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EXHIBIT 10.4
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is made effective as of the _____ day of
__________, 1998, by and between DATALINK CORPORATION, a Minnesota corporation
(the "Company"), and ___________________________ ("Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as directors
the most capable persons available;
WHEREAS, Indemnitee has recently become, or continues to serve as, a
director of the Company;
WHEREAS, the Bylaws of the Company require the Company to indemnify its
directors to the full extent permitted by law and Indemnitee is serving as a
director of the Company, in part, in reliance on such Bylaws; and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to maintain Indemnitee's continued service
to the Company in an effective manner and Indemnitee's reliance on the aforesaid
Bylaws and, in part, to provide Indemnitee with specific contractual assurance
that the protection promised by such Bylaws will be available to Indemnitee
(regardless of, among other things, any amendment to or revocation of such
Bylaws or any change in the composition of the Company's Board of Directors or
any acquisition transaction relating to the Company), the Company desires to
provide in this Agreement for the indemnification of and the advance of expenses
to Indemnitee to the full extent (whether partial or complete) permitted by law,
as set forth in this Agreement and, to the extent officers' and directors'
liability insurance is maintained by the Company, to provide for the continued
coverage of Indemnitee under the Company's officers' and directors' liability
insurance policies;
NOW, THEREFORE, in consideration of the covenants contained herein and of
Indemnitee's continuing service to the Company directly or, at its request,
other enterprises, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. CERTAIN DEFINITIONS.
(a) CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred if (i) any "person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended), other than a
trustee or other fiduciary holding securities under an employee benefit
plan of the Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing 20% or more of the total voting
power represented by the Company's then outstanding Voting Securities, or
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the
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Company, and any new director whose election by the Board of Directors or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were (x) directors at the beginning of the period or (y) whose
election or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for
any reason to constitute a majority of the Board of Directors, or (iii) the
stockholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation
which would result in the Voting Securities of the Company outstanding
immediately prior to such a merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into Voting
Securities of the surviving entity) at least 80% of the total voting power
represented by the Voting Securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company (in one
transaction or a series of transactions) of all or substantially all of the
Company's assets. A "Change of Control" shall not be deemed to occur as a
result of transactions in contemplation of or in connection with the
Company's initial public offering of Common Stock, including without
limitation, the election of Class I, Class II and Class III directors or
the issuance of Common Stock to the public in the offering.
(b) CLAIM. Any threatened, pending, or completed action, suit,
arbitration, alternate dispute resolution mechanism, investigation, or
proceeding, and any appeal thereof, whether civil, criminal,
administrative, or investigative and/or any inquiry or investigation,
whether conducted by the Company or any other party that Indemnitee in good
faith believes might lead to the institution of any such action.
(c) EXPENSES. Include attorneys' fees and all other costs, expenses,
and obligations, including retainers, court costs, transcript costs, expert
fees, witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, and delivery services fees, paid
or incurred in connection with investigating, defending, being a witness in
or participating in (including on appeal), or preparing to defend, be a
witness in or participate in any claim relating to any Indemnifiable Event.
(d) INDEMNIFIABLE EVENT. Any event, occurrence, or circumstance
related to the fact that Indemnitee is or was a director, officer,
employee, trustee, agent, or fiduciary of the Company, or is or was serving
at the request of the Company as a director, officer, employee, trustee,
agent or fiduciary of any other corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, or by reason of anything
done or not done by Indemnitee in any such capacity.
(e) POTENTIAL CHANGE IN CONTROL. Shall be deemed to have occurred if
(i) the Company enters into an agreement or arrangement, the consummation
of which would
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result in the occurrence of a Change in Control; (ii) any person
(including the Company) publicly announces an intention to take or
to consider taking actions which if consummated would constitute a Change
in Control; (iii) any person (other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company acting in
such capacity or a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company), who is or becomes the beneficial
owner, directly or indirectly, of securities of the Company representing
10% or more of the combined voting power of the Company's then outstanding
Voting Securities increases his beneficial ownership of such securities by
5% or more over the percentage so owned by such person on the date
hereof; or (iv) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred. A
"Potential Change of Control" shall not be deemed to occur as a result of
transactions in contemplation of or in connection with the Company's
initial public offering of Common Stock, including without limitation, the
election of Class I, Class II and Class III directors or the issuance of
Common Stock to the public in the offering.
(f) REVIEWING PARTY. Any appropriate person or body consisting of a
member or members of the Company's Board of Directors including the Special
Independent Counsel referred to in Section 4 (or, to the fullest extent
permitted by law, any other person or body appointed by the Board), who is
not a party to the particular claim for which Indemnitee is seeking
indemnification.
(g) VOTING SECURITIES. Any securities of the Company which vote
generally in the election of directors.
2. AGREEMENT TO SERVE. Indemnitee agrees to continue to serve as a
director 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). The Company shall have no obligation
under this Agreement to continue Indemnitee in any position with the Company.
3. BASIC INDEMNIFICATION AGREEMENT.
(a) In the event Indemnitee was, is or becomes a party to or witness
or other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim by reason of (or airing in party
out of), an Indemnifiable Event, the Company shall indemnify Indemnitee to
the fullest extent permitted by law, as soon as practicable but in any
event no later than thirty days after written demand is presented to the
Company against any and all expenses, judgments, fines, penalties, and
amounts paid in settlement (including all interest, assessments, and other
charges paid or payable in connection with or in respect of such expenses,
judgments, fines, penalties, or amounts paid in settlement) of such
Claim. Notwithstanding anything in this Agreement to the contrary, prior
to a Change in Control, Indemnitee shall not be entitled to
indemnification pursuant to this Agreement in connection with any Claim
initiated by Indemnitee against the Company or any director
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or officer of the Company unless the Company has joined in or consented
to the initiation of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request)
any and all Expenses to Indemnitee (an "Expense Advance").
(b) Notwithstanding the foregoing, (i) the obligations of the Company
under Section 3(a) shall be subject to the condition that any Reviewing
Party shall not have determined in a written opinion (in any case in which
the Special Independent Counsel referred to in Section 4 hereof is
involved) that Indemnitee would not be permitted to be indemnified under
applicable law, and (ii) the obligation of the Company to make an Expense
Advance pursuant to Section 3(a) shall be subject to the condition that
if, when and to the extent that any Reviewing Party determines that
Indemnitee would not be permitted to be so indemnified under applicable
law, the Company shall be entitled to be reimbursed by Indemnitee (who
hereby agrees to reimburse the Company, without interest) for all such
amounts theretofore paid; provided, however, that if Indemnitee has
commenced legal proceedings in a court of competent jurisdiction to secure
a determination that Indemnitee should be indemnified under applicable
law, any determination made by a Reviewing Party that Indemnitee would not
be permitted to be indemnified under applicable law shall not be binding
and Indemnitee shall not be required to reimburse the Company for any
Expense Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been exhausted or
lapsed). If there has not been a Change in Control, a Reviewing Party
shall be selected by the Board of Directors, and if there has been such a
Change in Control, a Reviewing Party shall be the Special Independent
Counsel referred to in Section 4 hereof. If there has been no appointment
or no determination by a Reviewing Party or if a Reviewing Party
determines that Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, Indemnitee shall
have the right to commence litigation in any court in the State of
Minnesota having subject matter jurisdiction thereof and in which venue is
proper seeking an initial determination by the court or challenging any
such determination by the court or challenging any such determination by
the Reviewing Party or any aspect thereof, including the legal or factual
basis therefor, and the Company hereby (i) consents to service of process
and to appear in any such proceeding, (ii) shall be precluded from
asserting that the procedures and presumptions of this Agreement are not
valid, binding, and enforceable, and (iii) shall stipulate in any
such proceeding that the Company is bound by all the provisions of this
Agreement. Any determination by the Reviewing Party otherwise shall be
conclusive and binding on the Company and Indemnitee.
4. CHANGE IN CONTROL. The Company agrees that if there is a Change in
Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were
directors immediately prior to such Change in Control) then with respect to
all matters thereafter arising concerning the rights of Indemnitee to
indemnity payment and Expense Advances under this Agreement or any other
agreement, the Company's Articles of Incorporation, or the Company's Bylaws
now or hereafter in effect relating to Claims for Indemnifiable Events, the
Company shall seek legal advice only from "Special Independent
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Counsel" selected by Indemnitee and approved by the Company (which
approval shall not be unreasonably withheld), and who has not otherwise
performed services for the Company or Indemnitee within the last five years
(other than in connection with such matters). Such Special Independent
Counsel, among other things, shall render its written opinion to the Company
and Indemnitee as to whether and to what extent the Indemnitee would be
permitted to be indemnified under applicable law. The Company agrees to pay
the reasonable fees of the Special Independent Counsel referred to above
and may fully indemnify such Special Independent Counsel against any and all
expenses (including attorney's fees), claims, liabilities, and damages
arising out of or relating to this Agreement or its engagement pursuant
hereto.
5. ESTABLISHMENT OF TRUST. In the event of Potential Change in Control, the
Company shall, upon written request by Indemnitee, create a "Trust" for
the benefit of Indemnitee and from time to time upon written request of
Indemnitee shall fund such Trust in an amount sufficient to satisfy any
and all Expenses reasonably anticipated at the time of each such request
to be incurred in connection with investigating, preparing for and defending
any Claim relating to an Indemnifiable Event, and any and all judgments,
fines, penalties, and settlement amounts of any and all Claims relating to an
Indemnifiable Event from time to time actually paid or claimed, reasonably
anticipated or proposed to be paid. The amount or amounts to be deposited
in the Trust pursuant to the foregoing funding obligation shall be
determined by a Reviewing Party, in any case in which the Special Independent
Counsel referred to above is involved. The Terms of the Trust shall provide
that upon a Change in Control (i) the Trust shall not be revoked or the
principal thereof invaded, without the written consent of the Indemnitee,
(ii) the Trustee shall advance, within two business days of a request by the
Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee hereby
agrees to reimburse the Trust under the circumstances under which the
Indemnitee would be required to reimburse the Company under Section 3(b) of
this Agreement, (iii) the Trust shall continue to be funded by the Company in
accordance with the funding obligation set forth above, (iv) the Trustee
shall promptly pay to the Indemnitee all amounts for which the
Indemnitee shall be entitled to indemnification pursuant to this Agreement
or otherwise, and (v) all unexpended funds in such Trust shall revert to
the Company upon a final determination by the Reviewing Party or a
court of competent jurisdiction, as the case may be, that the Indemnitee has
been fully indemnified under the terms of this Agreement. The Trustee shall
be a bank or trust company or other individual or entity chosen by the
Indemnitee and acceptable and approved by the Company. Nothing in this
Section 5 shall relieve the Company of any of its obligations under this
Agreement.
6. INDEMNIFICATION FOR ADDITIONAL EXPENSES. To the fullest extent permitted
by law, the Company shall indemnify against any and all Expenses
(including attorney's fees) and, if requested by Indemnitee, shall (within
two business days of such request) advance such Expenses to Indemnitee,
which are incurred by Indemnitee in connection with any Claim asserted
against or action brought by Indemnitee for (i) indemnification or advance
payment of Expenses by the Company under this Agreement or any other agreement,
the Company's Bylaws, or Articles of Incorporation hereafter in effect
relating to Claims for Indemnifiable Events and/or (ii) recovery under any
directors' and officers' liability insurance policies maintained by the
Company,
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regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, Expense advance or insurance recovery, as the case may be.
7. PARTIAL INDEMNITY, ETC. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of
the expenses, judgments, fines, penalties, and amounts paid in settlement of a
claim but not, however, for all of the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, notwithstanding any other provision of this
Agreement, all Claims relating in whole or in part to any Indemnifiable Event
or in defense of any issue or matter therein, including dismissal without
prejudice, Indemnitee shall be indemnified against all Expenses incurred in
connection therewith. In connection with any determination by the
Reviewing Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder the burden of proof shall be on the Company to establish
that Indemnitee is not so entitled.
8. CONTRIBUTION. If the indemnification provided in this Agreement is
unavailable and may not be paid to Indemnitee because such indemnification is
not permitted by law, then in respect of any threatened, pending, or completed
Claim in which the Company is jointly liable with Indemnitee (or would be if
joined in such Claim), the Company shall contribute, to the full extent
permitted by law, to the amount of expenses, judgments, fines, penalties, and
amounts paid in settlement (including all interest, assessments, and other
charges paid or payable in connection with or in respect of such expenses,
judgments, fines, penalties, or amounts paid in settlement) actually incurred
and paid or payable by Indemnitee in such proportion as is appropriate to
reflect (i) the relative benefits received by the Company on the one hand and
Indemnitee on the other hand from the transaction from which such Claim arose,
and (ii) the relative fault of the Company on the one hand and Indemnitee on the
other in connection with the events which resulted in such expenses, judgments,
fines, penalties, and amounts paid in settlement, as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand and
of Indemnitee on the other shall be determined by reference to, among other
things, the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent the circumstances resulting in such expenses,
judgment, fines, penalties, and amounts paid in settlement. The Company agrees
that it would not be just and equitable if contribution pursuant to this
paragraph were determined by pro rata allocation or any other method of
allocation which does not take account of the foregoing equitable
considerations.
9. NO PRESUMPTION. For purposes of this Agreement, to the fullest
extent permitted by law, the termination of any Claim, action, suit, or
proceeding, by judgment, order, settlement (whether with or without
court approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a
court has determined that indemnification is not permitted by applicable
law.
10. NON-EXCLUSIVITY, ETC. The rights of the Indemnitee hereunder shall be
in addition to any other rights Indemnitee may have under the Company's Articles
of Incorporation or Bylaws or the Minnesota Business Corporation Act or
otherwise. To the extent that a change in the
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Minnesota Business Corporation Act (whether by statute or judicial decision)
permits greater indemnification by agreement than would be afforded currently
under the Company's Articles of Incorporation or Bylaws or this Agreement, to
the fullest extent permitted by law it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change immediately upon the occurrence of such change without further
action by the Company or Indemnitee.
11. LIABILITY INSURANCE. To the extent the Company maintains an insurance
policy or policies providing directors' and officers' liability insurance,
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 director
or officer of the Company. The Board of Directors of the Company shall determine
the amount and coverage of such directors' and officers' liability insurance
from time to time.
12. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company or any affiliate of
the Company against Indemnitee, Indemnitee's spouse, heirs, executors or
personal or legal representatives after the expiration of two years from the
date of accrual of such cause of action, and any claim or cause of action of the
Company or its affiliate shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action such shorter period shall govern.
13. AMENDMENTS, ETC.. No supplement, modification, or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
14. SUBROGATION. In the event of 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 shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
15. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under this
Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, Bylaws, or otherwise) of the amounts otherwise
indemnifiable hereunder.
16. BINDING EFFECT, ETC.. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successors by purchase,
merger, consolidation, or otherwise to all or substantially all of the business
and/or assets of the Company, spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or
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indirect by purchase, merger, consolidation, or otherwise) to all, substantially
all or a substantial part, of the business and/or assets of the Company, by
written agreement in form and substance satisfactory to the Indemnitee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if no such
succession had taken place. This Agreement shall continue in effect regardless
of whether Indemnitee continues to serve as an officer or director of the
Company or of any other enterprise at the Company's requests.
17. SEVERABILITY. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph, or sentence) are held by a court of competent
jurisdiction to be invalid, void, or otherwise unenforceable in any respect, and
the validity and enforceability of any such provision in every other respect and
of the remaining provisions hereof shall not be in any way impaired, and shall
remain enforceable to the fullest extent permitted by law.
18. TERM. All obligations of the Company contained herein shall
continue during the period Indemnitee serves the Company in a capacity referred
to in Section 2 hereof, and shall continue thereafter so long as Indemnitee
shall be subject to any possible Claim relating to an Indemnifiable Event.
19. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Minnesota applicable to
contracts made and to be performed in such State without giving effects to the
principles of conflicts of law.
IN WITNESS WHEREOF, the undersigned have hereunto affixed their signatures.
DATALINK CORPORATION
By:_______________________________________
Xxxx X. Xxxxxx, Chief Executive Officer
INDEMNITEE
__________________________________________
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