EXHIBIT 10.5
INDEMNIFICATION AGREEMENT
(ClientLink & CompuCom)
This Indemnification Agreement (this "Agreement") is made and entered into
this 3rd day of December, 1997 by and between CompuCom Systems, Inc., a Delaware
corporation ("CompuCom"), and ClientLink, Inc., a Delaware corporation
("ClientLink").
BACKGROUND
A. CompuCom currently owns in excess of 80% of the outstanding common
stock of ClientLink.
B. ClientLink intends to effect an initial public offering of shares of
its common stock (the "Offering").
C. In connection with the Offering, ClientLink intends to file a
registration statement with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Registration Statement" and "1933 Act,"
respectively).
D. CompuCom and ClientLink desire to indemnify each other against certain
liabilities relating to, arising out of or resulting from their respective
businesses, operations and assets and the Registration Statement, on the terms
set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
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have the following meanings:
(a) "ClientLink Employees" means all employees or former employees of
ClientLink other than any person who as of the Effective Date is an employee of
CompuCom.
(b) "ClientLink Liabilities" means all Liabilities relating to,
resulting from or arising out of the businesses or operations conducted or
formerly conducted or assets owned or formerly owned by ClientLink. "ClientLink
Liabilities" shall also include all Liabilities for any benefits due and payable
with respect to ClientLink Employees accruing from and after the Effective Date,
under any "employee benefit plan," as defined in Section 3(3) of ERISA,
maintained or formerly maintained by ClientLink or CompuCom in which any
ClientLink Employee has at any time participated, as well as any taxes,
penalties, interest or other charges imposed by any governmental agency and
caused by or resulting from any action or omission by ClientLink with respect to
the maintenance and administration of any such plan, whether by CompuCom or
ClientLink; provided, however, that (i) any such liability, including without
limitation, liability for taxes, penalties, interest or other charges imposed by
any governmental agency with respect to any such employee benefit shall be
limited to that portion of such liability or other charge which bears the same
relationship to the whole as the benefit liabilities under such plan
attributable to ClientLink Employees bears to all benefit liabilities under such
plan, (ii) "ClientLink Liabilities" shall include all taxes, penalties, interest
and other charges imposed solely in relation to the participation of ClientLink
Employees and shall not include any taxes, penalties, interest or other charges
imposed solely in relation to the participation of CompuCom Employees; and (iii)
"ClientLink Liabilities" shall not include any taxes, penalties, interest and
other charges imposed as a result of any error or omission by CompuCom or
failure to take any action within CompuCom's exclusive control in connection
with the maintenance and administration of any plan.
(c) "ClientLink Securities Liabilities" means any Liability under the
1933 Act, the 1934 Act, or any other federal or state securities law or
regulation resulting from or arising out of the Offering, including without
limitation any such Liability arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement, or in any Prospectus, or (ii) the omission or alleged
omission to state in a Registration Statement or Prospectus a material fact
required to be stated therein or necessary to make the statements made therein
not misleading, but only to the extent that such Liability arises out of or is
based upon any such untrue statement or alleged untrue statement or any such
omission or alleged omission concerning the businesses and operations of
ClientLink, or relating to any ClientLink Employee or otherwise contained in
material furnished in writing by ClientLink expressly for use therein.
(d) "CompuCom Employees" means all employees or former employees of
CompuCom other than the ClientLink Employees and the Excluded Employees.
(e) "CompuCom Guarantee" means any guarantee, surety or performance
bond, letter of credit or other contractual arrangement in effect as of the
Effective Date pursuant to which CompuCom has guaranteed or secured or caused a
third party to guarantee or secure any liability or obligation of ClientLink.
(f) "CompuCom Liabilities" means all Liabilities relating to,
resulting from or arising out of the businesses or operations conducted by
CompuCom, other than ClientLink Liabilities. "CompuCom Liabilities" shall also
include all liabilities for any benefits due and payable with respect to
CompuCom Employees under any "employee benefit plan," as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained by CompuCom in which any CompuCom Employee has at any time
participated, as well as any taxes, penalties, interest or other charges imposed
by any governmental agency with respect to the maintenance and administration of
any such plan; provided, however, that (i) any such liability for taxes,
penalties, interest or other charges posed by any governmental agency with
respect to any such employee benefit plan shall be limited to that portion of
the tax, penalty, interest or other charge which bears the same relationship to
the whole as the benefit liabilities under such plan attributable to CompuCom
Employees bears to all benefit liabilities under such plan, (ii) "CompuCom
Liabilities" shall include all taxes, penalties, interest and other charges
imposed solely in relation to the participation of CompuCom Employees and shall
not include any taxes, penalties, interest or other charges imposed solely in
relation to the participation of ClientLink Employees, and (iii) "CompuCom
Liabilities" shall not include any taxes, penalties, interest and other charges
imposed as a result of any error or omission by ClientLink or its failure to
take any action within ClientLink's exclusive control in connection with the
maintenance and administration of any plan.
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(g) "CompuCom Securities Liabilities" means any Liability under the
1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act") or
any other federal or state securities law or regulation resulting from or
arising out of the Offering and arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement filed with the Securities and Exchange Commission in
connection with the Offering, or any amendment or supplement thereto (a
"Registration Statement"), or in any prospectus relating to the Offering or in
any amendment or supplement thereto (a "Prospectus"), or the omission or alleged
omission to state in a Registration Statement or Prospectus a material fact
required to be stated therein or necessary to make the statements made therein
not misleading, but only to the extent that such Liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission concerning the business and operations of CompuCom or relating
to any CompuCom Employee or otherwise contained in material furnished in writing
by CompuCom expressly for use therein.
(h) "Effective Date" means the date on which the purchase and sale of
shares of common stock of ClientLink pursuant to the Offering first occurs.
(i) "Excluded Employees" means all persons who as of the Effective
Date are employees of both ClientLink and CompuCom.
(j) "Liabilities" means all liabilities and obligations, actual or
contingent, liquidated or unliquidated, accrued or unaccrued, known or unknown,
whenever and however arising, including all costs and expenses (including
reasonable attorney fees) relating thereto, and including without limitation
liabilities and obligations arising in connection with any actual or threatened
claim, action, suit or proceeding by or before any court or regulatory or
administrative agency or commission or any arbitration panel.
(k) "Registration Rights Agreement" means the Registration Rights
Agreement between CompuCom and ClientLink dated as of the date hereof.
(l) "Taxes" means any and all taxes (including interest, penalties and
additions to tax), fees and charges (including sales, use, excise, value added,
personal property and other taxes) imposed by any federal, state or local or
government tax authority in the United States of America or by any foreign
government or taxing authority.
(m) "Underwriting Agreement" means the Underwriting Agreement by and
among The Xxxxxxxx-Xxxxxxxx Company, LLC, and Xxxxxx Brothers Inc. (as
representatives of the several underwriters), CompuCom and ClientLink to be
executed in connection with the Offering.
2. Indemnification by ClientLink. ClientLink shall indemnify, defend and
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hold harmless CompuCom and its past, present and future directors, officers,
employees, agents and representatives from and against any and all losses,
claims, damages, liabilities, demands, suits and actions, including reasonable
attorney fees (collectively, "Indemnifiable Losses"), relating to, resulting
from or arising out of (a) any ClientLink Liabilities, (b) any ClientLink
Securities Liabilities, or (c) any misrepresentation or material breach by
ClientLink of any covenant of ClientLink or any failure by ClientLink to satisfy
any condition required to be satisfied by ClientLink, contained in this
Agreement
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or any other agreement executed by ClientLink in connection with the
Offering, except to the extent that such misrepresentation, breach or failure
was caused by or resulted from any statement, act or omission within the
exclusive knowledge or control of CompuCom.
3. Indemnification by CompuCom. CompuCom shall indemnify, defend and
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hold harmless ClientLink and its past, present and future directors, officers,
employees, agents and representatives (regardless in each case of whether any
such person serves in one or more similar capacities for CompuCom and
ClientLink) from and against any and all Indemnifiable Losses relating to,
resulting from or arising out of (a) any CompuCom Liabilities, (b) any CompuCom
Securities Liabilities, or (c) any misrepresentation or material breach by
CompuCom of any covenant of CompuCom, or any failure of CompuCom to satisfy and
condition required to be satisfied by CompuCom, contained in this Agreement or
any other agreement executed by CompuCom in connection with the Offering, except
to the extent that such misrepresentation, breach or failure was caused by or
resulted from any statement, act or omission within the exclusive knowledge or
control of ClientLink.
4. Guarantees. ClientLink shall indemnify, defend and hold harmless
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CompuCom, and its directors, officers, employees, agents and representatives,
from and against any Indemnifiable Losses relating to, resulting from or arising
out of any CompuCom Guarantee. CompuCom shall not terminate unilaterally or
withdraw any CompuCom Guarantee and shall abide by the terms of the CompuCom
Guarantees.
5. Third Party Claims.
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(a) If any person entitled to indemnification under this Agreement (an
"Indemnitee") receives notice of the assertion of any claim or of the
commencement of any action or proceeding by any person that is not a party to
this Agreement or a subsidiary of any such party (a "Third Party Claim") against
such Indemnitee, the Indemnitee shall promptly provide written notice thereof
(including a description of the Third Party Claim and an estimate of any
Indemnifiable Losses, which estimate shall not be conclusive as to the final
amount of such Indemnifiable Losses) to the party required to provide
indemnification under this Agreement (the "Indemnifying Party") within ten (10)
days after the Indemnitee's receipt of notice of such Third Party Claim. Any
delay by the Indemnitee in providing such written notice shall not relieve the
Indemnifying Party of any liability for indemnification hereunder except to the
extent that the rights of the Indemnifying Party are materially prejudiced by
such delay.
(b) The Indemnifying Party shall have the right to participate in or,
by giving written notice to the Indemnitee, to assume the defense of any Third
Party Claim at such Indemnifying Party's expense and by such Indemnifying
Party's own counsel (which shall be reasonably satisfactory to the Indemnitee),
and the Indemnitee will cooperate in good faith in such defense. The
Indemnifying Party shall not be liable for any legal expenses incurred by the
Indemnitee after the Indemnitee has received notice of the Indemnifying Party's
intent to assume the defense of a Third Party Claim; provided, however, that if
the Indemnifying Party fails to take steps reasonably necessary to diligently
pursue the defense of such Third Party Claim within ten (10) days of receipt of
notice from the Indemnitee that such steps are not being taken, the Indemnitee
may assume its own defense and the Indemnifying Party shall be liable for the
reasonable costs thereof.
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(c) The Indemnifying Party may settle any Third Party Claim which it
has elected to defend so long as the written consent of the Indemnitee to such
settlement is first obtained (which consent shall not be unreasonably withheld).
The Indemnified Party shall not settle any Third Party Claim without the written
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld).
(d) In the event that a Third Party Claim involves a proceeding as to
which both CompuCom and ClientLink may be Indemnifying Parties, the parties
agree to cooperate in good faith in a joint defense of such Third Party Claim.
6. Contribution. If the indemnification provided for in this Agreement
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with respect to ClientLink Securities Liabilities or CompuCom Securities
Liabilities is for any reason held by a court or other tribunal to be
unavailable on policy grounds or otherwise, CompuCom and ClientLink shall
contribute to any Indemnifiable Losses relating to, resulting from or arising
out of the ClientLink Securities Liabilities or the CompuCom Securities
Liabilities in such proportion as to reflect each party's relative fault in
connection with such Indemnifiable Losses. The relative fault of the parties
shall be determined by reference to, among other things, whether the conduct or
information giving rise to the Indemnifiable Losses is attributable to CompuCom
or ClientLink and each party's relative intent, access to information and
opportunity to prevent or correct the Indemnifiable Losses. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any person who is not guilty of
fraudulent misrepresentation.
7. Allocations Relating to Excluded Employees. Liabilities for any
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benefits due and payable in respect of Excluded Employees under any "employee
benefit plan," as defined in Section 3(3) of ERISA, maintained or formerly
maintained by ClientLink or CompuCom in which any Excluded Employee has at any
time participated shall be allocated as between ClientLink and CompuCom as
follows: (a) to the extent such liabilities are directly attributable to periods
prior to the Effective Date, they shall be allocated entirely to CompuCom; (b)
to the extent such liabilities are directly attributable to periods on or after
the Effective Date and are directly attributable to an Excluded Employee's
service to ClientLink or CompuCom, they shall be allocated entirely to
ClientLink or CompuCom, respectively; and (c) in all other events, such
liabilities shall be allocated in a manner as nearly proportionate to the
services rendered by such Excluded Employee to ClientLink and CompuCom,
respectively, as may be practicable under the circumstances or as otherwise
mutually agreed by ClientLink and CompuCom. Liabilities allocated to ClientLink
pursuant to this Section shall be deemed to be ClientLink Liabilities for all
purposes of this Agreement, and liabilities allocated to CompuCom pursuant to
this Section shall be deemed to be CompuCom Liabilities for all purposes of this
Agreement.
8. Cooperation. So long as any books, records and files retained after
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the Effective Date by CompuCom or ClientLink relating to the businesses,
operations or assets of the other party (including any books, records and files
retained by ClientLink relating to the conduct of its businesses or operations
or the ownership of its assets prior to the Effective Date) remain in existence
and available, such other party shall have the right upon prior written notice
to inspect and copy the same at any time during business hours for any proper
purpose, provided that such right will not extend to any books, records or files
the disclosure of which would result in a waiver of the attorney-client, work
product or other privileges which permit non-disclosure of otherwise relevant
material in
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litigation or other proceedings, or which are subject on the date hereof and at
the time inspection is requested to a non-disclosure agreement with a third
party and a waiver cannot reasonably be obtained. CompuCom and ClientLink agree
that they shall not destroy any such books, records or files without reasonable
notice to the other party or if such party receives within ten (10) days of such
notice any reasonable objection from the other party to such destruction. Except
in the case of dispute between the parties hereto, CompuCom and ClientLink shall
cooperate with one another in a timely manner in any administrative or judicial
proceeding involving any matter affecting the actual or potential liability of
either party. Such cooperation shall include, without limitation, making
available to the other party during normal business hours all books, records and
information, and officers and employees (without substantial disruption of
operations or employment) necessary or useful in connection with any inquiry,
audit, investigation or dispute, any litigation or any other matter requiring
any such books, records, information, officers or employees for any reasonable
business purpose. The party requesting or otherwise entitled to any books,
records, information, officers or employees pursuant to this Section shall bear
all reasonable out-of-pocket costs and expenses (except for salaries, employee
benefits and general overhead) incurred in connection with providing such books,
records, information, officers or employees.
9. Effectiveness. This Agreement shall become effective on the Effective
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Date.
10. Successors and Assigns. This Agreement shall be binding upon the
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parties and their respective successors and permitted assigns and shall inure to
the benefit of the parties and their respective successors and permitted
assigns. This Agreement may not be assigned by either party.
11. No Third Party Beneficiaries. Except for the persons entitled to
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indemnification pursuant to Section 2 or Section 3, each of whom is an intended
third party beneficiary hereunder, nothing expressed or implied in this
Agreement shall be construed to give any person or entity other than the parties
any legal or equitable rights.
12. Entire Agreement. This Agreement constitutes the entire agreement
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among the parties with respect to the subject matter hereof.
13. Amendment. This Agreement may not be amended except by an instrument
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signed by the parties.
14. Waivers. Either party may (i) extend the time for the performance of
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any of the obligations or other act of the other party, (ii) waive any
inaccuracies in the representations and warranties contained herein, or (iii)
waive compliance with any of the agreements contained herein. No waiver shall be
effective unless signed by the parties. No waiver of any term shall be
construed as a subsequent waiver of the same term, or a waiver of any other
term, of this Agreement. The failure of any party to assert any of its rights
hereunder will not constitute a waiver of any such rights.
15. Severability. If any provision of this Agreement is invalid, illegal
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or incapable of being enforced by any rule of law or public policy, such
provision shall be deemed severable and all other provisions of this Agreement
shall nevertheless remain in full force and effect.
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16. Headings. Section headings in this Agreement are included for
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convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
17. Notices. All notices given in connection with this Agreement shall be
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in writing and shall be delivered to the principal place of business of the
other party.
18. Governing Law. This Agreement shall be governed by, and construed in
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accordance with, the law of the State of Texas, without giving effect to the
principles of conflict of laws of such State.
19. Counterparts. This Agreement may be executed in counterparts, each of
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which shall be an original, but all of which together shall constitute but one
and the same instrument.
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IN WITNESS WHEREOF, the parties have duly executed this Indemnification
Agreement as of the date first above written.
COMPUCOM SYSTEMS, INC.
By: /s/ X. Xxxxxx Xxxxx
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Name: X. Xxxxxx Xxxxx
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Title: Senior Vice President
and Chief Financial Officer
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CLIENTLINK, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
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Title: President and CEO
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