EXHIBIT 10.11
INDEMNIFICATION AGREEMENT
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AGREEMENT dated as of February , 1997 by and among Computer
Generated Solutions, Inc., a Delaware corporation (the "Company"), and Philip
Friedman and Victor Friedman (collectively, the "Selling Stockholders").
WHEREAS, the Company has filed a registration statement (Registration
Number 333-09297) on Form S-1, as amended (the "Registration Statement"), under
the Securities Act of 1933, as amended (the "Securities Act"); and
WHEREAS, the Selling Stockholders are selling certain shares of the
Company's common stock (the "Common Stock") pursuant to such Registration
Statement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties agree as follows:
1. Definitions.
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(a) As used herein, the term "Underwriting Agreement" shall mean the
Underwriting Agreement to be entered into among the parties to this Agreement
and Oppenheimer & Co., Inc. and Furman Selz LLC, as representatives of the
several underwriters to be identified therein pertaining to the Registration
Statement.
(b) As used herein, all other capitalized terms, unless the context
otherwise requires, shall have the meaning set forth in the Underwriting
Agreement.
2. Indemnification
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(a) The Company hereby agrees to indemnify and holds harmless, to the
fullest extent permitted by law, the Selling Stockholders from and against any
and all losses, claims, damages and liabilities (including, without limitation,
the legal fees and other expenses reasonably incurred in connection with any
suit, action or proceeding or any claim asserted) caused by any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Selling Stockholder furnished to the Company in writing by such
Selling Stockholder, expressly for use therein.
(b) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Selling Stockholder in respect of which indemnity may be sought pursuant to
the preceding paragraph (a), such Selling Stockholder (the "Indemnified Person")
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shall promptly notify the Company (the "Indemnifying Person") in writing, and
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such Indemnifying Person, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may designate in such
proceeding and shall pay the reasonable fees and expenses incurred by such
counsel related to such proceeding. In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Person unless (i)
such Indemnifying Person and such Indemnified Person shall have mutually agreed
to the contrary, (ii) such Indemnifying Person has failed within a reasonable
time to retain counsel reasonably satisfactory to such Indemnified Person or
(iii) the named parties in any such proceeding (including any impleaded parties)
include an Indemnifying Person and an Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that an
Indemnifying Person shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be reimbursed as
they are incurred. Any such separate firm for the Selling Stockholders shall be
designated in writing by the Selling Stockholders. The Indemnifying Person
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, such Indemnifying Person agrees to indemnify each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the preceding sentence, if at any time
an Indemnified Person shall have requested an Indemnifying Person to reimburse
the Indemnified Person for fees and expenses incurred by counsel as contemplated
by the third sentence of this paragraph, such Indemnifying Person agrees that it
shall be liable for any settlement of any proceeding
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effected without its written consent if (i) such settlement is entered into more
than 30 days after receipt by such Indemnifying Person of the aforesaid request
and (ii) such Indemnifying Person shall not have reimbursed the Indemnified
Person in accordance with such request prior to the date of such settlement. No
Indemnifying Person shall, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Person is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Person, unless such
settlement includes an unconditional release of such Indemnified Person from all
liability on claims that are the subject matter of such proceeding.
(c) If the indemnification provided for hereunder is unavailable to an
Indemnified Person in respect of any losses, claims, damages or liabilities
referred to herein, then the Indemnifying Person, in lieu of indemnifying such
Indemnified Person hereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand, and the Selling Stockholders,
on the other hand, from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, on the one
hand, and the Selling Stockholders, on the other hand, in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company, on the one hand, and the Selling
Stockholders, on the other hand, shall be deemed to be in the same respective
proportion as the net proceeds from the offering (before deducting expenses)
received by the Company and such Selling Stockholder, in each case as set forth
in the table on the cover of the Prospectus, bear to the aggregate public
offering price of the Shares. The relative fault of the Company, on the one
hand, and the Selling Stockholders, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Selling Stockholders and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
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(d) Each of the Company and the Selling Stockholders agrees that it
would not be just and equitable if contribution pursuant to this Section 2 were
determined by pro rata allocation (even if the Company on the one hand, and the
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Selling Stockholders, on the other hand, were each treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 2, in no event shall a Selling
Stockholder be required to contribute any amount in excess of the amount by
which the net proceeds received by it through the sale of its Shares to the
Underwriters exceeds the amount of any damages that such Selling Stockholder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The remedies provided for hereunder are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any indemnified
party at law or in equity.
4. Confirmation of Shares to be Sold. Each Selling Stockholder agrees that the
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disclosure contained under "Principal and Selling Stockholders" in the Company's
Preliminary Prospectus dated February 14, 1997, correctly sets forth the number
of shares of Common Stock that such Selling Stockholder has agreed to sell.
5. Miscellaneous.
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(a) The indemnification and contribution agreements of the Company
and the Selling Stockholders in this Agreement shall remain in full force and
effect regardless of (i) any termination of the Underwriting Agreement, (ii) any
investigation made by or on behalf of the Company, any Selling Stockholders, any
Underwriter or any controlling person, and (iii) delivery of and payment for the
Shares under the Underwriting Agreement.
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(b) Changes in or additions to this Agreement may be made, and
compliance with any provision of this Agreement may be omitted or waived, only
by a written instrument executed by the parties hereto.
(c) No failure or delay in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
(d) The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision.
(e) Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
(f) This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and supersedes all previous agreements,
negotiations, commitments and writings in respect of such subject matter.
(g) This Agreement shall be binding upon and inure to each of the
parties hereto and its respective successors and permitted assigns.
(h) This Agreement shall be governed by the law of the State of New
York, United States of America, without regard to its principles of conflict of
laws.
(i) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
COMPUTER GENERATED SOLUTIONS, INC.
By:
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Name:
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Title:
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Philip Friedman
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Victor Friedman
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