EXHIBIT 10.7 INDEMNIFICATION AGREEMENT ------------------------- INDEMNIFICATION AGREEMENT, dated as of February 28, 1994 (the "Agreement"), among CDW Holding Corporation, a Delaware corporation ("Holding"), CDW Acquisition Corporation, a Delaware corporation to be renamed WESCO Distribution, Inc. (the "Company"), Clayton, Dubilier & Rice, Inc., a Delaware corporation ("CD&R"), and The Clayton & Dubilier Private Equity Fund IV Limited Partnership, a Connecticut limited partnership (together with any other investment vehicle managed by CD&R, the "C&D Fund"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the C&D Fund is managed by CD&R, and the general partner of the C&D Fund is Clayton & Dubilier Associates IV Limited Partnership, a Connecticut limited partnership (together with any general partner of any other investment vehicle managed by CD&R, "C&D Associates"); WHEREAS, CD&R has organized Holding, Holding's wholly owned subsidiary the Company, and the Company's wholly owned subsidiary CDW Canada Acquisition Inc., an Ontario corporation ("CDW Canada"), to acquire substantially all of the assets of, and to assume certain of the liabilities of, the Westinghouse Electric Supply Company business of Westinghouse Electric Corporation, a Pennsylvania corporation ("Westinghouse"), and Westinghouse Canada, Inc., a Canadian corporation ("Westinghouse Canada"), pursuant to the Asset Acquisition Agreement, dated as of February 15, 1994, between Holding and Westinghouse (such transactions being hereinafter referred to as the "Acquisition"); WHEREAS, for the purpose of financing the Acquisition, (a) Holding - is offering and selling 950,000 shares of its Class A Common Stock, par value $.01 per share (the "Equity Offering"), (b) Holding is offering and issuing - and/or selling to Westinghouse a guaranteed first mortgage note due February 28, 2001 in the initial amount of $45 million (the "U.S. Note") and (c) CDW Canada - is offering and issuing and/or selling to Westinghouse Canada, Inc., a Canadian corporation ("Westinghouse Canada"), a guaranteed first mortgage note due February 28, 2001 in the original principal amount of C$6,757,250 million (the "Canadian Note", and together with the U.S. Note, the "Notes"). WHEREAS, at the closing of the Acquisition Holding will cause the Company (i) to assume all of Holding's obligations under the U.S. Note and (ii) - -- to cause the Company's wholly owned subsidiary CDW Realco, Inc. ("Realco") (a) - to assume all of the Company's obligations under the U.S. Note and (b) upon - surrender by Westinghouse of the U.S. Note, execute and deliver to Westinghouse in exchange therefor a guaranteed first mortgage note due February 28, 2001 in the initial amount of $45 million (the "Realco Note"); WHEREAS, (i) the Company will execute and deliver a guarantee of the - U.S. Note (the "Buyer Note Guarantee"), (ii) upon the issuance of the Realco -- Note by Realco, Holding and the Company will execute and deliver a guarantee of the Realco Note (the "Realco Note Guarantee") and (iii) Holding, the Company and --- Realco will execute and deliver a guarantee of the Canadian Note (the "Canadian Note Guarantee"); WHEREAS, the C&D Fund will purchase capital stock of Holding pursuant to the Equity Offering, becoming the majority stockholder of Holding; WHEREAS, Holding, the Company or one or more of their respective Subsidiaries (as defined below) from time 2 to time in the future (a) may offer and sell or cause to be offered and sold - equity or debt securities (such offerings and sales, together with the Equity Offering and the offering and the issuance and/or sale of the Notes, the Buyer Note Guarantee, the Realco Note Guarantee and the Canadian Note Guarantee, being hereinafter referred to as the "Securities Offerings"), including without limitation (i) offerings of shares of capital stock of Holding and/or options to - purchase such shares to employees, directors, managers and consultants of and to Holding and the Company (a "Management Offering"), and (ii) one or more -- offerings of debt securities for the purpose of refinancing the Notes or for other corporate purposes, and (b) may repurchase, redeem or otherwise acquire - certain securities of Holding, the Company or one or more of their respective Subsidiaries (any such repurchase or redemption being referred to herein as a "Redemption"); WHEREAS, the parties hereto recognize the possibility that claims might be made against and liabilities incurred by CD&R, the C&D Fund, C&D Associates or related persons or affiliates under applicable securities laws or otherwise in connection with the Securities Offerings, or relating to other actions or omissions of or by Holding and the Company, or relating to the provision by CD&R of management consulting, monitoring and financial advisory services to Holding and the Company, and the parties hereto accordingly wish to provide for CD&R, the C&D Fund, C&D Associates and related persons and affiliates to be indemnified in respect of any such claims and liabilities; and WHEREAS, the parties hereto recognize that claims might be made against and liabilities incurred by directors and officers of Holding and the Company in connection with their acting in such capacity, and accordingly wish to provide for such directors and officers to be indemnified to 3 the fullest extent permitted by law in respect of any such claims and liabilities; NOW, THEREFORE, in consideration of the foregoing premises, and the mutual agreements and covenants and provisions herein set forth, the parties hereto hereby agree as follows: 1. Definitions. ----------- (a) "Claim" means, with respect to any Indemnitee, any claim against such Indemnitee involving any Obligation with respect to which such Indemnitee may be entitled to be defended and indemnified by Holding or the Company under this Agreement. (b) "Consulting Agreement" means the Consulting Agreement, dated as of the date hereof, among Holding, the Company and CD&R, as the same may be amended, waived, modified or supplemented from time to time. (c) "Indemnitee" means each of CD&R, the C&D Fund, C&D Associates and their respective directors, officers, partners, employees, agents, advisors, representatives and controlling persons (within the meaning of the Securities Act of 1933, as amended (the "Securities Act")) and each other person who is or becomes a director or an officer of Holding or the Company. (d) "Obligations" means, collectively, any and all claims, obligations, liabilities, causes of actions, actions, suits, proceedings, investigations, judgments, decrees, losses, damages, fees, costs and expenses (including without limitation interest, penalties and fees and disbursements of attorneys, accountants, investment bankers and other professional advisors), in each case whether incurred, arising or existing with respect to third parties or otherwise at any time or from time to time. 4 (e) "Related Document" means any agreement, certificate, instrument or other document to which Holding or the Company may be a party or by which it or any of its properties or assets may be bound or affected from time to time relating in any way to any Securities Offering or any of the transactions contemplated thereby, including without limitation, in each case as the same may be amended, modified, waived or supplemented from time to time, (A) any - registration statement filed by or on behalf of Holding or the Company with the Securities and Exchange Commission (the "Commission") in connection with any Securities Offering, including all exhibits, financial statements and schedules appended thereto, and any submissions to the Commission in connection therewith, (B) any prospectus, preliminary or otherwise, included in such registration - statements or otherwise filed by or on behalf of Holding or the Company in connection with any Securities Offering or used to offer or confirm sales of their respective securities in any Securities Offering, (C) any private - placement or offering memorandum or circular, or other information or materials distributed by or on behalf of Holding, the Company or any placement agent, initial purchaser or underwriter in connection with any Securities Offering, (D) - any federal, state or foreign securities law or other governmental or regulatory filings or applications made in connection with any Securities Offering, the Acquisition or any of the transactions contemplated thereby, (E) any - underwriting, subscription, purchase, option or registration rights agreement or plan entered into or adopted by Holding or the Company in connection with any Securities Offering or (F) any purchase, repurchase, redemption or other - agreement entered into by Holding or the Company in connection with any Redemption. (f) "Subsidiary" means each corporation or other person or entity in which Holding or the Company owns or controls, directly or indirectly, capital stock or other 5 equity interests representing at least 50% of the outstanding voting stock or other equity interests. 2. Indemnification. --------------- (a) Each of Holding and the Company, jointly and severally, agrees to indemnify, defend and hold harmless each Indemnitee: (i) from and against any and all Obligations in any way resulting from, arising out of or in connection with, based upon or relating to (A) - the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any other applicable securities or other laws, in connection with any Securities Offering, any Related Document or any of the transactions contemplated thereby, (B) any other action or failure to act - of Holding, the Company, any Subsidiary or any of their predecessors, whether such action or failure has occurred or is yet to occur or (C) - except to the extent that any such Obligation is found in a final judgment by a court of competent jurisdiction to have resulted from the gross negligence or intentional misconduct of CD&R, the performance by CD&R of management consulting, monitoring, financial advisory or other services for Holding or the Company (whether pursuant to the Consulting Agreement or otherwise); and (ii) to the fullest extent permitted by Delaware law, from and against any and all Obligations in any way resulting from, arising out of or in connection with, based upon or relating to (A) the fact that such - Indemnitee is or was a director or an officer of Holding or the Company, as the case may be, or is or was serving at the request of such corporation as a director, officer, employee or agent of or advisor or consultant to another corporation, partnership, joint venture, trust or other enterprise or (B) any breach or - 6 alleged breach by such Indemnitee of his or her fiduciary duty as a director or an officer of Holding or the Company, as the case may be; in each case including but not limited to any and all fees, costs and expenses (including without limitation fees and disbursements of attorneys) incurred by or on behalf of any Indemnitee in asserting, exercising or enforcing any of its rights, powers, privileges or remedies in respect of this Agreement or the Consulting Agreement. (b) Without in any way limiting the foregoing Section 2(a), each of Holding and the Company agrees, jointly and severally, to indemnify, defend and hold harmless each Indemnitee from and against any and all Obligations resulting from, arising out of or in connection with, based upon or relating to liabilities under the Securities Act, the Exchange Act or any other applicable securities or other laws, rules or regulations in connection with (i) the - inaccuracy or breach of or default under any representation, warranty, covenant or agreement in any Related Document, (ii) any untrue statement or alleged -- untrue statement of a material fact contained in any Related Document or (iii) --- any omission or alleged omission to state in any Related Document a material fact required to be stated therein or necessary to make the statements therein not misleading. Notwithstanding the foregoing, neither Holding nor the Company shall be obligated to indemnify such Indemnitee from and against any such Obligation to the extent that such Obligation arises out of or is based upon an untrue statement or omission made in such Related Document in reliance upon and in conformity with written information furnished to Holding or the Company, as the case may be, in an instrument duly executed by such Indemnitee and specifically stating that it is for use in the preparation of such Related Document. 3. Contribution. ------------ 7 (a) Except to the extent that Section 3(b) is applicable, if for any reason the indemnity provided for in Section 2(a) is unavailable or is insufficient to hold harmless any Indemnitee from any of the Obligations covered by such indemnity, then Holding and the Company, jointly and severally, shall contribute to the amount paid or payable by such Indemnitee as a result of such Obligation in such proportion as is appropriate to reflect (i) the relative - fault of each of Holding, the Company and their Subsidiaries, on the one hand, and such Indemnitee, on the other, in connection with the state of facts giving rise to such Obligation, (ii) if such Obligation results from, arises out of, is -- based upon or relates to any Securities Offering, the relative benefits received by each of Holding, the Company and their Subsidiaries, on the one hand, and such Indemnitee, on the other, from such Securities Offering and (iii) if --- required by applicable law, any other relevant equitable considerations. (b) If for any reason the indemnity specifically provided for in Section 2(b) is unavailable or is insufficient to hold harmless any Indemnitee from any of the Obligations covered by such indemnity, then Holding and the Company,jointly and severally, shall contribute to the amount paid or payable by such Indemnitee as a result of such Obligation in such proportion as is appropriate to reflect (i) the relative fault of each of Holding, the Company - and their Subsidiaries, on the one hand, and such Indemnitee, on the other, in connection with the information contained in or omitted from any Related Document, which inclusion or omission resulted in the inaccuracy or breach of or default under any representation, warranty, covenant or agreement therein, or which information is or is alleged to be untrue, required to be stated therein or necessary to make the statements therein not misleading, (ii) the relative -- benefits received by Holding, the Company and their Subsidiaries, on the one hand, and such Indemnitee, on the other, from such Securities Offering and (iii) --- if required 8 by applicable law, any other relevant equitable considerations. (c) For purposes of Section 3(a), the relative fault of each of Holding, the Company and their Subsidiaries, on the one hand, and of the Indemnitee, on the other, shall be determined by reference to, among other things, their respective relative intent, knowledge, access to information and opportunity to correct the state of facts giving rise to such Obligation. For purposes of Section 3(b), the relative fault of each of Holding, the Company and their Subsidiaries, on the one hand, and of the Indemnitee, on the other, shall be determined by reference to, among other things, (i) whether the included or - omitted information relates to information supplied by Holding, the Company or a Subsidiary, on the one hand, or by such Indemnitee, on the other, and (ii) their -- respective relative intent, knowledge, access to information and opportunity to correct such inaccuracy, breach, default, untrue or alleged untrue statement, or omission or alleged omission. For purposes of Section 3(a) or 3(b), the relative benefits received by each of Holding, the Company and their Subsidiaries, on the one hand, and the Indemnitee, on the other, shall be determined by weighing the direct monetary proceeds to Holding, the Company and their Subsidiaries, on the one hand, and such Indemnitee, on the other, from such Securities Offering. (d) The parties hereto acknowledge and agree that it would not be just and equitable if contributions pursuant to Section 3(a) or 3(b) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in such respective Section. Holding and the Company shall not be liable under Section 3(a) or 3(b), as applicable, for contribution to the amount paid or payable by any Indemnitee except to the extent and under such circumstances as Holding or the Company would have been 9 liable to indemnify, defend and hold harmless such Indemnitee under the corresponding Section 2(a) or 2(b), as applicable, if such indemnity were enforceable under applicable law. No Indemnitee shall be entitled to contribution from Holding or the Company with respect to any Obligation covered by the indemnity specifically provided for in Section 2(b) in the event that such Indemnitee is finally determined to be guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with such Obligation and Holding and the Company are not guilty of such fraudulent misrepresentation. 4. Indemnification Procedures. -------------------------- (a) Whenever any Indemnitee shall have actual knowledge of the reasonable likelihood of the assertion of a Claim, CD&R (acting on its own behalf or, if requested by any such Indemnitee other than itself, on behalf of such Indemnitee) or such Indemnitee shall notify Holding or the Company, as the case may be, in writing of the Claim (the "Notice of Claim") with reasonable promptness after such Indemnitee has such knowledge relating to such Claim and has notified CD&R thereof. The Notice of Claim shall specify all material facts known to CD&R (or if given by such Indemnitee, such Indemnitee) that give rise to such Claim and the monetary amount or an estimate of the monetary amount of the Obligation involved if CD&R (or if given by such Indemnitee, such Indemnitee) has knowledge of such amount or a reasonable basis for making such an estimate. The failure to give such Notice of Claim shall not relieve Holding and the Company of their respective indemnification obligations under this Agreement except to the extent that such omission results in a failure of actual notice to them and they are materially injured as a result of the failure to give such Notice of Claim. Holding and the Company shall, at their expense, undertake the defense of such Claim with attorneys of their own choosing satisfactory in all re- 10 spects to CD&R. CD&R may participate in such defense with counsel of CD&R's choosing at the expense of Holding and the Company. In the event that none of Holding and the Company undertakes the defense of the Claim within a reasonable time after CD&R has given the Notice of Claim, CD&R may, at the expense of Holding and the Company and after giving notice to Holding and the Company of such action, undertake the defense of the Claim and compromise or settle the Claim, all for the account of and at the risk of Holding and the Company. In the defense of any Claim, Holding and the Company shall not, except with the consent of CD&R, consent to entry of any judgment or enter into any settlement that includes any injunctive or other non-monetary relief, or that does not include as an unconditional term thereof the giving by the person or persons asserting such Claim to each Indemnitee of a release from all liability with respect to such Claim. In each case, CD&R and each other Indemnitee seeking indemnification hereunder will cooperate with Holding and the Company, so long as Holding and the Company are conducting the defense of the Claim, in the preparation for and the prosecution of the defense of such Claim, including making available evidence within the control of CD&R or such Indemnitee, as the case may be, and persons needed as witnesses who are employed by CD&R or such Indemnitee, as the case may be, in each case as reasonably needed for such defense and at cost, which cost, to the extent reasonably incurred, shall be paid by Holding and the Company. (b) Holding and the Company hereby agree to advance costs and expenses, including attorney's fees, incurred by CD&R (acting on its own behalf or, if requested by any such Indemnitee other than itself, on behalf of such Indemnitee) or any Indemnitee in defending any Claim in advance of the final disposition of such Claim upon receipt of an undertaking by or on behalf of CD&R or such Indemnitee to repay amounts so advanced if it shall ultimately be determined that CD&R or such Indemnitee is not entitled to 11 be indemnified by Holding and the Company as authorized by this Agreement. (c) CD&R shall notify Holding and the Company in writing of the amount of any Claim actually paid by CD&R (the "Notice of Payment"). The amount of any Claim actually paid by CD&R shall bear simple interest at the rate equal to the prime rate most recently set forth in The Wall Street Journal as of the date of ----------------------- such payment plus 2% per annum, from the date Holding or the Company receives the Notice of Payment to the date on which Holding or the Company shall repay the amount of such Claim plus interest thereon to CD&R. 5. Certain Covenants. Holding agrees to cause the Company to ----------------- perform its obligations under this Agreement. The rights of each Indemnitee to be indemnified under any other agreement, document, certificate or instrument or applicable law are independent of and in addition to any rights of such Indemnitee to be indemnified under this Agreement. The rights of each Indemnitee and the obligations of Holding and the Company hereunder shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnitee. Each of Holding and the Company shall maintain the State of Delaware as its state of incorporation and shall implement and maintain in full force and effect any and all corporate charter and by-law provisions that may be necessary or appropriate to enable it to carry out its obligations hereunder to the fullest extent permitted by Delaware corporate law, including without limitation a provision of its certificate of incorporation eliminating liability of a director for breach of fiduciary duty to the fullest extent permitted by Section 102(b)(7) (or any successor section thereto) of the General Corporation Law of the State of Delaware, as it may be amended from time to time. 12 6. Notices. All notices and other communications hereunder shall ------- be in writing and shall be delivered by certified or registered mail (first class postage prepaid and return receipt requested), telecopier, overnight courier or hand delivery, as follows: (a) if to the Company, to: WESCO Distribution, Inc. One Riverfront Center Pittsburgh, Pennsylvania 15222 Attention: Secretary --------- Telecopier: (412) 642-3467 (b) if to Holding, to it care of the Company at the address set forth above (c) if to CD&R, to: Clayton, Dubilier & Rice, Inc. 126 East 56th Street New York, New York 10022 Attention: Alberto Cribiore --------- Telecopier: (212) 752-7629 (d) if to the C&D Fund, to: The Clayton & Dubilier Private Equity Fund IV Limited Partnership 270 Greenwich Avenue Greenwich, Connecticut 06830 Attention: Joseph L. Rice, III --------- Telecopier: (203) 661-0544 or to such other address or such other person as Holding, the Company, CD&R or the C&D Fund, as the case may be, shall have designated by notice to the other parties hereto. All communications hereunder shall be effective upon receipt by 13 the party to which they are addressed. A copy of any notice or other communication given under this Agreement shall also be given to: Debevoise & Plimpton 875 Third Avenue New York, New York 10022 Attention: David Brittenham, Esq. --------- Telecopier: (212) 909-6836 7. Governing Law. This Agreement shall be governed in all respects, ------------- including validity, interpretation and effect, by the law of the State of New York, regardless of the law that might be applied under principles of conflict of laws, except to the extent that the corporate law of the State of Delaware specifically and mandatorily applies, in which case such law shall apply. 8. Severability. If any provision or provisions of this Agreement ------------ shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. 9. Miscellaneous. The headings contained in this Agreement are for ------------- reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. This Agreement shall be binding upon and inure to the benefit of each party hereto and its successors and permitted assigns, and each other Indemnitee, but neither this Agreement nor any right, interest or obligation hereunder shall be assigned, whether by operation of law or otherwise, by Holding or the Company without the prior written consent of CD&R and the C&D Fund. This Agreement is not intended to confer any right or remedy hereunder upon any person other than each of the parties hereto and their respective successors and permitted assigns and each other Indemnitee. No amendment, modification, supplement or 14 discharge of this Agreement, and no waiver hereunder shall be valid and binding unless set forth in writing and duly executed by the party or other Indemnitee against whom enforcement of the amendment, modification, supplement or discharge is sought. Neither the waiver by any of the parties hereto or any other Indemnitee of a breach of or a default under any of the provisions of this Agreement, nor the failure by any party hereto or any other Indemnitee on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right, powers or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any provisions hereof, or any rights, powers or privileges hereunder. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any party or other Indemnitee may otherwise have at law or in equity or otherwise. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. 15 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement by their authorized representatives as of the date first above written. CDW HOLDING CORPORATION By: /s/ Alexander F. Brigham -------------------------------- Name: Alexander F. Brigham Title: Vice President and Assistant Secretary CDW ACQUISITION CORPORATION (to be renamed WESCO Distribution, Inc.) By: /s/ William A. Barbe -------------------------------- Name: William A. Barbe Title: Vice President and Secretary CLAYTON, DUBILIER & RICE, INC. By: /s/ Alberto Cribiore -------------------------------- Name: Alberto Cribiore Title: Vice President THE CLAYTON & DUBILIER PRIVATE EQUITY FUND IV LIMITED PARTNERSHIP By: Clayton & Dubilier 16 Associates IV Limited Partnership, the General Partner By: /s/ Alberto Cribiore ---------------------------- a general partner 17