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CDW CORP
FORM 10-K
(Annual Report)
Filed 03/08/13 for the Period Ending 12/31/12
Address 200 N MILWAUKEE AVE
VERNON HILLS, IL 60061
Telephone 8474656000
CIK 0001402057
SIC Code 5961 - Catalog and Mail-Order Houses
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2013, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    CDW CORP FORM 10-K (Annual Report) Filed 03/08/13 for the Period Ending 12/31/12 Address Telephone CIK SIC Code Fiscal Year 200 N MILWAUKEE AVE VERNON HILLS, IL 60061 8474656000 0001402057 5961 - Catalog and Mail-Order Houses 12/31 http://www.edgar-online.com © Copyright 2013, EDGAR Online, ...

  • Page 2
    ... No.) 200 N. Milwaukee Avenue Vernon Hills, Illinois (Address of principal executive offices) 60061 (Zip Code) (847) 465-6000 (Registrant's telephone number, including area code) None (Former name, former address and former fiscal year, if changed since last report) _____ Securities registered...

  • Page 3
    recently completed second fiscal quarter, was zero. As of March 6, 2013, there were 100,000 Class A common shares, $0.01 par value, outstanding, and 914,537 Class B common shares, $0.01 par value, outstanding, all of which were owned by CDW Holdings LLC.

  • Page 4
    Table of Contents DOCUMENTS INCORPORATED BY REFERENCE None

  • Page 5
    ... ANNUAL REPORT ON FORM 10-K Year Ended December 31, 2012 TABLE OF CONTENTS Item Page PART I Business Item 1. Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Properties Item 3. Legal Proceedings Item 4. Mine Safety Disclosures PART II Market for Registrant's Common Equity, Related...

  • Page 6
    ...cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties. We caution you that the important factors referenced above may not contain...

  • Page 7
    ..., state and local governments Education Higher education and K-12 Healthcare Private and public hospitals, ambulatory service providers and long-term care facilities $1.4 Other Advanced services customers across our channels plus Canadian businesses and agencies $0.6 2012 Net Sales (in billions...

  • Page 8
    ...and data storage, video monitors, printers, desktop computers and servers. Our software products include application suites, security, virtualization, operating systems, network management and Software as a Service ("SaaS") offerings. We also provide a full suite of value-added-services, which range...

  • Page 9
    ...on a shared public platform but want to obtain the flexibility, scalability and access offered by cloud computing and collaboration. • Virtualization : We design and implement server, storage and desktop virtualization solutions. Virtualization enables our customers to efficiently utilize hardware...

  • Page 10
    ... offer. Each vendor partner agreement provides for specific terms and conditions, which may include one or more of the following: product return privileges, price protection policies, purchase discounts and vendor incentive programs, such as purchase or sales rebates and cooperative advertising...

  • Page 11
    ...industries, business and government services, consumer, financial services, healthcare and telecom, media and technology services. Madison Dearborn's objective is to invest in companies in partnership with outstanding management teams to achieve significant long-term appreciation in equity value. To...

  • Page 12
    ... the manner in which we conduct our business; making it more difficult for us to obtain vendor financing from our vendor partners; limiting our flexibility in planning for, or reacting to, changes in the industry in which we operate; placing us at a competitive disadvantage compared to any of our...

  • Page 13
    ..., product return privileges, price protection policies, purchase discounts and vendor partner programs and funding, including purchase rebates, sales volume rebates, purchasing incentives and cooperative advertising reimbursements. However, we do not have any long-term contracts with our vendor...

  • Page 14
    ...up with changes in technology and new hardware, software and services offerings, for example by providing the appropriate training to our account managers, sales technology specialists and engineers to enable them to effectively sell and deliver such new offerings to customers, our business, results...

  • Page 15
    ... conduct business with our customers; • manage our inventory and accounts receivable; • purchase, sell, ship and invoice our hardware and software products and provide and invoice our services efficiently and on a timely basis; and • maintain our cost-efficient operating model. The integrity...

  • Page 16
    ... in our service and may not enable us to meet all of the needs of our customers and would cause us to incur incremental operating costs. In addition, we operate three customer data centers and numerous sales offices which may contain both business-critical data and confidential information of our...

  • Page 17
    ... outside of our control, including pricing pressures; changes in product costs from our vendor partners; the availability of price protection, purchase discounts and incentive programs from our vendor partners; changes in product, order size and customer mix; the risk of some items in our inventory...

  • Page 18
    ... distribution center in Vernon Hills, Illinois, and an approximately 513,000 square foot distribution center in North Las Vegas, Nevada. In addition, we conduct sales, services and administrative activities in various leased locations throughout the U.S. and Canada, including data centers in Madison...

  • Page 19
    Table of Contents As of December 31, 2012, we do not believe that there is a reasonable ...these proceedings and matters are inherently unpredictable. As such, our financial condition and results of operations could be adversely affected in any particular period by the unfavorable resolution ...

  • Page 20
    ... Purchases of Equity Securities Market Information Our outstanding common stock is privately held, and there is no established public trading market for our common stock. Holders All of our outstanding common stock is owned by CDW Holdings LLC. Dividends We did not pay any dividends in 2012 or 2011...

  • Page 21
    Table of Contents Years Ended December 31, (in millions) 2008 2009 2010 2011 2012 Statement of Operations Data: Net sales Cost of sales Gross profit Selling and administrative expenses Advertising expense Goodwill impairment Income (loss) from operations Interest expense, net Net gain (loss) on ...

  • Page 22
    18

  • Page 23
    ...for the periods presented: Years Ended December 31, (in millions) 2008 2009 2010 2011 2012 Net (loss) income Depreciation and amortization Income tax (benefit) expense Interest expense, net EBITDA Non-cash equity-based compensation Sponsor fees Consulting and debt-related professional fees Goodwill...

  • Page 24
    ... to net cash provided by operating activities for the periods presented: Years Ended December 31, (in millions) 2008 2009 2010 2011 2012 EBITDA Depreciation and amortization Income tax benefit (expense) Interest expense, net Net (loss) income Depreciation and amortization Goodwill impairment Equity...

  • Page 25
    ... by technology specialists and engineers, and managed services that include Infrastructure as a Service ("IaaS") offerings. Revenues from the sale of hardware, software, custom configuration and third-party provided services are recorded within our Corporate and Public segments. We may sell all...

  • Page 26
    ... needs, quality and breadth of product and service offerings, knowledge and expertise of sales force, customer service, price, product availability, speed of delivery and credit availability. • Key Business Metrics Our management monitors a number of financial and non-financial measures and...

  • Page 27
    ...10,128.2 54.4% $ 39.7 5.9 100.0% $ 5,334.4 3,757.2 510.8 9,602.4 55.6% $ 39.1 5.3 100.0% $ 178.4 265.8 81.6 525.8 3.3% 7.1 16.0 5.5% There were 254 and 255 selling days in the years ended December 31, 2012 and 2011 , respectively. On an average daily basis, total net sales increased 5.9% . 23

  • Page 28
    ...selling days in the years ended December 31, 2012 and 2011 , respectively. On an average daily basis, total net sales increased 5.9% . The increase in total net sales was the result of general volume growth, market share gains, a more tenured sales force, and a continued focus on seller productivity...

  • Page 29
    ... price protection programs, cooperative advertising funds classified as a reduction of cost of sales, product mix, net service contract revenue, commission revenue, pricing strategies, market conditions, and other factors, any of which could result in changes in gross profit margins. Selling...

  • Page 30
    ...from our logistics operations and a decrease of $0.5 million in Headquarters' expense allocations in 2012 compared to 2011. The improved profitability of our logistics operations was driven by stronger operating leverage given higher purchase volumes while support costs remained flat. Public segment...

  • Page 31
    .... (in millions) Years Ended December 31, 2012 2011 Net income Depreciation and amortization Income tax expense Interest expense, net EBITDA Adjustments: Non-cash equity-based compensation Sponsor fee Consulting and debt-related professional fees Net loss on extinguishments of long-term debt Other...

  • Page 32
    ... 9,602.4 55.6% $ 39.1 5.3 100.0% $ 4,833.6 3,560.6 407.0 8,801.2 54.9% $ 40.5 4.6 100.0% $ 500.8 196.6 103.8 801.2 10.4% 5.5 25.5 9.1% There were 255 and 254 selling days in the years ended December 31, 2011 and 2010, respectively. On an average daily basis, total net sales increased 8.7%. 28

  • Page 33
    ... unit volume increases in desktop computers, notebook/mobile devices and netcomm products, growth in software products and additional sales from an expanded relationship with a group purchasing organization. Net sales to government customers decreased $25.1 million, or 1.8%, in 2011 compared to 2010...

  • Page 34
    ... as a result of higher net sales and gross profit margin, partially offset by higher selling and administrative costs. In addition, Public segment income from operations benefited from an increase of $15.1 million in income allocations from our logistics operations in 2011 compared to 2010. 30

  • Page 35
    ... financing costs related to the previous facility. During 2010, we recorded a net gain of $2.0 million on the extinguishments of long-term debt resulting from two transactions. In March 2010, we repurchased $28.5 million of principal amount of senior subordinated notes due 2017 for a purchase price...

  • Page 36
    ...) Years Ended December 31, 2011 2010 Net income (loss) Depreciation and amortization Income tax expense (benefit) Interest expense, net EBITDA Adjustments: Non-cash equity-based compensation Sponsor fee Consulting and debt-related professional fees Net loss (gain) on extinguishments of long-term...

  • Page 37
    ... were as follows: (in millions) 2012 Years Ended December 31, 2011 2010 Net cash provided by (used in): Operating activities Investing activities Net change in accounts payable - inventory financing Other financing activities Financing activities Effect of exchange rate changes on cash and cash...

  • Page 38
    ... a higher combined balance of accounts payable-trade and accounts payable-inventory financing at December 31, 2011 compared to December 31, 2010 as purchase volumes increased to support higher net sales and we received more favorable payment terms for payables related to certain vendors. The one-day...

  • Page 39
    ... in accounts payable-inventory financing and reported as cash flows from financing activities. A combination of the increase in overall purchase volume under inventory financing agreements to support higher net sales in 2011 along with more favorable payment terms under the new inventory financing...

  • Page 40
    ... under the Revolving Loan inventory financing agreement, which did not reflect payments we made on December 31, 2012. The total amount reported on the consolidated balance sheet as accounts payable-inventory financing related to the Revolving Loan inventory financing agreement is $19.6 million...

  • Page 41
    ... of long-term indebtedness. A mandatory prepayment of approximately $40.0 million will be due in 2013 under the excess cash flow provision with respect to the year ended December 31, 2012. The payment is due within ten business days of filing this report with the SEC. On January 30, 2013, we made...

  • Page 42
    ... of long-term debt of $114.1 million in the consolidated statement of operations for the year ended December 31, 2011. This loss represented $97.0 million in tender offer premiums and $17.1 million for the write-off of a portion of the unamortized deferred financing costs related to the...

  • Page 43
    ... certain financial intermediaries to facilitate the purchase of inventory from various suppliers under certain terms and conditions, as described below. These amounts are classified separately as accounts payable-inventory financing on the consolidated balance sheets. We do not incur any interest...

  • Page 44
    ... of 2012, we terminated one of these agreements; amounts owed for subsequent purchases of this product line are included in accounts payable-trade on the consolidated balance sheet. At December 31, 2011, $30.3 million owed under this agreement was reported within accounts payable-inventory financing...

  • Page 45
    ...of total net sales, including approximately 10% to 15% related to electronic delivery for software licenses. Revenue from professional services is either recognized as incurred for services billed at an hourly rate or recognized using a proportional performance model for services provided at a fixed...

  • Page 46
    ... the sale of third-party services, warranties, software assurance ("SA") or third-party hosted Software as a Service and Infrastructure as a Service arrangements. SA is a product that allows customers to upgrade, at no additional cost, to the latest technology if new applications are introduced...

  • Page 47
    ...-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn. Under the market approach, we utilize valuation multiples derived from publicly available information for peer group companies to provide...

  • Page 48
    ...principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and International Financial Reporting Standards ("IFRS"). The new guidance did not extend the use of fair value accounting, but provided guidance on how it should...

  • Page 49
    ... 14, 2013. These interest rate cap agreements have not been designated as cash flow hedges of interest rate risk for accounting purposes. Instead, these agreements are recorded at fair value on the Company's consolidated balance sheet each period, with changes in fair value recorded directly to...

  • Page 50
    ... of Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2012 and 2011 Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010 Consolidated Statements of Comprehensive...

  • Page 51
    Table of Contents Report of Independent Registered Public Accounting Firm Board of Directors and Shareholders CDW Corporation We have audited the accompanying consolidated balance sheets of CDW Corporation and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of...

  • Page 52
    ... Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of CDW Corporation: In our opinion, the consolidated statements of operations, comprehensive income (loss), shareholders' equity (deficit) and cash flows for the year ended December 31, 2010...

  • Page 53
    ....4 1,636.0 68.5 3.0 5,949.6 2011 Liabilities and Shareholders' Equity (Deficit) Current liabilities: Accounts payable-trade Accounts payable-inventory financing Current maturities of long-term debt Deferred revenue Accrued expenses: Compensation Interest Sales taxes Advertising Other Total current...

  • Page 54

  • Page 55
    ... CONSOLIDATED STATEMENTS OF OPERATIONS (in millions) Years Ended December 31, 2012 2011 2010 Net sales Cost of sales Gross profit Selling and administrative expenses Advertising expense Income from operations Interest expense, net Net (loss) gain on extinguishments of long-term debt Other income...

  • Page 56
    ...of Contents CDW CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions) Years Ended December 31, 2012 2011 2010 Net income (loss) Change in unrealized loss on interest rate swap agreements, net of tax Reclassification of realized loss on interest rate swap...

  • Page 57
    ... to net loss, net of tax Foreign currency translation adjustment Balance at December 31, 2010 Equity-based compensation expense Investment from CDW Holdings LLC Repurchase of Class B Common Shares Accrued charitable contribution related to the MPK Coworker Incentive Plan II, net of tax Net income...

  • Page 58
    ... Mark to market loss on interest rate derivatives Net loss on sale and disposals of assets Other Changes in assets and liabilities: Accounts receivable Merchandise inventory Other assets Accounts payable-trade Other current liabilities Long-term liabilities Net cash provided by operating activities...

  • Page 59
    ... - end of period $ 37.9 $ 99.9 $ 36.6 Supplementary disclosure of cash flow information: Interest paid, including cash settlements on interest rate swap agreements Taxes (paid) refunded, net Non-cash investing and financing activities: Capital expenditures accrued in accounts payable-trade...

  • Page 60
    ... technology ("IT") solutions to small, medium and large business, government, education and healthcare customers in the U.S. and Canada. The Company's offerings range from discrete hardware and software products to integrated IT solutions such as mobility, security, data center optimization, cloud...

  • Page 61
    ... from vendors related to cooperative advertising allowances, volume rebates, bid programs, price protection and other programs. These incentives generally relate to written vendor agreements with specified performance requirements and are recorded as adjustments to cost of sales or inventory...

  • Page 62
    ... designated as cash flow hedges of interest rate risk, changes in fair value of the derivatives are recorded directly to interest expense, net in the Company's consolidated statements of operations. Fair Value Measurements Fair value is defined under GAAP as the price that would be received to sell...

  • Page 63
    ... for changes in the number of users over the year. With most EAs, the Company's vendors will transfer the license and bill the customer directly, paying resellers such as the Company an agency fee or commission on these sales. The Company records these fees as a component of net sales as earned and...

  • Page 64
    ...costs as a cost of sales. Deferred revenue includes (1) payments received from customers in advance of providing the product or performing services, and (2) amounts deferred if other conditions of revenue recognition have not been met. The Company performs an analysis of the estimated number of days...

  • Page 65
    ...: (in millions) 2012 December 31, 2011 Land Machinery and equipment Building and leasehold improvements Computer and data processing equipment Computer software Furniture and fixtures Construction in progress Total property and equipment Less accumulated depreciation Net property and equipment 59...

  • Page 66
    ...-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn. Under the market approach, the Company utilized valuation multiples derived from publicly available information for guideline companies...

  • Page 67
    ... the CDW Advanced Services reporting unit were discounted at 13.0% given inherent differences in the business model and risk profile. The following table presents the change in goodwill by segment for the years ended December 31, 2012 and 2011 : (in millions) Corporate Public Other (1) Consolidated...

  • Page 68
    ..., 2011 Customer relationships Trade name Internally developed software Other Total $ $ 1,861.4 421.0 77.1 3.3 2,362.8 $ $ 593.2 88.8 43.3 1.5 726.8 $ $ 1,268.2 332.2 33.8 1.8 1,636.0 Amortization expense related to intangible assets for the years ended December 31, 2012, 2011 and 2010 was...

  • Page 69
    ... of 2012, the Company terminated one of these agreements; amounts owed for subsequent purchases of this product line are included in accounts payable-trade on the consolidated balance sheet. At December 31, 2011 , $30.3 million owed under this agreement was reported within accounts payable-inventory...

  • Page 70
    ... 31, 2012. The total amount reported on the Company's consolidated balance sheet as accounts payable-inventory financing related to the Revolving Loan inventory financing agreement is $19.6 million less than the $267.9 million owed to the financial intermediary due to differences in the timing of...

  • Page 71
    ...-term indebtedness. A mandatory prepayment of approximately $40.0 million will be due in 2013 under the excess cash flow provision with respect to the year ended December 31, 2012. The payment is due within ten business days of filing this report with the SEC. On January 30, 2013, the Company made...

  • Page 72
    ... of Parent and each of CDW LLC's direct and indirect, 100% owned, domestic subsidiaries to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay other indebtedness, make distributions or other restricted payments, create liens, make equity or debt investments, make...

  • Page 73
    ... the year ended December 31, 2012. This loss represented $6.3 million in redemption premium and $1.5 million for the write-off of a portion of the unamortized deferred financing costs related to the Senior Subordinated Notes. On March 10, 2010, one of the Company's 100% owned subsidiaries purchased...

  • Page 74
    ...: (in millions) Years ending December 31, 2013 2014 2015 2016 2017 Thereafter $ $ See Note 19 for a description of refinancing transactions entered into in 2013. Fair Value 40.0 408.7 - - 1,512.3 1,805.0 3,766.0 The fair value of the Company's long-term debt instruments at December 31, 2012 was...

  • Page 75
    ..., 2013. These cap agreements have not been designated as cash flow hedges of interest rate risk for GAAP accounting purposes. Instead, the interest rate cap agreements are recorded at fair value on the Company's consolidated balance sheet each period, with changes in fair value recorded directly to...

  • Page 76
    ...the year ended December 31, 2010. The following table summarizes the classification and fair value amounts of derivative instruments reported in the consolidated balance sheets as of December 31, 2012 and 2011 : (in millions) Balance Sheet Location Derivative Assets December 31, 2012 2011 Derivative...

  • Page 77
    ... statements of operations for the years ended December 31, 2012, 2011 and 2010 was as follows: Derivatives not designated as hedging instruments (in millions) 2012 Amount of Loss Recognized in Interest Expense, net 2011 2010 Interest rate cap agreements Total Derivatives designated as hedging...

  • Page 78
    ... (loss) before income taxes and the effective tax rate is as follows: (dollars in millions) 2012 December 31, 2011 2010 Statutory federal income tax rate State taxes, net of federal effect Equity-based compensation Effect of rates different than statutory Valuation allowance Other Effective tax...

  • Page 79
    ... 31, 2012 2011 Deferred Tax Assets: Deferred interest State net operating loss and credit carryforwards, net Payroll and benefits Equity compensation plans Accounts receivable Charitable contribution carryforward Deferred financing costs Interest rate caps/hedge agreements Trade credits Other...

  • Page 80
    ... of CDW Holdings LLC adopted the CDW Holdings LLC 2007 Incentive Equity Plan (the "Plan") for coworkers, managers, consultants and advisors of the Company and its subsidiaries. The Plan permits a committee designated by the Board of Managers of CDW Holdings LLC (the "Committee") to grant or sell to...

  • Page 81
    ... the Company recorded incremental equity-based compensation expense of $6.6 million and $3.3 million during the years ended December 31, 2012 and 2011, respectively. In the first quarter of 2010, the Board of Managers made certain changes to the CDW Holdings Limited Liability Company Agreement ("LLC...

  • Page 82
    ... 31, 2012 , the Company estimated there was $30.8 million of total unrecognized compensation cost related to nonvested equity-based compensation awards granted under the equity plans. That anticipated cost is expected to be recognized over the weighted-average period of 4.5 years . The Company's net...

  • Page 83

  • Page 84
    ... for Mr. Edwardson for the years ended December 31, 2012 and 2011, respectively. During the year ended December 31, 2010, the Company recognized a $5.3 million reduction to equity-based compensation expense due to a change in the cumulative forfeiture rate assumed with respect to the MPK Plan. 12...

  • Page 85
    ...allocated to both of these segments based on a percent of sales. The centralized headquarters function provides services in areas such as accounting, information technology, marketing, legal and coworker services. Headquarters' function costs that are not allocated to the segments are included under...

  • Page 86
    ... Total Net Sales Year Ended December 31, 2011 Dollars in Millions Percentage of Total Net Sales Year Ended December 31, 2010 Dollars in Millions Percentage of Total Net Sales Notebooks/Mobile Devices $ NetComm Products Enterprise and Data Storage (Including Drives) Other Hardware Software Services...

  • Page 87
    ... for the years ended December 31, 2012, 2011 and 2010 , in accordance with Rule 3-10 of Regulation S-X. The consolidating financial information includes the accounts of CDW Corporation (the "Parent Guarantor"), which has no independent assets or operations, the accounts of CDW LLC (the "Subsidiary...

  • Page 88
    ... intangible assets, net Deferred financing costs, net Other assets Investment in and advances to subsidiaries Total assets Liabilities and Shareholders' Equity Current liabilities: Accounts payable-trade $ Accounts payable-inventory financing Current maturities of long-term debt Deferred revenue...

  • Page 89
    ... intangible assets, net Deferred financing costs, net Other assets Investment in and advances to subsidiaries Total assets Liabilities and Shareholders' (Deficit) Equity Current liabilities: Accounts payable-trade $ Accounts payable-inventory financing Current maturities of long-term debt Deferred...

  • Page 90
    82

  • Page 91
    ...Statement of Operations Year Ended December 31, 2012 (in millions) Parent Guarantor Subsidiary Issuer Guarantor Subsidiaries Non-Guarantor Subsidiary Co-Issuer Consolidating Adjustments Consolidated Net sales $ Cost of sales Gross profit Selling and administrative expenses Advertising expense (Loss...

  • Page 92
    ...Statement of Operations Year Ended December 31, 2011 (in millions) Parent Guarantor Subsidiary Issuer Guarantor Subsidiaries Non-Guarantor Subsidiary Co-Issuer Consolidating Adjustments Consolidated Net sales $ Cost of sales Gross profit Selling and administrative expenses Advertising expense (Loss...

  • Page 93
    ... Consolidated Net sales $ Cost of sales Gross profit Selling and administrative expenses Advertising expense (Loss) income from operations Interest (expense) income, net (Loss) gain on extinguishments of long-term debt Other income (expense), net (Loss) income before income taxes Income tax benefit...

  • Page 94

  • Page 95
    Table of Contents CDW CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidating Statement of Comprehensive Income (Loss) Year Ended December 31, 2012 (in millions) Parent Guarantor Subsidiary Issuer Guarantor Subsidiaries Non-Guarantor Subsidiary Co-Issuer ...

  • Page 96
    86

  • Page 97
    Table of Contents CDW CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidating Statement of Comprehensive Income (Loss) Year Ended December 31, 2011 (in millions) Parent Guarantor Subsidiary Issuer Guarantor Subsidiaries Non-Guarantor Subsidiary Co-Issuer ...

  • Page 98
    87

  • Page 99
    Table of Contents CDW CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidating Statement of Comprehensive Income (Loss) Year Ended December 31, 2010 (in millions) Parent Guarantor Subsidiary Issuer Guarantor Subsidiaries Non-Guarantor Subsidiary Co-Issuer ...

  • Page 100
    88

  • Page 101
    ...-term debt Proceeds from issuance of longterm debt Payments to extinguish longterm debt Payment of debt financing costs Net change in accounts payableinventory financing Advances to/from affiliates Other financing activities Net cash provided by (used in) financing activities Effect of exchange rate...

  • Page 102
    ...-term debt Proceeds from issuance of longterm debt Payments to extinguish longterm debt Payment of debt financing costs Net change in accounts payableinventory financing Advances to/from affiliates Other financing activities Net cash provided by (used in) financing activities Effect of exchange rate...

  • Page 103
    ...term debt Proceeds from issuance of longterm debt Payments to extinguish longterm debt Payment of debt financing costs Net change in accounts payable inventory financing Advances to/from affiliates Other financing activities Net cash provided by (used in) financing activities Effect of exchange rate...

  • Page 104
    ...) (in millions) First Quarter Second Quarter 2012 Third Quarter Fourth Quarter Net Sales Detail: Corporate: Medium/Large Small Business Total Corporate Public: Government Education Healthcare Total Public Other Net sales Gross profit Income from operations Net income (in millions) $ 1,089.6 273...

  • Page 105
    ...loss on extinguishment of long-term debt of $3.9 million in the Company's consolidated statement of operations in the first quarter of 2013. This loss represents the redemption premium and the write-off of a portion of the unamortized deferred financing costs related to the Senior Subordinated Notes...

  • Page 106
    ... to Costs and Expenses Balance at End of Period Deductions Allowance for doubtful accounts: Year Ended December 31, 2012 Year Ended December 31, 2011 Year Ended December 31, 2010 Reserve for sales returns: Year Ended December 31, 2012 Year Ended December 31, 2011 Year Ended December 31, 2010 94...

  • Page 107
    ...files or submits under the Exchange Act, and that information is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely discussions regarding required disclosure. Management's Annual Report...

  • Page 108
    ... of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of CDW Corporation and subsidiaries as of December 31, 2012 and December 31, 2011, and the related consolidated statements of operations, comprehensive income (loss), shareholders' equity (deficit) and...

  • Page 109
    Table of Contents Item 9B. Other Information None. 97

  • Page 110
    ... Services 48 Senior Vice President, General Counsel and Corporate Secretary 43 Senior Vice President - Operations and Chief Information Officer 49 Senior Vice President - Public and Advanced Technology Sales 42 Senior Vice President - Product and Partner Management 54 Senior Vice President and Chief...

  • Page 111
    ... our technology specialist teams focusing on servers and storage, unified communications, security, wireless, power and cooling, networking, software licensing and mobility solutions. He also holds responsibility for CDW Canada, Inc. Mr. Eckrote joined CDW in 1989 as an account manager. Mr. Eckrote...

  • Page 112
    ..., Mr. Allen was responsible for the company's network and information technology operations. Prior to being named Executive Vice President of Operations in March 2004, he served as Qwest's Executive Vice President of Operations and Chief Human Resources Officer. Before joining Qwest in August 2002...

  • Page 113
    ... as a manager of CDW Holdings and CDW LLC and a director of Parent. Mr. Finnegan is the Co-CEO of Madison Dearborn and co-founded the firm in 1992. Prior to co-founding Madison Dearborn, Mr. Finnegan was with First Chicago Venture Capital for ten years. Previously, he held a variety of marketing...

  • Page 114
    ... approval of the size of our Board, review of corporate governance guidelines, and oversight of programs for our managers. Compensation Committee Interlocks and Insider Participation None of our executive officers has served as a member of the Board of Directors or compensation committee of another...

  • Page 115
    ... compensated executive officers ("Named Executive Officers"). For 2012, the Named Executive Officers were Thomas E. Richards, Chairman (commencing January 1, 2013), President and Chief Executive Officer John A. Edwardson, Chairman (through December 31, 2012) Ann E. Ziegler, Senior Vice President...

  • Page 116
    ... of chief executive officer compensation data in public filings, with the compensation survey data providing a supplemental viewpoint. For the other Named Executive Officers other than Mr. Edwardson, the Committee reviewed blended market data when evaluating the 2012 base salary and annual cash...

  • Page 117
    ... similar size in terms of revenue and/or enterprise value (one-third to three times the Company's revenue or enterprise value); (ii) operates in a business-to-business distribution environment; (iii) members of the technology industry; (iv) similar customers ( i.e. , business, government, healthcare...

  • Page 118
    ... the Named Executive Officers during 2012, see the "2012 Summary Compensation Table" and for a description of Mr. Edwardson's base salary, see "Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table." Annual Cash Incentive Awards (Senior Management Incentive Plan) CDW provides...

  • Page 119

  • Page 120
    ... share changes. Market share changes were measured internally based on data from seven industry surveys and reports and, based on the availability of data, financial information regarding four publicly traded resellers and four publicly traded technology distributors and/or manufacturers. In 2012...

  • Page 121
    ... "2012 Outstanding Equity Awards at Fiscal Year-End" and the "2012 Units Vested Table" below. RDU Plan In 2010, the Board adopted the Restricted Debt Unit Plan (the "RDU Plan") which was designed to retain key leaders and focus them on driving the long-term success of the Company. The RDU Plan is...

  • Page 122
    ... not offer a service-based defined benefit pension plan or other similar benefits to its coworkers. Similarly, the Company does not provide nonqualified retirement programs or perquisites that are often provided at other companies to the Named Executive Officers. Compensation Committee Report The...

  • Page 123
    ... Plan Compensation ($) (3) All Other Compensation ($) (5) Total ($) Thomas E. Richards Chairman, President and Chief Executive Officer 2012 775,000 - 1,190,000 - 871,875 374,747 5,984 3,217,606 2011 John A. Edwardson Former Chairman 2010 2012 2011 Ann E. Ziegler Senior Vice President...

  • Page 124
    ... cash award levels set in 2012 under the SMIP. The amount actually earned by each Named Executive Officer is reported as Non-Equity Incentive Plan Compensation in the 2012 Summary Compensation Table. (2) The amount reported for Mr. Richards represents B Units granted in 2012 under the Company's 2007...

  • Page 125
    ...information regarding the operation of the RDU Plan. 2012 Outstanding Equity Awards at Fiscal Year-End The following table summarizes the number and market value of unvested equity awards held by each Named Executive Officer on December 31, 2012. Number of Units That Have Not Vested (1) Market Value...

  • Page 126
    ... The following table summarizes the number and market value of equity awards held by each Named Executive Officer that vested during 2012. Name Number of Units Acquired on Vesting (1) Value Realized on Vesting (2) Thomas E. Richards John A. Edwardson Ann E. Ziegler Neal J. Campbell Christina...

  • Page 127
    ... semi-annually on April 15 and October 15. The amounts reported in this column represent each Named Executive Officer's balance in the RDU Plan. (2) (3) (4) 2012 Potential Payments upon Termination or Change in Control Mr. Richards is a party to a compensation protection agreement that provides...

  • Page 128
    ... who is a party to a Compensation Protection Agreement and 12 months for each executive who participates in the Compensation Protection Plan. Employment Agreement with John A. Edwardson Mr. Edwardson's Amended Employment Agreement provided for payments and other benefits in connection with the...

  • Page 129
    ... tax reimbursement is applicable only in the case of the Company's first change in control following its initial public offering. RDU Plan As noted in the Compensation Discussion and Analysis and narrative to the "2012 Non-Qualified Deferred Compensation" table, the Company maintains the RDU...

  • Page 130
    ... based upon the average of the annual incentive bonus amounts earned for the last three full fiscal years. The multiple is one times for the Named Executive Officers who participate in the Compensation Protection Plan and two times for Mr. Edwardson and the Named Executive Officers who are parties...

  • Page 131
    ...360 Under the Compensation Protection Agreements, the Named Executive Officers are entitled to a pro rata bonus based on target or, in the case of Mr. Edwardson, actual performance for the year in which termination occurs. Named Executive Officers subject to the Compensation Protection Plan are not...

  • Page 132
    ... the units of CDW Holdings LLC as of December 31, 2012 by each person who is the beneficial owner of more than 5% of its outstanding voting common equity; each member of the board of managers of CDW Holdings LLC and our executive officers; and our managers and executive officers as a group. To our...

  • Page 133
    ... Owned Percent of All Units Beneficially Owned Number of A Units Beneficially Owned Principal Unitholders: Madison Dearborn (1) Providence Equity (2) Managers and Executive Officers: Thomas E. Richards (3) John A. Edwardson (4) Ann E. Ziegler (5) Christina Corley (6) Neal Campbell (7) Steven...

  • Page 134
    ...customary indemnification provisions in favor of the Equity Sponsors. Management, Board Member and Equity Sponsor Equity Arrangements Certain members of the Company's senior management team have purchased A Units in CDW Holdings. As of December 31, 2012, executive officers owned 37,228.1 A Units, or...

  • Page 135
    .... Prior to an initial public offering or a sale of all or substantially all of CDW Holdings, each unitholder will be required to vote his or her units in favor of a board of managers consisting of such representatives as the Equity Sponsors designate and our Chief Executive Officer. The right of...

  • Page 136
    ...2012 and 2011 also include services related to the Company's Registration Statements on Form S-4. Audit related fees include fees related to employee benefit plans. Tax fees include fees related to tax compliance. All other fees include a fee paid for a license to use software relating to accounting...

  • Page 137
    ...: Page Report of Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2012 and 2011 Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010 Consolidated Statements...

  • Page 138
    ... and Chief Executive Officer (principal executive officer) March 8, 2013 Senior Vice President and Chief Financial Officer (principal financial officer) March 8, 2013 Vice President and Controller (principal accounting officer) Director March 8, 2013 March 8, 2013 Director March 8, 2013 125

  • Page 139
    ... and Restated Limited Liability Company Agreement of CDW Direct, LLC, previously filed as Exhibit 3.10 with CDW Corporation's Form S-4 filed on September 7, 2010 (Reg. No. 333-169258) and incorporated herein by reference. 3.11 Articles of Organization of CDW Government LLC, previously filed as...

  • Page 140
    ... Association as trustee, previously filed as Exhibit 4.1 with CDW Corporation's Form 8-K filed on December 21, 2010 and incorporated herein by reference. 4.2 Senior Secured Note Supplemental Indenture, dated as of March 29, 2011, by and among CDW LLC, CDW Finance Corporation, the guarantors...

  • Page 141
    ... on April 14, 2011 and incorporated herein by reference. 4.11 Senior Notes Registration Rights Agreement, dated as of February 17, 2012, by and among CDW LLC, CDW Finance Corporation, the guarantors party thereto and Barclays Capital Inc. as initial purchaser, previously filed as Exhibit 4.7 with...

  • Page 142
    ... (Reg. No. 333-169258) and incorporated herein by reference. 4.17 Form of Global Fixed Rate Senior Subordinated Exchange Note due 2017, Series B, previously filed as Exhibit 4.11 with CDW Corporation's Form 10-K for the fiscal year ended December 31, 2010 and incorporated herein by reference. 127

  • Page 143
    ... Form S-4 filed on September 26, 2011 (Reg. No. 333-175597) and incorporated herein by reference. 10.7 Management Services Agreement, dated as of October 12, 2007, by and between CDW Corporation, Madison Dearborn Partners V-B, L.P. and Providence Equity Partners L.L.C., previously filed as Exhibit...

  • Page 144
    ... Equity Plan (executed by Thomas E. Richards, John A. Edwardson, Dennis G. Berger, Douglas E. Eckrote, Christine A. Leahy, Jonathan J. Stevens and Ann E. Ziegler). 10.13§* Form of CDW Holdings LLC Class B Common Unit Grant Agreement under the CDW Holdings LLC 2007 Incentive Equity Plan (executed...

  • Page 145
    Table of Contents Exhibit Number Description 10.14§ Form of CDW Holdings LLC Deferred Unit Purchase Agreement (executed by Dennis G. Berger, Douglas E. Eckrote and Christine A. Leahy), previously filed as Exhibit 10.16 with CDW Corporation's Form S-4 filed on September 7, 2010 (Reg. No. 333-...

  • Page 146
    ... Corporation and John A. Edwardson dated as of January 1, 2009, previously filed as Exhibit 10.27 with CDW Corporation's Amendment No. 1 to Form S-4 filed on October 18, 2010 (Reg. No. 333-169258) and incorporated herein by reference. 10.27§ Addendum to Compensation Protection Agreement dated as...

  • Page 147
    ..., 2011, by and among, CDW Holdings LLC, John A. Edwardson, Madison Dearborn Capital Partners V-A, L.P., Madison Dearborn Capital Partners V-C, L.P., Madison Dearborn Capital Partners V Executive-A, L.P., Providence Equity Partners VI, L.P. and Providence Equity Partners VI-A, L.P., previously filed...

  • Page 148
    ... of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. § A management contract or compensatory arrangement required to be filed as an exhibit pursuant to Item 601 of...

  • Page 149
    ...provisions of the LLC Agreement (as defined below) and the Company's 2007 Incentive Equity Plan (the " Plan "). The Class B Common Units granted hereunder are referred to herein as " Executive Units ." Each Executive Unit shall have a Participation Threshold equal to the Liquidation Value of a Class...

  • Page 150
    ...Securities Act or an exemption from such registration is available. (v) Executive has had an opportunity to ask questions and receive answers concerning the terms and conditions of the Executive Units and has had full access to such other information concerning the Company as he or she has requested...

  • Page 151
    ... of "Fair Market Value" in Section 9 herein or as required by applicable law, the Company shall have no duty or obligation to disclose to Executive, and Executive shall have no right to be advised of, any material information regarding the Company and its Subsidiaries at any time prior to, upon...

  • Page 152
    ...providing services to the Company or any of its Subsidiaries as an advisor or consultant as contemplated by or described in Rule 701, in each case from the date of this Agreement through and including such date. 4 The number of Vested Units shall not increase after Executive ceases to be an employee...

  • Page 153
    ...), first the Company and then the Institutional Investors shall have the right, but not the obligation, to purchase all or any portion of the Vested Units at a price per unit equal to Fair Market Value of such Executive Unit as of the date of repurchase; provided, however, if Executive Units are...

  • Page 154
    ... Units to be acquired and the time and place for the closing of the transaction. (c) Repurchase Procedure for the Institutional Investors . If for any reason the Company does not elect to purchase all of the Available Executive Units, then the Institutional Investors shall be entitled to repurchase...

  • Page 155
    ... by the terms of such indebtedness), (ii) by certified check or wire transfer of funds, (iii) by delivery of a number of shares of common stock of VH Holdings having a Fair Market Value equal to the aggregate repurchase price for such Executive Units (the " Repurchase Shares "); provided that, in...

  • Page 156
    ... such non1competition covenant), non1solicitation, confidentiality or protection of trade secrets (or similar provision regarding intellectual property) in favor of the Company or its Subsidiaries (or any new parent entity of CDW or VH Holdings) by which Executive is bound (whether contained in this...

  • Page 157
    ... with (as an employee, officer, director, manager, partner or consultant or member, stockholder or investor owning more than a 2% interest or other similar role) a Competitor (as defined below) of the Company or any of its Subsidiaries at any time during Executive's employment with or service to the...

  • Page 158
    ..., directly or indirectly, any (i) trade secret or other confidential or secret information of the Company or of any of its Subsidiaries or (ii) other technical, business, proprietary or financial information of the Company or of any of its Subsidiaries not available to the public generally or...

  • Page 159
    ... following terms shall have the following meanings: "CDW Customer" means (i) any person or entity that purchased any products or services from CDW or any of its Subsidiaries or affiliates at any time within a two year period prior to Executive's termination (for whatever reason) from the Company or...

  • Page 160
    ... or affiliates, acquired or had access to any Confidential Information or had contact with as a result of Executive's employment with the Company. "CDW Employee" means any person who was an officer, manager-level or other key employee or any material group of employees of the Company or any of...

  • Page 161
    ...the informed advice of the Company's outside counsel or independent accountants or at the express direction of the Board.] 14 " CDW " means CDW LLC, an Illinois limited liability company and indirect, wholly1owned Subsidiary of the Company. " Class A Common Units " has the meaning given such term in...

  • Page 162
    ... of the Company's equity or other capital interests issued with respect to such Class B Common Units by way of a split, combination, distribution or other recapitalization. " Fair Market Value " of the Executive Units shall mean the fair market value of such unit, taking into account all relevant...

  • Page 163
    ... assigned to that term in the LLC Agreement. " Institutional Investors " shall mean, collectively, Madison Dearborn Capital Partners V A, L.P., a Delaware limited partnership, Madison Dearborn Capital Partners V C, L.P., a Delaware limited partnership, Madison Dearborn Capital Partners V Executive...

  • Page 164
    ...and a direct, wholly1owned Subsidiary of the Company. (b) Whenever this Agreement requires a calculation of Common Units held by the Institutional Investors such calculation shall aggregate the number of Common Units held by Madison Dearborn Capital Partners V1A, L.P., a Delaware limited partnership...

  • Page 165
    Notices to the Company : VH Holdings, Inc. c/o CDW Corporation 200 N. Milwaukee Avenue Vernon Hills, IL 60061 Attention: Chief Executive Officer Facsimile: 847196810336 with copies to (which shall not constitute notice) : Madison Dearborn Capital Partners V A, L.P. Madison Dearborn Capital Partners ...

  • Page 166
    ...Madison Dearborn Capital Partners V A, L.P. Madison Dearborn Capital Partners V C, L.P. Madison Dearborn Capital Partners V Executive A, L.P. Three First National Plaza Suite 3800 Chicago, IL 60602 Attention: Benjamin D. Chereskin George Peinado Facsimile: 312189511001 and Providence Equity Partners...

  • Page 167
    ... U.S. mail (return receipt requested) and one day after deposit with a reputable overnight courier service. 11. General Provisions . (a) Transfers in Violation of Agreement . Any Transfer or attempted Transfer of any Executive Units in violation of any provision of this Agreement, the LLC Agreement...

  • Page 168
    ...Executive's address or the permanent residence of Executive's spouse is located in a community property jurisdiction, Executive's spouse shall execute and deliver to the Company on the date hereof the Consent in the form of Exhibit B attached hereto. (n) Business Days . If any time period for giving...

  • Page 169
    ...their benefit. Consent to Jurisdiction . Each party to this Agreement, by its execution hereof, (a) hereby (p) irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of Illinois for the purpose of any action, claim, cause of action or suit (in contract...

  • Page 170
    IN WITNESS WHEREOF, the parties hereto have executed this Class B Common Unit Grant Agreement on the date first written above. CDW HOLDINGS LLC By: Name: John A. Edwardson Its: Chairman and Chief Executive Officer Signature Page to Class B Common Unit Grant Agreement 22

  • Page 171
    ... under Section 83(b) of the Internal Revenue Code and the regulations promulgated thereunder in the form of Exhibit A attached hereto and shall deliver the executed Section 83(b) election to the Company for filing with the Internal Revenue Service within five days following the date hereof. 2

  • Page 172
    ... questions and receive answers concerning the terms and conditions of the Executive Units and has had full access to such other information concerning the Company as he or she has requested. Executive has reviewed, or has had an opportunity to review, the LLC Agreement in connection with the receipt...

  • Page 173
    ...providing services to the Company or any of its Subsidiaries as an advisor or consultant as contemplated by or described in Rule 701, in each case from the date of this Agreement through and including such date. 1 The number of Vested Units shall not increase after Executive ceases to be an employee...

  • Page 174
    ...), first the Company and then the Institutional Investors shall have the right, but not the obligation, to purchase all or any portion of the Vested Units at a price per unit equal to Fair Market Value of such Executive Unit as of the date of repurchase; provided, however, if Executive Units are...

  • Page 175
    ... shall set forth the number of Executive Units to be acquired and the time and place for the closing of the transaction. (c) Repurchase Procedure for the Institutional Investors . If for any reason the Company does not elect to purchase all of the Available Executive Units, then the Institutional...

  • Page 176
    ... to make, the time periods provided in this Section 3 shall be suspended, and the Company shall make such repurchases at the applicable purchase price therefore following the lapse of such restrictions. (e) Deemed Repurchase . Upon delivery of the full consideration for the Executive Units at the...

  • Page 177
    ...such Executive Units (the " Repurchase Shares "); provided that, in the event any Repurchase Shares are issued, promptly following the closing of the repurchase transaction, the Company may direct VH Holdings and VH Holdings may accordingly redeem, and the holder of such Repurchase Shares shall sell...

  • Page 178
    ... any entity holding (directly or indirectly) Executive Units, and (B) if the Board determines that the Transfer of Executive Units to a Permitted Transferee pursuant to this Section 4(b) would have an adverse effect on the Company, including by causing the Company to become subject to the reporting...

  • Page 179
    ... is required by applicable Delaware law). Each holder of Executive Units or other equity securities or interests shall take all necessary or desirable actions in connection with the consummation of the Sale of the Company, including without limitation, executing a sale contract pursuant to which...

  • Page 180
    ...to acquire Company Units (including Company Units that become (or would become) vested and exercisable in connection with a Sale of the Company) shall be given an opportunity to exercise such rights (including by means of a "cashless exercise" if provided in the agreement and/or company benefit plan...

  • Page 181
    ... with (as an employee, officer, director, manager, partner or consultant or member, stockholder or investor owning more than a 2% interest or other similar role) a Competitor (as defined below) of the Company or any of its Subsidiaries at any time during Executive's employment with or service to the...

  • Page 182
    ..., directly or indirectly, any (i) trade secret or other confidential or secret information of the Company or of any of its Subsidiaries or (ii) other technical, business, proprietary or financial information of the Company or of any of its Subsidiaries not available to the public generally or...

  • Page 183
    ... following terms shall have the following meanings: "CDW Customer" means (i) any person or entity that purchased any products or services from CDW or any of its Subsidiaries or affiliates at any time within a two year period prior to Executive's termination (for whatever reason) from the Company or...

  • Page 184
    ... of the prohibited contact; or (ii) at any time within 3 months of Executive's termination (for whatever reason) from the Company. "CDW Vendor" means any person or entity that provided goods or services to CDW or otherwise did business with the Company at any time within a two-year period prior to...

  • Page 185
    ...informed advice of the Company's outside counsel or independent accountants or at the express direction of the Board. " CDW " means CDW LLC, an Illinois limited liability company and indirect, wholly1owned Subsidiary of the Company. " Class A Common Units " has the meaning given such term in the LLC...

  • Page 186
    ...as determined in good faith by the Board; provided, however, that in the case of a Sale of the Company, the Fair Market Value of each Executive Unit shall be the price per Executive Unit in such transaction, as solely determined by the Board. " Family Group " shall mean, with respect to a Person who...

  • Page 187
    ...and a direct, wholly1owned Subsidiary of the Company. (b) Whenever this Agreement requires a calculation of Common Units held by the Institutional Investors such calculation shall aggregate the number of Common Units held by Madison Dearborn Capital Partners V1A, L.P., a Delaware limited partnership...

  • Page 188
    ...addresses indicated below: Notices to the Company : VH Holdings, Inc. c/o CDW Corporation 200 N. Milwaukee Avenue Vernon Hills, IL 60061 Attention: Chief Executive Officer Facsimile: 847-968-0336 with copies to (which shall not constitute notice) : Madison Dearborn Capital Partners V A, L.P. Madison...

  • Page 189
    ...Madison Dearborn Capital Partners V A, L.P. Madison Dearborn Capital Partners V C, L.P. Madison Dearborn Capital Partners V Executive A, L.P. Three First National Plaza Suite 3800 Chicago, IL 60602 Attention: Benjamin D. Chereskin George Peinado Facsimile: 312-895-1001 and Providence Equity Partners...

  • Page 190
    ... mail (return receipt requested) and one day after deposit with a reputable overnight courier service. 11. General Provisions . (a) Transfers in Violation of Agreement . Any Transfer or attempted Transfer of any Executive Units in violation of any provision of this Agreement or the LLC Agreement...

  • Page 191
    ... is lawfully married as of the date hereof and Executive's (m) address or the permanent residence of Executive's spouse is located in a community property jurisdiction, Executive's spouse shall execute and deliver to the Company on the date hereof the Consent in the form of Exhibit B attached...

  • Page 192
    (n) Business Days . If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or legal holiday in the state in which the Company's chief executive office is located, the time period shall be automatically extended to the business day immediately ...

  • Page 193
    IN WITNESS WHEREOF, the parties hereto have executed this Class B Common Unit Grant Agreement on the date first written above. CDW HOLDINGS LLC By: Name: John A. Edwardson Its: Chairman and Chief Executive Officer [Name] Signature Page to Class B Common Unit Grant Agreement 23

  • Page 194
    ... of a check or wire transfer of immediately available funds in an amount equal to the Purchase Price. The sale and issuance of the Units is conditioned on the receipt in full of the Purchase Price by the Company on the Closing Date. 2. Purchase Terms . (a) Investor, intending to be legally bound...

  • Page 195
    ..., she or it is acquiring the Units to be acquired by him, her or it hereunder for his, her or its own account with the present intention of holding such securities for investment purposes and that he, she or it has no intention of selling such securities in a public distribution in violation of the...

  • Page 196
    ... concerning the terms and conditions of the Units to be acquired by him, her or it hereunder and has had full access to such other information concerning the Company (including access to the Company's Certificate of Formation, the LLC Agreement, the Unitholders Agreement and an Offering Summary...

  • Page 197
    ...has decided to become a unitholder of the Company; (xi) Investor is not acquiring the Units as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine, internet publication or similar media or broadcast over television, radio or the...

  • Page 198
    ...If, as of the date hereof, Investor is lawfully married and Investor's address or the permanent residence of Investor's spouse is located in a community property jurisdiction, Investor's spouse shall execute and deliver to the Company on the Closing Date the Consent in the form of Exhibit A attached...

  • Page 199
    ...Date (the " Repurchase Notice Period "). The Company Repurchase Notice shall set forth the number of Class A Common Units to be acquired and the time and place for the closing of the transaction. (e) If for any reason the Company does not elect to purchase all of the Available Common Units, then the...

  • Page 200
    ... by the terms of such indebtedness); (ii) by certified check or wire transfer of funds; (iii) by delivery of a number of shares of common stock of VH Holdings having a Fair Market Value equal to the aggregate repurchase price for such Class A Common Units (the " Repurchase Shares "); provided that...

  • Page 201
    ... from time to time, and including any successor statute. " Affiliate " has the meaning set forth in the LLC Agreement. " Agreement " has the meaning set forth in the preamble. " Board " means the Board of Managers of the Company. " CDW " shall mean CDW LLC, an Illinois limited liability company and...

  • Page 202
    ... such securities and minority interests), as determined in accordance with the following procedure. Initially, Fair Market Value shall be determined by the Board acting in good faith. Upon request, the Company will provide to Investor strictly for use in determining whether to seek an appraisal its...

  • Page 203
    ... from time to time in accordance with its terms, by and among the Company and the Company's unitholders. " MDCP " means, collectively, Madison Dearborn Capital Partners V1A, L.P., a Delaware limited partnership, Madison Dearborn Capital Partners V1C, L.P., a Delaware limited partnership, and Madison...

  • Page 204
    ...and a direct, wholly1owned Subsidiary of the Company. Whenever this Agreement requires a calculation of Common Units held by the Institutional (b) Investors such calculation shall aggregate the number of Common Units held by Madison Dearborn Capital Partners V1A, L.P., a Delaware limited partnership...

  • Page 205
    ...Warranties . All covenants, representations and warranties contained herein or made in writing by any party in connection herewith shall survive the execution and delivery of this Agreement, the LLC... related to the subject matter hereof in any way. (f) Counterparts . This Agreement may be executed ...

  • Page 206
    .... (m) Business Days . If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or legal holiday in the state in which the Company's chief executive office is located, the time period shall be automatically extended to the business day immediately...

  • Page 207
    ...at the addresses indicated below: Notices to the Company : CDW Holdings LLC c/o CDW LLC 200 North Milwaukee Vernon Hills, Illinois 60061 Attention: Chief Executive Officer Facsimile: 847196810336 with copies to (which shall not constitute notice) : Madison Dearborn Capital Partners V1A, L.P. Madison...

  • Page 208
    Notices to MDCP : Madison Dearborn Capital Partners V1A, L.P. Madison Dearborn Capital Partners V1C, L.P. Madison Dearborn Capital Partners V Executive1A, L.P. Three First National Plaza Suite 3800 Chicago, IL 60602 Attention: Paul Finnegan Robin Selati Facsimile: 312189511001 with copies to (which ...

  • Page 209
    after deposit in the U.S. mail (return receipt requested) and one day after deposit with a reputable overnight courier service. *****

  • Page 210
    IN WITNESS WHEREOF, the parties hereto have executed this Class A Common Unit Purchase Agreement on the date first written above. CDW HOLDINGS LLC By: Name: Its: [Director Name] Signature Page to Class A Common Unit Purchase Agreement

  • Page 211
    Schedule A Units Investor Name and Address [Director Name] [Address 1] [Address 2] Number of Class A Common Units [_____] Price Per Class A Common Unit $ [___] Total Purchase Price [_____]

  • Page 212
    ... that I have read the foregoing Class A Common Unit Purchase Agreement executed by Investor as of the date hereof and that I understand its contents. I am aware that the foregoing Class A Common Unit Purchase Agreement provides for the sale or repurchase of my spouse's Class A Common Units under...

  • Page 213
    ...FIXED CHARGES (unaudited) Years ended December 31, (dollars in millions) Computation of earnings: Income (loss) before income taxes and adjustment for (income) loss from equity investees Distributed income from equity investees Fixed charges Total earnings $ 2008 2009 2010 2011 2012 $ (1,777...

  • Page 214
    ... information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ Thomas E. Richards Thomas E. Richards Chairman and Chief Executive Officer CDW Corporation March 8, 2013...

  • Page 215
    ... and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ Ann E. Ziegler Ann E. Ziegler Senior Vice President and Chief Financial Officer CDW...

  • Page 216
    ...1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE I, Thomas E. Richards, the chief executive officer of CDW Corporation ("CDW"), certify that (i) the Annual Report on Form 10-K for the year ended December 31, 2012 (the "10-K") of CDW fully complies with the requirements of Section 13(a) or 15...

  • Page 217
    ... 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE I, Ann E. Ziegler, the chief financial officer of CDW Corporation ("CDW"), certify that (i) the Annual Report on Form 10-K for the year ended December 31, 2012 (the "10-K") of CDW fully complies with the requirements of Section 13(a) or 15...