CDW 2012 Annual Report Download - page 134

Table of Contents
Item 13. Certain Relationships and Related Transactions, and Director Independence
Management Services Agreement
The Company is party to a management services agreement with affiliates of Madison Dearborn and Providence Equity pursuant to
which they have agreed to provide us with management and consulting services and financial and other advisory services. Pursuant to such
agreement, the Equity Sponsors earn an annual advisory fee of $5 million, payment of which is subject to certain restrictions contained in our
term loan facility, and reimbursement of out-of-pocket expenses incurred in connection with the provision of such services. Additionally, the
Equity Sponsors are entitled to certain fees based on the amount of any future equity or debt financing for us that is arranged by them. The
management services agreement includes 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 approximately 1.7% of the outstanding A Units. The aggregate purchase price paid by the
executive officers for these units was approximately $36.1 million.
On December 28, 2012, certain non-employee members of the board of managers of CDW Holdings purchased in a private placement A
Units in CDW Holdings at a price per unit equal to $859.00. The non-employee managers acquired an aggregate of 3,608.85 A Units for
aggregate consideration of approximately $3.1 million as follows: Steven W. Alesio purchased 232.83 A Units for an aggregate purchase price
of $200,000.97; Barry Allen purchased 349.25 A Units for an aggregate purchase price of $300,005.75; Benjamin D. Chereskin purchased
2,910.36 A Units for an aggregate purchase price of $2,499,999.24; and Donna F. Zarcone purchased 116.41 A Units for an aggregate purchase
price of $99,996.19.
The A Units are subject to restrictions on transfer, and also are subject to the right of CDW Holdings or, if not exercised by CDW
Holdings, the right of the Equity Sponsors, to repurchase the units in certain circumstances, subject to certain exceptions. With respect to certain
members of our executive committee, these circumstances include: (i) a termination of the executive's employment with the company for cause,
(ii) a resignation (other than upon retirement or resignation due to disability or for good reason) within three years of the date of such equity
purchase, (iii) a material violation of a restrictive covenant within three years after the executive's termination of employment with the company
or (iv) the executive becoming employed by, performing services for or becoming associated with a competitor. With respect to all other
management investors, these circumstances include: (i) a termination of the executive's employment with the company for any reason, (ii) a
violation of a restrictive covenant, or (iii) the executive becoming employed by, performing services for or becoming associated with a
competitor. If an executive's employment with us terminates for any reason other than for cause or violation of a restrictive covenant, the
executive's units can be repurchased at fair market value. Upon a termination for cause or violation of a restrictive covenant, the executive's units
can be repurchased at the lower of original cost or fair market value. With respect to board members, the units are subject to repurchase upon
termination of board service.
CDW Holdings, the Equity Sponsors, certain executive committee and board members and certain other co-investors have entered into
a unitholders agreement. Under the unitholders agreement, if the Equity Sponsors (so long as the Equity Sponsors collectively continue to hold
at least 51% of the Common Units (as defined in the CDW Holdings limited liability company agreement)) seek to sell all or substantially all of
the company, these unitholders must consent to the sale and
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(5) Includes 350 A Units held by the Mark A. Orloff Irrevocable Trust, the assets of which trust, including the 350 A Units, are pledged to
secure a loan incurred by the trust, 650 A Units held by the Ann E. Ziegler IRA Northern Trust Bank and 5,226 B Units held by the
Ann E. Ziegler 2012 Gift Trust which are deemed to be
beneficially owned by Ms. Ziegler. Also includes beneficial ownership of 286.1
B Units held by Ms. Ziegler that may be acquired within 60 days of December 31, 2012.
(6)
Includes beneficial ownership of 172.3 B Units held by Ms. Corley that may be acquired within 60 days of December 31, 2012.
(7)
Includes beneficial ownership of 157.1 B Units held by Mr. Campbell that may be acquired within 60 days of December 31, 2012.
(8) Does not include 250 A Units indirectly owned by Allen Enterprises LLC, a limited liability company controlled by Mr. Allen, through
its 0.1718% interest in PEP Co-Investors (CDW) L.P., a limited partnership which directly holds 145,535.8 A Units. Mr. Allen has no
voting or investment power over such A Units and disclaims beneficial ownership of such A Units, except to the extent of his pecuniary
interest therein. These A Units are included in Providence Equity's beneficial ownership (see Note 2 above).
(9)
Includes 2,910.4 A Units held by the Chereskin Family Dynasty Trust which are deemed to be beneficially owned by Mr. Chereskin.