CDW 2012 Annual Report Download - page 135

Table of Contents
cooperate with the Equity Sponsors, which may include selling their securities to the buyer on the terms and at the price negotiated by the Equity
Sponsors and signing whatever documents as are reasonably necessary to consummate the sale. Additionally, under the unitholders agreement,
prior to an initial public offering, if the Equity Sponsors sell a significant portion of their ownership interest in CDW Holdings to a third party
(disregarding sales in the public market, transfers to affiliates and certain other exceptions), certain unitholders will have the option, but will not
be required (except in the case of a sale of the entire company), to participate in the sale and sell alongside the Equity Sponsors on a pro rata
basis. 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 each Equity Sponsor to designate such representatives is subject to certain percentage ownership requirements.
CDW Holdings, the Company, the Equity Sponsors, certain executive committee members and certain other co-investors have entered
into a registration rights agreement. Under the registration rights agreement, the Equity Sponsors were given the right to require the Company to
register any or all of its securities under the Securities Act on Form S-1 or Form S-3, at the Company's expense. Additionally, these executives
are entitled to request the inclusion of their registrable securities in any such registration statement at the Company's expense whenever the
Company proposes to register any offering of its securities.
CDW Holdings, all senior management investors, the Equity Sponsors and certain board members and other co-investors have entered into
an amended and restated limited liability company agreement. The limited liability company agreement specifies the rights and obligations of the
members of CDW Holdings and the rights of the various classes of limited liability company interests therein. Pursuant to the amended and
restated limited liability company agreement, holders of A Units and B Units in CDW Holdings will share in future distributions on a pro rata
basis, subject to certain participation thresholds for holders of B Units.
Transactions with Equity Sponsors
Madison Dearborn and Providence Equity are private equity firms that have investments in companies that purchase products or services
from, or provide products or services to, us. From time to time, Madison Dearborn and Providence Equity also directly purchase products and
services from us. We believe that such transactions are entered into in the ordinary course of business on terms no less favorable to us than terms
that could have been reached with an unaffiliated third party.
Review and approval of transactions with related persons
The charter of the audit committee of CDW Holdings gives the audit committee the responsibility to review all transactions with related
persons. According to the charter, no related person transaction may be entered into unless and until it has been approved by the audit
committee. For these purposes, a related person transaction is considered to be any transaction that is required to be disclosed pursuant to
Item 404 of the SEC's Regulation S-K.
Potential related person transactions are identified based on information submitted by our officers and managers and then submitted to
the audit committee for review. The audit committee takes into account all relevant considerations in deciding whether to approve the
transaction. These considerations may, but need not, include:
Director Independence
Because affiliates of Madison Dearborn and Providence Equity own approximately 92.2% of the voting common units of CDW
Holdings, we would be a “controlled company” within the meaning of Rule 5615 of the Nasdaq Marketplace Rules, which would qualify us for
exemptions from certain corporate governance rules of The Nasdaq Stock Market, Inc., including the requirement that the board of directors be
composed of a majority of independent directors.
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the approximate dollar amount involved in the transaction, including the amount payable to or by the related person;
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the nature of the interest of the related person in the transaction;
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whether the transaction may involve a conflict of interest;
• whether the transaction was entered into on terms no less favorable to us than terms that could have been reached with an
unaffiliated third party; and
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the purpose of the transaction and any potential benefits to us.