Confirmation
of OTC Convertible Note Hedge
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February 12, 2007
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Anixter
International Inc. (“ Counterparty
”)
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Attention:
Treasurer
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Telephone
No.: (224) 521-8000
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Facsimile
No.: (224) 521-8990
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Merrill
Lynch International (“ MLI ”)
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The purpose of
this letter agreement (this “ Confirmation
”) is to confirm the terms and conditions of the
above-referenced transaction entered into among Counterparty, MLI
and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
“ Agent ” or “ MLPFS
”) on the Trade Date specified below (the “
Transaction ”). This Confirmation constitutes a
“Confirmation” as referred to in the Agreement
specified below.
The definitions
and provisions contained in the 2000 ISDA Definitions (the “
Swap Definitions ”) and the 2002 ISDA Equity
Derivatives Definitions (the “ Equity
Definitions ” and, together with the Swap
Definitions, the “ Definitions ”), in
each case as published by the International Swaps and Derivatives
Association, Inc., are incorporated into this Confirmation. In the
event of any inconsistency between the Swap Definitions and the
Equity Definitions, the Equity Definitions will govern, and in the
event of any inconsistency between the Definitions and this
Confirmation, this Confirmation will govern. References herein to a
“Transaction” shall be deemed to be references to a
“Share Option Transaction” for purposes of the Equity
Definitions and a “Swap Transaction” for the purposes
of the Swap Definitions.
This Confirmation
evidences a complete binding agreement between you and us as to the
terms of the Transaction to which this Confirmation relates. This
Confirmation (notwithstanding anything to the contrary herein),
shall be subject to an agreement in the 1992 form of the ISDA
Master Agreement (Multicurrency Cross Border) (the “
Master Agreement ” or “
Agreement ”) as if we had executed an agreement
in such form (but without any Schedule and with elections specified
in the “ISDA Master Agreement” Section of this
Confirmation) on the Trade Date. In the event of any inconsistency
between the provisions of that agreement and this Confirmation,
this Confirmation will prevail for the purpose of this Transaction.
The parties hereby agree that the Transaction evidenced by this
Confirmation shall be the only Transaction subject to and governed
by the Agreement.
The terms of the
particular Transaction to which this Confirmation relates are as
follows:
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February 12, 2007
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The date of
issuance of the Reference Notes.
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Modified
American, as described under “Settlement Terms”
below.
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Call
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MLI
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Counterparty
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The shares of
common stock, $1.00 par value, of Counterparty (Security
Symbol:
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“AXE”) or such other securities or
property into which the Reference Notes are convertible on the date
of determination.
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$88,800,000
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The fourth
Exchange Business Date following the Trade Date.
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NYSE
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All
Exchanges
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1% Senior
Convertible Notes due 2013 in the original amount of
$300,000,000.
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Applicable
Portion of the Reference Notes:
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100%. For the
avoidance of doubt, the Calculation Agent shall, as it deems
necessary, take into account the Applicable Portion of the
Reference Notes in determining or calculating any delivery or
payment obligations hereunder, whether upon a Conversion Date (as
defined below) or otherwise.
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The indenture,
dated as of closing of the issuance of the Reference Notes, between
Counterparty and The Bank of New York Trust Company, N.A., as
trustee relating to the Reference Notes, as the same may be
amended, modified or supplemented, subject to the “Additional
Termination Events” provisions of this Confirmation. Certain
defined terms used herein have the meanings assigned to them in the
Note Indenture.
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Procedures for Exercise
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Potential
Exercise Dates:
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Each Conversion
Date.
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Each
“conversion date” for any Reference Note pursuant to
the terms of the Note Indenture (the principal amount of Reference
Notes so converted, the “ Conversion Amount
” with respect to such Conversion Date) occurring before the
Expiration Date.
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If the
Conversion Amount for any Conversion Date is less than the
aggregate principal amount of Reference Notes then outstanding,
then the terms of this Transaction shall continue to apply, subject
to the terms and conditions set forth herein, with respect to the
remaining outstanding principal amount of the Reference Notes
multiplied by the Applicable Portion of the Reference
Notes.
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The period from
and excluding the Trade Date to and including the Expiration
Date.
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The earliest of
(i) the maturity date of the Reference Notes, (ii) the
first day on which none of such Reference Notes remain outstanding,
whether by virtue of conversion, issuer repurchase or otherwise and
(iii) the occurrence of an
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Additional
Termination Event hereunder in respect of the termination of the
Transaction in whole but not in part.
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Notwithstanding
anything to the contrary in the Equity Definitions, in order to
exercise any Options hereunder, Buyer shall provide Seller with
written notice prior to 5:00 p.m. New York City time on the
Exchange Business Day prior to the first Trading Day in the
Conversion Reference Period (both as defined in the Note Indenture)
relating to the Reference Notes converted on the relevant
Conversion Date of (i) the number of Reference Notes being
converted on the relevant Conversion Date, (ii) the first
Trading Day in the relevant Conversion Reference Period for the
Reference Notes and (iii) if any, the applicable Cash
Percentage (as defined in the Note Indenture); provided that with
respect to Reference Notes converted during the one-month period
ending on the business day immediately preceding the Final Maturity
Date (as defined in the Note Indenture) of the Reference Notes, the
related Exercise Notice shall be delivered prior to 5:00 p.m. New
York City time on such Final Maturity Date (as defined in the Note
Indenture); and provided further that the delivery by Buyer of an
Exercise Notice after the Conversion Reference Period has commenced
but prior to the close of business on the fifth Trading Day of such
Conversion Reference Period shall be effective, in which case the
Settlement Method shall be Net Share Settlement but without regard
to subsection (ii) of the definition of Net Share Settlement
and subject to adjustments to the Net Share Settlement Amount as
specified below. Notwithstanding the foregoing, in the event of
delivery by Buyer of an Exercise Notice after the commencement of
the Conversion Reference Period but prior to the close of business
on the fifth Trading Day of such Conversion Reference Period, if
Counterparty notifies MLI of its desire for the Settlement Method
to be Net Cash Settlement, MLI agrees to undertake commercially
reasonable efforts to modify the terms of the Transaction to enable
a Net Cash Settlement to be effected on commercially reasonable
terms.
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Seller’s
Telephone Number
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and Telex
and/or Facsimile
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Number and
Contact Details
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for purpose of
Giving Notice:
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Address:
Merrill Lynch International
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Merrill Lynch
Financial Centre
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2 King Edward
Street
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London EC1A
1HQ
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Attention:
Manager, Fixed Income Settlements
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Facsimile No.:
+44 207 995 2004
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Telephone No.:
+44 207 995 3769
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Net Share
Settlement or Net Cash Settlement consistent with Buyer’s
election with respect to the Reference Notes converted on the
applicable Conversion Date, provided that Net Share Settlement
shall apply in the event that Buyer elects to deliver any Shares in
connection with the applicable Conversion Date.
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Subject to the
delivery of an Exercise Notice to the Seller, the third (3
rd ) Exchange Business Day following the final
Trading Day in the applicable Conversion Reference Period in
respect of the relevant Conversion Date.
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In lieu of the
obligations set forth in Sections 8.1 and 9.1 of the Equity
Definitions, Seller shall deliver to Buyer on the related
Settlement Date (i) a number of Shares equal to the related Net
Share Settlement Amount, provided
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that in the
event that the number of Shares calculated comprises any fractional
Share, only whole Shares shall be delivered and an amount equal to
the value of such fractional Share shall be payable by Seller to
Buyer in cash and (ii) (x) an amount in cash equal to the cash
amount, if any, paid by Buyer in excess of the principal amount of
the applicable Reference Notes for such Conversion Date under the
Note Indenture multiplied by (y) the Applicable Portion of the
Reference Notes, provided that the delivery obligation set forth in
clause (i) and (ii) of this paragraph shall be determined
excluding any Shares or cash that Counterparty is obligated to
deliver to holders of the applicable Reference Notes as a result of
any adjustments to the Conversion Rate resulting from (i) a
discretionary adjustment to the Conversion Rate by Counterparty or
(ii) an adjustment to the Conversion Rate as a result of a
“Make Whole Premium” in connection with a fundamental
change or change of control as described in the Note Indenture. The
provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 and 9.12
of the Equity Definitions shall apply to any delivery of Shares
hereunder, provided that the Representation and Agreement in
Section 9.11 of the Equity Definitions shall be modified by
excluding any representations therein relating to restrictions,
obligations, limitations or requirements under applicable
securities laws as a result of the fact that Buyer is the issuer of
the Shares.
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In lieu of the
obligations set forth in Section 8.1 of the Equity
Definitions, on the Settlement Date Seller shall deliver to Buyer
an amount in cash equal to the related Net Cash Settlement
Amount.
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Net Share
Settlement Amount:
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For each
Conversion Date, the number of Shares equal to the Shares delivered
by Buyer for such Conversion Date under the Note Indenture
multiplied by the Applicable Portion of the Reference Notes,
provided that if an Exercise Notice with respect to such Conversion
Date has not been delivered to the Seller prior to the first
Trading Day of the Conversion Reference Period applicable to such
Conversion Date, the Net Share Settlement Amount for such
Conversion Date shall be adjusted by the Calculation Agent to
account for the reduced number of Trading Days from the delivery of
the Exercise Notice to the end of the applicable Conversion
Reference Period with respect to such Conversion Date. No reduction
of the Net Share Settlement Amount shall reduce the Net Share
Settlement Amount below zero.
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Net Cash
Settlement Amount:
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For each
Conversion Date, an amount equal to the cash delivered by the Buyer
in excess of the principal amount of the applicable Reference Notes
for such Conversion Date under the Note Indenture multiplied by the
Applicable Portion of the Reference Notes, provided that such cash
amount shall be determined excluding any cash that Counterparty is
obligated to deliver to holders of the applicable Reference Notes
as a result of any adjustments to the Conversion Rate resulting
from (i) a discretionary adjustment to the Conversion Rate by
Counterparty or (ii) an adjustment to the Conversion Rate as a
result of a fundamental change or change of control as described in
the Note Indenture.
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Calculation
Agent Adjustment; provided that the terms of this
Transaction shall be adjusted in a manner consistent with
adjustments of the Conversion Rate of the Reference Notes as
provided in the Note Indenture; provided further (without
limitation of the provisions set forth above under “Net Share
Settlement” and “Net Cash Settlement Amount”)
that no adjustment in respect of any Potential Adjustment Event or
Extraordinary Event shall be made hereunder as a result of any
adjustments to the Conversion Rate resulting from (i) a
discretionary adjustment to the Conversion Rate by Counterparty or
(ii) an
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adjustment to
the Conversion Rate as a result of a “Make Whole
Premium” in connection with a fundamental change or change of
control as described in the Note Indenture.
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Consequences
for Merger Events:
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The Transaction
will be adjusted consistent with the Reference Notes as provided in
the Note Indenture.
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The Transaction
will be adjusted consistent with the Reference Notes as provided in
the Note Indenture.
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The Transaction
will be adjusted consistent with the Reference Notes as provided in
the Note Indenture.
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Applicable
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Consequences of
Tender Offers:
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The Transaction
will be adjusted consistent with the Reference Notes as provided in
the Note Indenture.
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Nationalization, Insolvency and
Delisting:
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Cancellation
and Payment (Calculation Agent Determination), provided Buyer shall
determine whether payment shall be settled in cash or Shares. In
addition to the provisions of Section 12.6(a)(iii) of the
Equity Definitions, it will also constitute a Delisting if the
Exchange is located in the United States and the Shares are not
immediately re-listed, re-traded or re-quoted on any of the New
York Stock Exchange, the American Stock Exchange or the NASDAQ
National Market System (or their respective successors, including
without limitation the NASDAQ Global Market and NASDAQ Global
Select Market); if the Shares are immediately re-listed, re-traded
or re-quoted on any such exchange or quotation system, such
exchange or quotation system shall thereafter be deemed to be the
Exchange.
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Additional
Disruption Events:
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Applicable
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Applicable. If
there is inability in the market to deliver Shares due to
illiquidity on a day that would have been a Settlement Date, then
the Settlement Date shall be the first succeeding Exchange Business
Day on which there is no such inability to deliver, but in no such
event shall the Settlement Date be later than the date that is two
(2) Exchange Business Days immediately following what would
have been the Settlement Date but for such inability to
deliver.
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Applicable
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Hedging Disruption
Event:
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Applicable
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Increased Cost of
Hedging:
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Not
Applicable
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Not
Applicable
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Increased Cost of
Stock Borrow:
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Not
Applicable
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Seller
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Seller
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Applicable
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Agreements and
Acknowledgments
Regarding Hedging Activities
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