Exhibit 10.1
 
 
ANIXTER INTERNATIONAL INC.
(a Delaware corporation)
$275,000,000 1.00% Senior Convertible Notes due 2013
PURCHASE AGREEMENT
Dated: February 12, 2007
 
 

 

--------------------------------------------------------------------------------

 

ANIXTER INTERNATIONAL INC.
(a Delaware corporation)
$275,000,000
Senior Convertible Notes due 2013
PURCHASE AGREEMENT
February 12, 2007
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
                Incorporated
Banc of America Securities LLC
J.P. Morgan Securities Inc.
Wachovia Capital Markets, LLC
c/o Merrill Lynch, Pierce, Fenner & Smith
               Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
     Anixter International Inc., a Delaware corporation (the “Company”),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated (“Merrill Lynch”) and each of the other Initial Purchasers
named in Schedule A hereto (collectively, the “Initial Purchasers,” which term
shall also include any initial purchaser substituted as provided in Section 11
hereof), for whom Merrill Lynch is acting as representative, with respect to
(i) the issue and sale by the Company and the purchase by the Initial
Purchasers, acting severally and not jointly, of the respective principal
amounts set forth in said Schedule A of $275,000,000 aggregate principal amount
of the Company’s Senior Convertible Notes due 2013 (the “Initial Securities”)
and (ii) the grant by the Company to the Initial Purchasers of the option
described in Section 2(b) hereof to purchase all or any part of an additional
$25,000,000 aggregate principal amount of the Company’s Senior Convertible Notes
due 2013 to cover overallotments, if any (the “Option Securities” and, together
with the Initial Securities, the “Securities”). The Securities are to be issued
pursuant to an indenture to be dated as of February 16, 2007 (the “Indenture”)
between the Company and The Bank of New York Trust Company, N.A., as trustee
(the “Trustee”).
     The Securities are convertible, subject to certain conditions as described
in the Final Offering Memorandum (as described below), prior to maturity (unless
previously redeemed or otherwise purchased) into cash and shares of common
stock, par value $1.00 per share, of the Company (the “Common Stock”) in
accordance with the terms of the Securities and the Indenture, at the initial
conversion rate of 15.7530 shares of Common Stock per $1,000 principal amount of
Securities. Securities issued in book-entry form will be issued to Cede & Co. as
nominee of The Depository Trust Company (“DTC”).

 

--------------------------------------------------------------------------------

 

     The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers (“Subsequent
Purchasers”) at any time after this Agreement has been executed and delivered.
The Securities are to be offered and resold through the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the “1933
Act”), in reliance upon exemptions therefrom. Pursuant to the terms of the
Securities and the Indenture, investors that acquire Securities and any shares
of Common Stock acquired in connection with any conversion of Securities (solely
for purposes of this paragraph, “Securities”) may only resell or otherwise
transfer such Securities if such Securities are hereafter registered under the
1933 Act or if an exemption from the registration requirements of the 1933 Act
is available (including the exemption afforded by Rule 144A (“Rule 144A”) of the
rules and regulations promulgated under the 1933 Act by the Securities and
Exchange Commission (the “Commission”). On or prior to the Initial Closing Time,
the Company will enter into a registration rights agreement with the Initial
Purchasers (the “Registration Rights Agreement”) pursuant to which the Company
will be required to file and use reasonable best efforts to cause to become
effective a registration statement under the 1933 Act to register resales of the
Securities.
     The Company has (a) prepared and delivered to each Initial Purchaser copies
of (i) a preliminary offering memorandum dated February 12, 2007 and (ii) a
pricing term sheet dated February 12, 2007, attached hereto as Schedule B, which
includes the pricing terms and other information with respect to the Securities
and other matters not included in the Preliminary Offering Memorandum (as
defined below) (the “Pricing Term Sheet”) and (b) has prepared and will deliver
to each Initial Purchaser, as promptly as practicable prior to the Initial
Closing Time, copies of a final offering memorandum dated February 12, 2007 (the
“Final Offering Memorandum”), each for use by such Initial Purchaser in
connection with its solicitation of purchases of, or offering of, the
Securities. “Offering Memorandum” means, with respect to any date or time
referred to in this Agreement, the most recent offering memorandum (whether the
Preliminary Offering Memorandum or the Final Offering Memorandum, or any
amendment or supplement to either such document), including exhibits thereto and
any documents incorporated therein by reference, which has been prepared and
delivered by the Company to the Initial Purchasers in connection with their
solicitation of purchases of, or offering of, the Securities.
     All references in this Agreement to financial statements and schedules and
other information which is “contained,” “included,” “stated” or described in the
Offering Memorandum (or other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
which are incorporated by reference in the Offering Memorandum; and all
references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the “1934 Act”), that is
incorporated by reference in the Offering Memorandum.
     The preliminary offering memorandum dated February 12, 2007, as amended and
supplemented immediately prior to the Applicable Time (as defined below),
including any documents filed under the 1934 Act prior to the Applicable Time
and incorporated by reference therein, is referred to herein as the “Preliminary
Offering Memorandum,” and the Preliminary Offering Memorandum together with the
Pricing Term Sheet are collectively referred to herein as the “Disclosure
Package.” “Applicable Time” means 5:00 P.M. (Eastern Time) on February 12, 2007
or such other time as agreed by the Company and Merrill Lynch.

2

--------------------------------------------------------------------------------

 

     SECTION 1. Representations and Warranties by the Company.
     (a) Representations and Warranties. The Company represents and warrants to
each Initial Purchaser as of the Applicable Time and as of the Closing Time
referred to in Section 2(c) hereof, and agrees with each Initial Purchaser, as
follows:
     (i) Disclosure Package and Final Offering Memorandum. As of the Applicable
Time, neither (x) the Disclosure Package nor (y) any individual Supplemental
Offering Materials (as defined below), when considered together with the
Disclosure Package, included any untrue statement of a material fact or omitted
to state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
     “Supplemental Offering Materials” means any “written communication” (within
the meaning of the 1933 Act Regulations (as defined below)) prepared by or on
behalf of the Company, or used or referred to by the Company, that constitutes
an offer to sell or a solicitation of an offer to buy the Securities other than
the Offering Memorandum or amendments or supplements thereto (including the
Pricing Term Sheet), including, without limitation, any road show materials
relating to the Securities that constitutes such a written communication.
     As of its issue date and as of the Closing Time, the Final Offering
Memorandum will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
     The representation and warranties in this subsection shall not apply to
statements in or omissions from the Disclosure Package or the Final Offering
Memorandum made in reliance upon and in conformity with written information
furnished to the Company by any Initial Purchaser through Merrill Lynch
expressly for use therein. The Company has not distributed, and the Company will
not distribute, prior to the later of the Closing Time and the completion of the
Initial Purchasers’ distribution of the Securities, which shall be deemed to be
no later than the Closing Time unless the Company otherwise receives notice from
Merrill Lynch, any offering material in connection with the offering and sale of
the Securities other than the Disclosure Package and the Final Offering
Memorandum.
     (ii) Incorporated Documents. The Offering Memorandum as delivered from time
to time shall incorporate by reference the most recent Annual Report of the
Company on Form 10-K filed with the Commission and each Quarterly Report of the
Company on Form 10-Q and each Current Report of the Company on Form 8-K filed
with the Commission since the end of the fiscal year to which such Annual Report
relates. The documents incorporated or deemed to be incorporated by reference in
the Offering Memorandum at the time they were or hereafter are filed with the
Commission complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the Commission
thereunder (the “1934 Act Regulations”), and, when read together, at the
Applicable Time with the other information in the Disclosure Package, and at the
Closing Time with the Disclosure Package and the Final Offering Memorandum, did
not and will not include an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading.
     (iii) Independent Accountants. The accountants who certified the financial
statements and supporting schedules included in the Disclosure Package and the
Final Offering Memorandum are independent registered public accountants with
respect to the Company and its

3

--------------------------------------------------------------------------------

 

subsidiaries within the meaning of the 1933 Act and the rules and regulations
thereunder (the “1933 Act Regulations”).
     (iv) Financial Statements. The financial statements, together with the
related schedules and notes, included in the Disclosure Package and the Final
Offering Memorandum present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders’ equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial statements
have been prepared in conformity with generally accepted accounting principles
(“GAAP”) applied on a consistent basis throughout the periods involved, except
as stated therein. The supporting schedules included in the Disclosure Package
and the Final Offering Memorandum present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data and any
summary financial information included in the Disclosure Package and the Final
Offering Memorandum present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial statements
included in the Disclosure Package and the Final Offering Memorandum.
     (v) No Material Adverse Change in Business. Since the respective dates as
of which information is given in the Disclosure Package and the Final Offering
Memorandum, except as otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business (a “Material Adverse Effect”), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
     (vi) Good Standing of the Company. The Company has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of Delaware and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Disclosure Package and the Final Offering Memorandum and to enter into and
perform its obligations under, or as contemplated by, this Agreement. The
Company is duly qualified as a foreign corporation to transact business and is
in good standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
     (vii) Good Standing of Subsidiaries. Each “significant subsidiary” of the
Company (as such term is defined in Rule 1-02 of Regulation S-X) (each a
“Designated Subsidiary” and, collectively, the “Designated Subsidiaries”) has
been duly organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Disclosure Package and the Final Offering Memorandum and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in the
Disclosure Package and the Final Offering Memorandum, all of the issued and
outstanding capital stock of each Designated Subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any

4

--------------------------------------------------------------------------------

 

security interest, mortgage, pledge, lien, encumbrance, claim or equity; none of
the outstanding shares of capital stock of any Designated Subsidiary was issued
in violation of any preemptive or similar rights of any securityholder of such
Designated Subsidiary. The other subsidiaries of the Company other than
Designated Subsidiaries, considered in the aggregate as a single subsidiary, do
not constitute a “significant subsidiary” as defined in Rule 1-02 of
Regulation S-X.
     (viii) Capitalization. The authorized, issued and outstanding capital stock
of the Company is as set forth in the financial statements, including the
schedules and notes, included in the Disclosure Package and the Final Offering
Memorandum (except for subsequent issuances, if any, pursuant to this Agreement,
pursuant to reservations, agreements, employee benefit plans referred to in the
Disclosure Package and the Final Offering Memorandum or pursuant to the exercise
of convertible securities or options referred to in the Disclosure Package and
the Final Offering Memorandum). The             shares of issued and outstanding
capital stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of capital
stock of the Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company.
     (ix) Corporate Power. The Company has full right, power and authority to
execute and deliver this Agreement, the Securities, the Indenture, the
Registration Rights Agreement, the OTC Convertible Note Hedge and the OTC
Warrant Transaction (collectively, the “Transaction Documents”) and to perform
its obligations hereunder and thereunder; and all action required to be taken
for the due and proper authorization, execution and delivery of each of the
Transaction Documents and the consummation of the transactions contemplated
thereby has been duly and validly taken.
     (x) Authorization of Agreement. This Agreement has been duly authorized,
executed and delivered by the Company.
     (xi) Authorization and Description of the Indenture. The Indenture has been
duly authorized by the Company and, when executed and delivered by the Company
and the Trustee, will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors’ rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law). The Indenture will conform in all material respects to the statements
relating thereto contained in the Disclosure Package and the Final Offering
Memorandum.
     (xii) Authorization and Description of the Registration Rights Agreement.
The Registration Rights Agreement has been duly authorized by the Company and,
when duly executed and delivered by the Company and the Initial Purchasers, will
constitute a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other similar
laws relating to or affecting enforcement of creditors’ rights generally, by
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law) and by public policy limitations affecting the
enforceability of indemnification or contribution rights in connection with
securities transactions, to the extent applicable. The Registration Rights
Agreement will conform in all material respects to the statements relating
thereto contained in the Disclosure Package and the Final Offering Memorandum.

5

--------------------------------------------------------------------------------

 

     (xiii) Authorization and Description of the Securities. The Securities have
been duly authorized and, at the Closing Time, will have been duly executed by
the Company and, when authenticated, issued and delivered in the manner provided
for in the Indenture and delivered against payment of the purchase price
therefor as provided in this Agreement, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers) reorganization, moratorium or similar laws affecting enforcement of
creditors’ rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law), and will be in the form contemplated by, and
entitled to the benefits of, the Indenture. The Securities will conform in all
material respects to the statements relating thereto contained in the Disclosure
Package and the Final Offering Memorandum.
     (xiv) Authorization and Description of Common Stock. The Common Stock
conforms to all statements relating thereto included in the Disclosure Package
and the Final Offering Memorandum and such description conforms to the rights
set forth in the instruments defining the same. Upon issuance and delivery of
the Securities in accordance with this Agreement and the Indenture, the
Securities will be convertible at the option of the holder thereof and the
Company will have the option to pay a portion of the conversion value in shares
of Common Stock in accordance with the terms of the Securities and the
Indenture; the shares of Common Stock issuable upon conversion of the Securities
have been duly authorized and reserved for issuance upon such conversion by all
necessary corporate action and such shares, when issued upon such conversion,
will be validly issued and will be fully paid and non-assessable; no holder of
such shares will be subject to personal liability by reason of being such a
holder; and the issuance of such shares upon such conversion will not be subject
to the preemptive or other similar rights of any securityholder of the Company.
     (xv) Absence of Defaults and Conflicts. Neither the Company nor any of the
Designated Subsidiaries is in violation of its charter or by-laws or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which or any of them may be
bound, or to which any of the property or assets of the Company or any of its
Designated Subsidiaries is subject (collectively, “Agreements and Instruments”)
except for such defaults that would not, singly or in the aggregate, result in a
Material Adverse Effect; and the execution, delivery and performance of the
Transaction Documents and any other agreement or instrument entered into or
issued or to be entered into or issued by the Company in connection with the
transactions contemplated hereby or thereby or in the Disclosure Package and the
Final Offering Memorandum and the consummation of the transactions contemplated
herein and in the Disclosure Package and the Final Offering Memorandum
(including the issuance and sale of the Securities and the use of the proceeds
from the sale of the Securities as described in the Disclosure Package and the
Final Offering Memorandum under the caption “Use of Proceeds” and the issuance
of the shares of Common Stock issuable upon conversion of the Securities) and
compliance by the Company with its obligations hereunder do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of the
Designated Subsidiaries pursuant to, the Agreements and Instruments (except for
such conflicts, breaches or defaults or liens, charges or encumbrances that
would not, singly or in the aggregate, result in a Material Adverse Effect), nor
will such action result in any violation of the provisions

6

--------------------------------------------------------------------------------

 

of the charter or by-laws of the Company or any of the Designated Subsidiaries
or any applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its subsidiaries or any
of their assets, properties or operations. As used herein, a “Repayment Event”
means any event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder’s behalf)
the right to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of the Designated Subsidiaries.
     (xvi) Absence of Labor Dispute. No labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the knowledge of the Company,
is imminent.
     (xvii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or any of its subsidiaries which is
required to be disclosed in the Disclosure Package or the Final Offering
Memorandum (other than as disclosed therein), or which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect the properties or assets of the
Company or any of its subsidiaries or the consummation of the transactions
contemplated by this Agreement or the performance by the Company of its
obligations hereunder. The aggregate of all pending legal or governmental
proceedings to which the Company or any of its subsidiaries is a party or of
which any of their respective property or assets is the subject which are not
described in the Disclosure Package and the Final Offering Memorandum, including
ordinary routine litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Effect.
     (xviii) Accuracy of Exhibits. All of the descriptions of contracts or other
documents included in the Disclosure Package or the Final Offering Memorandum
are accurate and complete descriptions of such contracts or other documents.
There are no contracts or documents which are required to be described in the
documents incorporated by reference in the Disclosure Package or Final Offering
Memorandum or to be filed as exhibits thereto which have not been so described
and filed as required.
     (xix) Possession of Intellectual Property. The Company and its subsidiaries
own or possess, or can acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, “Intellectual Property”) necessary to carry
on the business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of
its subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate, would result in a Material Adverse Effect.
     (xx) Absence of Further Requirements. No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency is necessary or required for the
performance by the Company of its obligations under the Transaction Documents,
in connection with the offering, issuance or sale of the Securities hereunder,
the issuance of shares of Common Stock upon conversion of Securities

7

--------------------------------------------------------------------------------

 

or the consummation of the transactions contemplated by the Transaction
Documents or for the due execution, delivery or performance of the Transaction
Documents by the Company, except (A) such as have been already obtained, (B) as
may be required under 1933 Act or the 1933 Act Regulations in connection with
the transactions contemplated by the Registration Rights Agreement or state
securities laws and (C) for the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended (the “1939 Act”).
     (xxi) Possession of Licenses and Permits. The Company and the Designated
Subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, “Governmental Licenses”) issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them; the Company and the Designated
Subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not, singly
or in the aggregate, result in a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except where the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not have a Material Adverse
Effect; and neither the Company nor any of the Designated Subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
     (xxii) Title to Property. The Company and its subsidiaries have good and
marketable title to all real property owned by the Company and its subsidiaries
and good title to all other properties owned by them, in each case, free and
clear of all mortgages, pledges, liens, security interests, claims, restrictions
or encumbrances of any kind except such as (a) are described in the Disclosure
Package and the Final Offering Memorandum or (b) do not, singly or in the
aggregate, materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company or any
of its subsidiaries; and all of the leases and subleases of the Company and its
subsidiaries, considered as one enterprise, and under which the Company or any
of its subsidiaries holds properties described in the Disclosure Package and the
Final Offering Memorandum, are in full force and effect, and neither the Company
nor any of its subsidiaries has any notice of any claim of any sort that has
been asserted by anyone adverse to the rights of the Company or any of its
subsidiaries under any of the leases or subleases mentioned above, or affecting
or questioning the rights of the Company or any such subsidiary to the continued
possession of the leased or subleased premises under any such lease or sublease,
except where the failure of a lease or sublease to be in full force and effect
or the existence of any such claim would not, singly or in the aggregate, result
in a Material Adverse Effect.
     (xxiii) Environmental Laws. Except as described in the Disclosure Package
and the Final Offering Memorandum and except such matters as would not, singly
or in the aggregate, result in a Material Adverse Effect, (A) neither the
Company nor any of its subsidiaries is in violation of any federal, state, local
or foreign statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and regulations
relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, “Hazardous Materials”) or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, “Environmental Laws”), (B) the
Company and its subsidiaries have all permits, authorizations

8

--------------------------------------------------------------------------------

 

and approvals required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that would reasonably
be expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or governmental body or agency,
against or affecting the Company or any of its subsidiaries relating to
Hazardous Materials or Environmental Laws or the violation of any Environmental
Laws.
     (xxiv) Accounting Controls and Disclosure Controls. The Company and each of
its subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in accordance
with management’s general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (C) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as described in the Disclosure Package and
Final Offering Memorandum, since the end of the Company’s most recent audited
fiscal year, there has been (1) no material weakness in the Company’s internal
control over financial reporting (whether or not remediated) and (2) no change
in the Company’s internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting. The Company and its consolidated subsidiaries
employ disclosure controls and procedures that are designed to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the 1934 Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules and forms, and is
accumulated and communicated to the Company’s management, including its
principal executive officer or officers and principal financial officer or
officers, as appropriate, to allow timely decisions regarding disclosure.
     (xxv) Compliance with the Sarbanes-Oxley Act. There is and has been no
failure on the part of the Company or any of the Company’s directors or
officers, in their capacities as such, to comply in all material respects with
any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith (the “Sarbanes-Oxley Act”), including
Section 402 related to loans and Sections 302 and 906 related to certifications.
     (xxvi) Statistical and Market-Related Data. Any statistical and
market-related data included in the Disclosure Package and the Final Offering
Memorandum are based on or derived from sources that the Company believes to be
reliable and accurate in all material respects or represent the Company’s good
faith estimates that are made on the basis of data derived from such sources.
     (xxvii) Investment Company Act. The Company is not required, and upon the
issuance and sale of the Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Disclosure Package and the
Final Offering Memorandum will not be required, to register as an “investment
company” under the Investment Company Act of 1940, as amended (the “1940 Act”).
     (xxviii) Similar Offerings. Neither the Company nor any of its affiliates,
as such term is defined in Rule 501(b) under the 1933 Act (each, an
“Affiliate”), has, directly or indirectly,

9

--------------------------------------------------------------------------------

 

solicited any offer to buy, sold or offered to sell or otherwise negotiated in
respect of, or will solicit any offer to buy, sell or offer to sell or otherwise
negotiate in respect of, in the United States or to any United States citizen or
resident, any security which is or would be integrated with the sale of the
Securities in a manner that would require the offered Securities to be
registered under the 1933 Act.
     (xxix) Rule 144A Eligibility. The Securities are eligible for resale
pursuant to Rule 144A and will not be, at the Closing Time, of the same class as
securities listed on a national securities exchange registered under Section 6
of the 1934 Act, or quoted in a U.S. automated interdealer quotation system.
     (xxx) No General Solicitation. None of the Company, its Affiliates or any
person acting on its or any of their behalf (other than the Initial Purchasers
and their Affiliates, as to whom the Company makes no representation) has
engaged or will engage, in connection with the offering of the Securities, in
any form of general solicitation or general advertising within the meaning of
Rule 502(c) under the 1933 Act.
     (xxxi) No Registration Required. Subject to compliance by the Initial
Purchasers with their representations and warranties set forth in Section 6
hereof and the procedures set forth in Section 6 hereof, the compliance of the
Initial Purchasers with the offering and transfer procedures and restrictions
described in the Disclosure Package and Final Offering Memorandum and the
accuracy of the representations and warranties made in accordance with this
Agreement and the Final Offering Memorandum by purchasers to whom the Initial
Purchasers initially resell Securities, it is not necessary in connection with
the offer, sale and delivery of the Securities to the Initial Purchasers and to
each Subsequent Purchaser in the manner contemplated by this Agreement and the
Final Offering Memorandum to register the Securities under the 1933 Act or to
qualify the Indenture under the 1939 Act.
     (xxxii) Foreign Corrupt Practices Act. Neither the Company nor, to the
knowledge of the Company, any director, officer, agent, employee, Affiliate or
other person acting on behalf of the Company or any of its subsidiaries is aware
of or has taken any action, directly or indirectly, that would result in a
violation by such persons of the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder (the “FCPA”), including,
without limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment, promise to
pay or authorization of the payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the FCPA) or any foreign
political party or official thereof or any candidate for foreign political
office, in contravention of the FCPA and the Company and, to the knowledge of
the Company, its Affiliates have conducted their businesses in compliance with
the FCPA and have instituted and maintain policies and procedures designed to
ensure, and which are reasonably expected to continue to ensure, continued
compliance therewith.
     (xxxiii) Money Laundering Laws. The operations of the Company are and have
been conducted at all times materially in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator

10

--------------------------------------------------------------------------------

 

involving the Company with respect to the Money Laundering Laws is pending or,
to the best knowledge of the Company, threatened.
     (xxxiv) OFAC. Neither the Company nor, to the knowledge of the Company, any
director, officer, agent, employee, Affiliate or person acting on behalf of the
Company is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company
will not directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by
OFAC.
     (b) Officer’s Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to Merrill Lynch or to counsel for
the Initial Purchasers shall be deemed a representation and warranty by the
Company to each Initial Purchaser as to the matters covered thereby.
     SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
     (a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Initial Purchaser, severally and not jointly, and
each Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, the aggregate principal amount of Initial Securities set forth in
Schedule A hereto opposite the name of such Initial Purchaser, at a price of
97.75% of the principal amount thereof, plus any additional principal amount of
Securities which such Initial Purchaser may become obligated to purchase
pursuant to the provisions of Section 11 hereof.
     (b) Option Securities. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Initial Purchasers to purchase
up to an additional $25,000,000 aggregate principal amount of Option Securities
at the same purchase price as the Initial Purchasers paid for the Initial
Securities, plus accrued and unpaid interest from the Initial Closing Time to,
but excluding, the Option Closing Time. The option hereby granted will expire 13
days after the Initial Closing Time and may be exercised at any time, in whole
or in part, for the purpose of covering overallotments, if any, made in
connection with the offering and distribution of the Initial Securities upon
notice by Merrill Lynch to the Company setting forth the number of Option
Securities as to which the Initial Purchasers are then exercising the option and
the time and date of payment and delivery for such Option Securities. Any such
time and date of delivery (the “Option Closing Time”) shall be determined by the
Company and Merrill Lynch, but shall not be later than seven full business days
after the exercise of said option, nor in any event prior to the Initial Closing
Time, as hereinafter defined.
     (c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Sidley
Austin LLP, One South Dearborn Street, Chicago, Illinois 60603, or at such other
place as shall be agreed upon by Merrill Lynch and the Company, at 9:00 A.M.
(Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 11), or such other time
not later than ten business days after such date as shall be agreed upon by
Merrill Lynch and the Company (such time and date of payment and delivery being
herein called “Initial Closing Time” and the Initial Closing Time and the Option
Closing Time each being the applicable “Closing Time”).
     In addition, in the event that any or all of the Option Securities are
purchased by the Initial Purchasers, payment of the purchase price for, and
delivery of certificates for, such Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by
Merrill

11

--------------------------------------------------------------------------------

 

Lynch and the Company, on the Option Closing Time as specified in the notice
from Merrill Lynch to the Company.
     Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
Merrill Lynch for the respective accounts of the Initial Purchasers of
certificates for the Securities to be purchased by them. It is understood that
each Initial Purchaser has authorized Merrill Lynch, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Securities which it has agreed to purchase. Merrill Lynch, individually and not
as representative of the Initial Purchasers, may (but shall not be obligated to)
make payment of the purchase price for the Securities to be purchased by any
Initial Purchaser whose funds have not been received by the Closing Time, but
such payment shall not relieve such Initial Purchaser from its obligations
hereunder.
     (d) Denominations; Registration. Certificates for the Securities shall be
in such denominations ($1,000 or integral multiples of $1,000 in excess thereof)
and registered in such names as Merrill Lynch may request in writing at least
one full business day before Closing Time. The certificates representing the
Securities shall be made available for examination and packaging by the Initial
Purchasers in The City of New York not later than 10:00 A.M. (Eastern time) on
the last business day prior to Closing Time.
     SECTION 3. Covenants of the Company. The Company covenants with each
Initial Purchaser as follows:
     (a) Delivery of Offering Memorandum. The Company, as promptly as possible,
will furnish to each Initial Purchaser, without charge, such number of copies of
the Offering Memorandum and any amendments and supplements thereto and documents
incorporated by reference therein as such Initial Purchaser may reasonably
request.
     (b) Notice and Effect of Material Events. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any securities exchange or any other regulatory body in the
United States or any other jurisdiction, and (y) prior to the completion of the
placement of the Securities by the Initial Purchasers as evidenced by a notice
from the Initial Purchasers to the Company, any material changes in or affecting
the condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, which (i) make any statement in the Disclosure Package, any Offering
Memorandum or any Supplemental Offering Material false or misleading in any
material respect or (ii) if not disclosed in the Disclosure Package or the
Offering Memorandum, would constitute a material omission therefrom. In such
event or if during such time any event shall occur as a result of which it is
necessary, in the reasonable opinion of any of the Company, its counsel, the
Initial Purchasers or counsel for the Initial Purchasers, to amend or supplement
the Offering Memorandum in order that the Offering Memorandum not include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances then existing, the Company will forthwith amend or supplement the
Offering Memorandum by preparing and furnishing to each Initial Purchaser an
amendment or amendments of, or a supplement or supplements to, the Offering
Memorandum (in form and substance satisfactory in the reasonable opinion of
counsel for the Initial Purchasers) so that, as so amended or supplemented, the
Offering Memorandum will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances existing at the time it is delivered to a
Subsequent Purchaser, not misleading.
     (c) Amendment and Supplements to the Offering Memorandum; Preparation of
Pricing Supplement; Supplemental Offering Materials. The Company will advise
each Initial Purchaser promptly

12

--------------------------------------------------------------------------------

 

of any proposal to amend or supplement the Offering Memorandum, will furnish
each Initial Purchaser with copies of such amendment or supplement a reasonable
amount of time prior thereto and will not effect such amendment or supplement to
which the Initial Purchasers shall reasonably object. Neither the consent of the
Initial Purchasers, nor the Initial Purchasers’ delivery of any such amendment
or supplement, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof. The Company will prepare the Pricing Term Sheet, in form and
substance satisfactory to Merrill Lynch, and shall furnish as soon as
practicable but no later than 4 hours prior to the Applicable Time to each
Initial Purchaser, without charge, as many copies of the Pricing Term Sheet as
such Initial Purchaser may reasonably request. The Company represents and agrees
that, unless it obtains the prior consent of Merrill Lynch, and each Initial
Purchaser agrees that, unless it obtains the prior written consent of the
Company and Merrill Lynch, it has not made and will not make any offer relating
to the Securities by means of any Supplemental Offering Materials; provided,
however, that prior to the preparation of the Pricing Term Sheet, the Initial
Purchasers are authorized to use the information with respect to the final terms
of the Securities in communications conveying information relating to the
offering to investors.
     (d) Qualification of Securities for Offer and Sale. The Company will use
its best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities and the shares of Common Stock issuable upon conversion of Securities
for offering and sale under the applicable securities laws of such states as the
Initial Purchasers may designate; provided, however, that the Company shall not
be obligated to file any general consent to service of process or to qualify as
a foreign corporation or as a dealer in securities in any jurisdiction in which
it is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities or such shares of Common Stock issuable
upon conversion of the Securities have been so qualified, the Company will file
such statements and reports as may be required by the laws of such jurisdiction
to continue such qualification in effect for so long as may be required in
connection with the distribution of the Securities.
     (e) Listing of Common Stock. The Company will use its best efforts to cause
all shares of Common Stock issuable upon conversion of the Securities to be
listed on the New York Stock Exchange.
     (f) DTC. The Company will cooperate with the Initial Purchasers and use its
best efforts to permit the offered Securities to be eligible for clearance and
settlement through the facilities of DTC.
     (g) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Offering
Memorandum under “Use of Proceeds”.
     (h) Restriction on Sale of Securities. Except as otherwise contemplated by
the Offering Memorandum or the Transaction Documents, during a period of 90 days
from the date of the Final Offering Memorandum (the “Lock-up Period”), the
Company will not, without the prior written consent of Merrill Lynch, (i) offer,
pledge, sell, announce the intention to sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant for the sale of, lend or otherwise transfer or dispose
of any shares of Common Stock or any securities convertible into or exercisable
or exchangeable for or repayable with Common Stock, or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequences of ownership of the
Common Stock, or any securities convertible into or exercisable or exchangeable
for or repayable with Common Stock, whether any such swap or transaction
described in clause (i) above or this clause (ii) is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) shares of Common Stock to be issued upon
conversion of the Securities, (B) shares of Common Stock to be issued upon
conversion of the Company’s outstanding zero coupon convertible notes due 2033,
(C) the OTC Convertible Note Hedge and the OTC Warrant

13

--------------------------------------------------------------------------------

 

Transaction and any transactions in the Company’s securities contemplated
thereby, (D) the Company’s issuance of stock options and stock units to the
Company’s directors and employees pursuant to any existing employee benefit
plans or director compensation plans of the Company, (E) the Company’s issuance
of shares of Common Stock to directors and employees of the Company upon the
exercise of options outstanding on the date hereof or the conversion of stock
units outstanding on the date hereof under existing employee benefit plans or
director compensation plans of the Company, (F) securities issued or to be
issued by the Company in connection with a merger, acquisition or other business
combination, provided that the recipients of such securities shall enter into
lock-up agreements for the balance of the Lock-up Period, (G) the filing of a
registration statement on Form S-8 to register shares of Common Stock to be
issued under any existing employee benefit plans or director compensation plans
of the Company or (H) the filing of a registration statement on From S-4 to
register shares of Common Stock.
     (i) PORTAL Designation. The Company will use its best efforts to permit the
Securities to be designated PORTAL securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
(“NASD”) relating to trading in the PORTAL Market.
     (j) Reporting Requirements. Until the offering of the Securities is
complete, the Company will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by the 1934
Act and the 1934 Act Regulations.
     (k) Reservation of Shares of Common Stock. The Company shall reserve and
keep available at all times, free of preemptive rights, shares of Common Stock
for the purpose of enabling the Company to satisfy any obligations to issue
shares of Common Stock upon conversion of the Securities.
     (l) Trust Indenture Act. The Company agrees that it will comply with all
the terms and conditions of the Registration Rights Agreement and at the time of
any registration of the Securities pursuant to the Registration Rights Agreement
it will cause the Indenture to be qualified under the 1939 Act.
     SECTION 4. Payment of Expenses.
     (a) Expenses. The Company will pay all expenses incident to the performance
of its obligations under this Agreement, including (i) the preparation, printing
and delivery to the Initial Purchasers of the Disclosure Package or any Offering
Memorandum (including financial statements and any schedules or exhibits and any
document incorporated therein by reference) and of each amendment or supplement
thereto or of any Supplemental Offering Material, (ii) the preparation, printing
and delivery to the Initial Purchasers of this Agreement, any Agreement among
the Initial Purchasers, the Indenture and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Initial Purchasers, including any
transfer taxes, any stamp or other duties payable upon the sale, issuance and
delivery of the Securities to the Initial Purchasers and any charges of DTC in
connection therewith, (iv) the fees and disbursements of the Company’s counsel,
accountants and other advisors, (v) the qualification of the Securities and the
shares of Common Stock issuable upon conversion of the Securities under
securities laws in accordance with the provisions of Section 3(d) hereof,
including filing fees and the fees and disbursements of counsel for the Initial
Purchasers in connection therewith and in connection with the preparation of the
Blue Sky Survey, (vi) the fees and expenses of the Trustee, including the fees
and disbursements of counsel for the Trustee in connection with the Indenture
and the Securities, (vii) the costs and expenses of the Company relating to
investor presentations on any “road show” undertaken in connection with the
marketing of the Securities, if any, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in

14

--------------------------------------------------------------------------------

 

connection with the road show presentations and travel and lodging expenses of
the representatives and officers of the Company and any such consultants,
(viii) any fees payable in connection with the rating of the Securities and any
fees and expenses payable in connection with the initial and continued
designation of the Securities as PORTAL securities under the PORTAL Market Rules
pursuant to NASD Rule 5322, (ix) any fees of the NASD and (x) any fees and
expenses payable in connection with the initial and continued listing of the
Common Stock issuable upon conversion of the Securities on the New York Stock
Exchange.
     (b) Termination of Agreement. If this Agreement is terminated by Merrill
Lynch in accordance with the provisions of Section 5 or Section 10(a)(i) hereof,
the Company shall reimburse the Initial Purchasers for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Initial Purchasers.
     SECTION 5. Conditions of Initial Purchasers’ Obligations. The obligations
of the several Initial Purchasers hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any of its subsidiaries
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
     (a) Opinion of Counsel for Company. At the Closing Time, Merrill Lynch
shall have received the favorable opinion, dated as of the Closing Time, of
(i) Schiff Hardin LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Initial Purchasers, to the effect set forth in
Exhibit A-1 hereto and to such further effect as counsel to the Initial
Purchasers may reasonably request, and (ii) John A. Dul, Vice President –
General Counsel and Secretary of the Company, in form and substance satisfactory
to counsel for the Initial Purchasers, to the effect set forth in Exhibit A-2
hereto and to such further effect as counsel to the Initial Purchasers may
reasonably request.
     (b) Opinion of Counsel for Initial Purchasers. At the Closing Time, Merrill
Lynch shall have received the favorable opinion, dated as of the Closing Time,
of Sidley Austin LLP, counsel for the Initial Purchasers. In giving such opinion
such counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the State of New York, the federal law of the United
States and the General Corporation Law of the State of Delaware, upon the
opinions of counsel satisfactory to Merrill Lynch. Such counsel may also state
that, insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.
     (c) Officers’ Certificate. At the Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Disclosure Package or the Final Offering Memorandum (exclusive of
any amendments or supplements thereto subsequent to the date of this Agreement),
any material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, and Merrill Lynch shall have received a certificate
of the President or a Vice President of the Company and of the chief financial
or chief accounting officer of the Company, dated as of the Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct with
the same force and effect as though expressly made at and as of the Closing
Time, and (iii) the Company has complied, in all material respects, with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to Closing Time.
     (d) Accountants’ Comfort Letter. At the time of the execution of this
Agreement, Merrill Lynch shall have received from Ernst & Young LLP a letter
dated such date, in form and substance satisfactory

15

--------------------------------------------------------------------------------

 

to the Initial Purchasers, containing statements and information of the type
ordinarily included in accountants’ “comfort letters” to the Initial Purchasers
with respect to the financial statements and certain financial information
contained in the Disclosure Package and the Final Offering Memorandum.
     (e) Bring-down Comfort Letter. At the Closing Time, Merrill Lynch shall
have received from Ernst & Young LLP a letter, dated as of the Closing Time, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (d) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to the
Closing Time.
     (f) PORTAL. At the Closing Time, the Securities shall have been designated
for trading on PORTAL.
     (g) Lock-up Agreements. On or prior to the date of this Agreement, Merrill
Lynch shall received an agreement substantially in the form of Exhibit C hereto
signed by the persons listed in Schedule C hereto.
     (h) Indenture and Registration Rights Agreement. At or prior to the Initial
Closing Time, each of the Company and the Trustee shall have executed and
delivered the Indenture, and the Company and Merrill Lynch shall have executed
and delivered the Registration Rights Agreement.
     (i) Bond Hedge and Warrant Documents. At or prior to the Initial Closing
Time, the OTC Convertible Note Hedge and the OTC Warrant Transaction, in form
and substance reasonably satisfactory to the Initial Purchasers, shall have been
duly executed and delivered by the Company and be in full force and effect.
     (j) Conditions to Purchase of Option Securities. In the event that the
Initial Purchasers exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the obligation of the
Initial Purchasers to purchase such Option Securities is subject to the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company hereunder being true and
correct as of the Option Closing Time and that, at the Option Closing Time, the
Initial Purchasers shall have received:
(i) Officers’ Certificate. A certificate, dated the Option Closing Time, of the
President or a Vice President of the Company and of the chief financial officer
or chief accounting officer of the Company confirming that the certificate
delivered at the Initial Closing Time pursuant to Section 5(c) hereof remains
true and correct as of the Option Closing Time;
(ii) Opinions of Counsel for Company. The favorable opinion of (A) Schiff Hardin
LLP, counsel for the Company, in form and substance satisfactory to counsel for
the Initial Purchasers, dated as of the Option Closing Time, relating to the
Option Securities to be purchased on such Option Closing Time and otherwise to
the same effect as the opinion required by Section 5(a) hereof and (B) John A.
Dul, Vice President – General Counsel and Secretary of the Company, in form and
substance satisfactory to counsel for the Initial Purchasers, dated as of such
Option Closing Time, relating to the Option Securities to be purchased on such
Option Closing Time and otherwise to the same effect as the opinion required by
Section 5(a) hereof.
(iii) Opinion of Counsel for Initial Purchasers. The favorable opinion of Sidley
Austin LLP, counsel for the Initial Purchasers, dated as of the Option Closing
Time, relating to the Option Securities to be purchased on the Option Closing
Time and otherwise to the same effect as the opinion required by Section 5(b)
hereof;

16

--------------------------------------------------------------------------------

 

(iv) Bring-down Comfort Letter. A letter from Ernst & Young LLP, in form and
substance satisfactory to the Initial Purchasers and dated as of the Option
Closing Time, substantially in the same form and substance as the letter
furnished to Merrill Lynch pursuant to Section 5(d) hereof, except that the
“specified date” in the letter furnished pursuant to this subparagraph shall be
a date not more than three days prior to the Option Closing Time.
     (k) Additional Documents. At the Closing Time, counsel for the Initial
Purchasers shall have been furnished with such documents and opinions as they
may require for the purpose of enabling them to pass upon the issuance and sale
of the Securities as herein contemplated, or in order to evidence the accuracy
of any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be satisfactory in form and substance to Merrill Lynch and counsel for the
Initial Purchasers.
     (l) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement or, in the case of any condition to the purchase of Option Securities,
on an Option Closing Time which is after the Initial Closing Time, the
obligations of the Initial Purchasers to purchase the relevant Option
Securities, may be terminated by Merrill Lynch by notice to the Company at any
time at or prior to Initial Closing Time or Option Closing Time, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 7, 8 and 9
shall survive any such termination and remain in full force and effect.
     SECTION 6. Subsequent Offers and Resales of the Securities.
     (a) Offer and Sale Procedures. Each of the Initial Purchasers and the
Company, as the case may be, hereby establish and agree to observe the following
procedures in connection with the offer and sale of the Securities:
     (i) Offers and Sales. Offers and sales of the Securities shall be made to
such persons and in such manner as is contemplated by the Offering Memorandum.
     (ii) No General Solicitation. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the 1933 Act) will be used
in the United States in connection with the offering or sale of the Securities.
     (iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
Subsequent Purchaser of a Security acting as a fiduciary for one or more third
parties, each third party shall, in the judgment of the applicable Initial
Purchaser, be a “qualified institutional buyer” within the meaning of Rule 144A
under the 1933 Act (a “Qualified Institutional Buyer”).
     (iv) Subsequent Purchaser Notification. Each Initial Purchaser will take
reasonable steps to inform, and cause each of its U.S. Affiliates to take
reasonable steps to inform, persons acquiring Securities from such Initial
Purchaser or its Affiliate, as the case may be, in the United States that the
Securities (A) have not been and will not be registered under the 1933 Act,
(B) are being sold to them without registration under the 1933 Act in reliance
on Rule 144A or in accordance with another exemption from registration under the
1933 Act, as the case may be, and (C) may not be offered, sold or otherwise
transferred except (1) to the Company, (2) outside the United States in
accordance with Regulation S, or (3) inside the United States in accordance with
(x) Rule 144A to a person whom the seller reasonably believes is a Qualified
Institutional Buyer

17

--------------------------------------------------------------------------------

 

that is purchasing such Securities for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the offer, sale or
transfer is being made in reliance on Rule 144A or (y) pursuant to another
available exemption from registration under the 1933 Act.
     (v) Minimum Principal Amount. No sale of the Securities to any one
Subsequent Purchaser will be for less than U.S. $1,000 principal amount and no
Security will be issued in a smaller principal amount. If the Subsequent
Purchaser is a non-bank fiduciary acting on behalf of others, each person for
whom it is acting must purchase at least U.S. $1,000 principal amount of the
Securities.
     (vi) Transfer Restriction. The transfer restrictions and the other
provisions set forth in the Offering Memorandum under the caption “Transfer
Restrictions,” including the legend required thereby, shall apply to the
Securities except as otherwise agreed by the Company and Merrill Lynch.
Following the sale of the Securities by the Initial Purchasers to each
Subsequent Purchaser pursuant to the terms hereof, the Initial Purchasers shall
not be liable or responsible to the Company for any losses, damages or
liabilities suffered or incurred by the Company, including any losses, damages
or liabilities under the 1933 Act, arising from or relating to any subsequent
resale or transfer of any Security.
     (b) Covenants of the Company. The Company covenants with each Initial
Purchaser as follows:
     (i) Integration. The Company agrees that it will not and will cause its
Affiliates not to, directly or indirectly, solicit any offer to buy, sell or
make any offer or sale of, or otherwise negotiate in respect of, securities of
the Company of any class if, as a result of the doctrine of “integration”
referred to in Rule 502 under the 1933 Act, such offer or sale would render
invalid (for the purpose of (i) the sale of the Securities by the Company to the
Initial Purchasers, (ii) the resale of the Securities by the Initial Purchasers
to Subsequent Purchasers or (iii) the resale of the Securities by such
Subsequent Purchasers to others) the exemption from the registration
requirements of the 1933 Act provided by Section 4(2) thereof or by Rule 144A
thereunder or otherwise.
     (ii) Rule 144A Information. The Company agrees that, in order to render the
Securities eligible for resale pursuant to Rule 144A under the 1933 Act, while
any of the Securities remain outstanding, it will make available, upon request,
to any holder of Securities or prospective purchasers of Securities the
information specified in Rule 144A(d)(4), unless the Company furnishes
information to the Commission pursuant to Section 13 or 15(d) of the 1934 Act.
     (iii) Restriction on Repurchases. Until the expiration of two years after
the original issuance of the Securities, the Company will not, and will use its
reasonable efforts to cause its Affiliates not to, resell any offered Securities
which are “restricted securities” (as such term is defined under Rule 144(a)(3)
under the 1933 Act), whether as beneficial owner or otherwise (except as agent
acting as a securities broker on behalf of and for the account of customers in
the ordinary course of business in unsolicited broker’s transactions) that have
been reacquired by any of them and shall immediately upon any purchase of any
Securities submit such Securities to the Trustee for cancellation.
     (iv) Reasonable Inquiries; Information. In connection with the original
distribution of the Securities, the Company agrees that, prior to any offer or
resale of the Securities by the Initial Purchasers, the Initial Purchasers and
counsel for the Initial Purchasers shall have the right

18

--------------------------------------------------------------------------------

 

to make reasonable inquiries into the business of the Company and its
subsidiaries. The Company also agrees to provide answers to each prospective
Subsequent Purchaser of Securities who so requests concerning the Company and
its subsidiaries (to the extent such information is available or can be acquired
and made available to prospective Subsequent Purchasers without unreasonable
effort or expense and to the extent the provision thereof is not prohibited by
applicable law) and the terms and conditions of the offering of the Securities,
as provided in the Offering Memorandum.
     (c) Qualification of Initial Purchasers. Each Initial Purchaser severally
and not jointly represents and warrants to, and agrees with, the Company that:
     (i) it is a Qualified Institutional Buyer and an “accredited investor”
within the meaning of Rule 501(a) under the 1933 Act (an “Accredited Investor”)
with such knowledge in financial and business matters as are necessary in order
to evaluate the merits and risks of an investment in the Securities; and
     (ii) neither it, nor any of its Affiliates, nor any person acting on its
behalf, has engaged or will engage, in connection with the offering of the
Securities, in any form of general solicitation or general advertising within
the meaning of Rule 502(c) under the 1933 Act.
     The Initial Purchasers understand that the Company, and for purposes of the
opinions to be delivered to the Initial Purchasers pursuant to Section 5 hereof,
counsel to the Company and counsel to the Initial Purchasers will rely upon the
accuracy and truth of the foregoing representations, and the Initial Purchasers
hereby consent to such reliance.
     SECTION 7. Indemnification.
     (a) Indemnification of Initial Purchasers. The Company agrees to indemnify
and hold harmless each Initial Purchaser, its Affiliates, its selling agents and
each person, if any, who controls any Initial Purchaser within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
     (i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Disclosure Package, the Final
Offering Memorandum (or any amendment or supplement thereto) or any Supplemental
Offering Materials (when taken together with the Disclosure Package), or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading;
     (ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 7(d) below) any such
settlement is effected with the written consent of the Company; and
     (iii) against any and all expense whatsoever, as incurred (including the
fees and disbursements of counsel chosen by Merrill Lynch), reasonably incurred
in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon

19

--------------------------------------------------------------------------------

 

any such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
     provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any Initial Purchaser through Merrill Lynch expressly for use in the
Disclosure Package, the Final Offering Memorandum (or any amendment or
supplement thereto) or in any Supplemental Offering Materials.
     (b) Indemnification of Company, Directors and Officers. Each Initial
Purchaser severally agrees to indemnify and hold harmless the Company, its
directors, its officers and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section 7, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Disclosure Package, the Final Offering Memorandum or any
Supplemental Offering Materials in reliance upon and in conformity with written
information furnished to the Company by such Initial Purchaser through Merrill
Lynch expressly for use therein.
     (c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section or Section 8
hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
     (d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.

20

--------------------------------------------------------------------------------

 

     SECTION 8. Contribution. If the indemnification provided for in Section 7
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Initial Purchasers on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
     The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers bear to the aggregate initial offering price of the Securities.
     The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchasers and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
     The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 8 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
     Notwithstanding the provisions of this Section 8, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities purchased and sold by it hereunder exceeds
the amount of any damages which such Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
     No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
     For purposes of this Section 8, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act and each Initial Purchaser’s Affiliates shall have the same
rights to contribution as such Initial Purchaser, and each director of the
Company, each officer of the Company, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The Initial
Purchasers’ respective obligations to contribute pursuant to this

21

--------------------------------------------------------------------------------

 

Section 8 are several in proportion to the principal amount of Securities set
forth opposite their respective names in Schedule A hereto and not joint.
     SECTION 9. Representations, Warranties and Agreements to Survive. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Initial Purchaser or its
Affiliates or selling agents, any person controlling any Initial Purchaser, its
officers or directors or any person controlling the Company and (ii) delivery of
and payment for the Securities.
     SECTION 10. Termination of Agreement.
     (a) Termination; General. Merrill Lynch may terminate this Agreement, by
notice to the Company, at any time at or prior to Closing Time (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Preliminary Offering Memorandum,
the Disclosure Package or the Final Offering Memorandum (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of Merrill Lynch, impracticable or
inadvisable to market the Securities or to enforce contracts for the sale of the
Securities, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission or the New York Stock Exchange
or if trading generally on the American Stock Exchange or the New York Stock
Exchange or in the NASDAQ System has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the NASD or any other governmental authority, or (iv) a
material disruption has occurred in commercial banking or securities settlement
or clearance services in the United States or (v) if a banking moratorium has
been declared by either Federal or New York authorities.
     (b) Liabilities. If this Agreement is terminated pursuant to this
Section 10, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further that
Sections 1, 7, 8 and 9 shall survive such termination and remain in full force
and effect.
     SECTION 11. Default by One or More of the Initial Purchasers. If one or
more of the Initial Purchasers shall fail at the Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
“Defaulted Securities”), Merrill Lynch shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting Initial
Purchasers, or any other initial purchasers, to purchase all, but not less than
all, of the Defaulted Securities in such amounts as may be agreed upon and upon
the terms herein set forth; if, however, Merrill Lynch shall not have completed
such arrangements within such 24-hour period, then:
     (a) if the number of Defaulted Securities does not exceed 10% of the
aggregate principal amount of the Securities to be purchased hereunder, each of
the non-defaulting Initial Purchasers shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Initial Purchasers, or

22

--------------------------------------------------------------------------------

 

     (b) if the number of Defaulted Securities exceeds 10% of the aggregate
principal amount of the Securities to be purchased hereunder, this Agreement
shall terminate without liability on the part of any non-defaulting Initial
Purchaser.
     No action taken pursuant to this Section 11 shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
     In the event of any such default which does not result in a termination of
this Agreement, either Merrill Lynch or the Company shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Offering Memorandum or in any other documents
or arrangements. As used herein, the term “Initial Purchaser” includes any
person substituted for an Initial Purchaser under this Section 11.
     SECTION 12. Tax Disclosure. Notwithstanding any other provision of this
Agreement, immediately upon commencement of discussions with respect to the
transactions contemplated hereby, the Company (and each employee, representative
or other agent of the Company) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement and all materials of any kind (including opinions
or other tax analyses) that are provided to the Company relating to such tax
treatment and tax structure. For purposes of the foregoing, the term “tax
treatment” is the purported or claimed federal income tax treatment of the
transactions contemplated hereby, and the term “tax structure” includes any fact
that may be relevant to understanding the purported or claimed federal income
tax treatment of the transactions contemplated hereby.
     SECTION 13. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to Merrill Lynch at 4 World Financial Center, New
York, New York 10080, attention of Global Origination Counsel Group, facsimile
(212) 449-3207; and notices to the Company shall be directed to it at 2301
Patriot Blvd., Glenview, Illinois 60026, attention General Counsel, facsimile
(224) 521-8604.
     SECTION 14. No Advisory or Fiduciary Relationship. The Company acknowledges
and agrees that (a) the purchase and sale of the Securities pursuant to this
Agreement, including the determination of the offering price of the Securities
and any related discounts and commissions, is an arm’s-length commercial
transaction between the Company, on the one hand, and the several Initial
Purchasers, on the other hand, (b) in connection with the offering contemplated
hereby and the process leading to such transaction each Initial Purchaser is and
has been acting solely as a principal and is not the agent or fiduciary of the
Company, or its stockholders, creditors, employees or any other party, (c) no
Initial Purchaser has assumed or will assume an advisory or fiduciary
responsibility in favor of the Company with respect to the offering contemplated
hereby or the process leading thereto (irrespective of whether such Initial
Purchaser has advised or is currently advising the Company on other matters) and
the Initial Purchaser has any obligation to the Company with respect to the
offering contemplated hereby except the obligations expressly set forth in this
Agreement, (d) the Initial Purchasers and their Affiliates may be engaged in a
broad range of transactions that involve interests that differ from those of the
Company, and (e) no Initial Purchaser has provided any legal, accounting,
regulatory or tax advice with respect to the offering contemplated hereby and
the Company has consulted its own legal, accounting, regulatory and tax advisors
to the extent it deemed appropriate.
     SECTION 15. Integration. This Agreement supersedes all prior agreements and
understandings (whether written or oral) between the Company and the Initial
Purchasers, or any of them, with respect to the subject matter hereof.

23

--------------------------------------------------------------------------------

 

     SECTION 16. Parties. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchasers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchasers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Initial Purchaser shall be deemed to be a successor by reason merely of such
purchase.
     SECTION 17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
     SECTION 18. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
     SECTION 19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
     SECTION 20. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.

24

--------------------------------------------------------------------------------

 

     If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Initial Purchasers and the Company in accordance with its terms.

            Very truly yours,

ANIXTER INTERNATIONAL INC.
      By:   /s/ Rod Shoemaker         Name:   Rod Shoemaker        Title:   VP —
Treasurer     

CONFIRMED AND ACCEPTED,
    as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
BANC OF AMERICA SECURITIES LLC
J.P. MORGAN SECURITIES INC.
WACHOVIA CAPITAL MARKETS, LLC
By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

         
By:
  /s/ Joe McIntosh    
 
 
 
     Authorized Signatory    

For themselves and as representatives of the other Initial Purchasers named in
Schedule A hereto.
Signature page to
Purchase Agreement

 

--------------------------------------------------------------------------------

 

SCHEDULE A

              Principal       Amount of   Name of Initial Purchaser   Securities
 
Merrill Lynch Pierce, Fenner & Smith Incorporated
  $ 178,750,000  
Banc of America Securities LLC
  $ 41,250,000  
J.P. Morgan Securities Inc.
  $ 27,500,000  
Wachovia Capital Markets, LLC
  $ 27,500,000  
 
       
Total
  $ 275,000,000  
 
     

B-1