Exhibit 10.2
(MERRILL LYNCH LOGO) [c12371c1237101.gif]
Confirmation of OTC Convertible Note Hedge

     
Date:
  February 12, 2007
 
   
To:
  Anixter International Inc. (“Counterparty”)
 
   
 
  Attention: Treasurer
 
  Telephone No.: (224) 521-8000
 
  Facsimile No.: (224) 521-8990
 
   
From:
  Merrill Lynch International (“MLI”)

MLI Reference: 0781830
Dear Sir / Madam:
     The purpose of this letter agreement (this “Confirmation”) is to confirm
the terms and conditions of the above-referenced transaction entered into among
Counterparty, MLI and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
“Agent” or “MLPFS”) on the Trade Date specified below (the “Transaction”). This
Confirmation constitutes a “Confirmation” as referred to in the Agreement
specified below.
     The definitions and provisions contained in the 2000 ISDA Definitions (the
“Swap Definitions”) and the 2002 ISDA Equity Derivatives Definitions (the
“Equity Definitions” and, together with the Swap Definitions, the
“Definitions”), in each case as published by the International Swaps and
Derivatives Association, Inc., are incorporated into this Confirmation. In the
event of any inconsistency between the Swap Definitions and the Equity
Definitions, the Equity Definitions will govern, and in the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern. References herein to a “Transaction” shall be deemed to be
references to a “Share Option Transaction” for purposes of the Equity
Definitions and a “Swap Transaction” for the purposes of the Swap Definitions.
     This Confirmation evidences a complete binding agreement between you and us
as to the terms of the Transaction to which this Confirmation relates. This
Confirmation (notwithstanding anything to the contrary herein), shall be subject
to an agreement in the 1992 form of the ISDA Master Agreement (Multicurrency
Cross Border) (the “Master Agreement” or “Agreement”) as if we had executed an
agreement in such form (but without any Schedule and with elections specified in
the “ISDA Master Agreement” Section of this Confirmation) on the Trade Date. In
the event of any inconsistency between the provisions of that agreement and this
Confirmation, this Confirmation will prevail for the purpose of this
Transaction. The parties hereby agree that the Transaction evidenced by this
Confirmation shall be the only Transaction subject to and governed by the
Agreement.
     The terms of the particular Transaction to which this Confirmation relates
are as follows:

     
General Terms:
   
 
   
Trade Date:
  February 12, 2007
 
   
Effective Date:
  The date of issuance of the Reference Notes.
 
   
Option Style:
  Modified American, as described under “Settlement Terms” below.
 
   

 

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Option Type:
  Call
 
   
Seller:
  MLI
 
   
Buyer:
  Counterparty
 
   
Shares:
  The shares of common stock, $1.00 par value, of Counterparty (Security Symbol:
 
  “AXE”) or such other securities or property into which the Reference Notes are
convertible on the date of determination.
 
   
Premium:
  $88,800,000
 
   
Premium Payment Date:
  The fourth Exchange Business Date following the Trade Date.
 
   
Exchange:
  NYSE
 
   
Related Exchange(s):
  All Exchanges
 
   
Reference Notes:
  1% Senior Convertible Notes due 2013 in the original amount of $300,000,000.
 
   
Applicable Portion of the Reference Notes:
  100%. For the avoidance of doubt, the Calculation Agent shall, as it deems
necessary, take into account the Applicable Portion of the Reference Notes in
determining or calculating any delivery or payment obligations hereunder,
whether upon a Conversion Date (as defined below) or otherwise.
 
   
Note Indenture:
  The indenture, dated as of closing of the issuance of the Reference Notes,
between Counterparty and The Bank of New York Trust Company, N.A., as trustee
relating to the Reference Notes, as the same may be amended, modified or
supplemented, subject to the “Additional Termination Events” provisions of this
Confirmation. Certain defined terms used herein have the meanings assigned to
them in the Note Indenture.
 
   
Procedures for Exercise:
   
 
   
Potential Exercise Dates:
  Each Conversion Date.
 
   
Conversion Date:
  Each “conversion date” for any Reference Note pursuant to the terms of the
Note Indenture (the principal amount of Reference Notes so converted, the
“Conversion Amount” with respect to such Conversion Date) occurring before the
Expiration Date.
 
   
 
  If the Conversion Amount for any Conversion Date is less than the aggregate
principal amount of Reference Notes then outstanding, then the terms of this
Transaction shall continue to apply, subject to the terms and conditions set
forth herein, with respect to the remaining outstanding principal amount of the
Reference Notes multiplied by the Applicable Portion of the Reference Notes.
 
   
Expiration Period:
  The period from and excluding the Trade Date to and including the Expiration
Date.
 
   
Expiration Date:
  The earliest of (i) the maturity date of the Reference Notes, (ii) the first
day on which none of such Reference Notes remain outstanding, whether by virtue
of conversion, issuer repurchase or otherwise and (iii) the occurrence of an

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  Additional Termination Event hereunder in respect of the termination of the
Transaction in whole but not in part.
 
   
Exercise Notice:
  Notwithstanding anything to the contrary in the Equity Definitions, in order
to exercise any Options hereunder, Buyer shall provide Seller with written
notice prior to 5:00 p.m. New York City time on the Exchange Business Day prior
to the first Trading Day in the Conversion Reference Period (both as defined in
the Note Indenture) relating to the Reference Notes converted on the relevant
Conversion Date of (i) the number of Reference Notes being converted on the
relevant Conversion Date, (ii) the first Trading Day in the relevant Conversion
Reference Period for the Reference Notes and (iii) if any, the applicable Cash
Percentage (as defined in the Note Indenture); provided that with respect to
Reference Notes converted during the one-month period ending on the business day
immediately preceding the Final Maturity Date (as defined in the Note Indenture)
of the Reference Notes, the related Exercise Notice shall be delivered prior to
5:00 p.m. New York City time on such Final Maturity Date (as defined in the Note
Indenture); and provided further that the delivery by Buyer of an Exercise
Notice after the Conversion Reference Period has commenced but prior to the
close of business on the fifth Trading Day of such Conversion Reference Period
shall be effective, in which case the Settlement Method shall be Net Share
Settlement but without regard to subsection (ii) of the definition of Net Share
Settlement and subject to adjustments to the Net Share Settlement Amount as
specified below. Notwithstanding the foregoing, in the event of delivery by
Buyer of an Exercise Notice after the commencement of the Conversion Reference
Period but prior to the close of business on the fifth Trading Day of such
Conversion Reference Period, if Counterparty notifies MLI of its desire for the
Settlement Method to be Net Cash Settlement, MLI agrees to undertake
commercially reasonable efforts to modify the terms of the Transaction to enable
a Net Cash Settlement to be effected on commercially reasonable terms.
 
   
Seller’s Telephone Number
   
and Telex and/or Facsimile
   
Number and Contact Details
   
for purpose of Giving Notice:
  Address: Merrill Lynch International
 
  Merrill Lynch Financial Centre
 
  2 King Edward Street
 
  London EC1A 1HQ
 
  Attention: Manager, Fixed Income Settlements
 
  Facsimile No.: +44 207 995 2004
 
  Telephone No.: +44 207 995 3769
 
   
Settlement Terms:
   
 
   
Settlement Method:
  Net Share Settlement or Net Cash Settlement consistent with Buyer’s election
with respect to the Reference Notes converted on the applicable Conversion Date,
provided that Net Share Settlement shall apply in the event that Buyer elects to
deliver any Shares in connection with the applicable Conversion Date.
 
   
Settlement Date:
  Subject to the delivery of an Exercise Notice to the Seller, the third (3rd)
Exchange Business Day following the final Trading Day in the applicable
Conversion Reference Period in respect of the relevant Conversion Date.
 
   
Net Share Settlement:
  In lieu of the obligations set forth in Sections 8.1 and 9.1 of the Equity
Definitions, Seller shall deliver to Buyer on the related Settlement Date (i) a
number of Shares equal to the related Net Share Settlement Amount, provided

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  that in the event that the number of Shares calculated comprises any
fractional Share, only whole Shares shall be delivered and an amount equal to
the value of such fractional Share shall be payable by Seller to Buyer in cash
and (ii) (x) an amount in cash equal to the cash amount, if any, paid by Buyer
in excess of the principal amount of the applicable Reference Notes for such
Conversion Date under the Note Indenture multiplied by (y) the Applicable
Portion of the Reference Notes, provided that the delivery obligation set forth
in clause (i) and (ii) of this paragraph shall be determined excluding any
Shares or cash that Counterparty is obligated to deliver to holders of the
applicable Reference Notes as a result of any adjustments to the Conversion Rate
resulting from (i) a discretionary adjustment to the Conversion Rate by
Counterparty or (ii) an adjustment to the Conversion Rate as a result of a “Make
Whole Premium” in connection with a fundamental change or change of control as
described in the Note Indenture. The provisions of Sections 9.1(c), 9.8, 9.9,
9.10, 9.11 and 9.12 of the Equity Definitions shall apply to any delivery of
Shares hereunder, provided that the Representation and Agreement in Section 9.11
of the Equity Definitions shall be modified by excluding any representations
therein relating to restrictions, obligations, limitations or requirements under
applicable securities laws as a result of the fact that Buyer is the issuer of
the Shares.
 
   
Net Cash Settlement:
  In lieu of the obligations set forth in Section 8.1 of the Equity Definitions,
on the Settlement Date Seller shall deliver to Buyer an amount in cash equal to
the related Net Cash Settlement Amount.
 
   
Net Share Settlement Amount:
  For each Conversion Date, the number of Shares equal to the Shares delivered
by Buyer for such Conversion Date under the Note Indenture multiplied by the
Applicable Portion of the Reference Notes, provided that if an Exercise Notice
with respect to such Conversion Date has not been delivered to the Seller prior
to the first Trading Day of the Conversion Reference Period applicable to such
Conversion Date, the Net Share Settlement Amount for such Conversion Date shall
be adjusted by the Calculation Agent to account for the reduced number of
Trading Days from the delivery of the Exercise Notice to the end of the
applicable Conversion Reference Period with respect to such Conversion Date. No
reduction of the Net Share Settlement Amount shall reduce the Net Share
Settlement Amount below zero.
 
   
Net Cash Settlement Amount:
  For each Conversion Date, an amount equal to the cash delivered by the Buyer
in excess of the principal amount of the applicable Reference Notes for such
Conversion Date under the Note Indenture multiplied by the Applicable Portion of
the Reference Notes, provided that such cash amount shall be determined
excluding any cash that Counterparty is obligated to deliver to holders of the
applicable Reference Notes as a result of any adjustments to the Conversion Rate
resulting from (i) a discretionary adjustment to the Conversion Rate by
Counterparty or (ii) an adjustment to the Conversion Rate as a result of a
fundamental change or change of control as described in the Note Indenture.
 
   
Adjustments:
   
 
   
Method of Adjustment:
  Calculation Agent Adjustment; provided that the terms of this Transaction
shall be adjusted in a manner consistent with adjustments of the Conversion Rate
of the Reference Notes as provided in the Note Indenture; provided further
(without limitation of the provisions set forth above under “Net Share
Settlement” and “Net Cash Settlement Amount”) that no adjustment in respect of
any Potential Adjustment Event or Extraordinary Event shall be made hereunder as
a result of any adjustments to the Conversion Rate resulting from (i) a
discretionary adjustment to the Conversion Rate by Counterparty or (ii) an

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  adjustment to the Conversion Rate as a result of a “Make Whole Premium” in
connection with a fundamental change or change of control as described in the
Note Indenture.
 
   
Extraordinary Events:
   
 
   
Consequences for Merger Events:
   
 
   
     Share-for-Share:
  The Transaction will be adjusted consistent with the Reference Notes as
provided in the Note Indenture.
 
   
     Share-for-Other:
  The Transaction will be adjusted consistent with the Reference Notes as
provided in the Note Indenture.
 
   
     Share-for-Combined:
  The Transaction will be adjusted consistent with the Reference Notes as
provided in the Note Indenture.
 
   
Tender Offer:
  Applicable
 
   
Consequences of Tender Offers:
  The Transaction will be adjusted consistent with the Reference Notes as
provided in the Note Indenture.
 
   
Nationalization, Insolvency and Delisting:
  Cancellation and Payment (Calculation Agent Determination), provided Buyer
shall determine whether payment shall be settled in cash or Shares. In addition
to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will
also constitute a Delisting if the Exchange is located in the United States and
the Shares are not immediately re-listed, re-traded or re-quoted on any of the
New York Stock Exchange, the American Stock Exchange or the NASDAQ National
Market System (or their respective successors, including without limitation the
NASDAQ Global Market and NASDAQ Global Select Market); if the Shares are
immediately re-listed, re-traded or re-quoted on any such exchange or quotation
system, such exchange or quotation system shall thereafter be deemed to be the
Exchange.
Additional Disruption Events:
   
 
   
     Change in Law:
  Applicable
 
   
     Failure to Deliver:
  Applicable. If there is inability in the market to deliver Shares due to
illiquidity on a day that would have been a Settlement Date, then the Settlement
Date shall be the first succeeding Exchange Business Day on which there is no
such inability to deliver, but in no such event shall the Settlement Date be
later than the date that is two (2) Exchange Business Days immediately following
what would have been the Settlement Date but for such inability to deliver.
 
   
     Insolvency Filing:
  Applicable
 
   
     Hedging Disruption Event:
  Applicable
 
   
     Increased Cost of Hedging:
  Not Applicable
 
   
     Loss of Stock Borrow:
  Not Applicable

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     Increased Cost of Stock Borrow:
  Not Applicable
 
   
     Hedging Party:
  Seller
 
   
     Determining Party:
  Seller
 
   
Non-Reliance:
  Applicable
 
   
Agreements and Acknowledgments
Regarding Hedging Activities:
  Applicable
 
   
Additional Acknowledgments:
  Applicable

Additional Agreements, Representations and Covenants of Buyer, Etc.:

1.   Buyer hereby represents and warrants to Seller, on each day from the Trade
Date to and including the earlier of (i) February 16, 2007 and (ii) the date by
which Seller is able to initially complete a hedge of its position relating to
this Transaction, that:

  a.   it will effect (and cause any “affiliated purchaser” (as defined in
Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) to effect) any purchases, direct or indirect (including by
means of any cash-settled or other derivative instrument), of Shares or any
security convertible into or exchangeable or exercisable for Shares solely
through Agent in a manner that would not cause any purchases by Seller of its
hedge in connection with this Transaction not to comply applicable securities
laws;     b.   it will not engage in, or be engaged in, any “distribution,” as
such term is defined in Regulation M promulgated under the Exchange Act, other
than a distribution meeting the requirements of the exceptions set forth in
sections 101(b)(10) and 102(b)(7) of Regulation M (it being understood that
Buyer makes no representation pursuant to this clause in respect of any action
or inaction taken by Seller or any initial purchaser of the Reference Notes);
and     c.   Buyer has publicly disclosed all material information necessary for
Buyer to be able to purchase or sell Shares in compliance with applicable
federal securities laws and that it has publicly disclosed all material
information with respect to its condition (financial or otherwise).

2.   If Buyer would be obligated to receive or pay cash from or to Seller
pursuant to the terms of this Agreement for any reason without having had the
right (other than pursuant to this paragraph (2)) to elect to receive or deliver
Shares in satisfaction of such payment obligation, then Buyer may elect that
Seller deliver to or receive from Buyer (as the case may be) a number of Shares
(or, if the Shares have been converted into other securities or property in
connection with an Extraordinary Event, a number or amount of such other
securities or property as a holder of Shares would be entitled to receive upon
the consummation or closing of such Extraordinary Event) having a cash value
equal to the amount of such payment obligation (such number or amount of Shares
or other securities or property to be delivered to be determined by the
Calculation Agent acting in a commercially reasonable manner to determine the
number of Shares or number or amount of such other securities or property that
could be purchased over a reasonable period of time with the cash equivalent of
such payment obligation or that must be sold (into the public markets or in
private transactions, depending on the status of the Shares) to obtain the cash
equivalent of such payment obligation). Settlement relating to any delivery of
Shares or other securities or property pursuant to this paragraph (2) shall
occur within a reasonable period of time.       Buyer hereby agrees that with
respect to any Shares delivered to Seller pursuant to this paragraph (2): (i) in
order to allow Seller to sell the Shares in a registered offering, make
available to Seller an effective registration statement under the Securities Act
to cover the resale of such Shares and (a) enter into an agreement, in form and
substance satisfactory to Seller, substantially in the form of an underwriting

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    agreement for a registered offering, (b) provide accountant’s “comfort”
letters in customary form for registered offerings of equity securities,
(c) provide disclosure opinions of nationally recognized outside counsel to
Buyer reasonably acceptable to Seller, (d) provide other customary opinions,
certificates and closing documents customary in form for registered offerings of
equity securities and (e) afford Seller a reasonable opportunity to conduct a
“due diligence” investigation with respect to Buyer customary in scope for
underwritten offerings of equity securities; provided, however, that if Seller,
in its sole reasonable discretion, is not satisfied with access to due diligence
materials, the results of its due diligence investigation, or the procedures and
documentation for the registered offering referred to above, then clause (ii) of
this paragraph shall apply: (ii) in order to allow Seller to sell the Shares in
a private placement, enter into a private placement agreement substantially
similar to private placement purchase agreements customary for private
placements of equity securities, in form and substance satisfactory to Seller,
including customary representations, covenants, blue sky and other governmental
filings and/or registrations, indemnities to Seller, due diligence rights (for
Seller or any designated buyer of the Shares from Seller), opinions and
certificates and such other documentation as is customary for private placements
agreements, all reasonably acceptable to Seller (in which case, the Calculation
Agent shall make any adjustments to the terms of the Transaction that are
necessary, by commercially reasonable means, to compensate Seller for any
discount from the public market price of the Shares incurred on the sale of
Shares in a private placement), provided, however, that Counterparty shall
always have the right to deliver unregistered Shares.       Notwithstanding
anything herein or in the Agreement to the contrary, the number of Shares that
may be delivered at settlement by Counterparty shall not exceed 8,400,000 at any
time (“Maximum Deliverable Share Amount”), as adjusted by MLI to account for any
subdivision, stock-split, stock combination, reclassification or similar
dilutive or anti-dilutive event with respect to the Shares.       Counterparty
represents and warrants that the number of Available Shares as of the Trade Date
is greater than the Maximum Deliverable Share Amount. Counterparty covenants and
agrees that Counterparty shall not take any action of corporate governance or
otherwise to reduce the number of Available Shares below the Maximum Deliverable
Share Amount.       For this purpose, “Available Shares” means the number of
Shares Counterparty currently has authorized (but not issued and outstanding)
less the maximum number of Shares that may be required to be issued by
Counterparty in connection with stock options, convertibles, and other
commitments of Counterparty that may require the issuance or delivery of Shares
in connection therewith.   3.   Notwithstanding any provision in the Note
Indenture, this Confirmation or the Agreement to the contrary, each of the
applicable Conversion Rate (as such term is used in the Note Indenture), the Net
Share Settlement Amount and the Net Cash Settlement Amount shall be determined
without regard to any provisions in the Note Indenture allowing Counterparty to
unilaterally increase the applicable Conversion Rate.   4.   Counterparty is
not, and after giving effect to the Transaction contemplated hereby, will not
be, an “investment company” as such term is defined in the Investment Company
Act of 1940, as amended.   5.   As of the Trade Date and each date on which a
payment or delivery is made by Counterparty hereunder, (i) the assets of
Counterparty at their fair valuation exceed the liabilities of Counterparty,
including contingent liabilities; (ii) the capital of Counterparty is adequate
to conduct its business; and (iii) Counterparty has the ability to pay its debts
and other obligations as such obligations mature and does not intend to, or
believe that it will, incur debt or other obligations beyond its ability to pay
as such obligations mature.

Additional Termination Events:
The occurrence of any of the following shall be an Additional Termination Event
for purposes of this Transaction:

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1.   Amendment Event. If an Amendment Event (as defined below) occurs, this
Transaction shall terminate in its entirety and, notwithstanding anything to the
contrary herein, no payments shall be required hereunder in connection with such
Amendment Event. Notwithstanding the foregoing, if Counterparty so requests, MLI
agrees to consider waiving such consequences of an Amendment Event and modifying
the terms of the Transaction in a commercially reasonable manner in order to
enable the Transaction to continue after the occurrence of such Amendment Event.
      “Amendment Event” means that the Counterparty amends, modifies,
supplements or obtains a waiver of (a) any term of the Note Indenture or the
Reference Notes relating to the principal amount, coupon, maturity, repurchase
obligation of the Counterparty or redemption right of the Counterparty, (b) any
material term relating to conversion of the Reference Notes (including changes
to the conversion price, conversion settlement dates or conversion conditions)
or (c) any term that would require consent of the holders of 100% of the
principal amount of the Reference Notes to amend;   2.   Repayment Event. If a
Repayment Event (as defined below) occurs, this Transaction shall terminate only
to the extent of the principal amount of Reference Notes that cease to be
outstanding as a result of such Repayment Event and, notwithstanding anything to
the contrary herein, no payments shall be required hereunder in connection with
such Repayment Event.       “Repayment Event” means that (a) any Reference Notes
are repurchased (whether in connection with or as a result of a change of
control, howsoever defined, or for any other reason) by the Counterparty,
(b) any Reference Notes are delivered to the Counterparty in exchange for
delivery of any property or assets of the Counterparty or any of its
subsidiaries (howsoever described), other than as a result of and in connection
with a Conversion Date, (c) any principal of any of the Reference Notes is
repaid prior to the Final Maturity Date (as defined in the Note Indenture)
(whether following acceleration of the Reference Notes or otherwise), provided
that no payments of cash made in respect of the conversion of a Reference Note
shall be deemed a payment of principal under this clause (c), (d) any Reference
Notes are exchanged by or for the benefit of the holders thereof for any other
securities of the Counterparty or any of its Affiliates (or any other property,
or any combination thereof) pursuant to any exchange offer or similar
transaction or (e) any of the Reference Notes is surrendered by Counterparty to
the trustee for cancellation, other than registration of a transfer of such
Reference Notes or as a result of and in connection with a Conversion Date; or  
3.   Initial Purchase Event. If an Initial Purchase Event (as defined below)
occurs, this Transaction shall terminate automatically in its entirety and,
notwithstanding anything to the contrary herein, only the payments specified
below shall be required hereunder in connection with such Initial Purchase
Event.       “Initial Purchase Event” means that the transactions contemplated
by the Purchase Agreement shall fail to close for any reason.       If an
Initial Purchase Event occurs for any reason other than a breach of the Purchase
Agreement by the Initial Purchasers, then all payments previously made hereunder
shall be returned to the person making such payment, including the Premium, less
an amount equal to the product of (a) 4,725,900 Shares, (b) 0.50 per Share and
(c) an amount equal to the excess, if any, of the closing price of the Shares on
the Trade Date over the closing price of the Shares on the date of the
Termination Event (the “Break Expense”); provided that any negative amount shall
be replaced by zero and provided further that to the extent the Premium has not
been paid, Buyer shall promptly pay Seller the Break Expense. Seller and Buyer
agree that actual damages would be difficult to ascertain under these
circumstances and that the amount of liquidated damages resulting from the
determination in the preceding sentence is a good faith estimate of such damages
and not a penalty.       If an Initial Purchase Event occurs due to a breach of
the Purchase Agreement by the Initial Purchaser, then all payments previously
made hereunder, including the Premium, promptly shall be returned to the person
making such payment and no payments shall be required hereunder in connection
with such Initial Purchase Event.

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Staggered Settlement:
If Seller determines reasonably and in good faith that the number of Shares
required to be delivered to Buyer hereunder on any Settlement Date would exceed
8.0% of all outstanding Shares, then Seller may, by notice to Buyer on or prior
to such Settlement Date (a “Nominal Settlement Date”), elect to deliver the
Shares comprising the related Net Share Settlement Amount on two or more dates
(each, a “Staggered Settlement Date”) or at two or more times on the Nominal
Settlement Date as follows:

1.   in such notice, Seller will specify to Buyer the related Staggered
Settlement Dates (the first of which will be such Nominal Settlement Date and
the last of which will be no later than twenty (20) Trading Days following such
Nominal Settlement Date) or delivery times and how it will allocate the Shares
it is required to deliver hereunder among the Staggered Settlement Dates or
delivery times;

2.   the aggregate number of Shares that Seller will deliver to Buyer hereunder
on all such Staggered Settlement Dates or delivery times will equal the number
of Shares that Seller would otherwise be required to deliver on such Nominal
Settlement Date; and

3.   the Net Share Settlement terms will apply on each Staggered Settlement
Date, except that the Shares comprising the Net Share Settlement Amount will be
allocated among such Staggered Settlement Dates or delivery times as specified
by Seller in the notice referred to in clause (1) above.

Notwithstanding anything herein to the contrary, solely in connection with a
Staggered Settlement Date, Seller shall be entitled to deliver Shares to Buyer
from time to time prior to the date on which Seller would be obligated to
deliver them to Buyer pursuant to Net Share Settlement terms set forth above,
and Buyer agrees to credit all such early deliveries against Seller’s
obligations hereunder in the direct order in which such obligations arise. No
such early delivery of Shares will accelerate or otherwise affect any of Buyer’s
obligations to Seller hereunder.
Disposition of Hedge Shares:
Seller intends to conduct its hedging activities in connection with the
Transaction in a manner that it believes, based on its reasonable judgment, will
not require Counterparty to register under the Securities Act or any state
securities laws the Shares (the “Hedge Shares”) acquired by Seller for the
purpose of hedging its obligations pursuant to the Transaction. In addition,
Counterparty hereby agrees that if, in the reasonable judgment of Seller based
on advice of counsel, the Hedge Shares cannot be sold in the U.S. public market
by Seller without registration under the Securities Act, Counterparty shall, at
its election: (i) in order to allow Seller to sell the Hedge Shares in a
registered offering, make available to Seller an effective registration
statement under the Securities Act to cover the resale of such Hedge Shares and
(a) enter into an agreement, in form and substance satisfactory to Seller,
substantially in the form of an underwriting agreement for a registered
offering, (b) provide accountant’s “comfort” letters in customary form for
registered offerings of equity securities, (c) provide disclosure opinions of
nationally recognized outside counsel to Counterparty reasonably acceptable to
Seller, (d) provide other customary opinions, certificates and closing documents
customary in form for registered offerings of equity securities and (e) afford
Seller a reasonable opportunity to conduct a “due diligence” investigation with
respect to Counterparty customary in scope for underwritten offerings of equity
securities; provided, however, that if Seller, in its sole reasonable
discretion, is not satisfied with access to due diligence materials, the results
of its due diligence investigation, or the procedures and documentation for the
registered offering referred to above, then clause (ii) or clause (iii) of this
Section shall apply at the election of Counterparty; (ii) in order to allow
Seller to sell the Hedge Shares in a private placement, enter into a private
placement agreement substantially similar to private placement purchase
agreements customary for private placements of equity securities, in form and
substance satisfactory to Seller, including customary representations,
covenants, blue sky and other governmental filings and/or registrations,
indemnities to Seller, due diligence rights (for Seller or any designated buyer
of the Hedge Shares from Seller), opinions and certificates and such other
documentation as is customary for private placements agreements, all reasonably
acceptable to Seller (in which case, the Calculation Agent shall make any
adjustments to the terms of the Transaction that are necessary, by commercially
reasonable means, to compensate Seller for any discount from the public market
price of the Shares incurred on the sale of Hedge Shares in a private
placement); or (iii) purchase the Hedge Shares from Seller at the VWAP Price on
such Exchange Business Days, and in the amounts, requested by Seller. “VWAP
Price” means, on any Exchange Business Day, the per Share volume-weighted
average price as displayed under the heading

9

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“Bloomberg VWAP” on Bloomberg page AXE.N <equity> VAP (or any successor thereto)
in respect of the period from 9:45 a.m. to 3:45 p.m. (New York City time) on
such Exchange Business Day (or if such volume-weighted average price is
unavailable, the market value of one Share on such Exchange Business Day, as
determined by the Calculation Agent using a volume-weighted method).
Repurchase Notices:
Counterparty shall, on any day on which Counterparty effects any repurchase of
Shares, promptly give Seller a written notice of such repurchase (a “Repurchase
Notice”) on such day if following such repurchase, the Notice Percentage as
determined on such day is (i) greater than 6% and (ii) greater by 0.5% than the
Notice Percentage included in the immediately preceding Repurchase Notice (or,
in the case of the first such Repurchase Notice, greater than the Notice
Percentage as of the date hereof). In the event that Counterparty fails to
provide Seller with a Repurchase Notice on the day and in the manner specified
in this section, then Counterparty agrees to indemnify and hold harmless Seller,
its affiliates and their respective directors, officers, employees, agents and
controlling persons (Seller and each such person being an “Indemnified Party”)
from and against any and all losses, claims, damages and liabilities (or actions
in respect thereof), joint or several, to which such Indemnified Party may
become subject under applicable securities laws, including without limitation,
Section 16 of the Exchange Act, relating to or arising out of such failure. If
for any reason the foregoing indemnification is unavailable to any Indemnified
Party or insufficient to hold harmless any Indemnified Party, then Counterparty
shall contribute, to the maximum extent permitted by law, to the amount paid or
payable by the Indemnified Party as a result of such loss, claim, damage or
liability. In addition, Counterparty will reimburse any Indemnified Party for
all reasonable and documented expenses (including reasonable counsel fees and
expenses) as they are incurred (after notice to Counterparty) in connection with
the investigation of, preparation for or defense or settlement of any pending or
threatened claim or any action, suit or proceeding arising therefrom, whether or
not such Indemnified Party is a party thereto and whether or not such claim,
action, suit or proceeding is initiated or brought by or on behalf of
Counterparty. This indemnity shall survive the completion of the Transaction
contemplated by this Confirmation and any assignment and delegation of the
Transaction made pursuant to this Confirmation or the Agreement shall inure to
the benefit of any permitted assignee of Seller. Counterparty will not be liable
under this Indemnity provision to the extent that any loss, claim, damage,
liability or expense is found in a final judgment by a court to have resulted
from MLI’s gross negligence or willful misconduct. The “Notice Percentage” as of
any day is the fraction, expressed as a percentage, (i) the numerator of which
is the product of the number of outstanding Reference Notes and the number of
Shares per Reference Note equal to the Conversion Rate (as defined in the Note
Indenture) and (ii) the denominator of which is the number of Shares outstanding
on such day.

     
Compliance with Securities Laws:
  Each party represents and agrees that, in connection with this Transaction and
all related or contemporaneous sales and purchases of Shares by either party,
Buyer, or in the case of Seller, the person(s) that directly influences the
specific trading decisions of Seller, has complied and will comply with the
applicable provisions of the Securities Act of 1933, as amended (the “Securities
Act”), and the Exchange Act, and the rules and regulations each thereunder,
including, without limitation, Rules 10b-5, 10b-18 and 13e and Regulation M
under the Exchange Act; provided that each party shall be entitled to rely
conclusively on any information communicated by the other party concerning such
other party’s market activities.
 
   
 
  Each party acknowledges that the offer and sale of the Transaction to it is
intended to be exempt from registration under the Securities Act by virtue of
Section 4(2) thereof. Accordingly, Buyer represents and warrants to Seller that
(i) it has the financial ability to bear the economic risk of its investment in
the Transaction and is able to bear a total loss of its investment, (ii) it is
an “accredited investor” as that term is defined in Regulation D as promulgated
under the Securities Act and (iii) the disposition of the Transaction is
restricted under this Confirmation, the Securities Act and state securities
laws.
 
   
 
  Buyer further represents:

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  (a) Buyer is not entering into this Transaction to create actual or apparent
trading activity in the Shares (or any security convertible into or exchangeable
for Shares) or to raise or depress or otherwise manipulate the price of the
Shares (or any security convertible into or exchangeable for Shares);
 
   
 
  (b) Buyer acknowledges that as of the date hereof and without limiting the
generality of Section 13.1 of the Equity Definitions, Seller is not making any
representations or warranties with respect to the treatment of the Transaction
under FASB Statements 149 or 150, EITF Issue No. 00-19 (or any successor issue
statements) or under FASB’s Liabilities & Equity Project.

              Account Details:   Account for payments and
deliveries to Buyer:   Name:   Anixter International Inc.
 
      Bank:   Bank of America
 
      ABA#:   026-009-593
 
      Swift:   BOFAUS3N
 
      A/C:   8666100213
 
                Account for payment to Seller:   Chase Manhattan Bank, New York
 
          ABA#: 021-000-021
 
          FAO: ML Equity Derivatives
 
          A/C: 066213118

     
Bankruptcy Rights:
  In the event of Buyer’s bankruptcy, Seller’s rights in connection with this
Transaction shall not exceed those rights held by common shareholders. For the
avoidance of doubt, the parties acknowledge and agree that Seller’s rights with
respect to any other claim arising from this Transaction prior to Buyer’s
bankruptcy shall remain in full force and effect and shall not be otherwise
abridged or modified in connection herewith.
 
   
Set-Off:
  Each party waives any and all rights it may have to set-off, whether arising
under any agreement, applicable law or otherwise.
 
   
Collateral:
  None.
 
   
Transfer:
  Buyer shall have the right to assign its rights and delegate its obligations
hereunder with respect to any portion of this Transaction, subject to Seller’s
consent, such consent not to be unreasonably withheld; provided that such
assignment or transfer shall be subject to receipt by Seller of opinions and
documents reasonably satisfactory to Seller and effected on terms reasonably
satisfactory to the Seller with respect to any legal and regulatory requirements
relevant to the Seller; provided further that Buyer shall not be released from
its obligation to deliver a Exercise Notice. Seller may transfer any of its
rights or delegate its obligations under this Transaction with the prior written
consent of Buyer, which consent shall not be unreasonably withheld.
 
   
Regulation:
  Seller is regulated by The Securities and Futures Authority Limited.

Matters Relating to Agent:

1.   MLPFS will be responsible for the operational aspects of the Transactions
effected through it, such as record keeping, reporting, and confirming
Transactions to Buyer and Seller;

2.   Unless Seller is a “major U.S. institutional investor,” as defined in
Rule 15a-6 of the Exchange Act, neither Buyer nor Seller will contact the other
without the direct involvement of MLPFS;

3.   MLPFS’s sole role under this Agreement and with respect to any Transaction
is as an agent of Buyer and Seller on a disclosed basis and MLPFS shall have no
responsibility or liability to Buyer or Seller hereunder

11

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    except for gross negligence or willful misconduct in the performance of its
duties as agent. MLPFS is authorized to act as agent for Buyer, but only to the
extent expressly required to satisfy the requirements of Rule 15a-6 under the
Exchange Act in respect of the Options described hereunder. MLPFS shall have no
authority to act as agent for Buyer generally or with respect to transactions or
other matters governed by this Agreement, except to the extent expressly
required to satisfy the requirements of Rule 15a-6 or in accordance with express
instructions from Buyer.

ISDA Master Agreement:
With respect to the Agreement, Seller and Counterparty each agree as follows:
“Specified Entity” means in relation to Seller and in relation to Counterparty
for purposes of this Transaction: Not applicable.
The definition of “Specified Transaction” in Section 14 of this Agreement is
hereby amended by adding the text “commodity transaction, credit derivative
transaction, repurchase or reverse purchase transaction, securities lending
transaction, futures transaction, prime brokerage or margin lending transaction”
after the words “foreign exchange transaction” in the sixth line thereof and by
replacing the words “any other similar transaction” in the eighth line thereof
with the text “any other transaction between the parties”. “Specified
Transaction” shall exclude any default under a Specified Transaction if caused
solely by the general unavailability of the currency in which payments under
such Specified Transaction are denominated due to exchange controls or other
governmental action. “Specified Transaction” shall also exclude equity
transactions in which Shares represent the underlying equity.
The “Cross Default” provisions of Section 5(a)(vi) of the Agreement will not
apply to Seller and will not apply to Counterparty.
The “Credit Event Upon Merger” provisions of Section 5(b)(iv) of the Agreement
will not apply to Seller and Counterparty.
The “Automatic Early Termination” provision of Section 6(a) of the Agreement
will not apply to Seller or to Counterparty.
Payments on Early Termination. For the purpose of Section 6(e) of the Agreement:
(i) Loss shall apply; and (ii) the Second Method shall apply.
“Termination Currency” means USD.
Tax Representations.

(a)   Payer Representations. For the purpose of Section 3(e) of the Agreement,
each party represents to the other party that it is not required by any
applicable law, as modified by the practice of any relevant governmental revenue
authority, of any Relevant Jurisdiction to make any deduction or withholding for
or on account of any Tax from any payment (other than interest under
Section 2(e), 6(d)(ii), or 6(e) of the Agreement) to be made by it to the other
party under the Agreement. In making this representation, each party may rely on
(i) the accuracy of any representations made by the other party pursuant to
Section 3(f) of the Agreement, (ii) the satisfaction of the agreement contained
in Section 4(a)(i) or 4(a)(iii) of the Agreement, and the accuracy and
effectiveness of any document provided by the other party pursuant to
Section 4(a)(i) or 4(a)(iii) of the Agreement, and (iii) the satisfaction of the
agreement of the other party contained in Section 4(d) of the Agreement;
provided that it will not be a breach of this representation where reliance is
placed on clause (ii) above and the other party does not deliver a form or
document under Section 4(a)(iii) of the Agreement by reason of material
prejudice to its legal or commercial position.

(b)   Payee Representations. For the purpose of Section 3(f) of the Agreement,
each party makes the following representations to the other party:

  (i)   Seller represents that it is a corporation organized under the laws of
England and Wales.

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  (ii)   Counterparty represents that it is a corporation incorporated in
Delaware.

Delivery Requirements. For the purpose of Sections 4(a)(i) and (ii) of the
Agreement, each party agrees to deliver the following documents:

(a)   Tax forms, documents or certificates to be delivered are:       Each party
agrees to complete (accurately and in a manner reasonably satisfactory to the
other party), execute, and deliver to the other party, United States Internal
Revenue Service Form W-9 or W-8 BEN, or any successor of such form(s):
(i) before the first payment date under this agreement; (ii) promptly upon
reasonable demand by the other party; and (iii) promptly upon learning that any
such form(s) previously provided by the other party has become obsolete or
incorrect.

(b)   Other documents to be delivered:

                          Covered by Party Required to           Section 3(d)
Deliver Document   Document Required to be Delivered   When Required  
Representation
Counterparty
  Evidence of the authority and true signatures of each official or
representative signing this Confirmation   Upon or before execution and delivery
of this Confirmation   Yes
 
           
Counterparty
  Certified copy of the resolution of the Board of Directors or equivalent
document authorizing the execution and delivery of this Confirmation and such
other certificates as Seller shall reasonably request   Upon or before execution
and delivery of this Confirmation   Yes
 
           
Seller
  Guarantee of its Credit Support Provider, substantially in the form of
Exhibit A attached hereto, together with evidence of the authority and true
signatures of the signatories, if applicable   Upon or before execution and
delivery of this Confirmation   Yes

Additional Notice Requirements. Counterparty hereby agrees to promptly deliver
to Seller a copy of all notices and other communications required or permitted
to be given to the holders of any Reference Notes pursuant to the terms of the
Note Indenture on the dates so required or permitted in the Note Indenture and
all other notices given and other communications made by Counterparty in respect
of the Reference Notes to holders of any Reference Notes. Counterparty further
covenants to Seller that it shall promptly notify Seller of each Conversion
Date, Amendment Event (including in such notice a detailed description of any
such amendment) and Repayment Event (identifying in such notice the nature of
such Repayment Event and the principal amount at maturity of Reference Notes
being paid).
Addresses for Notices. For the purpose of Section 12(a) of the Agreement:
Address for notices or communications to Seller for all purposes:

     
Address:
  Merrill Lynch International
 
  Merrill Lynch Financial Centre
 
  2 King Edward Street
 
  London EC1A 1HQ
Attention:
  Manager, Fixed Income Settlements

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Facsimile No.:
  44 207 995 2004
Telephone No.:
  44 207 995 3769

Additionally, a copy of all notices pursuant to Sections 5, 6, and 7 as well as
any changes to Counterparty’s address, telephone number or facsimile number
should be sent to:

     
Address:
  GMI Counsel
 
  Merrill Lynch World Headquarters
 
  4 World Financial Center
 
  New York, New York 10080
Attention:
  Global Equity Derivatives
Facsimile No.:
  (212) 449-6576
Telephone No.:
  (212) 449-6309

Address for notices or communications to Counterparty for all purposes:

     
Address:
  Anixter International Inc.
 
  2301 Patriot Blvd.
 
  Glenview, Illinois 60026
Attention:
  Treasurer
Telephone No.:
  (224) 521-8000
Facsimile No.:
  (224) 521-8990

Process Agent. For the purpose of Section 13(c) of the Agreement, Seller
appoints as its Process Agent:

     
Address:
  Merrill Lynch, Pierce, Fenner & Smith Incorporated
 
  222 Broadway, 16th Floor
 
  New York, New York 10038
Attention:
  Litigation Department

     Counterparty does not appoint a Process Agent.
Multibranch Party. For the purpose of Section 10(c) of the Agreement: Neither
Seller nor Counterparty is a Multibranch Party.
Calculation Agent. The Calculation Agent is Seller, whose judgments,
determinations and calculations in this Transaction and any related hedging
transaction between the parties shall be made in good faith and in a
commercially reasonable manner. The Calculation Agent shall, no later than the
5th Business Day following any calculation, adjustment or other determination
made by it hereunder, provide the parties with a statement showing, in
reasonable detail, the computations (including any relevant quotations) by which
it has determined any amount payable or deliverable under, or any adjustment to
the terms of, this Transaction.
Credit Support Document.
Seller: Guarantee of ML & Co. in the form attached hereto as Exhibit A.
Counterparty: Not Applicable
Credit Support Provider.
With respect to Seller: ML & Co.
With respect to Counterparty: Not Applicable.

14

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Governing Law. This Confirmation will be governed by, and construed in
accordance with, the laws of the State of New York.
Waiver of Jury Trial. Each party waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any suit,
action or proceeding relating to this Transaction. Each party (i) certifies that
no representative, agent or attorney of the other party has represented,
expressly or otherwise, that such other party would not, in the event of such a
suit, action or proceeding, seek to enforce the foregoing waiver and
(ii) acknowledges that it and the other party have been induced to enter into
this Transaction, as applicable, by, among other things, the mutual waivers and
certifications provided herein.
Netting of Payments. The provisions of Section 2(c) of the Agreement shall not
be applicable to this Transaction.
Basic Representations. Section 3(a) of the Agreement is hereby amended by the
deletion of “and” at the end of Section 3(a)(iv); the substitution of a
semicolon for the period at the end of Section 3(a)(v) and the addition of
Sections 3(a)(vi), as follows:
Eligible Contract Participant; Line of Business. Each party agrees and
represents that it is an “eligible contract participant” as defined in
Section 1a(12) of the U.S. Commodity Exchange Act, as amended (“CEA”), this
Agreement and the Transaction thereunder are subject to individual negotiation
by the parties and have not been executed or traded on a “trading facility” as
defined in Section 1a(33) of the CEA, and it has entered into this Confirmation
and this Transaction in connection with its business or a line of business
(including financial intermediation), or the financing of its business.
Acknowledgements:

(a)   The parties acknowledge and agree that there are no other representations,
agreements or other undertakings of the parties in relation to this Transaction,
except as set forth in this Confirmation.   (b)   The parties hereto intend for:

  (i)   this Transaction to be a “securities contract” as defined in
Section 741(7) of Title 11 of the United States Code (the “Bankruptcy Code”),
qualifying for the protections under Section 555 of the Bankruptcy Code;    
(ii)   a party’s right to liquidate this Transaction and to exercise any other
remedies upon the occurrence of any Event of Default under the Agreement with
respect to the other party to constitute a “contractual right” as defined in the
Bankruptcy Code;     (iii)   all payments for, under or in connection with this
Transaction, all payments for the Shares and the transfer of such Shares to
constitute “settlement payments” as defined in the Bankruptcy Code.

Amendment of Section 6(d)(ii). Section 6(d)(ii) of the Agreement is modified by
deleting the words “on the day” in the second line thereof and substituting
therefore “on the day that is three Local Business Days after the day.”
Section 6(d)(ii) is further modified by deleting the words “two Local Business
Days” in the fourth line thereof and substituting therefore “three Local
Business Days.”
Amendment of Definition of Reference Market-Makers. The definition of “Reference
Market-Makers” in Section 14 is hereby amended by adding in clause (a) after the
word “credit” and before the word “and” the words “or to enter into transactions
similar in nature to Transactions.”
Consent to Recording. Each party consents to the recording of the telephone
conversations of trading and marketing personnel of the parties and their
Affiliates in connection with this Confirmation. To the extent that one party
records telephone conversations (the “Recording Party”) and the other party does
not (the “Non-Recording Party”), the Recording Party shall in the event of any
dispute, make a complete and unedited copy of such party’s

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tape of the entire day’s conversations with the Non-Recording Party’s personnel
available to the Non-Recording Party. The Recording Party’s tapes may be used by
either party in any forum in which a dispute is sought to be resolved and the
Recording Party will retain tapes for a consistent period of time in accordance
with the Recording Party’s policy unless one party notifies the other that a
particular transaction is under review and warrants further retention.
Disclosure. Each party hereby acknowledges and agrees that Seller has authorized
Counterparty to disclose this Transaction and any related hedging transaction
between the parties if and to the extent that Counterparty reasonably determines
(after consultation with Seller) that such disclosure is required by law or by
the rules of the New York Stock Exchange.
Severability. If any term, provision, covenant or condition of this
Confirmation, or the application thereof to any party or circumstance, shall be
held to be invalid or unenforceable in whole or in part for any reason, the
remaining terms, provisions, covenants, and conditions hereof shall continue in
full force and effect as if this Confirmation had been executed with the invalid
or unenforceable provision eliminated, so long as this Confirmation as so
modified continues to express, without material change, the original intentions
of the parties as to the subject matter of this Confirmation and the deletion of
such portion of this Confirmation will not substantially impair the respective
benefits or expectations of parties to this Agreement; provided, however, that
this severability provision shall not be applicable if any provision of
Section 2, 5, 6 or 13 of the Agreement (or any definition or provision in
Section 14 to the extent that it relates to, or is used in or in connection with
any such Section) shall be so held to be invalid or unenforceable.
Affected Parties. For purposes of Section 6(e) of the Agreement, each party
shall be deemed to be an Affected Party in connection with Illegality and any
Tax Event.
[Signatures follow on separate page]

16

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Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.

            Very truly yours,

MERRILL LYNCH INTERNATIONAL
      By:   /s/ Fran Jacobsen         Name:   Fran Jacobsen        Title:      
 

Confirmed as of the date first above written:
ANIXTER INTERNATIONAL INC.

         
By:
  /s/ Rod Shoemaker    
Name:
 
 
Rod Shoemaker    
Title:
  VP — Treasurer    

Acknowledged and agreed as to matters to the Agent:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
Solely in its capacity as Agent hereunder

         
By:
  /s/ Brian Carroll    
Name:
 
 
Brian Carroll    
Title:
       

17

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GUARANTEE OF MERRILL LYNCH & CO., INC.
     FOR VALUE RECEIVED, receipt of which is hereby acknowledged, MERRILL LYNCH
& CO., INC., a corporation duly organized and existing under the laws of the
State of Delaware (“ML & Co.”), hereby unconditionally guarantees to Anixter
International Inc. (the “Company”), the due and punctual payment of any and all
amounts payable by Merrill Lynch International, a company organized under the
laws of England and Wales (“ML”), under the terms of the Confirmation of OTC
Convertible Note Hedge between the Company and ML (ML as Seller), dated as of
February 12, 2007 (the “Confirmation”), including, in case of default, interest
on any amount due, when and as the same shall become due and payable, whether on
the scheduled payment dates, at maturity, upon declaration of termination or
otherwise, according to the terms thereof. In case of the failure of ML
punctually to make any such payment, ML & Co. hereby agrees to make such
payment, or cause such payment to be made, promptly upon demand made by the
Company to ML & Co.; provided, however that delay by the Company in giving such
demand shall in no event affect ML & Co.’s obligations under this Guarantee.
This Guarantee shall remain in full force and effect or shall be reinstated (as
the case may be) if at any time any payment guaranteed hereunder, in whole or in
part, is rescinded or must otherwise be returned by the Company upon the
insolvency, bankruptcy or reorganization of ML or otherwise, all as though such
payment had not been made.
     This Guarantee shall be one of payment and not collection. ML & Co. hereby
agrees that its obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Confirmation; the absence of
any action to enforce the same; any waiver or consent by the Company concerning
any provisions thereof; the rendering of any judgment against ML or any action
to enforce the same; or any other circumstances that might otherwise constitute
a legal or equitable discharge of a guarantor or a defense of a guarantor. ML
covenants that this guarantee will not be discharged except by complete payment
of the amounts payable under the Confirmation. This Guarantee shall continue to
be effective if ML merges or consolidates with or into another entity, loses its
separate legal identity or ceases to exist.
     ML & Co. hereby waives diligence; presentment; protest; notice of protest,
acceleration, and dishonor; filing of claims with a court in the event of
insolvency or bankruptcy of ML; all demands whatsoever, except as noted in the
first paragraph hereof; and any right to require a proceeding first against ML.
     ML & Co. hereby certifies and warrants that this Guarantee constitutes the
valid obligation of ML & Co. and complies with all applicable laws.
     ML & Co. shall not exercise any rights that it may acquire by way of
subrogation as a result of a payment by it under this Guarantee at any time when
any of the obligations of ML guaranteed hereunder shall have become due and
remain unpaid. Any amount paid to ML & Co. in violation of the preceding
sentence shall be held for the benefit of the Company and shall forthwith be
paid to the Company to be credited and applied to such obligations of ML then
due and unpaid. Subject to the foregoing, upon payment of all such obligations
of ML, ML & Co. shall be subrogated to the rights of the Company against ML, and
the Company agrees to take at ML & Co.’s expense such steps as ML &Co. may
reasonably request to implement such subrogation.
     This Guarantee shall be governed by, and construed in accordance with, the
laws of the State of New York.
     This Guarantee becomes effective concurrent with the effectiveness of the
Confirmation, according to its terms.

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     IN WITNESS WHEREOF, ML & Co. has caused this Guarantee to be executed in
its corporate name by its duly authorized representative.

                  MERRILL LYNCH & CO., INC.    
 
           
 
  By:   /s/ Patricia Kroplewnicki    
 
     
 
Name: Patricia Kroplewnicki    
 
      Title: Designated Signatory    
 
      Date: February 13, 2007    

19