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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes þ No o

Anixter International Inc. (the “Company”), formerly known as Itel Corporation, which was incorporated in Delaware in 1967, is engaged in the distribution of communications and specialty wire and cable products and fasteners and other small parts (“C” class inventory components) through Anixter Inc. and its subsidiaries (collectively “Anixter”).

On July 8, 2005, the Company acquired Infast Group plc (“Infast”), a UK-based value-added distributor of fasteners and related products specializing in inventory logistics management programs directed at supporting the production lines of original equipment manufacturers across a broad spectrum of industries. Headquartered in Gloucester, England, Infast employs approximately 900 people located in thirty locations in the United Kingdom and the United States.

The Company is engaged in the distribution of communications and specialty wire and cable products and “C” class inventory components from top suppliers to contractors and installers and to end users, including manufacturers, natural resources companies, utilities and original equipment manufacturers. The Company is organized by geographic regions and, accordingly, has identified North America (United States and Canada), Europe and Emerging Markets (Asia Pacific and Latin America) as reportable segments. The Company obtains and coordinates financing, legal, tax, information technology and other related services, certain of which are rebilled to subsidiaries. Interest expense and other non-operating items are not allocated to the segments or reviewed on a segment basis.

Within each geographic segment, the Company organizes its sales teams based on the anticipated customer use or application of the products sold. Currently, the Company has dedicated enterprise cabling and security sales specialists (primarily copper and fiber cabling, connectivity, security products and related support and supply products), industrial wire and cable sales specialists (primarily power, control and instrumentation cabling) and OEM supply sales specialists (primarily direct production line feed programs of small components to original equipment manufacturers). All sales teams have access to the full array of products and services offered by the Company and all sales are serviced by the same operations, systems and support functions of the Company.

The Company is a leader in the provision of advanced inventory management services including procurement, just-in-time delivery, quality assurance testing, advisory engineering services, component kit production, small component assembly and e-commerce and electronic data interchange to a broad spectrum of customers. The Company’s comprehensive supply chain management solutions are designed to reduce customer procurement and management costs and enhance overall production efficiencies. Inventory management services are frequently provided under customer contracts for periods in excess of one year and include the interfacing of Anixter and customer information systems and the maintenance of dedicated distribution facilities.

Through a combination of its service capabilities and a portfolio of products from industry leading manufacturers, Anixter is the leading global distributor of data, voice, video and security network communication products and largest North American distributor of specialty wire and cable products. In addition, Anixter is a leading distributor of “C” class inventory components which are incorporated into a wide variety of end use applications and include screws, bolts, nuts, washers, pins, rings, fittings, springs, electrical connectors and similar small parts, many of which are specialized or highly engineered for particular applications.

The Company sells products to over 95,000 active customers. These customers include international, national, regional and local companies that include end users of the Company’s products, installers, integrators and resellers of the Company’s products as well as original equipment manufacturers who use the Company’s products as a component of their end product. Customers for the Company’s products cover all industry groups including manufacturing, telecommunications, internet service, finance, education, healthcare, transportation, utilities and government as well as contractors, installers, system integrators, value-added resellers, architects, engineers and wholesale distributors. The Company’s customer base is well-diversified with no single customer accounting for more than 10% of sales and no single end-market industry group accounting for more than 16% of sales.

Anixter sells over 325,000 products. These products include communications (voice, data, video and security) products used to connect personal computers, peripheral equipment, mainframe equipment, security equipment and various networks to each other. The products consist of an assortment of transmission media (copper and fiber optic cable), connectivity products, support and supply products, and security surveillance and access control products. These products are incorporated into enterprise networks, physical security networks, central switching offices, web hosting sites and remote transmission sites. In addition, Anixter provides industrial wire and cable products, including electrical and electronic wire and cable, control and instrumentation cable and coaxial cable that is used in a wide variety of maintenance, repair and construction-related applications. The Company also provides a wide variety of electrical and electronic wire and cable products, fasteners and other small components that are used by original equipment manufacturers in manufacturing a wide variety of products.

The Company sources products from over 4,000 suppliers. However, over 30% of Anixter’s dollar volume purchases in 2005 were from its five largest suppliers. An important element of Anixter’s overall business strategy is to develop and maintain close relationships with its key suppliers, which include the world’s leading manufacturers of communication cabling, connectivity, support and supply products, electrical wiring systems, and fasteners. Such relationships stress joint product planning, inventory management, technical support, advertising and marketing. In support of this strategy, Anixter does not compete with its suppliers in product design or manufacturing activities. Anixter also does not sell product that is privately labeled as either an Anixter brand or a brand name exclusive to Anixter. If any of these suppliers changed its sales strategy to reduce its reliance in distribution channels, or decided to terminate its business relationship with Anixter, the Company’s sales and earnings could be adversely affected until the Company was able to establish relationships with suppliers of comparable products. Although the Company believes its relationships with these key suppliers are good, they could change their strategies as a result of a change in control, expansion of their direct sales force, changes in the marketplace or other factors beyond the Company’s control.

Anixter cost-effectively serves its customers’ needs through its proprietary computer system, which connects most of its warehouses and sales offices throughout the world. The system is designed for sales support, order entry, inventory status, order tracking, credit review and material management. Customers may also conduct business through Anixter’s e-commerce platform, one of the most comprehensive, user-friendly and secure websites in the industry.

Anixter operates a series of large modern regional warehouses in key distribution centers in North America, Europe and Emerging Markets that provide for cost-effective, reliable storage and delivery of products to its customers. Anixter has designated 13 warehouses as regional warehouses. Collectively, these facilities store approximately 40% of Anixter’s inventory. In certain cities, some smaller warehouses are also maintained to maximize transportation efficiency and to provide for the local pick-up needs of customers. The network of warehouses and sales offices consists of 132 locations in the United States, 17 in Canada, 45 in the United Kingdom, 25 in Continental Europe, 15 in Latin America, 16 in Asia and 4 in Australia/ New Zealand.

Anixter has also developed close relationships with certain freight, package delivery and courier services to minimize transit times between its facilities and customer locations. The combination of its information systems, distribution network and delivery partnerships allows Anixter to provide a high level of customer service while maintaining a reasonable level of investment in inventory and facilities.

At December 30, 2005, the Company and its subsidiaries employed approximately 6,800 people. Approximately 43% of the employees are engaged in sales or sales related activities, 43% are engaged in warehousing and distribution operations and 14% are engaged in support activities including inventory management, information services, finance, human resources and general management. Less than one percent of the Company’s employees are covered by collective bargaining agreements.

Given the Company’s role as an aggregator of many different types of products from many different sources and the fact that these products are sold to many different industry groups, there is no well-defined industry group against which the company competes. The Company views the competitive environment as highly fragmented with hundreds of distributors and manufacturers that sell products directly or through multiple distribution channels to end users or other resellers. Competition is based primarily on breadth of products, quality, services, price and geographic proximity. Anixter believes that it has a significant competitive advantage due to its comprehensive product and service offerings, highly-skilled workforce and global distribution network. The Company can ship 99% of orders from inventory for delivery within 24 to 48 hours to all major global markets. In addition, the Company has common systems and processes throughout most of its operations in 45 countries that provide its customers and suppliers with global consistency.

Anixter enhances its value to both key suppliers and customers through its specifications and testing facilities and numerous quality assurance certification programs such as ISO 9002 and QSO 9000. The Company uses its testing facilities in conjunction with suppliers to develop product specifications and to test quality compliance. At its suburban Chicago data network-testing lab, the Company also works with customers to design and test various product configurations to optimize network design and performance specific to the customers’ needs.

The Company has a number of customers who purchase products under long-term (generally 3 to 5 year) contractual arrangements. In such circumstances, the relationship with the customer typically involves a high degree of material requirements planning and information systems interfaces and, in some cases, may require the maintenance of a dedicated distribution facility or dedicated personnel and inventory at or in close proximity to the customer site to meet the needs of the customer. Such contracts do not generally require the customer to purchase any minimum amount of goods from the Company, but would require that materials acquired, as a result of joint material requirements planning between the Company and the customer, be purchased by the customer.

The Company maintains an Internet website at http://www.anixter.com that includes links to the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to these reports. These forms are available without charge as soon as reasonably practical following the time they are filed with or furnished to the Securities and Exchange Commission (“SEC”). Shareholders and other interested parties may request email notifications of the posting of these documents through the Investor Relations section of the Company’s website.

The following factors could materially adversely affect the Company’s operating results and financial condition. Although the Company has tried to discuss key factors, please be aware that other risks may prove to be important in the future. New risks may emerge at any time, and the Company cannot predict those risks or estimate the extent to which they may affect the Company’s financial performance.

Most of the Company’s agreements with suppliers are terminable by either party on short notice for any reason. The Company currently sources products from approximately 4,000 suppliers. However, over 30% of the Company’s dollar volume purchases in 2005 was from its five largest suppliers. If any of these suppliers changed its sales strategy to reduce its reliance on distribution channels, or decided to terminate its business relationship with the Company, sales and earnings could be adversely affected until the Company was able to establish relationships with suppliers of comparable products. Although the Company believes its relationships with these key suppliers are good, they could change their strategies as a result of a change in control, expansion of their direct sales force, changes in the marketplace or other factors beyond the Company’s control.

The Company must identify the right product mix and maintain sufficient inventory on hand to meet customer orders. Failure to do so could adversely affect the Company’s sales and earnings. However, if circumstances change (for example, an unexpected shift in market demand, pricing or customer defaults) there could be a material impact on the net realizable value of the Company’s inventory. To guard against inventory obsolescence, the Company has negotiated various return rights and price protection agreements with certain key suppliers. The Company also maintains an inventory valuation reserve account against diminution in the value or salability of the Company’s inventory. However, there is no guaranty that these arrangements will be sufficient to avoid write-offs in excess of the Company’s reserves in all circumstances.

The Company’s recent operating results have been favorably affected by the rise in commodity prices, primarily petrochemicals and copper, which are components in some of the products sold. As the Company’s purchase costs with suppliers increase to reflect higher commodity prices, its mark-up to customers remains relatively constant, resulting in higher sales revenue and gross profit. In addition, existing inventory purchased at lower prices and sold as prices increase favorably affects the Company’s results. However, a decrease in commodity prices in a short period of time would have the opposite effect, negatively affecting the Company’s results.

The Company’s recent growth in sales and earnings is attributable to a combination of internal growth and acquisitions. In connection with recent and future acquisitions, it will be necessary for the Company to create a cohesive business from the various acquired properties. To do this will require the establishment of a common management team to guide the acquired businesses, the conversion of numerous information systems to a common operating system, the establishment of a brand identity for the acquired businesses, the streamlining of the operating structure to optimize efficiency and customer service and a reassessment of the inventory and supplier base to insure the availability of products at competitive prices. No assurance can be given that these various actions can be completed without disruption to the business, that the various actions can be completed in a short period of time or that anticipated improvements in operating performance can be achieved.

The Company’s debt agreements contain numerous financial and operating covenants that limit its discretion with respect to certain business matters. These covenants restrict the Company’s ability to incur additional indebtedness, to pay dividends and other distributions and to merge or consolidate with other entities. As a result of these restrictions, the Company is limited in how it may conduct business and may be unable to compete effectively or take advantage of new business opportunities.

The Company’s distribution network consists of approximately 197 warehouses in 45 countries with more than 5.0 million square feet. There are 13 regional distribution centers (100,000 — 575,000 square feet), 30 local distribution centers (35,000 — 100,000 square feet) and 154 service centers. Additionally, the Company has approximately 57 sales offices throughout the world. Substantially all of these facilities are leased. No one facility is material to operations, and the Company believes there is ample supply of alternative warehousing space available on similar terms and conditions in each of its markets.

From time to time, in the ordinary course of business, the Company and its subsidiaries become involved as plaintiffs or defendants in various legal proceedings. The claims and counterclaims in such litigation, including those for punitive damages, individually in certain cases and in the aggregate, involve amounts that may be material. However, it is the opinion of the Company’s management, based upon the advice of its counsel, that the ultimate disposition of pending litigation will not be material.

Anixter International Inc.’s Common Stock is traded on the New York Stock Exchange under the symbol AXE. Stock price information, dividend information and shareholders of record are set forth in Note 15 “Selected Quarterly Financial Data (Unaudited)” in the Notes to the Consolidated Financial Statements. There have been no sales of unregistered securities.

* In July of 2005, June of 2004 and September of 2003 and 2002, the Company acquired Infast, DDI, Walters Hexagon and Pentacon for $71.8 million, $32.9 million, $43.9 million and $111.4 million, respectively, inclusive of legal and advisory fees. The acquisitions were accounted for as purchases and the results of operations of the acquired businesses are included in the consolidated financial statements from the date of acquisition. See Note 6 “Acquisition of Businesses” in the Notes to the Consolidated Financial Statements for further information.


		unfavorable expenses of $5.2 million ($0.09 per diluted share) related to the relocation of the Company’s largest distribution facility, severance costs associated with staffing reductions in Europe and acquisition- related charges; 2001 includes a restructuring charge of $31.7 million ($0.50 per diluted share) associated with reducing its workforce, closing or consolidating certain facilities and exiting the Korean market. Additionally, 2001 includes goodwill amortization of $9.0 million ($0.24 per diluted share).

(b)		In the fourth quarter of 2000, the Company incurred an $8.8 million charge ($0.12 per diluted share) relating to the discount on the initial non-recourse sale of accounts receivable to an unconsolidated wholly owned special purpose corporation (“ARC”) in connection with an accounts receivable securitization program. The Company expected to substantially recover this amount upon termination of the program. In the intervening years, due to a decline in the amount of accounts receivable in the program, $2.4 million of the initial discount costs had been recouped. Due to the accounting consolidation of ARC at the end of the third quarter of 2004, the Company recovered the remaining $6.4 million ($0.10 per diluted share) of discount costs during the fourth quarter of 2004. As a result of the consolidation of ARC, working capital, total assets and debt increased in 2004 by approximately $222.2 million, $168.3 million and $161.8 million, respectively. See Note 1 “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements for further detail.

(c)		On June 28, 2005, the Company retired all of its remaining Convertible Notes due 2020 for $69.9 million and recorded a charge of $1.2 million ($0.02 per diluted share) related to the write-off of deferred financing costs. In 2004, the Company recorded a charge of $0.7 million ($0.01 per diluted share) related to the write-off of deferred financing costs associated with the early termination and refinancing of the Company’s $275.0 million revolving credit facility. In 2003, the Company recorded a charge of $6.6 million ($0.11 per diluted share) for the early retirement of $67.5 million of its Convertible Notes due 2020 and debt issuance costs associated with the cancellation of $115.0 million of its available revolving credit facility.

(d)		An extraordinary gain of $4.1 million ($0.11 per diluted share) was recorded in 2004 associated with the receipt of $4.7 million of cash for a 1983 matter related to Itel Corporation, the predecessor of the Company.

(e)		For the year ended December 30, 2005, net income includes a favorable tax adjustment of $1.4 million ($0.03 per diluted share) related to a favorable income tax ruling in Europe and an unfavorable tax adjustment of $7.7 million ($0.19 per diluted share) related to the repatriation of accumulated foreign earnings.

(f)		Stockholders’ equity reflects treasury stock purchases of $35.6 million and $46.9 million in 2003 and 2001 respectively. The Company did not purchase any treasury shares in 2005, 2004 or 2002. As of December 30, 2005 and December 31, 2004, stockholders’ equity reflects the 2005 and 2004 special dividends declared of $4.00 and $1.50 per common share, respectively, as a return of excess capital to shareholders. The dividends declared in 2005 and 2004 were approximately $156.1 million and $55.8 million, respectively.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the use of forward-looking terminology such as “believe,” “expects,” “intends,” “anticipates,” “completes,” “estimates,” “plans,” “projects,” “should,” “may” or the negative thereof or other variations thereon or comparable terminology indicating the Company’s expectations or beliefs concerning future events. The Company cautions that such statements are qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, a number of which are identified in this report under Item 1A. “Risk Factors.” The information contained in this financial review should be read in conjunction with the consolidated financial statements, including the notes thereto, on pages 29 to 59 of this Report.

On July 8, 2005, the Company acquired Infast, a UK-based distributor of fasteners and other “C” class inventory components to original equipment manufacturers. Based on the offer price of 34 pence per Infast share, the Company paid approximately $71.8 million for all of the outstanding shares of Infast, including transaction related costs. As a result of the acquisition, Anixter assumed the outstanding debt obligations of Infast which, at July 8, 2005, totaled approximately $26.5 million. The purchase of the shares was funded from on-hand cash balances derived from the February 2005 issuance of Senior Notes. Infast is a value-added distributor of fasteners and related products specializing in inventory logistics management programs directed at supporting the production lines of original equipment manufacturers across a broad spectrum of industries. Infast employs approximately 900 people located in thirty locations in the United Kingdom and the United States. The Company believes Infast’s business model complements its strategy of building a global original equipment manufacturer supply business. Included in the results of the Company for 2005, are $126.4 million of sales and $1.7 million of operating income related to Infast.

In connection with the acquisition of Infast, the Company has undertaken a restructuring of the acquired business. In accordance with the requirements of Emerging Issues Task Force Pronouncement (EITF) 95-03, the Company is in the process of completing a plan that primarily includes facility closings, severance and other changes in the preliminary fair value of fixed assets. The Company expects that this plan will be finalized in the first half of 2006. The costs associated with implementing this plan, which the Company cannot currently determine, will be accounted for as part of purchase accounting.

On a preliminary basis, the Company has estimated the fair value of the tangible net assets acquired at $36.0 million. In addition to the restructuring plan described above, the Company may adjust this preliminary valuation when it completes the valuation of the inventory accounts and when the third party valuation of the lease obligation guarantee is completed (See Note 9 “Commitments and Contingencies”). Based on a preliminary third party valuation, intangible assets have been recorded as follows:

On June 22, 2004, the Company purchased substantially all of the assets and operations of DDI for $32.9 million, inclusive of legal and advisory fees. In the third quarter of 2003, the Company purchased 100% of the stock of Walters Hexagon for $42.0 million, inclusive of legal and financial advisory fees. DDI and Walters Hexagon, headquartered in the United States and United Kingdom, respectively, were privately held value-added distributors of fasteners, hardware and related products specializing in inventory logistics management programs directed at supporting the production lines of original equipment manufacturers across a broad spectrum of industries.

These acquisitions were accounted for as purchases and the results of operations of the acquired businesses are included in the consolidated financial statements from the date of acquisition. Had these acquisitions occurred at the beginning of the year of acquisition, the impact on the Company’s operating results would not have been significant. Intangible amortization expense is expected to be approximately $3.7 million per year for the next five years.

As a distributor, the Company’s use of capital is largely for working capital to support its revenue base. Capital commitments for property, plant and equipment are limited to information technology assets, warehouse equipment, office furniture and fixtures and leasehold improvements, since the Company operates from leased facilities. Therefore, in any given reporting period, the amount of cash consumed or generated by operations will primarily be a factor of the rate of sales increase or decline, due to the corresponding change in working capital.

In periods when sales are increasing, the expanded working capital needs will be funded first by cash from operations, secondly from additional borrowings and lastly from additional equity offerings. Also, the Company will, from time to time, issue or retire borrowings or equity in an effort to maintain a cost-effective capital structure consistent with its anticipated capital requirements.

Year ended December 30, 2005: Consolidated net cash provided by operating activities was $0.5 million in 2005, compared to $57.0 million for the same period in 2004. The reduction in cash flow from operations is primarily due to the increase in the working capital (accounts receivable, inventory, accounts payable and other current assets and liabilities) needed to support a 17.5% increase in sales. Also, there was a slight increase in the days sales outstanding.

Consolidated net cash used in investing activities increased to $86.8 million in 2005 versus $49.3 million for the same period in 2004. During 2005, the Company spent $71.8 million to purchase Infast as compared to $34.8 million of cash used in 2004 to acquire DDI ($32.9 million) and pay additional purchase consideration for Walters Hexagon ($1.9 million). Capital expenditures increased $0.5 million during 2005 as compared to the corresponding period in 2004. Capital expenditures are expected to increase to approximately $28.5 million in 2006 as the Company invests in the consolidation of certain facilities in North America and Europe and invests in system upgrades and new software to support its infrastructure.

Consolidated net cash provided by financing activities was $54.7 million in 2005 compared to cash used of $55.7 million in the corresponding 2004 period. In 2005, the Company had net proceeds from borrowings under revolving credit facilities of $64.2 million as compared to a net payment on revolving credit agreements of $19.8 million during 2004. In 2005, the Company issued $200.0 million of 5.95% unsecured senior notes due 2015 (“Senior Notes”). The proceeds were $199.6 million, a portion of which was used to redeem the Convertible Notes due 2020 for $69.9 million. In 2005 and 2004, the Company used $153.7 million and $55.1 million, respectively, to fund two special dividends of $4.00 and $1.50 per common share, respectively. Proceeds from the issuance of common stock relating to the exercise of stock options and the employee stock purchase plan were $15.0 million in 2005 compared to $20.9 million in 2004. Issuance costs totaling $2.3 million in 2005 primarily related to the offering of Senior Notes. These cash outlays were partially offset by proceeds of $1.8 million resulting from entering into an interest rate hedge prior to the offering. In 2004, the Company completed an exchange of its convertible notes due 2033 for new notes due 2033 and refinanced its $275.0 million revolving credit facility. These transactions resulted in additional deferred financing costs of $1.6 million in the prior year.

Year ended December 31, 2004: Consolidated net cash provided by operating activities was $57.0 million in 2004, compared to $123.6 million for the same period in 2003. The decrease in cash flows from operations was primarily due to an increase in working capital of $40.5 million to support the 24.8% growth in sales. In 2003, working capital decreased $24.3 million due to a much lower sales growth rate of 4.2%.

Consolidated net cash used in investing activities increased to $49.3 million in 2004 versus $36.8 million for the same period in 2003. During 2004, the Company spent $32.9 million to acquire DDI and $1.9 million in additional purchase consideration for Walters Hexagon, as compared to $42.0 million to acquire Walters Hexagon in the same period of 2003. Capital expenditures decreased $11.4 million during 2004 as compared to the corresponding period in 2003. The decrease is primarily the result of the Company spending $18.4 million during 2003 to complete the construction of the new corporate headquarters building. In the fourth quarter of 2003, the Company recovered approximately $27.0 million of capital that had been invested in this project during 2002 and 2003 through a sale and leaseback transaction.

Consolidated net cash used in financing activities was $55.7 million in 2004 compared to $4.5 million in the corresponding 2003 period. In 2004, the Company used $55.1 million to fund the special dividend of $1.50 per common share that was paid on March 31, 2004. In 2003, the Company issued $378.1 million of 3.25% zero coupon convertible notes due 2033. Proceeds of $143.8 million were used to purchase a portion of the $35.6 million of treasury stock and $80.2 million of its 7% zero coupon convertible notes and retire its 8% senior notes. The Company did not purchase any treasury stock, or debt prior to maturity, during 2004. However, the Company completed the exchange of its convertible notes due 2033 for new notes due 2033 and refinanced its $275.0 million revolving credit facility with a similar sized facility in 2004. This resulted in additional deferred financing costs of $1.6 million as compared to $4.9 million of deferred financing costs recorded in the corresponding period in 2003 primarily related to the issuance of the convertible notes due 2033. In 2004, the Company had a net payment on the revolving credit agreements of $19.8 million compared to $33.6 million during 2003. Proceeds from the issuance of common stock relating to the exercise of stock options and the employee stock purchase plan were $20.9 million in 2004 compared to $6.5 million in 2003. In 2004, as a result of the exercise of stock options and the employee stock purchase plan, approximately 1.0 million shares were issued at an average price of $20.39. In the corresponding period in 2003, approximately 0.5 million shares were issued at an average price of $16.83.

On February 24, 2005, the Company’s primary operating subsidiary, Anixter Inc., issued $200.0 million of Senior Notes, which are fully and unconditionally guaranteed by the Company. Interest of 5.95% on the Senior Notes is payable semi-annually on March 1 and September 1 of each year. Issuance costs related to the offering were approximately $2.1 million, offset by proceeds of $1.8 million, resulting from entering into an interest rate hedge prior to the offering. Accordingly, net issuance costs of approximately $0.3 million associated with the notes are being amortized through March 1, 2015 using the straight-line method. The proceeds from the sale of the Senior Notes were approximately $199.6 million, a portion of which was used to redeem the Convertible Notes due 2020 and acquire the shares of Infast (See Note 6 “Acquisition of Businesses”). The remaining proceeds from the Senior Notes were used for general corporate purposes.

On June 28, 2005, the Company retired all of its remaining Convertible Notes due 2020 for $69.9 million. As a result, the Company wrote-off the related unamortized issuance costs resulting in a pre-tax loss of $1.2 million ($0.7 million after-tax, or $0.02 per diluted share). For more information regarding the Convertible Notes due 2020, see Note 8 “Debt” in the Notes to the Consolidated Financial Statements.

Similar to the Old Securities, holders of the New Securities may convert each of them in any calendar quarter based on certain conditions. The conversion of the Old Securities could be settled in stock, cash or a combination of cash and stock. The conversion of the New Securities will be settled in cash up to the accreted principal amount of the convertible note. If the conversion value of the convertible note exceeds the accreted principal amount of the convertible note at the time of conversion, the amount in excess of the accreted value will be settled in stock.

The Company may redeem the New Securities, in whole or in part, on July 7, 2011 for cash at the accreted value. Additionally, holders may require the Company to purchase all or a portion of their New Securities at various prices on certain future dates beginning July 7, 2007. The Company is required to pay the purchase price in cash.

The New Securities are structurally subordinated to the indebtedness of Anixter. At December 30, 2005 and December 31, 2004, the book value of the New Securities was $155.8 million and $150.9 million, respectively. For further information regarding the convertible notes, see Note 8 “Debt” in the Notes to the Consolidated Financial Statements.

In June of 2004, Anixter entered into a new five-year, senior unsecured $275.0 million revolving credit agreement to support future growth of the business. This new facility replaces a similar sized facility that was set to expire in October 2005. The borrowing rate under the new revolving credit agreement is LIBOR plus 97.5 basis points. In addition, there are facility fees on the revolving credit facility equal to 27.5 basis points. The new agreement, which is guaranteed by the Company, contains covenants that among other things restricts the leverage ratio and set a minimum fixed charge coverage ratio. In connection with the refinancing in 2004, the Company recorded a pre-tax loss of $0.7 million ($0.4 million after-tax, or $0.01 per diluted share) in 2004 for the write-off of deferred financing costs remaining from the previous facility.

In March of 2003, Anixter cancelled $115.0 million of the $390.0 million five-year agreement that was set to expire in October 2005 in order to reduce costs associated with this excess availability. Accordingly, in 2003, the Company recorded a loss on the extinguishment of debt in its consolidated statements of operations of approximately $0.4 million to expense the financing fees associated with the cancelled portion of the revolving credit agreement.

At December 30, 2005, the primary liquidity source for Anixter is the $275.0 million, five-year revolving credit agreement, of which $110.6 million was outstanding. Facility fees payable on this credit agreement totaled $0.8 million in 2005 and $0.7 million in both 2004 and 2003, and were included in interest expense in the consolidated statements of operations. This revolving credit agreement requires certain covenant ratios to be maintained. The Company is in compliance with all of these covenant ratios and believes that there is adequate margin between the covenant ratios and the actual ratios given the current trends of the business. See Exhibit 4.3 for definitions of the covenant ratios. Under the leverage ratio, as of December 30, 2005, $221.2 million of revolving lines of credit at Anixter would be permitted to be borrowed, of which $74.9 million may be used to pay dividends to the Company.

In November of 2005, Anixter Canada Inc. entered into a $40.0 million (Canadian dollar) unsecured revolving credit facility maturing on June 18, 2009 for general corporate purposes and to finance, in part, the payment of a dividend to Anixter Inc. The Canadian dollar borrowing rate under the agreement is the BA/ CDOR rate plus the applicable bankers’ acceptance fee (currently 100.0 basis points) for Canadian dollar advances or the prime rate plus the applicable 22.5 basis points. The borrowing rate for U.S. dollar advances is the base rate plus the applicable margin. In addition, there are standby fees on the unadvanced balance currently equal to 22.5 basis points. At December 30, 2005, there was $34.3 million (U.S. dollar) available, of which $25.8 million (U.S. dollar) is included in long-term debt outstanding.

Excluding the primary $275.0 million revolving credit facility and the $40.0 million (Canadian dollar) facility at December 30, 2005 and December 31, 2004, certain foreign subsidiaries had approximately $30.5 million and $24.0 million, respectively, available under bank revolving lines of credit, $2.9 million and $2.1 million of which was included in long-term debt outstanding at December 30, 2005 and December 31, 2004, respectively.

In October 2000, Anixter entered into an accounts receivable securitization program. The program allows the Company to sell, on an ongoing basis without recourse, a majority of the accounts receivable originating in the United States to Anixter Receivables Corporation (“ARC”), a wholly-owned, bankruptcy-remote special purpose entity. The assets of ARC are not available to creditors of Anixter in the event of bankruptcy or insolvency proceedings. ARC may in turn sell an interest in these receivables to a financial institution for proceeds of up to $225.0 million. Effective October 1, 2004, ARC, which was previously unconsolidated, was consolidated for accounting purposes only in the financial statements of the Company. For further information, see Note 1 “Significant Accounting Policies.” The average outstanding funding extended to ARC during 2005 and 2004 was approximately $130.9 million and $159.2 million, respectively. The effective rate on the ARC funding was 4.0%, 2.0% and 2.1% in 2005, 2004 and 2003, respectively.

^a The securitization program is a three-year agreement expiring in 2007. The outstanding balance at December 30, 2005 was $130.0 million. Anixter had borrowings under revolving credit facilities of $139.3 million as of December 30, 2005. Holders of the Company’s 3.25% zero coupon convertible notes due 2033 may require the Company to purchase all or a portion of their convertible notes in July 2007 at the accreted value. The book value of the convertible notes due 2033 was $155.8 million and the face value was $378.1 million at December 30, 2005. The $200.0 million of Senior Notes are due in 2015.

^c A non-qualified deferred compensation plan was implemented on January 1, 1995. The plan provides for benefit payments upon retirement, death, disability, termination or other scheduled dates determined by the participant. At December 30, 2005, the long-term deferred compensation liability was $23.5 million. In an effort to ensure that adequate resources are available to fund the deferred compensation liability, the Company has purchased a series of company-owned life insurance policies on the lives of plan participants. At December 30, 2005, the cash surrender value of these company life insurance policies was $24.1 million.

Employee Retirement Income Security Act, the Internal Revenue Service and local statutory law. As of December 30, 2005 and January 1, 2005, the pension liability was $47.7 million and $43.6 million, respectively. The Company currently estimates that it will contribute $10.9 million to its pension funds in 2006. Due to the future impact of various market conditions, rates of return and changes in plan participants, the Company cannot provide a meaningful estimate of its future contributions beyond 2006.

In 2003, the Company repurchased 1,567,650 shares at an average cost of $22.74. Purchases were made in the open market and were financed from cash generated by operations and the net proceeds ($139.8 million) from the issuance of $378.1 million of Convertible Notes due 2033. No shares were repurchased in 2005 or 2004. However, the Company may purchase additional shares with the volume and timing dependent on market conditions.

Interest expense for continuing operations was $27.2 million, $13.8 million and $12.8 million for 2005, 2004, and 2003, respectively. The increase in interest expense in 2005 is due to higher debt levels as a result of an increase in working capital to support the sales growth along with the accounting consolidation of the securitization facility. The Company has entered into interest rate agreements that effectively fix or cap, for a period of time, the interest rate on a portion of its floating-rate obligations. As a result, the interest rate on 72.0% and 60.3% of debt obligations at December 30, 2005 and December 31, 2004, respectively, was fixed or capped. Total long-term outstanding debt at December 30, 2005 and December 31, 2004 was $625.1 million and $412.4 million, respectively. The impact of interest rate agreements was minimal in 2005 and an increase of $0.6 million to interest expense in both 2004 and 2003, respectively.

Various foreign subsidiaries of the Company had aggregate cumulative net operating loss (“NOL”) carryforwards for foreign income tax purposes of approximately $108.8 million at December 30, 2005, which are subject to various provisions of each respective country. Approximately $22.1 million of this amount expires between 2006 and 2015, and $86.7 million of the amount has an indefinite life. Of the $108.8 million NOL carryforwards of foreign subsidiaries, $79.3 million relates to losses that have already provided a tax benefit in the U.S. due to rules permitting flow-through of such losses in certain circumstances. Without such losses included, the cumulative NOL carryforwards at December 30, 2005, were approximately $29.5 million, which are subject to various provisions of each respective country. Approximately $8.7 million of this amount expires between 2006 and 2015 and $20.8 million of the amount has an indefinite life. During 2005, a tax provision of $0.8 million was recorded for NOLs for which future utilization was not determined to be more likely than not. The deferred tax asset and valuation allowance have been adjusted to reflect only the carryforwards for which the Company has not taken a tax benefit in the United States.

In December 2005, the Company completed the repatriation of accumulated foreign earnings under the American Jobs Creation Act (“AJCA”). The Company’s Canadian subsidiary declared and paid a gross dividend (before withholding taxes and other statutory holdbacks) of $75.0 million. The repatriation was funded through a combination of on-hand cash balances and bank borrowings by the Company’s Canadian subsidiary. As a result of this transaction, the Company recorded an additional tax provision of approximately $7.7 million in the fourth quarter of 2005, which reduced net income by approximately $0.19 per diluted share. The funds received through the repatriation will be deployed under a qualified investment plan as defined by the AJCA. The principal use of repatriated funds will be to fund pension plan contributions and ongoing non-executive compensation costs in the United States.

At the current level of operating margin and working capital turns, the Company estimates that in 2006 it will have positive cash flow from operating activities and after capital expenditures. The Company may continue to pursue opportunities to acquire businesses and issue or retire borrowings or equity in an effort to maintain a cost-effective capital structure consistent with its anticipated capital requirements. Assuming the current level of operating margins and working capital turns, if the organic sales growth rate in 2006 were to exceed approximately 15% to 17%, then the incremental working capital required to support the increase in sales may result in the Company having negative cash flows from operations. The Company has adequate facilities to fund its expected growth in operations.

On September 15, 2005 and February 11, 2004, the Company’s Board of Directors declared a special dividend of $4.00 and $1.50 per common share, respectively, as a return of excess capital to shareholders. The 2005 and 2004 special dividends of $156.1 million and $55.8 million, respectively, were paid to or accrued for shareholders of record as of October 14, 2005 and March 16, 2004, respectively. On October 31, 2005 and March 31, 2004, the Company paid $153.5 million and $55.1 million of the dividends, respectively, with the remaining balance to be paid on the vesting date to holders of employee stock units and restricted stock.

The Company competes with distributors and manufacturers who sell products directly or through existing distribution channels to end users or other resellers. The Company’s relationship with the manufacturers for which it distributes products could be affected by decisions made by these manufacturers as the result of changes in management or ownership as well as other factors. Although relationships with its suppliers are good, the loss of a major supplier could have a temporary adverse effect on the Company’s business, but would not have a lasting impact since comparable products are available from alternate sources. In addition to competitive factors, future performance could be subject to economic downturns and possible rapid changes in applicable technologies. For further information, see Item 1A. “Risk Factors.”

The Company’s recent operating results have been favorably affected by the rise in commodity prices, primarily petrochemicals and copper, which are components in some of the products sold. As current purchase costs with suppliers increase due to higher commodity prices, the Company’s percentage mark-up to customers remains relatively constant, resulting in higher sales revenue and gross profit. In addition, existing inventory purchased at previously lower prices and sold as prices increase, results in a higher gross profit margin. Conversely, a decrease in commodity prices in a short period of time would have the opposite effect, negatively affecting results.

In 2005, the market demand was strong in virtually all of the Company’s end markets, both by geography and by product set. The Company’s efforts to expand the customer base and product set continued to positively impact the results. In addition, the Company acquired Infast during the year which added to the sales and operating profit growth.

As a distributor, the Company’s use of capital is largely for working capital to support its revenue base. In any given reporting period, the amount of cash consumed or generated by operations will primarily be a function of the rate of organic sales increase or decline, due to the corresponding change in working capital. In periods when organic sales are increasing, the expanded working capital (accounts receivable, inventory and accounts payable and other current assets and liabilities) needs will be funded primarily by cash provided by operations. In 2005, working capital increased $140.4 million to support the organic sales growth. In each of 2005 and 2004, the Company paid a special dividend. As a result of the special dividends and expanded working capital needs, the Company had $21.8 million in cash and its debt to total capitalization was 47.0% at December 30, 2005 versus 35.1% at December 31, 2004.

Net Sales: The Company’s net sales increased 17.5% in fiscal 2005 to $3,847.4 million from $3,275.2 million in the same period in 2004. The acquisitions of Infast in July 2005 and DDI in June 2004, along with favorable effects from changes in exchange rates, accounted for $163.8 million and $29.4 million of the increase, respectively. Excluding the acquisitions of Infast and DDI and the effects from changes in exchange rates, the Company’s net sales increased 11.6% during 2005 from the same period in 2004. The increase in net sales was due to the combination of increased customer spending, market share gains from the addition of new customers, commodity driven price increases in several major product lines, continued growth from the Company’s initiative to expand its security products distribution business and an expanded supply chain services offering.

Gross Margins: Gross margins decreased to 24.0% in 2005 from 24.1% in the corresponding period in 2004. Gross margins were positively affected in 2004 by net favorable adjustments to cost of sales of $10.2 million, arising primarily from the reduction in risks associated with the value of certain inventories. Excluding the favorable adjustment from 2004 cost of sales, gross margins were 23.8% in 2004. The increase in gross margins of 20 basis points (after adjusting for the prior year net favorable cost of sales adjustments) was primarily due to an improved sales mix, higher prices and an increase in OEM supply sales at higher margins.

Operating Income: As a result of higher sales, operating margins were 4.9% for the fiscal year ended December 30, 2005 as compared to 4.2% in the corresponding period in 2004. Operating expenses increased $83.4 million in 2005 from the corresponding period in 2004. The Infast and DDI acquisitions increased operating expenses by $40.5 million, while changes in exchange rates increased operating expenses by $4.3 million. Operating expenses were negatively affected in 2004 by unfavorable expenses of $5.2 million related to the relocation of the Company’s largest distribution facility, severance costs associated with a staffing reduction in Europe and acquisition related charges. As a result of the Company’s new branding strategy of its recently-acquired fastener and small parts supply businesses, the Company recorded a pre-tax asset impairment charge of $1.8 million in the third quarter of 2004 to write-down to fair value the value assigned to the Pentacon tradename when it was acquired in September 2002. Excluding the above, operating expenses increased $45.6 million, or 7.1%, primarily due to variable costs associated with higher sales volumes, increases in healthcare costs, expenses associated with additional restricted stock grants and an increase in employee incentives due to our improved operating performance.

Interest Expense: Consolidated interest expense increased to $27.2 million in 2005 from $13.8 million in 2004. Interest expense increased due to higher average debt levels and the accounting consolidation of ARC, effective October 1, 2004. The average long-term debt balance was $549.5 million and $309.0 million for 2005 and 2004, respectively. The average interest rate for 2005 and 2004 was 5.0% and 4.5%, respectively.

Other expenses increased $0.7 million in the current year. Foreign exchange losses decreased from $5.6 million in 2004 to $4.1 million in 2005. The decline in foreign exchange losses was primarily due to a significant net loss in 2004 resulting from the February 2004 devaluation of the Venezuelan Bolivar. The foreign exchange loss of $4.1 million was primarily attributable to currency rate fluctuations in Brazil (Real), Europe (Euro and British Pound) and Venezuela (Bolivar). In 2005, a $1.2 million gain was recorded relating to the cash surrender value of life insurance policies compared to a $1.5 million gain in 2004. In 2004, there was a net $3.6 million gain recorded related to ARC, which primarily represents the $6.4 million of initial discount costs recouped during the fourth quarter of 2004. The Company also incurred $0.9 million of fees in 2004 related to the exchange of the Convertible Notes due 2033. Miscellaneous other expense decreased $0.8 million primarily due to interest earned on invested cash in 2005.

In 2005, the Company recorded a pre-tax loss of $1.2 million related to the write-off of deferred financing costs associated with the early retirement of the remaining $69.9 million Convertible Notes due 2020. In 2004, the Company recorded a pre-tax loss of $0.7 million related to the write-off of deferred financing costs associated with early termination and refinancing of the Company’s $275.0 million revolving credit facility. The extraordinary gain of $4.1 million in 2004 was the result of monies received from an escrow account in connection with the 1983 bankruptcy of Itel Corporation, the predecessor to the Company.

Income Taxes: The consolidated tax provision increased to $67.4 million in 2005 from $47.0 million in the corresponding period in 2004, due to an increase in income before taxes and extraordinary gain, as well as the $7.7 million in taxes related to the repatriation of accumulated foreign earnings under the AJCA. The increase to the 2005 consolidated tax provision was partially offset by a tax benefit of $1.4 million due to a favorable tax ruling in Europe. The 2005 effective tax rate (excluding the repatriation provision and Europe tax benefit) is 38.8% compared to 39.0% in 2004.

Excluding the acquisitions and the exchange rate impact, North America net sales increased 11.4% during 2005 as compared to the corresponding period in 2004. The combined enterprise cabling and industrial wire and cable sales increased 12.2% in 2005 as compared to the corresponding period in 2004, due to improved economic conditions, price increases driven by higher copper and data cabling prices, expanded product offerings and a favorable exchange rate impact. In the OEM supply market, sales increased 34.5% on a combination of the acquisitions of Infast and DDI, improved customer demand and new contract additions. Excluding the acquisitions of Infast and DDI, North America OEM supply sales were up 16.0% as compared to the prior year.

Gross Margins: North America’s gross margins were 24.1% in both 2005 and 2004. North America gross margins were positively affected in 2004 by net favorable adjustments to cost of sales of $10.2 million arising primarily from the reduction in risks associated with the value of certain inventories. Excluding the net favorable adjustments from 2004 cost of sales, gross margins increased 40 basis points in 2005 primarily due to an improved sales mix, higher copper prices and an increase in OEM supply sales which have higher margins.

Operating Income: Operating expenses increased $45.1 million, or 9.3%, in 2005 from the corresponding period in 2004. The Infast and DDI acquisitions accounted for $12.3 million of the increase, while changes in exchange rates increased operating expenses by $3.8 million. North America operating expenses were negatively affected in 2004 by unfavorable expenses of $3.3 million related to the relocation of the Company’s largest distribution facility and acquisition-related charges. As a result of the Company’s new branding strategy of its recently acquired fastener and small parts supply businesses, the Company recorded a pre-tax asset impairment charge of $1.8 million in 2004 to write-down to fair value the value assigned to the Pentacon tradename when it was acquired in September 2002. Excluding the effects of all the above, North America operating expenses were 7.2% above the prior year primarily due to variable costs associated with the increase in sales volume, higher healthcare costs, expenses related to additional restricted stock grants and an increase in employee incentives due to our strong operating performance. Primarily as a result of higher daily sales, continued tight expense controls and the leveraging of the existing infrastructure, North America operating margins increased to 5.7% in 2005 from 4.8% in same period in 2004. Exchange rate changes had a $1.8 million favorable impact on North America operating income in 2005.

Net Sales: Europe net sales increased 31.0% in 2005 to $726.1 million from $554.3 million in the corresponding period in 2004, including a $0.2 million favorable effect from changes in exchange rates and an increase of $115.6 million as a result of the acquisition of Infast in July 2005. Excluding Infast and exchange rate impact, sales increased 10.1% as a result of an increase in the sales in the OEM supply market and an increase in the number of large projects. Sales in the OEM supply market, excluding Infast, grew by $19.6 million, or 18.0%, in 2005.

of favorable changes in exchange rates. Excluding Infast and the exchange rate impact, operating expenses increased $4.9 million, or 3.7%, from the corresponding period in 2004. Tight expense controls and substantial improvement in the OEM supply business, which more than offset the decline in overall gross margins, resulted in operating margins increasing in 2005 to 2.5% from 1.8% in 2004. In 2005, Infast added $2.2 million to Europe’s operating profit, while exchange rate changes had a $0.2 million favorable impact on operating income. In 2004, Europe operating margins were unfavorably effected by a high percentage of large projects at reduced margins, significant pricing pressures and severance costs associated with a staff reduction. While Europe continues to generate solid operating margins in its OEM supply business, the communications business continues to suffer from comparatively weak demand and very competitive pricing.

Net Sales: Emerging Markets (Asia Pacific and Latin America) net sales were up 19.5% to $270.5 million in 2005 from $226.4 million in the corresponding period in 2004, including a $4.9 million favorable impact from changes in exchange rates. Latin America sales were up 27.2%, while Asia Pacific increased 1.4% compared to the corresponding fiscal 2004. Latin America growth was throughout the region. The Asia Pacific low sales growth was due to some major projects in 2004 which were not expected to repeat in 2005, and a general slowdown in economic activity.

Operating Income: Emerging Markets operating income increased $2.3 million from $7.9 million in 2004 to $10.2 million in 2005. Operating expenses increased 13.8% as compared to the corresponding period in 2004. Primarily as a result of the Latin America sales growth and resulting leveraging of the expense structure, operating margins increased to 3.8% in 2005 from 3.5% in the corresponding period in 2004. Exchange rate changes had a $0.2 million favorable impact on operating income.

Net Sales: The Company’s net sales increased 24.8% to $3,275.2 million from $2,625.2 million in the same period in 2003. The acquisitions of Walters Hexagon in September 2003 and DDI in June 2004, along with favorable effects from changes in exchange rates, accounted for $121.3 million and $67.9 million of the increase, respectively. Excluding the acquisitions of Walters Hexagon and DDI and the effects from changes in exchange rates, the Company’s net sales increased 17.7% during 2004 from the same period in 2003. The

Gross Margins: Gross margins decreased to 24.1% in 2004 from 24.5% in the corresponding period in 2003. The primary reason for the decline was an increase in larger capital projects during 2004 as compared to 2003. Due to excess capacity in the industry, pricing on these projects was extremely competitive, which reduced gross margins. Also, the timing of passing through commodity price increases to customers with long-term contracts put pressure on gross margins. Gross margins were positively affected in 2004 by net favorable adjustments to cost of sales of $10.2 million, arising primarily from the reduction in risks associated with the value of certain inventories.

Operating Income: As a result of higher sales, operating margins were 4.2% for the fiscal year ended December 31, 2004 as compared to 3.5% in the corresponding period in 2003. Operating expenses increased $102.4 million in 2004 from the corresponding period in 2003. The Walters Hexagon and DDI acquisitions increased operating expenses by $30.3 million, while changes in exchange rates increased operating expenses by $13.5 million. Operating expenses were negatively affected in 2004 by unfavorable expenses of $5.2 million related to the relocation of the Company’s largest distribution facility, severance costs associated with a staffing reduction in Europe and acquisition related charges. As a result of the Company’s new branding strategy of its recently-acquired fastener and small parts supply businesses, the Company recorded a pre-tax asset impairment charge of $1.8 million in the third quarter of 2004 to write-down to fair value the value assigned to the Pentacon tradename when it was acquired in September 2002. Excluding the above, operating expenses increased $51.5 million, or 9.4%, primarily due to variable costs associated with higher sales volumes, increases in healthcare and pension costs, expenses associated with additional restricted stock grants and an increase in employee incentives due to the Company’s improved operating performance.

Interest Expense: Consolidated interest expense increased to $13.8 million in 2004 from $12.8 million in 2003. Interest expense increased due to the accounting consolidation of ARC, effective October 1, 2004, and an increase in the average borrowings. The average long-term funding balance was $309.0 million and $229.7 million for 2004 and 2003, respectively. The average interest rate for 2004 and 2003 was 4.5% and 5.6%, respectively. The increase in average funding associated with the ARC facility was $45.4 million with an average interest rate of 2.6%.

Foreign exchange produced a net loss of $5.6 million in 2004 as compared to minimal gains in the corresponding period of 2003. A significant portion of the net loss in 2004 resulted from the February 2004 devaluation of the Venezuelan Bolivar. The accounts receivable securitization program had income of $3.6 million for 2004, compared to $2.8 million of expenses in 2003. In the fourth quarter of 2004, the Company recorded $6.4 million of income for the recovery of discount costs previously incurred on accounts receivable sold to ARC. Beginning in the fourth quarter of 2004, funding costs associated with the accounts receivable securitization program are included in interest expense, as ARC is now consolidated for accounting purposes in the Company’s consolidated financial statements. In conjunction with the exchange offer of the Company’s Convertible Notes due 2033, the Company incurred $0.9 million of fees.

Income Taxes: The consolidated tax provision increased to $47.0 million in 2004 from $31.0 million in the corresponding period in 2003, due to an increase in income before taxes and extraordinary gain. The 2004 effective tax rate (excluding extraordinary gain) is 39.0% compared to 42.5% in 2003. The decrease in the effective tax rate is primarily due to a change in the mix of foreign income and losses by country as compared to country-level net operating loss positions. The Company recorded a tax benefit of $2.9 million in 2004 related to the adjustment of valuation allowances for certain foreign NOL carryforwards, which was offset by a $3.2 million charge associated with the conclusion of the examination of the 1999-2001 federal income tax returns by the IRS. The change in tax rate increased income before extraordinary gain and net income by $4.2 million or $0.11 per diluted share in 2004.

Net Income: Net income for 2004 was $77.7 million compared with $41.9 million for 2003. In addition to the above, the Company recorded a pre-tax loss of $0.7 million related to the write-off of deferred financing costs associated with early termination and refinancing of the Company’s $275.0 million revolving credit facility. In 2003, the Company recorded a pre-tax loss of $6.6 million in 2003 for the early extinguishment of $67.5 million of its 7% zero coupon convertible notes and debt issuance costs associated with the cancellation of $115.0 million of its available revolving credit facility.

Net Sales: When compared to 2003, North America net sales for 2004 increased 22.0% to $2,494.5 million. The acquisition of DDI accounted for $34.2 million of the increase, while favorable changes in the Canadian exchange rate accounted for $23.7 million of the increase. Excluding DDI and the exchange rate impact, North America net sales increased 19.2% during 2004 as compared to the corresponding period in 2003. The combined enterprise cabling and industrial wire and cable sales increased 21.0% in 2004 as compared to the corresponding period in 2003, due to improved economic conditions, price increases driven by higher copper and data cabling prices, expanded product offering and a favorable exchange rate impact. In the OEM supply market, the Pentacon operations reported a 22.5% increase in sales on a combination of improved customer demand and new contract additions. Sales to telecom-related OEMs increased 11.9% in 2004 as compared to the corresponding period in 2003.

Gross Margins: North America’s gross margins decreased slightly to 24.1% in 2004 from 24.3% for the same period in 2003. The decrease is primarily due to a higher percentage of larger capital projects, which had lower gross margins due to excess capacity in the industry. Also, the timing of passing through commodity price increases to customers with long-term contracts put pressure on gross margins. North America gross margins were positively affected in 2004 by net favorable adjustments to cost of sales of $10.2 million, arising primarily from the reduction in risks associated the value of certain inventories.

Operating Income: Operating expenses increased $61.3 million in 2004 from the corresponding period in 2003. The DDI acquisition accounted for $10.0 million of the increase, while changes in exchange rates increased operating expenses by $4.0 million. Excluding the acquisition of DDI and the exchange rate impact, North America operating expenses increased 11.2%, primarily due to variable costs associated with the increase in sales volume, higher pension and healthcare costs, expenses related to additional restricted stock grants and an increase in employee incentives due to the Company’s strong operating performance. North America operating expenses were negatively affected in 2004 by unfavorable expenses of $3.3 million related

to the relocation of the Company’s largest distribution facility and acquisition-related charges. As a result of the Company’s new branding strategy of its recently acquired fastener and small parts supply businesses, the Company recorded a pre-tax asset impairment charge of $1.8 million in the third quarter of 2004 to write-down to fair value the value assigned to the Pentacon tradename when it was acquired in September 2002. Primarily as a result of higher daily sales, continued tight expense controls and the leveraging of the existing infrastructure, North America operating margins increased to 4.8% in 2004 from 3.7% in the same period in 2003. Exchange rate changes had a $1.2 million favorable impact on operating income.

Net Sales: Europe net sales increased 41.0% in 2004 to $554.3 million from $393.1 million in the corresponding period in 2003, including a $42.6 million favorable effect from changes in exchange rates and an increase of $87.1 million as a result of the acquisition of Walters Hexagon at the end of the third quarter of 2003. Excluding Walters Hexagon and exchange rate impact, sales increased 8.4%. Overall, demand remains comparatively weak resulting in significant margin pressure.

Gross Margins: Europe’s gross margins decreased to 25.4% in 2004 from 27.4% in the same period in 2003. The decrease is primarily due to large projects at reduced margins, a change in product mix which had lower gross margins and significant pricing pressures resulting from excess capacity in the industry. Walters Hexagon added 50 basis points to Europe’s gross margins in 2004.

Operating Income: Compared to 2003, Europe operating expenses increased 40.9%, or $38.0 million, to $131.1 million in 2004. Included in the increase are $20.3 million of expenses related to Walters Hexagon and $9.2 million for changes in exchange rates. Excluding Walters Hexagon and the exchange rate impact, operating expenses increased $8.5 million, or 9.7%, higher than 2003. Operating margins decreased in 2004 to 1.8% from 3.7% as compared to 2003. The decrease is primarily due to a higher percentage of large projects at reduced margins, significant pricing pressures and severance costs associated with a staff reduction. Walters Hexagon added 60 basis points to Europe’s operating margins, while exchange rate changes had a $1.1 million favorable impact on operating income.

Operating Income: Emerging Markets operating income increased $5.7 million from $2.2 million in 2003. Operating expenses increased 8.1% as compared to the corresponding period in 2003. As a result of the higher sales levels, improved gross margins and tight expense controls, operating margins increased to 3.5% in 2004 from 1.2% in the corresponding period in 2003. Exchange rate changes had a $0.4 million favorable impact on operating income.

The Company believes that the following are critical areas that either require significant judgement by management or may be affected by changes in general market conditions outside the control of management. As a result, changes in estimates and general market conditions could cause actual results to differ materially from future expected results. Historically, the Company’s estimates in these critical areas have not differed materially from actual results.

Inventory Obsolescence: At December 30, 2005 and December 31, 2004, the Company reported inventory of $711.5 million and $580.1 million, respectively. Each quarter the Company reviews the excess inventory and makes an assessment of the realizable value. There are many factors that management considers in determining whether or not a reserve should be established. These factors include the following:

Pension Expense: The Company accounts for its defined benefit pension plans in accordance with the Statement of Financial Accounting Standards (“SFAS”) No. 87, Employers’ Accounting for Pensions, which requires that amounts recognized in financial statements be determined on an actuarial basis. In 2005, the Company made an $18.3 million contribution to its various plans. SFAS No. 87 and the policies used by the Company generally reduce the volatility of the net benefit cost from changes in pension liability discount rates and the performance of the pension plan’s assets, as significant actuarial gains/losses are amortized over the service lives of the plan participants.

A significant element in determining the Company’s net periodic benefit cost in accordance with SFAS No. 87 is the expected return on plan assets. The Company has assumed that the weighted-average expected long-term rate of return on plan assets will be 7.60%. This expected return on plan assets is included in the net periodic benefit cost. The plan assets produced an actual return of approximately 10% in 2005. If significant, the difference between this expected return and the actual return on plan assets is amortized over the service lives of the plan participants.

At the end of each year, the Company determines the discount rate to be used to discount the plan liabilities. The discount rate reflects the current rate at which the pension liabilities could be effectively settled at the end of the year. In estimating this rate, the Company looks to rates of return on relevant market indices (Citigroup pension liability index, Moody’s Aa corporate bond yield and Bloomberg AAA/ AA 15 + year). These rates are adjusted to match the duration of the liabilities associated with the pension plans. At December 30, 2005, the Company determined this rate to be 5.32% on a consolidated basis.

As of December 30, 2005, the Company’s consolidated pension liability was $47.7 million, up from $43.6 million at the end of 2004. For the year ended December 30, 2005, the Company recognized a consolidated pre-tax net periodic cost of $11.3 million, down from $12.2 million in 2004. Due to its long duration, the pension liability is very sensitive to changes in the discount rate. As a result of a reduced discount rate and other actuarial gains and losses, the Company estimates its 2006 net periodic cost to increase by 5% to 10%. As a sensitivity measure, the effect of a 50 basis point decline in the discount rate assumption would result in an increase in the 2006 pension expense of approximately $3.2 million and an increase in the projected benefit obligations at December 30, 2005 of $28.9 million.

Deferred Tax Assets: The Company applies a three-year cumulative taxable income test for foreign subsidiaries whose results are not included in the U.S. tax return in determining whether to recognize an income tax benefit for their respective foreign NOL carryforwards, with a resultant adjustment to the valuation allowance. Qualitative factors surrounding a particular subsidiary are also examined and, in certain circumstances (e.g., projections of further losses for that subsidiary in the short-term), an income tax benefit may not be recorded (and therefore, the valuation allowance not adjusted) even when the three-year cumulative taxable income is positive for a given subsidiary.

Tax Contingencies: The Company believes it has a reasonable basis in the tax law for all of the positions it takes on the various tax returns it files. However, in recognition of the fact that various taxing authorities may take opposing views on some issues, that the costs and hazards of litigation in maintaining the positions that the Company has taken on various returns might be significant and that the taxing authorities may prevail in their attempts to overturn such positions, the Company maintains tax reserves. The amounts of such reserves, the potential issues they are intended to cover and their adequacy to do so are topics of frequent review internally and with outside tax professionals. Where necessary, periodic adjustments are made to such reserves to reflect the lapsing of statutes of limitations, closings of ongoing examinations or the commencement of new examinations.

As of December 30, 2005, the Company has recorded a current income tax payable of $27.0 million. The aggregate amount of global income tax reserves and related interest recorded in current taxes payable was approximately $14.7 million. These reserves cover a wide range of issues and involve numerous different taxing jurisdictions. The single largest item ($3.5 million) relates to a dispute with the state of Wisconsin concerning income taxes payable upon the 1993 sale of a short-line railroad that operated solely within such state. Other significant exposures for which reserves exist include, but are not limited to, a variety of foreign jurisdictional transfer pricing disputes and foreign withholding tax issues related to inter-company transfers and services.

The Company is exposed to the impact of interest rate changes and fluctuations in foreign currencies, as well as changes in the market value of its financial instruments. The Company periodically enters into derivatives in order to minimize these risks, but not for trading purposes. The Company’s strategy is to negotiate terms for its derivatives and other financial instruments to be perfectly effective, such that the change in the value of the derivative perfectly offsets the impact of the underlying hedged item. Any resulting gains or losses from hedge ineffectiveness are reflected directly in income. See in Note 1 “Interest rate agreements” and “Foreign currency forward contracts” and Note 8 “Debt” to the Notes to the Consolidated Financial Statements for further detail on interest rate agreements and outstanding debt obligations. Approximately 31% of the Company’s sales were denominated in foreign currency in 2005 and approximately 30% in 2004 and 28% in 2003. The Company’s exposure to currency rate fluctuations primarily relate to Europe (Euro and British Pound) and Canada (Canadian dollar). The Company also has exposure to currency rate fluctuations related to more volatile markets such as Venezuela (Bolivar), Brazil (Real) and Mexico (Peso).

As of December 30, 2005 and December 31, 2004, the Company had a significant amount of assets and liabilities that are denominated in currencies other than the functional currency of the reporting entity. The absolute value of these assets and liabilities at December 30, 2005 and December 31, 2004, was approximately $177.1 million and $151.9 million, respectively. The Company has purchased approximately $74.6 million of short-term foreign currency forward contracts to minimize the effect of fluctuating foreign currencies. If there was a 10 percent adverse change in the exchange rates, the Company would record a foreign exchange loss of approximately $10.3 million.

As of December 30, 2005, the Company utilized interest rate agreements that effectively fix or cap, for a period of time, the GBP London Interbank Offered Rate (“GBP-LIBOR”) and the Bankers Acceptance/ Canadian Dollar Offered Rate (“BA/ CDOR”) components of the interest rates on a portion of its floating-rate obligations. At December 30, 2005, the Company had interest rate swap agreements outstanding with a notional amount of GBP 30 million and $50 million Canadian. The GBP-LIBOR swap agreements obligate the Company to pay a fixed rate of approximately 4.6% through July 2012 and the BA/ CDOR swap agreement obligated the Company to pay a fixed rate of approximately 4.2% through December 2010.

At December 31, 2004, the Company had interest rate swap agreements outstanding with a notional amount of $30 million, which effectively fixed or capped the London Interbank Offered Rate component of the interest rate on a portion of its floating-rate debt obligations. These swap agreements obligated the Company to pay a fixed rate of approximately 3.5% through October 2007. These swap obligations were cancelled upon the issuance of the 5.95% Notes. At December 30, 2005 and December 31, 2004, as a result of these agreements, the interest rate on 72.0% and 60.3% of debt obligations, respectively, was fixed or capped.

The Company prepared sensitivity analyses of its derivatives and other financial instruments assuming a one-percentage point adverse change in interest rates and a 10 percent adverse change in the foreign currency contracts outstanding. Holding all other variables constant, the hypothetical adverse changes would have increased interest expense by $1.9 million and $0.3 million in 2005 and 2004, respectively, and decreased the value of foreign currency forward contracts by $8.1 million and $7.7 million in 2005 and 2004, respectively. The estimated fair market value of the Company’s outstanding fixed rate debt at December 30, 2005 and December 31, 2004 was $411.0 million and $273.2 million, respectively. If interest rates were to increase by 1%, the fair market value of the fixed rate debt would decrease by 3.8% and 2.0% for 2005 and 2004, respectively. If interest rates were to decrease by 1%, the fair market value of the fixed rate debt would increase by 4.1% and 2.1% for 2005 and 2004, respectively. Changes in the market value of the Company’s debt do not affect the reported results of operations unless the Company is retiring such obligations prior to their maturity. These analyses did not consider the effects of a changed level of economic activity that could exist in such an environment and certain other factors. Further, in the event of a change of this magnitude, the Company could take action to further mitigate its exposure to possible changes. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analyses assume no changes in the Company’s financial structure.

We have audited the accompanying consolidated balance sheets of Anixter International Inc. and subsidiaries as of December 30, 2005 and December 31, 2004 and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended December 30, 2005. Our audits also included the financial statement schedules listed in the Index at Item 15(a)(2). These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Anixter International Inc. at December 30, 2005 and December 31, 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 30, 2005, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Anixter International Inc.’s internal control over financial reporting as of December 30, 2005, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2006 expressed an unqualified opinion thereon.

Organization: Anixter International Inc. (“the Company”), formerly known as Itel Corporation, which was incorporated in Delaware in 1967, is engaged in the distribution of communications and specialty wire and cable products, fasteners and small parts through Anixter Inc. and its subsidiaries (collectively “Anixter”).

Basis of presentation: The consolidated financial statements include the accounts of Anixter International Inc. and its majority-owned subsidiaries. The Company’s fiscal year ends on the Friday nearest December 31 and included 52 weeks in 2005, 2004 and 2003. Certain amounts for prior years have been reclassified to conform to the current year presentation.

Receivables and allowance for doubtful accounts: The Company carries its accounts receivable at their face amounts less an allowance for doubtful accounts. On a regular basis, the Company evaluates its accounts receivable and establishes the allowance for doubtful accounts based on a combination of specific customer circumstances, as well as credit conditions and history of write-offs and collections. A receivable is considered past due if payments have not been received within the agreed upon invoice terms. The provision for doubtful accounts was $11.3 million, $10.5 million and $7.4 million in 2005, 2004 and 2003, respectively.

Accounts receivable program: On October 6, 2000, the Company entered into an accounts receivable securitization program. The underlying agreements for this program were most recently amended on September 29, 2005 to extend the program. The program is conducted through Anixter Receivables Corporation (“ARC”), a wholly-owned, bankruptcy remote, special purpose subsidiary. In 2004, an amendment to the program provided ARC with a call right with respect to receivables sold. As a result of this call right, ARC no longer holds a passive interest in the receivables and, thus, is no longer considered a qualified special purpose entity for accounting purposes. Accordingly, ARC, which was previously unconsolidated, is now consolidated in the financial statements of the Company. Additionally, Anixter’s investment in ARC and the inter-company note between Anixter and ARC is eliminated in consolidation. The receivables will continue to be sold by Anixter to ARC. The assets of ARC are not available to creditors of Anixter in the event of bankruptcy or insolvency proceedings.

Prior to the consolidation of the accounts receivable securitization facility at the end of the third quarter of 2004, interest expense associated with ARC funding was not recorded in the Company’s income statement. Generally accepted accounting principles required that the interest expense be classified as other expense when it was accounted for by the equity method as part of the Company’s 100% ownership of ARC. Interest expense related to the ARC funding included in the Consolidated Statement of Operations was $5.3 million during fiscal 2005 and $1.2 million in the fourth quarter of 2004.

At the inception of this program, the Company recorded a charge of $8.8 million for the initial discounting of the receivables sold to ARC. In the intervening years, due to a decline in the amount of accounts receivable in the program, $2.4 million of the initial discount costs had been recouped. In 2004, there was a net $3.6 million gain recorded related to ARC, which primarily represents the $6.4 million of initial discount costs recouped during the fourth quarter of 2004, partially offset by $2.8 million of funding costs incurred during the first nine months of 2004 (included above in the $27.8 million gain on the collection of receivables of ARC).

Anixter had total billings to ARC of $1,911.1 million, $1,687.2 million and $1,417.1 million in 2005, 2004 and 2003, respectively. These billings were for the sale of receivables, servicing fees and interest costs calculated on the outstanding balance of the note receivable. These billings are not included in the consolidated sales results of the Company. Anixter received proceeds from ARC of $1,911.3 million, $1,684.0 million and $1,430.1 million in 2005, 2004 and 2003, respectively, as payment for the Anixter billings.

Inventories: Inventories, consisting primarily of finished goods, are stated at the lower of cost or market. Cost is determined using the average-cost method. The Company has agreements with some of its vendors that provide a right to return products. This right is typically limited to a small percentage of the Company’s total purchases from that vendor. The Company can return slow moving product, and the vendor will replace it with faster moving product chosen by the Company. Some vendor agreements contain price protection provisions that require the manufacturer to issue a credit in an amount sufficient to reduce the Company’s current inventory carrying cost down to the manufacturer’s current price. The Company considers these agreements in determining its reserve for obsolescence.

Property and equipment: At December 30, 2005, net property and equipment consisted of $43.7 million of equipment and computer software and $9.4 million of buildings and leasehold improvements. At December 31, 2004, net property and equipment consisted of $35.9 million of equipment and computer software and $6.7 million of leasehold improvements. Equipment and computer software are recorded at cost and depreciated by applying the straight-line method over their estimated useful lives, which range from 3 to 10 years. Leasehold improvements are depreciated over the useful life or over the term of the related lease, whichever is shorter. Upon sale or retirement, the cost and related depreciation are removed from the respective accounts and any gain or loss is included in income. Maintenance and repair costs are expensed as incurred. Depreciation expense charged to operations was $18.3 million, $16.4 million and $18.0 million in 2005, 2004 and 2003, respectively.

Goodwill: Goodwill is the excess of cost over the fair value of the net assets of businesses acquired. Goodwill is reviewed annually for impairment. The Company performs its impairment tests utilizing the two step process outlined in Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and other Intangible Assets. If the carrying amount of a reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss would be recognized in an amount equal to that excess, not to exceed the carrying amount of the goodwill. The Company currently expects the carrying amount to be fully recoverable.

Intangible assets: Intangible assets primarily consist of customer relationships that are being amortized on a straight-line basis over periods ranging from 8 to 10 years. The Company continually evaluates whether events or circumstances have occurred that would indicate the remaining estimated useful lives of its intangible assets warrant revision or that the remaining balance of such assets may not be recoverable. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the asset in measuring whether the asset is recoverable.

Interest rate agreements: The Company uses interest rate swaps to reduce its exposure to adverse fluctuations in interest rates. The objective of the currently outstanding interest rate swaps (cash flow hedges) is to convert variable interest to fixed interest associated with forecasted interest payments resulting from revolving borrowings in the U.K. and Canada. Changes in the value of the interest rate swaps are expected to be highly effective in offsetting the changes attributable to fluctuations in the variable rates. When entered into, these financial instruments were designated as hedges of underlying exposures (interest payments associated with the U.K. and Canada borrowings) attributable to changes in the respective benchmark rates. The interest rate swaps were revalued at current interest rates, with the changes in valuation reflected directly in other comprehensive income, net of deferred taxes. The offsetting gain/loss is recorded as a derivative asset or liability, net of accrued interest.

As of December 31, 2004, the Company had interest rate swap agreements outstanding with a notional amount of $30 million, which effectively fixed or capped the London Interbank Offered Rate component of the interest rate on a portion of its floating-rate debt obligations. These swap agreements obligated the Company to pay a fixed rate of approximately 3.5% through October 2007. These swap obligations were cancelled upon the issuance of the 5.95% Notes.

As of December 30, 2005 and December 31, 2004, as a result of these agreements, the interest rate on 72.0% and 60.3% of debt obligations, respectively, was fixed or capped. The fair market value of outstanding interest rate agreements, which is the estimated amount that the Company would have received or paid to enter into similar interest rate agreements at the current interest rate, was minimal at December 30, 2005 and December 31, 2004. The impact of interest rate agreements to interest expense was minimal in 2005 and an increase of $0.6 million to interest expense in both 2004 and 2003, respectively. The Company does not enter into interest rate transactions for speculative purposes.

Foreign currency forward contracts: The Company uses foreign currency forward contracts to reduce its exposure to adverse fluctuations in foreign exchange rates. When entered into, these financial instruments are designated as hedges of underlying exposures. The Company does not enter into derivative financial instruments for trading purposes.

The Company purchased foreign currency forward contracts to minimize the effect of fluctuating foreign currency denominated payables (fair value hedges) on its reported income. The forward contracts were revalued at current foreign exchange rates, with the changes in valuation reflected directly in income offsetting the transaction gain/loss recorded on the foreign currency denominated payable. The net impact of these foreign currency forward contracts on the income statement was insignificant in 2005, 2004 and 2003. At December 30, 2005 and December 31, 2004, the face amount of the foreign currency forward contracts outstanding was approximately $74.6 million and $72.3 million, respectively. The Company recognized the difference between the face amount and the fair value of its forward contracts and recorded a liability of $0.4 million and $0.1 million at December 30, 2005 and December 31, 2004, respectively.

Foreign currency translation: The results of operations for foreign subsidiaries, where the functional currency is not the U.S. dollar, are translated into U.S. dollars using the average exchange rates during the year, while the assets and liabilities are translated using period-end exchange rates. The related translation adjustments are recorded in a separate component of Stockholders’ equity, “Foreign currency translation.” Gains and losses from foreign currency transactions are included in “Other, net” in the consolidated statements of operations. The Company recognized $4.1 million and $5.6 million in net foreign exchange losses in 2005 and 2004. In 2003, the Company’s net foreign exchange was minimal.

Revenue recognition: Sales to customers, resellers and distributors and related cost of sales are recognized upon transfer of title, which occurs upon shipment of products. Services, such as design and testing of product configurations for customers and contractual supply chain management, are not billed separately and are included in the sales price of the product.

In December 2004, the FASB issued Staff Position No. 109-1 (“FAS 109-1”), Application of SFAS No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004. The American Jobs Creation Act of 2004 (“AJCA”) introduces a special 9% tax deduction on qualified production activities. FAS 109-1 clarifies that this tax deduction should be accounted for as a special tax deduction in accordance with SFAS No. 109. Pursuant to the AJCA and the guidance that has been forthcoming to date, the Company will likely not be viewed as conducting “qualified production activities” and, thus, not be able to claim this tax benefit. Accordingly, the Company does not expect the adoption of these new tax provisions to have a material impact on its consolidated financial position, results of operations or cash flows.

In December 2004, the FASB issued Staff Position No. 109-2 (“FAS 109-2”), Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004. The AJCA introduced a limited time 85% dividends received deduction on the repatriation of certain foreign earnings to a U.S. taxpayer (repatriation provision), provided certain criteria are met. FAS 109-2 provides accounting and disclosure guidance for the repatriation provision. During 2005 the Company adopted a repatriation plan and the Company’s Canadian subsidiary declared and paid a gross dividend (before withholding taxes and other statutory holdbacks) of $75.0 million. The additional U.S. federal income tax incurred as a result of this repatriation was approximately $4.2 million. The additional foreign withholding tax incurred as a result of this transaction was approximately $3.5 million.

Under the provisions of Statement of Financial Accounting Standard (“SFAS”) No. 123, Accounting for Stock-Based Compensation, and SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of SFAS No. 123, the Company has elected to continue to apply the intrinsic value method of Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and its related interpretations in accounting for its stock-based compensation plans. In accordance with the APB Opinion No. 25, compensation cost for the Company’s fixed stock options issued were measured as the excess, if any, of the quoted market price of the Company’s stock at the date of the grant over the option exercise price and is charged to operations over the vesting period. The Company applied the disclosure-only provisions of SFAS No. 123. Accordingly, because the options were granted at market value, no compensation expense has been recognized in the consolidated statements of operations for the stock option plans.

The Black-Scholes option-pricing model was developed for estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from those of traded options and, because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock options. Had compensation costs for the plans been determined based on the fair value at the grant date using the Black-Scholes option pricing model and amortized over the respective vesting period, the Company’s net income would have been reduced to the pro forma amounts indicated below:

The weighted average fair value of the Company’s stock options (which was $14.74 per share in 2002) was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions: expected stock price volatility of 46%; expected dividend yield of zero; risk-free interest rate of 4.7%; and an average expected life of 8 years.

after June 15, 2005. On April 14, 2005, the Securities and Exchange Commission (“SEC”) postponed the effective date. SFAS No. 123(R) will be effective for annual (rather than interim) reporting periods beginning after June 15, 2005. The Company is required to adopt SFAS No. 123(R) in the first quarter of fiscal 2006. The Company will be required to measure the cost of all employee share-based payments to employees, including grants of employee stock options, using a fair-value-based method. The pro forma disclosures previously permitted under SFAS No. 123 no longer will be an alternative to financial statement recognition. See “Stock based compensation” above for the pro forma net income and net income per share amounts for the years 2005, 2004 and 2003 as if the Company had used a fair-value-based method similar to the methods required under SFAS No. 123(R) to measure compensation expense for employee stock incentive awards. Based on the number of options outstanding at December 30, 2005, the adoption of SFAS No. 123(R) by the Company is expected to result in an additional expense of approximately $0.8 million to be recognized in 2006. The additional expense of $0.8 million does not include potential future stock option grants under existing stock plans.

Upon conversion, the Company is required to deliver an amount of cash equal to the accreted principal amount and a number of common stock shares with a value equal to the amount, if any, by which the conversion value exceeds the accreted principal amount at the time of conversion. As a result of the conversion value exceeding the accreted principal in 2005 and 2004, the Company included 1.1 million and 0.4 million additional shares related to the Convertible Notes due 2033 in the diluted weighted average common shares outstanding. In 2003, the conversion value never exceeded the accreted principal amount of the Convertible Notes due 2033, therefore, no additional shares were included in the diluted weighted average common shares outstanding. The conversion rate of the Convertible Notes due 2033 has been adjusted to reflect the special dividends (See Note 5 “Special Dividends”).

In June 2005, the Company repurchased the remaining 7% zero coupon convertible notes due 2020 (“Convertible Notes due 2020”). The Company included in its calculation of diluted income per share 0.3 million of common stock equivalents relating to the Convertible Notes due 2020 and excluded $0.7 million of related net interest expense. In 2004 and 2003, the Company excluded from its calculation of diluted income per share 1.5 million of common stock equivalents relating to the Convertible Notes due 2020, as the effect was anti-dilutive. Because the convertible notes were not included in the diluted shares outstanding, the related $2.7 million and $4.0 million of net interest expense was not excluded from the determination of income in the calculation of diluted income per share for 2004 and 2003, respectively.

In December 2003, the Company received $4.7 million from an escrow account established in connection with the 1983 bankruptcy of Itel Corporation, the predecessor of the Company. As of January 2, 2004, the Company was unable to determine the appropriate beneficiary of this receipt and was in the process of an investigation to determine its proper disposition. As of January 2, 2004, the Company had not recorded income associated with this receipt because of the uncertainty of the beneficiary. During the first quarter of 2004, the Company completed the investigation and concluded that the funds are the property of the Company. Accordingly, in the first quarter of 2004, the Company recorded a $4.1 million extraordinary after-tax gain as a result of the receipt.

Following the September 2002 acquisition of the assets and operations of Pentacon, Anixter acquired Walters Hexagon as well as the assets and operations of DDI. All three of these businesses are engaged in the supply of “C” class inventory components to original equipment manufacturers throughout the United States and the United Kingdom, France and Italy. As a part of bringing these businesses together to form an industry leading supply chain solution that combines the individual strengths and expertise of the acquired companies

with the financial strength and global capabilities of Anixter, a new brand name, Anixter Fasteners^SM was introduced in 2004 to reflect the combined capabilities. As a result of this new brand name introduction, the Company recorded an asset impairment charge in its North America business segment of $1.8 million in 2004 to write-down to fair value the value assigned to the Pentacon name when that business was acquired by Anixter, as the Pentacon brand name will no longer be used in the industrial operations.

In accordance with the provisions of the stock option and enhanced incentive plans, the exercise price and the number of options and stock units outstanding were adjusted in 2005 and 2004 to reflect both special dividends. The changes resulted in no additional compensation expense. For further information regarding the adjustments to the stock options and stock units, see Note 12 “Preferred Stock and Common Stock.”

The conversion rate of the Convertible Notes due 2033 was adjusted in 2005 and 2004 to reflect both special dividends. Holders of the Convertible Notes due 2033 may convert each Note into 15.067 shares of the Company’s common stock. For further information regarding the adjustments to the conversion rate of the Convertible Notes due 2033, see Note 8 “Debt.”

On July 8, 2005, the Company acquired Infast, a UK-based distributor of fasteners and other “C” class inventory components to original equipment manufacturers. Based on the offer price of 34 pence per Infast share, the Company paid approximately $71.8 million for all of the outstanding shares of Infast, including transaction related costs. As a result of the acquisition, Anixter assumed the outstanding debt obligations of Infast which, at July 8, 2005, totaled approximately $26.5 million. The purchase of the shares was funded from on-hand cash balances derived from the February 2005 issuance of Senior Notes. Infast is a value-added distributor of fasteners and related products specializing in inventory logistics management programs directed at supporting the production lines of original equipment manufacturers across a broad spectrum of industries. Infast employs approximately 900 people located in 30 locations in the United Kingdom and the United States. The Company believes Infast’s business model complements its strategy of building a global original equipment manufacturer supply business. Included in the results of the Company for 2005, are $126.4 million of sales and $1.7 million of operating income related to Infast.

In connection with the acquisition of Infast, the Company has undertaken a restructuring of the acquired business. In accordance with the requirements of Emerging Issues Task Force Pronouncement (EITF) 95-03, the Company is in the process of completing a plan that primarily includes facility closings, severance and other changes in the preliminary fair value of fixed assets. The Company expects that this plan will be finalized in the first half of 2006. The cost associated with implementing this plan, which the Company cannot currently determine, will be accounted for as part of purchase accounting.

On February 24, 2005, the Company’s primary operating subsidiary, Anixter Inc., issued $200.0 million of Senior Notes, which are fully and unconditionally guaranteed by the Company. Interest of 5.95% on the Senior Notes is payable semi-annually on March 1 and September 1 of each year, commencing September 1, 2005. Issuance costs related to the offering were approximately $2.1 million offset by proceeds of $1.8 million, resulting from entering into an interest rate hedge prior to the offering. Accordingly, net issuance costs of approximately $0.3 million associated with the notes are being amortized through March 1, 2015 using the straight-line method. The proceeds from the sale of the Senior Notes were approximately $199.6 million, a portion of which was used to redeem the Convertible Notes due 2020 and acquire the shares of Infast (See Note 6 “Acquisition of Businesses”). The remaining proceeds from the Senior Notes were used for general corporate purposes.

The net proceeds from the issuance in July 2003 were $139.8 million and were initially used (i) to fund repurchases of $63.5 million of accreted value of the Company’s outstanding Convertible Notes due 2020 from a limited number of holders, (ii) to fund repurchases of approximately $17.2 million of the Company’s common stock and (iii) for general corporate purposes, including the repayment of working capital borrowings under a floating rate bank line of credit. The Company expects to continue to borrow such amounts under the line of credit from time to time for general corporate purposes. The discount associated with the issuance is being amortized through June 2033, using the effective interest rate method. Issuance costs at December 30, 2005 of approximately $4.3 million are being amortized through June 2033 using the straight-line method.

The conversion of the Old Securities could be settled in stock, cash or a combination of cash and stock. The conversion of the New Securities will be settled in cash up to the accreted principal amount of the convertible note. If the conversion value of the convertible note exceeds the accreted principal amount of the convertible note at the time of conversion, the amount in excess of the accreted value will be settled in stock.

The conversion rate of the Convertible Notes due 2033 was adjusted in 2005 and 2004 to reflect both special dividends. Holders of the Convertible Notes due 2033 may convert each Note into the equivalent of 15.067 shares of the Company’s common stock compared to the equivalent of 13.5584 shares and 12.8773 shares before the adjustments in 2005 and 2004, respectively. For further information regarding the adjustments to the conversion rate of the Convertible Notes due 2033, see Note 5 “Special Dividends.”

The Company must pay contingent cash interest to the holders of the New Securities during any six-month period commencing July 7, 2011 if the average market price of the New Securities for a five trading day measurement period preceding the applicable six-month period equals 120% or more of the sum of the original issuance price and accrued original issue discount for the New Securities as of the day immediately preceding the relevant six-month period. The contingent interest payable per New Security in respect of any six-month period will equal an annual rate of 0.25% of the average market price of a New Security for the five trading day measurement period and will be payable on the last day of the relevant six-month period. Except for the contingent interest described above, the Company will not pay cash interest on the New Securities prior to maturity. The original issue discount will continue to accrue at the yield to maturity whether or not contingent interest is paid.

On June 28, 2000, the Company issued $792.0 million of 7% zero coupon convertible notes due 2020 (“Convertible Notes due 2020”). On June 28, 2005, the Company retired all of its remaining Convertible Notes due 2020 for $69.9 million. As a result, the Company wrote off the related unamortized issuance costs, resulting in a pre-tax loss of $1.2 million ($0.7 million after-tax, or $0.02 per diluted share) in 2005. The remaining face value of the Convertible Notes due 2020 outstanding at December 31, 2004 was $196.3 million with a book value of $67.6 million. The discount associated with the issuance was being amortized through June 28, 2020, using the effective interest rate method.

The new agreement, which is guaranteed by the Company, contains covenants that among other things restrict the leverage ratio and set a minimum fixed charge coverage ratio. In connection with this refinancing in 2004, the Company recorded a pre-tax loss of $0.7 million ($0.4 million after-tax, or $0.01 per diluted share) in 2004 for the write-off of deferred financing costs remaining from the previous facility.

In March of 2003, Anixter cancelled $115.0 million of the $390.0 million five-year credit facility that was set to expire in October 2005 in order to reduce costs associated with this excess availability. Accordingly, in 2003 the Company recorded a loss on the extinguishment of debt of approximately $0.4 million to expense the financing fees associated with the cancelled portion of the revolving credit agreement.

At December 30, 2005, the primary liquidity source for Anixter is the $275.0 million, five-year revolving credit agreement, of which $110.6 million was outstanding. Facility fees payable on this credit agreement totaled $0.8 million in 2005 and $0.7 million in both 2004 and 2003 and were included in interest expense in the consolidated statements of operations. This revolving credit agreement requires certain covenant ratios to be maintained. The Company is in compliance with all of these covenant ratios and believes that there is adequate margin between the covenant ratios and the actual ratios given the current trends of the business. See Exhibit 4.3 for definitions of the covenant ratios. Under the leverage ratio, as of December 30, 2005, $221.2 million of revolving lines of credit at Anixter would be permitted to be borrowed, of which $74.9 million may be used to pay dividends to the Company.

In November of 2005, Anixter Canada, Inc. entered into a $40.0 million (Canadian dollar) unsecured revolving credit facility maturing on June 18, 2009 for general corporate purposes and to finance, in part, the payment of a dividend to Anixter Inc. The Canadian dollar borrowing rate under the agreement is the BA/ CDOR rate plus the applicable bankers’ acceptance fee (currently 100.0 basis points) for Canadian dollar advances or the prime rate plus the applicable 22.5 basis points. The borrowing rate for U.S. dollar advances is the base rate plus the applicable margin. In addition, there are standby fees on the unadvanced balance currently equal to 22.5 basis points. At December 30, 2005, there was $34.3 million (U.S. dollar) available, of which $25.8 million (U.S. dollar) is included in long-term debt outstanding.

In October 2000, Anixter entered into an accounts receivable securitization program. The program allows the Company to sell, on an ongoing basis without recourse, a majority of the accounts receivable originating in the United States to Anixter Receivables Corporation (“ARC”), a wholly-owned, bankruptcy-remote special purpose entity. The securitization program is set to expire in 2007. The assets of ARC are not available to creditors of Anixter in the event of bankruptcy or insolvency proceedings. ARC may in turn sell an interest in these receivables to a financial institution for proceeds of up to $225.0 million. Effective October 1, 2004, ARC, which was previously unconsolidated, is consolidated in the financial statements of the Company (See Note 1 “Significant Accounting Policies”).

Certain debt agreements entered into by the Company’s subsidiaries contain various restrictions, including restrictions on payments to the Company. The Company has guaranteed substantially all of the debt of its subsidiaries. Restricted net assets of its subsidiaries were approximately $927.3 million and $979.4 million at December 30, 2005 and December 31, 2004, respectively.

Substantially all of the Company’s office and warehouse facilities and equipment are leased under operating leases. A certain number of these leases are long-term operating leases containing rent escalation clauses and expire at various dates through 2023. Most operating leases entered into by the Company contain renewal options.

During 2003, the Company completed a sale and leaseback of its corporate headquarters facility. Under the terms of the transaction, Anixter received proceeds of $27.0 million equal to the amount expended for construction of the facility during 2002 and 2003. At the same time, Anixter entered into a 20-year operating lease agreement for the facility. Proceeds from the transaction were used for general corporate purposes.

As a result of the acquisition of Infast, Anixter has assumed a guarantee related to a lease obligation through 2014 of a previously owned operating division of Infast. If the previously owned operating division fails to meet its obligations under the lease, Anixter is obligated to make any payments for which the previously owned division of Infast is in default. The annual rentals payable under the lease are approximately $1.9 million. At December 30, 2005, funds amounting to $3.0 million were held in escrow for use by the Company in the event of default on the obligations under the lease. Total future lease obligations are approximately $17.2 million. As of December 30, 2005, $0.6 million has been recorded as the preliminary fair value liability and included as part of the tangible fair value of net assets acquired of Infast. The Company is still evaluating the fair market value of the guarantee with the assistance of third party advisors and the change in this liability, if any, will be included in the tangible fair value of net assets acquired of Infast. Management believes that, in the event of default, the property could be sublet to another party. As a result, the potential liability would be significantly less than $14.2 million, net of the escrow amount.

At December 30, 2005, various foreign subsidiaries of the Company had aggregate cumulative NOL carryforwards for foreign income tax purposes of approximately $108.8 million, which are subject to various provisions of each respective country. Approximately $22.1 million of this amount expires between 2006 and 2015 and $86.7 million of the amount has an indefinite life.

Of the $108.8 million NOL carryforwards of foreign subsidiaries mentioned above, $79.3 million relates to losses that have already provided a tax benefit in the U.S. due to rules permitting flow-through of such losses in certain circumstances. Without such losses included, the cumulative NOL carryforwards at December 30, 2005 were approximately $29.5 million, which are subject to various provisions of each respective country. Approximately $8.7 million of this amount expires between 2006 and 2015 and $20.8 million of the amount has an indefinite life. The deferred tax asset and valuation allowance, shown below relating to foreign NOL carryforwards, have been adjusted to reflect only the carryforwards for which the Company has not taken a tax benefit in the United States. In 2005 and 2004, the Company recorded a valuation allowance related to our foreign NOL carryforwards to reduce the deferred tax asset to the amount that is more likely than not to be realized.

Undistributed earnings of the Company’s foreign subsidiaries amounted to approximately $146.8 million at December 30, 2005. Historically, the Company considered those earnings to be indefinitely reinvested (see following paragraph regarding unusual, non-recurring exception to this philosophy) and, accordingly, no provision for U.S. federal and state income taxes or any withholding taxes has been recorded. Upon distribution of those earnings in the form of dividends or otherwise, the Company may be subject to both U.S. income taxes (subject to adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. With respect to the countries that have undistributed earnings as of December 30, 2005, according to the foreign laws and treaties in place at that time, estimated U.S. federal income tax of approximately $30.7 million and various foreign jurisdiction withholding taxes of approximately $4.0 million would be payable upon the remittance of all earnings at December 30, 2005.

In 2004, Congress enacted Internal Revenue Code Section 965, which introduced a limited-time 85% dividends received deduction on the repatriation of certain foreign earnings to a U.S. taxpayer (repatriation provision), provided certain criteria were met. (See Note 1 “Significant Accounting Policies”). In the fourth quarter of 2005, the Company’s Canadian subsidiary declared and paid a gross dividend (before withholding

taxes and other statutory holdbacks) of $75 million. The repatriation was funded through a combination of on-hand cash balances and bank borrowings by the Company’s Canadian subsidiary. The Company’s additional U.S. federal income tax and foreign withholding tax as a result of this transaction was approximately $4.2 million and $3.5 million, respectively. The Company’s diluted income per share decreased approximately $0.19 as a result of the additional $7.7 million tax expense associated with the $75 million repatriation. The final determination of the amount the Company repatriated under the repatriation provision was determined after consideration of, among other things, the qualifying investment requirements of the AJCA and foreign jurisdiction borrowing capacity. The principal use of repatriated funds will be to fund pension plan contributions and on-going non-executive compensation costs in the United States.

The Company has various defined benefit and defined contributory pension plans. The defined benefit plans of the Company are the Anixter Inc. Pension Plan, Executive Benefit Plan and Supplemental Executive Retirement Plan (together the “Domestic Plans”) and various pension plans covering employees of foreign subsidiaries (“Foreign Plans”). The majority of the Company’s pension plans are non-contributory and cover substantially all full-time domestic employees and certain employees in other countries. Retirement benefits are provided based on compensation as defined in both the Domestic and Foreign Plans. The Company’s policy is to fund all plans as required by the Employee Retirement Income Security Act of 1974 (“ERISA”), the Internal Revenue Service and applicable foreign laws. Assets in the various plans consisted primarily of equity securities and fixed income fund investments.

The investment objective of both the Domestic and Foreign Plans is to ensure, over the long-term life of the Plans, an adequate level of assets to fund the benefits to employees and their beneficiaries at the time they are payable. In meeting this objective, Anixter seeks to achieve a high level of total investment return consistent with a prudent level of portfolio risk. The risk tolerance of Anixter indicates an above average ability to accept risk relative to that of a typical contributory or non-contributory pension plan as the duration of the projected benefit obligation is longer than the average company. The risk preference indicates a willingness to accept some increases in short-term volatility in order to maximize long-term returns.

The expected long-term rate of return on both the Domestic and Foreign Plans’ assets reflects the average rate of earnings expected on the invested assets and future assets to be invested to provide for the benefits included in the projected benefit obligation. The weighted average expected rate of return on plan assets for 2006 is 7.60%. The measurement date for all plans is December 31.

The accumulated benefit obligation in 2005 and 2004 for the Domestic Plans was $125.7 million and $109.9 million, respectively, and for the Foreign Plans it was $123.8 million and $61.1 million, respectively. The Company had six plans in 2005 and seven plans in 2004 where the accumulated benefit obligation is in excess of the fair value of plan assets.

A minimum pension liability is defined as the difference between the accumulated benefit obligation and the underlying pension plan assets and the accrued pension liability. In 2005 and 2004, the Company was required to record a minimum pension liability of $4.4 million and $4.2 million, respectively, relating to the Domestic Plans. There was no income statement impact in 2005 or 2004. The offset to the minimum pension liability adjustment for the Domestic Plans in 2005 was an intangible asset of $0.6 million while $2.5 million was offset to other comprehensive income, net of deferred taxes. In 2004, the offset to the minimum pension liability adjustment for the Domestic Plans was an intangible asset of $4.2 million. In 2005 and 2004, the Company also recorded a minimum pension liability adjustment for its Foreign Plans of $0.7 million and $2.7 million. The Foreign Plans’ offset, net of deferred taxes, was to other comprehensive income of $0.5 million and $1.3 million in 2005 and 2004, respectively.

Non-union domestic employees of the Company hired on or after June 1, 2004 earn a benefit under a personal retirement account (cash balance account). Each year, a participant’s account receives a credit equal to 2.0% of the participant’s salary (2.5% if the participant’s years of service at the beginning of the plan year are five or more). Interest earned on the credited amount is not credited to the personal retirement account, but is contributed to the participant’s account in the Anixter Inc. Employee Savings Plan. The contribution equals the interest earned on the personal retirement account in the Domestic Plan and is based on the 10-year Treasury securities rate as of the last business day of December.

Anixter Inc. adopted the Anixter Inc. Employee Savings Plan effective January 1, 1994. The Plan is a defined-contribution plan covering all non-union domestic employees of the Company. Participants are eligible and encouraged to enroll in the tax-deferred plan on their date of hire, and are automatically enrolled approximately 60 days after their date of hire unless they opt out. The savings plan is subject to the provisions of ERISA. The Company makes a matching contribution equal to 25% of a participant’s contribution, up to 6% of a participant’s compensation. The Company’s contributions to these plans are based upon various levels of employee participation. The total cost of all of the defined contribution plans was $2.0 million, $1.9 million and $1.5 million in 2005, 2004 and 2003, respectively.

A non-qualified deferred compensation plan was implemented on January 1, 1995. The plan permits selected employees to make pre-tax deferrals of salary and bonus. Interest is accrued quarterly on the deferred compensation balances based on the average 10-year Treasury note rate for the previous three months times a factor of 1.4, and the rate is further adjusted if certain financial goals of the Company are achieved. The plan provides for benefit payments upon retirement, death, disability, termination or other scheduled dates determined by the participant. At December 30, 2005 and December 31, 2004, the long-term deferred compensation liability was $23.5 million and $20.6 million, respectively.

Concurrent with the implementation of the deferred compensation plan, the Company purchased variable, separate account life insurance policies on the lives of the participants. To provide for the liabilities associated with the deferred compensation plan and an executive non-qualified defined benefit plan, fixed general account “increasing whole life” insurance policies were purchased on the lives of certain participants. The Company pays level annual premiums on the above company-owned policies. The last premium was paid in 2005. Policy proceeds are payable to the Company upon the insured participant’s death. At December 30, 2005 and December 31, 2004, the cash surrender value of $30.8 million and $28.2 million, respectively, was recorded under this program and reflected in “Other assets” on the consolidated balance sheets.

In 2003, the Company repurchased 1.6 million shares at an average cost of $22.74. Purchases were made in the open market and were financed from cash generated by operations and the net proceeds ($139.8 million) from the issuance of $378.1 million of Convertible Notes due 2033. No shares were repurchased in 2005 or 2004. However, the Company may purchase additional shares with the volume and timing dependent on market conditions.

Beginning in 2003, the Company granted stock units in lieu of employee stock options under the 2001 Stock Incentive Plan. The Company granted approximately 262,183, 244,630 and 248,000 stock units to employees in 2005, 2004 and 2003, respectively, with a weighted-average grant date fair value of $37.39, $30.50 and $23.34 per share, respectively. The grant date value of the stock units is amortized and converted to common stock over a four-year vesting period from the date of grant. Compensation expense associated with the stock units was $6.7 million, $4.6 million and $2.2 million in 2005, 2004 and 2003, respectively.

In 1996, the Company adopted a Director Stock Unit Plan to pay its non-employee directors annual retainer fees in the form of stock units. Currently, these units are granted quarterly. Prior to 2005, these units were granted annually. These stock units convert to common stock of the Company at a pre-arranged time selected by each director. Stock units were granted to nine directors in 2005, eleven directors in 2004 and ten directors in 2003 having an aggregate value at grant date of $0.6 million, $1.0 million and $1.1 million, respectively. Compensation expense associated with the director stock units was $1.4 million, $1.0 million and $1.1 million in 2005, 2004 and 2003, respectively.

* In accordance with the provisions of the enhanced incentive plan, stock units granted in 2001 were adjusted to reflect the special dividend in 2004. As a result, the number of outstanding stock units associated with the 2001 grant increased from 53,680 to 56,531 in 2004. This change resulted in no additional compensation expense in 2004.

The Company had stock incentive plans that reserve 0.5 million shares for additional stock option awards or stock grants. Options previously granted under these plans have been granted with exercise prices at, or higher than, the fair market value of the common stock on the date of grant. One-fourth of the employee options granted become exercisable each year after the year of grant. All remaining director options outstanding at the end of 2004 were exercised during the fiscal year ended December 30, 2005. All options expire ten years after the date of grant.

* In accordance with the provisions of the stock option plan, the exercise price and number of options outstanding were adjusted to reflect the special dividends in 2005 and 2004. (See Note 5 “Special Dividends”). No adjustment was necessary in 2005 to director options as all previously outstanding options were exercised prior to the special dividend in 2005.

The Company discontinued the Employee Stock Purchase Plan (“ESPP”) on June 30, 2004, which represented the end of the 2003 plan year. Participants could request that up to 10% of their base compensation be applied toward the purchase of common stock under the Company’s ESPP. The discounted purchase price for the ESPP on June 30, 2004 was $19.92, or 85% of the fair market value of the common stock at the beginning of the ESPP year, July 1, 2003. Under the ESPP, the Company sold 0.1 million shares to employees in both 2004 and 2003.

The Company is engaged in the distribution of communications and specialty wire and cable products and “C” class inventory components from top suppliers to contractors and installers, and also to end users including manufacturers, natural resources companies, utilities and original equipment manufacturers. The Company is organized by geographic regions and, accordingly, has identified North America (United States and Canada), Europe and Emerging Markets (Asia Pacific and Latin America) as reportable segments. The Company obtains and coordinates financing, tax, information technology, legal and other related services, certain of which are rebilled to subsidiaries. Certain corporate expenses are allocated to the segments based primarily on specific identification, projected sales and estimated use of time. Interest expense and other non-operating items are not allocated to the segments or reviewed on a segment basis. Intercompany transactions are not significant.

In 2004, the Company recorded an extraordinary gain of $4.1 million and an impairment charge of $1.8 million in its North America segment. For more information, see Note 3 “Extraordinary Gain” and Note 4 “Impairment Charge.” In 2004, tangible long-lived assets in the United States declined $35.2 million, primarily due to the elimination of Anixter’s investment in Anixter Receivables Corporation, as it is now a consolidated entity. No customer accounted for 10% or more of sales in 2005, 2004 or 2003. Export sales were insignificant. Segment information for 2005, 2004 and 2003 was as follows:

The parent company of Anixter Inc. guarantees, fully and unconditionally, substantially all of the debt of its subsidiaries, which includes Anixter Inc. The parent company has no independent assets or operations and all other subsidiaries other than Anixter Inc. are minor. Certain debt agreements entered into by Anixter Inc. contain various restrictions including restrictions on payments to the Company. Such restrictions have not had nor are expected to have an adverse impact on the Company’s ability to meet its cash obligations. See Note 8 “Debt” for further details on restricted assets. The following summarizes the financial information for Anixter Inc.:

The following is a summary of the unaudited interim results of operations and the price range of the common stock composite for each quarter in the years ended December 30, 2005 and December 31, 2004. The Company has never paid regular cash dividends on its common stock. However, in 2005 and 2004, the Company declared two separate special dividends of $4.00 and $1.50 per common share, respectively, or $156.1 million and $55.8 million, respectively, as a return of excess capital to shareholders. See Note 5 “Special Dividends” for further details. As of February 14, 2006, the Company had 3,485 shareholders of record.

Under the supervision and the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation as of December 30, 2005 of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework, issued by the committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 30, 2005.

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Anixter International Inc. maintained effective internal control over financial reporting as of December 30, 2005, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Anixter International Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Anixter International Inc. maintained effective internal control over financial reporting as of December 30, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Anixter International Inc. maintained, in all material respects, effective internal control over financial reporting as of December 30, 2005, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Anixter International Inc. as of December 30, 2005 and December 31, 2004, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended December 30, 2005 and our report dated February 23, 2006 expressed an unqualified opinion thereon.

See Registrant’s Proxy Statement for the 2006 Annual Meeting of Stockholders — “Election of Directors,” “Corporate Governance — Code of Ethics” and “Section 16(a) Beneficial Ownership Reporting Compliance.” The Company’s Code of Ethics and changes or waivers, if any, related thereto are located on the Company’s website at http://www.anixter.com.

See Registrant’s Proxy Statement for the 2006 Annual Meeting of Stockholders — “Executive Compensation,” “Compensation of Directors,” “Employment Contracts and Termination of Employment and Change-in-Control Arrangements,” “Compensation Committee Interlocks and Insider Participation” and “Performance Graph.”

In the parent company condensed financial statements, the Company’s investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries since the date of acquisition. The Company’s share of net income of its unconsolidated subsidiaries is included in consolidated income using the equity method. The parent company financial statements should be read in conjunction with the Company’s consolidated financial statements.

73 EX-10.19 2 c02746exv10w19.txt ANIXTER INC. AMENDED AND RESTATED SUPPLEMENTAL RETIREMENT PLAN EXHIBIT 10.19 ANIXTER INC. AMENDED AND RESTATED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN EFFECTIVE AS OF JANUARY 1, 2006 SECTION 1 ESTABLISHMENT OF THE PLAN 1.1. Establishment of the Plan. Anixter Inc., a Delaware corporation (the "Company"), originally established the ANIXTER INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (the "Plan") effective as of August 4, 2004. This amendment and restatement of the Plan is Effective as of January 1, 2006. 1.2. Description of the Plan. The Plan is intended to constitute a nonqualified deferred compensation plan which, in accordance with ERISA Sections 201(2), 301(a)(3) and 401(a)(1), is unfunded and established primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. The Plan is intended to meet the requirements for effective deferrals of compensation under, and otherwise comply with, Section 409A of the Code and shall be operated in good faith compliance with Section 409A and the regulations promulgated thereunder. 1.3. Purpose of the Plan. In addition to the description of the Plan as set forth in subsection 1.2 above, the primary objective of the Company in establishing this Plan is to provide supplemental retirement income to certain employees of the Company in addition to that provided through all other sources. SECTION 2 DEFINITIONS 2.1. Definitions. Whenever used in the Plan, the following terms, when initially capitalized, shall have the respective meanings set forth below. Initially capitalized terms used in the Plan and not set forth below shall have the meanings ascribed to such terms under the Anixter Inc. Pension Plan as amended and restated from time to time. (a) "Accrued Normal Benefit" means the product of (A x B), where A is the Participant's Normal Benefit and B is a fraction the numerator of which is the Participant's total months of Benefit Accrual Service and the denominator of which is 60. (b) "Actuarially Equivalent" has the meaning given to such term under the Pension Plan. (c) "Affiliate" with respect to the Company means the Parent and any other entity controlled by, under the control of, or under common control with the Company within the meaning of the Securities Exchange Act of 1934 or that is a member of Company's controlled group within the meaning of Section 414(b) or (c) of the Code. (d) "Beneficiary" means any person or entity designated by the Participant or otherwise entitled to receive any benefits under the Plan which may be due upon the Participant's death. (e) "Benefit Accrual Service" means, with respect to a Participant, the lesser of (i) the total months of benefit accrual service earned by the Participant under the Pension Plan from, including, and after the Participant's Initial Participation Month and through the date of such Participant's Retirement or Termination, as applicable, or (ii) sixty (60) months. For purposes of determining Benefit Accrual Service for purposes of the Plan, a Participant's benefit accrual service under the Pension Plan shall be determined without regard to any limitation on the number of months of benefit accrual service which are considered for benefit purposes under the Pension Plan. (f) "Benefit Offset Amount" means with respect to a Participant, the sum of (i) a Participant's combined accrued monthly benefit amount, stated as a Life Annuity commencing at Normal Retirement Date, under the Pension Plan and the Excess Plan and (ii) the Participant's Social Security Offset Amount. (g) "Board" means the Board of Directors of Parent. (h) "Cause" has the meaning set forth in any employment or other similar written agreement between a Participant and the Company which governs the terms and conditions of a Participant's employment with the Company. In the absence of such an agreement, or if such agreement does not define "Cause," then "Cause" shall mean the termination of a Participant's employment by formal action of the Board for any of the following reasons: (1) embezzlement, dishonesty, fraud or any illegal or unethical act or omission in connection with the performance of Participant's duties or as an Employee that materially injures or reasonably could materially injure the Company or any Affiliate or which does or reasonably could materially impair a Participant's ability to satisfactorily perform his assigned duties and responsibilities; (2) conviction of (or plea of nolo contendere to) any (A) felony or (B) any other crime involving moral turpitude, or any other conviction (or plea of nolo contendere) that does or that reasonably could materially impair a Participant's ability to satisfactorily perform his assigned duties and responsibilities; (3) improper, willful and material disclosure of the proprietary information of the Company or any Affiliate or other willful material breach of a Participant's fiduciary obligations to the Company; or 2 (4) any willful failure or refusal to follow lawful and good faith directions of the Board or a duly authorized officer of the Company. For purposes of this definition, no act or failure to act on the part of a Participant shall be considered "willful" unless done, or omitted to be done, by him in bad faith or without a reasonable belief that his action or omission are in the best interests of the Company or its Affiliates. Any act or omission based on a direction of the Board or based on the advice of counsel for the Company or Parent shall be conclusively presumed to be done, or omitted to be done, in good faith and in the best interests of Company or its Affiliates. (i) "Code" means the Internal Revenue Code of 1986, as amended. (j) "Committee" means the Anixter Inc. Employee Benefits Administrative Committee or any successor thereto. (k) "Company" has the meaning given to such term in the introductory paragraph hereto, provided that where the context so requires the term shall also include each Affiliate that adopts this Plan with the consent and approval of the Board. (l) "Compensation" means, for purposes of determining a Participant's Normal Benefit, the total cash remuneration paid or payable to a Participant during a calendar year for services provided as an Employee which would be taken into account for purposes of computing the Participant's accrued benefit under the Pension Plan. (m) "Compensation Committee" means the Anixter International Inc. Compensation Committee or any successor thereto. (n) "Employee" means a person who is actively employed by the Company or an Affiliate and who would be considered to be in an employer-employee relationship with the Company or an Affiliate applying common law principles. (o) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. (p) "Excess Plan" means the Anixter Inc. Excess Benefit Plan or any successor thereto. (q) "Final Average Compensation" means the average monthly compensation amount determined under the Pension Plan as the participant's final average pay and which is used for purposes of computing such Participant's accrued benefit under the Pension Plan. (r) "Initial Participation Month" means with respect to a Participant the calendar month as of which such Participant's participation in the Plan is approved by the Compensation Committee. 3 (s) "Life Annuity" means a monthly annuity that is paid to the retired Participant for as long as he lives and which does not provide any payments to a Beneficiary following the Participant's death. (t) "Minimum Accrued Normal Benefit" means with respect to a Participant the product of (A x B), where A is the Participant's Minimum Normal Benefit and B is a fraction the numerator of which is the Participant's total months of Benefit Accrual Service and the denominator of which is 60. (u) "Minimum Normal Benefit" means with respect to a Participant any minimum monthly Life Annuity benefit payable to such Participant without regard to the date benefit payments commence as may be specified on Exhibit A hereto with respect to such Participant. (v) "Normal Benefit" means with respect to a Participant the greater of (i) the monthly benefit amount payable to such Participant as a Life Annuity commencing at the Participant's Normal Retirement Date determined by reducing the Target Benefit of such Participant as specified on Exhibit A by such Participant's Benefit Offset Amount or (ii) such Participant's Minimum Normal Benefit, if any. (w) "Normal Benefit Commencement Age" means the age so specified with respect to a Participant on Exhibit A hereto. (x) "Normal Benefit Commencement Date" means, with respect to a Participant, the first day of the seventh month following the month in which the later of (i) the date such Participant attains Normal Benefit Commencement Age or (ii) the date such Participant's Retirement or Termination occurs. (y) "Normal Retirement Date" means the first of the month coincident with or next following the attainment by the participant of age sixty-five (65). (z) "Parent" means Anixter International Inc., a Delaware corporation and sole shareholder of the Company, or any successor thereto. (aa) "Participant" means an Employee, so designated by action of the Compensation Committee, who is participating in the Plan. (bb) "Plan" means the Anixter Inc. Supplemental Executive Retirement Plan as set forth herein and as amended from time to time. (cc) "Plan Administrator" means the Anixter Inc. Employee Benefits Administrative Committee. (dd) "Pension Plan" means the Anixter Inc. Pension Plan or any successor thereto. (ee) "Retirement" means with respect to a Participant any "separation from service" (within the meaning of Section 409A of the Code) with the Company and all 4 Affiliates, other than termination by the Company for Cause, on or after the Participant attains age sixty-five (65). (ff) "Retirement Date" means the first day of the month coincident with or next following the date of a Participant's Retirement. (gg) "Social Security Offset Amount" means with respect to a Participant fifty percent (50%) of the assumed retirement benefit payable to such Participant under the Social Security Act as in effect on the Participant's Retirement Date or Termination Date, as applicable, computed consistent with the following assumptions: (i) no future increases in the social security wage base or average national wages following such Retirement Date or Termination Date, as applicable, (ii) such benefit is first payable on the Participant's Normal Retirement Date, without regard to when the Participant's actual Social Security Benefit Payments commence, and (iii) Participant has no covered wages for Social Security purposes following such Retirement Date or Termination Date, as applicable. (hh) "Target Benefit" means the monthly Life Annuity benefit commencing at Normal Retirement Date stated as a percentage of Final Average Compensation and so designated with respect to a Participant on Exhibit A hereto. (ii) "Termination" means a "separation from service" for purposes of Section 409A of the Code from the Company and all Affiliates for any reason prior to the Participant obtaining age sixty-five (65). (jj) "Termination Date" means the first day of the month coincident with or next following the date of a Participant's Termination. 2.2. Gender and Number. Except when otherwise indicated by the context, any masculine terminology used herein shall also include the feminine and the feminine shall include the masculine, and the use of any term herein in the singular may also include the plural and the plural shall include the singular. SECTION 3 ELIGIBILITY AND PARTICIPATION 3.1. Eligibility. No Employee shall be eligible to participate in or accrue a benefit under the Plan until such Employee's participation in the Plan has been approved by the Compensation Committee. An Employee shall become a Participant as of the date so specified in the Compensation Committee approval of such participation. 3.2. Reemployment of Former Participant. A former Employee who is re-employed shall be considered a Participant following such re-employment by the Company and such former Employee shall accrue additional Benefit Accrual Service following such re-employment, only if and to the extent such former Employee is re-designated by the Committee and such re-designation is approved by the Compensation Committee. 5 SECTION 4 BENEFITS 4.1. Normal Benefit. A Participant who has at least sixty (60) months of Benefit Accrual Service at the time of his Retirement or Termination will receive from the Plan a monthly benefit which is Actuarially Equivalent to a Life Annuity commencing on his Normal Retirement Date in an amount equal to the greater of his Normal Benefit or his Minimum Normal Benefit, if any, as computed in accordance with Exhibit A, as in effect at the time of such Retirement or Termination. 4.2. Deferred Benefit. If a Participant continues in employment past his Normal Retirement Date, the amount of his monthly benefit payable on Retirement under Section 4.1 above shall be Actuarially Equivalent to the larger of his Normal Benefit or Minimum Normal Benefit at Normal Retirement Date and accordingly adjusted to reflect the deferral of benefit payments beyond his Normal Retirement Date in a manner consistent with such adjustment under the Pension Plan. However, in any event, the Participant's benefit on his Retirement Date shall be computed based on his Final Average Compensation as of his Normal Retirement Date. 4.3. Accrued Benefit. A Participant who has less than sixty (60) months of Benefit Accrual Service at the time of his Retirement or Termination will receive from the Plan a monthly benefit which is Actuarially Equivalent to a Life Annuity commencing on his Normal Retirement Date in an amount equal to the greater of his Accrued Normal Benefit or Minimum Accrued Benefit as computed in accordance with Exhibit A as in effect at the time of such Retirement or Termination. 4.4. Benefit Commencement and Form of Payment. Unless a Participant has made a timely election under Sections 4.5 or 4.6 below, (i) payment of benefits under the Plan will commence on such Participant's Normal Benefit Commencement Date and (ii) benefits will be paid in the form of a Life Annuity. 4.5. Optional Payment Form. A Participant may elect to receive his benefit under the Plan in the form of a 50% Joint and Survivor Annuity for the life of the Participant and any Beneficiary, rather than in the form of a Life Annuity. If the Participant designates a Beneficiary which is not an individual, the Beneficiary shall be deemed to have the same life expectancy as the Participant. In such event, the monthly Joint and Survivor Annuity benefits shall be adjusted so as to be Actuarially Equivalent to the Participant's monthly Life Annuity benefit and the amount of the survivor annuity shall be fifty percent (50%) of the Participant's monthly Joint and Survivor Annuity benefit payable to the Participant. To be effective, any such election must be made in a timely manner for purposes of, and otherwise in compliance with, Section 409A of the Code. 4.6. Optional Benefit Commencement Date. A Participant may elect to have the payment of benefits commence on any date which is both after his Normal Benefit Commencement Date and on or before his Normal Retirement Date. In such event, such Participant's monthly benefit amount as of such date shall be adjusted so as to be Actuarially Equivalent to a Life Annuity commencing on his Normal Retirement Date equal to the greater of his Normal Benefit or his Minimum Normal Benefit, if any, computed in accordance with 6 Exhibit A, as in effect at the time of such Retirement or Termination. To be effective, any such election must be made in a timely manner for purposes of, and otherwise in compliance with, Section 409A of the Code. 4.7. Pre-Retirement Death Benefits. If a Participant dies before payments under the Plan have commenced, no special death benefits will be payable under the Plan, but if the Participant has made a timely and effective Beneficiary election, such Beneficiary will be entitled to receive a survivor benefit in an amount equal to the survivor annuity that would have been payable to the Beneficiary if the Participant had retired and begun receiving benefits in the form of a 50% Joint and Survivor Annuity on the day before his death. The amount of the monthly benefit payable to the Beneficiary shall be determined based on the joint life expectancy of the Participant and the designated Beneficiary or the life expectancy of the Participant if the designated Beneficiary is not an individual. 4.8. Disability Benefits. A Participant whose employment terminated due to disability will not receive special benefits on account of disability, but will be entitled to any benefit otherwise payable under Section 4.1. or 4.2 above. 4.9. Forfeiture of Benefits. Notwithstanding anything in this Plan to the contrary, the Company's obligations to make the payments hereunder and a Participant's right to receive benefits hereunder shall terminate in the event that such Participant is terminated for Cause or after a Participant's Termination or Retirement the Committee discovers grounds which would have constituted Cause had the Board been aware of such grounds during the Participant's employment. 4.10. Special Tax Distributions. In the event that a benefit under the Plan is required to be included in the income of a Participant under Section 409A of the Code prior to the date such benefit would be payable to the Participant under the terms of the Plan, the Participant shall receive an interim distribution from the Plan in a lump sum, made as soon as reasonably possible after the Committee determines that the benefit is includible in income, in an amount equal to the amount required to be included by the Participant in income under Section 409A. In such event, the amount of the monthly benefit payable to the Participant under the Plan shall be adjusted such that the combination of the revised monthly benefit and interim distribution amount are Actuarially Equivalent to the Participant's monthly benefit payable in the form of a Life Annuity commencing at the Participant's Normal Retirement Date. In making such equivalency computation, the amount of the Life Annuity commencing at the Normal Retirement Date and the amount of the interim distribution shall both be converted into a lump sum amount payable at the Normal Retirement Date and the lump sum value of the interim distribution subtracted from the lump sum value of the Life Annuity, with the remainder then being converted to a Life Annuity. SECTION 5 FINANCING 5.1. Financing of Benefits. Benefits shall be payable, when due, by the Company, out of its current operating revenue to the extent not paid from a trust created pursuant to Section 5.2. The Company's obligation to make payments to the recipient when due shall be contractual 7 in nature only, and participation in the Plan will not create in favor of any Participant any right or lien against the assets of the Company. No benefits under the Plan shall be required to be funded by a trust fund or insurance contracts or otherwise. 5.2. "Rabbi" Trust. In connection with this Plan, the Board may establish a grantor trust (known as the "Anixter Inc. Executive Benefit Plan Trust") for the purpose of accumulating funds to satisfy the obligations incurred by the Company under this Plan (and such other plans and arrangements as determined from time to time by the Company). At any time, the Company may transfer assets to the Trust to satisfy all or part of the obligations incurred by the Company under this Plan, in such amounts as may be determined in the sole discretion of the Committee, subject to the return of such assets to the Company at such time as determined in accordance with the terms of such Trust. Any assets of such Trust shall remain at all times subject to the claims of creditors of the Company in the event of the Company's insolvency; and no asset or other funding medium used to pay benefits accrued under the Plan shall result in the Plan being considered as other than "unfunded" under ERISA or the Code. Notwithstanding the establishment of the Trust, the right of any Participant to receive future payments under the Plan shall remain an unsecured claim against the general assets of the Company. SECTION 6 BENEFICIARY DESIGNATION 6.1. Designation of Beneficiary. (a) All Beneficiary designations shall be in writing and signed by the Participant. The designation shall be effective only if and when delivered to the Company during the lifetime of the Participant. The Participant also may change his Beneficiary or Beneficiaries by a signed, written instrument delivered to the Company during his life time. The payment of amounts shall be in accordance with the last unrevoked written designation of Beneficiary that has been signed and delivered to the Company during the life time of the Participant. All Beneficiary designations shall be addressed to the Secretary of Anixter Inc. and delivered to his office, and shall be processed as indicated in subsection (b) below by the Secretary or by his authorized designee. (b) The Secretary of Anixter Inc. (or his authorized designee) shall, upon receipt of the Beneficiary designation: (1) Ascertain that the designation has been signed and in proper form, and if it not, return it to the Participant for his signature or correction; (2) If signed and in proper form, stamp the designation "Received", indicate the date of receipt, and initial the designation in the proximity of the stamp. (c) Any Beneficiary Designation shall be void and of no effect if the designated Beneficiary predeceases the Participant. 6.2. Ineffective Designation. 8 (a) If the Participant does not designate a Beneficiary, or if for any reason such designation is entirely ineffective, the amounts that otherwise would have been paid to the Beneficiary shall be paid to the Participant's estate as the alternate Beneficiary. (b) If a designation is effective in part and ineffective in part, to the extent that a designation is effective, distribution shall be made so as to carry out as closely as discernable the intent of the Participant, with result that only to the extent that a designation is ineffective shall distribution instead be made to the Participant's estate as an alternate Beneficiary. 6.3. Simultaneous Death. If a Participant and Beneficiary die under circumstances such that it is not possible to determine who died first, it is presumed that the Participant survived the Beneficiary. 6.4. Disclaimer. A Beneficiary may disclaim any benefit hereunder in accordance with Internal Revenue Code Section 2518 and applicable state law. SECTION 7 GENERAL PROVISIONS 7.1. Employment/Participation Rights. (a) Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the Company. (b) Nothing in the Plan shall be construed to be evidence of any agreement or understanding, express or implied, that the Company will continue to employ a Participant in any particular position or at any particular rate of remuneration. (c) No employee shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. (d) Nothing in this Plan shall affect the right of a recipient to participate in and receive benefits under and in accordance with any pension, profit sharing, deferred compensation or other benefit plan or program of the Company. In addition, no payments under this Plan shall be deemed salary or other compensation to the Participant for the purpose of computing benefits to which the Participant may be entitled under any pension plan or other arrangements that the Company may have for the benefit of its employees. 7.2. Nonalienation of Benefits. (a) No right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or change, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or change the same shall be void; nor shall any such disposition be compelled by operation of law except to the extent required by law. 9 (b) No right or benefit under this Plan shall be subject to a Qualified Domestic Relations Order as the benefits payable under this Plan are not payable from a qualified plan as such term in used in the Code. (c) No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to benefits under the Plan. (d) If any Participant or Beneficiary hereunder should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber, or change any right or benefit hereunder, then such right or benefit shall, in the discretion of the Committee, cease, and the Committee shall direct in such event that the Company hold or apply the same or any part thereof for the benefit of the Participant or Beneficiary in such manner and in such proportion as the Committee may deem proper. 7.3. Severability. If any particular provision of the Plan shall be found to be illegal or unenforceable for any reason, the illegality or lack of enforceability of such provision shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the illegal or unenforceable provision had not been included. 7.4. No Individual Liability. It is declared to be the express purpose and intention of the Plan that no liability whatsoever shall attach to or be incurred by the shareholders, officers, or directors of the Company or any representative appointed hereunder by the Company, under or by reason of any of the terms or conditions of the Plan. 7.5. Applicable Law. The Plan shall be governed by and construed in accordance with the laws of the State of Illinois except to the extent governed by applicable Federal law. 7.6. Successors. The provisions of the Plan shall bind and inure to the benefit of Company and its successors and assigns. The term successors as used herein shall include any corporate or other business entity that shall, either by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of the Company, and successors of any such corporation or other business entity. 7.7. Indemnity of Committee. To the maximum extent permitted by applicable law, the Company shall indemnify, hold harmless and defend the Committee and the Compensation Committee, each member of the Committee and the Compensation Committee, any employee of the Company, or any individual acting as an employee or agent of any of them (to the extent not indemnified or saved harmless under any liability insurance or any other indemnification arrangement) from any and all claims, losses, damages, liabilities, costs and expenses (including attorneys' fees) arising out of any actual or alleged act or failure to act made in good faith in connection with the Plans (or any related trust agreements), including expenses reasonably incurred in the defense of any claim relating thereto. 7.8. Overpayment. If the Committee determines that any Participant or Beneficiary receives any payment to which he or she is not entitled hereunder, the Committee may seek recovery of such overpayment, plus interest. 10 7.9. Qualified Domestic Relations Order. If the Committee receives an order purporting to be a qualified domestic relations order with respect to a Participant's benefit under the Pension Plan, for purposes of determining the Participant's Benefit Offset Amount, the benefit payable under such order shall be considered a benefit payable to the Participant under the Pension Plan and shall be combined with the Participant's actual benefit under the Pension Plan. To the extent such order may also be given effect under the Excess Plan, the benefit payable under such order shall also be considered a benefit payable to Participant under the Excess Plan and shall be combined with the Participant's actual benefit under the Excess Plan. 7.10. Information to Company. The Company shall furnish to the Committee in writing all information the Company deems appropriate for the Committee to exercise its duties hereunder. Such information shall include but shall not be limited to the names of all Participants and their Salary, date of birth, employment, termination of employment, retirement, or death. 7.11. Information to Participant. The Committee shall make available to such Participant and Beneficiary for examination at the principal office of the Company (or at such other location as may be determined by the Committee), a copy of the Plan and such of its records or copies thereof as may pertain to the benefits of such Participant or Beneficiary. SECTION 8 PLAN ADMINISTRATION, AMENDMENT AND TERMINATION 8.1. In General. The Plan shall be administered by the Committee, which shall have the sole authority to construe and interpret the terms and provisions of the Plan and determine the amount, manner and time of payment of any benefits hereunder. The Committee shall maintain records, make the requisite calculations and disburse payments hereunder, and its interpretations, determinations, regulations and calculations shall be final and binding on all persons and parties concerned. The Committee may adopt such rules as it deems necessary, desirable or appropriate in administering the Plan and the Committee may act at a meeting, in a writing without a meeting, or by having actions otherwise taken by a member of the Committee pursuant to a delegation of duties from the Committee. No member of the Committee may act, vote, or otherwise influence a decision of the Committee specifically relating to his benefits, if any, under the Plan. 8.2. Claims Procedure. If the Committee denies a benefit, in whole or in part, it shall advise the Participant or Beneficiary, as applicable, of (i) the specific basis or bases for the denial (ii) references to the specific Plan provisions upon which the denial is based (iii) a description of any additional material or information that the Participant or Beneficiary needs to process the claim, and an explanation of why that material or information is necessary; and (iv) a statement of the Plan's appeal procedures as hereinafter set forth. Any person dissatisfied with the Committee's determination of a claim for benefits hereunder must file a written request for reconsideration with the Committee within 60 days of the denial by the Committee. Such person has the right to request, free of charge, and obtain copies of all documents, records, and other information that was relied upon by the Committee in denying such person's benefits or was submitted, considered, or generated in the course of making the benefit denial, regardless of whether it was used in denying the claim. This request must include a written explanation 11 setting forth the specific reasons for such reconsideration. The Committee shall review its determination within 60 days, plus an extension for an additional 60 days in special circumstances, and render a written decision with respect to the claim, setting forth the specific reasons for such denial written in a manner calculated to be understood by the claimant. Such claimant shall be given a reasonable time within which to comment, in writing, to the Committee with respect to such explanation. The Committee shall review its determination promptly and render a written decision with respect to the claim. Such decision upon matters within the scope of the authority of the Committee shall be conclusive, binding, and final upon all claimants under this Plan. No claimant may bring any action challenging a decision of the Committee at any time more than one year after the final written decision of the Committee is rendered. 8.3. Finality of Determination. The determination of the Committee as to any disputed questions arising under this Plan, whether of law or of fact, or mixed questions of law and fact, including questions of construction and interpretation, shall be final, binding, and conclusive upon all persons. 8.4. Delegation of Authority. The Committee may, in its discretion, delegate its duties to an officer or other employee of the Company, or to a committee composed of officers or employees of the Company. 8.5. Expenses. The cost of payment from this Plan and the expenses of administering the Plan shall be borne by the Company. 8.6. Tax Withholding. The Company shall have the right to deduct from all payments made from the Plan any federal, state, or local taxes required by law to be withheld with respect to such payments. 8.7. Incompetency. Any person receiving or claiming benefits under the Plan shall be conclusively presumed to be mentally competent and of age until the Company receives written notice, in a form and manner acceptable to it, that such person is incompetent or a minor, and that a guardian, conservator, statutory committee or other person legally vested with the care of his estate has been appointed. In the event that the Company finds that any person to whom a benefit is payable under the Plan is unable to properly care for his affairs, or is a minor, then any payment due (unless a prior claim therefore shall have been made by a duly appointed legal representative) may be paid to the spouse, a child, a parent, or a brother or sister, or to any person deemed by the Company to have incurred expense for the care of such person otherwise entitled to payment. In the event a guardian or conservator or statutory committee of the estate of any person receiving or claiming benefits under the Plan shall be appointed by a court of competent jurisdiction, payments shall be made to such guardian or conservator or statutory committee provided that proper proof of appointment is furnished in a form and manner suitable to the Company. Any payment made under the provisions of this Section 8.7 shall be a complete discharge of liability therefore under the Plan. 12 8.8. Action by Company. Any action required or permitted to be taken hereunder by the Company or its Board shall be taken by the Board, or by any person or persons authorized by the Board. 8.9. Notice of Address. Any payment made to a Participant or a Beneficiary at the last known post office address of the distributee on file with the Company, shall constitute a complete acquittance and discharge to the Company and any director, officer or employee including, without limitation, members of the Committee with respect thereto, unless the Company shall have received prior written notice of any change in the condition or status of the distributee. Neither the Company nor any director, officer or employee including, without limitation, members of the Committee shall have any duty or obligation to search for or ascertain the whereabouts of the Participant or the Beneficiary. 8.10. Amendment and Termination. The Plan may be amended, suspended or terminated, in whole or in part, by the Board, but no such action shall retroactively reduce the benefits under the Plan which have accrued prior to the effective date of such action. Following any such termination, benefits may be paid out under the Plan only to the extent expressly permitted under Section 409A or the Code and only to the extent such termination is implemented in accordance with Section 409A of the Code. In addition, the Committee shall have concurrent authority to make technical and/or clarifying amendments to the Plan or amendments that either have no cost effect on the Company or an effect that is not reasonably expected to exceed $10,000, plus any correlative modifications thereto. IN WITNESS WHEREOF, the Company has caused this Amended and Restated Anixter Inc. Supplemental Executive Retirement Plan to be executed by its duly authorized officer as of this 9th day of January, 2006 to be effective as of January 1, 2006. Anixter Inc. By: /s/ Samuel Zell ------------------------------------ Title: Authorized Agent ATTEST: /s/ John A. Dul - ------------------------------------- Secretary 13 Consent of Participants The undersigned Participants acknowledge and agree that (i) this Amendment and Restatement is effective with respect to them, (ii) their benefits under the Plan shall be determined under and in accordance with this Amendment and Restatement and (iii) this Amendment and Restatement has been duly authorized and adopted in accordance with Section 8.10 of the Plan. /s/ Robert Grubbs, Jr. ---------------------------------------- Robert Grubbs, Jr. /s/ Dennis Letham ---------------------------------------- Dennis Letham 14 ANIXTER INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN EXHIBIT A APPLICABLE FORMULA FOR NORMAL BENEFIT ELIGIBLE EMPLOYEES AS OF JANUARY 1, 2006 Eligible Employee: Robert Grubbs, Jr. Normal Retirement Date: First day of the month following 65th birthday Target Benefit: Monthly Life Annuity benefit equal to fifty percent (50%) of Final Average Compensation commencing at Normal Retirement Date Benefit Offset: Benefit Offset Amount determined under Plan Normal Benefit: Target Benefit less Benefit Offset Normal Benefit 54 Commencement Age Reduction: Normal Benefit to be actuarially reduced (using the same assumptions as provided under the Anixter Inc. Pension Plan) for commencement prior to age 65 Minimum Normal Benefit $45,833.33 per month less monthly Benefit Offset amount without reduction for payment commencing prior to Normal Retirement Date Benefit Offset to Minimum Benefit Offset used for Normal Benefit Normal Benefit computation actuarially reduced by the actuarially equivalent reduction factor that would be used to determine the amount of the benefit at commencement date that is Actuarially Equivalent to the Normal Benefit at the Normal Retirement Date. Eligible Employee: Dennis Letham Normal Retirement Date: First day of the month following 65th birthday Target Benefit: Monthly Life Annuity benefit equal to fifty percent (50%) of Final Average Compensation commencing at Normal Retirement Date Benefit Offset: Benefit Offset Amount determined under Plan

A-1 Normal Benefit: Target Benefit less Benefit Offset Normal Benefit 65 Commencement Age Reduction: Normal Benefit to be actuarially reduced (using the same assumptions as provided under the Anixter Inc. Pension Plan) for commencement prior to age 65 Minimum Benefit: None

2 EX-10.23 3 c02746exv10w23.txt FIRST AMENDMENT TO FIVE-YEAR, $275.0 MILLION, REVOLVING CREDIT AGREEMENT EXHIBIT 10.23 FIRST AMENDMENT THIS FIRST AMENDMENT dated as of November 10, 2005 (this "Amendment") amends the Five-Year Revolving Credit Agreement dated as of June 18, 2004, among Anixter Inc. ("Anixter"), various subsidiaries of Anixter (the "Borrowing Subsidiaries"), various financial institutions (the "Lenders") and Bank of America, N.A., as administrative agent (the "Administrative Agent"). Terms defined in the Credit Agreement are, unless otherwise defined herein or the context otherwise requires, used herein as defined therein. WHEREAS, Anixter, the Borrowing Subsidiaries, the Lenders and the Administrative Agent have entered into the Credit Agreement; and WHEREAS, the parties hereto desire to amend the Credit Agreement in certain respects as more fully set forth herein; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1 Amendments. Subject to the satisfaction of the conditions precedent set forth in Section 4, the Credit Agreement shall be amended as follows. (a) Section 1.01 of the Credit Agreement is amended by deleting the definition of "Foreign Currency Loan Notice" and adding the following definitions in the appropriate alphabetical positions: "Applicable Foreign Currency Commitment" means, as to each Available Foreign Currency and Applicable Foreign Currency Lender, such Foreign Currency Lender's obligation to make Foreign Currency Loans in such Available Foreign Currency to the Borrowers (or, in the case of Anixter Canada Inc., to make a Canadian Banker's Acceptance facility available) pursuant to Section 2.04, in an aggregate principal Dollar Equivalent amount at any one time outstanding not to exceed the amount of such Foreign Currency Lender's Applicable Foreign Currency Commitment in respect of such Available Foreign Currency set forth opposite such Foreign Lender's name on Schedule 2.04 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto or in the designation by Anixter accepted by such Foreign Currency Lender, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. The aggregate amount of all Applicable Foreign Currency Commitments for all Available Foreign Currencies shall not exceed the Aggregate Foreign Currency Commitments. "Applicable Foreign Currency Lender" means, with respect to any Available Foreign Currency, a Foreign Currency Lender with an Applicable Foreign Currency Commitment in respect of such Available Foreign Currency. "Applicable Foreign Currency Pro Rata Share" means, with respect to each Available Foreign Currency and Applicable Foreign Currency Lender, at any time the percentage (carried out to the ninth decimal place) that such Foreign Currency Lender's Applicable Foreign Currency Commitment in respect of such Available Foreign Currency comprises of the aggregate Applicable Foreign Currency Commitments in respect of such Available Foreign Currency. "Canadian BA Discount Proceeds" means, in respect of any Canadian Banker's Acceptance, an amount calculated on the applicable funding date which is (rounded to the nearest full cent, with one-half of one cent being rounded up) equal to the face amount of such Canadian Banker's Acceptance multiplied by the price, where the price is calculated by dividing one by the sum of one plus the product of (a) the Canadian BA Discount Rate applicable thereto expressed as a decimal fraction multiplied by (b) a fraction, the numerator of which is the term of such Canadian Banker's Acceptance and the denominator of which is 365, rounded to the nearest multiple of 0.001%. "Canadian BA Discount Rate" means (a) with respect to any Canadian Banker's Acceptance accepted by a Canadian Lender named on Schedule I to the Bank Act (Canada), the rate determined by such Canadian Lender as being the CDOR Rate on the applicable funding date, and (b) with respect to any Canadian Banker's Acceptance accepted by any other Canadian Lender, the lesser of (i) the rate advised by such Canadian Lender to the Administrative Agent as being the discount rate of such Canadian Lender, calculated on the basis of a year of 365 days and determined in accordance with normal market practice, for Canadian Banker's Acceptances of such Canadian Lender having a comparable face amount and identical maturity date to the face amount and maturity date of such Canadian Banker's Acceptance, and (ii) the rate determined by such Canadian Lender in accordance with (a) above plus 0.10% per annum. "Canadian BA Equivalent Loan" has the meaning specified in Schedule 2.04BA. "Canadian Banker's Acceptance" means a depository bill as defined in the Depository Bills and Notes Act (Canada) in Canadian Dollars that is in the form of an order signed by Anixter Canada Inc. and accepted by a Canadian Lender pursuant to this Agreement or, for Canadian Lenders not participating in clearing services contemplated in that Act, a draft or bill of exchange in Canadian Dollars that is drawn by Anixter Canada Inc. and accepted by a Canadian Lender pursuant to this Agreement. Orders or drafts that become depository bills, drafts and bills of exchange are sometimes collectively referred to in this Agreement as "orders". "Canadian Banker's Acceptance Fee" means, with respect to any Canadian Banker's Acceptance, the amount calculated by multiplying the face amount of the Canadian Banker's Acceptance by the then Applicable Margin applicable to Eurocurrency Rate Loans, and then multiplying the result by a fraction, the numerator of which is the duration of its term on the basis of the actual number of days to elapse from and including the date of acceptance of the Canadian Banker's Acceptance by the related Canadian Lender up to but excluding the maturity date of the Canadian Banker's Acceptance and the denominator of which is the number of days in the calendar year in question. "Canadian Dollars" means lawful currency of Canada. -2- "Canadian Lender" means a Foreign Currency Lender with a Foreign Currency Commitment in Canadian Dollars. "Canadian Prime Rate" means, on any day, with respect to any Loan in Canadian Dollars by a Canadian Lender, the greater of: (a) the annual rate of interest expressed as a percentage per annum on the basis of a 365 or 366 day year, as the case may be, announced by such Canadian Lender on that day as its reference rate for commercial loans made by it in Canada in Canadian Dollars; and (b) the CDOR Rate for one month Canadian Dollar banker's acceptances on that day plus 0.75% per annum. "CDOR Rate" means, on any date, with respect to any Canadian Banker's Acceptance and the related Canadian Lender, the simple average of the rates shown on the display referred to as the "CDOR Page" (or any display substituted therefor) on Reuters Domestic Money Service (or any successor source from time to time) with respect to the banks and other financial institutions named in such display at or about 10:00 a.m. (Toronto time) on such date for banker's acceptances having an identical maturity date to the maturity date of such Canadian Banker's Acceptance, as determined by such Canadian Lender, or if such day is not a Business Day, then on the immediately preceding Business Day; provided, however, that if such rates are not available, then the CDOR Rate for any day shall be calculated as the average of the bid rates (rounded upwards to the nearest 1/16th of 1%) quoted by such Canadian Lender for its own bankers' acceptances for the applicable period as of 10:00 a.m. (Toronto time) on such day, as determined by such Canadian Lender, or if such day is not a Business Day, then on the immediately preceding Business Day. "Foreign Currency Borrowing Notice" means a notice of (a) a Foreign Currency Borrowing, or (b) a continuation of Foreign Currency Loans for a new Interest Period, pursuant to Section 2.04, which, if in writing, shall be substantially in the form of Exhibit A-2. (b) Section 1.01 of the Credit Agreement is further amended so that each of the following definitions reads in its entirety as follows: "Aggregate Foreign Currency Commitments" means US$150,000,000, as such amount may be reduced or adjusted from time to time in accordance with this Agreement. The Aggregate Foreign Currency Commitments are part of, and not in addition to, the Aggregate Commitments. "Applicable Currency" means, with respect to any Loan or other Obligation, the currency in which such Loan or other Obligation is denominated. "Available Foreign Currency" means (i) British Pounds Sterling, (ii) Euro, (iii) Canadian Dollars, and (iv) any other currency (other than US Dollars) which is readily -3- available and freely transferable and convertible into US Dollars and which is requested by Anixter and approved by the Administrative Agent. "Cash Collateralize", with respect to L/C Obligations, has the meaning specified in Section 2.05(g) and, with respect to Canadian Banker's Acceptances, has the meaning specified in Schedule 2.04BA. "Default Rate" means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Margin, if any, applicable to Base Rate Loans plus (iii) 2% per annum; provided, however, that (A) with respect to a Eurocurrency Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such Loan plus 2% per annum, in each case to the fullest extent permitted by applicable Laws, (B) with respect to a Foreign Currency Swing Line Loan or a Foreign Currency Loan (other than a Foreign Currency Loan in Canadian Dollars) following the end of the relevant Interest Period therefor, the Default Rate shall be an interest rate equal to (i) the applicable Overnight Rate plus (ii) 2% per annum and (C) with respect to a Foreign Currency Loan in Canadian Dollars, the Default Rate shall be an interest rate equal to (i) the applicable Canadian Prime Rate plus (ii) 2% per annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to (i) the Applicable Margin plus (ii) 2% per annum. "Foreign Currency Borrowing" means a borrowing consisting of simultaneous Foreign Currency Loans of the same Available Foreign Currency from the Applicable Foreign Currency Lenders pursuant to Section 2.04 (or, in the case of Canadian Banker's Acceptances, a funding thereof by the Canadian Lenders pursuant to Section 2.04 and Schedule 2.04BA). "Foreign Currency Commitment" means, as to each Foreign Currency Lender, its Applicable Foreign Currency Commitment(s). "Foreign Currency Pro Rata Share" means, with respect to each Foreign Currency Lender at any time, the percentage (carried out to the ninth decimal place) that such Foreign Currency Lender's Applicable Foreign Currency Commitment(s) comprise of the Aggregate Foreign Currency Commitments at such time. "Loan Documents" means this Agreement, each Note, the Guaranty, the Agent/Arranger Fee Letters, each Request for Credit Extension, each Issuer Document, each Canadian Banker's Acceptance and each Compliance Certificate. "Obligations" means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, Canadian Banker's Acceptance or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest that accrues after the commencement by or against any Loan Party or any Affiliate thereof of any -4- proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding. "Outstanding Amount" means (a) with respect to Committed Loans, Swing Line Loans and Foreign Currency Loans on any date, the aggregate outstanding principal Dollar Equivalent amount thereof after giving effect to any borrowings and prepayments or repayments of Committed Loans, Swing Line Loans and Foreign Currency Loans, as the case may be, occurring on such date, (b) with respect to any L/C Obligations on any date, the Dollar Equivalent amount of the aggregate outstanding amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by Anixter of Unreimbursed Amounts, and (c) with respect to any Canadian Banker's Acceptance, the Dollar Equivalent amount of the unpaid portion of the face amount thereof. "Revaluation Date" means (a) with respect to any Loan, each of the following: (i) each date of a Borrowing of a Loan denominated in an Available Foreign Currency, (ii) each date of a continuation of a Eurocurrency Rate Loan denominated in an Available Foreign Currency pursuant to Section 2.02, and (iii) such additional dates as the Administrative Agent shall determine or the Required Lenders shall require; (b) with respect to any Canadian Banker's Acceptance, each of the following: (i) each date of the funding of such Canadian Banker's Acceptance and (ii) such additional dates as the Administrative Agent shall determine or the related Canadian Lender shall require, and (c) with respect to any Letter of Credit, each of the following: (i) each date of issuance of a Letter of Credit denominated in an Available Foreign Currency, (ii) each date of an amendment of any such Letter of Credit having the effect of increasing the amount thereof (solely with respect to the increased amount), (iii) each date of any payment by the L/C Issuer under any Letter of Credit denominated in an Available Foreign Currency, and (iv) such additional dates as the Administrative Agent or the L/C Issuer shall determine or the Required Lenders shall require. "Subsidiary" of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially directly or indirectly owned by such Person. Unless otherwise specified, all references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of Anixter. "Total Outstandings" means at any time the aggregate principal amount (or Dollar Equivalent principal amount, as applicable) of all Loans and all L/C Obligations and the Dollar Equivalent amount of the unpaid portion of the face amount of all Canadian Banker's Acceptances. (c) Section 1.05 of the Credit Agreement is amended to read in its entirety as follows: 1.05 [RESERVED]. -5- (d) Section 2.04 of the Credit Agreement is amended to read in its entirety as follows: (a) Foreign Currency Borrowings. Subject to the terms and conditions of this Agreement, with respect to each Available Foreign Currency, each Applicable Foreign Currency Lender severally agrees to make loans (each a "Foreign Currency Loan" and collectively the "Foreign Currency Loans") in such Available Foreign Currency to the Borrowers (and, in the case of each Canadian Lender, to make available Canadian Banker's Acceptances for Anixter Canada Inc. in accordance with the terms of Schedule 2.04BA) from time to time on any Business Day during the period from the Closing Date to the Maturity Date in an aggregate Dollar Equivalent amount at any time outstanding not to exceed such Foreign Currency Lender's Applicable Foreign Currency Commitment in respect of such Available Foreign Currency; provided that after giving effect to any Foreign Currency Borrowing, (i) the Total Outstandings shall not at any time exceed the Aggregate Commitments, (ii) the aggregate Outstanding Amount of all Foreign Currency Loans in such Available Foreign Currency of any Foreign Currency Lender (and, in the case of Canadian Dollars, Canadian Banker's Acceptances) shall not at any time exceed the Applicable Foreign Currency Commitment of such Foreign Currency Lender, (iii) the aggregate Outstanding Amount of all Foreign Currency Loans in such Available Foreign Currency (and, in the case of a Canadian Lender, Canadian Banker's Acceptances) shall not at any time exceed the aggregate Applicable Foreign Currency Commitments in respect of such Available Foreign Currency, (iv) the aggregate Outstanding Amount of all Foreign Currency Loans and Canadian Banker's Acceptances shall not at any time exceed the Aggregate Foreign Currency Commitment, and (v) the aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender's Pro Rata Share of the Outstanding Amount of all L/C Obligations, Swing Line Loans, Foreign Currency Loans and Canadian Banker's Acceptances shall not exceed such Lender's Commitment. Subject to the terms and conditions hereof, each Borrower may borrow under this Section 2.04, prepay under Section 2.06 and reborrow under this Section 2.04 from time to time. (b) Procedure for Foreign Currency Borrowings. (i) Each Foreign Currency Borrowing and each continuation of Foreign Currency Loans for a new Interest Period shall be made upon the applicable Borrower's irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than 11:00 a.m., four Business Days prior to the requested date of any Foreign Currency Borrowing or any continuation of Foreign Currency Loans. Each such telephonic notice must be confirmed promptly by delivery to the Administrative Agent of a written Foreign Currency Borrowing Notice, appropriately completed and signed by a Responsible Officer of such Borrower. Each Foreign Currency Borrowing or continuation of Foreign Currency Loans shall be in a principal amount of the applicable Minimum Tranche. Each Foreign Currency Borrowing Notice (whether telephonic or written) shall specify (A) whether such Borrower is requesting a Foreign Currency Borrowing or a continuation of Foreign Currency Loans for a new Interest Period, (B) the requested date of the Foreign -6- Currency Borrowing or continuation, as the case may be (which shall be a Business Day), (C) the principal amount and Available Foreign Currency of Foreign Currency Loans to be borrowed or continued or the aggregate face amount of Canadian Banker's Acceptances to be accepted, as the case may be, and (D) the duration of the Interest Period with respect thereto or the maturity of the Canadian Banker's Acceptances, as the case may be. If such Borrower fails to specify a new Interest Period in a Foreign Currency Loan Notice, then the applicable Foreign Currency Loans shall be continued for a new Interest Period of one month's duration. (ii) Following receipt of a Foreign Currency Borrowing Notice, the Administrative Agent shall promptly notify each Applicable Foreign Currency Lender of its Applicable Foreign Currency Pro Rata Share of the applicable Foreign Currency Loans or Canadian Banker's Acceptance. In the case of a Foreign Currency Borrowing, upon satisfaction of the applicable conditions set forth in Section 4.02, each Applicable Foreign Currency Lender shall make the amount of its Foreign Currency Loan or Canadian BA Discount Proceeds available (x) to the Administrative Agent in immediately available funds at the applicable office of the Administrative Agent specified for such Available Foreign Currency on Schedule 10.02 not later than 1:00 p.m., local time of such office, on the Business Day specified in the applicable Foreign Currency Loan Notice or (y) directly to the applicable Borrower, with notice to the Administrative Agent, in accordance with other funding procedures that may be agreed to from time to time among the Borrowers, the Administrative Agent and the Applicable Foreign Currency Lenders or (z) in the case of Canadian Banker's Acceptances, to Anixter Canada Inc. in accordance with Schedule 2.04BA. The Administrative Agent shall make all funds so received by the Administrative Agent available to the applicable Borrower in like funds as received by the Administrative Agent either by (A) crediting the account of such Borrower on the books of Bank of America with the amount of such funds or (B) wire transfer of such funds, in each case in accordance with instructions provided to the Administrative Agent by such Borrower. (iii) During the existence of a Default, the Required Lenders may demand that any or all of the then outstanding Foreign Currency Loans be converted immediately to Loans bearing interest at the applicable Overnight Rate. (iv) The Administrative Agent shall promptly notify Anixter and the Lenders of the interest rate applicable to any Foreign Currency Loan upon determination of such interest rate. The determination of the Eurocurrency Rate and Overnight Rate by the Administrative Agent shall be conclusive in the absence of manifest error. (v) After giving effect to all Foreign Currency Borrowings, and all continuations of Foreign Currency Loans as the same Type, there shall not be more than ten Interest Periods in effect with respect to Foreign Currency Loans. (c) Participations in Foreign Currency Loans and Canadian Banker's Acceptances. (i) Each Lender agrees that it shall at all times have a participation in, and acknowledges that it is irrevocably and unconditionally obligated, upon -7- receipt of notice that the Administrative Agent has received a Foreign Currency Participation Funding Notice, to fund (or to cause an Affiliate to fund) its participation in, each outstanding Foreign Currency Loan and Canadian Banker's Acceptance in an amount equal to its Pro Rata Share of the amount of such Foreign Currency Loan or its Pro Rata Share of the Canadian BA Discount Proceeds in respect of such Canadian Banker's Acceptance, as the case may be. (ii) The Administrative Agent shall promptly notify each Lender of its receipt of a Foreign Currency Participation Funding Notice. Promptly (and in any event within three Business Days) upon receipt of such Notice, each Lender shall (or shall cause an Affiliate to) make available to the Administrative Agent for the account of the Foreign Currency Lenders an amount in the applicable currencies and in Same Day Funds equal to its Pro Rata Share of all outstanding Foreign Currency Loans (and, with respect to participations in Canadian Banker's Acceptances, its Pro Rata Share of the Canadian BA Discount Proceeds of all outstanding Canadian Banker's Acceptances). If any Lender so notified fails to make available to the Administrative Agent for the account of the Foreign Currency Lenders the full amount of such Lender's participations in all Foreign Currency Loans and Canadian Banker's Acceptances by the date which is three Business Days after its receipt of such notice from the Administrative Agent, then interest shall accrue on such Lender's obligations to fund such participations, from such date to the date such Lender pays such obligations in full, at a rate per annum equal to the applicable Overnight Rate in effect from time to time during such period. (iii) From and after the date on which a Foreign Currency Lender has delivered to the Administrative Agent a Foreign Currency Participation Funding Notice, all funds received by the Foreign Currency Lenders in payment of the Foreign Currency Loans and Canadian Banker's Acceptances, interest accrued thereon and other amounts payable in respect thereof shall be delivered by each Foreign Currency Lender to the Administrative Agent, in the same funds as those received by such Foreign Currency Lender, to be distributed to all Lenders in accordance with their Pro Rata Shares (i.e., giving effect to the funding of participations pursuant to this Section 2.04), except that (A) the Pro Rata Share of such funds of any Lender that has not funded its participations as provided herein shall be retained by such Foreign Currency Lender, and (B) interest accrued on any portion of any Foreign Currency Loan prior to the Lenders' funding of their respective participations therein shall be retained by such Foreign Currency Lender. (iv) If the Administrative Agent or any Foreign Currency Lender is required at any time to return to a Borrower, or to a trustee, receiver, liquidator or custodian, or any official in any bankruptcy or insolvency proceeding, any portion of any payment made by such Borrower to the Administrative Agent or such Foreign Currency Lender in respect of any Foreign Currency Loan, any Canadian Banker's Acceptance or any interest or fee thereon, each Lender shall, on demand of the Administrative Agent, forthwith return to the Administrative -8- Agent for the account of such Foreign Currency Lender the amount of its Pro Rata Share of the amount so returned by the Administrative Agent or such Foreign Currency Lender plus interest thereon from the date such demand is made to the date such amount is returned by such Lender to the Administrative Agent, at a rate per annum equal to the applicable Overnight Rate from time to time in effect. (v) The Required Lenders, the Foreign Currency Lenders and the Administrative Agent may agree on any other reasonable method (such as making assignments of Foreign Currency Loans or Canadian Banker's Acceptances) for sharing the risks of Foreign Currency Loans and Canadian Banker's Acceptances ratably among all Lenders according to their Pro Rata Shares so long as such method does not materially disadvantage any Lender. (vi) References to participations in Foreign Currency Loans in this Agreement (including in the definitions of "Commitment", "Defaulting Lender", "Foreign Currency Participation Funding Notice" and "Voting Percentage", subsection 2.12(b), subsection 2.13(f), Section 2.14 and Section 10.06) shall be deemed to include participations in Canadian Banker's Acceptances. (d) Each Lender's obligation to purchase participation interests in Foreign Currency Loans and Canadian Banker's Acceptances pursuant to this Section 2.04 shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including (i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against any other Lender, any Borrower or any other Person for any reason whatsoever; (ii) the occurrence or continuance of an Event of Default, a Default or a Material Adverse Effect; (iii) any breach of this Agreement by any Borrower or any other Lender; (iv) any inability of any Borrower to satisfy the conditions precedent to borrowing set forth in this Agreement on the date upon which any Foreign Currency Loan or Canadian Banker's Acceptance is to be refunded or any participation interest in any Loan is to be purchased; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. (e) Notwithstanding the provisions of subsection (d) above, no Lender shall be required to purchase a participation interest in a Foreign Currency Loan or Canadian Banker's Acceptance pursuant to this Section 2.04 if, at least two Business Days prior to the making of such Foreign Currency Loan or Canadian Banker's Acceptance, the Administrative Agent and the Foreign Currency Lenders received written notice from such Lender specifying that such Lender believed in good faith that one or more of the conditions precedent to the making of such Loan or Canadian Banker's Acceptance were not satisfied (and detailing its basis for such good faith belief) and, in fact, such conditions precedent to the making of such Loan or Canadian Banker's Acceptance were not satisfied at the time of the making of such Loan or Canadian Banker's Acceptance; provided that the obligation of such Lender to make such Loan or Canadian Banker's Acceptance and/or to purchase such participation interest shall be reinstated upon the earlier of (i) the date on which such Lender notifies the Administrative Agent that its prior notice has been withdrawn or (ii) the date on which all conditions precedent to the -9- making of such Foreign Currency Loan or Canadian Banker's Acceptance have been satisfied (or waived by the Required Lenders or all Lenders, as applicable). (f) If at any time that the Outstanding Amount of all Foreign Currency Loans and Canadian Banker's Acceptances denominated at such time exceeds an amount equal to 105% of the Aggregate Foreign Currency Commitments then in effect, the Administrative Agent may (or, at the request of a Foreign Currency Lender, shall) notify Anixter of such excess and, then, within two Business Days after receipt of such notice, the Borrowers shall prepay Loans and/or Cash Collateralize Canadian Banker's Acceptances in an aggregate amount sufficient to reduce such Outstanding Amount as of such date of payment to an amount not to exceed 100% of the Aggregate Foreign Currency Commitments then in effect. (g) Interest Act (Canada). For the purposes of the Interest Act (Canada), (i) whenever a rate of interest or fee rate hereunder is calculated on the basis of a year (the "deemed year") that contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest or fee rate shall be expressed as a yearly rate by multiplying such rate of interest or fee rate by the actual number of days in the calendar year of calculation and dividing it by the number of days in the deemed year, (ii) the principle of deemed reinvestment of interest shall not apply to any interest calculation hereunder and (iii) the rates of interest stipulated herein are intended to be nominal rates and not effective rates or yields. (e) Section 2.06(c) of the Credit Agreement is amended to read in its entirety as follows: (c) The Borrowers may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Foreign Currency Loans in any Available Foreign Currency in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. four Business Days prior to any date of prepayment of Foreign Currency Loans; and (ii) any prepayment of Foreign Currency Loans shall be in a principal amount of the applicable Minimum Tranche. Each such notice shall specify the date and amount of such prepayment and the Foreign Currency Loans to be prepaid. The Administrative Agent will promptly notify each Applicable Foreign Currency Lender of its receipt of each such notice, and of such Applicable Foreign Currency Lender's Applicable Foreign Currency Pro Rata Share of such prepayment or, in the case of a prepayment in connection with a reduction or termination in an Applicable Foreign Currency Commitment pursuant to Section 2.18, such Applicable Foreign Currency Lender's share of such prepayment. If such notice is given by a Borrower, such Borrower shall make such prepayment to the Administrative Agent (or to the related Applicable Foreign Currency Lenders pursuant to procedures that may be agreed upon from time to time among the Borrowers, the Administrative Agent and such Applicable Foreign Currency Lenders) and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Foreign Currency Loan shall be accompanied by all accrued interest thereon, together with any additional amounts required pursuant to Section 3.05. Each such prepayment shall be applied to the Foreign Currency Loans of the Applicable Foreign Currency Lenders in accordance with their respective Applicable Foreign -10- Currency Pro Rata Shares, except in the case of a prepayment in connection with a reduction or termination in an Applicable Foreign Currency Commitment pursuant to Section 2.18, in which case such prepayment shall be applied to the applicable Foreign Currency Lender's Foreign Currency Loans. (f) Section 2.09(a) of the Credit Agreement is hereby amended so that clause (v) thereof reads in entirety as follows and the following clause (vi) is added thereto: (v) each Foreign Currency Loan (other than Loans in Canadian Dollars) shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the sum of (A) the Eurocurrency Rate for such Interest Period plus (B) the Applicable Margin, and (vi) each Foreign Currency Loan in Canadian Dollars shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Canadian Prime Rate. (g) Article II of the Credit Agreement is further amended by adding thereto the following Section 2.18: 2.18 DESIGNATION OF FOREIGN CURRENCY LENDERS; INCREASES, REDUCTIONS OR TERMINATIONS OF APPLICABLE FOREIGN CURRENCY COMMITMENTS. (a) Anixter may, from time to time, with the acceptance of the related Lender and the approval of the Administrative Agent (such approval by the Administrative Agent not to be unreasonably withheld), designate a Lender as a Foreign Currency Lender with an Applicable Foreign Currency Commitment in respect of an Available Foreign Currency, provided that (i) the aggregate Applicable Foreign Currency Commitments in respect of all Available Foreign Currencies shall not exceed the Aggregate Foreign Currency Commitments, and (ii) any such new Applicable Foreign Currency Commitment shall be in an aggregate amount of US$1,000,000 or any whole multiple of US$500,000 in excess thereof. (b) Anixter may, from time to time, with the acceptance of the related Foreign Currency Lender and the approval of the Administrative Agent (such approval by the Administrative Agent not to be unreasonably withheld), increase the Applicable Foreign Currency Commitment of such Foreign Currency Lender, provided that (i) the aggregate Applicable Foreign Currency Commitments in respect of all Available Foreign Currencies shall not exceed the Aggregate Foreign Currency Commitments, and (ii) any such increase in an Applicable Foreign Currency Commitment shall be in an aggregate amount of US$1,000,000 or any whole multiple of US$500,000 in excess thereof. (c) Upon the effectiveness of any new Applicable Foreign Currency Commitment or any increase in an Applicable Foreign Currency Commitment, the Borrowers shall make such borrowings and prepayments of Foreign Currency Loans in the related Available Foreign Currency (and pay any additional amounts pursuant to Section 3.05)(and in the case of Canadian Lenders, the Canadian Lenders shall sell and purchase participations in outstanding Canadian Banker's Acceptances) to the extent necessary to keep the outstanding Foreign Currency Loans in such Available Foreign -11- Currency (and, in the case of Canadian Lenders, Canadian Banker's Acceptances) ratable with any revised Applicable Foreign Currency Pro Rata Shares arising from any nonratable increase in Applicable Foreign Currency Commitments under this Section. (d) Anixter may, upon notice to the Administrative Agent, terminate the Applicable Foreign Currency Commitment of any Foreign Currency Lender, or reduce any Applicable Foreign Currency Commitment to an amount not less than the then Outstanding Amount of all Foreign Currency Loans in the related Available Foreign Currency of such Foreign Currency Lender (and, if applicable, its Canadian Banker's Acceptances); provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m., five Business Days prior to the date of termination or reduction, and (ii) any such partial reduction shall be in an aggregate amount of US$1,000,000 or any whole multiple of US$500,000 in excess thereof. (e) The Administrative Agent shall promptly notify the Lenders of any designation of a Foreign Currency Lender, of any increase in any Applicable Foreign Currency Commitment and of any notice of reduction or termination of Applicable Foreign Currency Commitments. (f) Without the consent of the Administrative Agent, Anixter may not effect more than three adjustments of Applicable Foreign Currency Commitments in any twelve month period pursuant to this Section (it being understood that a single adjustment may involve the concurrent addition, termination, increase or decrease of more than one Applicable Foreign Currency Commitment and the concurrent addition or termination of Available Foreign Currencies). (h) Section 7.01 of the Credit Agreement is amended by replacing the amount "US$100,000,000" in the proviso thereto with the amount "One Hundred Fifty Million Dollars (US$150,000,000)". (i) Section 7.04(v) of the Credit Agreement is amended by replacing the amount "Seventy Five Million Dollars (US$75,000,000)" therein with the amount "One Hundred Twenty Five Million Dollars (US$125,000,000)". (j) Section 8.02(c) of the Credit Agreement is amended to read in its entirety as follows: (c) require that Anixter Cash Collateralize the L/C Obligations and Canadian Banker's Acceptances (in an amount equal to the then Outstanding Amount thereof); and (k) The Credit Agreement is amended (i) so that each reference to a Foreign Currency Loan Notice is replaced with a reference to a Foreign Currency Borrowing Notice, (ii) so that Schedule 2.01 reads in its entirety in the form of Schedule 2.01 attached hereto, (iii) by adding thereto as Schedule 2.04 thereto Schedule 2.04 attached hereto, (iv) by adding thereto as Schedule 2.04BA thereto Schedule 2.04BA attached hereto, (v) so that Schedule 10.02 reads in its entirety in the form of Schedule 10.02 attached hereto, and (vi) so that Exhibit A-2 reads in its entirety in the form of Exhibit A-2 attached hereto. -12- SECTION 2 Addition of Anixter Canada Inc. as Borrowing Subsidiary. Pursuant to Section 2.15 of the Credit Agreement, Anixter hereby designates its Subsidiary, Anixter Canada Inc., organized under the laws of Canada (the "Designated Borrowing Subsidiary"), as a Borrowing Subsidiary. Anixter and the Designated Borrowing Subsidiary (i) confirm that the Designated Borrowing Subsidiary is a Foreign Subsidiary and (ii) make, on and as of the date hereof, the representations and warranties as to the Designated Borrowing Subsidiary contained in Article V of the Credit Agreement. The Designated Borrowing Subsidiary agrees to be bound in all respects by the terms of the Credit Agreement, including, without limitation, Article IV thereof, and to perform all of the obligations of a Borrowing Subsidiary thereunder. Each reference to a Borrowing Subsidiary in the Credit Agreement shall be deemed to include the Designated Borrowing Subsidiary. By its signature hereto each Guarantor ratifies and confirms the provisions of the Guaranty with respect to all Loans made by any Lender to the Designated Borrowing Subsidiary. The address to which communications to the Designated Borrowing Subsidiary under the Credit Agreement should be directed is Anixter Canada Inc. c/o Anixter Inc. 2301 Patriot Boulevard Glenview, IL 60025 Attn: Rod Shoemaker Telephone: (847) 521-8000 Facsimile: (847) 521-8990 Electronic Mail: rod.shoemaker@anixter.com Upon the effectiveness of this Amendment pursuant to Section 4 below, the Designated Borrowing Subsidiary shall become a Borrowing Subsidiary under the Credit Agreement as though it were an original party thereto and shall be entitled to borrow under the Credit Agreement upon the satisfaction of the conditions precedent set forth in Section 4.02 of the Credit Agreement. SECTION 3 Warranties. Each Borrower represents and warrants to the Administrative Agent and the Lenders that, after giving effect to the effectiveness hereof, (a) each warranty set forth in Article V of the Credit Agreement is true and correct in all material respects, except to the extent that such warranty specifically refers to an earlier date, and (b) no Default or Event of Default exists. SECTION 4 Effectiveness of Amendment. The amendments set forth in Section 1 above and the addition of the Designated Borrowing Subsidiary as a Borrowing Subsidiary pursuant to Section 2 above shall become effective when the Administrative Agent shall have received all of the following (provided that the following are received on or before December 15, 2005): (i) counterparts of this Amendment executed by Anixter, the Borrowing Subsidiaries -13- (including the Designated Borrowing Subsidiary), the Guarantors, the Lenders, the Swing Line Lender, the L/C Issuer and the Administrative Agent; (ii) Foreign Currency Notes executed by the Designated Borrowing Subsidiary payable to the order of each Foreign Currency Lender requesting such a Note, each in the principal amount of such Foreign Currency Lender's Foreign Currency Commitment, and a Swing Line Note executed by the Designated Borrowing Subsidiary payable to the order of the Swing Line Lender in the principal amount of the Swing Line Loan Commitment; (iii) all documents as shall reasonably demonstrate the existence of the Designated Borrowing Subsidiary, the corporate power and authority of the Loan Parties (including the Designated Borrowing Subsidiary) to enter into and the validity with respect to the Loan Parties (including the Designated Borrowing Subsidiary) of this Amendment and the other Loan Documents and any other matters relevant hereto (including opinions of counsel), all in form and substance satisfactory to the Administrative Agent; and (iv) any governmental and third party approvals necessary or advisable in connection with the execution, delivery and performance of this Amendment by the Loan Parties. SECTION 5 Miscellaneous. 5.1 Continuing Effectiveness, etc. As herein amended, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. After the effectiveness of this Amendment, all references in the Credit Agreement and the other Loan Documents to "Credit Agreement" or similar terms shall refer to the Credit Agreement as amended hereby. 5.2 Counterparts. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original but all such counterparts shall together constitute one and the same Amendment. 5.3 Governing Law. This Amendment shall be a contract made under and governed by the laws of the State of Illinois. 5.4 Successors and Assigns. This Amendment shall be binding upon Anixter, the Borrowing Subsidiaries (including the Designated Borrowing Subsidiary), the Guarantors, the Lenders and the Administrative Agent and their respective successors and assigns, and shall inure to the benefit of Anixter, the Borrowing Subsidiaries (including the Designated Borrowing Subsidiary), the Lenders and the Administrative Agent and the respective successors and assigns of the Lenders and the Administrative Agent. -14- Delivered as of the day and year first above written. ANIXTER INC., as Borrower By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- ANIXTER INTERNATIONAL BVBA, as a Borrowing Subsidiary By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- ANIXTER INTERNATIONAL LTD., as a Borrowing Subsidiary By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- ANIXTER CANADA INC., as a Borrowing Subsidiary By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-1 GUARANTORS: ANIXTER INTERNATIONAL INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- ANIXTER-REAL ESTATE, INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- ANIXTER INFORMATION SYSTEMS CORPORATION By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- ANIXTER FINANCIAL INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-2 BANK OF AMERICA, N.A., as Administrative Agent By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- BANK OF AMERICA, N.A., as a Lender, Swing Line Lender and L/C Issuer By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-3 JPMORGAN CHASE BANK, N.A., as Co- Documentation Agent and Lender By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-4 THE BANK OF NOVA SCOTIA, as Co- Documentation Agent and Lender By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-5 WACHOVIA BANK, N.A., as Syndication Agent and a Lender By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-6 WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Co-Documentation Agent and a Lender By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-7 NATIONAL CITY BANK OF MICHIGAN/ILLINOIS, as a Lender By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-8 SUNTRUST BANK, as a Lender By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-9 U.S. BANK NATIONAL ASSOCIATION, as a Lender By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-10 BANCA NAZIONALE DEL LAVORO SPA-NEW YORK BRANCH, as a Lender By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-11 THE BANK OF NEW YORK, as a Lender By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-12 KEYBANK NATIONAL ASSOCIATION, as a Lender By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-13 THE NORTHERN TRUST COMPANY, as a Lender By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-14 THE ROYAL BANK OF SCOTLAND PLC, as a Lender By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- S-15 SCHEDULE 2.01 COMMITMENTS AND PRO RATA SHARES
PRO RATA LENDER COMMITMENT SHARE ------ ----------------- ------------- Bank of America, N.A. US$ 31,000,000.00 11.272727273% Wachovia Bank N.A. US$ 31,000,000.00 11.272727273% JPMorgan Chase Bank, N.A. US$ 26,000,000.00 9.454545455% The Bank of Nova Scotia US$ 26,000,000.00 9.454545455% Wells Fargo Bank, National US$ 26,000,000.00 9.454545455% Association National City Bank of US$ 20,000,000.00 7.272727273% Michigan/Illinois SunTrust Bank US$ 20,000,000.00 7.272727273% U.S. Bank National Association US$ 20,000,000.00 7.272727273% Banca Nazionale del Lavoro US$ 15,000,000.00 5.454545455% SPA-New York Branch The Bank of New York US$ 15,000,000.00 5.454545455% KeyBank National Association US$ 15,000,000.00 5.454545455% The Northern Trust Company US$ 15,000,000.00 5.454545455% The Royal Bank of Scotland plc US$ 15,000,000.00 5.454545455% Total US$275,000,000.00 100.000000000%
SCHEDULE 2.04 APPLICABLE FOREIGN CURRENCY COMMITMENTS AND APPLICABLE FOREIGN CURRENCY PRO RATA SHARES
APPLICABLE FOREIGN APPLICABLE FOREIGN APPLICABLE FOREIGN CURRENCY COMMITMENT CURRENCY PRO RATA CURRENCY LENDER (BRITISH (BRITISH POUNDS SHARE (BRITISH POUNDS POUNDS STERLING) STERLING) STERLING) - ------------------------- ------------------- --------------------- Bank of America, N.A. US$40,000,000 50.000000000% JPMorgan Chase Bank, N.A. US$20,000,000 25.000000000% Wachovia Bank N.A. US$20,000,000 25.000000000% Total US$80,000,000 100.000000000%

APPLICABLE FOREIGN APPLICABLE FOREIGN APPLICABLE FOREIGN CURRENCY COMMITMENT CURRENCY PRO RATA CURRENCY LENDER (EUROS) (EUROS) SHARE (EUROS) - ------------------------- ------------------- ------------------ Bank of America, N.A. US$20,000,000 50.000000000% JPMorgan Chase Bank, N.A. US$20,000,000 50.000000000% Total US$40,000,000 100.000000000%

APPLICABLE FOREIGN APPLICABLE FOREIGN APPLICABLE FOREIGN CURRENCY LENDER (CANADIAN CURRENCY COMMITMENT CURRENCY PRO RATA SHARE DOLLARS) (CANADIAN DOLLARS) (CANADIAN DOLLARS) - ------------------------- ------------------- ----------------------- ~~The Bank of Nova Scotia US$30,000,000 100.000000000% Total US$30,000,000 100.000000000%~~
SCHEDULE 2.04BA CANADIAN BANKER'S ACCEPTANCES 1. EXECUTION OF CANADIAN BANKER'S ACCEPTANCES (a) To facilitate the acceptance of Canadian Banker's Acceptances hereunder, Anixter Canada Inc. hereby appoints each Canadian Lender as its attorney to sign and endorse on its behalf, as and when considered necessary by such Canadian Lender, an appropriate number of orders in the form prescribed by such Canadian Lender. (b) Each Canadian Lender may, at its option, execute any order in handwriting or by the facsimile or mechanical signature of any of its authorized officers, and each Canadian Lender is hereby authorized to accept or pay, as the case may be, any order of Anixter Canada Inc. which purports to bear such a signature notwithstanding that any such individual has ceased to be an authorized officer of such Canadian Lender. Any such order or Canadian Banker's Acceptance shall be as valid as if he or she were an authorized officer at the date of issue of the order or Canadian Banker's Acceptance. (c) Any order or Canadian Banker's Acceptance signed by a Canadian Lender as attorney for Anixter Canada Inc., whether signed in handwriting or by the facsimile or mechanical signature of an authorized officer of a Canadian Lender, may be dealt with by such Canadian Lender to all intents and purposes and shall bind Anixter Canada Inc. as if duly signed and issued by Anixter Canada Inc. (d) The receipt by a Canadian Lender of a request for a Foreign Currency Borrowing by way of Canadian Banker's Acceptances shall be such Canadian Lender's sufficient authority to execute, and each Canadian Lender shall, subject to the terms and conditions of this Agreement, execute orders in accordance with such request and the advice of the Administrative Agent given pursuant to Section 4 of this Schedule, and the orders so executed shall thereupon be deemed to have been presented for acceptance. 2. SALE OF CANADIAN BANKER'S ACCEPTANCES (a) It shall be the responsibility of each Canadian Lender to arrange, in accordance with normal market practice, for the sale on each funding date of the Canadian Banker's Acceptances to be accepted by that Canadian Lender, failing which the Canadian Lender shall purchase its Canadian Banker's Acceptances. (b) In accordance with the procedures set forth in Section 4 of this Schedule, the Canadian Lender will make the net proceeds of the Foreign Currency Borrowing by way of Canadian Banker's Acceptances available to Anixter Canada Inc. on 2.04BA-1 the funding date by crediting the account in Canada designated by Anixter Canada Inc. with such amount. 3. SIZE AND MATURITY OF CANADIAN BANKER'S ACCEPTANCES AND ROLLOVERS Each Foreign Currency Borrowing by means of Canadian Banker's Acceptances shall be in a minimum amount of $2,500,000 and the maximum number of Canadian Banker's Acceptances outstanding at any time shall not exceed ten. Each Canadian Banker's Acceptance shall have a term of 1, 2, 3 or (subject to availability) 6 months after the date of acceptance of the order by a Canadian Lender, but no Canadian Banker's Acceptance may mature on a date which is not a Business Day or after the Maturity Date. The face amount at maturity of a Canadian Banker's Acceptance may be renewed as a Canadian Banker's Acceptance (by repayment and reissue) or repaid. 4. CO-ORDINATION OF CANADIAN BA ADVANCES Each Canadian Lender shall advance its Applicable Foreign Currency Pro Rata Share of each Foreign Currency Borrowing by way of Canadian Banker's Acceptances in accordance with the provisions set forth below. (a) The Administrative Agent, promptly following receipt of a notice from Anixter Canada Inc. pursuant to Section 2.04 requesting a Foreign Currency Borrowing by way of Canadian Banker's Acceptances, shall advise each Canadian Lender of the aggregate face amount and term(s) of the Canadian Banker's Acceptances to be accepted by it, which term(s) shall be identical for all Canadian Lenders. The aggregate face amount of Canadian Banker's Acceptances to be accepted by a Canadian Lender shall be determined by the Administrative Agent by reference to the respective Canadian Commitments of the Canadian Lenders, except that, if the face amount of a Canadian Banker's Acceptance would not be $1,000,000 or a whole multiple thereof, the face amount shall be increased or reduced by the Administrative Agent in its sole discretion to the nearest whole multiple of $1,000,000. (b) Each Canadian Lender shall transfer to Anixter Canada Inc., for value not later than 11:00 a.m. (Toronto time) on each funding date immediately available Canadian Dollars in an aggregate amount equal to the Canadian BA Discount Proceeds of all Canadian Banker's Acceptances accepted and sold or purchased by the Canadian Lender on such funding date net of the applicable Canadian Banker's Acceptance Fee and net of the amount required to pay any of its previously accepted Canadian Banker's Acceptances that are maturing on the funding date or any of its other Foreign Currency Borrowings that are being converted to Canadian Banker's Acceptances on the funding date. (c) Notwithstanding any other provision hereof, for the purpose of determining the amount to be transferred by a Canadian Lender to Anixter Canada Inc. in respect of the sale of any Canadian Banker's Acceptance accepted by such Canadian 2.04BA-2 Lender and sold or purchased by it, the proceeds of sale thereof shall be deemed to be an amount equal to the Canadian BA Discount Proceeds calculated with respect thereto. Accordingly, in respect of any particular Canadian Banker's Acceptance accepted by it, a Canadian Lender in addition to its entitlement to retain the applicable Canadian Banker's Acceptance Fee for its own account (i) shall be entitled to retain for its own account the amount, if any, by which the actual proceeds of sale thereof exceed the Canadian BA Discount Proceeds calculated with respect thereto; and (ii) shall be required to pay out of its own funds the amount, if any, by which the actual proceeds of sale thereof are less than the Canadian BA Discount Proceeds calculated with respect thereto. (d) Whenever Anixter Canada Inc. requests a Foreign Currency Borrowing that includes Canadian Banker's Acceptances, each Lender that is not permitted by applicable law or by customary market practice to accept a Canadian Banker's Acceptance (a "Non BA Lender") shall, in lieu of accepting its pro rata amount of such Canadian Banker's Acceptances, make available to the Borrower on the Drawdown Date a non-interest bearing loan (a "Canadian BA Equivalent Loan") in Canadian Dollars in an amount equal to the Canadian BA Discount Proceeds of its pro rata amount of the Canadian Banker's Acceptances based on the Canadian BA Discount Rate applicable to a Canadian Lender named on Schedule I to the Bank Act (Canada) plus 0.10% per annum. Each Non BA Lender shall also be entitled to deduct from the Canadian BA Equivalent Loan an amount equal to the Canadian Banker's Acceptance Fee that would have been applicable had it been able to accept Canadian Banker's Acceptances. The Canadian BA Equivalent Loan shall have a term equal to the term of the Canadian Banker's Acceptances that the Non BA Lender would otherwise have accepted and Anixter Canada Inc. shall, at the end of that term, be obligated to pay the Non BA Lender an amount equal to the aggregate face amount of the Canadian Banker's Acceptances that it would otherwise have accepted. All provisions of this Agreement applicable to Canadian Banker's Acceptances and Canadian Lenders that accept Canadian Banker's Acceptances shall apply mutatis mutandis to Canadian BA Equivalent Loans and Non BA Lenders and, without limiting the foregoing, Foreign Currency Borrowings shall include Canadian BA Equivalent Loans. 5. PAYMENT OF CANADIAN BANKER'S ACCEPTANCES; CASH COLLATERAL; TAXES, YIELD PROTECTION AND ILLEGALITY (a) Anixter Canada Inc. shall provide for the payment to each Canadian Lender of the full face amount of each Canadian Banker's Acceptance accepted for its account on the earlier of (i) the date of maturity of a Canadian Banker's Acceptance; and (ii) the date on which any Obligations become due and payable pursuant to Section 8.02. Each Canadian Lender shall be entitled to recover interest from Anixter Canada Inc. at the Default Rate, upon any amount payment of which has not been provided for by Anixter Canada Inc. in accordance with this Section. Interest shall be calculated from and including the date of maturity of each such 2.04BA-3 Canadian Banker's Acceptance up to but excluding the date such payment, and all interest thereon, is provided for by Anixter Canada Inc., both before and after demand, default and judgment. (b) For purposes of this Schedule 2.04BA, Section 2.04(f) and Section 8.02(c), "Cash Collateralize" means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Canadian Lenders and the Lenders, as collateral for the Obligations in respect of Canadian Banker's Acceptances, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the Administrative Agent and the Canadian Lenders (which documents are hereby consented to by the Lenders). Derivatives of such term have corresponding meanings. Anixter hereby grants to the Administrative Agent, for the benefit of the Canadian Lenders and the Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash Collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America. (c) The provisions of Article III applicable to Loans, Letters of Credit and the Commitments and Obligations in respect thereof apply to Canadian Banker's Acceptances and the Commitments and Obligations in respect thereof, mutatis mutandis. 6. DEEMED ADVANCE - CANADIAN BANKER'S ACCEPTANCES Except for amounts which are paid from the proceeds of a rollover of a Canadian Banker's Acceptance or for which payment has otherwise been funded by Anixter Canada Inc., any amount which a Canadian Lender pays to any third party on or after the date of maturity of a Canadian Banker's Acceptance in satisfaction thereof or which is owing to the Canadian Lender in respect of such a Canadian Banker's Acceptance on or after the date of maturity of such a Canadian Banker's Acceptance, shall be deemed to be a Foreign Currency Loan in Canadian Dollars to Anixter Canada Inc. under this Agreement. Each Canadian Lender shall forthwith give notice of the making of such a Foreign Currency Loan to Anixter Canada Inc., the Administrative Agent and to the other Canadian Lenders. Interest shall be payable on such Foreign Currency Loans in accordance with the terms applicable to Foreign Currency Loans in Canadian Dollars. 7. WAIVER Anixter Canada Inc. shall not claim from a Canadian Lender any days of grace for the payment at maturity of any Canadian Banker's Acceptances presented and accepted by such Canadian Lender pursuant to this Agreement. Anixter Canada Inc. waives any defence to payment which might otherwise exist if for any reason a Canadian Banker's Acceptance shall be held by a Canadian Lender in its own right at the maturity thereof, and the doctrine of merger shall not apply to any Canadian Banker's Acceptance that is at any time held by a Canadian Lender in its own right. 2.04BA-4 8. DEGREE OF CARE Any executed orders to be used as Canadian Banker's Acceptances shall be held in safekeeping with the same degree of care as if they were the Canadian Lender's own property, and shall be kept at the place at which such orders are ordinarily held by such Canadian Lender. 9. OBLIGATIONS ABSOLUTE The obligations of Anixter Canada Inc. with respect to Canadian Banker's Acceptances under this Agreement shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following circumstances: (i) any lack of validity or enforceability of any order accepted by a Canadian Lender as a Canadian Banker's Acceptance; or (ii) the existence of any claim, set-off, defence or other right which Anixter Canada Inc. may have at any time against the holder of a Canadian Banker's Acceptance, a Canadian Lender or any other Person, whether in connection with this Agreement or otherwise. 10. SHORTFALL ON DRAWDOWNS, ROLLOVERS AND CONVERSIONS Anixter Canada Inc. agrees that: (i) the difference between the amount of a Foreign Currency Borrowing requested by Anixter Canada Inc. by way of Canadian Banker's Acceptances and the actual proceeds of the Canadian Banker's Acceptances; (ii) the difference between the actual proceeds of a Canadian Banker's Acceptance and the amount required to pay a maturing Canadian Banker's Acceptance, if a Canadian Banker's Acceptance is being rolled over; and (iii) the difference between the actual proceeds of a Canadian Banker's Acceptance and the amount required to repay any Foreign Currency Borrowing which is being converted to a Canadian Banker's Acceptance; shall be funded and paid by Anixter Canada Inc. from its own resources, by 11:00 a.m. on the day of the Foreign Currency Borrowing or may be advanced as a Foreign Currency Loan in Canadian Dollars under an Applicable Foreign Currency Commitment if Anixter Canada Inc. is otherwise entitled to a Foreign Currency Borrowing under this Agreement. 2.04BA-5 SCHEDULE 10.02 EUROCURRENCY AND DOMESTIC LENDING OFFICES, ADDRESSES FOR NOTICES ANIXTER INC. AND BORROWING SUBSIDIARIES c/o Anixter Inc. 2301 Patriot Boulevard Glenview, IL 60025 Attn: Rod Shoemaker Telephone: (847) 521-8000 Facsimile: (847) 521-8990 Electronic Mail: rod.shoemaker@anixter.com BANK OF AMERICA, N.A. Administrative Agent's Office and Bank of America's Lending Office (for payments and Requests for Credit Extensions): Bank of America, N.A. CA4-702-02-25 2001 Clayton Road Concord, CA 94520-2405 Attn: Kathy C. Eddy Tel: (925) 675-8458 Fax: (888) 969-2420 Electronic Mail: kathy.eddy@bankofamerica.com Payment Instructions: Bank of America, N.A. ABA# 111 000 012 Account No.: 3750836479 Ref: Anixter Other Notices as Administrative Agent: Bank of America, N.A. Agency Management CA5-701-05-19 1455 Market Street San Francisco, CA 94103-1399 Attn: Joan Mok Tel: (415) 436-3496 Fax: (415) 503-5085 Electronic Mail: joan.mok@bankofamerica.com With a copy to: Bank of America, N.A. 10.02-1 IL1-231-10-50 231 South LaSalle St. Chicago, IL 60604 Attn: Thomas R. Durham Telephone: (312) 828-8044 Facsimile: (312) 974-8681 Electronic Mail: Thomas.Durham@bankofamerica.com L/C Issuer: Bank of America, N.A. Trade Operations-Los Angeles #22621 Mail Code: CA9-703-19-23 333 S. Beaudry Avenue Los Angeles, CA 90017-1466 Attn: Sandra Leon Telephone: (213) 345-5231 Facsimile: (213) 345-6694 Electronic Mail: Sandra.leon@bankofamerica.com Applicable Office of Administrative Agent for British Pound Sterling Payments: Bank of America, N.A. CA4-702-02-25 2001 Clayton Road Concord, CA 94520-2405 Attn: Kathy C. Eddy Tel: (925) 675-8458 Fax: (888) 969-2420 Electronic Mail: kathy.eddy@bankofamerica.com Applicable Office of Administrative Agent for Euro Payments: Bank of America, N.A. CA4-702-02-25 2001 Clayton Road Concord, CA 94520-2405 Attn: Kathy C. Eddy Tel: (925) 675-8458 Fax: (888) 969-2420 Electronic Mail: kathy.eddy@bankofamerica.com Applicable Office of Administrative Agent for Canadian Dollar Payments: Bank of America, N.A. 10.02-2 CA4-702-02-25 2001 Clayton Road Concord, CA 94520-2405 Attn: Kathy C. Eddy Tel: (925) 675-8458 Fax: (888) 969-2420 Electronic Mail: kathy.eddy@bankofamerica.com 10.02-3 EXHIBIT A-2 FORM OF FOREIGN CURRENCY BORROWING NOTICE Date: ___________, _____ To: Bank of America, N.A., as Administrative Agent Ladies and Gentlemen: Reference is made to that certain Five-Year Revolving Credit Agreement, dated as of June 18, 2004 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Agreement;" the terms defined therein being used herein as therein defined), among Anixter Inc., certain of its Subsidiaries, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. The undersigned hereby requests (select one): - - A Borrowing of Foreign Currency Loans - - A continuation of Loans - - Canadian Banker's Acceptance(s) [Anixter Canada Inc. only] 1. On ______________ (a Business Day). 2. In the amount of _______________ in [Available Foreign Currency]. 3. [With an Interest Period of _____ months][With a maturity of _____ months]. [The Foreign Currency Borrowing requested herein complies with the proviso to the first sentence of Section 2.03 of the Agreement.] [BORROWER] By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- A-2-1 EX-10.24 4 c02746exv10w24.txt $40 MILLION (CANADIAN DOLLAR) CREDIT FACILITY EXHIBIT 10.24 EXECUTION COPY ANIXTER CANADA INC. AS BORROWER -AND- ANIXTER INC. ANIXTER INTERNATIONAL INC. ANIXTER-REAL ESTATE INC. ANIXTER INFORMATION SYSTEMS CORPORATION ANIXTER FINANCIAL INC. AS GUARANTORS -AND- SCOTIA CAPITAL AS ARRANGER -AND- THE BANK OF NOVA SCOTIA AS ADMINISTRATIVE AGENT -AND- THE LENDERS FROM TIME TO TIME PARTY TO THIS AGREEMENT ---------- CDN. $40,000,000 CREDIT FACILITY CREDIT AGREEMENT DATED AS OF 18 NOVEMBER 2005 ---------- (BORDEN LADNER GERVAIS LOGO) BORDEN LADNER GERVAIS LLP TABLE OF CONTENTS ARTICLE 1 DEFINED TERMS 1.1 Defined Terms........................................................ 1 1.2 Construction......................................................... 19 1.3 References to U.S. Credit Agreement.................................. 19 1.4 Certain Rules of Interpretation...................................... 19 ARTICLE 2 CREDIT 2.1 Amount and Availment Options......................................... 20 2.2 Revolving Credit..................................................... 20 2.3 Use of the Credit.................................................... 21 2.4 Term and Repayment................................................... 21 2.5 Voluntary Prepayments................................................ 21 2.6 Applicable Margin for Interest Rates, Fees and Commissions........... 21 2.7 Standby Fee.......................................................... 22 2.8 Assignment and Other Fees............................................ 23 2.9 Exchange Rate Fluctuations........................................... 23 ARTICLE 3 SECURITY 3.1 Security............................................................. 23 3.2 Obligations Secured by the Security.................................. 23 ARTICLE 4 DISBURSEMENT CONDITIONS 4.1 Conditions Precedent to Initial Advance.............................. 25 (1) Other Debt and Encumbrances.................................... 25 (2) Documentation and Ancillary Information........................ 25 (3) Opinions....................................................... 26 (4) Other Matters.................................................. 26 4.2 Conditions Precedent to all Advances................................. 26 ARTICLE 5 ADVANCES 5.1 Evidence of Indebtedness............................................. 27 5.2 Conversions.......................................................... 27 5.3 Notice of Advances and Payments...................................... 27 5.4 Prepayments and Reductions........................................... 28 5.5 Prime Rate, Base Rate and LIBOR Advances............................. 28 5.6 LIBOR Periods........................................................ 29

(i) 5.7 Co-ordination of Prime Rate Advances, Base Rate Advances and LIBOR Advances............................................................. 30 5.8 Execution of Banker's Acceptances.................................... 30 5.9 Sale of Banker's Acceptances......................................... 31 5.10 Size and Maturity of Banker's Acceptances and Rollovers.............. 31 5.11 Co-ordination of BA Advances......................................... 32 5.12 Payment of Banker's Acceptances...................................... 33 5.13 Deemed Advance - Banker's Acceptances................................ 33 5.14 Waiver............................................................... 34 5.15 Degree of Care....................................................... 34 5.16 Obligations Absolute................................................. 34 5.17 Shortfall on Drawdowns, Rollovers and Conversions.................... 34 5.18 Issuance and Maturity of L/Cs........................................ 35 5.19 Payment of L/C Commissions and Fronting Fees......................... 35 5.20 Payment of L/Cs and Participation by Lenders in L/Cs................. 36 5.21 Deemed Advance - L/Cs................................................ 37 5.22 Failure of Lender to Fund............................................ 37 5.23 Payment by the Borrower.............................................. 38 5.24 Payment by Agent..................................................... 39 5.25 Provisions Relating to Swingline Availability........................ 40 5.26 Prohibited Rates of Interest......................................... 41 ARTICLE 6 REPRESENTATIONS AND WARRANTIES 6.1 Representations and Warranties....................................... 42 (1) Corporate Matters.............................................. 42 (2) Loan Documents, etc............................................ 43 (3) Litigation, Financial Statements and Other Matters............. 43 (4) Business, Property, Capital Stock, Material Contracts and Material Permits............................................... 44 (5) Environmental Matters.......................................... 45 (6) Taxes and Withholdings......................................... 46 (7) Pension and Welfare Plans...................................... 47 (8) Cumulative Material Adverse Effect............................. 48 6.2 Survival of Representations and Warranties........................... 48 ARTICLE 7 COVENANTS 7.1 Financial Covenants of the Borrower.................................. 49 7.2 Positive Covenants................................................... 49 (1) Payments and Operation of Business............................. 49 (2) Inspection..................................................... 50 (3) Insurance...................................................... 50 (4) Taxes and Withholdings......................................... 50 (5) Other Matters.................................................. 50 7.3 Reporting and Notice Requirements.................................... 51 (1) Periodic Financial Reports..................................... 51

(ii) (2) Requirements for Notice........................................ 52 7.4 Negative Covenants................................................... 53 (1) Debt and Encumbrances.......................................... 53 (2) Distributions, Financial Assistance and other Financial Transactions................................................... 54 (3) Business and Property.......................................... 54 (4) Corporate Matters.............................................. 55 ARTICLE 8 DEFAULT 8.1 Events of Default.................................................... 55 8.2 Acceleration and Termination of Rights, Pre-Acceleration Rights...... 57 8.3 Payment of L/Cs, etc................................................. 58 8.4 Remedies............................................................. 58 8.5 Saving............................................................... 58 8.6 Perform Obligations.................................................. 58 8.7 Third Parties........................................................ 59 8.8 Remedies Cumulative.................................................. 59 ARTICLE 9 THE AGENT AND THE LENDERS 9.1 Authorization of Agent............................................... 59 9.2 Administration of the Credit......................................... 60 9.3 Acknowledgements, Representations and Covenants of Lenders........... 62 9.4 Provisions Operative Between Lenders and Agent Only.................. 63 ARTICLE 10 MISCELLANEOUS PROVISIONS 10.1 Accounting Terms..................................................... 63 10.2 Defined Terms........................................................ 63 10.3 Severability......................................................... 63 10.4 Amendment, Supplement or Waiver...................................... 63 10.5 Governing Law........................................................ 64 10.6 This Agreement to Govern............................................. 64 10.7 Permitted Encumbrances............................................... 64 10.8 Currency............................................................. 64 10.9 Liability of Lenders................................................. 64 10.10 Interest on Miscellaneous Amounts.................................... 65 10.11 Judgment Currency.................................................... 65 10.12 Address for Notice................................................... 65 10.13 Time of the Essence.................................................. 65 10.14 Further Assurances................................................... 66 10.15 Term of Agreement.................................................... 66 10.16 Payments on Business Day............................................. 66 10.17 Whole Agreement...................................................... 66

(iii) 10.18 English Language..................................................... 66 10.19 Senior Indebtedness.................................................. 66 10.20 Date of Agreement.................................................... 67

SCHEDULE A - FORM OF NOTICE OF ADVANCE OR PAYMENT SCHEDULE B - FORM OF BORROWER COMPLIANCE CERTIFICATE SCHEDULE C - FORM OF ANIXTER INC. COMPLIANCE CERTIFICATE SCHEDULE D - MODEL CREDIT AGREEMENT PROVISIONS SCHEDULE E - APPLICABLE PERCENTAGES OF LENDERS SCHEDULE F - DETAILS OF CAPITAL STOCK, PROPERTY, ETC. SCHEDULE G - OTHER SECURED OBLIGATIONS SCHEDULE H - ORGANIZATIONAL STRUCTURE SCHEDULE I - EXISTING SCOTIA L/CS (iv) THIS CREDIT AGREEMENT is dated as of 18 November 2005 BETWEEN: ANIXTER CANADA INC. a corporation incorporated under the laws of Canada as Borrower - and - ANIXTER INC. ANIXTER INTERNATIONAL INC. ANIXTER-REAL ESTATE INC. ANIXTER INFORMATION SYSTEMS CORPORATION ANIXTER FINANCIAL INC. as Guarantors - and - THE LENDERS LISTED ON SCHEDULE E TO THIS AGREEMENT FROM TIME TO TIME AS LENDERS - and - THE BANK OF NOVA SCOTIA, in its capacity as Administrative Agent RECITALS: A. The Bank of Nova Scotia and the Borrower have entered into a Commitment Letter and Term Sheet dated 5 October 2005 and accepted on 10 October 2005, as amended, under which The Bank of Nova Scotia has agreed to establish a credit facility in favour of the Borrower. B. The parties are entering into this Agreement to provide for the terms of such credit facility. FOR VALUE RECEIVED, and intending to be legally bound by this Agreement, the parties agree as follows: ARTICLE 1 DEFINED TERMS 1.1 DEFINED TERMS In this Agreement, unless something in the subject matter or context is inconsistent therewith: -2- 1.1.1 "ACCOMMODATION OBLIGATION" has the meaning defined in the U.S. Credit Agreement, as such definition may be amended from time to time in accordance with a Scotia Approved Amendment. 1.1.2 "ADMINISTRATIVE QUESTIONNAIRE" has the meaning defined in the Provisions. 1.1.3 "ADVANCE" means an availment of the Credit by the Borrower by way of a Prime Rate Advance, BA Equivalent Loan, Base Rate Advance, LIBOR Advance, acceptance of a Banker's Acceptance or issuance by the Issuing Bank of an L/C, including overdrafts under the Swingline Availability and other deemed Advances and conversions, renewals and rollovers of existing Advances, and any reference relating to the amount of Advances shall mean the sum of all outstanding Prime Rate Advances, Base Rate Advances and LIBOR Advances, plus the face amount of all outstanding Banker's Acceptances, BA Equivalent Loans and L/Cs. 1.1.4 "AFFILIATE" has the meaning defined in the Provisions. 1.1.5 "AGENT" or "ADMINISTRATIVE AGENT" means Scotia Capital in its capacity as administrative agent for the Lenders, and any successor administrative agent appointed in accordance with this Agreement. 1.1.6 "AGREEMENT", "HEREOF", "HEREIN", "HERETO", "HEREUNDER" or similar expressions mean this Agreement, the Recitals hereto and any Schedules hereto, including the Provisions, as amended, supplemented, restated and replaced from time to time in accordance with the provisions hereof, and not any particular Article, Section or other portion hereof. 1.1.7 "APPLICABLE LAW" has the meaning defined in the Provisions. 1.1.8 "APPLICABLE PERCENTAGE" has the meaning defined in the Provisions. The Applicable Percentage of each Lender as of the date of this Agreement is the percentage calculated based on the amounts set out in Schedule E to this Agreement, which shall be amended and distributed to all parties by the Administrative Agent from time to time as Applicable Percentages change in accordance with this Agreement. 1.1.9 "APPROVED FUND" has the meaning defined in the Provisions. 1.1.10 "ARMS' LENGTH" has the meaning given to that term for the purposes of the Income Tax Act (Canada). 1.1.11 "ARTICLE" means the designated article of this Agreement. 1.1.12 "ASSIGNMENT AND ASSUMPTION" has the meaning defined in the Provisions. 1.1.13 "BA DISCOUNT PROCEEDS" means, in respect of any Banker's Acceptance, an amount calculated on the applicable Drawdown Date which is (rounded to the nearest full cent, with one-half of one cent being rounded up) equal to the face amount of such Banker's Acceptance multiplied by the price, where the price is calculated by dividing -3- one by the sum of one plus the product of (a) the BA Discount Rate applicable thereto expressed as a decimal fraction multiplied by (b) a fraction, the numerator of which is the term of such Banker's Acceptance and the denominator of which is 365, rounded to the nearest multiple of 0.001%. 1.1.14 "BA DISCOUNT RATE" means, (a) with respect to any Banker's Acceptance accepted by a Lender named on Schedule I to the Bank Act (Canada), the rate determined by the Agent as being the arithmetic average (rounded upward to the nearest multiple of 0.01%) of the discount rates, calculated on the basis of a year of 365 days and determined in accordance with normal market practice at or about 10:00 a.m. (Toronto time) on the applicable Drawdown Date, for banker's acceptances of the Schedule I Reference Lenders having a comparable face amount and identical maturity date to the face amount and maturity date of such Banker's Acceptance, and (b) with respect to any Banker's Acceptance accepted by any other Lender, the rate determined by the Agent as being the arithmetic average (rounded upward to the nearest multiple of 0.01%) of the discount rates, calculated on the basis of a year of 365 days and determined in accordance with normal market practice at or about 10:00 a.m. (Toronto time) on the applicable Drawdown Date, for banker's acceptances of the Other Reference Lenders having a comparable face amount and identical maturity date to the face amount and maturity date of such Banker's Acceptance. 1.1.15 "BA EQUIVALENT LOAN" has the meaning defined in Section 5.11(5). 1.1.16 "BANKER'S ACCEPTANCE" means a depository bill as defined in the Depository Bills and Notes Act (Canada) in Canadian Dollars that is in the form of an order signed by the Borrower and accepted by a Lender pursuant to this Agreement or, for Lenders not participating in clearing services contemplated in that Act, a draft or bill of exchange in Canadian Dollars that is drawn by the Borrower and accepted by a Lender pursuant to this Agreement. Orders or drafts that become depository bills, drafts and bills of exchange are sometimes collectively referred to in this Agreement as "ORDERS". References in the Provisions to "BANKERS' ACCEPTANCES" shall be interpreted as referring to Banker's Acceptances. 1.1.17 "BANKER'S ACCEPTANCE FEE" means, with respect to any Banker's Acceptance, the amount calculated by multiplying the face amount of the Banker's Acceptance by the applicable rate for the Banker's Acceptance Fee specified in Section 2.6, and then multiplying the result by a fraction, the numerator of which is the duration of its term on the basis of the applicable actual number of days to elapse from and including the date of acceptance of the Banker's Acceptance by the Lender up to but excluding the maturity date of the Banker's Acceptance and the denominator of which is the number of days in the calendar year in question. 1.1.18 "BASE RATE" means, on any day, the greater of: (a) the average of the annual rates of interest (expressed as a percentage per annum on the basis of a 360 day year) offered by the Agent on that day as its reference rate for commercial loans made by it in Canada in U.S. Dollars; and -4- (b) the Federal Funds Effective Rate plus 0.63% per annum. 1.1.19 "BASE RATE ADVANCE" or "BASE RATE LOAN" means an advance in U.S. Dollars bearing interest based on the Base Rate and includes any deemed Base Rate Advance provided for in this Agreement. 1.1.20 "BORROWER" means Anixter Canada Inc., a corporation incorporated under the laws of Canada, its successors and permitted assigns. 1.1.21 "BRANCH OF ACCOUNT" means (a) for the purpose of obtaining and repaying Advances under the Swingline Availability, the branch of the Agent located at West Metro Commercial Banking Centre, 2 Robert Speck Parkway, 4th Floor, Mississauga, ON L4Z 1H8, and (b) for all other Advances, WBO-Loan Administration & Agency Operations of the Agent located at 720 King Street West, 4th Floor, Wholesale Banking Operations, Toronto, Ontario, M5V 2T3, or such other branch or branches as may be designated by the Agent from time to time. 1.1.22 "BUSINESS DAY" means a day of the year, other than Saturday or Sunday, on which (a) in respect of notices, determinations, payments or Advances relating to Base Rate Advances, the Agent is open for normal banking business at its executive offices in Toronto, Ontario, the Branch of Account and its principal office in New York, New York, (b) in respect of notices, determinations, payments or Advances relating to LIBOR Advances, the Agent is open for normal banking business at its executive offices in Toronto, Ontario, the Branch of Account and its principal offices in New York, New York and London, England, and (c) for all other purposes, the Agent is open for normal banking business at its executive offices in Toronto, Ontario and the Branch of Account. 1.1.23 "CANADIAN DOLLARS", "CDN. DOLLARS", "CDN. $" and "$" mean the lawful money of Canada. 1.1.24 "CAPITAL STOCK" means, with respect to any Person from time to time, any and all shares, units, trust units, partnership, membership or other interests, participations or other equivalent rights in the Person's equity or capital from time to time, however designated and whether voting or non-voting. 1.1.25 "CDOR RATE" means, on any date, with respect to any Banker's Acceptance, the simple average of the rates shown on the display referred to as the "CDOR PAGE" (or any display substituted therefor) on Reuters Domestic Money Service (or any successor source from time to time) with respect to the banks and other financial institutions named in such display at or about 10:00 a.m. (Toronto time) on such date for banker's acceptances having an identical maturity date to the maturity date of such Banker's Acceptance, as determined by the Agent, or if such day is not a Business Day, then on the immediately preceding Business Day; provided, however, that if such rates are not available, then the CDOR Rate for any day shall be calculated as the average of the bid rates (rounded upwards to the nearest 1/16th of 1%) quoted by each of the Schedule I Reference Lenders for its own banker's acceptances for the -5- applicable period as of 10:00 a.m. (Toronto time) on such day, as determined by the Agent, or if such day is not a Business Day, then on the immediately preceding Business Day. 1.1.26 "CHANGE IN LAW" has the meaning defined in the Provisions. 1.1.27 "CLOSING DATE" means 18 November 2005 or such other day as may be agreed to by the parties which is not later than 30 November 2005. 1.1.28 "COLLATERAL" means cash, a bank draft or a letter of credit issued by a Canadian chartered bank, all in a form satisfactory to the Agent, acting reasonably. 1.1.29 "COMMITMENT" means in respect of each Lender from time to time, the covenant to make Advances to the Borrower in the Lender's Applicable Percentage of the maximum amount of the Credit and, where the context requires, the maximum amount of Advances which the Lender has covenanted to make. 1.1.30 "COMPLIANCE CERTIFICATE" means a certificate in the form of Schedule B or Schedule C signed by a senior officer of, as applicable, the Borrower or Anixter Inc. 1.1.31 "CONSTATING DOCUMENTS" means, with respect to any Person, its articles or certificate of incorporation, amendment, amalgamation, continuance or association, memorandum of association, by-laws, declaration of trust, trust indenture, partnership agreement, limited liability company agreement or other similar document, as applicable, and all unanimous shareholder agreements, other shareholder agreements, voting trust agreements and similar arrangements applicable to the Person's Capital Stock, all as amended, supplemented, restated or replaced from time to time. 1.1.32 "CONTRACT" means any agreement, contract, indenture, lease, deed of trust, licence, option, undertaking, promise or any other commitment or obligation, whether oral or written, express or implied, other than a Permit. 1.1.33 "CONTRIBUTING LENDER" shall have the meaning defined in Section 5.22. 1.1.34 "CONTROL" means, with respect to any Person, (a) the possession another Person, directly or indirectly, of vote 33% or more (or, in the case of an Affiliate of a Lender, 20% or more) of the Capital Stock of the first Person (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners; or (b) that the other Person has the power to direct or cause the direction of the management and policies of such first Person whether by contract or otherwise and "Controlling" and "Controlled" have corresponding meanings. 1.1.35 "CREDIT" means the credit facility of up to Cdn. $40,000,000 or the Equivalent Amount in U.S. Dollars established by the Lenders in favour of the Borrower pursuant to Article 2 of this Agreement. 1.1.36 "CREDIT LIMIT" has the meaning defined in Section 2.1(1). -6- 1.1.37 "CURRENCY AGREEMENTS" means (a) any contract for the sale, purchase or exchange or whether for the spot or for future delivery of foreign currency (whether or not the subject currency is to be delivered or exchanged) and whether or not subject to any ISDA Master Agreement, (b) any currency swap agreements, option contracts, futures contracts, options on futures contracts, spot or forward contracts or other agreements to purchase or sell currency or any other similar arrangements related to movements in the rates of exchange of currencies, or (c) other similar derivatives transactions or any other contract or arrangement having the same economic effect as the foregoing, whether at, above or below current market prices. 1.1.38 "DEBT" means, with respect to any Person, without duplication and, except as provided in item (b) below, without regard to any interest component thereof (whether actual or imputed) that is not due and payable, the aggregate of the following amounts, each calculated in accordance with GAAP unless the context otherwise requires: (a) all obligations (including, without limitation, by way of overdraft and drafts or orders accepted representing extensions of credit) that would be considered to be indebtedness for borrowed money, and all obligations (whether or not with respect to the borrowing of money) that are evidenced by bonds, debentures, notes or other similar instruments; (b) the face amount of all bankers' acceptances, if any, and similar instruments; (c) all liabilities upon which interest charges are customarily paid by that Person; (d) any capital stock of that person (or of any Subsidiary of that Person) which capital stock, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, prior to the maturity date of the Credit, for cash or securities constituting Debt; (e) all capital lease obligations, synthetic lease obligations, obligations under sale and leaseback transactions and indebtedness under arrangements relating to purchase money encumbrances; (f) the amount of the contingent liability under any guarantee (other than by endorsement of negotiable instruments for collection or deposit in the ordinary course of business) in any manner of any part or all of an obligation of another person of the type included in items (a) through (e) above, including the amount of all contingent liabilities in respect of letters of credit and letters of guarantee and similar instruments; and (g) the amount of all contingent liabilities in respect of performance bonds and surety bonds, and any other guarantee or other contingent liability of any part or all of an obligation of a person other than an Obligor, in each case only to the extent that the guarantee or other contingent liability is required by GAAP -7- to be treated as a liability on a balance sheet of the guarantor or person contingently liable; provided that trade payables, accrued liabilities that are current liabilities incurred in the ordinary course of business do not constitute Debt. 1.1.39 "DEFAULT" has the meaning defined in the Provisions and, without limiting the Provisions, Default includes an Event of Default and a Pending Event of Default. 1.1.40 "DEFAULTING LENDER" has the meaning defined in Section 5.22. 1.1.41 "DEMAND" has the meaning defined in Section 5.20(3). 1.1.42 "DESIGNATED ACCOUNT" means, in respect of any Advance, the account or accounts maintained by the Borrower at a branch of the Agent in Toronto, Ontario that the Borrower designates in its notice requesting an Advance. 1.1.43 "DRAWDOWN DATE" means the date, which shall be a Business Day, of any Advance. 1.1.44 "EBITDA" means the net income of a Person calculated on a consolidated basis in accordance with GAAP for its last four completed fiscal quarters: (a) plus, the provision for depreciation and amortization expense of such Person for such period; (b) plus, income taxes of such Person for such period; and (c) plus, net interest expense of such Person for such period; provided that there shall be excluded from EBITDA any non-cash, non-operating gains or loses (including, without limitation, extraordinary or unusual gains or losses, gains or losses arising from the sale of capital assets or the sale of owned buildings and properties and other non-recurring gains or losses) during such period. 1.1.45 "ELIGIBLE ASSIGNEE" has the meaning defined in the Provisions. 1.1.46 "ENCUMBRANCE" means: (a) with respect to any Property, any mortgage, deed of trust, lien, pledge, hypothec, hypothecation, encumbrance, charge, assignment, consignment, security interest, royalty interest, adverse claim or defect of title in, on or of the Property; (b) the interest of a vendor or lessor under any conditional sale agreement, capital lease or title retention agreement relating to an asset; (c) any purchase option, call or similar right of a third party in respect of any Property; -8- (d) any netting arrangement or set-off arrangement (other than netting or set-off arising by operation of law in the ordinary course of business), defeasance arrangement or other similar arrangement; and (e) any other agreement, trust or arrangement having the effect of security for the payment or performance of any debt, liability or obligation, and "ENCUMBRANCES", "ENCUMBRANCER", "ENCUMBER" and "ENCUMBERED" shall have corresponding meanings. 1.1.47 "ENVIRONMENTAL LAWS" means all Applicable Laws or any parts thereof pertaining to the environment, Hazardous Material or health and safety. 1.1.48 "ENVIRONMENTAL LIEN" has the meaning defined in the U.S. Credit Agreement, as such definition may be amended from time to time in accordance with a Scotia Approved Amendment. 1.1.49 "EQUITY" means, in respect of any Person, Capital Stock of such Person, warrants, options or other rights to acquire Capital Stock of the Person and securities convertible into or exchangeable for Capital Stock of such Person. 1.1.50 "EQUIVALENT AMOUNT" means, on any date, the equivalent amount in Canadian Dollars or U.S. Dollars, as the case may be, after giving effect to a conversion of a specified amount of U.S. Dollars to Canadian Dollars or Canadian Dollars to U.S. Dollars, as the case may be, at the Exchange Rate. 1.1.51 "EVENT OF DEFAULT" means any of the events or circumstances described in Section 8.1. 1.1.52 "EXCHANGE RATE" means on any day, for the purpose of calculations under this Agreement, the amount of Canadian Dollars into which U.S. Dollars may be converted, or vice versa, using the Bank of Canada noon spot rate for converting the one currency into the other on that day or if that day is not a Business Day, the preceding Business Day, or if such rate is not so published by the Bank of Canada for any such day, then at the mid rate (i.e. the average of the Agent's spot buying and selling rates) quoted by the Agent at the Branch of Account at approximately noon (Toronto time) on that day in accordance with its normal practice for the applicable currency conversion in the wholesale market, or if that day is not a Business Day, the preceding Business Day. 1.1.53 "EXCLUDED TAXES" has the meaning defined in the Provisions. 1.1.54 "EXISTING CREDIT AGREEMENT" means the revolving term credit agreement dated as of 15 January 1997 between Anixter Canada Inc., as borrower, and The Bank of Nova Scotia, as lender, as amended to date. 1.1.55 "FEDERAL FUNDS EFFECTIVE RATE" means for any period, a fluctuating interest rate per annum equal, for each day during such period, to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System -9- arranged by Federal Funds brokers as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York or, for any day on which that rate is not published for that day by the Federal Reserve Bank of New York, the average of the quotations for that day for such transactions received by the Agent from three Federal Funds brokers of recognized standing. 1.1.56 "FEE LETTER" means the confidential fee letter agreement dated 5 October 2005 made by The Bank of Nova Scotia addressed to the Borrower providing for the payment of certain fees in relation to the Credit, accepted and agreed to by the Borrower on 10 October 2005. 1.1.57 "FITCH" means Fitch Ratings and its successors. 1.1.58 "FOREIGN LENDER" has the meaning defined in the Provisions. 1.1.59 "FRONTING FEE" means the fee payable to the Issuing Bank upon the issuance or renewal of an L/C calculated in accordance with Section 2.6. 1.1.60 "FUND" has the meaning defined in the Provisions. 1.1.61 "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession, that are applicable to the circumstances as of the date of determination, consistently applied. 1.1.62 "GOVERNMENTAL AUTHORITY" has the meaning defined in the Provisions. 1.1.63 "GUARANTOR OBLIGATIONS" means the obligations of the Guarantors under the Loan Documents. 1.1.64 "GUARANTORS" means each of Anixter Inc., Anixter International Inc., Anixter-Real Estate Inc., Anixter Information Systems Corporation and Anixter Financial Inc. and each other Person which delivers a guarantee hereunder, and becomes a party hereto, from time to time. 1.1.65 "HAZARDOUS MATERIALS" means any substance, product, waste, residue, pollutant, material, chemical, contaminant, dangerous good, constituent or other material which is or becomes listed, regulated, defined or addressed under or subject to any Environmental Law or any applicable Permit issued under any Environmental Law, including asbestos, petroleum, tailings, mining residue and polychlorinated biphenyls. 1.1.66 "INDEBTEDNESS" has the meaning defined in the U.S. Credit Agreement, as such definition may be amended from time to time in accordance with a Scotia Approved Amendment. -10- 1.1.67 "INDEMNIFIED TAXES" has the meaning defined in the Provisions. 1.1.68 "INTELLECTUAL PROPERTY" means patents, trademarks, service marks, trade names, copyrights, trade secrets, industrial designs and other similar rights. 1.1.69 "INTERBANK REFERENCE RATE" means, in respect of any currency, the interest rate expressed as a percentage per annum which is customarily used by the Agent when calculating interest due by it or owing to it arising from correction of errors in transactions in that currency between it and other chartered banks. 1.1.70 "INTEREST PAYMENT DATE" means the 21st day of each calendar month. 1.1.71 "INTEREST PERIOD" has the same meaning as LIBOR Period. 1.1.72 "INTEREST RATE AGREEMENTS" means any interest rate swap, option contract, futures contract, option on futures contract, cap, floor, collar, or any other similar arrangement relating to movements in interest rates or that is designed to protect against fluctuations in interest rates or to obtain the benefits of floating or fixed interest rates;, whether at, above or below current market prices. 1.1.73 "INVESTMENT" means (a) any investment in or purchase of or other acquisition of any Equity of any Person, (b) any purchase or other acquisition of a business or undertaking or division of any Person, including Property comprising the business, undertaking or division, or (c) any investment in or purchase of or other acquisition of any assets of any other Person, or (d) any loan or advance or guarantee or the provision of any other financial assistance of any kind to, or otherwise becoming liable for any debts, liabilities or obligations of, any Person. 1.1.74 "ISSUING BANK" has the meaning defined in the Provisions, which for the time being, is Scotia Capital and includes other Lenders designated by the Agent from time to time after consultation with the Borrower to be Issuing Banks. 1.1.75 "L/C" or "LETTER OF CREDIT" means a standby letter of credit, letter of guarantee or commercial letter of credit denominated in Canadian Dollars or U.S. Dollars in a form satisfactory to the Issuing Bank and issued by the Issuing Bank under the Credit at the request of the Borrower. The letters of credit issued (or deemed to have been issued) by Scotia Capital under the Existing Credit Agreement listed in Schedule I hereto that remain outstanding as of the date of the initial Advance under the Credit ("EXISTING SCOTIA L/CS"), and all extensions, replacements and renewals thereof, shall be deemed to have been issued by the Issuing Bank and to be L/Cs outstanding under the Credit. 1.1.76 "LENDERS" means each of the Persons listed on Schedule E and other lenders that agree from time to time to become Lenders in accordance with the terms of this Agreement and includes, where the context requires, the Issuing Bank, and "LENDER" means any one of the Lenders. 1.1.77 "LENDING OFFICE" means, as to any Lender, the office or offices from which it makes Advances and receives payments pursuant to this Agreement from time to time. -11- 1.1.78 "LIBO RATE" means for any LIBOR Period and LIBOR Advance, a rate expressed as a percentage per annum on the basis of a 360 day year equal: (a) to the rate for deposits in U.S. Dollars in the London interbank market for a period equal to the LIBOR Period and in an amount approximately equal to the amount of the LIBOR Advance, that appears on the Reuters Telerate Page 3750 (or any successor source from time to time) as of 11:00 a.m. London time two Business Days before the first day of the LIBOR Period or, (b) if no such rate appears as contemplated in item (a) above, to the rate at which deposits in U.S. Dollars are offered by the principal lending office of Scotia Capital in London, England to leading banks in the London interbank market at 11:00 a.m. London time two Business Days before the first day of the LIBOR Period for a period equal to the LIBOR Period and in an amount approximately equal to the amount of the LIBOR Advance. 1.1.79 "LIBOR ADVANCE" or "LIBO RATE LOAN" means an advance in U.S. Dollars bearing interest based on the LIBO Rate. 1.1.80 "LIBOR PERIOD" means the period selected by the Borrower for a LIBOR Advance or the period applicable to the LIBOR Advance under the terms of this Agreement. 1.1.81 "LOAN" has the meaning defined in the Provisions. 1.1.82 "LOAN DOCUMENTS" means this Agreement, all Security, the Fee Letter and all other documents from time to time relating to the Credit. 1.1.83 "MATERIAL ADVERSE EFFECT" means any material adverse change in or material adverse effect on (a) the business, affairs, prospects, assets or financial condition of the Obligors taken as a whole, (b) the ability of Obligors taken as a whole to observe, perform or comply with their material obligations under any of the Loan Documents, or (c) the rights and remedies of, as applicable, the Agent or any of the Lenders under any of the Loan Documents, in each case, as determined by the Required Lenders, acting reasonably. 1.1.84 "MATERIAL CONTRACTS" means any Contract (other than any Loan Document) to which an Obligor is or becomes a party at any time that, if terminated, has or could reasonably be expected to have a Material Adverse Effect. 1.1.85 "MATERIAL PERMIT" means any Permit issued at any time to an Obligor that, if terminated, has or could reasonably be expected to have a Material Adverse Effect. 1.1.86 "MATURITY DATE" means 18 June 2009. 1.1.87 "MOODY'S" means Moody's Investor Services, Inc. and its successors. 1.1.88 "NON BA LENDER" has the meaning defined in Section 5.11(5). -12- 1.1.89 "OBLIGATIONS" means all obligations of the Borrower to the Agent and Lenders under or in connection with this Agreement, including but not limited to all debts and liabilities, present or future, direct or indirect, absolute or contingent, matured or not, at any time owing by the Borrower to the Agent and Lenders in any currency or remaining unpaid by the Borrower to the Agent and Lenders in any currency under or in connection with this Agreement, whether arising from dealings between the Agent and Lenders and the Borrower or from any other dealings or proceedings by which the Agent and Lenders may be or become in any manner whatever creditors of the Borrower under or in connection with this Agreement, and wherever incurred, and whether incurred by the Borrower alone or with another or others and whether as principal or surety, and all interest, fees, legal and other costs, charges and expenses; provided, however, that "Obligations" shall not include "Other Secured Obligations". In this definition, "the Agent and Lenders" shall be interpreted as "the Agent and Lenders, or any of them". 1.1.90 "OBLIGORS" has the meaning defined in the Provisions. Without limiting the Provisions, "Obligors" includes the Borrower and each of the Guarantors, and "Obligor" means any of them. 1.1.91 "OTHER REFERENCE LENDERS" means two Lenders, one selected by the Agent and one selected by the Borrower, which are banks chartered under and referred to in either of Schedule II or Schedule III of the Bank Act (Canada). 1.1.92 "OTHER SECURED AGREEMENTS" means all agreements or arrangements (including guarantees) entered into or made from time to time by any Obligor (unless otherwise specified) in connection with: (a) Swap Transactions between an Obligor and Scotia Capital or an Affiliate of Scotia Capital; and (b) cash consolidation, cash management and electronic funds transfer arrangements between an Obligor and Scotia Capital or an Affiliate of Scotia Capital and, for greater certainty, all such agreements and arrangements entered into or made by any Obligor with or in favour of Scotia Capital or an Affiliate of Scotia Capital, as the case may be, shall not cease to be an Other Secured Agreement if Scotia Capital ceases to be the Agent or a Lender or have an Affiliate which is the Agent or a Lender. 1.1.93 "OTHER SECURED OBLIGATIONS" means all obligations of the Obligors to the Other Secured Parties under or in connection with the Other Secured Agreements, including but not limited to all debts and liabilities, present or future, direct or indirect, absolute or contingent, matured or not, at any time owing by the Obligors to the Other Secured Parties in any currency or remaining unpaid by the Obligors to the Other Secured Parties in any currency under or in connection with the Other Secured Agreements, whether arising from dealings between the Other Secured Parties and the Obligors or from any other dealings or proceedings by which the Other Secured Parties may be or become in any manner whatever creditors of the Obligors under or in connection with the Other Secured Agreements, and wherever incurred, and whether incurred by an Obligor alone or with another or others and whether as principal or surety, and all interest, fees, legal and other costs, charges and expenses; provided, however, that "Other Secured Obligations" shall not include "Obligations". In this definition, "the -13- Other Secured Parties" shall be interpreted as "the Other Secured Parties, or any of them," and "Obligors" shall be interpreted as "Obligors, and each of them". 1.1.94 "OTHER SECURED PARTY" means, at any time Scotia Capital or an Affiliate of Scotia Capital which at such time is a creditor under or in connection with an Other Secured Agreement. 1.1.95 "OTHER TAXES" has the meaning defined in the Provisions. 1.1.96 "PARTICIPANT" has the meaning defined in the Provisions. 1.1.97 "PENDING EVENT OF DEFAULT" means an event which would constitute an Event of Default hereunder, except for satisfaction of any requirement for giving of notice, lapse of time, or both, or other condition subsequent. 1.1.98 "PENSION PLAN" means (a) a "pension plan" or "plan" which is a "registered pension plan" as defined in the Income Tax Act (Canada) or pension benefits standards legislation in any jurisdiction of Canada and is applicable to employees resident in Canada of the Borrower, and (b) any other defined benefit, supplemental pension benefit plan or similar arrangement applicable to any employee of the Borrower. 1.1.99 "PERMITS" means licences, certificates, authorizations, consents, registrations, exemptions, permits, attestations, approvals, characterization or restoration plans, depollution programmes and any other approvals required by or issued pursuant to any Applicable Law, in each case, against a Person or its Property which are made, issued or approved by a Governmental Authority. 1.1.100 "PERMITTED ENCUMBRANCES" means, with respect to any Person, the following: (a) liens for taxes, assessments or governmental charges or levies which are not yet due, or for which instalments have been paid based on reasonable estimates pending final assessments, or the validity of which is being contested in good faith by appropriate proceedings and for which the Person has recorded the liability in accordance with GAAP and which do not have, and will not reasonably be expected to have, a Material Adverse Effect; (b) inchoate or statutory liens of contractors, subcontractors, mechanics, workers, suppliers, material men, carriers and others in respect of construction, maintenance, repair or operation of assets of the Person, in respect of which adequate holdbacks are being maintained as required by Applicable Laws and (i) which have not at such time been filed or exercised and of which none of the Lenders have been given notice, or (ii) which relate to obligations not due or payable or if due, the validity of which is being contested in good faith by appropriate proceedings and for which such Person has recorded the liability in accordance with GAAP and which do not materially reduce the value of the affected asset or materially interfere with the use of such asset in the operation of the business of the Person and do not have, and will not reasonably be expected to have, a Material Adverse Effect; -14- (c) easements, rights-of-way, licences, servitudes, restrictions, restrictive covenants, and similar rights in real property comprised in the assets of the Person or interests therein (including in respect of sewers, drains, gas and water mains or electric light and power or telephone and telegraph conduits, poles, wires and cables) which do not materially reduce the value of the affected asset or materially interfere with the use of such asset in the operation of the business of the Person and do not have, and will not reasonably be expected to have, a Material Adverse Effect; (d) title defects or irregularities which are of a minor nature and which do not materially reduce the value of the affected asset or materially interfere with the use of such asset in the operation of the business of the Person and do not have, and will not reasonably be expected to have, a Material Adverse Effect; (e) the Encumbrance resulting from the deposit of cash or securities in connection with contracts, tenders or expropriation proceedings, or to secure workers' compensation, employment insurance, surety or appeal bonds, costs of litigation when required by Applicable Laws and other similar obligations, in each case in the ordinary course of business; (f) the Encumbrance created by a judgment of a court of competent jurisdiction; provided, however, that the Encumbrance is in existence for less than 20 days after its creation or the execution or other enforcement of the Encumbrance is effectively stayed or the claims so secured are being actively contested in good faith and by proper legal proceedings and do not result in the occurrence of an Event of Default; (g) the reservations, limitations, provisos and conditions, if any, expressed in any original grant from the Crown of any real property or any interest therein which do not materially reduce the value of the affected asset or materially interfere with the use of such asset in the operation of the business of the Person and do not have, and will not reasonably be expected to have, a Material Adverse Effect; (h) Encumbrances given to a public utility or any municipality or governmental or other public authority when required by such utility or other authority in connection with the operation of the business or the ownership of the assets of the Person which do not materially reduce the value of the affected asset or materially interfere with the use of such asset in the operation of the business of the Person and do not have, and will not reasonably be expected to have, a Material Adverse Effect; (i) servicing agreements, development agreements, site plan agreements, and other agreements with Governmental Authorities pertaining to the use or development of any of the assets of the Person, provided same are complied with and do not materially reduce the value of the affected asset or materially interfere with the use of such asset in the operation of the business of the -15- Person and do not have, and will not reasonably be expected to have, a Material Adverse Effect; (j) the right reserved to or vested in any Governmental Authority by any statutory provision or by the terms of any lease, licence, franchise, grant or permit of the Person, to terminate any such lease, licence, franchise, grant or permit, or to require annual or other payments as a condition to the continuance thereof; (k) Encumbrances in favour of the Agent created by the Security, if any, including Encumbrances over Collateral; (l) landlords' rights of distraint and similar rights of a landlord (including in Quebec a landlord's hypothec) on tangible personal or moveable Property of the Person located solely on the premises leased by the landlord to the Person and securing only the obligations of the Person under the applicable lease of the premises, so long as the exercise of such rights do not result in the occurrence of an Event of Default; and (m) Liens (as such term is defined in the U.S. Credit Agreement, as such definition is amended by any Scotia Approved Amendment) which are permitted under Section 7.02(b) of the U.S. Credit Agreement, as such Section is amended by any Scotia Approved Amendment. 1.1.101 "PERMITTED OBLIGATIONS" means the following: (a) the Obligations; (b) the Other Secured Obligations; (c) debts, liabilities and obligations of the Obligors which under the U.S. Credit Agreement are Indebtedness which are permitted under Section 7.01 of the U.S. Credit Agreement, as such Section is amended by any Scotia Approved Amendment; or (d) other debts, liabilities and obligations secured by Permitted Encumbrances; (e) current accounts payable, accrued expenses and other similar debts, liabilities and obligations incurred in the ordinary course of business which are not for borrowed money; (f) current and deferred taxes; (g) obligations and liabilities incurred in the ordinary course of business which do not constitute Debt; and (h) other debts, liabilities and obligations expressly permitted under this Agreement or expressly consented to by the Required Lenders in writing. -16- 1.1.102 "PERSON" has the meaning defined in the Provisions and "PERSON" has the same meaning. 1.1.103 "PRIME RATE" means, on any day, the greater of: (a) the average of the annual rates of interest expressed as a percentage per annum on the basis of a 365 or 366 day year, as the case may be, announced by each Schedule I Reference Lender on that day as its reference rate for commercial loans made by it in Canada in Canadian Dollars; and (b) the CDOR Rate for one month Canadian Dollar banker's acceptances on that day plus 0.75% per annum. 1.1.104 "PRIME RATE ADVANCE" means an Advance in Canadian Dollars bearing interest based on the Prime Rate and includes any deemed Prime Rate Advance provided for in this Agreement. 1.1.105 "PROPERTY" means, with respect to any Person, any or all of its present and future undertaking, property and assets. 1.1.106 "PROVISIONS" means the model credit agreement provisions attached as Schedule D. 1.1.107 "RECEIVABLES SECURITIZATION TRANSACTION" has the meaning defined in the U.S. Credit Agreement, as such definition may be amended from time to time in accordance with a Scotia Approved Amendment. 1.1.108 "REGISTER" has the meaning defined in Section 10(c) of the Provisions. 1.1.109 "RELATED PARTY" means, with respect to any Person, such Person's Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person's Affiliates. 1.1.110 "RELEVANT RATING" means, as of any date of determination, the ratings as determined by either S&P, Moody's or Fitch (provided that Anixter Inc. shall have at least two such ratings and at lease one of such ratings shall be from S&P or Moody's) (collectively, the "RELEVANT RATINGS") of Anixter Inc.'s non-credit enhanced, senior unsecured long-term debt; provided that if the existing Relevant Ratings are not the same level, then (a) if there are two Relevant Ratings, the higher of such Relevant Ratings shall apply, (b) if there are three Relevant Ratings and no two debt ratings are at the same level, the intermediate Relevant Rating shall apply, or (c) if there are three Relevant Ratings and two Relevant Ratings are at the same level, then the level with the two Relevant Ratings shall apply. 1.1.111 "REQUIRED LENDERS" means a Lender or Lenders holding, in the aggregate, a minimum of 50.1% of the amount of the Commitments (or the outstanding Advances if the Commitments have terminated including after the occurrence of any Default). -17- 1.1.112 "RESTRICTED PAYMENT" has the meaning defined in the U.S. Credit Agreement, as such definition may be amended from time to time in accordance with a Scotia Approved Amendment. 1.1.113 "S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., or any of its successors. 1.1.114 "SCHEDULE" means the designated Schedule of this Agreement. 1.1.115 "SCHEDULE I REFERENCE LENDERS" means the Agent and such other institutions as may be agreed upon by the Borrower and the Agent from time to time, and "Schedule I Reference Lender" means any one of them. 1.1.116 "SCOTIA APPROVED AMENDMENT" means a proposed amendment to the U.S. Credit Agreement or a provision thereof: (a) which is made at a time when Scotia Capital is a lender under the U.S. Credit Agreement; (b) in respect of which Scotia Capital, in its capacity as a lender under the U.S. Credit Agreement, has voted to approve; (c) has been approved by the Lenders under the U.S. Credit Agreement; and (d) which is made at a time when Scotia Capital is the Agent under this Agreement; it being understood and agreed that any such Scotia Approved Amendment, to the extent incorporated by reference or referred to in this Agreement, will apply only to the Guarantors and not to the Borrower, to which the provisions of the U.S. Credit Agreement as at the date of this Agreement, to the extent incorporated by reference or referred to in this Agreement, will continue to apply. 1.1.117 "SCOTIA CAPITAL" means The Bank of Nova Scotia, a bank to which the Bank Act (Canada) applies. 1.1.118 "SECTION" means the designated section of this Agreement. 1.1.119 "SECURED OBLIGATIONS" means the Obligations and Other Secured Obligations. 1.1.120 "SECURED PARTIES" means, at any time, the Lenders and the Agent in respect of the Obligations and Guarantor Obligations and the Other Secured Parties at such time in respect of the Other Secured Obligations. 1.1.121 "SECURITY" means the guarantees held from time to time by or on behalf of the Secured Parties (including guarantees held by the Agent), supporting or intended to support, inter alia, repayment of any of the Secured Obligations, including, without limitation, the guarantees described in Section 3.1 from time to time. -18- 1.1.122 "STANDBY FEE" has the meaning defined in Section 2.7. 1.1.123 "SUBSIDIARY" means, with respect to a Person, a subsidiary of such Person as defined in the Canada Business Corporations Act as of the date of this Agreement (determined as if each such Person was a body corporate), and any other Person in which the Person or any Subsidiary of the Person has the right, directly or indirectly, through one or more intermediaries, to make or Control management decisions. 1.1.124 "SWAP TRANSACTION" means any interest rate swap, basis swap, forward rate transaction, currency hedging or swap transaction, cap transaction, floor transaction, collar transaction or other similar transaction, whether with respect to interest rates, currencies, commodities or otherwise, or any option with respect to such a transaction or combination of any such transactions, and includes Currency Agreements and Interest Rate Agreements. 1.1.125 "SWINGLINE AVAILABILITY" has the meaning defined in Section 2.1(3). 1.1.126 "TAXES" has the meaning defined in the Provisions. 1.1.127 "TOTAL DEBT" means, at any time, the aggregate, without duplication, of all Debt of the Borrower on a consolidated basis at that time. 1.1.128 "TOTAL LEVERAGE RATIO" means, at any time, the ratio calculated by dividing (a) Total Debt at that time by (b) EBITDA for the Borrower's four most recently completed fiscal quarters, provided that, for purposes of calculating the Total Leverage Ratio, EBITDA shall be calculated on a pro forma basis (in accordance with Article 11 of Regulation S-X of the Securities and Exchange Commission) to the extent necessary to give effect to (i) any acquisition made by the Borrower during such period (without giving effect to any increase in EBITDA reflecting projected synergies resulting from such acquisition) so long as, and to the extent that, (X) the Borrower delivers to the Agent (which shall promptly deliver to each Lender) a summary in reasonable detail of the assumptions underlying, and the calculations made, in computing EBITDA on a pro forma basis, and (Y) the Required Lenders do not object to such assumptions and/or calculations within 10 Business Days after receipt thereof, and (ii) any divestiture of a Subsidiary, division or other operating unit made during such period. 1.1.129 "U.S. CREDIT AGREEMENT" means the five-year revolving credit facility agreement dated as of 18 June 2004 among Anixter Inc. and various subsidiaries of Anixter Inc., as borrowers, Bank of America, N.A., as administrative agent, swing line lender and L/C issuer, Wachovia Bank, N.A., as syndication agent, Bank One, NA, The Bank of Nova Scotia and Wells Fargo Bank, N.A., as co documentation agents, and the lenders party thereto from time to time, as amended by the First Amendment dated as of 10 November 2005. 1.1.130 "U.S. DOLLARS" and "U.S. $" means lawful monies of the United States of America. 1.1.131 "WELFARE PLAN" means any life, medical, health, dental, hospitalization, disability, travel, accident, accidental health and dismemberment insurance or other employee -19- benefit or welfare plan, agreement or arrangement, other than a Pension Plan, applicable to any employee of any Obligor, whether or not insured and whether or not subject to any Applicable Laws, but excludes any statutory plans with which any Obligor is required to comply, including the Canada Pension Plan or plans administered pursuant to applicable provincial health, workers' compensation and employment insurance legislation. 1.2 CONSTRUCTION This Agreement has been negotiated by each party with the benefit of legal representation and any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not apply to the construction or interpretation of this Agreement. 1.3 REFERENCES TO U.S. CREDIT AGREEMENT The provisions of the U.S. Credit Agreement that are incorporated by reference or referred to in this Agreement shall continue to apply mutatis mutandis to the Credit notwithstanding the termination of the U.S. Credit Agreement for any reason. 1.4 CERTAIN RULES OF INTERPRETATION In this Agreement: (a) the division into sections and other subdivisions thereof and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement; and (b) unless specified otherwise or the context otherwise requires: (i) references to any Section or Schedule are references to the Section of, or Schedule to, this Agreement; (ii) "including" or "includes" means "including (or includes) but not limited to" and shall not be construed to limit any general statement preceding it to the specific or similar items or matters immediately following it; (iii) references to contracts, agreements or instruments, unless otherwise specified, are deemed to include all present and future amendments, supplements, restatements or replacements to or of such contracts, agreements or instruments, provided that such amendments, supplements, restatements or replacements to or of such contracts, agreements or instruments have been, if applicable, approved or consented to and otherwise made in accordance with the provisions of this Agreement; (iv) references to any legislation, statutory instrument or regulation or a section or other provision thereof, unless otherwise specified, is a -20- reference to the legislation, statutory instrument, regulation, section or other provision as amended, restated or re-enacted from time to time; (v) references to any thing includes the whole or any part of that thing and a reference to a group of things or Persons includes each thing or Person in that group; (vi) references to a Person includes that Person's successors and assigns; (vii) all references to specific times are references to Toronto time; and (viii) words in the singular include the plural and vice-versa and words in one gender include all genders. ARTICLE 2 CREDIT 2.1 AMOUNT AND AVAILMENT OPTIONS (1) Upon and subject to the terms and conditions of this Agreement, the Lenders severally agree to provide to the Borrower a credit facility for the use of the Borrower in the amount of up to Cdn. $40,000,000 (as reduced from time to time, the "CREDIT LIMIT") or the Equivalent Amount in U.S. Dollars (provided that each Lender's obligation hereunder shall be limited to its respective Applicable Percentage of the Credit). (2) At the option of the Borrower, the Credit may be utilized by the Borrower by requesting that Prime Rate Advances, Base Rate Advances, or LIBOR Advances be made by the Lenders, by presenting orders to a Lender for acceptance as Banker's Acceptances or by requesting that L/Cs in Canadian Dollars or in U.S. Dollars be issued by the Issuing Bank. The aggregate face amount of L/Cs outstanding under the Credit at any time shall not exceed Cdn. $2,000,000 or the Equivalent Amount in U.S. Dollars. (3) At the option of the Borrower, up to Cdn. $10,000,000 or the Equivalent Amount in U.S. Dollars of the undrawn available portion of the Credit may be utilized (the "SWINGLINE AVAILABILITY") by the Borrower by incurring overdrafts in its Canadian Dollar and U.S. Dollar accounts with Scotia Capital, which shall be deemed to be, as applicable, Prime Rate Advances or Base Rate Advances. Subject to Section 5.25, Advances under the Swingline Availability will be made solely by Scotia Capital and the Swingline Availability may be availed by the Borrower only through Scotia Capital. Advances under the Swingline Availability will reduce, to the extent of the Advances thereunder, the amounts available to be drawn under the Credit. 2.2 REVOLVING CREDIT The Credit is a revolving credit. The principal amount of any Advance under the Credit which is repaid from time to time may, subject to the terms of this Agreement, be reborrowed. -21- 2.3 USE OF THE CREDIT The Credit shall be used (a) to repay amounts owing under the Existing Credit Agreement, (b) for general corporate purposes, (c) for working capital, (d) for capital expenditures, (e) for acquisitions, and (f) to finance, in part, the payment of a dividend to be paid, ultimately, to Anixter Inc. 2.4 TERM AND REPAYMENT All Obligations under the Credit shall be repaid in full, and the Credit shall be cancelled, on the Maturity Date. 2.5 VOLUNTARY PREPAYMENTS The Borrower may prepay Prime Rate Advances and Base Rate Advances under the Credit upon prior written notice given in accordance with Section 5.3 and, subject to Section 5.4, may prepay LIBOR Advances under the Credit upon three Business Days prior written notice, without premium or penalty in minimum amounts of Cdn. $5,000,000 and integral multiples of Cdn. $1,000,000, in the case of Prime Rate Advances, and in minimum amounts of U.S. $5,000,000 and integral multiples of U.S. $1,000,000, in the case of Base Rate Advances or LIBOR Advances, except that no Banker's Acceptance or BA Equivalent Loan may be paid prior to its maturity date and any prepayments of LIBOR Advances shall include payment of all breakage costs. The Borrower may cash collateralize outstanding Banker's Acceptances and BA Equivalent Loans. 2.6 APPLICABLE MARGIN FOR INTEREST RATES, FEES AND COMMISSIONS (1) The Applicable Margin relating to interest rates, Banker's Acceptance Fees, L/C commissions and Standby Fees will vary and be calculated based on the Relevant Rating as follows:
BANKER'S ACCEPTANCE STANDBY FEE APPLICABLE MARGIN FOR FEES, L/C COMMISSIONS (% PER ANNUM) PRIME RATE ADVANCES AND AND APPLICABLE MARGIN ------------------------- BASE RATE ADVANCES FOR LIBOR ADVANCES = OR >50% <50% RELEVANT RATING (% PER ANNUM) (% PER ANNUM) utilization utilization - --------------- ----------------------- --------------------- ----------- ----------- Greater than A-/A3 0.100% 0.550% 0.100% 0.300% BBB+/Baa1 0.150% 0.750% 0.150% 0.350% BBB/Baa2 0.175% 0.875% 0.175% 0.375% BBB-/Baa3 0.225% 1.000% 0.225% 0.425% BB+/Ba1 0.275% 1.250% 0.275% 0.475% Lower than BB+/Ba1 0.350% 1.500% 0.350% 0.550%
-22- (2) Any increase or decrease in the Applicable Margin relating to interest rates, Banker's Acceptance Fees, L/C commissions and Standby Fees resulting from a publicly announced change in the Relevant Rating shall be effective, in the case of an upgrade, during the period commencing on the date of delivery by the Borrower to the Agent of notice thereof and ending on the date immediately preceding the effective date of the next such change and, in the case of a downgrade, during the period commencing on the date of the public announcement thereof and ending on the date immediately preceding the effective date of the next such change. Notwithstanding the foregoing, Banker's Acceptance Fees for Banker's Acceptances accepted or commissions related to L/Cs issued, in either case, before the effective date of an increase or decrease under this Section 2.6(2), will not be adjusted. (3) All interest rates (including Applicable Margins), Banker's Acceptance Fees, L/C commissions and Standby Fees set forth in Section 2.6(1) are rates per annum. Interest on Prime Rate Advances and Base Rate Advances shall, as applicable, be the Prime Rate or Base Rate, as the case may be, plus the relevant rate shown in the column of the table in Section 2.6(1) headed "Applicable Margin for Prime Rate Advances and Base Rate Advances". The rate for Banker's Acceptance Fees shall be the relevant rate shown in the column of the table in Section 2.6(1) headed "Banker's Acceptance Fees, L/C Commissions and Applicable Margin for LIBOR Advances". The commission for L/Cs shall be the relevant rate shown in the column of the table in Section 2.6(1) headed "Banker's Acceptance Fees, L/C Commissions and Applicable Margin for LIBOR Advances". Interest on LIBOR Advances shall be the LIBO Rate for the applicable LIBOR Period plus the relevant rate shown in the column of the table in Section 2.6(1) headed "Banker's Acceptance Fees, L/C Commissions and Applicable Margin for LIBOR Advances". Interest on Prime Rate Advances, Base Rate Advances and LIBOR Advances and Banker's Acceptances Fees, L/C commissions and Standby Fees received by the Agent shall be promptly distributed by the Agent to the Lenders in accordance with their respective Applicable Percentages. (4) In addition to the foregoing L/C commission, the Borrower shall pay a fronting fee to the Issuing Bank for its own account as issuer of L/Cs, in an amount equal to 0.15% per annum on the face amount of each L/C, payable on issuance. As well, customary administrative, issuance, amendment, payment and negotiation fees shall be payable to the Issuing Bank for its account as issuer of each L/C. 2.7 STANDBY FEE The Borrower shall pay a standby fee ("STANDBY FEE") on the daily unadvanced portion of the Credit at a rate per annum which shall vary and be calculated based on the Relevant Rating as set out in the column of the table in Section 2.6(1) headed "Standby Fee". In addition the Standby Fee will vary in accordance with the utilization of the Credit such that at any time that the aggregate of Advances outstanding is less than the Equivalent Amount of one-half of the Credit Limit then applicable, the rates in the column of the table in Section 2.6(1) -23- headed "<50% utilization" shall apply and at any time that the aggregate of Advances outstanding is equal to or greater than the Equivalent Amount of one-half of the Credit Limit then applicable, the rates in the column of the table in Section 2.6(1) headed "=>50% utilization" shall apply. The Standby Fee shall be calculated daily beginning on the Closing Date and shall be payable quarterly in arrears on the last Business Day of each fiscal quarter of the Borrower. Upon final payment of the Obligations relating to the Credit, the Borrower shall also pay any accrued but unpaid Standby Fees on the Credit. 2.8 ASSIGNMENT AND OTHER FEES The Borrower shall pay to the Agent, inter alia, the annual agency fee provided for in the Fee Letter. The processing and recordation fee payable to the Agent by a Lender as contemplated in Section 10(b)(vi) of the Provisions is Cdn. $3,500. 2.9 EXCHANGE RATE FLUCTUATIONS If at any time fluctuations in rates of exchange in effect between U.S. Dollars and Cdn. Dollars cause the aggregate amount of Advances (expressed in Cdn. Dollars using the Exchange Rate) outstanding under the Credit to exceed the maximum amount of the Credit permitted herein by more than Cdn. $100,000 (or the equivalent thereof in any other currency), the Borrower shall pay to the Lenders within one Business Day after demand given to it by the Agent such amount as is necessary to repay the excess. If the Borrower is unable to immediately pay that amount because LIBOR Periods have not ended or Banker's Acceptances have not matured, the Borrower shall, within one Business Day following demand, cause to be deposited with the Agent Collateral in the amount of the excess, which shall be held by the Agent until the amount of the excess is paid in full. The Borrower shall be entitled to receive interest on cash held by the Agent as Collateral in accordance with Section 10.10. If, on the date of any Advance under the Credit (whether by rollover, conversion or otherwise), the aggregate amount of Advances (expressed in Cdn. Dollars using the Exchange Rate) under the Credit exceeds the maximum amount of the Credit permitted herein because of fluctuations in rates of exchange, the Borrower shall immediately pay the Lenders the excess and shall not be entitled to any Advance that would result in the amount of the Credit being exceeded. ARTICLE 3 SECURITY 3.1 SECURITY The Security shall comprise the unconditional guarantees of the Obligations and the Other Secured Obligations by each of the Guarantors in favour of the Agent, which guarantees shall be unlimited except for limits provided by Applicable Laws which are satisfactory to the Lenders, all in form and substance satisfactory to the Lenders. 3.2 OBLIGATIONS SECURED BY THE SECURITY (1) The documents constituting the Security shall secure or support the following obligations which obligations, except as otherwise agreed by the Lenders among themselves, shall rank pari passu with each other: -24- (a) the Obligations and Guarantor Obligations; (b) the Other Secured Obligations; and (c) all other indebtedness, liabilities and obligations of the Obligors under the Loan Documents. (2) As of the date of this Agreement, the Other Secured Obligations are those listed in Schedule G. The Agent from time to time shall prepare and provide the Lenders and the Borrower with a revision of Schedule G to reflect changes in the Other Secured Obligations to the extent notified in writing by the Borrower to the Agent, but any failure to do so shall not affect the security for any Other Secured Obligations in favour of any Other Secured Parties. Other Secured Obligations in favour of the Other Secured Parties listed on Schedule G from time to time shall be conclusively deemed to be secured by the Security (in the absence of manifest error) and shall not cease to be secured without the prior written consent of the respective Secured Parties to whom the Other Secured Obligations are owed. If the Obligations have been indefeasibly paid and performed in full in cash and the Commitments have been terminated, the Secured Parties (in their respective capacities as Secured Parties and without prejudice to the retention of any interest in the Security in their capacities, if any, as Persons to whom are owed other obligations secured under or pursuant to the Security (other than Other Secured Obligations)) will release their interest in the Security upon receiving Collateral to secure the Other Secured Obligations, in an amount satisfactory to the Secured Parties to whom Other Secured Obligations are owed, acting reasonably. Each Other Secured Party, by its acceptance of the benefit of any Security, shall be deemed to have accepted and be bound by the provisions of this Agreement applicable to Other Secured Parties and regarding the terms upon which the Other Secured Obligations are secured by the Security, and authorizes and directs the Agent to act accordingly. (3) Notwithstanding the rights of Other Secured Parties to benefit from the Security in respect of the Other Secured Obligations, all decisions concerning the Security and the enforcement thereof shall be made by the Lenders or the Required Lenders in accordance with this Agreement. No Other Secured Party holding Other Secured Obligations from time to time shall have any additional right to influence the Security or the enforcement thereof as a result of holding Other Secured Obligations as long as this Agreement remains in force. No such Other Secured Party shall be able to enforce or realize on the Security unless the Lenders pursuant to the terms of this Agreement are at the same time enforcing or realizing on the Security for the Obligations and Guarantor Obligations. However, the Other Secured Obligations shall continue to be secured by the Security notwithstanding the termination of this Agreement by reason of payment of the Credit, or for any other reason and all Other Secured Obligations owed to any Other Secured Party shall continue to be secured by the Security after such Other Secured Party ceases to be the Agent or a Lender or have an Affiliate which is the Agent or a Lender. After the termination of this Agreement, decisions concerning the Security shall be made by the holders of Other Secured Obligations as they may determine among themselves. -25- ARTICLE 4 DISBURSEMENT CONDITIONS 4.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE The following conditions precedent must be satisfied at or before the time of the initial Advance under this Agreement, unless waived by the Lenders. Where delivery of documents is referred to, the documents shall be delivered to the Agent for and on behalf of the Lenders and shall be in full force and effect and in form and substance satisfactory to the Lenders. (1) OTHER DEBT AND ENCUMBRANCES - The Lenders shall: (a) be satisfied that all obligations under the Existing Credit Agreement have been or will be paid and performed in full and cancelled or otherwise satisfied concurrently with, or prior to, the initial Advance (other than Existing Scotia L/Cs which shall be deemed to be L/Cs outstanding under the Credit); (b) shall have a received a true copy of the U.S. Credit Agreement together with all amendments thereto up to the date of this Agreement, certified to be a true copy by an officer of Anixter Inc; (c) be satisfied that all other Debt the Obligors not forming part of Permitted Obligations has been or will be paid and performed in full and cancelled concurrently with, or prior to, the initial Advance such that the only Debt of the Obligors that is outstanding forms part of the Permitted Obligations; (d) shall have received releases and discharges (in registrable form where appropriate) covering all Encumbrances affecting the Property of the Obligors which are not Permitted Encumbrances in all applicable jurisdictions, and all statements and acknowledgments that are reasonably required in respect of other security interests affecting the Property of any Obligor to confirm that they are Permitted Encumbrances; and (e) be satisfied that no Permitted Obligation, other than Receivable Securitization Transactions, ranks senior to, as applicable, the Obligations, the Guarantor Obligations and the Other Secured Obligations. (2) DOCUMENTATION AND ANCILLARY INFORMATION - The Agent: (a) shall have received duly executed copies of this Agreement, the Security and the other Loan Documents, accompanied by all consents, acknowledgments and ancillary agreements as may be reasonably required by the Agent, all in form and substance satisfactory to the Agent and the Lenders; (b) shall have received a certificate from each of the Obligors with copies of its Constating Documents, a list of its officers, directors, trustees and/or partners, as the case may be, who are executing Loan Documents on its behalf with specimens of the signatures of those who are executing Loan Documents on its -26- behalf, and copies of the corporate proceedings taken to authorize it to execute, deliver and perform its obligations under the Loan Documents and the Lenders shall be satisfied that all internal approvals and authorizations of each of the Obligors to permit each to enter into and to perform its obligations in relation thereto have been obtained; and (c) shall have received evidence that the delivery of the Loan Documents will not contravene Applicable Laws governing financial assistance or other similar Applicable Laws which affect the Loan Documents. (3) OPINIONS - The Agent shall have received the following favourable legal opinions, each in form and substance satisfactory to it: (a) the opinion of Borden Ladner Gervais LLP, counsel to the Lenders, addressed to the Agent and the Lenders in relation to the Loan Documents which are governed by Ontario law; and (b) the opinion of in-house, counsel to the Guarantors, addressed to the Agent, the Lenders and Borden Ladner Gervais LLP in relation to, among other things, the Guarantors and the Loan Documents and such other matters as the Agent may reasonably require including, without limitation, that the Obligations, the Guarantor Obligations and the Other Secured Obligations are Indebtedness which is permitted under the U.S. Credit Agreement and is permitted under all public Debt of Anixter International Inc. (4) OTHER MATTERS - The following conditions must also be satisfied: (a) the Lenders shall be satisfied at the Closing Date that there is no material litigation affecting any Obligor; (b) the Lenders shall be satisfied at the Closing Date that there has not occurred and does not exist any event or circumstance which has, or would have, a Material Adverse Effect; (c) all fees and expenses payable under the Loan Documents and the Fee Letter (including upfront fees, agency fees, and reasonable legal fees and expenses of the Lenders' counsel invoiced prior to the Closing Date) shall have been paid; (d) the conditions precedent in this Section 4.1 shall be satisfied no later than 30 November 2005; and (e) the Agent shall have received such other documents as the Lenders may reasonably require. 4.2 CONDITIONS PRECEDENT TO ALL ADVANCES The obligation of the Lenders to make any Advance (including the initial Advance) is subject to the conditions precedent that: -27- (a) no Default has occurred and is continuing on the Drawdown Date, or would result from making the Advance; (b) the Agent has received timely notice as required under Section 5.3; (c) the representations and warranties set out in Section 6.1, other than those expressly stated to be made as of a specific date or otherwise expressly modified in accordance with Section 6.2, are true and correct in all material respects on the date of the Advance as if made on and as of the date of the Advance; and (d) all other terms and conditions of this Agreement upon which an Advance may be obtained are fulfilled. ARTICLE 5 ADVANCES 5.1 EVIDENCE OF INDEBTEDNESS The Agent will maintain records of the Obligations resulting from Prime Rate Advances, Base Rate Advances and LIBOR Advances made by the Lenders and each Lender will maintain records concerning those Advances it has made. The Agent shall also maintain records of the Obligations resulting from Advances by way of Banker's Acceptances, BA Equivalent Loans and L/Cs, and each Lender shall also maintain records relating to Banker's Acceptances that it has accepted and BA Equivalent Loans it has made and the Issuing Bank shall maintain records relating to L/Cs it has issued. The records maintained by the Agent shall constitute, in the absence of manifest error, prima facie evidence of the Obligations and all details relating thereto. After a request by the Borrower, the Agent or the Lender to whom the request is made will promptly advise the Borrower of the entries in such records. The failure of the Agent or any Lender to correctly record any such amount or date shall not, however, adversely affect the obligation of the Borrower to pay the Obligations in accordance with this Agreement. The Agent shall, upon the reasonable request of a Lender or the Borrower, provide any information contained in its records of Advances to such Lender or the Borrower and the Agent, each Lender and the Borrower shall cooperate in providing all information reasonably required to keep all accounts accurate and up-to-date. 5.2 CONVERSIONS Subject to the other terms of this Agreement, the Borrower may from time to time convert all or any part of the outstanding amount of any Advance into another form of Advance. 5.3 NOTICE OF ADVANCES AND PAYMENTS (1) The Borrower shall give the Agent irrevocable written notice, in the form of Schedule A, of any request for any Advance to it under the Credit (other than for any Advance under the Swingline Availability). The Borrower shall also give the Agent irrevocable written notice in the same form of any payment by it (whether resulting from a repayment, prepayment, rollover or conversion of any Advance under the -28- Credit and each such payment shall be for an amount no less than, as applicable, Cdn. $1,000,000 or U.S. $1,000,000 or the aggregate amount of the Advances outstanding, whichever is less. (2) Notice in respect of a LIBOR Advance or payment thereof shall be given on the third Business Day prior to the date of any LIBOR Advance or payment, notice shall be given in respect of an Advance by way of L/C at such time prior to the date of any Advance by way of L/C as the Issuing Bank may reasonably require (but not less than three Business Days) so that it has sufficient time to review the proposed form of L/C and notice in respect of a Prime Rate Advance, Base Rate Advance or Advance by way of Banker's Acceptance or payment thereof may be given on the Business Day before any such Advance or payment. Any permanent reduction of the Credit shall only be effective on three Business Days notice as required by Section 5.4. (3) Notices shall be given not later than 11:00 a.m. (Toronto time) on the date for notice. Payments (other than those being made solely from the proceeds of rollovers and conversions) must be made prior to 11:00 a.m. (Toronto time) on the date for payment. If a notice or payment is not given or made by those times, it shall be deemed to have been given or made on the next Business Day, unless all Lenders affected by the late notice or payment agree, in their sole discretion, to accept a notice or payment at a later time as being effective on the date it is given or made. 5.4 PREPAYMENTS AND REDUCTIONS (1) Subject to giving notice required by Section 5.3, the Borrower may from time to time repay Advances outstanding under the Credit without premium or penalty, except that (a) Banker's Acceptances and BA Equivalent Loans may not be paid prior to their respective maturity dates, and (b) LIBOR Advances may not be paid prior to the end of the applicable LIBOR Period unless the Borrower indemnifies the Lenders for any loss or expense that the Lenders incur as a result, including any breakage costs. (2) The Borrower may from time to time, by giving not less than three Business Days express written notice to the Agent, irrevocably notify the Agent of the cancellation of the Credit or of the permanent reduction of the committed amount of the Credit by an amount which shall be a minimum of Cdn. $1,000,000 and a whole multiple of Cdn. $1,000,000. The Borrower shall have no right to any increase in the committed amount of the Credit thereafter. 5.5 PRIME RATE, BASE RATE AND LIBOR ADVANCES (1) Upon timely fulfilment of all applicable conditions as set forth in this Agreement, the Agent, in accordance with the procedures set forth in Section 5.7, will make the requested amount of a Prime Rate Advance, Base Rate Advance or LIBOR Advance available to the Borrower on the Drawdown Date requested by the Borrower by crediting the Designated Account with such amount. Each Prime Rate Advance, Base Rate Advance or LIBOR Advance (other than an Advance under the Swingline Availability) shall be in an aggregate minimum amount of, as applicable, -29- Cdn. $1,000,000 or U.S. $1,000,000 and in a whole multiple of, as applicable, Cdn. $1,000,000 or U.S. $1,000,000. Notwithstanding the foregoing, if the aggregate minimum amount of any such Advance would cause the Borrower to exceed the maximum amount of the Credit, the Borrower shall be permitted to request an aggregate amount for such an Advance that is equal to the difference or the Equivalent Amount in U.S. Dollars of the difference between the maximum amount of the Credit and the aggregate amount of all Advances outstanding under the Credit at the time of such request. The Borrower shall pay interest to the Agent for the account of the Lenders at the Branch of Account on any such Advances outstanding from time to time hereunder at the applicable rate of interest specified in Section 2.6. (2) Interest on Prime Rate Advances and Base Rate Advances shall be calculated and payable monthly on each Interest Payment Date. Interest on LIBOR Advances shall be payable on the last day of the applicable LIBOR Period and, if the LIBOR Period is longer than 3 months, every 3 months after the date of the relevant LIBOR Advance. All interest shall accrue from day to day and shall be payable in arrears for the actual number of days elapsed from and including the date of Advance or the previous date on which interest was payable, as the case may be, to but excluding the date on which interest is payable, both before and after maturity, default and judgment, with interest on overdue interest at the same rate payable on demand. Overdue interest with respect to a LIBOR Advance shall, upon the expiry of the LIBOR Period applicable to such LIBOR Advance, bear interest, payable on demand calculated at the rate applicable to Base Rate Advances. (3) Interest calculated with reference to the Prime Rate shall be calculated on the basis of a calendar year. Interest calculated with reference to the Base Rate or LIBO Rate shall be calculated on the basis of a year of 360 days. Each rate of interest which is calculated with reference to a period (the "DEEMED INTEREST PERIOD") that is less than the actual number of days in the calendar year of calculation is, for the purposes of the Interest Act (Canada), equivalent to a rate based on a calendar year calculated by multiplying such rate of interest by the actual number of days in the calendar year of calculation and dividing by the number of days in the deemed interest period. Interest shall be calculated using the nominal rate of calculation, and will not be calculated using the effective rate method of calculation or any other basis that gives effect to the principle of deemed reinvestment of interest. 5.6 LIBOR PERIODS The Borrower may select, by irrevocable notice to the Agent, LIBOR Periods of 1, 2, 3 or 6 months to apply to any particular LIBOR Advance. LIBOR Periods of other lengths shall also be available at the discretion of the Lenders from time to time, but there shall not at any time be LIBOR Advances outstanding with more than 6 different maturity dates. No LIBOR Period may end on a date which is not a Business Day or after the Maturity Date. The Borrower shall from time to time select and give notice to the Agent of the LIBOR Period for a LIBOR Advance which shall commence upon the making of the LIBOR Advance or on the date of the expiry of any outstanding LIBOR Period applicable to a LIBOR Advance that is being rolled over. If the Borrower fails to select and give the Agent notice of a LIBOR Period for a LIBOR Advance in -30- accordance with Section 5.3, the Lenders shall be deemed to have made a Base Rate Advance to the Borrower to replace the maturing LIBOR Advance, unless such LIBOR Advance is repaid by the Borrower at the end of the applicable LIBOR Period. 5.7 CO-ORDINATION OF PRIME RATE ADVANCES, BASE RATE ADVANCES AND LIBOR ADVANCES Each Lender shall advance its Applicable Percentage of each Prime Rate Advance, Base Rate Advance and LIBOR Advance in accordance with the following provisions: (a) the Agent shall advise each Lender of its receipt of a notice from the Borrower pursuant to Section 5.3 on the day such notice is received and shall, as soon as possible, advise each Lender of such Lender's Applicable Percentage of any Advance requested by the notice; (b) each Lender shall deliver its Applicable Percentage of the Advance to the Agent not later than 11:00 a.m. (Toronto time) on the Drawdown Date; and (c) unless a Lender notifies the Agent that a condition precedent to an Advance specified in this Agreement has not been met, the Agent shall advance to the Borrower the amount delivered by each Lender by crediting the Designated Account prior to 2:00 p.m. (Toronto time) on the Drawdown Date, but if the conditions precedent to the Advance are not met by 2:00 p.m. (Toronto time) on the Drawdown Date, the Agent shall return the funds to the Lenders or invest them in an overnight investment as orally instructed by each Lender until such time as the Advance is made. 5.8 EXECUTION OF BANKER'S ACCEPTANCES (1) To facilitate the acceptance of Banker's Acceptances hereunder, the Borrower hereby appoints each Lender as its attorney to sign and endorse on its behalf, as and when considered necessary by the Lender, an appropriate number of orders in the form prescribed by that Lender. (2) Each Lender may, at its option, execute any order in handwriting or by the facsimile or mechanical signature of any of its authorized officers, and the Lenders are hereby authorized to accept or pay, as the case may be, any order of the Borrower which purports to bear such a signature notwithstanding that any such individual has ceased to be an authorized officer of the Lender. Any such order or Banker's Acceptance shall be as valid as if he or she were an authorized officer at the date of issue of the order or Banker's Acceptance. (3) Any order or Banker's Acceptance signed by a Lender as attorney for the Borrower, whether signed in handwriting or by the facsimile or mechanical signature of an authorized officer of a Lender, may be dealt with by the Agent or any Lender to all intents and purposes and shall bind the Borrower as if duly signed and issued by the Borrower. -31- (4) The receipt by the Agent of a request for an Advance by way of Banker's Acceptances shall be each Lender's sufficient authority to execute, and each Lender shall, subject to the terms and conditions of this Agreement, execute orders in accordance with such request and the advice of the Agent given pursuant to Section 5.11, and the orders so executed shall thereupon be deemed to have been presented for acceptance. 5.9 SALE OF BANKER'S ACCEPTANCES (1) It shall be the responsibility of each Lender to arrange, in accordance with normal market practice, for the sale on each Drawdown Date of the Banker's Acceptances to be accepted by that Lender, failing which the Lender shall purchase its Banker's Acceptances. (2) In accordance with the procedures set forth in Section 5.11, the Agent will make the net proceeds of the requested Advance by way of Banker's Acceptances received by it from the Lenders available to the Borrower on the Drawdown Date by crediting the Designated Account with such amount. (3) Notwithstanding the foregoing, if in the determination of the Required Lenders, acting reasonably, a market for Banker's Acceptances does not exist at any time, or the Lenders cannot for other reasons, after reasonable efforts, readily sell Banker's Acceptances or perform their other obligations under this Agreement with respect to Banker's Acceptances, then upon at least one Business Day's written notice by the Agent to the Borrower, the Borrower's right to request Advances by way of Banker's Acceptances shall be and remain suspended until the Agent notifies the Borrower that any condition causing such determination no longer exists (and the Agent shall be obligated to so notify the Borrower promptly following such occurrence). 5.10 SIZE AND MATURITY OF BANKER'S ACCEPTANCES AND ROLLOVERS Each Advance of Banker's Acceptances shall be in a minimum amount of Cdn. $5,000,000 and integral multiples of Cdn. $1,000,000 and the maximum number of maturities of Banker's Acceptances outstanding at any time shall not exceed fifteen. Each Banker's Acceptance shall have a term of 1, 2, 3 or 6 months after the date of acceptance of the order by a Lender, but no Banker's Acceptance may mature on a date which is not a Business Day or after the Maturity Date. Subject to the terms and conditions of this Agreement, the face amount at maturity of a Banker's Acceptance may be renewed as a Banker's Acceptance (by repayment and reissue) or converted (by repayment) into another form of Advance. If, before the due date for delivery of a Compliance Certificate, the Borrower has knowledge that the fees payable by the Borrower in connection with an Advance by way of Banker's Acceptance will increase after the delivery of such Compliance Certificate, then the Borrower shall not request or renew an Advance by way of Banker's Acceptance for a term that exceeds 1 month. After such Compliance Certificate has been delivered and the fees payable by the Borrower in connection with an Advance by way of Banker's Acceptance have increased as set forth herein, the Borrower may then request or renew Advances by way of Banker's Acceptance for terms otherwise permitted by this Section. -32- 5.11 CO-ORDINATION OF BA ADVANCES Each Lender shall advance its Applicable Percentage of each Advance by way of Banker's Acceptances in accordance with the provisions set forth below. (1) The Agent, promptly following receipt of a notice from the Borrower pursuant to Section 5.3 requesting an Advance by way of Banker's Acceptances, shall advise each Lender of the aggregate face amount and term(s) of the Banker's Acceptances to be accepted by it, which term(s) shall be identical for all Lenders. The aggregate face amount of Banker's Acceptances to be accepted by a Lender shall be determined by the Agent by reference to the respective Commitments of the Lenders, except that, if the face amount of a Banker's Acceptance would not be Cdn. $1,000 or a whole multiple thereof, the face amount shall be increased or reduced by the Agent in its sole discretion to the nearest whole multiple of Cdn. $1,000. (2) Each Lender shall transfer to the Agent at the Branch of Account for value not later than 11:00 a.m. (Toronto time) on each Drawdown Date immediately available Cdn. Dollars in an aggregate amount equal to the BA Discount Proceeds of all Banker's Acceptances accepted and sold or purchased by the Lender on such Drawdown Date net of the applicable Banker's Acceptance Fee and net of the amount required to pay any of its previously accepted Banker's Acceptances that are maturing on the Drawdown Date or any of its other Advances that are being converted to Banker's Acceptances on the Drawdown Date. (3) Unless a Lender notifies the Agent that a condition precedent to an Advance specified in this Agreement has not been met, the Agent shall advance to the Borrower the amount delivered by each Lender by crediting the Designated Account prior to 2:00 p.m. (Toronto time) on the Drawdown Date, but if the conditions precedent to the Advance are not met by 2:00 p.m. (Toronto time) on the Drawdown Date, the Agent shall return the funds to the Lenders or invest them in an overnight investment as orally instructed by each Lender until such time as the Advance is made. (4) Notwithstanding any other provision hereof, for the purpose of determining the amount to be transferred by a Lender to the Agent for the account of the Borrower in respect of the sale of any Banker's Acceptance accepted by such Lender and sold or purchased by it, the proceeds of sale thereof shall be deemed to be an amount equal to the BA Discount Proceeds calculated with respect thereto. Accordingly, in respect of any particular Banker's Acceptance accepted by it, a Lender in addition to its entitlement to retain the applicable Banker's Acceptance Fee for its own account (a) shall be entitled to retain for its own account the amount, if any, by which the actual proceeds of sale thereof exceed the BA Discount Proceeds calculated with respect thereto; and (b) shall be required to pay out of its own funds the amount, if any, by which the actual proceeds of sale thereof are less than the BA Discount Proceeds calculated with respect thereto. (5) Whenever the Borrower requests an Advance that includes Banker's Acceptances, each Lender that is not permitted by Applicable Law or by customary market practice -33- to accept a Banker's Acceptance (a "NON BA LENDER") shall, in lieu of accepting its pro rata amount of such Banker's Acceptances, make available to the Borrower on the Drawdown Date a non-interest bearing loan (a "BA EQUIVALENT LOAN") in Canadian Dollars and in an amount equal to the BA Discount Proceeds of its pro rata amount of the Banker's Acceptances that the Non BA Lender would have been required to accept on the Drawdown Date if it were able to accept Banker's Acceptances. The BA Discount Proceeds shall be calculated based on the BA Discount Rate provided by the Other Reference Lenders. Each Non BA Lender shall also be entitled to deduct from the BA Equivalent Loan an amount equal to the Banker's Acceptance Fee that would have been applicable had it been able to accept Banker's Acceptances. The BA Equivalent Loan shall have a term equal to the term of the Banker's Acceptances that the Non BA Lender would otherwise have accepted and the Borrower shall, at the end of that term, be obligated to pay the Non BA Lender an amount equal to the aggregate face amount of the Banker's Acceptances that it would otherwise have accepted. All provisions of this Agreement applicable to Banker's Acceptances and Lenders that accept Banker's Acceptances shall apply mutatis mutandis to BA Equivalent Loans and Non BA Lenders and, without limiting the foregoing, Advances shall include BA Equivalent Loans. 5.12 PAYMENT OF BANKER'S ACCEPTANCES (1) The Borrower shall provide for the payment to the Agent at the Branch of Account for the account of the applicable Lenders of the full face amount of each Banker's Acceptance accepted for its account on the earlier of (a) the date of maturity of a Banker's Acceptance; and (b) the date on which any Obligations become due and payable pursuant to Section 8.2. The Lenders shall be entitled to recover interest from the Borrower at a rate of interest per annum equal to the rate applicable to Prime Rate Advances under the Credit under which the Banker's Acceptance was issued, compounded monthly, upon any amount payment of which has not been provided for by the Borrower in accordance with this Section. Interest shall be calculated from and including the date of maturity of each such Banker's Acceptance up to but excluding the date such payment, and all interest thereon, is provided for by the Borrower, both before and after demand, default and judgment. (2) If the Borrower provides cash in response to any Obligations becoming due and payable under Section 8.2, it shall be entitled to receive interest on the cash provided in accordance with Section 10.10 as long as the cash is held as Collateral. 5.13 DEEMED ADVANCE - BANKER'S ACCEPTANCES Except for amounts which are paid from the proceeds of a rollover of a Banker's Acceptance or for which payment has otherwise been funded by the Borrower, any amount which a Lender pays to any third party on or after the date of maturity of a Banker's Acceptance in satisfaction thereof or which is owing to the Lender in respect of such a Banker's Acceptance on or after the date of maturity of such a Banker's Acceptance, shall be deemed to be a Prime Rate Advance to the Borrower under this Agreement. Each Lender shall forthwith give notice of the making of such a Prime Rate Advance to the Borrower and the Agent (which shall promptly -34- give similar notice to the other Lenders). Interest shall be payable on such Prime Rate Advances in accordance with the terms applicable to Prime Rate Advances. 5.14 WAIVER The Borrower shall not claim from a Lender any days of grace for the payment at maturity of any Banker's Acceptances presented and accepted by the Lender pursuant to this Agreement. The Borrower waives any defence to payment which might otherwise exist if for any reason a Banker's Acceptance shall be held by a Lender in its own right at the maturity thereof, and the doctrine of merger shall not apply to any Banker's Acceptance that is at any time held by a Lender in its own right. 5.15 DEGREE OF CARE Any executed orders to be used as Banker's Acceptances shall be held in safekeeping with the same degree of care as if they were the Lender's own property, and shall be kept at the place at which such orders are ordinarily held by such Lender. 5.16 OBLIGATIONS ABSOLUTE The obligations of the Borrower with respect to Banker's Acceptances under this Agreement shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following circumstances: (a) any lack of validity or enforceability of any order accepted by a Lender as a Banker's Acceptance; or (b) the existence of any claim, set-off, defence or other right which the Borrower may have at any time against the holder of a Banker's Acceptance, a Lender or any other Person, whether in connection with this Agreement or otherwise. 5.17 SHORTFALL ON DRAWDOWNS, ROLLOVERS AND CONVERSIONS The Borrower agrees that: (a) the difference between the amount of an Advance requested by the Borrower by way of Banker's Acceptances and the actual proceeds of the Banker's Acceptances; (b) the difference between the actual proceeds of a Banker's Acceptance and the amount required to pay a maturing Banker's Acceptance, if a Banker's Acceptance is being rolled over; and (c) the difference between the actual proceeds of a Banker's Acceptance and the amount required to repay any Advance which is being converted to a Banker's Acceptance; -35- shall be funded and paid by the Borrower from its own resources, by 11:00 a.m. on the day of the Advance or may be advanced as a Prime Rate Advance under the Credit if the Borrower is otherwise entitled to an Advance under the Credit. 5.18 ISSUANCE AND MATURITY OF L/CS (1) All L/Cs shall be issued by the Issuing Bank in accordance with its customary practice including standard cancellation terms and, if requested by the Borrower, an evergreen renewal feature, in form and substance satisfactory to the Issuing Bank, and the Borrower shall execute all such indemnity and/or reimbursement agreements in connection therewith as the Issuing Bank customarily requires, in form and substance satisfactory to the Issuing Bank. (2) A request for an Advance by way of L/C shall be made by the Borrower in accordance with Section 5.3. A request shall include the details of the L/C to be issued. The Issuing Bank shall promptly notify the Borrower of any comment concerning the form of the L/C requested by the Borrower and shall, if the Borrower is otherwise entitled to an Advance, issue the L/C to the Borrower on the Drawdown Date or as soon thereafter as the Issuing Bank is satisfied with the form of L/C to be issued. (3) Each L/C issued under this Agreement shall have a term which is not more than, as applicable, 365 or 366 days after its issuance date or renewal date (provided that any such L/C may provide an automatic renewal thereof for any stated period or periods of up to one year in duration in the absence of timely notice of termination by the issuer of such L/C), except that the maturity date of an L/C may not exceed the Maturity Date unless the Borrower shall have posted Collateral with the Issuing Bank in connection therewith. An L/C may be renewed by the Borrower subject to complying with the terms of this Agreement applicable to an Advance by way of L/C. 5.19 PAYMENT OF L/C COMMISSIONS AND FRONTING FEES (1) Payment of L/C commissions shall be made to Issuing Bank at the branch where the L/C is issued. L/C commissions shall be calculated at the rate specified in Section 2.6 on the face amount of each L/C for the duration of its term on the basis of the actual number of days to elapse from and including the date of issuance or renewal by the Issuing Bank to but not including the expiry date of the L/C. L/C commissions shall be calculated on the basis of a 365 or 366 day year, as the case may be. L/C commissions shall be payable in full on the date of issuance of each L/C. (2) Payment of Fronting Fees shall be made to the Issuing Bank at the branch where an applicable L/C is issued. The Fronting Fee in relation to any L/C shall be calculated on the basis of the actual number of days to elapse from and including the date of issuance or renewal, as applicable, of the L/C to but excluding its expiry date calculated on the basis of a year of 365 or 366 days, as applicable, and shall be paid to the Issuing Bank on the date of issuance or renewal of such L/C and shall be non-refundable in whole or in part. -36- 5.20 PAYMENT OF L/CS AND PARTICIPATION BY LENDERS IN L/CS (1) Each Lender shall be deemed to have purchased, without recourse, a participation from the Issuing Bank in each L/C issued by the Issuing Bank, in each case in an amount equal to such Lender's Applicable Percentage of each such L/C. Without limiting the scope and nature of each Lender's participation in each L/C issued by the Issuing Bank, to the extent that the Issuing Bank has not been reimbursed by the Borrower for any amount required to be disbursed by the Issuing Bank under or in connection with an L/C, each Lender shall pay to the Issuing Bank its Applicable Percentage of such unreimbursed amount. In the event that the Issuing Bank is required to disburse an amount under an L/C, the Issuing Bank shall notify the Agent who shall in turn, as soon as possible, notify the Lenders and each Lender shall forthwith deliver its Applicable Percentage of the amount of the payment by the Issuing Bank to the Agent who will forthwith deliver all such amounts received from the Lenders to the Issuing Bank. The obligation of each Lender to so reimburse the Issuing Bank shall be absolute and unconditional as a primary obligor and not as a surety and shall not be affected by the occurrence of a Default, an order or judgment restricting payment by the Issuing Bank in accordance with the L/C or extending the Issuing Bank's liability under an L/C beyond the expiration date stated therein or any other occurrence or event of any nature or kind. Any such reimbursement shall not relieve or otherwise impair the obligation of the Borrower to reimburse the Issuing Bank for all amounts arising under or in connection with any L/C, together with interest as provided for in this Agreement. Each Lender that has reimbursed the Issuing Bank pursuant to this Section for its Applicable Percentage of any payment made by the Issuing Bank under an L/C shall thereupon acquire a participation, to the extent of such reimbursement, in the claim of the Issuing Bank against the Borrower in respect of amounts owing under or in connection with such L/C. In the event that a Lender fails to reimburse the Issuing Bank under the terms provided in this Section, the Issuing Bank shall also be entitled to recover from such Lender interest on such amount, from and including the date on which such Lender was required to provide payment to but excluding the date such payment is provided for by such Lender at the rate of interest per annum which would otherwise be applicable at such time to Prime Rate Advances (in the case of Canadian Dollar L/Cs) or Base Rate Advances (in the case of U.S. Dollar L/Cs), compounded monthly, and all interest thereon, both before and after demand, default and judgment. (2) The Borrower shall provide for the payment to the Agent, on behalf of the Issuing Bank, of the full face amount of each L/C (or the amount actually paid in the case of a partial payment) on the earlier of (a) the date on which the Issuing Bank makes a payment to the beneficiary of an L/C, (b) the date on which any Obligations become due and payable pursuant to Section 8.2, and (c) the Maturity Date. The Agent on behalf of the Issuing Bank shall be entitled to recover interest from the Borrower at a rate of interest per annum equal to the rate applicable to Prime Rate Advances (in the case of Canadian Dollar L/Cs) or Base Rate Advances (in the case of U.S. Dollar L/Cs), compounded monthly, upon any amount payment of which has not been provided for by the Borrower in accordance with this Section. Interest shall be calculated from and including the date on which the Issuing Bank makes a payment to -37- the beneficiary of an L/C, up to but excluding the date such payment, and all interest thereon, is provided for by the Borrower, both before and after demand, default and judgment. (3) The obligation of the Borrower to reimburse the Agent, on behalf of the Issuing Bank, for a payment to a beneficiary of an L/C shall be absolute and unconditional (without prejudice to the Borrower's right, after reimbursing the Agent (on behalf of the Issuing Bank), to claim damages from the Issuing Bank for matters arising from the Issuing Bank's wilful misconduct or gross negligence), and shall not be reduced or limited by any demand or other request for payment of an L/C (a "DEMAND") paid or acted upon in good faith and in conformity with laws, regulations or customs applicable thereto being invalid, insufficient, fraudulent or forged, nor shall the Borrower's obligation be subject to any defence or be affected by any right of set-off, counter-claim or recoupment which the Borrower may now or hereafter have against the beneficiary, the Agent, the Issuing Bank, any other Lender or any other Person for any reason whatsoever, including the fact that the Issuing Bank paid a Demand or Demands (if applicable) aggregating up to the amount of the L/C notwithstanding any contrary instructions from the Borrower to the Agent or the Issuing Bank or the occurrence of any event including, but not limited to, the commencement of legal proceedings to prohibit payment by the Issuing Bank of a Demand. Any action, inaction or omission taken or suffered by the Agent or the Issuing Bank under or in connection with an L/C or any Demand, if in good faith and in conformity with laws, regulations or customs applicable thereto, shall be binding on the Borrower and shall not place the Agent or the Issuing Bank under any resulting liability to the Borrower. Without limiting the generality of the foregoing, the Issuing Bank may receive, accept, or pay as complying with the terms of the L/C, any Demand otherwise in order which may be signed by, or issued to, any administrator, executor, trustee in bankruptcy, receiver or other Person or entity acting as the representative or in place of, the beneficiary. (4) If the Borrower provides cash in response to any Obligations becoming due and payable under Section 8.2, it shall be entitled to receive interest on the cash provided in accordance with Section 10.10 as long as the cash is held as Collateral. 5.21 DEEMED ADVANCE - L/CS Except for amounts which have been funded by the Borrower, any amount which the Issuing Bank or the Agent on behalf of the Lenders pays to any third party in respect of an L/C in satisfaction or partial satisfaction thereof shall also be deemed to be a Prime Rate Advance (in the case of Canadian Dollar L/Cs) or Base Rate Advances (in the case of U.S. Dollar L/Cs). The Issuing Bank shall forthwith give notice of the making of such an Advance to the Agent and the Borrower. Interest shall be payable on such Advances in accordance with the terms applicable to such Advances. 5.22 FAILURE OF LENDER TO FUND Notwithstanding the provisions of Section 6(a) of the Provisions, if any Lender fails to make available to the Agent its Applicable Percentage of any Advance (such Lender being herein -38- called the "DEFAULTING LENDER"), the Administrative Agent shall forthwith give notice of such failure by the Defaulting Lender to the Borrower and the other Lenders. The Agent shall then forthwith give notice to the other Lenders that any Lender may make available to the Agent all or any portion of the Defaulting Lender's Applicable Percentage of such Advance (but in no way shall any other Lender or the Agent be obliged to do so) in the place of the Defaulting Lender. If more than one Lender gives notice that it is prepared to make funds available in the place of a Defaulting Lender in such circumstances and the aggregate of the funds which such Lenders (herein collectively called the "CONTRIBUTING LENDERS" and individually called the "CONTRIBUTING LENDER") are prepared to make available exceeds the amount of the Advance which the Defaulting Lender failed to make, then each Contributing Lender shall be deemed to have given notice that it is prepared to make available its Applicable Percentage of such Advance based on the Contributing Lenders' relative commitments to advance in such circumstances. If any Contributing Lender makes funds available in the place of a Defaulting Lender in such circumstances, then the Defaulting Lender shall pay to any Contributing Lender making the funds available in its place, forthwith on demand, any amount advanced on its behalf together with interest thereon at the rate applicable to such Advance from the date of advance to the date of payment, against payment by the Contributing Lender making the funds available of all interest received in respect of the Advance from the Borrower. The failure of any Lender to make available to the Agent its Applicable Percentage of any Advance as required herein shall not relieve any other Lender of its obligations to make available to the Agent its Applicable Percentage of any Advance as required herein. 5.23 PAYMENT BY THE BORROWER (1) Except as otherwise provided herein, all payments made by or on behalf of the Borrower pursuant to this Agreement shall be made to and received by the Agent and shall be distributed by the Agent to the Lenders as soon as possible upon receipt by the Agent. Except as otherwise provided in this Agreement (including Sections 5.22 and 5.24), the Agent shall distribute: (a) payments of interest in accordance with each Lender's Applicable Percentage of the Credit; (b) repayments of principal in accordance with each Lender's Applicable Percentage of the Credit; or (c) all other payments received by the Agent including amounts received upon the realization of Security, in accordance with each Lender's Applicable Percentage of the Credit provided, however, that with respect to proceeds of realization, no Lender shall receive an amount in excess of the amounts owing to it in respect of the Obligations. (2) All payments made by or on behalf of the Borrower pursuant to this Agreement with respect to an L/C shall be made to and received by the Agent. Subject to Section 5.22, the Agent shall distribute all payments received by it with respect to any L/C as follows: -39- (a) if the amount received by the Agent is an amount reimbursing the Issuing Bank for amounts paid by the Issuing Bank, payment shall be made to the Issuing Bank, to the extent that the Issuing Bank has not been previously reimbursed by the Borrower or the Lenders or otherwise as provided for herein, and to the extent that the Issuing Bank has been previously reimbursed by the Lenders, to such Lenders; and (b) if the amount received by the Agent is an amount in respect of an L/C commission or the Fronting Fee: (i) payment shall be made firstly to the Issuing Bank of an amount in respect of the Fronting Fee to the extent not already received, and (ii) payment shall be made thereafter to each Lender of its Applicable Percentage of the amount of the L/C commission received. (3) If the Agent does not distribute a Lender's share of a payment made by the Borrower to that Lender for value on the day that payment is made or deemed to have been made to the Agent, the Agent shall pay to the Lender on demand an amount equal to the product of (i) the Interbank Reference Rate per annum multiplied by (ii) the Lender's share of the amount received by the Agent from the Borrower and not so distributed, multiplied by (iii) a fraction, the numerator of which is the number of days that have elapsed from and including the date of receipt of the payment by the Agent to but excluding the date on which the payment is made by the Agent to such Lender and the denominator of which is 365. The Agent shall be entitled to withhold any Tax applicable to any such payment as required by Applicable Laws. 5.24 PAYMENT BY AGENT For greater certainty, the following provisions shall apply to any and all payments made by the Agent to the Lenders hereunder: (1) the Agent shall be under no obligation to make any payment (whether in respect of principal, interest, fees or otherwise) to any Lender until an amount in respect of such payment has been received by the Agent from the Borrower; (2) if the Agent receives less than the full amount of any payment of principal, interest, fees or other amount owing by the Borrower under this Agreement, the Agent shall have no obligation to remit to each Lender any amount other than such Lender's Applicable Percentage of that amount which is the amount actually received by the Agent; (3) if any Lender advances more or less than its Applicable Percentage of the Credit, such Lender's entitlement to such payment shall be increased or reduced, as the case may be, in proportion to the amount actually advanced by such Lender; (4) if a Lender's Applicable Percentage of an Advance has been advanced, or a Lender's Commitment has been outstanding, for less than the full period to which any payment -40- (other than a payment of principal) by a Borrower relates, such Lender's entitlement to such payment shall be reduced in proportion to the length of time such Lender's Applicable Percentage of the Credit or such Lender's Commitment, as the case may be, has actually been outstanding; (5) the Agent acting reasonably and in good faith shall, after consultation with the Lenders in the case of any dispute, determine in all cases the amount of all payments to which each Lender is entitled and such determination shall, in the absence of manifest error, be binding and conclusive; and (6) upon request, the Agent shall deliver a statement detailing any of the payments to the Lenders referred to herein. 5.25 PROVISIONS RELATING TO SWINGLINE AVAILABILITY (1) While Scotia Capital is the sole Lender making Advances under the Swingline Availability, its participation in Advances under the Credit which are not made under the Swingline Availability ("NON SWINGLINE ADVANCES") shall be reduced, and the participations of the other Lenders in such Non Swingline Advances shall be increased, and such participations may be adjusted from time to time, as determined by the Agent, so that each Lender's overall Applicable Percentage of the aggregate of all Advances under the Credit is, to the greatest extent practicable, as provided in Schedule E to this Agreement. For greater certainty, the aggregate of Advances outstanding under the Swingline Availability and Non Swingline Advances made by Scotia Capital shall not at any time exceed Scotia Capital's Commitment in respect of the Credit, and if it does, the Borrower shall repay Advances outstanding under the Swingline Availability in an amount to eliminate such excess as soon as possible and, in any event, immediately following notice thereof by the Agent. (2) Notwithstanding that Advances under the Swingline Availability are from time to time made by Scotia Capital and Scotia Capital's participation in Non Swingline Advances is reduced, and the participation of the other Lenders in Non Swingline Advances is increased in accordance with Section 5.25(1), it is the intention of the parties that the ultimate credit risk and exposure of each Lender in respect of the Credit be in accordance with its Applicable Percentage of the entire amount of the Credit. Accordingly, upon the Obligations becoming due and payable under Section 8.2, each Lender shall (and hereby absolutely, unconditionally and irrevocably agrees to) do all such things, including delivery of indemnity agreements and assignments to other Lenders of Advances made by Scotia Capital under the Swingline Availability or assignments to Scotia Capital of Non Swingline Advances made by other Lenders as shall be required to ensure that result. Any such action on the part of the Lenders shall be binding on the Obligors. If any Lender fails to take the actions required by this Section, the Agent may, without prejudice to the other rights of the Lenders, make such adjustments to the payments to the defaulting Lender under this Agreement as are necessary to compensate the other Lenders for the defaulting Lender's failure. -41- (3) Subject to the provisions of Section 5.25(2) regarding the assignment of interests in Advances under the Swingline Availability in the event of acceleration of payment of the Obligations, the provisions of this Agreement do not apply to Advances under the Swingline Availability to the extent that the provisions contemplate the participation by any Lender other than Scotia Capital in making Advances and receiving payments in respect of Advances under the Swingline Availability. All Advances under the Swingline Availability shall be made solely by Scotia Capital and records concerning such Advances shall be maintained solely by Scotia Capital. All payments of principal, interest, fees and other amounts relating to Advances under the Swingline Availability shall be made solely to Scotia Capital. Any notices by the Borrower in connection with the Swingline Availability shall be made to Scotia Capital. The parties hereto agree that notice and minimum amount requirements in respect of Advances shall not apply to Advances by way of overdraft under the Swingline Availability. Similarly, subject to any assignment of interests in Advances under the Swingline Availability in the event of acceleration of payment of the Obligations as contemplated in Section 5.25(2), references in this Agreement to the Lenders shall, in the context of the Swingline Availability, be interpreted as referring only to Scotia Capital. No Lender other than Scotia Capital shall have any right to receive payments in respect of Advances under the Swingline Availability or any obligations to make Advances under the Swingline Availability. (4) Advances under the Swingline Availability are available by way of overdraft only. Upon presentation to Scotia Capital for payment of any cheque or other item drawn by the Borrower on any of its Canadian Dollar or U.S. Dollar current accounts at the Branch of Account which, when charged against the applicable account, creates or increases an overdraft in that account, Scotia Capital shall pay the cheque or other item provided that, after doing so, the aggregate amount of the overdrafts outstanding in such accounts of the Borrower do not exceed Cdn. $10,000,000 (which overdrafts shall, in the case of the Borrower's Canadian Dollar accounts, be deemed to be Prime Rate Advances, and, in the case of the Borrower's U.S. Dollar accounts, be deemed to be Base Rate Advances). The Borrower hereby requests and authorizes Scotia Capital to make such Prime Rate Advances and Base Rate Advances to cover such overdrafts, subject to the terms of this Agreement, and this standing authorization to the Agent shall be deemed for the purposes of this Agreement to constitute a request for an Advance in the form of Schedule A on each date such Advances are made by Scotia Capital to cover any such overdraft. All of the provisions applicable to Prime Rate Advances and Base Rate Advances under this Agreement shall apply to Advances under the Swingline Availability, respectively, other than minimum notice or minimum amount requirements. 5.26 PROHIBITED RATES OF INTEREST It is the intention of the parties to comply with applicable usury laws now or hereafter enacted. Accordingly, notwithstanding any other provisions of this Agreement or any other Loan Document, in no event shall any Loan Document require the payment or permit the collection of interest or other amounts in an amount or at a rate in excess of the amount or rate that is permitted by law or in an amount or at a rate that would result in the receipt by the -42- Lenders or the Agent of interest at a criminal rate, as the terms "interest" and "criminal rate" are defined under the Criminal Code (Canada). Where more than one such law is applicable to any Obligor, such Obligor shall not be obliged to make payment in an amount or at a rate higher than the lowest amount or rate permitted by such laws. If from any circumstances whatever, fulfilment of any provision of any Loan Document shall involve transcending the limit of validity prescribed by any Applicable Law for the collection or charging of interest, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such circumstances the Agent or the Lenders shall ever receive anything of value as interest or deemed interest under any Loan Document in an amount that would exceed the highest lawful rate of interest permitted by any Applicable Law, such amount that would be excessive interest shall be applied to the reduction of the principal amount of the Credit, and not to the payment of interest, or if such excessive interest exceeds the unpaid principal balance of the Credit, the amount exceeding the unpaid balance shall be refunded to the Borrower. In determining whether or not the interest paid or payable under any specified contingency exceeds the highest lawful rate, the Obligors, the Agent and the Lenders shall, to the maximum extent permitted by Applicable Laws (a) characterize any non-principal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) amortize, prorate, allocate and spread the total amount of interest throughout the term of such indebtedness so that interest thereon does not exceed the maximum amount permitted by Applicable Laws, or (d) allocate interest between portions of such indebtedness to the end that no such portion shall bear interest at a rate greater than that permitted by Applicable Laws. For the purposes of the application of the Criminal Code (Canada), the effective annual rate of interest shall be determined in accordance with generally accepted actuarial practices and principles and in the event of any dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by the Agent shall be conclusive for the purpose of such determination. ARTICLE 6 REPRESENTATIONS AND WARRANTIES 6.1 REPRESENTATIONS AND WARRANTIES Each of the Obligors represents and warrants, with respect to itself and each other Obligor, to the Lenders as follows: (1) CORPORATE MATTERS (a) It is a duly incorporated, amalgamated or continued and validly existing corporation under its jurisdiction of incorporation and has the corporate power and authority to enter into and perform its obligations under each Loan Document to which it is or will be a party, to own or lease its Property and to carry on its business as conducted. (b) It is qualified to carry on business in all jurisdictions in which the Property owned or leased by it or the nature of the activities carried on by it makes such qualification necessary, except to the extent that the non-qualification would not and could not reasonably be expected to have a Material Adverse Effect. -43- (c) It has all Permits required to own its Property and to carry on the business in which it is engaged and all such Permits are in good standing, except to the extent that the absence of Permits or lack of good standing of Permits would not and could not reasonably be expected to have a Material Adverse Effect. (d) The entering into and the performance by it of the Loan Documents to which it is or will be a party (i) have been duly authorized by all necessary corporate or other action on its part, (ii) do not and will not violate its Constating Documents or any Applicable Law, (iii) do not and will not result in a breach of or constitute (with the giving of notice, the lapse of time or both) a default under or require a consent under any Material Permit or any Material Contract to which it is a party or by which it or its Property is bound, and (iv) do not and will not result in the creation of any Encumbrance on any of its Property and will not require it to create any Encumbrance on any of its Property and will not result in the forfeiture of any of its Property. (e) Its Constating Documents do not restrict the power of its directors, trustees or partners, as the case may be, to borrow money, to give financial assistance by way of loan, guarantee or otherwise, or to encumber any or all of its present and future Property to secure the Secured Obligations, except for restrictions under any Constating Document which have been complied with in connection with the Loan Documents, the Other Secured Agreements and all other Permitted Obligations. (f) It is not in violation of any term of its Constating Documents and is not in violation of any Applicable Law, Material Contract or Material Permit, the violation of which would or could reasonably be expected to have a Material Adverse Effect. (2) LOAN DOCUMENTS, ETC. (a) The Loan Documents to which it is or will be a party have been or will be duly executed and delivered by it (or on its behalf) and, when executed and delivered, will constitute legal, valid and binding obligations enforceable against it in accordance with their respective terms, subject to the availability of equitable remedies and the effect of bankruptcy, insolvency and other laws of general application limiting the enforceability of creditors' rights generally and to the fact that equitable remedies, including specific performance and injunctive relief, are discretionary and may not be ordered in respect of certain defaults. (b) No Default has occurred and is continuing. (3) LITIGATION, FINANCIAL STATEMENTS AND OTHER MATTERS (a) There are no actions, suits, arbitration or administrative proceedings or industrial or labour disputes outstanding or, to its knowledge after having made -44- reasonable inquiry, pending or threatened, against it which, in any such case, would or could reasonably be expected to have a Material Adverse Effect. (b) All of its historical financial statements which have been furnished to the Agent and the Lenders, or any of them, in connection with this Agreement are complete and fairly present the financial position of the applicable Person as of the dates referred to therein and have been prepared in accordance with GAAP on a consistent basis except that, in the case of quarterly financial statements, notes to the statements and normal year-end audit adjustments required by GAAP are not included. (c) As of the Closing Date it has no liabilities (contingent or other) or other obligations of the type required to be included in the consolidated financial statements of Anixter Inc. in accordance with GAAP which are not fully included in the audited financial statements of Anixter Inc. for its fiscal year ending December 2004 or in Anixter Inc.'s quarterly consolidated financial statements for its fiscal quarter ended 30 September 2005, other than liabilities and obligations incurred since the date of such statements in the ordinary course of business, none of which has a Material Adverse Effect, and the Obligations. (d) It is not in default under any of the Permitted Encumbrances to an extent that such defaults, individually or in the aggregate, would or could reasonably be expected to have a Material Adverse Effect. (e) From and after 30 September 2005, no event has occurred and no fact has become known to it that has or could reasonably be expected to have a Material Adverse Effect. (f) It has no Debt that is not a Permitted Obligation. (g) The Obligations, the Guarantor Obligations and the Other Secured Obligations are Indebtedness which is permitted under the U.S. Credit Agreement and all public Debt of Anixter International Inc. (4) BUSINESS, PROPERTY, CAPITAL STOCK, MATERIAL CONTRACTS AND MATERIAL PERMITS (a) Schedule F fully and fairly describes, as of the Closing Date, the ownership of all of the issued and outstanding Capital Stock of the Borrower and of Capital Stock that is owned by the Borrower in other Persons, the locations of the Borrower's head office (and chief executive office, if different). Except as set out in Schedule F, the Borrower does not have any Subsidiaries, direct or indirect, is not a partner in any partnership (general or limited) and is not a co-venturer in any joint venture, as of the date hereof. (b) It owns or is licensed or otherwise has the right to use all Intellectual Property that is necessary for the operation of its business, to its knowledge without conflict with the rights of any other Person. -45- (c) It maintains appropriate insurance coverage, including, business interruption insurance, that satisfies the covenants and conditions of the U.S. Credit Agreement concerning insurance coverage. (d) Each Material Contract to which any Obligor is a party is in full force and effect and no material breach by any party thereto of any of the terms or conditions thereof has occurred and is continuing, there have been no events that are continuing which, but for giving notice, lapse of time or any other condition subsequent, would constitute a default of a material obligation thereunder or would allow the termination of such Material Contract or the imposition of any material sanction on any party to such Material Contract of which it is aware and no party to such Material Contract has any set-off or counterclaim against it relating to or affecting such Material Contract of which it is aware. (e) No Material Contract is the subject of any Encumbrances other than Permitted Encumbrances. (f) It has good title to all personal or moveable Property and good and marketable title to all real or immoveable Property or leasehold interests therein owned or leased by it, free and clear from any Encumbrance, other than any Permitted Encumbrances, and no Person has any agreement with it or right to acquire an interest in any such Property. (g) Each Material Permit to which any Obligor is party or of which any Obligor has the benefit is in full force and effect, without further amendment thereto, and no further or other Permit is required for any Obligor to carry on its business as conducted, except to the extent that a failure to maintain, comply with, or to have, the same would not or could not reasonably be expected to have a Material Adverse Effect. (h) None of the Obligors is a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935; nor is any of them a "registered investment company", or an "affiliated company" or a "principal underwriter" of a "registered investment company", as such terms are defined in the Investment Company Act of 1940. (i) The complete and accurate organizational structure of the Obligors is set forth on Schedule H. (5) ENVIRONMENTAL MATTERS (a) (i) It and all of its respective Property and operations are in full compliance in all respects with all Environmental Laws, (ii) it is not aware of, nor has it received notice of, any past, present or future conditions, events, activities, practices or incidents which may interfere with or prevent the compliance or continued compliance of it in all respects with all Environmental Laws, and -46- (iii) it has obtained all Permits which are currently required under all Environmental Laws and is in full compliance with the provisions of such Permits, in each case except to the extent that the non-compliance would not or could not reasonably be expected to have a Material Adverse Effect. (b) None of the Obligors is aware that any Hazardous Materials exist on, about or within or have been used, generated, stored, transported, disposed of on, or released from any of the properties or assets forming any part of its respective Property other than in material accordance and compliance with all Environmental Laws, except to the extent that the non-compliance would not or could not reasonably be expected to have a Material Adverse Effect. (c) The use which each Obligor has made and intends to make of its Property will not result in the use, generation, storage, transportation, accumulation, disposal, or release of any Hazardous Materials on, in or from any such properties except in material accordance and compliance with all Environmental Laws, except to the extent that the non-compliance would not or could not reasonably be expected to have a Material Adverse Effect. (d) There is no action, suit or proceeding, or, to its knowledge, investigation, or inquiry, before any Governmental Authority pending or, to its knowledge, threatened against any Obligor relating in any way to any Environmental Law that would or could reasonably be expected to have a Material Adverse Effect. (e) No Obligor has (i) incurred any current and outstanding liability for any clean-up or remedial action under any Environmental Law in respect to both current and past operations, events, activities, practices, incidents or the condition or use of any properties or assets owned currently or in the past, (ii) received any outstanding written request for information (other than information to be provided in the normal course in connection with applications for Permits) by any Person under any Environmental Law with respect to the condition, use or operation of its respective Property, or (iii) received any outstanding written notice or claim under any Environmental Law or relating to the presence of Hazardous Material on or originating from its respective Property and operations or from other Persons with respect to any material violation of or liability under any Environmental Law or relating to the presence of Hazardous Material on or originating from its respective Property and operations; that, in any such case, would or could reasonably be expected to have a Material Adverse Effect. (6) TAXES AND WITHHOLDINGS (a) It has duly filed on a timely basis all tax returns, elections and reports required by Applicable Law to be filed by it (if the failure to do so would have a Material Adverse Effect) and has paid, collected and remitted all material Taxes due and payable, collectible or remittable by it, unless being contested in -47- good faith by appropriate proceedings and for which it has recorded the liability in accordance with GAAP. (b) It has (i) withheld from each payment made to any of its past or present employees, officers, directors, trustees, agents and/or beneficiaries, as the case may be, and to any non-resident of the country in which it is resident, the amount of all material Taxes and other deductions required by Applicable Law to be withheld therefrom and has paid the same to the proper tax or other receiving officers within the time required under any Applicable Law, unless being contested in good faith by appropriate proceedings, and (ii) collected and remitted to the appropriate tax authority when required by Applicable Law to do so all material amounts collectible and remittable in respect of goods and services tax and similar Taxes, and has paid all such material amounts payable by it on account of sales Taxes including goods and services and value-added taxes (it being agreed that, for purposes of this paragraph, the amount of a Tax is material if it equals or exceeds Cdn. $1,000,000 or the equivalent thereof in another currency). (7) PENSION AND WELFARE PLANS (a) During the twelve consecutive month period before the date of this Agreement and before the date of any Advance hereunder (i) no steps have been taken to terminate or wind-up any Pension Plan (wholly or in part), which could reasonably be expected to result in the Borrower making contributions (including special payments) to the Pension Plan in any twelve month period in excess of 115% of the contributions that were scheduled to be made in the prior twelve consecutive month period, (ii) no failure to remit a contribution in accordance with the terms of any Pension Plan or pension benefits legislation has occurred with respect to any Pension Plan sufficient to give rise to a deemed trust, lien or charge under any pension benefits legislation of any jurisdiction that, individually or in the aggregate would or could reasonably be expected to have a Material Adverse Effect, (iii) no condition exists and no event or transaction has occurred with respect to any Pension Plan which could reasonably be expected to result in the incurrence by the Borrower of any fines or penalties which would or could reasonably be expected to have a Material Adverse Effect, and (iv) except as disclosed in the financial statements required to be provided pursuant to this Agreement or as otherwise disclosed in writing from time to time to the Agent, the Borrower has no contingent liability with respect to any post-retirement benefit under a Welfare Plan that, individually or in the aggregate would or could reasonably be expected to have a Material Adverse Effect. (b) Each Pension Plan is and has been established, registered, funded, invested and administered in compliance with its terms and all Applicable Laws and (i) all contributions or premiums (including employee contributions or premiums made by authorized payroll deductions or other withholdings) required to be made to the appropriate funding agent in accordance with all Applicable Laws -48- and the terms of each Pension Plan or Welfare Plan have been made in accordance with all Applicable Laws and the terms of each Pension Plan or Welfare Plan, (ii) there have, to its knowledge after having made reasonable inquiry, been no withdrawals, applications, payments or transfers of assets from any Pension Plan or Welfare Plan or the trusts or other funding media relating thereto which have not been made or done in accordance with all Applicable Laws, (iii) as at the date of the most recent actuarial report filed with respect to the Pension Plan, all liabilities under each Pension Plan that is a registered pension plan were fully funded in accordance with Applicable Law, on a going concern and solvency basis, in accordance with the terms of the respective Pension Plans, the requirements of all Applicable Laws and applicable regulatory authorities using the methods and assumptions set out in such report, and (iv) to its knowledge, no event has occurred and no condition exists with respect to any Pension Plan that has resulted or could reasonably be expected to result in any Pension Plan having its registration revoked or refused for the purposes of any Applicable Law or being placed under the administration of any relevant pension benefits regulatory authority or the Borrower being required to pay any taxes or penalties under any Applicable Law, except for any exceptions to clauses (i) through (iv) above that, individually or in the aggregate, would not and could not reasonably be expected to have a Material Adverse Effect. (8) CUMULATIVE MATERIAL ADVERSE EFFECT There has not been any one or more breaches, defaults or instances of non-compliance with the foregoing representations and warranties (assuming none of such representations and warranties were qualified by "materiality" or the concept of Material Adverse Effect) such that the cumulative effect of all such breaches, defaults, or non-compliance would or could reasonably be expected to have a Material Adverse Effect. 6.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES The representations and warranties made in this Agreement shall survive the execution of this Agreement and all other Loan Documents, and unless expressly stated to be made as of a specific date, shall be deemed to be repeated and made as of the date of each Advance (including any deemed Advance) and as of the date of delivery of each Compliance Certificate with the same force and effect as if made on and as of each such date, subject to modifications communicated by the Borrower to the Lenders in writing and accepted by the Required Lenders. The Lenders shall be deemed to have relied upon such representations and warranties at each such time as a condition of making an Advance hereunder or continuing to extend the Credit hereunder. -49- ARTICLE 7 COVENANTS 7.1 FINANCIAL COVENANTS OF THE BORROWER The Borrower shall at all times maintain a Total Leverage Ratio of not greater than 3.50 to 1.00. The Total Leverage Ratio shall be calculated on a rolling four quarter basis, based on the most recently completed four fiscal quarters of the Borrower. 7.2 POSITIVE COVENANTS During the term of this Agreement, each Obligor shall perform the covenants specified below: (1) PAYMENTS AND OPERATION OF BUSINESS (a) It shall duly and punctually pay and perform its indebtedness, liabilities and obligations hereunder and under the other Loan Documents at the times and places and in the manner required by the terms hereof and thereof. (b) It shall (i) maintain its corporate existence as at the date of this Agreement, and (ii) operate and carry on and conduct its business and affairs in compliance in all material respects with all applicable Material Contracts and Material Permits, except to the extent that a failure to do so would not, or could not reasonably be expected to, have a Material Adverse Effect. (c) It shall operate its business in a prudent manner and in compliance in all material respects with all Applicable Laws except to the extent that a failure to do so would not, or could not reasonably be expected to, have a Material Adverse Effect. (d) It shall maintain in good standing and shall obtain, as and when required, all Permits and Contracts which may be necessary to permit it to acquire, own, operate and maintain its business and Property, observe and perform all the obligations imposed upon it under or in connection therewith, take any and all commercially reasonable actions necessary to preserve its rights thereunder except to the extent that a failure to do so would not and could not reasonably be expected to have a Material Adverse Effect. (e) It shall maintain in good standing in all material respects all Material Contracts and Material Permits (other than any Material Permit or Material Permit, the loss of which would not, individually or in the aggregate, have a Material Adverse Effect), observe and perform in all material respects all the obligations imposed upon it under or in connection therewith, take any and all commercially reasonable actions necessary to preserve in all material respects its rights thereunder and cooperate with the Agent to the fullest extent possible in pursuing any claim it may have under or in respect thereof. -50- (2) INSPECTION It shall upon reasonable notice and at reasonable times, permit representatives of or consultants to the Agent, during regular business hours, to inspect any of its Property, conduct environmental site assessments and/or compliance audits, examine and report on all insurance maintained by or on behalf of each Obligor and to examine and take extracts from its financial books, accounts and records, including but not limited to accounts and records stored in computer data banks and computer software systems, and to discuss its financial condition with its senior officers and (in the presence of such of its representatives as it may designate) its auditors. Each such visitation and inspection made by or on behalf to the Agent shall be at the Borrower's expense. Any visitation and inspection made by any Lender shall be at such Lender's own expense. (3) INSURANCE Each Obligor shall maintain or cause to be maintained insurance on its Property that satisfies the covenants and conditions of the U.S. Credit Agreement concerning insurance coverage from time to time. Whenever reasonably requested in writing by the Agent, it shall cause certificates evidencing such policies of insurance, and such other material which is required to be provided under the U.S. Credit Agreement from time to time relating thereto, to be made available to the Agent. (4) TAXES AND WITHHOLDINGS (a) It shall pay all Taxes as they become due and payable unless they are being contested in good faith by appropriate proceedings. (b) It shall withhold from each payment made to any of its past or present employees, officers, directors, partners and trustees, and to any non-resident of Canada, the amount of all Taxes and other deductions required by Applicable Laws to be withheld therefrom and pay the same to the proper tax or other receiving officers within the time required under any Applicable Law. (c) It shall collect from all Persons the amount of all Taxes required by any Applicable Law to be collected from them and remit the same to the proper tax or other receiving officers within the time required under any Applicable Law. (5) OTHER MATTERS Without limiting any other provision of this Agreement, it shall remove, clean up or otherwise remedy all matters which are the subject of any written order or notice of inquiry, investigation, complaint, allegation or claim pertaining to or under Environmental Laws or Permits to the extent required under applicable Environmental Laws which, if not remediated, would or could reasonably be expected to have a Material Adverse Effect. -51- 7.3 REPORTING AND NOTICE REQUIREMENTS During the term of this Agreement, the Borrower shall deliver or cause the delivery of the periodic reports specified below and shall give notices in the circumstances specified below, or cause notices to be given. All financial statements and other reports shall be in a form satisfactory to the Lenders acting reasonably and all financial statements shall be prepared in accordance with GAAP applied on a consistent basis. (1) PERIODIC FINANCIAL REPORTS (a) The Borrower shall, as soon as practicable and in any event within 45 days of the end of each of its fiscal quarters (excluding the fourth fiscal quarter), cause to be prepared and delivered to the Agent (with sufficient copies for each of the Lenders), its interim unaudited consolidated financial statements as at the end of such quarter. (b) The Borrower shall, as soon as practicable and in any event within 120 days after the end of each of its fiscal years, prepare and deliver to the Agent (with sufficient copies for each of the Lenders) its unaudited consolidated annual financial statements. (c) The Borrower shall, concurrently with the delivery of its quarterly financial statements and annual financial statements, provide the Agent (with sufficient copies for each of the Lenders) with a Compliance Certificate. (d) Anixter Inc. shall, as soon as practicable and in any event within 45 days of the end of each of its fiscal quarters (excluding the fourth fiscal quarter), cause to be prepared and delivered to the Agent (with sufficient copies for each of the Lenders), its interim unaudited consolidated financial statements as at the end of such quarter. (e) Anixter Inc. shall, as soon as practicable and in any event within 120 days after the end of each of its fiscal years, prepare and deliver to the Agent (with sufficient copies for each of the Lenders) its unaudited consolidated annual financial statements. (f) Anixter Inc. shall, concurrently with the delivery of its quarterly financial statements and annual financial statements, provide the Agent (with sufficient copies for each of the Lenders) with a Compliance Certificate. (g) Anixter Inc. shall, on a timely basis, provide the Agent (with sufficient copies for each of the Lenders), copies of all financial statements, reports and notices, if any, sent or made available generally by any Obligor to the holders of its publicly-held securities, if any, or filed with the Securities and Exchange Commission concerning developments in the business of any Obligor that individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. -52- (h) The Obligors shall promptly provide the Agent with all other information, reports and certificates reasonably requested by the Lenders from time to time concerning the business, financial condition and Property of the Borrower and each other Obligor, it being understood and agreed that the Agent and the Lenders shall treat all non-public information as confidential. (2) REQUIREMENTS FOR NOTICE (a) Each Obligor shall promptly after it becomes aware thereof, notify the Agent of any Default, or of any material breach of any material obligation or material default (whether it is its own default or a default by any other party) under any Material Contract to which it is a party or Material Permit, or of any termination or cancellation of a Material Contract (other than at the expiry of its term), or of any event which, with or without the giving of notice, lapse of time or any other condition subsequent, would be a material default under or would otherwise allow the termination of any Material Contract or Material Permit or the imposition of any material sanction on any party to a Material Contract or Material Permit, and shall from time to time provide the Lenders with all information reasonably requested by any of the Lenders concerning the status thereof. (b) Each Obligor shall promptly notify the Agent on becoming aware of the occurrence of any action, suit, dispute, arbitration, proceeding, labour or industrial dispute or other circumstance affecting it, the result of which if determined adversely would or could reasonably be expected to have a Material Adverse Effect, and shall from time to time provide the Agent with all reasonable information requested by any of the Lenders concerning the status thereof. (c) Each Obligor shall promptly notify the Agent in writing upon the occurrence of any of the following events which, in each case or together, could reasonably be expected to result in a Material Adverse Effect: (i) knowledge that any of Property of Anixter Inc. or of any Subsidiary of Anixter Inc. is subject to an Environmental Lien; or (ii) knowledge that Anixter Inc. or any Subsidiary of Anixter Inc. is subject to a condition which could reasonably be expected to result in (A) a notice of violation of any Environmental Law, or (B) any liabilities or costs with respect to any Release or threatened Release of any Hazardous Materials into the environment. (d) The Borrower shall provide notice to the Agent and copies of all relevant documentation promptly upon becoming aware of (i) the institution of any steps by the Borrower or any applicable regulatory authority to terminate or wind-up any Pension Plan (wholly or in part) which could reasonably be expected to result in the Borrower making contributions (including special -53- payments) to the Pension Plan in any twelve month period in excess of 115% of the contributions that were scheduled to be made in the prior twelve consecutive month period, (ii) the failure to make a required contribution to any Pension Plan if such failure is sufficient to give rise to a deemed trust, lien or charge under any pension benefits legislation of any jurisdiction that, individually or in the aggregate, would or could reasonably be expected to have a Material Adverse Effect, (iii) the taking of any action with respect to a Pension Plan which could reasonably be expected to result in the requirement that the Borrower furnish a bond or other security to such Pension Plan or any applicable regulatory authority that, individually or in the aggregate, would or could reasonably be expected to have a Material Adverse Effect, (iv) the occurrence of any event with respect to any Pension Plan which could reasonably be expected to result in the incurrence by the Borrower of any fines or penalties which could reasonably be expected to have a Material Adverse Effect, (v) the occurrence of any breach of any statutory fiduciary obligation with respect to the administration of any Pension Plan, Welfare Plan or any related funding medium which has or could reasonably be expected to have a Material Adverse Effect, (vi) the occurrence of any event which results or could reasonably be expected to result in any qualification for special tax status for any Pension Plan or Welfare Plan under any Applicable Law being revoked or refused, or (vii) any annual increase in the contingent liability of the Borrower with respect to any post-retirement Welfare Plan benefit as at December 31 of a calendar year in excess of 115% of the contingent liability for the preceding December 31. 7.4 NEGATIVE COVENANTS During the term of this Agreement, none of the Obligors shall, or shall cause or permit any other Obligor, to do any of the things specified in this Section without the prior written consent of the Required Lenders or the Lenders, as the case may be. (1) DEBT AND ENCUMBRANCES None of the Obligors shall: (a) create, incur, assume or suffer to exist or cause or permit any Encumbrance upon or in respect of any of its Property other than Permitted Encumbrances; (b) create, incur, assume or permit any debts, liabilities or obligations of any kind (including contingent liabilities) to remain outstanding, other than Permitted Obligations; or (c) create, incur, assume or permit the existence of any Permitted Obligations which rank senior to the Obligations, the Other Secured Obligations or the Guarantor Obligations, except to the extent permitted under the U.S. Credit Agreement, as U.S. Credit Agreement may be amended from time to time in -54- accordance with a Scotia Approved Amendment (which, for greater certainty, includes Receivable Securitization Transactions). (2) FINANCIAL ASSISTANCE AND OTHER FINANCIAL TRANSACTIONS None of the Obligors shall: (a) create or become or be liable with respect to any Accommodation Obligation except to the extent permitted under the U.S. Credit Agreement, as the U.S. Credit Agreement is amended by any Scotia Approved Amendment; (b) enter into or cause to be entered into Swap Transactions (including Currency Agreements and Interest Rate Agreements) except to the extent permitted under the U.S. Credit Agreement, as the U.S. Credit Agreement is amended by any Scotia Approved Amendment; (c) make any Restricted Payment except to the extent that it may do so in compliance with the U.S. Credit Agreement, as amended by any Scotia Approved Amendment; (d) other than transactions between or among the Obligors, enter into any transaction of any kind with any Affiliate or Related Party, or Person in respect of which it is a Related Party, except (i) on a commercially reasonable basis as if it were dealing with such Person on the Arm's Length basis, or (ii) if otherwise permitted under the U.S. Credit Agreement, as the U.S. Credit Agreement is amended by any Scotia Approved Amendment; or (e) use the proceeds of any Advance in any way that will violate Regulations U or X of the Board of Governors of the Federal Reserve System. (3) BUSINESS AND PROPERTY None of the Obligors shall: (a) effect any change in, or carry on, any business other than the business carried on by it at the date of this Agreement; (b) make any Investments except to the extent that it may do so in compliance with Section 7.03 of the U.S. Credit Agreement, as such Section is as amended from time to time in relation to the Guarantors, and as such Section exists at the date of this Agreement in relation to the Borrower; or (c) permit any sale, lease or other disposition of the whole or any part of its Property or any rights or interest therein (including any sale and lease-back arrangement) other than a sale or other disposition which is permitted under Section 7.02 of the U.S. Credit Agreement, as such Section is amended by any Scotia Approved Amendment. -55- (4) CORPORATE MATTERS None of the Obligors shall (a) except to the extent it may do so in compliance with the U.S. Credit Agreement, as any relevant provision of the U.S. Credit Agreement is amended by any Scotia Approved Amendment, consolidate, amalgamate or merge with any other Person, enter into any corporate reorganization or other transaction intended to effect or otherwise permit a change in its existing Constating Documents or its capital structure, liquidate, wind up or dissolve itself, or permit any liquidation, winding up or dissolution (collectively, "FUNDAMENTAL CHANGES") except for fundamental changes involving solely two or more Obligors if prior notice has been given to the Agent and each Obligor has taken all steps reasonably required by the Lenders to ensure that the Lenders' rights and interests (including under all Security) are not adversely affected by any such fundamental change including delivery of other security documents granting Encumbrances on the Property of the Obligors if necessary to ensure that the interests of the Secured Parties are not structurally subordinated; or (b) change its fiscal year end. ARTICLE 8 DEFAULT 8.1 EVENTS OF DEFAULT The occurrence of any one or more of the following events shall constitute an Event of Default under this Agreement: (a) the Borrower fails to pay, whether by acceleration or otherwise, any amount of principal (including any amount relating to a Banker's Acceptance or L/C) when due; or (b) the Borrower fails to pay any amount of interest, fees, commissions or other Obligations (other than amounts on account of principal) when due, and such failure continues for three Business Days after the date of such default; or (c) there occurs a breach of the financial covenant in Section 7.1; or (d) there occurs a breach of any of the negative covenants in Section 7.4,; or (e) any Obligor makes any representation or warranty in any Loan Document, or in any written statement or certificate made or delivered pursuant to this Agreement which is incorrect, incomplete or misleading in any material respect when made or deemed to be made; or (f) Anixter Inc., Anixter International Inc. or the Borrower ceases or threatens to cease to carry on its business; or -56- (g) any Obligor defaults under one or more agreements or instruments relating to its Debt or any Swap Transactions or permits any other event to occur and to continue without being waived or cured after any applicable grace period specified in such agreements or instruments, if the effect of one or more of such events is to accelerate, or to permit the acceleration of, the date on which Debt (or Swap Transactions) in an aggregate amount of U.S. $25,000,000 (or the equivalent thereof in any other currency) or more becomes due (whether or not such acceleration actually occurs) or a Obligor fails to pay any Debt in an aggregate principal amount of U.S. $25,000,000 (or the equivalent thereof in any other currency) when due; or (h) any Obligor having assets in excess of U.S. $25,000,000 (or the equivalent thereof in any other currency) (i) admits its inability to pay its debts generally, is, or is deemed for the purposes of any law to be, unable to pay its debts as they fall due, fails to pay its debts generally, acknowledges its insolvency in writing or becomes a bankrupt (voluntarily or involuntarily), or (ii) becomes subject to any proceeding seeking court protection, examinership, administration, reorganization by way of scheme of arrangement or otherwise, liquidation, dissolution, arrangement, winding-up, relief of debtors or from creditors or the appointment of a receiver or trustee over any material part of its Property or analogous proceeding in any jurisdiction or becomes subject to any judgment or order which has or could reasonably be expected to have a Material Adverse Effect or a material adverse effect on any material part of its Property, and such proceeding, if instituted against any such Person or Persons, or such judgment or order, is not contested diligently, in good faith and on a timely basis and vacated, dismissed, withdrawn or stayed within 20 days of its commencement or issuance; or (i) any Obligor denies, to any extent, its obligations under any Loan Document or claims any Loan Document to be invalid or withdrawn in whole or in part; or (j) this Agreement, any of the Security, the Fee Letter or any other material Loan Document is invalidated in any material respect by any act, regulation or governmental action or is determined to be invalid in any material respect by a court or other judicial entity and such determination has not been stayed pending appeal and such circumstances remain unremedied for a period of ten Business Days following notice thereof by the Agent, on behalf of the Secured Parties, to the Borrower; or (k) one or more final judgments, writs of execution, garnishments or attachments or similar processes representing claims in an aggregate of U.S. $25,000,000 (or the equivalent thereof in any other currency) or more for all of the Obligors at any time are issued or levied against any of their Property and are not released, bonded, satisfied, discharged, vacated, stayed or accepted for payment by an insurer within 20 days after their entry, commencement or levy; or -57- (l) one or more Encumbrancer and/or landlord exercising distraint or similar rights in relation to the Debt or other obligations in an amount which, in the aggregate exceeds U.S. $25,000,000 (or the equivalent thereof in any other currency), takes possession of all or, in the aggregate, a material portion of the Property of the Obligors taken as a whole by appointment of a receiver or receiver and manager, by seizure, repossession or distraint, or otherwise; or (m) there is a breach of any covenant, condition or other provision of any Loan Document (other than a breach which is specifically dealt with elsewhere in this Section 8.1), by any party thereto other than the Agent or the Secured Parties, and such breach, if capable of being remedied, is not corrected or otherwise remedied within 15 days after the Agent, for and on behalf of the Secured Parties, gives written notice thereof to the Borrower; or (n) the Borrower ceases to be directly or indirectly wholly-owned by Anixter Inc.; or (o) the occurrence of any Event of Default (as such term is defined in the U.S. Credit Agreement as amended from time to time in accordance with a Scotia Approved Amendment). 8.2 ACCELERATION AND TERMINATION OF RIGHTS, PRE-ACCELERATION RIGHTS (1) If any Event of Default occurs, no Lender shall be under any further obligation to make Advances and the Required Lenders may instruct the Agent to give notice to the Borrower (a) declaring the Lenders' obligations to make Advances to be terminated, whereupon the same shall forthwith terminate, (b) declaring the Obligations or any of them to be forthwith due and payable, whereupon they shall become and be forthwith due and payable without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower, and/or (c) demanding that the Borrower deposit forthwith with the Agent for the Lenders' benefit Collateral equal to the full face amount at maturity of all L/Cs and Banker's Acceptances then outstanding for its account. (2) Notwithstanding the preceding paragraph, if any Obligor having assets in excess of U.S. $25,000,000 (or the equivalent thereof in any other currency) becomes a bankrupt (voluntarily or involuntarily), or institutes any proceeding seeking liquidation, dissolution, arrangement, winding-up, relief of debtors or from creditors or the appointment of a receiver or trustee over any material part of its Property or analogous proceeding in any jurisdiction, then without prejudice to the other rights of the Lenders as a result of any such event, without any notice or action of any kind by the Agent or any Lender, and without presentment, demand or protest, the Lenders' obligation to make Advances shall immediately terminate, the Obligations shall immediately become due and payable and the Borrower shall be obligated to deposit forthwith with the Agent for the Lenders' benefit Collateral equal to the full face amount at maturity of all L/Cs and Banker's Acceptances then outstanding for its account -58- 8.3 PAYMENT OF L/CS, ETC. (1) Immediately upon any Obligations becoming due and payable under Section 8.2, the Borrower shall, without necessity of further act or evidence, be and become thereby unconditionally obligated to deposit forthwith with the Agent for the benefit of, as applicable, the Issuing Bank and each other applicable Lender Collateral equal to the full face amount at maturity of all L/Cs and Banker's Acceptances then outstanding for its account and the Borrower hereby unconditionally promises and agrees to deposit with the Agent immediately upon such demand Collateral in the amount so demanded. The Borrower authorizes the Lenders, or any of them, to debit its accounts with the amount required to pay such L/Cs and to pay such Banker's Acceptances, notwithstanding that such Banker's Acceptances may be held by the Lenders, or any of them, in their own right at maturity. Amounts paid to the Agent pursuant to such a demand in respect of Banker's Acceptances and L/Cs shall be applied against, and shall reduce, pro rata among the Lenders, to the extent of the amounts paid to the Agent in respect of Banker's Acceptances and L/Cs, respectively, the obligations of the Borrower to pay amounts then or thereafter payable under Banker's Acceptances and L/Cs, respectively, at the times amounts become payable thereunder. (2) The Borrower shall be entitled to receive interest on cash held by the Agent as Collateral in accordance with Section 10.10. 8.4 REMEDIES Upon the occurrence of any event by which any of the Obligations become due and payable under Section 8.2, the Security shall become immediately enforceable and the Required Lenders may instruct the Agent to take such action or proceedings on behalf of the Lenders and in compliance with Applicable Laws as the Required Lenders in their sole discretion deem expedient to enforce the same, all without any additional notice, presentment, demand, protest or other formality, all of which are hereby expressly waived by the Obligors. 8.5 SAVING Neither the Agent nor any Lender shall be under any obligation to any Obligor or any other Person to realize any collateral or enforce the Security or any part thereof or to allow any of the collateral to be sold, dealt with or otherwise disposed of. None of the Agent or any Lender shall be responsible or liable to any Obligor or any other Person for any loss or damage upon the realization or enforcement of, the failure to realize or enforce the collateral or any part thereof or the failure to allow any of the collateral to be sold, dealt with or otherwise disposed of or for any act or omission on their respective parts or on the part of any director, officer, agent, servant or adviser in connection with any of the foregoing, except that the Agent and each Lender may be responsible or liable for any loss or damage arising from its wilful misconduct or gross negligence. 8.6 PERFORM OBLIGATIONS If an Event of Default has occurred and is continuing and any Obligor has failed to perform any of its covenants or agreements in the Loan Documents, the Required Lenders, may, -59- but shall be under no obligation to, instruct the Agent on behalf of the Lenders to perform any such covenants or agreements in any manner deemed fit by the Required Lenders without thereby waiving any rights to enforce the Loan Documents. The reasonable expenses (including any legal costs) paid by the Agent and/or the Lenders in respect of the foregoing shall be secured by the Security. 8.7 THIRD PARTIES No Person dealing with the Lenders or any agent of the Lenders shall be concerned to inquire whether the Security has become enforceable, or whether the powers which the Lenders are purporting to exercise have become exercisable, or whether any Obligations remain outstanding upon the security thereof, or as to the necessity or expediency of the stipulations and conditions subject to which any sale shall be made, or otherwise as to the propriety or regularity of any sale or other disposition or any other dealing with the collateral charged by such Security or any part thereof. 8.8 REMEDIES CUMULATIVE The rights and remedies of the Lenders under the Loan Documents are cumulative and are in addition to and not in substitution for any rights or remedies provided by Applicable Laws. Any single or partial exercise by the Lenders of any right or remedy for a default or breach of any term, covenant, condition or agreement herein contained shall not be deemed to be a waiver of or to alter, affect, or prejudice any other right or remedy or other rights or remedies to which the Lenders may be lawfully entitled for the same default or breach. Any waiver by the Lenders of the strict observance, performance or compliance with any term, covenant, condition or agreement herein contained, and any indulgence granted by the Lenders shall be deemed not to be a waiver of any subsequent default. ARTICLE 9 THE AGENT AND THE LENDERS 9.1 AUTHORIZATION OF AGENT (1) Without limiting Section 7.1 of the Provisions, each Secured Party irrevocably designates and appoints the Agent for the purpose of holding and realizing on the Security in accordance with and subject to the terms hereof and the terms of the other Loan Documents, and authorizes the Agent to take such action and to exercise such rights, powers and discretions as are expressly granted to it under this Agreement and the other Loan Documents and on the terms hereof or thereof together with such other rights, powers and discretions as are reasonably incidental thereto. The Agent may perform any of its duties hereunder or thereunder by or through its agents, officers or employees, its Affiliates or its Affiliates' agents, officers or employees. (2) Without limiting the foregoing, each of the Secured Parties hereby grants to the Agent a power of attorney, (a) for the purposes of laws applicable to the Security from time to time, to sign documents comprising the Security from time to time (as the party accepting the grant of the security), and (b) for the right to delegate its authority as attorney under item (a) above to any other Person, whether or not an officer or -60- employee of the Agent. The Agent hereby accepts each such appointment. Each such appointment may only be terminated as expressly provided in this Agreement. 9.2 ADMINISTRATION OF THE CREDIT (1) Unless otherwise specified herein, the Agent shall perform the following duties under this Agreement: (a) take delivery of each Lender's Applicable Percentage of an Advance and make all Advances hereunder in accordance with the procedures set forth in Sections 5.7 and 5.11; (b) use reasonable efforts to collect promptly all sums due and payable by the Borrower pursuant to this Agreement; (c) make all payments to the Lenders in accordance with the provisions hereof; (d) hold the Security on behalf of the Secured Parties; (e) hold all legal documents relating to the Credit, maintain complete and accurate records showing all Advances made by the Lenders, all remittances and payments made by the Borrower to the Agent, all remittances and payments made by the Agent to the Lenders and all fees or any other sums received by the Agent and, except for accounts, records and documents relating to the fees payable by the Borrower to the Agent in its capacity as Agent or arranger hereunder or under the Fee Letter, allow each Lender and their respective advisors to examine such accounts, records and documents at their own expense, and provide any Lender, upon reasonable notice, with such copies thereof or information contained therein as such Lender may reasonably require from time to time at the Lender's expense; and (f) except as otherwise specifically provided for in this Agreement, promptly advise each Lender upon receipt of each notice and deliver to each Lender, promptly upon receipt, all other written communications furnished by any Obligor to the Agent on behalf of the Lenders pursuant to this Agreement, including copies of financial reports and certificates which are to be furnished to the Agent. (2) The Agent may take the following actions only with the prior consent of the Required Lenders, unless otherwise specified in this Agreement: (a) subject to Section 9.2(3), exercise any and all rights of approval conferred upon the Lenders by this Agreement; (b) give written notice to any Obligor in respect of any matter in respect of which notice may be required, permitted, necessary or desirable in accordance with or pursuant to this Agreement, promptly after receiving the consent of the Required Lenders, except that the Agent shall, without direction from the -61- Lenders, immediately give the Borrower notice of any payment that is due or overdue under the terms of this Agreement unless the Agent considers that it should request the direction of the Required Lenders, in which case the Agent shall promptly request that direction; (c) amend, modify or waive any of the terms of this Agreement, including waiver of a Default, if such action is not otherwise provided for in Section 9.2(3); (d) declare an Event of Default or take, or cause to be taken by the Agent, action to enforce performance of the Obligations and to realize upon the Security, including the appointment of a receiver, the exercise of powers of distress, lease or sale given by the Security or by law and the taking of foreclosure proceedings and/or the pursuit of any other legal remedy necessary; (e) decide to accelerate the amounts outstanding under the Credit; and (f) pay, or instruct the Agent to pay, insurance premiums, Taxes and any other sums as may be reasonably required to protect the interests of the Lenders. (3) The Agent may take the following actions only if the prior unanimous consent of the Lenders is obtained, unless otherwise specified herein: (a) amend, modify, discharge, terminate or waive any of the terms of this Agreement or the Security if such amendment, modification, discharge, termination or waiver would increase the amount of the Credit, amend the purpose of the Credit, reduce the interest rates and similar charges applicable to the Credit, reduce the fees payable with respect to the Credit, extend any date fixed for payment of principal, interest or any other amount relating to the Credit or extend the term of the Credit; (b) amend the definition of "Required Lenders" or this Section 9.2(3); and (c) subject to Section 9.2(4), discharge any Security. For greater certainty, no Lender's Commitment or Applicable Percentage may be amended without the consent of that Lender. In addition, no amendment, modification or waiver affecting the rights or obligations of the Agent or Issuing Bank may be made without their respective consent. (4) Notwithstanding Sections 9.2(2) and 9.2(3) the Agent may, without the consent of the Lenders (but with the consent of the Borrower), make, or cause to be made, amendments to the Loan Documents that are for the sole purpose of curing any immaterial or administrative ambiguity, defect or inconsistency, but shall immediately notify the Lenders of any such action. The Agent may also discharge, or authorize and direct or otherwise cause to be discharged, any Security to the extent necessary to allow any Obligor to complete any sale or other disposition of Property permitted by this Agreement (including pursuant to any consent, waiver or other decision by, as applicable, the Lenders or the Required Lenders). -62- (5) As between the Obligors, on the one hand, and the Agent and the Lenders, on the other hand: (a) all statements, certificates, consents and other documents which the Agent purports to deliver on behalf of the Lenders or the Required Lenders shall be binding on each of the Lenders, and none of the Obligors shall be required to ascertain or confirm the authority of the Agent in delivering such documents; (b) all certificates, statements, notices and other documents which are delivered by any Obligor to the Agent in accordance with this Agreement shall be deemed to have been duly delivered to each of the Lenders; and (c) all payments which are delivered by the Borrower to the Agent in accordance with this Agreement shall be deemed to have been duly delivered to each of the Lenders. (6) Except in its own right as a Lender, the Agent shall not be required to advance its own funds for any purpose, and in particular, shall not be required to pay with its own funds insurance premiums, Taxes or public utility charges or the cost of repairs or maintenance with respect to the assets which are the subject matter of the Security, nor shall it be required to pay with its own funds the fees of solicitors, counsel, auditors, experts or agents engaged by it as permitted hereby. (7) To the extent that any Obligor or any Affiliate of an Obligor becomes a Lender, such Lender shall not be permitted to vote on or consent to any matter under this Agreement on or to which a Lender may vote or consent and the Commitment of such Lender shall be deemed not to be outstanding for the purposes of determining whether a specified majority has been achieved. (8) all actions taken and consents and approvals given by the Agent shall be valid and binding on all Secured Parties, and will be deemed to be consented to by the Secured Parties, if taken or given by the Agent in accordance with the terms (including requisite levels of approval) of this Agreement, and the Agent shall be fully protected in taking such actions and granting consents and approvals. 9.3 ACKNOWLEDGEMENTS, REPRESENTATIONS AND COVENANTS OF LENDERS (1) Each Lender represents and warrants that it has the legal capacity to enter into this Agreement pursuant to its charter and any Applicable Law and has not violated its charter, constating documents or any applicable legislation by so doing. (2) Each of the Lenders acknowledges and confirms that in the event that the Agent does not receive payment in accordance with this Agreement, it shall not be the obligation of the Agent to maintain the Credit in good standing nor shall any Lender have recourse to the Agent in respect of any amounts owing to such Lender under this Agreement. -63- (3) Each Lender acknowledges and agrees that its obligation to advance its Applicable Percentage of Advances in accordance with the terms of this Agreement is independent and in no way related to the obligation of any other Lender hereunder. (4) Each Lender hereby acknowledges receipt of a copy of this Agreement and the Security (to the extent that the Security has been delivered) and acknowledges that it is satisfied with the form and content of such documents. 9.4 PROVISIONS OPERATIVE BETWEEN LENDERS AND AGENT ONLY Except for the provisions of Sections 9.2(5), 9.3(1), 9.3(3) and this Section 9.4, the provisions of this Article 9 relating to the rights and obligations of the Lenders or the Secured Parties, as the case may be, and the Agent inter se shall be operative as between the Lenders or the Secured Parties, as the case may be, and the Agent only, and no Obligor shall have any rights or obligations under or be entitled to rely for any purpose upon such provisions. ARTICLE 10 MISCELLANEOUS PROVISIONS 10.1 ACCOUNTING TERMS Subject to the last paragraph of Section 7.3(1), wherever in this Agreement reference is made to GAAP or to a calculation to be made or an action to be taken in accordance with generally accepted accounting principles, such reference will be deemed to be to GAAP as at the date on which such calculation or action is made or taken or required to be made or taken in accordance with GAAP, in each case applied on a consistent basis. 10.2 DEFINED TERMS All terms used in any of the Loan Documents (other than this Agreement) which are defined in this Agreement shall have the meanings defined herein unless otherwise defined in the other Loan Document. 10.3 SEVERABILITY Any provision of this Agreement which is or becomes prohibited or unenforceable in any relevant jurisdiction shall not invalidate or impair the remaining provisions hereof which shall be deemed severable from such prohibited or unenforceable provision and any such prohibition or unenforceability in any such jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Should this Agreement fail to provide for any relevant matter, the validity, legality or enforceability of this Agreement shall not thereby be affected. 10.4 AMENDMENT, SUPPLEMENT OR WAIVER No amendment, supplement or waiver of any provision of the Loan Documents, nor any consent to any departure by an Obligor therefrom, shall in any event be effective unless it is in writing, makes express reference to the provision affected thereby and is signed by the Agent -64- for and on behalf of the Lenders or the Required Lenders, as the case may be, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. In addition, any amendment or supplement shall require the written consent of the other parties to the Loan Document in question. No waiver or act or omission of the Agent, the Lenders, or any of them, shall extend to or be taken in any manner whatsoever to affect any subsequent Event of Default or breach by an Obligor of any provision of the Loan Documents or the rights resulting therefrom. 10.5 GOVERNING LAW The Province referred to in Sections 11(a) and (b) of the Provisions is the Province of Ontario. The law governing this Agreement shall also govern each of the other Loan Documents, except for those that expressly provide otherwise. 10.6 THIS AGREEMENT TO GOVERN In the event of any conflict or inconsistency between the terms of this Agreement and the terms of any other Loan Document, the provisions of this Agreement shall govern to the extent necessary to remove the conflict or inconsistency. 10.7 PERMITTED ENCUMBRANCES The designation of an Encumbrance as a Permitted Encumbrance is not, and shall not be deemed to be, an acknowledgment by the Agent or the Lenders that the Encumbrance shall have priority over the Security. 10.8 CURRENCY (1) All payments made hereunder shall be made in the currency in respect of which the obligation requiring such payment arose. Unless the context otherwise requires, all amounts expressed in this Agreement in terms of money shall refer to Canadian Dollars. (2) Except as otherwise expressly provided in this Agreement, wherever this Agreement contemplates or requires the calculation of the equivalent in one currency of an amount expressed in another currency, the calculation shall be made on the basis of the Exchange Rate, at the effective date of the calculation. 10.9 LIABILITY OF LENDERS The liability of the Lenders in respect of all matters relating to this Agreement and the other Loan Documents is several and not joint or joint and several. Without limiting that statement, the obligations of the Lenders to make Advances is limited to their respective Applicable Percentages of any Advance that is requested, and, in the aggregate, to their respective Applicable Percentages of the total amounts of the Credit. -65- 10.10 INTEREST ON MISCELLANEOUS AMOUNTS (1) If the Borrower fails to pay any amount payable hereunder on the due date (including principal, interest thereon, interest upon interest or any other amount on which interest is payable as otherwise provided in this Agreement), the Borrower shall, on demand, pay interest on such overdue amount to the Agent from and including such due date up to but excluding the date of actual payment, both before and after demand, default or judgment, at a rate of interest per annum equal to, in the case of amounts payable in Cdn. Dollars, the sum of the Prime Rate plus 2.0% per annum, and, in the case of amounts payable in U.S. Dollars, the sum of the Base Rate plus 2% per annum, in each case compounded monthly. (2) If the Borrower deposits cash as Collateral pursuant to a requirement under this Agreement, the Agent, Lender or Lenders, as applicable, holding the cash shall pay the Borrower interest on the cash while it continues to be held as Collateral at the rate offered by the relevant Lender or Agent from time to time for deposits in the relevant currency of comparable size and term. 10.11 JUDGMENT CURRENCY In the event of a judgment or order being rendered by any court or tribunal for the payment of any amounts owing to the Lenders or any of them under this Agreement or for the payment of damages in respect of any breach of this Agreement or under or in respect of a judgment or order of another court or tribunal for the payment of such amounts or damages, such judgment or order being expressed in a currency (the "JUDGMENT CURRENCY") other than the currency payable hereunder or thereunder (the "AGREED CURRENCY"), the party against whom the judgment or order is made shall indemnify and hold the Lenders harmless against any deficiency in terms of the Agreed Currency in the amounts received by the Lenders arising or resulting from any variation as between (a) the exchange rate at which the Agreed Currency is converted into the Judgment Currency for the purposes of such judgment or order, and (b) the exchange rate at which each Lender is able to purchase the Agreed Currency with the amount of the Judgment Currency actually received by the Lender on the date of such receipt. The indemnity in this Section shall constitute a separate and independent obligation from the other obligations of the Obligors hereunder, shall apply irrespective of any indulgence granted by the Lenders, and shall be secured by the Security. 10.12 ADDRESS FOR NOTICE As of the date of this Agreement, the addresses and telecopier numbers of the Borrower and the Lenders contemplated in Section 8(a) of the Provisions are as specified beside their respective signatures to this Agreement. Notices to the other Obligors shall be sent in care of the Borrower. 10.13 TIME OF THE ESSENCE Time shall be of the essence in this Agreement. -66- 10.14 FURTHER ASSURANCES Each Obligor shall, at its expense, at the request of the Agent acting on the instructions of the Required Lenders, do all such further acts and execute and deliver all such further documents, agreements, certificates and instruments as may, in the reasonable opinion of the Required Lenders, be necessary or desirable in order to fully perform and carry out the purpose and intent of the Loan Documents. 10.15 TERM OF AGREEMENT Except as otherwise provided herein, this Agreement shall remain in full force and effect until the indefeasible payment and performance in full in cash of all of the Obligations and Guarantor Obligations and the termination of the Commitments. The obligations of the Obligors in Sections 3.1, 3.2 and 9 of the Provisions and of the Lenders in Section 7.5 of the Provisions shall continue for the benefit of those to whom the obligations are owed notwithstanding the termination of this Agreement or the termination of any particular Person's role as Obligor, Administrative Agent or Lender. 10.16 PAYMENTS ON BUSINESS DAY Whenever any payment or performance under the Loan Documents would otherwise be due on a day other than a Business Day, such payment shall be made on the following Business Day, unless the following Business Day is in a different calendar month, in which case the payment shall be made on the preceding Business Day. 10.17 WHOLE AGREEMENT Except in relation to matters contemplated by the other Loan Documents, this Agreement constitutes the whole and entire agreement between the parties hereto concerning the matters addressed in this Agreement, and cancels and supersedes any prior agreements, undertakings, declarations, commitments or representations, written or verbal, in respect thereof. 10.18 ENGLISH LANGUAGE The Loan Documents have been negotiated in English and will be or have been executed in the English language. Les soussigne ont expressement demande que ce document soit redige en langue anglaise. All paper writings given or delivered pursuant to this Agreement and the other Loan Documents shall, if requested by the Agent, be in the English language or, if not, shall be accompanied by a certified English translation thereof. The English language version of any document shall, absent manifest error, control the meaning and interpretation of the matters set forth therein. 10.19 SENIOR INDEBTEDNESS The obligations of the Obligors under the Loan Documents constitute "senior indebtedness" for all purposes. -67- 10.20 DATE OF AGREEMENT This Agreement may be referred to as being dated 18 November 2005 or as of 18 November 2005, notwithstanding the actual date of execution. * * * * [SIGNATURE PAGES FOLLOW] -S1- IN WITNESS WHEREOF, the parties have duly executed this Agreement. ADDRESS FOR NOTICE THE BANK OF NOVA SCOTIA, as Agent THE BANK OF NOVA SCOTIA, as Agent Scotia Capital By: Corporate Banking - Loan Syndications ------------------------------------ 62nd Floor E. W. Read Scotia Plaza Director 40 King Street West Toronto, Ontario M5W 2X6 By: ATTENTION: UNIT HEAD ------------------------------------ A. Kotsidis Facsimile: (416) 866-3329 Associate Director [signature page for Credit Agreement relating to Anixter Canada Inc. et al.] -S2- IN WITNESS WHEREOF, the parties have duly executed this Agreement. ADDRESS FOR NOTICE ANIXTER CANADA INC. ANIXTER CANADA INC. c/o Anixter Inc. By: 2301 Patriot Boulevard ------------------------------------ Glenview, IL 60026 Name: ---------------------------------- ATTENTION: MR. ROD SHOEMAKER Title: --------------------------------- Facsimile: (224) 521-8990 By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- [signature page for Credit Agreement relating to Anixter Canada Inc. et al.] -S3- IN WITNESS WHEREOF, the parties have duly executed this Agreement. ADDRESS FOR NOTICE ANIXTER INC. ANIXTER INC. 2301 Patriot Boulevard By: Glenview, IL 60026 ------------------------------------ Name: ATTENTION: MR. ROD SHOEMAKER ---------------------------------- Title: Facsimile: (224) 521-8990 --------------------------------- By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- [signature page for Credit Agreement relating to Anixter Canada Inc. et al.] -S4- IN WITNESS WHEREOF, the parties have duly executed this Agreement. ADDRESS FOR NOTICE ANIXTER INTERNATIONAL INC. ANIXTER INTERNATIONAL INC. c/o Anixter Inc. By: 2301 Patriot Boulevard ------------------------------------ Glenview, IL 60026 Name: ---------------------------------- ATTENTION: MR. ROD SHOEMAKER Title: --------------------------------- Facsimile: (224) 521-8990 By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- [signature page for Credit Agreement relating to Anixter Canada Inc. et al.] -S5- IN WITNESS WHEREOF, the parties have duly executed this Agreement. ADDRESS FOR NOTICE ANIXTER-REAL ESTATE INC. ANIXTER-REAL ESTATE INC. c/o Anixter Inc. By: 2301 Patriot Boulevard ------------------------------------ Glenview, IL 60026 Name: ---------------------------------- ATTENTION: MR. ROD SHOEMAKER Title: --------------------------------- Facsimile: (224) 521-8990 By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- [signature page for Credit Agreement relating to Anixter Canada Inc. et al.] -S6- IN WITNESS WHEREOF, the parties have duly executed this Agreement. ADDRESS FOR NOTICE ANIXTER INFORMATION SYSTEMS CORPORATION ANIXTER INFORMATION SYSTEMS CORPORATION By: c/o Anixter Inc. ------------------------------------ 2301 Patriot Boulevard Name: Glenview, IL 60026 ---------------------------------- Title: ATTENTION: MR. ROD SHOEMAKER --------------------------------- Facsimile: (224) 521-8990 By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- [signature page for Credit Agreement relating to Anixter Canada Inc. et al.] -S7- IN WITNESS WHEREOF, the parties have duly executed this Agreement. ADDRESS FOR NOTICE ANIXTER FINANCIAL INC. ANIXTER FINANCIAL INC. c/o Anixter Inc. By: 2301 Patriot Boulevard ------------------------------------ Glenview, IL 60026 Name: ---------------------------------- ATTENTION: MR. ROD SHOEMAKER Title: --------------------------------- Facsimile: (224) 521-8990 By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- [signature page for Credit Agreement relating to Anixter Canada Inc. et al.] -S8- IN WITNESS WHEREOF, the parties have duly executed this Agreement. ADDRESS FOR NOTICE THE BANK OF NOVA SCOTIA, as Lender THE BANK OF NOVA SCOTIA, as Lender Scotia Capital By: Corporate Banking - Industrial Products ---------------------------------- 62nd Floor E. W. Read Scotia Plaza Director 40 King Street West Toronto, ON M5W 2X6 By: ATTENTION: UNIT HEAD ---------------------------------- A. Kotsidis Facsimile: (416) 866-2010 Associate Director [signature page for Credit Agreement relating to Anixter Canada Inc. et al.] SCHEDULE A FORM OF NOTICE OF ADVANCE OR PAYMENT [see reference in Section 5.3] TO: THE BANK OF NOVA SCOTIA c.c. THE BANK OF NOVA SCOTIA Scotia Capital Scotia Capital WBO - Loan Administration & Corporate Banking - Industrial Products Agency Operations 62nd Floor, Scotia Plaza 720 King Street West 40 King Street West 4th Floor Toronto, ON M5W 2X6 Wholesale Banking Operations Toronto, ON M5V 2T3 Attention: Managing Director Attention: Unit Head Facsimile: (416) 866-5991 Facsimile: (416) 866-2010 We refer to the credit agreement dated as of 18 November 2005 between Anixter Canada Inc., as Borrower, others, as Guarantors, The Bank of Nova Scotia, as Administrative Agent and the Lenders named therein, as amended, supplemented, restated or replaced from time to time (the "CREDIT AGREEMENT"). All terms used in this certificate and that are defined in the Credit Agreement will have the meanings defined in the Credit Agreement. 1. Request for Advance Notice is hereby given pursuant to Section 5.3 of the Credit Agreement that the undersigned hereby irrevocably requests as follows: (a) that an Advance be made under the Credit; (b) the requested Advance represents the following [CHECK ONE OR MORE]: initial Advance under the Credit [ ] increase in an Advance under the Credit [ ] rollover of an existing Advance under the Credit [ ] conversion of an existing Advance to another type of Advance [ ] (c) the Drawdown Date shall be ___________. (d) the Advance shall be in the form of [CHECK ONE OR MORE AND COMPLETE DETAILS]: Prime Rate Advance [ ] Amount: $__________ Base Rate Advance [ ] Amount: $__________ -A2- Banker's Acceptances [ ] Face Amount: $__________ Term: __________________ L/C [ ] Nominal amount and currency: $__________ Type: __________________________________ Issue Date: ____________________________ Expiry date: ___________________________ Name and Address of Beneficiary: ___________________________ ___________________________ Purpose: _______________________________ [NOTE: ATTACH PROPOSED FORM OR DETAILS] LIBOR Advance [ ] Amount: $__________ LIBOR Period: _________ (e) the proceeds of the Advance shall be deposited in [SPECIFY DESIGNATED ACCOUNT] 2. The undersigned hereby confirms as follows: (a) the representations and warranties made in Section 6.1 of the Credit Agreement, other than those expressly stated to be made as of a specific date or otherwise expressly modified pursuant to the provisions of Section 6.2 of the Credit Agreement, are true and correct on and as of the date hereof with the same force and effect as if such representations and warranties had been made on and as of the date hereof, but subject to the same qualifications as are contained in Section 6.2 of the Credit Agreement; (b) no Default has occurred and is continuing on the date hereof or will result from the Advance(s) requested herein; (c) after due inquiry, there is no reasonable expectation that the Borrower will not be in compliance with all covenants contained in Section 7.1 of the Credit Agreement at the end of its current fiscal quarter and was not in compliance with those covenants at the end of its immediately preceding fiscal quarter if it has not yet delivered its Compliance Certificate for that quarter; (d) the undersigned will immediately notify you if it becomes aware of the occurrence of any event which would mean that the statements in the immediately preceding paragraphs (a), (b) and (c) would not be true if made on the Drawdown Date; and (e) all other conditions precedent set out in Section 4.2 [AND SECTION 4.1 AS APPLICABLE] of the Credit Agreement have been fulfilled. -A3- 3. Notice of Payment Pursuant to Section 5.3 of the Credit Agreement, the undersigned hereby irrevocably notifies you of the following: (a) that a payment will be made under the Credit; (b) the payment represents the following [CHECK ONE OR MORE]: reduction in Advances under the Credit [ ] payment of existing Advances which will be rolled over as the same type of Advance under the Credit [ ] payment of existing Advances which will be converted to another type of Advance under the Credit [ ] (c) the payment date shall be __________________; (d) the Advance to be paid shall be in the form of [CHECK ONE OR MORE AND COMPLETE DETAILS]: Prime Rate Advance [ ] Amount: $__________ Base Rate Advance [ ] Amount: $__________ Banker's Acceptances [ ] Face Amount: $__________ Maturity Date: $__________ LIBOR Advance [ ] Amount: $__________ DATED . ----------------- ANIXTER CANADA INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- SCHEDULE B FORM OF BORROWER COMPLIANCE CERTIFICATE [see references in Sections 4.2 and 7.3(1)(c)] TO: THE LENDERS (as defined in the Credit Agreement referred to below) AND TO: THE BANK OF NOVA SCOTIA, as Agent We refer to Sections 4.2 and 7.3(1)(c) of the credit agreement dated as of 18 November 2005 between Anixter Canada Inc., as Borrower, others, as Guarantors, The Bank of Nova Scotia, as Administrative Agent and the Lenders named therein, as amended, supplemented, restated or replaced from time to time (the "CREDIT AGREEMENT"). All terms used in this certificate that are defined in the Credit Agreement will have the meanings defined in the Credit Agreement. The undersigned hereby certifies that: 1. The representations and warranties made in Section 6.1 of the Credit Agreement, other than those expressly stated to be made as of a specific date or otherwise expressly modified pursuant to the provisions of Section 6.2 of the Credit Agreement, are true and correct on and as of the date hereof with the same force and effect as if such representations and warranties had been made on and as of the date hereof, but subject to the same qualifications as are contained in Section 6.2 of the Credit Agreement. 2. No Default has occurred and is continuing on the date hereof [OR AS THE CASE MAY BE]. 3. The undersigned hereby certifies that, as of the end of its most recently completed fiscal quarter, which ended on ____________, the Total Leverage Ratio was ________: 1. 4. Appendix A attached sets out the calculations of the ratio referred to above. 5. Appendix B attached is an up-to-date version of Schedule F to the Credit Agreement. [or There has been no change to the information contained in the version of Schedule F attached to the Credit Agreement.] 6. Appendix C attached contains details of all Other Secured Obligations as of the end of the undersigned's most recently completed fiscal quarter that have not previously been listed on Schedule G to the Credit Agreement. 7. Appendix E attached is an up-to-date version of Schedule H to the Credit Agreement. [or There has been no change to the information contained in the version of attached to Schedule H the Credit Agreement.] 8. Appendix F attached is an up-to-date version of Schedule I to the Credit Agreement. [or There has been no change to the information contained in the version of Schedule I attached to the Credit Agreement.] -B2- DATED . ------------------------------ ANIXTER CANADA INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- SCHEDULE C FORM OF ANIXTER INC. COMPLIANCE CERTIFICATE [see references in Sections 4.2 and 7.3(1)(c)] TO: THE LENDERS (as defined in the Credit Agreement referred to below) AND TO: THE BANK OF NOVA SCOTIA, as Agent We refer to Sections 4.2 and 7.3(1)(c) of the credit agreement dated as of 18 November 2005 between Anixter Canada Inc., as Borrower, others, as Guarantors, The Bank of Nova Scotia, as Administrative Agent and the Lenders named therein, as amended, supplemented, restated or replaced from time to time (the "CREDIT AGREEMENT"). All terms used in this certificate that are defined in the Credit Agreement will have the meanings defined in the Credit Agreement. The undersigned hereby certifies that: 1. The representations and warranties made in Section 6.1 of the Credit Agreement, other than those expressly stated to be made as of a specific date or otherwise expressly modified pursuant to the provisions of Section 6.2 of the Credit Agreement, are true and correct on and as of the date hereof with the same force and effect as if such representations and warranties had been made on and as of the date hereof, but subject to the same qualifications as are contained in Section 6.2 of the Credit Agreement. 2. No Default has occurred and is continuing on the date hereof [OR AS THE CASE MAY BE]. 3. Attached hereto is the compliance certificate for the fiscal period ending delivered under ____________ the U.S. Credit Agreement. DATED . ------------------- ANIXTER INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- SCHEDULE D MODEL CREDIT AGREEMENT PROVISIONS [see reference in Section 1.1] The attached model credit agreement provisions, which have been revised under the direction of the Canadian Bankers' Association Secondary Loan Market Specialist Group from provisions prepared by The Loan Syndications and Trading Association, Inc., form part of this Agreement, except for the footnotes to the model credit agreement provisions and subject to the following variations: 1. The defined term "Related Parties" in the Provisions is deleted. Such term shall have the meaning set out in Section 1.1 of the Agreement. 2. The term "Release," which is used in Section 9(b) but not defined in the Provisions, shall be interpreted as referring to any release, spill, leakage, emission, deposit, discharge, leaching, migration or disposition. The term "Environmental Liability" which is used in Section 9(b) but not defined in the Provisions, shall be interpreted as referring to any remedial action taken by the Agent or any Lender relating to any Hazardous Materials or any breach of any Environmental Law. 3. Clause (A) of the defined term "Excluded Taxes" is deleted and replaced with the following provision: "(A) is imposed or assessed other than in respect of a Loan that was made on the premise that an exemption from such withholding tax would be available where the exemption is subsequently determined, or alleged by a taxing authority, not to be available and" 4. Section 3.2(a) of the Provisions is amended by adding the following sentence at the end thereof: "Notwithstanding the foregoing provisions of this Section 3.2(a), no Obligor shall be required to pay the additional amounts contemplated in clause (i) above to any Lender who becomes a Lender by way of assignment after the occurrence of a Default." 5. The first reference to "the Borrower" in each of Sections 3.3(a) and 3.3(b) of the Provisions shall be interpreted as referring to "any Obligor" and the references to "the Borrower" in Section 3.2(b), the first reference to "the Borrower" in Section 3.2(c) and the reference to "the Borrower" in the second paragraph of Section 10(d) of the Provisions shall be interpreted as referring to "each Obligor". 6. Clause 5(iii)(y) of the Provisions is deleted and replaced with the following: "any reduction arising from an amount owing to an Obligor upon the termination of any derivative entered into between the Obligor -D2- and such Lender except for a net amount available after the termination of all derivatives entered into between the Obligors and such Lender and the setoff of resulting amounts owing by the Obligors and to the Obligors," 7. References in the Provisions to participations by Lenders in respect of Letters of Credit shall be interpreted as referring to the participations and the obligations of Lenders to indemnify the Issuing Bank in accordance with Section 5.20 of this Agreement. 8. Clause 10(b)(iii) of the Provisions is deleted and replaced with the following: "any assignment of a Commitment relating to a credit under which Letters of Credit may be issued must be approved by the Issuing Bank in its sole discretion" 9. Clause 10(b)(v) of the Provisions is deleted and replaced with the following: "(v) any assignment must be approved by the Borrower (such approval not to be unreasonably withheld or delayed) unless the proposed assignee is itself already a Lender with the same type of Commitment or a Default has occurred and is continuing and, in the event approval of the Borrower to any assignment is not required pursuant to this Clause 10(b)(v), the Borrower shall be provided with notice of such assignment, which notice shall indicate whether the assignee is a Foreign Lender or is not a Foreign Lender, but the giving of notice is not in any way a condition to the effectiveness of any such assignment and the Administrative Agent's failure to give notice shall not impose any liability on the Administrative Agent; and" 10. The following is added to the end of the defined term "Other Taxes": ", but, for greater certainty, does not include any Excluded Taxes." 11. The defined term "Control" in the Provisions is deleted. Such term shall have the meaning set out in Section 1.1 of the Agreement. MODEL CREDIT AGREEMENT PROVISIONS 1. Definitions "Administrative Questionnaire" means an Administrative Questionnaire in a form supplied by the Administrative Agent. "Affiliate" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "Agreement" means the credit agreement of which these Provisions form part. "Applicable Law" means (a) any domestic or foreign statute, law (including common and civil law), treaty, code, ordinance, rule, regulation, restriction or by-law (zoning or otherwise); (b) any judgement, order, writ, injunction, decision, ruling, decree or award; (c) any regulatory policy, practice, guideline or directive; or (d) any franchise, licence, qualification, authorization, consent, exemption, waiver, right, permit or other approval of any Governmental Authority, binding on or affecting the Person referred to in the context in which the term is used or binding on or affecting the property of such Person, in each case whether or not having the force of law. "Applicable Percentage" means with respect to any Lender, the percentage of the total Commitments represented by such Lender's Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be the percentage of the total outstanding Loans and participations in respect of Letters of Credit represented by such Lender's outstanding Loans and participations in respect of Letters of Credit. "Approved Fund" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. "Assignment and Assumption" means an assignment and assumption entered into by a Lender and an Eligible Assignee and accepted by the Administrative Agent, in substantially the form of Exhibit A or any other form approved by the Administrative Agent. "Change in Law" means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any Applicable Law, (b) any change in any Applicable Law or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any Applicable Law by any Governmental Authority. "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have corresponding meanings. "Default" means any event or condition that constitutes an Event of Default or that would constitute an Event of Default except for satisfaction of any condition subsequent required to make the event or condition an Event of Default, including giving of any notice, passage of time, or both. "Eligible Assignee" means any Person (other than a natural person, any Obligor or any Affiliate of an Obligor), in respect of which any consent that is required by Section 10(b) has been obtained. "Excluded Taxes" means, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of an Obligor hereunder, (a) taxes imposed on or measured by its net income, and franchise taxes imposed on -2- it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes or any similar tax imposed by any jurisdiction in which the Lender is located and (c) in the case of a Foreign Lender (other than (i) an assignee pursuant to a request by the Borrower under Section 3.3(b), (ii) an assignee pursuant to an Assignment and Assumption made when an Event of Default has occurred and is continuing or (iii) any other assignee to the extent that the Borrower has expressly agreed that any withholding tax shall be an Indemnified Tax), any withholding tax that (A) is not imposed or assessed in respect of a Loan that was made on the premise that an exemption from such withholding tax would be available where the exemption is subsequently determined, or alleged by a taxing authority, not to be available and (B) is required by Applicable Law to be withheld or paid in respect of any amount payable hereunder or under any Loan Document to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new lending office) or is attributable to such Foreign Lender's failure or inability (other than as a result of a Change in Law) to comply with Section 3.2(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from an Obligor with respect to such withholding tax pursuant to Section 3.2(a). For greater certainty, for purposes of item (c) above, a withholding tax includes any Tax that a Foreign Lender is required to pay pursuant to Part XIII of the Income Tax Act (Canada) or any successor provision thereto.(1) "Foreign Lender" means any Lender that is not organized under the laws of the jurisdiction in which the Borrower is resident for tax purposes and that is not otherwise considered or deemed in respect of any amount payable to it hereunder or under any Loan Document to be resident for income tax or withholding tax purposes in the jurisdiction in which the Borrower is resident for tax purposes by application of the laws of that jurisdiction. For purposes of this definition Canada and each Province and Territory thereof shall be deemed to constitute a single jurisdiction and the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction. "Fund" means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business. "Governmental Authority" means the government of Canada or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, including any supra-national bodies such as the European Union or the European Central Bank and including a Minister of the Crown, Superintendent of Financial Institutions or other comparable authority or agency. "Indemnified Taxes" means Taxes other than Excluded Taxes. "Issuing Bank" means the Person named elsewhere in this Agreement(2) as the issuer of Letters of Credit on the basis that it is "fronting" for other Lenders and not on the basis that it is the attorney of other Lenders to sign Letters of Credit on their behalf, or any successor issuer of Letters of Credit. For greater certainty, where the context requires, references to "Lenders" in these Provisions include the Issuing Bank. - ---------- (1) Please note that this definition of "Excluded Taxes" will result in Foreign Lenders not being grossed up for withholding taxes that exist at the time of execution and delivery of the Credit Agreement, except in the circumstances specified. If a loan is intended to be exempt from withholding tax as a "5/25" structure or otherwise, this premise should be specified in the Credit Agreement. (2) Ensure that the Credit Agreement identifies the Issuing Bank or indicates that there is none. -3- "Loan" means any extension of credit by a Lender under this Agreement, including by way of bankers' acceptance or LIBO Rate Loan, except for any Letter of Credit or participation in a Letter of Credit. "Obligors" means, collectively, the Borrower and each of the guarantors of the Borrower's obligations that are identified elsewhere in this Agreement. "Other Taxes" means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document. "Participant" has the meaning assigned to such term in Section 10(d). "Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. "Provisions" means these model credit agreement provisions. "Related Parties" means, with respect to any Person, such Person's Affiliates and the directors, officers, employees, agents and advisors of such Person and of such Person's Affiliates. "Taxes" means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto. 2. Terms Generally (1) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein (including this Agreement) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, restated or otherwise modified (subject to any restrictions on such amendments, supplements, restatements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and permitted assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) unless otherwise expressly stated, all references in these Provisions to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, these Provisions, but all such references elsewhere in this Agreement shall be construed to refer to this Agreement apart from these Provisions, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (f) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. (2) If there is any conflict or inconsistency between these Provisions and the other terms of this Agreement, the other terms of this Agreement shall govern to the extent necessary to resolve the conflict or inconsistency. -4- 3. Yield Protection 3.1 Increased Costs. (a) Increased Costs Generally. If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender; (ii) subject any Lender to any Tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof, except for Indemnified Taxes or Other Taxes covered by Section 3.2 and the imposition, or any change in the rate, of any Excluded Tax payable by such Lender; or (iii) impose on any Lender or any applicable interbank market any other condition, cost or expense affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or any other amount), then upon request of such Lender the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered. (b) Capital Requirements. If any Lender determines that any Change in Law affecting such Lender or any lending office of such Lender or such Lender's holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's capital or on the capital of such Lender's holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or the Letters of Credit issued or participated in by such Lender, to a level below that which such Lender or its holding company could have achieved but for such Change in Law (taking into consideration such Lender's policies and the policies of its holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or its holding company for any such reduction suffered. (c) Certificates for Reimbursement. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section, including reasonable detail of the basis of calculation of the amount or amounts, and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. (d) Delay in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's right to demand such compensation, except that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's intention to claim compensation therefore, unless the Change in Law giving rise to such increased costs or reductions is retroactive, in which case the nine-month period referred to above shall be extended to include the period of retroactive effect thereof. -5- 3.2 Taxes. (a) Payments Subject to Taxes. If any Obligor, the Administrative Agent, or any Lender is required by Applicable Law to deduct or pay any Indemnified Taxes (including any Other Taxes) in respect of any payment by or on account of any obligation of an Obligor hereunder or under any other Loan Document, then (i) the sum payable shall be increased by that Obligor when payable as necessary so that after making or allowing for all required deductions and payments (including deductions and payments applicable to additional sums payable under this Section) the Administrative Agent or Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions or payments been required, (ii) the Obligor shall make any such deductions required to be made by it under Applicable Law and (iii) the Obligor shall timely pay the full amount required to be deducted to the relevant Governmental Authority in accordance with Applicable Law. (b) Payment of Other Taxes by the Borrower. Without limiting the provisions of paragraph (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with Applicable Law. (c) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent and each Lender, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent or such Lender and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. (d) Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by an Obligor to a Governmental Authority, the Obligor shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (e) Status of Lenders. Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall, at the request of the Borrower, deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by Applicable Law as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, (a) any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to withholding or information reporting requirements, and (b) any Lender that ceases to be, or to be deemed to be, resident in Canada for purposes of Part XIII of the Income Tax Act (Canada) or any successor provision thereto shall within five days thereof notify the Borrower and the Administrative Agent in writing. (f) Treatment of Certain Refunds and Tax Reductions. If the Administrative Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which an Obligor has paid additional amounts pursuant to this Section or that, because of the payment of such Taxes or Other Taxes, it has benefited from a reduction in Excluded Taxes otherwise payable by it, it shall pay to the Borrower or Obligor, as applicable, an amount equal to such refund or reduction (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower or Obligor under this Section with respect to the Taxes or Other Taxes giving rise to such refund or reduction), net of all out-of-pocket expenses of the -6- Administrative Agent or such Lender, as the case may be, and without interest (other than any net after-Tax interest paid by the relevant Governmental Authority with respect to such refund). The Borrower or Obligor as applicable, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower or Obligor (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender if the Administrative Agent or such Lender is required to repay such refund or reduction to such Governmental Authority. This paragraph shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person, to arrange its affairs in any particular manner or to claim any available refund or reduction. 3.3 Mitigation Obligations: Replacement of Lenders. (a) Designation of a Different Lending Office. If any Lender requests compensation under Section 3.1, or requires the Borrower to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.2, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.1 or 3.2, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. (b) Replacement of Lenders.(3) If any Lender requests compensation under Section 3.1, if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.2, if any Lender's obligations are suspended pursuant to Section 3.4 or if any Lender defaults in its obligation to fund Loans hereunder, then the Borrower may, at its sole expense and effort, upon 10 days' notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that: (i) the Borrower pays the Administrative Agent the assignment fee specified in Section 10(b)(vi); (ii) the assigning Lender receives payment of an amount equal to the outstanding principal of its Loans and participations in disbursements under Letters of Credit, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any breakage costs and amounts required to be paid under this Agreement as a result of prepayment to a Lender) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts); (iii) in the case of any such assignment resulting from a claim for compensation under Section 3.1 or payments required to be made pursuant to Section 3.2, such assignment will result in a reduction in such compensation or payments thereafter; and (iv) such assignment does not conflict with Applicable Law. - ---------- (3) Please note that the Breakfunding section in the Credit Agreement should expressly include any amounts payable as a result of an assignment required by this Section. -7- A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. 3.4 Illegality. If any Lender determines that any Applicable Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make or maintain any Loan (or to maintain its obligation to make any Loan), or to participate in, issue or maintain any Letter of Credit (or to maintain its obligation to participate in or to issue any Letter of Credit), or to determine or charge interest rates based upon any particular rate, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender with respect to the activity that is unlawful shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if conversion would avoid the activity that is unlawful, convert any Loans, or take any necessary steps with respect to any Letter of Credit in order to avoid the activity that is unlawful. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender. 3.5 Inability to Determine Rates Etc. If the Required Lenders determine that for any reason a market for bankers' acceptances does not exist at any time or the Lenders cannot for other reasons, after reasonable efforts, readily sell bankers' acceptances or perform their other obligations under this Agreement with respect to bankers' acceptances, the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, the Borrower's right to request the acceptance of bankers' acceptances shall be and remain suspended until the Required Lenders determine and the Agent notifies the Borrower and each Lender that the condition causing such determination no longer exists. If the Required Lenders determine that for any reason adequate and reasonable means do not exist for determining the LIBO Rate for any requested Interest Period with respect to a proposed LIBO Rate Loan, or that the LIBO Rate for any requested Interest Period with respect to a proposed LIBO Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain LIBO Rate Loans shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a borrowing, conversion or continuation of LIBO Rate Loans or, failing that, will be deemed to have converted such request into a request for a borrowing of Base Rate Loans in the amount specified therein. 4. Right of Setoff. If an Event of Default has occurred and is continuing, each of the Lenders and each of their respective Affiliates is hereby authorized at any time and from time to time to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of any Obligor against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender, irrespective of whether or not such Lender has made any demand under this Agreement or any other Loan Document and although such obligations of the Obligor may be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each the Lenders and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff, consolidation of accounts and bankers' lien) that the Lenders or their respective Affiliates may have. Each Lender agrees to promptly notify the Borrower and the Administrative Agent after any such setoff and application, but the failure to give such notice shall not -8- affect the validity of such setoff and application. If any Affiliate of a Lender exercises any rights under this Section 4, it shall share the benefit received in accordance with Section 5 as if the benefit had been received by the Lender of which it is an Affiliate. 5. Sharing of Payments by Lenders. If any Lender, by exercising any right of setoff or counterclaim or otherwise, obtains any payment or other reduction that might result in such Lender receiving payment or other reduction of a proportion of the aggregate amount of its Loans and accrued interest thereon or other obligations hereunder greater than its pro rata share thereof as provided herein, then the Lender receiving such payment or other reduction shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders rateably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, (ii) the provisions of this Section shall not be construed to apply to (x) any payment made by any Obligor pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in disbursements under Letters of Credit to any assignee or participant, other than to any Obligor or any Affiliate of an Obligor (as to which the provisions of this Section shall apply); and (iii) the provisions of this Section shall not be construed to apply to (w) any payment made while no Event of Default has occurred and is continuing in respect of obligations of the Borrower to such Lender that do not arise under or in connection with the Loan Documents, (x) any payment made in respect of an obligation that is secured by a Permitted Lien or that is otherwise entitled to priority over the Borrower's obligations under or in connection with the Loan Documents, (y) any reduction arising from an amount owing to an Obligor upon the termination of derivatives entered into between the Obligor and such Lender(4), or (z) any payment to which such Lender is entitled as a result of any form of credit protection obtained by such Lender. The Obligors consent to the foregoing and agree, to the extent they may effectively do so under Applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Obligor rights of setoff and counterclaim and similar rights of Lenders with respect to such participation as fully as if such Lender were a direct creditor of each Obligor in the amount of such participation. 6. Administrative Agent's Clawback (a) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any advance of funds that such Lender will not make available to the Administrative Agent such Lender's share of such - ---------- (4) Those preparing Credit Agreements should consider whether this exclusion of proceeds of derivatives is appropriate in the particular circumstances of the Credit Agreement. It may be appropriate to provide for sharing of, for example, any net amount available after the termination of all derivatives entered into between the Obligors and a Lender and the setoff of resulting amounts owing by the Obligors and to the Obligors if there is more than one such derivative. -9- advance, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with the provisions of this Agreement concerning funding by Lenders and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable advance available to the Administrative Agent, then the applicable Lender shall pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at a rate determined by the Administrative Agent in accordance with prevailing banking industry practice on interbank compensation. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender's Loan included in such advance. If the Lender does not do so forthwith, the Borrower shall pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon at the interest rate applicable to the advance in question. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that has failed to make such payment to the Administrative Agent. (b) Payments by Borrower; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of any Lender hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute the amount due to the Lenders. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at a rate determined by the Administrative Agent in accordance with prevailing banking industry practice on interbank compensation. 7. Agency. 7.1 Appointment and Authority. Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Person identified elsewhere in this Agreement as the Administrative Agent(5) to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Bank, and no Obligor shall have rights as a third party beneficiary of any of such provisions. 7.2 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with any Obligor or any Affiliate thereof as if such Person were not the Administrative Agent and without any duty to account to the Lenders. - ---------- (5) Ensure that the Credit Agreement identifies the Administrative Agent for the purpose of this reference. -10- 7.3 Exculpatory Provisions. (1) The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents.(6) Without limiting the generality of the foregoing, the Administrative Agent: (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing; (b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for in the Loan Documents), but the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or Applicable Law; and (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the person serving as the Administrative Agent or any of its Affiliates in any capacity. (2) The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as is necessary, or as the Administrative Agent believes in good faith is necessary, under the provisions of the Loan Documents) or (ii) in the absence of its own gross negligence or wilful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing the Default is given to the Administrative Agent by the Borrower or a Lender. (3) Except as otherwise expressly specified in this Agreement, the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition specified in this Agreement, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent. 7.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent - ---------- (6) It is anticipated that the Credit Agreement will require the Borrower to be responsible for compliance with all requirements to maintain perfection of security. -11- accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. 7.5 Indemnification of Administrative Agent. Each Lender agrees to indemnify the Administrative Agent and hold it harmless (to the extent not reimbursed by the Borrower), rateably according to its Applicable Percentage (and not jointly or jointly and severally) from and against any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel, which may be incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or the transactions therein contemplated. However, no Lender shall be liable for any portion of such losses, claims, damages, liabilities and related expenses resulting from the Administrative Agent's gross negligence or wilful misconduct. 7.6 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent from among the Lenders (including the Person serving as Administrative Agent) and their respective Affiliates. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The provisions of this Article and other provisions of this Agreement for the benefit of the Administrative Agent shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. 7.7 Replacement of Administrative Agent. (1) The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Bank and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a Lender having a Commitment to a revolving credit if one or more is established in this Agreement and having an office in Toronto, Ontario or Montreal, Quebec, or an Affiliate of any such Lender with an office in Toronto or Montreal. The Administrative Agent may also be removed at any time by the Required Lenders upon 30 days' notice to the Administrative Agent and the Borrower as long as the Required Lenders, in consultation with the Borrower, appoint and obtain the acceptance of a successor within such 30 days, which shall be a Lender having a Commitment to a revolving credit if one or more is established in this Agreement and having an office in Toronto or Montreal, or an Affiliate of any such Lender with an office in Toronto or Montreal. (2) If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications specified in Section 7.7(1), provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in the preceding paragraph. (3) Upon a successor's appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the former Administrative Agent, and the former Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided in the preceding paragraph). The fees payable by the Borrower to a successor Administrative -12- Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the termination of the service of the former Administrative Agent, the provisions of this Section 7 and of Section 9 shall continue in effect for the benefit of such former Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the former Administrative Agent was acting as Administrative Agent. 7.8 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and the Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder. 7.9 Collective Action of the Lenders. Each of the Lenders hereby acknowledges that to the extent permitted by Applicable Law, any collateral security and the remedies provided under the Loan Documents to the Lenders are for the benefit of the Lenders collectively and acting together and not severally and further acknowledges that its rights hereunder and under any collateral security are to be exercised not severally, but by the Administrative Agent upon the decision of the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for in the Loan Documents). Accordingly, notwithstanding any of the provisions contained herein or in any collateral security, each of the Lenders hereby covenants and agrees that it shall not be entitled to take any action hereunder or thereunder including, without limitation, any declaration of default hereunder or thereunder but that any such action shall be taken only by the Administrative Agent with the prior written agreement of the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for in the Loan Documents). Each of the Lenders hereby further covenants and agrees that upon any such written agreement being given, it shall co-operate fully with the Administrative Agent to the extent requested by the Administrative Agent. Notwithstanding the foregoing, in the absence of instructions from the Lenders and where in the sole opinion of the Administrative Agent, acting reasonably and in good faith, the exigencies of the situation warrant such action, the Administrative Agent may without notice to or consent of the Lenders take such action on behalf of the Lenders as it deems appropriate or desirable in the interest of the Lenders. 7.10 No Other Duties. etc. Anything herein to the contrary notwithstanding, none of the Bookrunners, Arrangers or holders of similar titles, if any, specified in this Agreement shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder. 8. Notices: Effectiveness; Electronic Communication (a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as-provided in paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier to the addresses or telecopier numbers specified elsewhere in this Agreement(7) or, if to a Lender, to it at its address or telecopier number specified in the Register or, if to an Obligor other than the Borrower, in care of the Borrower. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been - ---------- (7) Ensure that the Credit Agreement contains the contact information referred to. -13- given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given on a business day between 9:00 a.m. and 5:00 p.m. local time where the recipient is located, shall be deemed to have been given at 9:00 a.m. on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b). (b) Electronic Communications. Notices and other communications to the Lenders and the Issuing Bank hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent,(8) provided that the foregoing shall not apply to notices to any Lender of Loans to be made or Letters of Credit to be issued if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender's receipt of an acknowledgement from the intended recipient (such as by the "return receipt requested" function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor. (c) Change of Address. Etc. Any party hereto may change its address or telecopier number for notices and other communications hereunder by notice to the other parties hereto. 9. Expenses; Indemnity: Damage Waiver(9) (a) Costs and Expenses. The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, any Lender or the Issuing Bank, including the reasonable fees, charges and disbursements of counsel, in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit. (b) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the Issuing Bank, and each Related Party of any of the foregoing Persons (each such Person being called an "Indemnitee") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, - ---------- (8) Administrative Agents may wish to prescribe procedures for electronic communications and to disseminate those procedures to Lenders. (9) A reference to this Section should be included in the Survival Section, if any, of the Credit Agreement -14- including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Obligor arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance or non-performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation or non-consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or Release of Hazardous Materials on or from any property owned or operated by any Obligor, or any Environmental Liability related in any way to any Obligor, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by an Obligor and regardless of whether any Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower or any other Obligor against an Indemnitee for breach in bad faith of such Indemnitee's obligations hereunder or under any other Loan Document, if the Obligor has obtained a final and nonappealable judgment in its favour on such claim as determined by a court of competent jurisdiction, nor shall it be available in respect of matters specifically addressed in Sections 3.1, 3.2 and 9(a). (c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under paragraph (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the Issuing Bank or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the Issuing Bank or such Related Party, as the case may be, such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the Issuing Bank in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or Issuing Bank in connection with such capacity. The obligations of the Lenders under this paragraph (c) are subject to the other provisions of this Agreement concerning several liability of the Lenders. (d) Waiver of Consequential Damages. Etc. To the fullest extent permitted by Applicable Law, the Obligors shall not assert, and hereby waive, any claim against any Indemnitee, on any theory of liability, for indirect, consequential, punitive, aggravated or exemplary damages (as opposed to direct damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby (or any breach thereof), the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby. (e) Payments. All amounts due under this Section shall be payable promptly after demand therefor. A certificate of the Administrative Agent or a Lender setting forth the amount or amounts owing to the Administrative Agent, Lender or a sub-agent or Related Party, as the case may be, as specified in this Section, including reasonable detail of the basis of calculation of the amount or amounts, and delivered to the Borrower shall be conclusive absent manifest error. 10. Successors and Assigns (a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns -15- permitted hereby, except that no Obligor may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of paragraph (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that: (i) except if an Event of Default has occurred and is continuing or in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Commitment being assigned (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loan of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000, in the case of any assignment in respect of a revolving facility, or $1,000,000, in the case of any assignment in respect of a term facility, unless each of the Administrative Agent and, so long as no Default has occurred and is continuing, the Borrower otherwise consent to a lower amount (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to the Loan or the Commitment assigned, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate credits on a non-pro rata basis; (iii) any assignment of a Commitment relating to a credit under which Letters of Credit may be issued must be approved by any Issuing Bank (such approval not to be unreasonably withheld or delayed) unless the Person that is the proposed assignee is itself already a Lender with a Commitment under that credit; (iv) any assignment must be approved by the Administrative Agent (such approval not to be unreasonably withheld or delayed) unless: (x) in the case of an assignment of a Commitment relating to a revolving credit, the proposed assignee is itself already a Lender with the same type of Commitment, (y) no Event of Default has occurred and is continuing, and the assignment is of a Commitment relating to a non-revolving credit that is fully advanced, or -16- (z) the proposed assignee is a bank whose senior, unsecured, non-credit enhanced, long term debt is rated at least A3, A- or A low by at least two of Moody's Investor Services Inc., Standard & Poor's, a division of The McGraw-Hill Companies, Inc. and Dominion Bond Rating Service Limited, respectively; (v) any assignment must be approved by the Borrower (such approval not to be unreasonably withheld or delayed) unless the proposed assignee is itself already a Lender with the same type of Commitment or a Default has occurred and is continuing; and (vi) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in an amount specified elsewhere in this Agreement(10) and the Eligible Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire. Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement and the other Loan Documents, including any collateral security, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3 and 9, and shall continue to be liable for any breach of this Agreement by such Lender, with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (d) of this Section. Any payment by an assignee to an assigning Lender in connection with an assignment or transfer shall not be or be deemed to be a repayment by the Borrower or a new Loan to the Borrower. (c) Register. The Administrative Agent shall maintain at one of its offices in Toronto, Ontario or Montreal, Quebec a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person, an Obligor or any Affiliate of an Obligor(11)) (each, a "Participant") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal - ---------- (10) Ensure that the Credit Agreement specifies the amount of this fee. (11) Consideration should be given to the percentage of Lenders required to permit the sale of a participation to an Obligor or any Affiliate or Subsidiary of an Obligor. -17- solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any payment by a Participant to a Lender in connection with a sale of a participation shall not be or be deemed to be a repayment by the Borrower or a new Loan to the Borrower. Subject to paragraph (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Section 3 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 4 as though it were a Lender, provided such Participant agrees to be subject to Section 5 as though it were a Lender. (e) Limitations upon Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 3.1 and 3.2 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.2 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.2(e) as though it were a Lender. (f) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, but no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. 11. Governing Law: Jurisdiction: Etc. (a) Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the Province specified elsewhere in this Agreement(12) and the laws of Canada applicable in that Province. (b) Submission to Jurisdiction. Each Obligor irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the courts of the Province specified elsewhere in this Agreement, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Loan Document shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Obligor or its properties in the courts of any jurisdiction. (c) Waiver of Venue. Each Obligor irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. 12. WAIVER OF JURY TRIAL EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL - ---------- (12) Ensure that the Credit Agreement identifies the Province referred to here and in paragraph (b) immediately below. -18- PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. 13. Counterparts: Integration: Effectiveness: Electronic Execution (a) Counterparts: Integration: Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in the conditions precedent Section(s) of this Agreement, this Agreement shall become effective when it has been executed by the Administrative Agent and when the Administrative Agent has received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or by sending a scanned copy by electronic mail shall be effective as delivery of a manually executed counterpart of this Agreement. (b) Electronic Execution of Assignments. The words "execution," "signed," "signature," and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any Applicable Law, including Parts 2 and 3 of the Personal Information Protection and Electronic Documents Act (Canada), the Electronic Commerce Act, 2000 (Ontario) and other similar federal or provincial laws based on the Uniform Electronic Commerce Act of the Uniform Law Conference of Canada or its Uniform Electronic Evidence Act, as the case may be. 14. Treatment of Certain Information: Confidentiality (1) Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to it, its Affiliates and its and its Affiliates' respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority), (c) to the extent required by Applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap, derivative, credit-linked note or similar transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent or any Lender on a non-confidential basis from a source other than an Obligor. -19- (2) For purposes of this Section, "Information" means all information received in connection with this Agreement from any Obligor relating to any Obligor or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a non-confidential basis prior to such receipt. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. In addition, the Administrative Agent may disclose to any agency or organization that assigns standard identification numbers to loan facilities such basic information describing the facilities provided hereunder as is necessary to assign unique identifiers (and, if requested, supply a copy of this Agreement), it being understood that the Person to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to make available to the public only such Information as such person normally makes available in the course of its business of assigning identification numbers (3) In addition, and notwithstanding anything herein to the contrary, the Administrative Agent may provide the information described on Exhibit B concerning the Borrower and the credit facilities established herein to Loan Pricing Corporation and/or other recognized trade publishers of information for general circulation in the loan market. EXHIBIT A ASSIGNMENT AND ASSUMPTION This Assignment and Assumption (the "Assignment and Assumption") is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the "Assignor") and [Insert name of Assignee] (the "Assignee"). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the "Credit Agreement"), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full. For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor's rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including without limitation any letters of credit, guarantees, and swingline loans included in such facilities) and (ii) to the extent permitted to be assigned under Applicable Law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan-transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the "Assigned Interest"). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor. 1. Assignor: ___________________________________________________________ 2. Assignee: ___________________________________________________________ [and is an Affiliate/Approved Fund of [identify Lender](1)] 3. Borrower(s): ___________________________________________________________ 4. Administrative Agent: _______________, as the administrative agent under the Credit Agreement 5. Credit Agreement: [The [amount] Credit Agreement dated as of _________________ among [name of Borrower(s)], the Lenders parties thereto, [name of Administrative Agent], as Administrative Agent, and the other agents parties thereto] - ---------- (1) Select as applicable. -2- 6. Assigned Interest:
Aggregate Amount of Amount of Commitment/Loans for Commitment/Loans Percentage Assigned of Facility Assigned(2) all Lenders(3) Assigned(3) Commitment/Loans(4) CUSIP Number - -------------------- -------------------- ---------------- ---------------------- ------------ ~~$ $ % $ $ % $ $ %~~
[7. Trade Date: ____________________________________](5) - ---------- (2) Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g. "Revolving Credit Commitment", "Term Loan Commitment," etc.) (3) Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date. (4) Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder. (5) To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date. -3- Effective Date: ___________, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.] The terms set forth in this Assignment and Assumption are hereby agreed to: ASSIGNOR [NAME OF ASSIGNOR] By: ------------------------------------ Title: --------------------------------- ASSIGNEE [NAME OF ASSIGNEE] By: ------------------------------------ Title: --------------------------------- [Consented to and](6) Accepted: [NAME OF ADMINISTRATIVE AGENT], as Administrative Agent By: --------------------------------- Title: ------------------------------ [Consented to:](7) [NAME OF RELEVANT PARTY] By: --------------------------------- Title: ------------------------------ - ---------- (6) To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement. (7) To be added only if the consent of the Borrower and/or other parties (e.g. Swingline Lender, L/C Issuer) is required by the terms of the Credit Agreement. ANNEX 1 to Assignment and Assumption [_______________________](1) STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION 1. Representations and Warranties. 1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document(2), (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document. 1.2 Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section ___ thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign Lender(3), attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender. - ---------- (1) Describe Credit Agreement at option of Administrative Agent. (2) The term "Loan Document" should be conformed to the term used in the Credit Agreement. (3) The concept of "Foreign Lender" should be conformed to the section in the Credit Agreement governing withholding taxes and gross-up. -2- 2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignee whether such amounts have accrued prior to, on or after the Effective Date. The Assignor and the Assignee shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves. 3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and permitted assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy or by sending a scanned copy by electronic mail shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law governing the Credit Agreement. EXHIBIT B LOAN MARKET DATA TEMPLATE RECOMMENDED DATA FIELDS - AT CLOSE The items highlighted in bold are those that Loan Pricing Corporation (LPC) deem essential. The remaining items are those that LPC has seen become more prominent over time as transparency has increased in the U.S. Loan Market.
COMPANY LEVEL DEAL SPECIFIC FACILITY SPECIFIC - ------------- ------------- ----------------- ISSUER NAME CURRENCY/AMOUNT CURRENCY/AMOUNT LOCATION DATE TYPE SIC (CDN) PURPOSE PURPOSE Identification Number(s) SPONSOR TENOR REVENUE FINANCIAL COVENANTS Term Out Option EXPIRATION DATE Target Company FACILITY SIGNING DATE *MEASUREMENT OF RISK ASSIGNMENT LANGUAGE PRICING S&P SR. DEBT Law Firms BASE RATE(S)/SPREAD(S)/BAILIBOR S&P ISSUER MAC Clause INITIAL PRICING LEVEL MOODY'S SR. DEBT Springing lien PRICING GRID (TIED TO, LEVELS) MOODY'S ISSUER Cash Dominion GRID EFFECTIVE DATE FITCH SR. DEBT Mandatory Prepays FEES FITCH ISSUER Restrct'd Payments (Neg Covs) PARTICIPATION FEE (TIERED ALSO) S&P Implied (internal assessment) Other Restrictions COMMITMENT FEE DBRS Other Ratings ANNUAL FEE *Industry Classification UTILIZATION FEE Moody's Industry LC FEE(S) S&P Industry BA FEE Parent Prepayment Fee Financial Ratios Other Fees to Market Security SECURED/UNSECURED Collateral and Seniority of Claim Collateral Value GUARANTORS LENDERS NAMES/TITLES LENDER COMMITMENT ($) Commited/Uncommited Distribution method AMORTIZATION SCHEDULE Borrowing Base/Advance Rates New Money Amount COUNTRY OF SYNDICATION Facility Rating (Loss given default) S&P BANK LOAN MOODY'S BANK LOAN FITCH BANK LOAN DBRS OTHER RATINGS
* These items would be considered useful to capture from an analytical perspective SCHEDULE E APPLICABLE PERCENTAGES OF LENDERS [see references in Section 1.1]
LENDER COMMITMENT APPLICABLE PERCENTAGE - ------ ---------- --------------------- ~~The Bank of Nova Scotia Cdn. $40,000,000 100%~~
SCHEDULE F DETAILS OF CAPITAL STOCK, PROPERTY, ETC. [see references in Sections 6.1(4)(a)] ANIXTER CANADA INC.
OWNERSHIP OF ENTITY'S CAPITAL STOCK OWNED BY HEAD OFFICE (AND CHIEF EXECUTIVE CAPITAL STOCK ENTITY IN OTHER PERSONS OFFICE, IF DIFFERENT) - --------------------- ----------------------- -------------------------------- ~~Anixter Eurofin B.V. WireXpress Ltd. 200 Foster Crescent (100%) (100%) Mississauga, Ontario L5R 3Y5~~
SCHEDULE G OTHER SECURED OBLIGATIONS [see reference in Section 3.2] 1. All future Swap Transactions with the Borrower to which Scotia Capital or its Affiliate is a party (whether entered into directly or as a result of an assignment or otherwise), to the extent Scotia Capital was a Lender at the time the Swap Transaction was entered into by or assigned to Scotia Capital or Affiliate. 2. Cash consolidation, cash management and electronic funds transfer arrangements between an Obligor and Scotia Capital or an Affiliate of the Agent. SCHEDULE H ORGANIZATIONAL STRUCTURE [see references in Sections 1.1 and 6.1(4)(i)] ATTACHED ANIXTER INTERNATIONAL INC. LIST OF SUBSIDIARIES - OCTOBER 2005
JURISDICTION COMPANY NAME OF INCORPORATION - ------------ ---------------- Anixter Inc. Delaware Accu-Tech Corporation Georgia Accu-Tech Enterprises, Inc. (formerly Wallace Electronics, Inc.) Georgia Anixter Australia Pty. Ltd. Australia ALLNET Technologies Pty. Ltd. Australia Anixter Cables y Manufacturas, S.A. de C.V. Mexico Anixter Chile S.A. Chile Anixter Colombia S.A. Colombia Anixter Costa Rica S.A. Costa Rica Anixter de Mexico, S.A. de C.V. Mexico Anixter Logistica y Servicios (ALS) Mexico Anixter do Brazil Ltda. Brazil Anixter Dominicana, S.A. (formerly AIS, S.A.) Dominican Republic Anixter Financial Inc. Delaware Anixter Communications (Malaysia) Sdn Bhd Malaysia Anixter India Private Limited India Anixter Singapore Pte Ltd. Singapore Anixter Hong Kong Limited Hong Kong Anixter International Trading (Qingdao) Company Ltd China Anixter Trading (Shanghai) Company Limited China Anixter Thailand Inc. Delaware Anixter Holdings, Inc. Delaware Anixter Argentina S.A. Argentina Anixter AEH Holdings Inc. Delaware B.E.L. Corporation Delaware Anixter Eurotwo Holdings B.V. Netherlands Anixter Austria GmbH Austria Anixter Czech Republic - Czech Republic Branch of Anixter Austria GmbH Anixter Danmark A.S. Denmark Anixter Deutschland GmbH Germany Anixter Hungary Ltd. Hungary Anixter Iletsim Sistemleri Pazarlama ve Ticaret A.S. Turkey Anixter Network Systems Greece L.L.C. Greece Anixter Norge A.N.S. Norway Anixter Poland Sp.z.o.o. Poland Anixter Portugal S.A. Portugal Anixter Sverige AB Sweden Anixter Eurofin B.V. Netherlands Anixter Canada Inc. Canada WireXpress Ltd. Canada Anixter Eurinvest B.V. Netherlands Anixter Belgium B.V.B.A. Belgium Anixter Espana S.L. Spain Anixter France SARL France
-H2-
JURISDICTION COMPANY NAME OF INCORPORATION - ------------ ---------------- Anixter International B.V.B.A. Belgium Anixter International Ltd. United Kingdom Eagerport Limited United Kingdom Infast Group plc United Kingdom Haden MacLellan Inc. Delaware Nim-Cor Holdings Inc. Delaware Brown Products Inc. New Hampshire Infast USA, Inc. (formerly Fabricated Delaware Components Inc.) Ducost Ltd. United Kingdom HMH Pension Trustees Ltd. United Kingdom ISI GmbH Germany Plant Construction GmbH Germany Haden MacLellan Inv. Ltd. United Kingdom Haden Spain Spain Haden Drysys Tech Services Ltd. United Kingdom Fawndeck Ltd. United Kingdom Earlydress Limited United Kingdom Pastspeed Limited United Kingdom Petrie & McNaught Limited United Kingdom HMH Fasteners Ltd. United Kingdom HMH Infast plc United Kingdom MB Fastener Co. Ltd. United Kingdom Ohta-Philidas Ltd. United Kingdom Centrepiece Engineering Ltd. United Kingdom Centrepiece Distributors Ltd. United Kingdom AW2 Ltd. United Kingdom AW (B&N) Ltd. United Kingdom H Frankish Ltd. United Kingdom Stainless Fasteners Ltd. United Kingdom Everbright Fasteners Ltd. United Kingdom Infast Automotive Ltd. United Kingdom Automotive Fastener Solutions Ltd. United Kingdom Industrial Fasteners Ltd. United Kingdom Infast Manufacturing Ltd. United Kingdom Budget Fasteners Ltd. United Kingdom Infast Ltd. (formerly Peterborough United Kingdom Nuts & Bolts Ltd.) Infast Subsidiary No. 2 Ltd. United Kingdom Ross Screw Ltd. United Kingdom Sandiacre Screw Ltd. United Kingdom Industrial Fastener Supplies Ltd. United Kingdom IFS Distributors Limited United Kingdom IFS (Stainless) Limited United Kingdom Adesco Limited United Kingdom IP (Pontefract) Ltd. United Kingdom Fastnaparts Limited United Kingdom GKS (UK) Limited United Kingdom GKS Centrepiece Ltd. United Kingdom Anixter Power & Construction Ltd. United Kingdom
-H3-
JURISDICTION COMPANY NAME OF INCORPORATION - ------------ ---------------- Anixter Holdings Limited United Kingdom Anixter Limited United Kingdom Anixter Distribution Ireland Ltd. Ireland Anixter (U.K.) Ltd. (Dubai UAE Branch) United Kingdom Heyco Limited United Kingdom Plastic Screws Limited United Kingdom Plastic Seals Limited United Kingdom Webb Fasteners Limited United Kingdom Burgess Fasteners Limited United Kingdom Heyco Technologies Limited United Kingdom NedHex Ltd. United Kingdom Anixter Italia S.r.l. Italy Anixter Logistics, Europe B.V.B.A. Belgium Anixter Nederland B.V. Netherlands Anixter Switzerland Sarl Switzerland Anixter Finance Ltd. United Kingdom Anixter (CIS) L.L.C. (Russia) Russia Anixter Information Systems Corporation Illinois Anixter Korea Limited Korea Anixter New Zealand Limited New Zealand Anixter Peru, S.A.C. Peru Anixter Philippines Inc. Delaware Anixter Procurement Corporation Illinois Anixter Puerto Rico, Inc. Delaware Anixter-Real Estate Inc. Illinois Anixter Receivables Corporation Delaware Anixter Venezuela Inc. Delaware GL Holding of Delaware, Inc. Delaware Itel Corporation Delaware Itel Container Ventures Inc. Delaware ICV GP Inc. Delaware Itel Rail Holdings Corporation Delaware Fox River Valley Railroad Corporation Wisconsin Green Bay & Western Railroad Company Wisconsin Michigan & Western Railroad Company Michigan Rex Railways, Inc. New Jersey Signal Capital Corporation Delaware Richdale, Ltd. Delaware Signal Capital Projects, Inc. Delaware Railcar Services Corporation Delaware
SCHEDULE I EXISTING SCOTIA L/CS [see references in Section 1.1.75]
BENEFICIARY APPLICANT L/C NUMBER DATE OF ISSUE FACE AMOUNT EXPIRY DATE - ----------- --------- ------------ ------------- ------------ ------------ ~~Revenue Canada Customs Excise Borrower G18572/79787 22 June 1994 Cdn. $60,000 22 June 2006 and Taxation~~
EX-10.31 5 c02746exv10w31.txt AMENDMENT NO. 3 TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT EXHIBIT 10.31 EXECUTION COPY AMENDMENT NO. 3 TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT THIS AMENDMENT NO. 3 TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (the "Amendment"), dated as of September 29, 2005, among ANIXTER RECEIVABLES CORPORATION, a Delaware corporation (the "Seller"), ANIXTER INC., a Delaware corporation ("Anixter"), as the initial Servicer, each financial institution party hereto as a Financial Institution, FALCON ASSET SECURITIZATION CORPORATION ("Falcon") and THREE PILLARS FUNDING LLC (f/k/a Three Pillars Funding Corporation) ("Three Pillars"), as conduits, (collectively, the "Conduits" and each individually, a "Conduit") and SUNTRUST CAPITAL MARKETS and JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA) ("JPMorgan"), as managing agents (collectively, the "Managing Agents" and each individually, a "Managing Agent") and JPMorgan, as agent for the Purchasers (the "Agent"). WITNESSETH: WHEREAS, the Seller, Anixter, the Financial Institutions, Falcon, Three Pillars, the Managing Agents and the Agent are parties to that certain Amended and Restated Receivables Purchase Agreement, dated as of October 3, 2002 (as amended, restated, supplemented or otherwise modified from time to time, the "Agreement"); and WHEREAS the parties hereto desire to amend the Agreement on the terms and conditions set forth below; NOW THEREFORE, in consideration of the premises herein contained, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Defined Terms. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement. SECTION 2. Amendment to the Agreement. Subject to the satisfaction of the conditions precedent set forth in Section 3 below, the parties hereto agree that the Agreement is amended as follows: (a) Section 9.1(f) of the Agreement is hereby amended and restated in its entirety to read as follows: "(f) As at the end of any Collection Period: (i) the average of the Delinquency Ratios as of the end of such Collection Period and the two preceding Collection Periods shall exceed 14.00%; (ii) the average of the Dilution Trigger Ratios as of the end of such Collection Period and the two preceding Collection Periods shall exceed 4.0%; or (iii) the average of the Loss-to-Liquidation Ratios as of the end of such Collection Period and the two preceding Collection Periods shall exceed 5.25%." (b) The definition of the term "Liquidity Termination Date" set forth in Exhibit I to the Agreement is amended and restated in its entirety to read as follows "Liquidity Termination Date" means September 28, 2006. SECTION 3. Effective Date. This Amendment shall become effective and shall be deemed effective as of the date first written above when the Agent shall have received a copy of this Amendment duly executed by each of the parties hereto. SECTION 4. Representations and Warranties of the Seller Parties. In order to induce the parties hereto to enter into this Amendment, each of the Seller Parties represents and warrants to the Agent and the Purchasers, as to itself, that: (a) The representations and warranties of such Seller Party set forth in Section 5.1 of the Agreement, as hereby amended, are true, correct and complete on the date hereof as if made on and as of the date hereof and there exists no Amortization Event or Potential Amortization Event on the date hereof, provided that in the case of any representation or warranty in Section 5.1 that expressly relates to facts in existence on an earlier date, the reaffirmation thereof under this Section 4(a) shall be made as of such earlier date. (b) The execution and delivery by such Seller Party of this Amendment has been duly authorized by proper corporate proceedings of such Seller Party and this Amendment, and the Agreement, as amended by this Amendment, constitutes the legal, valid and binding obligation of such Seller Party, enforceable against such Seller Party in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general applicability affecting the enforcement of creditors' rights generally. SECTION 5. Ratification. The Agreement, as amended hereby, is hereby ratified, approved and confirmed in all respects. SECTION 6. Reference to Agreement. From and after the effective date hereof, each reference in the Agreement to "this Agreement", "hereof", or "hereunder" or words of like import, and all references to the Agreement in any and all agreements, instruments, documents, notes, certificates and other writings of every kind and nature shall be deemed to mean the Agreement, as amended by this Amendment. -2- SECTION 7. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS. SECTION 8. Execution of Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. * * * * * -3- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the date first written above: ANIXTER RECEIVABLES CORPORATION, as the Seller By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- ANIXTER INC., as the initial Servicer By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- Signature Page to Amendment No. 3 to Amended and Restated Receivables Purchase Agreement FALCON ASSET SECURITIZATION CORPORATION By: ------------------------------------ Name: Ronald J. Atkins Title: Authorized Signatory JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA), as a Financial Institution, a Managing Agent and as Agent By: ------------------------------------ Name: Ronald J. Atkins Title: Vice President Signature Page to Amendment No. 3 to Amended and Restated Receivables Purchase Agreement THREE PILLARS FUNDING LLC (f/k/a Three Pillars Funding Corporation) By: ------------------------------------ Name: ---------------------------------- Title: Authorized Signatory SUNTRUST BANK, as a Financial Institution By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- SUNTRUST CAPITAL MARKETS INC., as a Managing Agent By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- Signature Page to Amendment No. 3 to Amended and Restated Receivables Purchase Agreement EX-21.1 6 c02746exv21w1.txt LIST OF SUBSIDIARIES OF THE REGISTRANT . . . EXHIBIT 21.1 ANIXTER INTERNATIONAL INC. LIST OF SUBSIDIARIES - DECEMBER 30, 2005
JURISDICTION COMPANY NAME OF INCORPORATION - ------------ ---------------- Anixter Inc. Delaware Accu-Tech Corporation Georgia Accu-Tech Enterprises, Inc. (formerly Wallace Electronics, Inc.) Georgia Anixter Australia Pty. Ltd. Australia ALLNET Technologies Pty. Ltd. Australia Anixter Cables y Manufacturas, S.A. de C.V. Mexico Anixter Chile S.A. Chile Anixter Colombia S.A. Colombia Anixter Costa Rica S.A. Costa Rica Anixter de Mexico, S.A. de C.V. Mexico Anixter Logistica y Servicios (ALS) Mexico Anixter do Brazil Ltda. Brazil Anixter Dominicana, S.A. (formerly AIS, S.A.) Dominican Republic Anixter Financial Inc. Delaware Anixter Communications (Malaysia) Sdn Bhd Malaysia Anixter India Private Limited India Anixter Singapore Pte Ltd. Singapore Anixter Hong Kong Limited Hong Kong Anixter International Trading (Qingdao) Company Ltd China Anixter Trading (Shanghai) Company Limited China Anixter Thailand Inc. Delaware Anixter Holdings, Inc. Delaware Anixter Argentina S.A. Argentina Anixter AEH Holdings Inc. Delaware B.E.L. Corporation Delaware Anixter Eurotwo Holdings B.V. Netherlands Anixter Austria GmbH Austria Anixter Danmark A.S. Denmark Anixter Deutschland GmbH Germany Anixter Hungary Ltd. Hungary Anixter Iletsim Sistemleri Pazarlama ve Ticaret A.S. Turkey Anixter Network Systems Greece L.L.C. Greece Anixter Norge A.N.S. Norway Anixter Poland Sp.z.o.o. Poland Anixter Portugal S.A. Portugal Anixter Sverige AB Sweden Anixter Eurofin B.V. Netherlands Anixter Canada Inc. Canada WireXpress Ltd. Canada Anixter Eurinvest B.V. Netherlands Anixter Belgium B.V.B.A. Belgium Anixter Espana S.L. Spain Anixter France SARL France Anixter International B.V.B.A. Belgium Anixter International Ltd. United Kingdom Eagerport Limited United Kingdom
Infast Group Limited United Kingdom Ducost Ltd. United Kingdom Fawndeck Ltd. United Kingdom Earlydress Limited United Kingdom Pastspeed Limited United Kingdom Petrie & McNaught Limited United Kingdom Haden Drysys S.A. Spain Haden Drysys Tech Services Ltd. United Kingdom Haden MacLellan Inv. Ltd. United Kingdom HMH Fasteners Ltd. United Kingdom AW2 Ltd. United Kingdom AW (B&N) Ltd. United Kingdom H Frankish Ltd. United Kingdom Stainless Fasteners Ltd. United Kingdom Centrepiece Engineering Ltd. United Kingdom Centrepiece Distributors Ltd. United Kingdom Everbright Fasteners Ltd. United Kingdom HMH Infast plc United Kingdom Infast Automotive Ltd. United Kingdom Automotive Fastener Solutions Ltd. United Kingdom Industrial Fasteners Ltd. United Kingdom Budget Fasteners Ltd. United Kingdom Infast Ltd. United Kingdom Infast Manufacturing Ltd. United Kingdom Infast Subsidiary No. 2 Ltd. United Kingdom Industrial Fastener Supplies Ltd. United Kingdom Adesco Limited United Kingdom Fastnaparts Limited United Kingdom GKS (UK) Limited United Kingdom GKS Centrepiece Ltd. United Kingdom IFS Distributors Limited United Kingdom IFS (Stainless) Limited United Kingdom IP (Pontefract) Ltd. United Kingdom MB Fastener Co. Ltd. United Kingdom Ohta-Philidas Ltd. United Kingdom Ross Screw Ltd. United Kingdom Sandiacre Screw Ltd. United Kingdom Anixter Power & Construction Ltd. United Kingdom Anixter Holdings Limited United Kingdom Anixter Limited United Kingdom Anixter Distribution Ireland Ltd. Ireland Anixter U.K. Ltd. United Kingdom Heyco Limited United Kingdom Plastic Screws Limited United Kingdom Plastic Seals Limited United Kingdom Webb Fasteners Limited United Kingdom Heyco Technologies Limited United Kingdom NedHex Ltd. United Kingdom Anixter Italia S.r.l. Italy Anixter Logistics, Europe B.V.B.A. Belgium Anixter Nederland B.V. Netherlands Anixter Switzerland Sarl Switzerland

Anixter Finance Ltd. United Kingdom Anixter (CIS) L.L.C. Russia Servicios Anixter, S.A. de C.V. Mexico Anixter Information Systems Corporation Illinois Anixter Korea Limited Korea Anixter New Zealand Limited New Zealand Anixter Peru, S.A.C. Peru Anixter Philippines Inc. Delaware Anixter Procurement Corporation Illinois Anixter Puerto Rico, Inc. Delaware Anixter-Real Estate Inc. Illinois Anixter Receivables Corporation Delaware Anixter Venezuela Inc. Delaware GL Holding of Delaware, Inc. Delaware Itel Corporation Delaware Itel Container Ventures Inc. Delaware ICV GP Inc. Delaware Itel Rail Holdings Corporation Delaware Fox River Valley Railroad Corporation Wisconsin Green Bay & Western Railroad Company Wisconsin Michigan & Western Railroad Company Michigan Rex Railways, Inc. New Jersey Signal Capital Corporation Delaware Richdale, Ltd. Delaware Signal Capital Projects, Inc. Delaware Railcar Services Corporation Delaware

EX-23.1 7 c02746exv23w1.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM EXHIBIT 23.1 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in each of the following Registration Statements of Anixter International Inc. and in the related Prospectuses of our reports dated February 23, 2006, with respect to the consolidated financial statements and schedules of Anixter International Inc., Anixter International Inc. management's assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Anixter International Inc., included in this Annual Report (Form 10-K) for the year ended December 30, 2005.
FORM AND REGISTRATION STATEMENT NO. PURPOSE - --------------------- --------------------------------------------------------- FORM S - 8 No. 33 - 13486 Key Executive Equity Plan FORM S - 8 No. 33 - 38364 1989 Employee Stock Incentive Plan FORM S - 8 No. 333 - 05907 1996 Stock Incentive Plan FORM S - 8 No. 333 - 56815 1998 Mid - Level Stock Option Plan FORM S - 8 No. 333 - 56935 1998 Stock Incentive Plan FORM S - 8 No. 333 - 103270 2001 Stock Incentive Plan FORM S - 8 No. 333 - 104506 2001 Mid - Level Stock Option Plan FORM S - 4 No. 333 - 120279 Exchange Offer for Zero Coupon Convertible Notes Due 2033 FORM S - 3 No. 333 - 121428 $300 million Shelf Registration
Chicago, Illinois February 23, 2006 EX-24.1 8 c02746exv24w1.txt POWER OF ATTORNEY EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned director and/or officer of Anixter International Inc., a Delaware corporation (the "Corporation"), which is about to file an annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, on Form 10-K, hereby constitutes and appoints Dennis Letham, Terry Faber and John Dul, and each of them as his or her true and lawful attorney-in-fact and agent, with full power and all capacities, to sign the Corporation's Form 10-K and any and all amendments thereto, and any other documents in connection therewith, to be filed with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as she or he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact agents or their substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and seal as of the 23rd day of February, 2006. /s/ Lord James Blyth /s/ George Munoz - ------------------------------------- ---------------------------------------- Lord James Blyth George Munoz /s/ Linda Walker Bynoe /s/ Stuart M. Sloan - ------------------------------------- ---------------------------------------- Linda Walker Bynoe Stuart M. Sloan /s/ Robert L. Crandall /s/ Thomas C. Theobald - ------------------------------------- ---------------------------------------- Robert L. Crandall Thomas C. Theobald /s/ Robert W. Grubbs /s/ Matthew Zell - ------------------------------------- ---------------------------------------- Robert W. Grubbs Matthew Zell /s/ F. Philip Handy /s/ Samuel Zell - ------------------------------------- ---------------------------------------- F. Philip Handy Samuel Zell /s/ Melvyn N. Klein - ------------------------------------- Melvyn N. Klein EX-31.1 9 c02746exv31w1.txt ROBERT W. GRUBBS, PRESIDENT AND CEO, CERTIFICATION PURSUANT TO SECTION 302 EXHIBIT 31.1 PRESIDENT AND CHIEF EXECUTIVE OFFICER CERTIFICATION I, Robert W. Grubbs, certify that: (1) I have reviewed this annual report on Form 10-K of Anixter International Inc.; (2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; (3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; (4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and (5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. February 23, 2006 /s/ Robert W. Grubbs ---------------------------------------- Robert W. Grubbs President and Chief Executive Officer EX-31.2 10 c02746exv31w2.txt DENNIS J. LETHAM, SENIOR VP-FINANCE AND CFO, CERTIFICATION PURSUANT TO SECTION 302 EXHIBIT 31.2 SENIOR VICE PRESIDENT - FINANCE AND CHIEF FINANCIAL OFFICER CERTIFICATION I, Dennis J. Letham, certify that: (1) I have reviewed this annual report on Form 10-K of Anixter International Inc.; (2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; (3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; (4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and (5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. February 23, 2006 /s/ Dennis J. Letham ---------------------------------------- Dennis J. Letham Senior Vice President-Finance and Chief Financial Officer EX-32.1 11 c02746exv32w1.txt ROBERT W. GRUBBS, PRESIDENT AND CEO, CERTIFICATION PURSUANT TO SECTION 906 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report of Anixter International Inc. (the "Company") on Form 10-K for the period ending December 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report") I, Robert W. Grubbs, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Robert W. Grubbs - ------------------------------------- Robert W. Grubbs President and Chief Executive Officer February 23, 2006 EX-32.2 12 c02746exv32w2.txt DENNIS J. LETHAM, SENIOR VP-FINANCE AND CFO, CERTIFICATION PURSUANT TO SECTION 906 EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report of Anixter International Inc. (the "Company") on Form 10-K for the period ending December 30, 2005 as filed with the Securities and Exchange Commission on the date here of ("the Report") I, Dennis J. Letham, Senior Vice President-Finance and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Dennis J. Letham - ------------------------------------- Dennis J. Letham Senior Vice President-Finance and Chief Financial Officer February 23, 2006 -----END PRIVACY-ENHANCED MESSAGE-----


þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the fiscal year ended December 30, 2005

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Delaware		94-1658138
(State or other jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)


Title of each class on which registered		Name of each exchange on which registered

Common stock, $1 par value		New York Stock Exchange


		Page

PART I
Item 1.	Business		1
Item 1A.	Risk Factors		4
Item 1B.	Unresolved Staff Comments		6
Item 2.	Properties		6
Item 3.	Legal Proceedings		6
Item 4.	Submission of Matters to a Vote of Security Holders		6

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		8
Item 6.	Selected Financial Data		8
Item 7.	Management’s Discussion and Analysis of Financial Conditions and Results of Operations		10
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		26
Item 8.	Financial Statements and Supplementary Data		27
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		60
Item 9A.	Controls and Procedures		60
Item 9B.	Other Information		62

PART III
Item 10.	Directors and Executive Officers of the Registrant		62
Item 11.	Executive Compensation		62
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		62
Item 13.	Certain Relationships and Related Transactions		62
Item 14.	Principal Accountant Fees and Services		62

PART IV
Item 15.	Exhibits and Financial Statement Schedules		63
Anixter Inc. Amended and Restated Supplemental Retirement Plan
First Amendment to Five-Year, $275.0 Million, Revolving Credit Agreement
$40 Million (Canadian Dollar) Credit Facility
Amendment No. 3 to Amended and Restated Receivables Purchase Agreement
List of Subsidiaries of the Registrant
Consent of Independent Registered Public Accounting Firm
Power of Attorney
Robert W. Grubbs, President and CEO, Certification Pursuant to Section 302
Dennis J. Letham, Senior VP-Finance and CFO, Certification Pursuant to Section 302
Robert W. Grubbs, President and CEO, Certification Pursuant to Section 906
Dennis J. Letham, Senior VP-Finance and CFO, Certification Pursuant to Section 906


	•	A non-exclusive right to re-sell products to any customer in a geography (typically defined as a country);

	•	Usually cancelable upon 90 days notice by either party for any reason;


Large Accelerated Filer þ	Accelerated Filer o	Non-Accelerated Filer o


	•	Excludes any minimum purchase agreements, although pricing may change with volume on a prospective basis; and

	•	The right to pass through the manufacturer’s warranty to Anixter’s customers.


ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.


John A. Dul, 44		Secretary of the Company since November 2002; General Counsel since May 1998; Assistant Secretary from May 1995 to November 2002; General Counsel and Secretary of Anixter since January 1996.

Terrance A. Faber, 54		Vice-President — Controller of the Company since October 2000.

Robert W. Grubbs Jr., 49		President and Chief Executive Officer of the Company since February 1998; President and Chief Executive Officer of Anixter since July 1994.

Dennis J. Letham, 54		Senior Vice-President — Finance and Chief Financial Officer of the Company since January 1995; Chief Financial Officer, Executive Vice-President of Anixter since July 1993.

Philip F. Meno, 46		Vice-President — Taxes of the Company since May 1993.

Rodney A. Shoemaker, 48		Vice-President — Treasurer of the Company and Anixter since July 1999.


ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.


			Fiscal Year

			2005*			2004*			2003*			2002*			2001

			(In millions, except per share amounts)
Selected Income Statement Data:
	Net sales		$	3,847.4		$	3,275.2		$	2,625.2		$	2,520.1		$	3,144.2
	Operating income^a			189.4			138.0			92.3			87.7			102.0
	Interest expense and other, net^b			(30.8	)		(16.7	)		(12.8	)		(15.2	)		(43.8	)
	Extinguishment of debt^c			(1.2	)		(0.7	)		(6.6	)		(0.7	)		(5.5	)
	Income before extraordinary gain^a,b,c,e			90.0			73.6			41.9			43.1			30.3
	Extraordinary gain, net^d			—			4.1			—			—			—
	Net income^a,b,c,d,e		$	90.0		$	77.7		$	41.9		$	43.1		$	30.3
	Basic income per share:
		Income before extraordinary gain	$	2.37		$	2.00		$	1.15		$	1.17		$	0.83
		Net income	$	2.37		$	2.11		$	1.15		$	1.17		$	0.83
	Diluted income per share:
		Income before extraordinary gain	$	2.22		$	1.90		$	1.13		$	1.13		$	0.80
		Net income	$	2.22		$	2.01		$	1.13		$	1.13		$	0.80
	Dividends declared per common share^f		$	4.00		$	1.50		$	—		$	—		$	—
Selected Balance Sheet Data:
	Total assets^b		$	2,012.1		$	1,706.6		$	1,371.4		$	1,226.0		$	1,198.8
	Total debt^b		$	625.1		$	412.4		$	239.2		$	195.1		$	241.1
	Stockholders’ equity^f		$	706.4		$	763.0		$	690.8		$	634.8		$	563.1
	Diluted book value per share		$	17.30		$	19.75		$	18.58		$	16.71		$	14.90
	Weighted-average diluted shares			40.8			38.6			37.2			38.0			37.8
	Year-end outstanding shares			38.4			37.4			36.4			37.5			36.9
Other Financial Data:
	Working capital^b		$	932.6		$	815.3		$	562.7		$	462.5		$	476.3
	Capital expenditures		$	15.0		$	14.5		$	25.9		$	16.9		$	22.0
	Depreciation and amortization		$	30.3		$	25.6		$	24.3		$	23.5		$	32.4


(a)		For the year ended December 31, 2004, operating income includes net favorable adjustments to cost of sales of $10.2 million ($0.16 per diluted share) arising primarily from the reduction in risks associated with the value of certain inventories, an impairment charge of $1.8 million ($0.03 per diluted share) to write down to fair value the value assigned to the Pentacon name when it was acquired in 2002 and


ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.


	•	$8.1 million of intangible assets with a finite life of 8.0 years (customer relationships); and

	•	$27.7 million of goodwill.


	Payments due by period

											Beyond
	2006		2007		2008		2009		2010		2010		Total

	(In millions)
Long-Term Debt^a	$	—	$	130.0	$	—	$	139.3	$	—	$	578.1	$	847.4
Purchase Obligations^b		370.0		2.6		0.3		0.2		—		—		373.1
Operating Leases		48.1		36.6		28.2		23.2		18.9		100.7		255.7
Deferred Compensation Liability^c		2.0		0.8		2.0		1.1		1.6		18.0		25.5
Pension Plans^d		10.9		—		—		—		—		—		10.9
Capital Lease Obligations		0.2		0.2		0.2		0.2		0.2		0.3		1.3
Restructuring Liability		0.3		0.1		0.1		0.1		—		—		0.6

Total Obligations	$	431.5	$	170.3	$	30.8	$	164.1	$	20.7	$	697.1	$	1,514.5


ITEM 1.	BUSINESS.


(a)	General Development of Business


(b)	Financial Information about Industry Segments


(c)	Narrative Description of Business


	Years ended

	December 30,		December 31,		Percent
	2005		2004		Change

	(In millions)
Net sales	$	3,847.4	$	3,275.2		17.5%
Gross profit	$	925.1	$	790.3		17.1%
Operating expenses	$	735.7	$	652.3		12.8%
Operating income	$	189.4	$	138.0		37.2%


	Years ended

	December 31,		January 2,		Percent
	2004		2004		Change

	(In millions)
Net sales	$	3,275.2	$	2,625.2		24.8%
Gross profit	$	790.3	$	642.2		23.1%
Operating expenses	$	652.3	$	549.9		18.6%
Operating income	$	138.0	$	92.3		49.5%


	•	Customers that have refused to pay their balances are reserved based on the historical write-off percentages;

	•	Risk accounts are individually reviewed and the reserve is based on the probability of potential default; and

	•	The outstanding balance for customers who have declared bankruptcy is reserved at 100%.


	•	Return or rotation privileges with vendors;

	•	Price protection from vendors;

	•	Expected usage during the next twenty-four months;

	•	Whether or not a customer is obligated by contract to purchase the inventory;

	•	Current market pricing; and

	•	Risk of obsolescence.


ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


	Page

Report of Independent Registered Public Accounting Firm		28
Consolidated Statements of Operations		29
Consolidated Balance Sheets		30
Consolidated Statements of Cash Flows		31
Consolidated Statements of Stockholders’ Equity		32
Notes to the Consolidated Financial Statements		33
Selected Quarterly Financial Data (Unaudited)		59


														Accumulated
		Common Stock												Other
								Capital			Retained			Comprehensive			Comprehensive
		Shares			Amount			Surplus			Earnings			Income			Income

Balance at January 3, 2003			37.5		$	37.5		$	45.2		$	596.3		$	(44.2	)
Net income			—			—			—			41.9			—		$	41.9
Other comprehensive income:
	Foreign currency translation		—			—			—			—			39.1			39.1
	Minimum pension liability, net of tax of $0.1		—			—			—			—			(0.2	)		(0.2	)
	Change in fair market value of foreign exchange contracts, net of tax of $0.2		—			—			—			—			(0.3	)		(0.3	)

Comprehensive income																	$	80.5

Issuance of common stock and related tax benefits			0.5			0.5			10.6			—			—
Purchase and retirement of treasury stock			(1.6	)		(1.6	)		(34.0	)		—			—

Balance at January 2, 2004			36.4			36.4			21.8			638.2			(5.6	)
Net income			—			—			—			77.7			—		$	77.7
Other comprehensive income:
	Foreign currency translation		—			—			—			—			21.4			21.4
	Minimum pension liability, net of tax of $0.6		—			—			—			—			(1.3	)		(1.3	)
	Change in fair market value of foreign exchange contracts, net of tax of $0.2		—			—			—			—			0.3			0.3

Comprehensive income																	$	98.1

Dividends declared on common stock ($1.50 per share)			—			—			—			(55.8	)		—
Issuance of common stock and related tax benefits			1.0			1.0			28.9			—			—

Balance at December 31, 2004			37.4			37.4			50.7			660.1			14.8
Net income			—			—			—			90.0			—		$	90.0
Other comprehensive income:
	Foreign currency translation		—			—			—			—			(18.1	)		(18.1	)
	Minimum pension liability, net of tax of $1.6		—			—			—			—			(3.1	)		(3.1	)
	Change in fair market value of derivatives, net of tax of $0.6		—			—			—			—			0.8			0.8

Comprehensive income																	$	69.6

Dividends declared on common stock ($4.00 per share)			—			—			—			(156.1	)		—
Issuance of common stock and related tax benefits			1.0			1.0			28.9			—			—

Balance at December 30, 2005			38.4		$	38.4		$	79.6		$	594.0		$	(5.6	)


		2004			2003

Loss on sales of receivables		$	22.1		$	29.6
Gain on collection of receivables by ARC			(27.8	)		(29.6	)
Interest expense incurred by ARC			2.1			2.8

	Total	$	(3.6	)	$	2.8


	•	the sales price of our common stock reaches specified thresholds;

	•	during any period in which the credit rating assigned to the Convertible Notes due 2033 is below a specified level;

	•	the Convertible Notes due 2033 are called for redemption; or

	•	specified corporate transactions have occurred.


	•	the sales price of our common stock reaches specified thresholds;

	•	during any period in which the credit rating assigned to the New Securities is below a specified level;

	•	the New Securities are called for redemption; or

	•	specified corporate transactions have occurred.


	•	July 7, 2007 at a price equal to $432.48 per Convertible Note due 2033;

	•	July 7, 2009 at a price equal to $461.29 per Convertible Note due 2033;

	•	July 7, 2011 at a price equal to $492.01 per Convertible Note due 2033;

	•	July 7, 2013 at a price equal to $524.78 per Convertible Note due 2033;

	•	July 7, 2018 at a price equal to $616.57 per Convertible Note due 2033;

	•	July 7, 2023 at a price equal to $724.42 per Convertible Note due 2033; and

	•	July 7, 2028 at a price equal to $851.13 per Convertible Note due 2033.


	(In millions)

2006	$	48.1
2007		36.6
2008		28.2
2009		23.2
2010		18.9
2011 and thereafter		100.7

Total	$	255.7


NOTE 11.	PENSION PLANS, POST-RETIREMENT BENEFITS AND OTHER BENEFITS


	Domestic Plans

							Allocation Guidelines
	December 30,			December 31,
	2005			2004			Min			Target			Max

Large capitalization U.S. stocks		30.4	%		33.3	%		20	%		30	%		40	%
Small capitalization U.S. stocks		15.3			17.1			10			15			20
International stocks		15.5			14.9			10			15			20
Convertible investments		8.0			9.4			5			10			15

Total equity securities		69.2			74.7						70
Fixed income investments		28.7			24.7			25			30			35
Other investments		2.1			0.6			—			—			—

		100.0	%		100.0	%					100	%


	Foreign Plans

							Allocation Guidelines
	December 30,			December 31,
	2005			2004				Target

Equity securities		78.4	%		73.3	%			70	%
Fixed income investments		21.0			21.0				25
Other investments		0.6			5.7				5

		100.0	%		100.0	%			100	%


	•	Each asset class is actively managed by one investment manager;

	•	Each asset class may be invested in a commingled fund, mutual fund, or separately managed account;

	•	Each manager is expected to be “fully invested” with minimal cash holdings;

	•	The use of options and futures is limited to covered hedges only;

	•	Each equity asset manager has a minimum number of individual company stocks that need to be held and there are restrictions on the total market value that can be invested in any one industry and the percentage that any one company can be of the portfolio total. The domestic equity funds are limited as to the percentage that can be invested in international securities;

	•	The international stock fund is limited to readily marketable securities; and

	•	The fixed income fund has similar restrictions as the equity funds and is further restricted by minimum investment ratings.


	•	Make sure that the obligations to the beneficiaries of the Plan can be met;

	•	Maintain funds at a level to meet the minimum funding requirements; and

	•	The investment managers are expected to provide a return, within certain tracking tolerances, close to that of the relevant market’s indices.


		Pension Benefits

		Domestic						Foreign						Total

		2005			2004			2005			2004			2005			2004

		(In millions)
Change in projected benefit obligation:
	Beginning balance	$	142.6		$	115.2		$	82.5		$	62.3		$	225.1		$	177.5
	Service cost		5.7			6.0			4.1			3.9			9.8			9.9
	Interest cost		7.6			7.4			5.8			3.7			13.4			11.1
	Plan participants contributions		—			—			0.3			0.3			0.3			0.3
	Actuarial (gain) loss		(1.8	)		12.7			14.2			6.0			12.4			18.7
	Acquisition		—			—			55.4			—			55.4			—
	Amendment		—			(0.1	)		—			1.1			—			1.0
	Benefits paid		(3.1	)		(3.2	)		(3.1	)		(0.7	)		(6.2	)		(3.9	)
	Unrecognized prior service cost		—			4.6			—			—			—			4.6
	Foreign currency exchange rate changes		—			—			(8.2	)		5.9			(8.2	)		5.9

	Ending balance	$	151.0		$	142.6		$	151.0		$	82.5		$	302.0		$	225.1

Change in plan assets at fair value:
	Beginning balance	$	85.5		$	75.0		$	56.5		$	43.5		$	142.0		$	118.5
	Actual return on plan assets		7.8			7.4			9.1			3.5			16.9			10.9
	Acquisitions		—			—			48.0			—			48.0			—
	Company contributions		12.1			6.3			6.2			3.9			18.3			10.2
	Plan participants contributions		—			—			0.4			0.3			0.4			0.3
	Benefits paid		(3.1	)		(3.2	)		(3.1	)		(0.7	)		(6.2	)		(3.9	)
	Foreign currency exchange rate changes		—			—			(5.4	)		6.0			(5.4	)		6.0

	Ending balance	$	102.3		$	85.5		$	111.7		$	56.5		$	214.0		$	142.0

Reconciliation of funded status:
	Projected benefit obligation	$	(151.0	)	$	(142.6	)	$	(151.0	)	$	(82.5	)	$	(302.0	)	$	(225.1	)
	Plan assets at fair value		102.3			85.5			111.7			56.5			214.0			142.0

	Funded status		(48.7	)		(57.1	)		(39.3	)		(26.0	)		(88.0	)		(83.1	)
	Unrecognized net actuarial loss		24.5			26.8			22.5			13.5			47.0			40.3
	Unrecognized prior service cost		5.1			5.9			0.2			0.2			5.3			6.1
	Minimum pension liability		(8.6	)		(4.2	)		(3.4	)		(2.7	)		(12.0	)		(6.9	)

	Accrued benefit cost	$	(27.7	)	$	(28.6	)	$	(20.0	)	$	(15.0	)	$	(47.7	)	$	(43.6	)

Weighted average assumptions used for measurement of the projected benefit obligation:
	Discount rate		5.50	%		5.90	%		5.14	%		5.59	%		5.32	%		5.79	%
	Salary growth rate		4.46	%		4.80	%		3.67	%		3.80	%		4.13	%		4.41	%


	Estimated Future Benefit
	Payments

	Domestic		Foreign		Total

2006	$	3.6	$	3.5	$	7.1
2007		3.8		3.6		7.4
2008		4.0		4.0		8.0
2009		4.2		4.6		8.8
2010		5.2		4.3		9.5
2011-2015		31.9		27.9		59.8

Total	$	52.7	$	47.9	$	100.6


				Weighted					Weighted
	Director			Average		Employee			Average
	Stock			Grant Date		Stock			Grant Date
	Units			Value		Units			Value

	(Units in thousands)
Balance at January 3, 2003		101.2		$	21.93		107.4		$	18.81
Granted		47.8			23.56		248.0			23.34
Converted		(7.1	)		26.32		(53.6	)		18.81
Canceled		—			—		(17.1	)		22.89

Balance at January 2, 2004		141.9			22.26		284.7			22.51
Adjustment*		—			—		2.8			18.81
Granted		30.4			33.24		244.6			30.50
Converted		(9.2	)		26.87		—			—
Canceled		—			—		(6.4	)		25.57

Balance at December 31, 2004		163.1			24.05		525.7			26.17
Granted		15.5			37.17		262.2			37.39
Converted		(45.6	)		23.50		(132.1	)		21.40
Canceled		—			—		(6.2	)		29.57

Balance at December 30, 2005		133.0		$	25.77		649.6		$	31.62