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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
NOVEMBER 2, 1994
Date of Report (Date of earliest event reported)
BEST BUY CO., INC.
(Exact name of registrant as specified in charter)
MINNESOTA 1-9595 41-0907483
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
7075 Flying Cloud Drive, Eden Prairie, Minnesota 55344
(Address of principal executive offices) (Zip Code)
612\947-2000
(Registrant's telephone number, including area code)
None.
(Former name or former address, if changed since last report)
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Item 5. Other Events.
Included herewith are the forms of the following documents to be executed
in connection with the offering of 6-1/2% Convertible Monthly Income Preferred
Securities of Best Buy Capital, L.P., a Delaware limited partnership of which
the registrant is the general partner ("Capital"), earlier versions of which
were filed with the Registration Statement on Form S-3 of the registrant and
Capital (Reg. Nos. 33-55701 and 33-55701-01) having the exhibit numbers
indicated (except for Exhibit 4.8 hereto which has not been previously filed):
NUMBER DESCRIPTION
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2.2 Form of Amended and Restated Agreement of Limited Partnership of
Best Buy Capital, L.P.
3.3 Form of Certificate of Designation with respect to Best Buy
Series A Preferred Stock
4.1 Form of Best Buy Capital Preferred Securities Certificate
(included in 2.2)
4.2 Form of Best Buy Series A Preferred Stock Certificate
4.3 Form of Indenture
4.4 Form of Subordinated Debenture (included in 4.3)
4.5 Form of Guarantee Agreement
4.6 Form of Deposit Agreement with respect to Best Buy Series A
Cumulative Preferred Stock
4.8 Form of Depositary Receipt (included in 4.6)
2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BEST BUY CO., INC.
(Registrant)
Date: November 2, 1994 By: /s/ Elliot S. Kaplan
---------------------------
Elliot S. Kaplan, Secretary
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EXHIBIT 2.2
Draft of November 1. 1994
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AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
BEST BUY CAPITAL, L.P.
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DATED AS OF NOVEMBER 3, 1994
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TABLE OF CONTENTS
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.1 Continuation of the Partnership . . . . . . . . . . . . . . . 11
Section 2.2 Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.3 Business of the Partnership . . . . . . . . . . . . . . . . . 11
Section 2.4 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.5 Registered Agent and Office . . . . . . . . . . . . . . . . . 12
Section 2.6 Principal Place of Business . . . . . . . . . . . . . . . . . 12
Section 2.7 Name and Business Address
of General Partner. . . . . . . . . . . . . . . . . . . . . 12
Section 2.8 Qualification to Do Business. . . . . . . . . . . . . . . . . 12
Section 2.9 Admission of Holders of
Preferred Securities;
Withdrawal of Initial
Limited Partner . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PREFERRED SECURITY HOLDER'S INTEREST; CAPITAL ACCOUNTS
Section 3.1 Capital Contributions . . . . . . . . . . . . . . . . . . . . 13
Section 3.2 Preferred Security Holder's Interest
Represented by LP Certificate . . . . . . . . . . . . . . . 14
Section 3.3 Capital Accounts. . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.4 Interest on Capital Contributions . . . . . . . . . . . . . . 14
Section 3.5 Withdrawal and Return of Capital
Contributions . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.6 Investment of Capital Contributions . . . . . . . . . . . . . 15
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ARTICLE IV
ALLOCATIONS
Section 4.1 Profits and Losses. . . . . . . . . . . . . . . . . . . . . . 15
Section 4.2 Special Allocations . . . . . . . . . . . . . . . . . . . . . 17
Section 4.3 Allocations for Income Tax Purposes . . . . . . . . . . . . . 18
Section 4.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V
DIVIDENDS AND DISTRIBUTIONS
Section 5.1 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.2 Limitations on Distributions. . . . . . . . . . . . . . . . . 19
ARTICLE VI
ISSUANCE OF PREFERRED SECURITIES
Section 6.1 General Provisions Regarding
Preferred Securities. . . . . . . . . . . . . . . . . . . . 20
Section 6.2 Preferred Securities. . . . . . . . . . . . . . . . . . . . . 21
Section 6.3 Conversion Rights of Preferred
Securities. . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.4 Optional Exchange for Depositary
Shares Representing Best Buy
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 7.1 Books and Records . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.2 Accounting Method . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.3 Annual Audit. . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 8.1 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.2 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.3 Priority. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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ARTICLE IX
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 9.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.2 Powers and Duties of General Partner. . . . . . . . . . . . . 37
Section 9.3 Expenses Payable by General Partner . . . . . . . . . . . . . 39
Section 9.4 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.5 Investment Company or Tax Actions . . . . . . . . . . . . . . 39
Section 9.6 Outside Businesses. . . . . . . . . . . . . . . . . . . . . . 40
Section 9.7 Limits on General Partner's Powers. . . . . . . . . . . . . . 40
Section 9.8 Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . 42
Section 9.9 Consolidation, Merger or
Sale of Assets. . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE X
TRANSFERS OF INTERESTS BY PARTNERS
Section 10.1 Transfer of Interests . . . . . . . . . . . . . . . . . . . . 44
Section 10.2 Transfer of LP Certificates . . . . . . . . . . . . . . . . . 44
Section 10.3 Persons Deemed Preferred Security
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 10.4 Book-Entry Interests. . . . . . . . . . . . . . . . . . . . . 45
Section 10.5 Notices to Clearing Agency. . . . . . . . . . . . . . . . . . 46
Section 10.6 Definitive LP Certificates. . . . . . . . . . . . . . . . . . 46
ARTICLE XI
WITHDRAWAL; DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 11.1 Withdrawal of Partners. . . . . . . . . . . . . . . . . . . . 46
Section 11.2 Dissolution of the Partnership. . . . . . . . . . . . . . . . 47
Section 11.3 Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.4 Distribution in Liquidation . . . . . . . . . . . . . . . . . 48
Section 11.5 Rights of Limited Partners. . . . . . . . . . . . . . . . . . 49
Section 11.6 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 12.2 Amendment of Certificate. . . . . . . . . . . . . . . . . . . 49
Section 12.3 Meetings of Partners. . . . . . . . . . . . . . . . . . . . . 50
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ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 13.2 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . 51
Section 13.3 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.4 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.5 Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.6 Pronouns and Number . . . . . . . . . . . . . . . . . . . . . 52
Section 13.7 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.8 Partial Enforceability. . . . . . . . . . . . . . . . . . . . 53
Section 13.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 13.10 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ANNEX A -- Form of LP Certificate Evidencing Preferred Securities
ANNEX B -- Form of Notice of Conversion
ANNEX C -- Form of Notice of Exchange
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AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
BEST BUY CAPITAL, L.P.
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Best Buy
Capital, L.P., a Delaware limited partnership (the "PARTNERSHIP"), dated as of
November 3, 1994, among Best Buy Co., Inc., a Minnesota corporation ("BEST
BUY"), as the general partner, Best Buy Financial Corporation, a Delaware
corporation, as the initial limited partner (the "INITIAL LIMITED PARTNER") and
such other Persons (as defined herein) who become Limited Partners (as defined
herein) as provided herein.
WHEREAS, Best Buy and the Initial Limited Partner entered into a
Limited Partnership Agreement, dated as of September 22, 1994 (the "ORIGINAL
LIMITED PARTNERSHIP AGREEMENT");
WHEREAS, the Certificate of Limited Partnership of the Partnership was
filed with the Office of the Secretary of State of the State of Delaware on
September 23, 1994; and
WHEREAS, the Partners desire to continue the Partnership under the Act
(as defined herein) and to amend and restate the Original Limited Partnership
Agreement in its entirety.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
and restate the Original Limited Partnership Agreement as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified.
"ACT" means the Delaware Revised Uniform Limited Partnership Act, as
amended from time to time.
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"ACTION" means any action permitted to be taken by the General Partner
under this Agreement relating to the terms of the Preferred Securities, which
action shall be in writing.
"ADDITIONAL DIVIDENDS" means Dividends that shall accumulate on any
Dividend arrearages in respect of the Preferred Securities at the rate of 6 1/2%
per annum compounded monthly.
"ADDITIONAL INTEREST" means interest that shall accrue on any interest
on the Subordinated Debentures that is not paid monthly and that shall accrue at
the rate of 6 1/2% per annum compounded monthly.
"AFFILIATE" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person, (d) a partnership in which the specified Person is a
general partner, (e) any officer or director of the specified Person and (f) if
the specified Person is an officer, director, general partner or employee, any
other entity for which the specified Person acts in any such capacity.
"AGREEMENT" means this Amended and Restated Agreement of Limited
Partnership, as amended, modified, supplemented or restated from time to time in
accordance with its terms.
"BEST BUY" has the meaning set forth in the forepart of this
Agreement.
"BEST BUY COMMON STOCK" means the Common Stock, par value $.10 per
share, of Best Buy. However, subject to the provisions of Article XII of the
Indenture, shares of Best Buy Common Stock issuable on conversion of Preferred
Securities shall include only shares of the class designated as Common Stock of
Best Buy on the first Closing Date or shares of any class or classes resulting
from any reclassification or reclassifications thereof and which have no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of Best Buy and
which are not subject to redemption by Best Buy; PROVIDED, that if at any
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time there shall be more than one such resulting class, the shares of each
such class then so issuable shall be substantially in the proportion which the
total number of shares of such class resulting from all such reclassifications
bears to the total number of shares of all such classes resulting from all
such reclassifications.
"BEST BUY PREFERRED STOCK" means the Series A Cumulative Convertible
Preferred Stock, par value $1.00 per share, of Best Buy with a liquidation
preference of $5,000 per share.
"BOOK-ENTRY INTEREST" means a beneficial interest in the LP
Certificates, ownership of which shall be recorded and transfers of which shall
be made through the book-entry system of a Clearing Agency as described in
Section 10.4.
"BUSINESS DAY" means any day other than a day on which banking
institutions in The City of New York or Chicago are authorized or required by
law or executive order to close.
"CAPITAL ACCOUNT" has the meaning set forth in Section 3.3.
"CERTIFICATE" means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of Delaware on
September 23, 1994, as it may be amended and restated from time to time.
"CLEARING AGENCY" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Preferred Securities and in whose name (or nominee's name) shall be
registered one or more global LP Certificates and which shall undertake to
effect book-entry transfers and pledges of the Preferred Securities.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects bookentry transfers and pledges of interests in securities
deposited with the Clearing Agency.
"CLOSING DATE" means each "Time of Delivery" under the Underwriting
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, or any corresponding federal tax statute enacted after the date of this
Agreement. A reference to a specific section (SECTION) of the Code refers not
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only to such specific section but also to any corresponding provision of any
federal tax statute enacted after the date of this Agreement, as such specific
section or corresponding provision is in effect on the date of application of
the provisions of this Agreement containing such reference.
"CONVERSION AGENT" has the meaning set forth in Section 6.3(c) of this
Agreement.
"CONVERSION DATE" has the meaning set forth in Section 6.3(b) of this
Agreement.
"CONVERSION EXPIRATION DATE" has the meaning set forth in
Section 6.3(d)(iii) of this Agreement.
"CONVERSION PRICE" has the meaning set forth in Section 6.3(a) of this
Agreement.
"CURRENT MARKET PRICE" of Best Buy Common Stock for any day means the
last reported sales price, regular way on such day, or, if no sale takes place
on such day, the average of the reported closing bid and asked prices on such
day, regular way, in either case as reported on the New York Stock Exchange
Consolidated Transaction Tape, or, if the Best Buy Common Stock is not listed or
admitted to trading on the New York Stock Exchange, on the principal national
securities exchange on which the Best Buy Common Stock is listed or admitted to
trading, if the Best Buy Common Stock is listed on a national securities
exchange, or the National Market System of the National Association of
Securities Dealers, Inc., or, if the Best Buy Common Stock is not quoted or
admitted to trading on such quotation system, on the principal quotation system
on which the Best Buy Common Stock may be listed or admitted to trading or
quoted, or, if not listed or admitted to trading or quoted on any national
securities exchange or quotation system, the average of the closing bid and
asked prices of the Best Buy Common Stock in the over-the-counter market on the
day in question as reported by the National Quotation Bureau Incorporated, or a
similar generally accepted reporting service, or, if not so available in such
manner, as furnished by any New York Stock Exchange member firm selected from
time to time by the Board of Directors of Best Buy for that purpose or, if not
so available in such manner, as otherwise determined in good faith by the Board
of Directors.
"DEFINITIVE LP CERTIFICATES" has the meaning set forth in Section 10.4
of this Agreement.
"DEPOSITARY" means Harris Trust and Savings Bank and its successors
and assigns.
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"DEPOSIT AGREEMENT" means the Deposit Agreement dated as of
November 3, 1994 among Best Buy, the Depositary, and the holders from time to
time of the Depositary Receipts.
"DEPOSITARY RECEIPT" means one of the deposit receipts, issued by the
Depositary under the Deposit Agreement, each representing any number of whole
Depositary Shares.
"DEPOSITARY SHARES" means the depositary shares, each representing a
1/100th interest in a share of Best Buy Preferred Stock deposited with the
Depositary pursuant to the Deposit Agreement.
"DIVIDENDS" means the cumulative cash distributions from the
Partnership with respect to the Interests represented by the Preferred
Securities, accruing from the first Closing Date and payable monthly in arrears
on the last day of each calendar month of each year, commencing November 30,
1994.
"DIVIDEND PAYMENT DATE" has the meaning set forth in Section
6.2(b)(ii) of this Agreement.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"ELIGIBLE INVESTMENT ACCOUNT" means either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States of America or any one of the states thereof or the District
of Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as any
of the securities of such depository institution shall have a credit rating from
each Rating Agency in one of its generic rating categories which signifies
investment grade.
"ELIGIBLE INSTITUTION" means (a) the Trustee or (b) a depository
institution organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia (or any domestic branch of a
foreign bank), (1) (i) which has either (A) a long-term unsecured debt rating of
AAA or better by S&P's and Aaa or better by Moody's or (B) a short-term
unsecured debt rating or a certificate of deposit rating of A-1+ or better by
S&P's and P-1 or better by Moody's and (ii) whose deposits are insured by the
FDIC or (2) (i) the parent of which has a long-term or short-term unsecured debt
rating which signi-
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fies investment grade and (ii) whose deposits are insured by the FDIC.
"ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable
instruments, cash or securities represented by instruments in bearer or
registered form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the Government of the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any state thereof and subject to supervision
and examination by federal or state banking or depository institution
authorities; PROVIDED, HOWEVER, that at the time of the investment or
contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall have a credit rating
from each of S&P's, Moody's and, if rated by Fitch, Fitch in the highest
investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of S&P's,
Moody's and, if rated by Fitch, Fitch in the highest investment rating
category granted thereby;
(d) investments in money market funds having a rating from each of
S&P's and Moody's in the highest investment rating category granted
thereby;
(e) demand deposits, time deposits and certificates of deposit which
are fully insured by the FDIC;
(f) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above; or
(g) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the Government of the United
States of America or any agency or instrumentality thereof, the obligations
of which are backed by the full faith and credit of the United States of
America, in either case entered into with (i) a depository institution or
trust
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company (acting as principal) described in clause (b) or (ii) a depository
institution or trust company which is an Eligible Institution and the deposits
of which are insured by the FDIC.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE DATE" has the meaning specified in Section 6.4(e) of this
Agreement.
"EXCHANGE ELECTION" has the meaning specified in Section 6.4(c) of
this Agreement.
"EXCHANGE ELECTION MEETING" has the meaning specified in Section
6.4(c) of this Agreement.
"EXCHANGE EVENT" has the meaning specified in Section 6.4(b) of this
Agreement.
"EXCHANGE PRICE" means one Depositary Share (with a proportionate
liquidation preference per share of $50) representing a 1/100th interest in a
share of Best Buy Preferred Stock (with a liquidation preference per share of
$5,000) for each $50 principal amount of Subordinated Debentures (which rate of
exchange is equivalent to one Depositary Share representing Best Buy Preferred
Stock for one Preferred Security).
"FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.
"FISCAL PERIOD" means each calendar month.
"FISCAL YEAR" means (i) the period commencing upon the formation of
the Partnership and ending on December 31, 1994, and (ii) any subsequent twelve
(12) month period commencing on January 1 and ending on December 31.
"FITCH" means Fitch Investors Service, Inc. or any successor thereto.
"GENERAL PARTNER" means Best Buy in its capacity as general partner of
the Partnership, its permitted successors, or any successor general partner in
the Partnership admitted as such pursuant to the applicable provisions of this
Agreement.
"GUARANTEE" means the Guarantee Agreement dated as of November 3, 1994
of Best Buy in favor of the Preferred Security Holders with respect to the
Preferred Securities.
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"HOLDER" or "PREFERRED SECURITY HOLDER" means a Limited Partner in
whose name an LP Certificate representing Preferred Securities is registered.
"INDENTURE" means the Indenture, dated as of November 3, 1994, among
Best Buy, the Partnership and the Trustee relating to the Subordinated
Debentures.
"INITIAL LIMITED PARTNER" means Best Buy Financial Corporation, a
Delaware corporation.
"INTEREST" means the entire ownership interest of a Partner in the
Partnership at any particular time, including, without limitation, its interest
in the capital, profits, losses and distributions of the Partnership.
"LIMITED PARTNER" means any Person who is admitted to the Partnership
as a Limited Partner pursuant to the terms of this Agreement.
"LIQUIDATION DISTRIBUTION" has the meaning set forth in Section
6.2(f).
"LIQUIDATOR" has the meaning specified in Section 11.3 of this
Agreement.
"LP CERTIFICATE" means a certificate substantially in the form
attached hereto as Annex A, evidencing the Preferred Securities held by a
Limited Partner.
"MAJORITY (OR OTHER STATED PERCENTAGE) IN LIQUIDATION PREFERENCE"
means Holder(s) of Preferred Securities who are the record owners of Preferred
Securities whose aggregate liquidation preferences represent not less than 50%
or not less than such stated percentage of the aggregate liquidation preference
of all Preferred Securities then outstanding.
"MOODY'S" means Moody's Investors Service, Inc. or any successor
thereto.
"NET INCOME" and "NET LOSS", respectively, for any Fiscal Period means
the income and loss, respectively, of the Partnership for such Fiscal Period as
determined in accordance with the method of accounting followed by the
Partnership for federal income tax purposes, including, for all purposes, the
net income, if any, from Eligible Investments and any income exempt from tax and
any expenditures of the Partnership which are described in Code Section 705(a)
(2)(B); PROVIDED, HOWEVER, that any item allocated under
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Section 4.2 shall be excluded from the computation of Net Income and Net Loss.
"NOTICE OF CONVERSION" has the meaning set forth in Section 4.2 of
this Agreement.
"NOTICE OF CONVERSION EXPIRATION" has the meaning set forth in
Section 6.3(d)(iii) of this Agreement.
"NOTICE OF EXCHANGE" has the meaning specified in Section 6.4(d) of
this Agreement.
"NYSE" means the New York Stock Exchange, Inc.
"ORIGINAL LIMITED PARTNERSHIP AGREEMENT" has the meaning set forth in
the recitals to this Agreement.
"PARTNERS" means the General Partner and, if appointed pursuant to
Section 6.2(g), any Special General Partner and the Limited Partners,
collectively, where no distinction is required by the context in which the term
is used.
"PARTNERSHIP" means the limited partnership formed under the Act
pursuant to the Original Limited Partnership Agreement upon filing of the
Certificate, and continued pursuant to this Agreement.
"PARTNERSHIP DISTRIBUTION ACCOUNT" has the meaning specified in
Section 3.6(b) of this Agreement.
"PERSON" means any individual, corporation, association, partnership,
trust or other entity.
"POWER OF ATTORNEY" means the Power of Attorney granted pursuant to
Section 13.2.
"PREFERRED SECURITIES" means the Interests of Limited Partners
represented by one or more LP Certificates and described in Article VI.
"PREFERRED SECURITY OWNER" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency or Clearing Agency Participant).
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"PRESS RELEASE" has the meaning set forth in Section 6.3(d)(ii) of
this Agreement.
"PURCHASE PRICE" for any Preferred Security means the amount paid per
Preferred Security pursuant to the Underwriting Agreement, payment of which
shall constitute the contribution to capital contemplated by Section 3.1(c).
"REDEMPTION PRICE" has the meaning set forth in Section 6.2(d).
"RATING AGENCIES" means Fitch, Moody's and S&P.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SPECIAL GENERAL PARTNER" means the Person appointed (i) to enforce
Preferred Security Holders' rights under the Guarantee, (ii) to enforce the
Partnership's rights against Best Buy under the Subordinated Debentures or (iii)
to exercise rights otherwise exercisable by the General Partner to declare and
pay distributions on the Preferred Securities as provided in Section 6.2(g) of
this Agreement.
"S&P" means Standard & Poor's Ratings Group or any successor thereof.
"SUBORDINATED DEBENTURES" means the convertible subordinated
debentures of Best Buy issued pursuant to the Indenture and sold by Best Buy to
the Partnership in connection with the issuance and sale by the Partnership of
the Preferred Securities.
"TAX MATTERS PARTNER" means the General Partner designated as such in
Section 9.8 hereof.
"TRADING DAY" means, with respect to any security listed for trading
on the New York Stock Exchange, any day on which such securities are traded on
the New York Stock Exchange.
"TRANSFER AGENT" means Harris Trust and Savings Bank and its
successors and assigns.
"TREASURY REGULATIONS" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
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"TRUSTEE" means Harris Trust and Savings Bank, the trustee under the
Indenture, and its successors and assigns.
"UNDERWRITERS" means the underwriters named in Schedule I to the
Underwriting Agreement.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated
October 27, 1994, among Best Buy, the Partnership and the several Underwriters
named therein relating to the issuance of the Preferred Securities.
Section 1.2 HEADINGS. The headings and subheadings in this Agreement
are included for convenience and identification purposes only and are in no way
intended to describe, interpret, define or limit the scope, extent or intent of
this Agreement or any provision hereof.
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PREFERRED SECURITY HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.1 CONTINUATION OF THE PARTNERSHIP. The parties hereto
agree to continue the Partnership in accordance with the terms of this
Agreement. The General Partner, for itself and as agent for the Limited
Partners, shall make every reasonable effort to assure that an amendment to the
Certificate of Limited Partnership reflecting this Agreement, and all other
certificates and documents, are properly executed and shall accomplish all
filing, recording, publishing and other acts necessary or appropriate for
compliance with all the requirements for the continuation of the Partnership as
a limited partnership under the Act and under all other laws of the State of
Delaware or such other jurisdictions in which the General Partner determines
that the Partnership may conduct business. The rights and duties of the
Partners shall be as provided herein and, subject to the terms hereof, in the
Act.
Section 2.2 NAME. The name of the Partnership is "Best Buy Capital,
L.P.", as such name may be modified from time to time by the General Partner
following written notice to the Limited Partners.
Section 2.3 BUSINESS OF THE PARTNERSHIP. The purposes of the
Partnership are (a) to issue limited partnership interests in the Partnership in
the form of Preferred Securities, and to use substantially all of the
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proceeds thereof and substantially all of the proceeds from the capital
contributed to the Partnership by the General Partner to purchase Subordinated
Debentures of Best Buy, (b) to invest, at all times, at least 1% of the total
capital contributed to the Partnership by the Partners in the Eligible
Investment Account as provided herein and (c) except as otherwise limited
herein, to enter into, make and perform all contracts and other undertakings,
and engage in all activities and transactions as the General Partner may
reasonably deem necessary or advisable for the carrying out of the foregoing
purposes of the Partnership. The Partnership may not conduct any other business
or operations except as contemplated by the preceding sentence.
Section 2.4 TERM. The term of the Partnership shall commence upon
the filing of the Certificate in the Office of the Secretary of State of the
State of Delaware and shall continue until December 31, 2039, unless dissolved
before such date in accordance with the provisions of this Agreement.
Section 2.5 REGISTERED AGENT AND OFFICE. The Partnership's
registered agent and office in Delaware shall be The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801. At any time, the General Partner may designate another
registered agent and/or registered office.
Section 2.6 PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Partnership shall be 7075 Flying Cloud Drive, Eden Prairie,
Minnesota 55344. Upon ten days written notice to the Partners, the General
Partner may change the location of the Partnership's principal place of
business, provided that such change has no material adverse effect upon any
Partner.
Section 2.7 NAME AND BUSINESS ADDRESS OF GENERAL PARTNER. The name
and address of the General Partner are as follows:
Best Buy Co., Inc.
7075 Flying Cloud Drive
Eden Prairie, Minnesota 55344
Attention: Chief Financial Officer
The General Partner may change its name or business address from time to time,
in which event the General Partner shall promptly notify the Limited Partners of
any such change.
Section 2.8 QUALIFICATION TO DO BUSINESS. The General Partner shall
cause the Partnership to become quali-
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fied, formed or registered under the
applicable qualification, fictitious name or similar laws of any jurisdiction in
which the Partnership transacts business.
Section 2.9 ADMISSION OF HOLDERS OF PREFERRED SECURITIES; WITHDRAWAL
OF INITIAL LIMITED PARTNER.
(a) Without execution of this Agreement, upon the acquisition of an
LP Certificate by a Person, whether by purchase, gift, devise or otherwise,
which acquisition shall be deemed to constitute a request by such Person that
the books and records of the Partnership reflect such Person's admission as a
Limited Partner, such Person shall be admitted to the Partnership as a Limited
Partner and shall become bound by this Agreement.
(b) Following the first admission of a Preferred Security Holder to
the Partnership as a Limited Partner, the Initial Limited Partner shall withdraw
from the Partnership and shall receive the return of its capital contribution
without interest or deduction.
(c) The name and mailing address of each Partner and the amount
contributed by such Partner to the capital of the Partnership shall be listed on
the books and records of the Partnership. The General Partner shall be required
to update the books and records from time to time as necessary to accurately
reflect such information.
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PREFERRED SECURITY HOLDER'S INTEREST; CAPITAL ACCOUNTS
Section 3.1 CAPITAL CONTRIBUTIONS.
(a) The General Partner has, on or prior to the first Closing Date,
contributed an aggregate of $21.00 to the capital of the Partnership. The
General Partner shall on or prior to each Closing Date, make such additional
capital contributions as are necessary to maintain its Capital Account balance
at an amount equal to at least 21% of the aggregate positive Capital Account
balances of all Partners as of the time of each such Closing Date.
(b) The Initial Limited Partner has, prior to the date hereof,
contributed the amount of $79.00 to the capital of the Partnership, which amount
will be returned to the Initial Limited Partner as contemplated by Section
2.9(b).
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(c) On each Closing Date, each Person who acquires a Preferred
Security from the Partnership shall, as the consideration for the acquisition of
such Preferred Security, contribute to the capital of the Partnership an amount
in cash equal to the Purchase Price for such Preferred Security.
(d) No Limited Partner shall at any time be required to make any
additional capital contributions to the Partnership, except as may be required
by law.
Section 3.2 PREFERRED SECURITY HOLDER'S INTEREST REPRESENTED BY
LP CERTIFICATE. A Preferred Security Holder's Interest shall be represented by
the LP Certificate held by or on behalf of such Holder. Each Preferred Security
Holder's respective ownership of Preferred Securities shall be set forth on the
books and records of the Partnership. Each Holder hereby agrees that its
Interest represented by its LP Certificate shall for all purposes be personal
property. A Preferred Security Holder shall have no interest in specific
Partnership property.
Section 3.3 CAPITAL ACCOUNTS. An individual capital account (a
"CAPITAL ACCOUNT") shall be established and maintained on the books of the
Partnership for each Partner in compliance with Treasury Regulation
SECTIONS 1.704-1(b)(2)(iv) and 1.704-2, as amended. Subject to the preceding
sentence, each Capital Account will be increased by the amount of the capital
contributions (including the Purchase Price) made by, and the Net Income
allocated to, such Partner (or predecessor in interest) and reduced by the
amount of distributions made by the Partnership, and Net Losses allocated, to
the Partner (or predecessor thereof). In addition, a Partner's Capital Account
shall be increased or decreased, as the case may be, for any items specifically
allocated to such Partner under Section 4.2 of this Agreement, and, to the
extent permitted under such Treasury Regulation, the General Partner's Capital
Account will be increased to the extent the General Partner pays any costs or
expenses of the Partnership directly out of the General Partner's own funds.
Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS. Except as provided
herein, no Partner shall be entitled to interest on or with respect to any
capital contribution to the Partnership.
Section 3.5 WITHDRAWAL AND RETURN OF CAPITAL CONTRIBUTIONS. Subject
to Section 3.l(b), no Partner shall be entitled to withdraw any part of such
Partner's capital contribution to the Partnership. No Partner shall be
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entitled to receive any distributions from the Partnership, except as provided
in this Agreement.
Section 3.6 INVESTMENT OF CAPITAL CONTRIBUTIONS.
(a) The General Partner shall establish and maintain in the name of
the Partnership an Eligible Investment Account bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Partners. On each Closing Date, the General Partner shall deposit from the
proceeds of the aggregate capital contributions received from the Partners an
amount equal to at least 1% of such aggregate capital contributions into the
Eligible Investment Account. On the first Closing Date, the amount so deposited
by the General Partner shall equal $2,911,392.
(b) Funds on deposit in the Eligible Investment Account shall be
invested by the General Partner in Eligible Investments; PROVIDED, HOWEVER, it
is understood and agreed that the General Partner shall not be liable for any
loss arising from such investment in Eligible Investments; PROVIDED FURTHER that
none of the funds deposited in the Eligible Investment Account shall be invested
in an Eligible Investment or Eligible Investments issued by the General Partner
or an Affiliate thereof for a period of five years following the Closing Date.
All such Eligible Investments shall be held by the General Partner for the
benefit of the Partnership, PROVIDED, HOWEVER, that on the day preceding each
Dividend Payment Date all interest and other investment income (net of losses
and investment expenses) on funds on deposit in the Eligible Investment Account
shall be deposited into an account maintained by the Partnership for receipt of
income on the Subordinated Debentures (the "PARTNERSHIP DISTRIBUTION ACCOUNT")
and shall constitute a portion of the Partnership's Net Income eligible for
distribution to the Partners. Funds on deposit in the Eligible Investment
Account shall be invested in Eligible Investments that will mature prior to the
next succeeding Dividend Payment Date.
ARTICLE IV
ALLOCATIONS
Section 4.1 PROFITS AND LOSSES. After giving effect to the special
allocations set forth in Section 4.2,
(a) the Partnership's Net Income for each Fiscal Period of the
Partnership shall be allocated as follows:
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(i) First, to each Holder, as of the close of business on the record
date for such Fiscal Period, an amount of Net Income equal to the excess of
(x) the Dividends accrued on such Holder's Preferred Securities from the
first Closing Date through and including the close of business on the
record date for such Fiscal Period, including any Additional Dividends
payable with respect thereto, over (y) the amount of Net Income allocated
to each such Holder (or predecessor thereof) pursuant to this Section
4.1(a)(i) in all prior Fiscal Periods, including any Additional Dividends
payable with respect thereto.
(ii) Second, to each Holder, as of the close of business on the
record date for such Fiscal Period, an amount of Net Income equal to the
excess of (x) all Net Losses allocated to each such Holder (or predecessor
thereof) from the date of issuance of each of such Holder's Preferred
Securities through and including the close of such Fiscal Period pursuant
to Section 4.1(b)(ii) over (y) the amount of Net Income allocated to such
Holder (or predecessor thereof) pursuant to this Section 4.1(a)(ii) in all
prior Fiscal Periods.
(iii) Any remaining Net Income shall be allocated to the General
Partner.
(b) The Partnership's Net Loss for any Fiscal Period shall be
allocated as follows:
(i) First, to the General Partner until the balance of the General
Partner's Capital Account is reduced to zero.
(ii) Second, among the Holders in proportion to their respective
aggregate Capital Account balances, until the Capital Account balances of
such Holders are reduced to zero; PROVIDED, HOWEVER, that the General
Partner shall make appropriate adjustments in these allocations, in
accordance with Section 4.1(c), with respect to any Preferred Securities as
to which Net Income has been allocated with respect to Dividends that
accrued but were not paid.
(iii) Any remaining Net Loss shall be allocated to the General
Partner.
(c) The General Partner shall make such changes to the allocations in
Sections 4.1(a) and 4.1(b) as it deems reasonably necessary so that, in the year
of the Partnership's liquidation, amounts distributed to the
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Preferred Security Holders in accordance with Section 11.4(ii) shall equal their
Liquidation Distributions.
Section 4.2 SPECIAL ALLOCATIONS.
(a) If a Holder delivers to the Conversion Agent an irrevocable
notice of conversion substantially in the form of Annex B hereto ("NOTICE OF
CONVERSION") pursuant to Section 6.3(b) of this Agreement, such Holder shall be
allocated any interest (including original issue discount) accruing on a daily
basis on the Subordinated Debentures so converted until the date of such
conversion, but only to the extent such interest was not previously allocated to
the Partners in a prior Fiscal Period as part of Net Income under Section 4.1(a)
of this Agreement.
(b) All expenditures described in Code Section 705(a)(2)(B) that are
incurred by, or on behalf of, the Partnership and paid by the General Partner
shall be allocated entirely to the General Partner.
(c) In the event any Holder unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation
SECTION 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership Net Income
shall be specially allocated to such Holder in an amount and manner sufficient
to eliminate, to the extent required by the Treasury Regulations, the deficit,
if any, in the balance of the Capital Account of such Holder as quickly as
possible. This Section 4.2(c) is intended to comply with the qualified income
offset provision in SECTION 1.704-1(b)(2)(ii)(d) of the Treasury Regulations.
(d) For purposes of determining the profits, losses or any other
items allocable to any period, profits, losses and any such other items shall be
determined on a daily, monthly or other basis, as determined by the General
Partner using any method that is permissible under SECTION 706 of the Code and
the Treasury Regulations promulgated thereunder. Unless otherwise specified,
such profits, losses or other items shall be determined for each Fiscal Period.
(e) The Partners and Holders, by becoming parties to this Agreement,
either by execution hereof or pursuant to Section 2.9, will be deemed to be
aware of the income tax consequences of the allocations made by this Article IV
and will be deemed to have agreed to be bound by the provisions of this Article
IV in reporting their shares of Partnership Net Income and Net Loss for U.S.
federal income tax purposes.
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(f) Notwithstanding anything to the contrary that may be expressed or
implied in this Article IV, the interest of the General Partner in each item of
income, gain, loss, deduction and credit will be equal to at least (i) at any
time that aggregate capital contributions to the Partnership are equal to or
less than $50,000,000, 1% of each such item and (ii) at any time that aggregate
capital contributions to the Partnership are greater than $50,000,000, 1% of
each such item, multiplied by a fraction (not exceeding one and not less than
0.2), the numerator of which is $50,000,000 and the denominator of which is the
lesser of the aggregate Capital Account balances of the Capital Accounts of all
Partners at such time and the aggregate capital contributions to the Partnership
of all Partners at such time.
(g) The Partners intend that the allocations under Section 4.1
conform to Treasury Regulations SECTIONS 1.704-1(b) and 1.704-2 (including,
without limitation, the minimum gain chargeback, chargeback of partner non-
recourse debt minimum gain, qualified income offset and partner nonrecourse
debt provisions of such Treasury Regulations), and the General Partner shall
make such changes in the allocations under Section 4.1 as it believes are
reasonably necessary to meet the requirements of such Treasury Regulations.
(h) Solely for the purpose of adjusting the Capital Accounts of the
Partners, and not for tax purposes, if any property is distributed in kind to
any Partner, the difference between its fair market value and its book value at
the time of distribution shall be treated as gain or loss recognized by the
Partnership and allocated pursuant to the provisions of Section 4.1.
Section 4.3 ALLOCATIONS FOR INCOME TAX PURPOSES. The income, gains,
losses, deductions and credits of the Partnership shall be allocated in the same
manner as the items entering into the computation of Net Income and Net Loss are
allocated under Sections 4.1 and 4.2; PROVIDED, HOWEVER, that solely for
federal, state and local income and franchise tax purposes, but not for book or
Capital Account purposes, income, gain, loss and deductions with respect to any
property properly carried on the Partnership's books at a value other than the
tax basis of such property shall be allocated in a manner determined in the
General Partner's discretion, so as to take into account (consistently with Code
Section 704(c) principles) the difference between such property's book value and
its tax basis. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner is authorized to modify the allocations of
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this Section 4.3, and Sections 4.1 and 4.2, if necessary or appropriate, in
the General Partner's sole discretion, for the allocations to fairly reflect
the economic gain, income or loss to each of the Partners, or as otherwise
required by the Code or the Treasury Regulations.
Section 4.4 WITHHOLDING. The Partnership shall comply with
withholding requirements under federal, state and local law and shall remit
amounts withheld to and file required forms with applicable jurisdictions. To
the extent that the Partnership is required to withhold and pay over any amounts
to any authority with respect to distributions or allocations to any Partner,
the amount withheld shall be deemed to be a distribution in the amount of the
withholding to the Partner. In the event of any claimed over-withholding,
Partners shall be limited to an action against the applicable jurisdiction. If
the amount withheld was not withheld from actual distributions, the Partnership
may reduce subsequent distributions by the amount of such withholding. Each
Partner agrees to furnish the Partnership with any representations and forms as
shall reasonably be requested by the Partnership to assist it in determining the
extent of, and in fulfilling, its withholding obligations.
ARTICLE V
DIVIDENDS AND DISTRIBUTIONS
Section 5.1 DIVIDENDS. Limited Partners shall receive periodic
Dividends, if any, redemption payments and liquidation distributions in
accordance with the terms of the Preferred Securities set forth in Article VI.
Subject to the rights of the Preferred Security Holders, all cash remaining in
the Partnership Distribution Account shall be distributed to the General Partner
at such time as the General Partner shall determine.
Section 5.2 LIMITATIONS ON DISTRIBUTIONS. The Partnership shall not
make a distribution to any Partner on account of such Partner's Interest if such
distribution would violate Section 17-607 of the Act or other applicable law.
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ARTICLE VI
ISSUANCE OF PREFERRED SECURITIES
Section 6.1 GENERAL PROVISIONS REGARDING PREFERRED SECURITIES.
(a) There is hereby authorized for issuance and sale Preferred
Securities having an aggregate liquidation preference not greater than
$230,000,000 and having the designation, annual Dividend rate, liquidation
preference, redemption terms, conversion and exchange rights and other powers,
preferences and special rights and limitations set forth in this Article VI.
The aggregate liquidation preference of Preferred Securities authorized
hereunder shall be reduced 30 days after the first Closing Date to the aggregate
liquidation preference of such Preferred Securities as shall have been purchased
through such date by the Underwriters.
(b) The payment of Dividends and payments of distributions by the
Partnership in liquidation or on redemption in respect of Preferred Securities
shall be guaranteed by Best Buy pursuant to, and to the extent provided in, the
Guarantee. In the event of an appointment of a Special General Partner pursuant
to Section 6.2(g), among other things, to enforce the Guarantee, the Special
General Partner may take possession of the Guarantee for such purpose. The
Preferred Security Holders, by acceptance of such Preferred Securities,
acknowledge and agree to the subordination provisions and other terms of the
Guarantee.
(c) The proceeds received by the Partnership from the issuance of
Preferred Securities, together with the proceeds of the capital contributed by
the General Partner pursuant to Section 3.1(a) of this Agreement, but less any
amounts deposited by the General Partner in the Eligible Investment Account
pursuant to Section 3.6(a), shall be invested by the Partnership in Subordinated
Debentures with (i) an aggregate principal amount equal to such aggregate
invested proceeds and (ii) an interest rate at least equal to the Dividend rate
of the Preferred Securities.
(d) The Partnership may not issue any other interests in the
Partnership, without the approval of the Holders of not less than 66 2/3% in
Liquidation Preference of the Preferred Securities; PROVIDED, HOWEVER, that the
Partnership may issue a general partnership interest to the Special General
Partner. All Preferred Securities shall rank senior to all other Interests in
the Partnership in respect of the right to receive Dividends or other
distribu-
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tions and the right to receive payments out of the assets of the
Partnership upon voluntary or involuntary liquidation, dissolution, winding-up
or termination of the Partnership. All Preferred Securities redeemed, purchased
or otherwise acquired by the Partnership (including Preferred Securities
surrendered for conversion or exchange) shall be canceled. The Preferred
Securities will be issued in registered form only. Dividends on all Preferred
Securities shall be cumulative.
(e) No Holder shall be entitled as a matter of right to subscribe for
or purchase, or have any preemptive right with respect to, any part of any new
or additional limited partnership interests, or of securities convertible into
any Preferred Securities or other limited partnership interests, whether now or
hereafter authorized and whether issued for cash or other consideration or by
way of a Dividend.
(f) Neither Best Buy nor any Affiliate of Best Buy shall have the
right to vote or give or withhold consent with respect to any Preferred Security
owned by it, directly or indirectly, and, for purposes of any matter upon which
the Limited Partners may vote or give or withhold consent as provided in this
Agreement, Preferred Securities owned by Best Buy or any Affiliate shall be
treated as if they were not outstanding.
Section 6.2 PREFERRED SECURITIES.
(a) DESIGNATION. The Preferred Securities, liquidation preference
$50 per Preferred Security, are hereby designated as "6 1/2 % CONVERTIBLE
MONTHLY INCOME PREFERRED SECURITIES".
(b) DIVIDENDS. (i) Preferred Security Holders shall be entitled to
receive, when, as and if declared by the General Partner, cumulative Dividends
at a rate per annum of 6 1/2% of the stated liquidation preference of $50 per
Preferred Security, calculated on the basis of a 360-day year consisting of 12
months of 30 days each. For any period shorter than a full monthly Dividend
period, Dividends will be computed on the basis of the actual number of days
elapsed in such period. Dividends shall be payable in United States dollars
monthly in arrears on the last day of each calendar month of each year,
commencing November 30, 1994. Such Dividends will accrue and be cumulative
whether or not they have been declared and whether or not there are funds of the
Partnership legally available for the payment of Dividends. Dividends on the
Preferred Securities shall be cumulative from the first Closing Date.
Additional
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Dividends upon any Dividend arrearages shall be declared and paid in
order to provide, in effect, monthly compounding on such Dividend arrearages at
a rate of 6 1/2% per annum compounded monthly and such Additional Dividends
shall accumulate. In the event that any date on which Dividends are payable on
the Preferred Securities is not a Business Day, then payment of the Dividend
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
(ii) Dividends on the Preferred Securities must be declared monthly
and be paid on the last day of each calendar month (each a "DIVIDEND PAYMENT
DATE") to the extent that the Partnership has, on such date, (x) funds legally
available for the payment of such Dividends and (y) cash on hand sufficient to
permit such payments, it being understood that to the extent that funds are not
available to pay in full all accumulated and unpaid Dividends, the Partnership
may pay partial pro rata Dividends to the extent of funds legally available
therefor. For purposes of this Section 6.2(b), net interest and investment
income from funds on deposit in the Eligible Investment Account that is
transferred into the Partnership Distribution Account shall be considered funds
available for the payment of Dividends; PROVIDED, HOWEVER, that the principal
amount of Eligible Investments shall not be available as distributions as
Dividends or otherwise except in connection with a liquidating distribution
pursuant to Section 11.4 of this Agreement. Dividends will be payable to the
Holders as they appear on the books and records of the Partnership on the
relevant record dates, which will be one Business Day prior to the related
Dividend Payment Date. In the event of any extended interest payment period
with respect to the Subordinated Debentures resulting in the deferral of the
payment of Dividends on the Preferred Securities, the Partnership shall give
written notice by first-class mail to the Holders as to such extended interest
payment period no later than the last date on which it would be required to
notify the NYSE of the record or payment date of the related Dividend on the
Preferred Securities.
(iii) The Partnership shall not:
(A) pay, declare or set aside for payment, any dividends or other
distributions on any other Interests in the Partnership; or
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(B) redeem, purchase or otherwise acquire any other Interests in the
Partnership;
until, in each case, such time as all accumulated and unpaid Dividends on all of
the Preferred Securities, including any Additional Dividends thereon, shall have
been paid in full for all Dividend periods terminating on or prior to the date
of such payment or the date of such redemption, purchase or acquisition, as the
case may be.
(iv) In the event of an election by the Holder to convert its
Preferred Securities through the Conversion Agent into Best Buy Common Stock
pursuant to Section 6.3 of this Agreement, neither Best Buy nor the Partnership
shall make, or be required to make, any payment, allowance or adjustment with
respect to accumulated and unpaid Dividends on such Preferred Securities;
PROVIDED that Holders of Preferred Securities at the close of business on any
record date for the payment of Dividends will be entitled to receive the
Dividend payable on such Preferred Securities on the corresponding Dividend
Payment Date notwithstanding the conversion of such Preferred Securities into
Best Buy Common Stock following such record date.
(d) REDEMPTION. (i) If at any time following the Conversion
Expiration Date, less than five percent (5%) of the Preferred Securities issued
and sold pursuant to the Underwriting Agreement remain outstanding, such
Preferred Securities shall be redeemable, at the option of the Partnership, in
whole but not in part, from time to time, upon not fewer than 30 nor more than
60 days' prior notice, at a redemption price equal to the liquidation preference
per Preferred Security plus accumulated and unpaid Dividends (whether or not
earned or declared) to the date fixed for redemption, including any Additional
Dividends accrued thereon (the "REDEMPTION PRICE").
(ii) Upon repayment at maturity of the Subordinated Debentures or as
a result of acceleration of the Subordinated Debentures, the Preferred
Securities shall be redeemable, in whole but not in part, at the Redemption
Price, and the proceeds from such repayment shall be applied to redeem the
Preferred Securities at the Redemption Price. In the case of such acceleration,
the Preferred Securities shall only be redeemed when repayment of the
Subordinated Debentures has actually been received by the Partnership.
(e) REDEMPTION PROCEDURES. (i) Notice of any redemption (a "NOTICE
OF REDEMPTION") of the Preferred Securities to be redeemed will be given by the
Partnership by first-class mail to each record Holder of Preferred
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Securities not fewer than 30 nor more than 60 days prior to the date fixed for
redemption thereof following the issuance of a notice of redemption of the
Subordinated Debentures by Best Buy to the Partnership. For purposes of the
calculation of the date of redemption and the dates on which notices are given
pursuant to this paragraph (e)(i), a Notice of Redemption shall be deemed to
be given on the day such notice is first mailed by first-class mail, postage
prepaid, to each Holder of Preferred Securities. Each Notice of Redemption
shall be addressed to each Holder of Preferred Securities at the address of
the Holder appearing in the books and records of the Partnership. If all of
the Preferred Securities are represented by Book-Entry Interests, Notices of
Redemption shall be sent to the Clearing Agency. No defect in the Notice
of Redemption or in the mailing thereof with respect to any Preferred Security
shall affect the validity of the redemption proceedings with respect to any
other Preferred Security.
(ii) If, following a notice of redemption of all outstanding
Subordinated Debentures, the Partnership issues a Notice of Redemption, then, by
12:00 noon, New York time, on the redemption date, Best Buy will repay to the
Partnership an aggregate principal amount of the Subordinated Debentures which,
together with accrued and unpaid interest and any Additional Interest thereon,
will be an amount sufficient to pay the Redemption Price for all Preferred
Securities then outstanding. If all of the Preferred Securities are represented
by Book-Entry Interests, the Partnership shall irrevocably deposit such funds
with the Clearing Agency and give the Clearing Agency irrevocable instructions
and authority to pay the Redemption Price to the Holders of Preferred Securities
and otherwise the Partnership may pay the Redemption Price by check. If a
Notice of Redemption shall have been issued and funds deposited as required or a
check deposited in the U.S. mails postage prepaid, then upon the date of such
deposit, all rights of the Preferred Security Holders who hold such Preferred
Securities so called for redemption will cease, except the right of the Holders
of such securities to receive the Redemption Price, but without interest from
and after such redemption date. In the event that any date fixed for redemption
of Preferred Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day. In the event
that payment of the Redemption Price in respect of Preferred Securities is
improperly withheld or refused and
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not paid either by the Partnership or by Best
Buy pursuant to the Guarantee, Dividends on such Preferred Securities (including
any Additional Dividends thereon) will continue to accumulate at the then
applicable rate, from the original redemption date to the date that the
Redemption Price is actually paid.
(f) LIQUIDATION RIGHTS. In the event of any voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Partnership, the
Holders of Preferred Securities at the time outstanding will be entitled to
receive out of the assets of the Partnership (including any Eligible Investments
or amounts deposited in the Eligible Investment Account) legally available for
distribution to Partners after satisfaction of liabilities of creditors as
required by the Act before any distribution of assets is made with respect to
any other Interest in the Partnership, an amount equal to the aggregate of the
stated liquidation preference of $50 per Preferred Security and accumulated and
unpaid Dividends (whether or not earned or declared) to the date of payment,
including any Additional Dividends accrued thereon (the "LIQUIDATION
DISTRIBUTION").
(g) VOTING RIGHTS -- SPECIAL GENERAL PARTNER. (i) If (x) the
Partnership fails to pay Dividends in full on the Preferred Securities for 15
consecutive months (other than as a result of a determination by Best Buy to
extend the interest payment period of the Subordinated Debentures in accordance
with the terms thereof), (y) an Event of Default under the Subordinated
Debentures occurs and is continuing or (z) Best Buy is in default on any of its
payment obligations under the Guarantee, then the Holders, upon the affirmative
vote of at least a Majority in Liquidation Preference of the Preferred
Securities, will be entitled to appoint and authorize a Special General Partner
to enforce the Partnership's rights as a creditor under the Subordinated
Debentures, enforce the rights of the Holders under the Guarantee and to declare
and pay Dividends (including Additional Dividends) on the Preferred Securities.
Upon the appointment of a Special General Partner, the Special General Partner
shall be authorized, and shall to the extent of legally available funds, declare
and pay Dividends (including Additional Dividends) on the Preferred Securities.
So long as the appointment of the Special General Partner is effective, the
Special General Partner shall manage the business and affairs of the Partnership
to the exclusion of the General Partner.
(ii) In furtherance of the foregoing, and without limiting the powers
of any Special General Partner so appointed and for the avoidance of any doubt
concerning the
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powers of the Special General Partner, any Special General Partner, in its own
name and as Special General Partner of the Partnership, may institute a
proceeding, including, without limitation, any suit in equity, an action at
law or other judicial or administrative proceeding, to enforce the Partnership's
rights directly against Best Buy, or any other obligor in connection with such
obligations on behalf of the Partnership, and may prosecute such proceeding to
judgment or final decree, and enforce the same against Best Buy or any other
obligor in connection with such obligations and collect, out of the property,
wherever situated, of Best Buy or any such other obligor upon such obligations,
the monies adjudged or decreed to be payable in the manner provided by law.
(iii) For purposes of determining whether the Partnership has failed
to pay Dividends in full for 15 consecutive months, Dividends shall be deemed to
remain in arrears, notwithstanding any partial payments in respect thereof,
until full cumulative Dividends have been or contemporaneously are declared and
paid with respect to all monthly Dividend periods terminating on or prior to the
date of payment of such full cumulative Dividends. Not later than 30 days after
such right to appoint a Special General Partner arises and upon not less than
15 days' written notice by first-class mail to the Holders, the General Partner
will convene a meeting for election of a Special General Partner. If the
General Partner fails to convene such meeting within such 30-day period, the
Holders of not less than 10% in Liquidation Preference of the Preferred
Securities will be entitled to convene such meeting. Except as provided herein,
the provisions of Section 12.3 relating to the convening and conduct of meetings
of the Partners will apply with respect to any such meeting. Any Special
General Partner so appointed shall vacate office immediately if the Partnership
(or Best Buy pursuant to the Guarantee) shall have paid in full all accumulated
and unpaid Dividends (including any Additional Dividends) on the Preferred
Securities or such Event of Default or default, as the case may be, shall have
been cured.
(h) VOTING RIGHTS -- CERTAIN AMENDMENTS. (i) If any proposed
amendment of this Agreement provides for, or the General Partner otherwise
proposes to effect, (x) any action that would materially adversely affect the
powers, preferences or rights of the Preferred Securities, whether by way of
amendment of this Agreement or otherwise (including, without limitation, the
authorization or issuance of any additional limited partnership interests in the
Partnership) or (y) the liquidation, dissolution, winding-up or termination of
the Partnership (other than in
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connection with the exchange of Depositary Shares representing Best Buy
Preferred Stock for all of the Preferred Securities upon the occurrence of an
Exchange Event), then the Holders of outstanding Preferred Securities will be
entitled to vote on such amendment or action of the General Partner (but not on
any other amendment or action) and such amendment or action shall not be
effective except with the approval of Holders of not less than 66 2/3% in
Liquidation Preference of the Preferred Securities; PROVIDED, HOWEVER, that no
such approval shall be required if the liquidation, dissolution, winding-up or
termination of the Partnership is proposed or initiated pursuant to
Section 11.2 hereof.
(ii) Any required approval of Holders may be given at a separate
meeting of such Holders convened for such purpose or pursuant to written
consent. The Partnership will cause written notice of any meeting at which
Holders are entitled to vote, or of any matter upon which action by written
consent of such Holders is to be taken, to be mailed by first-class mail to each
Holder at least 15 days prior to the date of such meeting or the date by which
such action is to be taken. Each such notice will include a statement setting
forth (x) the date of such meeting or the date by which such action is to be
taken, (y) a description of any matter on which such Holders are entitled to
vote or upon which written consent is sought and (z) instructions for the
delivery of proxies or consents. No vote or consent of the Holders will be
required for the Partnership to redeem and cancel Preferred Securities in
accordance with this Agreement.
(iii) Except as provided in this Section 6.2, Holders shall have no
voting rights, and the Holders may not remove the General Partner.
Section 6.3 CONVERSION RIGHTS OF PREFERRED SECURITIES. The Holders
of Preferred Securities shall have the right, at their option, at any time
before the close of business on the Conversion Expiration Date, to cause the
Conversion Agent to convert Preferred Securities, on behalf of the converting
Holders, into shares of Best Buy Common Stock in the manner described herein on
and subject to the following terms and conditions:
(a) The Preferred Securities will be convertible at the office of the
Conversion Agent into fully paid and nonassessable shares of Best Buy Common
Stock, pursuant to the Holder's direction to the Conversion Agent given by means
of a Notice of Conversion to (i) exchange such Preferred Securities for a
portion of the Subordinated
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Debentures theretofore held by the Partnership on the basis of one Preferred
Security per $50 principal amount of Subordinated Debentures, and (ii)
immediately convert such Subordinated Debentures into fully paid and
nonassessable shares of Best Buy Common Stock, at an initial rate of 1.111
shares of Best Buy Common Stock per $50 principal amount of Subordinated
Debentures (which is equivalent to a conversion price of $45.00 per share of
Best Buy Common Stock, subject to certain adjustments set forth in the Indenture
(as so adjusted, "CONVERSION PRICE")).
(b) In order to convert Preferred Securities into Best Buy Common
Stock, the Holder shall surrender the Preferred Securities to be converted to
the Conversion Agent at the office referred to above, together with an
irrevocable Notice of Conversion (i) setting forth the number of Preferred
Securities to be converted and the name or names, if other than the Holder, in
which the shares of Best Buy Common Stock should be issued and (ii) directing
the Conversion Agent to exchange such Preferred Securities for Subordinated
Debentures and immediately convert such Subordinated Debentures, on behalf of
such Holder, into Best Buy Common Stock. If the Notice of Conversion is
delivered before the close of business on the Conversion Expiration Date, the
Conversion Agent shall notify the Partnership of the Holder's election to
convert and the Partnership shall, upon receipt of such notice, deliver to the
Conversion Agent (x) the appropriate principal amount of Subordinated Debentures
for exchange in accordance with this Section, together with (y) Preferred
Securities represented by the surrendered certificates but not directed to be
converted in the Notice of Conversion. The Conversion Agent shall thereupon, on
behalf of such Holder, effect the conversion of such Subordinated Debentures
into shares of Best Buy Common Stock. Holders of Preferred Securities at the
close of business on a dividend payment record date will be entitled to receive
the Dividend payable on such securities on the corresponding Dividend Payment
Date notwithstanding the conversion of such Preferred Securities following such
dividend payment record date. Except as provided above, no payment, allowance
or adjustment shall be made by the Partnership or Best Buy upon any conversion
on account of any accumulated and unpaid Dividends accrued on the Preferred
Securities (including any Additional Dividends accrued thereon) surrendered for
conversion, or on account of any accumulated and unpaid dividends on the shares
of Best Buy Common Stock issued upon such conversion. Preferred Securities
shall be deemed to have been converted immediately prior to the close of
business on the day on which a Notice of Conversion relating to such Preferred
Securities is delivered in accordance with the foregoing
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provision (the "CONVERSION DATE"). The Person or Persons entitled to receive
the Best Buy Common Stock issuable upon conversion of the Subordinated
Debentures shall be treated for all purposes as the record holder or holders of
such Best Buy Common Stock at such time. No fractional shares of Best Buy
Common Stock will be issued as a result of conversion, but in lieu thereof, such
fractional interest will be paid in cash by Best Buy. As promptly as
practicable on or after the Conversion Date, Best Buy shall issue and deliver at
the office of the Conversion Agent a certificate or certificates for the number
of full shares of Best Buy Common Stock issuable upon such conversion, together
with the cash payment, if any, in lieu of any fraction of any share to the
Person or Persons entitled to receive the same, and unless otherwise directed by
the Holder in the Notice of Conversion, the Conversion Agent shall distribute
such certificate or certificates and cash payment, together with the
certificate(s) representing any unconverted Preferred Securities, to such
Person or Persons.
(c) Each Holder of a Preferred Security by his acceptance thereof
appoints the Transfer Agent for the Preferred Securities "CONVERSION AGENT" for
the purpose of effecting the conversion of Preferred Securities in accordance
with this Section and the exchange of Preferred Securities for Depositary Shares
representing Best Buy Preferred Stock in accordance with Section 6.4. In
effecting the conversion and exchange transactions described in this Section and
Section 6.4, the Conversion Agent shall be acting as agent of the Holders of
Preferred Securities directing it to effect such conversion or exchange
transactions. The Conversion Agent is hereby authorized (i) to effect
conversions of Preferred Securities from time to time upon receipt of Notices of
Conversion and (ii) following the occurrence of an Exchange Event, to exchange
all of the Subordinated Debentures for Depositary Shares representing Best Buy
Preferred Stock in accordance with the provisions of Section 6.4.
(d) (i) On and after November 3, 1997, and provided that the
Partnership has paid in full all accumulated and unpaid Dividends on all of the
Preferred Securities, including any Additional Dividends thereon, for all
Dividend periods terminating on or prior to such date, the Partnership shall
have the right, at its option, to cause the conversion rights set forth in this
Section to expire, BUT ONLY IF for 20 Trading Days within any period of
30 consecutive Trading Days, including the last Trading Day of such period, the
Current Market Price of the Best Buy Common Stock exceeds 120% of the Conversion
Price in effect on such Trading Day.
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(ii) In order to exercise its option to cause the conversion
rights of Holders to expire, the Partnership must issue a press release
announcing the Conversion Expiration Date (the "PRESS RELEASE") prior to the
opening of business on the second Trading Day after a period in which the
condition in the preceding paragraph has been met (but in no event prior to
November 3, 1997). The Press Release shall be issued for publication to the Dow
Jones News Service and to such other print and electronic media as the
Partnership may select. The Press Release shall state that the Partnership has
elected to exercise its right to extinguish the conversion rights of Holders of
Preferred Securities, specify the Conversion Expiration Date and provide the
Conversion Price of the Preferred Stock and the Current Market Price of the Best
Buy Common Stock, in each case as of the close of business on the Trading Day
next preceding the date of the Press Release. If the Partnership exercises the
option described in this paragraph, the "CONVERSION EXPIRATION DATE" shall be a
date selected by the Partnership which shall be not less than 30 or more than
60 days after the date on which the Partnership issues the Press Release. In
the event the Partnership does not exercise the option described in this
paragraph, the Conversion Expiration Date shall be the earlier of (a) the date
of an Exchange Election, as set forth in Section 6.4(c), and (b) two Business
Days prior to the date set for the mandatory redemption of the Preferred
Securities pursuant to Section 6.2(d)(ii).
(iii) In addition to issuing the Press Release, the Partnership
shall send notice of the expiration of conversion rights (a "NOTICE OF
CONVERSION EXPIRATION") by first-class mail to each record Holder of Preferred
Securities not more than four (4) Business Days after the Partnership issues the
Press Release. Such mailed Notice of Conversion Expiration shall state:
(1) the Conversion Expiration Date; (2) the Conversion Price of the Preferred
Securities and the Current Market Price of the Best Buy Common Stock, in each
case as of the close of business on the Trading Day next preceding the date of
the Notice of Conversion Expiration; (3) the place or places at which Preferred
Securities are to be surrendered prior to the Conversion Expiration Date for
certificates representing shares of Best Buy Common Stock; and (4) such other
information or instructions as the Partnership deems necessary or advisable to
enable a Holder to exercise its conversion right hereunder. No defect in the
Notice of Conversion Expiration or in the mailing thereof with respect to any
Preferred Security shall affect the validity of such notice with respect to any
other Preferred Security. As of the close of business on the Conversion
Expiration Date, the
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Preferred Securities shall no longer be convertible into Best Buy Common Stock.
(e) No fractional shares of Best Buy Common Stock will be issued as a
result of conversion, but in lieu thereof, Best Buy shall pay to the Conversion
Agent a cash adjustment in an amount equal to the same fraction of the Current
Market Price on the date on which the certificate or certificates for such
shares were duly surrendered for conversion, or, if such day is not a Trading
Day, on the next Trading Day, and the Conversion Agent in turn will make such
payment to the Holder or Holders of Preferred Securities so converted.
(f) Best Buy shall at all times reserve and keep available out of its
authorized and unissued Best Buy Common Stock, solely for issuance upon the
conversion of the Subordinated Debentures, free from any preemptive or other
similar rights, such number of shares of Best Buy Common Stock as shall from
time to time be issuable upon the conversion of all the Subordinated Debentures
then outstanding. Any shares of Best Buy Common stock issued upon conversion of
the Subordinated Debentures shall be duly authorized, validly issued and fully
paid and nonassessable. Best Buy shall deliver the shares of Best Buy Common
Stock upon conversion of the Subordinated Debentures to the Conversion Agent, as
agent for the converting Holder, free and clear of all liens, charges, security
interests and encumbrances, except for United States withholding taxes. Each of
Best Buy and the Partnership shall prepare and shall use its best efforts to
obtain and keep in force such governmental or regulatory permits or other
authorizations as may be required by law, and shall comply with all applicable
requirements as to registration or qualification of the Best Buy Common Stock
(and all requirements to list the Best Buy Common Stock issuable upon conversion
of Subordinated Debentures that are at the time applicable), in order to enable
Best Buy to lawfully issue Best Buy Common Stock to the Conversion Agent and the
Conversion Agent to lawfully deliver the Best Buy Common Stock to each Holder
upon conversion of the Preferred Securities.
(g) Best Buy will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Best Buy Common Stock to the
Conversion Agent on conversion of Subordinated Debentures and by the Conversion
Agent upon conversion of the Preferred Securities. Best Buy shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Best Buy Common Stock
in a name other than that in which the Preferred Securities so converted were
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registered, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Partnership the amount of any such
tax, or has established to the satisfaction of the Partnership that such tax
has been paid.
(h) Nothing in Section 6.3(g) shall limit the requirement of the
Partnership to withhold taxes pursuant to Section 4.4 or otherwise require the
General Partner or the Partnership to pay any amounts on account of such
withholdings.
Section 6.4 OPTIONAL EXCHANGE FOR DEPOSITARY SHARES REPRESENTING BEST
BUY PREFERRED STOCK.
(a) Upon the occurrence of an Exchange Event, the Holders of a
Majority in Liquidation Preference of the Preferred Securities, voting as a
class or by written consent, may, at their option, cause the Conversion Agent to
(i) exchange all (but not less than all) of the Preferred Securities then
outstanding for Subordinated Debentures held by the Partnership,
(ii) immediately exchange such Subordinated Debentures, on behalf of the
Holders, for Depositary Shares, each representing ownership of 1/100th of a
share of Best Buy Preferred Stock, at the Exchange Price and (iii) distribute
such Depositary Shares to the Holders, subject to the following terms and
conditions.
(b) The failure of Holders to receive for 15 consecutive months the
full amount of Dividend payments (including any arrearages thereon) on the
Preferred Securities shall constitute an "EXCHANGE EVENT."
(c) As soon as practicable, but in no event later than 30 days after
the occurrence of an Exchange Event, the General Partner will, upon not less
than 15 days' written notice by first-class mail to the Holders, convene a
meeting of such Holders for the purpose of acting on the matter of whether to
cause the Conversion Agent to effect an exchange, as described above, of all of
the Preferred Securities then outstanding for Depositary Shares. If the General
Partner fails to convene such Exchange Election Meeting within such 30-day
period, the Holders of not less than 10% in Liquidation Preference of the
Preferred Securities will be entitled to convene such Exchange Election
Meeting. Upon the affirmative vote of the Holders of a Majority in Liquidation
Preference of the Preferred Securities at an Exchange Election Meeting or, in
the absence of such meeting, upon receipt by the Partnership of a written
consent signed by the Holders of a Majority in Liquidation Preference of the
Preferred Securities, an election to
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exchange all outstanding Preferred Securities on the basis described above (an
"EXCHANGE ELECTION") will be deemed to have been made.
Holders, by becoming a party to this Agreement pursuant to Section 2.9
of this Agreement, will be deemed to have agreed to be bound by these optional
exchange provisions in regard to the exchange of Preferred Securities for
Depositary Shares pursuant to the terms described above.
(d) Upon receipt of notice substantially in the form of Annex C
hereto from such Holders (the "NOTICE OF EXCHANGE"), the Conversion Agent shall
promptly deliver copies of the Notice of Exchange to the Partnership, Best Buy
and the Trustee.
(e) All outstanding Preferred Securities shall be deemed to have been
exchanged, immediately prior to the close of business on the date of the
Exchange Election (the "EXCHANGE DATE"), for Subordinated Debentures held by the
Partnership, at an exchange rate of $50 principal amount of Subordinated
Debentures for each Preferred Security, and the Partnership shall promptly
deliver the Subordinated Debentures deemed to have been so exchanged to the
Conversion Agent, on behalf of the Holders of exchanged Preferred Securities.
As promptly as practicable after the exchange date, Best Buy shall issue and
deposit with the Depositary, pursuant to the Deposit Agreement, a certificate or
certificates for the number of fully paid and non-assessable shares of Best Buy
Preferred Stock issuable at the rate referred to in paragraph (f) below upon the
exchange contemplated in such paragraph in return for a Depositary Receipt or
Receipts issued by the Depositary evidencing a proportionate number of
Depositary Shares in respect of the Best Buy Preferred Stock so deposited. Best
Buy shall request that the Depositary Receipts be issued in the names of the
Holders of Preferred Securities designated in the Notice of Exchange.
(f) Best Buy shall thereafter, promptly upon request by the
Conversion Agent, exchange such Subordinated Debentures for Depositary Shares,
each representing a 1/100th interest in a fully paid and non-assessable share of
Best Buy Preferred Stock and evidenced by Depositary Receipts, at the rate of
one Depositary Share for each $50 principal amount of Subordinated Debentures
(which rate is equivalent to one Depositary Share or 1/100th of a share of Best
Buy Preferred Stock for each Preferred Security). Any accumulated and unpaid
Dividends on the Preferred Securities (including any Additional Dividends
thereon) at the time of the Exchange Election shall from and after the time of
such
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exchange be treated as accumulated and unpaid dividends on the Best Buy
Preferred Stock issued in exchange for the Subordinated Debentures. The Person
or Persons entitled to receive the Depositary Shares representing the Best Buy
Preferred Stock issuable upon such exchange shall be treated for all purposes as
the record holder or holders of such Best Buy Preferred Stock as of the exchange
date. As promptly as practicable on or after the exchange date, Best Buy shall
deliver at the office of the Conversion Agent the Depositary Receipt or Receipts
representing the Best Buy Preferred Stock issuable upon such exchange. The
Conversion Agent shall deliver such Depositary Receipt or Receipts to the Person
or Persons entitled to receive the same.
(g) Each Depositary Share will represent a one one-hundredth
(1/100th) interest in a share of Best Buy Preferred Stock and shall be evidenced
by a Depositary Receipt. Best Buy shall at all times reserve and keep available
out of its authorized and unissued Best Buy Preferred Stock, solely for issuance
upon the exchange of Subordinated Debentures for Depositary Shares, free from
any preemptive or other similar rights, such number of shares of Best Buy
Preferred Stock as shall from time to time be issuable upon the exchange of all
the Subordinated Debentures then outstanding for Depositary Shares. Each of
Best Buy and the Partnership shall prepare and shall use its best efforts to
obtain and keep in force such governmental or regulatory permits or other
authorizations as may be required by law, and shall comply with all applicable
requirements as to registration or qualification of the Best Buy Preferred Stock
in order to enable Best Buy to lawfully issue the Best Buy Preferred Stock upon
exchange of the Subordinated Debentures and deposit such Best Buy Preferred
Stock with the Depositary under the Deposit Agreement and the Conversion Agent
to lawfully deliver Depositary Shares upon exchange of the Preferred
Securities. All shares of Best Buy Preferred Stock issued upon conversion of
the Subordinated Debentures shall be duly authorized, validly issued and fully
paid and non-assessable and the terms of the Best Buy Preferred Stock shall be
valid and binding on Best Buy. The Conversion Agent shall deliver the
Depositary Shares, evidenced by Depositary Receipts, received upon exchange of
the Preferred Securities to the exchanging Holder, free and clear of all liens,
charges, security interests and encumbrances. Best Buy will use its best
efforts to have the Depositary Shares issued upon an exchange of Preferred
Securities listed for trading on the NYSE or such other securities exchange on
which the Preferred Securities may then be listed.
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(h) Best Buy will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Best Buy Preferred Stock to the
Conversion Agent upon exchange of the Subordinated Debentures, the delivery and
deposit of such shares to the Depositary and the delivery of the Depositary
Shares by the Conversion Agent upon exchange of the Preferred Securities. Best
Buy shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of Best Buy Preferred
Stock or Depositary Shares in a name other than that in which Preferred
Securities so exchanged were registered, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the
Partnership the amount of any such tax, or has established to the satisfaction
of the Partnership that such tax has been paid.
(i) Nothing in Section 6.4(h) shall limit the requirement of the
Partnership to withhold taxes pursuant to Section 4.4 or otherwise require the
General Partner or the Partnership to pay any amounts on account of such
withholdings.
ARTICLE VII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 7.1 BOOKS AND RECORDS.
(a) Proper and complete records and books of account of the
Partnership shall be kept by the General Partner in which shall be entered fully
and accurately all transactions and other matters relative to the Partnership's
business as are usually entered into records and books of account maintained by
Persons engaged in businesses of a like character, including a Capital Account
for each Partner. The books and records of the Partnership, together with a
copy of this Agreement and of the Certificate, shall at all times be maintained
at the principal office of the General Partner and shall be open to the
inspection and examination of the Partners or their duly authorized
representatives for a proper purpose during reasonable business hours.
(b) The General Partner may, for such period of time that the General
Partner deems reasonable, keep confidential from the Partners any information
with respect to the Partnership the disclosure of which the General Partner
reasonably believes is not in the best interests of the Partner-
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ship or is adverse to the interests of the Partnership or which the Partnership
or the General Partner is required by law or by an agreement with any Person
to keep confidential.
(c) Within three months after the close of each Fiscal Year, the
General Partner shall transmit to each Partner a statement indicating such
Partner's share of each item of Partnership income, gain, loss, deduction or
credit for such Fiscal Year for federal income tax purposes.
Section 7.2 ACCOUNTING METHOD. For both financial and tax reporting
purposes and for purposes of determining profits and losses, the books and
records of the Partnership shall be kept on the accrual method of accounting
applied in a consistent manner and shall reflect all Partnership transactions
and be appropriate and adequate for the Partnership's business.
Section 7.3 ANNUAL AUDIT. As soon as practical after the end of each
Fiscal Year, but not later than 90 days after such end, the financial statements
of the Partnership shall be audited by a firm of independent certified public
accountants selected by the General Partner, and such financial statements shall
be accompanied by a report of such accountants containing their opinion. The
cost of such audits will be an expense of the Partnership and paid by Best Buy.
ARTICLE VIII
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 8.1 LIMITATIONS. Other than as set forth in this Agreement,
the Limited Partners shall not participate in the management or control of the
Partnership's business, property or other assets nor shall the Limited Partners
transact any business for the Partnership, nor shall the Limited Partners have
the power to act for or bind the Partnership, said powers being vested solely
and exclusively in the General Partner (and, upon appointment, the Special
General Partner). Except for shares of Best Buy Common Stock or Best Buy
Preferred Stock deliverable upon conversion or exchange of the Preferred
Securities, the Limited Partners shall have no interest in the properties or
assets of the General Partner, or any equity therein, or in any proceeds of any
sales thereof (which sales shall not be restricted in any respect, by virtue of
acquiring or owning an Interest in the Partnership).
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Section 8.2 LIABILITY. Subject to the provisions of the Act, no
Limited Partner shall be liable for the repayment, satisfaction or discharge of
any debts or other obligations of the Partnership in excess of the Capital
Account balance of such Limited Partner.
Section 8.3 PRIORITY. No Limited Partner shall have priority over
any other Limited Partner as to Partnership allocations or distributions.
ARTICLE IX
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 9.1 AUTHORITY. Subject to the limitations provided in this
Agreement, the General Partner or, upon appointment pursuant to Section 6.2(g),
the Special General Partner, shall have exclusive and complete authority and
discretion to manage the operations and affairs of the Partnership and to make
all decisions regarding the business of the Partnership. Any action taken by
the General Partner or, upon appointment pursuant to Section 6.2(g), the Special
General Partner, shall constitute the act of and serve to bind the Partnership.
In dealing with the General Partner or, upon appointment pursuant to Section
6.2(g), the Special General Partner, acting on behalf of the Partnership, no
Person shall be required to inquire into the authority of the General Partner
or, upon appointment pursuant to Section 6.2(g), the Special General Partner to
bind the Partnership. Persons dealing with the Partnership are entitled to rely
conclusively on the power and authority of the General Partner or, upon
appointment pursuant to Section 6.2(g), the Special General Partner, as set
forth in this Agreement.
Section 9.2 POWERS AND DUTIES OF GENERAL PARTNER. Except as
otherwise specifically provided herein, the General Partner (or, upon
appointment pursuant to Section 6.2(g), the Special General Partner) shall have
all rights and powers of a general partner under the Act, and shall have all
authority, rights and powers in the management of the Partnership business to do
any and all other acts and things necessary, proper, convenient or advisable to
effectuate the purposes of this Agreement, including by way of illustration but
not by way of limitation, the following:
(a) to secure the necessary goods and services required in performing
the General Partner's duties for the Partnership;
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(b) to exercise all powers of the Partnership, on behalf of the
Partnership, in connection with enforcing the Partnership's rights under
the Subordinated Debentures and the Guarantee;
(c) to issue Preferred Securities and to admit Limited Partners in
connection therewith in accordance with this Agreement;
(d) to act as registrar and transfer agent for the Preferred
Securities or designate an entity to act as registrar and transfer agent;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including with
respect to Dividends and voting rights and to make determinations as to the
payment of Dividends, and make or cause to be made all other required
payments to Holders and to the General Partner;
(f) to open, maintain and close bank accounts and to draw checks and
other orders for the payment of money;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Partnership;
(h) to deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in a manner consistent with the provisions of this
Agreement;
(i) to take all action which may be necessary or appropriate for the
preservation and the continuation of the Partnership's valid existence,
rights, franchises and privileges as a limited partnership under the laws
of the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Limited
Partners or to enable the Partnership to conduct the business in which it
is engaged;
(j) to cause the Partnership to enter into and perform, on behalf of
the Partnership, the Underwriting Agreement and to cause the Partnership to
purchase the Subordinated Debentures without any further act, vote or
approval of any Partner; and
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(k) to execute and deliver any and all documents or instruments,
perform all duties and powers and do all things for and on behalf of the
Partnership in all matters necessary or desirable or incidental to the
foregoing.
Section 9.3 EXPENSES PAYABLE BY GENERAL PARTNER. The General Partner
hereby assumes and shall be liable for the debts, obligations and liabilities of
the Partnership and agrees to pay to each Person or entity to whom the
Partnership is now or hereafter becomes indebted or liable, whether such
indebtedness, obligations or liabilities arise in contract, tort or otherwise,
(including, without limitation, payment obligations arising under Section 7.3 of
this Agreement, but excluding payment obligations of Best Buy to Holders of the
Preferred Securities in such Holders' capacities as Holders of such Preferred
Securities, such obligations being separately guaranteed under the Guarantee)
(the "BENEFICIARIES") the full payment of such indebtedness and any and all
liabilities, when and as due. This agreement is intended to be for the benefit
of and to be enforceable by all such Beneficiaries whether or not such
Beneficiaries have received notice hereof.
Section 9.4 LIABILITY. Except as expressly set forth in this
Agreement, (a) the General Partner shall not be personally liable for the return
of any portion of the capital contributions (or any return thereon) of the
Limited Partners; (b) the return of such capital contributions (or any return
thereon) shall be made solely from assets of the Partnership; and (c) the
General Partner shall not be required to pay to the Partnership or to any
Limited Partner any deficit in any Limited Partner's Capital Account upon
dissolution or otherwise. Other than as provided in Sections 6.3 and 6.4 of
this Agreement or under the Act, no Limited Partner shall have the right to
demand or receive property other than cash for its respective Interest in the
Partnership.
Section 9.5 INVESTMENT COMPANY OR TAX ACTIONS. The General Partner
is authorized and directed to conduct its affairs and to operate the Partnership
in such a way that the Partnership would not be deemed to be an "investment
company" required to be registered under the Investment Company Act of 1940 (the
"1940 ACT") or taxed as a corporation for federal income tax purposes and so
that the Subordinated Debentures will be treated as indebtedness of Best Buy for
federal income tax purposes. In this connection, the General Partner is
authorized to take any action not inconsistent with applicable law or this
Agreement, and that does not materially and adversely affect the interests
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of Holders, that the General Partner determines in its discretion to be
necessary or desirable for such purposes.
Section 9.6 OUTSIDE BUSINESSES. Any Partner or Affiliate thereof may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Partnership, and the Partnership and the Partners shall have no rights by
virtue of this Agreement in and to such independent ventures or the income or
profits derived therefrom and the pursuit of any such venture, even if
competitive with the business of the Partnership, shall not be deemed wrongful
or improper. No Partner or Affiliate thereof shall be obligated to present any
particular investment opportunity to the Partnership even if such opportunity is
of a character that, if presented to the Partnership, could be taken by the
Partnership, and any Partner or Affiliate thereof shall have the right to take
for its own account (individually or as a partner or fiduciary) or to recommend
to others any such particular investment opportunity.
Section 9.7 LIMITS ON GENERAL PARTNER'S POWERS. (a) Anything in this
Agreement to the contrary notwithstanding, the General Partner (or, upon
appointment pursuant to Section 6.2(g), the Special General Partner) shall not
cause or permit the Partnership to:
(i) acquire any assets other than as expressly provided herein;
(ii) do any act which would make it impractical or impossible to
carry on the ordinary business of the Partnership;
(iii) possess Partnership property for other than a Partnership
purpose;
(iv) admit a Person as a Partner, except as expressly provided
in this Agreement;
(v) make any loans to the General Partner or its Affiliates,
other than loans represented by the Subordinated Debentures;
(vi) perform any act that would subject any Limited Partner to
liability as a general partner in any jurisdiction;
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(vii) engage in any activity that is not consistent with the
purposes of the Partnership, as set forth in Section 2.3;
(viii) without the written consent of 66 2/3% in Liquidation
Preference of the Preferred Securities, have an order for relief
entered with respect to the Partnership or commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or consent to the entry of an order for relief
in an involuntary case under any such law, or consent to the
appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of the Partnership's property,
or make any assignment for the benefit of creditors of the
Partnership; or
(ix) borrow money or become liable for the borrowings of any
third party or engage in any financial or other trade or business.
(b) So long as the Subordinated Debentures are held by the
Partnership, the General Partner shall not:
(i) direct the time, method and place of conducting any
proceeding for any remedy available to the Special General Partner, or
exercising any trust or power conferred on the Special General Partner
with respect to the Subordinated Debentures,
(ii) waive any past default which is waivable under the
Subordinated Debentures,
(iii) exercise any right to rescind or annul a declaration that
the principal of all the Subordinated Debentures shall be due and
payable,
(iv) consent to any amendment, modification or termination of
the Subordinated Debentures or the Indenture
without, in each case, obtaining the prior approval of the Holders of not less
than 66 2/3% in Liquidation Preference of the Preferred Securities; PROVIDED,
HOWEVER, that where a consent under the Subordinated Debentures would require
the consent of each holder of Subordinated Debentures affected thereby, no such
consent shall be given by the General Partner without the prior consent of each
Holder of Preferred Securities.
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(c) The General Partner shall not revoke any action previously
authorized or approved by the Special General Partner or by a vote of Holders
without the approval of the Holders of not less than 66 2/3% in Liquidation
Preference of the Preferred Securities. The General Partner shall notify all
Holders of any notice of default received from the Trustee with respect to the
Subordinated Debentures.
Section 9.8 TAX MATTERS PARTNER.
(a) For purposes of Code Section 6231(a)(7), the "TAX MATTERS
PARTNER" shall be the General Partner as long as it remains the general partner
of the Partnership. The Tax Matters Partner shall keep the Limited Partners
fully informed of any inquiry, examination or proceeding.
(b) The General Partner shall not make an election in accordance
with Section 754 of the Code.
(c) The General Partner and the Preferred Security Holders
acknowledge that they intend, for U.S. federal income tax purposes, that the
Partnership shall be treated as a partnership and that the General Partner and
the Preferred Security Holders shall be treated as Partners of such Partnership
for such purposes.
(d) The General Partner shall retain, at the expense of the
Partnership and at its sole discretion, a nationally recognized firm of
certified public accountants which shall prepare all federal, state, local or
other tax returns (including information returns) of the Partnership, as
required by law, and the Schedule K-1's or any successor or similar forms or
schedules required by law.
Section 9.9 CONSOLIDATION, MERGER OR SALE OF ASSETS.
(a) Best Buy may not merge or consolidate with or into another
entity or permit another entity to merge or consolidate with or into, or be
replaced by, or convey, transfer or lease all or substantially all of its
properties and assets to another entity (each such event, a "TRANSACTION")
unless (i) at the time of such Transaction, no Event of Default (as defined in
the Indenture) shall have occurred and be continuing, or would occur as a result
of such Transaction, (ii) the survivor of such merger or consolidation or the
entity to which Best Buy's assets are sold, transferred or leased is an entity
organized under the laws of the United States or any state thereof, such entity
(if other than Best Buy) becomes a party to this Agreement
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and becomes the General Partner, assumes all of Best Buy's obligations under
this Agreement, and such entity has a net worth equal to at least 10% of the
total capital contributions made by the Partners to the Partnership, and
(iii) prior to such Transaction, Best Buy obtains an opinion of nationally
recognized independent counsel experienced in such matters to the effect that
the Partnership will continue to be taxable as a partnership for federal income
tax purposes after such Transaction and (iv) in the case of any sale, transfer
or lease of all or substantially all of Best Buy's assets that includes Best
Buy's Interest in the Partnership, Best Buy has obtained the consent of the
Holders of not less than 66 2/3% in Liquidation Preference of the Preferred
Securities to the sale, transfer or lease of its Interest in the Partnership.
(b) In addition, Best Buy shall not cause or allow the
Partnership to enter into a Transaction, except as described below and as
permitted or required under Section 11.3 of this Agreement. The Partnership
may, in order to avoid 1940 Act consequences adverse to Best Buy, itself or the
Holders, without the consent of the Holders, merge or consolidate with or into,
or be replaced by, a limited partnership or trust organized as such under the
laws of any state of the United States of America; PROVIDED, that (i) such
successor entity either (x) expressly assumes all of the obligations of the
Partnership under the Preferred Securities or (y) substitutes for the Preferred
Securities other securities having substantially the same terms as the Preferred
Securities (the "SUCCESSOR SECURITIES") so long as the Successor Securities
rank, with respect to participation in the profits or assets of the successor
entity, at least as high as the Preferred Securities rank, with respect to
participation in the profits or assets of the Partnership, (ii) Best Buy
expressly acknowledges such successor entity as the holder of the Subordinated
Debentures, (iii) such Transaction does not cause the Preferred Securities (or
the Successor Securities) to be delisted by any national securities exchange or
other organization on which the Preferred Securities are then listed, (iv) such
Transaction does not cause the Preferred Securities (or the Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, as that term is defined by the Securities and Exchange Commission
for purposes of Rule 436(g)(2) under the Securities Act, (v) such Transaction
does not adversely affect the powers, preferences and other special rights of
Holders of Preferred Securities (including Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in the
new entity), (vi) prior to such Transaction Best Buy has
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received an opinion of nationally recognized independent counsel to the
Partnership experienced in such matters to the effect that (x) such successor
entity will be treated as a partnership for federal income tax purposes,
(y) following such Transaction, Best Buy and such successor entity will be in
compliance with the 1940 Act without registering thereunder as an investment
company, and (z) such Transaction will not adversely affect the limited
liability of the Holders.
ARTICLE X
TRANSFERS OF INTERESTS BY PARTNERS
Section 10.1 TRANSFER OF INTERESTS.
(a) Preferred Securities shall be freely transferable by a
Holder.
(b) Except as provided in the next sentence, the General Partner
may not assign or transfer its Interest in the Partnership in whole or in part
unless, prior to such assignment or transfer, the General Partner has obtained
the consent of the Holders of not less than 66 2/3% in Liquidation Preference of
the Preferred Securities. The General Partner may assign or transfer its
interest in the Partnership without such consent only to an entity that is the
survivor of a merger or consolidation of the General Partner in a transaction
that meets the requirements of Section 9.9(a). "PERMITTED SUCCESSOR" shall mean
an entity that is an assignee or transferee of the Interest of the General
Partner as permitted by this Section 10.1(b).
(c) Except as provided above, no Interest shall be transferred,
in whole or in part, except in accordance with the terms and conditions set
forth in this Agreement. Any transfer or purported transfer of any Interest not
made in accordance with this Agreement shall be null and void.
Section 10.2 TRANSFER OF LP CERTIFICATES. The General Partner
shall provide for the registration of LP Certificates and of transfers of LP
Certificates. Upon surrender for registration of transfer of any LP
Certificate, the General Partner shall cause one or more new LP Certificates to
be issued in the name of the designated transferee or transferees. Every LP
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the General Partner duly
executed by the Preferred Security Holder or his or her attorney duly authorized
in writing.
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Each LP Certificate surrendered for registration of transfer shall be canceled
by the General Partner. A transferee of an LP Certificate shall be admitted to
the Partnership as a Limited Partner and shall be entitled to the rights and
subject to the obligations of a Preferred Security Holder hereunder upon the
receipt by a transferee of an LP Certificate.
Section 10.3 PERSONS DEEMED PREFERRED SECURITY HOLDERS. The
Partnership may treat the Person in whose name any LP Certificate shall be
registered on the books and records of the Partnership as the sole holder of
such LP Certificate and of the Preferred Securities represented by such LP
Certificate for purposes of receiving Dividends and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such LP Certificate or in the Preferred Securities
represented by such LP Certificate on the part of any other Person, whether or
not the Partnership shall have actual or other notice thereof.
Section 10.4 BOOK-ENTRY INTERESTS. The LP Certificates, on
original issuance, will be issued in the form of a global LP Certificate or LP
Certificates representing the Book-Entry Interests, to be delivered to DTC, the
initial Clearing Agency, by, or on behalf of, the Partnership. Such LP
Certificate or LP Certificates shall initially be registered on the books and
records of the Partnership in the name of Cede & Co., the nominee of DTC, and no
Preferred Security Owner will receive a definitive LP Certificate representing
such Preferred Security Owner's interests in such LP Certificate, except as
provided in Section 10.6. Unless and until definitive, fully registered LP
Certificates (the "DEFINITIVE LP CERTIFICATES") have been issued to the
Preferred Security Owners pursuant to Section 10.6:
(i) The provisions of this Section shall be in full force and
effect;
(ii) The Partnership, the General Partner and any Special
General Partner shall be entitled to deal with the Clearing Agency for
all purposes of this Agreement (including the payment of Dividends,
Redemption Price and liquidation proceeds on the LP Certificates and
receiving approvals, votes or consents hereunder) as the Preferred
Security Holder and the sole holder of the LP Certificates and shall
have no obligation to the Preferred Security Owner; and
(iii) None of the Partnership, the General Partner, any Special
General Partner or any agent of the General
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Partner, the Partnership or any Special General Partner shall have any
liability with respect to or responsibility for the records of the
Clearing Agency.
Section 10.5 NOTICES TO CLEARING AGENCY. Whenever a notice or
other communication to the Preferred Security Holders is required under this
Agreement, unless and until Definitive LP Certificates shall have been issued to
the Preferred Security Owners pursuant to Section 10.6, the General Partner and
any Special General Partner shall give all such notices and communications
specified herein to be given to the Preferred Security Holders to the Clearing
Agency, and shall have no obligations to the Preferred Security Owners.
Section 10.6 DEFINITIVE LP CERTIFICATES. If (i) the Clearing
Agency elects to discontinue its services as securities depository, (ii) the
Partnership elects to terminate the book-entry system through the Clearing
Agency, or (iii) there is an Event of Default under the Subordinated Debentures,
then Definitive LP Certificates shall be prepared by the Partnership. Upon
surrender of the global LP Certificate or LP Certificates representing the Book-
Entry Interests by the Clearing Agency, accompanied by registration
instructions, the General Partner shall cause Definitive LP Certificates to be
delivered to Preferred Security Owners in accordance with the instructions of
the Clearing Agency. Neither the General Partner nor the Partnership shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Any Person
receiving a Definitive LP Certificate in accordance with this Article X shall be
admitted to the Partnership as a Limited Partner upon receipt of such Definitive
LP Certificate and shall be registered on the books and records of the
Partnership as a Preferred Security Holder. The Definitive LP Certificates
shall be printed, lithographed or engraved or may be produced in any other
manner as may be required by any national securities exchange on which the
Preferred Securities may be listed and is reasonably acceptable to the General
Partner, as evidenced by its execution thereof.
ARTICLE XI
WITHDRAWAL; DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 11.1 WITHDRAWAL OF PARTNERS. The General Partner shall
not at any time retire or withdraw from the Partnership except as otherwise
permitted hereunder. If the
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General Partner retires or withdraws in contravention of this Section 11.1, it
shall indemnify, defend and hold harmless the Partnership and the other Partners
from and against any losses, expenses, judgments, fines, settlements or damages
suffered or incurred by the Partnership or such other Partners arising out of or
resulting from such retirement or withdrawal.
Section 11.2 DISSOLUTION OF THE PARTNERSHIP.
(a) The Partnership shall not be dissolved by the admission of
Partners in accordance with the terms of this Agreement. Except as provided in
Section 11.2(b)(ii), the death, retirement, resignation, expulsion, bankruptcy
or dissolution of a Partner, or the occurrence of any other event which
terminates the Interest of a Partner in the Partnership, shall not cause the
Partnership to be dissolved and its affairs wound up so long as the Partnership
at all times has at least two Partners. Upon the occurrence of any such event,
the business of the Partnership shall be continued without dissolution.
(b) The Partnership shall be dissolved and terminated and its
affairs shall be wound up upon the earliest to occur of any of the following
events:
(i) the expiration of the term of the Partnership, as provided
in Section 2.4 of this Agreement;
(ii) upon the bankruptcy, insolvency or dissolution of the
General Partner;
(iii) the entry of a decree of judicial dissolution under
Section 17-802 of the Act; or
(iv) the written consent of all Partners.
(c) Upon dissolution of the Partnership, the Liquidator shall
promptly notify the Partners of such dissolution.
Section 11.3 LIQUIDATION.
(a) In the event of the dissolution of the Partnership for any
reason, the General Partner (or, if the Partnership is dissolved pursuant to
Section 11.2(b)(ii), then a liquidating agent appointed by Holders of not less
than 66 2/3% in Liquidation Preference of the Preferred Securities (the General
Partner or such person so appointed is hereinafter referred to as the
"LIQUIDATOR")) shall commence to wind up the affairs of the Partnership and to
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liquidate the Partnership's assets, including the Partnership's Eligible
Investments and/or amounts deposited in the Eligible Investment Account;
PROVIDED, HOWEVER, that a reasonable time shall be allowed for the orderly
liquidation of the assets of the Partnership and the satisfaction of liabilities
to creditors so as to enable the Partners to minimize the normal losses
attendant upon liquidation. The Partners shall continue to share all income,
losses and distributions during the period of liquidation in accordance with
Articles IV and V. Subject to the provisions of this Article XI, the Liquidator
shall have full right and unlimited discretion to determine the time, manner and
terms of any sale or sales of Partnership property pursuant to such liquidation,
giving due regard to the activity and condition of the relevant market and
general financial and economic conditions.
(b) The Liquidator shall have all of the rights and powers with
respect to the assets and liabilities of the Partnership in connection with the
liquidation and termination of the Partnership that the General Partner would
have with respect to the assets and liabilities of the Partnership during the
term of the Partnership, and the Liquidator is hereby expressly authorized and
empowered to execute any and all documents necessary or desirable to effectuate
the liquidation and termination of the Partnership and the transfer of any
assets.
(c) Notwithstanding the foregoing, a Liquidator that is not the
General Partner shall not be deemed a Partner in this Partnership and shall not
have any of the economic interests in the Partnership of a Partner; and such
Liquidator may be compensated for its services to the Partnership at normal
customary and competitive rates for its services to the Partnership as
reasonably proposed by the General Partner and agreed to by a Majority in
Liquidation Preference of the Preferred Securities (by written consent or by
vote taken at a meeting convened by the General Partner therefor).
Section 11.4 DISTRIBUTION IN LIQUIDATION. Subject to
Section 9.3, the proceeds of liquidation shall be applied in the following order
of priority (and without regard to the provisions of Section 17-804 of the Act):
(i) to creditors of the Partnership, including Preferred
Security Holders who are creditors, to the extent otherwise permitted
by law, in satisfaction of the liabilities of the Partnership (whether
by payment or the making of reasonable provision for payment
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thereof), other than liabilities for distributions (including
Dividends) to Partners; and
(ii) following any allocations required under Section 4.1(c) of
the Agreement, to the Partners in proportion to the Partners' positive
Capital Account balances.
Section 11.5 RIGHTS OF LIMITED PARTNERS. Each Limited Partner
shall look solely to the assets of the Partnership for all distributions with
respect to the Partnership and such Partner's capital contribution (including
returns thereof), and such Partner's share of profits or losses thereof, and
shall have no recourse therefor (upon dissolution or otherwise) against the
General Partner, except under the Guarantee. Except as provided in Sections 6.3
and 6.4 of this Agreement, no Partner shall have any right to demand or receive
property other than cash upon dissolution and termination of the Partnership.
Section 11.6 TERMINATION. The Partnership shall terminate when
all of the assets of the Partnership shall have been disposed of and the assets
shall have been distributed as provided in Section 11.4. The Liquidator shall
then execute and cause to be filed a certificate of cancellation of the
Partnership.
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 AMENDMENTS. Except as provided by Section 6.2(h),
this Agreement may be amended by a written instrument executed by the General
Partner without the consent of any Limited Partner; PROVIDED, HOWEVER, that no
amendment shall be made, and any such purported amendment shall be void and
ineffective, to the extent the result thereof would be to cause the Partnership
to be treated as anything other than a partnership for purposes of United States
income taxation or require the Partnership to register under the 1940 Act.
Section 12.2 AMENDMENT OF CERTIFICATE. In the event this
Agreement shall be amended pursuant to Section 12.1, the General Partner shall
amend the Certificate to reflect such change if it deems such amendment of the
Certificate to be necessary or appropriate.
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Section 12.3 MEETINGS OF PARTNERS.
(a) Meetings of the Limited Partners who are Holders may be
called at any time by the General Partner to consider and act on any matter on
which Limited Partners are entitled to act under the terms of this Agreement or
the Act. The General Partner shall call a meeting of Holders if directed to do
so by Holders of not less than 10% in Liquidation Preference as permitted by
this Agreement. Such direction shall be given by delivering to the General
Partner a request in writing stating that the signing Limited Partners desire to
call a meeting and indicating the general or specific purpose for which the
meeting is to be called.
(b) Unless otherwise specified herein, notice of any such
meeting shall be given to all Partners not less than seven (7) Business Days nor
more than 60 days prior to the date of such meeting. Each such notice shall set
forth the date, time and place of the meeting, a description of any matter on
which Holders are entitled to vote and instructions for the delivery of proxies
or written consents.
(c) Any action that may be taken at a meeting of the Limited
Partners may be taken without a meeting if a consent in writing setting forth
the action so taken is signed by Limited Partners owning not less than the
minimum Interests that would be necessary to authorize or take such action at a
meeting in which all Limited Partners having a right to vote thereon were
present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Limited Partners entitled to vote who have not consented
in writing. The General Partner may provide that any written ballot submitted
to the Limited Partners for the purpose of taking any action without a meeting
shall be returned to the Partnership within a specified time.
(d) Each Partner may authorize any Person to act for it by proxy
on all matters as to which a Partner is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting. Every
proxy must be signed by the Partner or its attorney-in-fact. No proxy shall be
valid after the expiration of 11 months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of the
Partner executing it.
(e) Each meeting of Partners shall be conducted by the General
Partner or by such other Person that the General Partner may designate.
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(f) The General Partner may establish all other reasonable
procedures relating to meetings of Partners or the giving of written consents,
in addition to those expressly provided, including notice of time, place or
purpose of any meeting at which any matter is to be voted on by any Partners,
waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 NOTICES. All notices provided for in this
Agreement shall be in writing, and shall be delivered or mailed by first class
or registered or certified mail or, with respect to the Partnership and General
Partner, telecopied, as follows:
(a) if given to the Partnership, in care of the General Partner
at the Partnership's mailing address set forth below:
Best Buy Capital, L.P.
c/o Best Buy Co., Inc.
7075 Flying Cloud Drive
Eden Prairie, Minnesota 55344
Attention: Chief Financial Officer
Telecopy: (612) 947-1141
(b) if given to the General Partner, at its mailing address set
forth below:
Best Buy Co., Inc.
7075 Flying Cloud Drive
Eden Prairie, Minnesota 55344
Attention: Chief Financial Officer
Telecopy: (612) 947-1141
(c) if given to any other Partner, at the address set forth on
the books and records of the Partnership.
Section 13.2 POWER OF ATTORNEY. Each Holder does hereby
constitute and appoint the General Partner, and if applicable, any Special
General Partner appointed pursuant to Section 6.2(g) of this Agreement, as its
true and lawful representative and attorney-in-fact, in its name, place and
stead to make, execute, sign, deliver and file (a) any
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amendment of the Certificate required because of an amendment of this Agreement
or in order to effect any change in the Partnership, (b) this Agreement, (c) any
amendments to this Agreement and (d) all such other instruments, documents and
certificates which from time to time may required by the laws of the United
States of America, the State of Delaware or any other jurisdiction, or any
political subdivision or agency thereof, to effectuate, implement and continue
the valid and subsisting existence of the Partnership or to dissolve the
Partnership for any other purpose consistent with this Agreement and the
transactions contemplated hereby.
The power of attorney granted hereby is coupled with an interest
and shall (a) survive and not be affected by the subsequent death, incapacity,
disability, dissolution, termination, or bankruptcy of the Holder granting the
same or the transfer of all or any portion of such Holder's Interest and
(b) extend to such Holder's successors, assigns and legal representatives.
Section 13.3 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement among the parties. It supersedes any prior agreement or
understandings among them, and it may not be modified or amended in any manner
other than as set forth herein.
SECTION 13.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED
BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
Section 13.5 EFFECT. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, successors and assigns.
Section 13.6 PRONOUNS AND NUMBER. Wherever from the context it
appears appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine, feminine or neuter shall include the masculine, feminine and neuter.
Section 13.7 CAPTIONS. Captions contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit or extend
the scope or intent of this Agreement or any provisions hereof.
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<PAGE>
Section 13.8 PARTIAL ENFORCEABILITY. If any provision of this
Agreement, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
Section 13.9 COUNTERPARTS. This Agreement may contain more than
one counterpart of the signature page and this Agreement may be executed by the
affixing of the signature of each of the Partners to one of such counterpart
signature pages. All of such counterpart signatures pages shall be read as
though one, and they shall have the same force and effect as though all of the
signers had signed a single signature page.
Section 13.10 REMEDIES. The failure of any party to seek
redress for violation of, or to insist upon the strict performance of, any
provision of this Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation. The rights and remedies provided by this Agreement are cumulative
and the use of any one right or remedy by any party shall not preclude or waive
its right to use any or all other remedies. Said rights and remedies
-53-
<PAGE>
are given in addition to any other rights the parties may have by law, statute,
ordinance or otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above stated.
GENERAL PARTNER:
BEST BUY CO., INC.,
a Minnesota corporation
By:
------------------------
Richard M. Schulze
Chairman and Chief
Executive Officer
INITIAL LIMITED PARTNER:
BEST BUY FINANCIAL CORPORATION,
a Delaware corporation
By:
------------------------
Richard M. Schulze
Chairman and Chief
Executive Officer
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<PAGE>
Annex A
[IF A GLOBAL LP CERTIFICATE ADD --
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York Corporation ("DTC"), to
Best Buy Capital, L.P. or its agent for registration of transfer,
exchange, or payment, and any certificate issued is registered in the
name of Cede & Co. (or in such other name as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.]
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
Certificate Number Number of Preferred Securities
- - -------------------------------------------------------------------------------
R-1
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
CUSIP NO. 086 51F 200
Certificate Evidencing Preferred Securities
of
Best Buy Capital, L.P.
6 1/2% Convertible Monthly Income Preferred Securities
(liquidation preference $50 per Preferred Security)
Best Buy Capital, L.P., a limited partnership formed under the
laws of the State of Delaware (the "Partnership"), hereby certifies that _____
(the "Holder") is the registered owner of _______ preferred securities of the
Partnership representing limited partnership interests in the Partnership, which
are designated the 6 1/2% Convertible Monthly Income Preferred Securities
(liquidation preference $50 per Preferred Security) (the "Preferred
Securities"). The Preferred Securities are fully paid and are nonassessable
interests in the Partnership, as to which the Partners in the Partnership who
hold the Preferred
A-1
<PAGE>
Securities (the "Preferred Security Holders"), in their capacities as Partners
in the Partnership, will have no liability solely by reason of being Preferred
Security Holders (subject to the obligation of a Preferred Security Holder to
repay any funds wrongfully distributed to it), and are freely transferable on
the books and records of the Partnership, in person or by a duly authorized
attorney, upon surrender of this certificate duly endorsed and in proper form
for transfer. The powers, preferences and special rights and limitations of the
Preferred Securities are set forth in, and this certificate and the Preferred
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Limited Partnership
Agreement of the Partnership dated as of November 3, 1994, as the same may be
amended from time to time in accordance with its terms (the "Limited Partnership
Agreement"), authorizing the issuance of the Preferred Securities and
determining the powers, preferences and other special rights and limitations,
regarding Dividends, voting, return of capital and otherwise, and other matters
relating to the Preferred Securities. Capitalized terms used herein but not
defined herein shall have the meaning given them in the Limited Partnership
Agreement. The Holder is entitled to the benefits of the Guarantee Agreement of
Best Buy Co., Inc., a Minnesota corporation ("Best Buy"), dated as of November
3, 1994 (the "Guarantee") to the extent provided therein. The Partnership will
furnish a copy of the Limited Partnership Agreement and the Guarantee to the
Holder without charge upon written request to the Partnership at its principal
place of business or registered office.
The Holder, by accepting this certificate, is deemed to have
agreed (i) to be bound by the provisions of the Limited Partnership Agreement,
including the provisions of the Limited Partnership Agreement concerning the
exchange of the Preferred Securities for Depositary Shares representing
fractional interests in Best Buy Preferred Stock and (ii) that the Subordinated
Debentures acquired by the Partnership with the proceeds from the issuance of
the Preferred Securities are subordinated and junior in right of payment to all
Senior Indebtedness of Best Buy as and to the extent provided in the
Subordinated Debentures and (iii) that the Guarantee ranks (x) subordinate and
junior in right of payment to all Senior Indebtedness of Best Buy, and (y) PARI
PASSU with the most senior preferred or preference stock now or hereafter issued
by Best Buy and with any guarantee now or hereafter entered into by Best Buy in
respect of any preferred or preference stock of any Affiliate of Best Buy, and
(z) senior to Best Buy Common Stock and any other class or series of capital
stock of Best Buy or any of its
A-2
<PAGE>
Affiliates which by its express terms ranks junior in the payment of dividends
and amounts on liquidation, dissolution, and winding-up to the Preferred
Securities, in each case, as and to the extent provided in the Guarantee. Upon
receipt of this certificate, the Holder is admitted to the Partnership as a
Limited Partner, is bound by the Limited Partnership Agreement and is entitled
to the benefits thereunder.
IN WITNESS WHEREOF, this certificate has been executed on behalf
of the Partnership by its duly authorized General Partner and countersigned by a
duly authorized officer of each of Best Buy Co., Inc., as Guarantor, and Harris
Trust and Savings Bank, as Registrar and Transfer Agent this _____ day of
_________________, ____.
BEST BUY CAPITAL, L.P.
By: BEST BUY CO. INC.,
its General Partner
By:
----------------------
Name:
Title:
By: BEST BUY CO., INC.,
as Guarantor
By:
----------------------
Name:
Title:
Registered and Countersigned by
HARRIS TRUST AND SAVINGS BANK
By:
---------------------------
Authorized Signature
A-3
<PAGE>
Annex B
Form of
Notice of Conversion
Best Buy Capital, L.P.
6 1/2% Convertible Monthly Income Preferred Securities
To: Harris Trust and Savings Bank,
Conversion Agent
------------------------
------------------------
The undersigned (the "Holder") hereby irrevocably exercises its
option to convert 6 1/2% Convertible Monthly Income Preferred Securities (the
"Preferred Securities") of Best Buy Capital, L.P. ("Capital"), as designated
below and surrendered herewith to the Conversion Agent, into shares of common
stock (the "Best Buy Common Stock") of Best Buy Co., Inc. ("Best Buy") in
accordance with the terms of the Amended and Restated Agreement of Limited
Partnership of Capital, dated as of November 3, 1994 (the "Agreement").
The Holder directs the Conversion Agent, on behalf of the Holder,
to effect the conversion of the Preferred Securities designated under (A) below
for shares of Best Buy Common Stock pursuant to and in the manner described in
Section 6.3 of the Agreement. The Conversion Agent shall instruct Best Buy that
the shares of Best Buy Common Stock issuable and deliverable upon the
conversion, together with any check in lieu of fractional shares, be issued to
the Holder unless, in the case of the Best Buy Common Stock, a different name
has been indicated below and to deliver such shares and such check, if any, to
the Conversion Agent. The Conversion Agent shall distribute, as promptly as
possible after the date hereof, (x) the certificate or certificates for the
number of full shares of Best Buy Common Stock issuable upon conversion of the
Preferred Securities designated under (A) below, (y) any check in lieu of
fractional shares and (z) any certificate or certificates issued by Capital for
Preferred Securities surrendered herewith but not designated for conversion
under (A) below, to the person or persons entitled to receive the same.
If shares of Best Buy Common Stock are to be issued in the name
of a person other than the Holder, the Holder will pay transfer taxes payable
with respect thereto.
B-1
<PAGE>
A. PREFERRED SECURITIES TO BE CONVERTED
Certificate Numbers of Surrendered
Certificate(s):
---------------
Number of Preferred Securities to be
Converted:
------------
Number of Preferred Securities Surrendered
But Not to be Converted:
------------
B. SPECIAL ISSUANCE INSTRUCTIONS
To be completed if Best Buy Common Stock Certificate(s) and/or check
in lieu of fractional shares to be issued otherwise than to Holder.
Please type or print.
Social Security or
Other Taxpayer
Identification Number
- - ---------------------
(Name)
- - --------------------- ---------------------
(Address)
- - ---------------------
C. SIGNATURE
Dated:
-------- -------------------------
Signature of Holder (must
conform in all respects to
the name of the registered
owner of the Preferred
Securities certificate(s)
specified in (A) and
surrendered herewith)
Signature Guaranteed By:
-------------------------
B-2
<PAGE>
Annex C
Form of
Notice of Exchange
Best Buy Capital, L.P.
6 1/2% Convertible Monthly Income Preferred Securities
To: Harris Trust and Savings Bank,
Conversion Agent
------------------------
------------------------
The undersigned holders of a majority in liquidation preference
(the "Holders") of the 6 1/2% Convertible Monthly Income Preferred Securities
(the "Preferred Securities") of Best Buy Capital, L.P. ("Capital") have,
pursuant to an Exchange Election on the date hereof, elected to cause the
Conversion Agent to effect an exchange of all (but not less than all) of the
outstanding Preferred Securities for Depositary Shares (the "Depositary
Shares"), each representing a 1/100th ownership interest in a share of Series A
Cumulative Convertible Preferred Stock (the "Best Buy Preferred Stock") of Best
Buy Co., Inc. ("Best Buy") in accordance with the terms of the Amended and
Restated Agreement of Limited Partnership of Capital, dated as of November 3,
1994 (the "Agreement"). Capitalized terms not defined herein have the meanings
ascribed to them in the Agreement.
The Holders direct the Conversion Agent, on their behalf, to
effect the exchange of the Preferred Securities for Depositary Shares pursuant
to and in the manner described in Section 6.4 of the Agreement. The Conversion
Agent is directed to instruct Best Buy, as promptly as possible after the date
hereof, (x) to issue and deposit with the Depositary the number of shares of
Best Buy Preferred Stock issuable upon such exchange in return for a Depositary
Receipt or Receipts evidencing Depositary Shares, (y) to request the Depositary
to issue the Depositary Receipts evidencing Depositary Shares issuable and
deliverable upon the exchange to all registered owners of Preferred Securities
unless any such owners have indicated a different name or names on copies of
Attachment 1 hereto and (z) to deliver such Depositary Receipts to the
Conversion Agent. The Conversion Agent shall distribute, as promptly as
possible after the date hereof, the Depositary Receipt or
C-1
<PAGE>
Receipts to the person or persons entitled to receive the same.
If Depositary Receipts are to be issued in the name of a person
other than a registered owner of Preferred Securities as specified on one or
more copies of Attachment 1 hereto, each owner requesting such special issuance
will pay any transfer taxes payable with respect thereto.
SIGNATURES OF HOLDERS
Signatures of Holders must conform in all respects to the names of registered
owners of Preferred Securities. This Notice of Exchange may be executed in more
than one counterpart of this signature page with the same effect as though all
Holders had signed on a single page.
Dated:
---------------
- - ---------------------- ----------------------
- - ---------------------- ----------------------
- - ---------------------- ----------------------
- - ---------------------- ----------------------
- - ---------------------- ----------------------
- - ---------------------- ----------------------
- - ---------------------- ----------------------
- - ---------------------- ----------------------
- - ---------------------- ----------------------
- - ---------------------- ----------------------
C-2
<PAGE>
ATTACHMENT 1 TO NOTICE OF EXCHANGE
SPECIAL ISSUANCE INSTRUCTIONS
To be completed if Depositary Receipt(s) are to be issued otherwise than to
registered owners of Preferred Securities. Please type or print.
NAME OF
REGISTERED OWNER NUMBER OF PREFERRED
OF PREFERRED SECURITIES: SECURITIES OWNED:
- - ----------------------- --------------------
PERSON TO WHOM
DEPOSITARY RECEIPTS
TO BE ISSUED:
SOCIAL SECURITY OR
- - ----------------------- OTHER TAXPAYER
(Name) IDENTIFICATION NUMBER:
- - ----------------------- ----------------------
(Address)
SIGNATURE OF REGISTERED OWNER Signature Guaranteed by:
OF PREFERRED SECURITIES:
- - ----------------------- --------------------
C-3
<PAGE>
EXHIBIT 3.3
Draft of November 1, 1994
CERTIFICATE OF DESIGNATION
OF
BEST BUY CO., INC.
Series A Cumulative Convertible Preferred Stock
______________________
THE UNDERSIGNED, ELLIOT S. KAPLAN, the Secretary of the Best Buy Co.,
Inc. (the "Corporation"), does hereby certify that pursuant to Minnesota
Statutes Section 302A.401, resolutions as hereinafter set forth were adopted in
writing as of October 27, 1994 by the Board of Directors of the Corporation,
such resolutions stating the number, designation, relative rights, preferences
and limitations of a series of Preferred Stock, as fixed by the Board of
Directors of the Corporation:
RESOLVED:
That the Board of Directors of this Corporation hereby
establishes a series of preferred stock of the Corporation with such
terms and relative rights and preferences as set forth in EXHIBIT A,
attached hereto (the "Series A Preferred Stock").
RESOLVED
FURTHER:
That the appropriate officer or officers of this Corporation
shall prepare a Certificate of Designation describing the Series A
Preferred Stock and cause the same to be filed with the Secretary of
State of the State of Minnesota.
IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Designation this ____ day of November, 1994.
-----------------------------------
Elliot S. Kaplan
Secretary
<PAGE>
EXHIBIT A
SECTION 1. DESIGNATION AND AMOUNT; SPECIAL PURPOSE; RESTRICTION ON
SENIOR SERIES.
(A) The shares of this series of Preferred Stock shall be designated
as "Series A Cumulative Convertible Preferred Stock" ("Series A Preferred
Stock") and the number of shares constituting such series shall be 46,000, par
value $1.00 per share.
(B) Shares of Series A Preferred Stock shall be issued by the
conversion and exchange agent (the "Conversion Agent") for the Series A
Preferred Stock only upon the exchange of 6 1/2% Convertible Subordinated
Debentures due 2024 of the Corporation (the "Subordinated Debentures") following
a valid exchange election (an "Exchange Election") by the holders of a majority
of the aggregate liquidation preference of the outstanding 6 1/2% Convertible
Monthly Income Preferred Securities, liquidation preference $50 per security
(the "Best Buy Capital Preferred Securities"), of Best Buy Capital, L.P., a
Delaware limited partnership ("Best Buy Capital"), to cause the Best Buy Capital
Preferred Securities then outstanding to be exchanged for depositary shares,
each representing a one one-hundredth (1/100th) interest in a share of Series A
Preferred Stock (the "Depositary Shares"), issued pursuant to the Deposit
Agreement, dated as of November 3, 1994, among the Corporation, Harris Trust and
Savings Bank, as Depositary and the holders from time to time of the receipts
described therein (the "Deposit Agreement"), in the manner prescribed in the
Amended and Restated Agreement of Limited Partnership of Best Buy Capital, dated
as of November 3, 1994 (the "Partnership Agreement").
(C) So long as any Best Buy Capital Preferred Securities are
outstanding, the Corporation shall not authorize or issue any other class or
series of capital stock ranking senior as to the payment of dividends or amounts
upon liquidation, dissolution or winding-up to the Series A Preferred Stock
without the approval of the holders of not less than 66 2/3% of the aggregate
liquidation preference of the Best Buy Capital Preferred Securities then
outstanding.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A)(1) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors of the
Corporation out of funds legally available therefor, cumulative cash dividends
in an amount per share per annum equal to $325.00 (equivalent to a rate per
annum of 6 1/2% of the stated liquidation
<PAGE>
preference of $5,000 per share of Series A Preferred Stock), calculated on the
basis of a 360-day year consisting of 12 months of 30 days each, and for any
period shorter than a full monthly dividend period, dividends will be computed
on the basis of the actual number of days elapsed in such period, and payable in
United States dollars monthly in arrears on the last day of each calendar month
of each year.
(2) Dividends, when, as and if declared by the Board of Directors of
the Corporation out of funds legally available therefor, shall be paid on the
last day of each month. Such dividends will accrue and be cumulative whether or
not they have been earned or declared and whether or not there are funds of the
Corporation legally available for the payment of dividends. Dividends on the
Series A Preferred Stock shall be cumulative from the date of the Exchange
Election. Accumulated but unpaid dividends, if any (including arrearages at the
rate of 6 1/2% per annum compounded monthly), on the Best Buy Capital Preferred
Securities on the date of the Exchange Election shall constitute, and be treated
as, accumulated and unpaid dividends on the Series A Preferred Stock as of the
date of the issuance thereof. The record date for each dividend payment date
shall be the day immediately preceding such dividend payment date, provided that
such day is a day on which banking institutions in The City of New York are not
authorized or obligated by law or executive order to be closed (a "Business
Day"). In the event that any date on which dividends are payable on the
Series A Preferred Stock is not a Business Day, then payment of the dividend
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
(B) In the event that full cumulative dividends on the Series A
Preferred Stock have not been declared and paid or set apart for payment when
due, then the Corporation shall not, and shall not permit any majority-owned
subsidiary to, declare or pay any dividend on, or redeem, purchase, acquire for
value or make a liquidation payment with respect to, any Pari Passu Stock or
Junior Stock (each as defined herein) (other than as a result of a
reclassification of Pari Passu Stock or Junior Stock or the exchange or
conversion of one class or series of Pari Passu Stock or Junior Stock for
another class or series of Pari Passu Stock or Junior Stock, respectively), or
make any guarantee payments with respect to the foregoing (other than payments
under the Guarantee Agreement dated as of November 3, 1994
-2-
<PAGE>
of the Corporation in favor of the holders of Best Buy Capital Preferred
Securities with respect to such securities or dividends or guarantee payments to
the Corporation).
When dividends are not paid in full, all dividends declared upon the
Series A Preferred Stock and all dividends declared upon any Pari Passu Stock
shall be paid ratably in proportion to the respective amounts of dividends
accumulated and unpaid on the Series A Preferred Stock and accumulated and
unpaid on such Pari Passu Stock. "Pari Passu Stock" means any preference stock
or preferred stock of the Corporation, or any guarantee now or hereafter entered
into by the Corporation in respect of any preferred or preference stock of any
affiliate of the Corporation, ranking, in such case, as to the payment of
dividends and amounts upon liquidation, dissolution and winding-up on a parity
with the Series A Preferred Stock. "Junior Stock" means Common Stock and any
other class or series of capital stock of the Corporation or any of its
affiliates which by its express terms ranks junior in the payment of dividends
or amounts upon liquidation, dissolution or winding-up to the Series A Preferred
Stock.
SECTION 3. VOTING RIGHTS.
(A) In the event that full cumulative dividends on the Series A
Preferred Stock have not been paid for 18 monthly dividend periods (including
for this purpose any arrearage with respect to Best Buy Capital Preferred
Securities), the number of directors of the Corporation constituting the entire
Board of Directors shall be increased by two (2) persons and the holders of the
Series A Preferred Stock shall have the right to elect such persons to fill such
positions at any regular meeting of shareholders or special meeting held in
place thereof, or at a special meeting of the holders of the Series A Preferred
Stock called as hereinafter provided. Whenever all arrearages of dividends on
the Series A Preferred Stock then outstanding shall have been paid and dividends
thereon for the current monthly period shall have been paid or declared and set
apart for payment, then the right of the holders of the Series A Preferred Stock
to elect such additional two (2) directors shall cease (but subject always to
the same provisions for the vesting of such voting rights in the case of any
similar future arrearages in dividends), and the terms of office of all persons
elected as directors by the holders of the Series A Preferred Stock shall
forthwith terminate and the number of directors of the Corporation shall be
reduced accordingly. At any time after such voting power shall have been so
vested in the holders of shares of the Series A Preferred Stock, the Secretary
of the
-3-
<PAGE>
Corporation may, and upon the written request for a special meeting signed by
the holders of at least 10% of all outstanding Series A Preferred Stock
(addressed to the Secretary at the principal office of the Corporation) shall,
call a special meeting of the holders of the Series A Preferred Stock for the
election of the two (2) directors to be elected by them as herein provided; such
call to be made by notice similar to that provided for in the by-laws for a
special meeting of the shareholders or as required by law. If any such special
meeting required to be called as above provided shall not be called by the
Secretary within 20 days after receipt of any such request, then any holder of
Series A Preferred Stock may call such meeting, upon the notice above provided,
and for that purpose shall have access to the stock books and records of the
Corporation. The directors elected at any such special meeting shall hold
office until the next regular meeting of the shareholders or special meeting
held in place thereof if such office shall not have previously terminated as
above provided. In case any vacancy shall occur among the directors elected by
the holders of the Series A Preferred Stock, a successor shall be elected by the
Board of Directors to serve until the next regular meeting of the shareholders
or special meeting held in place thereof upon the nomination of the then
remaining director elected by the holders of the Series A Preferred Stock or the
successor of such remaining director.
(B) Except as otherwise required by law or set forth herein, holders
of Series A Preferred Stock shall have no voting rights and their consent shall
not be required for the taking of any corporate action. So long as any shares
of Series A Preferred Stock are outstanding, the consent of the holders of not
less than 66 2/3% of the outstanding shares of Series A Preferred Stock, given
in person or by proxy either at a regular meeting or at a special meeting called
for that purpose, at which the holders of Series A Preferred Stock shall vote
separately as a series, shall be necessary for effecting, validating or
authorizing any one or more of the following:
(1) The amendment, alteration or repeal of any of the provisions of
the Amended and Restated Articles of Incorporation, as amended, of the
Corporation, or any amendment thereto or any other certificate filed
pursuant to law (including any such amendment, alteration or repeal
effected by any merger or consolidation to which the Corporation is a
party) that would adversely affect any of the rights, powers or preferences
of outstanding shares of Series A Preferred Stock; PROVIDED, HOWEVER, that
any amendment or amendments to the provisions of the Amended and
-4-
<PAGE>
Restated Articles of Incorporation, as amended, so as to authorize or
create, or to increase the authorized amount of, any Junior Stock shall not
be deemed to adversely affect the voting powers, rights or preferences of
the holders of the Series A Preferred Stock;
(2) The creation of any shares of any class or series or any security
convertible into shares of any class or series of capital stock ranking
prior to the Series A Preferred Stock in the distribution of assets on any
liquidation, dissolution or winding-up of the Corporation or in the payment
of dividends; or
(3) Any merger or consolidation with or into, or any sale, transfer,
exchange or lease of all or substantially all of the assets of the
Corporation to, any other corporation, in either case that would adversely
affect any of the rights, powers or preferences of outstanding shares of
Series A Preferred Stock.
(C) For purposes of this Section 3, while Best Buy Capital Preferred
Securities are outstanding and owned by any entity other than the Corporation,
Best Buy Capital, or their subsidiaries or affiliates, any Best Buy Capital
Preferred Securities owned by the Corporation, Best Buy Capital or their
subsidiaries or affiliates shall not have the voting rights referred to in this
Section.
SECTION 4. REDEMPTION.
(A) If at any time following the Conversion Expiration Date (as
defined below), less than five percent (5%) of the shares of Series A Preferred
Stock remain outstanding, such shares of Series A Preferred Stock are
redeemable, at the option of the Corporation, in whole but not in part, from
time to time, at a redemption price equal to the liquidation preference, plus
accumulated and unpaid dividends, whether or not earned or declared, to the date
of redemption (the "Redemption Price").
(B) Unless otherwise required by law, notice of redemption will be
sent to the holders of Series A Preferred Stock by first-class mail, postage
prepaid, mailed not less than thirty (30), nor more than sixty (60) days prior
to the redemption date. Each such notice shall state: (i) the redemption date;
(ii) the Redemption Price; (iii) the place or places where receipts for
Depositary Shares representing such shares are to be surrendered for payment of
the Redemption Price; and (iv) that dividends on the shares to be redeemed will
cease to accrue on such redemption date.
-5-
<PAGE>
Upon surrender of the receipts for Depositary Shares representing the shares so
called for redemption (properly endorsed or assigned for transfer, if the Board
of Directors of the Corporation shall so require and the notice shall so state),
such shares shall be redeemed by the Corporation on the date fixed for
redemption at the Redemption Price.
SECTION 5. LIQUIDATION, DISSOLUTION OR WINDING-UP.
(A) Upon any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Corporation, the holders of Series A Preferred
Stock at the time outstanding will be entitled to receive out of the net assets
of the Corporation available for payment to shareholders and subject to the
rights of the holders of any stock of the Corporation ranking senior to or on a
parity with the Series A Preferred Stock in respect of distributions upon
liquidation, dissolution, winding-up or termination of the Corporation, before
any amount shall be paid or distributed with respect to any Junior Stock,
liquidating distributions in the amount of $5,000 per share plus an amount equal
to all accrued and unpaid dividends thereon (whether or not earned or declared)
to the date fixed for distribution. If, upon any liquidation, dissolution,
winding-up or termination of the Corporation, the amounts payable with respect
to the Series A Preferred Stock and any Pari Passu Stock are not paid in full,
the holders of the Series A Preferred Stock and such Pari Passu Stock shall
share ratably in any distribution of assets based on the proportion of their
full respective liquidation preference to the entire amount of the unpaid
liquidation preference of the Series A Preferred Stock. After payment of the
full amount to which they are entitled as provided by the foregoing provisions
of this Section 5(A), the holders of shares of Series A Preferred Stock shall
not be entitled to any further right or claim to any of the remaining assets of
the Corporation.
(B) Neither the merger or consolidation of the Corporation with or
into any other corporation, nor the merger or consolidation of any other
corporation with or into the Corporation, nor the sale, transfer, exchange or
lease of all or any portion of the assets of the Corporation, shall be deemed to
be a dissolution, liquidation or winding-up of the affairs of the Corporation
for purposes of this Section 5.
(C) Written notice of any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, stating the payment date or dates
when, and the
-6-
<PAGE>
place or places where, the amounts distributable to holders of Series A
Preferred Stock in such circumstances shall be payable, shall be given by first-
class mail, postage prepaid, mailed not less than twenty (20) days prior to any
payment date stated therein, to the holders of Series A Preferred Stock, at the
address shown on the books of the Corporation or the transfer agent for the
Series A Preferred Stock; PROVIDED, HOWEVER, that a failure to give notice as
provided above or any defect therein shall not affect the Corporation's ability
to consummate a voluntary or involuntary liquidation, dissolution or winding-up
of the Corporation.
SECTION 6. CONVERSION RIGHTS OF SERIES A PREFERRED STOCK.
(A) The shares of Series A Preferred Stock are convertible at any
time before the close of business on the Conversion Expiration Date, at the
option of the holder thereof, into shares of Common Stock at the initial
conversion price of $45.00 per share of Common Stock, subject to adjustment, as
provided in Section 7 (as so adjusted, the "Conversion Price"). For this
purpose, each share of Series A Preferred Stock shall be taken at $5,000.
(B) Holders of record of Series A Preferred Stock at the close of
business on a dividend payment record date will be entitled to receive the
dividend payable on such shares of Series A Preferred Stock on the corresponding
dividend payment date notwithstanding the conversion thereof following such
dividend payment record date but on or prior to such dividend payment date.
Except as provided in the immediately preceding sentence, the Corporation will
make no payment or allowance for accumulated and unpaid dividends, whether or
not in arrears, on converted shares of Series A Preferred Stock.
(C) No fractional shares of Common Stock will be issued as a result
of conversion, but in lieu thereof, the Corporation shall pay a cash adjustment
in an amount equal to the same fraction of the Closing Price (as hereinafter
defined) on the date on which the certificate or certificates for such shares
were duly surrendered for conversion, or, if such date is not a Trading Day (as
hereinafter defined), on the next Trading Day.
(D) Any holder of shares of Series A Preferred Stock desiring to
convert such shares into shares of Common Stock shall surrender the certificate
or certificates representing the shares of Series A Preferred Stock being
converted, duly assigned or endorsed for transfer to the
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Corporation (or accompanied by duly executed stock powers relating thereto), at
the principal executive office of the Corporation or the offices of the transfer
agent for the Series A Preferred Stock or such office or offices in the
continental United States of an agent for conversion as may from time to time be
designated by notice to the holders of the Series A Preferred Stock by the
Corporation or the transfer agent for the Series A Preferred Stock, accompanied
by written notice of conversion, on any day prior to the Conversion Expiration
Date (as defined herein) that is a Business Day. Such notice of conversion
shall specify (i) the number of shares of Series A Preferred Stock to be
converted and the name or names in which such holder desires the certificate or
certificates for Common Stock and for any shares of Series A Preferred Stock not
to be so converted to be issued (subject to compliance with applicable legal
requirements if any of such certificates are to be issued in a name other than
the name of the holder), and (ii) the address to which such holder wishes
delivery to be made of such new certificates to be issued upon such conversion.
(E) Upon surrender of a certificate representing a share or shares of
Series A Preferred Stock for conversion, the Corporation shall issue and send by
hand delivery (with receipt to be acknowledged) or by first-class mail, postage
prepaid, to the holder thereof, at the address designated by such holder, a
certificate or certificates representing the number of shares of Common Stock to
which such holder shall be entitled upon conversion. In the event that there
shall have been surrendered a certificate or certificates representing shares of
Series A Preferred Stock, only part of which are to be converted, the
Corporation shall issue and deliver to such holder or such holder's designee in
the manner provided in the immediately preceding sentence a new certificate or
certificates representing the number of shares of Series A Preferred Stock that
shall not have been converted.
(F) The issuance by the Corporation of shares of Common Stock upon a
conversion of shares of Series A Preferred Stock into shares of Common Stock
made at the option of the holder thereof shall be effective upon the surrender
by such holder or such holder's designee of the certificate or certificates for
the shares of Series A Preferred Stock to be converted, duly assigned or
endorsed for transfer to the Corporation (or accompanied by duly executed stock
powers relating thereto). The person or persons entitled to receive the Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of the close of
business on the effective date of the
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conversion. No allowance or adjustment shall be made in respect of dividends
payable to holders of Common Stock of record as of any date prior to such
effective date.
(G) (i) On and after November 3, 1997, the Corporation shall have the
right, at its option, to cause the conversion rights set forth in this Section
to expire, provided that the Current Market Price (as defined below) of the
Common Stock of the Corporation on each of 20 Trading Days within any period of
30 consecutive Trading Days, including the last Trading Day of such period,
exceeds 120% of the Conversion Price in effect on such Trading Day;
(ii) In order to exercise its option to cause the conversion rights
of holders of shares of Series A Preferred Stock to expire, the Corporation must
issue a press release for publication on the Dow Jones News Service and such
other print and electronic media as the Corporation shall select announcing the
Conversion Expiration Date (the "Press Release") prior to the opening of
business on the second Trading Day after a period in which the condition in the
preceding paragraph has been met (but in no event prior to November 3, 1997).
The Press Release shall state that the Corporation has elected to exercise its
right to extinguish the conversion rights of holders of shares of Series A
Preferred Stock, specify the Conversion Expiration Date and provide the
Conversion Price of the Series A Preferred Stock and the Current Market Price of
the Common Stock, in each case as of the close of business on the Trading Day
next preceding the date of the Press Release. If the Corporation exercises the
option described in this paragraph, the "Conversion Expiration Date" shall be a
date selected by the Corporation which date shall be not less than 30 or more
than 60 days after the date on which the Corporation issues the Press Release;
and
(iii) In addition to issuing the Press Release, the Company shall
send notice of the expiration of conversion rights (a "Notice of Conversion
Expiration") by first-class mail to each record holder of shares of Series A
Preferred Stock not more than four (4) Business Days after the Corporation
issues the Press Release. Such Notice of Conversion Expiration shall state:
(1) the Conversion Expiration Date; (2) the Conversion Price of the Series A
Preferred Stock and the Current Market Price of the Common Stock, in each case
as of the close of business on the Trading Day next preceding the date of the
Notice of Conversion Expiration; (3) the place or places at which receipts for
Depositary Shares representing shares of Series A Preferred Stock are to be
surrendered prior to the Conversion Expiration Date for certificates
representing
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shares of Common Stock; and (4) such other information or instructions as the
Corporation deems necessary or advisable to enable a holder of shares of Series
A Preferred Stock to exercise its conversion right hereunder. No defect in the
Notice of Conversion Expiration or in the mailing thereof with respect to any
shares of Series A Preferred Stock shall affect the validity of such notice with
respect to any other share of Series A Preferred Stock. As of the close of
business on the Conversion Expiration Date, the Series A Preferred Stock shall
no longer be convertible into Common Stock. As used in this Section, "Current
Market Price" of publicly traded shares of Common Stock for any day means the
last reported sales price, regular way on such day, or, if no sale takes place
on such day, the average of the reported closing bid and asked prices on such
day, regular way, in either case as reported on the New York Stock Exchange
Consolidated Transaction Tape, or, if the Common Stock is not listed or admitted
to trading on the New York Stock Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to trading if the
Common Stock is listed on a national securities exchange, or the National Market
System of the National Association of Securities Dealers, Inc., or, if the
Common Stock is not quoted or admitted to trading on such quotation system, on
the principal quotation system on which the Common Stock may be listed or
admitted to trading or quoted, or, if not listed or admitted to trading or
quoted on any national securities exchange or quotation system, the average of
the closing bid and asked prices of the Common Stock in the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting service, or, if not so
available in such manner, as furnished by any New York Stock Exchange member
firm selected from time to time by the Board of Directors of the Corporation for
that purpose or, if not so available in such manner, as otherwise determined in
good faith by the Board of Directors.
(H) The Corporation shall at all times reserve and keep available out
of its authorized and unissued Common Stock, solely for issuance upon the
conversion of shares of Series A Preferred Stock as herein provided, free from
any preemptive or other similar rights, such number of shares of Common Stock as
shall from time to time be issuable upon the conversion of all the shares of
Series A Preferred Stock then outstanding. All shares of Common Stock delivered
upon conversion of the Series A Preferred Stock shall be duly authorized,
validly issued, fully paid and non-assessable, free and clear of all liens,
claims, interests and other encumbrances. The Corporation shall prepare and
shall use its best efforts to obtain and keep in force such govern-
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mental or regulatory permits or other authorizations as may be required by law,
and shall comply with all applicable requirements as to registration or
qualification of the Common Stock (and all requirements to list the Common Stock
issuable upon conversion of Series A Preferred Stock that are at the time
applicable), in order to enable the Corporation lawfully to issue and deliver to
each holder of record of Series A Preferred Stock such number of shares of its
Common Stock as shall from time to time be sufficient to effect the conversion
of all shares of Series A Preferred Stock then outstanding and convertible into
shares of Common Stock.
SECTION 7. ADJUSTMENT OF CONVERSION PRICE.
(A) ADJUSTMENT OF CONVERSION PRICE. The Conversion Price at which a share
of Series A Preferred Stock is convertible into Common Stock shall be subject to
adjustment from time to time as follows:
(i) In case the Corporation shall pay or make a dividend or other
distribution on any class or series of capital stock of the Corporation
exclusively in Common Stock, the Conversion Price in effect at the opening of
business on the day following the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination and the denominator shall
be the sum of such number of shares and the total number of shares constituting
such dividend or other distribution or exchange, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination.
(ii) In case the Corporation shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall otherwise
issue to all holders of its Common Stock, rights or warrants entitling the
holders thereof to subscribe for or purchase shares of Common Stock at a price
per share less than the current market price per share (determined as provided
in subparagraph (vii) of this Section 7(a)) of the Common Stock on the date
fixed for the determination of shareholders entitled to receive such rights or
warrants, the Conversion Price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced by multiplying
such Conversion Price by a fraction of which the numerator shall be the number
of shares of Common Stock
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outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered for subscription
or purchase would purchase at such current market price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination. In case any rights or warrants referred to
in this subparagraph (ii) in respect of which an adjustment shall have been made
shall expire unexercised within 45 days after the same shall have been
distributed or issued by the Corporation, the Conversion Price shall be
readjusted at the time of such expiration to the Conversion Price that would
have been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
(iii) In case outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the Conversion Price in effect at
the opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(iv) Subject to the last sentence of this subparagraph (iv), in case the
Corporation shall, by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any class or series of
capital stock, cash or assets (including securities, but excluding any rights or
warrants referred to in subparagraph (ii) of this Section 7(A), any dividend or
distribution paid exclusively in cash and any dividend or distribution referred
to in subparagraph (i) of this Section 7(A)), the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this subparagraph (iv) by a fraction
of which the numerator shall be the current market price per share (determined
as provided in
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subparagraph (vii) of this Section 7(A)) of the Common Stock on the date fixed
for the payment of such distribution (the "Reference Date") less the fair market
value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors), on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed applicable
to one share of Common Stock and the denominator shall be such current market
price per share of the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following the Reference
Date. If the Board of Directors determines the fair market value of any
distribution for purposes of this subparagraph (iv) by reference to the actual
or when issued trading market for any securities comprising such distribution,
it must in doing so consider the prices in such market over the same period used
in computing the current market price per share of Common Stock pursuant to
subparagraph (vii) of this Section 7(A). For purposes of this subparagraph
(iv), any dividend or distribution that includes shares of Common Stock or
rights or warrants to subscribe for or purchase shares of Common Stock shall be
deemed instead to be (1) a dividend or distribution of the evidences of
indebtedness, shares of capital stock, cash or assets other than such shares of
Common Stock or such rights or warrants (making any Conversion Price reduction
required by this subparagraph (iv)) immediately followed by (2) a dividend or
distribution of such shares of Common Stock or such rights or warrants (making
any further Conversion Price reduction required by subparagraph (i) or (ii) of
this Section 7(A)), except (A) the Reference Date of such dividend or
distribution as defined in this subparagraph (iv) shall be substituted as "the
date fixed for the determination of shareholders entitled to receive such
dividend or other distribution," "the date fixed for the determination of
shareholders entitled to receive such rights or warrants" and "the date fixed
for such determination" within the meaning of subparagraphs (i) and (ii) of this
Section 7(A) and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of subparagraph (i) of
this Section 7(A).
(v) In case the Corporation shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding, in the case of
any regular cash dividend on the Common Stock, the portion thereof that does not
exceed the per share amount of the next preceding regular cash dividend on the
Common Stock (as adjusted to appropriately reflect any of the events referred to
in
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<PAGE>
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this Section 7(A)), or
excluding all of such regular cash dividend if the annualized amount thereof per
share of Common Stock does not exceed 15% of the current market price per share
(determined as provided in subparagraph (vii) of this Section 7(A)) of the
Common Stock on the Trading Day (as defined in Section 7(E)) next preceding the
date of declaration of such dividend), the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subparagraph (v) by a fraction of which the
numerator shall be the current market price per share (determined as provided in
subparagraph (vii) of this Section 7(A)) of the Common Stock on the date fixed
for the payment of such distribution less the amount of cash so distributed and
not excluded as provided above applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock,
such reduction to become effective immediately prior to the opening of business
on the day following the date fixed for the payment of such distribution.
(vi) In case a tender or exchange offer made by the Corporation or any
subsidiary of the Corporation for all or any portion of the Corporation's Common
Stock shall expire and such tender or exchange offer shall involve the payment
by the Corporation or such subsidiary of consideration per share of Common Stock
having a fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors) at the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it shall
have been amended) that exceeds 10% of the current market price per share
(determined as provided in subparagraph (vii) of this Section 7(A)) of the
Common Stock on the Trading Day (as defined in Section 7(E)) next succeeding the
Expiration Time, the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this subparagraph (vi) by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding (including any
tendered or exchanged shares) at the Expiration Time multiplied by the current
market price per share (determined as provided in subparagraph (vii) of this
Section 7(A)) of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
holders of Common Stock
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based on the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of all shares validly tendered or exchanged and not withdrawn
as of the Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Purchased Shares) at the
Expiration Time and the current market price per share (determined as provided
in subparagraph (vii) of this Section 7(A)) of the Common Stock on the Trading
Day next succeeding the Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the Expiration
Time.
(vii) For the purpose of any computation under subparagraphs (ii), (iv),
(v) and (vi) of this Section 7(A), the current market price per share of Common
Stock on any date in question shall be deemed to be the average of the daily
Closing Prices (as defined in Section 7(E)) for the five consecutive Trading
Days selected by the Company commencing not more than 20 Trading Days before,
and ending not later than, the earlier of the day in question and, if
applicable, the day before the "ex" date with respect to the issuance or
distribution requiring such computation; PROVIDED, HOWEVER, that if another
event occurs that would require an adjustment pursuant to subparagraphs (i)
through (vi), inclusive, the Board of Directors may make such adjustments to the
Closing Prices during such five Trading Day period as it deems appropriate to
effectuate the intent of the adjustments in this Section 7(A), in which case any
such determination by the Board of Directors shall be set forth in a resolution
of the Board of Directors and shall be conclusive. For purposes of this
paragraph, the term "ex" date, (1) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular way
on the New York Stock Exchange or on such successor securities exchange as the
Common Stock may be listed or in the relevant market from which the Closing
Price was obtained without the right to receive such issuance or distribution,
and (2) when used with respect to any tender or exchange offer means the first
date on which the Common Stock trades regular way on such securities exchange or
in such market after the Expiration Time of such offer.
(viii) The Corporation may make such reductions in the Conversion Price,
in addition to those required by subparagraphs (i), (ii), (iii), (iv), (v) and
(vi) of this Section 7(A), as it considers to be advisable to avoid or diminish
any income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or dis-
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tribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes. The Corporation from time to time may reduce the
Conversion Price by any amount for any period of time if the period is at least
twenty (20) days, the reduction is irrevocable during the period, and the Board
of Directors of the Corporation shall have made a determination that such
reduction would be in the best interest of the Corporation, which determination
shall be conclusive. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Corporation shall mail to holders of record of the
Series A Preferred Stock a notice of the reduction at least fifteen (15) days
prior to the date the reduced Conversion Price takes effect, and such notice
shall state the reduced Conversion Price and the period it will be in effect.
(ix) Notwithstanding anything herein to the contrary, no adjustment in the
Conversion Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Conversion Price; PROVIDED, HOWEVER,
that any adjustments which by reason of this subparagraph (ix) are not required
to be made shall be carried forward and taken into account in any subsequent
adjustment.
(x) Whenever the Conversion Price is adjusted as herein provided:
(1) the Corporation shall compute the adjusted Conversion Price and
shall prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Corporation setting forth the adjusted Conversion Price
and showing in reasonable detail the facts upon which such adjustment is
based, and such certificate shall forthwith be filed with the transfer
agent for the Series A Preferred Stock; and
(2) a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as practicable be
mailed by the Corporation to all record holders of shares of Series A
Preferred Stock at their last addresses as they shall appear upon the stock
transfer books of the Corporation.
(B) RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE OF ASSETS. In the
event that the Corporation shall be a party to any transaction (including
without limitation any recapitalization or reclassification of the Common Stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination of the
Common Stock), any
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consolidation of the Corporation with, or merger of the Corporation into, any
other person, any merger of another person into the Corporation (other than a
merger which does not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Corporation), any sale
or transfer of all or substantially all of the assets of the Corporation or any
compulsory share exchange) pursuant to which the Common Stock is converted into
the right to receive other securities, cash or other property), then lawful
provision shall be made as part of the terms of such transaction whereby the
holder of each share of Series A Preferred Stock then outstanding shall have the
right thereafter, to convert such share only into (i) in the case of any such
transaction other than a Common Stock Fundamental Change (as defined in Section
7(E)), the kind and amount of securities, cash and other property receivable
upon such transaction by a holder of the number of shares of Common Stock of the
Corporation into which such share of Series A Preferred Stock could have been
converted immediately prior to such transaction, after giving effect, in the
case of any Non-Stock Fundamental Change (as defined in Section 7(E)), to any
adjustment in the Conversion Price required by the provisions of Section 7(D),
and (ii) in the case of a Common Stock Fundamental Change, common stock of the
kind received by holders of Common Stock as a result of such Common Stock
Fundamental Change in an amount determined pursuant to the provisions of Section
7(D). The Corporation or the person formed by such consolidation or resulting
from such merger or which acquires such assets or which acquires the
Corporation's shares, as the case may be, shall make provision in its
certificate or articles of incorporation or other constituent document to
establish such right. Such certificate or articles of incorporation or other
constituent document shall provide for adjustments which, for events subsequent
to the effective date of such certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 7. The above provisions shall
similarly apply to successive transactions of the foregoing type.
(C) PRIOR NOTICE OF CERTAIN EVENTS. In case:
(i) the Corporation shall (1) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in
shares of Common Stock or (B) a dividend payable in cash out of its
retained earnings that would not require an adjustment pursuant to 7(A)(iv)
or (v) or (2) authorize a tender or exchange offer that would require an
adjustment pursuant to 7(A)(vi);
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(ii) the Corporation shall authorize the granting to all holders of Common
Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or series or of any other rights or warrants;
(iii) of any reclassification of Common Stock (other than a subdivision or
combination of the outstanding Common Stock, or a change in par value, or
from par value to no par value, or from no par value to par value), or of
any consolidation or merger to which the Corporation is a party and for
which approval of any shareholders of the Corporation shall be required, or
of the sale or transfer of all or substantially all of the assets of the
Corporation or of any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution, liquidation or winding-
up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for the
Series A Preferred Stock, and shall cause to be mailed to the holders of record
of the Series A Preferred Stock, at their last addresses as they shall appear
upon the stock transfer books of the Corporation, at least fifteen (15) days
prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record (if any) is to be taken for the purpose
of such dividend, distribution, redemption, repurchase, rights or warrants or,
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution, redemption, repurchase,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding-up (but no failure
to mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice).
(D) ADJUSTMENTS IN CASE OF FUNDAMENTAL CHANGES. Notwithstanding any other
provision in this Section 7 to the contrary, if any Fundamental Change (as
defined in Section 7(E)) occurs, then the Conversion Price in effect will be
adjusted immediately after such Fundamental Change as
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described below. In addition, in the event of a Common Stock Fundamental
Change, each share of Series A Preferred Stock shall be convertible solely into
common stock of the kind and amount received by holders of Common Stock as the
result of such Common Stock Fundamental Change as more specifically provided in
the following clauses (D)(i) and (D)(ii).
For purposes of calculating any adjustment to be made pursuant to this Section
7(D) in the event of a Fundamental Change, immediately after such Fundamental
Change:
(i) in the case of a Non-Stock Fundamental Change, the Conversion Price of
the Series A Preferred Stock shall thereupon become the lower of (A) the
Conversion Price in effect immediately prior to such Non-Stock Fundamental
Change, but after giving effect to any other prior adjustments effected pursuant
to this Section 7, and (B) the result obtained by multiplying the greater of the
Applicable Price (as defined in Section 7(E)) or the then applicable Reference
Market Price (as defined in Section 7(E)) by a fraction of which the numerator
shall be $5,000 and the denominator shall be an amount per share of Series A
Preferred Stock determined by the Corporation in its sole discretion, after
consultation with a nationally recognized investment banking firm, to be the
equivalent of the hypothetical redemption price that would have been applicable
if the Series A Preferred Stock had been redeemable during such period; and
(ii) in the case of a Common Stock Fundamental Change, the Conversion
Price of the Series A Preferred Stock in effect immediately prior to such Common
Stock Fundamental Change, but after giving effect to any other prior adjustments
effected pursuant to this Section 7, shall thereupon be adjusted by multiplying
such Conversion Price by a fraction of which the numerator shall be the
Purchaser Stock Price (as defined in Section 7(E)) and the denominator shall be
the Applicable Price; PROVIDED, HOWEVER, that in the event of a Common Stock
Fundamental Change in which (A) 100% by value of the consideration received by a
holder of Common Stock is common stock of the successor, acquiror or other third
party (and cash, if any, is paid with respect to any fractional interests in
such common stock resulting from such Common Stock Fundamental Change) and (B)
all of the Common Stock shall have been exchanged for, converted into or
acquired for common stock (and cash with respect to fractional interests) of the
successor, acquiror or other third party, the Conversion Price of the Series A
Preferred Stock in effect immediately prior to such Common Stock Fundamental
Change shall thereupon be adjusted by
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multiplying such Conversion Price by a fraction of which the numerator shall be
one (1) and the denominator shall be the number of shares of common stock of the
successor, acquiror, or other third party received by a shareholder for one
share of Common Stock as a result of such Common Stock Fundamental Change.
(E) DEFINITIONS. The following definitions shall apply to terms used in
this Section 7:
(1) "Applicable Price" shall mean (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by a shareholder for one share of Common Stock and
(ii) in the event of any other Non-Stock Fundamental Change or any Common Stock
Fundamental Change, the average of the daily Closing Prices of the Common Stock
for the ten (10) consecutive Trading Days prior to and including the record date
for the determination of the holders of Common Stock entitled to receive
securities, cash or other property in connection with such Non-Stock Fundamental
Change or Common Stock Fundamental Change, or, if there is no such record date,
the date upon which the holders of the Common Stock shall have the right to
receive such securities, cash or other property, in each case, as adjusted in
good faith by the Board of Directors of the Corporation to appropriately reflect
any of the events referred to in subparagraphs (i), (ii), (iii), (iv), (v) and
(vi) of Section 7(A).
(2) "Closing Price" of any common stock on any day shall mean the last
reported sale price regular way on such day or, in case no such sale takes place
on such day, the average of the reported closing bid and asked prices regular
way of such common stock, in each case on the principal national securities
exchange on which such common stock is listed, if the common stock is listed on
a national securities exchange, or the NASDAQ National Market System of the
National Association of Securities Dealers, Inc., or, if the common stock is not
quoted or admitted to trading on such quotation system, on the principal
national securities exchange or quotation system on which the common stock is
listed or admitted to trading or quoted, or, if not listed or admitted to
trading or quoted on any national securities exchange or quotation system, the
average of the closing bid and asked prices of the common stock in the over-the-
counter market on the day in question as reported by the National Quotation
Bureau Incorporated, or a similarly generally accepted reporting service, or, if
not so available in such manner, as furnished by any New York Stock Exchange
member firm selected from time to time by the Board of Directors of the
Corporation for that purpose or, if not so available in
-20-
<PAGE>
such manner, as otherwise determined in good faith by the Board of Directors.
(3) "Common Stock Fundamental Change" shall mean any Fundamental Change in
which more than 50% by value (as determined in good faith by the Board of
Directors of the Corporation) of the consideration received by holders of Common
Stock consists of common stock that for each of the ten (10) consecutive Trading
Days referred to with respect to such Fundamental Change in Section 7(E)(1)
above has been admitted for listing or admitted for listing subject to notice of
issuance on a national securities exchange or quoted on the NASDAQ National
Market System of the National Association of Securities Dealers, Inc.; PROVIDED,
HOWEVER, that a Fundamental Change shall not be a Common Stock Fundamental
Change unless either (i) the Corporation continues to exist after the occurrence
of such Fundamental Change and the outstanding shares of Series A Preferred
Stock continue to exist as outstanding shares of Series A Preferred Stock, or
(ii) not later than the occurrence of such Fundamental Change, the outstanding
shares of Series A Preferred Stock are converted into or exchanged for shares of
convertible preferred stock of a corporation succeeding to the business of the
Corporation, which convertible preferred stock has powers, preferences and
relative, participating, optional or other rights, and qualifications,
limitations and restrictions, substantially similar to those of the Series A
Preferred Stock.
(4) "Fundamental Change" shall mean the occurrence of any transaction or
event in connection with a plan pursuant to which all or substantially all of
the Common Stock shall be exchanged for, converted into, acquired for or
constitute solely the right to receive securities, cash or other property
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); PROVIDED, HOWEVER, in the case of a plan involving more than one
such transaction or event, for purposes of adjustment of the Conversion Price,
such Fundamental Change shall be deemed to have occurred when substantially all
of the Common Stock of the Corporation shall be exchanged for, converted into,
or acquired for or constitute solely the right to receive securities, cash or
other property, but the adjustment shall be based upon the highest weighted
average of consideration per share which a holder of Common Stock could have
received in such transactions or events as a result of which more than 50% of
the Common Stock of the Corporation shall have been exchanged for, converted
into, or acquired for or constitute solely the right to receive securities, cash
or other property.
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<PAGE>
(5) "Non-Stock Fundamental Change" shall mean any Fundamental Change other
than a Common Stock Fundamental Change.
(6) "Purchaser Stock Price" shall mean, with respect to any Common Stock
Fundamental Change, the average of the daily Closing Prices of the common stock
received in such Common Stock Fundamental Change for the ten (10) consecutive
Trading Days prior to and including the record date for the determination of the
holders of Common Stock entitled to receive such common stock, or, if there is
no such record date, the date upon which the holders of the Common Stock shall
have the right to receive such common stock, in each case, as adjusted in good
faith by the Board of Directors of the Corporation to appropriately reflect any
of the events referred to in subparagraphs (i), (ii), (iii), (iv), (v) and (vi)
of Section 7(A);
(7) "Reference Market Price" shall initially mean $25.00 and in the event
of any adjustment to the Conversion Price other than as a result of a Non-Stock
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the Conversion Price after giving
effect to any such adjustment shall always be the same as the ratio of $25.00 to
the initial Conversion Price per share.
(8) "Trading Day" shall mean a day on which securities are traded on the
national securities exchange or quotation system or in the over-the-counter
market used to determine the Closing Price.
(F) DIVIDEND OR INTEREST REINVESTMENT PLANS. Notwithstanding the
foregoing provisions, the issuance of any shares of Common Stock pursuant to any
plan providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional optional amounts
in shares of Common Stock under any such plan, and the issuance of any shares of
Common Stock or options or rights to purchase such shares pursuant to any
employee benefit plan or program of the Corporation or pursuant to any option,
warrant, right or exercisable, exchangeable or convertible security outstanding
as of the date the Series A Preferred Stock was first designated, shall not be
deemed to constitute an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Corporation to which any of the adjustment
provisions described above applies.
(G) CERTAIN ADDITIONAL RIGHTS. In case the Corporation shall, by dividend
or otherwise, declare or make
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<PAGE>
a distribution on its Common Stock referred to in Section 7(A)(iv) or 7(A)(v)
(including, without limitation, dividends or distributions referred to in the
last sentence of Section 7(A)(iv)), the holder of each share of Series A
Preferred Stock, upon the conversion thereof subsequent to the close of business
on the date fixed for the determination of shareholders entitled to receive such
distribution and prior to the effectiveness of the Conversion Price adjustment
in respect of such distribution, shall also be entitled to receive for each
share of Common Stock into which such share of Series A Preferred Stock is
converted, the portion of the shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash and assets so
distributed applicable to one share of Common Stock; PROVIDED, HOWEVER, that, at
the election of the Corporation (whose election shall be evidenced by a
resolution of the Board of Directors) with respect to all holders so converting,
the Corporation may, in lieu of distributing to such holder any portion of such
distribution not consisting of cash or securities of the Corporation, pay such
holder an amount in cash equal to the fair market value thereof (as determined
in good faith by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors). If any conversion of
a share of Series A Preferred Stock described in the immediately preceding
sentence occurs prior to the payment date for a distribution to holders of
Common Stock which the holder of the share of Series A Preferred Stock so
converted is entitled to receive in accordance with the immediately preceding
sentence, the Corporation may elect (such election to be evidenced by a
resolution of the Board of Directors) to distribute to such holder a due bill
for the shares of Common Stock, rights, warrants, evidences of indebtedness,
shares of capital stock, cash or assets to which such holder is so entitled,
PROVIDED that such due bill (i) meets any applicable requirements of the
principal national securities exchange or other market on which the Common Stock
is then traded and (ii) requires payment or delivery of such shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash or assets no later than the date of payment or delivery thereof to holders
of shares of Common Stock receiving such distribution.
-23-
<PAGE>
(H) STOCK ISSUANCES; MULTIPLE ADJUSTMENTS. There shall be no adjustment of
the Conversion Price in case of the issuance of any stock (or securities
convertible into or exchangeable for stock) of the Corporation except as
specifically described in this Section 7. If any action would require
adjustment of the Conversion Price pursuant to more than one of the provisions
described above, only one adjustment shall be made and such adjustment shall be
the amount of adjustment which has the highest absolute value to holders of
Series A Preferred Stock.
SECTION 8. RANKING; ATTRIBUTABLE CAPITAL AND ADEQUACY OF SURPLUS;
RETIREMENT OF SHARES.
(A) The Series A Preferred Stock shall rank senior to all shares of
Junior Stock as to the payment of dividends and amounts upon the liquidation,
dissolution or winding-up of the Corporation. The ranking of any subsequent
series of Preferred Stock issued by the Corporation as compared to the Series A
Preferred Stock as to the payment of dividends and amounts upon the liquidation,
dissolution or winding-up of the Corporation shall be as specified in the
Amended and Restated Articles of Incorporation, as amended, of the Corporation,
the Certificate of Designation pertaining thereto and, if appropriate, shall
also be subject to the provisions of paragraph (C) of Section 1 and
paragraph (B) of Section 3 hereof.
(B) The capital of the Corporation allocable to the Series A
Preferred Stock for purposes of the Minnesota Business Corporation Act shall be
$1.00 per share.
(C) Any shares of Series A Preferred Stock acquired by the
Corporation by reason of the conversion or redemption of such shares, or
otherwise so acquired, shall be retired as shares of Series A Preferred Stock
and restored to the status of authorized but unissued shares of Preferred Stock,
par value $1.00 per share, of the Corporation, undesignated as to series, and
may thereafter be reissued as part of a new series of Preferred Stock as
permitted by law.
SECTION 9. MISCELLANEOUS.
(A) All notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon the earlier of receipt
thereof or three business days after the mailing thereof if sent by registered
or certified mail (unless first-class mail shall be specifically permitted for
such notice) with postage prepaid addressed: (i) if to the Corporation, to its
office
-24-
<PAGE>
at 7075 Flying Cloud Drive, Eden Prairie, Minnesota 55344 (Attention: Chief
Financial Officer) or to the transfer agent for the Series A Preferred Stock, or
such other agent of the Corporation designated as permitted by this paragraph,
or (ii) if to any holder of the Series A Preferred Stock or Common Stock, as the
case may be, to such holder at the address of such holder as listed in the stock
record books of the Corporation (which may include the records of any transfer
agent for the Series A Preferred Stock or Common Stock, as the case may be) or
(iii) to such other address as the Corporation or any such holder, as the case
may be, shall have designated by notice similarly given.
(B) The term "Common Stock" as used herein means the Corporation's
Common Stock, par value $0.10 per share, as the same exists at the date of
filing of the Certificate of Designation relating to the Series A Preferred
Stock (the "Certificate of Designation") with the Secretary of State of the
state of Minnesota, or any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value. However, subject to the provisions of Section 7(B), shares of Common
Stock issuable on conversion of shares of Series A Preferred Stock shall include
only shares of the class designated as Common Stock of the Corporation at the
date of the filing of the Certificate of Designation with the Secretary of State
of the state of Minnesota or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation and which
are not subject to redemption by the Corporation; PROVIDED that if at any time
there shall be more than one such resulting class, the shares of each such class
then so issuable shall be substantially in the proportion which the total number
of shares of such class resulting from all such reclassifications bears to the
total number of shares of such classes resulting from all such
reclassifications.
(C) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of any issuance or
delivery of shares of Series A Preferred Stock or shares of Common Stock or
other securities issued on account of Series A Preferred Stock pursuant hereto
or certificates representing such shares or securities. The Corporation shall
not, however, be required to pay any such tax that may be payable in respect of
any transfer involving the issuance or delivery of shares of
-25-
<PAGE>
Series A Preferred Stock or Common Stock or other securities in a name other
than that in which the shares of Series A Preferred Stock with respect to which
such shares or other securities are issued or delivered were registered, or in
respect of any payment to any person with respect to any such shares or
securities other than a payment to the registered holder thereof, and shall not
be required to make any such issuance, delivery or payment unless and until the
person otherwise entitled to such issuance, delivery or payment has paid to the
Corporation the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid or is not payable.
(D) In the event that a holder of shares of Series A Preferred Stock
shall not by written notice designate the name in which shares of Common Stock
to be issued upon conversion of such shares should be registered or to whom
payment upon redemption of shares of Series A Preferred Stock should be made or
the address to which the certificate or certificates representing such shares,
or such payment, should be sent, the Corporation shall be entitled to register
such shares, and make such payment, in the name of the holder of such Series A
Preferred Stock as shown on the records of the Corporation and to send the
certificate or certificates representing such shares, or such payment, to the
address of such holder shown on the records of the Corporation.
(E) The Corporation may appoint, and from time to time discharge and
change, a transfer agent for the Series A Preferred Stock. Upon any such
appointment or discharge of a transfer agent, the Corporation shall send notice
thereof by first-class mail, postage prepaid, to each holder of record of
Series A Preferred Stock.
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<PAGE>
EXHIBIT 4.2
SPECIMEN
SHARE CERTIFICATE
6 1/2% SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
BEST BUY CO., INC.
Incorporated under the laws of the State of Minnesota
Certificate Number: Shares
--------------- -------------
This is to certify that ______________________ is the owner of
___________________________________ shares of Best Buy Co., Inc. 6 1/2% Series A
Cumulative Convertible Preferred Stock, par value One Dollar ($1.00)
per share, liquidation preference Five Thousand Dollars ($5,000.00) per share,
fully paid and nonassessable, transferable only on the books of Best Buy Co.,
Inc. by the holder thereof in person or by his duly authorized attorney upon
surrender of this certificate properly indorsed.
All of the designations, relative rights, preferences and limitations
of the shares of the 6 1/2% Series A Cumulative Convertible Preferred Stock are
set forth in the Certificate of Designation of Best Buy Co., Inc., filed with
the Secretary of State of Minnesota on November 1, 1994, a copy of which will
be furnished upon request and without charge to any holder of a share of the
6 1/2% Series A Cumulative Convertible Preferred Stock. Any request should be
directed to Best Buy Co., Inc., 7075 Flying Cloud Drive, Eden Prairie, Minnesota
55344, Attention: Corporate Communication.
WITNESS the seal of Best Buy Co., Inc. and the signatures of its duly
authorized officers affixed this ____ day of _____________, 19___.
- - ------------------- -----------------------
Secretary Chairman of the Board
Countersigned and Registered
Harris Trust and Savings Bank,
Transfer Agent and Registrar
By
-------------------------
Authorized Signature
<PAGE>
ASSIGNMENT
OF
SHARES OF BEST BUY CO., INC.
6 1/2% SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
CERTIFICATE FOR _____ SHARES
FOR VALUE RECEIVED, __________________________ does hereby sell,
assign, and transfer unto _______________
___________________________________________________, __________ shares of 6 1/2%
Series A Cumulative Convertible Preferred Stock of Best Buy Co., Inc.
represented by the within certificate numbered ______________, and standing in
the name of _____________________________________________ on the books of said
corporation, and does hereby irrevocably constitute and appoint
____________________________________ attorney to transfer said shares on the
books of the within named corporation, with full power of substitution.
Dated, 19 .
-------------- ---
--------------------
Shareholder
In presence of:
-------------------------------
NOTICE: The signature to this assignment must correspond with the
name as written upon the face of the certificate in every particular.
-2-
<PAGE>
EXHIBIT 4.3
Draft of November 1, 1994
________________________________________________________________________________
BEST BUY CO., INC.,
BEST BUY CAPITAL, L.P.
TO
HARRIS TRUST AND SAVINGS BANK
Trustee
________________
Indenture
Dated as of November 3, 1994
________________
$288,227,848
6 1/2% Convertible Subordinated Debentures
Due November 3, 2024
________________________________________________________________________________
<PAGE>
.....................................
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Indenture
Act Section Section
- - ------------------ ---------
Section 310 (a)(1) .................................... 609
(a)(2) .................................... 609
(a)(3) .................................... Not Applicable
(a)(4) .................................... Not Applicable
(b) .................................... 608, 610
Section 311 (a) .................................... 613
(b) .................................... 613
Section 312 (a) .................................... 701
702(a)
(b) .................................... 702(b)
(c) .................................... 702(c)
Section 313 (a) .................................... 703(a)
(a)(4) .................................... 101, 1004
(b) .................................... 703(a)
(c) .................................... 703(a)
(d) .................................... 703(b)
Section 314 (a) .................................... 704
(b) .................................... Not Applicable
(c)(1) .................................... 102
(c)(2) .................................... 102
(c)(3) .................................... Not Applicable
(d) .................................... Not Applicable
(e) .................................... 102
Section 315 (a) .................................... 601
(b) .................................... 602
(c) .................................... 601
(d) .................................... 601
(e) .................................... 514
Section 316 (a) .................................... 101
(a)(1)(A) .................................... 502
512
(a)(1)(B) .................................... 513
(a)(2) .................................... Not Applicable
(b) .................................... 508
(c) .................................... 104(c)
<PAGE>
Trust Indenture Indenture
Act Section Section
- - ------------------ ---------
Section 317 (a)(1) .................................... 503
(a)(2) .................................... 504
(b) .................................... 1003
Section 318 (a) .................................... 107
______________
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Indenture.
-ii-
<PAGE>
TABLE OF CONTENTS
PAGE
Parties........................................................... 1
Recitals of the Company and Best Buy Capital...................... 1
ARTICLE ONE
Definitions and Other Provisions of
General Application
SECTION 101. Definitions:
Act............................................. 3
Additional Dividends............................ 3
Additional Interest............................. 3
Affiliate; control.............................. 3
Applicable Price................................ 4
Bank Agreement.................................. 4
Best Buy Capital................................ 4
Board of Directors.............................. 4
Board Resolution................................ 4
Business Day.................................... 4
Capital Lease Obligation........................ 4
Closing Price................................... 4
Commission...................................... 4
Common Stock.................................... 5
Common Stock Fundamental Change................. 5
Company......................................... 5
Company Request; Company Order.................. 5
Conversion Agent................................ 5
Conversion Date................................. 5
Conversion Expiration Date...................... 6
Corporate Trust Office.......................... 6
corporation..................................... 6
Defaulted Interest.............................. 6
Designated Senior Holder........................ 6
Event of Default................................ 6
exchange date................................... 6
Exchange Election............................... 6
Exchange Event.................................. 6
Expiration Date................................. 6
Fundamental Change.............................. 6
General Partner Contribution.................... 7
Guarantee; primary obligor...................... 7
___________
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
-i-
<PAGE>
PAGE
Holder.......................................... 7
Incur........................................... 7
Indebtedness.................................... 7
Indenture....................................... 8
Interest Payment Date........................... 8
Junior Subordinated Payment..................... 8
Limited Partnership Agreement................... 8
Maturity........................................ 8
Non-Stock Fundamental Change.................... 8
Notice of Conversion............................ 8
Notice of Exchange.............................. 8
Officers' Certificate........................... 8
Opinion of Counsel.............................. 9
Outstanding..................................... 9
Parent Guarantee................................ 10
Paying Agent.................................... 10
Payment Blockage Period......................... 10
Person.......................................... 10
Predecessor Security............................ 10
Preferred Securities............................ 10
Proceeding...................................... 10
Purchased Shares................................ 10
Purchaser Stock Price........................... 10
Redeemable Interest............................. 10
Redemption Date................................. 11
Redemption Price................................ 11
Reference Date.................................. 11
Reference Market Price.......................... 11
Regular Record Date............................. 11
Responsible Officer............................. 11
Securities...................................... 11
Securities Payment.............................. 11
Security Register;
Security Registrar............................ 11
Senior Indebtedness............................. 11
Senior Nonmonetary Default...................... 13
Senior Payment Default.......................... 13
Series A Preferred Stock........................ 13
Special Record Date............................. 13
Stated Maturity................................. 13
Subsidiary...................................... 13
Trading Day..................................... 14
Trustee......................................... 14
___________
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
-ii-
<PAGE>
PAGE
Trust Indenture Act............................. 14
Vice President.................................. 14
SECTION 102. Compliance Certificates and
Opinions...................................... 14
SECTION 103. Form of Documents
Delivered to Trustee.......................... 14
SECTION 104. Acts of Holders; Record Dates................... 15
SECTION 105. Notices, Etc., to Trustee, Company
and Best Buy Capital.......................... 17
SECTION 106. Notice to Holders; Waiver....................... 17
SECTION 107. Conflict with Trust Indenture Act............... 18
SECTION 108. Effect of Headings and
Table of Contents............................. 18
SECTION 109. Successors and Assigns.......................... 18
SECTION 110. Separability Clause............................. 18
SECTION 111. Benefits of Indenture........................... 19
SECTION 112. Governing Law................................... 19
SECTION 113. Legal Holidays.................................. 19
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally................................. 19
SECTION 202. Form of Face of Security........................ 20
SECTION 203. Form of Reverse of Security..................... 24
SECTION 204. Form of Trustee's
Certificate of Authentication................. 27
___________
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
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<PAGE>
PAGE
ARTICLE THREE
The Securities
SECTION 301. Title and Terms................................. 27
SECTION 302. Denominations................................... 29
SECTION 303. Execution, Authentication,
Delivery and Dating........................... 29
SECTION 304. Temporary Securities............................ 30
SECTION 305. Registration, Registration of
Transfer and Exchange......................... 31
SECTION 306. Mutilated, Destroyed,
Lost and Stolen Securities.................... 32
SECTION 307. Payment of Interest;
Interest Rights Preserved..................... 33
SECTION 308. Persons Deemed Owners........................... 35
SECTION 309. Cancellation.................................... 35
SECTION 310. Computation of Interest......................... 35
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and
Discharge of Indenture........................ 36
SECTION 402. Application of Trust Money...................... 37
ARTICLE FIVE
Remedies
SECTION 501. Events of Default............................... 38
___________
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
-iv-
<PAGE>
PAGE
SECTION 502. Acceleration of Maturity;
Rescission and Annulment...................... 40
SECTION 503. Collection of Indebtedness and
Suits for Enforcement by
Trustee....................................... 41
SECTION 504. Trustee May File Proofs of Claim................ 42
SECTION 505. Trustee May Enforce Claims
Without Possession of
Securities.................................... 43
SECTION 506. Application of Money Collected.................. 43
SECTION 507. Limitation on Suits............................. 44
SECTION 508. Unconditional Right of Holders to
Receive Principal and
Interest and to Convert....................... 45
SECTION 509. Restoration of Rights and Remedies.............. 45
SECTION 510. Rights and Remedies Cumulative.................. 45
SECTION 511. Delay or Omission Not Waiver.................... 46
SECTION 512. Control by Holders.............................. 46
SECTION 513. Waiver of Past Defaults......................... 46
SECTION 514. Undertaking for Costs........................... 47
SECTION 515. Waiver of Stay or Extension Laws................ 47
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and
Responsibilities.............................. 48
SECTION 602. Notice of Defaults.............................. 48
___________
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
-v-
<PAGE>
PAGE
SECTION 603. Certain Rights of Trustee....................... 48
SECTION 604. Not Responsible for Recitals
or Issuance of Securities..................... 50
SECTION 605. May Hold Securities............................. 50
SECTION 606. Money Held in Trust............................. 50
SECTION 607. Compensation and Reimbursement.................. 50
SECTION 608. Disqualification; Conflicting
Interests...................................... 51
SECTION 609. Corporate Trustee Required;
Eligibility................................... 51
SECTION 610. Resignation and Removal;
Appointment of Successor...................... 52
SECTION 611. Acceptance of Appointment by
Successor..................................... 53
SECTION 612. Merger, Conversion, Consolidation
or Succession to Business..................... 54
SECTION 613. Preferential Collection of
Claims Against Company........................ 54
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names
and Addresses of Holders...................... 54
SECTION 702. Preservation of Information;
Communications to Holders..................... 55
SECTION 703. Reports by Trustee.............................. 55
SECTION 704. Reports by Company.............................. 56
___________
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
-vi-
<PAGE>
PAGE
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc.,
Only on Certain Terms......................... 56
SECTION 802. Successor Substituted........................... 58
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without
Consent of Holders............................ 58
SECTION 902. Supplemental Indentures with
Consent of Holders............................ 59
SECTION 903. Execution of Supplemental Indentures............ 60
SECTION 904. Effect of Supplemental Indentures............... 61
SECTION 905. Conformity with Trust Indenture Act............. 61
SECTION 906. Reference in Securities to
Supplemental Indentures....................... 61
ARTICLE TEN
Covenants; Representations and Warranties
SECTION 1001. Payment of Principal
and Interest.................................. 61
SECTION 1002. Maintenance of Office or Agency................. 62
SECTION 1003. Money for Security Payments to
Be Held in Trust.............................. 62
SECTION 1004. Statement by Officers as to
Default....................................... 63
___________
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
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<PAGE>
PAGE
SECTION 1005. Existence....................................... 64
SECTION 1006. Maintenance of Properties....................... 64
SECTION 1007. Payment of Taxes and Other Claims............... 64
SECTION 1008. Additional Covenants............................ 65
SECTION 1009. Representations and Warranties.................. 66
ARTICLE ELEVEN
Subordination of Securities
SECTION 1101. Securities Subordinate to Senior
Indebtedness.................................. 67
SECTION 1102. Payment Over of Proceeds Upon
Dissolution, Etc. ............................ 67
SECTION 1103. No Payment When Senior
Indebtedness in Default....................... 69
SECTION 1104. Payment Permitted If No Default................. 71
SECTION 1105. Subrogation to Rights of Holders
of Senior Indebtedness........................ 71
SECTION 1106. Provisions Solely to Define
Relative Rights............................... 72
SECTION 1107. Trustee to Effectuate Subordination............. 72
SECTION 1108. No Waiver of Subordination
Provisions.................................... 73
SECTION 1109. Notice to Trustee............................... 73
SECTION 1110. Reliance on Judicial Order or
Certificate of Liquidating Agent.............. 75
SECTION 1111. Trustee Not Fiduciary for Holders
of Senior Indebtedness........................ 75
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
___________
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
-viii-
<PAGE>
PAGE
SECTION 1112. Rights of Trustee as Holder of
Senior Indebtedness;
Preservation of Trustee's
Rights........................................ 75
SECTION 1113. Article Applicable to Paying
Agents........................................ 76
ARTICLE TWELVE
Conversion of Securities
SECTION 1201. Conversion Rights................................... 76
SECTION 1202. Conversion Price Adjustments........................ 79
ARTICLE THIRTEEN
Redemption of Securities
SECTION 1301. Conditional Right of Redemption;
Mandatory Redemption................................ 92
SECTION 1302. Applicability of Article............................ 92
SECTION 1303. Election to Redeem; Notice
to Trustee........................................ 92
SECTION 1304. Notice of Redemption................................ 93
SECTION 1305. Deposit of Redemption Price......................... 93
SECTION 1306. Securities Payable on
Redemption Date................................... 93
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Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
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PAGE
ARTICLE FOURTEEN
Exchange
SECTION 1401. Optional Exchange for Depositary
Shares Representing Series A
Preferred Stock............................... 94
TESTIMONIUM....................................................... 96
SIGNATURES AND SEALS.............................................. 96
ACKNOWLEDGEMENTS.................................................. 97
ANNEX A: Form of Amended and Restated Agreement of Limited Partnership
of Best Buy Capital, L.P., dated as of November 3, 1994.
___________
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
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INDENTURE, dated as of November 3, 1994, among Best Buy Co., Inc., a
corporation duly organized and existing under the laws of the State of Minnesota
(herein called the "COMPANY"), having its principal office at 7075 Flying
Cloud Drive, Eden Prairie, Minnesota 55344, Best Buy Capital, L.P., a limited
partnership organized under the laws of the State of Delaware (herein called
"Best Buy Capital"), having its principal office at c/o Best Buy Co. Inc., 7075
Flying Cloud Drive, Eden Prairie, Minnesota and Harris Trust and Savings Bank, a
corporation duly organized and existing under the laws of Illinois, as Trustee
(herein called the "TRUSTEE"). Unless otherwise defined herein, all
capitalized items used herein shall have the meanings ascribed to them in the
Amended and Restated Agreement of Limited Partnership of Best Buy Capital, dated
as of November 3, 1994 (the "LIMITED PARTNERSHIP AGREEMENT"), as in effect on
the date hereof, the form of which is attached as Annex A hereto.
RECITALS OF THE COMPANY AND BEST BUY CAPITAL
WHEREAS, Best Buy Capital may pursuant to the Underwriting Agreement
dated October 27, 1994 among the Company, Best Buy Capital and the Underwriters
named therein issue up to $230,000,000 aggregate liquidation preference of its 6
1/2% Convertible Monthly Income Preferred Securities (the "PREFERRED
SECURITIES") with a liquidation preference of $50 per Preferred Security;
WHEREAS, the Company is guaranteeing the payment of Dividends on the
Preferred Securities (if and to the extent declared from funds of Best Buy
Capital legally available therefor), and payment of the Redemption Price and
payments on liquidation with respect to the Preferred Securities, to the extent
provided in the Guarantee Agreement dated November 3, 1994, between the Company
and Best Buy Capital (the "PARENT GUARANTEE") for the benefit of the holders
of the Preferred Securities;
WHEREAS, the Company wishes to sell to Best Buy Capital, and Best
Buy Capital wishes to purchase from the Company, Securities in an aggregate
principal amount equal to the sum of the capital contributed by the Company to
Best Buy Capital as the general partner thereof (the "GENERAL PARTNER
CONTRIBUTION") and the aggregate stated liquidation preference of the Preferred
Securities issued and sold by Best Buy Capital pursuant to the Underwriting
Agreement, less $2,911,392, which is equal to 1% of such sum;
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WHEREAS, so long as Best Buy Capital is a Holder of Securities and
any Preferred Securities are outstanding, the Limited Partnership Agreement
provides that (i) the holders of Preferred Securities may, on or before the
Conversion Expiration Date, cause the Conversion Agent to (a) exchange such
Preferred Securities for Securities held by Best Buy Capital and (b) immediately
convert such Securities into Common Stock and (ii) under certain circumstances
the holders of Preferred Securities may cause the Conversion Agent to (a)
exchange such Preferred Securities for Securities held by Best Buy Capital and
(b) immediately exchange such Securities for Depositary Shares, each
representing a 1/100th interest in a share of Series A Preferred Stock;
WHEREAS, the Company has duly authorized the creation of an issue of
its 6 1/2% Convertible Subordinated Debentures Due November 3, 2024 (the
"SECURITIES"), of substantially the tenor and amount hereinafter set forth and
to provide therefor the Company has duly authorized the execution and delivery
of this Indenture; and
WHEREAS, all things necessary to make the Securities, when executed
by the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
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(1) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles
and, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally accepted at the
date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"ACT", when used with respect to any Holder, has the meaning
specified in Section 104.
"ADDITIONAL DIVIDENDS" means dividends that shall accumulate on
any dividend arrearages in respect of the Preferred Securities at the rate of 6
1/2% per annum compounded monthly.
"ADDITIONAL INTEREST" means interest that shall accrue on any
interest on the Securities that is not paid when due or not paid during an
extension of an interest payment period, which in either case shall accrue at
the rate of 6 1/2% per annum compounded monthly.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"CONTROL" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to
the foregoing.
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"APPLICABLE PRICE" has the meaning specified in Section 1202.
"BANK AGREEMENT" means the Credit Agreement dated as of July 29,
1994, between the Company and First Bank National Association, as Agent, as such
Agreement may hereafter be amended, restated, supplemented or otherwise modified
from time to time, together with all other documents executed in connection
therewith.
"BEST BUY CAPITAL" means the Person specified as such in the first
paragraph of this instrument.
"BOARD OF DIRECTORS" means either the board of directors of the
Company or any duly authorized committee of that board.
"BOARD RESOLUTION" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"BUSINESS DAY" means any day other than a day on which banking
institutions in New York City or Chicago are authorized or obligated by law or
executive order to close.
"CAPITAL LEASE OBLIGATION" of any Person means the obligation to
pay rent or other payment amounts under a lease of (or other Indebtedness
arrangements conveying the right to use) real or personal property of such
Person which is required to be classified and accounted for as a capital lease
or a liability on the face of a balance sheet of such Person in accordance with
generally accepted accounting principles. The stated maturity of such
obligation shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease may be terminated
by the lessee without payment of a penalty.
"CLOSING PRICE" has the meaning specified in Section 1202.
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, or,
if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
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"COMMON STOCK" includes any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding-up of
the Company and which is not subject to redemption by the Company. However,
subject to the provisions of Article 12, shares issuable on conversion of
Securities shall include only shares of the class designated as Common Stock of
the Company at the date of this instrument or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which are not subject to redemption by the Company; PROVIDED that if at
any time there shall be more than one such resulting class, the shares of each
such class then so issuable shall be substantially in the proportion which the
total number of shares of such class resulting from all such reclassifications
bears to the total number of shares of all such classes resulting from all such
reclassifications.
"COMMON STOCK FUNDAMENTAL CHANGE" has the meaning specified in
Section 1202.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request or
order signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"CONVERSION AGENT" means the Person appointed under the Limited
Partnership Agreement to act on behalf of the holders of Preferred Securities in
effecting the conversion of Preferred Securities as and in the manner set forth
in the Limited Partnership Agreement and Section 1201 hereof and in effecting
the exchange of Preferred Securities for Depositary Shares representing Best Buy
Preferred Stock as and in the manner set forth in the Limited Partnership
Agreement and Section 1401 hereof.
"CONVERSION DATE" has the meaning specified in Section 1201.
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"CONVERSION EXPIRATION DATE" has the meaning specified in Section
6 of the Limited Partnership Agreement.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee
in Chicago, Illinois, at which at any particular time its corporate trust
business shall be administered.
"CORPORATION" means a corporation, association, company,
joint-stock company or business trust.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DESIGNATED SENIOR HOLDER" means (i) with respect to the Bank
Agreement, the agent bank or such other Person designated as such thereunder and
(ii) with respect to any Senior Indebtedness, the Person designated as such in
accordance with the terms of the instrument evidencing such Senior Indebtedness.
"EVENT OF DEFAULT" has the meaning specified in Section 501.
"EXCHANGE DATE" has the meaning specified in Section 1401.
"EXCHANGE ELECTION" means the right of holders of a majority of
the aggregate liquidation preference of Preferred Securities then outstanding,
upon an Exchange Event, to cause the Conversion Agent to (i) exchange the
Preferred Securities for Securities held by Best Buy Capital and (ii)
immediately exchange such Securities for Depositary Shares, each representing a
one-one hundredth (1/100th) interest in a share of Series A Preferred Stock.
"EXCHANGE EVENT" means failure of Holders of Preferred Securities
(including any such failure following an election by Best Buy to extend interest
payments on the Securities in accordance with their terms) to receive, for 15
consecutive months the full amount of dividend payments (including Additional
Dividends) accumulated on the Preferred Securities.
"EXPIRATION DATE" has the meaning specified in Section 1202.
"FUNDAMENTAL CHANGE" has the meaning specified in Section 1202.
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"GENERAL PARTNER CONTRIBUTION" has the meaning specified in the
Recitals to this instrument.
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing any Indebtedness of any other Person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, and
including, without limitation, any obligation of such Person (i) to purchase or
pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Indebtedness, (ii) to purchase property,
securities or services for the purpose of assuring the holder of such
Indebtedness of the payment of such Indebtedness, or (iii) to maintain working
capital, equity capital or other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such Indebtedness
(and "GUARANTEED," "GUARANTEEING" and "GUARANTOR" shall have meanings
correlative to the foregoing); PROVIDED, HOWEVER, that the Guarantee by any
Person shall not include endorsements by such Person for collection or deposit,
in either case, in the ordinary course of business.
"HOLDER" means a Person in whose name a Security is registered in
the Security Register.
"INCUR" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, Guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to
generally accepted accounting principles or otherwise, of any such Indebtedness
or other obligation as a liability on the balance sheet of such Person (and
"INCURRENCE," "INCURRED," "INCURRABLE" and "INCURRING" shall have
meanings correlative to the foregoing); PROVIDED, HOWEVER, that a change in
generally accepted accounting principles that results in an obligation of such
Person that exists at such time becoming Indebtedness shall not be deemed an
Incurrence of such Indebtedness.
"INDEBTEDNESS" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person,
(i) all Indebtedness described in clauses (i)-(ix) of the definition of Senior
Indebtedness (all references to Best Buy in such definition being deemed to
refer to such Person) and (ii) the maximum fixed redemption or repurchase price
of Redeemable Interests of such Person at the time of determination.
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"INDENTURE" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"INTEREST PAYMENT DATE" means the Stated Maturity of each
installment of interest on the Securities, which shall be on the last day of
each calendar month of each year commencing November 30, 1994 until the
principal of the Securities is paid or duly provided for.
"JUNIOR SUBORDINATED PAYMENT" has the meaning specified in Section
1102.
"LIMITED PARTNERSHIP AGREEMENT" has the meaning specified in the
first paragraph of this instrument.
"MATURITY", when used with respect to any Security, means the date
on which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"NON-STOCK FUNDAMENTAL CHANGE" has the meaning specified in
Section 1202.
"NOTICE OF CONVERSION" means the notice to be given by a holder of
Preferred Securities to the Conversion Agent directing the Conversion Agent to
exchange such Preferred Securities for Securities and to convert such Securities
into Common Stock on behalf of such holders.
"NOTICE OF EXCHANGE" has the meaning specified in Section 1401.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman
of the Board, a Vice Chairman of the Board, the President or a Vice President,
and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 1004 shall be the
principal executive, financial or accounting officer of the Company.
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"OPINION OF COUNSEL" means a written opinion of counsel, who may
be counsel for the Company, and who shall be acceptable to the Trustee.
"OUTSTANDING", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, EXCEPT:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Securities; PROVIDED that, if such Securities
are to be redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefor satisfactory to the Trustee has
been made; and
(iii) Securities which have been paid pursuant to Section 306,
converted into Common Stock pursuant to Section 1201, exchanged for Series
A Preferred Stock pursuant to Section 1401 or in exchange for or in lieu
of which other Securities have been authenticated and delivered pursuant
to this Indenture, other than any such Securities in respect of which
there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to
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the satisfaction of the Trustee the pledgee's right so to act with respect to
such Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor.
"PARENT GUARANTEE" has the meaning specified in the Recitals to
this instrument.
"PAYING AGENT" means any Person authorized by the Company to pay
the principal of or interest on any Securities on behalf of the Company.
"PAYMENT BLOCKAGE PERIOD" has the meaning specified in Section
1103.
"PERSON" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"PREDECESSOR SECURITY" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"PREFERRED SECURITIES" has the meaning specified in the Recitals
to this instrument.
"PROCEEDING" has the meaning specified in Section 1102.
"PURCHASED SHARES" has the meaning specified in Section 1202.
"PURCHASER STOCK PRICE" has the meaning specified in Section 1202.
"REDEEMABLE INTEREST" of any Person means any equity security of
or other ownership interest in such Person that by its terms or otherwise is
required to be redeemed prior to the Stated Maturity of the principal of the
Securities or is or may be redeemable at the option of the holder thereof at any
time prior to the Stated Maturity of the principal of the Securities;
PROVIDED, HOWEVER, that interests which are redeemable solely for any equity
security of or other ownership interest in such Person that by its terms or
otherwise is not required to be redeemed
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prior to the Stated Maturity of the principal of the Securities shall not
constitute Redeemable Interests.
"REDEMPTION DATE", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"REDEMPTION PRICE", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"REFERENCE DATE" has the meaning specified in Section 1202.
"REFERENCE MARKET PRICE" has the meaning specified in Section
1202.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date means the Business Day next preceding such Interest Payment Date.
"RESPONSIBLE OFFICER", when used with respect to the Trustee,
means the chairman or any vice-chairman of the board of directors, the chairman
or any vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"SECURITIES" has the meaning specified in the Recitals to this
instrument.
"SECURITIES PAYMENT" has the meaning specified in Section 1102.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 305.
"SENIOR INDEBTEDNESS" means the principal of, premium, if any,
interest on and any other payment due pursuant to any of the following, whether
Incurred on or prior to the date hereof or hereafter Incurred:
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(i) all obligations of the Company for money borrowed
(including all obligations of the Company under the Bank Agreement,
including all reborrowings, if any, by the Company);
(ii) all obligations of the Company evidenced by notes,
debentures, bonds or other similar instruments, including obligations
Incurred in connection with the acquisition of property, assets or
businesses;
(iii) all Capital Lease Obligations of the Company;
(iv) all reimbursement obligations of the Company with respect
to letters of credit, bankers' acceptances or similar facilities issued
for the account of the Company;
(v) all obligations of the Company issued or assumed as the
deferred purchase price of property or services, including all obligations
under master lease transactions pursuant to which the Company or any of
its subsidiaries have agreed to be treated as owner of the subject
property for federal income tax purposes (but excluding trade accounts
payable, accrued liabilities resulting from the sale of extended service
plans, or accrued liabilities arising in the ordinary course of business);
(vi) all payment obligations of the Company under interest rate
swap or similar agreements or foreign currency hedge, exchange or similar
agreements at the time of determination, including any such obligations
Incurred by the Company solely to act as a hedge against increases in
interest rates that may occur under the terms of other outstanding
variable or floating rate Indebtedness of the Company;
(vii) all obligations of the Company under secured inventory
financing credit lines;
(viii) all obligations of the type referred to in clauses (i)
through (vii) above of another Person and all dividends of another Person
the payment of which, in either case, the Company has assumed or
Guaranteed or for which the Company is responsible or liable, directly or
indirectly, jointly or severally, as obligor, Guarantor or otherwise; and
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(ix) all amendments, modifications, renewals, extensions,
refinancings, replacements and refundings by the Company of any such
Indebtedness referred to in clauses (i) through (viii) above (and of any
such amended, modified, renewed, extended, refinanced, refunded or
replaced Indebtedness);
PROVIDED, HOWEVER, that the following shall not constitute Senior
Indebtedness: (A) any Indebtedness owed to a Person when such Person is a
Subsidiary of the Company, (B) any Indebtedness which by the terms of the
instrument creating or evidencing the same expressly provides that it is not
superior in right of payment to the Securities, or (C) any Indebtedness to the
extent Incurred in violation of this Indenture. For purposes of this
definition, "INDEBTEDNESS" includes any obligation to pay principal, premium
(if any), interest, penalties, reimbursement or indemnity amounts, fees and
expenses (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post-petition interest is allowed in such proceeding). Such Senior
Indebtedness shall continue to be Senior Indebtedness and entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
"SENIOR NONMONETARY DEFAULT" has the meaning specified in
Section 1103.
"SENIOR PAYMENT DEFAULT" has the meaning specified in Section 1103.
"SERIES A PREFERRED STOCK" means the Series A Cumulative
Convertible Preferred Stock par value $1.00 per share, of the Company having a
liquidation preference of $5,000.00 per share.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.
"STATED MATURITY", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal, together with any accrued and unpaid
interest (including Additional Interest), of such Security or such installment
of interest is due and payable.
"SUBSIDIARY" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or
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indirectly, by the Company or by one or more other Subsidiaries, or by the
Company and one or more other Subsidiaries. For the purposes of this
definition, "voting stock" means stock which ordinarily has voting power for the
election of directors, whether at all times or only so long as no senior class
of stock has such voting power by reason of any contingency.
"TRADING DAY" has the meaning specified in Section 1202.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; PROVIDED,
HOWEVER, that in the event the Trust Indenture Act of 1939 is amended after
such date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"VICE PRESIDENT", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall furnish
to the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of
an Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirement set forth in
this Indenture.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person,
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or that they be so certified or covered by only one document, but one such
Person may certify or give an opinion with respect to some matters and one or
more other such Persons as to other matters, and any such Person may certify or
give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS; RECORD DATES.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
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(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders entitled to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 701)
prior to such first solicitation or vote, as the case may be. With regard to
any record date, only the Holders on such date (or their duly designated
proxies) shall be entitled to give or take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
SECTION 105. NOTICES, ETC., TO TRUSTEE, COMPANY AND BEST BUY CAPITAL.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document
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provided or permitted by this Indenture to be made upon, given or furnished to,
or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Judy
Bartolini,
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company, or
(3) Best Buy Capital by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to Best
Buy Capital addressed to it at the address of its principal office
specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by Best Buy Capital.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at his address as it appears in the Security Register,
not later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
Holders
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shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company or
Best Buy Capital shall bind their respective successors and assigns, whether so
expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
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SECTION 111. BENEFITS OF INDENTURE.
The Company's obligations under this Indenture and the Securities
will also be for the benefit of the holders from time to time of the Preferred
Securities. Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness, the holders of Preferred
Securities and the Holders of Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of New York.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security or the last date on which a Holder has the right
to convert his Securities shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal or conversion of the Securities need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as if
made on the Interest Payment Date or Redemption Date, or at the Stated Maturity,
or on such last day for conversion, PROVIDED that no interest shall accrue for
the period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be.
ARTICLE TWO
Security Forms
SECTION 201. FORMS GENERALLY.
The Securities and the Trustee's certificates of authentication
shall be in substantially the forms set forth in this Article, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or
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endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities.
The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these or other methods, all as determined by
the officers executing such Securities, as evidenced by their execution of such
Securities.
SECTION 202. FORM OF FACE OF SECURITY.
BEST BUY CO., INC.
6 1/2% Convertible Subordinated Debentures
Due November 3, 2024
No._________ $___________
Best Buy Co., Inc., a corporation duly organized and existing under
the laws of the State of Minnesota (herein called "BEST BUY", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to _____________ ________________, or
registered assigns, the principal sum of _________ Dollars on the earliest of
(i) November 3, 2024 or (ii) the date upon which Best Buy Capital, L.P. ("BEST
BUY CAPITAL") is dissolved, wound up, liquidated or terminated, and to pay
interest thereon at the rate of 6 1/2% per annum from November 3, 1994, payable
monthly in arrears on the last day of each calendar month of each year (each an
"INTEREST PAYMENT DATE"), commencing November 30, 1994, until the principal
hereof is paid or made available for payment. Interest will compound monthly
and will accrue at the rate of 6 1/2% per annum on any interest installment that
is not paid at the end of any monthly interest period or when otherwise due
("ADDITIONAL INTEREST"). The amount of interest payable for any period will
be computed on the basis of twelve 30-day months and a 360-day year and, for any
period shorter than a full monthly interest period, will be computed on the
basis of the actual number of days elapsed in such period. In the event that
any date on which interest is payable on this Security is not a Business Day,
then a payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such
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delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. A "BUSINESS
DAY" shall mean any day other than a day on which banking institutions in New
York City or Chicago are authorized or required by law to close. The interest
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture, be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest, which shall be the
Business Day next preceding such Interest Payment Date. Any such interest not
so punctually paid or duly provided for will forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Securities not less than 10 days prior to such Special Record Date,
or be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
Best Buy shall have the right at any time and from time to time
during the term of this Security to extend interest payment periods for up to 60
months, during which periods interest will compound monthly and Best Buy shall
have the right to make partial payments of interest on any Interest Payment
Date, and at the end of which periods Best Buy may pay all interest then accrued
and unpaid (together with Additional Interest); PROVIDED that during any such
extended interest payment period neither Best Buy nor any majority-owned
Subsidiary of Best Buy may declare or pay any dividend on, or redeem, purchase,
acquire for value or make a liquidation payment with respect to, any of its
common or preferred stock (other than as a result of a reclassification of such
common or preferred stock or the exchange or conversion of one class or series
of common or preferred stock for another class or series of common or preferred
stock), or make any guarantee payments with respect to the foregoing (other than
payments under the Parent Guarantee or dividends or guarantee payments to Best
Buy from a majority-owned Subsidiary of Best Buy). Prior to the termination of
any such extended interest payment period, Best Buy may further extend the
interest payment period, PROVIDED that such extended interest payment period
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together with all such further extensions thereof may not exceed 60 months, nor
may such extended interest payment period extend the Stated Maturity of this
Security. After Best Buy has paid all accrued and unpaid interest (including
Additional Interest) following an extended interest payment period, it may again
extend interest payment periods for up to 60 months, subject to the preceding
sentence. Best Buy shall give the Holder of this Security and the Trustee
notice of its selection of an extended interest payment period five Business
Days prior to the first scheduled Interest Payment Date on which the scheduled
interest payment shall be deferred pursuant to such selection and, if Best Buy
Capital is the Holder of this Security, no later than the last date on which
Best Buy Capital would be required to notify the New York Stock Exchange of the
record or payment date of the related dividend payment on the 6 1/2% Convertible
Monthly Income Preferred Securities of Best Buy Capital.
Payment of the principal of and interest on this Security will be
made at the office or agency of Best Buy maintained for that purpose in Chicago,
Illinois, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
PROVIDED, HOWEVER, that at the option of Best Buy payment of interest may be
made (i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register or (ii) by wire transfer in
immediately available funds at such place and to such account as may be
designated by the Person entitled thereto as specified in the Security Register.
Reference is hereby made to the further provisions of the Indenture
summarized on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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IN WITNESS WHEREOF, Best Buy has caused this instrument to be duly
executed under its corporate seal.
Dated: ___________ __, 1994
BEST BUY CO., INC.
By:___________________________
Name:
Title:
Attest:_______________________
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SECTION 203. FORM OF REVERSE OF SECURITY.
This Security is one of a duly authorized issue of Securities of
Best Buy, designated as its 6 1/2% Convertible Subordinated Debentures Due
November 3, 2024 (herein called the "SECURITIES"), limited in aggregate
principal amount to $288,227,848, issued and to be issued under an Indenture,
dated as of November 3, 1994 (herein called the "INDENTURE"), among Best Buy,
Best Buy Capital and Harris Trust and Savings Bank of Chicago, as Trustee
(herein called the "TRUSTEE", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of Best Buy, Best Buy Capital, the
Trustee, the holders of the Securities, the holders of Preferred Securities and
the holders of Senior Indebtedness and of the terms upon which the Securities
are, and are to be, authenticated and delivered. All terms used in this
Security which are defined in the Indenture or in the Limited Partnership
Agreement attached as Annex A thereto shall have the meanings assigned to them
in the Indenture or the Limited Partnership Agreement, as the case may be.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
If an Event of Default with respect to the Securities shall occur
and be continuing, the principal of the Securities may be declared due and
payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of Best
Buy, Best Buy Capital and the rights of the Holders of the Securities under the
Indenture at any time by the Company and the Trustee with the consent of the
Holders of 66-2/3% in aggregate principal amount of the Securities at the time
Outstanding and while the Preferred Securities are outstanding, the consent of
holders of 66-2/3% in aggregate liquidation preference of
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such Preferred Securities. Any such consent by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent is made upon this Security.
Subject to and in compliance with the provisions of the Indenture,
the Securities are convertible at any time on or before the close of business on
the date of their Stated Maturity at the option of the Holder into fully paid
and nonassessable shares of Common Stock of Best Buy at an initial conversion
price of $45.00 aggregate principal amount of Securities per share of Common
Stock of Best Buy, subject to adjustment as provided for in the Indenture. The
Holder of the Securities will be entitled to receive the interest payable on the
Securities on the Interest Payment Date notwithstanding the conversion thereof
following the Regular Record Date immediately preceding such Interest Payment
Date. Except as otherwise provided in the immediately preceding sentence, in
the case of any Security which is converted, interest whose Stated Maturity is
after the date of conversion of such Security shall not be payable, and the
Company shall not make nor be required to make any other payment, adjustment or
allowance with respect to accrued but unpaid interest on the Securities being
converted. Each conversion will be deemed to have been effected immediately
prior to the close of business on the day on which notice was received by the
Conversion Agent from a holder of the Preferred Securities effecting a
conversion thereof pursuant to its conversion rights under the Limited
Partnership Agreement and as provided in the Indenture. No fractional shares of
the Common Stock of Best Buy will be issued as a result of conversion, but in
lieu thereof, in the sole discretion of Best Buy, such fractional interest will
be paid in cash by Best Buy.
In the event that, following the Conversion Expiration Date (as
defined in the Indenture), less than 5% of the original aggregate principal
amount of the Securities remain Outstanding, such Securities shall be subject to
redemption at the option of Best Buy upon not less than 30 days' nor more than
60 days' notice, at a Redemption Price equal to 100% of the principal amount,
together with accrued and unpaid interest (including Additional Interest) to the
Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Securities of
record at the close of business on the relevant Record Dates referred to on the
face hereof, all as provided in the Indenture.
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The Company has covenanted to exercise such right to redeem if Best Buy Capital
redeems its Preferred Securities.
The Securities are exchangeable (in whole but not in part) at the
request of the Holders of the Securities following the occurrence of an Exchange
Event at the Exchange Price for Depositary Shares, each representing a
fractional interest in a share of Best Buy Series A Preferred Stock as provided
under the terms of the Indenture.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of Best Buy,
which is absolute and unconditional, to pay the principal of and interest on
this Security at the times, place and rate, and in the coin or currency, herein
prescribed or to convert or exchange this Security as provided in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of Best Buy in Chicago, Illinois, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to Best Buy
and the Security Registrar duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Securities, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons
in denominations of $50 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but Best Buy may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, Best Buy, the Trustee and any agent of Best Buy or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue,
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and neither Best Buy, the Trustee nor any such agent shall be affected by notice
to the contrary.
SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the within-mentioned
Indenture.
_________________________,
AS TRUSTEE
By: _______________________
AUTHORIZED OFFICER
ARTICLE THREE
The Securities
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $288,227,848,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section 304,
305, 306, 906 or 1201.
The Securities shall be known and designated as the "6 1/2%
Convertible Subordinated Debentures Due November 3, 2024" of the Company. Their
Stated Maturity shall be the earliest of November 3, 2024 or the date upon which
Best Buy Capital is dissolved, wound-up, liquidated or terminated, and they
shall bear interest at the rate of 6 1/2% per annum, from November 3, 1994 or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, as the case may be, payable monthly, in arrears, on the last
day of each calendar month of each year, commencing November 30, 1994 until the
principal thereof is paid or made available for payment. Interest will compound
monthly and will accrue at the rate of 6 1/2% per annum on any interest
installment that is not paid when due or during an extension of an interest
payment period as set forth below in this Section 301. In the event that any
date on which interest is payable on the Securities is not a
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Business Day, then a payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date.
The Company shall have the right, at any time and from time to time
during the term of the Securities, to extend an interest payment period for up
to 60 months, provided that during the period of any such extension, interest
will continue to accrue and compound monthly. The Company shall have the right
to make partial payments of interest during any such extended interest payment
period. At the end of any such extended interest payment period, the Company
shall pay all interest then accrued and unpaid (together with Additional
Interest thereon). Prior to the termination of any such extended interest
payment period, the Company may further extend the interest payment period,
provided that such extended interest payment period together with all such
further extensions thereof may not exceed 60 months and provided, further, that
no extended interest payment period shall extend the Stated Maturity of the
Securities. After the Company has paid all accrued and unpaid interest
(including Additional Interest) following an extended interest payment period,
it may again extend interest payment periods for up to 60 months, subject to the
preceding sentence. The Company shall give the Holders of the Securities and
the Trustee notice of its selection of an extended interest payment period five
Business Days prior to the first scheduled Interest Payment Date on which the
scheduled interest payment shall be deferred pursuant to such selection and, if
Best Buy Capital is the Holder of the Securities, no later than the last date on
which Best Buy Capital would be required to notify the New York Stock Exchange
of the record or payment date of the related dividend payment on the Preferred
Securities. In addition, at any time when any Preferred Securities are
outstanding, the Company shall give Best Buy Capital notice of its selection of
an extended interest payment period at least one Business Day prior to the
earlier of (i) the Interest Payment Date and (ii) the date Best Buy Capital is
required to give notice of the record or payment date of any Dividend payable on
the Preferred Securities to the New York Stock Exchange or other applicable
self-regulatory organization or to holders of the Preferred Securities, but in
any event not less than two Business Days prior to such record date. The
Company, as general partner of Best Buy Capital, shall give
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notice of the Company's selection of an extended interest payment period to the
holders of the Preferred Securities.
The principal of and interest on the Securities shall be payable at
the office or agency of the Company in Chicago, Illinois maintained for such
purpose and at any other office or agency maintained by the Company for such
purpose; PROVIDED, HOWEVER, that at the option of the Company payment of
interest may be made (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register or (ii) by wire
transfer in immediately available funds at such place and to such account as may
be designated by the Person entitled thereto as specified in the Security
Register.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Eleven.
The Securities shall be convertible as provided in Article Twelve.
The Securities shall be redeemable as provided in Article Thirteen.
The Securities shall be exchangeable as provided in Article
Fourteen.
SECTION 302. DENOMINATIONS.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $50 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to
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hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
1002, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged the
temporary Securities
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shall in all respects be entitled to the same benefits under this Indenture as
definitive Securities.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
collectively referred to as the "SECURITY REGISTER") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "SECURITY REGISTRAR" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations and of a like aggregate principal
amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
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No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1201 not involving any transfer.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
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The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this Clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not
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less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at his address as it appears in the Security Register, not
less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and, if so
listed, upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue (including in each such case Additional Interest),
which were carried by such other Security.
In the case of any Security which is converted after any Regular
Record Date and on or prior to the next succeeding Interest Payment Date (other
than any Security whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date shall be payable
on such Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of
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business on such Regular Record Date. Except as otherwise expressly provided in
the immediately preceding sentence, in the case of any Security which is
converted, interest whose Stated Maturity is after the date of conversion of
such Security shall not be payable, and the Company shall not make nor be
required to make any other payment, adjustment or allowance with respect to
accrued but unpaid interest on the Securities being converted.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 307) interest (including Additional Interest) on such Security and for
all other purposes whatsoever, whether or not such Security be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
SECTION 309. CANCELLATION.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or conversion shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled by
it. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of as directed by a Company
Order.
SECTION 310. COMPUTATION OF INTEREST.
Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months and, for any period shorter than a full
monthly interest period, shall be computed on the basis of the actual number of
days elapsed in such period.
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ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Company
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and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for
principal and interest (including Additional Interest) to the
date of such deposit (in the case of Securities which have become
due and payable) or to the Stated Maturity or Redemption Date, as
the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with the Trustee. All moneys
deposited with the Trustee pursuant to Section 401 (and held by it or any Paying
Agent) for the payment of Securities subsequently converted shall be returned to
the Company upon Company Request.
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ARTICLE FIVE
Remedies
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Eleven or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) failure to pay any principal of the Securities when due;
(2) failure to pay any interest on the Securities, including any
Additional Interest, when due and such failure continues for a period of
10 days; PROVIDED that a valid extension of the interest payment period
by the Company pursuant to this Indenture shall not constitute a default
in the payment of interest for this purpose;
(3) failure by the Company to issue and deliver the Series A
Preferred Stock or Common Stock upon an election to convert the Securities
for Common Stock or exchange the Securities for Depositary Shares
representing Series A Preferred Stock;
(4) failure by the Company to perform in any material respect any
other covenant herein for the benefit of the holders of Securities
continued for a period of 60 days after written notice to the Company from
any Holder of the Securities or any holder of Preferred Securities;
(5) the dissolution, winding up, liquidation or termination of
Best Buy Capital; or
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(6) entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company or Best Buy Capital
in an involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company or Best Buy Capital a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Company or Best Buy Capital under any applicable Federal or State law,
or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or Best Buy Capital
or of any substantial part of the property of either, or ordering the
winding up or liquidation of its affairs, and the continuance of any such
decree or order for relief or any such other decree or order unstayed and
in effect for a period of 60 consecutive days; or
(7) the commencement by the Company or Best Buy Capital of a
voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by either the Company or Best Buy Capital to the entry of a decree
or order for relief in respect of itself in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against either the Company or
Best Buy Capital, or the filing by either of them of a petition or answer
or consent seeking reorganization or relief under any applicable Federal
or State law, or the consent by either the Company or Best Buy Capital to
the filing of such petition or to the appointment of or
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taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or Best Buy Capital
or of any substantial part of the property of either of them, or the
making by either of them of an assignment for the benefit of creditors, or
the admission by either of them in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by
the Company or Best Buy Capital in furtherance of any such action.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Securities shall have the right to declare the principal of and
the interest on all the Securities (including any Additional Interest) and any
other amounts payable hereunder to be due and payable immediately, provided,
however that if upon an Event of Default, the Trustee or the Holders of at least
25% in aggregate principal amount of the outstanding Securities fail to declare
the payment of all amounts on the Securities to be immediately due and payable,
the holders of at least 25% in aggregate liquidation preference of Preferred
Securities then outstanding shall have such right, by a notice in writing to the
Company (and to the Trustee if given by Holders or the holders of Preferred
Securities) and to enforce any and all other rights of Holders of Securities as
creditors with respect to the Securities. Upon any such declaration such
principal and all accrued interest shall become immediately due and payable.
The Company expressly acknowledges that, under the terms of the
Preferred Securities, the holders of outstanding Preferred Securities shall have
the right to appoint a Special General Partner, which Special General Partner
shall be authorized to exercise the right of the Trustee or the Holders of not
less than 25% in principal amount of the Outstanding Securities to accelerate
the principal amount of the Securities and to enforce the Holders' other rights
hereunder and under the Securities.
At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been obtained
by the
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Trustee as hereinafter provided in this Article, the Holders of a majority in
principal amount of the Outstanding Securities, by written notice to the Company
and the Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest (including any Additional Interest) on
all Securities,
(B) the principal of any Securities which have become due
otherwise than by such declaration of acceleration and interest
thereon at the rate borne by the Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any interest (including any
Additional Interest) on any Security when such interest
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becomes due and payable and such default continues for a period of 30 days,
or
(2) default is made in the payment of the principal of any Security
at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest (including any Additional Interest), and,
to the extent that payment thereof shall be legally enforceable, interest on any
overdue principal and on any overdue interest (including any Additional
Interest), at the rate borne by the Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
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No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Subject to Article Eleven, any money collected by the Trustee
pursuant to this Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on
account of principal or interest (including any Additional Interest), upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest (including any Additional Interest) on the
Securities in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal
and interest (including any Additional Interest), respectively.
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SECTION 507. LIMITATION ON SUITS.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
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SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND INTEREST
AND TO CONVERT.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Section 307) interest
(including any Additional Interest) on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to convert such Security in accordance with Article Twelve
and to institute suit for the enforcement of any such payment and right to
convert, and such rights shall not be impaired without the consent of such
Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
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SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, PROVIDED that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture; and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. WAIVER OF PAST DEFAULTS.
Subject to Section 1008 hereof, the Holders of not less than a
majority in principal amount of the Outstanding Securities may on behalf of the
Holders of all the Securities waive any past default hereunder and its
consequences, except a default
(1) in the payment of the principal of or interest (including any
Additional Interest) on any Security; or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Inden-
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ture; but no such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; PROVIDED, that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or in any suit for the
enforcement of the right to receive the principal of and interest (including any
Additional Interest) on any Security, convert any Security in accordance with
Article Twelve or exchange any Security in accordance with Article Fourteen.
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE SIX
The Trustee
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
The duties and responsibilities of the Trustee shall be as provided
by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
SECTION 602. NOTICE OF DEFAULTS.
The Trustee shall give the Holders notice of any default hereunder
as and to the extent provided by the Trust Indenture Act; PROVIDED, HOWEVER,
that in the case of any default of the character specified in Section 501(4), no
such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
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(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and
any resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney; and
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(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the
use or application by the Company of Securities or the proceeds thereof.
SECTION 605. MAY HOLD SECURITIES.
The Trustee, any Paying Agent, any Security Registrar, any
Conversion Agent or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Paying Agent, Security Registrar,
Conversion Agent or such other agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation
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shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 at its Corporate
Trust Office in Chicago, Illinois. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
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with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
a majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for
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at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; PROVIDED that, on request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and
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certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
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(a) semiannually, not later than February 15 and August 15 in each
year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of a date not more than 15 days prior
to the delivery thereof, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list
of similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
EXCLUDING from any such list names and addresses received by the Trustee in
its capacity as Security Registrar.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE.
(a) The Trustee shall transmit to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture
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Act at the times and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Securities are listed on any stock
exchange.
SECTION 704. REPORTS BY COMPANY.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; PROVIDED that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be
filed with the Trustee within 15 days after the same is so required to be filed
with the Commission.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an
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entirety shall be a corporation, partnership or trust, shall be organized
and validly existing under the laws of the United States of America, any
State thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the
principal of and interest (including any Additional Interest) on all the
Securities and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed and shall
have provided for conversion rights in accordance with Section 1201 and
exchange rights in accordance with Section 1401;
(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company or a
Subsidiary as a result of such transaction as having been incurred by the
Company or such Subsidiary at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing;
(3) such consolidation or merger or conveyance, transfer or lease
of properties or assets of the Company is permitted under, and does not
give rise to any breach or violation of, the Limited Partnership Agreement
or the Parent Guarantee; and
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction, such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with.
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SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 801, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by
a Board Resolution, Best Buy Capital, when authorized by a resolution of the
General Partner, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to secure the Securities; or
(4) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Section 1201; or
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(5) to make provision with respect to the exchange rights of
Holders pursuant to the requirements of Section 1401; or
(6) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with the provisions of
this Indenture, PROVIDED that such action pursuant to this clause (6) shall
not adversely affect the interests of the Holders or, so long as any of the
Preferred Securities shall remain outstanding, the holders of the Preferred
Securities.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than 66 2/3% in
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, Best Buy Capital, when authorized by resolution of the General
Partner, and the Trustee may enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders under this Indenture; PROVIDED, HOWEVER,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest (including any Additional Interest) on, any
Security, or reduce the principal amount thereof or the rate of interest
thereon, or change the place of payment where, or the coin or currency in
which, any Security or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or adversely affect the right to convert any Security
as provided in Article Twelve (except as permitted by Section 901(4)), or
adversely affect the right to exchange any Security as provided in Article
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Fourteen (except as permitted by Section 901(5)), or modify the provisions
of this Indenture with respect to the subordination of the Securities in a
manner adverse to the Holders,
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1008, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby;
PROVIDED, that, so long as any of the Preferred Securities remains
outstanding, no such amendment shall be made that adversely affects the holders
of the Preferred Securities, and no termination of this Agreement shall occur,
and no waiver of any Event of Default or compliance with any covenant under this
Agreement shall be effective, without the prior consent of the holders of at
least 66-2/3% of the aggregate liquidation preference of the outstanding
Preferred Securities unless and until the Subordinated Debentures and all
accrued and unpaid interest (including any Additional Interest) thereon have
been paid in full.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture
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which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE TEN
Covenants; Representations and Warranties
SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST.
The Company will duly and punctually pay the principal of and
interest on the Securities in accordance with the terms of the Securities and
this Indenture.
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SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in Chicago, Illinois an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange, where Securities
may be surrendered for conversion and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside Chicago, Illinois) where the Securities may
be presented or surrendered for any or all such purposes and may from time to
time rescind such designations; PROVIDED, HOWEVER, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in Chicago, Illinois for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
SECTION 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal or interest so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of or interest on any Securities,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be
held as provided by the Trust Indenture Act, and (unless such Paying
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Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will (i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (ii) during the continuance of any
default by the Company (or any other obligor upon the Securities) in the making
of any payment in respect of the Securities, upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or interest on
any Security and remaining unclaimed for two years after such principal or
interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease.
SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the terms, provisions and conditions of this Indenture (without regard to
any period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults
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and the nature and status thereof of which they may have knowledge.
SECTION 1005. EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; PROVIDED, HOWEVER,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 1006. MAINTENANCE OF PROPERTIES.
The Company will cause all properties used or useful in the conduct
of its business or the business of any Subsidiary to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; PROVIDED,
HOWEVER, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
SECTION 1007. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary;
PROVIDED, HOWEVER, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability
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or validity is being contested in good faith by appropriate proceedings.
SECTION 1008. ADDITIONAL COVENANTS.
The Company agrees that neither it nor any of its Subsidiaries will
declare or pay any dividend on, or redeem, purchase, acquire for value or make a
liquidation payment with respect to, any of its Common Stock or preferred stock
(other than as a result of a reclassification of such Common Stock or preferred
stock or the exchange or conversion of one class or series of Common Stock or
preferred stock for another class or series of Common Stock or preferred stock),
or make any guarantee payments with respect to the foregoing (other than
payments under the Parent Guarantee or dividends or guarantee payments to the
Company from a Subsidiary) if at such time (a) there shall have occurred any
event that, with the giving of notice or the lapse of time or both, would
constitute an Event of Default hereunder or under the Securities, (b) the
Company shall be in default with respect to its payment or other obligations
under the Parent Guarantee or (c) the Company shall have given notice of its
selection of an extended interest payment period as provided herein and such
period, or any extension thereof, shall be continuing. The Company also
covenants (i) to remain the General Partner of Best Buy Capital; PROVIDED that
any permitted successor of the Company under the Limited Partnership Agreement
may succeed to the Company's duties as General Partner, (ii) to cause at least
21% of the total value of Best Buy Capital and at least 21% of all interests in
the capital, income, gain, loss, deduction and credit of Best Buy Capital to be
held by the Company, as a General Partner of Best Buy Capital, (iii) not to
voluntarily dissolve, wind-up or liquidate Best Buy Capital, (iv) to perform
timely all of its duties as General Partner (including the duty to declare and
pay Dividends on the Preferred Securities), (v) to maintain direct ownership of
all partnership interests of Best Buy Capital other than the Preferred
Securities and any Special General Partnership Interest, except as may be
permitted by the Limited Partnership Agreement, (vi) to use its reasonable
efforts to cause Best Buy Capital to remain a limited partnership and otherwise
to continue to be treated as a partnership for United States federal income tax
purposes and (vii) to issue Series A Preferred Stock in the form of Depositary
Shares or Common Stock upon an election by Holders to exchange or convert the
Securities.
The Company also covenants that so long as any Securities are held
by Best Buy Capital, the General Partner
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shall not (i) direct the time, method and place of conducting any proceeding for
any remedy available to the Special General Partner, or exercising any trust or
power conferred on the Special General Partner with respect to the Securities,
(ii) waive any past default which is waivable under this Agreement, (iii)
exercise any right to rescind or annul a declaration that the principal of all
the Securities shall be due and payable, or (iv) consent to any amendment,
modification or termination of the Securities or of this Indenture without, in
each case, obtaining the prior approval of the holders of at least 66 2/3% or
more of the aggregate liquidation preference of the Preferred Securities then
outstanding, PROVIDED, HOWEVER, that where a consent under the Securities
would require the consent of each holder affected thereby, no such consent shall
be given by the General Partner without the prior consent of each holder of the
Preferred Securities. The General Partner shall not revoke any action
previously authorized or approved by a vote of Preferred Securities, without the
approval of the holders of Preferred Securities representing 66 2/3% or more of
the aggregate liquidation preference of the Outstanding Preferred Securities.
SECTION 1009. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants that:
(a) It is a corporation, validly existing and in good standing
under the laws of the State of Minnesota, with all power and authority
(corporate and other) to own its properties and conduct its business as
now being conducted.
(b) It has full power and authority to enter into this Indenture
and to incur and perform the obligations provided for herein, all of which
have been duly authorized by all proper and necessary corporate action.
(c) The execution and delivery of this Indenture and the
performance by the Company of all its obligations hereunder will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement, fiscal agency agreement or other agreement
or instrument to which the Company is a party or by which the Company is
bound or subject, nor will this Indenture result in a violation of the
provisions of the Company's Certificate of Incorporation or By-laws.
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(d) This Indenture and the Securities have been duly authorized,
executed and delivered by the Company and constitute the valid and legally
binding obligation of the Company enforceable in accordance with their
respective terms, subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
ARTICLE ELEVEN
Subordination of Securities
SECTION 1101. SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner herein-after set forth in this Article (subject to Article Four),
the payment of the principal of and interest (including any Additional Interest)
on each and all of the Securities are hereby expressly made subordinate and
subject in right of payment to the prior payment in full in cash of all Senior
Indebtedness.
This Article Eleven shall constitute a continuing offer to all
persons who become holders of, or continue to hold, Senior Indebtedness, and
such provisions are made for the benefit of the holders of Senior Indebtedness
and such holders are made obligees hereunder and any one or more of them may
enforce such provisions. Holders of Senior Indebtedness need not prove reliance
on the subordination provisions hereof.
SECTION 1102. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
Upon any payment or distribution of assets of the Company to
creditors upon (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its assets, or (b) any
liquidation, dissolution or other winding up of the Company, whether voluntary
or involuntary and whether or not involving insolvency or bankruptcy, or
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(c) any assignment for the benefit of creditors or any other marshalling of
assets or liabilities of the Company, then and in any such event specified in
(a), (b) or (c) above (each such event, if any, herein sometimes referred to as
a "PROCEEDING");
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of all amounts due on or to become due on or in
respect of all Senior Indebtedness, before the Holders of the Securities
are entitled to receive any payment or distribution of any kind or
character whether in cash, property or securities (including any payment
or distribution which may be payable or deliverable to Holders of the
Securities made in respect of any other Indebtedness of the Company
subordinated to the payment of the Securities, such payment or
distribution being hereinafter referred to as a "JUNIOR SUBORDINATED
PAYMENT"), on account of the principal of (and premium, if any) or
interest on the Securities or on account of any purchase, redemption or
other acquisition of Securities by the Company, any Subsidiary of the
Company, the Trustee or any Paying Agent (all such payments,
distributions, purchases, redemptions and acquisitions, whether or not in
connection with a Proceeding, herein referred to, individually and
collectively, as a "SECURITIES PAYMENT"); and
(2) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, by set-off or
otherwise, to which the Holders of the Securities or the Trustee would be
entitled but for the provisions of this Article (including, without
limitation, any Junior Subordinated Payment) shall be paid by the
liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating
trustee or otherwise, directly to the holders of Senior Indebtedness or
their representative or representatives or to the trustee or trustees
under any indenture under which any instruments evidencing any of such
Senior Indebtedness may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Senior Indebtedness
held or represented by each, to the extent necessary to make payment in
full in cash of all Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment to the holders of such Senior
Indebtedness.
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In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received in
connection with any Proceeding any Securities Payment before all Senior
Indebtedness is paid in full or payment thereof provided for in cash, then and
in such event such Securities Payment shall be paid over or delivered forthwith
to the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of assets of the
Company for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay all Senior Indebtedness in full in cash
after giving effect to any concurrent payment to or for the holders of Senior
Indebtedness.
For purposes of this Article only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include a payment or distribution of stock or securities
of the Company provided for by a plan of reorganization or readjustment
authorized by an order or decree of a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy law or of any other
corporation provided for by such plan of reorganization or readjustment which
stock or securities are subordinated in right of payment to all then outstanding
Senior Indebtedness to substantially the same extent, or to a greater extent
than, the Securities are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of all or substantially all of its properties and assets as an
entirety to another Person upon the terms and conditions set forth in Article
Eight shall not be deemed a Proceeding for the purposes of this Section if the
Person formed by such consolidation or into which the Company is merged or the
Person which acquires by conveyance or transfer such properties and assets as an
entirety, as the case may be, shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions set forth in Article Eight.
SECTION 1103. NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT.
In the event that any Senior Payment Default (as defined below)
shall have occurred, then no Securities Payment shall be made, nor shall any
property of the Company or any Subsidiary of the Company be applied to the
purchase, acquisition, retirement or redemption of the Securities,
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unless and until such Senior Payment Default shall have been cured or waived in
writing or shall have ceased to exist or all amounts then due and payable in
respect of such Senior Indebtedness (including amounts that have become and
remain due by acceleration) shall have been paid in full in cash. "SENIOR
PAYMENT DEFAULT" means any default in the payment of principal of (or premium,
if any) or interest on any Senior Indebtedness when due, whether at the stated
maturity of any such payment or by declaration of acceleration, call for
redemption, mandatory payment or prepayment or otherwise.
In the event that any Senior Nonmonetary Default (as defined below)
shall have occurred and be continuing, then, upon the receipt by the Company and
the Trustee of written notice of such Senior Nonmonetary Default from the
Designated Senior Holder of such certain Senior Indebtedness, no Securities
Payment shall be made, nor shall any property of the Company or any Subsidiary
of the Company be applied to the purchase, acquisition, requirement or
redemption of the Securities, during the period (the "PAYMENT BLOCKAGE
PERIOD") commencing on the date of such receipt of such written notice and
ending (subject to any blockage of payments that may then or thereafter be in
effect as the result of any Senior Payment Default) on the earlier of (i) the
date on which the Senior Indebtedness to which such Senior Nonmonetary Default
relates is discharged or such Senior Nonmonetary Default shall have been cured
or waived in writing or shall have ceased to exist and any acceleration of
Senior Indebtedness to which such Senior Nonmonetary Default relates shall have
been rescinded or annulled or (ii) the 179th day after the date of such receipt
of such written notice. No more than one Payment Blockage Period may be
commenced with respect to the Securities during any period of 360 consecutive
days and there shall be a period of at least 181 consecutive days in each period
of 360 consecutive days when no Payment Blockage Period is in effect. Following
the commencement of any Payment Blockage Period, the holders of the Senior
Indebtedness will be precluded from commencing a subsequent Payment Blockage
Period until the conditions set forth in the preceding sentence are satisfied.
For all purposes of this paragraph, no Senior Nonmonetary Default that existed
or was continuing on the date of commencement of any Payment Blockage Period
with respect to the Senior Indebtedness initiating such Payment Blockage Period
shall be, or be made, the basis for the commencement of a subsequent Payment
Blockage Period by holders of Senior Indebtedness or their representatives
unless such Senior Nonmonetary Default shall have been cured for a period of not
less than 90 consecutive days. "SENIOR NONMONETARY DEFAULT" means the
occurrence or existence and continuance of any default (other than a
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Senior Payment Default) or any event which, after notice or lapse of time (or
both), would become an event of default (other than a Senior Payment Default),
under the terms of any instrument or agreement pursuant to which any Senior
Indebtedness is outstanding, permitting (after notice or lapse of time or both)
one or more holders of such Senior Indebtedness (or a trustee or agent on behalf
of the holders thereof) to declare such Senior Indebtedness due and payable
prior to the date on which it would otherwise become due and payable.
The provisions of this Section shall not apply to any Securities
Payment with respect to which Section 1102 hereof would be applicable.
SECTION 1104. PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in this Article or elsewhere in this Indenture or
in any of the Securities shall prevent the Company, at any time except during
the pendency of any Proceeding referred to in Section 1102 hereof or under the
conditions described in Section 1103 hereof, from making Securities Payments.
SECTION 1105. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the payment in full in cash of all Senior Indebtedness,
the Holders of the Securities shall be subrogated to the rights of the holders
of such Senior Indebtedness to receive payments and distributions of cash,
property and securities applicable to the Senior Indebtedness until the
principal of and interest on the Securities shall be paid in full. For purposes
of such subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this
Article, and no payments over pursuant to the provisions of this Article to the
holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
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SECTION 1106. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is intended to or
shall (a) impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional (and which, subject to the rights
under this Article of the holders of Senior Indebtedness, is intended to rank
equally with all other general obligations of the Company), to pay to the
Holders of the Securities the principal of and interest (including any
Additional Interest) on the Securities as and when the same shall become due and
payable in accordance with their terms; or (b) affect the relative rights
against the Company of the Holders of the Securities and creditors of the
Company other than the holders of Senior Indebtedness; or (c) prevent the
Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Indebtedness to
receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder.
SECTION 1107. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the Indebtedness of the Company owing to such Holder in the form required in
such proceedings and the causing of such claim to be approved. If the Trustee
does not file a proper claim at least 30 days before the expiration of the time
to file such claim, then the holders of the Senior Indebtedness and their
agents, trustees or other representatives are authorized to do so (but shall in
no event be liable for any failure to do so) for and on behalf of the Holders of
the Securities.
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SECTION 1108. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstanding; (ii) permit the Company to borrow,
repay and then reborrow any or all of the Senior Indebtedness; (iii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (iv) release any Person liable in any
manner for the collection of Senior Indebtedness; (v) exercise or refrain from
exercising any rights against the Company and any other Person; and (vi) apply
any sums received by them to Senior Indebtedness.
SECTION 1109. NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities. Notwithstanding the provisions of
this Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until a Responsible Officer of the Trustee shall have received written
notice thereof from the Company, any holder of Senior Indebtedness, any
Designated Senior Holder or from any trustee, fiduciary or agent
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therefor; and, prior to the receipt of any such written notice, the Trustee,
subject to the provisions of Section 601 hereof, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section at least
three Business Days prior to the date upon which by the terms hereof any money
may become payable for any purpose (including, without limitation, the payment
of the principal of or interest on any Security), then, anything herein
contained to the contrary notwithstanding, but without limiting the rights and
remedies of the holders of Senior Indebtedness or any trustee, fiduciary or
agent therefor, the Trustee shall have full power and authority to receive such
money and to apply the same to the purpose for which such money was received and
shall not be affected by any notice to the contrary which may be received by it
within two Business Days prior to such date. Any notice required or permitted
to be given to the Trustee by a holder of Senior Indebtedness or by any
Designated Senior Holder shall be in writing and shall be sufficient for every
purpose hereunder if in writing and either (i) sent via facsimile to the
Trustee, the receipt of which shall be confirmed via telephone, or (ii) mailed,
first class postage prepaid, or sent by overnight carrier, to the Trustee
addressed to it at the address of its principal office specified in the first
paragraph of this instrument or at any other address furnished in writing to
such holder of Senior Indebtedness by the Trustee.
Subject to the provisions of Section 601 hereof, the Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness or Designated Senior
Holder (or a trustee, fiduciary or agent therefor to establish that such notice
has been given by a holder of Senior Indebtedness or Designated Senior Holder or
a trustee, fiduciary or agent therefor). In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness or Designated Senior
Holder to participate in any payment or distribution pursuant to this Article,
the Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
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Notwithstanding anything else contained herein, no notice, request
or other communication to or with the Trustee shall be deemed given unless
received by a Responsible Officer at the Trustee's principal corporate trust
office.
SECTION 1110. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets of the Company referred
to in this Article, the Trustee, subject to the provisions of Section 601
hereof, and the Holders of the Securities shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or to
the Holders of Securities, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article, provided that the foregoing shall
apply only if such court has been apprised of the provisions of this Article.
SECTION 1111. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of Securities
or to the Company or to any other Person cash, property or securities to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
or otherwise.
SECTION 1112. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
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Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 607 hereof.
SECTION 1113. ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee;
PROVIDED, HOWEVER, that Section 1111 hereof shall not apply to the Company
or any Affiliate of the Company if it or such Affiliate acts as Paying Agent.
ARTICLE TWELVE
Conversion of Securities
SECTION 1201. CONVERSION RIGHTS.
(a) The Securities are convertible, at the option of the Holder, at
any time on or before the close of business at the Stated Maturity, unless
previously exchanged pursuant to Article Fourteen, into fully paid and
nonassessable shares of Common Stock of the Company at an initial conversion
price of $45.00 aggregate principal amount of Securities per share of Common
Stock, subject to adjustment as described in Section 1202. A Holder of
Securities may convert any portion of the principal amount of the Securities
into that number of fully paid and nonassessable shares of Common Stock
(calculated as to each conversion to the nearest 1/100th of a share) obtained by
dividing the principal amount of the Securities to be converted by such
conversion price.
(b) In order to convert a portion of the Securities, the Holder
shall deliver to the Conversion Agent an irrevocable Notice of Conversion
setting forth the principal amount of Securities to be converted, together with
the name or names, if other than the Holder, in which
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the shares of Common Stock should be issued upon conversion. In addition, a
holder of Preferred Securities may exercise its right under the Limited
Partnership Agreement to convert such Preferred Securities into Common Stock by
delivering to the Conversion Agent such Preferred Securities and an irrevocable
Notice of Conversion setting forth the information called for by the preceding
sentence and directing it (i) to exchange such Preferred Security for a portion
of the Securities held by Best Buy Capital (at an exchange rate of $50 principal
amount of Securities for each Preferred Security) and (ii) to immediately
convert such Securities, on behalf of such holder, into Common Stock of Best Buy
pursuant to this Article Twelve; if such Notice of Conversion (accompanied by
such Preferred Securities) is delivered before the close of business on the
Conversion Expiration Date with respect to the Preferred Securities, Best Buy
Capital shall deliver Securities held by it to the Conversion Agent for exchange
in accordance with this paragraph, and the Conversion Agent shall immediately
convert such Securities on behalf of such holders. So long as any Preferred
Securities are outstanding, Best Buy Capital shall not convert any Securities
except pursuant to a Notice of Conversion delivered to the Conversion Agent by a
holder of Preferred Securities.
If a Notice of Conversion is given on the Regular Record Date, the
Holder will be entitled to receive the interest payable on the portion of
Securities to be converted on the subsequent Interest Payment Date
notwithstanding the conversion thereof prior to such Interest Payment Date.
Except as otherwise provided in the immediately preceding sentence, in the case
of any Security which is converted, interest whose Stated Maturity is after the
date of conversion of such Security shall not be payable, and the Company shall
not make nor be required to make any other payment, adjustment or allowance with
respect to accrued but unpaid interest on the Securities being converted. Each
conversion shall be deemed to have been effected immediately prior to the close
of business on the day on which the Notice of Conversion was received (the
"CONVERSION DATE") by the Conversion Agent from the Holder or from a holder of
the Preferred Securities effecting a conversion thereof pursuant to its
conversion rights under the Limited Partnership Agreement, as the case may be.
The Person or Persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock as of the Conversion Date. As promptly as practicable on or
after the Conversion Date, the Company shall issue and deliver at the office of
the Conversion Agent, unless otherwise directed by the Holder in the Notice of
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Conversion, a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion, together with the cash payment, if
any, in lieu of any fraction of any share to the Person or Persons entitled to
receive the same. The Conversion Agent shall deliver such certificate or
certificates to such Person or Persons.
(c) The Company's delivery upon conversion of the fixed number of
shares of Common Stock into which the Securities are convertible (together with
the cash payment, if any, in lieu of fractional shares) shall be deemed to
satisfy the Company's obligation to pay the principal amount at Maturity of the
portion of Securities so converted and any unpaid interest accrued on such
Securities at the time of such conversion.
(d) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, such fractional interest will be paid
in cash by the Company.
(e) In the event of the conversion of any Security in part only, a
new Security or Securities for the unconverted portion thereof will be issued in
the name of the Holder thereof upon the cancellation thereof in accordance with
Section 305.
(f) In effecting the conversion transactions described in this
Section or the exchange transactions described in Article Fourteen hereof, the
Conversion Agent is acting as agent of the holders of Preferred Securities (in
the exchange of Preferred Securities for Securities) and as agent of the Holders
of Securities (in the exchange of Securities for Common Stock or Series A
Preferred Stock), as the case may be, directing it to effect such conversion or
exchange transactions. The Conversion Agent is hereby authorized (i) to
exchange Securities held by Best Buy Capital from time to time for Preferred
Securities in connection with the conversion or exchange of such Preferred
Securities in accordance with Articles Twelve and Thirteen hereof, (ii) to
convert all or a portion of the Securities into Common Stock and thereupon to
deliver such shares of Common Stock in accordance with the provisions of this
Article Twelve and to deliver to Best Buy Capital a new Security or Securities
for any resulting unconverted principal amount and (iii) to exchange all of the
Securities following the occurrence of an Exchange Event for Depositary Shares
representing Series A Preferred Stock in accordance with the provisions of
Article Thirteen hereof and thereupon to deliver such Depositary Shares to the
Persons entitled to receive them.
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SECTION 1202. CONVERSION PRICE ADJUSTMENTS.
(a) The conversion price shall be subject to adjustment from time
to time as follows:
(i) In case the Company shall pay or make a dividend or other
distribution on any class or series of capital stock of the Company exclusively
in Common Stock, the conversion price in effect at the opening of business on
the day following the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution shall be reduced by multiplying
such conversion price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution or exchange, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this subparagraph (i), the number of shares
of Common Stock at any time outstanding shall not include shares held in the
treasury of the Company. The Company shall not pay any dividend or make any
distribution on shares of any class or series of Capital Stock of the Company
exclusively in Common Stock held in the treasury of the Company.
(ii) In case the Company shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall otherwise
issue to all holders of its Common Stock, rights or warrants entitling the
holders thereof to subscribe for or purchase shares of Common Stock at a price
per share less than the current market price per share (determined as provided
in subparagraph (vii) of this Section 1202(a)) of the Common Stock on the date
fixed for the determination of stockholders entitled to receive such rights or
warrants, the conversion price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced by multiplying
such conversion price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such current market price
and the denominator shall be the number of shares of Common Stock outstanding at
the close of business on the date fixed for such determination plus the number
of shares of Common Stock so offered for subscription or
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purchase, such reduction to become effective immediately after the opening of
business on the day following the date fixed for such determination. For the
purposes of this subparagraph (ii), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the Company.
The Company shall not issue any rights or warrants in respect of shares of
Common Stock held in the treasury of the Company. In case any rights or
warrants referred to in this subparagraph (ii) in respect of which an adjustment
shall have been made shall expire unexercised within 45 days after the same
shall have been distributed or issued by the Company, the conversion price shall
be readjusted at the time of such expiration to the conversion price that would
have been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
(iii) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the conversion price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced and, conversely,
in case outstanding shares of Common Stock shall each be combined into a smaller
number of shares of Common Stock, the conversion price in effect at the opening
of business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(iv) Subject to the last sentence of this subparagraph (iv), in case
the Company shall, by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any class or series of
capital stock, cash or assets (including securities, but excluding any rights or
warrants referred to in subparagraph (ii) of this Section 1202(a), any dividend
or distribution paid exclusively in cash and any dividend or distribution
referred to in subparagraph (i) of this Section 1202(a)), the conversion price
shall be reduced so that the same shall equal the price determined by
multiplying the conversion price in effect immediately prior to the
effectiveness of the conversion price reduction contemplated by this
subparagraph (iv) by a fraction of which the numerator shall be the current
market price per share (determined as provided in subparagraph (vii) of this
Section 1202(a)) of the Common Stock on the date fixed for the payment of such
distribution (the "REFERENCE DATE") less the fair market value (as determined
in good faith by the Board of
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Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors), on the Reference Date, of the portion of the
evidences of indebtedness, shares of capital stock, cash and assets so
distributed applicable to one share of Common Stock and the denominator shall be
such current market price per share of the Common Stock, such reduction to
become effective immediately prior to the opening of business on the day
following the Reference Date. If the Board of Directors determines the fair
market value of any distribution for purposes of this subparagraph (iv) by
reference to the actual or when issued trading market for any securities
comprising such distribution, it must in doing so consider the prices in such
market over the same period used in computing the current market price per share
of Common Stock pursuant to subparagraph (vii) of this Section 1202(a). For
purposes of this subparagraph (iv), any dividend or distribution that includes
shares of Common Stock or rights or warrants to subscribe for or purchase shares
of Common Stock shall be deemed instead to be (1) a dividend or distribution of
the evidences of indebtedness, shares of capital stock, cash or assets other
than such shares of Common Stock or such rights or warrants (making any
conversion price reduction required by this subparagraph (iv)) immediately
followed by (2) a dividend or distribution of such shares of Common Stock or
such rights or warrants (making any further conversion price reduction required
by subparagraph (i) or (ii) of this Section 1202(a), except (A) the Reference
Date of such dividend or distribution as defined in this subparagraph (iv) shall
be substituted as "the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution," "the date fixed for the
determination of stockholders entitled to receive such rights or warrants" and
"the date fixed for such determination" within the meaning of subparagraphs (i)
and (ii) of this Section 1202(a) and (B) any shares of Common Stock included in
such dividend or distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination" within the meaning of
subparagraph (i) of this Section 1202(a).
(v) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding, in the case of
any regular cash dividend on the Common Stock, the portion thereof that does not
exceed the per share amount of the next preceding regular cash dividend on the
Common Stock (as adjusted to appropriately reflect any of the events referred to
in subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this Section 1202(a)),
or all of such regular cash dividend if the annualized amount thereof per share
of Common Stock does
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not exceed 15% of the current market price per share (determined as provided in
subparagraph (vii) of this Section 1202(a)) of the Common Stock on the Trading
Day (as defined in Section 1202(e)) next preceding the date of declaration of
such dividend), the conversion price shall be reduced so that the same shall
equal the price determined by multiplying the conversion price in effect
immediately prior to the effectiveness of the conversion price reduction
contemplated by this subparagraph (v) by a fraction of which the numerator shall
be the current market price per share (determined as provided in subparagraph
(vii) of this Section 1202(a)) of the Common Stock on the date fixed for the
payment of such distribution less the amount of cash so distributed and not
excluded as provided above applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock,
such reduction to become effective immediately prior to the opening of business
on the day following the date fixed for the payment of such distribution.
(vi) In case a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of Best Buy's Common Stock
shall expire and such tender or exchange offer shall involve the payment by the
Company or such subsidiary of consideration per share of Common Stock having a
fair market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors) at the last time (the "EXPIRATION TIME") tenders or exchanges may
be made pursuant to such tender or exchange offer (as it shall have been
amended) that exceeds 10% of the current market price per share (determined as
provided in subparagraph (vii) of this Section 1202(a)) of the Common Stock on
the Trading Day (as defined in Section 1202(e)) next succeeding the Expiration
Time, the conversion price shall be reduced so that the same shall equal the
price determined by multiplying the conversion price in effect immediately prior
to the effectiveness of the conversion price reduction contemplated by this
subparagraph (vi) by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding (including any tendered or exchanged shares)
at the Expiration Time multiplied by the current market price per share
(determined as provided in subparagraph (vii) of this Section 1202(a)) of the
Common Stock on the Trading Day next succeeding the Expiration Time and the
denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the
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shares deemed so accepted, up to any such maximum, being referred to as the
"PURCHASED SHARES") and (y) the product of the number of shares of Common
Stock outstanding (less any Purchased Shares) at the Expiration Time and the
current market price per share (determined as provided in subparagraph (vii) of
this Section 1202(a)) of the Common Stock on the Trading Day next succeeding the
Expiration Time, such reduction to become effective immediately prior to the
opening of business on the day following the Expiration Time.
(vii) For the purpose of any computation under subparagraphs (ii),
(iv), (v) and (vi) of this Section 1202(a), the current market price per share
of Common Stock on any date in question shall be deemed to be the average of the
daily Closing Prices (as defined in Section 1202(e)) for the five consecutive
Trading Days selected by the Company commencing not more than 20 Trading Days
before, and ending not later than, the earlier of the day in question and, if
applicable, the day before the "ex" date with respect to the issuance or
distribution requiring such computation; PROVIDED, HOWEVER, that if another
event occurs that would require an adjustment pursuant to subparagraph (i)
through (vi), inclusive, the Board of Directors may make such adjustments to the
Closing Prices during such five Trading Day period as it deems appropriate to
effectuate the intent of the adjustments in this Section 1202(a), in which case
any such determination by the Board of Directors shall be set forth in a Board
Resolution and shall be conclusive. For purposes of this paragraph, the term
"ex" date, (1) when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the New York Stock
Exchange or on such successor securities exchange as the Common Stock may be
listed or in the relevant market from which the Closing Prices were obtained
without the right to receive such issuance or distribution, and (2) when used
with respect to any tender or exchange offer means the first date on which the
Common Stock trades regular way on such securities exchange or in such market
after the Expiration Time of such offer.
(viii) The Company may make such reductions in the conversion price,
in addition to those required by subparagraphs (i), (ii), (iii), (iv), (v) and
(vi) of this Section 1202(a), as it considers to be advisable to avoid or
diminish any income tax to holders of Common Stock or rights to purchase Common
Stock resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. The Company
from time to time may reduce the conversion price by any amount for any period
of time if the period is at least
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twenty (20) days, the reduction is irrevocable during the period, and the Board
of Directors of the Company shall have made a determination that such reduction
would be in the best interest of the Company, which determination shall be
conclusive. Whenever the conversion price is reduced pursuant to the preceding
sentence, the Company shall mail to holders of record of the Securities a notice
of the reduction at least fifteen (15) days prior to the date the reduced
conversion price takes effect, and such notice shall state the reduced
conversion price and the period it will be in effect.
(ix) No adjustment in the conversion price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
conversion price; PROVIDED, HOWEVER, that any adjustments which by reason of
this subparagraph (ix) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
(x) Whenever the conversion price is adjusted as herein provided:
(1) the Company shall compute the adjusted conversion price
and shall prepare a certificate signed by the Chief Financial
Officer or the Treasurer of the Company setting forth the adjusted
conversion price and showing in reasonable detail the facts upon
which such adjustment is based, and such certificate shall forthwith
be filed with the transfer agent for the Preferred Securities; and
(2) a notice stating the conversion price has been adjusted
and setting forth the adjusted conversion price shall as soon as
practicable be mailed by the Company to all record holders of
Preferred Securities at their last addresses as they appear upon the
stock transfer books of the Company.
(b) RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE OF ASSETS.
In the event that the Company shall be a party to any transaction (including
without limitation any recapitalization or reclassification of the Common Stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination of the
Common Stock), any consolidation of the Company with, or merger of the Company
into, any other person, any merger of another person into the Company (other
than a merger which does not result in a
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reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company), any sale or transfer of all or substantially all
of the assets of the Company or any compulsory share exchange) pursuant to which
the Common Stock is converted into the right to receive other securities, cash
or other property, then lawful provision shall be made as part of the terms of
such transaction whereby the holder of each Security then outstanding shall have
the right thereafter to convert such Security only into (i) in the case of any
such transaction other than a Common Stock Fundamental Change (as defined in
Section 1202(e)), the kind and amount of securities, cash and other property
receivable upon such transaction by a holder of the number of shares of Common
Stock of the Company into which such Security could have been converted
immediately prior to such transaction, after giving effect, in the case of any
Non-Stock Fundamental Change, to any adjustment in the conversion price required
by the provision of Section 1202(d), and (ii) in the case of a Common Stock
Fundamental Change, common stock of the kind received by holders of Common Stock
as a result of such Common Stock Fundamental Change in an amount determined
pursuant to the provisions of Section 1202(d). The Company or the person formed
by such consolidation or resulting from such merger or which acquired such
assets or which acquires the Company's shares, as the case may be, shall make
provision in its certificate or articles of incorporation or other constituent
document to establish such right. Such certificate or articles of incorporation
or other constituent document shall provide for adjustments which, for events
subsequent to the effective date of such certificate or articles of
incorporation or other constituent document, shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 1202. The
above provisions shall similarly apply to successive transactions of the
foregoing type.
(c) PRIOR NOTICE OF CERTAIN EVENTS. In case:
(i) the Company shall (1) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in
shares of Common Stock or (B) a dividend payable in cash that would not
require an adjustment pursuant to 1202(a)(iv) or (v) or (2) authorize a
tender or exchange offer that would require an adjustment pursuant to
Section 1202(a)(vi);
(ii) the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any shares
of stock of any class or series or of any other rights or warrants;
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(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change in
par value, or from par value to no par value, or from no par value to par
value), or of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company shall be
required, or of the sale or transfer of all or substantially all of the
assets of the Company or of any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or other property;
or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed with the transfer agent for the
Preferred Securities, and shall cause to be mailed to the holders of record of
the Preferred Securities, at their last addresses as they shall appear upon the
stock transfer books of the Company, at least fifteen days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record (if any) is to be taken for the purpose of such
dividend, distribution, redemption, repurchase, rights or warrants or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, redemption, repurchase,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no failure
to mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice).
(d) ADJUSTMENTS IN CASE OF FUNDAMENTAL CHANGES. Notwithstanding
any other provision in this Section 1202 to the contrary, if any Fundamental
Change (as defined in Section 1202(e)) occurs, then the conversion price in
effect will be adjusted immediately after such Fundamental Change as described
below. In addition, in the event of a Common Stock Fundamental Change (as
defined in Section 1202(e)), each Security shall be convertible solely into
common stock of the kind and amount received by holders of Common Stock as the
result of such Common Stock Fundamental Change as
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more specifically provided in the following clauses (d)(i) and (d)(ii).
For purposes of calculating any adjustment to be made pursuant to this Section
1202(d) in the event of a Fundamental Change, immediately after such Fundamental
Change:
(i) in the case of a Non-Stock Fundamental Change (as defined in
Section 1202(e)), the conversion price of the Securities shall thereupon
become the lower of (A) the conversion price in effect immediately prior
to such Non-Stock Fundamental Change, but after giving effect to any other
prior adjustments effected pursuant to this Section 1202, and (B) the
result obtained by multiplying the greater of the Applicable Price (as
defined in Section 1202(e)) or the then applicable Reference Market Price
(as defined in Section 1202(e)) by a fraction of which the numerator shall
be $50 and the denominator shall be an amount per Security determined by
the General Partner in its sole discretion, after consultation with a
nationally recognized investment banking firm, to be the equivalent of the
hypothetical redemption price that would have been applicable if the
Securities had been redeemable during such period; and
(ii) in the case of a Common Stock Fundamental Change, the
conversion price of the Securities in effect immediately prior to such
Common Stock Fundamental Change, but after giving effect to any other
prior adjustments effected pursuant to this Section 1202, shall thereupon
be adjusted by multiplying such conversion price by a fraction of which
the numerator shall be the Purchaser Stock Price (as defined in Section
1202(e)) and the denominator shall be the Applicable Price; PROVIDED,
HOWEVER, that in the event of a Common Stock Fundamental Change in which
(A) 100% of the value of the consideration received by a holder of Common
Stock is common stock of the successor, acquiror or other third party (and
cash, if any, is paid with respect to any fractional interests in such
common stock resulting from such Common Stock Fundamental Change) and (B)
all of the Common Stock shall have been exchanged for, converted into or
acquired for common stock (and cash with respect to fractional interests)
of the successor, acquiror or other third party, the conversion price of
the Securities in effect immediately prior to such Common Stock
Fundamental Change shall thereupon be adjusted by multiplying such
conversion price by a fraction of which the numerator shall be one (1) and
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the denominator shall be the number of shares of common stock of the
successor, acquiror, or other third party received by a stockholder for
one share of Common Stock as a result of such Common Stock Fundamental
Change.
(e) DEFINITIONS. The following definitions shall apply to terms
used in this Section 1202:
(1) "APPLICABLE PRICE" shall mean (i) in the event of a
Non-Stock Fundamental Change in which the holders of the Common Stock
receive only cash, the amount of cash received by a stockholder for one
share of Common Stock and (ii) in the event of any other Non-Stock
Fundamental Change or any Common Stock Fundamental Change, the average of
the daily Closing Prices of the Common Stock for the ten (10) consecutive
Trading Days prior to and including the record date for the determination
of the holders of Common Stock entitled to receive securities, cash or
other property in connection with such Non-Stock Fundamental Change or
Common Stock Fundamental Change, or, if there is no such record date, the
date upon which the holders of the Common Stock shall have the right to
receive such securities, cash or other property, in each case, as adjusted
in good faith by the Board of Directors of Best Buy to appropriately
reflect any of the events referred to in subparagraphs (i), (ii), (iii),
(iv), (v) and (vi) of Section 1202(a).
(2) "CLOSING PRICE" of any common stock on any day shall mean
the last reported sale price regular way on such day or, in case no such
sale takes place on such day, the average of the reported closing bid and
asked prices regular way of such common stock, in each case on the
principal national securities exchange on which such common stock is
listed, if the common stock is listed on a national securities exchange,
or the National Market System of the National Association of Securities
Dealers, Inc., or, if the common stock is not quoted or admitted to
trading on such quotation system, on the principal quotation system on
which the common stock is listed or admitted to trading or quoted, or, if
not listed or admitted to trading or quoted on any national securities
exchange or quotation system, the average of the closing bid and asked
prices of the common stock in the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a
similarly generally accepted reporting service, or, if not so available in
such manner, as furnished by any New York Stock Exchange member firm
selected from time to time by the
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Board of Directors of Best Buy for that purpose or, if not so available in
such manner, as otherwise determined in good faith by the Board of
Directors.
(3) "COMMON STOCK FUNDAMENTAL CHANGE" shall mean any Fundamental
Change in which more than 50% of the value (as determined in good faith by
the Board of Directors) of the consideration received by holders of Common
Stock consists of common stock that for each of the ten consecutive
Trading Days referred to with respect to such Fundamental Change in
Section 1202(e)(1) above has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on the National Market System of the National Association of
Securities Dealers, Inc.; PROVIDED, HOWEVER, that a Fundamental Change
shall not be a Common Stock Fundamental Change unless either (i) the
Company continues to exist after the occurrence of such Fundamental Change
and the outstanding Securities continue to exist as outstanding
Securities, or (ii) not later than the occurrence of such Fundamental
Change, the outstanding Securities are converted into or exchanged for
convertible subordinated debentures of a corporation succeeding to the
business of the Company, which convertible subordinated debentures have
terms substantially similar to those of the Securities.
(4) "FUNDAMENTAL CHANGE" shall mean the occurrence of any
transaction or event in connection with a plan pursuant to which all or
substantially all of the Common Stock shall be exchanged for, converted
into, acquired for or constitute solely the right to receive securities,
cash or other property (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise); PROVIDED, HOWEVER,
in the case of a plan involving more than one such transaction or event,
for purposes of adjustment of the conversion price, such Fundamental
Change shall be deemed to have occurred when substantially all of the
Common Stock of the Company shall be exchanged for, converted into, or
acquired for or constitute solely the right to receive securities, cash or
other property, but the adjustment shall be based upon the highest
weighted average of consideration per share which a holder of Common Stock
could have received in such transactions or events as a result of which
more than 50% of the Common Stock of the Company shall have been exchanged
for, converted into, or acquired for or
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constitute solely the right to receive securities, cash or other property.
(5) "NON-STOCK FUNDAMENTAL CHANGE" shall mean any Fundamental
Change other than a Common Stock Fundamental Change.
(6) "PURCHASER STOCK PRICE" shall mean, with respect to any
Common Stock Fundamental Change, the average of the daily Closing Prices
of the common stock received in such Common Stock Fundamental Change for
the ten (10) consecutive Trading Days prior to and including the record
date for the determination of the holders of Common Stock entitled to
receive such common stock, or, if there is no such record date, the date
upon which the holders of the Common Stock shall have the right to receive
such common stock, in each case, as adjusted in good faith by the Board of
Directors to appropriately reflect any of the events referred to in
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of Section 1202(a).
(7) "REFERENCE MARKET PRICE" shall initially mean $25.00 and in
the event of any adjustment to the conversion price other than as a result
of a Non-Stock Fundamental Change, the Reference Market Price shall also
be adjusted so that the ratio of the Reference Market Price to the
conversion price after giving effect to any such adjustment shall always
be the same as the ratio of $25.00 to the initial conversion price per
share.
(8) "TRADING DAY" shall mean a day on which securities are
traded on the national securities exchange or quotation system or in the
over-the-counter market used to determine the Closing Price.
(f) DIVIDEND OR INTEREST REINVESTMENT PLANS. Notwithstanding the
foregoing provisions, the issuance of any shares of Common Stock pursuant to any
plan providing for the reinvestment of dividends or interest payable on
securities of the Company and the investment of additional optional amounts in
shares of Common Stock under any such plan, and the issuance of any shares of
Common Stock or options or rights to purchase such shares pursuant to any
employee benefit plan or program of the Company or pursuant to any option,
warrant, right or exercisable, exchangeable or convertible security outstanding
as of the date the Securities were first issued, shall not be deemed to
constitute an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Company to
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which any of the adjustment provisions described above applies. There shall
also be no adjustment of the conversion price in case of the issuance of any
stock (or securities convertible into or exchangeable for stock) of Best Buy
except as specifically described in this Section 1202. If any action would
require adjustment of the conversion price pursuant to more than one of the
provisions described above, only one adjustment shall be made and such
adjustment shall be the amount of adjustment that has the highest absolute value
to the holder of the Securities.
(g) CERTAIN ADDITIONAL RIGHTS. In case the Company shall, by
dividend or otherwise, declare or make a distribution on its Common Stock
referred to in Section 1202(a)(iv) or 1202(a)(v) (including, without limitation,
dividends or distributions referred to in the last sentence of Section
1202(a)(iv)), the holder of the Securities, upon the conversion thereof
subsequent to the close of business on the date fixed for the determination of
stockholders entitled to receive such distribution and prior to the
effectiveness of the conversion price adjustment in respect of such
distribution, shall also be entitled to receive for each share of Common Stock
into which the Securities are converted, the portion of the shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash and assets so distributed applicable to one share of Common Stock;
PROVIDED, HOWEVER, that, at the election of the Company (whose election
shall be evidenced by a resolution of the Board of Directors) with respect to
all holders so converting, the Company may, in lieu of distributing to such
holder any portion of such distribution not consisting of cash or securities of
the Company, pay such holder an amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors). If any conversion of Securities described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the holder of Securities so converted is entitled
to receive in accordance with the immediately preceding sentence, the Company
may elect (such election to be evidenced by a resolution of the Board of
Directors) to distribute to such holder a due bill for the shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash or assets to which such holder is so entitled, PROVIDED that such due
bill (i) meets any applicable requirements of the principal national securities
exchange or other market on which the Common Stock is then traded and (ii)
requires payment or delivery of such shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash or
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assets no later than the date of payment or delivery thereof to holders of
shares of Common Stock receiving such distribution.
ARTICLE THIRTEEN
Redemption of Securities
SECTION 1301. CONDITIONAL RIGHT OF REDEMPTION; MANDATORY REDEMPTION.
In the event that, following the Conversion Expiration Date in
respect of the Preferred Securities, less than 5% of the original aggregate
principal amount of the Preferred Securities remain Outstanding, the Securities
shall be subject to redemption at the option of the Company at the Redemption
Price specified in the form of Security hereinbefore set forth, together with
accrued interest (including Additional Interest) to the Redemption Date,
provided that if the Company elects to redeem Securities, the aggregate
principal amount of Securities so redeemed shall be not less than the aggregate
liquidation preference of the Preferred Securities then outstanding.
The Company covenants that if Best Buy Capital redeems the Preferred
Securities in accordance with the terms thereof, the Company will exercise its
foregoing right of redemption, shall redeem the Securities not later than the
date of redemption of the Preferred Securities, and shall pay the Redemption
Price therefor prior to 12:00 noon, New York City time on the date of such
redemption.
SECTION 1302. APPLICABILITY OF ARTICLE.
Redemption of Securities at the election of the Company, as
permitted by Section 1301, shall be made in accordance with such provision and
this Article.
SECTION 1303. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem Securities pursuant to Section
1301 shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least [35] days and no more than
60 days prior to the Redemption Date fixed by the Company, notify the Trustee of
such Redemption Date and of
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the principal amount of Securities to be redeemed and provide a copy of the
notice of redemption given to Holders of Securities to be redeemed pursuant to
Section 1304.
SECTION 1304. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 35 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date, and
(4) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1305. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent, (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
SECTION 1306. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date
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(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Upon surrender
of any such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price, together with
accrued interest to the Redemption Date; PROVIDED, HOWEVER, that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid, bear interest
from the Redemption Date at the rate borne by the Security.
ARTICLE FOURTEEN
Exchange
SECTION 1401. OPTIONAL EXCHANGE FOR DEPOSITARY SHARES REPRESENTING SERIES A
PREFERRED STOCK.
For so long as any Preferred Securities are outstanding, the
Securities shall be exchangeable at the request of Holders thereof, following an
Exchange Election by a Majority in Liquidation Preference of the Preferred
Securities for Depositary Shares (as such terms are defined in the Limited
Partnership Agreement), each representing ownership of 1/100th of a fully paid
and non-assessable share of Series A Preferred Stock, subject to the following
terms and conditions:
(a) The Conversion Agent, upon receiving irrevocable notice of an
Exchange Election by the holders of a majority in Liquidation Preference
of the Preferred Securities (a "Notice of Exchange"), shall promptly
deliver a copy of such notice to the Company, the Trustee and Best Buy
Capital.
(b) All outstanding Preferred Securities shall be deemed to have
been exchanged, immediately prior to the close of business on the date of
the Exchange Election (the "exchange date"), for Securities held by Best
Buy Capital, at an exchange rate of $50 principal amount of Securities for
each Preferred Security, and Best Buy
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Capital shall promptly deliver the Securities deemed to have been so
exchanged to the Conversion Agent, on behalf of the holders of exchanged
Preferred Securities. As promptly as practicable after the exchange date,
the Company shall issue and deposit with the Depositary, pursuant to the
Deposit Agreement, a certificate or certificates for the number of fully
paid and non-assessable shares of Series A Preferred Stock issuable at the
rate referred to in paragraph (c) below upon the exchange contemplated in
such paragraph in return for a Depositary Receipt or Receipts issued by
the Depositary evidencing a proportionate number of Depositary Shares in
respect of the Series A Preferred Stock so deposited. The Company shall
request that the Depositary Receipts be issued in the names of the holders
of Preferred Securities designated in the Notice of Exchange.
(c) The Company shall thereafter, promptly upon request by the
Conversion Agent, exchange such Securities for Depositary Shares, each
representing a 1/100th interest in a fully paid and non-assessable share
of its Series A Preferred Stock and evidenced by Depositary Receipts, at
the rate of one Depositary Share for each $50 principal amount of
Securities (which rate is equivalent to one Depositary Share or 1/100th of
a share of Series A Preferred Stock for each Preferred Security). Any
accumulated and unpaid dividends on the Preferred Securities (including
any Additional Dividends thereon) at the time of the Exchange Election
shall from and after the time of such exchange be treated as accumulated
and unpaid dividends on the Series A Preferred Stock issued in exchange
for the Securities. The Person or Persons entitled to receive the Series
A Preferred Stock issuable upon such exchange shall be treated for all
purposes as the record holder or holders of such Series A Preferred Stock
as of the exchange date. As promptly as practicable on or after the
exchange date, the Company shall deliver at the office of the Conversion
Agent the Depositary Receipt or Receipts representing the Series A
Preferred Stock issuable upon such exchange. The Conversion Agent shall
deliver such Depositary Receipt or Receipts to the Person or persons
entitled to receive the same.
(d) The Company will use its best efforts to have the Depositary
Shares listed for trading on the New York Stock Exchange or such other
securities exchange on which the Preferred Securities may be listed at the
time of the Exchange Election.
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____________________
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
BEST BUY CO., INC.
By: _______________________________________
Richard M. Schulze
Chairman and Chief Executive Officer
BEST BUY CAPITAL, L.P.
By: Best Buy Co., Inc.,
General Partner
By: _______________________________________
Richard M. Schulze
Chairman and Chief Executive Officer
HARRIS TRUST AND SAVINGS BANK
By: _______________________________________
Judith M. Bartolini
Vice President
Attest:___________________________
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STATE OF ________ ) ss.:
COUNTY OF ________ )
On the _____ day of November, 1994, before me personally came
Richard M. Schulze, to me known, who, being by me duly sworn, did depose and say
that he is the Chairman and Chief Executive Officer of Best Buy Co., Inc., a
corporation described in and which executed the foregoing instrument; and that
he signed his name thereto by authority of the Board of Directors of such
corporation.
_____________________________________
STATE OF ________ ) ss.:
COUNTY OF ________ )
On the _____ day of November, 1994, before me personally came
Richard M. Schulze, to me known, who, being by me duly sworn, did depose and say
that he is the Chairman and Chief Executive Officer of Best Buy Co., Inc., the
General Partner of Best Buy Capital, L.P., a limited partnership described in
and which, through the General Partner, executed the foregoing instrument; and
that he signed his name thereto by authority of the Board of Directors of such
General Partner.
_____________________________________
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<PAGE>
STATE OF ________ ) ss.:
COUNTY OF ________ )
On the _____ day of November, 1994, before me personally came Judith
M. Bartolini, to me known, who, being by me duly sworn, did depose and say that
she is a Vice President of Harris Trust and Savings Bank, a corporation
described in and which executed the foregoing instrument; and that she signed
her name thereto by authority of the Board of Directors of such corporation.
_____________________________________
STATE OF _________ ) ss.:
COUNTY OF ________ )
On the _____ day of November, 1994, before me personally came C.
Potter, to me known, who, being by me duly sworn, did depose and say that she is
a Vice President of Harris Trust and Savings Bank, one of the corporations
described in and which executed the foregoing instrument; that she knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors of
said corporation, and that she signed her name thereto by like authority.
_____________________________________
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EXHIBIT 4.5
Draft of November 1, 1994
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT (this "Guarantee"), dated as of November 3, 1994,
is executed and delivered by Best Buy Co., Inc., a corporation organized under
the laws of the State of Minnesota ("Best Buy"), for the benefit of the Holders
(as hereinafter defined) from time to time of the Preferred Securities (as
hereinafter defined) of Best Buy Capital, L.P., a Delaware limited partnership
("Best Buy Capital" or the "Partnership").
WHEREAS, Best Buy Capital is issuing up to 4,600,000 of its 6 1/2%
Convertible Monthly Income Preferred Securities, with a liquidation preference
of $50 each (the "Preferred Securities"), and Best Buy desires to issue this
Guarantee for the benefit of the Holders, as provided herein;
WHEREAS, Best Buy Capital will purchase the Subordinated Debentures
(as hereinafter defined) issued pursuant to the Indenture (as hereinafter
defined) with substantially all of the proceeds from the issuance and sale of
the Preferred Securities and its other partnership interests (the "Partnership
Interests"); and
WHEREAS, Best Buy desires hereby to unconditionally and irrevocably
agree, to the extent set forth herein, to pay to the Holders the Guarantee
Payments (as hereinafter defined) and to perform the other obligations set forth
herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase Best Buy hereby agrees shall benefit Best
Buy, Best Buy executes and delivers this Guarantee for the benefit of the
Holders.
Article I
DEFINITIONS
As used in this Guarantee, the terms set forth below shall, unless the
context otherwise requires, have the following meanings. Capitalized terms used
herein but not otherwise defined herein shall have the meanings ascribed to such
terms in the Amended and Restated Agreement of Limited Partnership of Best Buy
Capital L.P., dated as of November 3, 1994 (the "Limited Partnership
Agreement").
1.1 "Additional Dividends" means Dividends that shall accumulate on
any Dividend arrearages in respect of the Preferred Securities at the rate of
6 1/2% per annum compounded monthly.
<PAGE>
1.2 "Best Buy Common Stock" shall mean the shares of common stock,
par value $.10 per share, of Best Buy.
1.3 "Best Buy Preferred Stock" shall mean the Series A Cumulative
Convertible Preferred Stock of Best Buy, liquidation preference $5,000 per
share.
1.4 "Conversion Agent" shall mean Harris Trust and Savings Bank and
its successors, acting as agent of the Holders in effecting the conversion of
Preferred Securities into shares of Best Buy Common Stock or the exchange of
Preferred Securities for Depositary Shares, in each case as and in the manner
set forth in the Limited Partnership Agreement.
1.5 "Deposit Agreement" shall mean the Deposit Agreement, dated as of
November 3, 1994, among Best Buy, the Depositary and the holders from time to
time of the Depositary Receipts.
1.6 "Depositary" shall mean Harris Trust and Savings Bank and its
successors and assigns.
1.7 "Depositary Receipt" shall mean one of the depositary receipts,
issued by the Depositary under the Deposit Agreement, each representing any
number of whole Depositary Shares.
1.8 "Depositary Share" shall mean one of the depositary shares, each
representing a one one-hundredth (1/100th) interest in a share of Best Buy
Preferred Stock deposited with the Depositary pursuant to the Deposit Agreement.
1.9 "Dividends" means the cumulative cash distributions from the
Partnership with respect to the Interests represented by the Preferred
Securities, accumulating from November 3, 1994 and payable monthly in arrears on
the last day of each calendar month of the year, commencing November 30, 1994.
1.10 "General Partner" means Best Buy in its capacity as general
partner in Best Buy Capital or any permitted successor general partner in Best
Buy Capital admitted as such pursuant to the applicable provisions of the
Limited Partnership Agreement.
1.11 "Guarantee Payments" shall mean the following payments, without
duplication, to the extent not paid by Best Buy Capital: (a) any accumulated and
unpaid Dividends (including any Additional Dividends accrued thereon) which have
been theretofore declared on the Preferred Securities from funds legally
available therefor; (b) the Redemption Price (including all accumulated and
unpaid Dividends and distributions) payable with respect to Preferred Securities
called for redemption by Best Buy Capital out of funds legally available
therefor; and (c) upon a liquida-
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tion of Best Buy Capital, the lesser of (i) the Liquidation Distribution and
(ii) the amount of assets of Best Buy Capital available for distribution to
Holders in liquidation of Best Buy Capital.
1.12 "Holder" shall mean any holder from time to time of any
Preferred Securities of Best Buy Capital; PROVIDED, HOWEVER, that in determining
whether the Holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include Best Buy or any Subsidiary thereof, either directly or indirectly.
1.13 "Indenture" shall mean the Indenture, dated as of November 3,
1994, among Best Buy, Best Buy Capital and Harris Trust and Savings Bank, as
trustee.
1.14 "Liquidation Distribution" shall mean the aggregate of the
stated liquidation preference of $50 per Preferred Security and all accumulated
and unpaid dividends and distributions (whether or not declared) to the date of
payment, including any Additional Dividends accrued thereon.
1.15 "Redemption Price" shall have the meaning ascribed to such term
in the Limited Partnership Agreement.
1.16 "Subordinated Debentures" shall mean the 6 1/2% Convertible
Subordinated Debentures issued pursuant to the Indenture and sold by Best Buy to
the Partnership in connection with the issuance and sale by the Partnership of
the Preferred Securities. The Subordinated Debentures will evidence the loans
to be made by the Partnership to Best Buy from time to time of the proceeds
received by the Partnership from the issuance and sale of the Preferred
Securities and substantially all of the Partnership Interests.
1.17 "Subsidiary" of any Person means a corporation more than 50% of
the outstanding voting stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries, or by such Person and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.
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<PAGE>
Article II
GUARANTEE
2.1 GENERAL. Best Buy irrevocably and unconditionally agrees to pay
in full to the Holders the Guarantee Payments, as and when due (except to the
extent paid by Best Buy Capital), regardless of any defense, right of set-off or
counterclaim which Best Buy Capital may have or assert. This Guarantee is
continuing, irrevocable, unconditional and absolute. Best Buy's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by Best Buy to the Holders or by causing Best Buy Capital to pay such
amounts to the Holders.
2.2 WAIVER OF CERTAIN RIGHTS. Best Buy hereby waives notice of
acceptance of this Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
2.3 OBLIGATIONS NOT AFFECTED. The obligations, covenants, agreements
and duties of Best Buy under this Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by Best Buy Capital of any express or
implied agreement, covenant, term or condition relating to the
Preferred Securities to be performed or observed by Best Buy Capital;
(b) the extension of time for the payment by Best Buy Capital of
all or any portion of the Dividends, distributions, Additional
Dividends, Redemption Price, Liquidation Distribution or any other
sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Preferred Securities;
(c) any, failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Preferred Securities, or any action on the part of Best
Buy Capital granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale
of any collateral, receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization, arrangement, composition
or
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<PAGE>
readjustment of debt of, or other similar proceedings affecting, Best
Buy Capital or any of the assets of Best Buy Capital;
(e) any invalidity of, or defect or deficiency in, any of the
Preferred Securities; or
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred.
There shall be no obligation of the Holders to give notice to, or obtain any
consent of, Best Buy with respect to the happening of any of the foregoing.
2.4 HOLDERS MAY PROCEED DIRECTLY AGAINST BEST BUY. This Guarantee is
a guarantee of payment and not of collection. A Holder may enforce this
Guarantee directly against Best Buy, and Best Buy waives any right or remedy to
require that any action be brought against Best Buy Capital or any other person
or entity before proceeding against Best Buy. Subject to Section 2.5 hereof,
all waivers herein contained shall be without prejudice to the Holders' right at
the Holders' option to proceed against Best Buy Capital, whether by separate
action or by joinder. Best Buy agrees that this Guarantee shall not be
discharged except by payment of the Guarantee Payments in full.
2.5 SUBROGATION. Best Buy shall be subrogated to all (if any) rights
of the Holders against Best Buy Capital in respect of any amounts paid to the
Holders by Best Buy under this Guarantee and shall have the right to waive
payment of any amount of dividends or distributions in respect of which payment
has been made to the Holders by Best Buy pursuant to Section 2.1 hereof;
PROVIDED, HOWEVER, that Best Buy shall not (except to the extent required by
mandatory provisions of law) exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of a payment under this Guarantee, if, at the time of any such payment,
any amounts are due and unpaid under this Guarantee. If any amount shall be
paid to Best Buy in violation of the preceding sentence, Best Buy agrees to pay
over such amount to the Holders.
2.6 INDEPENDENT OBLIGATIONS. Best Buy acknowledges that its
obligations hereunder are independent of the obligations of Best Buy Capital
with respect to the Preferred Securities and that Best Buy shall be liable as
principal and sole debtor under this Guarantee to make Guarantee Payments
pursuant to the terms of this Guarantee notwithstanding the occurrence of any
event referred to in subsections (a) through (f), inclusive, of Section 2.3
hereof.
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<PAGE>
2.7 TERMINATION. This Guarantee shall terminate and be of no further
force and effect upon full payment of the Redemption Price of all Preferred
Securities then outstanding, upon full payment of the amounts payable to the
Holders upon liquidation of Best Buy Capital or upon the conversion or exchange
(in the manner provided in the Limited Partnership Agreement) of all Preferred
Securities into Best Buy Common Stock or Depositary Shares representing Best Buy
Preferred Stock, as the case may be, and the distribution of such stock or
Depositary Shares to the Holders of the Preferred Securities then outstanding;
PROVIDED, HOWEVER, that this Guarantee shall continue to be effective or shall
be reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Guarantee for any reason whatsoever. Best Buy agrees to indemnify
each Holder and hold it harmless from and against any loss it may suffer in such
circumstances.
Article III
CERTAIN COVENANTS OF BEST BUY
3.1 DIVIDENDS AND OTHER PAYMENTS. So long as any Preferred
Securities remain outstanding, neither Best Buy, nor any Subsidiary of Best Buy,
shall declare or pay any dividend or distribution on, or redeem, purchase or
otherwise acquire or make a liquidation payment with respect to, any of its
capital stock (other than as a result of a reclassification of capital stock or
the exchange or conversion of one class or series of capital stock for another
class or series of capital stock) or make any Guarantee Payments with respect to
the foregoing (other than payments under this Guarantee or dividends or
Guarantee Payments to Best Buy by a Subsidiary of Best Buy), if at such time
Best Buy has exercised its option to extend the interest payment period on the
Subordinated Debentures and such extension is continuing, Best Buy shall be in
default with respect to its payment or other obligations hereunder or there
shall have occurred any event that, with the giving of notice or the lapse of
time or both, would constitute an Event of Default under the Subordinated
Debentures. Best Buy shall take all actions necessary to ensure the compliance
of its Subsidiaries with this Section 3.1.
3.2 CERTAIN OTHER COVENANTS. Best Buy covenants that, so long as any
Preferred Securities remain outstanding it shall: (a) maintain direct 100%
ownership of the Partnership Interests and any other interests in Best Buy
Capital other than the Preferred Securities (except as permitted in the Limited
Partnership Agreement); (b) cause at least 21% of the total value of Best Buy
Capital and at least 21% of all interest in the capital, income, gain, loss,
deduction and credit of Best Buy
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<PAGE>
Capital to be held by Best Buy as General Partner; (c) not voluntarily dissolve,
wind up or liquidate itself or Best Buy Capital; (d) remain the General Partner
of Best Buy Capital and timely perform all of its duties as General Partner
(including the duty to cause Best Buy Capital to declare and pay dividends on
the Preferred Securities), unless a permitted successor General Partner is
appointed pursuant to the Limited Partnership Agreement; and (e) subject to the
terms of the Preferred Securities, use reasonable efforts to cause Best Buy
Capital to remain a Delaware limited partnership and otherwise continue to be
treated as a partnership for United States federal income tax purposes.
Article IV
SUBORDINATION
4.1 SUBORDINATION. Best Buy covenants and agrees, and each holder of
Preferred Securities by his acceptance of such Preferred Securities shall be
deemed to acknowledge and agree that for all purposes (including any bankruptcy,
insolvency, or reorganization of Best Buy) this Guarantee constitutes an
unsecured obligation of Best Buy ranking (i) subordinate and junior in right of
payment to all liabilities of Best Buy, (ii) PARI PASSU with the most senior
preferred shares now or hereafter issued by Best Buy and with any guarantee now
or hereafter entered into by Best Buy in respect of any preferred or preference
stock of any affiliate of Best Buy and (iii) senior to Best Buy Common Stock and
any other class or series of capital stock issued by Best Buy or any of its
affiliates which by its express terms ranks junior in the payment of dividends
and amounts on liquidation, dissolution and winding-up to the Preferred
Securities.
Article V
CONVERSION AND EXCHANGE OF PREFERRED SECURITIES
5.1 ISSUANCE OF BEST BUY COMMON STOCK. Best Buy hereby agrees that,
upon the request of the Conversion Agent, on behalf of one or more Holders of
Preferred Securities, to convert Subordinated Debentures into Best Buy Common
Stock in accordance with the terms of the Limited Partnership Agreement, Best
Buy shall deliver to the Conversion Agent certificates representing the full
number of shares of Best Buy Common Stock issuable upon conversion of such
Subordinated Debentures in accordance with the terms of the Indenture and such
Subordinated Debentures. Best Buy has reserved and will keep available for
issuance, solely for the purpose of effecting the conversion of the Subordinated
Debentures, the full number of shares of Best Buy Common Stock
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<PAGE>
deliverable upon the conversion of all outstanding Preferred Securities not
theretofore converted.
5.2 VALIDITY OF BEST BUY COMMON STOCK. All shares of Best Buy Common
Stock delivered by Best Buy upon such conversion will be duly and validly issued
and fully paid and nonassessable.
5.3 ISSUANCE OF BEST BUY PREFERRED STOCK AND DEPOSITARY SHARES. Best
Buy hereby agrees that, upon the making of an Exchange Election by the Holders
of a majority in outstanding liquidation preference of the Preferred Securities
in accordance with the terms of the Limited Partnership Agreement, it will issue
one one-hundredth (1/100th) of a share of Best Buy Preferred Stock in respect of
each $50 principal amount of Subordinated Debentures then outstanding. Best Buy
further agrees to deposit as soon as may be practicable after the Exchange
Election the full number of shares of Best Buy Preferred Stock so issuable with
the Depositary and to cause to be delivered to the Conversion Agent the
Depositary Receipts representing Depositary Shares issued in respect of the
deposited shares of Best Buy Preferred Stock. Best Buy shall reserve and keep
available for issuance, solely for the purpose of effecting such exchange, the
full number of shares of Best Buy Preferred Stock issuable upon exchange of all
outstanding Preferred Securities.
5.4 VALIDITY OF BEST BUY PREFERRED STOCK AND DEPOSITARY SHARES. All
shares of Best Buy Preferred Stock issued by Best Buy upon such exchange will be
duly and validly issued and fully paid and nonassessable. Upon due issuance by
the Depositary of Depositary Receipts evidencing the Depositary Shares against
the deposit of shares of Best Buy Preferred Stock in accordance with the
provisions of the Deposit Agreement, such Depositary Receipts will be duly and
validly issued and will entitle the holders thereof to the rights specified in
such Depositary Receipts and in the Deposit Agreement.
5.5 TERMINATION OF OBLIGATION TO ISSUE BEST BUY COMMON STOCK AND BEST
BUY PREFERRED STOCK. Best Buy's obligations under this Article V to issue Best
Buy Common Stock shall terminate upon the termination of the right of Holders of
Preferred Securities to request the Conversion Agent to effect such conversion
as set forth in the Limited Partnership Agreement and, with respect to a
particular Holder, upon such conversion. Best Buy's obligations under this
Article V to issue Best Buy Preferred Stock shall terminate upon the termination
of the right of Holders of Preferred Securities to make an Exchange Election as
set forth in the Limited Partnership Agreement and upon such exchange.
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<PAGE>
Article VI
MISCELLANEOUS
6.1 THIRD PARTY BENEFICIARIES. All of Best Buy's obligations under
this Guarantee shall be directly enforceable by the Holders from time to time of
the Preferred Securities. Each Holder of Preferred Securities is an intended
third-party beneficiary of this Guarantee.
6.2 SUCCESSORS AND ASSIGNS. All guarantees and agreements contained
in this Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of Best Buy and shall inure to the benefit of the Holders.
Except as permitted by Section 6.4 hereof, Best Buy shall not assign its rights
or delegate its obligations hereunder without the prior approval of the Holders
of not less than 66-2/3% of the aggregate liquidation preference of all
Preferred Securities then outstanding.
6.3 AMENDMENTS. This Guarantee may only be amended by an instrument
in writing signed by Best Buy with the prior approval of the Holders of not less
than 66-2/3% of the aggregate liquidation preference of all Preferred Securities
then outstanding.
6.4 MERGER, CONSOLIDATION OR SALE OF ASSETS. Best Buy, without the
consent of any Holders of Preferred Securities, may merge or consolidate with or
into another entity or may permit another entity to merge or consolidate with or
into Best Buy, and may sell, transfer or lease all or substantially all of Best
Buy's assets to another entity, if (a) at such time no Event of Default (as
defined in the Indenture) shall have occurred and be continuing, or would occur
as a result of such merger, consolidation or sale, transfer or lease and (b) the
successor is an entity organized under the laws of the United States or any
state thereof, becomes the General Partner, assumes all of Best Buy's
obligations under this Guarantee and has a net worth equal to at least 10% of
the total capital contributions to Best Buy Capital.
6.5 NOTICES. Any notice, request or other communication required or
permitted to be given hereunder to Best Buy shall be given in writing by
delivering the same against receipt therefor by registered mail, hand delivery,
facsimile transmission (confirmed by registered mail) or telex, addressed to
Best Buy, as follows (and if so given, shall be deemed given when mailed; upon
receipt of facsimile confirmation, if sent by facsimile transmission; or upon
receipt of an answer-back, if sent by telex):
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<PAGE>
Best Buy Co., Inc.
7075 Flying Cloud Drive
Eden Prairie, Minnesota 55344
Attention: Chief Financial Officer
Telecopy: (612) 947-1141
Any notice, request or other communication required or permitted to be
given hereunder to the Holders shall be given by Best Buy in the same manner as
notices are sent by Best Buy Capital to the Holders.
6.6 GENDERS. The masculine and neuter genders used herein shall
include the masculine, feminine and neuter genders.
6.7 GUARANTEE NOT SEPARATELY TRANSFERABLE. This Guarantee is solely
for the benefit of the Holders and is not separately transferable from the
Preferred Securities.
6.8 GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
6.9 SEVERABILITY. In case any provision of this Guarantee shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
6.10 HEADINGS. The Article and section headings herein are for
convenience only and shall not affect the construction hereof.
IN WITNESS WHEREOF, Best Buy has caused this Guarantee to be duly
executed as of the day and year first above written.
BEST BUY CO., INC.
By:
------------------------
Richard M. Schulze
Chairman and Chief
Executive Officer
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EXHIBIT 4.6
Draft of November 1, 1994
DEPOSIT AGREEMENT
dated as of November 3, 1994
among
BEST BUY CO., INC.,
a Minnesota corporation,
HARRIS TRUST AND SAVINGS BANK,
an Illinois corporation,
AND THE HOLDERS FROM TIME TO TIME
OF THE RECEIPTS DESCRIBED HEREIN.
WHEREAS, it is desired to provide, as hereinafter set forth in this
Deposit Agreement, for the deposit of shares of Series A Cumulative Convertible
Preferred Stock, par value $1.00 per share (liquidation preference $5,000 per
share), of BEST BUY CO., INC. with the Depositary (as defined herein) for the
purposes set forth in this Deposit Agreement and for the issuance hereunder of
Receipts (as defined herein) by the Depositary evidencing Depositary Shares (as
defined herein) in respect of the Stock (as defined herein) so deposited; and
WHEREAS, the Receipts are to be substantially in the form of EXHIBIT A
hereto, with such appropriate insertions, modifications and omissions as
provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and
such other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following definitions shall for all purposes, unless otherwise
indicated, apply to the respective terms used in this Deposit Agreement and the
Receipts (as defined herein):
"Certificate" shall mean the Certificate of Designation of Best Buy
Co., Inc. of Series A Cumulative Convertible Preferred Stock filed with the
Secretary of State of the State of Minnesota establishing the Stock as a series
of preferred stock of the Company, as it may be amended from time to time in
accordance with its terms.
<PAGE>
"Common Stock" shall mean the Company's Common Stock, par value $.10
per share.
"Company" shall mean Best Buy Co., Inc., a Minnesota corporation, and
its successors.
"Deposit Agreement" shall mean this Deposit Agreement as amended or
supplemented from time to time in accordance with the terms hereof.
"Depositary" shall mean Harris Trust and Savings Bank, an Illinois
corporation, and any successor Depositary hereunder.
"Depositary Shares" shall mean the Depositary Shares, each
representing a one-one hundredth (1/100th) interest in a share of Stock and
evidenced by a Receipt.
"Depositary's Agent" shall mean an agent appointed by the Depositary
pursuant to Section 7.05.
"Depositary's Office" shall mean the principal office of the
Depositary at which at any particular time its depositary business shall be
administered.
"Receipt" shall mean one of the depositary receipts, whether in
definitive or temporary form, issued hereunder by the Depositary, each
representing any number of whole Depositary Shares.
"Record Holder" or "Holder" with respect to a Receipt shall mean the
individual, entity or person in whose name a Receipt is registered on the books
of the Depositary or any register of any Registrar maintained for such purpose
at a given time.
"Registrar" shall mean any bank or trust company appointed by the
Depositary to register ownership and transfers of Receipts as herein provided
(and may include the Depositary).
"Stock" shall mean shares of the Company's Series A Cumulative
Convertible Preferred Stock, par value $1.00 per share (liquidation preference
$5,000.00 per share).
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ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF STOCK, EXECUTION AND DELIVERY,
TRANSFER, SURRENDER AND REDEMPTION OF RECEIPTS
SECTION 2.01. FORM AND TRANSFER OF RECEIPTS. Definitive Receipts
shall be engraved or printed or lithographed with steel-engraved borders and
shall be substantially in the form set forth in EXHIBIT A hereto, with such
appropriate insertions, modifications and omissions, as hereinafter provided.
Pending the preparation of definitive Receipts, the Depositary, upon the written
order of the Company delivered in compliance with Section 2.02, shall execute
and deliver temporary Receipts, which shall be printed, lithographed,
typewritten, mimeographed or otherwise substantially of the tenor of the
definitive Receipts in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the persons
executing such Receipts may determine, as evidenced by their execution of such
Receipts. If temporary Receipts are issued, the Company and the Depositary will
cause definitive Receipts to be prepared without unreasonable delay. After the
preparation of definitive Receipts, the temporary Receipts shall be exchangeable
for definitive Receipts upon surrender of the temporary Receipts at the
Depositary's Office. Upon surrender for cancellation of any one or more
temporary Receipts, the Depositary shall execute and deliver in exchange
therefor definitive Receipts representing the same number of Depositary Shares
as represented by the surrendered temporary Receipt or Receipts registered in
the name (and only the name) of the Holder of the temporary Receipt. Such
exchange shall be made at the Company's expense (and without any charge therefor
to the Holder). Until so exchanged, the temporary Receipts shall in all
respects be entitled to the same benefits under this Deposit Agreement, and with
respect to the Stock, as definitive Receipts.
Receipts shall be executed by the Depositary by the manual signature
of one of its duly authorized officers; PROVIDED, that such signature may be a
facsimile if a Registrar for the Receipts (other than the Depositary) shall have
been appointed and such Receipts are countersigned by manual signature of a duly
authorized officer of the Registrar. No Receipt shall be entitled to any
benefits under this Deposit Agreement or be valid or obligatory for any purpose
unless it shall have been executed manually by a duly authorized officer of the
Depositary or, if a Registrar for the Receipts (other than the Depositary) shall
have been appointed, by facsimile signature of a duly authorized
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officer of the Depositary and countersigned manually by a duly authorized
officer of such Registrar. The Depositary shall record on its books each
Receipt so signed and delivered as hereinafter provided. The manual or
facsimile signatures of individuals who were at any time proper officers of the
Depositary or the Registrar, as the case may be, shall constitute adequate
signatures hereunder, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the delivery of Receipts bearing such
signatures or did not hold such offices on the date of delivery of such
Receipts.
Receipts shall be in denominations of any number of whole Depositary
Shares.
Receipts may be endorsed with or have incorporated in the text thereof
such legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary and approved by the
Company or required to comply with any applicable law or regulation or with the
rules and regulations of any securities exchange upon which the Stock, the
Depositary Shares or the Receipts may be listed or to conform with any usage
with respect thereto, or to indicate any special limitations or restrictions to
which any particular Receipts are subject.
Title to any Receipt (and to the Depositary Shares evidenced by such
Receipt) that is properly endorsed, or accompanied by a properly executed
instrument of transfer, shall be transferable by delivery of such Receipt with
the same effect as if such receipt were a negotiable instrument; PROVIDED,
HOWEVER, that until transfer of a Receipt shall be registered on the books of
the Registrar, on behalf of the Depositary, as provided in Section 2.04, the
Depositary may, notwithstanding any notice to the contrary, treat the Record
Holder as the absolute owner thereof for the purpose of determining the person
entitled to distributions of dividends or other distributions with respect to
the Stock or to any notice provided for in this Deposit Agreement and for all
other purposes.
The Depositary shall not lend any Stock deposited hereunder.
SECTION 2.02. DEPOSIT OF STOCK; EXECUTION AND DELIVERY OF RECEIPTS IN
RESPECT THEREOF. Subject to the terms and conditions of this Deposit Agreement,
the Company may from time to time deposit shares of Stock with the Depositary
under this Deposit Agreement by delivery to the Depositary a certificate or
certificates representing the
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Stock to be deposited; PROVIDED, HOWEVER, that other than in the case of
splits, combinations or other reclassifications affecting the Stock, or in the
case of dividends or other distributions of Stock, if any, there shall be
deposited with the Depositary hereunder not more than 46,000 shares of Stock.
Such certificate or certificates representing the Stock shall be properly
endorsed or accompanied, if required by the Depositary, by a duly executed
instrument of transfer or endorsement, in form satisfactory to the Depositary,
together with all such certifications as may be required by the Depositary in
accordance with the provisions of this Deposit Agreement, and together with a
written order of the Company directing the Depositary to execute and deliver to
the person or persons named in such order a Receipt or Receipts evidencing in
the aggregate the number of Depositary Shares representing such deposited
Stock.
All Stock deposited by the Company with the Depositary shall be held
by the Depositary at the Depositary's Office or at such other place or places as
the Depositary shall determine.
If required by the Depositary, Stock presented for deposit at any time
(except for the initial deposit of Stock and any subsequent deposit by the
Company), whether or not the register of shareholders of the Company is closed,
shall also be accompanied by an agreement or assignment, or other instrument
satisfactory to the Depositary, that will provide for the prompt transfer to the
Depositary or its nominee of any dividend or right to subscribe for additional
Stock or to receive other property that any person in whose name the Stock is or
has been registered may thereafter receive upon or in respect of such deposited
Stock, or in lieu thereof such agreement of indemnity or other agreement as
shall be satisfactory to the Depositary.
Upon receipt by the Depositary of a certificate or certificates
representing Stock deposited with the Depositary by the Company in accordance
with the provisions of this Section 2.02, together with the other documents
required as above specified, and upon recordation of the Stock so deposited on
the books of the Company in the name of the Depositary, the Depositary shall
execute and deliver, to the person or persons named in the written order
delivered to the Depositary referred to in the first paragraph of this
Section 2.02, a Receipt or Receipts evidencing in the aggregate the number of
Depositary Shares relating to the Stock so deposited. Such Receipt or Receipts
shall be registered by the Depositary or the Registrar in such name or names as
may be requested by the person or persons named in the written order of the
Company
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delivered to the Depositary. The Depositary shall execute and deliver
such Receipts at the Depositary's Office or such other offices, if any, as such
person may designate. Delivery at other offices shall be at the risk and
expense of the person requesting such delivery. In each case, delivery will be
made only upon payment by the Company to the Depositary of all taxes and other
governmental charges and any fees payable in connection with such deposit and
the transfer of the deposited Stock.
The Company shall deliver to the Depositary from time to time such
quantities of blank Receipts as the Depositary may request to enable it to
perform its obligations under this Deposit Agreement.
SECTION 2.03. REDEMPTION OF STOCK. Whenever the Company shall elect
to redeem shares of Stock in accordance with the Certificate, it shall (unless
otherwise agreed in writing with the Depositary) give the Depositary in its
capacity as Depositary not less than ten days' prior notice of the proposed date
of the mailing of a notice of redemption of Stock to Holders of Receipts to be
effected in connection with a redemption of Stock and of the number of such
shares of Stock held by the Depositary to be redeemed as hereinafter provided.
On the date of any such redemption of Stock, the Depositary shall redeem (using
the proceeds received by the Depositary from the redemption of the Stock) the
number of Depositary Shares representing such redeemed Stock. The Depositary
shall, as directed by the Company, mail, first class postage prepaid, a notice
of the redemption of Stock and the proposed simultaneous redemption of the
Depositary Shares representing the Stock to be redeemed, not less than 30 and
not more than 60 days prior to the date fixed for redemption (the "Redemption
Date") of such Stock and Depositary Shares. Such notice shall be mailed to the
Record Holders on the record date fixed for such redemption pursuant to
Section 4.04 hereof of the Receipts evidencing the Depositary Shares to be so
redeemed, at the addresses of such Holders as the same appear on the records of
the Depositary; but neither failure to mail any such notice to one or more such
Holders nor any defect in any notice shall affect the sufficiency of the
proceedings for redemption. The Company shall provide the Depositary with such
notice, and each such notice shall state: the record date for such redemption;
the Redemption Date; that all outstanding Depositary Shares are to be redeemed
or converted; the place or places where Receipts evidencing Depositary Shares to
be redeemed are to be surrendered for redemption; and that dividends in respect
of the Stock represented by the Depositary Shares to be redeemed will cease to
accrue on such Redemption Date unless the Company
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shall default in delivering the money or other property payable by the Company
at the time and place specified in such notice.
Notice having been mailed by the Depositary as aforesaid, from and
after the Redemption Date (unless the Company shall have failed to redeem the
shares of Stock to be redeemed by it as set forth in the Company's notice
provided for in the preceding paragraph), all dividends in respect of the shares
of Stock so called for redemption shall cease to accrue (except as otherwise
provided in the Certificate), the Depositary Shares being redeemed shall be
deemed no longer to be outstanding, all rights of the Holders of Receipts
evidencing such Depositary Shares (except the right to receive the amounts
payable upon redemption) shall, to the extent of such Depositary Shares, cease
and terminate. Upon surrender in accordance with such notice of the Receipts
evidencing any such Depositary Shares (properly endorsed or assigned for
transfer, if the Depositary shall so require), the Holders of such Receipts
shall receive for each such Depositary Share an amount of cash or other property
equal to one-one hundredth (1/100th) of the redemption price per share payable
with respect to the Stock redeemed. The foregoing shall be subject further to
the terms and conditions of the Certificate.
The Depositary shall not be required (a) to issue, transfer or
exchange any Receipts for a period beginning at the close of business on the day
the Company first publicly announces the redemption of Stock and ending at the
close of business on the day the Depositary mails the notices of redemption of
Depositary Shares or (b) to transfer or exchange for another Receipt any Receipt
evidencing Depositary Shares called or being called for redemption.
SECTION 2.04. REGISTRATION OF TRANSFER OF RECEIPTS. Subject to the
terms and conditions of this Deposit Agreement, the Registrar, on behalf of the
Depositary, shall register on its books transfers of Receipts from time to time
upon notice to the Registrar by the Depositary of the surrender of a Receipt for
transfer by the Holder in person or by duly authorized attorney, which Receipt
in each case must be properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement together with evidence of the payment of
any transfer taxes as may be required by law. Upon surrender of a properly
endorsed Receipt or a Receipt accompanied by an instrument of transfer or
endorsement, the Depositary shall execute a new Receipt or Receipts evidencing
the same aggregate number of Depositary Shares as those evidenced by the Receipt
or Receipts surrendered and deliver such new
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Receipt or Receipts to or upon the order of the transferee named in the
endorsement or instrument of transfer.
SECTION 2.05. SPLIT-UPS AND COMBINATIONS OF RECEIPTS, SURRENDER OF
RECEIPTS AND WITHDRAWAL OF STOCK. Upon surrender of a Receipt or Receipts at
the Depositary's Office or at such other office as it may designate for the
purpose of effecting a split-up or combination of such Receipt or Receipts, the
Depositary will execute and deliver a new Receipt or Receipts to the Holder
thereof or to such Holder's order in the denominations requested, evidencing the
aggregate number of Depositary Shares evidenced by the Receipt or Receipts
surrendered.
Any Holder of at least 100 Depositary Shares which have not been
previously called for redemption may withdraw the number of whole shares of
Stock underlying such Depositary Shares and all money and other property, if
any, represented thereby by surrendering such Receipt or Receipts at the
Depositary's Office or at such other offices as the Depositary may designate for
such withdrawals. Thereafter, without unreasonable delay, the Depositary shall
deliver to such Holder, or to the person or persons designated by such Holder as
hereinafter provided, the number of whole shares of Stock and all money and
other property, if any, represented by the Receipt or Receipts so surrendered
for withdrawal, but Holders of such whole shares of Stock will not thereafter be
entitled to deposit such Stock hereunder or to receive Depositary Shares
therefor. If the Receipt or Receipts delivered by the Holder to the Depositary
in connection with such withdrawal shall evidence in the aggregate a number of
Depositary Shares in excess of the number of Depositary Shares representing the
number of whole shares of Stock to be so withdrawn, the Depositary shall at the
same time, in addition to such number of whole shares of Stock and such money
and other property, if any, to be so withdrawn, deliver to such Holder, or
(subject to Sections 2.04 and 3.02) upon his order, a new Receipt evidencing
such excess number of Depositary Shares. Delivery of the Stock and the money
and other property being withdrawn may be made by the delivery of such
certificates, documents of title and other instruments as the Depositary may
deem appropriate.
If the Stock and the money and other property being withdrawn are to
be delivered to a person or persons other than the Record Holder of the Receipt
or Receipts being surrendered for withdrawal of Stock, such Holder shall execute
and deliver to the Depositary a written order so directing the Depositary and
the Depositary may require that the Receipt or Receipts surrendered by such
Holder for withdrawal of such shares of Stock be properly endorsed in
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blank or accompanied by a properly executed instrument of transfer in blank.
Delivery of the Stock and the money and other property, if any,
represented by Receipts surrendered for withdrawal shall be made by the
Depositary at the Depositary's Office, except that, at the request, risk and
expense of the Holder surrendering such Receipt or Receipts and for the account
of the Holder thereof, such delivery may be made at such other place as may be
designated by such Holder.
SECTION 2.06. LIMITATIONS ON EXECUTION AND DELIVERY, TRANSFER,
SURRENDER AND EXCHANGE OF RECEIPTS. As a condition precedent to the execution
and delivery, registration of transfer, split-up, combination, surrender or
exchange of any Receipt, the Depositary, any of the Depositary's Agents or the
Company may require payment to it of a sum sufficient for the payment (or, in
the event that the Depositary or the Company shall have made such payment, the
reimbursement to it) of any taxes, charges or expenses payable by the Holder of
a Receipt pursuant to Sections 3.02 and 5.07, may require the production of
evidence satisfactory to it as to the identity and genuineness of any signature
and may also require compliance with the rules and regulations of any
governmental body, any stock exchange or any applicable self-regulatory body,
including, without limitation, the National Association of Securities Dealers,
Inc. (the "NASD") or such procedures, if any, as the Depositary or the Company
may establish consistent with the provisions of this Deposit Agreement.
The delivery of Receipts against Stock deposited with the Depositary
may be suspended, the registration of transfer of Receipts may be refused and
the registration of transfer, surrender, exchange, split-up or combination of
outstanding Receipts may be suspended and the deposit of Stock may be refused
(i) during any period when the register of shareholders of the Company is closed
or (ii) if any such action is deemed necessary by the Depositary, any of the
Depositary's Agents or the Company at any time or from time to time because of
any requirement of law or of any government, governmental body or commission,
stock exchange or the NASD.
SECTION 2.07. LOST RECEIPTS, ETC. If any mutilated Receipt is
surrendered to the Depositary, the Depositary shall execute and deliver in
exchange therefor a new Receipt of like form and tenor in exchange and
substitution for such mutilated Receipt. In case any Receipt shall be
destroyed, lost or stolen, the Depositary
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shall execute and deliver a Receipt to the Holder thereof of like form and
tenor in exchange and substitution for such destroyed or lost or stolen
Receipt, upon (i) the filing by the Holder thereof with the Depositary of
evidence satisfactory to the Depositary of such destruction or loss or theft
of such Receipt, of the authenticity thereof and of such Holder's ownership
thereof and (ii) the Holder's furnishing the Depositary with reasonable
indemnification satisfactory to such Depositary and (iii) payment of any
expenses including fees, charges and expenses of the Depositary in connection
with such execution and delivery. Every new Receipt issued pursuant to this
Section 2.07 in lieu of any mutilated, destroyed, lost or stolen Receipt shall
constitute an original additional contractual obligation under this Deposit
Agreement, whether or not the mutilated, destroyed, lost or stolen Receipt
shall be at any time enforceable by anyone.
SECTION 2.08. CANCELLATION AND DESTRUCTION OF SURRENDERED RECEIPTS.
All Receipts surrendered to the Depositary or any Depositary's Agent shall be
canceled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy all Receipts so cancelled.
SECTION 2.09. CONVERSION OF STOCK INTO COMMON STOCK. At any time
when the Stock is convertible into Common Stock, Receipts may be surrendered
with written instructions to the Depositary to instruct the Company to cause the
conversion of any specified number of whole or fractional shares of Stock
represented by the Depositary Shares evidenced thereby into whole shares of
Common Stock at the conversion price then in effect for the Stock (and,
therefore, for the Depositary Shares) specified in the Certificate, as such
conversion price may be adjusted by the Company from time to time as provided in
the Certificate. Subject to the terms and conditions of this Deposit Agreement
and the Certificate, a Holder of a Receipt or Receipts evidencing Depositary
Shares representing whole or fractional shares of Stock may surrender such
Receipt or Receipts at the Depositary's Office or to such office or to such
Depositary's Agents as the Depositary may designate for such purpose, together
with a notice of conversion duly completed and executed, thereby directing the
Depositary to instruct the Company to cause the conversion of the number of
shares or fractions thereof of underlying Stock specified in such notice of
conversion into shares of Common Stock, and an assignment of such Receipt or
Receipts to the Company or in blank, duly completed and executed. If more than
one Receipt shall be delivered for conversion at one time by the same Holder,
the number of whole shares of Common Stock
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issuable upon conversion thereof shall be computed on the basis of the
aggregate number of Receipts so delivered.
Upon receipt by the Depositary of a Receipt or Receipts, together with
notice of conversion, duly completed and executed, directing the Depositary to
instruct the Company to cause the conversion of a specified number of shares or
fractions thereof of Stock and an assignment of such Receipt or Receipts to the
Company or in blank, duly completed and executed, if the Stock is at such time
convertible into Common Stock, the Depositary shall instruct the Company to
cause (i) the conversion of the Depositary Shares evidenced by the Receipts so
surrendered for conversion as specified in the written notice to the Depositary
and (ii) the delivery to the Holders of such Receipts of a certificate or
certificates evidencing the number of whole shares of Common Stock and the
amount of money, if any, to be delivered to the Holders of Receipts surrendered
for conversion in lieu of fractional shares of Common Stock otherwise issuable.
The Company shall as promptly as practicable after receipt thereof cause the
delivery of (i) a certificate or certificates evidencing the number of whole
shares of Common Stock into which the Stock represented by the Depositary Shares
evidenced by such Receipt or Receipts has been converted, and (ii) any money or
other property to which the Holder is entitled. Upon such conversion the
Depositary shall (i) deliver to the Holder a Receipt evidencing the number of
Depositary Shares, if any, which such Holder has elected not to convert and
evidencing the number of Depositary Shares, if any, in excess of the number of
Depositary Shares representing Stock which has been so converted, (ii) cancel
the Depositary Shares evidenced by Receipts surrendered for conversion and (iii)
deliver to the Company or its transfer agent for the Stock for cancellation, the
shares of Stock represented by the Depositary Shares evidenced by the Receipts
so surrendered and so converted.
The Record Holder of Depositary Shares on any dividend payment record
date established by the Depositary pursuant to Section 4.04 shall be entitled to
receive the dividend payable with respect to such Depositary Shares on the
corresponding dividend payment date notwithstanding the subsequent conversion of
the shares of Stock to which such Depositary Shares relate.
Upon the conversion of any shares of Stock for which a request for
conversion has been made by the Holder of Depositary Shares representing such
shares, all dividends in respect of such Depositary Shares shall cease to
accrue, such Depositary Shares shall be deemed no longer
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outstanding, all rights of the Holders of the Receipts with respect to such
Depositary Shares (except the right to receive the Common Stock, any cash
payable with respect to any fractional shares of Common Stock as provided
herein and any cash payable on account of accrued dividends and any Receipts
evidencing Depositary Shares not so converted) shall terminate, and the
Receipts evidencing such Depositary Shares shall be cancelled in accordance
with Section 2.08 hereof.
No fractional shares of Common Stock shall be issuable upon conversion
of Stock underlying the Depositary Shares. If any Holder of Receipts
surrendered with instructions to the Depositary for conversion of the underlying
Stock would be entitled to a fractional share of Common Stock upon such
conversion, the Company shall cause to be delivered to such Holder an amount in
cash for such fractional share as provided in the Certificate.
ARTICLE III
CERTAIN OBLIGATIONS OF THE HOLDERS
OF RECEIPTS AND THE COMPANY
SECTION 3.01. FILING PROOFS, CERTIFICATES AND OTHER INFORMATION.
Except for the initial deposit of Stock by the Company and any subsequent
deposit by the Company, any person presenting Stock for deposit or any Holder of
a Receipt may be required from time to time to file such proof of residence, or
other matters or other information, to obtain such guaranties of signature, to
execute such certificates and to make such customary representations and
warranties consistent with the terms of the Stock as the Depositary or the
Company may reasonably deem necessary or proper. The Depositary or the Company
may withhold the delivery, or delay the registration of transfer, conversion,
redemption or exchange, of any Receipt or the distribution of any dividend or
other distribution or the sale of any rights or of the proceeds thereof until
such proof or other information is filed or such certificates are executed or
such representations and warranties are made.
SECTION 3.02. PAYMENT OF TAXES OR OTHER GOVERNMENTAL CHARGES.
Holders of Receipts shall be obligated to make payments to the Depositary of
certain charges and expenses as provided in Section 5.07. Registration of
transfer of any Receipt and delivery of all money or other property, if any,
represented by the Depositary Shares evidenced by such Receipt may be refused
until any such payment due is made, and any dividends,
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interest payments or other distributions may be withheld or all or any part of
the Stock or other property represented by the Depositary Shares evidenced by
such Receipt and not theretofore sold may be sold for the account of the Holder
thereof (after attempting by reasonable means to notify such Holder prior to
such sale), and such dividends, interest payments or other distributions or the
proceeds of any such sale may be applied to any payment of such charges or
expenses, the Holder of such Receipt remaining liable for any deficiency.
SECTION 3.03. WARRANTY AS TO STOCK. The Company hereby represents
and warrants to the Depositary that the Stock, when issued, will be validly
issued, fully paid and nonassessable. Such representation and warranty shall
survive the deposit of the Stock and the issuance of Receipts.
SECTION 3.04. COVENANTS AND WARRANTIES AS TO COMMON STOCK. The
Company covenants that it will keep reserved or otherwise available a sufficient
number of authorized and unissued shares of Common Stock to meet conversion
requirements in respect of the Stock and that it will give written notice to the
Depositary of any adjustments in the conversion price as set forth in the
Certificate. The Company represents and warrants that the Common Stock issued
upon conversion, when issued, will be validly issued, fully paid and
nonassessable. Such representation and warranty shall survive the conversion of
the Stock into such Common Stock.
ARTICLE IV
THE DEPOSITED SECURITIES; NOTICES
SECTION 4.01. CASH DISTRIBUTIONS. Whenever the Depositary shall
receive any cash dividend or other cash distribution with respect to the Stock,
the Depositary shall, subject to Section 3.02, distribute to Record Holders of
Receipts on the record date fixed pursuant to Section 4.04 such amounts of such
dividend or distribution as are applicable to the number of Depositary Shares
evidenced by the Receipts held by such Holders; PROVIDED, HOWEVER, that if the
Company or the Depositary shall be required to withhold and shall withhold any
monies from any cash dividend or other cash distribution in respect of the Stock
on account of taxes or as otherwise required by law, regulation or court order,
the distribution in respect of Depositary Shares shall be reduced accordingly.
The Depositary shall distribute or make available for
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distribution, as the case may be, only such amount, however, as can be
distributed without attributing to any Holder of Depositary Shares a fraction
of one cent, and any balance not so distributable shall be held by the
Depositary (without liability for interest thereon) and shall be added to and
be treated as part of the next succeeding distribution to Record Holders of
Receipts then outstanding.
SECTION 4.02. DISTRIBUTIONS OTHER THAN CASH. Whenever the Depositary
shall receive any property (including securities) for distribution in a form
other than cash with respect to the Stock, the Depositary shall, subject to
Section 3.02, distribute to Record Holders of Receipts on the record date fixed
pursuant to Section 4.04 such amounts, as nearly as practicable, of such
property (including securities) received by it as are applicable to the number
of Depositary Shares evidenced by the Receipts held by such Holders, in any
manner that the Depositary may deem equitable and practicable for accomplishing
such distribution. If, in the opinion of the Depositary, such distribution
cannot be made proportionately among such Record Holders, or if for any other
reason (including any requirement that the Company or that Depositary withhold
an amount on account of taxes or as otherwise required by law, regulation or
court order) the Depositary deems, after consultation with the Company, such
distribution not to be feasible, the Depositary may, with the approval of the
Company, adopt such method as it deems equitable and practicable for the purpose
of effecting such distribution, including the sale of the property thus
received, or any part thereof, in a commercially reasonable manner. The net
proceeds of any such sale shall, subject to Section 3.02, be distributed or made
available for distribution, as the case may be, by the Depositary to Record
Holders of Receipts in accordance with the provisions of Section 4.01 for a
distribution received in cash.
SECTION 4.03. SUBSCRIPTION RIGHTS, PREFERENCES OR PRIVILEGES. If the
Company shall at any time offer or cause to be offered to the persons in whose
names Stock is recorded on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary to
the Record Holders of Receipts in such manner as the Depositary may determine,
either by the issue to such Record Holders of warrants representing such rights,
preferences or privileges or by such other method as may be approved by the
Depositary in its discretion with the approval of the Company; PROVIDED,
HOWEVER, that (i) if at the time of issue or offer
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of any such rights, preferences or privileges the Depositary determines that it
is not lawful or (after consultation with the Company) not feasible to make
such rights, preferences or privileges available to Holders of Receipts by the
issue of warrants or otherwise, or (ii) if and to the extent so instructed by
Holders of Receipts who do not desire to exercise such rights, preferences or
privileges, then the Depositary, in its discretion (with the approval of the
Company, in any case where the Depositary has determined that it is not
feasible to make such rights, preferences or privileges available), may, if
applicable laws or the terms of such rights, preferences or privileges permit
such transfer, sell such rights, preferences or privileges at public or private
sale, at such place or places and upon such terms as it may deem proper. The
net proceeds of any such sales shall be distributed by the Depositary to the
Record Holders of Receipts entitled thereto as provided by Section 4.01 in the
case of a distribution received in cash.
If any action under the laws of any jurisdiction or any governmental
or administrative authorization, consent or permit is required in order for such
rights, preferences or privileges to be made available to Holders of Receipts,
the Company agrees with the Depositary that the Company will use its best
efforts to take such action or obtain such authorization, consent or permit
sufficiently in advance of the expiration of such rights, preferences or
privileges to enable such Holders to exercise such rights, preferences or
privileges.
SECTION 4.04. NOTICE OF DIVIDENDS, ETC.; FIXING OF RECORD DATE FOR
HOLDERS OF RECEIPTS. Whenever any cash dividend or other cash distribution
shall become payable or any distribution of property (including securities)
other than cash shall be made, or if rights, preferences or privileges shall at
any time be offered with respect to Stock, or whenever the Depositary shall
receive notice of (i) any meeting at which holders of Stock are entitled to vote
or of which holders of Stock are entitled to notice or (ii) any election on the
part of the Company to redeem any shares of stock, the Depositary, in each such
instance, shall fix a record date (which shall be the same date as the record
date fixed by the Company with respect to the Stock) for the determination of
the Holders of Receipts who shall be entitled hereunder to receive a
distribution in respect of such dividend, distribution, rights, preferences or
privileges or the net proceeds of the sale thereof, or to give instructions for
the exercise of voting rights at any such meeting, or to receive notice of such
meeting.
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SECTION 4.05. VOTING RIGHTS. Upon receipt of notice of any meeting
at which the holders of Stock are entitled to vote, the Depositary shall, as
soon as practicable thereafter, mail to the Record Holders of Receipts a notice
which shall be provided by the Company and which shall contain (i) such
information as is contained in such notice of meeting and (ii) a statement that
the Record Holders at the close of business on the specified record date fixed
pursuant to Section 4.04 will be entitled to instruct the Depositary as to the
exercise of the voting rights pertaining to the amount of Stock (or portion
thereof) underlying their respective Depositary Shares and (iii) a brief
statement to the manner in which such instructions may be given. Upon the
written request of the Holders of Receipts on the applicable record date, the
Depositary shall endeavor, insofar as practicable, to vote or cause to be voted,
in accordance with the instructions set forth in such requests, the votes
relating to the shares of Stock (or portion thereof) underlying the Depositary
Shares evidenced by all Receipts as to which any particular voting instructions
are received. The Company hereby agrees to take all necessary action in order
to enable the Depositary to vote such Stock (or portion thereof) or cause such
Stock (or portion thereof) to be voted. Absent specific instructions from the
Holder of a Receipt, the Depositary will abstain from voting (but, at its
discretion, not from appearing at any meeting with respect to such Stock unless
directed to the contrary by the Holders of all the Receipts then outstanding) to
the extent of the Stock (or portion thereof) underlying the Depositary Shares
evidenced by such Receipt.
SECTION 4.06. CHANGES AFFECTING DEPOSITED SECURITIES AND
RECLASSIFICATIONS, RECAPITALIZATIONS, ETC. Upon any change in par or stated
value, split-up, combination or any other reclassification of the Stock, or upon
any recapitalization, reorganization, merger, amalgamation or consolidation to
which the Company is a party or sale of all or substantially all of the
Company's assets (each of the foregoing being referred to herein as a
"Transaction"), the Depositary may with the approval of, and shall upon the
instructions of, the Company, and (in either case) in such manner as to retain
as nearly as possible the percentage ownership interest in Stock of Holders of
Receipts immediately prior to such event, (i) make such adjustments in (a) the
fraction of an interest in one share of Stock underlying one Depositary Share,
(b) the ratio of the redemption price per Depositary Share to the redemption
price of a share of Stock and (c) the ratio of the conversion price per
Depositary Share to the conversion price of a share of Stock, in each case as
may be necessary
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<PAGE>
to reflect fully the effects of such Transaction, and (ii) treat any securities
received by the Depositary in exchange for, or upon conversion or in respect
of, the Stock as new deposited securities so received in exchange for, or upon
conversion or in respect of, the Stock. In any such case the Depositary may,
with the approval of the Company, execute and deliver additional Receipts, or
may call for surrender of all outstanding Receipts to be exchanged for new
Receipts specifically describing such new deposited securities.
Anything to the contrary herein or in the Receipt notwithstanding,
Holders of Receipts shall have the right from and after the effective date of
any such Transaction, to the extent that Holders of Stock had the right, prior
to or on the applicable effective date, to convert, exchange or surrender shares
of Stock into or for other stock, securities, property or cash, to surrender
such Receipts to the Depositary with instructions to convert, exchange or
surrender the Stock represented thereby only into or for, as the case may be,
the kind and amount of shares of stock and other securities and property and
cash into which such Stock represented by such Receipts has been converted or
for which such Stock might have been exchanged or surrendered immediately prior
to the effective date of such Transaction.
SECTION 4.07. INSPECTION OF REPORTS. The Depositary shall make
available for inspection by Holders of Receipts during normal business hours at
the Depositary's office, and at such other places as it may from time to time
deem advisable, any reports and communications received from the Company that
are both received by the Depositary as the holder of Stock and made generally
available to the holders of Stock.
SECTION 4.08. LIST OF RECEIPT HOLDERS. Promptly upon request by, and
at the expense of, the Company, the Depositary shall furnish to it a list, as of
a specified date, of the names and addresses of all persons in whose names
Receipts are registered on the books of the Depositary, and the amount of Stock
represented thereby.
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ARTICLE V
THE DEPOSITARY, THE DEPOSITARY'S AGENTS,
THE REGISTRAR AND THE COMPANY
SECTION 5.01. MAINTENANCE OF OFFICES, AGENCIES AND TRANSFER BOOKS BY
THE DEPOSITARY; REGISTRAR. Upon execution of this Deposit Agreement, the
Depositary shall maintain, at the Depositary's Office, facilities for the
execution and delivery, registration and registration of transfer, surrender and
exchange of Receipts, and at the offices of the Depositary's Agents, if any,
facilities for the delivery, registration of transfer, surrender and exchange of
Receipts, all in accordance with the provisions of this Deposit Agreement.
The Depositary shall, with the approval of the Company, appoint a
Registrar for registration of such Receipts or Depositary Shares in accordance
with any requirements of any applicable stock exchange in which the Receipts or
the Depositary Shares are listed. Such Registrar (which may be the Depositary
if so permitted by the requirements of such exchange) may be removed and a
substitute Registrar appointed by the Depositary upon the request or with the
approval of the Company. If the Receipts, the Depositary Shares or the Stock
are listed on one or more other stock exchanges, the Depositary will, at the
request of the Company, arrange such facilities for the delivery, registration,
registration of transfer, surrender and exchange of such Receipts, such
Depositary Shares or such Stock as may be required by law or applicable stock
exchange regulation.
The Registrar shall maintain books at the Depositary's Office for the
registration and registration of transfer of Receipts or at such other place as
shall be approved by the Company and of which the Holders of Receipts shall have
reasonable notice, which books at all reasonable times during normal business
hour shall be open for inspection by the Record Holders of Receipts; PROVIDED,
that any such Holder requesting to exercise such rights shall certify in writing
to the Registrar that such inspection shall be for a proper purpose reasonably
related to such person's interest as an owner of Depositary Shares evidenced by
the Receipts.
The Depositary may cause the Registrar to close the books with respect
to the Receipts, at any time or from time to time, when the register of
shareholders of the Company is closed with respect to the Stock or when such
action is deemed necessary or advisable by the Depositary,
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<PAGE>
any Depositary's Agent or the Company because of any requirement of law or of
any government, governmental body or commission, stock exchange or any
applicable self-regulatory body, including, without limitation, the NASD.
SECTION 5.02. PREVENTION OF OR DELAY IN PERFORMANCE BY THE
DEPOSITARY, THE DEPOSITARY'S AGENTS, THE REGISTRAR OR THE COMPANY. Neither the
Depositary nor any Depositary's Agent nor any Registrar nor the Company, nor any
officers, directors, employees or agents thereof, shall incur any liability to
any Holder of any Receipt if by reason of any provision of any present or future
law, or regulation thereunder, of the United States of America or of any other
governmental authority or by reason of any provision, present or future, of the
Company's Amended and Restated Articles of Incorporation (including the
Certificate) or by reason of any act of God, war or civil disorder, failure of
power, fire or other casualty damage or governmental requirements or
restrictions, the Depositary, the Depositary's Agent, the Registrar or the
Company shall be prevented, delayed or forbidden from doing or performing any
act or thing that the terms of this Deposit Agreement provide shall be done or
performed; nor shall the Depositary, any Depositary's Agent, any Registrar or
the Company, nor any officers, directors, employees or agents thereof, incur any
liability or be subject to any obligation (i) by reason of any nonperformance or
delay, caused as aforesaid, in the performance of any act or thing that the
terms of this Deposit Agreement provide shall or may be done or performed, or
(ii) by reason of any exercise of, or failure to exercise, any discretion
provided for in this Deposit Agreement, except in the event of the negligence or
misconduct of the party charged with such exercise or failure to exercise.
SECTION 5.03. OBLIGATIONS OF THE DEPOSITARY, THE DEPOSITARY'S AGENTS,
THE REGISTRAR AND THE COMPANY. Neither the Depositary nor any Depositary's
Agent nor any Registrar nor the Company shall be under any obligation to appear
in, prosecute or defend any action, suit or other proceeding in respect of the
Stock, the Depositary Shares or the Receipts that in its opinion may involve it
in expense or liability unless indemnity satisfactory to such party against all
such expense and liability be furnished as required.
Neither the Depositary nor any Depositary's Agent nor the Company, nor
any officer, director, employee or agent thereof, assumes any obligation or
shall be subject to any liability under this Deposit Agreement to Holders of
Receipts other than to use its best judgment and good faith
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<PAGE>
in the performance of such duties as are specifically set forth in this Deposit
Agreement. Neither the Depositary nor any Depositary's Agent nor any Registrar
nor the Company, nor any officer, director, employee or agent thereof, shall be
liable to any party hereto for any action or any failure to act by it with
respect to this Deposit Agreement in reliance upon the written advice of legal
counsel or accountants, or information from any person presenting stock for
deposit, any Holder of a Receipt or other persons believed to be authorized or
competent and on documents believed to be genuine. The Depositary, any
Depositary's Agent, any Registrar and the Company, and any officer, director,
employee or agent thereof, may each rely and shall each be protected in acting
upon any written notice, request, direction or other document believed by it
to be genuine and to have been signed or presented by the proper party or
parties.
The Depositary undertakes, and shall cause any Registrar to undertake,
to perform such duties as are specifically set forth in this Deposit Agreement
using its best efforts and in good faith. The parties hereto acknowledge that
no implied covenants or obligations shall be read into this Deposit Agreement
against the Depositary or any Registrar or against the Company with respect to
the Depositary and any Registrar. The Depositary hereby indemnifies the Company
against any liability that may arise out of acts performed or omitted by the
Depositary or any Depositary's Agent due to its or their negligence or bad
faith.
The Depositary and its affiliates or subsidiaries, any Depositary's
Agent and the Company (to the extent permitted by law) may own, buy, sell or
deal in any class of securities of the Company and its affiliates and in
Receipts or Depositary Shares. The Depositary and its affiliates or
subsidiaries, and any Depositary's Agent may become pecuniarily interested in
any transaction in which the Company or its affiliates or subsidiaries may be
interested or contract with or lend money to the Company or its affiliates or
subsidiaries or otherwise act as fully or as freely as if it were not the
Depositary or the Depositary's Agent hereunder. The Depositary may also act as
transfer agent or registrar of any of the securities of the Company and its
affiliates or subsidiaries or act in any other capacity for the Company or its
affiliates or subsidiaries. Neither the Depositary (or its officers, directors,
employees or agents) nor any Depositary's Agent makes any representation or has
any responsibility as to the validity of the Registration Statement pursuant to
which the Depositary Shares are registered under the Securities Act of
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<PAGE>
1933, as amended, the Stock, the Depositary Shares, the Receipts (except its
signature thereon) or any instruments referred to therein or herein, or as to
the correctness of any statement made therein except the number of Depositary
Shares represented by such Receipts.
The Depositary assumes no responsibility for the correctness of the
description that appears in the Receipts, which can be taken as a statement of
the Company summarizing certain provisions of this Deposit Agreement.
Notwithstanding any other provision herein or in the Receipts, the Depositary
makes no warranties or representations as to the validity, genuineness or
sufficiency of any Stock at any time deposited with the Depositary hereunder or
of the Depositary Shares or as to the value of the Depositary Shares. The
Depositary shall not be accountable for the use or application by the Company of
the Depositary Shares or the Receipts or the proceeds thereof.
SECTION 5.04. RESIGNATION AND REMOVAL OF THE DEPOSITARY; APPOINTMENT
OF SUCCESSOR DEPOSITARY. The Depositary may at any time resign as Depositary
hereunder by written notice of its election so to resign delivered to the
Company, such resignation to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by notice of
such removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor Depositary and its acceptance of such appointment as
hereinafter provided.
If the Depositary acting hereunder shall at any time resign or be
removed, the Company shall, within sixty (60) days after the delivery of the
notice of resignation or removal, as the case may be, appoint a successor
Depositary, which shall be a bank or trust company having its principal office
in the United States of America and having a combined capital and surplus of at
least $50,000,000. Every successor Depositary shall execute and deliver to its
predecessor and to the Company an instrument in writing accepting its
appointment hereunder and agreeing to become a party to this Deposit Agreement,
and thereupon such successor Depositary, without any further act or deed, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor and for all purposes shall be the Depositary under this Deposit
Agreement, and such predecessor, upon payment of all sums due it and on the
written request of the Company, shall execute and deliver an instrument
transferring to such
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successor all rights and powers of such predecessor hereunder, shall duly
assign, transfer and deliver all right, title and interest in the Stock and
any monies or property held hereunder to such successor and shall deliver to
such successor a list of the Record Holders of all outstanding Receipts. Any
successor Depositary shall promptly mail notice of its appointment to the
Record Holders of Receipts.
Any corporation or other entity into or with which the Depositary may
be merged, consolidated or converted, or to which the Depositary may sell all or
substantially all its assets, shall be the successor of such Depositary without
the execution or filing of any document or any further act. Such successor
Depositary may authenticate the Receipts in the name of the predecessor
Depositary or in the name of the successor Depositary.
SECTION 5.05. CORPORATE NOTICES AND REPORTS. The Company agrees that
it will deliver to the Depositary and the Depositary will, promptly after
receipt thereof, transmit to the Record Holders of Receipts, in each case at the
address furnished to it pursuant to Section 4.08, all notices and reports
(including, without limitation, financial statements) required by law, the rules
of any national securities exchange upon which the Stock, the Depositary Shares
or the Receipts are listed or by the Company's Amended and Restated Articles of
Incorporation (including the Certificate) or By-laws to be furnished by the
Company to Holders of Stock. Such transmission will be at the Company's expense
and the Company will provide the Depositary with such number of copies of such
documents as the Depositary may reasonably request. In addition, the Depositary
will transmit to Record Holders of Receipts at the Company's expense such other
documents as may be requested by the Company.
SECTION 5.06. INDEMNIFICATION BY THE COMPANY. The Company shall
indemnify the Depositary, any Depositary's Agent and any Registrar against, and
hold each of them harmless from, any loss, liability or expense (including the
reasonable costs and expenses of defending itself) that may arise out of (i)
acts performed or omitted in connection with this Deposit Agreement and the
Receipts (a) by the Depositary, any Registrar or any of their respective agents
(including any Depositary's Agent) except for any liability arising out of gross
negligence or willful misconduct on the respective parts of any such person or
persons, or (b) by the Company or any of its agents, or (ii) the offer, sale or
registration of the Depositary Shares, Receipts or the Stock
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pursuant to the provisions hereof. This indemnification does not extend in
favor of Holders of Receipts.
SECTION 5.07. CHARGES AND EXPENSES. The Company shall pay all
transfer and other taxes and governmental charges arising solely from the
existence of the depositary arrangements. The Company shall pay all charges of
the Depositary in connection with the initial deposit of the Stock and the
initial issuance of the Depositary Shares, any redemption of the Stock and the
issuance of shares of Common Stock upon the surrender of Receipts for
conversion. All other transfer and other taxes and governmental charges shall
be at the expense of Holders of Depositary Shares. If, at the request of a
Holder of Receipts, the Depositary incurs charges or expenses for which it is
not otherwise liable hereunder, such Holder will be liable for such charges and
expenses. All other charges and expenses of the Depositary and any Depositary's
Agent hereunder and of any Registrar (including, in each case, reasonable fees
and expenses of counsel) incident to the performance of their respective
obligations hereunder will be payable by the Company only after prior
consultation and agreement between the Depositary and the Company and consent by
the Company to the incurrence of such expenses, which consent shall not be
unreasonably withheld. The Depositary shall present any statement for charges
and expenses to the Company promptly, unless the Company shall agree otherwise.
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.01. AMENDMENT. The form of the Receipts and any provisions
of this Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect which they may
deem necessary or desirable; PROVIDED, HOWEVER, that no such amendment that
shall materially and adversely alter the rights of the Holders of Receipts shall
be effective unless such amendment shall have been approved by the Holders of at
least 66-2/3% of the Depositary Shares then outstanding. Every Holder of an
outstanding Receipt at the time any amendment becomes effective shall be deemed,
by continuing to hold such Receipt, to consent and agree to such amendment and
to be bound by the Deposit Agreement as amended thereby. In no event shall any
amendment impair the right, subject to the provisions of Sections 2.05, 2.06 and
2.09 hereof, of any owner of any Depositary Shares to surrender any Receipt
evidencing such Depositary Shares to the Depositary with instructions to cause
the conversion of
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such Receipt into Common Stock or to deliver to the Holder the Stock, all
money and other property, if any, represented thereby, except in order to
comply with mandatory provisions of applicable law or the rules and regulations
of any governmental body, agency or commission, the NASD or any applicable
stock exchange.
SECTION 6.02. TERMINATION. This Agreement may be terminated by the
Company or the Depositary only after (i) all outstanding Depositary Shares shall
have been redeemed pursuant to Section 2.03, (ii) there shall have been made a
final distribution in respect of the Stock in connection with any liquidation,
dissolution or winding up of the Company and such distribution shall have been
distributed to the Holders of Depositary Shares pursuant to Section 4.01 or
4.02, as applicable, or (iii) each share of Stock shall been converted into
shares of Common Stock.
Upon the termination of this Deposit Agreement, the parties hereto
shall be discharged from all obligations under this Deposit Agreement except for
their respective obligations under Sections 5.03, 5.06 and 5.07.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. COUNTERPARTS. This Deposit Agreement may be executed
in any number of counterparts, and by each of the parties hereto in separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed an original, but all of which counterparts when taken together shall
constitute one and the same instrument.
SECTION 7.02. EXCLUSIVE BENEFIT OF PARTIES. This Deposit Agreement
is for the exclusive benefit of the parties hereto, and their respective
successors hereunder, and shall not be deemed to give any legal or equitable
right, remedy or claim to any other person whatsoever.
SECTION 7.03. INVALIDITY OF PROVISIONS. If any one or more of the
provisions contained in this Deposit Agreement or in the Receipts should be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
in no way be affected, prejudiced or modified thereby.
SECTION 7.04. NOTICES. All notices hereunder shall be deemed given
by a party hereto if in writing and
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<PAGE>
delivered personally or by telegram or facsimile transmission or by registered
or certified mail (return receipt requested) to the other party at the
following address for such party (or at such other address as shall be
specified by like notice):
If to the Company to:
7075 Flying Cloud Drive
Eden Prairie, Minnesota 55344
Telecopy: (612) 947-2706
Attention: Chief Financial Officer
If to the Depositary to:
311 West Monroe, 12th Floor
Chicago, Illinois 60606
Telecopy:
Attention:
Any notices given to any Holder of a Receipt hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if (i)
personally delivered, (ii) sent by first-class mail, or (iii) sent by telegram,
telex, telecopier or facsimile transmission and confirmed by first-class
letter. Such notice shall be addressed to such Holder at the address of such
Holder as it appears on the books of the Depositary or, if such Holder shall
have timely filed with the Depositary a written request that notices intended
for such Holder be mailed to some other address, at the address designated in
such request.
Delivery of a notice sent by first class mail, or by telegram or telex
or telecopier or facsimile shall be deemed to be effected at the time when a
duly addressed letter containing the same (or a duly addressed letter confirming
an earlier notice in the case of a telegram or telex or telecopier or facsimile)
is deposited, postage prepaid, in a post office letter box. The Depositary or
the Company may, however, act upon any telegram or telex or telecopier message
received by it from the other or from any Holder of a Receipt, notwithstanding
that such telegram or telex or telecopier message shall not subsequently be
confirmed by letter as aforesaid.
SECTION 7.05. DEPOSITARY'S AGENTS. The Depositary may from time to
time appoint any Depositary's Agent to act in any respect for the Depositary for
the purposes of this Deposit Agreement and may at any time appoint additional
Depositary's Agents and vary or terminate
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the appointment of such Depositary's Agents. The Depositary will promptly
notify the Company of any such action.
SECTION 7.06. HOLDERS OF RECEIPTS ARE PARTIES. By acceptance of
delivery of the Receipts, any Holder of such Receipt from time to time shall be
deemed to have agreed to become a party to this Deposit Agreement and to be
bound by all of the terms and conditions hereof and of the Receipts to the same
extent as though such person executed this Agreement.
SECTION 7.07. GOVERNING LAW. THIS DEPOSIT AGREEMENT AND THE RECEIPTS
AND ALL RIGHTS HEREUNDER AND THEREUNDER AND PROVISIONS HEREOF AND THEREOF SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (WITHOUT REFERENCE TO APPLICABLE CONFLICTS OF LAW PROVISIONS).
SECTION 7.08. INSPECTION OF DEPOSIT AGREEMENT. Copies of the Deposit
Agreement shall be filed with the Depositary and the Depositary's Agents and
shall be open to inspection during business hours at the Depositary's Office and
the respective offices of the Depositary's Agents, if any, by any Holder of a
Receipt.
SECTION 7.09. HEADINGS. The headings of articles and sections in
this Deposit Agreement and in the form of the Receipt set forth in EXHIBIT A
hereto have been inserted for convenience only and are not to be regarded as a
part of this Deposit Agreement or the Receipts or to have any bearing upon the
meaning or interpretation of any provision contained herein or in the Receipts.
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IN WITNESS WHEREOF, the Company and the Depositary have caused their
duly authorized officers to execute and deliver this Deposit Agreement as of the
day and year first above set forth, and all Holders of Receipts shall become
parties hereto by and upon acceptance by them of delivery of Receipts issued in
accordance with the terms hereof.
BEST BUY CO., INC.
By:
------------------------------
Richard M. Schulze
Chairman and Chief Executive
Officer
HARRIS TRUST AND SAVINGS BANK
By:
--------------------------------
Authorized Officer
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<PAGE>
EXHIBIT A
DEPOSITARY RECEIPT
FOR
DEPOSITARY SHARES
EACH REPRESENTING AN INTEREST IN ONE-ONE HUNDREDTH
(1/100th) OF
A SHARE OF SERIES A CUMULATIVE CONVERTIBLE PREFERRED
STOCK
(Par Value $1.00 Per Share)
OF
BEST BUY CO., INC.
(Incorporated under the Laws of the State of Minnesota)
--------------------------------
Harris Trust and Savings Bank, a corporation duly organized and
existing under the laws of the State of Illinois, with an office at the time of
the execution of the Deposit Agreement (as defined below) at 311 W. Monroe,
Chicago, Illinois 60606, as Depositary (the "Depositary"), hereby certifies
that _______________________________ is the registered owner of _____________
Depositary Shares ("Depositary Shares"), each Depositary Share representing an
interest in one-one hundredth (1/100th) of a share of Series A Cumulative
Convertible Preferred Stock, par value $1.00 per share (the "Stock") of Best Buy
Co., Inc., a corporation duly organized and existing under the laws of the State
of Minnesota (the "Company"). Subject to the terms of the Deposit Agreement,
each owner of a Depositary Share is entitled, proportionately, through the
Depositary to all the rights and preferences of the Stock relating thereto,
including dividend, voting, conversion, redemption and liquidation rights and
preferences contained in the Certificate of Designation of Best Buy Co., Inc. of
Series A Cumulative Convertible Preferred Stock adopted by the Company's Board
of Directors setting forth the number, terms, powers, designations, rights,
preferences, qualifications, restrictions and limitations of the Stock (the
"Certificate"), copies of which are on file at the Depositary's Office.
1. THE DEPOSIT AGREEMENT. Depositary Receipts (the "Receipts"), of
which this Receipt is one, are made available upon the terms and conditions set
forth in the Deposit Agreement, dated as of November 3, 1994 (the "Deposit
Agreement"), among the Company, the Depositary and all Holders from time to time
of Receipts. The Deposit Agreement (copies of which are on file at the
Depositary's
<PAGE>
Office) sets forth the rights of Holders of Receipts and the rights
and duties of the Depositary and the Company in respect of the Stock deposited,
and any and all other property and cash deposited from time to time, thereunder.
The statements made on the face and the reverse of this Receipt are summaries of
certain provisions of the Deposit Agreement and are subject to the detailed
provisions thereof, to which reference is hereby made. Unless otherwise
expressly herein provided, all capitalized and undefined terms used herein shall
have the meaning ascribed thereto in the Deposit Agreement.
2. REDEMPTION. Whenever the Company shall elect to redeem shares of
Stock, it shall (unless otherwise agreed in writing with the Depositary) give
the Depositary not less than 10 days' prior notice of the proposed date of the
mailing of a notice of redemption of Stock to Holders of Receipts to be effected
in connection with a redemption of Stock and of the number of such shares of
Stock held by the Depositary to be redeemed as provided herein. On the date of
any such redemption of Stock, the Depositary shall redeem (using the proceeds
received by the Depositary from the redemption of the Stock) the number of
Depositary Shares representing such redeemed Stock. The Depositary shall, as
directed by the Company, mail, first-class postage prepaid, notice of the
redemption of Stock and the proposed simultaneous redemption of the Depositary
Shares representing the Stock to be redeemed, not less than 30 and not more than
60 days prior to the date fixed for redemption (the "Redemption Date") of such
Stock and Depositary Shares. Such notice shall be mailed to the Holders of
record of the Receipts evidencing Depositary Shares to be redeemed on the record
date fixed for such redemption as provided in paragraph 11 below. Notice having
been mailed as aforesaid, from and after the Redemption Date (unless the Company
shall have failed to redeem the shares of Stock to be redeemed by it, as set
forth in the Company's notice provided for above), the Depositary Shares called
for redemption shall be deemed no longer to be outstanding and all rights of
the Holders of Receipts evidencing such Depositary Shares (except the right to
receive the redemption price) shall, to the extent of such Depositary Shares,
cease and terminate. Upon surrender in accordance with said notice of the
Receipts evidencing such Depositary Shares (properly endorsed or assigned for
transfer, if the Depositary shall so require), the Holders of such Receipts
shall receive for each such Depositary Share an amount of cash or other property
equal to one-one hundredth (1/100th) of the redemption price per share payable
with respect to the Stock redeemed. The foregoing shall be subject further to
the terms and conditions of the Certificate.
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<PAGE>
3. TRANSFER, SPLIT-UPS, COMBINATIONS. This Receipt is transferable
on the books of the Depositary upon surrender of this Receipt to the Depositary,
properly endorsed or accompanied by a properly executed instrument of transfer
or endorsement, and upon such transfer the Depositary shall execute a new
Receipt to or upon the order of the person entitled thereto, as provided in the
Deposit Agreement. This Receipt may be split into other Receipts or combined
with other Receipts into one Receipt, representing the same aggregate number of
Depositary Shares as the Receipt or Receipts surrendered. Any Holder of at
least one hundred (100) Depositary Shares which have not been previously called
for redemption may withdraw the number of whole shares of Stock underlying such
Depositary Shares and all money and other property, if any, represented thereby
by surrendering such Receipt or Receipts at the Depositary's Office or at such
other offices as the Depositary may designate for such withdrawals. Thereafter,
holders of such whole shares will not be entitled to deposit such Stock and
receive Depository Shares therefor.
4. CONVERSION RIGHTS. At any time when the Stock is convertible into
Common Stock, this Receipt may be surrendered with written instructions to the
Depositary to instruct the Company to cause the conversion of any specified
number of whole or fractional shares of Stock represented by the Depositary
Shares evidenced thereby into whole shares of Common Stock at the conversion
price then in effect for the Stock (and, therefore, for the Depositary Shares)
specified in the Certificate, as such conversion price may be adjusted by the
Company from time to time as provided in the Certificate. Subject to the terms
and conditions of the Deposit Agreement and the Certificate, a Holder of a
Receipt or Receipts evidencing Depositary Shares representing whole or
fractional shares of Stock may surrender such Receipt or Receipts at the
Depositary's Office or to such office or to such Depositary's Agents as the
Depositary may designate for such purpose, together with a notice of conversion
duly completed and executed, thereby directing the Depositary to instruct the
Company to cause the conversion of the number of shares or fractions thereof of
underlying Stock specified in such notice of conversion into shares of Common
Stock, and an assignment of such Receipt or Receipts to the Company or in blank,
duly completed and executed.
Upon receipt by the Depositary of a Receipt or Receipts, together with
notice of conversion, duly completed and executed, directing the Depositary to
instruct the Company to cause the conversion of a specified number of shares or
fractions thereof of Stock into Common Stock and
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<PAGE>
an assignment of such Receipt or Receipts to the Company or in blank, duly
completed and executed, if the Stock is at such time convertible into Common
Stock, the Depositary shall instruct the Company (i) to cause the conversion of
the Depositary Shares evidenced by the Receipts so surrendered for conversion
as specified in the written notice to the Depositary and (ii) to cause the
delivery to the Holders of such Receipts a certificate or certificates
evidencing the number of whole shares of Common Stock, and the amount of money,
if any, to be delivered to the Holders of Receipts surrendered for conversion
in lieu of fractional shares of Common Stock otherwise issuable. The Company
shall as promptly as practicable after receipt thereof cause the delivery of
(i) a certificate or certificates evidencing the number of whole shares of
Common Stock into which the Stock represented by the Depositary Shares
evidenced by such Receipt or Receipts has been converted, and (ii) any money
or other property to which the Holder is entitled. Upon such conversion, the
Depositary shall (i) deliver to the Holder a Receipt evidencing the number of
Depositary Shares, if any, which such Holder has elected not to convert and
evidencing the number of Depositary Shares, if any, in excess of the number of
Depositary Shares representing Stock which has been so converted, (ii) cancel
the Depositary Shares evidenced by Receipts surrendered for conversion and
(iii) deliver to the Company or its transfer agent for the Stock for
cancellation the shares of Stock represented by the Depositary Shares evidenced
by the Receipts so surrendered and so converted.
The Holder of Depositary Shares on any dividend payment record date
established by the Depositary shall be entitled to receive the dividend payable
with respect to such Depositary Shares on the corresponding dividend payment
date notwithstanding the subsequent conversion of the shares of Stock to which
such Depositary Shares relate.
Upon the conversion of any shares of Stock for which a request for
conversion has been made by the Holder of Depositary Shares representing such
shares, all dividends in respect of such Depositary Shares shall cease to
accrue, such Depositary Shares shall be deemed no longer outstanding, all rights
of the Holder of the Receipt with respect to such Depositary Shares (except the
right to receive the Common Stock, any cash payable with respect to any
fractional shares of Common Stock as provided herein and any cash payable on
account of accrued dividends and any Receipts evidencing Depositary Shares not
so converted) shall terminate, and the Receipt evidencing such Depositary Shares
shall be cancelled.
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<PAGE>
5. SUSPENSION OF DELIVERY, TRANSFER, ETC. The transfer, split-up,
combination or surrender of this Receipt may be suspended and except as
otherwise provided in the Deposit Agreement, the deposit of Stock may be refused
during any period when the register of shareholders of the Company is closed, or
if any such action is deemed necessary or advisable by the Depositary, any agent
of the Depositary or the Company at any time or from time to time because of any
requirement of law or of any government or governmental body or commission, or
under any provision of the Deposit Agreement.
6. WARRANTY BY COMPANY. The Company warrants that the Stock when
issued and any shares of Common Stock issuable upon conversion of the Stock
(which the Company shall keep available for issuance), will be validly issued,
fully paid and nonassessable.
7. AMENDMENT. The form of the Receipts and any provisions of the
Deposit Agreement may at any time and from time to time be amended by agreement
between the Company and the Depositary in any respect which they may deem
necessary or desirable; PROVIDED, HOWEVER, that no such amendment that shall
materially and adversely alter the rights of the Holders of Receipts shall be
effective unless such amendment shall have been approved by the Holders of at
least 66 2/3% of the Depositary Shares then outstanding. A Holder of a Receipt
at the time any amendment so becomes effective shall be deemed, by continuing to
hold such Receipt, to consent and agree to such amendment and to be bound by the
Deposit Agreement as amended thereby.
8. CHARGES OF DEPOSITARY. The Company will pay all transfer and
other taxes and governmental charges arising solely from the existence of the
depositary arrangements, and all charges of the Depositary in connection with
the initial deposit of the Stock, the initial issuance of the Depositary Shares,
the redemption of the Stock at the option of the Company, and the issuance of
shares of Common Stock upon the surrender of Receipts for conversion. All other
transfer and other taxes and other governmental charges shall be at the expense
of Holders of Depositary Shares.
9. TITLE TO RECEIPTS. This Receipt (and the Depositary Shares
evidenced hereby), when properly endorsed or accompanied by a properly executed
instrument of transfer, is transferable by delivery with the same effect as in
the case of a negotiable instrument; PROVIDED, HOWEVER, that until transfer of a
Receipt shall be registered on the books of the Registrar, on behalf of the
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<PAGE>
Depositary, the Depositary may, notwithstanding any notice to the contrary,
treat the record Holder hereof at such time as the absolute owner hereof for the
purpose of determining the person entitled to distributions of dividends or
other distributions or to any notice provided for in the Deposit Agreement, and
for all other purposes.
10. DIVIDENDS AND DISTRIBUTIONS. Whenever the Depositary receives
any cash dividend or other cash distribution on the Stock, the Depositary will,
subject to the provisions of the Deposit Agreement, make such distribution to
the Receipt Holders in proportion to the number of Depositary Shares held by
them; PROVIDED, HOWEVER, that the amount distributed will be reduced by any
amounts required to be withheld by the Company or the Depositary on account of
taxes or as otherwise required pursuant to law, regulations or court order.
Other distributions received on the Stock may by distributed to Holders of
Receipts as provided in the Deposit Agreement.
11. FIXING OF RECORD DATE. Whenever any cash dividend or other cash
distribution shall become payable or any distribution other than cash shall be
made, or if rights, preferences or privileges shall at any time be offered with
respect to Stock, or whenever the Depositary shall receive notice of any meeting
at which holders of Stock are entitled to vote or of which holders of Stock are
entitled to notice, the Depositary shall in each instance fix a record date
(which shall be the record date fixed by the Company with respect to the Stock),
for the determination of the Holders of Receipts who shall be entitled to
receive such dividend, distribution, rights, preferences, privileges or the net
proceeds of the sale thereof, or to give instructions for the exercise of voting
rights at any such meeting, or who shall be entitled to notice of such meeting.
12. VOTING RIGHTS. Upon receipt of notice of any meeting at which
Holders of Stock are entitled to vote, the Depositary shall, as soon as
practicable thereafter, mail to the Record Holders of Receipts a notice which
shall be provided by the Company which shall contain (i) such information as is
contained in such notice of meeting, (ii) a statement informing Holders of
record at the close of business on a specified record date that they may
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of Stock (or portion thereof) relating to their respective Depositary
Shares and (iii) a brief statement as to the manner in which such instructions
may be given. Upon the written request of a Holder of a Receipt on such record
date, the Depositary shall endeavor
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<PAGE>
insofar as practicable to vote or to cause to be voted the amount of Stock (or
portion thereof) relating to such Receipt in accordance with the instructions
set forth in such request. Absent specific instructions from the Holder of a
Receipt, the Depositary will abstain from voting (but, at its discretion, not
from appearing at any meeting with respect to such Stock unless directed to
the contrary by the Holders of all the Receipts then outstanding) to the
extent of the Stock (or portion thereof) underlying the Depositary Shares
evidenced by such Receipt.
13. CHANGES AFFECTING DEPOSITED SECURITIES. Upon any change in par
or stated value, split-up, combination or any, other reclassification of the
Stock or upon any recapitalization, reorganization, merger, amalgamation or
consolidation to which the Company is a party, or upon the sale of all or
substantially all of the Company's assets, the Depositary may with the approval
of, and shall upon the instructions of, the Company, and (in either case) in
such manner as to retain as nearly as possible the percentage ownership interest
in Stock of Holders of Receipts immediately prior to such event, (i) make such
adjustments in (a) the fraction of an interest in one share of Stock underlying
one Depositary Share, (b) the ratio of the redemption price per Depositary Share
to the redemption price of a share of Stock, and (c) the ratio of the conversion
price per Depositary Share to the conversion price of a share of Stock, in each
case as may be necessary fully to reflect the effects of such change, and (ii)
treat any securities received by the Depositary in exchange for, or upon
conversion or in respect of, the Stock as new deposited securities so received
in exchange for, or upon conversion or in respect of, such Stock. In any such
case the Depositary may in its discretion, with the approval of the Company,
execute and deliver additional Receipts, or may call for the surrender of
outstanding Receipts to be exchanged for new Receipts specifically describing
such new deposited securities.
Anything to the contrary herein or in the Depositary Agreement
notwithstanding, Holders of Receipts shall have the right from and after the
effective date of any such transaction, to the extent that holders of Stock had
the right, prior to or on the applicable effective date, to convert, exchange or
surrender shares of Stock into or for other stock, securities, property or cash,
to surrender such Receipts to the Depositary with instructions to convert,
exchange or surrender the Stock represented thereby only into or for, as the
case may be, the kind and amount of shares of stock and other securities and
property and cash into which the Stock represented by such Receipts has been
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<PAGE>
converted or for which such Stock might have been exchanged or surrendered
immediately prior to the effective date of such transaction.
14. LIABILITY AND OBLIGATIONS OF THE DEPOSITARY, THE DEPOSITARY'S
AGENTS OR THE COMPANY. Neither the Depositary nor any Depositary's Agent nor
any Registrar nor the Company, nor any officer, director, employee or agent
thereof, shall incur any liability to any Holder of any Receipt if by reason of
any provision of any present or future law, or regulation thereunder, of the
United States of America or of any other governmental authority or by reason of
any provision, present of future, of the Company's Articles of Incorporation
(including the Certificate) or by reason of any act of God, war or civil
disorder, failure of power, fire or other casualty damage or governmental
requirements or restrictions, the Depositary, the Depositary's Agent, the
Registrar or the Company shall be prevented or forbidden from doing or
performing any act or thing that the terms of the Deposit Agreement provide
shall be done or performed; nor shall the Depositary, any Depositary's Agent,
any Registrar or the Company, nor any officer, director, employee or agent
thereof, incur any liability or be subject to any obligation (i) by reason of
nonperformance or delay, caused as aforesaid, in performance of any act or thing
that the terms of the Deposit Agreement provide shall or may be done or
performed, or (ii) by reason of any exercise of, or failure to exercise, any
discretion provided for in the Deposit Agreement, except in the event of the
negligence or misconduct of the party charged with such exercise or failure to
exercise. Neither the Depositary nor any Depositary's Agent nor the Company,
nor any officer, director, employee or agent thereof, assumes any obligation or
shall be subject to any liability under the Deposit Agreement to Holders of
Receipts other than to use its best judgment and good faith in the performance
of such duties as are specifically set forth in the Deposit Agreement. Neither
the Depositary nor any Depositary's Agent nor any Registrar nor the Company
shall be under any obligation to appear in, prosecute or defend any action, suit
or other proceeding in respect of the Stock, the Depositary Shares or the
Receipts that in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all such expense and liability be
furnished. The Deposit Agreement contains various other exculpatory,
indemnification and related provisions, to which reference is hereby made.
15. RESIGNATION AND REMOVAL OF DEPOSITARY. The Depositary may at any
time (i) resign by written notice of its election so to resign delivered to the
Company, such
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<PAGE>
resignation to take effect upon the appointment of a successor Depositary and
its acceptance of such appointment, or (ii) be removed by the Company, such
removal to take effect upon the appointment of a successor Depositary and its
acceptance of such appointment.
16. TERMINATION OF DEPOSIT AGREEMENT. The Deposit Agreement may be
terminated by the Company or the Depositary upon or after the occurrence of any
of the following events: (i) all outstanding Depositary Shares shall have been
redeemed; (ii) there shall have been made a final distribution in respect of the
Stock in connection with any liquidation, dissolution or winding up of the
Company and such distribution shall have been distributed to the Holders of
Receipts; or (iii) each share of Stock shall have been converted into shares of
Common Stock.
17. GOVERNING LAW. THIS RECEIPT AND THE DEPOSIT AGREEMENT AND ALL
RIGHTS HEREUNDER AND THEREUNDER AND PROVISIONS HEREOF AND THEREOF SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REFERENCE TO APPLICABLE CONFLICTS OF LAW PROVISIONS).
This receipt shall not be entitled to any benefits under the Deposit
Agreement or be valid or obligatory for any purpose unless this Receipt shall
have been executed manually by a duly authorized officer of the Depositary or,
if a Registrar for the Receipts (other than the Depositary) shall have been
appointed, by facsimile signature of a duly authorized officer of the Depositary
and countersigned manually by a duly authorized officer of such Registrar.
THE DEPOSITARY IS NOT RESPONSIBLE FOR THE VALIDITY OF ANY DEPOSITED STOCK. THE
DEPOSITARY ASSUMES NO RESPONSIBILITY FOR THE CORRECTNESS OF THE FOREGOING
DESCRIPTION, WHICH CAN BE TAKEN AS A STATEMENT OF THE COMPANY SUMMARIZING
CERTAIN PROVISIONS OF THE DEPOSIT AGREEMENT THAT APPEARS IN THE DEPOSITARY
RECEIPTS. THE DEPOSITARY MAKES NO WARRANTIES OR REPRESENTATIONS AS TO THE
VALIDITY, GENUINENESS OR SUFFICIENCY OF ANY STOCK AT ANY TIME DEPOSITED WITH THE
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DEPOSITARY HEREUNDER OR OF THE DEPOSITARY SHARES (EXCEPT ITS SIGNATURE HEREON),
OR AS TO THE VALUE OF THE DEPOSITARY SHARES.
Dated:
HARRIS TRUST AND SAVINGS BANK
By:
---------------------------
Authorized Officer
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<PAGE>
NOTICE OF CONVERSION
The undersigned hereby irrevocably exercises the option to convert
this Receipt or a portion hereof below designated into shares of Common Stock of
Best Buy Co., Inc. in accordance with the terms of the Certificate referred to
in this Receipt, and directs the Depositary to instruct the Company that the
shares of Common Stock issuable and deliverable upon the conversion, together
with any check in payment of accrued and unpaid dividends or in lieu of
fractional shares, and any Receipts representing any unconverted Depositary
Shares be issued and delivered to the undersigned unless, in the case of such
shares of Common Stock or Receipts, a different name has been indicated below.
If shares of Common Stock or Receipts are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto.
Dated:
-------------- ------------------------------
Signature of Holder (must conform in all respects
to the name of the Holder appearing on the face
hereof)
Signature Guaranteed By:
------------------------------
Number of Depositary Shares
to be Converted
- - -------------------------
Fill in for registration of shares of Common Stock and/or Receipts if to be
issued otherwise than to Holder.
Social Security or Other
- - ------------------------- Taxpayer Identifying Number
(Name)
- - ------------------------- -------------------------
(Address)
- - -------------------------
Print name and address
(including zip code number)
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