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.
"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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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
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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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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.]
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Certificate Number Number of Preferred Securities
- - -------------------------------------------------------------------------------
R-1
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- - -------------------------------------------------------------------------------
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
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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
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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:
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Authorized Signature
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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
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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.
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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:
-------------------------
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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
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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:
---------------
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- - ---------------------- ----------------------
- - ---------------------- ----------------------
- - ---------------------- ----------------------
- - ---------------------- ----------------------
- - ---------------------- ----------------------
- - ---------------------- ----------------------
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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:
- - ----------------------- --------------------
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