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Prepared by MERRILL CORPORATION

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$492,400,000    
    
    BEST BUY CO., INC.    
    
    Convertible Debentures Due June 27, 2021    
    
    REGISTRATION RIGHTS AGREEMENT    
  

    June 27, 2001 

	CREDIT SUISSE FIRST BOSTON CORPORATION

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
	c/o	 	Credit Suisse First Boston Corporation

Eleven Madison Avenue

New York, New York 10010-3629

Ladies and Gentlemen: 

    Best
Buy Co., Inc., a Minnesota corporation (the "Company"), proposes to issue and sell to Credit Suisse First Boston
Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Purchasers"), upon the terms set forth in a purchase agreement dated
June 22, 2001 (the "Purchase Agreement"), $492,400,000 initial aggregate principal amount at maturity of its Convertible Debentures due
June 27, 2021 (the "Debentures"), to be guaranteed (the "Guarantees") by each of the Guarantors
(as defined below). The Debentures will be issued pursuant to an Indenture, dated as of June 27, 2001 (the "Indenture"), among the Company, each
of the subsidiary Guarantors party thereto (the "Guarantors" and, collectively with the Company, the "Best Buy
Companies") and Wells Fargo Bank Minnesota, National Association, a national banking association, as trustee (the "Trustee").
Under the terms of the Indenture, the Debentures are convertible, in whole or in part, into shares of the Company's common stock, par value $0.10 (the "Conversion
Shares", and together with the Debentures and the Guarantees, the "Securities"). As an inducement, the Best Buy Companies agree
with the Purchasers, for the benefit of the holders of the Debentures (including, without limitation, the Purchasers), the Conversion Shares and the Guarantees (collectively the
"Holders"), as follows: 

    1.  Shelf Registration.  (a) The Best Buy Companies shall promptly (but in no event more than
90 days of the First Closing Date (as defined in the Purchase Agreement) such 90th day being a "Filing Deadline") use their
reasonable efforts to file with the Securities and Exchange Commission (the "Commission") and thereafter use their reasonable efforts to cause to be
declared effective no later than 180 days after the First Closing Date (such 180th day being an "Effectiveness Deadline") a
registration statement (the "Registration Statement") on an appropriate form under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the offer and sale of the Transfer Restricted Securities (as defined herein) by the Holders thereof from time to time in
accordance with the methods of distribution set forth in the Registration Statement and Rule 415 under the Securities Act (hereinafter, the "Shelf
Registration"); provided, however, that no Holder (other than a Purchaser) shall be entitled to have the Securities held by it
covered by such Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder. "Transfer Restricted
Securities" means each Security until (i) the date on which such Security has been effectively registered under the Securities Act and disposed of in accordance with the
Registration Statement or (ii) the date on which such Security is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k)
under the Securities Act. 

	(b)
	The
Best Buy Companies shall use their reasonable efforts to keep the Registration Statement continuously effective in order to permit the prospectus included therein, as the same
may be amended or supplemented from time to time (the "Prospectus"), to be lawfully delivered by the Holders of the relevant Securities, for a period of
two years from the date of its effectiveness or such shorter period that will terminate at the earlier of the time when all the Securities covered by the Registration Statement (i) have been
sold pursuant thereto or (ii) are no longer restricted securities (as defined in Rule 144 under the Securities Act) (in any such case, such period being called the
"Shelf Registration Period"). The Best Buy 

 

Companies
shall be deemed not to have used their reasonable efforts to keep the Registration Statement effective during the Shelf Registration Period if they voluntarily take any action that they know
will or is reasonably likely to result in Holders of Securities covered thereby not being able to offer and sell such Securities during the Shelf Registration Period, unless such action is required by
applicable law. 

	(c)
	Notwithstanding
any other provisions of this Agreement to the contrary, the Best Buy Companies shall cause the Registration Statement and the Prospectus and any amendment or
supplement thereto, as of the effective date of the Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities
Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Best Buy Companies shall not be liable for any Holder
Information (as defined in Section 4(a)). 

    2.  Registration Procedures.  In connection with the Shelf Registration contemplated by Section 1
hereof the following provisions shall apply: 

	(a)
	The
Best Buy Companies shall (i) furnish to each Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof
and each supplement, if any, to the Prospectus and, in the event that a Purchaser (with respect to any portion of an unsold allotment from the original offering of the Debentures) is participating in
the Registration Statement, the Best Buy Companies shall use their reasonable efforts to reflect in each such document, when so filed with the Commission, such comments as such Purchaser reasonably
may propose and deliver to the Company at least two business days prior to the filing of such document with Commission, provided, however, that the Best Buy Companies shall not be required to include
in any document any statements that in the reasonable opinion of counsel for the Best Buy Companies are not required by applicable law; and (ii) subject to paragraph (l) of this
Section 2, include the names of the Holders who propose to sell Securities pursuant to the Registration Statement as selling securityholders and who have returned to the Company a properly
completed and signed Selling Security Notice and Questionnaire in the form of Annex A to the Best Buy Companies' Offering Circular dated June 22, 2001 relating to the Debentures (each a
"Notice Holder").

	(b)
	The
Best Buy Companies shall give notice to the Purchasers and the Notice Holders of the Securities (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by
an instruction to suspend the use of the Prospectus until the requisite changes have been made, if appropriate):

	(i)
	when
the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any
post-effective amendment thereto has become effective;

	(ii)
	of
any request by the Commission for amendments or supplements to the Registration Statement or the Prospectus or for additional information
related thereto;

	(iii)
	of
the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose;

	(iv)
	of
the receipt by the Best Buy Companies or its legal counsel of any notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and 

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	(v)
	of
(A) the occurrence or existence of any pending corporate development with respect to the Best Buy Companies or (B) the happening of
any event, including, without limitation, any event resulting in a Deferral Period (as defined below), that requires the Best Buy Companies to make changes in the Registration Statement or the
Prospectus in order that the Registration Statement or the Prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary
to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading. 

If
the Best Buy Companies shall be required to suspend the use of the Prospectus pursuant to clauses (ii)-(v) above, the Company shall give notice to the Notice Holders that the availability of
the Shelf Registration Statement is suspended (a "Deferral Notice") and, upon receipt of any Deferral Notice, each Holder agrees not to sell any
Transfer Restricted Securities pursuant to the Registration Statement until such Holder's receipt of copies of the supplemented or amended Prospectus provided for in Section 2(h), or until it
is advised in writing by the Company that the Prospectus may be used, and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in
such Prospectus. The Best Buy Companies will use their reasonable efforts to ensure that the use of the Prospectus may be resumed (x) in the case of clauses (ii), (iii) and
(iv) above, as promptly as is practicable, (y) in the case of clause (v)(A) above, as soon as, in the sole judgment of the Company, public disclosure of such development would not
be prejudicial to or contrary to the interests of the Company or, if necessary to avoid unreasonable burden or expense, as soon as reasonably practicable thereafter and (z) in the case of
clause (v)(B)) above, as soon as, in the discretion of the Best Buy Companies, such suspension is no longer appropriate. The periods during which the availability of the Registration Statement
and the Prospectus is suspended (each a "Deferral Period") shall, without the Best Buy Companies incurring any obligation to pay Additional Interest
pursuant to Sections 5(a) and (b), not exceed forty-five (45) days in the aggregate in any three (3) month period or one hundred twenty (120) days in the aggregate in
any twelve (12) month period. 

	(c)
	The
Best Buy Companies shall make every reasonable effort during the Shelf Registration Period to obtain the withdrawal at the earliest possible time of any order suspending the
effectiveness of the Registration Statement.

	(d)
	The
Best Buy Companies shall furnish to each Holder of Securities included within the coverage of the Shelf Registration, without charge, one copy of the Registration Statement and
any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated
by reference).

	(e)
	The
Best Buy Companies shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as
many copies of the Prospectus (including each preliminary Prospectus) included in the Registration Statement as such person may reasonably request. The Best Buy Companies consent, subject to the
provisions of this Agreement, to the use of the Prospectus by each of the selling Holders of the Securities in connection with the offering and sale of the Securities covered by the Prospectus.

	(f)
	Prior
to any public offering of the Securities pursuant to any Registration Statement, the Best Buy Companies shall register or qualify or cooperate with the Holders of the
Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or "blue sky" laws of such 

3

 

states
of the United States as any Holder of the Securities reasonably requests in writing and do any and all other reasonable acts or things necessary or advisable to enable the offer and sale in
such jurisdictions of the Securities covered by such Registration Statement; provided, however, that the Best Buy Companies shall not be required to
(i) qualify generally to do business in any jurisdiction where they are not then so qualified, (ii) qualify as a dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Agreement, or (iii) take any action which would subject them to general service of process or to taxation in any jurisdiction where they are not then so
subject. 

	(g)
	The
Best Buy Companies shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold
pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of
the Securities pursuant to such Registration Statement.

	(h)
	Upon
the occurrence of any event contemplated by clauses (ii) through (v) of Section 2(b) above during the Shelf Registration Period, the Best Buy Companies
shall promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related Prospectus and any other required document so that, as
thereafter delivered to Holders of the Securities or purchasers of Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, other than Holder Information (as defined below). If the Best
Buy Companies notify the Purchasers and the Holders of the Securities in accordance with paragraphs (ii) through (v) of Section 2(b) above to suspend the use of the Prospectus
until the requisite changes to the Prospectus have been made, then the Purchasers and the Holders of the Securities shall suspend use of such Prospectus, and the period of effectiveness of the
Registration Statement provided for in Section 1 above shall be extended by the number of days from and including the date of the giving of such notice to and including the date when the
Purchasers and the Holders of the Securities shall have received such amended or supplemented Prospectus pursuant to this Section 2(h).

	(i)
	Not
later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Debentures and the Conversion Shares registered under
the Registration Statement and provide the Trustee with printed certificates for the Debentures in a form eligible for deposit with The Depository Trust Company.

	(j)
	The
Best Buy Companies will comply with all rules and regulations of the Commission to the extent and so long as they are applicable to the Shelf Registration and will make
generally available to its securityholders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a)
of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Best Buy
Companies' first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period.

	(k)
	The
Best Buy Companies shall cause the Indenture to be qualified under the Trust Indenture Act of 1939 as amended (the "Trust Indenture
Act"), in a timely manner and containing such changes, if any, as shall be necessary for such qualification. In the event that such qualification would require the appointment
of a new trustee under the Indenture, the Best Buy Companies shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture. 

4

 

	(l)
	The
Best Buy Companies may require each Holder of Securities to be sold pursuant to the Registration Statement to furnish to the Best Buy Companies such information regarding the
Holder and the distribution of the Securities as the Best Buy Companies may from time to time reasonably require for inclusion in the Registration Statement, and the Best Buy Companies may exclude
from such registration the Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request.

	(m)
	The
Best Buy Companies shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other reasonable action,
if any, as any Holder of the Securities shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration.

	(n)
	The
Best Buy Companies shall (i) make reasonably available for inspection by the Holders of the Securities, any underwriter participating in any disposition pursuant to the
Registration Statement (an "Underwriter") and any attorney, accountant or other agent retained by the Holders of the Securities or any Underwriter all
relevant financial and other records, pertinent corporate documents and properties of the Best Buy Companies and (ii) cause the Best Buy Companies' officers, directors, employees, accountants
and auditors to supply all relevant information reasonably requested by the Holders of the Securities or any Underwriter, attorney, accountant or agent in connection with the Registration Statement,
in each case, as shall be reasonably necessary to enable such persons, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act;  provided, however, that the
foregoing inspection and information gathering shall be coordinated on behalf of the Purchasers and the other parties
hereto, by one counsel designated by the Purchasers.

	(o)
	The
Best Buy Companies, if requested by any Holder of Securities covered by the Registration Statement, shall cause (i) their counsel(s) to deliver an opinion and updates
thereof relating to the Securities in customary form addressed to such Holders and the Managing Underwriters (as defined herein), if any, thereof and dated, in the case of the initial opinion, the
effective date of such Registration Statement (it being agreed that the matters to be covered by such opinion shall include, without limitation, the due incorporation and good standing of the Best Buy
Companies; the qualification of the Best Buy Companies to transact business as foreign corporations, limited liability companies or partnerships, as the case may be; the due authorization, execution
and delivery of the relevant agreement of the type referred to in Section 2(m) hereof; the due authorization, execution, authentication and issuance, and the validity and enforceability, of the
applicable Securities; the absence of material legal or governmental proceedings involving the Best Buy Companies; the absence of governmental approvals required to be obtained in connection with the
Registration Statement, the offering and sale of the applicable Securities, or any agreement of the type referred to in Section 2(m) hereof; the compliance as to form of such Registration
Statement and any documents incorporated by reference therein and of the Indenture with the requirements of the Securities Act and the Trust Indenture Act, respectively; and, as of the date of the
opinion and as of the effective date of the Registration Statement or most recent post-effective amendment thereto, as the case may be, the absence, to such counsel's (s') knowledge, from
such Registration Statement and the Prospectus, as then amended or supplemented, and from any documents incorporated by reference therein, of an untrue statement of a material fact or the omission to
state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any such documents, in the light of the circumstances existing at
the time that such documents were filed with the Commission under the Exchange Act), other than Holder Information; (ii) their authorized officer or officers to execute and deliver all
customary documents and certificates and updates thereof reasonably requested by any Underwriters, and (iii) their independent public accountants and the independent public 

5

 

accountants
with respect to any other entity for which financial information is provided in the Registration Statement to provide to the selling Holders of the applicable Securities and any
Underwriter a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with primary underwritten offerings, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72. 

	(p)
	The
Best Buy Companies will use their reasonable efforts to (a) if the Securities have been rated prior to the initial sale of such Securities, confirm such ratings will
apply to the Securities covered by the Registration Statement, or (b) if the Securities were not previously rated, cause the Securities covered by the Registration Statement to be rated with
the appropriate rating agencies, if so requested by Holders of a majority in initial aggregate principal amount at maturity of Debentures covered by the Registration Statement, or by the Managing
Underwriters, if any.

	(q)
	In
the event that any broker-dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or
"assist in the distribution" (within the meaning of the Conduct Rules (the "Rules") of the National Association of Securities Dealers, Inc.
("NASD")) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or
otherwise, the Best Buy
Companies will use their reasonable efforts to assist such broker-dealer in complying with the requirements of such Rules, including, without limitation, by (i) if such Rules, including
Rule 2720, shall so require, engaging a "qualified independent underwriter" (as defined in Rule 2720) to participate in the preparation of the Registration Statement relating to such
Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made
through a placement or sales agent, to recommend the yield of such Securities, (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of Underwriters
provided in Section 4 hereof and (iii) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Rules.

	(r)
	The
Best Buy Companies shall use their reasonable efforts to take all other steps necessary to effect the registration of the Securities covered by the Registration Statement
contemplated hereby.

	(s)
	The
Company shall cause each Additional Guarantor (as defined in the Indenture) upon the creation or acquisition by the Company of such Additional Guarantor, to execute a
counterpart to this Agreement in the form attached hereto as Annex A and to deliver such counterpart, together with an opinion of counsel as to the enforceability thereof against such entity, to the
Purchasers no later than five business days following the execution thereof. 

    3.  Registration Expenses.  All expenses incident to the Best Buy Companies' performance of and
compliance with this Agreement will be borne by the Best Buy Companies, regardless of whether the Registration Statement is ever filed or becomes effective, including without limitation; 

	(i)
	all
registration and filing fees and expenses;

	(ii)
	all
fees and expenses of compliance with federal securities and state "blue sky" or securities laws;

	(iii)
	all
expenses of printing, messenger and delivery services and telephone;

	(iv)
	all
fees and disbursements of counsel for the Best Buy Companies; 

6

 

	(v)
	all
application and filing fees in connection with listing the Securities on a national securities exchange; and

	(vi)
	all
fees and disbursements of independent certified public accountants of the Best Buy Companies (including the expenses of any special audit and
comfort letters required by or incident to such performance). 

    The
Best Buy Companies will bear their internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting
duties), the expenses of any annual audit and the fees and expenses of any person, including special experts, retained by the Best Buy Companies. 

    4.  Indemnification.  (a) The Best Buy Companies agree, jointly and severally, to indemnify and
hold harmless each Holder of the Securities and each person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act (each Holder and such controlling persons are
referred to collectively as the "Indemnified Parties") from and against any losses, claims, damages or liabilities, joint or several, or any actions in
respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or Prospectus or in any amendment or supplement thereto or in any preliminary Prospectus relating to the Shelf Registration, or
arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall
reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or
action in respect thereof; provided, however, that (i) the Best Buy Companies shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or Prospectus or in any
amendment or supplement thereto or in any preliminary Prospectus relating to the Shelf Registration in reliance upon and in conformity with written information pertaining to such Holder and furnished
to the Best Buy Companies by or on behalf of such Holder specifically for inclusion therein (such information being referred to herein as "Holder
Information"), and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary Prospectus relating to the
Registration Statement, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Holder from whom the person asserting any such losses, claims, damages or
liabilities purchased the Securities concerned, to the extent that a Prospectus relating to such Securities was required to be delivered by such Holder under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder results from the fact that there was not sent or given to such person, at or prior to the written confirmation of the sale of such
Securities to such person, a copy of the final Prospectus if the Best Buy Companies had previously furnished copies thereof to such Holder; provided further, however,  that this indemnity agreement will
be in addition to any liability which the Best Buy Companies may otherwise have to such Indemnified Party. The Best Buy Companies shall also,
jointly and severally, indemnify Underwriters, their officers and directors and each person who controls such Underwriters within the meaning of the Securities Act or the Exchange Act to the same
extent as provided above with respect to the indemnification of the Holders of the Securities if requested by such Holders. 

	(b)
	Each
Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Best Buy Companies and each person, if any, who controls any of the Best Buy Companies
within the meaning of the Securities Act or the Exchange Act from and against any losses, 

7

 

claims,
damages or liabilities or any actions in respect thereof, to which the Best Buy Companies or any such controlling persons may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or Prospectus or in any amendment or supplement thereto or in any preliminary Prospectus relating to the Shelf Registration, or arise out of or are based upon the omission or
alleged omission to state therein a material fact necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue
statement or omission was made in reliance upon and in conformity with Holder information pertaining to such Holder; and, subject to the limitation set forth immediately preceding this clause, shall
reimburse, as incurred, the Best Buy Companies for any legal or other expenses reasonably incurred by the Best Buy Companies or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Best Buy Companies
or any of their controlling persons. 

	(c)
	Promptly
after receipt by an indemnified party under this Section 4 of notice of the commencement of any action or proceeding (including a governmental investigation), such
indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 4, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party, which consent shall not be unreasonably withheld or
delayed), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party
under this Section 4 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof. No
indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action, and does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

	(d)
	If
the indemnification provided for in this Section 4 is unavailable or insufficient to hold harmless an indemnified party under subsections (a) or (b) above,
then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above
(i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the sale of
the Securities, pursuant to the Shelf Registration, or (ii) if allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the 

8

 

indemnified
party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information supplied by the Best Buy Companies on the one hand or such Holder or such other indemnified party, as the case may be, on the other,
and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 4(d), the Holders of the
Securities shall not be required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Securities pursuant to the Registration
Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as such indemnified party and each person, if any, who controls the Best Buy Companies within the meaning of the Securities Act or the Exchange Act shall have the same rights to
contribution as the Best Buy Companies. 

	(e)
	The
agreements contained in this Section 4 shall survive the sale of the Securities pursuant to the Registration Statement and shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party. 

    5.  Additional Interest Under Certain Circumstances.  (a) Additional interest (the
"Additional Interest") with respect to the Debentures and the Conversion Shares, as the case may be, shall be assessed as follows if any of the
following events occur (each such event in clauses (i) through (iii) below being herein called a "Registration Default"):

	(i)
	If
the Registration Statement required by this Agreement is not filed with the Commission on or prior to the Filing Deadline;

	(ii)
	If
the Registration Statement has not been declared effective by the Commission by the Effectiveness Deadline; or

	(iii)
	If
the Registration Statement has been declared effective by the Commission but (A) such Registration Statement thereafter ceases to be
effective or (B) such Registration Statement or the Prospectus ceases to be usable in connection with resales of Transfer Restricted Securities during the Shelf Registration Period because
either (1) any event occurs as a result of which the Prospectus would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading, or (2) it shall be necessary to amend the Registration Statement or supplement the Prospectus, to comply
with the Securities Act or the Exchange Act or the respective rules thereunder. 

Each
of the foregoing will constitute a Registration Default whatever the reason for any such event and whether it is voluntary or involuntary, or is beyond the control of the Best Buy Companies or
pursuant to operation of law or as a result of any action or inaction by the Commission. 

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    Additional
Interest shall accrue on the Debentures (or on the Conversion Shares, after conversion of the Debentures) from and including the date on which any such Registration Default
shall occur to but excluding the date on which all such Registration Defaults have been cured, (A) at a rate of 0.25% per annum for the first 90-day period after the incurrence of a
Registration Default and (B) at a rate of 50% per annum thereafter (the "Additional Interest Rate"). Notwithstanding the foregoing, no Additional
Interest shall accrue or be payable as to any Debentures or Conversion Shares from and after the earlier of (x) the date such Securities are no longer Transfer Restricted Securities and
(y) the expiration of the Shelf Registration Period. 

	(b)
	A
Registration Default referred to in Section 5(a)(iii) hereof shall be deemed not to have occurred and be continuing in relation to a Registration Statement or the
Prospectus if (i) such Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to the Registration Statement to incorporate
annual audited financial information with respect to the Best Buy Companies where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to
use the Prospectus or (y) other material events, with respect to the Best Buy Companies that would need to be described in the Registration Statement or the Prospectus and (ii) in the
case of clause (y), the Best Buy Companies are proceeding promptly and in good faith to amend or supplement the Registration Statement and Prospectus to describe such events;  provided, however,
that in any case, if such Registration Default occurs for a continuous period in excess of 30 days, Additional Interest shall
be payable in accordance with the above paragraph from the day such Registration Default occurs until such Registration Default is cured.

	(c)
	Any
amounts of Additional Interest due pursuant to Section 5(a) will be payable with respect to the Debentures and the Conversion Shares issued upon conversion of the
Debentures in cash on the regular interest payment dates with respect to the Debentures. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest Rate by
the Issue Price (as defined in the Indenture) of the Debentures (or in the case of Conversion Shares, the Issue Price of the Debentures converted into such Conversion Shares) and further multiplied by
a fraction, the numerator of which is the number of days such Additional Interest Rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve
30-day months), and the denominator of which is 360. 

    6.  Rules 144 and 144A.  The Best Buy Companies shall use their reasonable efforts to file the
reports required to be filed by them under the Securities Act and the Exchange Act in a timely manner and, if at any time the Best Buy Companies are not required to file such reports, they will, upon
the request of any Holder of Securities, make publicly available such other information so long as necessary to permit sales of their Securities pursuant to Rules 144 and 144A under the
Securities Act. The Best Buy Companies covenant that they will take such further action as any Holder of Debentures may reasonably request, all to the extent required from time to time to enable such
Holder to sell Debentures without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of
Rule 144A(d)(4) under the Securities Act). The Best Buy Companies will provide a copy of this Agreement to prospective purchasers of Debentures identified to the Best Buy Companies by the
Purchasers upon request. Upon the request of any Holder of Debentures, the Best Buy Companies shall deliver to such Holder a written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 6 shall be deemed to require the Best Buy Companies to register any of their securities pursuant to the Exchange Act. 

10

  

    7.  Underwritten Registrations.  Holders of at least 25% in initial aggregate principal amount at
maturity of the Transfer Restricted Securities (in the case of Conversion Shares, the initial aggregate principal amount at maturity of the Debentures into which such Conversion Shares were converted)
may elect to have one underwritten offering of the Transfer Restricted Securities. If any of the Transfer Restricted Securities covered by the Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers that will administer the offering (the "Managing Underwriters") will be
selected by the Holders of a majority in initial aggregate principal amount at maturity of such Transfer Restricted Securities (in the case of Conversion Shares, the initial aggregate principal amount
at maturity of the Debentures into which such Conversion Shares were converted) to be included in such offering, provided such Managing Underwriters
shall have a national reputation and be reasonably acceptable to the Company. 

    No
person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Transfer Restricted Securities on the basis reasonably
provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. The Holders participating in any underwritten offering shall be
responsible for any expenses customarily borne by selling securityholders, including underwriting discounts and commissions and fees and expenses of counsel to the selling securityholders to the
extent not required to be paid by the Best Buy Companies pursuant to Section 3 hereof. 

    8.  Miscellaneous.  

    (a)  Remedies.  Each Best Buy Company acknowledges and agrees that any failure by it to comply with its
obligations under Section 1 hereof may result in material irreparable injury to the Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such failure, the Purchasers or any Holder may obtain such relief as may be required to specifically enforce such Best Buy
Company's obligations under Section 1 hereof. Each of the Best Buy Companies further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. 

    (b)  No Inconsistent Agreements.  The Best Buy Companies will not on or after the date of this Agreement
enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Best Buy Companies' securities under any agreement in effect on
the date hereof. 

    (c)  Amendments and Waivers.  The provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Best Buy Companies and the written consent of the Holders of a majority in initial
aggregate principal amount at maturity of the Securities (in the case of Conversion Shares, the initial aggregate principal amount at maturity of the Debentures into which such Conversion Shares were
converted) affected by such amendment, modification, supplement, waiver or consents. 

    (d)  Notices.  All notices and other communications provided for or permitted hereunder shall be made in
writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery: 

	(1)
	if
to a Holder of the Securities, at the most current address given by such Holder to the Best Buy Companies. 

12

 

	(2)
	if
to the Purchasers: 

c/o
Credit Suisse First Boston Corporation

Eleven Madison Avenue

New York, NY 10010-3629

Fax No.: (212) 325-8278

Attention: Transactions Advisory Group 

With
a copy to: 

Milbank,
Tweed, Hadley & McCloy LLP

One Chase Manhattan Plaza

New York, NY 10005-1413

Fax No.: (212) 822-5546

Attention: Arnold B. Peinado, III 

	(3)
	if
to the Best Buy Companies, to the following address: 

c/o
Best Buy Co., Inc.

7075 Flying Cloud Drive

Eden Prairie, Minnesota 55344

Fax No.: (952) 996-4180

Attention: General Counsel 

With
a copy to: 

Robins,
Kaplan, Miller & Ciresi, LLP

2800 LaSalle Plaza

800 LaSalle Avenue

Minneapolis, MN 55402

Fax No.: (612) 339-4181

Attention: Anne M. Rosenberg 

    All
such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the
mail, postage prepaid, if mailed; when receipt is acknowledged by recipient's facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery. 

    (e)  Third Party Beneficiaries.  The Holders shall be third party beneficiaries to the agreements made
hereunder between the Best Buy Companies, on the one hand, and the Purchasers, on the other hand, and shall have the right to enforce such agreements directly as provided herein to the extent they may
deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder. 

    (f)  Successors and Assigns.  This Agreement shall be binding upon the Best Buy Companies and its
successors and assigns. 

    (g)  Counterparts.  This Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 

    (h)  Headings.  The headings in this Agreement are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof. 

13

 

    (i)  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. 

    (j)  Severability.  If any one or more of the provisions contained herein, or the application thereof in
any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein
shall not be affected or impaired thereby. 

    (k)  Securities Held by the Best Buy Companies.  Whenever the consent or approval of Holders of a
specified percentage of initial aggregate principal amount at maturity of Securities (in the case of Conversion Shares, the initial aggregate principal amount at maturity of the Debentures into which
the Conversion Shares were converted) is required hereunder, Securities held by the Best Buy Companies or their affiliates (other than subsequent Holders of Securities if such subsequent Holders are
deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required
percentage. 

    (l)  Submission to Jurisdiction; Waiver of Immunities.  By the execution and delivery of this Agreement,
each of the Best Buy Companies (i) submits to the nonexclusive jurisdiction of any federal or state court in the State of New York in any suit or proceeding arising out of or relating to this
Agreement, and (ii) agrees that service of process upon the Company shall be deemed in every respect effective service of process upon it in any such suit or proceeding. To the extent that any
of the Best Buy Companies may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, such Best Buy Company hereby irrevocably waives such immunity in respect of this Agreement, to the fullest extent permitted
by law. 

14

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

	 	 	BEST BUY CO., INC.
	

 	
 	

By:	
 	

/s/ DARREN R. JACKSON   
	 	 	 	 	

	 	 	 	 	Name:	 	Darren R. Jackson
	 	 	 	 	Title:	 	Senior Vice President—Finance, Treasurer and Chief Financial Officer
	

 	
 	

BBC INSURANCE AGENCY, INC.
	

 	
 	

By:	
 	

/s/ DARREN R. JACKSON   
	 	 	 	 	

	 	 	 	 	Name:	 	Darren R. Jackson
	 	 	 	 	Title:	 	Senior Vice President—Finance, Treasurer and Chief Financial Officer
	

 	
 	

BBC INVESTMENT CO.
	

 	
 	

By:	
 	

/s/ DARREN R. JACKSON   
	 	 	 	 	

	 	 	 	 	Name:	 	Darren R. Jackson
	 	 	 	 	Title:	 	Senior Vice President—Finance and Treasurer
	

 	
 	

BBC PROPERTY CO.
	

 	
 	

By:	
 	

/s/ DARREN R. JACKSON   
	 	 	 	 	

	 	 	 	 	Name:	 	Darren R. Jackson
	 	 	 	 	Title:	 	Senior Vice President—Finance and Treasurer
	

 	
 	

BEST BUY STORES, L.P.
	

 	
 	

By:	
 	

/s/ DARREN R. JACKSON   
	 	 	 	 	

	 	 	 	 	Name:	 	Darren R. Jackson
	 	 	 	 	Title:	 	Senior Vice President

	

 	
 	

BEST BUY PURCHASING LLC
	

 	
 	

By:	
 	

/s/ DARREN R. JACKSON   
	 	 	 	 	

	 	 	 	 	Name:	 	Darren R. Jackson
	 	 	 	 	Title:	 	Senior Vice President
	

 	
 	

BESTBUY.COM, INC.
	

 	
 	

By:	
 	

/s/ DARREN R. JACKSON   
	 	 	 	 	

	 	 	 	 	Name:	 	Darren R. Jackson
	 	 	 	 	Title:	 	Senior Vice President—Finance, Treasurer
	

 	
 	

BEST BUY CONCEPTS, INC.
	

 	
 	

By:	
 	

/s/ DARREN R. JACKSON   
	 	 	 	 	

	 	 	 	 	Name:	 	Darren R. Jackson
	 	 	 	 	Title:	 	Senior Vice President—Finance, Treasurer
	

 	
 	

MAGNOLIA HI-FI, INC.
	

 	
 	

By:	
 	

/s/ JOSEPH M. JOYCE   
	 	 	 	 	

	 	 	 	 	Name:	 	Joseph M. Joyce
	 	 	 	 	Title:	 	Senior Vice President and Secretary
	

 	
 	

MUSICLAND STORES CORPORATION
	

 	
 	

By:	
 	

/s/ JOSEPH M. JOYCE   
	 	 	 	 	

	 	 	 	 	Name:	 	Joseph M. Joyce
	 	 	 	 	Title:	 	Senior Vice President
	

 	
 	

THE MUSICLAND GROUP, INC.
	

 	
 	

By:	
 	

/s/ JOSEPH M. JOYCE   
	 	 	 	 	

	 	 	 	 	Name:	 	Joseph M. Joyce
	 	 	 	 	Title:	 	Senior Vice President

	

 	
 	

MEDIA PLAY, INC.
	

 	
 	

By:	
 	

/s/ JOSEPH M. JOYCE   
	 	 	 	 	

	 	 	 	 	Name:	 	Joseph M. Joyce
	 	 	 	 	Title:	 	Senior Vice President
	

 	
 	

MG FINANCING SERVICES, INC.
	

 	
 	

By:	
 	

/s/ JOSEPH M. JOYCE   
	 	 	 	 	

	 	 	 	 	Name:	 	Joseph M. Joyce
	 	 	 	 	Title:	 	Senior Vice President
	

 	
 	

MLG INTERNET, INC.
	

 	
 	

By:	
 	

/s/ JOSEPH M. JOYCE   
	 	 	 	 	

	 	 	 	 	Name:	 	Joseph M. Joyce
	 	 	 	 	Title:	 	Senior Vice President
	

 	
 	

MUSICLAND RETAIL, INC.
	

 	
 	

By:	
 	

/s/ JOSEPH M. JOYCE   
	 	 	 	 	

	 	 	 	 	Name:	 	Joseph M. Joyce
	 	 	 	 	Title:	 	Senior Vice President
	

 	
 	

ON CUE, INC.
	

 	
 	

By:	
 	

/s/ JOSEPH M. JOYCE   
	 	 	 	 	

	 	 	 	 	Name:	 	Joseph M. Joyce
	 	 	 	 	Title:	 	Senior Vice President
	

 	
 	

REQUEST MEDIA, INC.
	

 	
 	

By:	
 	

/s/ JOSEPH M. JOYCE   
	 	 	 	 	

	 	 	 	 	Name:	 	Joseph M. Joyce
	 	 	 	 	Title:	 	Senior Vice President

	

 	
 	

SUNCOAST GROUP, INC.
	

 	
 	

By:	
 	

/s/ JOSEPH M. JOYCE   
	 	 	 	 	

	 	 	 	 	Name:	 	Joseph M. Joyce
	 	 	 	 	Title:	 	Senior Vice President
	

 	
 	

SUNCOAST MOTION PICTURE COMPANY, INC.
	

 	
 	

By:	
 	

/s/ JOSEPH M. JOYCE   
	 	 	 	 	

	 	 	 	 	Name:	 	Joseph M. Joyce
	 	 	 	 	Title:	 	Senior Vice President
	

 	
 	

SUNCOAST RETAIL, INC.
	

 	
 	

By:	
 	

/s/ JOSEPH M. JOYCE   
	 	 	 	 	

	 	 	 	 	Name:	 	Joseph M. Joyce
	 	 	 	 	Title:	 	Senior Vice President
	

 	
 	

TMG CARIBBEAN, INC.
	

 	
 	

By:	
 	

/s/ JOSEPH M. JOYCE   
	 	 	 	 	

	 	 	 	 	Name:	 	Joseph M. Joyce
	 	 	 	 	Title:	 	Senior Vice President
	

 	
 	

TMG-VIRGIN ISLANDS, INC.
	

 	
 	

By:	
 	

/s/ JOSEPH M. JOYCE   
	 	 	 	 	

	 	 	 	 	Name:	 	Joseph M. Joyce
	 	 	 	 	Title:	 	Senior Vice President
	

 	
 	

REDLINE ENTERTAINMENT, INC.
	

 	
 	

By:	
 	

/s/ DARREN R. JACKSON   
	 	 	 	 	

	 	 	 	 	Name:	 	Darren R. Jackson
	 	 	 	 	Title:	 	Senior Vice President—Finance, Treasurer

The foregoing Registration Rights Agreement

is hereby confirmed and accepted

as of the date first above written.

CREDIT SUISSE FIRST BOSTON CORPORATION

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED 

By: CREDIT SUISSE FIRST BOSTON CORPORATION, for the Purchasers 

	By:	 	/s/ DAVID N. FRANK   	 	 
	 	 	
	 	 
	 	 	Name: David N. Frank	 	 
	 	 	Title: Director	 	 

ANNEX A 

Counterpart
To Registration Rights Agreement 

    The
undersigned hereby absolutely, unconditionally and irrevocably agrees (as a "Guarantor") to use its reasonable efforts to include
its Guarantee in any Registration Statement required to be filed by the Company and the Guarantors pursuant to the Registration Rights Agreement, dated as of June 27, 2001 (the
"Registration Rights Agreement") by and among Best Buy Co., Inc, a Minnesota corporation, the guarantors named therein and Credit Suisse First Boston
Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated; to use its reasonable efforts to cause such Registration Statement to become effective as specified in the Registration
Rights Agreement; and to otherwise be bound by the terms and provisions of the Registration Rights Agreement. 

    IN
WITNESS WHEREOF, the undersigned has executed this Counterpart as of             ,       . 

	

 	
 	

[NAME]
	

 	
 	

By:	
 	

 
	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:

QuickLinks

$492,400,000 BEST BUY CO., INC. Convertible Debentures Due June 27, 2021 REGISTRATION RIGHTS AGREEMENT<PAGE>

                                                                     Exhibit 4.1

                              AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                            NEON COMMUNICATIONS, INC.

FIRST: The name of the Corporation is: NEON Communications, Inc.

SECOND: The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.

THIRD: The nature of the business or purposes to be conducted or promoted by the
Corporation is as follows:

To engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.

FOURTH: The total number of shares of all classes of stock which the Corporation
shall have authority to issue is 62,000,000 shares, consisting of (i) 60,000,000
shares of Common Stock, $0.01 par value per share ("Common Stock"), and (ii)
2,000,000 shares of Preferred Stock, $0.01 par value per share ("Preferred
Stock") which may be issued from time to time in one or more series as set forth
in Part B of this Article FOURTH.

The following is a statement of the designations and the powers, privileges and
rights, and the qualifications, limitations or restrictions thereof in respect
of each class of capital stock of the Corporation.

A. COMMON STOCK

         1. GENERAL. The voting, dividend and liquidation rights of the holders
of the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by the Board of Directors
upon any issuance of the Preferred Stock of any series.

         2. VOTING. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders. There shall be no cumulative
voting. The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote, irrespective of the provisions of Section 242(b)(2) of the
General Corporation Law of Delaware.

         3. DIVIDENDS. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.

<PAGE>

         4. LIQUIDATION. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding
Preferred Stock.

B. PREFERRED STOCK

Preferred Stock may be issued from time to time in one or more series, each of
such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of
Preferred Stock which may be redeemed, purchased or acquired by the Corporation
may be reissued except as otherwise provided by law. Different series of
Preferred Stock shall not be construed to constitute different classes of shares
for the purposes of voting by classes unless expressly provided.

Authority is hereby expressly granted to the Board of Directors from time to
time to issue the Preferred Stock in one or more series, and in connection with
the creation of any such series, by resolution or resolutions providing for the
issue of the shares thereof, to determine and fix such voting powers, full or
limited, or no voting powers, and such designations, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including without limitation thereof, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be stated and expressed in such resolutions, all to the full extent now or
hereafter permitted by the General Corporation Law of Delaware. Without limiting
the generality of the foregoing, the resolutions providing for issuance of any
series of Preferred Stock may provide that such series shall be superior or rank
equally or be junior to the Preferred Stock of any other series to the extent
permitted by law. Except as otherwise provided in this Amended and Restated
Certificate of Incorporation, no vote of the holders of the Preferred Stock or
Common Stock shall be a prerequisite to the designation or issuance of any
shares of any series of the Preferred Stock authorized by and complying with the
conditions of this Amended and Restated Certificate of Incorporation, the right
to have such vote being expressly waived by all present and future holders of
the capital stock of the Corporation.

FIFTH: The Corporation shall have a perpetual existence.

SIXTH: In furtherance of and not in limitation of powers conferred by statute,
it is further provided:

         1. Election of directors need not be by written ballot.

         2. The Board of Directors is expressly authorized to adopt, amend or
repeal the By-Laws of the Corporation.

SEVENTH: Except to the extent that the General Corporation Law of Delaware
prohibits the elimination or limitation of liability of directors for breaches
of fiduciary duty, no director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, notwithstanding any provision of law imposing such
liability. No amendment to or repeal of this provision shall apply to or have
any

<PAGE>

effect on the liability or alleged liability of any director of the Corporation
for or with respect to any acts or omissions or such director occurring prior to
such amendment.

EIGHTH: The Corporation shall, to the fullest extent permitted by Section 145 of
the General Corporation Law of Delaware, as amended from time to time, indemnify
each person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was, or has agreed to become, a director or officer of the Corporation, or
is or was serving, or has agreed to serve, at the request of the Corporation, as
a director, officer or trustee of, or in a similar capacity with, another
corporation, partnership, joint venture, trust or other enterprise (including
any employee benefit plan) (all such persons being referred to hereafter as an
"Indemnitee"), or by reason of any action alleged to have been taken or omitted
in such capacity, against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by or on
behalf of an Indemnitee in connection with such action, suit or proceeding and
any appeal therefrom.

As a condition precedent to his or her right to be indemnified, the Indemnitee
must notify the Corporation in writing as soon as practicable of any action,
suit, proceeding or investigation involving him for which indemnity will or
could be sought. With respect to any action, suit, proceeding or investigation
of which the Corporation is so notified, the Corporation will be entitled to
participate therein at its own expense and/or assume the defense thereof at its
own expense, with legal counsel reasonably acceptable to the Indemnitee.

In the event that the Corporation does not assume the defense of any action,
suit, proceeding or investigation of which the Corporation receives notice under
this Article, the Corporation shall pay in advance of the final disposition of
such matter any expenses (including attorneys' fees) incurred by an Indemnitee
in defending a civil or criminal action, suit, proceeding or investigation or
any appeal therefrom; PROVIDED, HOWEVER, that the payment of such expenses
incurred by an Indemnitee in advance of the final disposition of such matter
shall be made only upon receipt of any undertaking by or on behalf of the
Indemnitee to repay all amounts so advanced in the event that it shall
ultimately be determined that the Indemnitee is not entitled to be indemnified
by the Corporation as authorized in this Article, which undertaking shall be
accepted without reference to the financial ability of the Indemnitee to make
such repayment; and FURTHER, PROVIDED that no such advancement of expenses shall
be made if it is determined that (i) the Indemnitee did not act in good faith
and in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Corporation, or (ii) with respect to any criminal action or
proceeding, the Indemnitee had reasonable cause to believe his conduct was
unlawful.

The Corporation shall not indemnify an Indemnitee seeking indemnification in
connection with a proceeding (or part thereof) initiated by such Indemnitee
unless the initiation thereof was approved by the Board of Directors of the
Corporation. In addition, the Corporation shall not indemnify an Indemnitee to
the extent such Indemnitee is reimbursed from the proceeds of insurance, and in
the event the Corporation makes any indemnification payments to an Indemnitee
and such Indemnitee is subsequently reimbursed from the proceeds of insurance,
such Indemnitee shall promptly refund such indemnification payments to the
Corporation to the extent of such insurance reimbursement.

<PAGE>

All determinations hereunder as to the entitlement of an Indemnitee to
indemnification or advancement of expenses shall be made in each instance by (a)
a majority vote of the directors of the Corporation consisting of persons who
are not at that time parties to the action, suit or proceeding in question
("disinterested directors"), whether or not a quorum, (b) a majority vote of a
quorum of the outstanding shares of stock of all classes entitled to vote for
directors, voting as a single class, which quorum shall consist of stockholders
who are not at that time parties to the action, suit or proceeding in question,
(c) independent legal counsel (who may, to the extent permitted by law, be
regular legal counsel to the Corporation), or (d) a court of competent
jurisdiction.

The indemnification rights provided in this Article (i) shall not be deemed
exclusive of any other rights to which an Indemnitee may be entitled under any
law, agreement or vote of stockholders or disinterested directors or otherwise,
and (ii) shall inure to the benefit of the heirs, executors and administrators
of the Indemnitees. The Corporation may, to the extent authorized from time to
time by its Board of Directors, grant indemnification rights to other employees
or agents of the Corporation or other persons serving the Corporation and such
rights may be equivalent to, or greater or less than, those set forth in this
Article.

NINTH: The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute and this Amended and
Restated Certificate of Incorporation, and all rights conferred upon
stockholders herein are granted subject to this reservation.

TENTH: This Article is inserted for the management of the business and for the
conduct of the affairs of the Corporation.

         1. NUMBER OF DIRECTORS. The exact number of directors shall be fixed
from time to time by, or in the manner provided in, the Corporation's By-Laws.

         2. ELECTION OF DIRECTORS. Elections of directors need not be by written
ballot except as and to the extent provided in the By-Laws of the Corporation.

         3. TERMS OF OFFICE. Each director shall serve for a term ending on the
date of the first annual meeting following the annual meeting at which such
director was elected; PROVIDED, that the term of each director shall be subject
to the election and qualification of his or her successor and to his or her
earlier death, resignation or removal.

         4. QUORUM; ACTION AT MEETING. A majority of the total number of the
whole Board of Directors shall constitute a quorum at all meetings of the Board
of Directors. In the event one or more of the directors shall be disqualified to
vote at any meeting, then the required quorum shall be reduced by one for each
such director so disqualified; provided, however, that in no case shall less
than one-third of the number fixed pursuant to Section 1 above constitute a
quorum. In the absence of a quorum at any such meeting, a majority of the
directors present may adjourn the meeting from time to time without further
notice other than announcement at the meeting, until a quorum shall be present.
At any meeting of the Board of Directors at which a quorum is present, the vote
of a majority of those present shall be sufficient to take any action, unless a
different

<PAGE>

vote is specified by law, by the By-Laws of the Corporation or by this Amended
and Restated Certificate of Incorporation.

         5. REMOVAL. Directors of the Corporation may be removed only for cause
by the affirmative vote of the holders of at least seventy-five percent (75%) of
the shares of the capital stock of the Corporation issued and outstanding and
entitled to vote.

         6. VACANCIES. Any vacancy in the Board of Directors, however occurring,
including a vacancy resulting from an enlargement of the board, shall be filled
only by a vote of a majority of the directors then in office, although less than
a quorum, or by a sole remaining director. A director elected to fill a vacancy
shall be elected to hold office until the next election of directors, subject to
the election and qualification of his or her successor and to his or her earlier
death, resignation or removal.

         7. STOCKHOLDER NOMINATIONS AND INTRODUCTION OF BUSINESS, ETC. Advance
notice of stockholder nominations for election of directors and other business
to be brought by stockholders before a meeting of stockholders shall be given in
the manner provided by the By-Laws of the Corporation.

ELEVENTH. Stockholders of the Corporation may not take any action by written
consent in lieu of a meeting. Notwithstanding any other provisions of law, the
Amended and Restated Certificate of Incorporation or the By-Laws of the
Corporation, and notwithstanding the fact that a lesser percentage may be
specified by law, the affirmative vote of the holders of at least seventy-five
percent (75%) of the shares of capital stock of the Corporation issued and
outstanding and entitled to vote shall be required to amend or repeal, or to
adopt any provision inconsistent with, this Article ELEVENTH.

TWELFTH. Special meetings of stockholders may be called at any time only by the
Chairman of the Board of Directors, the President or the Board of Directors.
Business transacted at any special meeting of stockholders shall be limited to
matters relating to the purpose or purposes stated in the notice of meeting.
Notwithstanding any other provision of law, this Amended and Restated
Certificate of Incorporation or the By-Laws of the Corporation, and
notwithstanding the fact that a lesser percentage may be specified by law, the
affirmative vote of the holders of at least seventy-five percent (75%) of the
shares of capital stock of the Corporation issued and outstanding and entitled
to vote shall be required to amend or repeal, or to adopt any provision
inconsistent with, this Article TWELFTH.

THIRTEENTH. In addition to any other considerations which the Board of Directors
may lawfully take into account in determining whether to take or to refrain from
taking corporate action on any matter, including proposing any matter to the
stockholders of the Corporation, the Board of Directors may take into account
the interests of creditors, customers, employees and other constituencies of the
Corporation and its subsidiaries and the effect thereof upon communities in
which the Corporation and its subsidiaries do business. Notwithstanding any
other provision of law, this Amended and Restated Certificate of Incorporation
or the By-Laws of the Corporation, and notwithstanding the fact that a lesser
percentage may be specified by law, the affirmative vote of the holders of at
least seventy-five percent (75%) of the shares of

<PAGE>

capital stock of the Corporation issued and outstanding and entitled to vote
shall be required to amend or repeal, or to adopt any provision inconsistent
with, this Article THIRTEENTH.

FOURTEENTH. In furtherance and not in limitation of the powers conferred by law
or in this Amended and Restated Certificate of Incorporation, the Board of
Directors (and any committee of the Board of Directors) is expressly authorized
to take such action or actions as the Board or such committee may determine to
be reasonably necessary or desirable to (a) encourage any person to enter into
negotiations with the Board of Directors and management of the Corporation with
respect to any transaction which may result in a change in control of the
Corporation which is proposed or initiated by such person, or (b) contest or
oppose any such transaction which the Board of Directors or such committee
determines to be unfair, abusive or otherwise undesirable with respect to the
Corporation and its business, assets or properties or the stockholders of the
Corporation, including, without limitation, the adoption of such plans or the
issuance of such rights, options, capital stock, notes, debentures or other
evidence of indebtedness or other securities of the Corporation, which rights,
options, capital stock, notes, debentures or other evidences of indebtedness and
other securities (i) may be exchangeable for or convertible into cash or other
securities on such terms and conditions as may be determined by the Board of
Directors (or any such committee) and (ii) may provide for the treatment of any
holder or class of holders thereof designated by the Board of Directors (or any
such committee) in respect of the terms, conditions, provisions and rights of
such securities which is different from, and unequal to, the terms, conditions,
provisions and rights applicable to all other holders thereof. Notwithstanding
any other provision of law, this Amended and Restated Certificate of
Incorporation or the By-Laws of the Corporation, and notwithstanding the fact
that a lesser percentage may be specified by law, the affirmative vote of the
holders of at least seventy-five percent (75%) of the shares of capital stock of
the Corporation issued and outstanding and entitled to vote shall be required to
amend or repeal, or to adopt any provision inconsistent with, this Article
FOURTEENTH.

<PAGE>

         IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Incorporation to be signed by its
President this 13th day of September, 2000.

                                               NEON COMMUNICATIONS, INC.

                                               By: /s/ VICTOR COLANTONIO
                                                   ----------------------------
                                                   Victor Colantonio, President

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