Document:

Exhibit
4.1

 

SECOND
AMENDMENT TO CREDIT AGREEMENT

 

This SECOND AMENDMENT TO CREDIT AGREEMENT (this
“Amendment”), made and entered into as of March 5, 2004 is by and between Best
Buy Co., Inc., a Minnesota corporation (the “Company”), the banks which are signatories
hereto (individually, each a “Bank” and collectively, the “Banks”) and U.S.
Bank National Association, a national banking association, as agent for the
banks party to the Credit Agreement (in such capacity, the “Agent”).

 

RECITALS

 

1.                                       The banks party thereto, Company, and the
Agent entered into an Amended and Restated Credit Agreement dated as of March
21, 2002, as amended by a First Amendment to Credit agreement dated as of
October 7, 2002 (as so amended, the “Credit Agreement”); and

 

2.                                       The Company desires to amend certain
provisions of the Credit Agreement, and the Banks and the Agent have agreed to
make such amendments, subject to the terms and conditions set forth in this
Amendment.

 

AGREEMENT

 

NOW,
THEREFORE, for good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby covenant and agree to be bound as
follows:

 

Section 1.                                            Capitalized Terms. 
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Credit Agreement, unless the context
shall otherwise require.

 

Section 2.                                            Amendments.  The
Credit Agreement is hereby amended as follows:

 

2.1                                 Liens. 
Section 5.12 of the Credit Agreement is amended  by deleting the clause “, and;” at the end
of subsection (g) thereof and by inserting in lieu thereof a period.

 

2.2                                 Negative Pledges. 
Section 5.24 of the Credit Agreement is deleted in its entirety and the
following is substituted in lieu thereof.

 

 

Section 5.24   Negative
Pledges.  Not, and not
permit any Subsidiary to, enter into any agreement, bond, note or other
instrument for the benefit of any Person other than the Agent and the Banks
that would (a) prohibit the Company or such Subsidiary from granting, or
otherwise limit the ability of the Company or such Subsidiary to grant, any
Lien on any of its property to the Agent, for the benefit of the Banks, or to
lenders providing credit facilities to replace the Commitments or refinance the
Obligations, except (i) limitations created in agreements creating Liens on,
and applicable only to, property on which a Lien is granted by the Company as
permitted in Sections 5.12(e), (f) or (g) or (ii)

 

 

limitations in agreements
creating the Indebtedness permitted by Section 5.13(k), or (b) require the
Company or such Subsidiary to grant a Lien to any other Person if the Company
or such Subsidiary grants Liens to the Agent, for the benefit of the Banks, or
to lenders providing credit facilities to replace the Commitments or refinance
the Obligations.

 

2.3                                 Schedule of Permitted
Canadian Debt.  Schedule 5.13(k) of the Credit Agreement is
hereby amended and restated to read as set forth in Exhibit A hereto, which
Exhibit A is hereby made a part of the Credit Agreement as Schedule 5.13(k)
thereto.

 

Section 3.                                            Effectiveness of Amendments.  The
amendments contained in this Amendment shall become effective upon delivery by
the Company of, and compliance by the Company with, the following:

 

3.1                                 This Amendment duly executed by the Company,
the Agent, and the Majority Banks.

 

3.2                                 A consent of each Guarantor in the form of
Exhibit B attached to this Amendment, duly executed by such Guarantor.

 

3.3                                 The Company shall have satisfied such other
conditions as specified by the Banks, including payment of all unpaid legal
fees and expenses incurred by the Agent through the date of this Amendment in
connection with the Credit Agreement and this Amendment.

 

Section 4.                                            Representations, Warranties,
Authority, No Adverse Claim.

 

4.1                                 Reassertion of
Representations and Warranties, No Default.  The
Company hereby represents that on and as of the date hereof and after giving
effect to this Amendment (a) all of the representations and warranties
contained in the Credit Agreement are true, correct and complete in all
respects as of the date hereof as though made on and as of such date, except
for changes permitted by the terms of the Credit Agreement, and (b) there will
exist no Default or Event of Default under the Credit Agreement as amended by
this Amendment on such date which has not been waived by the Banks.

 

4.2                                 Authority, Validity, No
Conflict, No Consent Required. The
Company represents and warrants that the Company has the power and legal right
and authority to enter into this Amendment and has duly authorized as
appropriate the execution and delivery of this Amendment and other agreements
and documents executed and delivered by the Company in connection herewith or
therewith by proper corporate authority, and neither this Amendment nor the
agreements contained herein contravenes or constitutes a default under any
agreement, instrument or indenture to which the Company is a party or a
signatory or a provision of the Company’s Articles of Incorporation, Bylaws or
any other agreement or requirement of law, or result in the imposition of any
Lien on any of its property under any agreement binding on or applicable to the
Company or any of its property except, if any, in favor of the Banks.  The Company represents and warrants that
this Amendment constitutes the legal, valid, and binding obligations of the
Company,

 

2

 

enforceable against the
Company in accordance with its terms, subject to limitations as to
enforceability which might result from bankruptcy, insolvency, moratorium, and
other similar laws affecting Creditors’ rights generally and general principles
of equity.  The Company represents and
warrants that no consent, approval or authorization of or registration or
declaration with any person, including but not limited to any governmental
authority, is required in connection with the execution and delivery by the
Company of this Amendment or other agreements and documents executed and
delivered by the Company in connection therewith or the performance of
obligations of the Company therein described, except for those which the
Company has obtained or provided and as to which the Company has delivered
certified copies of documents evidencing each such action to the Agent.

 

4.3                                 No Adverse Claim. The Company warrants, acknowledges and agrees
that no events have been taken place and no circumstances exist at the date
hereof which would give the Company a basis to assert a defense, offset or
counterclaim to any claim of the Banks with respect to the Obligations.

 

4.4                                 Affirmation of Credit
Agreement, Further References.  The Banks and the Company
each acknowledge and affirm that the Credit Agreement, as hereby amended, is
hereby ratified and confirmed in all respects and all terms, conditions and
provisions of the Credit Agreement, except as amended by this Amendment, shall
remain unmodified and in full force and effect.  All references in any document or instrument to the Credit
Agreement are hereby amended and shall refer to the Credit Agreement as amended
by this Amendment.   The Company
confirms to the Banks that all of the terms, conditions, provisions,
agreements, requirements, promises, obligations, duties, covenants and
representations of the Company under any and all other documents and agreements
entered into with respect to the obligations under the Credit Agreement are
incorporated herein by reference and are hereby ratified and affirmed in all
respects by the Company.

 

4.5                                 Canadian Credit Documents.  The
Company represents and warrants to the Banks that (i) a true and accurate copy
of the Canadian Credit Agreement (as defined in Exhibit A hereto) is attached
to this Amendment as Exhibit C and (b) true and accurate copies of the Canadian
Guaranties (as defined in Exhibit A hereto) are attached to this Amendment as
Exhibit D.

 

4.6                                 Resolution and Incumbency
Certificate.  Within 30 days of the date of this
Amendment, the Company will furnish to the Agent a copy of the resolutions of
the Board of Directors of the Company ratifying the execution, delivery and
performance of this Amendment certified as true and accurate by its Secretary
or Assistant Secretary, along with a certification by such Secretary or
Assistant Secretary (i) certifying that there has been no amendment to the
Articles of Incorporation or Bylaws of the Company since true and accurate
copies of the same were delivered to the Agent with a certificate of the
Secretary of the Company dated March 21, 2002, and (ii) identifying each
officer of the Company authorized to execute this Amendment and any other
instrument or agreement executed by the Company in connection with this
Amendment, and certifying as to

 

3

 

specimens of such officer’s
signature and such  officer’s incumbency
in such offices as such officer holds.

 

Section 5.                                            Merger and Integration,
Superseding Effect.  This Amendment, from and after the date
hereof, embodies the entire agreement and understanding between the parties
hereto and supersedes and has merged into this Amendment all prior oral and
written agreements on the same subjects by and between the parties hereto with
the effect that this Amendment, shall control with respect to the specific
subjects hereof and thereof.

 

Section 6.                                            Severability. 
Whenever possible, each provision of this Amendment and any other
statement, instrument or transaction contemplated hereby or thereby or relating
hereto or thereto shall be interpreted in such manner as to be effective, valid
and enforceable under the applicable law of any jurisdiction, but, if any
provision of this Amendment or any other statement, instrument or transaction
contemplated hereby or thereby or relating hereto or thereto shall be held to
be prohibited, invalid or unenforceable under the applicable law, such
provision shall be ineffective in such jurisdiction only to the extent of such
prohibition, invalidity or unenforceability, without invalidating or rendering
unenforceable the remainder of such provision or the remaining provisions of
this Amendment or any other statement, instrument or transaction contemplated
hereby or thereby or relating hereto or thereto in such jurisdiction, or
affecting the effectiveness, validity or enforceability of such provision in
any other jurisdiction.

 

Section 7.                                            Successors. 
This Amendment shall be binding upon the Company and the Banks and their
respective successors and assigns, and shall inure to the benefit of the
Company and the Banks and the successors and assigns of the Banks.

 

Section 8.                                            Legal Expenses.  As
provided in Section 8.3 of the Credit Agreement, the Company agrees to
reimburse the Agent, upon execution of this Amendment, for all reasonable
out-of-pocket expenses (including attorney’ fees and legal expenses of Dorsey
& Whitney LLP, counsel for the Agent) incurred in connection with the
Credit Agreement, including in connection with the negotiation, preparation and
execution of this Amendment and all other documents negotiated, prepared and
executed in connection with this Amendment and in enforcing the obligations of
the Company under this Amendment and to pay and save the Agent harmless from
all liability for, any stamp or other taxes which may be payable with respect
to the execution or delivery of this Amendment, which obligations of the
Company shall survive any termination of the Credit Agreement.

 

Section 9.                                            Headings.  The
headings of various sections of this Amendment have been inserted for reference
only and shall not be deemed to be a part of this Amendment.

 

Section 10.                                      Counterparts. 
This Amendment may be executed in several counterparts as deemed necessary
or convenient, each of which, when so executed, shall be deemed an original,
provided that all such counterparts shall be regarded as one and the same
document.

 

Section 11.                                      Governing Law. 
THIS AMENDMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES THEREOF, BUT
GIVING EFFECT TO FEDERAL

 

4

 

LAWS APPLICABLE TO NATIONAL BANKS, THEIR HOLDING COMPANIES AND THEIR
AFFILIATES.

 

THE REMAINDER OF THIS PAGE
WAS INTENTIONALLY LEFT BLANK.

 

5

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the day and year
first above written.

 

	
   

  	
  BEST BUY CO., INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Ryan D.
  Robinson

  	
   

  
	
   

  	
   

  	
  Its V.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION, as

  Agent and as a Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  Karen Weathers

  	
   

  
	
   

  	
   

  	
  Its  Vice President

  
					

 

S-1

 

	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION, f/k/a First Union National Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Michael R. Jordan

  	
   

  
	
   

  	
   

  	
  Its  Managing Director

  
					

 

[Signature page to Second
Amendment to Credit Agreement]

 

S-2

 

	
   

  	
  BANK ONE, NA (MAIN CHICAGO OFFICE)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Vincent R. Henchek

  	
   

  
	
   

  	
   

  	
  Its  Director

  
					

 

[Signature page to Second
Amendment to Credit Agreement]

 

S-3

 

	
   

  	
  WELLS FARGO BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  Scott D. Bjelde

  	
   

  
	
   

  	
   

  	
  Its Vice President and Senior Banker

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  Allison S. Gelfman

  	
   

  
	
   

  	
   

  	
  Its  Vice President

  
					

 

[Signature page to Second
Amendment to Credit Agreement]

 

S-4

 

	
   

  	
  THE BANK OF TOKYO-MITSUBISHI, LTD.,

  CHICAGO BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  Patrick McCue

  	
   

  
	
   

  	
   

  	
  Its  Vice President &
  Manager

  
					

 

[Signature page to Second
Amendment to Credit Agreement]

 

S-5

 

	
   

  	
  CREDIT SUISSE FIRST BOSTON,

  CAYMAN ISLANDS BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  William O’Daly

  	
   

  
	
   

  	
   

  	
  Its  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  Cassandra Droogan

  	
   

  
	
   

  	
   

  	
  Its  Associate

  
					

 

[Signature page to Second
Amendment to Credit Agreement]

 

S-6

 

	
   

  	
  FLEET NATIONAL BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Suzanne Chomiczewski

  	
   

  
	
   

  	
   

  	
  Its  Vice President

  
					

 

[Signature page to Second
Amendment to Credit Agreement]

 

S-7

 

	
   

  	
  THE BANK OF NOVA SCOTIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Its

  	
   

  	
   

  
						

 

[Signature page to Second
Amendment to Credit Agreement]

 

S-8

 

	
   

  	
  MERRILL LYNCH CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Stephanie Vallillo

  	
   

  
	
   

  	
   

  	
  Its  Vice President

  
					

 

[Signature page to Second
Amendment to Credit Agreement]

 

S-9

 

EXHIBIT A

TO SECOND AMENDMENT

TO CREDIT AGREEMENT

 

Schedule 5.13(k)

 

CDN INDEBTEDNESS

 

Best Buy Canada Ltd./Magasins Best Buy Ltee (“Best Buy Canada”) has a
Cdn $25,000,000 unsecured revolving operating loan facility from Royal Bank of
Canada pursuant to an offer letter (the “Cdn Credit Agreement”), in the form
attached to the Second Amendment to this Agreement as Exhibit C.  Best Buy Canada’s obligations under the Cdn
Credit Agreement are guarantied by the Company and by its subsidiary, Best Buy
Stores, L.P., pursuant to the terms of separate guaranties, each in the form
attached to the Second Amendment to this Agreement as Exhibit D (the “Canadian
Guaranties”).

 

A-1

 

EXHIBIT B

TO SECOND AMENDMENT

TO CREDIT AGREEMENT

 

CONSENT OF
GUARANTORS

 

Each of the undersigned have
guaranteed payment and performance of the obligations of BEST BUY CO., INC., a
Minnesota corporation (the “Company”), to U.S. Bank National Association, as
agent (the “Agent”) and as a Bank, and certain other Banks (the “Banks”) under
that certain Amended and Restated Credit Agreement dated as of March 21, 2002,
as amended by a First Amendment to Credit Agreement dated as of October 7,
2002, between the Company and the Banks (the “Credit Agreement”), pursuant to
the terms of separate Guaranties executed by the undersigned in favor of the
Banks and dated as of March 21, 2002 (as amended, collectively, the
“Guaranties” and each individually, a “Guaranty”).

 

Each of the undersigned
acknowledges receipt of a copy of the proposed Second Amendment to Credit
Agreement, dated concurrently herewith (the “Second Amendment”).

 

Each of the undersigned
confirms, agrees and acknowledges that the Amendment shall in no way impair or
limit the rights of the Agent and the Banks under its Guaranty and that obligations
of the Company under the Credit Agreement, as amended by the Second Amendment,
constitute “Obligations” as defined in its Guaranty.

 

Each of the undersigned
confirms that, by its Guaranty, and subject to the terms and conditions of its
Guaranty, the undersigned continues to guaranty payment and performance of the
obligations of the Company to the Banks under the Credit Agreement, as amended
by the Second Amendment.  The
undersigned hereby confirms that its Guaranty remains in full force and effect,
enforceable against the undersigned by the Banks, in accordance with its terms.

 

	
   

  	
  Dated as of March 5, 2004

  	
  BBC PROPERTY CO.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Ryan D. Robinson

  	
   

  
	
   

  	
   

  	
  Its Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BEST BUY STORES, L.P.

  
	
   

  	
   

  	
  By:  BBC Property Co.

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Ryan D. Robinson

  	
   

  
	
   

  	
   

  	
  Its Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BEST BUY INVESTMENT CO.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Ryan D. Robinson

  	
   

  
	
   

  	
   

  	
  Its Vice President

  

 

B-1

 

EXHIBIT C

TO SECOND AMENDMENT

TO CREDIT AGREEMENT

 

[Copy of Canadian Offer
Letter]

 

C-1

 

K. (Keith) Richmond

Senior Account Manager

Tel: (604) 665-8409

Fax: (604) 665-6368

Email: keith.richmond@rbc.com

 

March 9, 2004

 

Private and Confidential

 

Best Buy Canada
Ltd./Magasins Best Buy Ltee

8800 Glenlyon
Parkway

Burnaby, British
Columbia V5J 5K3

 

Attention:  Lana
Bevilacqua

 

Dear Sirs:

 

We are pleased to
offer the credit facilities described below (the “Credit Facilities”),
subject to the following terms and conditions. 
This agreement supersedes and cancels any and all previous agreements
with the Borrower or its predecessors (the “Cancelled Credit Facility”). In
addition, any amount owing by the Borrower to the Bank under the Cancelled
Credit Facility is deemed to be a Borrowing hereunder.

 

DEFINITIONS AND SCHEDULES

The attached
schedules are incorporated into this agreement by reference. Schedule “A”
contains definitions of capitalized terms used and not otherwise defined in
this agreement.  Unless otherwise provided,
all dollar amounts are in Canadian currency and accounting terms are to be
interpreted in accordance with GAAP.

 

BORROWER

	
  Best Buy Canada Ltd./Magasins Best Buy Ltee

  	
   

  	
  (the “Borrower”)

  

 

LENDER

	
  Royal Bank of
  Canada

  	
   

  	
  (the “Bank”)

  

 

CREDIT FACILITIES

	
  Facility

  	
  (1):

  	
  $20,000,000
  revolving demand facility, by way of:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  RBP based loans
  (“RBP
  Loans”);

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  RBUSBR based
  loans in US currency (“RBUSBR Loans”);

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Bankers’
  Acceptances (“BAs”);

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Letters of
  Credit in Canadian currency, US currency or other approved currency (“LCs”);

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Letters of
  Guarantee in Canadian currency, US currency or other approved currency (“LGs”).

  

 

 

C-2

 

	
  Facility

  	
  (2):

  	
  $5,000,000
  revolving demand facility available only from  August 1st to
  and including January 31st annually, by way of:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  RBP based loans
  (“RBP
  Loans”);

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  RBUSBR based
  loans in US currency (“RBUSBR Loans”);

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Bankers’
  Acceptances (“BAs”);

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Letters of
  Credit in Canadian currency, US currency or other approved currency (“LCs”);

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Letters of
  Guarantee in Canadian currency, US currency or other approved currency (“LGs”).

  

 

Each use of the
Credit Facilities is a “Borrowing” and all such usages outstanding at any
time are “Borrowings”.
Schedule “B” contains notice provisions applicable to Borrowings that must be
complied with.  Schedule “C” contains terms and
conditions applicable to Borrowings made otherwise than by way of RBP Loans or
RBUSBR Loans which must be complied with.

 

FEF CONTRACTS

At the Borrower’s
request the Bank may enter into Foreign Exchange Forward Contracts (“FEF Contracts”)
with the Borrower from time to time. 
The Bank makes no commitment to enter into any FEF Contract and may at
any time in its sole discretion decline to enter into any FEF Contract. FEF
Contracts will be governed by the terms and conditions set forth in the FEF
Contracts Schedule attached hereto.

 

TERMS OF OTHER
FACILITIES

The Credit
Facilities are in addition to the following:

 

(a)                                  an
assigned lease obligation from GATX

 

In the event of
conflict between this agreement and any separate agreement delivered in
connection with any such other facilities, the terms of such separate agreement
shall govern.

 

PURPOSE

 

Facilities (1)
& (2)

Finance general
operating requirements.

 

AVAILABILITY

Facilities (1)
& (2)

The Borrower may
borrow, convert, repay and reborrow up to the amount of these revolving
facilities, provided:

 

(a)                                  these
facilities are made available at the sole discretion of the Bank and the Bank
may cancel or restrict availability of any unutilized portion of these
facilities at any time and from time to time without notice or demand.

 

REPAYMENT

 

Facilities (1)
& (2)

Borrowings under
these facilities are expected to revolve with operating requirements.

 

Notwithstanding
compliance with the covenants and all other terms and conditions of this
agreement, and regardless of the maturities of any outstanding instruments or
contracts, Borrowings under these facilities are repayable on demand and the
Bank may terminate these facilities at any time, without notice or demand.

 

C-3

 

Upon demand the
Borrower shall pay to the Bank all Borrowings outstanding under these
facilities including, without limitation, an amount equal to the aggregate of
the face amounts of all BAs, LCs and LGs which are unmatured or unexpired,
which amount shall be held by the Bank as security for the Borrower’s
obligations to the Bank in respect of such instruments or contracts.  The Bank may enforce its rights to realize
upon its security and retain an amount sufficient to secure the Bank for the
Borrower’s obligations to the Bank in respect of such instruments or contracts.

 

INTEREST RATES AND FEES

 

Facilities (1)
& (2)

	
  RBP Loans:

  	
  RBP plus 0% per
  annum.

  
	
  RBUSBR Loans:

  	
  RBUSBR plus 0%
  per annum.

  
	
  BAs:

  	
  acceptance fee
  1.00% per annum.

  
	
  LCs:

  	
  fee to be quoted
  by the Bank at the time of issue of each LC.

  
	
  LGs:

  	
  fee to be quoted
  by the Bank at the time of issue of each LG, subject to a minimum fee of $100
  in the currency of issue (where in Canadian currency or US currency) and $100
  in Canadian currency where issued in any other approved currency.

  

 

The Bank agrees to
reimburse the Borrower for up to the first $10,000 (Canadian) in legal fees
associated with the establishment of these Facilities.

 

CALCULATION AND PAYMENT OF INTEREST AND FEES

 

RBP Loans and
RBUSBR Loans

The Borrower shall
pay interest on each RBP Loan and RBUSBR Loan, monthly in arrears, on the 21st
day of each month.  Such interest will
be calculated monthly and will accrue daily on the basis of the actual number
of days elapsed and a year of 365 days. 
Interest on RBUSBR Loans shall be paid in US currency.

 

LC Fees

The Borrower shall
pay an LC fee on the date of any payment made by the Bank pursuant to a drawing
under any LC calculated on the amount drawn, based upon the number of days the
LC was outstanding and a year of 365 days. 
If the total amount available under any LC has not been drawn prior to
the expiry of such LC, the Borrower shall pay an LC fee calculated on the
undrawn portion of such LC on the expiry date thereof, based upon the number of
days the LC was outstanding and a year of 365 days.

 

LG Fees

The Borrower shall
pay an LG fee on the date of issuance of any LG calculated on the face amount
of the LG issued and based on the number of days in the term thereof and a year
of 365 days.

 

BAs

The Borrower shall
pay an acceptance fee in advance on the date of issue of each BA at the
applicable rate provided for in this agreement.  Acceptance fees shall be calculated on the face amount of the BA
issued and based upon the number of days in the term thereof and a year of 365
days.

 

Limit on Interest

The Borrower shall
not be obligated to pay any interest, fees or costs under or in connection with
this agreement in excess of what is permitted by law.

 

Overdue Payments

Any amount that is
not paid when due hereunder shall, unless interest is otherwise payable in
respect thereof in accordance with the terms of this agreement or the
instrument or contract governing same, bear interest until paid at the rate of
RBP plus 5% per annum or, in the case of an amount in US currency, RBUSBR plus
5% per annum.

 

C-4

 

Equivalent Yearly
Rates

The annual rates
of interest or fees to which the rates calculated in accordance with this
agreement are equivalent, are the rates so calculated multiplied by the actual
number of days in the calendar year in which such calculation is made and
divided by 365.

 

Time and Place of
Payment

Amounts payable by
the Borrower hereunder shall be paid at the Branch of Account in the applicable
currency. Amounts due on a day other than a Business Day shall be deemed to be
due on the Business Day next following such day.  Interest and fees payable under this agreement are payable both
before and after any or all of default, maturity date, demand and judgement.

 

EXCHANGE RATE FLUCTUATIONS

If, for any
reason, the amount of Borrowings outstanding under any facility, when converted
to the Equivalent Amount in Canadian currency, exceeds the amount available
under such facility, the Borrower shall immediately repay such excess or shall
secure such excess to the satisfaction of the Bank.

 

INCREASED COSTS

The Borrower shall
reimburse the Bank for any additional cost or reduction in income arising as a
result of (i) the imposition of, or increase in, taxes on payments due to the
Bank hereunder (other than taxes on the overall net income of the Bank), (ii)
the imposition of, or increase in, any reserve or other similar requirement,
(iii) the imposition of, or change in, any other condition affecting the Credit
Facilities imposed by any applicable law or the interpretation thereof.

 

EVIDENCE OF INDEBTEDNESS

The Bank shall
open and maintain at the Branch of Account accounts and records evidencing the
Borrowings made available to the Borrower by the Bank under this agreement. The
Bank shall record the principal amount of each Borrowing, the payment of
principal and interest and all other amounts becoming due to the Bank under
this agreement.

 

The Bank’s
accounts and records constitute, in the absence of manifest error, conclusive  evidence of
the indebtedness of the Borrower to the Bank pursuant to this agreement.

 

The Borrower
authorizes and directs the Bank to automatically debit, by mechanical,
electronic or manual means, any bank account of the Borrower for all amounts
payable by the Borrower to the Bank pursuant to this agreement.

 

GENERAL ACCOUNT

The Borrower shall
establish a current account with the Bank (the “General Account”) for the
conduct of the Borrower’s day-to-day banking business.  If the balance in the General Account:

 

(a)                                  is
a credit, the Bank may apply, at any time in its discretion, the amount of such
credit or part thereof, rounded to the nearest $10,000 in Canadian currency or
US currency, as applicable, as a repayment of Borrowings outstanding by way of
RBP Loans or RBUSBR Loans, as applicable, under Facilities (1) & (2), or

 

(b)                                 is
a debit, the Bank may, subject to availability, make available a Borrowing by
way of an RBP Loan or RBUSBR Loans, as applicable, under Facilities (1) &
(2) in an amount, rounded to the nearest $10,000 in Canadian currency or US
currency, as applicable, as is required to place the General Account at not
less than a zero balance.

 

CONDITIONS PRECEDENT

The availability
of any Borrowing is conditional upon:

 

(a)                                  the
receipt of a duly executed copy of this agreement in form and substance
satisfactory to the Bank and reviewed by its solicitors, Bull Housser and
Tupper;

 

(b)                                 the
receipt of  the security provided for
herein, in form and substance satisfactory to the

 

C-5

 

Bank, registered as required to perfect and maintain
the security created thereby and such certificates, authorizations, resolutions
and legal opinions as the Bank may reasonably require;

 

(c)                                  the
receipt and review, to the satisfaction of the Bank, of  the US Credit Agreement;

 

(d)                                 there
being no material adverse change in financial condition;

 

(e)                                  the
representations and warranties being true and correct;

 

(f)                                    the
satisfactory execution, registration and receipt of documentation, including
all legal opinions, copies of all necessary corporate authorizations, documents
etc. as required;

 

(g)                                 no
event of default by the Borrower or Guarantors under any credit agreement will
have occurred or be continuing at the time of, or after giving effect to, any
Borrowing hereunder; and

 

(h)                                 the
receipt and approval of such financial and other information or documents
relating to the Borrower and Guarantors as the Bank may reasonably require, in
its sole discretion.

 

SECURITY

Security for the
Borrowings and all other obligations of the Borrower to the Bank shall include:

 

(a)                                  Guaranty
and Subordination Agreement for $25,000,000 provided by Best Buy Co., Inc. (a
“Guarantor”);

 

(b)                                 Guaranty
and Subordination Agreement for $25,000,000 provided by Best Buy Stores, L.P.
(a “Guarantor”).

 

REPRESENTATIONS AND WARRANTIES

The Borrower  represents and
warrants to the Bank which representations and warranties are deemed to be
repeated as at the time of each Borrowing hereunder that:

 

(a)                                  it
is a corporation duly incorporated, validly existing and duly registered or
qualified to carry on business in all jurisdictions where it carries on
business, including in the Province of British Columbia;

 

(b)                                 the
execution, delivery and performance by it of this agreement have been duly
authorized by all necessary actions and do not violate its constating documents
or any Applicable Laws or agreements to which it is subject or by which it is
bound;

 

(c)                                  no
event has occurred which constitutes, or which, with notice, lapse of time, or
both, would constitute, a breach of any covenant or other term or condition of
this agreement or any security agreement given in connection therewith.

 

(d)                                 its
most recent consolidated financial statements provided to the Bank fairly
present its financial position as of the date thereof and its results of
operations and cash flows for the fiscal period covered thereby, and since the
date of such financial statements, there has occurred no material adverse
change in its business or financial condition;

 

(e)                                  there
is no claim, action, prosecution or other proceeding of any kind pending or
threatened against it or any of its assets or properties before any court or
administrative agency which relates to any non-compliance with any
Environmental Law or any Release from its lands of a Contaminant into the
natural environment or which, if adversely determined, might have a material
adverse effect upon its financial condition or operations or its ability to
perform its obligations under this agreement or any of the

 

C-6

 

Bank’s security, and there are no circumstances of
which it is aware which might give rise to any such proceeding which it has not
fully disclosed to the Bank;

 

(f)                                    it
has good and marketable title to all of its properties and assets, free and
clear of any encumbrances, other than as may be provided for herein;

 

(g)                                 it
is in compliance in all material respects with all Applicable Laws including,
without limitation, all Environmental Laws;

 

(h)                                 it
possesses all licenses, patents, trade marks, service marks and copyrights,
free from material restrictions, that are necessary for the ownership,
maintenance and operation of its assets and businesses and it is not in
violation of any rights of others with respect to any of the foregoing;

 

(i)                                     it
has filed all material tax returns which were required to be filed by it, paid
or made provision for payment of all taxes and Potential Prior-Ranking Claims
(including interest and penalties) which are due and payable, and provided
adequate reserves for payment of any tax, the payment of which is being
contested.

 

REPORTING COVENANTS

The Borrower and
Guarantors covenant and agree with the Bank, while this agreement is in effect,
to provide the Bank with:

 

(a)                                  Quarterly:  unaudited consolidated financial statements
for the Borrower within 60 days of each of the first three fiscal quarters of
each fiscal year;

 

(b)                                 Quarterly:  unaudited consolidated financial statements
for Best Buy Co., Inc. within 60 days of each of the first three fiscal
quarters of each fiscal year;

 

(c)                                  Quarterly:
within 60 days after the close of each of the first three fiscal quarters of
the fiscal year of each Guarantor, an officer’s compliance certificate, to
include financial covenant calculations pertaining to the US Credit Agreement,
stating that as of the close of such fiscal quarter no default or event of
default had occurred and was continuing;

 

(d)                                 Annually:  within 120 days after the close of each of
the Guarantor’s fiscal years, an officer’s compliance certificate, to include
financial covenant calculations pertaining to the US Credit Agreement, stating
that as of the close of such fiscal quarter no default or event of default had
occurred and was continuing;

 

(e)                                  Annually:  unaudited consolidated financial statements
for the Borrower, within 120 days of each fiscal year end;

 

(f)                                    Annually:  audited consolidated financial statements
for Best Buy Co., Inc., within 120 days of each fiscal year end; and

 

(g)                                 Such
other financial and operating statements and reports as and when the Bank may
reasonably require.

 

GENERAL COVENANTS

The Borrower
covenants and agrees with the Bank, while this agreement is in effect:

 

(a)                                  to
pay all sums of money when due by it under this agreement;

 

(b)                                 to
provide the Bank with prompt written notice of any event which constitutes, or
which, with notice, lapse of time, or both, would constitute a breach of any
covenant or other term or condition of this agreement or any security agreement
given in connection

 

C-7

 

therewith;

 

(c)                                  to
keep its assets fully insured against such perils and in such manner as would
be customarily insured by companies carrying on a similar business or owning
similar assets;

 

(d)                                 if
the Borrower owns any commercial buildings located in Metropolitan Vancouver,
the Lower Fraser Valley, Metropolitan Victoria or Saanich Peninsula, then, in
addition to (c) above, the Borrower shall insure and keep fully insured such
commercial buildings against risk of earthquake;

 

(e)                                  to
file all material tax returns which are to be filed by it from time to time, to
pay or make provision for payment of all taxes (including interest and
penalties) and Potential Prior-Ranking Claims when due, and to provide adequate
reserves for the payment of any tax, the payment of which is being contested;

 

(f)                                    to
comply in all material respects with all Applicable Laws including, without
limitation, all Environmental Laws;

 

(g)                                 not
to, without the prior written consent of the Bank, grant, create, assume or
suffer to exist any mortgage, charge, lien, pledge, security interest or other
encumbrance affecting any of its properties, assets or other rights;

 

(h)                                 not
to, without the prior written consent of the Bank, sell, transfer, convey,
lease or otherwise dispose of any of its properties or assets other than in the
ordinary course of business and on commercially reasonable terms;

 

(i)                                     except
as required under section 5.25 of the US Credit Agreement, not to, without the
prior written consent of the Bank, guarantee or otherwise provide for, on a
direct, indirect or contingent basis, the payment of any monies or performance
of any obligations by any other Person, except as may be provided for herein;

 

(j)                                     to
provide the Bank with a minimum of 30 days’ prior written notice of any
intention to merge, amalgamate, or otherwise enter into any other form of
business combination with any other Person;

 

(k)                                  to
provide the Bank with prompt written notice of any non-compliance by the
Borrower with any Environmental Laws or any Release from the land of the
Borrower of a Contaminant into the natural environment and to indemnify and
save harmless the Bank from all liability of loss as a result of an
Environmental Activity or any non-compliance with any Environmental Law;

 

(l)                                     to
permit the Bank or its representatives, from time to time, to visit and inspect
the Borrower’s premises, properties and assets and examine and obtain copies of
the Borrower’s records or other information and discuss the Borrower’s affairs
with the auditors, counsel and other professional advisers of the Borrower;

 

(m)                               to
remain a wholly owned subsidiary, either directly or indirectly, of Best Buy
Co., Inc. at all times; and

 

(n)                                 to
notify the Bank within 5 days after receipt of any demand for a guarantee from
the Borrower under the US Credit Agreement.

 

Nothing contained
in the foregoing Covenants sections shall limit any right of the Bank under
this agreement to terminate or demand payment of, or cancel or restrict
availability of any unutilized portion of, any demand or other discretionary
facility made available under this agreement.

 

C-8

 

The Borrower and
Best Buy Co., Inc. covenant and agree with the Bank, while this agreement is in
effect:

 

(a)          to
notify the Bank within 5 days after any acceleration of indebtedness owing by
Best Buy Co., Inc. under the US Credit Agreement;

 

(b)         to
notify the Bank of any demand for security against the assets of Best Buy Co.,
Inc. and/or Best Buy Stores, L.P. by the lenders under the US Credit Agreement
within 5 days of the making of such demand; and

 

(c)          to
provide to the Bank a copy of all future amendments to the US Credit Agreement
within 15 days of execution thereof by the Guarantors.

 

Nothing contained
in the foregoing Covenants sections shall limit any right of the Bank under
this agreement to terminate or demand payment of, or cancel or restrict
availability of any unutilized portion of, any demand or other discretionary
facility made available under this agreement.

 

SUCCESSORS AND ASSIGNS

This agreement
shall be binding upon and enure to the benefit of the parties and their
respective successors and permitted assigns.

 

The Bank may
assign all or part of its rights and obligations under this agreement to any
Person.  The rights and obligations of
the Borrower under this agreement may not be assigned without the prior written
consent of the Bank.

 

The Bank may
disclose to potential or actual assignees confidential information regarding
the Borrower (including, any such information provided by the Borrower to the
Bank) and shall not be liable for any such disclosure.

 

GENERAL

 

Expenses

The Borrower
agrees to pay all fees (including legal fees), costs and expenses incurred by
the Bank in connection with the preparation, negotiation and documentation of
this agreement and the security provided for herein and the operation or
enforcement of this agreement and the security provided for herein.

 

Review

The Bank may
conduct periodic reviews of the affairs of the Borrower, as and when determined
by the Bank, for the purpose of evaluating the financial condition of the
Borrower.  The Borrower shall make
available to the Bank such financial statements and other information and
documentation as the Bank may reasonably require and shall do all things
reasonably necessary to facilitate such review by the Bank.

 

Potential
Prior-Ranking Claims

The Borrower
hereby grants its consent (such grant to remain in force as long as this
agreement is in effect or any Borrowings are outstanding) to any Person having
information relating to any Potential Prior-Ranking Claim arising by any law,
statute, regulation or otherwise and including, without limitation, claims by
or on behalf of government to release such information to the Bank at any time
upon its written request for the purpose of assisting the Bank to evaluate the
financial condition of the Borrower.

 

Set Off

The Bank is
authorized, but not obligated, at any time, to apply any credit balance,
whether or not then due, to which the Borrower is entitled on any account in
any currency at any branch or office of the Bank

 

C-9

 

in or towards
satisfaction of the obligations of the Borrower due to the Bank under this
agreement.  The Bank is authorized to
use any such credit balance to buy such other currencies as may be necessary to
effect such application.

 

Non-Merger

The provisions of
this agreement shall not merge with any security provided to the Bank, but
shall continue in full force for the benefit of the parties hereto.

 

Amendments and
Waivers

No amendment or
waiver of any provision of this agreement will be effective unless it is in
writing signed by the Borrower and the Bank. 
No failure or delay, on the part of the Bank, in exercising any right or
power hereunder or under any security document shall operate as a waiver
thereof.

 

Severability

If any provision
of this agreement is or becomes prohibited or unenforceable in any
jurisdiction, such prohibition or unenforceability shall not invalidate or
render unenforceable the provision concerned in any other jurisdiction nor
invalidate, affect or impair any of the remaining provisions of this agreement.

 

Life Insurance
Options

The Borrower
acknowledges that Borrowings are not insured under the Bank’s
Business Loan Insurance Program.

 

Judgement Currency

If for the purpose
of obtaining judgement in any court in any jurisdiction with respect to this
agreement, it is necessary to convert into the currency of such jurisdiction
(the “Judgement Currency”) any amount due hereunder in any currency other than
the Judgement Currency, then conversion shall be made at the rate of exchange
prevailing on the Business Day before the day on which judgement is given.  For this purpose “rate of exchange” means
the rate at which the Bank would, on the relevant date, be prepared to sell a
similar amount of such currency in the Toronto foreign exchange market, against
the Judgement Currency, in accordance with normal banking procedures.

 

In the event that
there is a change in the rate of exchange prevailing between the Business Day
before the day on which judgement is given and the date of payment of the
amount due, the Borrower will, on the date of payment, pay such additional
amounts as may be necessary to ensure that the amount paid on such date is the
amount in the Judgement Currency which, when converted at the rate of exchange
prevailing on the date of payment, is the amount then due under this agreement
in such other currency together with interest at RBP and expenses (including
legal fees on a solicitor and client basis). 
Any additional amount due from the Borrower under this section will be
due as a separate debt and shall not be affected by judgement being obtained
for any other sums due under or in respect of this agreement.

 

Governing Law

This agreement
shall be construed in accordance with and governed by the laws of the Province
of British Columbia and of Canada applicable therein.

 

Whole Agreement

This agreement,
the security and any other written agreement delivered pursuant to or referred
to in this agreement constitute the whole and entire agreement between the
parties in respect of the Credit Facilities. 
There are no verbal agreements, undertakings or representations in
connection with the Credit Facilities.

 

Joint and Several

Where more than
one Person is liable as Borrower [or Guarantor] for any obligation under this
agreement, then the liability of each such Person for such obligation is joint
and several with each other such Person.

 

C-10

 

Counterparts and
Facsimile Signatures

This agreement may
be executed in any number of counterparts and all such counterparts shall for
all purposes constitute one and the same agreement binding on all the parties
hereto notwithstanding that all parties are not signatories to the same
counterpart, provided that each party has signed at least one counterpart.  This agreement may be executed and delivered
by facsimile transmission and the parties hereto may rely upon all such
facsimile signatures as though such facsimile signatures were original
signatures.

 

Time

Time shall be of
the essence in all provisions of this agreement.

 

Acceptance

This offer is open
for acceptance until March 19, 2004,  after which
date it will be null and void, unless extended in writing by the Bank.

 

Please confirm
your acceptance of this agreement by signing the attached copy of this letter
in the space provided below and returning it to the undersigned.

 

	
  Yours truly,

  
	
   

  
	
  /s/ Keith
  Richmond

  	
   

  

 

 

We acknowledge and
accept the foregoing terms and conditions as of March 9, 2004.

 

Best Buy Canada Ltd./Magasins Best Buy Ltee

 

 

	
  By:

  	
  /s/ Kevin Layden

  	
   

  
	
  Name:

  
	
  Title:

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  
				

 

I/We have
authority to bind the corporation.

 

We acknowledge and
confirm our agreement with the foregoing terms and conditions, as Guarantor, as
of March 9, 2004.

 

Best Buy Co., Inc.

 

 

	
  By:

  	
  /s/ Ryan D. Robinson

  	
   

  
	
  Name: Ryan D. Robinson

  
	
  Title: V.P.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  
				

 

I/We have
authority to bind the corporation.

 

C-11

 

We acknowledge and
confirm our agreement with the foregoing terms and conditions, as Guarantor, as
of March 9, 2004.

 

Best Buy Stores, L.P.

By its General Partner BBC Property Co.

 

	
  By:

  	
  /s/  Ryan D. Robinson

  	
   

  
	
  Name:  Ryan D. Robinson

  
	
  Title:  V.P.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  
				

 

I/We have
authority to bind partnership.

 

C-12

 

Schedule “A” to
the agreement dated March 9, 2004 between Best Buy Canada Ltd./Magasins Best
Buy Ltee, as Borrower, and Royal Bank of Canada, as the Bank.

 

DEFINITIONS

 

For the purpose of
this agreement, the following terms and phrases shall have the following
meanings:

 

“Applicable Laws” means, with respect
to any Person, property, transaction or event, all present or future Applicable
Laws, statutes, regulations, rules, orders, codes, treaties, conventions,
judgements, awards, determinations and decrees of any governmental, regulatory,
fiscal or monetary body or court of competent jurisdiction in any applicable
jurisdiction;

 

“Bankers’ Acceptance” or “BA” mean a bill
of exchange, including a depository bill issued in accordance with the Depository Bills and Notes
Act (Canada), drawn on the Bank by, and payable to the order of, the
Borrower which have been accepted by the Bank;

 

“Branch of Account” means the branch
of the Bank at which the Borrower’s accounts are maintained.  As at the date of this agreement, the “Branch of Account”
is the Bank’s branch at 1025 West Georgia Street, Vancouver, B.C.;

 

“Business Day” means a day, excluding
Saturday, Sunday and any other day which shall be a legal holiday or a day on
which banking institutions are closed in the province of the Branch of Account;

 

“Contaminant” includes, without
limitation, any pollutant, dangerous substance, liquid waste, industrial waste,
hazardous material, hazardous substance or contaminant including any of the
foregoing as defined in any Environmental Law;

 

“Environmental Activity” means any
activity, event or circumstance in respect of a Contaminant, including, without
limitation, its storage, use, holding, collection, purchase, accumulation,
assessment, generation, manufacture, construction, processing, treatment,
stabilization, disposition, handling or transportation, or its Release into the
natural environment, including movement through or in the air, soil, surface
water or groundwater;

 

“Environmental Laws” means all
Applicable Laws relating to the environment or occupational health and safety,
or any Environmental Activity;

 

“Equivalent Amount” means, with
respect to an amount of any currency, the amount of any other currency required
to purchase that amount of the first mentioned currency through the Bank in
Toronto, in accordance with normal banking procedures;

 

“GAAP” means, generally accepted
accounting principles in effect from time to time in Canada applied in a
consistent manner from period to period;

 

“Letter of Credit” or “LC” means a
documentary credit issued by the Bank on behalf of the Borrower for the purpose
of paying suppliers of goods;

 

“Letter of Guarantee” or “LG” means a
documentary credits issued by the Bank on behalf of the Borrower for the
purpose of providing security to a third party that the Borrower or a person
designated by the Borrower will perform a contractual obligation owed to such
third party.

 

“Person” includes an individual, a
partnership, a joint venture, a trust, an unincorporated organization, a
company, a corporation, an association, a government or any department or
agency thereof, and any other incorporated or unincorporated entity;

 

“Potential Prior-Ranking Claims”
means all amounts owing or required to be paid, where the failure to

 

C-13

 

pay any such
amount could give rise to a claim pursuant to any law, statute, regulation or
otherwise, which ranks or is capable of ranking in priority to the Bank’s
security or otherwise in priority to any claim by the Bank for repayment of any
amounts owing under this agreement;

 

“RBP” and “Royal Bank Prime” each means the annual
rate of interest announced by the Bank from time to time as being a reference
rate then in effect for determining interest rates on commercial loans made in
Canadian currency in Canada;

 

“RBUSBR” and “Royal Bank US Base Rate”
each means the annual rate of interest announced by the Bank from time to time
as a reference rate then in effect for determining interest rates on commercial
loans made in US currency in Canada;

 

“Royal Bank Prime Acceptance Fee” or “RBPAF” means
the annual rate announced by the Bank from time to time as a reference rate then
in effect for determining fees on BAs.

 

“Release” includes discharge, spray,
inject, inoculate, abandon, deposit, spill, leak, seep, pour, emit, empty,
throw, dump, place and exhaust, and when used as a noun has a similar meaning;

 

“US” means United States of America;

 

“US Credit Agreement” defined as the
amended and restated credit agreement dated as of March 21, 2002 by and between
Best Buy Co., Inc., the lenders from time to time party thereto, and U.S. Bank
National Association, as agent for the lenders party thereto, as amended from
time to time.

 

C-14

 

Schedule “B” to
the agreement dated March 9, 2004 between Best Buy Canada Ltd./Magasins Best
Buy Ltee, as Borrower, and Royal Bank of Canada, as the Bank.

 

NOTICE
REQUIREMENTS

 

	
  Amount

  	
   

  	
  Prior Notice

  
	
   

  	
   

  	
   

  
	
  Under
  $10,000,000, Canadian or US currency

  	
   

  	
  By 10:00 a.m. on
  the day of Borrowing

  
	
   

  	
   

  	
   

  
	
  $10,000,000 up
  to but not including $25,000,000, Canadian or US currency

  	
   

  	
  By 10:00 a.m. 1
  Business Day prior to the day of Borrowing

  

 

C-15

 

Schedule “C” to
the agreement dated March 9, 2004 between Best Buy Canada Ltd./Magasins Best
Buy Ltee, as Borrower, and Royal Bank of Canada, as the Bank.

 

BORROWING
CONDITIONS

 

Borrowings made
otherwise than by way of RBP Loans or RBUSBR Loans will be subject to the
following terms and conditions:

 

	
  BAs:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  BAs shall be
  issued and mature on a Business Day and shall be issued in minimum face
  amounts of $500,000 or such larger amount as is a whole multiple of $100,000
  for terms of not less than 30 and not more than 180 days;

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  the Bank may, in
  its sole discretion, refuse to accept the Borrower’s drafts or limit the
  amount of any BA issue at any time;

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  notwithstanding
  any other provision of this agreement, the Borrower shall indemnify the Bank
  against any loss, cost or expense incurred by the Bank if any BA is repaid,
  prepaid, converted or cancelled other than on the maturity date of such BA;

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  any BA issued
  under a term facility must have a maturity on or before the maturity date of
  the term facility, unless otherwise agreed by the Bank; and

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  prior to the
  issue of any BA the Borrower shall execute the Bank’s standard form of
  undertaking and agreement in respect of BAs. 
  If there is any inconsistency at any time between the terms of this
  agreement and the terms of the Bank’s standard form of undertaking and
  agreement, the terms of this agreement shall govern.

  
	
   

  	
   

  	
   

  
	
  LCs or LGs:

  
	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  each LC and LG
  shall expire on a Business Day and shall have a term of not more than 365
  days;

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  at least 2
  Business Days prior to the issue of an LC or LG, the Borrower shall execute a
  duly authorized application with respect to such LC or LG and each LC and LG
  shall be governed by the terms and conditions of the relevant application for
  such contract;

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  an LC or LG may
  not be revoked prior to its expiry date unless the consent of the beneficiary
  of the LC or LG has been obtained; and

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  if there is any
  inconsistency at any time between the terms of this agreement and the terms
  of the application for LC or LG, the terms of the application for LC or LG
  shall govern.

  

 

C-16

 

Schedule “D” to
the agreement dated March 9, 2004 between Best Buy Canada Ltd./Magasins Best
Buy Ltee, as Borrower, and Royal Bank of Canada, as the Bank.

 

FEF  CONTRACTS
SCHEDULE

 

FEF Contract Definitions

 

“Foreign Exchange Forward Contract”
or “FEF Contract”
means a currency exchange transaction or agreement or any option with respect
to any such transaction now existing or hereafter entered into between the
Borrower and the Bank;

 

Conditions Applicable to FEF Contracts

 

At the Borrower’s
request, the Bank may agree to enter into FEF Contracts with the Borrower from
time to time.  The Borrower acknowledges
that the Bank makes no formal commitment herein to enter into any FEF Contract
and the Bank may, at any time and at all times, in its sole and absolute
discretion, accept or reject any request by the Borrower to enter into a FEF
Contract. If the Bank does enter into a FEF Contract with the Borrower, it will
do so subject to the following:

 

	
  (a)

  	
   

  	
  the Borrower
  shall promptly issue or countersign and return a confirmation or acknowledgement
  of the terms of each such FEF Contract as required by the Bank;

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  the Borrower
  shall, if required by the Bank, 
  promptly enter into a Foreign Exchange and Options Master Agreement or
  such other agreement in form and substance satisfactory to the Bank to govern
  the FEF Contract(s);

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  in the event of
  demand for payment under the agreement of which this schedule forms a part,
  the Bank may terminate all or any FEF Contracts. If the agreement governing
  any FEF Contract does not contain provisions governing termination, any such
  termination shall be effected in accordance with customary market
  practice.  The Bank’s determination of
  amounts owing under any terminated FEF Contract shall be conclusive in the
  absence of manifest error.  The Bank
  shall apply any amount owing by the Bank to the Borrower on termination of
  any FEF Contract against the Borrower’s obligations to the Bank under the
  agreement and any amount owing to the Bank by the Borrower on such
  termination shall be added to the Borrower’s obligations to the Bank under
  the agreement and secured by the Bank’s security;

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  the Borrower
  shall pay all required fees in connection with any FEF Contracts and
  indemnify and hold the Bank harmless against any loss, cost or expense
  incurred by the Bank in relation to any FEF Contract;

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  any rights of
  the Bank herein in respect of any FEF Contract are in addition to and not in
  limitation of or substitution for any rights of the Bank under any agreement
  governing such FEF Contract.  In the
  event that there is any inconsistency at any time between the terms hereof
  and any agreement governing such FEF Contract, the terms of such agreement
  shall prevail.

  

 

C-17

 

EXHIBIT D  

TO SECOND AMENDMENT

TO CREDIT AGREEMENT

 

[Copy of Canadian
Guaranties]

 

D-1

 

GUARANTY AND SUBORDINATION AGREEMENT

(General Guaranty)

 

To:                              ROYAL BANK OF CANADA:

 

FOR VALUE RECEIVED, and in order to induce Royal Bank of Canada (the
“Bank”) to grant, extend or continue credit or other financial accommodations
to

 

Best Buy Canada Ltd./Magasins Best Buy Ltee (the “Customer”),

 

the undersigned (the “Guarantor”) unconditionally and irrevocably
guarantees to the Bank and its successors and assigns, the complete and
punctual payment when due (whether at the stated maturity or earlier by
acceleration or otherwise) of all Liabilities (as defined in the next sentence)
at any time owing by the Customer to the Bank. 
“Liabilities” as used in this Guaranty means all indebtedness,
obligations, liabilities and other amounts due, of whatever nature, of the
Customer to the Bank arising under or in connection with the credit facilities
described in and to be provided pursuant to the terms of the offer letter dated
March 9, 2004 (as the same may be amended, extended, renewed, restated,
superseded or replaced from time to time, the “Cdn Credit Agreement”) given by
the Bank to the Customer, as such credit facilities may from time to time be
amended, extended, renewed, restated, superseded or replaced with the
acknowledgement, confirmation or consent of the Guarantor (collectively the
“Credit Facilities”),whether now existing or hereafter incurred, whether
matured or unmatured, whether absolute or contingent, whether characterized as
principal, premium, interest, additional interest, fees, expenses or otherwise
and whether the Customer is bound alone or with any others or as principal or
as surety.

 

PROVIDED, however, that, regardless of the amount of the Liabilities of
the Customer to the Bank, the liability of the Guarantor hereunder is limited
to the greater of (a) the maximum liability that the Guarantor can incur
hereunder without rendering itself insolvent and (b) the amount in United
States Dollars of the value received by the Guarantor as a result of the
financial accommodations made available by the Bank to the Customer.  The terms “value” and “insolvent”, as used
in this proviso shall have the same meanings as in 11 U.S.C. §§ 548(a)(2)(A)
and (B), respectively.  If for any
reason this Guaranty would be otherwise avoidable as a fraudulent transfer
(whether under state law or the United States Bankruptcy Code), then the terms
“value” and “insolvent” as used herein shall be defined and the limitation on
the liability of the Guarantor shall be deemed to operate in such a manner as
to prevent this Guaranty from being avoided as a fraudulent transfer while
preserving the liability of the Guarantor to the fullest extent legally
permissible.  Notwithstanding anything
to the contrary contained herein, the maximum liability of Guarantor under this
Guaranty shall be limited to Cdn. $25,000,000 plus interest thereon from the
date of demand for payment at a rate equal to “Royal Bank Prime” plus 5% per
annum, both before and after default and judgment.   The term “Royal Bank Prime” means the annual rate of
interest  announced by the Bank from
time to time as being a reference rate then in effect for determining interest
rates on commercial loans made in Canadian currency in Canada, and “Cdn. $”
means dollars of lawful currency of Canada.

 

D-2

 

This Guaranty may be terminated only upon written notice to the Bank
and only with respect to Liabilities thereafter incurred or arising.  Any such termination shall not affect the
liability of the Guarantor under this Guaranty with respect to Liabilities
created or incurred prior to the effective date of such termination.  Without limiting the foregoing, any such
termination shall not relate to any approval given, commitment made or
liability incurred by the Bank to or for the benefit of the Customer prior to
the effective date of such termination even though not then matured, and upon
any such termination, the Guarantor shall nevertheless remain liable with
respect to all Liabilities, and the performance of all duties, created or
arising theretofore or based on a commitment theretofore entered into or any
approval, commitment or liability theretofore given, made or incurred to or for
the benefit of the Customer to the full extent of the Guarantor’s liability
therefor as provided herein.

 

THE GUARANTOR FURTHER AGREES WITH THE BANK AS FOLLOWS:

 

1.                                       Certain Rights of Bank.  At
any time and from time to time (and whether once or more than once), without
the necessity of any reservation of rights against the Guarantor and without
notice to, demand on or further assent by the Guarantor or any other person:

 

	
  (a)

  	
   

  	
  any collateral security (which term as used in this Guaranty includes
  other guaranties) held by or available to the Bank in respect of the
  Liabilities or in respect of any guaranty of the Liabilities may be sold,
  exchanged, waived, subordinated, surrendered or released, in whole or in part
  and in any order;

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  any of the Liabilities or the obligations of any other guarantor of
  the Liabilities may be changed, renewed, extended, continued, accelerated,
  surrendered, compromised, subordinated, waived or released, in whole or in
  part, or any default with respect thereto waived or any demand for payment
  with respect thereto rescinded;

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  the Bank may set off, refrain from setting off or release, in whole
  or in part, any balance of any and all deposits (general or special) or
  credits on its books in favour of the Customer or of any such guarantor, may
  take or refrain from taking or perfecting any security interest in any
  collateral security and may exercise or refrain from exercising any right
  against the Customer or any other person;

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  the Bank may extend or refrain from extending further credit or
  financial accommodations in any manner whatsoever to, may accept compositions
  from and may otherwise generally deal with the Customer and any other person
  and with any collateral security as the Bank may see fit; and

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  the Bank may apply all moneys at any time received from the Customer
  or any other person or from any collateral security in such manner, in such
  amounts and against such part of the Liabilities as the Bank considers best
  and change any such application in whole or in part as the Bank may see fit.

  

 

All of these actions may be taken without in any way limiting,
diminishing or affecting the Guarantor’s liability under this Guaranty and
without imposing any obligation of trust on the Bank, and no loss of or in
respect of any collateral security, whether caused by the fault of the

 

D-3

 

Bank or otherwise, shall in any way limit, diminish or affect the
Guarantor’s liability under this Guaranty.

 

2.                                       Liability of Guarantor Unconditional. 
This Guaranty is a guaranty of payment and not merely of
collection.  The Guarantor’s liability
under this Guaranty is absolute and unconditional and shall not be limited, diminished
or affected by the happening from time to time of any event, including (but not
limited to) any event described in paragraph 1 of this Guaranty and any of the
following events, whether or not any such event occurs with notice to or with
the consent of the Guarantor or once or more than once:

 

	
  (a)

  	
   

  	
  the waiver, surrender, compromise, settlement, discharge, release or
  termination of any or all of the Liabilities;

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  the failure to give any notice to the Customer;

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  the extension of the time for payment or performance of any of the
  Liabilities;

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  the change (whether or not material) of the terms of any document
  relating to the Liabilities (a “Document”);

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  the taking of or failure to take any action referred to in any
  Document;

  
	
   

  	
   

  	
   

  
	
  (f)

  	
   

  	
  the illegality, invalidity, unenforceability (including, but not
  limited to, by reason of any statute of limitations or automatic stay) or
  irregularity of any of the Liabilities or any Document;

  
	
   

  	
   

  	
   

  
	
  (g)

  	
   

  	
  any failure, omission, delay or lack of diligence on the part of the
  Bank in the enforcement, assertion or exercise of any right, power or remedy
  conferred on the Bank under any Document, or the inability of the Bank to
  enforce any provision of any Document for any reason, or any other act or
  omission on the part of the Bank, including (but not limited to) failure by
  the Bank to perfect or protect any lien or security interest granted to the
  Bank, to commence and prosecute any action to collect the Liabilities or to
  enforce or collect any judgment obtained by the Bank;

  
	
   

  	
   

  	
   

  
	
  (h)

  	
   

  	
  the dissolution or liquidation of the Customer, the sale or other
  disposition of all or substantially all of the assets of the Customer, the
  marshalling of assets and liabilities of the Customer or the existence of
  receivership, insolvency, assignment for the benefit of creditors,
  bankruptcy, reorganization, arrangement, adjustment, composition or other
  similar proceedings affecting the Customer; and

  
	
   

  	
   

  	
   

  
	
  (i)

  	
   

  	
  any other event, action or circumstance that would, in the absence of
  this subparagraph (i), result in the release or discharge of the Guarantor
  from the performance or observance of any obligation, covenant or agreement
  contained in this Guaranty.

  

 

3.                                       Waiver of Notice.  The
Guarantor waives all notices of the creation, renewal, extension or accrual of
any of the Liabilities and notice or proof of reliance by the Bank on this
Guaranty or

 

D-4

 

acceptance of this Guaranty. 
The Liabilities shall conclusively be considered to have been created,
contracted or incurred in reliance on this Guaranty, and all dealings between
the Customer and the Bank shall likewise be conclusively presumed to have been
had or consummated in reliance on this Guaranty.  The Guarantor also waives (to the extent permitted by applicable
law) all requirements of notice, presentment, protest or demand on it, the
Customer or any other person, all other notices and demands whatsoever relating
to the Liabilities and any requirement that the Bank file a claim with a court
in any bankruptcy or similar proceedings of the Customer or first proceed
against the Customer or any other person or first realize on any collateral
security held by it or otherwise exhaust any right, power or remedy under any
Document or against the Customer or any other person before proceeding against
the Guarantor under this Guaranty.  The
Bank shall have no responsibility to notify the Guarantor of the Customer’s
financial condition or the Customer’s incurrence or performance of the Liabilities.

 

4.                                       Continuing Guaranty. 
This Guaranty is a continuing guaranty, shall not be discharged until
performance and payment in full of all of the Liabilities, payment of all
amounts payable by the Guarantor under this Guaranty and cancellation of this
Guaranty provided by the Bank to the Customer and shall remain in full force
and effect notwithstanding any interruption in the business relations between
the Customer and the Bank or any increase or decrease (including a decrease to
zero) from time to time in the amount of the Liabilities.  If demand for, or acceleration of the time
for, payment by the Customer to the Bank of any of the Liabilities is stayed
upon the insolvency, bankruptcy, reorganization or proposed compromise or
arrangement with creditors of the Customer, all Liabilities of which payment or
performance is stayed that would otherwise be subject to demand for payment or
acceleration shall nonetheless be payable by the Guarantor immediately on
demand by the Bank.

 

5.                                       Reinstatement. 
This Guaranty shall continue to be effective, or shall be reinstated, if
at any time payment, or any part thereof, of any of the Liabilities is
rescinded or must otherwise be returned by the Bank for any reason whatsoever
(including, but not limited to, the bankruptcy, insolvency, dissolution,
liquidation or reorganization of the Customer or any other person), all as
though such payment had not been received by the Bank.

 

6.                                       Subordination.  All
indebtedness, obligations, liabilities and other amounts due, of whatever
nature, of the Customer to the Guarantor (the “Subordinated Debt”), whether now
existing or hereafter incurred, whether created directly or acquired by the
Guarantor by assignment or otherwise, whether matured or unmatured, whether
absolute or contingent, whether characterized as principal, premium, interest,
additional interest, fees, expenses or otherwise and whether the Customer is
bound alone or with any others or as principal or as surety, shall be subject
and subordinate to the Liabilities, and no payment shall be made or received on
account of the Subordinated Debt until all of the Liabilities have been paid
and satisfied.  Notwithstanding the
foregoing, indebtedness, obligations, liabilities and other amounts due from
the Customer to the Guarantor with respect to royalty and licensing fees,
expense reimbursements, capital purchases and inventory purchases
(collectively, “Trade Debt”) shall not be considered Subordinated Debt.  All moneys received by the Guarantor in
respect of the Subordinated Debt contrary to the foregoing shall be received in
trust for the Bank and paid over to the Bank. 
This subordination is independent of the guaranty provided in this
Guaranty and shall remain in full force and effect for so long as the Guarantor
has any liability under this

 

D-5

 

Guaranty.  Assets of the
Customer held by the Guarantor, whether in the form of deposits, collateral
security or otherwise, except for assets held for the purpose of paying Trade
Debt then owing, shall not at any time be set off against the Subordinated Debt
but shall be held in trust for the Bank. 
The Guarantor hereby undertakes to execute such additional documents and
to do such additional acts as may be necessary or desirable (in the reasonable
opinion of the Bank) in order to carry out, complete or perfect this
subordination.

 

7.                                       Limits on Subrogation.  No
payment by the Guarantor pursuant to any provision of this Guaranty or other
satisfaction of the Guarantor’s liability under this Guaranty shall entitle the
Guarantor, by subrogation or otherwise, to any right or remedy against the
Customer until after the indefeasible payment in full of the Liabilities.

 

8.                                       Costs, Expenses, Etc.  The
Guarantor agrees to pay on demand all losses, costs, expenses (including, but
not limited to, the actual amount of attorneys’ fees) and damages incurred by
the Bank in connection with the preparation of this Guaranty or any amendment,
waiver or consent with respect to this Guaranty, in connection with any
rescission or return referred to in paragraph 5 of this Guaranty, in enforcing
or attempting to enforce this Guaranty or any other guaranty of the Liabilities
or in protecting the Bank’s rights under this Guaranty or any other guaranty of
the Liabilities following any default by the Guarantor under this Guaranty,
whether the Bank’s rights are enforced by suit or otherwise.

 

9.                                       Obligations Additional. 
This Guaranty and the Guarantor’s liability under this Guaranty are in
addition to and not in substitution for:

 

	
  (a)

  	
   

  	
  any other collateral security, by whomsoever given, at any time held
  by the Bank and

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  any present or future obligation of the Guarantor or any other
  obligor to the Bank incurred otherwise than under this Guaranty,

  

 

whether the Guarantor or such other obligor is bound with or apart from
the Customer.

 

10.                                 Payments.  All payments under this
Guaranty shall be made to the Bank at such branch, agency or affiliate of the
Bank as the Bank may require, in immediately available funds and without
setoff, counterclaim or deduction of any kind, and shall be made in the lawful
currency in which the Liabilities are payable (“Primary Currency”).  Without in any manner limiting the
Guarantor’s obligations contained in the preceding sentence, if any sum is paid
to and received by the Bank under this Guaranty in a currency other than the
Primary Currency (such other currency is called the “Alternative Currency”),
whether by judgment (and notwithstanding the rate of exchange actually applied
in such judgment) or otherwise, the Guarantor’s liability under this Guaranty
shall nevertheless be discharged only to the extent of the net amount of
Primary Currency that the Bank is able in accordance with its normal banking
procedures to purchase with such amount of Alternative Currency.  If the Bank is not able to purchase with
such amount of Alternative Currency sufficient Primary Currency to discharge
the Guarantor’s liability under this Guaranty in full, the Guarantor’s
obligations to the Bank with respect to such difference shall be due as a
separate debt and shall not be affected by payment of or judgment being
obtained for any other sums due under this Guaranty.

 

D-6

 

11.                                 Successors and Assigns. 
This Guaranty shall inure to the benefit of the Bank and its successors,
transferees and assigns and shall bind the Guarantor and the Guarantor’s heirs,
executors, administrators, legal representatives, successors and assigns;
provided, however, that the Guarantor may not assign its rights or obligations
under this Guaranty without the Bank’s prior written consent.  If the Guarantor is a partnership, the
Guarantor’s liability under this Guaranty shall remain in full force and effect
notwithstanding any change in the parties comprising the partnership and the
term “Guarantor” shall include any altered or successive partnerships, but the
predecessor partnerships and their partners shall continue to be bound under
this Guaranty.

 

12.                                 Joint and Several Obligations.  If
this Guaranty is executed by more than one party, each party’s liability under
this Guaranty shall be joint and several; provided, however, that this Guaranty
shall be construed for all purposes as if a separate, identical agreement
(including the amount of any limitation on the Guarantor’s liability) had been
executed by each party.  The Guarantor’s
liability under this Guaranty shall not in any way be changed, reduced or
terminated as a result of:

 

(a)                                  any change or reduction in or termination of
the obligations of any other guarantor of the Liabilities,

 

(b)                                 the death or loss or diminution of capacity
of any other guarantor of the Liabilities or

 

(c)                                  the failure of any other person to execute
this or any other guaranty of the Liabilities.

 

13.                                 Waivers and Amendments, Cumulative Remedies.  The
Bank shall not be obligated to exercise any right, power or privilege under
this Guaranty, and no failure to exercise and no delay in exercising, on the
part of the Bank, any such right, power or privilege under this Guaranty shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.  No notice to
or demand on the Guarantor shall be deemed to be a waiver of the Bank’s right
to take further action without notice or demand as provided herein.  No waiver shall be applicable except in the
specific instance for which given or shall in any way impair the Bank’s rights
or the Guarantor’s liability in any other respect or at any other time, nor in
any event shall any modification or waiver of any provision of this Guaranty be
effective unless in writing and signed on behalf of the Bank.  The rights and remedies provided in this
Guaranty are cumulative and are not exclusive of any other right or remedy provided
by law, in equity or under any other agreement or instrument.

 

14.                                 Representations and Warranties.  The
Guarantor represents and warrants to the Bank that:

 

(a)                                   it is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization;

 

(b)                                 the Guarantor has full capacity and authority
to execute, deliver and perform this Guaranty, and the execution, delivery and
performance of this Guaranty will not:

 

D-7

 

(i)                                     violate any law or regulation,

 

(ii)                                  violate any provision of the Guarantor’s
organizational documents,

 

(iii)                               violate or constitute (with due notice or
lapse of time or both) a default under any indenture, agreement, license or
other instrument to which the Guarantor is a party or by which the Guarantor or
any of the Guarantor’s properties may be bound,

 

(iv)                              violate any order of any court, tribunal or
governmental agency binding on the Guarantor or any of the Guarantor’s
properties or

 

(v)                                 result in the creation or imposition of any
lien of any nature whatsoever on any of the Guarantor’s properties or assets;

 

(c)                                  no
approval or consent of, or filing or registration with, any federal, state or
local regulatory authority is required in connection with the execution,
delivery and performance of this Guaranty; and

 

(d)                                 this Guaranty constitutes the legal, valid and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with its terms.

 

These representations and warranties shall survive the execution of
this Guaranty.

 

15.                                 Financial Information.  The
Guarantor agrees to furnish promptly to the Bank copies of the Guarantor’s
annual and quarterly financial statements and such other information relating
to the Guarantor’s business and financial condition as the Bank may from time
to time reasonably request.

 

16.                                 Stamp Taxes, Etc. The Guarantor agrees to indemnify the Bank
against any claim or liability for any stamp, excise or other similar taxes and
any penalties or interest with respect thereto that may be imposed, levied,
collected, withheld or assessed by any jurisdiction in connection with the
execution and delivery of this Guaranty, any document related to this Guaranty
or any modification of this Guaranty or any such document.  This covenant shall survive the termination
of this Guaranty.

 

17.                                 Withholding Tax.  Any
and all payments by the Guarantor hereunder shall be made free and clear of,
and without deduction for, any and all present and or future taxes.  If the Guarantor is required by law to
deduct any taxes from or in respect of any sum payable hereunder to the Bank,
(a) the sum payable shall be increased by the amount necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 16) the Bank will receive an amount equal to
the sum it would have received had no such deductions been made; (b) the
Guarantor shall make such deductions; and (c) the Guarantor shall pay the full
amount deducted to the relevant taxing authority or other governmental
authority in accordance with applicable law and promptly forward to the Bank an
official receipt or other documentation acceptable to the Bank evidencing such
payment.

 

D-8

 

18.                                 Governing Law, Submission to Jurisdiction. 
This Guaranty and the rights and obligations of the Bank and of the
Guarantor under this Guaranty shall be governed by and construed in accordance
with the laws of the State of Minnesota. 
For purposes of any suit, action or proceeding involving this Guaranty
or any judgment entered by any court in respect of such suit, action or
proceeding, the Guarantor expressly submits to the non-exclusive jurisdiction
of any Minnesota court of competent jurisdiction sitting in Minneapolis or St.
Paul, Minnesota, and agrees that any order, process or other paper may be
served upon the Guarantor within or without such court’s jurisdiction by
mailing a copy to the Guarantor at the Guarantor’s address for notices provided
in this Guaranty, provided that a reasonable time for appearance is
allowed.  The Guarantor irrevocably
waives any objection the Guarantor may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this
Guaranty brought in any such court and further irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. 
Nothing contained in this Guaranty shall affect the Bank’s right to
serve legal process in any other manner permitted by law or to bring any action
or proceeding against the Guarantor or the Guarantor’s property in the courts
of other jurisdictions.

 

19.                                 Severability.  Any
provision of this Guaranty that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Guaranty, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate such provision or render it unenforceable
in any other jurisdiction.

 

20.                                 Notices.  Notices and other
communications with respect to this Guaranty shall be in writing (including
telecommunications) and made or delivered to the party to which such notice or
other communication is required or permitted to be given or made at the
address(es) shown on the signature page of this Guaranty or at such other
address as shall be designated by such party in a written notice to the other party
given in accordance with this paragraph and shall be considered delivered on
receipt if telecommunicated or delivered by messenger or courier service or
five days after mailing, postage prepaid. 
All mailed notices shall be by certified or registered mail.

 

21.                                 Headings.  The headings used in this
Guaranty are for convenience only and shall not affect the construction of this
Guaranty.

 

22.                                 Waiver of Jury Trial.  EACH PARTY TO THIS GUARANTY, AND  BY ITS ACCEPTANCE OF THIS GUARANTY THE BANK,
KNOWINGLY, VOLUNTARILY  AND
INTENTIONALLY WAIVES ANY RIGHT TO A JURY TRIAL OF ANY DISPUTE

 

D-9

 

RELATING TO THIS GUARANTY AND AGREES THAT ANY SUCH
DISPUTE SHALL BE  TRIED BEFORE A JUDGE SITTING WITHOUT A JURY

 

IN WITNESS WHEREOF, the Guarantor has executed this Guaranty, or has
caused this Guaranty to be executed by its duly authorized officer or partner,
as of the 9th day of March, 2004.

 

 

	
  Address for Notices:

  	
   

  	
  BEST BUY STORES, L.P.

  
	
   

  	
   

  	
  By: BBC PROPERTY CO.

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
  7601 Penn Avenue South

  	
   

  	
  By:

  	
  /s/  Ryan D. Robinson

  	
   

  
	
  Richfield, Minnesota 55423

  	
   

  	
  Name: Ryan D. Robinson

  
	
  Attention:  General Counsel

  	
   

  	
  Title: V.P.

  
	
  Telephone:612-291-7445

  	
   

  	
   

  
	
  Telefax:  612-292-2323

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Bank’s Address for Notices:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Royal Bank of Canada

  	
   

  	
   

  
	
  Commercial Markets, Greater Vancouver

  	
   

  	
   

  
	
  36th Floor, 1055 West Georgia Street

  	
   

  	
   

  
	
  Vancouver, British Columbia, V6E 3S5

  	
   

  	
   

  
	
  Telephone:  604-665-8409

  	
   

  	
   

  
	
  Telefax:  604-665-6368

  	
   

  	
   

  

 

D-10Exhibit 4.2

 

February 26, 2004

 

 

Best Buy Canada
Ltd.

8800 Glenlyon
Parkway

Burnaby, British
Columbia

V5J 5K3

 

	
  Attention:

  	
   

  	
  Mr.
  Kevin Layden

  
	
   

  	
   

  	
  President
  and Chief Operating Officer

  

 

Dear Sirs:

 

We refer to the
offer letters (the “Existing Offer Letters”) from HSBC Bank
Canada (the “Bank”) to Best Buy Canada Ltd./Magasins Best Buy Ltée (the “Borrower”)
dated September 13, 2002, September 16, 2003 and January 20, 2004.  On the basis of information provided by you
in connection with your request for the Bank’s consent to the proposed internal
reorganization of the Borrower scheduled to occur on or before February 29,
2004, pursuant to which:

 

(i)                                   the Borrower and its sole parent corporation, Future Shop Acquisition,
Inc.  (“Acquisitionco”)
shall amalgamate under the name Best Buy Canada Ltd./Magasins Best Buy Ltée (“BYCA-Amalco”)
(the
“Amalgamation”); and

 

(ii)                                the indebtedness in the aggregate principal amount of $610,000,000,
together with interest accrued thereon, owed by the Borrower to Acquisitionco
(the “Subordinated
Debt”)
shall either be extinguished as a result of the Amalgamation by operation of
law or repaid, wholly or in part, prior to the Amalgamation,

 

we are pleased to
advise that the Bank consents to the transactions contemplated by such internal
reorganization as set out above (the “Consent”) and has authorized the continued
availability of the credit facilities set out in the Existing Offer Letters
(the “Loans”),
subject to the following amendments:

 

1.                         Borrower:

 

1.1.                           The Borrower agrees that BBYCA-Amalco shall execute and accept this
third supplemental offer letter.

 

Upon Amalgamation:

 

1.2.                           BBYCA-Amalco shall be bound by all the indebtedness, liabilities, and
obligations of the Borrower to the Bank prior to the Amalgamation arising from
and in connection with the Existing Offer Letters, this third supplemental
offer letter, the Loan Documents to which the Borrower is a party, and the
Loans; and

 

 

 

HSBC Bank Canada

Vancouver Main
Branch

Suite 200 — 885
West Georgia Street, Vancouver, BC V6C 3G1

Tel: (604) 685-1000                    Fax: (604) 641-1808

Telex: 04-507750

 

 

 

Page 2

 

 

1.3.                           Any reference to the “Borrower” in the Existing Offer Letters shall be
deemed to be amended and substituted by BBYCA-Amalco.

 

2.                         Credit
Facilities:

 

2.1.                           Subject to section 2.2 below, on March 1, 2004 all Indebtedness owed by
the Borrower to the Bank in connection with the Loans shall be repaid in full
and the Loans cancelled immediately thereafter.

 

2.2.                           All letters of credit and bank guarantees issued and outstanding at the date
of this third supplemental offer letter under the Documentary Credit
Sub-Facility (the “Existing Documentary Credits”) shall
become the obligations of BBYCA-Amalco upon Amalgamation and shall survive the
cancellation of the Loans; for great clarification, the Documentary Credit
Sub-Facility shall be amended in that no further letters of credit or bank
guarantees shall be issued by the Bank after the date of this third
supplemental offer letter.  For greater
certainty, the face amount of the outstanding letters of credit and bank
guarantees amount to approximately CDN$2,440,824 (this figure includes
conversion to Canadian Dollars of outstanding US Dollar letters of credit).

 

3.                                    Conditions
Precedent:

 

It shall be a condition precedent to the Consent
and the continued availability of the Loans that the Bank shall have received
this third supplemental offer letter signed by all the parties hereto other
than BBYCA-Amalco (who shall sign the letter promptly after the Amalgamation
occurs).

 

4.                                    Repayment
of Subordinated Debt:

 

Notwithstanding anything to the contrary contained
in the Existing Offer Letters or the Loan Documents, the Subordinated Debt may
be repaid to Acquisitionco provided the Subordinated Debt is not repaid from
any proceeds of the Loans or extinguished by operation of the Amalgamation.

 

5.                                    Counterparts:

 

This third supplemental offer letter may be
executed in one or more counterparts, by telecopier or otherwise, all of which
taken together shall constitute one and the same original second supplemental
offer letter.

 

6.                                    Guarantors:

 

By executing this third supplemental offer letter,
each of the Guarantors hereby acknowledges and affirms to the Bank:

 

6.1.                              its continuing obligations under the Loan Documents to which it’s a
party and, in particular, but without limitation of the foregoing, that the
Loan Documents

 

 

 

Page 3

 

 

previously
executed by it shall be and remain valid and continuing Loan Documents
enforceable in accordance with their terms notwithstanding the Amalgamation or
the repayment of the Subordinated Debt:

 

6.2.                              that, without limitation of the foregoing or any term or provision of
the guarantee provided it, such guarantee is and shall continue to be a good,
valid and continuing guarantee of and security for, as the case may be, all of
the present and future indebtedness, liabilities, obligations of BBYCA-Amalco,
being the Borrower for the purposes of the Existing Offer Letters on and after
the Amalgamation.

 

Unless otherwise
defined herein, all the words capitalized in this third supplemental offer
letter shall have the meanings ascribed to such terms in the Existing Offer
Letters.

 

The Existing Offer
Letters shall henceforth be read and construed in conjunction with this third
supplemental offer letter and shall be deemed to be amended and supplemented
hereby, but only to such extent as may be necessary to give full force and
effect to the provisions hereof. 
Nothing contained in this third supplemental offer letter shall in any
way prejudice or derogate from any provision contained in the Existing Offer
Letters, except to the extent that any provision of this second supplemental
offer letter may be inconsistent or conflict with any provision of the Existing
Offer Letters, in which case the provisions hereof shall prevail, but save as aforesaid
the Existing Offer Letters and all the terms, covenants and conditions thereof,
shall be and continue to be in full force and effect as extended, supplemented
and amended hereby.

 

Without limiting
any of the foregoing, the Borrower and the Guarantors acknowledge and agree
that there shall not, by virtue of any amendments to the Existing Offer Letters
or the Loans effected hereby, be deemed to have been any refinancing,
repayment, extinguishment or novation of any indebtedness, obligation or liability
of the Borrower and Guarantors, or any of them, existing at the date of the
issuance of this third supplemental offer letter.

 

 

 

Page 4

 

 

Kindly acknowledge
and confirm your agreement to and acceptance of the foregoing terms and
conditions by returning the enclosed duplicate copy of this letter executed by
the Borrower and Guarantors by not later than February 29, 2004.

 

Yours truly,

 

HSBC BANK CANADA

 

 

 

	
  By:

  	
   

  	
  /s/
  Bruce Clarke

  	
   

  	
  By:

  	
  /s/
  John Davis

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bruce
  Clarke

  	
   

  	
  John
  Davis

  
	
   

  	
   

  	
  Vice
  President

  	
   

  	
  Assistant
  Vice President

  
	
   

  	
   

  	
  Commercial
  Financial Services

  	
   

  	
  Commercial
  Financial Services

  

 

• • • • • • • •

 

ACKNOWLEDGED AND
AGREED THIS 26TH DAY OF FEBRUARY, 2004.

 

 

THE BORROWER:

 

BEST BUY CANADA
LTD. MAGASINS BEST BUY LTÉE.

 

 

 

 

Per:         /s/ Kevin Layden

 

 

 

 

Per:         ____________________________

 

 

THE GUARANTORS:

 

	
  BEST
  BUY CO., INC.

  	
   

  	
  BEST
  BUY STORES, L.P. by its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  BBC
  PROPERTY CO.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Per:

  	
  /s/
  Joseph M. Joyce

  	
   

  	
  Per:

  	
   

  	
  /s/
  Joseph M. Joyce

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Per:

  	
  /s/
  David P. Berg

  	
   

  	
  Per:

  	
   

  	
  /s/
  David P. Berg

  

 

 

 

 

Page 5

 

 

ACQUISITIONCO:

 

FUTURE SHOP
ACQUISITION, INC.

 

 

 

 

Per:         /s/ Kevin Layden

 

 

 

 

Per:         ____________________________

 

 

BBYCA-AMALCO:

 

BESTBUY CANADA
LTD./MAGASINS BEST BUY LTÉE.

 

 

 

 

Per:         /s/ Kevin Layden

 

 

 

 

Per:         ____________________________

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