<PAGE>
As filed with the Securities and Exchange Commission on April 3, 1998
Registration Statement No. 33-_______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BEST BUY CO., INC.
--------------------------------------------------
(Exact name of issuer as specified in its charter)
Minnesota 41-0907483
------------------------ -------------------
(State of incorporation) (I.R.S. Employer
Identification No.)
7075 Flying Cloud Drive
Eden Prairie, Minnesota 55344
-------------------------------------- -------------------
(Address of Principal Executive Offices) (Zip Code)
Best Buy Co., Inc.
Deferred Compensation Plan
--------------------------
(Full title of the plan)
Richard M. Schulze
7075 Flying Cloud Drive Copy of communications to:
Eden Prairie, MN 55344
-----------------------
(Name and address of Anne M. Rosenberg
agent for service) Robins, Kaplan, Miller & Ciresi L.L.P.
2800 LaSalle Plaza
(612) 947-2000 800 LaSalle Avenue
--------------------- Minneapolis, MN 55402-2015
(Telephone number, (612) 349-8500
including area code,
of agent for service)
(cover page is continued on next page)
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Proposed Proposed
Title of Amount to be Maximum Maximum Amount of
Securities to be Registered Offering Price Aggregate Registration Fee
Registered(1) Per Obligation Offering Price
(2)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Deferred
Compensation $10,000,000 100% $10,000,000 $2,950
Obligations
- ----------------------------------------------------------------------------------
</TABLE>
(1) The Deferred Compensation Obligations are unsecured obligations of the
Registrant to pay deferred compensation in the future in accordance with
the terms of the Best Buy Co., Inc. Deferred Compensation Plan.
(2) Estimated solely for the purpose of determining the registration fee.
Exhibit Index on Page 10.
2
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
are incorporated in this Registration Statement by reference:
1. Registrant's Annual Report on Form 10-K for the year ended March 1,
1997.
2. All other reports filed by the Registrant pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (the "1934 Act") since March 2,
1997.
All documents hereafter filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the 1934 Act, prior to the filing of a post-effective
amendment which indicates that all the securities offered hereby have been sold
or which deregisters all securities then remaining unsold, shall be deemed to be
incorporated herein by reference and to be a part hereof from the date of filing
such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
The following description of the securities offered hereby is qualified by
reference to the Registrant's Deferred Compensation Plan (the "Plan").
Capitalized terms used herein and not otherwise defined are defined in the Plan.
Under the Plan, the Registrant will provide eligible employees and
directors the opportunity to enter into agreements for the deferral of a
specified amount or percentage of their future cash compensation and stock
option gains. The obligations of the Registrant under such agreements,
together with any amounts the Registrant may choose to contribute to the Plan
on behalf of one or more Participants, as defined below (collectively, the
"Obligations"), will be unsecured general obligations of the Registrant to
pay the deferred compensation and deferred stock option gains in the future
in accordance with the terms of the Plan, and will rank equally with other
unsecured and unsubordinated indebtedness of the Registrant from time to time
outstanding and payable from the general assets of the Registrant. Moreover,
because the Registrant maintains operating subsidiaries, the right of the
Registrant and, therefore, the right of the creditors of the Registrant
(including participants in the Plan), to participate in any distribution of
the assets of any subsidiary upon its liquidation or reorganization or
otherwise is necessarily subject to the prior claims of creditors of the
subsidiary, except to the extent that claims of the Registrant itself as a
creditor of the subsidiary may be recognized.
The amount of compensation and stock option gains to be deferred by each
participating employee or director (each a "Participant") will be determined
in accordance with the Plan based on elections by each Participant. Each
Obligation will be indexed to one or more Measurement Funds chosen by each
Participant from a list of investment media (currently five mutual funds and
the Registrant's common stock, par value $0.10 per share). The Obligation
will be adjusted to reflect the investment experience, whether positive or
negative, of the selected Measurement Fund(s), including any appreciation or
depreciation. The Obligations will be denominated and be payable in United
States dollars generally upon termination of employment or
3
<PAGE>
on a date or dates selected by the Participant in accordance with the terms
of the Plan. The Plan is not required to be funded and the amount of
compensation or stock option gains deferred by each Participant are part of
the general funds of the Registrant, are subject to all the risks of the
Registrant's business and may be deposited, invested or expended in any
manner whatsoever by the Registrant.
A Participant's right or the right of any other person to the Obligations
cannot be assigned, alienated, sold, garnished, transferred, pledged or
encumbered except by a written designation of a beneficiary under the Plan, by
written will, or by the laws of descent and distribution.
The Obligations are not subject to redemption, in whole or in part,
prior to the individual payment dates specified by each Participant except in
the event of extreme financial hardship of a Participant or termination of
his or her employment, although the Obligations could be redeemed in case of
termination of the Plan. However, the Registrant reserves the right to amend
or terminate the Plan at any time, except that no such amendment or
termination shall adversely affect the right of each Participant to the
vested balance of his or her deferred account as of the date of such
amendment or termination.
The Obligations are not convertible into another security of the
Registrant. The Obligations will not have the benefit of a negative pledge
or any other affirmative or negative covenant on the part of the Registrant.
No trustee has been appointed having the authority to take action with
respect to the Obligations and each Participant will be responsible for
acting independently with respect to, among other things, the giving of
notices, responding to any requests for consents, waivers or amendments
pertaining to the Obligations, enforcing covenants and taking action upon a
default.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Elliot S. Kaplan, a director and Secretary of the Registrant, is also a
member of the law firm of Robins, Kaplan, Miller & Ciresi L.L.P., which will
be rendering an opinion as to the validity of the Obligations issuable under
the Plan.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is subject to the Minnesota Business Corporation
Act, Minnesota Statutes, Chapter 302A. Minnesota Statutes, Section 302A.521,
provides that a corporation shall indemnify any person made or threatened to
be made a party to a proceeding by reason of the former or present official
capacity of such person against judgments, penalties, fines, including,
without limitation, excise taxes assessed against such person with respect to
an employee benefit plan, settlements and reasonable expenses, including
attorneys' fees and disbursements, incurred by such person in connection with
the proceeding, if, with respect to the acts or omissions of such person
complained of in the proceeding, such person (1) has not been indemnified
therefor by another organization or employee benefit plan; (2) acted in good
faith; (3) received no improper personal benefit and Section 302A.255 (with
respect to director conflicts of interest), if applicable, has been
satisfied; (4) in the case of a criminal proceeding, had no reasonable cause
to believe the conduct was unlawful; and (5) reasonably believed that the
conduct was in the best interests of the corporation in the case of acts or
omissions in such person's official capacity for the corporation, or
reasonably
4
<PAGE>
believed that the conduct was not opposed to the best interests of the
corporation in the case of acts or omissions in such person's official
capacity for other affiliated organizations.
In addition, the Registrant's Articles of Incorporation provide that a
director of the Registrant shall not be personally liable to the Registrant
or its shareholders for monetary damages for breach of fiduciary duty as a
director except for liability (1) for any breach of the director's duty of
loyalty to the Registrant or its shareholders; (2) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law; (3) for paying a dividend or approving a stock repurchase in
violation of Minnesota Statutes, Section 302A.551; (4) for violating the
securities registration or anti-fraud provisions of Minnesota Statutes,
Section 80A.23; (5) for any transaction from which the director derived an
improper personal benefit; or (6) for acts or omissions occurring prior to
the date when the relevant provision of the Articles of Incorporation became
effective. The Articles of Incorporation do not limit directors' liability
for violations of the federal securities laws. The Articles of Incorporation
are consistent with the Minnesota Business Corporation Act and if such Act is
amended to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Registrant would be eliminated or limited to the fullest extent permitted by
Minnesota law.
As of September 1, 1997, the Registrant obtained a Directors' and
Officers' Liability Insurance Policy, with coverage of $30 million, subject
to various deductibles and exclusions from coverage. There is no coverage
for liabilities arising in connection with the filing of a registration
statement by the Registrant under the Securities Act of 1933 (the "1933 Act")
or under any underwriting agreement entered into in connection with a public
offering of securities.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The following are filed as exhibits to this Registration Statement:
<TABLE>
<CAPTION>
Exhibits
--------
<S> <C>
4.1 Best Buy Co., Inc. Deferred Compensation Plan.
5 Opinion of Robins, Kaplan, Miller & Ciresi L.L.P. as to
the legality of the securities being registered.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Robins, Kaplan, Miller & Ciresi L.L.P.
(contained in their opinion filed as Exhibit 5).
24 Power of Attorney (included on signature page hereto).
</TABLE>
5
<PAGE>
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) to include any prospectus required by Section 10(a)(3) of the
1933 Act;
(b) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and
(c) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
PROVIDED, HOWEVER, that paragraphs (a) and (b), above, do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the 1934 Act that are incorporated by reference
in this Registration Statement;
2. That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof;
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering;
4. That, for purposes of determining any liability under the 1933 Act,
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the 1934 Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof; and
5. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
6
<PAGE>
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933
Act and will be governed by the final adjudication of such issue.
7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Eden Prairie, State of Minnesota,
on this 30th day of March, 1998.
BEST BUY CO., INC.
By: /s/ Richard M. Schulze
----------------------------------------
Richard M. Schulze
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
RICHARD M. SCHULZE and ALLEN U. LENZMEIER, and each of them, his true and
lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments (including
post-effective amendments) to the Registration Statement on Form S-8 and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, each acting alone, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities on the date indicated.
Signature Title Date
- --------- ----- ----
Chairman, Chief March 30, 1998
/s/Richard M. Schulze Executive Officer
- ---------------------- (principal executive
Richard M. Schulze officer) and Director
Executive Vice March 30, 1998
/s/Allen U. Lenzmeier President and Chief
- ---------------------- Financial Officer
Allen U. Lenzmeier (principal financial
officer)
8
<PAGE>
Signature Title Date
- --------- ----- ----
Senior Vice President- March 30, 1998
/s/Robert C. Fox Finance and Treasurer
- ---------------------- (principal accounting
Robert C. Fox officer)
Secretary and March 30, 1998
/s/Elliot S. Kaplan Director
- ----------------------
Elliot S. Kaplan
/s/Frank D. Trestman Director March 30, 1998
- ----------------------
Frank D. Trestman
/s/Bradbury H. Anderson Director March 30, 1998
- ----------------------
Bradbury H. Anderson
Director March ____, 1998
- ----------------------
Culver Davis, Jr.
Director March ____, 1998
- ----------------------
David Stanley
Director March ____, 1998
- ----------------------
James C. Wetherbe
9
<PAGE>
EXHIBIT INDEX
SEQUENTIAL
EXHIBITS PAGE NO.
- -------- ----------
4.1 Best Buy Co., Inc. Deferred Compensation Plan.
5 Opinion of Robins, Kaplan, Miller & Ciresi L.L.P. as to the
legality of the securities being registered.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Robins, Kaplan, Miller & Ciresi L.L.P. (contained
in their opinion filed as Exhibit 5).
24 Power of Attorney (included on signature page hereto).
10
<PAGE>
BEST BUY CO., INC.
Deferred Compensation Plan
MASTER PLAN DOCUMENT
- ------------------------------------------------------------------------------
EFFECTIVE APRIL 1, 1998
COPYRIGHT -C- 1998
BY COMPENSATION RESOURCE GROUP, INC.
ALL RIGHTS RESERVED
<PAGE>
BEST BUY CO., INC.
DEFERRED COMPENSATION PLAN
Effective April 1, 1998
PURPOSE
The purpose of this Plan is to provide specified benefits to a select
group of management and highly compensated Employees and Directors who
contribute materially to the continued growth, development and future
business success of Best Buy Co., Inc., a Minnesota corporation, and its
subsidiaries. This Plan shall be unfunded for tax purposes and for purposes
of Title I of ERISA.
ARTICLE 1
DEFINITIONS
For purposes of this Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:
1.1 "Account Balance" shall mean, with respect to a Participant, a credit on
the records of the Company equal to the sum of (i) the Deferral Account
balance, (ii) the vested Company Contribution Account balance, (iii) the
vested Company Matching Account balance and (iv) the Stock Option
Account balance. The Account Balance, and each other specified account
balance, shall be a bookkeeping entry only and shall be utilized solely
as a device for the measurement and determination of the amounts to be
paid to a Participant, or his or her designated Beneficiary, pursuant to
this Plan.
1.2 "Annual Deferral Amount" shall mean that portion of a Participant's Base
Annual Salary, Bonus and Directors Fees that a Participant elects to
have, and is deferred, in accordance with Article 3, for any one Plan
Year. In the event of a Participant's Retirement, Disability (if
deferrals cease in accordance with Section 8.1), death or a Termination
of Employment prior to the end of a Plan Year, such year's Annual
Deferral Amount shall be the actual amount withheld prior to such event.
1.3 "Annual Stock Option Amount" shall mean, with respect to a Participant
for any one Plan Year, the amount of Qualifying Gains deferred on
Eligible Stock Option exercise in accordance with Section 3.7 of this
Plan, calculated using the closing price of Stock as of the end of the
business day of such Eligible Stock Option exercise.
1.4 "Base Annual Salary" shall mean the annual cash compensation relating to
services performed during any calendar year, whether or not paid in such
calendar year or included on the Federal
1
<PAGE>
Income Tax Form W-2 for such calendar year, excluding bonuses,
commissions, overtime, fringe benefits, stock options, relocation
expenses, incentive payments, non-monetary awards, directors fees and
other fees, automobile and other allowances paid to a Participant for
employment services rendered (whether or not such allowances are
included in the Employee's gross income). Base Annual Salary shall be
calculated before reduction for compensation voluntarily deferred or
contributed by the Participant pursuant to all qualified or
non-qualified plans of any Employer and shall be calculated to include
amounts not otherwise included in the Participant's gross income under
Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans
established by any Employer; provided, however, that all such amounts
will be included in compensation only to the extent that, had there been
no such plan, the amount would have been payable in cash to the Employee.
1.5 "Beneficiary" shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 9, that are entitled to
receive benefits under this Plan upon the death of a Participant.
1.6 "Beneficiary Designation Form" shall mean the form established from time
to time by the Committee that a Participant completes, signs and returns
to the Committee to designate one or more Beneficiaries.
1.7 "Board" shall mean the board of directors of the Company.
1.8 "Bonus" shall mean any compensation, in addition to Base Annual Salary
relating to services performed during any calendar year, whether or not
paid in such calendar year or included on the Federal Income Tax Form
W-2 for such calendar year, payable to a Participant as an Employee
under any Employer's bonus and cash incentive plans, excluding stock
options.
1.9 "Change in Control" shall mean the first to occur of any of the
following events:
(a) Any "person" (as that term is used in Section 13 and 14(d)(2) of
the Securities Exchange Act of 1934 ("Exchange Act")) becomes the
beneficial owner (as that term is used in Section 13(d) of the
Exchange Act), directly or indirectly, of 50% or more of the
Company's capital stock entitled to vote in the election of
directors;
(b) During any period of not more than two consecutive years, not
including any period prior to the adoption of this Plan,
individuals who at the beginning of such period constitute the
board of directors of the Company, and any new director (other than
a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (a),
(c), (d) or (e) of this Section 1.9) whose election by the board of
directors or nomination for election by the Company's stockholders
was approved by a vote of at least three-fourths (3/4ths) of the
directors then still in office who either were directors at the
beginning of the period or whose
2
<PAGE>
election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(c) The shareholders of the Company approve any consolidation or merger
of the Company, other than a consolidation or merger of the Company
in which the holders of the common stock of the Company immediately
prior to the consolidation or merger hold more than 50% of the
common stock of the surviving corporation immediately after the
consolidation or merger;
(d) The shareholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company; or
(e) The shareholders of the Company approve the sale or transfer of all
or substantially all of the assets of the Company to parties that
are not within a "controlled group of corporations" (as defined in
Code Section 1563) in which the Company is a member.
1.10 "Claimant" shall have the meaning set forth in Section 14.1.
1.11 "Code" shall mean the Internal Revenue Code of 1986, as it may be amended
from time to time.
1.12 "Committee" shall mean the committee described in Article 12.
1.13 "Company" shall mean Best Buy Co., Inc., a Minnesota corporation, and any
successor to all or substantially all of the Company's assets or business.
1.14 "Company Contribution Account" shall mean (i) the sum of the
Participant's Company Contribution Amounts, plus or minus (ii) amounts
credited or debited in accordance with all the applicable crediting and
debiting provisions of this Plan that relate to the Participant's
Company Contribution Account, less (iii) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate
to the Participant's Company Contribution Account.
1.15 "Company Contribution Amount" shall mean, for any one Plan Year, the
amount determined in accordance with Section 3.5.
1.16 "Company Matching Account" shall mean (i) the sum of all of a
Participant's Company Matching Amounts, plus or minus (ii) amounts
credited or debited in accordance with all the applicable crediting and
debiting provisions of this Plan that relate to the Participant's
Company Matching Account, less (iii) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate
to the Participant's Company Matching Account.
3
<PAGE>
1.17 "Company Matching Amount" for any one Plan Year shall be the amount
determined in accordance with Section 3.6.
1.18 "Company Stock Fund" shall mean a measurement fund which tracks the
performance of the Stock, including any dividends declared on the Stock.
1.19 "Company Stock Option Deferral Trust" shall mean one or more trusts
established pursuant to that certain Best Buy Co., Inc. Stock Option
Deferral Trust Agreement, dated as of April 1, 1998 between the Company
and the trustee named therein, as amended from time to time.
1.20 "Deduction Limitation" shall mean the following described limitation on
a benefit that may otherwise be distributable pursuant to the provisions
of this Plan. Except as otherwise provided, this limitation shall be
applied to all distributions that are "subject to the Deduction
Limitation" under this Plan. If the Company determines in good faith
prior to a Change in Control that there is a reasonable likelihood that
any compensation paid to a Participant for a taxable year of the
Employer would not be deductible by the Employer solely by reason of the
limitation under Code Section 162(m), then to the extent deemed
necessary by the Company to ensure that the entire amount of any
distribution to the Participant pursuant to this Plan prior to the
Change in Control is deductible, the Company may defer all or any
portion of a distribution under this Plan. Any amounts deferred
pursuant to this limitation shall continue to be credited/debited with
additional amounts in accordance with Section 3.11 below, even if such
amount is being paid out in installments. The amounts so deferred and
amounts credited thereon shall be distributed to the Participant or his
or her Beneficiary (in the event of the Participant's death) at the
earliest possible date, as determined by the Company in good faith, on
which the deductibility of compensation paid or payable to the
Participant for the taxable year of the Employer during which the
distribution is made will not be limited by Section 162(m), or if
earlier, the effective date of a Change in Control. Notwithstanding
anything to the contrary in this Plan, the Deduction Limitation shall
not apply to any distributions made after a Change in Control.
1.21 "Deferral Account" shall mean (i) the sum of all of a Participant's
Annual Deferral Amounts, plus or minus (ii) amounts credited or debited
in accordance with all the applicable crediting and debiting provisions
of this Plan that relate to the Participant's Deferral Account, less
(iii) all distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to his or her Deferral
Account.
1.22 "Director" shall mean any member of the board of directors of any
Employer.
1.23 "Directors Fees" shall mean the annual fees paid by any Employer,
including retainer fees and meetings fees, as compensation for serving
on the board of directors.
4
<PAGE>
1.24 "Disability" shall mean a period of disability during which a
Participant qualifies for permanent disability benefits under the
Participant's Employer's long-term disability plan, or, if a Participant
does not participate in such a plan, a period of disability during which
the Participant would have qualified for permanent disability benefits
under such a plan had the Participant been a participant in a plan, as
determined in the sole discretion of the Committee. If the
Participant's Employer does not sponsor such a plan, or discontinues to
sponsor such a plan, Disability shall be determined by the Committee in
its sole discretion.
1.25 "Disability Benefit" shall mean the benefit set forth in Article 8.
1.26 "Election Form" shall mean the form established from time to time by the
Committee that a Participant completes, signs and returns to the
Committee to make an election under the Plan.
1.27 "Eligible Stock Option" shall mean one or more non-qualified stock
option(s) granted under a plan or arrangement of any Employer permitting
a Participant under this Plan to defer gain with respect to such option.
1.28 "Employee" shall mean a person who is an employee of any Employer.
1.29 "Employer(s)" shall mean the Company and/or any of its subsidiaries (now
in existence or hereafter formed or acquired) whose Employees and/or
Directors have been selected by the Board to participate in the Plan.
1.30 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.
1.31 "First Plan Year" shall mean the period beginning April 1, 1998 and
ending December 31, 1998.
1.32 "401(k) Plan" shall be that certain Best Buy Retirement Savings Plan,
dated June 1, 1995 adopted by the Company, as it may be amended from
time to time.
1.33 "In-Service Distribution" shall mean the payout set forth in Section 4.1.
1.34 "Master Trust" shall mean one or more trusts established pursuant to
that certain Master Trust Agreement, dated as of April 1, 1998 between
the Company and the trustee named therein, as amended from time to time.
1.35 "Participant" shall mean any Employee or Director (i) who is selected to
participate in the Plan, (ii) who elects to participate in the Plan,
(iii) who signs a Plan Agreement, an Election Form and a Beneficiary
Designation Form, (iv) whose signed Plan Agreement, Election Form and
Beneficiary Designation Form are accepted by the Committee, (v) who
commences
5
<PAGE>
participation in the Plan, and (vi) whose Plan Agreement has not
terminated. A spouse or former spouse of a Participant shall not be
treated as a Participant in the Plan or have an Account Balance under
the Plan, even if he or she has an interest in the Participant's
benefits under the Plan as a result of applicable law or property
settlements resulting from legal separation or divorce.
1.36 "Plan" shall mean the Company's Deferred Compensation Plan, which shall
be evidenced by this instrument and by each Plan Agreement, as they may
be amended from time to time.
1.37 "Plan Agreement" shall mean a written agreement, as may be amended from
time to time, which is entered into by and among the Company, an
Employer (if different from the Company) and a Participant. Each Plan
Agreement executed by a Participant, the Participant's Employer and the
Company shall provide for the entire benefit to which such Participant
is entitled under the Plan; should there be more than one Plan
Agreement, the Plan Agreement bearing the latest date of acceptance by
the Company shall supersede all previous Plan Agreements in their
entirety and shall govern such entitlement. The terms of any Plan
Agreement may be different for any Participant, and any Plan Agreement
may provide additional benefits not set forth in the Plan or limit the
benefits otherwise provided under the Plan; provided, however, that any
such additional benefits or benefit limitations must be agreed to by the
Company, the Employer and the Participant.
1.38 "Plan Year" shall, except for the First Plan Year, mean a period
beginning on January 1 of each calendar year and continuing through
December 31 of such calendar year.
1.39 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
Article 6.
1.40 "Qualifying Gain" shall mean the value accrued upon exercise of an
Eligible Stock Option (i) using a Stock-for-Stock payment method and
(ii) having an aggregate fair market value in excess of the total Stock
purchase price necessary to exercise the option under the Plan. In
other words, the Qualifying Gain upon exercise of an Eligible Stock
Option equals the total market value of the shares (or share equivalent
units) acquired minus the total stock purchase price. For example,
assume a Participant elects to defer the Qualifying Gain accrued upon
exercise of an Eligible Stock Option to purchase 2000 shares of Stock at
an exercise price of $20 per share, when Stock has a current fair market
value of $25 per share. Using the Stock-for-Stock payment method, the
Participant would deliver or be deemed to deliver 1600 shares of Stock
(worth $40,000), which the Participant has held for a minimum of six
months, to exercise the Eligible Stock Option and receive or be deemed
to receive, in return, 1600 shares of Stock plus a Qualifying Gain (in
this case, in the form of an unfunded and unsecured promise to pay money
or property in the future) equal to $10,000 (i.e., the current value of
the remaining 400 shares of Stock).
6
<PAGE>
1.41 "Quarterly Installment Method" shall be a quarterly installment payment
over the number of quarters selected by the Participant in accordance
with this Plan, calculated as follows: The Account Balance of the
Participant shall be calculated as of the close of business on the last
business day of the quarter. The quarterly installment shall be
calculated by multiplying this balance by a fraction, the numerator of
which is one, and the denominator of which is the remaining number of
quarterly payments due the Participant. By way of example, if the
Participant elects a 40 quarter Annual Installment Method, the first
payment shall be 1/40th of the Account Balance, calculated as described
in this definition. The following quarter, the payment shall be 1/39th
of the Account Balance, calculated as described in this definition. Each
quarterly installment shall be paid on or as soon as practicable after
the last business day of the applicable quarter. Unless the Committee
determines otherwise, quarterly installment payments shall be drawn on a
pro-rata basis from each of the applicable Measurement Funds used to
determine amounts to be credited or debited to the Participant's Account
Balance pursuant to Section 3.11 below.
1.42 "Retirement", "Retire(s)" or "Retired" shall mean, with respect to an
Employee, severance from employment from all Employers for any reason
other than a leave of absence, death or Disability on or after the
attainment of age sixty (60); and shall mean with respect to a Director
who is not an Employee, severance of his or her directorships with all
Employers on or after the attainment of age seventy (70). If a
Participant is both an Employee and a Director, Retirement shall not
occur until he or she Retires as both an Employee and a Director, which
Retirement shall be deemed to be a Retirement as a Director; provided,
however, that such a Participant may elect, at least five years prior to
Retirement and in accordance with the policies and procedures
established by the Committee, to Retire for purposes of this Plan at the
time he or she Retires as an Employee, which Retirement shall be deemed
to be a Retirement as an Employee.
1.43 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.44 "Stock" shall mean Best Buy Co., Inc. common stock, $0.10 par value, or
any other equity securities of the Company designated by the Committee.
1.45 "Stock Option Account" shall mean the sum of (i) the Participant's
Annual Stock Option Amounts, plus or minus (ii) amounts credited or
debited in accordance with all the applicable crediting and debiting
provisions of this Plan that relate to the Participant's Stock Option
Account, less (iii) all distributions made to the Participant or his or
her Beneficiary pursuant to this Plan that relate to the Participant's
Stock Option Account.
1.46 "Stock Option Amount" shall mean, for any Eligible Stock Option, the
amount of Qualifying Gains deferred in accordance with Section 3.7 of
this Plan, calculated using the closing price of Stock as of the end of
the business day of exercise of such Eligible Stock Option.
7
<PAGE>
1.47 "Subsidiary Stock Option Deferral Trust" shall mean one or more trusts
established pursuant to that certain Best Buy Co., Inc. Stock Option
Deferral Trust Agreement for Best Buy Stores, L.P. Employees, dated as
of April 1, 1998, as amended from time to time, and any other trust
established by a subsidiary of the Company to hold Stock Option Amounts
of Employees and Directors of such subsidiary.
1.48 "Termination Benefit" shall mean the benefit set forth in Article 7.
1.49 "Termination of Employment" shall mean the severing of employment with
all Employers, or service as a Director of all Employers, voluntarily or
involuntarily, for any reason other than Retirement, Disability, death
or an authorized leave of absence. If a Participant is both an Employee
and a Director, a Termination of Employment shall occur only upon the
termination of the last position held; provided, however, that such a
Participant may elect, at least five years before cessation of
employment with all Employers and in accordance with the policies and
procedures established by the Committee, to be treated for purposes of
this Plan as having experienced a Termination of Employment at the time
he or she ceases employment with all Employers as an Employee.
1.50 "Trusts" shall mean the Master Trust, the Company Stock Option Deferral
Trust, and the Subsidiary Stock Option Deferral Trust(s).
1.51 "Unforeseeable Financial Emergency" shall mean an unanticipated
emergency that is caused by an event beyond the control of the
Participant that would result in severe financial hardship to the
Participant resulting from (i) a sudden and unexpected illness or
accident of the Participant or a dependent of the Participant, (ii) a
loss of the Participant's property due to casualty, or (iii) such other
extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, all as determined in the
sole discretion of the Committee.
1.52 "Years of Service" shall mean the total number of years in which a
Participant has been employed by one or more Employers, as defined in
Article IV of the 401(k) Plan.
ARTICLE 2
SELECTION, ENROLLMENT, ELIGIBILITY
2.1 SELECTION BY COMMITTEE. Participation in the Plan shall be limited to a
select group of management and highly compensated Employees and
Directors of the Employers, as determined by the Committee in its sole
discretion. From that group, the Committee shall select, in its sole
discretion, Employees and Directors to participate in the Plan.
2.2 ENROLLMENT REQUIREMENTS. As a condition to participation, each selected
Employee or Director shall complete, execute and return to the Committee
a Plan Agreement, an Election Form and a Beneficiary Designation Form,
all within 30 days after he or she is selected to
8
<PAGE>
participate in the Plan. In addition, the Committee shall establish
from time to time such other enrollment requirements as it determines in
its sole discretion are necessary.
2.3 ELIGIBILITY; COMMENCEMENT OF PARTICIPATION. Provided an Employee or
Director selected to participate in the Plan has met all enrollment
requirements set forth in this Plan and required by the Committee,
including returning all required documents to the Committee within the
specified time period, that Employee or Director shall commence
participation in the Plan (i) in the case of the First Plan Year, on the
first day of the pay period within the First Plan Year following the
date on which the Employee or Director completes all enrollment
requirements; or (ii) in the case of any subsequent Plan Year, on the
first day of the pay period commencing in the Plan Year following the
date on which the Employee or Director completes all enrollment
requirements. If an Employee or a Director fails to meet all such
requirements within the period required, in accordance with Section 2.2,
that Employee or Director shall not be eligible to participate in the
Plan until the first day of the pay period commencing in the Plan Year
following the delivery to and acceptance by the Committee of the
required documents.
2.4 TERMINATION OF PARTICIPATION AND/OR DEFERRALS. If the Committee
determines in good faith that a Participant no longer qualifies as a
member of a select group of management or highly compensated employees,
as membership in such group is determined in accordance with Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee shall have the
right, in its sole discretion, to (i) terminate any deferral election
the Participant has made for the remainder of the Plan Year in which the
Participant's membership status changes, (ii) prevent the Participant
from making future deferral elections and/or (iii) immediately
distribute the Participant's then Account Balance as a Termination
Benefit subject to Article 7 and terminate the Participant's
participation in the Plan.
ARTICLE 3
DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING/TAXES
3.1 MINIMUM DEFERRALS.
(a) Base Annual Salary, Bonus and Director's Fees. For each Plan Year, a
Participant may elect to defer, as his or her Annual Deferral Amount,
Base Annual Salary, Bonus and/or Director's Fees in the following
minimum amounts for each deferral elected:
9
<PAGE>
<TABLE>
<CAPTION>
----------------------------------
DEFERRAL MINIMUM AMOUNT
----------------------------------
<S> <C>
Base Annual Salary $2,500
----------------------------------
Bonus $2,500
----------------------------------
Directors Fees $ 0
----------------------------------
</TABLE>
If an election is made for less than stated minimum amounts, or if no
election is made, the amount deferred shall be zero.
(b) STOCK OPTION AMOUNT. For each Eligible Stock Option exercised in
accordance with the terms of the applicable stock option plan, a
Participant may elect to defer, as his or her Stock Option Amount,
the following minimum amount of Qualifying Gain with respect to
exercise of the Eligible Stock Option:
<TABLE>
<CAPTION>
----------------------------------
DEFERRAL MINIMUM AMOUNT
----------------------------------
<S> <C>
Qualifying Gain $10,000
----------------------------------
</TABLE>
3.2 MAXIMUM DEFERRAL.
(a) BASE ANNUAL SALARY, BONUS AND DIRECTORS FEES. For each Plan Year, a
Participant may elect to defer, as his or her Annual Deferral
Amount, Base Annual Salary, Bonus and/or Directors Fees up to the
following maximum percentages for each deferral elected:
<TABLE>
<CAPTION>
----------------------------------
DEFERRAL MAXIMUM AMOUNT
----------------------------------
<S> <C>
Base Annual Salary 50%
----------------------------------
Bonus 100%
----------------------------------
Directors Fees 100%
----------------------------------
</TABLE>
(b) Notwithstanding the foregoing, if a Participant first becomes a
Participant after the first day of a Plan Year, or in the case of
the first Plan Year of the Plan itself, the maximum Annual Deferral
Amount, with respect to Base Annual Salary, Bonus and Directors
Fees shall be limited to the amount of compensation not yet earned
by the Participant as of the date the Participant submits a Plan
Agreement and Election Form to the Committee for acceptance.
10
<PAGE>
(c) For each Eligible Stock Option, a Participant may elect to defer,
as his or her Stock Option Amount, Qualifying Gain up to the
following maximum percentage with respect to exercise of the
Eligible Stock Option:
<TABLE>
<CAPTION>
----------------------------------
DEFERRAL MAXIMUM AMOUNT
----------------------------------
<S> <C>
Qualifying Gain 100%
----------------------------------
</TABLE>
(d) Stock Option Amounts may also be limited by other terms or
conditions set forth in the stock option plan or agreement under
which such options are granted.
3.3 ELECTION TO DEFER; EFFECT OF ELECTION FORM.
(a) FIRST PLAN YEAR. In connection with a Participant's commencement
of participation in the Plan, the Participant shall make an
irrevocable deferral election for the Plan Year in which the
Participant commences participation in the Plan, along with such
other elections as the Committee deems necessary or desirable under
the Plan. For these elections to be valid, the Election Form must
be completed and signed by the Participant, timely delivered to the
Committee (in accordance with Section 2.2 above) and accepted by
the Committee.
(b) SUBSEQUENT PLAN YEARS. For each succeeding Plan Year, an
irrevocable deferral election for that Plan Year, and such other
elections as the Committee deems necessary or desirable under the
Plan, shall be made by timely delivering to the Committee, in
accordance with its rules and procedures, before the end of the
Plan Year preceding the Plan Year for which the election is made, a
new Election Form. If no such Election Form is timely delivered for
a Plan Year, the Annual Deferral Amount shall be zero for that Plan
Year.
(c) STOCK OPTION DEFERRAL. For an election to defer gain upon an
Eligible Stock Option exercise to be valid: (i) a separate Election
Form must be completed and signed by the Participant with respect
to the Eligible Stock Option; (ii) the Election Form must be timely
delivered to the Committee and accepted by the Committee at any
time prior to the date the Participant exercises the Eligible Stock
Option for the First Plan Year, and at least six (6) months prior
to the date the Participant exercises the Eligible Stock Option for
each subsequent Plan Year; (iii) the Eligible Stock Option must be
exercised using an actual or phantom Stock-for-Stock payment
method; and (iv) the Stock actually or constructively delivered by
the Participant to exercise the Eligible Stock Option must have
been owned by the Participant during the entire six (6) month
period prior to its delivery. In the event that the total Stock
purchase price necessary to
11
<PAGE>
exercise the Eligible Stock Option exceeds the aggregate fair
market value of the Stock actually or constructively delivered by
the Participant, the excess portion of the Eligible Stock Option
shall be forfeited by the Participant.
(d) EFFECT OF TERMINATION ON PENDING ELECTION. Upon the occurrence of
a Termination of Employment, any pending election shall be
automatically terminated.
3.4 WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS. For each Plan Year, the Base
Annual Salary portion of the Annual Deferral Amount shall be withheld
from each regularly scheduled Base Annual Salary payroll in equal
amounts, as may be adjusted from time to time for increases and
decreases in Base Annual Salary. The Bonus and/or Directors Fees portion
of the Annual Deferral Amount shall be withheld at the time the Bonus or
Directors Fees are or otherwise would be paid to the Participant,
whether or not this occurs during the Plan Year itself.
3.5 COMPANY CONTRIBUTION AMOUNT. For each Plan Year, the Company, in its
sole discretion, may, but is not required to, credit any amount it
desires to any Participant's Company Contribution Account under this
Plan, which amount shall be for that Participant the Company
Contribution Amount for that Plan Year. The amount so credited to a
Participant may be smaller or larger than the amount credited to any
other Participant, and the amount credited to any Participant for a Plan
Year may be zero, even though one or more other Participants receive a
Company Contribution Amount for that Plan Year. The Company
Contribution Amount, if any, shall be credited as of the date(s)
selected by the Company.
3.6 COMPANY MATCHING AMOUNT. For each Plan Year, the Company, in its sole
discretion, may, but is not required to, credit to each Participant's
Company Matching Account a Company Matching Amount for any Plan Year
equal to a percentage of all or a portion of the Participant's Annual
Deferral Amount for such Plan Year. Such Company Matching Amount may,
but need not be, coordinated with any matching contribution made to the
401(k) Plan on the Participant's behalf for the plan year of the 401(k)
Plan that corresponds to the Plan Year. The Company Matching Amount, if
any, shall be credited as of the date(s) selected by the Company, which
may, but need not be, the same date(s) that matching contributions are
credited under the 401(k) Plan.
3.7 STOCK OPTION AMOUNT. Subject to any terms and conditions imposed by
this Plan and by the Committee, Participants may elect to defer, under
the Plan, Qualifying Gains attributable to an Eligible Stock Option
exercise. Stock Option Amounts shall be credited to the Participant on
the books of the Company at the time Stock would otherwise have been
delivered to the Participant pursuant to the Eligible Stock Option
exercise, but for the election to defer.
3.8 INVESTMENT OF TRUST ASSETS. The trustees of the Trusts shall be
authorized, upon written instructions received from the Committee or
investment manager appointed by the Committee, to invest and reinvest
the assets of the Trusts in accordance with the applicable trust
12
<PAGE>
agreements, including the disposition of Stock and reinvestment of the
proceeds in one or more investment vehicles designated by the Committee.
3.9 SOURCES OF STOCK. If Stock Option Amounts are credited under the Plan
in either the Company Stock Option Deferral Trust or any Subsidiary
Stock Option Deferral Trust pursuant to Section 3.7 in connection with
an Eligible Stock Option exercise, the shares underlying the Stock
Option Amounts so credited shall be counted against the number of shares
reserved under such other plan, program or arrangement.
3.10 VESTING.
(a) A Participant shall at all times be 100% vested in his or her
Deferral Account and Stock Option Account.
(b) A Participant shall be vested in his or her Company Contribution
Account, if any, and any earnings credited thereon pursuant to
Section 3.11 below, in accordance with the vesting schedule
established by the Company in its sole discretion and contained in
his or her plan Agreement.
(c) A Participant shall be vested in his or her Company Matching
Account, and any earnings credited thereon pursuant to Section 3.11
below, as follows: (i) with respect to all benefits under this Plan
other than the Termination Benefit, a Participant's vested Company
Matching Account shall equal 100% of such Participant's Company
Matching Account; and (ii) with respect to the Termination Benefit,
a Participant's Company Matching Account shall vest on the basis of
the Participant's Years of Service at the time the Participant
experiences a Termination of Employment, in accordance with the
following schedule:
<TABLE>
<CAPTION>
----------------------------------------------------------
YEARS OF SERVICE AT DATE OF VESTED PERCENTAGE OF
TERMINATION OF EMPLOYMENT COMPANY MATCHING ACCOUNT
----------------------------------------------------------
<S> <C>
Less than 3 years 0%
----------------------------------------------------------
3 years or more, but less than 4 25%
----------------------------------------------------------
4 years of more, but less than 5 50%
----------------------------------------------------------
5 years or more 100%
----------------------------------------------------------
</TABLE>
(d) Notwithstanding anything to the contrary contained in this Section
3.10, in the event of a Change in Control, a Participant's Company
Contribution Account and Company Matching Account shall immediately
become 100% vested (if it is not already vested in accordance with
the above vesting schedules).
13
<PAGE>
(e) Notwithstanding subsection (d), the vesting schedule for a
Participant's Company Contribution Account and Company Matching
Account shall not be accelerated to the extent that the Committee
determines that such acceleration would cause the deduction
limitations of Section 280G of the Code to become effective. In
the event that all of a Participant's Company Contribution Account
and/or Company Matching Account is not vested pursuant to such a
determination, the Participant may request independent verification
of the Committee's calculations with respect to the application of
Section 280G. In such case, the Committee must provide to the
Participant within 15 business days of such a request an opinion
from a nationally recognized accounting firm selected by the
Participant (the "Accounting Firm"). The opinion shall state the
Accounting Firm's opinion that any limitation in the vested
percentage hereunder is necessary to avoid the limits of Section
280G and contain supporting calculations. The cost of such opinion
shall be paid for by the Company.
3.11 CREDITING/DEBITING OF ACCOUNT BALANCES. In accordance with, and subject
to, the rules and procedures that are established from time to time by
the Committee, in its sole discretion, amounts shall be credited or
debited to a Participant's Account Balance, which solely for purposes of
this Section 3.11 shall include the Participant's Company Contribution
Account and Company Matching Account regardless of vesting status, in
accordance with the following rules:
(a) ELECTION OF MEASUREMENT FUNDS. Except as otherwise provided in
Section 3.11(f) below, a Participant, in connection with his or her
initial deferral election in accordance with Section 3.3(a) above,
shall elect, on the Election Form, one or more Measurement Fund(s)
(as described in Section 3.11(c) below) to be used to determine the
additional amounts to be credited or debited to his or her Account
Balance for the first calendar quarter or portion thereof in which
the Participant commences participation in the Plan and continuing
thereafter for each subsequent calendar quarter in which the
Participant participates in the Plan, unless changed in accordance
with the next sentence. Except as otherwise provided in Section
3.11(f) below, commencing with the first calendar quarter that
follows the Participant's commencement of participation in the Plan
and continuing thereafter for each subsequent calendar quarter in
which the Participant participates in the Plan, no later than five
days prior to the last business day of the calendar quarter, the
Participant may (but is not required to) elect, by submitting an
Election Form to the Committee that is accepted by the Committee,
to add or delete one or more Measurement Fund(s) to be used to
determine the additional amounts to be credited or debited to his
or her Account Balance, or to change the portion of his or her
Account Balance allocated to each previously or newly elected
Measurement Fund. If an election is made in accordance with the
previous sentence, it shall apply to the next calendar quarter and
continue thereafter for each subsequent calendar quarter
14
<PAGE>
in which the Participant participates in the Plan, unless changed
in accordance with the previous sentence.
(b) PROPORTIONATE ALLOCATION. In making any election described in
Section 3.11(a) above, the Participant shall specify on the
Election Form, in increments of one percentage point (1%), the
percentage of his or her Account Balance to be allocated to a
Measurement Fund (as if the Participant was making an investment in
that Measurement Fund with that portion of his or her Account
Balance).
(c) MEASUREMENT FUNDS. Except as otherwise provided in Section 3.11(f)
below, the Participant may elect one or more of the following
measurement funds, based on certain mutual funds (the "Measurement
Funds"), for the purpose of crediting additional amounts to his or
her Account Balance:
(1) Dreyfus VIF Capital Appreciation Portfolio
(2) Fidelity VIP II Asset Manager Portfolio
(3) Fidelity VIP Overseas Portfolio
(4) Neuberger & Berman Advisors Management Trust Limited Maturity
Bond Portfolio
(5) Warburg Pincus Trust Small Company Growth Portfolio
(6) Company Stock Fund (only available upon exercise of an Eligible
Stock Option to the extent of a Qualifying Gain deferral)
As necessary, the Committee may, in its sole discretion,
discontinue, substitute or add a Measurement Fund. Each such
action will take effect as of the first day of the calendar quarter
that follows by thirty (30) days the day on which the Committee
gives Participants advance written notice of such change.
(d) CREDITING OR DEBITING METHOD. The performance of each elected
Measurement Fund (either positive or negative) will be determined
by the Committee, in its reasonable discretion, based on the
performance of the Measurement Funds themselves. A Participant's
Account Balance shall be credited or debited on a daily basis based
on the performance of each Measurement Fund selected by the
Participant, AS DETERMINED BY THE COMMITTEE IN ITS SOLE DISCRETION,
as though (i) a Participant's Account Balance were invested in the
Measurement Fund(s) selected by the Participant, in the percentages
applicable to such calendar quarter, as of the close of business on
the first business day of such calendar quarter, at the closing
price on such date; (ii) the portion of the Annual
15
<PAGE>
Deferral Amount that was actually deferred during any calendar
quarter were invested in the Measurement Fund(s) selected by the
Participant, in the percentages applicable to such calendar
quarter, no later than the close of business on the third business
day after the day on which such amounts are actually deferred from
the Participant's Base Annual Salary through reductions in his or
her payroll, at the closing price on such date; and (iii) any
distribution made to a Participant that decreases such
Participant's Account Balance ceased being invested in the
Measurement Fund(s), in the percentages applicable to such calendar
quarter, no earlier than three business days prior to the
distribution, at the closing price on such date. The Participant's
Company Matching Amount shall be credited to his or her Company
Matching Account for purposes of this Section 3.11(d) as of the
close of business on the date(s) that matching contributions are
credited under the 401(k) Plan. The Participant's Company
Contribution Amount shall be credited to his or her Company
Contribution Account on any date(s) selected by the Company. The
Participant's Annual Stock Option Amount(s) shall be credited to
his or her Stock Option Account no later than the close of business
on the third business day after the day on which the Eligible Stock
Option was exercised or otherwise disposed of.
(e) NO ACTUAL INVESTMENT. Notwithstanding any other provision of this
Plan that may be interpreted to the contrary, the Measurement Funds
are to be used for measurement purposes only, and a Participant's
election of any such Measurement Fund, the allocation to his or her
Account Balance thereto, the calculation of additional amounts and
the crediting or debiting of such amounts to a Participant's
Account Balance SHALL NOT be considered or construed in any manner
as an actual investment of his or her Account Balance in any such
Measurement Fund. In the event that the Company or the trustees of
the Trusts, in their own discretion, decide to invest funds in any
or all of the Measurement Funds, no Participant shall have any
rights in or to such investments themselves. Without limiting the
foregoing, a Participant's Account Balance shall at all times be a
bookkeeping entry only and shall not represent any investment made
on his or her behalf by the Company or the Trusts; the Participant
shall at all times remain an unsecured creditor of the Company, and
where applicable, the Participant's Employer.
(f) SPECIAL RULE FOR STOCK OPTION AMOUNT. Notwithstanding any other
provision of this Plan that may be interpreted to the contrary, a
Participant may not discretionarily elect to invest in the Company
Stock Fund, but shall automatically be invested in the Company
Stock Fund upon exercise of an Eligible Stock Option to the extent
of Qualifying Gains deferral. Once the Stock Option Amount
representing the Qualifying Gains deferral is credited to the
Account Balance of a Participant, the Participant cannot reallocate
the Stock Option Amount from the Company Stock Fund to another
Measurement Fund for the first six (6) months following the date it
is first credited to the Participant's Account Balance.
16
<PAGE>
3.12 FICA AND OTHER TAXES.
(a) ANNUAL DEFERRAL AMOUNTS. For each Plan Year in which an Annual
Deferral Amount is being withheld from a Participant, the
Participant's Employer(s) shall withhold from that portion of the
Participant's Base Annual Salary and Bonus that is not being
deferred, in a manner determined by the Employer(s), the
Participant's share of FICA and other employment taxes on such
Annual Deferral Amount. If necessary, the Committee may reduce the
Annual Deferral Amount in order to comply with this Section 3.12.
(b) COMPANY MATCHING AND CONTRIBUTION AMOUNTS. When a Participant
becomes vested in a portion of his or her Company Matching Account
or Company Contribution Account, the Participant's Employer(s)
shall withhold from the Participant's Base Annual Salary and/or
Bonus that is not deferred, in a manner determined by the
Employer(s), the Participant's share of FICA and other employment
taxes. If necessary, the Committee may reduce the vested portion
of the Participant's Company Matching Account in order to comply
with this Section 3.12.
(c) ANNUAL STOCK OPTION AMOUNTS. For each Plan Year in which an Annual
Stock Option Amount is being first credited to a Participant's
Stock Option Account, the Participant's Employer(s) shall withhold
from that portion of the Participant's Base Annual Salary, Bonus
and Qualifying Gains that are not being deferred, in a manner
determined by the Employer(s), the Participant's share of FICA and
other employment taxes on such Annual Stock Option Amount. If
necessary, the Committee may reduce the Annual Stock Option Amount
in order to comply with this Section 3.12.
3.13 DISTRIBUTIONS. The Company, or the trustees of the Trusts, shall
withhold from any payments made to a Participant under this Plan all
federal, state and local income, employment and other taxes required to
be withheld in connection with such payments, in amounts and in a manner
to be determined in the sole discretion of the Company and the trustees
of the Trusts.
ARTICLE 4
IN-SERVICE DISTRIBUTION; UNFORESEEABLE FINANCIAL EMERGENCIES;
4.1 IN-SERVICE DISTRIBUTION. In connection with each election to defer an
Annual Deferral Amount, a Participant may irrevocably elect to receive a
future "In-Service Distribution" from the Plan with respect to all or a
portion of such Annual Deferral Amount. Subject to the Deduction
Limitation, the In-Service Distribution shall be a lump sum payment in
an amount that is equal to the portion of the Annual Deferral Amount for
which the Participant has elected to receive an In-Service Distribution
plus or minus amounts credited or debited in the manner
17
<PAGE>
provided in Section 3.11 above on that amount, determined at the time
that the In-Service Distribution becomes payable (rather than the date
of a Termination of Employment). Subject to the Deduction Limitation
and the other terms and conditions of this Plan, each In-Service
Distribution elected shall be paid out during a 60 day period commencing
immediately after the last day of any Plan Year designated by the
Participant that is at least five Plan Years after the Plan Year in
which the Annual Deferral Amount is actually deferred. By way of
example, if a five year In-Service Distribution is elected for Annual
Deferral Amounts that are deferred in the Plan Year commencing April 1,
1998, the five year In-Service Distribution would become payable during
a 60 day period commencing January 1, 2004.
4.2 OTHER BENEFITS TAKE PRECEDENCE OVER IN-SERVICE DISTRIBUTION. Should an
event occur that triggers a benefit under Article 5, 6, 7 or 8, any
Annual Deferral Amount, plus amounts credited or debited thereon, that
is subject to an In-Service Distribution election under Section 4.1
shall not be paid in accordance with Section 4.1 but shall be paid in
accordance with the other applicable Article.
4.3 WITHDRAWAL PAYOUT/SUSPENSIONS FOR UNFORESEEABLE FINANCIAL EMERGENCIES.
If the Participant experiences an Unforeseeable Financial Emergency, the
Participant may petition the Committee to (i) suspend any deferrals
required to be made by a Participant and/or (ii) receive a partial or
full payout from the Plan. The payout shall not exceed the lesser of
the Participant's Account Balance, calculated as if such Participant
were receiving a Termination Benefit, or the amount reasonably needed to
satisfy the Unforeseeable Financial Emergency. If, subject to the sole
discretion of the Committee, the petition for a suspension and/or payout
is approved, suspension shall take effect upon the date of approval and
any payout shall be made within 60 days of the date of approval. The
payment of any amount under this Section 4.3 shall not be subject to the
Deduction Limitation.
ARTICLE 5
RETIREMENT BENEFIT
5.1 RETIREMENT BENEFIT. Subject to the Deduction Limitation, a Participant
who Retires shall receive, as a Retirement Benefit, his or her Account
Balance.
5.2 PAYMENT OF RETIREMENT BENEFIT. A Participant, in connection with his or
her commencement of participation in the Plan, shall elect on an
Election Form to receive the Retirement Benefit in a lump sum or
pursuant to a Quarterly Installment Method of 20, 40 or 60 quarters. If
the Participant's Account Balance at the time of Retirement is less than
$10,000, the Committee, at its discretion, may allow the Retirement
Benefit to be paid in a lump sum. The Participant may annually change
his or her election to an allowable alternative payout period by
submitting a new Election Form to the Committee, provided that any such
Election Form is submitted at least 3 years prior to the Participant's
Retirement and is accepted by the Committee in its sole discretion. The
Election Form most recently accepted by the Committee shall govern the
18
<PAGE>
payout of the Retirement Benefit. If a Participant does not make any
election with respect to the payment of the Retirement Benefit, then
such benefit shall be payable in a lump sum. The lump sum payment shall
be made, or installment payments shall commence, no later than 60 days
after the last day of the Plan Year in which the Participant Retires.
Any payment made shall be subject to the Deduction Limitation.
5.3 DEATH PRIOR TO COMPLETION OF RETIREMENT BENEFIT. If a Participant dies
after Retirement but before the Retirement Benefit is paid in full, the
Participant's unpaid Retirement Benefit payments shall continue and
shall be paid to the Participant's Beneficiary (a) over the remaining
number of quarters and in the same amounts as that benefit would have
been paid to the Participant had the Participant survived, or (b) in a
lump sum, if requested by the Beneficiary and allowed in the sole
discretion of the Committee, that is equal to the Participant's unpaid
remaining Account Balance.
ARTICLE 6
PRE-RETIREMENT SURVIVOR BENEFIT
6.1 PRE-RETIREMENT SURVIVOR BENEFIT. Subject to the Deduction Limitation,
the Participant's Beneficiary shall receive a Pre-Retirement Survivor
Benefit equal to the Participant's Account Balance if the Participant
dies before he or she Retires, experiences a Termination of Employment
or suffers a Disability.
6.2 PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT. A Participant, in
connection with his or her commencement of participation in the Plan,
shall elect on an Election Form whether the Pre-Retirement Survivor
Benefit shall be received by his or her Beneficiary in a lump sum or
pursuant to a Quarterly Installment Method of 20 or 40 quarters. The
Participant may annually change this election to an allowable
alternative payout period by submitting a new Election Form to the
Committee, which form must be accepted by the Committee in its sole
discretion. The Election Form most recently accepted by the Committee
prior to the Participant's death shall govern the payout of the
Participant's Pre-Retirement Survivor Benefit. If a Participant does
not make any election with respect to the payment of the Pre-Retirement
Survivor Benefit, then such benefit shall be paid in a lump sum.
Despite the foregoing, if the Participant's Account Balance at the time
of his or her death is less than $25,000, payment of the Pre-Retirement
Survivor Benefit may be made, in the sole discretion of the Committee,
in a lump sum or pursuant to a Quarterly Installment Method of not more
than 20 quarters. The lump sum payment shall be made, or installment
payments shall commence, no later than 60 days after the last day of the
Plan Year in which the Committee is provided with proof that is
satisfactory to the Committee of the Participant's death. Any payment
made shall be subject to the Deduction Limitation.
19
<PAGE>
ARTICLE 7
TERMINATION BENEFIT
7.1 TERMINATION BENEFIT. Subject to the Deduction Limitation, the
Participant shall receive a Termination Benefit, which shall be equal to
the Participant's Account Balance, if a Participant experiences a
Termination of Employment prior to his or her Retirement, death or
Disability.
7.2 PAYMENT OF TERMINATION BENEFIT. If the Participant's Account Balance at
the time of his or her Termination of Employment is less than $25,000,
payment of his or her Termination Benefit shall be paid in a lump sum.
If his or her Account Balance at such time is equal to or greater than
that amount, the Participant may request and the Committee, in its sole
discretion, may allow the Termination Benefit to be paid in a lump sum
or pursuant to a Quarterly Installment Method of 20 quarters. The lump
sum payment shall be made, or installment payments shall commence, no
later than 60 days after the last day of the Plan Year in which the
Participant experiences the Termination of Employment. Any payment made
shall be subject to the Deduction Limitation.
ARTICLE 8
DISABILITY WAIVER AND BENEFIT
8.1 DISABILITY WAIVER.
(a) WAIVER OF DEFERRAL. A Participant who is determined by the
Committee to be suffering from a Disability shall be (i) excused
from fulfilling that portion of the Annual Deferral Amount
commitment that would otherwise have been withheld from a
Participant's Base Annual Salary, Bonus and/or Directors Fees for
the Plan Year during which the Participant first suffers a
Disability and (ii) excused from fulfilling any unexercised Stock
Option Amount commitments. During the period of Disability, the
Participant shall not be allowed to make any additional deferral
elections, but will continue to be considered a Participant for all
other purposes of this Plan.
(b) RETURN TO WORK. If a Participant returns to employment, or service
as a Director, with an Employer, after a Disability ceases, the
Participant may elect to defer an Annual Deferral Amount and Stock
Option Amount for the Plan Year following his or her return to
employment or service and for every Plan Year thereafter while a
Participant in the Plan; provided such deferral elections are
otherwise allowed and an Election Form is delivered to and accepted
by the Committee for each such election in accordance with Section
3.3 above.
8.2 CONTINUED ELIGIBILITY; DISABILITY BENEFIT. A Participant suffering a
Disability shall, for benefit purposes under this Plan, continue to be
considered to be employed, or in the service of an Employer as a
Director, and shall be eligible for the benefits provided for in
Articles 4,
20
<PAGE>
5, 6 or 7 in accordance with the provisions of those Articles.
Notwithstanding the above, the Committee shall have the right to, in its
sole and absolute discretion and for purposes of this Plan only, and
must in the case of a Participant who is otherwise eligible to Retire,
deem the Participant to have experienced a Termination of Employment, or
in the case of a Participant who is eligible to Retire, to have Retired,
at any time (or in the case of a Participant who is eligible to Retire,
as soon as practicable) after such Participant is determined to be
suffering a Disability, in which case the Participant shall receive a
Disability Benefit equal to his or her Account Balance at the time of
the Committee's determination; provided, however, that should the
Participant otherwise have been eligible to Retire, he or she shall be
paid in accordance with Article 5. The Disability Benefit shall be paid
in a lump sum within 60 days of the Committee's exercise of such right.
Any payment made shall be subject to the Deduction Limitation.
ARTICLE 9
BENEFICIARY DESIGNATION
9.1 BENEFICIARY. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as
contingent) to receive any benefits payable under the Plan to a
beneficiary upon the death of a Participant. The Beneficiary designated
under this Plan may be the same as or different from the Beneficiary
designation under any other plan of an Employer in which the Participant
participates.
9.2 BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT. A Participant shall
designate his or her Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Committee or its
designated agent. A Participant shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the
terms of the Beneficiary Designation Form and the Committee's rules and
procedures, as in effect from time to time. If the Participant names
someone other than his or her spouse as a Beneficiary of at least fifty
percent (50%) of the Participant's benefits, a spousal consent, in the
form designated by the Committee, must be signed by that Participant's
spouse and returned to the Committee. Upon the acceptance by the
Committee of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be canceled. The Committee shall be
entitled to rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee prior to his or her death.
9.3 ACKNOWLEDGMENT. No designation or change in designation of a
Beneficiary shall be effective until received and acknowledged in
writing by the Committee or its designated agent.
9.4 NO BENEFICIARY DESIGNATION. If a Participant fails to designate a
Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, then the
Participant's designated Beneficiary shall be deemed to be his or her
surviving spouse. If the Participant has no
21
<PAGE>
surviving spouse, the benefits remaining under the Plan to be paid to a
Beneficiary shall be payable to the executor or personal representative
of the Participant's estate.
9.5 DOUBT AS TO BENEFICIARY. If the Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the
Committee shall have the right, exercisable in its discretion, to cause
the Company to withhold such payments until this matter is resolved to
the Committee's satisfaction.
9.6 DISCHARGE OF OBLIGATIONS. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the
Committee from all further obligations under this Plan with respect to
the Participant, and that Participant's Plan Agreement shall terminate
upon such full payment of benefits.
ARTICLE 10
LEAVE OF ABSENCE
10.1 PAID LEAVE OF ABSENCE. If a Participant is authorized by the
Participant's Employer for any reason to take a paid leave of absence
from the employment of the Employer, the Participant shall continue to
be considered employed by the Employer and the Annual Deferral Amount
shall continue to be withheld during such paid leave of absence in
accordance with Section 3.3.
10.2 UNPAID LEAVE OF ABSENCE. If a Participant is authorized by the
Participant's Employer for any reason to take an unpaid leave of absence
from the employment of the Employer, the Participant shall continue to
be considered employed by the Employer and the Participant shall be
excused from making deferrals until the earlier of the date the leave of
absence expires or the Participant returns to a paid employment status.
Upon such expiration or return, deferrals shall resume for the remaining
portion of the Plan Year in which the expiration or return occurs, based
on the deferral election, if any, made for that Plan Year. If no
election was made for that Plan Year, no deferral shall be withheld.
ARTICLE 11
TERMINATION, AMENDMENT OR MODIFICATION
11.1 TERMINATION. Although the Company anticipates that it will continue the
Plan for an indefinite period of time, there is no guarantee that the
Company will continue the Plan or will not terminate the Plan at any
time in the future. Accordingly, the Company reserves the right to
discontinue its sponsorship of the Plan and/or to terminate the Plan at
any time with respect to any or all of the participating Employees and
Directors, by action of its board of directors. Upon the termination of
the Plan with respect to the Employees and/or Directors of any Employer,
the Plan Agreements of the affected Participants who are employed by
that Employer, or in the service of that Employer as Directors, shall
terminate and their Account
22
<PAGE>
Balances, determined as if they had experienced a Termination of
Employment on the date of Plan termination or, if Plan termination
occurs after the date upon which a Participant was eligible to Retire,
then with respect to that Participant as if he or she had Retired on the
date of Plan termination, shall be paid to the Participants as follows:
Prior to a Change in Control, if the Plan is terminated with respect to
all of the Employees and/or Directors of an Employer, the Company shall
have the right, in its sole discretion, and notwithstanding any
elections made by the Participant, to pay such benefits in a lump sum or
pursuant to a Quarterly Installment Method of up to 60 quarters, with
amounts credited and debited during the installment period as provided
herein. If the Plan is terminated with respect to less than all of the
Employees and/or Directors of an Employer, the Company shall be required
to pay such benefits in a lump sum. After a Change in Control, the
Company shall be required to pay such benefits in a lump sum. The
termination of the Plan shall not adversely affect any benefits to which
a Participant or Beneficiary has become entitled under the Plan as of
the date of termination; provided however, that the Company shall have
the right to accelerate installment payments without a premium or
prepayment penalty by paying the Account Balance in a lump sum or
pursuant to a Quarterly Installment Method using fewer quarters
(provided that the present value of all payments that will have been
received by a Participant at any given point of time under the different
payment schedule shall equal or exceed the present value of all payments
that would have been received at that point in time under the original
payment schedule).
11.2 AMENDMENT. The Company may, at any time, amend or modify the Plan in
whole or in part by the action of its board of directors; provided,
however, that: (i) no amendment or modification shall be effective to
decrease or restrict the value of a Participant's Account Balance in
existence at the time the amendment or modification is made, calculated
as if the Participant had experienced a Termination of Employment as of
the effective date of the amendment or modification or, if the amendment
or modification occurs after the date upon which the Participant was
eligible to Retire, the Participant had Retired as of the effective date
of the amendment or modification, and (ii) no amendment or modification
of this Section 11.2 or Section 12.2 of the Plan shall be effective.
The amendment or modification of the Plan shall not adversely affect any
benefits to which a Participant or Beneficiary has become entitled under
the Plan as of the date of the amendment or modification; provided,
however, that the Company shall have the right to accelerate installment
payments by paying the Account Balance in a lump sum or pursuant to a
Quarterly Installment Method using fewer quarters (provided that the
present value of all payments that will have been received by a
Participant at any given point of time under the different payment
schedule shall equal or exceed the present value of all payments that
would have been received at that point in time under the original
payment schedule).
11.3 PLAN AGREEMENT. Despite the provisions of Sections 11.1 and 11.2 above,
if a Participant's Plan Agreement contains benefits or limitations that
are not in this Plan document, the Company may only amend or terminate
such provisions with the consent of the Participant.
23
<PAGE>
11.4 EFFECT OF PAYMENT. The full payment of the applicable benefit under
Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all
obligations to a Participant and his or her designated Beneficiaries
under this Plan and the Participant's Plan Agreement shall terminate.
ARTICLE 12
ADMINISTRATION
12.1 COMMITTEE DUTIES. Except as otherwise provided in this Article 12, this
Plan shall be administered by a Committee which shall consist of the
Board, or such committee as the Board shall appoint. Members of the
Committee may be Participants under this Plan. The Committee shall also
have the discretion and authority to (i) make, amend, interpret, and
enforce all appropriate rules and regulations for the administration of
this Plan and (ii) decide or resolve any and all questions including
interpretations of this Plan, as may arise in connection with the Plan.
Any individual serving on the Committee who is a Participant shall not
vote or act on any matter relating solely to himself or herself. When
making a determination or calculation, the Committee shall be entitled
to rely on information furnished by a Participant or the Company.
12.2 ADMINISTRATION UPON CHANGE IN CONTROL. For purposes of this Plan, the
Company shall be the "Administrator" at all times prior to the
occurrence of a Change in Control. Upon and after the occurrence of a
Change in Control, the "Administrator" shall be an independent third
party selected by the trustee of the Master Trust and approved by the
individual who, immediately prior to such event, was the Company's Chief
Executive Officer or, if not so identified, the Company's highest
ranking officer (the "Ex-CEO"). The Administrator shall have the
discretionary power to determine all questions arising in connection
with the administration of the Plan and the interpretation of the Plan
and Trusts including, but not limited to benefit entitlement
determinations; provided, however, upon and after the occurrence of a
Change in Control, the Administrator shall have no power to direct the
investment of Plan assets or assets of the Trusts or select any
investment manager or custodial firm for the Plan or Trusts. Upon and
after the occurrence of a Change in Control, the Company must: (1) pay
all reasonable administrative expenses and fees of the Administrator;
and (2) supply full and timely information to the Administrator or all
matters relating to the Plan, the Trusts, the Participants and their
Beneficiaries, the Account Balances of the Participants, the date of
circumstances of the Retirement, Disability, death or Termination of
Employment of the Participants, and such other pertinent information as
the Administrator may reasonably require. Upon and after a Change in
Control, the Administrator may be terminated (and a replacement
appointed) by the trustee of the Master Trust only with the approval of
the Ex-CEO. Upon and after a Change in Control, the Administrator may
not be terminated by the Company.
12.3 AGENTS. In the administration of this Plan, the Committee may, from
time to time, employ agents and delegate to them such administrative
duties as it sees fit (including acting through
24
<PAGE>
a duly appointed representative) and may from time to time consult with
counsel who may be counsel to any Employer.
12.4 BINDING EFFECT OF DECISIONS. The decision or action of the
Administrator with respect to any question arising out of or in
connection with the administration, interpretation and application of
the Plan and the rules and regulations promulgated hereunder shall be
final and conclusive and binding upon all persons having any interest in
the Plan.
12.5 INDEMNITY OF COMMITTEE. The Company shall indemnify and hold harmless
the members of the Committee, and any Employee or agent to whom the
duties of the Committee may be delegated, and the Administrator against
any and all claims, losses, damages, expenses or liabilities arising
from any action or failure to act with respect to this Plan, except in
the case of gross negligence or willful misconduct by the Committee, any
of its members, any such Employee or the Administrator.
12.6 EMPLOYER INFORMATION. To enable the Committee and/or Administrator to
perform its functions, the Company and each Employer shall supply full
and timely information to the Committee and/or Administrator, as the
case may be, on all matters relating to the compensation of its
Participants, the date and circumstances of the Retirement, Disability,
death or Termination of Employment of its Participants, and such other
pertinent information as the Committee or Administrator may reasonably
require.
ARTICLE 13
OTHER BENEFITS AND AGREEMENTS
13.1 COORDINATION WITH OTHER BENEFITS. The benefits provided for a
Participant and Participant's Beneficiary under the Plan are in addition
to any other benefits available to such Participant under any other plan
or program for employees of the Participant's Employer. The Plan shall
supplement and shall not supersede, modify or amend any other such plan
or program except as may otherwise be expressly provided.
ARTICLE 14
CLAIMS PROCEDURES
14.1 PRESENTATION OF CLAIM. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as
a "Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such Claimant
from the Plan. If such a claim relates to the contents of a notice
received by the Claimant, the claim must be made within 60 days after
such notice was received by the Claimant. All other claims must be made
within 180 days of the date on which the event that
25
<PAGE>
caused the claim to arise occurred. The claim must state with
particularity the determination desired by the Claimant.
14.2 NOTIFICATION OF DECISION. The Committee shall consider a Claimant's
claim within a reasonable time, and shall notify the Claimant in writing:
(a) that the Claimant's requested determination has been made, and that
the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole or
in part, to the Claimant's requested determination, and such notice
must set forth in a manner calculated to be understood by the
Claimant:
(i) the specific reason(s) for the denial of the claim, or any part
of it;
(ii) specific reference(s) to pertinent provisions of the Plan upon
which such denial was based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is necessary;
and
(iv) an explanation of the claim review procedure set forth in
Section 14.3 below.
14.3 REVIEW OF A DENIED CLAIM. Within 60 days after receiving a notice from
the Committee that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file
with the Committee a written request for a review of the denial of the
claim. Thereafter, but not later than 30 days after the review
procedure began, the Claimant (or the Claimant's duly authorized
representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole discretion,
may grant.
14.4 DECISION ON REVIEW. The Committee shall render its decision on review
promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other
special circumstances require additional time, in which case the
Committee's decision must be rendered within 120 days after such date.
Such decision must be written in a manner calculated to be understood by
the Claimant, and it must contain:
26
<PAGE>
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon which the
decision was based; and
(c) such other matters as the Committee deems relevant.
14.5 SUBSEQUENT ACTION; MANDATORY ARBITRATION.
(a) SUBSEQUENT ACTION. A Claimant's compliance with the foregoing
provisions of this Article 14 is a mandatory prerequisite to a
Claimant's right to commence any subsequent action with respect to any
claim for benefits under this Plan.
(b) MANDATORY ARBITRATION. Any controversy or claim arising out of or
relating to this Plan shall be resolved by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association. Arbitration shall be by a single arbitrator experienced in
the matters at issue and selected by the parties in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
The arbitration shall be held in such place in Minneapolis, Minnesota,
as may be specified by the arbitrator (or any place agreed to by the
parties and the arbitrator). The decision of the arbitrator shall be
final and binding as to any matters submitted under this Article 14;
provided, however, if necessary, such decision may be enforced in any
court having jurisdiction over the subject matter or over any of the
parties to this Plan. All costs and expenses incurred in connection
with any such arbitration proceeding (including reasonable attorneys'
fees) shall be borne by the party against which the decision is
rendered. If the arbitrator's decision is a compromise, the
determination of which party or parties bears the costs and expenses
incurred in connection with such arbitration proceeding shall be made by
the arbitrator on the basis of the arbitrator's assessment of the
relative merits of the parties' positions.
ARTICLE 15
TRUSTS
15.1 ESTABLISHMENT OF THE TRUSTS.
(a) IN GENERAL. The Company shall establish the Trusts.
(b) MASTER TRUST. The Company shall at least annually transfer over to
the Master Trust such assets as the Company determines, in its sole
discretion, are necessary to provide, on a present value basis, for
its respective future liabilities created with respect to the
Annual Deferral Amounts, Company Contribution Amounts, and Company
Matching
27
<PAGE>
Amounts for the Participants for all periods prior to the transfer,
as well as any debits and credits to the Participants' Account
Balances (excluding debits and credits to the Participant's Stock
Option Account balance) for all periods prior to the transfer,
taking into consideration the value of the assets in such Trust at
the time of the transfer.
(c) COMPANY STOCK OPTION DEFERRAL TRUST. The Company shall at least
annually transfer over to the Company Stock Option Deferral Trust
such assets as the Company determines, in its sole discretion, are
necessary to provide, on a present value basis, for its respective
future liabilities created with respect to the Annual Stock Option
Amounts for the Company's Participants for all periods prior to the
transfer, as well as any debits and credits to the Participants'
Account Balances (excluding debits and credits to the Participant's
Deferral Account balance, Company Contribution Account balance, and
Company Matching Account balance) for all periods prior to the
transfer, taking into consideration the value of the assets in such
Trust at the time of the transfer.
(d) SUBSIDIARY STOCK OPTION DEFERRAL TRUSTS. The Company shall at least
annually transfer over to the Subsidiary Stock Option Deferral
Trust such assets as the Company determines, in its sole
discretion, are necessary to provide, on a present value basis, for
its respective future liabilities created with respect to the
Annual Stock Option Amounts for Participants who are Employees or
Directors of any subsidiary of the Company, for all periods prior
to the transfer, as well as any debits and credits to such
Participants' Account Balances (excluding debits and credits to the
Participant's Deferral Account balance, Company Contribution
Account balance, and Company Matching Account balance) for all
periods prior to the transfer, taking into consideration the value
of the assets in such Trust at the time of the transfer.
15.2 INTERRELATIONSHIP OF THE PLAN AND THE TRUSTS. The provisions of the
Plan and the Plan Agreement shall govern the rights of a Participant to
receive distributions pursuant to the Plan. The provisions of the
Trusts shall govern the rights of the Company, the Participants, and the
creditors of the Company and, where applicable, creditors of Employers
other than the Company, to the assets transferred to the Trusts. The
Company shall at all times remain liable to carry out its obligations
under the Plan.
15.3 DISTRIBUTIONS FROM THE TRUSTS. The Company's obligations under the Plan
may be satisfied with assets of the Trusts distributed pursuant to the
terms of the Trusts, and any such distribution shall reduce the
Company's obligations under this Plan.
15.4 STOCK TRANSFERRED TO THE TRUSTS. Notwithstanding any other provision of
this Plan, the Company Stock Option Deferral Trust, or any Subsidiary
Stock Option Deferral Trust: (i) if assets of the Trusts are
distributed to a Participant in a distribution which reduces the
Participant's Stock Option Account balance under this Plan, such
distribution must be made in the form of Stock during every 6 month
period beginning on the date an Eligible Stock
28
<PAGE>
Option of the Participant is exercised, to the extent of the Qualifying
Gain deferred in accordance with Section 3.7 with respect to that
Eligible Stock Option; and (ii) any Stock transferred to any such Trusts
may not be otherwise distributed or disposed of by the trustee until at
least 6 months after the date such Stock is transferred to such Trusts.
ARTICLE 16
MISCELLANEOUS
16.1 STATUS OF PLAN. The Plan is intended to be a plan that is not qualified
within the meaning of Code Section 401(a) and that "is unfunded and is
maintained by an employer primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employee" within the meaning of ERISA Sections 201(2),
301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted
to the extent possible in a manner consistent with that intent.
16.2 UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries,
heirs, successors and assigns shall have no legal or equitable rights,
interests or claims in any property or assets of an Employer. For
purposes of the payment of benefits under this Plan, any and all of the
Company's assets shall be, and remain, the general, unpledged
unrestricted assets of the Company. The Company's obligation under the
Plan shall be merely that of an unfunded and unsecured promise to pay
money in the future.
16.3 EMPLOYER LIABILITY. The Company's liability for the payment of benefits,
and the obligation of any Employer, shall be defined only by the Plan
and the Plan Agreement, as entered into between the Company, the
Employer (if different from the Company) and a Participant. Neither the
Company nor an Employer shall have any obligation to a Participant under
the Plan except as expressly provided in the Plan and his or her Plan
Agreement.
16.4 NONASSIGNABILITY. Neither a Participant nor any other person shall have
any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate, alienate or
convey in advance of actual receipt, the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are
expressly declared to be, unassignable and non-transferable. No part of
the amounts payable shall, prior to actual payment, be subject to
seizure, attachment, garnishment or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant
or any other person, be transferable by operation of law in the event of
a Participant's or any other person's bankruptcy or insolvency or be
transferable to a spouse as a result of a property settlement or
otherwise.
16.5 NOT A CONTRACT OF EMPLOYMENT. The terms and conditions of this Plan
shall not be deemed to constitute a contract of employment between any
Employer and the Participant. Such
29
<PAGE>
employment is hereby acknowledged to be an "at will" employment
relationship that can be terminated at any time for any reason, or no
reason, with or without cause, and with or without notice, unless
expressly provided in a written employment agreement. Nothing in this
Plan shall be deemed to give a Participant the right to be retained in
the service of any Employer, either as an Employee or a Director, or to
interfere with the right of any Employer to discipline or discharge the
Participant at any time.
16.6 FURNISHING INFORMATION. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information
requested by the Committee and take such other actions as may be
requested in order to facilitate the administration of the Plan and the
payments of benefits hereunder, including but not limited to taking
such physical examinations as the Committee may deem necessary.
16.7 TERMS. Whenever any words are used herein in the masculine, they shall
be construed as though they were in the feminine in all cases where
they would so apply; and whenever any words are used herein in the
singular or in the plural, they shall be construed as though they were
used in the plural or the singular, as the case may be, in all cases
where they would so apply.
16.8 CAPTIONS. The captions of the articles, sections and paragraphs of
this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
16.9 GOVERNING LAW. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the State
of Minnesota without regard to its conflicts of laws principles.
16.10 NOTICE. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address
below:
Best Buy Co., Inc.
Office of the General Counsel
7075 Flying Cloud Drive
Eden Prairie, MN 55344
with a copy to:
Elliot S. Kaplan, Esq.
Robins, Kaplan, Miller & Ciresi, L.L.P.
2800 LaSalle Plaza
800 LaSalle Avenue
Minneapolis, MN 55402
30
<PAGE>
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
Any notice or filing required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and hand-delivered,
or sent by mail, to the last known address of the Participant.
16.11 SUCCESSORS. The provisions of this Plan shall bind and inure to the
benefit of the Company and, where applicable, the Participant's
Employer, their respective successors and assigns, and the Participant
and the Participant's designated Beneficiaries.
16.12 SPOUSE'S INTEREST. The interest in the benefits hereunder of a spouse
of a Participant who has predeceased the Participant shall
automatically pass to the Participant and shall not be transferable by
such spouse in any manner, including but not limited to such spouse's
will, nor shall such interest pass under the laws of intestate
succession.
16.13 VALIDITY. In case any provision of this Plan shall be illegal or
invalid for any reason, said illegality or invalidity shall not affect
the remaining parts hereof, but this Plan shall be construed and
enforced as if such illegal or invalid provision had never been
inserted herein.
16.14 INCOMPETENT. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of
that person's property, the Committee may direct payment of such
benefit to the guardian, legal representative or person having the care
and custody of such minor, incompetent or incapable person. The
Committee may require proof of minority, incompetence, incapacity or
guardianship, as it may deem appropriate prior to distribution of the
benefit. Any payment of a benefit shall be a payment for the account
of the Participant and the Participant's Beneficiary, as the case may
be, and shall be a complete discharge of any liability under the Plan
for such payment amount.
16.15 COURT ORDER. The Committee is authorized to make any payments directed
by court order in any action in which the Plan or the Committee has
been named as a party. In addition, if a court determines that a
spouse or former spouse of a Participant has an interest in the
Participant's benefits under the Plan in connection with a property
settlement or otherwise, the Committee, in its sole discretion, shall
have the right, notwithstanding any election made by a Participant, to
immediately distribute the spouse's or former spouse's interest in the
Participant's benefits under the Plan to that spouse or former spouse.
16.16 DISTRIBUTION IN THE EVENT OF TAXATION.
(a) IN GENERAL. If, for any reason, all or any portion of a
Participant's benefits under this Plan becomes taxable to the
Participant prior to receipt, a Participant may petition the
31
<PAGE>
Committee before a Change in Control, or the Administrator of the
Trusts after a Change in Control, for a distribution of that
portion of his or her benefit that has become taxable. Upon the
grant of such a petition, which grant shall not be unreasonably
withheld (and, after a Change in Control, shall be granted), the
Company shall distribute to the Participant immediately available
funds in an amount equal to the taxable portion of his or her
benefit (which amount shall not exceed a Participant's unpaid
Account Balance under the Plan). If the petition is granted, the
tax liability distribution shall be made within 90 days of the date
when the Participant's petition is granted. Such a distribution
shall affect and reduce the benefits to be paid under this Plan.
(b) TRUSTS. If any of the Trusts terminate in accordance with Section
3.6(e) of such Trust and benefits are distributed from such Trust
to a Participant in accordance with that Section, the Participant's
benefits under this Plan shall be reduced to the extent of such
distributions.
16.17 INSURANCE. The Company, on its own behalf or on behalf of the trustees
of any of the Trusts, and, in its sole discretion, may apply for and
procure insurance on the life of the Participant, in such amounts and
in such forms as the trustees may choose. The Company or the trustees
of any of the Trusts, as the case may be, shall be the sole owner and
beneficiary of any such insurance. The Participant shall have no
interest whatsoever in any such policy or policies, and at the request
of the Company shall submit to medical examinations and supply such
information and execute such documents as may be required by the
insurance company or companies to whom the Company has applied for
insurance.
16.18 LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL. The Company is
aware that upon the occurrence of a Change in Control, the Board or the
board of directors of a Participant's Employer (which might then be
composed of new members) or a shareholder of the Company or the
Participant's Employer, or of any successor corporation might then
cause or attempt to cause the Company, the Participant's Employer or
such successor to refuse to comply with its obligations under the Plan
and might cause or attempt to cause the Company or the Participant's
Employer to institute, or may institute, litigation seeking to deny
Participants the benefits intended under the Plan. In these
circumstances, the purpose of the Plan could be frustrated.
Accordingly, if, following a Change in Control, it should appear to any
Participant that the Company, the Participant's Employer
or any successor corporation has failed to comply with any of its
obligations under the Plan or any agreement thereunder or, if the
Company, such Employer or any other person takes any action to declare
the Plan void or unenforceable or institutes any litigation or other
legal action designed to deny, diminish or to recover from any
Participant the benefits intended to be provided, then the Company
irrevocably authorizes such Participant to retain counsel of his or her
choice at the expense of the Company to represent such Participant in
connection with the initiation or defense of any litigation or other
legal action, whether by or against the Company, the Participant's
Employer
32
<PAGE>
or any director, officer, shareholder or other person affiliated with the
Company, the Participant's Employer or any successor thereto in any
jurisdiction.
IN WITNESS WHEREOF, the Company has signed this Plan document as of
March 30, 1998.
Best Buy Co., Inc., a Minnesota corporation
By: /s/Richard M. Schulze
---------------------------------------------
Richard M. Schulze
Chief Executive Officer
33
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE 2 Selection, Enrollment, Eligibility . . . . . . . . . . . . . . . . . . .8
2.1 Selection by Committee . . . . . . . . . . . . . . . . . . . . . . . . .8
2.2 Enrollment Requirements. . . . . . . . . . . . . . . . . . . . . . . . .8
2.3 Eligibility; Commencement of Participation . . . . . . . . . . . . . . .9
2.4 Termination of Participation and/or Deferrals. . . . . . . . . . . . . .9
ARTICLE 3 Deferral Commitments/Company Matching/Crediting/Taxes. . . . . . . . . .9
3.1 Minimum Deferrals. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.2 Maximum Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Election to Defer; Effect of Election Form . . . . . . . . . . . . . . 11
3.4 Withholding of Annual Deferral Amounts . . . . . . . . . . . . . . . . 12
3.5 Company Contribution Amount. . . . . . . . . . . . . . . . . . . . . . 12
3.6 Company Matching Amount. . . . . . . . . . . . . . . . . . . . . . . . 12
3.7 Stock Option Amount. . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.8 Investment of Trust Assets . . . . . . . . . . . . . . . . . . . . . . 12
3.9 Sources of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.10 Vesting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.11 Crediting/Debiting of Account Balances . . . . . . . . . . . . . . . . 14
3.12 FICA and Other Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.13 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 4 In-Service Distribution; Unforeseeable Financial Emergencies;. . . . . 17
4.1 In-Service Distribution. . . . . . . . . . . . . . . . . . . . . . . . 17
4.2 Other Benefits Take Precedence Over In-Service Distribution. . . . . . 18
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies. 18
ARTICLE 5 Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.1 Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2 Payment of Retirement Benefit. . . . . . . . . . . . . . . . . . . . . 18
5.3 Death Prior to Completion of Retirement Benefit. . . . . . . . . . . . 19
ARTICLE 6 Pre-Retirement Survivor Benefit. . . . . . . . . . . . . . . . . . . . 19
6.1 Pre-Retirement Survivor Benefit. . . . . . . . . . . . . . . . . . . . 19
6.2 Payment of Pre-Retirement Survivor Benefit . . . . . . . . . . . . . . 19
ARTICLE 7 Termination Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.1 Termination Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.2 Payment of Termination Benefit . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 8 Disability Waiver and Benefit. . . . . . . . . . . . . . . . . . . . . 20
8.1 Disability Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.2 Continued Eligibility; Disability Benefit. . . . . . . . . . . . . . . 20
ARTICLE 9 Beneficiary Designation. . . . . . . . . . . . . . . . . . . . . . . . 21
9.1 Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.2 Beneficiary Designation; Change; Spousal Consent . . . . . . . . . . . 21
9.3 Acknowledgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.4 No Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . 21
9.5 Doubt as to Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . 22
9.6 Discharge of Obligations . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 10 Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.1 Paid Leave of Absence. . . . . . . . . . . . . . . . . . . . . . . . . 22
10.2 Unpaid Leave of Absence. . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 11 Termination, Amendment or Modification . . . . . . . . . . . . . . . . 22
11.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.2 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.3 Plan Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.4 Effect of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 12 Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.1 Committee Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.2 Administration Upon Change In Control. . . . . . . . . . . . . . . . . 24
12.3 Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.4 Binding Effect of Decisions. . . . . . . . . . . . . . . . . . . . . . 25
12.5 Indemnity of Committee . . . . . . . . . . . . . . . . . . . . . . . . 25
12.6 Employer Information . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 13 Other Benefits and Agreements. . . . . . . . . . . . . . . . . . . . . 25
13.1 Coordination with Other Benefits . . . . . . . . . . . . . . . . . . . 25
ARTICLE 14 Claims Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
14.1 Presentation of Claim. . . . . . . . . . . . . . . . . . . . . . . . . 25
14.2 Notification of Decision . . . . . . . . . . . . . . . . . . . . . . . 26
14.3 Review of a Denied Claim . . . . . . . . . . . . . . . . . . . . . . . 26
14.4 Decision on Review . . . . . . . . . . . . . . . . . . . . . . . . . . 26
14.5 Subsequent Action; Mandatory Arbitration . . . . . . . . . . . . . . . 27
ARTICLE 15 Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
15.1 Establishment of the Trusts. . . . . . . . . . . . . . . . . . . . . . 27
15.2 Interrelationship of the Plan and the Trusts . . . . . . . . . . . . . 28
15.3 Distributions From the Trusts. . . . . . . . . . . . . . . . . . . . . 28
15.4 Stock Transferred to the Trusts. . . . . . . . . . . . . . . . . . . . 28
ARTICLE 16 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16.1 Status of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16.2 Unsecured General Creditor . . . . . . . . . . . . . . . . . . . . . . 29
16.3 Employer Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16.4 Nonassignability . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16.5 Not a Contract of Employment . . . . . . . . . . . . . . . . . . . . . 29
16.6 Furnishing Information . . . . . . . . . . . . . . . . . . . . . . . . 30
16.7 Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
16.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
16.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
16.10 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
16.11 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
16.12 Spouse's Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
16.13 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
16.14 Incompetent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
16.15 Court Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
16.16 Distribution in the Event of Taxation. . . . . . . . . . . . . . . . . 31
16.17 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
16.18 Legal Fees To Enforce Rights After Change in Control . . . . . . . . . 32
</TABLE>
iii
<PAGE>
March 30, 1998
Best Buy Co., Inc.
7075 Flying Cloud Drive
Eden Prairie, MN 55344
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-8 (the
"Registration Statement") of even date herewith of Best Buy Co., Inc., a
Minnesota corporation (the "Company"), relating to obligations which may be
incurred by the Company pursuant to its Deferred Compensation Plan (the
"Obligations"), we, as counsel for the Company, have examined such corporate
records and other documents, including the Registration Statement, and have
reviewed such matters of law as we have deemed relevant hereto, and, based
upon such examination and review, it is our opinion that all necessary
corporate action on the part of the Company has been taken to authorize the
Company to incur the Obligations, and that the Obligations, when incurred as
contemplated in the Registration Statement, will be binding obligations of
the Company in accordance with their terms, except as enforceability may be
limited by the application of bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting the rights of creditors generally
and by judicial limitations on the right of specific performance.
The Plan permits a deferral of income by eligible employees and
directors for periods extending to the termination of employment (or
directorship) or beyond. Accordingly, the Plan by its terms appears to fall
within the definition of an "employee pension benefit plan" in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
However, as a plan that is unfunded and maintained primarily for the purpose
of providing deferred compensation to a select group of management or highly
compensated employees (commonly referred to as a "top hat plan"), the Plan is
only subject to Parts 1 and 5 of Title I of ERISA.
Parts 1 and 5 of Title I of ERISA do not impose any specific written
requirements on top hat plans as a condition to compliance with the
applicable provisions of ERISA. Rather, they relate to reporting and
disclosure requirements and administration and enforcement which govern the
operation of plans like the Plan.
<PAGE>
There being no express terms of the Plan that contravene or conflict
with the provisions of Parts 1 and 5 of Title I of ERISA, we are of the
opinion that the provisions of the written document constituting the Plan
comply with the applicable requirements of ERISA.
This opinion letter is issued as of the date hereof and is limited to
the laws now in effect, and in all respects is subject to and may be limited
by future legislation, as well as by future case law. We assume no
responsibility to keep this opinion current or to supplement it to reflect
facts or circumstances which may hereafter come to our attention or any
changes in laws which may hereafter occur.
We hereby consent to being named in the Registration Statement as
counsel for the Company who have passed upon legal matters in connection with
the incurrance of the Obligations. We further consent to the filing of this
opinion as an exhibit to the Registration Statement.
Yours very truly,
/s/Robins, Kaplan, Miller & Ciresi L.L.P.
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Best Buy Co., Inc. Deferred Compensation Plan of
our report dated April 8, 1997, with respect to the consolidated financial
statements of Best Buy Co., Inc. incorporated by reference in its Annual
Report (Form 10-K) for the year ended March 1, 1997, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
March 31, 1998
