<PAGE>
As filed with the Securities and Exchange Commission on June 17, 1999
Registration Statement No. 333-
- ----------------------------------------------------------------------------
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, as amended
--------------------------------------
(Full title of the plan)
Richard M. Schulze
7075 Flying Cloud Drive Copy of communications to:
Eden Prairie, MN 55344
----------------------- Anne M. Rosenberg
(Name and address of Robins, Kaplan, Miller & Ciresi L.L.P.
agent for service) 2800 LaSalle Plaza
800 LaSalle Avenue
(612) 947-2000 Minneapolis, MN 55402-2015
----------------------- (612) 349-8500
(Telephone number,
including area code,
of agent for service)
(cover page is continued on next page)
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Title of Securities to Amount to be Offering Price Per Aggregate Offering Amount of
be Registered (1) Registered Obligation Price (2) Registration Fee
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Deferred
Compensation $40,000,000 100% $40,000,000 $11,120
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 February
27, 1999.
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
February 28, 1999.
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, as amended (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. 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 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 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). 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 on a date or dates
selected by the
3
<PAGE>
Participant in accordance with the terms of the Plan. The Plan is not
required to be funded and the amount of compensation 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 has
rendered 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, 1998, the Registrant obtained a Directors' and
Officers' Liability Insurance Policy, with coverage of $100 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 Best Buy Co., Inc. Deferred Compensation Plan, as amended.
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 17th day of June, 1999.
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 indicated on June 17, 1999.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C>
Chairman, Chief
/s/ Richard M. Schulze Executive Officer
- ----------------------------------- (principal executive
Richard M. Schulze officer) and Director
Executive Vice
/s/ Allen U. Lenzmeier President and Chief
- ----------------------------------- Financial Officer
Allen U. Lenzmeier (principal financial
officer)
8
<PAGE>
Senior Vice President-
/s/ Robert C. Fox Finance and Treasurer
- ----------------------------------- (principal accounting
Robert C. Fox officer)
Secretary and
/s/ Elliot S. Kaplan Director
- -----------------------------------
Elliot S. Kaplan
/s/ Frank D. Trestman Director
- -----------------------------------
Frank D. Trestman
Director
- -----------------------------------
Bradbury H. Anderson
Director
- -----------------------------------
Culver Davis, Jr.
Director
- -----------------------------------
James C. Wetherbe
/s/ Yvonne R. Jackson Director
- -----------------------------------
Yvonne R. Jackson
Director
- -----------------------------------
Hatim A. Tyabji
/s/ David H. Starr Director
- -----------------------------------
David H. Starr
</TABLE>
9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS
- --------
<S> <C> <C>
4 Best Buy Co., Inc. Deferred Compensation Plan, as amended. Filed herewith
5 Opinion of Robins, Kaplan, Miller & Ciresi L.L.P. as to the Filed herewith
legality of the securities being registered.
23.1 Consent of Ernst & Young LLP. Filed herewith
23.2 Consent of Robins, Kaplan, Miller & Ciresi L.L.P. (contained Filed herewith
in their opinion filed as Exhibit 5).
24 Power of Attorney (included on signature page hereto). Filed herewith
</TABLE>
10
<PAGE>
BEST BUY CO., INC.
First Amended and Restated
Deferred Compensation Plan
MASTER PLAN DOCUMENT
- -------------------------------------------------------------------------------
EFFECTIVE APRIL 1, 1998
AMENDED AND RESTATED EFFECTIVE OCTOBER 1, 1998
COPYRIGHT -C- 1998
BY COMPENSATION RESOURCE GROUP, INC.
ALL RIGHTS RESERVED
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
ARTICLE 1 Definitions......................................................................................1
ARTICLE 2 Selection, Enrollment, Eligibility...............................................................9
2.1 Selection by Committee...........................................................................9
2.2 Enrollment Requirements..........................................................................9
2.3 Eligibility; Commencement of Participation.......................................................9
2.4 Termination of Participation and/or Deferrals....................................................9
ARTICLE 3 Deferral Commitments/Company Matching/Crediting/Taxes...........................................10
3.1 Minimum Deferrals...............................................................................10
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.............................................................................13
3.8 Investment of Trust Assets......................................................................13
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...................................................................................18
ARTICLE 4 In-Service Distribution; Unforeseeable Financial Emergencies;...................................18
4.1 In-Service Distribution.........................................................................18
4.2 Other Benefits Take Precedence Over In-Service Distribution.....................................19
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies...........................19
ARTICLE 5 Retirement Benefit..............................................................................19
5.1 Retirement Benefit..............................................................................19
5.2 Payment of Retirement Benefit...................................................................19
5.3 Death Prior to Completion of Retirement Benefit.................................................20
ARTICLE 6 Pre-Retirement Survivor Benefit.................................................................20
6.1 Pre-Retirement Survivor Benefit.................................................................20
6.2 Payment of Pre-Retirement Survivor Benefit......................................................20
ARTICLE 7 Termination Benefit.............................................................................21
7.1 Termination Benefit.............................................................................21
</TABLE>
i
<PAGE>
<TABLE>
<C> <S> <C>
7.2 Payment of Termination Benefit..................................................................21
ARTICLE 8 Disability Waiver and Benefit...................................................................21
8.1 Disability Waiver...............................................................................21
8.2 Continued Eligibility; Disability Benefit.......................................................22
ARTICLE 9 Beneficiary Designation.........................................................................22
9.1 Beneficiary.....................................................................................22
9.2 Beneficiary Designation; Change; Spousal Consent................................................22
9.3 Acknowledgment..................................................................................23
9.4 No Beneficiary Designation......................................................................23
9.5 Doubt as to Beneficiary.........................................................................23
9.6 Discharge of Obligations........................................................................23
ARTICLE 10 Leave of Absence................................................................................23
10.1 Paid Leave of Absence...........................................................................23
10.2 Unpaid Leave of Absence.........................................................................23
ARTICLE 11 Termination, Amendment or Modification..........................................................24
11.1 Termination.....................................................................................24
11.2 Amendment.......................................................................................24
11.3 Plan Agreement..................................................................................25
11.4 Effect of Payment...............................................................................25
ARTICLE 12 Administration..................................................................................25
12.1 Committee Duties................................................................................25
12.2 Administration Upon Change In Control...........................................................25
12.3 Agents..........................................................................................26
12.4 Binding Effect of Decisions.....................................................................26
12.5 Indemnity of Committee..........................................................................26
12.6 Employer Information............................................................................26
ARTICLE 13 Other Benefits and Agreements...................................................................27
13.1 Coordination with Other Benefits................................................................27
ARTICLE 14 Claims Procedures...............................................................................27
14.1 Presentation of Claim...........................................................................27
14.2 Notification of Decision........................................................................27
14.3 Review of a Denied Claim........................................................................28
14.4 Decision on Review..............................................................................28
14.5 Subsequent Action; Mandatory Arbitration........................................................28
</TABLE>
ii
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE 15 Trusts..........................................................................................29
15.1 Establishment of the Trusts.....................................................................29
15.2 Interrelationship of the Plan and the Trusts....................................................30
15.3 Distributions From the Trusts...................................................................30
15.4 Stock Transferred to the Trusts.................................................................30
ARTICLE 16 Miscellaneous...................................................................................30
16.1 Status of Plan..................................................................................30
16.2 Unsecured General Creditor......................................................................31
16.3 Employer Liability..............................................................................31
16.4 Nonassignability................................................................................31
16.5 Not a Contract of Employment....................................................................31
16.6 Furnishing Information..........................................................................31
16.7 Terms...........................................................................................32
16.8 Captions........................................................................................32
16.9 Governing Law...................................................................................32
16.10 Notice..........................................................................................32
16.11 Successors......................................................................................32
16.12 Spouse's Interest...............................................................................33
16.13 Validity........................................................................................33
16.14 Incompetent.....................................................................................33
16.15 Court Order.....................................................................................33
16.16 Distribution in the Event of Taxation...........................................................33
16.17 Insurance.......................................................................................34
16.18 Legal Fees To Enforce Rights After Change in Control............................................34
</TABLE>
iii
<PAGE>
BEST BUY CO., INC.
FIRST AMENDED AND RESTATED
DEFERRED COMPENSATION PLAN
Effective April 1, 1998
Amended and Restated Effective October 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.
The Plan was initially adopted effective as of April 1, 1998. The Plan
was amended and restated effective October 1, 1998 to (i) eliminate the ability
of a Participant to elect to defer Qualifying Gain from the exercise of an
Eligible Stock Option, (ii) modify the vesting schedule applicable to a
Participant's Company Matching Account to be consistent with the vesting
schedule applicable to the Company Retirement Savings Plan, retroactive to April
1, 1998, (iii) increase the maximum percentage of Base Annual Salary which may
be deferred effective as of January 1, 1999, and (iv) make other clarifying
modifications.
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
1
<PAGE>
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 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
2
<PAGE>
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 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
3
<PAGE>
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.
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.
4
<PAGE>
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.
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.
5
<PAGE>
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 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
6
<PAGE>
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).
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.
7
<PAGE>
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.
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.
8
<PAGE>
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
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.
9
<PAGE>
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:
<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:
10
<PAGE>
<TABLE>
<CAPTION>
DEFERRAL MAXIMUM AMOUNT
--------------------------------------------------------------
<S> <C>
Base Annual Salary Prior to 1999 - 50%
After 1998 - 75%
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.
(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
11
<PAGE>
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 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. NOTWITHSTANDING ANYTHING
HEREIN TO THE CONTRARY, NO ELECTION TO DEFER GAIN UPON AN
ELIGIBLE STOCK OPTION EXERCISE AFTER SEPTEMBER 30, 1998
WILL BE VALID.
(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.
12
<PAGE>
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
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
13
<PAGE>
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 2 years 0%
2 years or more, but less than 3 20%
3 years or more, but less than 4 40%
4 years or more, but less than 5 60%
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).
(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,
14
<PAGE>
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 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
15
<PAGE>
(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 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
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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 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, except as provided below, the Participant
cannot reallocate the Stock Option Amount from the Company
Stock Fund to another Measurement Fund; PROVIDED, HOWEVER,
ANY PARTICIPANT WHO HAS DEFERRED QUALIFYING GAINS UPON AN
ELIGIBLE STOCK OPTION EXERCISE PRIOR TO OCTOBER 1, 1998,
SHALL HAVE UNTIL MARCH 31, 1999 TO ELECT TO REALLOCATE THE
STOCK OPTION ACCOUNT FROM THE COMPANY STOCK FUND TO ONE OR
MORE OTHER MEASUREMENT FUND(S) IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 3.11 HEREOF.
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
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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
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
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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 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
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shall be subject to the Deduction Limitation. Notwithstanding any other
provision of this Plan that may be interpreted to the contrary, all
distributions from the Company Stock Fund must be paid in the form of
Stock.
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. Notwithstanding any
other provision of this Plan that may be interpreted to the contrary,
all distributions from the Company Stock Fund must be in the form of
Stock.
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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. Notwithstanding any other
provision of this Plan that may be interpreted to the contrary, all
distributions from the Company Stock Fund must be paid in the form of
Stock.
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.
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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, 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.
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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 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.
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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 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
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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.
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
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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 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.
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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 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
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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:
(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
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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 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
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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; and (ii)
any Stock transferred to any such Trusts may not be otherwise
distributed or disposed of by the trustee (except pursuant to a
valid election to reallocate from the Company Stock Fund made by a
Participant in accordance with Section 3.11(f) hereof).
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.
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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 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.
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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
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
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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 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
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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
or any director, officer, shareholder or other person
affiliated with the Company, the Participant's Employer or any
successor thereto in any jurisdiction.
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IN WITNESS WHEREOF, the Company has signed this Amended and Restated
Plan document effective as of October 1, 1998.
Best Buy Co., Inc., a Minnesota corporation
By: /s/ Richard M. Schulze
-----------------------------
Richard M. Schulze
Chief Executive Officer
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ROBINS, KAPLAN, MILLER & CIRESI L.L.P.
ATTORNEYS AT LAW
2800 LASALLE PLAZA
800 LASALLE AVENUE
MINNEAPOLIS, MINNESOTA 55402-2015
TELEPHONE (612) 349-8500
FACSIMILE (612) 339-4181
[LETTERHEAD]
June 17, 1999
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 $40,000,000 of
obligations (the "Obligations") which may be incurred by the Company pursuant to
its Deferred Compensation Plan, as amended (the "Plan"), 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>
Best Buy Co., Inc.
June 17, 1999
Page 2
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 incurrence 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.
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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,
as amended, of our report dated March 30, 1999, 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 February 27,
1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
June 15, 1999