BEST BUY CO., INC.
1997
DIRECTORS' NON-QUALIFIED STOCK OPTION PLAN
1999-2 AMENDMENT AND RESTATEMENT
A. PURPOSE.
The purpose of this Directors' Non-Qualified Stock Option Plan ("Plan")
is to further the growth and general prosperity of Best Buy Co., Inc. (the
"Company"), and its directly and indirectly wholly-owned subsidiaries
(collectively, the "Companies") by enabling current directors of the Company,
who have been or are serving on the Company's Board of Directors (the "Board")
and upon whose judgment, initiative and effort the Companies were or are largely
dependent for the successful conduct of their business, to acquire shares of the
common stock of the Company under the terms and conditions and in the manner
contemplated by this Plan, thereby increasing their personal involvement in the
Companies. Options granted under the Plan are intended to be options which do
not meet the requirements of Section 422A of the Internal Revenue Code of 1986,
as amended (the "Code").
B. ADMINISTRATION.
This Plan shall be administered by the Compensation and Human Resources
Committee (the "Committee") of the Board. Subject to such orders and resolutions
not inconsistent with the provisions of this Plan as may from time to time be
issued or adopted by the Board, the Committee shall have full power and
authority to interpret the Plan.
All decisions and determinations made by the Committee pursuant to the
provisions of the Plan and applicable orders and resolutions of the Board shall
be final. Each option granted shall be evidenced by a written agreement
containing such terms and conditions as may be approved by the Committee and
which shall not be inconsistent with the Plan and the orders and resolutions of
the Board with respect thereto.
C. ELIGIBILITY, PARTICIPATION AND GRANTS.
Options shall be granted under the Plan to current members of the
Board. The Committee shall grant to each director options to purchase shares in
such amounts as the Committee shall from time to time determine.
D. SHARES SUBJECT TO THE PLAN.
Subject to adjustment as provided below, an aggregate of 2,800,000
shares of $0.10 par value common stock of the Company shall be subject to this
Plan from authorized but unissued shares of
the Company. Such number and kind of shares shall be appropriately adjusted in
the event of any one or more stock splits, reverse stock splits or stock
dividends hereafter paid or declared with respect to such stock. If, prior to
the termination of the Plan, shares issued pursuant hereto shall have been
repurchased by the Company pursuant to this Plan, such repurchased shares shall
again become available for issuance under the Plan.
Any shares which, after the effective date of this Plan, shall become
subject to valid outstanding options under this Plan may, to the extent of the
release of any such shares from option by termination or expiration of option(s)
without valid exercise, be made the subject of additional options under this
Plan.
E. NO ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
Except as expressly provided herein, in the event of a merger,
consolidation, reorganization, stock dividend, stock split, or other change in
corporate structure or capitalization affecting the common stock of the Company,
there shall be no change in the number of shares subject to options to be
granted thereafter pursuant to the Plan; provided, however, that in such event,
an appropriate adjustment may be made in the number and kind of shares subject
to and the exercise prices of outstanding options granted under the Plan as
determined by the Committee.
F. TERMS AND CONDITIONS OF OPTIONS.
The Committee shall have the power, subject to the limitations
contained in this Plan, to prescribe any terms and conditions in respect of the
granting or exercise of any option under this Plan and, in particular, shall
prescribe the following terms and conditions:
(1) Each option shall state the number of shares to which it
pertains.
(2) The price at which shares shall be sold to participants
hereunder (the "Exercise Price") shall be the Fair Market Value of the
Company's common stock on the date of grant. Payment of the Exercise
Price shall be made (a) if payment is made by check payable to the
Company, at the time the shares are sold hereunder, or (b) if payment
is made pursuant to an irrevocable election to surrender outstanding
shares of common stock of the Company which have a Fair Market Value on
the date of surrender equal to the Exercise Price of the shares as to
which the option is being exercised, no later than the settlement date
for the shares sold in the market to cover the Exercise Price, or (c)
by a combination thereof, UNLESS an option is exercised in connection
with a deferral election pursuant to the Deferred Compensation Plan,
defined below, in which case payment of the Exercise Price shall be
made as provided in Section M herein.
(3) An option shall be exercisable in whole or in part with
respect to the shares included therein until the earlier of (a) the
close of business on the tenth day prior to the proposed effective date
of (i) any merger or consolidation of the Company with any other
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corporation or entity as a result of which the holders of the common
stock of the Company will own less than a majority voting control of
the surviving corporation; (ii) any sale of substantially all of the
assets of the Companies or (iii) any sale of common stock of the
Company to a person not a shareholder on the date of issuance of the
option who thereby acquires majority voting control of the Company,
subject to any such transaction actually being consummated, or (b) the
close of business on the date ten (10) years after the date the option
was granted. The Company shall give written notice to the optionee not
less than 30 days prior to the proposed effective date of any of the
transactions described in (a) above. Notwithstanding the foregoing, in
the event a director who is not an employee of the Companies resigns or
is removed from the Board prior to the end of the term to which he or
she has been elected or appointed (the "Term End"), all of the then
outstanding options granted pursuant hereto shall expire on and as of
the Term End; provided, however, that the foregoing shall not apply to
any resignation or removal due to health reasons.
(4) An option shall be exercised when notice of such exercise,
whether in writing or orally, has been given to the Company at its
principal business office or to its designated agent by the person
entitled to exercise the option and full payment for the shares with
respect to which the option is exercised has been received by the
Company. Until the stock certificates are issued, no right to vote or
receive dividends or any other rights as a shareholder shall exist with
respect to optioned shares, notwithstanding the exercise of the option.
(5) Each optionee shall be obligated to maintain the
confidentiality of all of the confidential and proprietary information
of the Companies and, in the event of a breach by the optionee of such
obligation, all of the optionee's options granted pursuant to the Plan
and all rights thereunder shall immediately terminate. Notwithstanding
the foregoing, this Section F(5), adopted as of April 16, 1999, shall
be effective only for options granted hereunder on and after April 16,
1999.
G. OPTIONS NOT TRANSFERABLE.
Options under the Plan may not be sold, pledged, assigned or
transferred in any manner, whether by operation of law or otherwise, except by
will, the laws of descent or a qualified domestic relations order.
H. AMENDMENT OR TERMINATION OF THE PLAN.
The Board may amend this Plan from time to time as it may deem
advisable and may at any time terminate the Plan, provided that any such
termination of the Plan shall not adversely affect options already granted and
such options shall remain in full force and effect as if the Plan had not been
terminated.
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I. AGREEMENT AND REPRESENTATIONS OF PARTICIPANTS.
As a condition precedent to the exercise of any option or portion
thereof, the Company may require the person exercising such option to represent
and warrant at the time of any such exercise that the shares are being purchased
only for investment and without any present intention to sell or distribute such
shares if, in the opinion of counsel for the Company, such a representation is
required under the Securities Act of 1933 or any other applicable law,
regulation or rule of any governmental agency.
In the event legal counsel to the Company renders an opinion to the
Company that shares for options exercised pursuant to this Plan cannot be issued
to the optionee because such action would violate any applicable federal or
state securities laws, then in that event the optionee agrees that the Company
shall not be required to issue said shares to the optionee and shall have no
liability to the optionee other than the return to optionee of amounts tendered
to the Company upon exercise of the option.
J. EFFECTIVE DATE AND TERMINATION OF THE PLAN.
The Plan shall become effective as of April 18, 1997 if approved
thereafter by the Company's shareholders. The Plan shall terminate on the
earliest of:
(1) The date when all the shares available under the Plan
shall have been acquired through the exercise of options granted under
the Plan; or
(2) Ten (10) years after the date of approval of the Plan by
the Company's shareholders; or
(3) Such other earlier date as the Board may determine.
K. FAIR MARKET VALUE.
"Fair Market Value" shall mean the last reported sale price of the
Company's common stock on the date of grant, as quoted on by the New York Stock
Exchange. If the Company's common stock ceases to be listed for trading on the
New York Stock Exchange, "Fair Market Value" shall mean the value determined in
good faith by the Board.
L. COMPLIANCE WITH RULE 16b-3 AND SECTION 162(m).
Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 under the Securities Exchange Act of 1934, as amended,
and avoid loss of the deduction referred to in paragraph (1) of Section 162(m)
of the Code. Anything in the Plan to the contrary notwithstanding, to the extent
any provision of the Plan or action by the Committee fails to so comply
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or avoid the loss of such deduction, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.
M. DEFERRAL OF OPTION GAIN.
Participants in the Company's Deferred Compensation Plan, effective as
of April 1, 1998 (the "Deferred Compensation Plan"), may be able to defer the
gain, if any, upon exercise of options granted hereunder pursuant to and in
accordance with the terms of the Deferred Compensation Plan. To the extent that
the Deferred Compensation Plan permits a participant to defer any gain with
respect to an option, the Exercise Price must be satisfied utilizing shares of
the Company's common stock held at least six months prior to exercise. In the
event any deferral election is made with respect to an option, if the optionee
is unable to deliver the requisite number of shares of the Company's common
stock to cover the full Exercise Price prior to the expiration of such option,
the portion of the option that corresponds to the portion of the full Exercise
Price not covered shall be forfeited.
N. FORM OF OPTION.
Options shall be issued in substantially the same form as the Committee
or the Board may approve.
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