BEST BUY CO., INC.
1987
EMPLOYEE NON-QUALIFIED
STOCK OPTION PLAN
A. PURPOSE.
The purpose of this Employee Non-Qualified Stock Option Plan ("Plan") is to
further the growth and general prosperity of Best Buy Co., Inc. ("Company") by
enabling current key employees of the Company, who have been or will be given
responsibility for the administration of the affairs of the Company and upon
whose judgment, initiative and effort the Company was or is largely dependent
for the successful conduct of its 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
Company and enabling the Company to obtain and retain the services of such
employees. 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.
B. ADMINISTRATION.
This Plan shall be administered by the Compensation Committee of the
Company's Board of Directors (the "Committee"). Options may not be granted to
any person while serving on the Committee unless approved by a majority of the
disinterested members of the Board of Directors. 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 of Directors, the Committee shall have
full power and authority to interpret the Plan and, to the extent contemplated
herein, shall exercise the discretion granted to it regarding participation in
the Plan and the number of shares to be optioned and sold to each participant.
All decisions, determinations and selections made by the Committee
pursuant to the provisions of the Plan and applicable orders and resolutions of
the Board of Directors 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 of Directors with respect thereto.
C. ELIGIBILITY AND PARTICIPATION.
Options may be granted under the Plan to (i) key executive personnel,
including officers, senior management employees and members of the Board of
Directors who are employees of the Company; (ii) staff management employees,
including managers, supervisors, and their functional equivalents for:
warehousing, service, merchandising, leaseholds, installation, and finance and
administration; (iii) line management employees, including retail
store and field managers, supervisors and their functional equivalents; and
(iv) any employee having served the Company continuously for a period of not
less than ten (10) years. The Committee shall grant to such participants
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 in Section E. herein, an aggregate of
3,625,000 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. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
In the event of a merger, consolidation, reorganization, stock dividend,
stock split, or other change in corporate structure or capitalization affecting
the common shares of the Company, an appropriate adjustment shall be made in the
maximum number of shares available to any one individual and in the number,
kind, exercise price, etc., of shares subject to options granted under the Plan
as may be 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 Committee shall determine the price at which shares shall be
sold to participants hereunder (the "Exercise Price"), provided however
that in no event shall the Exercise Price be less than the fair market
value of the stock as of
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the date of grant. Payment of the Exercise Price shall be made at the time
the shares are sold hereunder by certified or cashier's check payable to
the Company.
(3) An option shall be exercisable in whole or in part (but not as to
less than twenty-five percent of the original aggregate amount of shares of
common stock made subject to the option) 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 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 Company or (iii) any sale of
common stock of the Company to a person not a stockholder 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)
4:00 p.m., local standard time, in Minneapolis, Minnesota, on the date five
(5) 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.
(4) Except in the event of death, an option shall be exercisable with
respect to the shares included therein not earlier than the date one (1)
year following the date of grant of the option, nor later than the date
five (5) years following the date of grant of the option, and, during each
year that the option may be exercised, the optionee may exercise such
optionee's right to acquire only twenty-five percent (25%) of the shares
subject to such option together with any shares that the optionee had
previously been able to exercise.
(5) Except as in the event of death, an option may be exercised only
by the optionee while such optionee is, and has continually been, since the
date of the grant of the option, an employee of the Company. If the
continuous employment of an optionee terminates by reason of death, an
option granted hereunder held by the deceased employee may be exercised to
the extent of all shares subject to the option within one (1) year
following the date of death, but in no event later than five (5) years
after the date of grant of such option, by the person or persons to whom
the participant's rights under such option shall have passed by will or by
the applicable laws of descent and distribution.
(6) An option shall be exercised when written notice of such exercise
has been given to the Company at its principal business office by the
person entitled to exercise the option
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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.
G. OPTIONS NOT TRANSFERRABLE.
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 or the laws
of descent, and may be exercised during the lifetime of an optionee only by such
optionee.
H. AMENDMENT OR TERMINATION OF THE PLAN.
The Board of Directors of the Company 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.
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 May 1, 1987 if approved thereafter by
the Stockholders of the Company. The Plan shall terminate on the earliest of:
(1) The date when all the common shares available under the Plan
shall have been acquired through the exercise of options granted under the
Plan; or
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(2) Ten (10) years after the date of approval of the Plan by the
Stockholders of the Company; or
(3) Such other earlier date as the Board of Directors of the Company
may determine.
K. FORM OF OPTION.
Options shall be issued in substantially the same form as Exhibit "A"
attached hereto or in such other form as the Compensation Committee or the board
may approve.
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EXHIBIT A
BEST BUY CO., INC.
1987 EMPLOYEE NON-QUALIFIED STOCK OPTION PLAN CERTIFICATE
This certifies that the Compensation Committee appointed by the Board of
Directors of the Company has awarded
______________________________________
the right, option and privilege of purchasing __________ shares of the Company's
Common Stock pursuant to a stock option grant made on ________, 199__, under the
1987 Employee Non-Qualified Stock Option Plan at the price of $_____ per share.
The shares subject to this option may be purchased, subject to the conditions on
the reverse side of this certificate, as follows:
______________________________________________ shares on or after _____________,
(25% of the total number of shares granted)
199_, 25% of the shares subject to this option each year thereafter together
with any unpurchased shares that were previously eligible for purchase.
However, in no event shall this option extend beyond _________, 19__, and it
may terminate earlier in accordance with the terms of the Plan.
The Company has caused this option certificate to be executed by its duly
authorized officer effective _______, 199_.
NOT TRANSFERABLE.
Richard M. Schulze
Founder, Chairman & CEO
VOID AFTER ________, 199_,
________ Total Shares at $____ each. OR EARLIER AS PROVIDED
HEREIN.
BEST BUY CO., INC. 1987 EMPLOYEE NON-QUALIFIED STOCK OPTION PLAN
SUMMARY OF CONDITIONS.
All terms and conditions of the Best Buy Co., Inc. 1987 Employee Non-Qualified
Stock Option Plan are incorporated herein by this reference. Please consult the
Plan for your rights thereunder. Any conflict between any summary provisions
stated in this certificate and any provision stated in the Plan will be governed
by the Plan.
TIME.
You may exercise this option to purchase shares of the Company's common stock
based on the schedule shown on the reverse side of this certificate UNTIL THE
EARLIER OF:
(a) 4:00 p.m. local standard time, in Minneapolis, MN, on _____, 199_, or
(b) the date you are longer an employee of the Company*, or
(c) the close of business on the 10th day prior to the proposed effective
date of:
(i) any merger or consolidation of the Company in which holders
of the Common Stock of the Company will own less than a
majority voting control of the surviving corporation, or
(ii) any sale of substantially all of the assets of the Company,
or
(iii) any sale of the 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.
* Except in the event of death, you are eligible to exercise this option only
while YOU ARE AND HAVE CONTINUOUSLY BEEN, since the date of the grant of
the option, an employee of Best Buy. If you die during the period of your
employment, the executors of your estate or heirs may exercise this option
within one year of the date of your death, but in no event later than five
(5) years after the date of grant of this option.
MANNER OF EXERCISE.
You may exercise the ELIGIBLE PORTION of your option by completing the Exercise
of Stock Option Form and mailing it to the Employee Benefits Manager at the
principal office of the Company, specifying the number of shares to be
purchased, and tendering payment of the option exercise price for such shares.
As promptly as practical thereafter, the Company will issue a stock certificate
to you or your designee for the number of shares purchased.
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RESTRICTIONS.
(a) This option is NOT TRANSFERABLE OR ASSIGNABLE during your lifetime.
(b) You may NOT PLEDGE OR ENCUMBER this option.
(c) This option may NOT be exercised at a time when the exercise of the
option or the issuance of shares thereunder would constitute a
violation of any federal or state law, or the rules of any stock
exchange whereon the Company's stock is listed.
DILUTION.
If at any time prior to the expiration of this option, the Company effects a
stock dividend, stock split, reorganization, recapitalization, combination of
shares or similar capital adjustment, the Company will equitably adjust the
number, kind and purchase price of shares of common stock subject to this option
so that you will be entitled to purchase, for the same aggregate purchase price,
the number of shares you would have held immediately after such capital
adjustment if you had exercised your option immediately prior to such capital
adjustment.
MISCELLANEOUS.
This option and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by both parties except as specifically
outlined in other plan provisions. This option shall be construed and enforced
in accordance with and governed by the laws of Minnesota.
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