BEST BUY CO., INC.
SECOND AMENDED AND RESTATED
1997
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. (the "Company"),
and its directly and indirectly wholly-owned subsidiaries (collectively, the
"Companies") by enabling current key employees of the Companies, who have been
or will be given responsibility for the administration of the affairs of the
Companies 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 and enabling the Companies 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 (the "Code").
B. ADMINISTRATION.
This Plan shall be administered by the Compensation and Human Resources
Committee (the "Committee") of the Company's Board of Directors (the "Board").
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. 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 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
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 AND PARTICIPATION.
Options may be granted under the Plan to (i) key executive personnel,
including officers, senior management employees and members of the Board who are
employees of any of the Companies; (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 Companies 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
20,000,000 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 stock of the Company, an appropriate adjustment may be made in the
number and kind of shares subject to and the exercise prices of 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 N. herein.
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(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 UNLESS the optionee is precluded,
pursuant to the Deferred Compensation Plan, defined below, from exercising
the minimum portion of the option because the optionee is unable to deliver
enough shares of common stock to cover the full Exercise Price therefor, in
which case the optionee may exercise the option 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 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.
(4) Except in the event of disability, death or normal retirement, 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 ten (10) years following the date of grant
of the option; provided, however, that during the second through fourth
years following the date of grant, 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 acquire; and provided further, however, that in the
event of a change in status of an employee from full-time to part-time or
seasonal, such employee shall continue to have the right to exercise an
option following such change in status but only to the extent of the shares
available for acquisition on the date of such change in status (the "Change
in Status Date").
(5) Except as in the event of disability, death or normal retirement,
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 any of the Companies; provided, however, that a former employee
shall continue to have the right to exercise an option for a period of
thirty (30) days following such termination to the extent of the shares
available for acquisition on the date of such former employee's
termination. If the continuous employment of an optionee terminates by
reason of disability, death or normal retirement, an option granted
hereunder held by the disabled, deceased or retired employee may be
exercised to the extent of all shares subject to the option (or, with
respect to a disabled, deceased or retired part-time or seasonal employee,
to the extent of the shares available for acquisition on the Change in
Status Date) within one (1) year following the date of disability or death
or five (5) years following the date of normal retirement, but in no event
later than ten (10) years after the date of grant of such option, by the
disabled or retired employee or the person or persons to whom the
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deceased employee's rights under such option shall have passed by will or
by the applicable laws of descent and distribution. For purposes of this
Plan only, (a) an employee shall be deemed "disabled" if the employee is
unable to perform his or her usual duties for the Companies as a result of
physical or mental disability, and such inability to perform continues or
is expected to continue for at least twelve (12) consecutive months, and
(b) "normal retirement" shall mean retirement on or after age 60 so long as
the employee has served the Companies continuously for at least the three
(3) years immediately preceding retirement. Notwithstanding the foregoing,
the changes made in Sections F(4) and (5) pursuant to the amendments hereto
adopted on April 24, 1998 (relating to the vesting of options in the event
of normal retirement), shall be effective only for options granted
hereunder on and after April 24, 1998.
(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 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 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 OPTIONEES.
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
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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. WITHHOLDING TAXES.
The Companies shall have the right to take any action that may be
necessary in the opinion of the Companies to satisfy all obligations for the
payment of any federal, state or local taxes of any kind, including FICA taxes,
required by law to be withheld with respect to the exercise of an option granted
hereunder. If stock is withheld or surrendered to satisfy tax withholding, such
stock shall be the Fair Market Value of the Company's common stock on the date
of exercise.
L. 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.
M. COMPLIANCE WITH RULE 16b-3 AND SECTION 162(m).
With respect to employees subject to Section 16 of the Securities Exchange
Act of 1934, as amended, or Section 162(m) of the Code, transactions under the
Plan are intended to comply with all applicable conditions of such Rule 16b-3
and avoid loss of the deduction referred to in paragraph (1) of such Section
162(m). 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 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.
N. 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
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granted hereunder pursuant to and in accordance with the terms of the
Deferred Compensation Plan. The Deferred Compensation Plan provides, among
other things, that 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.
O. FORM OF OPTION.
Options shall be issued in substantially the form as the Committee or the
Board may approve.
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