BEST BUY CO., INC.
1997
EMPLOYEE NON-QUALIFIED
STOCK OPTION PLAN
1999 AMENDMENT AND RESTATEMENT
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 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 40,000,000 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) The vested portion of 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 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 or part-time to occasional/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 but in no event later than the date ten
(10) years after the date of grant of such option. 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 occasional/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 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
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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 notice of such exercise,
either 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.
(7) 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 including,
notwithstanding the up to thirty (30) day grace period provided in
Section F(5), in the event of termination of the optionee's employment.
To evidence the foregoing, each optionee shall sign and deliver to the
Company prior to exercising such options an agreement documenting the
optionee's understanding of and agreement to the confidentiality
restrictions imposed hereby. Notwithstanding the foregoing, this
Section F(7), adopted as of April 16, 1999, shall be effective only for
options granted hereunder on and after April 16, 1999.
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
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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. 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
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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 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 a 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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