Document:

Exhibit 10.2

 

LENOX GROUP INC. STOCK OPTION
AGREEMENT (Director Option)

 

	
  Optionee:

  	
   

  	
   

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Number
  of Shares subject to the Option:

  	
   

  	
  Exercise
  Price per Share:

  

 

1.                                       General.

 

1.1                                 The
Company hereby grants to the Optionee, subject to the terms of this Agreement
and the Company’s 2004 Stock Incentive Plan (the “Plan”), the right and option
(the “Option”) to purchase, at the Exercise Price, the number of Shares set
forth above.  The number of Shares and
the Exercise Price are subject to adjustment as provided in Section 10 of
the Plan, which is made a part hereof as if fully set forth herein.  Except as otherwise defined herein,
capitalized terms used in this Agreement shall have the same definitions as set
forth in the Plan.

 

1.2                                 This
Option is not intended to qualify as an Incentive Stock Option within the
meaning of Section 422 of the Code.

 

1.3                             The Option shall be
exercisable to the extent and in the manner provided herein for a period of 10
years from the date hereof (the “Exercise Term”); provided, however,
that the Option may be earlier terminated as provided in Section 4 hereof.

 

2.                                       Vesting
and Exercisability of Options.

 

2.1                                 Vesting.  Subject to the provisions of this Agreement
and the Plan, the Option shall be fully vested on and as of the Grant
Date.  Notwithstanding the foregoing and
subject to the provisions of this Agreement and the Plan, the Option shall
become exercisable with respect to the total number of shares which may be
purchased pursuant to the Option on the first anniversary of the Grant Date.

 

2.2                                 Timing
of Exercise.  The Optionee or the
guardian, executor, administrator or other legal representative (each a “Legal
Representative”) of the Optionee (all references herein to “Optionee” being
deemed to include the Optionee’s Legal Representative, if any, unless the
context otherwise requires) may exercise the Option, in whole or in part, at
any time or from time to time.

 

2.3                                 Effect
of Change in Control. 
Notwithstanding anything contained in this Agreement to the contrary, in
the event of a Change in Control, the Option shall become immediately and fully
exercisable.

 

3.                                       Manner
of Exercise and Payment.

 

3.1                                 Subject
to the terms and conditions of this Agreement and the Plan, the Option may be
exercised by delivery of written notice, in person or by mail, to the Secretary
of the Company, at the Company’s principal executive office (or such other
address as the Company may from time to time notify the Optionee of in
writing). Such notice shall state that the Optionee is electing to exercise the
Option and the number of Shares in respect of which the Option is being
exercised and shall be signed by the Optionee or, where applicable, by his
Legal Representative.  The Company may
require proof satisfactory to it as to the right of the Legal Representative to
exercise the Option.

 

3.2                                 The
notice of exercise described in Section 3.1 hereof shall be accompanied by
the full purchase price for the Shares in respect of which the Option is being
exercised, such purchase price to be paid by check and/or the transfer of
Shares to the Company upon such terms and conditions as determined by the
Committee.  No fewer than 10 Shares may
be purchased at any one time upon an exercise of the Option, unless the number
of Shares so purchased constitutes the total number of Shares then purchasable
under the Option.

 

3.3                                 The
Optionee shall not be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any Shares subject to the Option until the
conditions in Section 11 of the Plan have been satisfied.

 

4.                                       Certain
Restrictions.

 

4.1                                 Transferability.  The Option shall not be transferable by the
Optionee otherwise than (x) by will or the laws of descent and distribution or
(y) subject to such terms, conditions and undertakings as 

 

 

the Company may require from time
to time. The terms of such Option shall be final, binding and conclusive upon
the beneficiaries, executors, administrators, heirs, successors and permitted
transferees of the Optionee.

 

4.2                                 Termination.  (a)  If the Optionee’s service as a
Director terminates for any reason other than Cause, the Optionee may for a
period of one (1) year after such termination exercise the Option to the
extent, and only to the extent, that the Option or portion thereof is vested
and exercisable as of the date the Optionee’s service as a Director is
terminated, after which time the Option shall automatically terminate in full.

 

(b)                                 If
the Optionee’s service as a Director terminates for Cause, the Option shall
immediately terminate in full and no rights hereunder may be exercised.

 

(c)                                  If
the Optionee dies while a Director or within the one (1) year period after
termination of his service as a Director as described in clause (a) of this
Section 4.2, the Option may be exercised at any time within twelve (12) months
after the Optionee’s death by his Legal Representative, after which time the
Option shall terminate in full; provided, however,
that the Option may be exercised to the extent, and only to the extent, that
the Option or portion thereof is exercisable on the date of death or earlier
termination of the Optionee’s services as a Director.

 

5.                                       Entire
Agreement.  This Agreement and the
Plan constitute the entire agreement, and supersede all prior agreements and
understandings, oral and written, between the parties hereto with respect to
the subject matter hereof.

 

6.                                       Specific
Performance.  The parties hereto
acknowledge that there will be no adequate remedy at law for a violation of any
of the provisions of this Agreement and that, in addition to any other remedies
which may be available, all of the provisions of this
Agreement shall be specifically enforceable in accordance with their respective
terms.

 

7.                                       Acknowledgment.  The Optionee hereby acknowledges prior
receipt of a copy of the Plan and agrees to be bound by all the terms and
provisions thereof as the same may be amended from time to time.  The Optionee hereby acknowledges that he has
reviewed the Plan and this Agreement and understands his rights and obligations
thereunder and hereunder.  The Optionee
also acknowledges that he has been provided with such information concerning
the Company, the Plan and this Agreement as he and his advisors have requested.

 

 

	
   

  	
  LENOX GROUP INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
  [Name, Title]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
  [Name of Optionee]Exhibit 10.1

 

BEST BUY CO., INC.

2006 LONG-TERM INCENTIVE PROGRAM
AWARD AGREEMENT

Award
Date:  November 8, 2005

 

I.       The Award. 
As of the Award Date set forth in the Award Notification accompanying
this award, Best Buy Co., Inc. (“Best Buy”) grants to you an option to
purchase the number of shares of Best Buy common stock set forth in such Award
Notification (the “Option”) at the option price per share set forth in such
Award Notification, and/or a mix of long-term incentive award alternatives you
have selected, including (i) a number of performance shares of Best Buy
common stock (the “Performance Shares”), (ii) a number of restricted
shares of Best Buy common stock (the “Restricted Shares”), and/or (iii) a
number of performance units to be paid in cash (the “Performance Units”) as set
forth in such Award Notification, on the terms and conditions contained in this
2006 Long-Term Incentive Program Award Agreement (this “Agreement”) and the
Best Buy Co., Inc. 2004 Omnibus Stock and Incentive Plan (the “Plan”).  Capitalized terms not defined in the body of
this Agreement are defined in the Addendum.

 

II.      Option

 

2.1     Duration and Exercisability of Option.  You may not exercise any portion of the
Option prior to one year from the Award Date, and the Option expires 10 years
after the Award Date (the “Expiration Date”). 
You may exercise the Option in cumulative installments of 25% on and
after each of the first four anniversaries of the Award Date.  The entire Option will vest earlier and become
exercisable upon your Qualified Retirement, Disability or death or if your
employment is terminated without Cause or you terminate your employment for
Good Reason within 12 months following a Change of Control.  The Option may only be exercised by you
during your lifetime, and may not be assigned or transferred other than by will
or the laws of descent and distribution.

 

2.2     Exercise and Tax Withholding.  The
Option may be exercised in whole or in part by notice to Best Buy (through the
Plan administrator or other means as shall be specified by Best Buy from
time-to-time) stating the number of shares to be purchased under the Option and
the method of payment.  The notice must
be accompanied by payment in full of the exercise price for all shares
designated in the notice.  Payment of the
exercise price may be made by cash, check or delivery of previously owned
shares of stock having a Fair Market Value (as defined in the Plan) on the date
of exercise equal to the exercise price, or a combination thereof.  The Option will not be eligible for treatment
as a qualified or incentive stock option for federal income tax purposes.  You are liable for any federal and state
income or other taxes applicable upon the grant or exercise of the Option or the
disposition of the underlying shares, and you acknowledge that you should
consult with your own tax advisor regarding the applicable tax
consequences.  Upon exercise of the
Option, Best Buy will withhold from the shares that would otherwise be
delivered to you a number of shares having a fair market value equal to the
amount of all applicable taxes required by Best Buy to be withheld or collected
upon the exercise of the Option, unless your notice of exercise indicates your
desire to satisfy such withholding obligations through the payment of cash or
the delivery of previously acquired shares of Best Buy common stock, and such
cash or shares are delivered to Best Buy promptly thereafter.  You have no rights in the shares subject to
the Option until such shares are received upon exercise of the Option. 

 

2.3     Retirement, Disability, Death or Termination.  Upon your Qualified Retirement,
you will have one year from the date of your retirement to exercise the
Option.  If you die while employed, the
representative of your estate or your heirs will have one year from the date of
your death to exercise the Option.  If
you become Disabled, you will have one year from the effective date of such
classification to exercise the Option. 
If your employment is terminated by Best Buy or an Affiliate without Cause
or if you resign or otherwise voluntarily terminate your employment with Best
Buy or an Affiliate, you will have 60 days from the date of your termination to
exercise the Option, to the extent the Option had vested as of your termination
date.  In no case, however, may the
Option be exercised after the Expiration Date. 
The Option may not be exercised following termination of employment for
Cause.

 

III.     Performance Shares

 

3.1     Restricted Period.  The Performance Shares are subject to the
restrictions contained in this Agreement and the Plan during the period (for
purposes of this Section III, the “Restricted Period”) beginning on the
Award Date and ending on February 28, 2009, subject to the provisions of Section 3.3
below.  The restrictions will lapse and
the

 

1

 

Performance Shares will
become transferable and non-forfeitable as of February 28, 2009 if the
Vesting Criteria set forth in the attached Vesting Criteria Schedule have
been met.  If the Vesting Criteria are
not met as of such date, your rights to some or all of the Performance Shares,
as set forth in the Vesting Criteria Schedule, will be immediately
forfeited.  The Committee will determine
in its sole discretion whether the Vesting Criteria are met, upon which the
Performance Shares will be issued in your name no later than 75 days after the
end of the Restricted Period, either by book-entry registration or issuance of
a stock certificate.  If the Performance Shares
are issued prior to the end of the Restricted Period, the stock certificate
will be held by Best Buy, and may bear an appropriate legend referring to the
restrictions applicable to the Performance Shares.

 

3.2     Restrictions.  The Performance Shares are subject to the
following restrictions during the Restricted Period:

 

(a)        The
Performance Shares are subject to forfeiture to Best Buy as provided in this
Agreement and the Plan.

(b)        The
Performance Shares may not be sold, assigned, transferred or pledged during the
Restricted Period.  You may not transfer
the right to receive the Performance Shares, other than by will or the laws of
descent and distribution, and any such attempted transfer will be void.

 

3.3     Forfeiture/Acceleration.  Upon your Qualified Retirement prior to February 28,
2009, the Restricted Period will continue and the Performance Shares will not
be issued until such date as the Committee determines in its sole discretion
whether and to what extent the Vesting Criteria set forth in the Vesting
Criteria Schedule have been met, as set forth in Section 3.1
above.  If your employment is terminated
by reason of death or you become Disabled prior to February 28, 2009, the
restrictions will lapse and the Performance Shares will be issued and become
non-forfeitable and transferable as of the date of such termination in the same
amount as if the performance goals had been achieved such that 100% of the
Performance Shares had been earned through the date of termination.  If,
prior to February 28, 2009, your employment is terminated without Cause or
you terminate your employment for Good Reason within 12 months following a
Change in Control,  the restrictions will
lapse and the Performance Shares will be issued and become non-forfeitable and
transferable as of the date of such termination in the same amount as if the
performance goals had been achieved such that 100% of the Performance Shares
had been earned through the date of termination.  If your employment is terminated prior to February 28,
2009 for any other reason, your rights to all of the Performance Shares will be
immediately and irrevocably forfeited.

 

3.4     Rights. 
Until issuance of the Performance Shares, you will not have any rights
of a shareholder with respect to the Performance Shares.  Upon issuance of the Performance Shares, you
will, subject to the restrictions of this Agreement and the Plan, have all of
the rights of a shareholder with respect to the Performance Shares, unless and
until the Performance Shares are forfeited, except that you will not have the
right to vote the Performance Shares during the Restricted Period.  Any dividends or other distributions (whether
cash, stock, or otherwise) paid on the Performance Shares during the Restricted
Period will be held by Best Buy until the end of the Restricted Period, at
which time Best Buy will pay you all such dividends and other distributions,
plus interest compounded quarterly based on the prime interest rate, on any
cash dividends or distributions, less any applicable tax withholding amounts.  If the Performance Shares are forfeited as
described in Section 3.3 of this Agreement, then all rights to such
payments will also be forfeited.

 

3.5     Income Taxes.  You are liable for any federal and state
income or other taxes applicable upon the grant of the Performance Shares if
you make an election under Section 83(b) of the Internal Revenue Code
of 1986, as amended, within 30 days of the date of grant, or upon the lapse of
the restrictions on the Performance Shares, and the subsequent disposition of
the Performance Shares, and you acknowledge that you should consult with your
own tax advisor regarding the applicable tax consequences.  Upon the lapse of the restrictions on the
Performance Shares, Best Buy will withhold from the Performance Shares the
number of Performance Shares having a fair market value equal to the amount of
all applicable taxes required by Best Buy to be withheld upon the lapse of the
restrictions on the Performance Shares unless, prior to the end of the
Restricted Period, you notify Best Buy of your desire to satisfy such
withholding obligations through the payment of cash or the delivery of
previously acquired shares of Best Buy common stock, and such cash or shares
are delivered to Best Buy promptly thereafter.

 

IV.     Restricted Stock

 

4.1     Restricted Period.  The Restricted Shares are subject to the
restrictions contained in this Agreement and the Plan during the period (for
purposes of this Section IV, the “Restricted Period”) beginning on the
Award Date and ending on February 28, 2009, subject to the provisions of Section 4.3
below.  The restrictions will lapse and
the Restricted Shares will become transferable and non-forfeitable as of February 28,
2009 if the Vesting Criteria set forth in the attached Vesting Criteria Schedule have
been met.  If the Vesting Criteria are
not met as of such date,

 

2

 

your rights to some or
all of the Restricted Shares, as set forth in the Vesting Criteria Schedule,
will be immediately forfeited.  The
Committee will determine in its sole discretion whether the Vesting Criteria
are met, upon which the Restricted Shares will be issued in your name no later
than 75 days after the end of the Restricted Period, either by book-entry
registration or issuance of a stock certificate.  If the Restricted Shares are issued prior to
the end of the Restricted Period, the stock certificate will be held by Best
Buy, and may bear a legend referring to the restrictions applicable to the
Restricted Shares.

 

4.2     Restrictions.  The Restricted Shares are subject to the
following restrictions during the Restricted Period:

 

(a)        The
Restricted Shares are subject to forfeiture to Best Buy as provided in this
Agreement and the Plan.

(b)        The
Restricted Shares may not be sold, assigned, transferred or pledged during the
Restricted Period.  You may not transfer
the right to receive the Restricted Shares, other than by will or the laws of
descent and distribution, and any such attempted transfer will be void.

 

4.3     Forfeiture/Acceleration.  Upon your Qualified Retirement prior to February 28,
2009, the Restricted Period will continue and the Restricted Shares will not be
issued until such date as the Committee determines in its sole discretion
whether and to what extent the Vesting Criteria set forth in the Vesting Criteria
Schedule have been met, as set forth in Section 4.1 above.  If your employment is terminated by reason of
death or you become Disabled prior to February 28, 2009, the restrictions
will lapse and the Restricted Shares will be issued and become non-forfeitable
and transferable as of the date of such termination in the same amount as if
the performance goals had been achieved such that 100% of the Restricted Shares
had been earned through the date of termination.  If, prior to February 28,
2009, your employment is terminated without Cause or you terminate your
employment for Good Reason within 12 months following a Change in Control, the
restrictions will lapse and the Restricted Shares will become non-forfeitable
and transferable as of the date of such termination in the same amount as if
the performance goals had been achieved such that 100% of the Restricted Shares
had been earned through the date of termination.  If your employment is terminated prior to February 28,
2009 for any other reason, your rights to all of the Restricted Shares will be
immediately and irrevocably forfeited.

 

4.4     Rights. 
Until issuance of the Restricted Shares, you will not have any rights of
a shareholder with respect to the Restricted Shares.  Upon issuance of the Restricted Shares, you
will, subject to the restrictions of this Agreement and the Plan, have all of
the rights of a shareholder with respect to the Restricted Shares, unless and
until the Restricted Shares are forfeited, except that you will not have the
right to vote the Restricted Shares during the Restricted Period.  Any dividends or other distributions (whether
cash, stock, or otherwise) paid on the Restricted Shares during the Restricted
Period will be held by Best Buy until the end of the Restricted Period, at which
time Best Buy will pay you all such dividends and other distributions, plus
interest compounded quarterly based on the prime interest rate, on any cash
dividends or distributions, less any applicable tax withholding amounts.  If the Restricted Shares are forfeited as
described in Section 4.3 of this Agreement, then all rights to such
payments will also be forfeited.

 

4.5     Income Taxes.  You are liable for any federal and state
income or other taxes applicable upon the grant of the Restricted Shares if you
make an election under Section 83(b) of the Internal Revenue Code of
1986, as amended, within 30 days of the date of grant, or upon the lapse of the
restrictions on the Restricted Shares, and the subsequent disposition of the
Restricted Shares, and you acknowledge that you should consult with your own
tax advisor regarding the applicable tax consequences.  Upon the lapse of the restrictions on the
Restricted Shares, Best Buy will withhold from the Restricted Shares the number
of Restricted Shares having a fair market value equal to the amount of all
applicable taxes required by Best Buy to be withheld upon the lapse of the
restrictions on the Restricted Shares unless, prior to the end of the
Restricted Period, you notify Best Buy of your desire to satisfy such
withholding obligations through the payment of cash or the delivery of
previously acquired shares of Best Buy common stock, and such cash or shares
are delivered to Best Buy promptly thereafter.

 

V.      Performance Units

 

5.1     Restricted Period.  The Performance Units are subject to the
restrictions contained in this Agreement and the Plan during the period (for
purposes of this Section V, the “Restricted Period”) beginning on the
Award Date and ending on February 28, 2009, subject to the provisions of Section 5.4
below.  The restrictions will lapse and
the Performance Units will become non-forfeitable as of February 28, 2009
if the Vesting Criteria set forth in the attached Vesting Criteria Schedule have
been met.  If the Vesting Criteria are
not met as of such date, your rights to some or all of the cash value of the
Performance Units, as set forth in the Vesting Criteria Schedule, will be
immediately forfeited.  The Committee
will determine in its sole discretion whether the Vesting Criteria are met.

 

3

 

5.2     Payment. 
Subject to the provisions of Section 5.4 of this Agreement, the
Performance Units shall be paid in cash at the end of the Restricted Period,
with each payment occurring as soon as practicable after the Committee
determines, in its discretion after the end of the Restricted Period, whether
and to what extent the performance goals have been achieved in accordance with
the terms set forth in the Vesting Criteria Schedule, but
in all cases within 75 days after the end of the  Restricted
Period. 

 

5.3     Restrictions.  The Performance Units are subject to the
following restrictions during the Restricted Period:

 

(a)        The
Performance Units, and the right to receive the cash payment, is subject to
forfeiture to Best Buy as provided in this Agreement and the Plan.

(b)        The
Performance Units, and the right to receive the cash payment, may not be sold,
assigned, transferred or pledged during the Restricted Period.  You may not transfer the Performance Units or
the right to receive the cash payment, other than by will or the laws of
descent and distribution, and any such attempted transfer will be void.

 

5.4     Forfeiture/Early Payment.  Upon your Qualified Retirement prior to February 28,
2009, the Restricted Period will continue and cash payment on the Performance
Units will not be made until such date as the Committee determines in its sole
discretion whether and to what extent the Vesting Criteria set forth in the
Vesting Criteria Schedule have been met, as set forth in Section 5.1
above.  If your employment is terminated
by reason of death or you become Disabled prior to February 28, 2009, the
restrictions will lapse and you or your estate shall be entitled to receive a
cash payment of the Performance Units in the same amount as if the performance
goals had been achieved such that 100% of the value of the Performance Units
had been earned through the date of termination, to be paid as soon as soon as
practicable, but in all cases
within 75 days after the date of termination.  If, prior to February 28, 2009,
your employment is terminated without Cause or you terminate your employment
for Good Reason within 12 months following a Change in Control,  the restrictions will lapse and you shall be
entitled to receive a cash payment of the Performance Units in the same amount
as if the performance goals had been achieved such that 100% of the value of
the Performance Units had been earned through the date of termination, to be
paid as soon as soon as practicable, but in all cases within 75 days after the date of termination.  If your employment is terminated prior to February 28,
2009 for any other reason, your rights to all of the Performance Units, and the
right to receive the cash payment, will be immediately and irrevocably forfeited.

 

5.5     Income Taxes.  Best Buy shall have the right to deduct from
all payments made under this Agreement any federal, state, or local taxes
required by law to be withheld with respect to such payments. 

 

VI.     Confidentiality.  In consideration of the Option and the Performance
Shares, Restricted Shares and/or
Performance Units, you acknowledge that
Best Buy operates in a competitive environment and that Best Buy has a
substantial interest in protecting its Confidential Information, and you agree,
during your employment by Best Buy and thereafter, to maintain the
confidentiality of Best Buy’s Confidential Information and to use such
Confidential Information for the exclusive benefit of Best Buy.

 

VII.          Terms and Conditions.  This Agreement does not guarantee your
continued employment or alter the right of Best Buy or its affiliates to
terminate your employment at any time. 
This Award is granted pursuant to the Plan and is subject to its terms.  In the event of any conflict between the
provisions of this Agreement and the Plan, the provisions of the Plan will
govern.  By
your acceptance of this award, you acknowledge receipt of a copy of the
Prospectus for the Plan and your agreement to the terms and conditions of the
Plan and this Agreement.

 

	
   

  	
  BEST BUY CO., INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

4

 

ADDENDUM TO

2006 LONG-TERM INCENTIVE PROGRAM
AWARD AGREEMENT

 

For
the purposes hereof the terms used herein will have the following meanings:

 

“Affiliate”
will mean a company controlled directly or indirectly by Best Buy, where “control”
will mean the right, either directly or indirectly, to elect a majority of the
directors thereof without the consent or acquiescence of any third party.

 

“Beneficial
Owner” will have the meaning defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended.

 

“Cause”
will mean:

 

(i)            You have
breached your obligations of confidentiality to Best Buy or any of its
Affiliates;

 

(ii)           You commit
an act, or omit to take action, in bad faith which results in material
detriment to Best Buy or any of its Affiliates;

 

(iii)          You
have violated Best Buy’s Conflict of Interest policy (unless authorized by
state or federal law);

 

(iv)          You have
committed fraud, misappropriation, embezzlement or other act of dishonesty,
including theft or misuse of Best Buy property, equipment or store merchandise
or violation or abuse of Best Buy’s discount policy, in connection with Best
Buy or any of its Affiliates or its or their businesses;

 

(v)           You have
been convicted or have pleaded guilty or nolo contendere to criminal misconduct
constituting a felony or a gross misdemeanor, which gross misdemeanor involves
a breach of ethics, moral turpitude, or immoral or other conduct reflecting
adversely upon the reputation or interest of Best Buy or its Affiliates;

 

(vi)          Your use of
narcotics, liquor or illicit drugs has had a detrimental effect on your
performance of employment responsibilities; or

 

(vii)         You
are in material default under any agreement between you and Best Buy or any of
its Affiliates following any applicable notice and cure period.

 

A
“Change of Control” will be deemed to have occurred if the conditions set forth
in any one of the following paragraphs will have been satisfied:

 

(I)            any
Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of Best Buy representing 50% or more of the combined voting power of
Best Buy’s then outstanding securities excluding, at the time of their original
acquisition, from the calculation of securities beneficially owned by such
Person, any securities acquired directly from Best Buy or its Affiliates or in
connection with a transaction described in clause (a) of paragraph III
below; or

 

(II)           individuals
who at the Award Date constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of Best Buy) whose appointment
or election by the Board or nomination for election by Best Buy’s shareholders
was approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the Award Date or
whose appointment, election or nomination for election was previously so
approved or recommended, cease for any reason to constitute a majority thereof;
or

 

(III)         there
is consummated a merger or consolidation of Best Buy or any Affiliate with any
other company, other than (a) a merger or consolidation which would result
in the voting securities of Best Buy outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of Best Buy or any Affiliate, at
least 50% of the combined voting power of the voting securities of Best Buy or
such surviving

 

A-1

 

entity or parent thereof
outstanding immediately after such merger or consolidation, or (b) a
merger or consolidation effected to implement a recapitalization of Best Buy
(or similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly of securities of Best Buy representing 50% or more of
the combined voting power of Best Buy’s then outstanding securities; or

 

(IV)         the
shareholders of Best Buy approve a plan of complete liquidation of Best Buy or
there is consummated an agreement for the sale or disposition by Best Buy of
all or substantially all Best Buy’s assets, other than a sale or disposition by
Best Buy of all or substantially all of Best Buy’s assets to an entity, at
least 50% of the combined voting power of the voting securities of which are
owned by shareholders of Best Buy in substantially the same proportions as
their ownership of Best Buy immediately prior to such sale; or

 

(V)           the Board
determines in its sole discretion that a change in control of Best Buy has
occurred.

 

(VI)         Notwithstanding
the foregoing, a “Change in Control” will not be deemed to have occurred by
virtue of the consummation of any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of Best Buy immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of Best Buy immediately
following such transaction or series of transactions. 

 

“Committee”
will mean the Compensation and Human Resources Committee of the Board of
Directors of Best Buy or any other committee of the Board designated by the Board
to administer the Plan.

 

“Confidential
Information” will mean any and all information in whatever form, whether
written, electronically stored, orally transmitted or memorized pertaining
to:  trade secrets; customer lists,
records and other information regarding customers; price lists and pricing
policies, financial plans, records, ledgers and information; purchase orders,
agreements and related data; business development plans; products and
technologies; product tests; manufacturing costs; product or service pricing;
sales and marketing plans; research and development plans; personnel and
employment records, files, data and policies (regardless of whether the
information pertain to you or other employees of Best Buy); tax or financial
information; business and sales methods and operations; business
correspondence, memoranda and other records; inventions, improvements and
discoveries; processes and methods; and business operations and related data
formulae; computer records and related data; know-how, research and
development; trademark, technology, technical information, copyrighted
material; and any other confidential or proprietary data and information which
you encounter during employment, all of which are held, possessed and/or owned
by Best Buy and all of which are used in the operations and business of Best
Buy.  Confidential Information does not
include information which is or becomes generally known within Best Buy’s
industry through no act or omission by you; provided, however, that the
compilation, manipulation or other exploitation of generally known information
may constitute Confidential Information.

 

“Disabled”
will mean an employee who is deemed disabled if he or she is unable to perform
any of the material and substantial duties of his or her regular occupation due
to a sickness or injury, and such inability to perform continues for at least
six consecutive months.  If any such
Affiliate does not have a long term disability plan in effect at such time, you
will be deemed disabled for the purposes hereof if you would have qualified for
long term disability payments under Best Buy’s long term disability plan had
you then been an employee of Best Buy.

 

“Good Reason” will mean the occurrence of any of the
following events following a Change in Control, except for the occurrence of
such an event in connection with the termination of your employment by Best Buy
or any successor company or affiliated entity then employing you for Cause,
Disability or death:  

 

(I)            the
assignment of employment duties or responsibilities which are not substantially
comparable in responsibility and status to the employment duties and
responsibilities held by you immediately prior to the Change in Control;

 

(II)           a material
reduction in your base salary as in effect immediately prior to the Change in
Control; or

 

(III)         being
required to work in a location more than 50 miles from your office location
immediately prior to the Change in Control, except for requirements of
temporary travel on Best Buy’s business to an extent substantially consistent
with your business travel obligations immediately prior to the Change in
Control.

 

A-2

 

“Person”
will have the meaning defined in Sections 3(a)(9) and 13(d) of the
Securities Exchange Act of 1934, as amended, except that such term will not
include (i) Best Buy or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of Best Buy
or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the shareholders of Best Buy in
substantially the same proportions as their ownership of stock of Best Buy. 

 

“Qualified
Retirement” will mean any termination of employment for retirement on or after
age 60, so long as the employee has served Best Buy continuously for at least
the three years immediately preceding the retirement.

 

A-3

 

VESTING CRITERIA SCHEDULE TO

 

2006 LONG-TERM INCENTIVE PROGRAM AWARD
AGREEMENT

 

Performance Share Vesting

 

Performance Share Vesting
is determined based on the following illustration:

 

	
  Vesting
  Based on

  Best Buy TSR vs.

  S&P 500 Member

  Companies

  	
   

  	
  

  	
   

  	
  S&P
  500 Member Companies’ Total

  Shareholder Return

  

 

TSR Formula

 

Total
Shareholder Return (TSR) represents the annual return shareholders receive on
their investment, including both paid dividends and capital gains (stock price
appreciation).  The beginning price is
calculated by taking the average of the closing prices over a 90 day period
prior to February 26, 2006.  The
ending price is calculated by taking the average of the closing prices over a
90 day period prior to February 28, 2009. TSR % is determined for both Best Buy and each of the S&P 500 member
companies using the formula below.

 

	
  [

  	
  (End Price + Dividends)

  	
  ]

  	
  1/3

  	
  -1

  	
  =

  	
   

  	
  TSR %

  
	
   

  	
  (Beginning Price)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Vesting Formula

Best
Buy’s TSR % is then compared to the TSR % of the S&P 500 member companies.

 

For
Performance below the 25th Percentile, no shares vest.

 

For
Performance from 25th Percentile to 40th Percentile,
vesting is determined based on the following formula:

 

	
  (Best Buy TSR %
  - S&P 25th Percentile TSR %)

  	
   

  	
  x

  	
  50%

  
	
  (S&P 40th
  Percentile TSR % - S&P 25th Percentile TSR %)

  	
   

  	
   

  

 

For
Performance from 40th Percentile to 50th Percentile,
vesting is determined based on the following formula:

 

	
  (Best Buy TSR %
  - S&P 40th Percentile TSR %)

  	
   

  	
  x

  	
  50%

  	
  +

  	
    50%

  
	
  (S&P 50th
  Percentile TSR % - S&P 40th Percentile TSR %)

  	
   

  	
   

  	
   

  	
   

  

 

 

A-4

 

For
Performance from 50th Percentile to 75th Percentile,
vesting is determined based on the following formula:

 

	
  (Best Buy TSR %
  - S&P 50th Percentile TSR %)

  	
   

  	
  x

  	
  50%

  	
  +

  	
    100%

  
	
  (S&P 75th
  Percentile TSR % - S&P 50th Percentile TSR %)

  	
   

  	
   

  	
   

  	
   

  

 

For
Performance at or above the 75th Percentile, 150% of shares vest.

 

Restricted Share Vesting

 

Restricted Shares will be
earned if Best Buy’s fiscal 2007 Economic Value Added (“EVA”) achieves a
certain level compared with the fiscal 2007 EVA target as determined by the
Committee.  EVA measures the amount by
which Best Buy’s after-tax profits, after certain adjustments, exceed Best Buy’s
cost of capital.  The following sets
forth the percentage of Restricted Shares that may be earned based on varying
levels of Best Buy’s fiscal 2007 EVA as a percentage of the fiscal 2007 EVA
target:

 

 

	
  Fiscal 2007 EVA as a Percentage

  of Fiscal 2007 EVA Target

  	
   

  	
  % of Restricted Shares

  that will be Earned

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  111% and Above

  	
   

  	
  125

  	
  %

  
	
  At least 91% but less than 111%

  	
   

  	
  100

  	
  %

  
	
  At least 75% but less than 91%

  	
   

  	
  75

  	
  %

  
	
  Below 75%

  	
   

  	
  0

  	
  %

  

 

Performance Unit Vesting

 

Performance Units will be
earned if Best Buy’s fiscal 2007 Economic Value Added (“EVA”) achieves a
certain level compared with the fiscal 2007 EVA target as determined by the
Committee.  EVA measures the amount by
which Best Buy’s after-tax profits, after certain adjustments, exceed Best Buy’s
cost of capital.  The following sets
forth the dollar value of Performance Units that may be earned based on varying
levels of Best Buy’s fiscal 2007 EVA as a percentage of the fiscal 2007 EVA
target:

 

	
  Fiscal 2007 EVA as a Percentage

  of Fiscal 2007 EVA Target

  	
   

  	
  $ Value of Performance

  Units that will be Earned

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  111% and Above

  	
   

  	
  $

  	
  1.25

  	
   

  
	
  At least 91% but less than 111%

  	
   

  	
  $

  	
  1.00

  	
   

  
	
  At least 75% but less than 91%

  	
   

  	
  $

  	
  0.75

  	
   

  
	
  Below 75%

  	
   

  	
  $

  	
  0.00

  	
   

  

 

A-5

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