1989 Stock Option Plan for Non-Employee Directors - Starbucks Corp.
STARBUCKS CORPORATION
AMENDED AND RESTATED 1989 STOCK OPTION PLAN
FOR
NON-EMPLOYEE DIRECTORS
As Amended and Restated Effective November 20, 2003
1. Purpose.
The purpose of the Starbucks Corporation Amended and Restated 1989 Stock
Option Plan for Non-Employee directors (the "Plan") is to attract and retain the
services of experienced and knowledgeable independent directors of Starbucks
Corporation (the "Corporation") for the benefit of the Corporation and its
shareholders and to provide an additional incentive for such directors to work
for the best interest of the Corporation and its shareholders through continuing
ownership of its common stock.
2. Shares Subject to the Plan.
The total number of shares of common stock, $0.001 par value per share, of
the Corporation (the "Shares"), for which options may be granted under the Plan
shall not exceed 5,700,000 in the aggregate, subject to adjustment hereafter in
accordance with Section 13 hereof. Within the foregoing limitations, Shares
subject to options granted pursuant to the Plan shall become available for the
grant of additional options if the options originally granted lapse or otherwise
terminate. Five million seven hundred thousand (5,700,000) of the Corporation's
authorized but unissued shares are reserved for issuance pursuant to options
granted under the Plan, subject to adjustment hereafter in accordance with
Section 13 hereof.
3. Administration of Plan.
The Plan shall be administered by the Board of Directors of the
Corporation (the "Board"). The Board shall have the power to interpret and
construe the Plan, to determine all questions arising hereunder, and to adopt
and amend such rules and regulations for the administration of the Plan as it
may deem desirable.
4. Eligibility.
Each director of the Corporation who is not, and has not during the
immediately preceding 12-month period been, an employee of the Corporation or
any parent or subsidiary of the Corporation (a "Participant") shall
automatically participate in the Plan.
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5. Option Grants.
a. Each Participant who is elected to the Board for the first time
shall automatically be granted non-qualified stock options to purchase 30,000
Shares pursuant to the Plan (the "Initial Option Grant"), with such Initial
Option Grant to be documented as soon thereafter as administratively feasible.
For any individual appointed to the Board after January 1, 2003, but prior to
May 6, 2003, such Participant's Initial Option Grant shall occur automatically
upon the adoption of this Amended Plan.
b. Each Participant who (i) is serving as a director of the
Corporation on the first day of the Corporation's fiscal year (beginning
September 29, 2003), and (ii) who elects to convert all or a portion of either
(A) any deferred stock unit contribution made by the Corporation to the
Starbucks Directors Deferred Compensation Plan, or (B) the director's cash
retainer to be paid for services rendered in the future, shall, on the date the
Board (or a committee appointed by the Board) grants annual stock options to the
Corporation's executives, be granted non-qualified stock options to purchase the
number of Shares determined pursuant to the Plan using the conversion formula
specified in (d) (the "Annual Option Grant").
c. Each Participant who is (i) serving as a director of the
Corporation on March 24, 2003, (ii) served at least one complete term as a
director prior to March 24, 2003, and (iii) who elects to convert all or a
portion of either (A) any deferred stock unit contribution made by the
Corporation to the Starbucks Directors Deferred Compensation Plan, or (B) the
director's cash retainer to be paid for services rendered in the future, shall,
on such date in 2003 as this Amendment is approved (or as soon thereafter as
administratively feasible) receive a one-time grant of non-qualified stock
options to purchase the number of Shares determined pursuant to the Plan using
the conversion formula specified in (d) (the "Transition Option Grant").
d. Shares to be granted under paragraphs (b) and (c) above shall be
determined by (i) dividing the forgone cash retainer by the Option Exercise
Price under Section 7, (ii) adding that result to the number of forgone stock
units elected to be converted to options (under (b)(ii)(A) or (c)(iii)(A)), and
(iii) multiplying by three (3) to determine the number of Shares to be granted
in either the Annual or Transition Option Grant.
e. In no event, however, shall the combined number of options
granted to a director in any one year exceed 50,000 under (a), (b) and (c)
above.
6. Option Agreement.
Each grant of options under the Plan shall be evidenced by an option grant
agreement (the "Agreement") duly executed on behalf of the Corporation and by
the Participant to whom such options are granted, which Agreements may but need
not be identical and which shall comply with and be subject to the terms and
conditions of the Plan. Any Agreement may contain such other terms, provisions,
and conditions not inconsistent with the Plan as may be determined by the Board.
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7. Option Exercise Price.
The option exercise price for an option granted under the Plan shall be
the fair market value of a Share on the grant date. For purposes hereof, the
fair market value of a Share shall be the price per Share on the National Market
tier of The Nasdaq Stock Market, Inc. at the close of regular trading. The Board
may designate a different time or method of determining the fair market value if
appropriate because of changes in the hours and methods of trading on The Nasdaq
Stock Market, Inc. If the Shares cease to be listed on The Nasdaq Stock Market,
Inc., the Board shall designate an alternative exchange, stock market or method
of determining the fair market value of a Share.
8. Vesting of Options.
Unless otherwise approved by action of the Board and reflected in the
Agreement, or unless the option otherwise expires earlier under Section 9,
Option Grants shall vest as follows:
a. Each Initial Option Grant, as referenced in Section 5a, shall
vest and become exercisable annually in three installments, each equal to one
third of the Initial Option Grant, commencing on the first anniversary date of
grant, and the succeeding two anniversary dates thereafter.
b. Each Annual Option Grant, as referenced in Section 5b, shall vest
and become exercisable in its entirety in one annual installment on the first
anniversary of the date of grant.
c. Each Transition Option Grant, as referenced in Section 5c, shall
vest and become exercisable in its entirety in one annual installment on the
first anniversary of the date of grant.
d. All unvested options granted on or after November 20, 2003 shall
vest as of the date of the Participant's death or retirement as a director of
the Corporation. For purposes of this Section 8(d), "retirement" shall be deemed
to have occurred with respect to any Participant who has attained the age of 55
years, has served on the Board for at least six years and has ceased to be a
Board member pursuant to election by the shareholders or by voluntary
resignation with the approval of the Board's chair. Any unvested options granted
prior to November 20, 2003 and held by a Participant who has ceased to be a
Board member for any reason, or granted on or after November 20, 2003 and held
by a Participant who has ceased to be a Board member for reasons other than
death or retirement, shall cease vesting and shall be forfeited.
9. Term and Expiration of Options.
Options granted under this Plan shall be evidenced by the Agreement and
shall expire at and shall not be exercisable on or after the earliest of the
following (a) - (e):
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a. three (3) years from the date the Participant ceases to be a
director of the Corporation, except as stated in paragraph (b) and (c) below;
b. 180 days after the date of the Participant's death;
c. immediately upon the Participant's removal from the Board of
directors for cause as determined by the shareholders;
d. upon the expiration date specified in the Participant's
Agreement; or
e. ten (10) years from the date of grant.
10. Exercise of Options.
a. A Participant desiring to exercise options granted hereunder
shall notify the Company or, if the Company requires, the brokerage firm
designated by the Company to facilitate exercises and sales under the Plan,
specifying the number of options to be exercised and, if required by the
Company, representing in form satisfactory to the Company that the Shares are
being purchased for investment and not with a view to resale or distribution.
The notification to the brokerage firm shall be made in accordance with
procedures of such brokerage firm approved by the Company.
b. Options may be exercised by payment to the Company of the
aggregate exercise price. Payment of the exercise price shall be made in cash or
in accordance with procedures for a "cashless exercise" as the same shall have
been established from time to time by the Company and the brokerage firm
designated by the Company to facilitate exercises and sales under this Plan.
Payment in shares of the Company's common stock shall be deemed to be the
equivalent of payment in cash at the fair market value of those shares
(described in Section 7). No such payment in shares of the Company's common
stock shall be allowed when the same may, in the reasonable opinion of the
Company, cause the Company to record a loss or expense as a result thereof.
11. Transferability of Options.
The right of any Participant to exercise options granted under the Plan
shall not be assignable or transferable by such Participant except (i) by will
or the laws of descent and distribution, or (ii) by gift or, with the consent of
the Corporation, for value to immediate family members of the Participant,
partnerships of which the only partners are members of the Participant's
immediate family and trusts established solely for the benefit of such family
members; and solely as it pertains to effecting an exercise of options
transferred in accordance with this Section 11, the term Participant shall
include a permitted transferee.
12. No Rights as Shareholder Until Exercise.
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Neither the recipient of an option under the Plan nor such Participant's
successors in interest shall have rights as a shareholder of the Corporation
with respect to any Shares subject to options granted to such person until such
person becomes holder of record of such Shares.
13. Adjustments Upon Changes in Capitalization.
In the event that the outstanding shares of the common stock of the
Corporation are changed into or exchanged for a different number or kind of
shares or other securities of the Corporation or of another corporation, by
reason of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split, combination of shares, or dividend payable in
capital stock, appropriate adjustment shall be made in the number and kind of
shares subject to and reserved for issuance under the Plan and as to which
outstanding options shall be exercisable, to the end that the proportionate
interest of Participants with respect to options theretofore granted shall be
maintained as before the occurrence of such event. Such adjustment in
outstanding options shall be made without change in the total price applicable
to the unexercised portion of such options, but with a corresponding adjustment
in the exercise price per share. The Board of directors may, in its discretion,
adjust proportionally or change the number of options to be granted annually to
each director pursuant to Section 5 hereof in connection with the occurrence of
any reorganization, merger, consolidation, recapitalization, reclassification,
stock split, combination of shares, or dividend payable in capital stock.
14. Restrictions on Issue of Shares.
Anything in this Plan to the contrary notwithstanding, the Corporation may
delay the issuance of Shares pursuant to the exercise of an option under the
Plan and the delivery of such Shares until the following conditions shall be
satisfied:
a. the Shares with respect to which options have been exercised are
at the times of the issue or transfer of such Shares effectively registered
under applicable federal securities laws now in force or hereafter amended; or
b. counsel for the Corporation shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such Shares are
exempt from registration under applicable federal securities laws now in force
or hereafter amended.
It is intended that all exercises of options shall be effective. Accordingly,
the Corporation shall use its best efforts to bring about compliance with the
above conditions within a reasonable time, except that the Corporation shall be
under no obligation to cause a registration statement or a post-effective
amendment to any registration statement to be prepared at its expense solely for
the purpose of covering the issuance of Shares pursuant to an option granted
under the Plan.
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15. Purchase for Investment.
Unless the Shares to be issued upon exercise of options granted under the
Plan have been effectively registered under the Securities Act of 1933, as now
in force or hereafter amended, the Corporation shall be under no obligation to
issue or transfer any Shares covered by options unless the person or persons who
exercise such options gives a written representation and undertaking to the
Corporation, which is satisfactory in form and scope to counsel to the
Corporation and upon which, in the opinion of such counsel, the Corporation may
reasonably rely, that he or she is acquiring the Shares issued or transferred to
him or her for his or her own account as an investment and not with a view to,
or for sale in connection with, the distribution of any such Shares, and that he
or she will make no transfer of the same except in compliance with any rules and
regulations in force at the time of such transfer under the Securities Act of
1933, or any other applicable law, and that if Shares are issued or transferred
without such registration a legend to this effect may be placed upon the
certificates representing the Shares.
16. Effective Date.
The effective date (the "Effective Date") of this Amended and Restated
1989 Stock Option Plan for Non-Employee directors is November 20, 2003.
17. Expenses of the Plan.
All costs and expenses of the adoption and administration of the Plan
shall be borne by the Corporation and none of such expenses shall be charged to
any Participant.
18. Termination and Amendment of Plan.
Unless sooner terminated as herein provided, the Plan shall terminate ten
years from the Effective Date. The Board may at any time terminate the Plan or
make such modification or amendment hereof as it deems advisable; provided,
however, that, except as provided in Section 13, the Board may not, without the
approval of the shareholders of the Corporation, increase the maximum aggregate
number of shares for which options may be granted under the Plan or the number
of Shares granted to any Participant each year. Termination or any modification
or amendment of the Plan shall not, without the consent of a Participant, affect
his or her rights under options previously granted to him or her.
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