1994 Key Employee Stock Option Plan - Starbucks Corp.
STARBUCKS CORPORATION
AMENDED AND RESTATED
KEY EMPLOYEE STOCK OPTION PLAN - 1994
AS AMENDED AND RESTATED THROUGH NOVEMBER 20, 2003
1. PURPOSES OF THE PLAN
The purposes of the Starbucks Corporation Amended and Restated Key
Employee Stock Option Plan - 1994 (the "Plan") are (i) to attract and retain the
most talented personnel available for positions of substantial responsibility,
(ii) to encourage ownership of the Company's Common Stock by key Employees of
and Consultants to the Company and its Subsidiaries, and (iii) to promote the
Company's business success by providing both rewards for exceptional performance
and long-term incentives for future contributions.
2. DEFINITIONS
Capitalized terms used in this Plan shall have the following meanings:
"ACT" shall mean the Securities Act of 1933, as amended from time to
time, or any replacement act or legislation.
"BENEFICIAL OWNERSHIP" shall have the meaning set forth in Rule 13d-3
promulgated under the Exchange Act.
"BOARD" shall mean the Board of Directors of the Company.
"CHANGE IN CONTROL" shall mean the occurrence during the term of the
Plan of:
(a) an acquisition (other than directly from the Company) of any
voting securities of the Company by any Person, after which such Person has
Beneficial Ownership of twenty-five percent (25%) or more of the then
outstanding Shares or the combined voting power of the Company's then
outstanding voting securities; provided, however, that in determining whether a
Change in Control has occurred, Shares or voting securities that are acquired in
a Non-Control Acquisition shall not constitute an acquisition that would cause a
Change in Control;
(b) a change in the membership of the Board so that the members of
the Incumbent Board cease to constitute at least two-thirds of the members of
the Board;
(c) the execution of a definitive agreement providing for a
merger, consolidation or reorganization with or into the Company or in which
securities of the Company are issued, unless such merger, consolidation or
reorganization is a Non-Control Transaction;
(d) the consummation of a complete liquidation or dissolution of
the Company; or
(e) the execution of a definitive agreement providing for the sale
or other disposition of all or substantially all of the assets of the Company to
any Person (other than the transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person acquired Beneficial Ownership of more than
the permitted amount of the then outstanding Shares or voting securities as a
result of the acquisition of Shares or voting securities by the Company which,
by reducing the number of Shares or voting securities outstanding, increases the
percentage of shares Beneficially Owned by the Person. If a Change in Control
would occur (but for the operation of the preceding sentence) as a result of the
acquisition of Shares or voting securities by the Company, and after such share
acquisition by the Company the Person becomes the Beneficial Owner of any
additional Shares or voting securities which increases the percentage of the
then
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outstanding Shares or voting securities Beneficially Owned by the Person, then a
Change in Control shall be deemed to have occurred.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any replacement act or legislation.
"COMMITTEE" shall mean the Compensation Committee of the Board of
Directors or another committee appointed by the Board comprised of not less than
two Non-Employee Directors.
"COMMON STOCK" shall mean the common stock, $0.001 par value per share,
of Starbucks Corporation.
"COMPANY" shall mean Starbucks Corporation.
"CONSULTANT" shall mean any person engaged by the Company as a
non-employee service provider pursuant to the terms of a written agreement.
"DISABILITY" means:
(a) in the case of an Optionee whose employment with the Company
or a Subsidiary is subject to the terms of an employment or consulting agreement
between such Optionee and the Company or Subsidiary that includes a definition
of "Disability," the term "Disability" as used in this Plan or any agreement
shall have the meaning set forth in such employment or consulting agreement
during the period that such employment or consulting agreement remains in
effect; and
(b) in all other cases, the term "Disability" as used in this Plan
shall mean a physical or mental condition resulting from bodily injury, disease,
or mental disorder which renders the Optionee incapable of continuing his or her
employment with the Company or a Subsidiary, as the case may be.
"EMPLOYEE" means any person employed by the Company or any Subsidiary,
including those individuals whose services as an Employee have been temporarily
interrupted due to any authorized leave of absence.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time, or any replacement act or legislation.
"FAIR MARKET VALUE" of the Common Stock shall be the price per share of
the Common Stock on the National Market tier of The Nasdaq Stock Market, Inc. at
the close of regular trading. The Board or the Committee 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 Common Stock ceases to be listed on The Nasdaq Stock Market,
Inc., the Board or the Committee shall designate an alternative exchange, stock
market or method of determining the Fair Market Value of the Common Stock.
"FAMILY MEMBER" shall include any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Optionee's household (other than a tenant or an employee), a trust in which
these persons have more than fifty percent (50%) of the beneficial interest, a
foundation in which these persons (or the Optionee) control the management of
assets, and any other entity in which these persons (or the Optionee) own more
than fifty percent (50%) of the voting interests.
"INCENTIVE STOCK OPTION" shall mean any stock option that qualifies as
an "incentive stock option" within the meaning of Section 422 of the Code.
"INCUMBENT BOARD" shall mean the individuals who are members of the
Board as of December 28, 1999 and any new director whose election or nomination
for election by the Company's shareholders was approved by a vote of at least
two-thirds of the Incumbent Board. No individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened election contest (as
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described in Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board, including any individual who assumed office by means of an
agreement intended to avoid or settle any election or proxy contest.
"NON-CONTROL ACQUISITION" shall mean an acquisition by:
(a) an employee benefit plan (or a trust forming a part thereof)
maintained by the Company or any Subsidiary;
(b) the Company or any Subsidiary; or
(c) any Person in connection with a merger, consolidation or
reorganization with or into the Company or in which securities of the Company
are issued in which:
(i) the shareholders of the Company, immediately before such
merger, consolidation or reorganization, own directly or indirectly
immediately following such merger, consolidation or reorganization, at
least fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation resulting from such
merger, consolidation or reorganization in substantially the same
proportion as their ownership of the voting securities immediately
before such merger, consolidation or reorganization;
(ii) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such
merger, consolidation or reorganization constitute at least two-thirds
of the members of the board of directors of the corporation resulting
from such merger, consolidation or reorganization, or a corporation
with direct or indirect Beneficial Ownership of a majority of the
voting securities of such corporation; and
(iii) no Person other than (A) the Company, (B) any
Subsidiary, (C) any employee benefit plan (or any trust forming a part
thereof) that, immediately prior to such merger, consolidation or
reorganization, was maintained by the Company or any Subsidiary, or (D)
any Person who, immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of twenty-five percent (25%) or
more of the then outstanding voting securities or Shares, has
Beneficial Ownership of twenty-five percent (25%) or more of the
combined voting power of the then outstanding voting securities or
common stock of the corporation resulting from such merger,
consolidation or reorganization.
"NON-EMPLOYEE DIRECTOR" shall mean any member of the Board who
qualifies as a non-employee director as that term is defined in Rule 16b-3
promulgated pursuant to the Exchange Act or any replacement rule promulgated
under the Exchange Act.
"NONQUALIFIED STOCK OPTION" shall mean any Stock Option that does not
qualify or is not intended to qualify as an Incentive Stock Option.
"OFFICER" shall have the meaning ascribed to that term in Rule 16a-1(f)
promulgated under the Exchange Act.
"OPTIONEE" shall mean an Employee or Consultant who has received a
Stock Option pursuant to this Plan.
"PERSON" shall mean an individual or a business entity, including,
without limitation, a corporation, trust, estate or partnership, as such term is
used for purposes of Section 13(d) or 14(d) of the Exchange Act.
"PLAN" shall mean the Starbucks Corporation Amended and Restated Key
Employee Stock Option Plan - 1994, including any country-specific rules approved
and adopted by the Board or the Committee, as such plan and country-specific
rules may be amended and restated from time to time.
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"RETIREMENT" shall mean the attainment of age 55 and ten (10) years of
credited service with the Company, as determined by the Board or Committee in
its sole discretion.
"SHARE" shall mean one share of the Company's Common Stock.
"STOCK OPTION" shall mean the right to purchase one Share at a fixed
exercise price and may refer to either an Incentive Stock Option or a
Nonqualified Stock Option.
"SUBSIDIARY" shall mean any subsidiary of the Company.
3. GENERAL PROVISIONS APPLICABLE TO STOCK OPTIONS
3.1 TERM OF THE PLAN.
The Starbucks Corporation Amended and Restated Key Employee Stock
Option Plan - 1994, shall expire on December 28, 2009. The termination of the
Plan at that time shall not affect Stock Options previously granted, and Stock
Options to purchase Shares granted prior to the termination of the Plan shall be
governed by the terms of the Plan upon its termination.
3.2 SHARES RESERVED FOR ISSUANCE UNDER THE PLAN.
Subject to any adjustment pursuant to the provisions of Section 3.7 of
the Plan, the maximum aggregate number of Shares reserved for issuance upon the
exercise of Stock Options granted pursuant to this Plan is 70,100,000. Shares
subject to Stock Options that are forfeited through expiration, termination of
employment or otherwise shall be available for issuance pursuant to other Stock
Options granted under this Plan. Any increase in the maximum aggregate number of
Shares reserved for issuance pursuant to the exercise of Stock Options granted
under the Plan shall be approved and recommended by the Board and approved by
the Shareholders of the Company.
3.3 ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Board or a Committee
duly appointed by the Board. The Board or the Committee shall have the authority
to determine the form and substance of agreements, instruments and guidelines
for the administration of the Plan. The Board or the Committee shall have
authority to determine the Employees and Consultants to be granted Stock Options
under the Plan, to determine the size, type, and applicable terms and conditions
of grants to be made to such Employees and Consultants, to determine when Stock
Options will be granted, and to authorize grants to Employees and Consultants.
In addition, the Board or the Committee may engage a qualified brokerage or
other financial services firm to assist in the administration of the Plan.
(b) The Board may delegate authority to an Officer of the Company
to authorize Stock Option grants within specified guidelines established by the
Board or the Committee from time to time to Employees who are not Officers of
the Company.
(c) The Board or the Committee may delegate to an administrator or
administrators those clerical and administrative functions that may be legally
delegated to such administrator or administrators.
(d) The Board's or the Committee's interpretation of the Plan, and
all actions taken and determinations made by the Board or the Committee, as the
case may be, concerning any matter arising under or with respect to this Plan or
any Stock Options granted pursuant to this Plan, shall be final, binding, and
conclusive on all interested parties, including the Company, its shareholders,
and all former, present, and future Employees or Consultants of the Company. The
Board or the Committee may, as to questions of accounting, rely conclusively
upon any determinations made by the independent public accountants of the
Company.
(e) The grant of Stock Options pursuant to this Plan shall be entirely
in the discretion of the Board, the Committee or an Officer designated by the
Board, as the case may be, and nothing herein contained shall be
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construed to give any Employee or Consultant any right to receive Stock Options
under this Plan. The maximum number of Stock Options that may be granted to any
Optionee in any one fiscal year hereunder is 1,000,000. The granting of Stock
Options pursuant to this Plan shall not constitute any agreement or an
understanding, express or implied, on the part of the Company or a Subsidiary to
employ the Optionee for any specified period.
3.4 EFFECT OF A CHANGE IN CONTROL.
(a) In the event of a Change in Control, all Stock Options
outstanding on the date of such Change in Control shall become immediately and
fully exercisable and shall remain exercisable in accordance with Section 3.6.
(b) This Section 3.4 above applies to any Stock Option granted or
Change in Control occurring after February 14, 2000, provided, however, that in
the event that the adoption of Section 3.4 is considered to be an alteration of
equity interests in contemplation of a pooling of interests transaction, the
adoption of Section 3.4 will automatically be rescinded. Upon the rescission of
the adoption of Section 3.4 set forth above, the effect of a merger,
consolidation, tender offer or takeover bid shall be governed by the terms of
Section 2.5 of the Starbucks Corporation Key Employee Stock Option Plan - 1994
Plan in effect prior to February 14, 2000.
3.5 TERMS AND EXPIRATION OF OPTIONS.
Stock Options granted under this Plan shall be evidenced by a written
grant agreement and:
(a) shall be exercisable only by the Optionee, the Optionee's
personal representative or a permitted transferee;
(b) shall not be transferable by the Optionee or by operation of
law other than (i) by will of, or by the laws of descent and distribution
applicable to, a deceased Optionee, (ii) pursuant to a domestic relations order;
(iii) to the extent permitted by the Board or Committee, to one or more
beneficiaries on a Company-approved form who may exercise the Option after the
Optionee's death; and/or (iv) in the case of Nonqualified Stock Options, by gift
to a Family Member of the Optionee;
(c) unless transferred as permitted by Section 3.5(b), shall
automatically terminate and expire upon any other sale or transfer, any other
attempted sale or transfer or upon the bankruptcy or insolvency of the Optionee
or Optionee's estate;
(d) shall grant no right to the Optionee to receive any dividend
on or to vote or exercise any right with respect to any Shares unless and until
the Optionee has exercised Stock Options for such Shares and Beneficial
Ownership of such Shares has been transferred to the Optionee;
(e) shall expire at the earliest of the following:
(i) three (3) months after voluntary or involuntary
termination of Optionee's employment as either an
Employee or Consultant other than termination as
described in subparagraphs (ii), (iii) or (iv) below;
(ii) immediately upon the discharge of Optionee for
misconduct, willfully or wantonly harmful to the
Company or Subsidiary;
(iii) twelve (12) months after Optionee's death or
Disability;
(iv) thirty six (36) months after termination of
Optionee's employment as an Employee due to
Retirement;
(v) upon the expiration date specified in the Optionee's
written grant agreement; or
(vi) ten (10) years from the date of grant;
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(f) shall to the extent that such Stock Options vest and become
exercisable in increments, stop vesting as of the date of the Optionee's
Disability or termination of Optionee's employment as an Employee or Consultant;
provided, however, that such Stock Options shall vest in full as of the date of
termination of Optionee's employment as an Employee due to Retirement or death.
(g) shall not be affected by any changes of duties or position so
long as the Optionee shall continue to be employed as an Employee or Consultant
by the Company or a Subsidiary; and
(h) shall have an exercise price determined by the Board, the
Committee or a designated Officer, as the case may be, at the time the grant is
made, that is not less than the Fair Market Value of a Share on the date of
grant.
3.6 EXERCISE OF OPTIONS.
An Optionee, an Optionee's personal representative or a permitted
transferee desiring to exercise Stock Options granted and exercisable hereunder
shall notify the Company or, if required by the Company, the brokerage firm
designated by the Company to facilitate exercises and sales under this Plan,
specifying the number of Stock Options to be exercised. The notification to the
brokerage firm shall be made in accordance with procedures of such brokerage
firm approved by the Company. The notification to the Company or the designated
brokerage firm shall be accompanied by (i) payment of the aggregate exercise
price of the Stock Options in cash or by tender of Shares that have been held by
the Optionee for at least six (6) months that have an aggregate Fair Market
Value of at least the aggregate exercise price, (ii) a request that the
designated brokerage firm conduct a cashless exercise of the Stock Options, or
(iii) in the case of Nonqualified Stock Options only, a request that the Company
withhold sufficient Shares to pay the aggregate exercise price and an
attestation that the Optionee or the permitted transferee has held a number of
shares equal to the number to be withheld to pay the aggregate exercise price
for at least six (6) months. Payment of the aggregate exercise price by means of
tendering or attesting to the ownership of previously-owned shares of the
Company's Common Stock shall not be permitted when the same may, in the
reasonable opinion of the Company, cause the Company to record a loss or expense
as a result thereof.
3.7 RECAPITALIZATION.
The aggregate number of Shares reserved for issuance pursuant to Stock
Options granted hereunder, the number of Stock Options previously granted
hereunder and the exercise price per Share for each Stock Option previously
granted hereunder shall be proportionately adjusted for an increase or decrease
in the number of outstanding shares of Common Stock resulting from a stock split
or reverse split or any other capital adjustment. The Board may, in its
discretion, authorize the proportionate adjustment to the maximum number of
Stock Options that may be granted to an Optionee in any one year. If the
exercise of the adjusted number of Stock Options results in an obligation of the
Company to issue a fractional Share, the number of Shares to be issued shall be
rounded to the nearest whole number. Under no circumstances shall the Company be
obligated to issue fractional shares pursuant to the exercise of Stock Options
granted under this Plan. All adjustments made pursuant to this Section shall be
determined by the Board or the Committee, whose determination in that respect
shall be final, binding, and conclusive.
3.8 SUBSTITUTIONS AND ASSUMPTIONS.
The Board or the Committee shall have the right to substitute or assume
Stock Options in connection with mergers, reorganizations, separations, or other
"corporate transactions" as that term is defined in, and said substitutions and
assumptions are permitted by, Section 424 of the Code and the regulations
promulgated thereunder.
3.9 AMENDMENT OR TERMINATION OF THE PLAN.
This Plan and all rules, guidelines, and regulations adopted with
respect hereto may be terminated, suspended, modified, or amended at any time by
a majority vote of the Board or the Committee, provided, however,
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that the following modifications or amendments require approval of or
ratification by the shareholders of the Company: (i) any increase in the number
of Shares reserved for issuance pursuant to Stock Options granted under the
Plan, other than in connection with any adjustment under Section 3.7 of this
Plan; and (ii) any change in Section 3.5(h) that would permit the exercise price
of Stock Options to be set at an amount less than Fair Market Value of a Share
of Common Stock on the date of grant. The Board or the Committee may amend the
terms and conditions of outstanding Stock Options, provided, however, that (i)
no such amendment would adversely affect the holders of such Stock Options
without the holders' consent, (ii) no such amendment shall change the length of
the term of a Stock Option, and (iii) the amended provisions of such Stock
Options would be permitted under this Plan.
3.10 WITHDRAWAL.
An Optionee may at any time elect in writing to abandon Stock Options
that have not yet been exercised.
3.11 GOVERNMENT REGULATIONS.
This Plan and the grant and exercise of Stock Options hereunder and the
obligations of the Company to issue and deliver Shares pursuant to such Stock
Options shall be subject to all applicable laws, rules, and regulations and to
such approvals by any governmental agencies as may be required.
4. PROVISIONS APPLICABLE SOLELY TO NONQUALIFIED STOCK OPTIONS
In addition to the provisions of Section 3 above, the following
paragraph shall apply to all Stock Options granted under this Plan that are not
Incentive Stock Options.
4.1 METHOD OF PAYMENT OF EXERCISE PRICE AND TAXES.
The amount to be paid by the Optionee, his or her personal
representative or permitted transferee upon the exercise of Nonqualified Stock
Options shall be the full aggregate exercise price thereof, together with the
amount of federal, state, and local income and FICA taxes required to be
withheld by the Company. The Optionee, his or her personal representative, or
permitted transferee may elect to pay the federal, state, or local income and
FICA withholding tax in cash, by having the designated brokerage firm forward
payment of such taxes to the Company from the proceeds of a cashless exercise,
or by having the Company withhold Shares having a Fair Market Value at the time
of exercise equal to the amount required to be withheld, such withholding to be
done at the minimum tax rate required under applicable law. If Shares are to be
withheld to pay required taxes, the Optionee, his or her personal representative
or permitted transferee must deliver an attestation that he or she has held a
number of Shares equal to the number to be withheld to pay such taxes for at
least six (6) months.
5. PROVISIONS APPLICABLE SOLELY TO INCENTIVE STOCK OPTIONS
In addition to the provisions of Section 3 above, the following
paragraphs shall apply to all Stock Options granted under this Plan that are
Incentive Stock Options.
5.1 CONFORMANCE WITH INTERNAL REVENUE CODE.
Incentive Stock Options granted under this Plan shall conform to, be
governed by, and be interpreted in accordance with the Code and any regulations
promulgated thereunder as amended from time to time, including, without
limitation, those provisions of Section 422 of the Code that prohibit an
Incentive Stock Option by its terms to be exercisable after ten (10) years from
the date that it was granted. Only Employees of the Company or of a "subsidiary
corporation" within the meaning of Section 424(f) of the Code may be granted
Incentive Stock Options hereunder. To the extent that Stock Options granted
hereunder as Incentive Stock Options fail to conform to the foregoing
requirements, such Stock Options shall be treated as Nonqualified Stock Options.
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5.2 LIMITATION ON AMOUNT OF INCENTIVE STOCK OPTIONS.
The aggregate Fair Market Value of shares subject to Incentive Stock
Options (determined on the date of grant) that vest in any one calendar year
(under this Plan or any other plan of the Company that authorizes Incentive
Stock Options) shall not exceed the maximum amount allowed in any one year by
the Code in connection with the grant of Incentive Stock Options.
5.3 LIMITATION ON GRANTS TO SUBSTANTIAL SHAREHOLDERS.
An Employee may not, immediately prior to the grant of Incentive Stock
Options hereunder, own stock in the Company representing more than ten percent
(10%) of the voting power of all classes of stock of the Company unless the
exercise price per Share specified by the Board or the Committee, as the case
may be, for Incentive Stock Options granted to such an Employee is at least one
hundred ten percent (110%) of the Fair Market Value of the Company's Common
Stock on the date of grant and such Stock Options, by their terms, are not
exercisable after the expiration of five (5) years from the date of grant. For
purposes of this limitation, Section 425(d) of the Code governs the attributes
of stock ownership.
6. FOREIGN EMPLOYEES OR CONSULTANTS
Without amending the Plan, the Board or the Committee may grant Stock
Options to eligible Employees or Consultants who are foreign nationals on such
terms and conditions not inconsistent with those specified in this Plan as may,
in the judgment of the Board or the Committee, as the case may be, be necessary
or desirable to foster and promote achievement of the purposes of the Plan. In
furtherance of such purposes, the Board or the Committee may approve such
modifications, amendments, procedures, sub-plans, and the like as may be
necessary or advisable to comply with the provisions of the laws in other
countries in which the Company operates or has Employees or Consultants.
7. COSTS AND EXPENSES
Except as provided herein with respect to the payment of taxes, all
costs and expenses of administering the Plan shall be borne by the Company.
8. GOVERNING LAW
Except for circumstances in which Federal law governs, this Plan shall
be governed by and construed in accordance with the laws of the State of
Washington.
(Approved by the Compensation and Management Development Committee of the Board
of Directors on October 22, 2003.)
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