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STARBUCKS CORPORATION
1991 COMPANY-WIDE
STOCK OPTION PLAN
As Amended and Restated through August 28, 2000
1. Purpose.
The purpose of this Plan is to encourage ownership of the common
stock of Starbucks Corporation ("the Company") by all Partners of the Company
and its Subsidiaries. This Plan is intended to provide an incentive for Partners
to exert their maximum efforts to achieve the successful operation of the
Company and is intended to assist the Company in attracting and retaining
talented personnel by providing an opportunity to benefit from the increased
value of the Company, to which such Partners and new personnel have contributed.
The Plan is expected to benefit the shareholders of the Company by linking the
interests of the Company's Partners with those of its shareholders. The benefits
of this Plan are not a substitute for compensation otherwise payable to Partners
pursuant to the terms of their employment.
2. Definitions.
For purposes of the Plan:
"AGREEMENT" means the written document issued by the Company to
an Optionee evidencing the grant of Options and setting forth the terms and
conditions of such grant.
"BASE WAGES," with respect to an Eligible Partner, means all
gross actual base pay (including any applicable shift differentials), whether
paid or deferred, but not including overtime, bonuses and commissions, and shall
be calculated before deductions for amounts contributed to Company benefits
and/or long-term savings plans. "Base Wages" does not include deferred income at
payout, any awards payable under any long-term incentive plan to be adopted by
the Company, imputed income for life insurance, relocation reimbursement or
similar programs. With respect to the entire Company, "Base Wages" means the
total amount of Base Wages for all Eligible Partners at a particular time under
the Plan.
"BOARD" means the Board of Directors of the Company.
"CHANGE IN CAPITALIZATION" means any increase or reduction in
the number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company or another corporation, by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
spin-off, split-up, issuance of warrants or rights or
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debentures, stock dividend, stock split or reverse stock split, cash dividend,
property dividend, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise.
"CHANGE IN CONTROL" has the meaning set forth in Section 5.9
hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means a committee, as described in Section 3.1, that
may be appointed by the Board from time to time to administer the Plan and to
perform the functions set forth herein.
"COMPANY" means Starbucks Corporation.
"DIRECTOR" means a member of the Board.
"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 agreement
between such Optionee and the Company or Subsidiary, which employment agreement
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
agreement during the period that such employment agreement remains in effect;
and
(b) in all other cases, the term "Disability" as used in
this Plan or any Agreement shall have the same meaning as set forth under the
Company's long- term disability plan as may be amended from time to time and in
the event the Company does not maintain such a plan, a physical or mental
condition resulting from bodily injury, disease, or mental disorder which
renders the Optionee incapable of continuing his or her usual and customary
employment with the Company or Subsidiary, as the case may be.
"ELIGIBLE PARTNER" means any regular, full-time or part-time
Partner who (i) was a Partner as of April 1 in the fiscal year of the Company
prior to the date of the Option grant, (ii) is a Partner on the date of the
Option grant, and (iii) who has been paid for at least 500 hours (which equates
to approximately twenty hours per week on average) between April 1 and the last
day of the prior fiscal year or between the first day of the prior fiscal year
and March 31 of the fiscal year prior to the date of the Option grant. Officers
and members of the Boards of Directors of the Company or its Subsidiaries shall
not be eligible to participate in this Plan. In addition, none of the following
individuals shall be an Eligible Partner:
(1) A Partner covered by a collective bargaining agreement,
unless the collective bargaining agreement applicable to the
Partner specifically provides for participation in this
Plan;
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(2) A leased employee;
(3) A temporary Partner as defined by the Company's human
resources policy; or
(4) Individuals who are not designated as "employees" in the
Company's or applicable Subsidiary's employment records. For
example, individuals engaged to perform services in a
relationship which the Company or Subsidiary characterizes
as that of an "independent contractor" with respect to the
Company or Subsidiary shall not be Eligible Partners.
Individuals described in this paragraph shall not be
Eligible Partners for the period they are not characterized
as employees in the Company or applicable Subsidiary's
employment records, even if a determination is made by the
Internal Revenue Service, the United States Department of
Labor, another governmental agency, a court or other
tribunal that the individual is an "employee" of the Company
or Subsidiary during that period, for purposes of pertinent
sections of the Code or for any other purpose. An individual
who has not been designated an Eligible Partner on account
of this paragraph may, in the sole discretion of the
Committee, be designated an Eligible Partner effective as of
the date as of which the Company or applicable Subsidiary
characterizes the individual as an "employee" in their
employment records.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" on any date means the closing sale price of
a Share on the principal national securities exchange or stock market on which
such Shares are listed or admitted to trading. If there are no quoted prices
with respect to Shares for such date, the Fair Market Value shall be the closing
sale price per Share on the immediately previous business day on which such
quotations are available and, if the Shares are no longer publicly-traded, the
Fair Market Value shall be the value established by the Board in good faith.
"OFFICER" means a Partner serving in a position of vice
president or higher of the Company or its Subsidiaries.
"OPTION" means an option to purchase a Share under the Plan; no
Option granted under the Plan shall be an incentive stock option within the
meaning of Section 422 of the Code.
"OPTIONEE" means a person to whom an Option has been granted
under the Plan.
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"PARTNER" means any individual serving as an employee of the
Company or any of its Subsidiaries.
"PERSON" means a natural person, company, government or
political subdivision, agency or instrumentality of a government.
"PLAN" means the Starbucks Corporation 1991 Company-Wide Stock
Option Plan, 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.
"SHARES" means the shares of common stock, no par value per
share, of the Company.
"SUBSIDIARY" means any corporation or other Person, of which a
majority of its voting equity securities or equity interest is owned directly or
indirectly by the Company.
3. Administration.
3.1. The Plan shall be administered by the Board, provided
however that the Board may appoint a Committee to administer the Plan,
consisting of not less than three members of the Board.
3.2. Authority; Powers. Subject to the express terms and
conditions set forth herein, the Board (or the Committee, if so appointed) shall
have the power from time to time to:
(a) determine those Eligible Partners to whom Options
shall be granted under the Plan, the number of Options to be granted and the
terms and conditions of such Option grants, including the exercise price per
Option;
(b) construe and interpret the Plan and the Options
granted hereunder and to establish, amend and revoke rules and regulations for
the administration of the Plan, including, but not limited to, correcting any
defect or supplying any omission, or reconciling any inconsistency in the Plan
or in any Agreement, in the manner and to the extent it shall deem necessary or
advisable so that the Plan complies with applicable law, and otherwise to make
the Plan fully effective. All decisions and determinations by the Board or the
Committee in the exercise of this power shall be final, binding and conclusive
upon the Company, its Subsidiaries, the Optionees, and all other persons having
any interest herein;
(c) exercise its discretion with respect to the powers
and rights granted to it as set forth in the Plan;
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(d) generally exercise such powers and to perform such
acts as are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan; and
(e) delegate to an administrator or administrators those
clerical and administrative functions which can be legally delegated to such
administrator or administrators.
4. Stock Subject to the Plan and Maximum Grants.
4.1. Number. The number of Shares reserved for issuance pursuant
to the exercise of Options granted under the Plan is 16,000,000. The maximum
number of Options that an Eligible Partner may receive in any fiscal year may
not exceed Options to purchase the number of Shares having an aggregate Fair
Market Value on the date of grant equal to fourteen percent (14%) of such
Eligible Partner's Base Wages for the previous fiscal year of the Company. No
Eligible Partner shall be granted Options under this Plan that would result in
such Eligible Partner receiving more than five percent (5%) of the maximum
number of Shares available for issuance hereunder. Upon a Change in
Capitalization, the number of Shares referred to in the first sentence of this
Section 4.1 shall be adjusted pursuant to Section 7.
4.2. Reduction of Number. Upon the granting of Options, the
number of Shares available under Section 4.1 for the granting of further Options
shall be reduced by the number of Shares for which such Options may be
exercised.
4.3. Expired Options. Whenever any outstanding Option is
canceled or is otherwise terminated for any reason without having been
exercised, the Share allocable to the expired, canceled or otherwise terminated
Option shall continue to be reserved for issuance under the Plan and may be the
subject of new Options granted hereunder.
5. Terms and Conditions of Options.
5.1. Agreement and Date of Grant. The terms and conditions of
the grant of Options to an Eligible Partner shall be set forth in an Agreement.
The Board or the Committee shall determine, in its sole discretion, the date
during the quarter following the end of the Company's fiscal year upon which
Options are granted.
5.2. Exercise Price. The exercise price for each Option shall be
100% of the Fair Market Value of a Share on the date the Option is granted.
5.3. Vesting. Subject to Section 5.9, and unless otherwise
approved by action of the Board or the Committee, each grant of Options shall
vest and become exercisable in annual twenty-five percent (25%) installments
commencing on the first anniversary of the date of grant. To the extent not
exercised, installments shall accumulate and be exercisable, in whole or in
part, at any time after becoming exercisable, but not later than the date the
Options expire. Options shall cease vesting as
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of the date of the Optionee's death, Disability, or other voluntary or
involuntary termination of employment with the Company or any Subsidiary.
5.4. Term. Unless otherwise provided in the applicable
Agreement, each Option granted hereunder shall have a term of ten (10) years.
The Committee may, subsequent to the granting of any Option, extend the term
thereof, but in no event shall the term of any Option exceed ten (10) years.
5.5. Modification. No modification of an Option shall adversely
alter or impair any rights or obligations under the Option without the
Optionee's consent.
5.6 Non-Transferability. An Option granted hereunder shall not
be transferable by the Optionee except by will or the laws of descent and
distribution or pursuant to a domestic relations order (within the meaning of
Rule 16a-12 promulgated under the Exchange Act). An Option may be exercised
during the lifetime of such Optionee only by the Optionee or his or her guardian
or legal representative. The terms of such Option shall be final, binding and
conclusive upon the beneficiaries, executors, administrators, heirs and
successors of the Optionee.
5.7 Method of Exercise. An Optionee desiring to exercise 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 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 Options in cash or by tender of
previously-owned Shares having an aggregate Fair Market Value of at least the
aggregate exercise price, or (ii) a request that the Company or the designated
brokerage firm conduct a cashless exercise of the Options. Payment of the
aggregate exercise price by means of tendering 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.
5.8 Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Options unless and until
(i) the Options shall have been exercised pursuant to the terms thereof, and
(ii) the Company shall have issued and delivered Shares to or for the account of
the Optionee. Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares. Nothing in this Plan should be
construed to provide any Partner with any right to receive an Option under this
Plan, irrespective of whether the Partner may or may not be an Eligible Partner.
5.9 Effect of Change in Control. In the event of a Change in
Control, all Options outstanding on the date of such Change in Control shall
become immediately
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and fully exercisable and shall remain exercisable in accordance with Section
6.2. A "Change in Control" means 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 (the "Voting Securities") by
any Person (as the term Person is used for purposes of Section 13(d) or 14(d) of
the Exchange Act), immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
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, in determining whether a Change in Control has occurred,
Shares or Voting Securities which are acquired in a "Non-Control Acquisition"
(as hereinafter defined) shall not constitute an acquisition which would cause a
Change in Control.
A "Non-Control Acquisition" shall mean an acquisition by
(i) an employee benefit plan (or a trust forming a part thereof) maintained by
the Company or any Subsidiary, (ii) the Company or its Subsidiaries, or (iii)
any Person in connection with a "Non-Control Transaction" (as hereinafter
defined);
(b) Cessation for any reason of the individuals who are
members of the Board as of August 28, 2000(the "Incumbent Board") to constitute
at least two-thirds of the members of the Board; provided, however, that if the
election, or nomination for election by the Company's common shareholders, of
any new director was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Plan, be considered as a
member of the Incumbent Board; provided further, however, that 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 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 (a "Proxy Contest") including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest; or
(c) The consummation of:
(i) 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." A
"Non-Control Transaction" shall mean a merger,
consolidation or reorganization with or into the Company
or in which securities of the Company are issued where:
(A) 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
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the outstanding voting securities of the
corporation resulting from such merger or
consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion
as their ownership of the Voting Securities
immediately before such merger, consolidation or
reorganization,
(B) 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 Surviving Corporation, or a
corporation directly or indirectly beneficially
owning a majority of the Voting Securities of the
Surviving Corporation, and
(C) no Person other than (i) the Company,
(ii) any Subsidiary, (iii) 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 (iv) 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
Surviving Corporation's then outstanding voting
securities or its common stock.
(ii) A complete liquidation or dissolution of the
Company; or
(iii) The sale or other disposition of all or
substantially all of the assets of the Company to any
Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject 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 then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of Shares or Voting Securities by the Company, and after such share
acquisition by the Company, the Subject 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 Subject
Person, then a Change in Control shall occur.
Section 5.9 set forth above applies to any Option granted or
Change in Control occurring after June 4, 1998; provided, however, that in the
event that the adoption of Section 5.9 as set forth above is considered to be an
alteration of equity interests in contemplation of a pooling of interests
transaction, the adoption of Section 5.9 shall be automatically rescinded. Upon
the rescission of the adoption of Section 5.9 set forth above, the effect of a
merger, consolidation, tender offer or takeover bid shall be governed by the
terms of Section 2.6 of the Plan in effect prior to June 4, 1998.
6. Effect of a Termination of Employment.
6.1. Board or Committee Discretion. The Agreement evidencing the
grant of each Option may set forth the terms and conditions applicable to such
Option upon a termination or change in the status of the employment of the
Optionee by the Company, or a Subsidiary (including a termination or change by
reason of the sale of a Subsidiary), which shall be as the Board or Committee
may, in its discretion, determine at the time the Option is granted or
thereafter.
6.2. Default Provisions. Unless otherwise provided in the
applicable Agreement pursuant to the Board or Committee's authority as set forth
in Section 6.1, any Option granted pursuant to this Plan shall expire at the
earliest of the following:
(i) the date specified in the Option;
(ii) ninety (90) days after the date of voluntary or involuntary
termination of Optionee's employment other than a termination as described in
(iii) or (iv) below;
(iii) on the date of the discharge of the Optionee for
misconduct that is willfully or wantonly harmful to the Company; or
(iv) twelve (12) months after the date of the Optionee's death
or termination due to Disability.
7. Adjustment Upon Changes in Capitalization.
7.1. Adjustment. In the event of a Change in Capitalization, the
Board or the Committee, as appropriate, shall conclusively determine the
appropriate adjustments, if any, to (i) the number of Shares reserved for
issuance pursuant to the exercise of Options under the Plan, (ii) the maximum
number of Shares with respect to which Options may be granted to any Eligible
Partner during the term of the Plan, and (iii) the number of Shares which are
subject to outstanding Options granted under the Plan and the exercise price
therefor (if applicable).
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7.2. No Fractional Shares. If any adjustment under Section 7.1
hereof 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 and fractional
Shares pursuant to the exercise of Options under this Plan.
8. Termination and Amendment of the Plan.
The Plan shall terminate on August 28, 2010 and no Option may be
granted thereafter. Subject to Section 5.5, the Board or the Committee may
terminate the Plan prior to the day set forth above and the Board or the
Committee, may at any time and from time to time amend, modify or suspend the
Plan and all administrative rules, regulations and practices; provided, however,
that:
(a) no such amendment, modification, suspension or
termination shall impair or adversely alter any Options theretofore granted
under the Plan, except with the consent of the Optionee, nor shall any
amendment, modification, suspension or termination deprive any Optionee of any
Shares that he or she may have acquired through or as a result of the Plan; and
(b) to the extent necessary under applicable law, no
amendment shall be effective unless approved by the shareholders of the Company
in accordance with applicable law.
9. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be construed as
amending, modifying or rescinding any previously approved incentive arrangement
or as creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without limitation,
the granting of stock options otherwise than under the Plan, and such
arrangements may be either applicable generally or only in specific cases.
10. Limitation of Liability.
As illustrative of the limitations of liability of the Company,
but not intended to be exhaustive thereof, nothing in the Plan shall be
construed to:
(a) give any person any right to be granted an Option
other than at the sole discretion of the Board or the Committee;
(b) give any person any rights whatsoever with respect
to Shares except as specifically provided in the Plan and any applicable
Agreement;
(c) limit in any way the right of the Company or any
Subsidiary to terminate the employment of any person at any time; or
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(d) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any person at any particular
rate of compensation or for any particular period of time.
11. Regulations and Other Approvals; Governing Law.
11.1. State Law. Except as to matters of federal law, the Plan
and the rights of all persons claiming hereunder shall be construed and
determined in accordance with the laws of the State of Washington without giving
effect to conflicts of laws principles thereof.
11.2. Applicable Laws and Regulations. The obligation of the
Company to issue Shares upon the exercise of Options granted under the Plan
shall be subject to all applicable laws, rules and regulations, including all
applicable federal and state securities laws, and the obtaining of all such
approvals by governmental agencies as may be deemed necessary or appropriate by
the Board or the Committee.
11.3. Compliance. The Board or the Committee may make such
changes to the Plan as may be necessary or appropriate to comply with the rules
and regulations of any government authority.
12. Foreign Eligible Partners.
Without amending the Plan, the Board or the Committee may grant
Options to Eligible Partners who are foreign nationals on such terms and
conditions different from those specified in this Plan as may in the judgment of
the Committee be necessary or advisable to foster and promote achievement of the
purposes of the Plan, and, in furtherance of such purposes, the Board or the
Committee may make such modifications, amendments, procedures, subplans, and the
like as may be necessary or advisable to comply with the provisions of the laws
in other countries in which the Company or its Subsidiaries operate or have
employees.
13. Miscellaneous.
13.1. Multiple Option Grants. The terms of each Option grant may
differ from other Options granted under the Plan at another time. The Committee
may also make more than one grant of Options to a given Eligible Partner during
the term of the Plan.
13.2. Withholding of Taxes. At such time as an Optionee
recognizes taxable income in connection with the receipt of Shares or receives
cash in connection with the sale of Shares acquired pursuant to the exercise of
Options under the Plan (a "Taxable Event"), the Optionee shall pay to the
Company an amount equal to the federal, state and local (including applicable
local country) taxes required to be withheld by the Company in connection with
the Taxable Event (the "Withholding Taxes") prior to the issuance of such Shares
or the payment of such cash. The Company shall have the right
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to deduct from any payment of cash to an Optionee an amount equal to the
Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the Company, the
Optionee may elect to have a portion of the Shares then issuable to him or her
having an aggregate Fair Market Value on the date of exercise equal to or
greater than the Withholding Taxes withheld by the Company. If Shares are to be
withheld to pay required Withholding 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
Withholding Taxes for at least six (6) months.
