2005 Key Employee Sub-plan

EXHIBIT 10.2


STARBUCKS CORPORATION


2005 KEY EMPLOYEE SUB-PLAN
TO THE
STARBUCKS CORPORATION
2005 LONG TERM EQUITY INCENTIVE PLAN


1. PURPOSE. The purpose of this Sub-Plan is (i) to assist in the administration and implementation of the Starbucks Corporation 2005 Long-Term Equity Incentive Plan (the "PLAN"), by providing additional procedures and guidelines which apply specifically to Key Partners and Consultants, and (ii) to encourage ownership of the Common Stock by all key Partners and Consultants. This Sub-Plan is intended to provide an incentive for key Partners and Consultants 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 key Partners and Consultants have contributed. The Sub-Plan is intended to link the interests of the Company's key Partners and Consultants with those of its shareholders. The benefits of this Sub-Plan are not a substitute for compensation otherwise payable to Participants pursuant to the terms of their employment or contractual arrangement.


2. DEFINITIONS. Capitalized terms used without definition in this Sub-Plan shall have the meanings given such terms in the Plan. To the extent that any term defined herein conflicts with the definition of such term under the Plan, the definition in this Sub-Plan shall control.


For purposes of the Sub-Plan:


(a) "ACTIVE STATUS" shall mean for (i) Partners, the absence of any interruption or termination of service as a Partner, and (ii) for Consultants, the absence of any interruption, expiration, or termination of such Person's consulting or advisory relationship with the Company or any Subsidiary or the occurrence of any termination event as set forth in such person's Award Agreement. Active Status shall not be considered interrupted for a (A) Partner in the case of sick leave, maternity leave, infant care leave, medical emergency leave, military leave, or any other leave of absence properly taken in accordance with the policies of the Company or any applicable Subsidiary as may be in effect from time to time, and (B) for a Consultant, in the case of any temporary interruption in such person's availability to provide services to the Company or any Subsidiary which has been granted in writing by an authorized officer of the Company. Whenever a mandatory severance period applies under applicable law with respect to a termination of service as a Partner, Active Status shall be considered terminated upon such Partner's receipt of notice of termination in whatever form prescribed by applicable law.


(b) "AWARD" shall mean any award or benefits granted under the Sub-Plan, including Options, Restricted Stock and Restricted Stock Units.


(c) "AWARD AGREEMENT" shall mean the written or electronic agreement between the Company and the Participant setting forth the terms of the Award.


(d) "BENEFICIAL OWNERSHIP" shall have the meaning set forth in Rule 13d-3 promulgated under the Exchange Act.


(e) "BOARD" shall mean the Board of Directors of the Company.


(f) "CHANGE IN CONTROL" shall mean the first day that any one or more of the following conditions shall have been satisfied:


(i) the sale, liquidation or other disposition of all or substantially all of the Company's assets in one or a series of related transactions;


(ii) an acquisition (other than directly from the Company) of any outstanding voting securities by any Person, after which such person (as the term is used for purposes of Section 13(d) or 14(d) of the Exchange Act) has Beneficial Ownership of twenty-five percent (25%) or more of the then outstanding voting securities of the Company, other than a Board approved transaction;


(iii) during any 36-consecutive month period, the individuals who, at the beginning of such period, constitute the Board ("Incumbent Directors") cease for any reason other than death to constitute at least a majority of the members of the Board; provided however that except as set forth in this Section 2(f)(iii), an individual who becomes a member of the Board subsequent to the beginning of the 36-month period, shall be deemed to have satisfied such 36-month requirement and shall be deemed an Incumbent Director if such Director was elected by or on the recommendation of or with the approval of at least two-thirds of the Directors who then qualified as Incumbent Directors either actually (because they were Directors at the beginning of such period) or by operation of the provisions of this section; if any such individual initially assumes office as a result of or in connection with either an actual or threatened solicitation with respect to the election of Directors (as such terms are used in Rule 14a-12(c) of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitations of proxies or consents by or on behalf of a Person other than the Board, then such individual shall not be considered an Incumbent Director; or


(iv) a merger, consolidation or reorganization of the Company, as a result of which the shareholders of the Company immediately prior to such merger, consolidation or reorganization own directly or indirectly immediately following such merger, consolidation or reorganization less than fifty percent (50%) of the combined voting power of the outstanding voting securities of the entity resulting from such merger, consolidation or reorganization.


(g) "CODE" shall mean the Internal Revenue Code of 1986, as amended.


(h) "COMMITTEE" shall mean the Compensation and Management Development Committee appointed by the Board.


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(i) "COMMON STOCK" shall mean the common stock of the Company, par value $0.001 per share.


(j) "COMPANY" shall mean Starbucks Corporation, a Washington corporation and any successor thereto.


(k) "DIRECTOR" shall mean a member of the Board.


(l) "DISABILITY" shall mean (i) in the case of a Participant whose employment with the Company or a Subsidiary is subject to the terms of an employment or consulting agreement that includes a definition of "Disability" as used in this Plan 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 (ii) in all other cases, the term "Disability" as used in this Plan shall have the same meaning as set forth under the Company's long-term disability plan applicable to the Participant as may be amended from time to time, and in the event the Company does not maintain any such plan with respect to a Participant, a physical or mental condition resulting from bodily injury, disease or mental disorder which renders the Participant incapable of continuing his or her usual and customary employment with the Company or a Subsidiary, as the case may be, for a period of not less than 120 days or such other period as may be required by applicable law.


(m) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.


(n) "FAIR MARKET VALUE" shall mean the closing price per share of the Common Stock on Nasdaq as to the date specified (or the previous trading day if the date specified is a day on which no trading occurred), or if Nasdaq shall cease to be the principal exchange or quotation system upon which the shares of Common Stock are listed or quoted, then such exchange or quotation system as the Company elects to list or quote its shares of Common Stock and that the Committee designates as the Company's principal exchange or quotation system.


(o) "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 a Participant'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 a Participant) control the management of assets, and any other entity in which these persons (or a Participant) own more than fifty percent (50%) of the voting interests.


(p) "INCENTIVE STOCK OPTION" shall mean any Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.


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(q) "MISCONDUCT" shall mean any of the following:


(i) any material breach of an agreement between the Participant and the Company or any Subsidiary which, if curable, has not been cured within twenty (20) days after the Participant has been given written notice of the need to cure such breach, or which breach, if previously cured, recurs;


(ii) willful unauthorized use or disclosure of confidential information or trade secrets of the Company or any Subsidiary by the Participant;


(iii) the Participant's continued willful and intentional failure to satisfactorily perform Participant's essential responsibilities, provided that the Participant has been given at least thirty (30) days' written notice of the need to cure the failure and cure has not been effected within that time period, or which failure, if previously cured, recurs;


(iv) material failure of the Participant to comply with rules, policies or procedures of the Company or any Subsidiary as they may be amended from time to time, provided that the Participant has been given at least thirty (30) days' written notice of the need to cure the failure, if such failure is curable, and cure has not been effected within that time period, or which failure, if previously cured, recurs;


(v) Participant's dishonesty, fraud or gross negligence related to the business or property of the Company or any Subsidiary;


(vi) personal conduct that is materially detrimental to the business of the Company or any Subsidiary; or


(vii) conviction of or plea of nolo contendere to a felony.


(r) "NASDAQ" shall mean The Nasdaq Stock Market, Inc.


(s) "NONQUALIFIED STOCK OPTION" shall mean an Option that does not qualify or is not intended to qualify as an incentive stock option under Section 422 of the Code.


(t) "OPTION" shall mean an incentive stock option or a nonqualified stock option granted pursuant to the Sub-Plan.


(u) "PARTNER" shall mean any Person, including an Officer, who is a common law employee of, receives remuneration for personal services to, is reflected on the official human resources database as an employee of, and is on the payroll of the Company or any Subsidiary of the Company. A Person is on the payroll if he or she is paid from or at the direction of the payroll department of the Company, or any Subsidiary of the Company. Persons providing services to the Company, or to any Subsidiary of the Company, pursuant to an agreement with a staff leasing organization, temporary workers engaged through or employed by temporary or leasing agencies, and workers who hold themselves out to the Company, or a


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