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EXHIBIT 10.1
[Starbucks letterhead]
February 11, 2005
Mr. Howard D. Schultz
Chairman and Chief Global Strategist
Starbucks Corporation
P.O. Box 34110
Seattle, WA 98124-1110
Mr. Steve Ritt, Trustee
c/o Mr. Matthew B. McCutchen
Quellos Financial Advisors, LLC
601 Union Street, 56th Floor
Seattle, WA 98101-2341
RE: TERMINATION OF
SPLIT-DOLLAR AGREEMENTS
Dear Messrs. Schultz and Ritt:
This letter contains the terms and
conditions of the agreement ("this
agreement") to terminate two split-dollar
agreements between Starbucks
Corporation (the "Company") and the trusts
described below in exchange for
certain consideration. The relevant
background is as follows.
Pursuant to the Split-Dollar Insurance
Agreement dated January 31, 1994 (the
"1994 Agreement") and the Split-Dollar Life
Insurance Agreement and Collateral
Assignment dated September 16, 1996 (the
"1996 Agreement" and together, the
"1994 and 1996 Agreements"), the Company
agreed to make premium payments
covering endorsement and collateral
assignment policies underwritten by several
life insurance carriers. The Schultz
Irrevocable Trust and the Company jointly
own the endorsement policies, while the
collateral assignment policy is owned by
the Howard D. Schultz Irrevocable
Trust.
The Company has not paid premiums toward
the policies since the enactment of the
Sarbanes-Oxley Act of 2002 due to
substantial questions regarding such Act's
prohibition on personal loans to executive
officers and potential applicability
to split-dollar arrangements. It had been
hoped that the Securities and Exchange
Commission would provide guidance on which
the parties could rely, but it
appears that such guidance will not be
forthcoming in the near future. Moreover,
the lack of premiums for more than two
years and other pertinent factors during
that time have compromised the ability of
the policies to meet the design
intended by the parties.
In response, the parties agree to terminate
the 1994 and 1996 Agreements and
cancel the underlying endorsement and
collateral assignment policies. The
termination of the 1994 and 1996 Agreements
will be carried out in accord
