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As filed with the Securities and Exchange Commission on October 1, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________
STARBUCKS CORPORATION
(Exact Name of Issuer as Specified in its Charter)
Washington 91-1325671
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2401 Utah Avenue South
Seattle, Washington 98134
(Address of Principal Executive Offices)
______________
STARBUCKS CORPORATION
MANAGEMENT DEFERRED
COMPENSATION PLAN
(Full Title of the Plan)
Shelley B. Lanza, Esq.
senior vice president, Law and Corporate Affairs, and general counsel
Starbucks Corporation
2401 Utah Avenue South
Seattle, Washington 98134
(Name and Address of Agent for Service)
Telephone Number, Including Area Code, of Agent for Service: (206) 447-1575
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Securities Amount to Offering Price Aggregate
to be be Per Security Offering Amount of
Registered(1) Registered(2) Price(3) Registration Fee
Deferred 11,000,000 $1.00 $11,000,000.00 $3,245.00
Compensation
Obligations
(1) The deferred compensation obligations are unsecured obligations of the
Registrant to pay deferred compensation in the future in accordance with the
terms of the Starbucks Corporation Management Deferred Compensation Plan
(the "Plan").
(2) The deferred compensation obligations being registered represent the
amount of compensation deferrals that the Company estimates will be made by
participants in the Plan during the twenty-four month period following the
initial date of deferrals under this Registration Statement.
(3) The amount set forth herein is estimated solely for the purposes of
calculating the registration fee in accordance with Rule 457(h)(1) of the
Securities Act of 1933, as amended (the "Act").
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PART I
Item 1. PLAN INFORMATION.
Not included pursuant to Form S-8 instructions.
Item 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Not included pursuant to Form S-8 instructions.
PART II
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The Company hereby incorporates the following documents herein by reference:
1. Annual Report on Form 10-K for the fiscal year ended September 28, 1997,
including Exhibit 13 thereto (as the financial statements therein have been
restated in the Current Report on Form 8-K dated July 9, 1998).
2. Quarterly Report on Form 10-Q for the period ended December 28, 1997
(as the financial statements therein have been restated in the Current
Report on Form 8-K dated July 9, 1998).
3. Proxy Statement for the Annual Meeting of Shareholders dated January 1,
1998.
4. Quarterly Report on Form 10-Q for the period ended March 29, 1998 (as
the financial statements therein have been restated in the Current Report on
Form 8-K dated July 9, 1998).
5. Current Report on Form 8-K (date of earliest event reported: April 29,
1998).
6. Current Report on Form 8-K (date of earliest event reported: June 4, 1998).
7. Current Report on Form 8-K dated July 9, 1998.
8. Quarterly Report on Form 10-Q for the period ended June 28, 1998.
In addition, all documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act of 1934 subsequent to the date of
this registration statement and prior to the filing of a post-effective
amendment that indicates that all securities offered herein have been sold
or which deregisters all securities then remaining unsold shall be deemed to
be incorporated herein by reference and to be a part hereof from the
respective date of filing of each such document.
Item 4. DESCRIPTION OF SECURITIES.
The following description of the securities offered hereby is qualified by
reference to the Starbucks Corporation Management Deferred Compensation Plan
(the "Plan"). Capitalized terms used herein and not otherwise defined are used
as defined in the Plan. The Plan is an unfunded, nonqualified deferred
compensation plan intended to be exempt from Parts 1, 2, 3 and 4 of Title I
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). The securities represent obligations of the Company to pay Plan
Participants certain compensation amounts that have been credited to a
Participants' accounts under the Plan.
Participation in the Plan is limited to eligible Partners who have a
position at the Company or at any of its Subsidiaries at the director level
or above, and such other Partners selected by the committee appointed by the
Board of Directors to administer the Plan (the "Committee") who are management
or highly-compensated employees. An eligible Partner may elect to
participate in the Plan with respect to any Deferral Period by submitting a
Participation Election to the Committee before the beginning of the Deferral
Period on a date selected by the Committee. All account balances shall
remain in the Plan until they can be distributed according to benefit
payment terms (see below).
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A deferral shall be a portion of the Deferrable Compensation payable by the
Company to the Participant during the Deferral Period. A Participant may
elect a deferral by stating the amount to be deferred as a percentage
(between one percent and 100% of Deferrable Compensation). The Committee may
change the minimum or maximum deferral amounts from time to time by giving
written notice to all Participants. Participants' accounts will be indexed
to one or more investment options chosen by each Participant at the time of
the Participation Election. If a Participant's employment with the Company
ends, the Deferral period shall end on the date of termination.
The elected Deferral Amount shall remain in effect for the applicable
Deferral Period once a Participant has submitted a Participation Election.
Such an election shall generally be irrevocable except as provided in the
Plan with respect to committee-approved cases of financial hardships and
with respect to Participant-elected accelerated distributions.
The Plan permits the Company to make Matching Contributions and Discretionary
Contributions to the Participant's Matching Contributions Account after each
Deferrable Compensation Payment Date. The Company does not intend to make
such contributions at the current time.
Each Participant shall be 100% vested at all times in the amounts credited
to such Participant's Deferral Contributions Account, including earnings.
The Matching Contributions and Discretionary Contributions Accounts shall
vest in accordance with the vesting schedule under the Company's 401(k) plan.
If the Participant is terminated for misconduct which is willfully or
wantonly harmful to the Company, the Participant shall have to forfeit the
entire balance of both his or her Matching Contributions Account and
Discretionary Contributions Account. A Participant shall be 100% vested in
the amounts credited to both such accounts upon the earliest of the
following during the Participant's employment by the Company: (1) the date
of the Participant's death; (2) the date of the Participant's Disability; or
(3) the date the Participant attains age 65; or (4) the date of a Change in
Control.
A Participant's account may be distributed to the Participant while still
employed through early withdrawal (including early withdrawals due to
financial hardship) and accelerated distributions. Otherwise, benefits are
paid out upon termination of employment. A Participant shall be entitled to
receive a lump-sum distribution of all vested account balances within 60 days
following the receipt of the Participant's written request to the Committee
for withdrawal, provided, however, that if such early withdrawal is not an
approved financial hardship withdrawal, then ten percent (10%) of all vested
account balances shall be forfeited to the Company as a penalty.
If a Participant terminates employment with the Company prior to age 65 for
any reason, including death or Disability, the Company shall pay to the
Participant (or the Participant's beneficiary) benefits equal to the balance
in the vested accounts within 60 days following the Participant's termination
date. If a Participant terminates employment with the Company after
attaining the age of 65, the Participant's account balance shall be paid as
elected in his or her participation election(s) prior to each Deferral Period
or by electing to change the form of benefit payment at any time up to 12
months before the date benefit payments commence. Alternative forms of
benefit payment shall be either a lump-sum amount equal to the applicable
account balance, or annual installments of the account balance amortized
over a period of up to ten years. The account balance shall be reamortized
each year, so that the amount of each installment payment will depend on the
earnings credited or debited to the account during the prior year.
Regardless of the form elected, if the Participant's total account is $10,000
or less, the benefit shall be paid in a lump sum.
The Committee administering the Plan is the same committee that administers
the Company's 401(k) Plan, and it shall administer the Plan under the same
rules prescribed by Article 11 of the Company 401(k) Plan to the extent such
rules are applicable. The Plan is not subject to the fiduciary duty
requirements of ERISA, and its expenses shall be paid out of the general
assets of the Company.
The Board may, at any time, amend the Plan in whole or in part by written
instrument, as long as it does not reduce the amount credited to any account
maintained under the Plan as of the date of the amendment. The Committee
may approve amendments to the Plan, without prior approval or subsequent
ratification by the Board, if the amendment: (i) does not significantly
change the benefits provided under the Plan; (ii) does not significantly
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increase the costs of the Plan; and (iii) the amendment is intended either
to enable the Plan to remain in compliance with the requirements of the Code,
ERISA, or other applicable law, to facilitate administration of the Plan, or
to improve its operation.
The Board may at any time terminate the Plan. The Board may partially
terminate the Plan by instructing the Committee not to accept any additional
Participation Elections in such a way as to allow the Plan to continue to
operate and be effective with regard to Participation Elections entered into
prior to the effective date of such partial termination. The Board may
completely terminate the Plan by instructing the Committee not to accept any
additional Participation Elections, and by terminating all ongoing
Participation Elections. The Plan shall then cease to operate and the
Company shall pay out to each Participant the vested balance in his or her
account. Payment shall be made as a lump sum or in annual installments over
a period of 1 to 10 years, based on the vested account balance. The Board may
terminate the Plan and make no further benefit payments or remove certain
employees as Participants if it is determined by the United States
Department of Labor, a court of competent jurisdiction, or an opinion of
counsel that the Plan constitutes an employee pension benefit plan within
the meaning of Section 3(2) of ERISA.
Participants and their beneficiaries, heirs, successors, and assigns shall
have no secured legal or equitable rights, interest or claims in any
property or assets of the Company, nor shall they be beneficiaries of, or
have any rights, claims or interests in any property which may be acquired by
the Company. Assets of the Company shall not be held under any trust for the
benefit of Participants, their beneficiaries, heirs, successors or assigns,
or held in any way as collateral security for the fulfilling of the
obligations of the Company under this Plan. Any and all of the Company's
assets and policies are and shall be the general, unpledged, unrestricted
assets of the Company. The Company's obligation under the Plan shall be that
of an unfunded and unsecured promise to pay money in the future.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VIII of the Amended and Restated Bylaws of the Company authorizes the
Company to indemnify any present or former director or officer to the
fullest extent authorized by the Washington Business Corporation Act (the
"WBCA") or other applicable law. Sections 23B.8.510 and 23B.8.570 of the WBCA
authorize a corporation to indemnify its directors, officers, employees, or
agents against liability incurred in a proceeding if (a) the individual
acted in good faith; (b) the individual reasonably believed (i) in the case
of conduct in the individual's capacity with the corporation that his or her
conduct was in the corporation's best interests; or (ii) in all other cases,
that his or her conduct was at least not opposed to its best interests; and
(c) in the case of criminal proceedings, the individual had no reasonable
cause to believe his or her conduct was unlawful.
Article 10 of the Restated Articles of Incorporation of Starbucks, as
amended, provides that, to the fullest extent that the WBCA permits the
limitation or elimination of directors' liability, a director shall not be
liable to Starbucks or its shareholders for monetary damages as a result of
acts or omissions as a director.
In addition, Starbucks maintains directors' and officers' liability
insurance under which Starbucks directors and officers are insured against
loss (as defined in the policy) as a result of claims brought against them
for their wrongful acts in such capacities.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
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Item 8. EXHIBITS.
Exhibit No. Description of Exhibits
4.1 Starbucks Corporation Management Deferred Compensation Plan.
5.1 Opinion of Lane Powell Spears Lubersky LLP regarding the
legality of the securities being registered.
23.1 Consent of Lane Powell Spears Lubersky LLP (included as
part of Exhibit 5.1).
23.2 Consent of Deloitte & Touche LLP, independent accountants.
24.1 Power of Attorney (included on the signature page of this
registration statement).
Item 9. UNDERTAKINGS.
The undersigned hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated by reference in
the registration statement;
(2) that, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering;
(4) that, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Exchange Act (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
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offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(5) insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Seattle, Washington on this 25th
day of September, 1998.
STARBUCKS CORPORATION
By: /s/ Howard Schultz
Name: Howard Schultz
Title: chairman of the Board of
Directors and chief executive
officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Howard Schultz and Michael Casey and each of
them severally, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite or necessary to be done in and about
the premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or either of them, or their or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on
the dates indicated.
Signature Title Date
/s/ Howard Schultz chairman of the Board of Directors September 25, 1998
Howard Schultz and chief executive officer
/s/ Orin C. Smith Director, president and chief September 16, 1998
Orin C. Smith operating officer
/s/ Howard Behar Director, president of Starbucks September 23, 1998
Howard Behar Coffee International, Inc.
/s/ Michael Casey executive vice president, chief September 28, 1998
Michael Casey financial officer and chief
administrative officer(Principal
Financial Officer and Principal
Accounting Officer)
/s/ Barbara Bass Director September 19, 1998
Barbara Bass
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/s/ Jeffrey H. Brotman Director September 18, 1998
Jeffrey H. Brotman
/s/ Craig J. Foley Director September 19, 1998
Craig J. Foley
/s/ Arlen I. Prentice Director September 17, 1998
Arlen I. Prentice
/s/ James G. Shennan Director September 21, 1998
James G. Shennan, Jr.
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EXHIBITS
Exhibit No. Description of Exhibits
4.1 Starbucks Corporation Management Deferred Compensation Plan.
5.1 Opinion of Lane Powell Spears Lubersky LLP regarding the
legality of the securities being registered.
23.1 Consent of Lane Powell Spears Lubersky LLP (included as part
of Exhibit 5.1).
23.2 Consent of Deloitte & Touche LLP, independent accountants.
24.1 Power of Attorney (included on the signature page of this
registration statement).
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EXHIBIT 4.1
MANAGEMENT DEFERRED COMPENSATION PLAN
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STARBUCKS CORPORATION
MANAGEMENT DEFERRED COMPENSATION PLAN
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TABLE OF CONTENTS
Page
1. PURPOSE; EFFECTIVE DATE. . . . . . . . . . . . . . . . . . . . . . 1
2. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1. 401(k) Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2. Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3. Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4. Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.5. Change in Control. . . . . . . . . . . . . . . . . . . . . . . . 1
2.6. Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.7. Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8. Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9. Deferrable Compensation. . . . . . . . . . . . . . . . . . . . . 3
2.10. Deferrable Compensation Payment Date. . . . . . . . . . . . . . 4
2.11. Deferral Contributions. . . . . . . . . . . . . . . . . . . . . 4
2.12. Deferral Contributions Account. . . . . . . . . . . . . . . . . 4
2.13. Deferral Period. . . . . . . . . . . . . . . . . . . . . . . . .4
2.14. Determination Date. . . . . . . . . . . . . . . . . . . . . . . 4
2.15. Disability (or Disabled) . . . . . . . . . . . . . . . . . . . .4
2.16. Discretionary Contributions. . . . . . . . . . . . . . . . . . .4
2.17. Discretionary Contributions Account. . . . . . . . . . . . . . .4
2.18. Earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.19. Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . 5
2.20. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.21. Ineligible Partner. . . . . . . . . . . . . . . . . . . . . . . 5
2.22. Investment Index. . . . . . . . . . . . . . . . . . . . . . . . 5
2.23. Matching Contributions. . . . . . . . . . . . . . . . . . . . . 5
2.24. Matching Contributions Account . . . . . . . . . . . . . . . . .5
2.25. Participant. . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.26. Participation Election. . . . . . . . . . . . . . . . . . . . . 6
2.27. Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.28. Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.29. Plan Year. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.30. Subaccount. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.31. Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.32. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.33. Year of Service. . . . . . . . . . . . . . . . . . . . . . . . .7
3. PARTICIPATION AND DEFERRALS. . . . . . . . . . . . . . . . . . . . 7
3.1. Eligibility and Participation. . . . . . . . . . . . . . . . . . 7
3.2. Form of Deferral. . . . . . . . . . . . . . . . . . . . . . . . .7
3.3. Limitations on Deferrals. . . . . . . . . . . . . . . . . . . . .8
3.4. Termination of Employment. . . . . . . . . . . . . . . . . . . . 8
3.5. Continuation of Deferral Amount. . . . . . . . . . . . . . . . . 8
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4. DEFERRAL CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . .8
4.1. Withholding of Deferral Contributions. . . . . . . . . . . . . . 8
4.2. Timing of Credits; Tax and Other Withholding. . . . . . . . . . .8
5. MATCHING CONTRIBUTIONS AND DISCRETIONARY CONTRIBUTIONS. . . . . . .9
5.1. Matching Contributions. . . . . . . . . . . . . . . . . . . . . .9
5.2. Discretionary Contributions. . . . . . . . . . . . . . . . . . . 9
5.3. Vesting of Accounts. . . . . . . . . . . . . . . . . . . . . . . 9
5.4. Timing of Credits; Tax and Other Withholding. . . . . . . . . . .10
6. ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
6.1. Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.2. Determination of Accounts and Subaccounts. . . . . . . . . . . . 10
6.3 Selection of Investment Index (Indices). . . . . . . . . . . . . .11
6.4. Statement of Accounts. . . . . . . . . . . . . . . . . . . . . . 11
7. BENEFIT PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . .11
7.1. Early Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . 11
7.2. Accelerated Distribution. . . . . . . . . . . . . . . . . . . . .12
7.3. Termination of Employment Prior to Age 65. . . . . . . . . . . . 12
7.4. Termination of Employment On or After Age 65. . . . . . . . . . .12
7.5. Withholding; Payroll Taxes. . . . . . . . . . . . . . . . . . . .13
7.6. Covered Employee. . . . . . . . . . . . . . . . . . . . . . . . .13
7.7. Payment to Guardian. . . . . . . . . . . . . . . . . . . . . . . 13
8. BENEFICIARY DESIGNATION. . . . . . . . . . . . . . . . . . . . . . 14
8.1. Beneficiary Designation. . . . . . . . . . . . . . . . . . . . . 14
9. ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . .14
9.1. Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.2. Administrative Provisions. . . . . . . . . . . . . . . . . . . . 14
10. AMENDMENT AND TERMINATION OF PLAN. . . . . . . . . . . . . . . . .14
10.1. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
10.2. Company's Right to Terminate. . . . . . . . . . . . . . . . . . 15
11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . .15
11.1. Unfunded Plan. . . . . . . . . . . . . . . . . . . . . . . . . .15
11.2. Unsecured General Creditor. . . . . . . . . . . . . . . . . . . 16
11.3. Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.4. Nonassignability. . . . . . . . . . . . . . . . . . . . . . . . 16
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11.5. Not a Contract of Employment. . . . . . . . . . . . . . . . . . 16
11.6. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . .17
11.7. Validity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.8. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.9. Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.10. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . .17
APPENDIX A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
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STARBUCKS CORPORATION
MANAGEMENT DEFERRED COMPENSATION PLAN
1. PURPOSE; EFFECTIVE DATE
The purpose of this Management Deferred Compensation Plan is to provide
current tax planning opportunities as well as supplemental funds for
retirement or death for certain employees of the Company. It is intended that
the Plan will aid in attracting and retaining employees of exceptional
ability by providing them with these benefits. The Plan is a nonqualified
deferred compensation plan intended to be an unfunded plan as described in
Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income
Security Act of 1974. The Plan shall be effective as of the Effective Date.
2. DEFINITIONS
Whenever used in this document, the following terms shall have the meanings
set forth in this Article unless a contrary or different meaning is expressly
provided:
2.1. 401(k) Plan
"401(k) Plan" means the Starbucks Corporation 401(k) Plan, effective
January 1, 1998, as it may be amended from time to time.
2.2. Account
"Account" means the separate account established and maintained for each
Participant which represents his or her vested and unvested interest in the
Plan as of any date, and which consists of the sum of the following
Subaccounts, as adjusted for allocations of Earnings, distributions, and
other factors that may affect the value of such Subaccounts: Deferral
Contributions Account, Matching Contributions Account, and Discretionary
Contributions Account.
2.3. Beneficiary
"Beneficiary" means the person, persons or entity entitled under Section 8
to receive any Plan benefits payable after a Participant's death.
2.4. Board
"Board" means the Board of Directors of the Company.
2.5. Change in Control
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 Securities
Exchange Act of 1934, as amended (the "Exchange Act")), immediately after
which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
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promulgated under the Exchange Act) of twenty-five percent (25%) or more of
the then outstanding shares of the Company 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 (A)
the Company or (B) any corporation or other Person of which a majority of its
voting power or its voting equity securities or equity interest is owned,
directly or indirectly, by the Company (for purposes of this definition, a
"Subsidiary"), (ii) the Company or its Subsidiaries, or (iii) any Person in
connection with a "Non-Control Transaction" (as hereinafter defined);
(b) The individuals who, as of the Effective Date, are members of the
Board (the "Incumbent Board"), cease for any reason 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 stockholders,
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 stockholders 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 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 beneficially directly or indirectly 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
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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 outstanding shares or Voting Securities Beneficially
Owned by the Subject Person, then a Change in Control shall occur.
2.6. Code
"Code" means the Internal Revenue Code of 1986, as amended, or any other
provision of law of similar purpose as may at any time be substituted therefor.
2.7. Committee
"Committee" means the committee appointed by the Board to administer the Plan
pursuant to Section 9.
2.8. Company
"Company" means Starbucks Corporation, a Washington corporation, and any
successor thereto which assumes its obligations under this Plan.
2.9. Deferrable Compensation
"Deferrable Compensation" means, with respect to a Participant for the period
specified, the amount considered "Deferrable Compensation" within the meaning
of the 401(k) Plan, specifically including any amounts that would be paid to
the Participant, but for a compensation reduction agreement pursuant to Code
Section 125 or pursuant to the 401(k) Plan.
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2.10. Deferrable Compensation Payment Date
"Deferrable Compensation Payment Date" means, with respect to a Plan Year and
a Participant, each date during that Plan Year on which Deferrable
Compensation is paid to that Participant (or would be paid to the
Participant, but for an election pursuant to a Participation Election to have
the Deferrable Compensation otherwise payable on that date reduced). For
example, each date on which a regular payroll check for a payroll period is
given to a Participant is a Deferrable Compensation Payment Date.
2.11. Deferral Contributions
"Deferral Contributions" means the compensation deferred by Participants and
allocated to Participants' Deferral Contributions Account, pursuant to
Section 4.2.
2.12. Deferral Contributions Account
"Deferral Contributions Account" means the Subaccount recording Deferral
Contributions of the Participant, pursuant to Section 4.2, as adjusted for
allocations of Earnings, distributions, and other factors affecting the value
of such Subaccount.
2.13. Deferral Period
"Deferral Period" means the twelve (12) month period ending December 31;
provided, however, the first "Deferral Period" shall be the shorter period
beginning with the Effective Date and ending December 31, 1998.
2.14. Determination Date
"Determination Date" means each date on which any one or more of the 401(k)
Plan funds, or any other fund on which an Investment Index (Section 2.22) is
based, is traded.
2.15. Disability (or Disabled)
"Disability" (or "Disabled") means a disability as determined under the
Company's long-term disability plan.
2.16. Discretionary Contributions
"Discretionary Contributions" means the contributions, if any, made by the
Company to the Plan, which are in addition to Matching Contributions. The
aggregate amount of Discretionary Contributions allocated to the Plan for any
Plan Year shall be such amount as determined by the Board in its sole
discretion. The vesting schedule for Discretionary Contributions shall be the
schedule shown in Section 5.3, or such other schedule the Board shall
determine at the time it elects to make Discretionary Contributions.
2.17. Discretionary Contributions Account
"Discretionary Contributions" Account means the Subaccount recording
Discretionary Contributions made to the Plan on behalf of the Participant,
pursuant to Section 5.2, as adjusted for allocations of Earnings,
distributions, and other factors affecting the value of such Subaccount.
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2.18 Earnings
"Earnings" for each Subaccount means the rate of growth credited or debited
to the Subaccount on each Determination Date in a Plan Year, which shall be
credited or debited at the rates described in the definition of Investment
Index in Section 2.22. Earnings for an Account shall mean the aggregate
Earnings for each Subaccount making up the Account.
2.19. Effective Date
"Effective Date" means the date selected by the Committee, which shall be on
or after the date a statement covering the interests to be granted to
Participants under this Plan shall be declared effective by the Securities
and Exchange Commission.
2.20. ERISA
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time or any successor statute.
2.21. Ineligible Partner
"Ineligible Partner" means any Partner that is:
1. Covered by a collective bargaining agreement;
2. Treated by the Company as an independent contractor;
3. Leased from another company;
4. A temporary employee as defined in the Company's Human Resources
policies; or
5. Not on the United States payroll (such as a non-resident alien with no
U.S. source of income).
2.22. Investment Index
"Investment Index" means each index selected by a Participant to be used as
an earnings index pursuant to Section 6. Each Investment Index shall be a
phantom investment fund, which shall be credited with earnings (whether a
gain or a loss) at the same rate as the funds provided under the 401(k) Plan,
or such other similar indices as the Committee may select from time to time and
shown in Appendix A attached.
2.23. Matching Contributions
"Matching Contributions" means the contributions, if any, allocated to a
Participant's Matching Contribution Account, pursuant to Section 5.1.
2.24. Matching Contributions Account
"Matching Contributions Account" means the Subaccount recording Matching
Contributions made to the Plan on behalf of the Participant, pursuant to
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Section 5.1, as adjusted for allocations of Earnings, distributions, and
other factors affecting the value of such Subaccount.
2.25. Participant
"Participant" means a person for whom a Deferral Contributions Account is
maintained.
2.26. Participation Election
"Participation Election" means the election submitted by a Participant to
the Committee prior to the beginning of a Deferral Period, subject to Section
3.1(c), specifying the amount to be deferred for such Deferral Period. Such
election may be submitted in any form permitted by the Committee, including,
but not limited to, submission through an interactive voice response system,
the Internet, electronic mail, or writing.
2.27. Partner
"Partner" means a person classified by the Company as an employee of the
Company or its Subsidiaries, regardless of the person's classification by any
federal, state or local government, or any of their agencies.
2.28. Plan
"Plan" means this Management Deferred Compensation Plan as amended from time
to time.
2.29. Plan Year
"Plan Year" means the calendar year, except for the first Plan Year, which
shall begin the Effective Date and end December 31, 1998.
2.30. Subaccount
"Subaccount" means one or more of the Deferral Contributions Account,
Matching Contributions Account, and Discretionary Contributions Account.
2.31. Subsidiary
"Subsidiary" means a subsidiary of the Company, of which the Company
beneficially owns, directly or indirectly, more than 50% of the aggregate
voting power of all outstanding classes and series of stock.
2.32. Termination
"Termination" means leaving employment with the Company prior to attaining
age 65.
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2.33. Year of Service
"Year of Service" means each year of service since the Participant's last
date of hire. Fractional years of one-half year or more shall be counted as
one year. Fractional years of less than one-half year shall not be counted.
In addition, Years of Service shall include any previous year(s) of service
beginning from any previous date of hire and ending on the date of
termination, if such service would be counted under the break in vesting
service rules applicable under the 401(k) plan, with fractional years treated
in the same manner as described above for current service. Years of service
credited during all periods during which the Participant has been a Partner
shall be included when determining a Participant's Years of Service,
including periods before the Partner becomes a Participant in this Plan and
periods before this Plan was established.
3. PARTICIPATION AND DEFERRALS
3.1. Eligibility and Participation
(a) Eligibility. Eligibility to participate in the Plan shall be limited
to those Partners, excluding Ineligible Partners, who have a position at the
Company or at any of its Subsidiaries at the director level or above and such
other Partners selected by the Committee who are management or highly-
compensated employees.
(b) Participation. An eligible Partner may elect to participate in the
Plan with respect to any Deferral Period by submitting a Participation
Election to the Committee by the date selected by the Committee, which date
shall precede the beginning of the Deferral Period.
(c) Part-Year Participation. Partners who become newly eligible to
participate in the Plan may begin their participation in the Plan as of a
date or dates determined under rules to be established by the Committee. A
Participation Election must be submitted to the Committee no later than
prescribed by the Committee. If no Participation Election is submitted prior to
such day, the Partner shall next be eligible to participate beginning
January 1st of the next following calendar year.
(d) Change in Employment Status. If a Participant is no longer a member of
the eligible group of Partners, any current Participation Election shall be
continued to the end of the Deferral Period but no new Participation Election
may be made by such Participant. All account balances shall remain in the Plan
until they are distributed under the terms of Section 7.
3.2. Form of Deferral
A Participant may elect a deferral in the Participation Election as follows:
(a) A deferral shall be a portion of the Deferrable Compensation payable by
the Company to the Participant during the Deferral Period.
(b) The amount to be deferred shall be stated as a percentage, not to
exceed the maximums and not to be less than the minimums described in Section
3.3.
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3.3. Limitations on Deferrals
The following limitations shall apply to deferrals:
(a) Maximum. The Committee shall establish the maximum percentage of
Deferrable Compensation (excluding amounts payable under this Plan) that may
be deferred for each Plan Year prior to the beginning of such Plan Year. The
maximum amount of Deferrable Compensation that consists of amounts that may
become payable under this Plan shall be one hundred percent (100%).
(b) Minimum. The minimum percentage of Deferrable Compensation (excluding
amounts payable under this Plan) that may be deferred shall be one percent (1%).
(c) Changes in Minimum or Maximum. The Committee may change the minimum or
maximum deferral amounts from time to time by giving written notice to all
Participants. No such change may affect the amount specified in a
Participation Election made prior to the Committee's action.
3.4. Termination of Employment
If a Participant terminates employment with the Company prior to the end of
the Deferral Period, the Deferral Period shall end at the date of termination.
3.5. Continuation of Deferral Amount
Once a Participant has submitted a Participation Election, the elected
deferral amount shall remain in effect for the applicable Deferral Period.
The election shall be irrevocable except as provided in Sections 7.1(b),
relating to a financial hardship, and 7.2, relating to accelerated distribution.
4. DEFERRAL CONTRIBUTIONS
4.1. Withholding of Deferral Contributions
For each Plan Year, the Participant's Deferral Contributions shall be
withheld each Deferrable Compensation Payment Date in the percentage amount
elected in the Participant's Participation Election for that Plan Year.
4.2. Timing of Credits; Tax and Other Withholding
A Participant's Deferral Contributions shall be credited to the Deferral
Contributions Account in accordance with rules established by the Committee
and by such deadlines as the Committee shall establish, in its discretion.
Any withholding of taxes or other amounts, including FICA and Medicare taxes,
with respect to Deferral Contributions that is required by state, federal or
local law shall be withheld from the Participant's corresponding nondeferred
Deferrable Compensation.
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5. MATCHING CONTRIBUTIONS AND DISCRETIONARY CONTRIBUTIONS
5.1. Matching Contributions
(a) The Company shall allocate Matching Contributions, if any, to the
Participant's Matching Contributions Account after each Deferrable
Compensation Payment Date for which the Company allocated Deferral
Contributions to the Participant's Deferral Contributions Account. No
Matching Contribution shall be allocated with respect to Deferral
Contributions that represent deferrals of payments otherwise payable under
this Plan.
(b) The Committee shall determine the amount of the Matching Contribution,
if any, which the Company shall allocate with respect to Deferral
Contributions and shall inform the Board of such determination. The
Committee may determine the amount prior to the beginning of, during, or
after the end of the Deferral Period during which such Deferral Contributions
are made. The Committee may determine part of a Matching Contribution at one
time and another part at a later time, at its discretion. For example, the
Committee may determine to match 25% of Deferral Contributions up to 4% of
Deferrable Compensation prior to the beginning of a Deferral Period and then
may determine to match an additional 25% at any time during or after such
Deferral Period. In no case, however, shall the Matching Contribution
formula be greater than that provided under the 401(k) Plan.
5.2. Discretionary Contributions
Each Plan Year, the Company may determine whether to make Discretionary
Contributions for that Plan Year and the amount of the aggregate
Discretionary Contributions. If the Company determines to make such
Discretionary Contributions, the Committee shall determine how the
Discretionary Contributions should be allocated to each Participant's
Discretionary Contributions Account.
5.3. Vesting of Accounts
(a) Each Participant shall be one hundred percent (100%) vested at all
times in the amounts credited to such Participant's Deferral Contributions
Account, including Earnings.
(b) Subject to Section 5.3(d), each Participant shall be one hundred
percent (100%) vested in the amounts credited to such Participant's Matching
Contributions Account, Discretionary Contributions Account, including
Earnings, upon the earliest of the following dates if on that date the
Participant is employed by the Company:
(1) the date of the Participant's death;
(2) the date of the Participant's Disability; or
(3) the date the Participant attains age 65; or
(4) the date of a Change in Control.
(c) Subject to Section 5.3(b) and Section 5.3(d), the interest of a
Participant in his or her Matching Contributions Account and Discretionary
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Contributions Account shall vest in accordance with the vesting schedule
applicable to Matching Contributions Accounts under the 401(k) Plan.
(d) If the Participant is terminated for misconduct, willfully or wantonly
harmful to the Company, the Participant shall forfeit the entire balance of
both his or her Matching Contributions Account and Discretionary
Contributions Account.
5.4. Timing of Credits; Tax and Other Withholding
A Participant's Matching Contributions shall be credited to the Matching
Contributions Account at the time the Deferral Contributions to which the
Matching Contributions relate would have been payable to the Participant. A
Participant's Discretionary Contributions shall be credited to the
Discretionary Contributions Account at the time selected by the Committee.
Any withholding of taxes or other amounts with respect to Matching
Contributions and Discretionary Contributions that is required by state,
federal or local law shall be withheld from the Participant's nondeferred
Deferrable Compensation.
6. ACCOUNTS
6.1. Account
For record-keeping purposes only, a Participant's Deferral Contributions,
Matching Contributions, Discretionary Contributions, and Earnings on each
shall be credited to the Participant's respective Subaccounts, and, in the
aggregate, to the Participant's Account. The Account and Subaccounts shall be
bookkeeping devices utilized for the sole purpose of determining the benefits
payable under the Plan and shall not constitute a separate fund of assets.
6.2. Determination of Accounts and Subaccounts
Each Participant's Account and Subaccount(s) as of each Determination Date
shall consist of the balance of the Account and Subaccount(s) as of the
immediately preceding Determination Date, adjusted as follows:
(a) Deferral Contributions. The Account and Subaccount(s) shall be
increased by any Deferral Contributions credited since such Determination Date.
(b) Matching Contributions. The Account and Subaccount(s) shall be
increased by any Matching Contributions, if any, credited since such
Determination Date.
(c) Discretionary Contributions. The Account and Subaccount(s) shall be
increased by Discretionary Contributions, if any, credited since such
Determination Date.
(d) Distributions. The Account and Subaccount(s) shall be reduced by any
benefits distributed to the Participant since such Determination Date.
(e) Earnings. The Account and Subaccount(s) shall be increased or
decreased by the Earnings credited on the average daily balance in the
Account and each Subaccount since such Determination Date.
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6.3. Selection of Investment Index (Indices)
(a) At the time a Participant elects a deferral under Section 3.2, the
Participant shall also select the Investment Index or Indices in which the
Participant wishes to have the combined amount of Deferral Contributions,
Matching Contributions and/or Discretionary Contributions deemed invested.
The Participant may select any combination of one (1) or more of the Investment
Indices in one percent (1%) increments, or as further limited by the
Committee. The Participant may elect a different Index or set of Indices as
permitted by the Committee.
(b) At the time the Participant selects the Investment Index(ices) for new
Deferral Contributions, Matching Contributions and Discretionary
Contributions, the Participant may also elect a different allocation among
Investment Funds for current Account balances.
6.4. Statement of Accounts
The Committee shall give to each Participant a statement showing the balances
in the Participant's Account and Subaccount(s) on a quarterly basis and at
such other times as may be determined by the Committee.
7. BENEFIT PAYMENTS
7.1. Early Withdrawals
A Participant's Account may be distributed to the Participant before
termination of employment as follows, or in accordance with Section 7.2:
(a) Election for In-Service Withdrawal. A Participant may elect in a
Participation Election to withdraw all or any portion of the amount deferred,
including any earnings credited thereon, by that Participation Election as of
a date specified in the election. Such date shall not be sooner than five
(5) years after the date the Deferral Period commences. No amounts from
the Participant's Matching Contributions Account and Discretionary
Contributions Account may be withdrawn.
(b) Unexpected Financial Hardship. If upon the request of a Participant or
Beneficiary the Committee finds that a Participant or Beneficiary has
suffered an unexpected financial hardship, the Committee may, in its sole
discretion:
(i) Suspend in whole or in part a Participant's Participation Election;
and/or
(ii) Make distributions from the Participant's Deferral Contributions
Account.
A "financial hardship" means an unanticipated financial emergency that is
caused by an event beyond the control of the Participant or Beneficiary and
that would result in severe financial hardship to the individual if a
suspension or distribution were not permitted. In no event shall declining
earnings be considered a financial hardship. Any distribution approved by
the Committee shall be limited to the amount necessary to meet the emergency.
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Distributions shall be made from the Participant's Deferral Contributions
Account only.
If a Participant receives a hardship distribution, the Participant shall make
no additional deferrals for the remainder of the calendar year in which
withdrawal is made and for the immediately succeeding calendar year.
(c) Payment. The amount payable under this section shall be paid in a lump
sum within sixty (60) days following receipt of the request and shall be
charged to the Participant's Account as a distribution.
7.2. Accelerated Distribution
Notwithstanding any other provision of the Plan, a Participant shall be
entitled to receive, upon written request to the Committee, a lump-sum
distribution of all of the vested Account balance, subject to the following:
(a) Penalty. Ten percent (10%) of the vested Account shall be forfeited
and ninety percent (90%) of the vested Account shall be paid to the
Participant. Any unvested Account balance shall be permanently forfeited.
(b) Suspension of Participation. A Participant who receives a distribution
under this Section will be prohibited from deferring for the rest of the
current calendar year and for the immediately succeeding calendar year.
(c) Payment. The Account balance shall be as of the Determination Date
immediately preceding the date on which the Committee receives the written
request. The Committee shall pay the amount payable under this Section in a
lump sum within sixty (60) days following the receipt of the Participant's
written request.
7.3. Termination of Employment Prior to Age 65
If a Participant terminates employment with the Company for any reason prior
to attainment of age 65, including death or Disability, the Company shall pay
to the Participant (or the Participant's Beneficiary, in case of death)
benefits equal to the balance in the vested Account on the Determination Date
corresponding to the Participant's termination date. The Committee shall pay
the vested Account balance in a lump sum within sixty (60) days following the
Participant's termination date.
7.4. Termination of Employment On or After Age 65
If a Participant terminates employment with the Company on or after
attainment of age 65, the Participant's Account balance, subject to the
forfeiture provision of Section 5.3(d), shall be paid as elected in his or
her Participation Election(s) prior to each Deferral Period or as elected
pursuant to Subsection (c) below.
(a) Alternative Forms. Alternative forms of benefit payment shall be:
(i) A lump-sum amount which is equal to the applicable Account balance.
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(ii) Annual installments of the Account balance amortized over a period
of up to 10 years. Earnings on the unpaid balance shall continue to be
credited to Subaccounts at the appropriate Investment Index rate. The
Account balance shall be reamortized each year, so that the amount of each
installment payment will depend on the Earnings credited or debited to the
Account during the prior year.
(b) Small Amounts. Notwithstanding the form elected, if the Participant's
total Account is ten thousand dollars ($10,000) or less on the applicable
Determination Date, the benefit shall be paid in a lump sum.
(c) Change in Form of Benefits. A Participant may elect to change the form
of benefit payment at any time up to twelve (12) months before the date
benefit payments commence. Any changes made to the form of benefit payment
within twelve (12) months of the date benefit payments commence will not be
valid.
7.5. Withholding; Payroll Taxes
The Company shall withhold from payments hereunder any taxes required to be
withheld from such payments under federal, state or local law. A
Beneficiary, however, may elect not to have withholding of federal income tax
pursuant to Section 3405 of the Internal Revenue Code, or any successor
provision thereto.
7.6. Covered Employee
Notwithstanding any other provision of this Plan except early withdrawals
under Section 7.1 and accelerated distributions under Section 7.2, if any
portion of a payment in a calendar year would be disallowed as a deduction to
the Company because the Participant is an employee for that calendar year
subject to Section 162(m) (the 1 million dollar limitation on compensation
deduction) of the Code, or any successor provision to such Section, that
portion shall instead be paid in the first following calendar year during
which the Participant is not subject to Section 162(m) of the Code or any
successor provision, by January 30th of such year.
7.7. Payment to Guardian
If a distribution is payable to a minor or a person declared incompetent or
to a person incapable of handling the disposition of property, the Committee
may direct payment to the guardian, legal representative, or person having
the care and custody of such minor, incompetent, or person. The Committee may
require proof of incompetency, minority, incapacity or guardianship, as
it may deem appropriate prior to distribution. The Company may withhold
payment under the Plan upon a dispute as to the proper payee(s) or in any
other situation in which the proper payee(s) may be in question, until the
proper payee(s) are finally determined in a court of law. Distribution of any
benefit under the Plan shall completely discharge the Committee from all
liability with respect to such benefit.
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8. BENEFICIARY DESIGNATION
8.1. Beneficiary Designation
Each Participant shall have the right, at any time, to designate one (1) or
more persons or an entity as Beneficiary (both primary as well as secondary)
to whom benefits under this Plan shall be paid in the event of a
Participant's death prior to complete distribution of the Participant's
Account. Each Beneficiary designation shall be made in accordance with the
provisions of Section 8.6 of the 401(k) Plan, as it may be amended from time to
time. In the event that no separate Beneficiary designation is made under
this Plan, the Participant's Beneficiary designation made under the 401(k)
Plan shall determine to whom benefits under this Plan shall be paid in the
event of a Participant's death.
9. ADMINISTRATION
9.1. Committee
(a) The Committee shall administer this Plan.
(b) The Committee shall be the same committee that administers the 401(k)
Plan.
(c) The Committee shall administer this Plan under the same rules
prescribed by the provisions of Article 11 of the 401(k) Plan to the extent
such rules are applicable.
9.2. Administrative Provisions
As prescribed by Section 9.1(c), to the extent applicable, the provisions of
Article 11 of the 401(k) Plan are intended to govern the administration of
this Plan. Specific provisions of Article 11 that are not applicable include:
(a) Section 11.4(b) (payment of expenses). Expenses of this Plan shall be
paid out of the general assets of the Company or, if established, the
trust(s) described in Section 11.3 of this Plan.
(b) Section 11.6 (investment responsibilities).
(c) Section 11.10 (fiduciaries). This Plan is not subject to the fiduciary
duty requirements of ERISA.
10. AMENDMENT AND TERMINATION OF PLAN
10.1. Amendment
(a) The Board may, at any time, amend the Plan in whole or in part by
written instrument, provided that no amendment shall reduce the amount
credited to any Account maintained under the Plan as of the date of the
amendment. Any change in the manner that Earnings are credited to Accounts
shall not become effective before the first day of the Plan Year that follows
the adoption of the amendment, provided, however, that the selection of
Investment Indices by the Committee may be changed at any time as long as
Participants are given the opportunity to change their election of Investment
Indices prior to the time the Indices are changed.
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(b) Generally, the Company shall amend the Plan by action of the Board.
However, the Committee may approve amendments to the Plan, without prior
approval or subsequent ratification by the Board, if the amendment: (i) does
not significantly change the benefits provided under the Plan (except as
required by a change in applicable law); (ii) does not significantly increase
the costs of the Plan; and (iii) the amendment is intended either to enable
the Plan to remain in compliance with the requirements of the Code, ERISA, or
other applicable law, to facilitate administration of the Plan, or to improve
the operation of the Plan. A duly authorized officer of the Company shall
execute the amendment, evidencing the Company's adoption of the amendment.
10.2. Company's Right to Terminate
The Board may, at any time, partially or completely, terminate the Plan.
(a) Partial Termination. The Board may partially terminate the Plan by
instructing the Committee not to accept any additional Participation
Elections. If such a partial termination occurs, the Plan shall continue to
operate and be effective with regard to Participation Elections entered into
prior to the effective date of such partial termination.
(b) Complete Termination. The Board may completely terminate the Plan by
instructing the Committee not to accept any additional Participation
Elections, and by terminating all ongoing Participation Elections. If such a
complete termination occurs, the Plan shall cease to operate and the Company
shall pay out to each Participant the vested balance in his or her Account.
Unless the Committee determines otherwise, payment shall be made as a lump
sum or in annual installments over the following period, based on the vested
Account balance:
Vested Account Balance Payout Period
-----------------------------------------------------------------
$10,000 or less Lump Sum
More than $10,000 but less than $100,000 3 Years
More than $100,000 but less than $250,000 5 Years
$250,000 or more 10 Years
=================================================================
Earnings at an interest rate determined by the Board shall be credited on the
unpaid balance in each Account.
The Company reserves the right to pay each Account in a lump sum,
notwithstanding the above schedule.
11. MISCELLANEOUS
11.1. Unfunded Plan
This Plan is an unfunded plan maintained primarily to provide deferred
compensation benefits for a select group of "management or highly-compensated
employees" within the meaning of Sections 201, 301 and 401 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and therefore
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is exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.
Accordingly, the Board may terminate the Plan and make no further benefit
payments or remove certain employees as Participants if it is determined by
the United States Department of Labor, a court of competent jurisdiction, or
an opinion of counsel that the Plan constitutes an employee pension benefit
plan within the meaning of Section 3(2) of ERISA (as currently in effect or
hereafter amended) which is not so exempt.
11.2. Unsecured General Creditor
Participants and their Beneficiaries, heirs, successors, and assigns shall
have no secured legal or equitable rights, interest or claims in any property
or assets of the Company, nor shall they be Beneficiaries of, or have any
rights, claims or interests in any property or asset which may be acquired by
the Company. Except as provided in Section 11.3, assets of the Company shall
not be held under any trust for the benefit of Participants, their
Beneficiaries, heirs, successors or assigns, or held in any way as collateral
security for the fulfilling of the obligations of the Company under this
Plan. Any and all of the Company's assets and policies shall be, and remain,
the general, unpledged, unrestricted assets of the Company. The Company's
obligation under the Plan shall be that of an unfunded and unsecured promise
to pay money in the future.
11.3. Trust Fund
At its sole discretion, the Company may establish one (1) or more trusts,
with such trustees as the Board may approve, for the purpose of providing
for the payment of benefits owed under the Plan. Although such a trust may
be irrevocable, its assets shall be held for payment of all the Company's
general creditors in the event of insolvency. To the extent any benefits
provided under the Plan are paid from any such trust, the Company shall have no
further obligation to pay them. If not paid from any trust, such benefits
shall remain the obligation of the Company. Notwithstanding the existence of
such a trust, it is intended that the Plan be unfunded for tax purposes and
for purposes of Title I of ERISA.
11.4. Nonassignability
Neither a Participant nor any other person shall have any right to commute,
sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
transfer, hypothecate or convey in advance of actual receipt the amounts, if
any, payable hereunder, or any part thereof, which are, and all rights to
which are, expressly declared to be unassignable and nontransferable. Except
as may otherwise be required by law or order of a court of competent
jurisdiction, no part of the amounts payable shall, prior to actual payment,
be subject to seizure or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any other
person, nor be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency.
11.5. Not a Contract of Employment
This Plan shall not constitute a contract of employment between the Company
and the Participant. Nothing in this Plan shall give a Participant the right
to be retained in the service of the Company or to interfere with the right
of the Company to discipline or discharge a Participant at any time.
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11.6. Governing Law
The provisions of this Plan shall be construed and interpreted according to
the laws of the State of Washington, except as preempted by federal law.
11.7. Validity
In case any provision of this Plan shall be held illegal or invalid for
any reason, said illegality or invalidity shall not affect the remaining
parts hereof, but this Plan shall be construed and enforced as if such
illegal and invalid provision had never been inserted herein.
11.8. Successors
The provisions of this Plan shall bind and inure to the benefit of the
Company, its Subsidiaries, and their successors and assigns. The term
successors as used herein shall include any corporate or other business
entity, which shall, whether by merger, consolidation, purchase or otherwise
acquire all or substantially all of the business and assets of the Company, and
successors of any such corporation or other business entity.
11.9. Captions
The captions of the articles, sections, and paragraphs of this Plan are for
convenience only and shall not control or affect the meaning or construction
of any of its provisions.
11.10 Entire Agreement
This Plan document represents the entire agreement between the Company and
any Participant in this Plan. This agreement supersedes any and all prior
agreements between the Company and any Participant, whether such agreement or
agreements were written or oral. Any amendment or modification to the terms of
this Plan must be in writing and signed by an authorized officer of the
Company. No Participation Election shall in any way amend, modify, alter or
revise this Plan. In the event the terms of the Participation Election
conflict with the terms of the Plan, the terms of the Plan shall be
controlling.
IN WITNESS WHEREOF, the authorized officers of the Company have signed this
document and have affixed the corporate seal on September 17, 1998, to be
effective upon the Effective Date.
Starbucks Corporation
Attest:
By: /s/ Sharon E. Elliott
Its: senior vice president,
Human Resources
By: Jennifer O'Connor
Its: vice president and (Corporate Seal)
assistant general counsel
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APPENDIX A
Investment Indices
Effective upon the Effective Date, the Investment Indices available to
Participants in the Starbucks Corporation Management Deferred Compensation
Plan shall be the following:
PBHG Growth
Hotchkis & Wiley International
Janus Fund
BGI Daily Equity Index
Pax World
Vanguard/Wellesley Income
DFA One-Year Fixed-Income
The Committee reserves the right to change these indices from time to time.
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EXHIBIT 5.1
OPINION OF LANE POWELL SPEARS LUBERSKY LLP
Starbucks Corporation
2401 Utah Avenue South
Seattle, WA 98134
Re: Management Deferred Compensation Plan -- Registration Statement on Form S-8
Sir/Madam:
At your request, we have examined the Registration Statement on Form S-8 (the
"Registration Statement"), which Starbucks Corporation, a Washington
corporation (the "Company"), intends to file with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1933,
as amended, of $11,000,000 in deferred compensation obligations (the
"Obligations") of the Company under the Starbucks Corporation Management
Deferred Compensation Plan (the "Plan"). We are familiar with the proceedings
undertaken in connection with the authorization of the Plan and the
Obligations. Additionally, we have examined such questions of law and fact as
we have considered necessary or appropriate for purposes of this opinion.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to authentic original documents of all documents submitted to us as copies.
We are opining herein as to the effect on the subject transaction only of the
federal securities law of the United States and the laws of the State of
Washington, and we express no opinion with respect to the applicability
thereto, or the effect thereon, of any other laws.
Based on the foregoing, we are of the opinion that the Obligations have been
duly authorized, and upon the issuance of the Obligations under the terms of
the Plan, such Obligations will be legally valid and binding obligations of the
Company, except as may be limited by the effect of bankruptcy , insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights or remedies of creditors; the effect of
general principles of equity, whether enforcement is considered in a proceeding
in equity or at law, and the discretion of the court before which any
proceeding therefor may be brought; and the effect of the laws of usury or
other laws or equitable principles relating to or limiting the interest rate
payable on indebtedness.
We consent to your filing this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Lane Powell Spears Lubersky LLP
LANE POWELL SPEARS LUBERSKY LLP
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement
of Starbucks Corporation on Form S-8 of our report dated June 8, 1998
appearing in the Company's Current Report on Form 8-K filed July 9, 1998.
Deloitte & Touche LLP
Seattle, Washington
October 1, 1998
