Exhibit 10.12(b)

 

FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT

 

This First Amendment to Asset Purchase Agreement (this “Agreement”) is entered
into as of August 31, 2005 (the “Effective Date”) by and between Tully’s Coffee
Japan Co., Ltd., a corporation organized under the laws of Japan (“Buyer”), and
Tully’s Coffee Corporation, a Washington corporation (“Seller”). Each of Buyer
and Seller is a “Party” and together, the “Parties.”

 

RECITALS

 

A. The Parties entered into an Asset Purchase Agreement (the “Agreement”) as of
August 19, 2005.

 

B. Buyer and Seller have agreed that the Closing and payment of the purchase
price shall occur no earlier than 12:01 a.m. Tokyo Time on September 1, 2005 and
no later than 2:00 p.m. Pacific Daylight Time on August 31, 2005. Assuming such
Closing Date, (i) the Parties have also determined that the relevant Tax Filing
Date is October 10, 2005, and (ii) the Seller has instructed Buyer that the KCL
Payoff Amount is $1,169,098.72.

 

C. Assuming the Closing Date is prior to the filing and acceptance of the
Exemption Notice, the Parties acknowledge that (i) the Buyer’s obligations to
pay the Purchase Price at Closing shall be fulfilled if the Buyer wire transfers
$1,169,098.72 to KCL and $12,649,746.19 to Seller, subject to the obligations of
Seller with respect to the Remitted Amount, and (ii) the Remitted Amount is
$3,681,155.09.

 

D. The Parties wish to amend certain provisions of the Agreement to reflect the
treatment of withholding taxes in connection with the Closing.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises
contained in this Amendment, the Parties hereby agree as follows:

 

1. Section 3.7(b) of the Agreement shall be amended and restated to read as
follows:

 

3.7 Withholding Taxes.

 

(b) If the Closing Date occurs after the filing and acceptance of the Exemption
Notice, Buyer shall not withhold any taxes from Seller on the Purchase Price
paid to Seller or to KCL after the filing of the Exemption Notice. Buyer and
Seller have also independently determined that until such time as the Exemption
Notice is filed with and accepted by the Japanese Tax Office, Japanese income
tax withholding would apply to the Purchase Price paid to Seller. Buyer and
Seller have determined that if the Exemption Notice is filed and accepted after
the Closing Date but prior to the due date designated by the Japanese Tax Office
for the remittance of tax withheld on the Closing Date (the “Tax Filing Date”),
Buyer is not required to remit the tax withholding to the Japanese Tax Office
and would be permitted to refund any withheld amounts to Seller. However, if
such taxes have been withheld and the Exemption Notice has not been filed with
and accepted by the Japanese Tax Office prior to the Tax Filing

 

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Date, then Buyer would be required to remit the withheld tax to the Japanese Tax
Office on the Tax Filing Date and such taxes would be subject to Seller’s tax
refund claim to the Japanese Tax Office, for reasons of the tax treaty
exemption, after the Exemption Notice is filed and accepted. If the Closing Date
is prior to the filing and acceptance of the Exemption Notice, Buyer shall
deduct and withhold tax at the rate of 20% on the Purchase Price paid to Seller
prior to the filing of the Exemption Notice (the “Remitted Amount”); provided
that the KCL Payoff Amount will not be adjusted as a result of such withholding
tax and the applicable withholding tax shall decrease the amount of the Purchase
Price paid to Seller, and Buyer shall hold the Remitted Amount as custodian for
the benefit of Seller until the Remitted Amount has been fully paid to Seller or
to the Japanese Tax Office as described below. If the Exemption Notice is filed
with and accepted by the Japanese Tax Office prior to the Tax Filing Date, Buyer
shall pay the Remitted Amount, without deduction or offset, to Seller by wire
transfer on or before October 7, 2005. On the Tax Filing Date, if the Remitted
Amount has not already been paid to Seller as described in the preceding
sentence, Buyer shall pay the Remitted Amount to the Japanese Tax Office using
the proper remittance form, which shall be reviewed with Seller prior to filing,
and promptly furnish Seller with official receipt from the Japanese Tax Office
evidencing the payment of the Remitted Amount. The Remitted Amount shall be
treated as a payment of the Purchase Price at the time as it is either paid to
Seller or paid to the Japanese Tax Office as provided in this Section 3.7;
provided, however, that the Remitted Amount does not need to be paid to Seller
or paid to the Japanese Tax Office for the Closing to occur. In the event that
the Remitted Amount has been deducted from the payment to Seller and remitted to
the Japanese Tax Office pursuant to this paragraph, Seller shall promptly
prepare (at its expense) a request for refund of the Remitted Amount (“Request
for Refund”) and will furnish it to Buyer for purposes of filing. Buyer will
promptly file (at Seller’s expense) the Request for Refund with the Japanese Tax
Office and will notify Seller when the filing has been made. Buyer shall not be
responsible for any failure of Seller to timely furnish the Request for Refund
to the Buyer. The refund proceeds paid by the Japanese Tax Office pursuant to
the Request for Refund (the “Refund Amount”) shall be solely for the account of
Seller and shall not be an asset of Buyer. In the event that the Japanese Tax
Office pays the Refund Amount to Buyer, (1) Buyer shall handle such refund
proceeds as custodian for the benefit of Seller, (2) Buyer shall promptly notify
Seller when Buyer receives any such refund proceeds, and (3) Buyer will promptly
pay the full amount of such refund proceeds to Seller in the manner reasonably
designated by Seller.

 

2. Section 7.7 of the Agreement shall be amended and restated to read as
follows:

 

7.7 Assignment. Neither Party may assign, directly or indirectly, this
Agreement, or any of its rights or obligations hereunder, to any third party at
any time; provided, however, that an “assignment” or “transfer” of this
Agreement or a Party’s rights or obligations hereunder by operation of law (for
example, by way of merger, consolidation or corporate split) shall not
constitute a violation of this Section’s prohibition; and provided, further,
however, that Buyer may assign this Agreement or its rights or obligations
hereunder to an Affiliate of Buyer provided that (i) Buyer shall give Seller
prior written notice of such assignment; (ii) such Affiliate shall be bound by
the rights and obligations under this Agreement after such an assignment, and
(iii) such Affiliate shall have a tangible net worth equal to or greater than
Buyer; provided that subsection (iii) shall not apply after the Refund Amount or
Remitted Amount, subject to the Offset Amount, has been paid, if applicable, or
shall otherwise not apply.

 

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3. Except as specifically set forth in this Amendment, the remaining terms and
conditions of the Agreement shall remain unchanged and shall remain in full
force and effect. In the event of a conflict between the provisions of this
Amendment and the Agreement, the provisions of this Amendment shall prevail.

 

4. The capitalized terms used in the Amendment, unless specifically defined
otherwise herein, shall have the meanings ascribed to them in the Agreement.

 

5. This Amendment may be executed in counterparts, which, when taken together,
shall constitute one and the same agreement.

 

 

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IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have
executed this Amendment as of the Effective Date.

 

SELLER       BUYER TULLY’S COFFEE CORPORATION       TULLY’S COFFEE JAPAN CO.,
LTD. By:  

/s/ John D. Dresel

      By:  

/s/ Kouta Matsuda

Name:

 

John D. Dresel

     

Name:

 

Kouta Matsuda

Title:

 

President and COO

     

Title:

 

President and CEO

 

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