Exhibit 10.1

 

AMENDMENT NO. 4 TO PROMISSORY NOTE

 

This Amendment No. 4 to Promissory Note (this “Amendment No. 4”) is dated for
reference purposes June 1, 2005, and is by and between TULLY’S COFFEE
CORPORATION, a Washington corporation (“Maker”), and KENT CENTRAL, L.L.C., a
Washington limited liability company (“Holder”).

 

R E C I T A L S

 

A. Maker has previously executed that certain Promissory Note dated November 1,
2002, in favor of Holder in the original principal amount of up to TWO MILLION
EIGHT HUNDRED NINETY THOUSAND THIRTY SEVEN AND 09/100 DOLLARS ($2,890,037.09)
(the “Original Note”). The Original Note was amended by Amendment to Promissory
Note dated March 3, 2003 (“Amendment No. 1”), Amendment No. 2 to Promissory Note
dated June 26, 2003 (“Amendment No. 2) and Amendment No. 3 to Promissory Note
dated June 24, 2004 (“Amendment No. 3). Amendment No. 1, among other changes,
increased the maximum amount of the Note to THREE MILLION EIGHT HUNDRED NINETY
THOUSAND THIRTY SEVEN AND 09/100 DOLLARS ($3,890,037.09). The Original Note,
Amendment No. 1 Amendment No. 2 and Amendment No. 3 are collectively referred to
herein as the “Note.”

 

B. Maker has requested that Holder (1) extend the maturity date of the Note to
July 1, 2006, and (2) execute a Subordination and Release Agreement (the
“Subordination Agreement”) subordinating Holder’s security interest in Maker’s
accounts receivable and inventory to Maker’s granting of a security interest in
Maker’s accounts receivables and inventory (the “Security Agreement”) in favor
of Northrim Funding Services, a division of Northrim Bank (“Northrim”), to which
requests Holder has agreed upon the terms and conditions set forth below.

 

NOW, THEREFORE, the parties hereto, in consideration of their mutual promises
contained herein and for other good and valuable consideration, hereby agree to
amend the Note as follows:

 

AGREEMENT

 

1. The paragraph on page 3 of the Original Note which began with the sentence
“This Note evidences a revolving line of credit” and which was replaced with
Section 3 of Amendment No. 2 is hereby deleted in its entirety so that the Note
no longer evidences a revolving line of credit and Maker acknowledges that Maker
is not entitled to any additional advances under the Note.

 

2. Sections 3 through 9 of Amendment No. 1 are hereby deleted in their entirety
effective upon Holder’s delivery of this Amendment No. 4 to Maker.

 

3. On or before June 24, 2005, Maker shall make an additional principal payment
of $224,632.79 so that the outstanding principal balance under the Note is
$1,300,000.00.

 

4. Maker shall continue to pay all interest accrued under the Note on a monthly
basis on the first (1st) day of each calendar month and Maker shall continue to
make monthly principal payments of Seventy Thousand and 00/100 Dollars
($70,000.00) on the first day of each calendar month until this Note has been
paid in full.

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5. Notwithstanding anything to the contrary contained in the Note, the maturity
date of the Note is hereby extended to July 1, 2006, on which date any
outstanding principal balance under the Note, together with any accrued, but
unpaid, interest, shall be due and payable in full in the form of a balloon
payment.

 

6. By their execution of counterparts to this Amendment No. 4, Guarantors
hereby: (a) approve the foregoing, (b) agree that nothing contained herein shall
in any way terminate or reduce their guaranties, (c) subordinate their security
interest in the Collateral to the security interest of Holder which secures
repayment of the Note, as amended by Amendment No. 1, Amendment No. 2, Amendment
No. 3 and this Amendment No. 4, (d) agree that the “Indebtedness” (as defined in
each of their guaranties) includes all amounts owed Lender under the Note,
Amendment No. 1, Amendment No. 2, Amendment No. 3 and this Amendment No. 4, and
(e) consent to Maker granting a security in Maker’s accounts receivable and
inventory in favor of Northrim and Holder subordinating its security interest in
said collateral to the security interest granted Northrim under the Security
Agreement.

 

7. Except as set forth in this Amendment No. 4, the Original Note, Amendment No.
1, Amendment No. 2 and Amendment No. 3 shall remain in full force and effect as
originally executed by Maker and Lender.

 

8. This Amendment No. 4 may be executed in any number of original counterparts,
each of which shall be deemed an original, but all of which when taken together
shall constitute one and the same instrument.

 

MAKER:

 

TULLY’S COFFEE CORPORATION

 

By:  

/s/ Kristopher S. Galvin

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Name:   Kristopher S. Galvin Title:   Executive Vice President and CFO

 

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LENDER:

 

KENT CENTRAL, L.L.C.

 

By:  

/s/ Larry R. Benaroya

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Name:   Larry R. Benaroya Title:   Manager

 

GUARANTORS:

 

/s/ Richard Padden

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Richard Padden

 

/s/ Laurie Padden

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Laurie Padden

 

/s/ Tom T. O’Keefe

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Tom T. O’Keefe

 

/s/ Cathy O’Keefe

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Cathy O’Keefe

 

/s/ Ron Neubauer

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Ron Neubauer

 

/s/ Linda Neubauer

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Linda Neubauer

 

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/s/ George Hubman

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George Hubman

 

/s/ Carolyn Hubman

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Carolyn Hubman

 

/s/ Larry Hood

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Larry Hood

 

/s/ Ritchie Hood

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Ritchie Hood

 

/s/ Marc Evanger

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Marc Evanger

 

/s/ Heidi Evanger

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Heidi Evanger

 

/s/ Kevin Fortun

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Kevin Fortun

 

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