Exhibit 10.6




 




FIRST AMENDMENT TO EMPLOYMENT AGREEMENT




 




 




THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT is entered

into as of the 3rd day of December, between ANTHONY J. GIOIA (“Executive”), and

TULLY’S COFFEE CORPORATION, a Washington corporation (“Tully’s”).




 




RECITALS




 




A.            Tully’s

and Executive are parties to that certain Tully’s Coffee Corporation Employment

Agreement dated May 13, 2002 (the “Original Employment Agreement”), setting

forth the terms and conditions of Executive’s employment with Tully’s.




 




B.            The

parties desire to amend the Original Employment Agreement to reflect certain

changes in the terms and conditions of Executive’s employment with Tully’s.




 




AGREEMENT




 




NOW, THEREFORE, in consideration of the foregoing, and

for other good and valuable consideration, the receipt and sufficiency of which

is hereby acknowledged, the parties hereto agree as follows:




 




1)            Definitions.           All capitalized terms

used herein and not otherwise defined shall have the meanings assigned to such

terms in the Original Employment Agreement.




 




2)            Amendments

to Original Employment Agreement.  Effective as of the date set forth above,

the Original Employment Agreement is hereby amended as follows:




 




2.1           A

new Section 3(i) is hereby added to the Original Employment Agreement reading as

follows:




 




i.              Housing

Allowance.   Commencing

on December 1, 2002 and continuing on December 1, 2003 and December 2004

(provided that this Agreement is still in effect on such dates), Executive

shall be paid an annual housing allowance of $10,000  (the “Housing Allowance”). 

Each such payment of the Housing Allowance shall be considered a

prepayment for the twelve month period following such payment date.  In the event that this Agreement is

terminated either (a) for cause by Tully’s under Section 5(c), or (ii)

voluntarily by Executive under Section 5(e), Executive shall be obligated to

repay to Tully’s a pro-rated portion of the Housing Allowance covering the

unearned portion of the Housing Allowance.




 




 




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2.2           Section

6(b) of the Original Employment Agreement is hereby amended and restated to

read as follows:




 




b.             Termination

of Executive’s Employment Without Cause or By Executive for Good Reason.




 




                (1)  In the

event that, during the twelve-month period ending on the first anniversary of

the Commencement Date,  Executive’s

employment with Tully’s is terminated by Tully’s Without Cause in accordance

with Section 5(d) or by Executive for Good Reason in accordance with Section

5(f),  Executive shall be entitled

to receive (a) Executive’s first year Base Salary for an additional one-year

period following the termination date of Executive’s employment, with such Base

Salary to paid out monthly in accordance with Tully’s payroll practices as in

effect from time to time; (b) full vesting with respect to 225,000 of the Grant

1 Stock Options; and (c) payment by Tully’s to Executive of $100,000 less the

aggregate amount of all Housing Allowance payments made under Section 3(i).




 




                (2)  In the

event that, during the twelve-month period ending on the second anniversary of

the Commencement Date, Executive’s employment with Tully’s is terminated by

Tully’s Without Cause in accordance with Section 5(d) or by Executive

for Good Reason in accordance with Section 5(f),  Executive shall be entitled to receive (a)

Executive’s second year Base Salary for an additional fifteen months following

the termination date of Executive’s employment, with such Base Salary to be

paid out monthly in accordance with Tully’s payroll practices as in effect from

time to time; (b) full vesting with respect to an aggregate total of 300,000 of

the Grant 1 Stock Options; and (c) 

payment by Tully’s to Executive of $100,000 less the aggregate amount of

all Housing Allowance payments made under Section 3(i).




 




                (3)  In the

event that, Executive’s employment with Tully’s is terminated by Tully’s

Without Cause in accordance with Section 5(d) or by Executive for Good

Reason in accordance with Section 5(f) at any time after the second

anniversary of the Commencement Date, Executive shall be entitled to receive

(a) Executive’s Base Salary (in the year during which the termination occurs)

for an additional eighteen months following the termination date of Executive’s

employment, with such Base Salary to be paid out monthly in accordance with

Tully’s payroll practices as in effect from time to time; (b) ratable vesting

(based on the portion of the third year worked by the Executive prior to the

effective date of such termination) of the remaining 150,000 unvested Grant 1

Stock Options, and (c)  payment by

Tully’s to Executive of $100,000 less the aggregate amount of all Housing

Allowance payments made under Section 3(i).




 




 




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The payments and vesting rights described in Sections

6(b) (1)-(3) above are conditioned upon Executive’s execution and delivery

to Tully’s of a full and complete written release (the “Release”) of any and

all other claims the Executive may have against the Company in form and

substance acceptable to the Company.  If

Executive fails to deliver the Release in a timely manner, Tully’s shall have

no obligation to make the payments or grant early vesting as to any of the

Stock Options as described in Sections 6(b)(1)-(3) above.




 




2.2           Section

7 of the Original Employment Agreement is hereby amended to add the following

additional sentences:




 




In the event of a Change in Control, Executive

shall also be entitled to receive a one-time payment of $100,000 less the

aggregate amount of all Housing Allowance payments made under Section 3(i) (the

“Change in Control Payment”).  If a  Change in Control Payment is made, Tully’s

shall (a) have no further obligation to make any such payment on any Change in

Control occurring thereafter, and (b) be relieved of any obligation to make the

payments described in Sections’ 6(b)(1)(c), 6(b)(2)(c) and 6(b)(3)(c) above.




 




2.3           Section

8 of the Original Employment Agreement is hereby amended and restated to read

as follows:




 




8.             Relocation.   Tully’s shall

reimburse Executive for 100% of the normal closing costs and expenses (but not

including any loss on sale or the payment of the actual sales purchase price)

incurred in connection with (i) the sale of Executive’s current personal

residence in Phoenix, Arizona, and (2) the purchase by Executive of a personal

residence in Seattle, Washington. 

Tully’s shall also reimburse Executive for (a) 100% of Executive’s

actual temporary residential living expenses in Seattle, Washington (not to

exceed $2,500 per month) for up to but not exceeding the earlier of six months

after the Commencement Date or the date upon which Executive closes on the

purchase of a personal residence in Seattle, Washington; (b) the cost of moving

two personal vehicles from Phoenix, Arizona to Seattle, Washington; and (c) the

cost of up to two round trip tickets for each of Executive and his spouse

between Phoenix, Arizona and Seattle, Washington  related to Executive’s initial move to Seattle.




 




 




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3.             Remainder of Original Employment

Agreement Remains in Full Force and Effect. 

Except as specifically amended by this First

Amendment, the Original Employment Agreement shall remain in full force and

effect.




 




4.             Miscellaneous.




 




4.1          Governing

Law.  This First Amendment shall be governed by, construed and enforced

in accordance with the internal laws of the state of Washington, without giving

effect to principles and provisions thereof relating to conflict or choice of

laws.




4.2          Attorneys’

Fees.  In the event that suit is brought to interpret or enforce any

term or provision of this First Amendment, the prevailing party in any such

suit or proceeding shall, in addition to any other relief to which such party

may be entitled, be awarded its costs and attorneys’ fees reasonably and actually

incurred.




 




4.3          Interpretation.  This First Amendment is the

result of negotiations between the parties and, accordingly, shall not be

construed against for or against either party regardless of which party drafted

this First Amendment or any portion thereof.




 




4.4          Counterparts.  This First Amendment may be

executed in counterparts, each of which shall be deemed an original, but all of

which together shall constitute one and the same instrument.




 




 




IN WITNESS WHEREOF, the parties have hereunto set

their hands the day and year first set forth above.




 




 




	

  EXECUTIVE:


  	

   


  	

  TULLY’S:


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  TULLY’S COFFEE CORPORATION


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  /s/ Anthony J. Gioia


  	

   


  	

  By


  	

  /s/ Tom T. O’Keefe


  
	

  Anthony J. Gioia


  	

   


  	

  Tom T. O’Keefe


  Its Chairman of the Board of Directors


  
					





 




 




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