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Prepared by MERRILL CORPORATION

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TULLY'S COFFEE LICENSE AGREEMENT    
  

[*—Material
has been omitted pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. The redacted material has been filed separately with the Securities and Exchange Commission.] 

        THIS
AGREEMENT, effective as of the 26th day of April, 2001, is entered into between TULLY'S COFFEE CORPORATION, a Washington corporation, doing business at 3100 Airport Way South,
Seattle, Washington 98134 U.S.A. ("Licensor"), and TULLY'S COFFEE JAPAN a company organized under the laws of Japan, doing business at 3-4-1 Takanawa, Minato-ku,
Tokyo Japan ("Licensee"). 

RECITALS  

        A.    Licensor is in the business of developing and operating specialty stores featuring coffee drinks and other beverages and a light food menu for on
and off premises consumption and which offer retail sales of whole beans and ground coffee, tea, herbal teas, and related goods (referred to herein as a "Tully's Store" or as "Tully's Stores"). 

        B.    Tully's
Stores are operated with uniform design, formats, signs, equipment, layout, systems, and procedures utilizing the know-how, confidential business
information and proprietary tradedress and designs of Licensor. 

        C.    Licensor
owns rights in, and uses, promotes and licenses, certain business names and trademarks for services relating to such stores and trademarks for goods sold through
such stores including without limitation the business names shown in Schedule A (the "Business Names"), the trademarks for services and
trademarks for goods shown in Schedule B (the "Trademarks"). 

        D.    By
virtue of that certain Exclusive Licensing Agreement entered into as of August 1, 1997, between Licensor and Loco Trading Co., Ltd., Licensee currently
engages in the operation of Tully's Stores in Japan, by itself and through franchisees. By entering into this Agreement, Licensor and Licensee desire to set forth revised terms and conditions under
which Licensee is entitled to an exclusive license to use Licensor's know how, trade secrets, proprietary information and designs, Business Names, and Trademarks in association with the operation of
Tully's Stores in Japan (referred to herein as the "Territory"). 

        E.    Simultaneous
with the execution of this Agreement, the parties have agreed to enter into a Supply Agreement with respect to the purchase and sale of certain products to
be used in connection with the operation of Tully's Stores in the Territory (the "Supply Agreement"). 

        NOW,
THEREFORE, in consideration of the covenants and obligations of this agreement and for other good and valuable consideration, the parties hereto have agreed with each other as
follows: 

        1.        Grant of License.    During the term of this Agreement, Licensor hereby grants to Licensee the
exclusive license to operate Tully's Store's in the Territory and to use such Tully's Store designs, formats, signs, equipment, layout, systems, procedures, copyrights, know how, the Business Names,
and the Trademarks in the Territory (collectively, the "Rights") only in connection with the operation of retail Tully's Stores in the Territory on the terms and conditions stated herein. The Rights
include the rights to utilize in the Territory the present and future names and marks used by Licensor in its operations of Tully's Stores whether registered or unregistered. 

        2.        No Sublicensing; Franchises.    Except as set forth below with respect to franchisees, Licensee
may not sublicense the rights conferred upon Licensee by this Agreement. Notwithstanding the above and subject to the conditions stated below, Licensee may enter into franchise agreements with
franchisees pursuant to which Licensee may grant the right to use the Rights in the Territory to a franchisee. Except as to the existing franchise arrangements with the parties listed on  Schedule C

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hereto, no such franchise arrangement shall be entered into with a franchisee unless and until Licensor approves of such franchisee, which approval shall not be unreasonably be withheld or delayed.
The parties acknowledge one condition to any such approval by Licensor shall be that such franchise arrangement shall be governed by a written franchise agreement acceptable to Licensor. Such written
franchise agreement shall, if requested by Licensor, include Licensor as a party thereto solely for the purposes of maintaining a direct right to enforce Licensor's Standard Specifications and other
specifications and requirements with respect to the use of the Rights by such franchisee. Unless otherwise agreed to in writing by Licensor, all such franchise arrangements (including all existing
franchisees listed on the attached Schedule C) shall provide that each franchisee shall pay a royalty fee of
[    *    ] on all net revenues (as defined below) with [    *    ] of such royalty payable to Licensor (the
"Licensor Franchise Royalty Fee"). As used in this Agreement, the term "net revenues" shall mean and include the actual gross charges for all products and services of any kind or nature sold in
connection with the Tully's Business Names or Trademarks, for cash or credit through any business conducted by any franchisee, but excluding sales, use, service, or excise taxes collected from
customers and paid to the
appropriate taxing authority. The Licensor Franchise Royalty Fee shall be payable on or before the end of the month following the month in which the net revenues were generated. 

        3.        No Wholesale Rights.    Nothing in this Agreement shall be deemed to grant or license to Licensee
any rights whatsoever with respect to the use of the Rights in connection with wholesale or other distribution of products in the Territory or any other location (other than retail sales made in
connection with the operation of Tully's Stores in the Territory). 

        4.        Operation and Development of Stores.    Licensor will furnish to Licensee standard basic plans and
specifications for Tully's Store's (the "Standard Specifications") for use in the Territory, including specifications for general interior design, color schemes, finish materials, furniture, equipment
and signs. Licensee agrees that all Tully's Stores in the Territory (including any franchised Tully's Stores) shall materially comply with Licensor's Standard Specifications as adopted by Licensor
from time to time. Notwithstanding the foregoing, Licensee Tully's Stores may be modified to the extent necessary to comply with applicable ordinances, building codes, permit requirements, and lease
or deed requirements and restrictions. 

        5.        Equipment, Fixtures and Signs.    Licensee agrees to use in the operation of each Tully's Store in
the Territory only such equipment, fixtures, furniture and signs that are consistent with Licensor's Standard Specifications. Licensee further agrees to place or display at the premises of each such
Store (interior and exterior) only such signs, emblems, logos, lettering, and display materials that are consistent with Licensor's Standard Specifications 

        6.        Training and Operating Assistance.  

         a.        Initial Training.    Upon request of Licensee, which request may be made from time to
time, Licensor shall train one or
more Licensee managers in the operation of a Tully's Store. Training shall be conducted at Licensor's training headquarters at a time which is mutually acceptable to the parties. Licensee shall bear
the cost of any travel and living expenses incurred in connection with such training. 

        b.        Hiring and Training of Employees by Licensee.    Licensee shall hire all employees of each Tully's
Store owned by Licensee in the Territory, and shall be exclusively responsible for the terms of their employment and compensation and for the proper training of such employees in the operation of a
Tully's Store. 

        c.        Consulting Assistance.    Licensor shall be available at mutually convenient times to consult with
Licensee from time to time with respect to general operating issues related to any Tully's Store in the Territory, including without limitation any problems or deficiencies disclosed by reports
submitted to or inspections made by Licensor related to Tully's Stores in the Territory. 

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        d.        Semi-Annual Meetings.    Licensor and Licensee agree that the parties shall meet at
least semi-annually to review the status of the operations of the Licensee Tully's Stores and Licensor's operation and licensing of Tully's Stores in the United States and elsewhere. The
first such meeting shall take place at a location to be designated by Licensee. Thereafter, Licensor and Licensee shall take turns designating the location of such annual meetings. 

        7.            Store Image and Operating Standards.  

         a.        Condition and Appearance of Stores.    Licensee agrees to maintain the condition and
appearance of each Licensee Tully's
Store consistent in all material respects with the image of a Licensor owned and operated Tully's Stores with each Licensee Tully's Store as an attractive, modern, sanitary, convenient, and
efficiently operated store selling premium, high quality products and service. Licensee agrees to effect such maintenance of each Licensee Tully's Store as is reasonably required from time to time to
maintain such condition, appearance, and efficient operation, including, without limitation, replacement of worn out or obsolete equipment, fixtures, furniture, and signs; repair of the interior and
exterior of such Stores. If at any time in Licensor's commercially reasonable judgment, the general state of repair, appearance, or cleanliness of the premises of a Licensee Tully's Store or its
equipment, fixtures, furniture, signs, or decor does not meet Licensor's standards therefore, Licensor shall so notify Licensee, specifying the action to be taken by Licensee to correct such
deficiency. 

        b.        Authorized Products and Services.    The presentation of a uniform image to the public and the
furnishing of uniform products and services are an essential element of the Tully's Store system and brand concept. Licensee therefore agrees that each Licensee Tully's Store will offer only
beverages, food, and other products and services that are consistent in all material respects with the Tully's Store concept as announced from time to time by Licensor. 

        c.        Food and Beverage Products, Supplies, and Materials.    The reputation and goodwill of the Tully's
Store system is based upon, and can be maintained and enhanced only by, the sale of consistent, quality products and the rendering of fast, efficient, consistent and quality service. Licensee
therefore agrees that, unless otherwise agreed by the parties in writing, all beverages and food products, cooking materials, containers, packaging materials, other paper and plastic products,
glassware, utensils, uniforms, menus, forms, cleaning and sanitation materials, and other supplies and materials used in the operation of Licensee Tully's Stores shall conform to Licensor's
specifications and quality standards as established by Licensor from time to time. 

        d.        Use of Materials Imprinted With Trademarks.    Licensee shall in the operation of each Tully's
Store in the Territory use containers, napkins, uniforms, packaging, and other forms and materials imprinted
with the Trademarks as prescribed and used from time to time by Licensor with respect to its operation of Tully's Stores in the U.S. 

        8.        Specifications, Standards, and Procedures.    Licensee agrees to comply with Licensor's
specifications, standards and general procedures for the operation of Tully's Stores including without limitation the following: 

        a.        Recipes, quality of ingredients, portions, and methods and procedures relating to the storage, handling,
preparation, and serving of beverages and food; 

        b.        Safety, maintenance, cleanliness, sanitation, function, and appearance of each Tully's Store premises and
its equipment, fixtures, furniture, and signs; 

        c.        Uniforms to be worn by and general appearance of Store employees; 

        d.        Use of Business Names and Trademarks; 

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        All
such specifications, standards, and operating procedures shall be reasonable and consistent with the obligations of Licensee under the lease or deed for the premises of each Licensee
Tully's Store and applicable laws and ordinances. 

        9.        Compliance with Laws and Good Business Practices.    Licensee shall secure and maintain in force
all required licenses, permits, and certificates relating to the operation of each Licensee Tully's Store and shall operate each such Store in full compliance with all applicable laws, ordinances, and
regulations. Licensee agrees to refrain from any business or advertising practice which may be injurious to the business of Licensor and the goodwill associated with the Business Names and Trademarks
and Tully's Stores. Licensor agrees to refrain from any business or advertising practice, which may be injurious to the business of Licensee or Licensee's use of the Rights in compliance with this
Agreement. 

        10.      Management of Stores—Conflicting and Competing Interests.    All
non-franchised stores in the Territory shall at all times be under the direct, on-premises supervision of Licensee or a trained and competent employee thereof. Licensee agrees
to use its best efforts to promote and enhance the business of the Tully's Stores in the Territory, and that it will not engage in any business or other activity that will conflict with its
obligations hereunder. Licensee further agrees that during the term of the License, it
will not have any interest as an owner, director, officer, employee, consultant, representative, or agent, or in any other capacity, in any other business having as a principal product coffee
beverages. 

        11.      Deviation From Licensor's Standards.    Licensor acknowledges that in order to better cater to
customers in Japan, it may sometimes be advisable for Licensee to deviate from the Standard Specifications or other of Licensor's specifications, standards or instructions with which Licensee is
required to comply under this Agreement. Notwithstanding anything to the contrary in this Agreement, such deviation shall not constitute a breach of this Agreement if such deviation is not material
and does not adversely affect the image of Licensor, Tully's Stores, Business Names or Trademarks; provided, however, that after good faith consultation with Licensee, Licensor is entitled to order
Licensee in writing to correct such deviation, whereupon Licensee is obligated to do so and its failure to do so shall constitute a breach of this Agreement. 

        12.      Indemnification.    Licensee agrees to indemnify, defend and hold harmless Licensor and all of
its shareholders, directors, officers, employees and representatives from and against all claims, lawsuits, fines, penalties or damages of any kind (collectively, "Damages") of any kind whatsoever
arising out of or related to Licensee's use of the Business Names or Trademarks or operation of Tully's Stores in the Territory, except to the percentage extent that any such Damages are caused by
Licensor's own acts or omissions to act. 

        13.      Trade Secrets of Licensor.    Licensee acknowledges that its knowledge of the operation of a
Tully's Store will be derived from information disclosed to Licensee by Licensor pursuant to the License and that certain of such information, including without limitation all recipes and Licensor's
Standard Specifications is proprietary, confidential, and a trade secret of Licensor. Licensee agrees that Licensor will maintain the absolute confidentiality of all such information during and after
the term of the License, and that they will not use any such information in any other business or in any manner not specifically authorized or approved in writing by Licensor. 

        14.      Business Names and Trademarks.  

         a.        Ownership of Names and Marks.    Licensee acknowledges and agrees that Licensor is the
owner of all Business Names and
Trademarks licensed to Licensee by this Agreement, that Licensee's right to use the Business Names and Trademarks is derived solely from this Agreement and is limited to the operation of Licensee
Tully's Stores in the Territory and the right to enter into franchise arrangements as provided for in Section 2 of this Agreement. Licensee agrees that 

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all usage of the Business Names and Trademarks by Licensee and any goodwill established thereby shall inure to the exclusive benefit of Licensor. Licensee further agrees that after the termination or
expiration of the License, Licensee will not directly or indirectly at any time or in any manner identify itself or any other business operation of Licensee as a Tully's Store, a former Tully's Store,
or as a Licensee of or otherwise associated with Licensor, or use in any manner or for any purpose any Business Name or Trademark or other indicia of a Tully's Store. 

        b.        Limitations on Licensee's Use of Business Names and Trademarks.    Licensee agrees to use the
Business Names and Trademarks as the sole service mark and trademark and trade name identification of each Licensee Tully's Store. 

        15.      Reporting Requirements.    During the term of this Agreement, Licensee shall furnish to Licensor
(i) monthly reports setting forth the total number of Tully's Stores in the Territory, new store openings, net revenues and comparable store sales for Tully's Store in the Territory ("Quarterly
Reports"); (ii) Licensor's annual business and financial plan (supplemented with any updates or changes thereto) and (iii) Licensee's annual financial statements within 120 days
of the end of Licensee's fiscal year. 

        16.      Licensor's Right to Inspect Stores.    To determine whether Licensee is complying with this
Agreement, Licensor shall have the right, at any time during business hours and without prior notice to Licensee, to inspect any of the Licensee Tully's Stores. 

        17.      Termination of License.  

         a.        By Licensee.    Licensee may terminate this Agreement effective upon delivery of notice
of termination to Licensor, if
Licensor: 

        (1)      Breaches
this Agreement, while Licensee is in substantial compliance with this Agreement, and fails to cure such breach within thirty (30) days
after written notice thereof is delivered to Licensor; 

        (2)      Makes
an assignment for the benefit of creditors or an admission of its inability to pay its obligations as they become due; or 

        (3)      Files
or has filed against it a petition in bankruptcy or any similar proceeding or files any pleading seeking any reorganization, liquidation, or
dissolution under any law, or admits or fails to contest the material allegations of any such pleading filed against it, or is adjudicated a bankrupt or insolvent, or a receiver is appointed for a
substantial part of the assets of Licensor, or the claims of creditors of Licensor are abated or subject to a moratorium under any law. 

        b.        By Licensor.    Licensor may terminate this Agreement effective upon delivery of notice of
termination to Licensee, if Licensee: 

        (1)      Makes
an assignment for the benefit of creditors or an admission of its inability to pay its obligations as they become due; 

        (2)      Files
or has filed against it a petition in bankruptcy or any similar proceeding or files any pleading seeking any reorganization, liquidation, or
dissolution under any law, or admits or fails to contest the material allegations of any such pleading filed against it, or is adjudicated a bankrupt or insolvent, or a receiver is appointed for a
substantial part of the assets of Licensee, or the claims of creditors of Licensee are abated or subject to a moratorium under any law; 

        (3)      Makes
an unauthorized assignment of Licensee's rights under this Agreement; 

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        (4)      Fails
or refuses to pay any amount owed to Licensor for products purchased from Licensor, or any amounts otherwise due to Licensor, or fails or refuses to
comply with any mandatory specification, standard, or operating procedure prescribed by Licensor relating to recipes, quality of beverage or food products, methods and procedures for preparing and
serving food products, cleanliness, or sanitation, and does not correct such failure or refusal within seven (7) days after written notice thereof (which shall describe the corrective action
that Licensee must take) is delivered to Licensee; provided that if such failure cannot reasonably be corrected within seven (7) days, to initiate within such seven-day period and
thereafter continue such action as will correct such failure within a reasonable time; or 

        (5)      Fails
to comply with any other provision of this Agreement or any other mandatory specification, standard, or operating procedure prescribed by Licensor,
and does not correct such failure within thirty (30) days after written notice of such failure to comply (which shall describe the action that Licensee must take) is delivered to Licensee,
provided that if such failure cannot reasonably be corrected within thirty (30) days, to initiate within such thirty-day period and thereafter continue such action as will correct
such failure within a reasonable time. 

        (6)      Fails
to comply with any provision of and/or breaches any of Licensee's obligations under the Supply Agreement, and does not correct such breach, failure
or refusal within seven (7) days after written notice thereof (which shall describe the corrective action that Licensee must take) is delivered to Licensee; provided that if such failure cannot
reasonably be corrected within seven (7) days, to initiate within such seven-day period and thereafter continue such action as will correct such failure within a reasonable time. 

        18.      Licensee's Obligation upon Termination or Expiration.  

         a.        Payment of Amounts Owed to Licensor.    Licensee agrees to pay to Licensor within
fifteen (15) days after the
effective date of termination or expiration of the License all such amounts owed for products purchased by Licensee from Licensor, and all other amounts owed to Licensor, which are then unpaid. 

        b.        Return of Information.    Licensee further agrees that upon termination of the License, it will
immediately return to Licensor all copies of any manuals, recipes, specifications, menus, software, records or documents of any kind (in any form of media) delivered to Licensee by Licensor during the
term of the License. 

        c.        Cancellation of Assumed Names.    Licensee further agrees that upon termination or expiration of
the License, it will take such action as may be required to cancel all assumed name or equivalent registrations relating to its use of any Business Name or Trademark. 

        d.        Continuing Obligations.    All obligations of Licensor and Licensee which expressly, or by their
nature, survive the expiration or termination of the License shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of the License under this Agreement
and until they are satisfied in full or by their nature expire. 

        19.      Assignment, Transfer, and Encumbrance.  

        a.        By Licensor.    This Agreement may be assigned by Licensor and shall inure to the benefit
of any assignee or other legal
successor to the interest of Licensor herein. 

        b.        Licensee May Not Assign Without Approval of Licensor.    Licensee shall not, without the prior
written consent of Licensor (which consent may be granted or withheld in Licensor's sole discretion), voluntarily, involuntarily, directly, or indirectly assign, transfer or sell all or any part of
Licensee's rights under this Agreement. Notwithstanding the above, Licensee may enter into franchise arrangements in accordance with the conditions set forth in Section 2 above. 

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        20.      Enforcement.  

        a.        Judicial Enforcement, Injunction, and Specific Performance.    Notwithstanding
Section 19 b., Licensor shall have
the right to elect to seek injunctive or equitable relief as provided for in this Section 19 a. in the state or federal courts situated in Seattle, Washington, USA (and/or in any appellate
court
therefrom). The parties each consent to jurisdiction in such courts, waive objection to such venue, waive trial by jury. The parties stipulate and agree that any judgment relating to this Agreement
which is entered in a court located within the State of Washington shall be binding throughout the world and may be sued upon, docketed, entered and/or enforced, without challenge or opposition on
their part and without re-trial of any of the issues which gave rise to such judgment, in any state, country, province, commonwealth or territory having jurisdiction over their respective
persons or properties. Licensor shall be entitled, without bond, to the entry of temporary and permanent injunctions and orders of specific performance enforcing the provisions of this Agreement
relating to Licensee's use of the Business Names and Trademarks, the obligations of Licensee upon termination or expiration of this Agreement and assignment of the License and ownership interests in
Licensee, and to prohibit any act or omission by Licensee that constitutes a violation of any applicable law, ordinance, or regulation, is dishonest or misleading to customers or prospective customers
of any Licensee Tully's Store, constitutes a danger to employees or customers of the Store or to the public, or may impair the goodwill associated with the Business Names and Trademarks and Tully's
Stores. If Licensor secures any such injunction or order of specific performance, Licensee agrees to pay to Licensor an amount equal to the aggregate of its costs of obtaining such relief, including
without limitation reasonable attorney and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses, and travel and living expenses, and any damages
incurred by Licensor as a result of the breach of any such provision. 

        b.    Arbitration.    Except insofar as Licensor elects to enforce this Agreement by judicial process, injunction, or
specific performance as hereinabove provided, all disputes and claims relating to any provision hereof, any specification, standard, or operating procedure, or any other obligation of Licensee
prescribed by Licensor, or any obligation of Licensor, or the alleged breach thereof (including without limitation any claim that this Agreement, any provision thereof, any specification, standard, or
operating procedure, or any other obligation of Licensee or Licensor, is illegal or otherwise unenforceable or voidable under any law, ordinance, or ruling) shall be settled by arbitration at Seattle,
Washington, under the U.S. Arbitration Act (9 U.S.C. §§ 1 et seq.), if applicable, and the Rules of the American Arbitration Association (relating to the arbitration of
disputes arising under License and license agreements, if any, otherwise the general rules of commercial arbitration), provided that the arbitrator shall award, or include in his award, the specific
performance of this Agreement unless he determines that performance is impossible. Judgment upon the award of the arbitrator may be entered in any court having jurisdiction thereof or over Licensor or
Licensee. 

        21.      Severability and Substitution of Valid Provisions.    All provisions of this Agreement are
severable, and this Agreement shall be interpreted and enforced as if all completely invalid or unenforceable provisions were not contained herein, and partially valid and enforceable provisions shall
be enforced to the extent valid and enforceable. If any applicable and binding law or rule of any jurisdiction requires a greater prior notice of the termination of or refusal to renew this Agreement
than is required hereunder, or the taking of some other action not required hereunder, or if under any applicable and binding law or rule of any jurisdiction, any provision of this Agreement or any
specification, standard, or operating procedure prescribed by Licensor is invalid or unenforceable, the prior notice and/or other action required by such law or rule shall be substituted for the
notice requirements hereof, or such invalid or unenforceable provision, specification, standard, or operating procedure shall be modified to the extent required to be valid and enforceable. Such
modifications to 

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this Agreement shall be effective only in such jurisdiction and shall be enforced as originally made and entered into in all other jurisdictions. 

        22.      Licensee May Not Withhold Payments Due Licensor.    Licensee agrees that on grounds of the
alleged non-performance by Licensor of any of its obligations hereunder, it will not withhold payment of any royalty and service fees, amounts due to Licensor for products purchased by
Licensee, or any other amounts due Licensor. Except insofar as Licensor elects to enforce this Agreement by judicial process, injunction, or specific performance as hereinabove provided, all such
claims by Licensee, if not otherwise resolved by Licensor and Licensee, shall be submitted to arbitration as provided in Section 19 b. 

        23.      Rights Of Parties Are Cumulative.    The right of Licensor and Licensee hereunder are cumulative,
and no exercise or enforcement by Licensor or Licensee of any right or remedy hereunder shall preclude the exercise or enforcement by Licensor or Licensee of any other right or remedy hereunder, or
which Licensor or Licensee is entitled by law to enforce. 

        24.      Goodwill, Trademark and Business Name Protection, Third Party Litigation, Cessation of Use.  

         a.        Licensee agrees and admits to the high value of the notoriety, reputation and goodwill associated with the
Trademarks and Business
Names. Licensee acknowledges Licensor's right, title and interest in and to the Trademarks and Business Names in the Territory and elsewhere. Licensee further acknowledges that the Trademarks and
Business Names have acquired distinctiveness/secondary meaning and have an established identity in the mind of the trade and the purchasing public. 

        b.        Licensee will not at any time do or cause to be done any act or thing contesting or in any way impairing or
intending to impair any part of the such right, title and interest of Licensor in the Trademarks and Business Names and the distinctiveness of the Trademarks and Business Names. 

        c.        Except as expressly provided for in this Agreement, Licensee shall not in any manner represent that it has
any ownership in the Trademarks or Business Names, application for the registration thereof or registration thereof, and Licensee acknowledges that the use of the Trademarks and Business Names shall
not create in Licensee's favor any right, title or interest in or to the Trademarks, but all uses of the Trademarks and Business Names shall inure to the benefit of Licensor. 

        d.        To the extent that the ownership of any rights in the Trademarks and Business Names becomes established in
Licensee, whether by operation of law or otherwise, Licensee agrees to execute such assignments and other documents as Licensor may reasonably request to transfer such rights to Licensor, provided
that no such assignments or other documents in any way affect or limit Licensee's exclusive license to use the rights conferred under this Agreement. In addition, this Section 22 d shall not
apply to a transfer of rights in the Business Names and Trademarks pursuant to a foreclosure of the security interest granted pursuant to Section 21 below. 

        e.        Licensor retains the right to protect the Trademarks and Business Names from infringement and to prosecute
infringers. Licensor has the right to bring suit for infringement of the Trademarks and Business Names without joining Licensee. Licensor has the right to control all actions against infringers and to
resolve such matters whether by settlement or suit. If Licensee becomes aware of any infringement of the Trademarks or Business Names, it shall notify Licensor in writing. Licensee shall cooperate
with Licensor by promptly supplying, at a reasonable cost, assistance and information reasonably considered necessary by Licensor for settlement or suit. 

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        f.          Licensee agrees not to use the Trademarks or Business Names in association with any goods or services or
business except as expressly provided in this Agreement or other written authorization by Licensor. 

        g.        Licensee agrees not to adopt, use, apply to register or register anywhere any trademark or Business Names,
service mark or business name which is confusingly similar to the Trademarks or which contain the designations "TULLY" or "TULLY'S", without regard to the nature of the associated goods, services or
business either during the term of Licensee or thereafter. 

        25.      Term.    The term of this Agreement shall commence on the date set forth above and continue for a
period of five years (the "Initial Term"). Provided that Licensee is not then in default of any of its obligations under this Agreement, Licensee shall have the successive right to renew this
Agreement for an additional five year terms (each a "Renewal Term") upon giving Licensor prior written notice of such intention within 90 days of the expiration of the Initial Term or any
Renewal Term, as applicable. 

        26.      Notices.    All notices and requests in connection with this Agreement shall be in writing and
may be given by registered or certified mail, personal delivery or facsimile addressed as follows. 

	

To:	
 	

Tully's Coffee Corporation

3100 Airport Way South

Seattle, WA 98134 U.S.A.

Attn: Mr. Jamie S. Colbourne

Facsimile No. (206) 233-2077
	

with a copy to:	

 	

Carney Badley Smith & Spellman, P.S.

2200 Bank of America Tower

701 Fifth Avenue

Seattle, Washington 98104

Attn: Patrick R. Lamb

Facsimile No. (206) 467-8215
	

To:	

 	

Tully's Coffee of Japan Ltd.

3-4-1 Takanawa, Minato-ku

Tokyo, Japan

Attn: Kouta Matsuda

Facsimile No. 03-5798-8021

or
to such other address as the party to receive the notice or request shall designate by written notice to the other. The effective date of any notice or request shall be five (5) days from
the date on which it is sent by the addressor, or when received when personally delivered or sent by facsimile. 

        27.      Waiver.    The failure of either party to insist in any one or more instances upon strict
performance by the other of its obligations hereunder shall not constitute a waiver or relinquishment of any such obligation for the future, and the obligation shall continue in full force and effect. 

        28.      Governing Law.    This Agreement shall be governed by and construed in accordance with the laws
of the State of Washington, U.S.A. without giving effect to the conflict of law rules or choice of law rules thereof, and by applicable federal law. 

        29.      Warranty of Authority.    All corporate parties hereto and the individuals executing this
Agreement on behalf of said corporations warrant that said corporations have corporate authority to 

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enter into this Agreement and that the individuals executing on behalf of each corporation have the authority to execute this Agreement on behalf of their respective corporation. Licensor and
Licensee each warrant the authority of the individual executing on their behalf and hereby each consents to the execution of this Agreement. 

        30.      Representations as to Corporate Authority.    All corporate parties hereto and the individuals
executing these documents on behalf of said corporations warrant that said corporations have corporate authority to enter into this Agreement and that the individual executing on behalf of each
corporation has the authority to execute this Agreement on behalf of the respective corporation. 

        31.      Headings.    Headings used in this Agreement are for reference purposes only and shall not be
deemed part of this Agreement. 

        32.      Relationship.    The relationship between the parties hereto is that of Licensor and Licensee as
defined in this Agreement, and this Agreement is not to be construed as creating a partnership, joint venture, master-servant, principal-agent, or other relationship for any purpose whatsoever. Except
as may be expressly provided herein, neither party may be held for the acts either of omission or commission of the other party, and neither party is authorized to, or has the power to, obligate or
bind the other party by contract, agreement, warranty, representation or otherwise in any manner whatsoever. 

        33.      Force Majeure.    If either party is delayed or interrupted in or prevented from, the performance
of its obligations hereunder by reason of an act of God, fire, flood, war, public disaster, strikes or labor difficulties, governmental enactment, regulation or order, or any other cause beyond its
control, such party shall not be liable to the other therefor; and the time for the performance of its obligations shall thereupon be extended for a period equal to the duration of the contingency
that occasioned the delay, interruption or prevention. 

        34.      Integration and Modification.    This is the entire agreement between the parties with respect to
the subject matters hereof. For such matters, there are no other agreements or representations not set forth herein, and this Agreement incorporates all prior negotiations, agreements, and
representations. This Agreement may not be modified except in writing signed by each party. 

        35.      Languages.    Both parties acknowledge that this agreement is written in both Japanese and
English. In case of doubt as to the interpretation of any of the provisions of this agreement, the English version shall be controlling. 

        36.      Counterparts.    This Agreement may be signed in one or more counterparts, each of which may be
deemed an original, but all of which together shall constitute one and the same agreement notwithstanding that both parties are not signatories to each counterpart, however, this agreement shall not
be enforceable against any party until a counterpart has been executed by both parties hereto. 

        37.      Waiver of Breach.    The waiver by either party of any breach of this Agreement shall not be
deemed a waiver of any subsequent breach. 

[The
remainder of this page has been left blank intentionally.] 

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Executed
as of the date set forth above. 

	
LICENSOR:	

 
	

TULLY'S COFFEE CORPORATION	

 
	

 	
 	

 	

 
	

By:	
 	

 	

 
	

 	
 	

 Jamie S. Colbourne, its President and CEO	

 
	

 	
 	

 	

 
	

 	
 	

 	

 
	
LICENSEE:	

 
	

TULLY'S COFFEE JAPAN, LTD.	

 
	

 	
 	

 	

 
	

By:	
 	

 	

 
	

 	
 	

                                        
                                , its             	

 

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SCHEDULE A
  TO
  TULLY'S COFFEE LICENSE AGREEMENT    
  

LIST
OF BUSINESS NAMES 

Tully's

Tully's Coffee

Tully's Roaster of Fine Coffee

Swirkle

Tullini

Tullini Sandwiches 

12

 
 
 

SCHEDULE B
  TO
  TULLY'S COFFEE LICENSE AGREEMENT    
  

LIST
OF TRADEMARKS FOR SERVICES AND GOODS 

See
attached Status Report dated February 14, 2001 

13

 
 
 

SCHEDULE C
  TO
  TULLY'S COFFEE LICENSE AGREEMENT    
  

LIST
OF EXISTING FRANCHISEES IN THE TERRITORY: 

Design
Exchange Co., Ltd.

Lightous International Co., Ltd.

Mays & Friends 

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TULLY'S COFFEE LICENSE AGREEMENT

SCHEDULE A TO TULLY'S COFFEE LICENSE AGREEMENT

SCHEDULE B TO TULLY'S COFFEE LICENSE AGREEMENT

SCHEDULE C TO TULLY'S COFFEE LICENSE AGREEMENTPrepared by MERRILL CORPORATION

QuickLinks
 -- Click here to rapidly navigate through this document
  

 
 

FIRST AMENDMENT
  TO TULLY'S COFFEE LICENSE AGREEMENT    
  

[*—Material
has been omitted pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. The redacted material has been filed separately with the Securities and Exchange Commission.] 

        This
First Amendment to Tully's Coffee License Agreement (the "First Amendment") is made this 1st day of October, 2001 by and between TULLY'S COFFEE CORPORATION, a
Washington corporation, doing business at 3100 Airport Way South, Seattle, Washington 98134, U.S.A. ("Licensor"), and TULLY'S COFFEE JAPAN, LTD. a company organized under the laws of Japan,
doing business at 3-4-1 Takanawa, Minato-ku, Tokyo, Japan ("Licensee"). 

RECITALS  

        A.    On April 26, 2001, Licensor and Licensee entered into that certain Tully's Coffee License Agreement (the "License Agreement") that sets
forth the terms and conditions under which Licensee was granted an exclusive license to use, inter alia, Licensor's know-how, trade secrets,
proprietary information and designs, Business Names, and Trademarks in association with the operation of Tully's Stores in Japan (referred to herein as the "Territory"). 

        B.    The
parties desire to amend the License Agreement to grant Licensee an exclusive license to use, inter alia, Licensor's
know-how, trade secrets, proprietary information and designs, Business Names, and Trademarks in connection with wholesale sale of roasted coffee beans and ground coffee in the Territory. 

        C.    The
following terms used herein shall have the meanings ascribed thereto in the License Agreement: Business Names; Trademarks; and Tully's Stores. 

        NOW,
THEREFORE, the parties hereto agree as follows: 

AGREEMENT  

        1.    The License Agreement is hereby amended as follows: 

        1.1      Sections
1 through 3 of the License Agreement are deleted in their entirety and new Sections 1 through 6 are inserted to read as follows: 

        1.        Grant of License.    During the term of this Agreement, Licensor hereby grants to Licensee the
exclusive license to: (a) operate Tully's Stores in the Territory and to use such Tully's Store designs, formats, signs, equipment, layout, systems, procedures, copyrights,
know-how, the Business Names, and the Trademarks in the Territory (collectively, the "Retail Rights") in connection with the operation of retail Tully's Stores in the Territory on the
terms and conditions stated herein and (b) to use such formats, signs, equipment, layout, systems, procedures, copyrights, know-how, the Business Names, and the Trademarks in the
Territory in connection with the wholesale sale of roasted coffee beans and ground coffee in the Territory on the terms and conditions stated herein (the "Wholesale Rights"). The Retail Rights and the
Wholesale Rights include the rights to utilize in the Territory the present and future names and marks used by Licensor in its operations of Tully's Stores and U.S. wholesale operations whether
registered or unregistered. The Retail Rights and the Wholesale Rights are sometimes collectively referred to herein as the "Rights". Licensee shall use its reasonable best efforts to promote and
market the Rights in the Territory. 

1

 

        2.        Compensation. 

        a.        Payment—Franchise Operations.    Unless otherwise agreed to in writing by Licensor,
all franchise arrangements (including all existing franchisees listed on the attached Schedule C) shall provide that each franchisee shall pay a royalty fee of
[ * ] on all net revenues (as defined below). The royalty fee shall be allocated [ * ] to the Licensee and
[ * ] to Licensor (the "Licensor Franchise Royalty Fee"). As used in this Agreement, the term "net revenues" shall mean and include the actual gross charges for
all products and services of any kind or nature sold in connection with the Business Names or Trademarks, for cash or credit through any business conducted by any franchisee, but excluding sales, use,
service, or excise taxes collected from customers and paid to the appropriate taxing authority. The Licensor Franchise Royalty Fee shall be payable by Licensee on or before the end of the month
following the month in which the net revenues were generated by the franchisee. 

        b.        Payment and Reports.    Licensee agrees to report and pay the royalties set forth in this
Section 2 as follows: 

        (1)      Reporting.    Within thirty (30) days after the end of each calendar month, Licensee will
send Licensor a written report on (i) all net revenues under Section 2.a., and (ii) a computation of the royalties due. 

        (2)      Payments.    Licensee agrees to pay the royalties due by the time the report is due, i.e., within
thirty (30) days after the end of each calendar month. With respect to the royalty payment under Section 2.a, Licensee is entitled to withhold and pay to appropriate government
authorities applicable withholding taxes. 

        (3)      Form of Payment.    Unless otherwise specified, all payments to be made under this
Section 2 will be in Japanese yen and will be made by check or by wire transfer to a bank account specified by Licensor in writing. 

        (4)      Late Payments.    Late payments will accrue interest from the date due until paid in full at the
lower of (x) a floating yearly rate equal to three percent (3%) plus the prime rate for short-term unsecured commercial loans announced from time to time by Bank of America,
Seattle, Washington, USA and (y) the highest rate permitted by law. 

        (5)      Performance Under Reservation of Rights.    For the avoidance of doubt, in the event of a dispute
between the parties regarding any payment or performance due or claimed to be due under this Agreement by Licensee, Licensee shall have the right to pay such amount or render such performance under a
reservation of rights (by using the words "reservation of rights", "without prejudice", or "under protest") (i.e., any such payment or performance shall
not be rejected by Licensor on the basis that the reservation of rights renders it a conditional payment or performance, and any such payment or performance shall not prejudice the rights reserved). 

        3.        Record Keeping.    Licensee agrees to make copies of all reports to Licensor and copies of
original agreements, bills and invoices containing the information needed to prepare them and to keep them for a period of at least three (3) years. 

        4.        Audits; Quality Control Inspections.    Licensor shall have the right, on a quarterly basis during
the calendar year during the term of this License Agreement and on an annual basis for three (3) years thereafter, to have independent certified public accountants reasonably acceptable to
Licensee audit all records that the License Agreement requires Licensee to make and keep. All audits will be begun upon at least forty-eight (48) hours' prior notice. Licensor shall be solely
responsible for the auditor's fees for the quarterly audits, provided that in the event that any audit shows a shortfall of more than five percent (5%) in any payment as reported or paid to Licensor 

2

 

for the period under audit, Licensee will pay the entire auditor's fee for the examination that discloses such shortfall. All audits will be in confidence, and the auditors will disclose to Licensor
only the information necessary to verify payments due, and not Licensee's customer lists. 

        5.        No Sublicensing; Franchises.    Except as set forth below with respect to franchisees of the
Retail Rights, Licensee may not sublicense or franchise any of the rights conferred upon Licensee by this Agreement. Notwithstanding the above and subject to the conditions stated below, Licensee may
enter into franchise agreements with franchisees pursuant to which Licensee may grant the right to use the Retail Rights in the Territory to a franchisee. Except as to the existing franchise
arrangements with the parties listed on Schedule C hereto, no such franchise arrangement shall be entered into with a franchisee unless and until Licensor approves of such franchisee, which
approval shall not be unreasonably withheld or delayed. The parties acknowledge one condition to any such approval by Licensor shall be that such franchise arrangement shall be governed by a written
franchise agreement acceptable to Licensor. Such written franchise agreement shall, if requested by Licensor, include Licensor as a party thereto solely for the purposes of maintaining a direct right
to enforce Licensor's Standard Specifications (as defined in this Agreement) and other specifications and requirements with respect to the use of the Retail Rights by such franchisee. 

        6.        Wholesale Rights.  

         a.        Wholesale and Other Distribution Customers.    Licensor will furnish to Licensee
standard operating specification and
criteria for the selection of wholesale customers for Tully's products in the Territory (the "Wholesale Specifications"). Licensee agrees that all wholesale and other distribution customers (the
"Wholesale Customers") in the Territory shall materially comply with Licensor's Wholesale Specifications, as adopted by Licensor from time to time. Licensor shall have the right to require Licensee to
reject Wholesale Customers based on Licensor's determination that such Wholesale Customers do not meet the Wholesale Specifications. Licensee shall use its reasonable best efforts to prepare and
deliver an annual marketing plan for Wholesale Customers. 

        b.        Equipment, Fixtures and Signs.    Licensee agrees to cause all Wholesale Customers to materially
comply with the Wholesale Specifications in their operations in the Territory, including use of equipment, fixtures, furniture and signs that are consistent with Licensor's Wholesale Specifications.
Licensee further shall cause Wholesale Customers to place or display at their premises only such signs, emblems, logos, lettering, and display materials that are consistent with Licensor's Wholesale
Specifications. 

        1.2      The
Section entitled "Operation and Development of Stores" shall be renumbered to become Section 7. All Sections thereafter shall be renumbered
sequentially. All internal cross-referencing between Sections shall be renumbered accordingly. 

        1.3      The
cure periods set forth in Section 17.b. (4) and Section 17.b. (6) shall be changed from seven (7) days to fourteen
(14) days. 

        1.4      A
new Section 17.b. (7) shall be inserted following Section 17.b (6) as follows: 

        (7)      undergoes
a "change in control" of TCJ. For purposes of this Agreement, the term "change in control" shall mean (i) any sale, transfer, assignment
or other disposition, whether by operation of law or otherwise, of TCJ's voting or other securities, which results in any third party owning more than a majority of TCJ's voting stock, (ii) the
sale of substantially all of TCJ's assets in one or a series of transactions other than to its wholly-owned subsidiary, (iii) a merger or consolidation with any other entity in which TCJ is not
the surviving entity, or (iv) the acquisition by a third party of the right to nominate a majority of members of the board of directors of TCJ. 

3

 

        1.5      A
new Section 17.c shall be inserted following Section 17.b as follows: 

        17.c    Licensee'
purchase option 

        In
the event that (1) Licensor files or has filed against it a petition in bankruptcy or any similar proceeding or files any pleading seeking any reorganization, liquidation, or
dissolution under any law, and (2) in any such proceeding a final order is entered rejecting or otherwise fully and completely terminating Licensee's rights under this Agreement as a result of
act or acts of either Licensor or a Trustee in any such proceeding, Licensee shall have an option (the "Option"), exercisable only within thirty days after the issuance of any order confirming the
rejection or termination referenced above by notice in writing to Licensor, to purchase the Rights granted under this Agreement at a price equal to the Fair Market Value thereof. The parties
specifically agree that such Rights shall include any business names, trademarks and any other intellectual property registered under the name of Licensor in the Territory solely to extent the same
relate to the use of such rights in the Territory (the "Registered Rights"). As a result of the exercise of the Option by Licensee and at the closing of the transaction contemplated thereby (including
full payment of the Fair Market Value of such Rights), Licensee shall be registered in Japan as the owner of the Registered Rights and Licensor shall execute all such documents as are reasonably
necessary to complete such registration. The Fair Market Value of the Rights shall be equal to the price which would be paid assuming a willing seller and a willing buyer of the rights subject to the
Option. In the event Licensee fails to provide Licensor with written notice within thirty (30) days of the final order of its unconditional exercise of the Option as provided for above, the
Option shall terminate. When Licensee exercises the option granted under this Section 17.c., notwithstanding anything to the contrary herein or in the Supply Agreement, this Agreement, the
Supply Agreement any other agreement (if any) between Licensor and Licensee that may in any way restrict Licensees rights or freedom to conduct its business using the Rights, shall terminate,
provided,
however, that Licensor's obligations under this Section 17c shall survive the termination of this Agreement. 

        2.        Except
as specifically set forth in this First Amendment, the remaining terms and conditions of the License Agreement shall remain unchanged and shall
remain in full force and effect. All Licensee and Licensor rights and obligations contained in the License Agreement pertaining to the Retail Rights granted therein shall also apply to the Wholesale
Rights. 

        3.        In
the event of a conflict between the provisions of this First Amendment and the License Agreement, the provisions of this First Amendment shall prevail. 

        4.        This
First Amendment may be executed in counterparts, each of which shall constitute an original, but all of which together shall constitute one and the
same document notwithstanding that both parties are no signatories to each counterpart. However, this First Amendment shall not be enforceable against a party until a counterpart has been executed by
both parties. 

4

 

IN
WITNESS WHEREOF, the parties hereto have executed this First Amendment as of the day and year first above written. 

	
LICENSOR:	

 
	

TULLY'S COFFEE CORPORATION	

 
	

 	
 	

 	

 
	

By:	
 	

 	

 
	

 	
 	

 Marc Evanger, its President and CEO	

 
	

 	
 	

 	

 
	

 	
 	

 	

 
	
LICENSEE:	

 
	

TULLY'S COFFEE JAPAN, LTD.	

 
	

 	
 	

 	

 
	

By:	
 	

 	

 
	

 	
 	

 Kouta Matsuda, its President	

 

5

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FIRST AMENDMENT TO TULLY'S COFFEE LICENSE AGREEMENT

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