Document:

Nonrecourse Guaranty of Tully's Coffee Corporation

 Exhibit 10.5 
 NON-RECOURSE GUARANTY 
 THIS CONTINUING GUARANTY (“Guaranty”) is given as of
December 28, 2007, by TULLY’S COFFEE CORPORATION, a Washington corporation (“Guarantor”), to and for the benefit of UCC UESHIMA COFFEE CO. LTD., a Japanese corporation (“UCC”), its successors and assigns, in support of
certain obligations more particularly described as follows: 
 A. UCC has entered into a certain Settlement Agreement (the
“Settlement”), of this same date, with Guarantor, pursuant to which a wholly owned subsidiary of Guarantor, Tully’s Coffee Asia Pacific, Inc., a Nevada corporation (“TCAP”), has agreed to pay to UCC Six Million U.S. Dollars
($6,000,000) (the “Note Balance”) under a Promissory Note (the “Note”) also executed as of this same date. 
 B.
Guarantor expects to directly benefit from the proposed Settlement, since the Settlement is a means of settling Guarantor’s dispute with UCC. 
 C. The execution and delivery of this Guaranty and the security documents described in Section 6 herein are conditions precedent to UCC’s willingness to enter into such Settlement. 
 NOW, THEREFORE, Guarantor acknowledges and agrees that it is therefore in the best interests of Guarantor to make this Guaranty in favor of UCC and
Guarantor therefore hereby undertakes and agrees as follows: 
 1. Guaranty. For value received, and in order to induce UCC to enter
into the Settlement, Guarantor hereby absolutely, unconditionally and irrevocably guarantees to UCC the full and prompt payment and performance of all of TCAP’s “Obligations” (as defined herein), whether such Obligations are now
existing or hereafter arising. As used in this Guaranty, the term “Obligations” means all of TCAP’s indebtedness, liabilities, and obligations to UCC relating to or arising under the Settlement, including without limitation the Note
Balance, all principal, interest, attorneys’ fees and all other obligations of TCAP to UCC arising under or relating to any agreements between TCAP and/or Guarantor and UCC. Guarantor agrees that payment and performance of TCAP’s
Obligations shall be made without set-off, counterclaim, recoupment or deduction of any kind. This Guaranty is a guaranty of payment and not merely collection. 
 2. Defined Terms. Any capitalized terms used in this Guaranty that are not defined herein shall have the meaning given to them in accordance with the Settlement. 
 3. Non-Recourse Guaranty. Notwithstanding any other provisions of this Guaranty, Guarantor’s obligations under this Guaranty shall be limited
to Guarantor’s right, title and interest in and to those certain assets in which Guarantor or TCAP has provided or will provide UCC with a security interest, pursuant to the Amendment to License and the Security Agreement both of this same
date, including, without limitation, the following: (a) royalty payments (of not less than 1 % of all revenues on or after April 1, 2008) from the rights licensed under its existing license with TCAP (which TCAP contemplates assigning
to TC-P, subject to this security interest), (b) Guarantor’s shares in TCAP, which Guarantor will not sell or transfer and TCAP will not dilute or allow to be diluted; and (c) Guarantor’s interest in the Tully’s Business
Names and Trademarks in the Territory (as such terms are defined, either directly or indirectly, in the Settlement) and the goodwill associated therewith. Accordingly, in the event that Guarantor fails to make any payment which is demanded under
Section 4 below, UCC’s sole recourse against Guarantor shall be to foreclose upon the assets described in this Section 3, and shall not have any recourse against any other assets of Guarantor. 

 4. Payment Upon Demand; Accrual of Interest. Subject to the limitations set forth in
Section 3 above, if any of TCAP’s Obligations are not paid when due, Guarantor agrees to pay to UCC such amounts upon demand. If such payment is not made by Guarantor immediately upon such demand, interest shall accrue (from the date of
demand) on the amount demanded by UCC at the lower of: (a) eighteen percent (18%) per annum, or (b) the highest rate permitted by applicable law (the “Default Rate”). 
 5. Continuing Nature. This Guaranty and the obligations of Guarantor hereunder shall be continuing and irrevocable. Guarantor agrees that
notwithstanding the reorganization, dissolution, or insolvency of Guarantor or of TCAP, this Guaranty shall continue in full force and effect until the Obligations have been paid in full and any applicable preference period has ended. 
 6. Security. This Guaranty shall be secured by a Security Agreement in form and substance acceptable to UCC, executed by Guarantor and TCAP in
favor of UCC (the “Security Agreement”), which Guarantor shall execute and deliver, and cause to be executed and delivered by TCAP, concurrently with the execution and delivery of this Guaranty. Guarantor covenants and agrees that during
the term of the Guaranty, Guarantor shall not in any manner create, assume or permit to exist any mortgage, charge, pledge, lien or encumbrance on any of the assets in which UCC receives a security interest or a guaranty, hereunder or under the
Security Agreement, other than the rights held by Benaroya Capital under the Subordination Agreement attached to the Security Agreement and except as is otherwise permitted under the Security Agreement. 
 7. Representations and Warranties. Guarantor hereby represents and warrants to UCC that: 
 7.1 This Guaranty constitutes the valid, legal and binding obligation of Guarantor enforceable in accordance with its terms, and
the execution and performance of this Guaranty does not and will not (i) contravene any applicable law, order, regulation, restriction, contractual restriction or the like of any kind binding on Guarantor, or (ii) conflict with
Guarantor’s organizational or other constituent documents. 
 7.2 Except for the Action being settled by the
Settlement, no litigation, arbitration or administrative proceeding before any court, tribunal, arbitrator or governmental authority is currently taking place, pending, or, to the knowledge of Guarantor having made all reasonable inquiries,
threatened against Guarantor, or any of the assets or properties of Guarantor, and, to Guarantor’s knowledge, Guarantor is not in default with respect to any order, writ, injunction, decree or demand of any court or governmental authority.

 7.3 Guarantor is a corporation, duly organized, validly existing and in good standing under the laws of the state of
Washington and in each other state or jurisdiction in which Guarantor’s activities make such qualification necessary, and TCAP is a corporation, duly organized, validly existing and in good standing under the laws of the state of Nevada. Until
all of the Obligations (including without limitation, contingent liability) to UCC under the Note shall be extinguished, Guarantor will maintain its existence and good standing and cause TCAP to maintain its existence and good standing, as provided
herein. 
 7.4 Guarantor has no indebtedness of any kind which materially affects Guarantor’s ability to perform
its obligations pursuant to this Guaranty, and Guarantor does not know or have grounds to know of any basis for the assertion against Guarantor of any such material indebtedness. 
 7.5 Guarantor has sufficient assets to comply with and perform all of its existing obligations to third parties, including without
limitation its obligations under this Guaranty. 
  

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 7.6 Guarantor has extensive knowledge of the financial condition of TCAP and will
at all times keep itself informed of the financial condition of TCAP until all of the Obligations have been fully performed. 
 7.7 Guarantor has not relied on any information from UCC in evaluating Guarantor’s ability to perform its obligations under this Guaranty. 
 7.8 No representation or warranty by Guarantor contained herein or in any other document furnished by Guarantor in connection with
the negotiation of this Guaranty contains any untrue statement of a material fact or omits to state a material fact necessary to make such representation or warranty not misleading. 
 8. Independent Obligation. This Guaranty constitutes a separate and independent obligation to UCC, and Guarantor intends that this Guaranty shall
be a separate source of payment and performance of the Obligations. Accordingly, Guarantor hereby represents and warrants to UCC that: 
 8.1 UCC may obtain recourse against Guarantor for the payment and performance of all or any outstanding portion of the Obligations prior to, concurrently with, or after any action, proceeding, settlement or
other means by which UCC may from time to time elect to enforce payment or performance of such Obligations. 
 8.2
Guarantor’s obligations under this Guaranty shall continue until the expiration of the period of time during which any payment could be avoided through the operation of bankruptcy laws or any other applicable laws relating to preferential
transfers. 
 8.3 In no event shall UCC be deemed to have elected any remedy that precludes or impairs its ability to
proceed against Guarantor hereunder. 
 8.4 This Guaranty may be enforced prior to, concurrently with or after any
action against TCAP and shall survive any foreclosure, private or public sale, sheriff’s sale, or trustee’s sale, of any assets that serve as security for the Obligations, regardless of whether such sale was conducted in a commercially
reasonable manner or otherwise; and specifically, this Guaranty shall survive, as an independent contractual obligation, any such sale despite any statutory provision which otherwise prohibits any deficiency judgment, or otherwise relieves TCAP from
further liability. Guarantor hereby recognizes and agrees that its liability hereunder is not conditioned in any manner upon the existence of such liability of TCAP or the ability of Guarantor to obtain any redress against TCAP through
indemnification, subrogation or otherwise. 
 8.5 Except as provided in this Guaranty, Guarantor’s obligations
under this Guaranty are not subject to any condition whatsoever and are not dependent upon the existence or validity of the obligations of any other guarantor. 
 8.6 Upon the occurrence of an Event of Default as defined herein, UCC may maintain an action upon this Guaranty whether or not TCAP
is a party to such action. UCC may maintain successive actions for default under this Guaranty. 
 9. Consent to Amendments and
Modifications. Guarantor agrees that UCC may, without obtaining the consent of and without giving notice to Guarantor, and without releasing or reducing Guarantor’s liability under this Guaranty, do any one or more of the following at any
time: 
 9.1 Amend any agreement UCC has or may have with TCAP, or agree with TCAP to change the manner, place or terms
of payment, or change or extend the terms of any of the Obligations; 
  

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 9.2 Discharge or release any other party (including any other guarantor) who is or
may be liable for any of the Obligations; or 
 9.3 Refrain from enforcing any security, or release any present or
future security or guarantee that UCC holds from TCAP or any other person. 
 Guarantor agrees that no course of dealing between UCC and TCAP nor any failure
or delay by UCC to exercise any one or more of its rights or remedies, or any other agreement between UCC and TCAP, shall impair or release Guarantor’s obligations under this Guaranty. 
 10. Waiver of Reimbursement or Subrogation. Guarantor hereby waives and relinquishes any right of subrogation to UCC’s rights or other right
of reimbursement from TCAP and any other right to payment from TCAP arising out of or on account of any sums paid or agreed to be paid to UCC by Guarantor, whether any such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured. Such waiver is made for the express benefit of TCAP and UCC and may be enforced independently by TCAP. 
 11. Preservation and Priority of UCC’s Claims. With respect to any rights other than those rights expressly waived by Guarantor herein, Guarantor agrees that until all of the Obligations have been paid and
performed in full: 
 11.1 Any rights that Guarantor may have to be paid or reimbursed by TCAP shall in all respects be
subordinate and inferior to UCC’s rights to collect and enforce payment, performance, and satisfaction of the Obligations. 
 11.2 Guarantor shall not assert priority to UCC or make any claim against TCAP or make any claim in any bankruptcy or insolvency proceeding or take or enforce any security from or against TCAP. 
 11.3 Guarantor agrees to refrain from attempting to collect or enforce any rights against TCAP until all Obligations have been paid
and performed in full. 
 11.4 If for any reason Guarantor takes any security from TCAP, or if Guarantor receives any
payment from TCAP, Guarantor hereby agrees that such security or payment shall be held by Guarantor in trust for UCC as continuing security for Guarantor’s liability to UCC under this Guaranty and any terms hereof that need to be amended or
modified to reflect such agreement shall be deemed so amended or modified. 
 12. Preferences. In addition to Guarantor’s waivers
set forth above, Guarantor agrees that if TCAP ever files a petition for relief in bankruptcy, or if an involuntary petition for relief in bankruptcy is filed against TCAP (whether such proceedings are initiated by or against TCAP under the laws of
the United States or the laws of any foreign jurisdiction) all rights of recourse that Guarantor might then or thereafter have or acquire against TCAP arising out of or as a result of this Guaranty shall automatically be forever waived and
extinguished as of the moment of such filing, whether such rights are based on contract or arise by operation of law; provided, however, that in an involuntary bankruptcy proceeding, Guarantor’s rights of recourse against TCAP shall reattach if
TCAP obtains dismissal of such proceeding within sixty (60) days after the date of filing. This waiver supersedes any contrary provisions of this Guaranty, which merely suspend or subordinate Guarantor’s rights of recourse against TCAP
until the Obligations have been paid in full. 
  

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 13. Defaults; Enforcement of Guaranty. UCC may enforce this Guaranty upon the occurrence of any of
the following events (each, an “Event of Default”): 
 13.1 If any of the Obligations are not paid when due,
then, subject to the provisions of Sections 3 and 4 of this Guaranty, Guarantor shall pay to UCC any such unpaid amounts on UCC’s demand. 
 13.2 If any amount due under or pursuant to the Security Agreement or the Note is not paid by Guarantor when due, and Guarantor has failed to make such payment prior to the expiration of any applicable notice
and cure period provided in any such document. 
 13.3 If Guarantor shall fail to comply fully with any other
obligation or covenant under this Guaranty (including without limitation Guarantor’s obligations under Section 5 herein) or under the Security Agreement, and Guarantor has failed to cure the default prior to the expiration of any
applicable notice and cure period provided in any such document. 
 13.4 If TCAP shall fail to comply fully and timely
with any undertaking or material obligation under the Note or any other document evidencing or securing the Note (collectively, the Note Documents”) and TCAP has failed to cure the default prior to expiration of any applicable cure periods.

 13.5 If any representation or warranty made by Guarantor herein or in the Security Agreement, or by TCAP in any of
the Note Documents, in any material respect, proves to have been incorrect when made or becomes incorrect at any time during the term of this Guaranty. 
 13.6 If either Guarantor or TCAP shall fail to comply fully with any of their respective obligations, covenants, representations, or warranties under any documents evidencing or securing the Note Balance and
Settlement, and such party has failed to cure their default prior to the expiration of any notice and cure period provided in any such document. 
 14. Application of Payments. UCC may apply any payments received in connection with the Obligations (regardless of whether such payment is made by TCAP, Guarantor, or any other party) to any of the Obligations in any order or in any
manner as determined by UCC in its sole discretion. 
 15. Miscellaneous. The following provisions shall be applicable to this
Guaranty, and to its construction and interpretation: 
 15.1 Rules of Construction. All parties have been actively
represented by counsel throughout the negotiations leading to the execution and delivery of this Guaranty. Consequently, the usual rules of construction of documents against the interest of the party drafting the same are hereby waived, and the
parties stipulate that this Guaranty and the documents contemplated thereby be construed in accordance with the intent of the parties as expressed herein or therein. 
 15.2 Notices. Any notice or other communication required or permitted hereunder (“Notice”) shall be in writing, and shall
be deemed to have been given when delivered addressed as follows or when sent by facsimile with evidence of receipt to the telephone numbers listed below: 
  

			
	If to UCC	  	UCC Ueshima Coffee Co., Ltd.
		  	7-7-7 Minatojima-Nakamachi, Chuo-ku
		  	Kobe, Japan 650-8577
		  	Attn: Gota Ueshima & Seisuke Ueshima
		  	Fax 011-81-78-304-8845

  

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	With a copy to	  	Garvey Schubert Barer
		  	1191 Second Avenue, 18th Floor
		  	Seattle, WA 98101-2939
		  	Attn: Sara P. Sandford & Bruce A. McDermott
		  	Fax 1-206-464-0125
		
	If to Tully’s	  	Tully’s Coffee Corporation
		  	3100 Airport Way South
		  	Seattle. WA 98134
		  	Attn: President
		  	Fax: 1-206-233-2075
		
	With a copy to	  	Carney Badley Spellman, P.S.
		  	701 Fifth Avenue, Suite 3600
		  	Seattle, WA 98104
		  	Attn: Patrick R. Lamb
		  	Fax: 1-206-467-8215

 Each of the parties shall be entitled to specify a different address or telephone number by giving Notice as
aforesaid. 
 15.3 Entire Agreement. This Guaranty (with the Settlement, Security Agreement, Note and documents
referenced herein and therein) constitutes the entire agreement relating to the subject matter hereof between the parties and supersedes all prior agreements, understandings, negotiations, and discussions, whether oral or written. No supplement,
modification or waiver of this Guaranty shall be binding unless executed in writing by the party to be bound or issued by the court having jurisdiction over such matter, after application by either party after due Notice to the other. No waiver of
any of the provisions of this Guaranty shall be deemed or shall constitute a waiver of any other provisions (whether or not similar), nor shall such waiver constitute a continuing waiver or estoppel with respect to subsequent defaults unless
otherwise expressly provided. 
 15.4 Headings. Section headings are not to be considered part of this Guaranty and are
included solely for convenience and reference and are not intended to be full or accurate descriptions of the content thereof. 
 15.5 Governing Law. The validity, construction, and interpretation of this Guaranty shall be governed by the laws of the State of Washington applicable to contracts made and to be performed wholly within that state. 
 15.6 Venue and Consent to Jurisdiction. Venue and jurisdiction of any litigation arising out of this Guaranty shall lie exclusively
in the United States District Court for the Western District of Washington located in Seattle, Washington. The parties hereto hereby submit to the jurisdiction of such court, and the rights granted under this paragraph may be specifically enforced
by either party to this Guaranty. 
 15.7 Waiver of Jury Trial. Both parties agree that in the event of any litigation
arising out of this Guaranty, the matters are not suitable for determination by a jury. All parties hereby waive their right to a jury trial on any matter litigated pursuant to this Guaranty, and the waiver set forth herein may be specifically
enforced by all other parties to this Guaranty. 
 15.8 No Third Party Rights. Except as specifically provided in this
Guaranty, nothing in this Guaranty is intended to imply or by implication to confer upon any person other than the parties hereto any rights or remedies under or by reason of this Guaranty. 
  

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 15.10 Attorneys’ Fees. In the event any party takes legal action to enforce
any of its rights under this Guaranty, the prevailing party to such action shall be entitled to recover its costs and expenses, including reasonable attorneys’ fees, incurred in any such action or any appeal thereof. All such costs shall be due
and payable upon demand and shall bear interest from the date of such demand to and including the date of collection at the Default Rate. 
 15.11 Number, Gender and Persons. In this Guaranty, words importing the singular number only shall include the plural and vice versa, words importing gender shall include all genders and words importing
persons shall include individuals, corporations, partnerships, associations, trusts, unincorporated organizations, governmental bodies and other legal or business entities of any kind whatsoever. 
 15.12 Time of Essence. Time shall be of the essence of this Guaranty. 
 15.13 Savings Provision. Invalidity or unenforceability of any one or more of the provisions of this Guaranty for any reason shall
not affect any of the other provisions hereof, and such other provisions shall remain in full force and effect 
 15.14
Successors and Assigns. This Guaranty is for the benefit of UCC, and UCC’s successors and assigns, and in the event of any assignment by UCC of the Obligations hereby guaranteed or any part thereof, the rights and benefits hereunder, to the
extent applicable to the Obligations so assigned, shall be transferred with such Obligations and inure to the benefit of the assignee. This Guaranty is binding upon Guarantor and on its successors and assigns. Notwithstanding the foregoing, however,
Guarantor may not delegate any of its obligations or liabilities, contingent or otherwise, hereunder. Guarantor shall permit no transfer in its ownership or control of TCAP without the consent of UCC. As used in this section, a “transfer in
ownership or control” of TCAP shall include without limitation, any transfer of any interest in Guarantor’s share ownership of TCAP. Notwithstanding the foregoing, however, this Guaranty shall not be discharged or in any way
affected by any change in the ownership or control of Guarantor. Guarantor pledges and agrees not to transfer by gift or without adequate consideration any assets owned individually or jointly with any person at any time this Guaranty remains in
effect. 
 ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, TO EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW 
 EXECUTED as of the date first set forth above. 
  

					
	Tully’s Coffee Corporation
		
	By	 	 
		 	Its	 	 

  

 7Security Agreement

 Exhibit 10.6 
 SECURITY AGREEMENT 
 THIS SECURITY AGREEMENT (the “Security Agreement”) is made as of December 28,
2007, by Tully’s Coffee Corporation, a Washington corporation (“Tully’s”) and Tully’s Coffee Asia Pacific, Inc., a Nevada Corporation (“TCAP”) (collectively and severally the “Grantor”) in favor of UCC
Ueshima Co. Ltd., a Japanese corporation (“UCC”). 
 RECITALS 
 A. Tully’s and UCC have entered into that certain Settlement Agreement as of this same date (the “Settlement”). 
 B. In accordance with the Settlement, Tully’s has executed a certain Guaranty, as of this same date (the “Guaranty”), and TCAP has executed a certain Promissory Note, as of this same date (the “Note”), which
provides for TCAP to pay UCC a principal sum of $6 million U.S. dollars on the terms and conditions more particularly described in that Note. 
 C. It is a
condition precedent to the Settlement and the Note that Tully’s shall have executed and delivered this Security Agreement. 
 ACCORDINGLY, in
consideration of the above premises and to induce UCC to enter into the Settlement and the Note, Tully’s hereby agrees with UCC as follows: 
 AGREEMENT 
 1. Defined Terms. Unless otherwise defined herein, the capitalized terms used herein which are defined in
the Settlement and Note shall have the meanings specified therein. All terms defined in this Security Agreement in the singular shall have comparable meanings when used in the plural, and vice versa, unless otherwise specified. 
 (a) “Collateral” means: 
 (i) The Trademarks (provided that Trademark Collateral will not include “intent to use” trademark applications unless and until Tully’s has used such trademarks and has filed a statement of use or amendment to allege
use with respect to such application), and all rights in any trademarks or registrations in the United States Patent and Trademark Office to the extent the same are necessary to perfect or enforce UCC’s rights in the Trademarks; all income,
royalties, damages and payments now and hereafter due and/or payable with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements
thereof, unfair competition, dilution, or for injury to the goodwill associated with any of the Trademarks; and all rights corresponding thereto; 
 (ii) All license agreements with any other party, including TCAP, in connection with any Trademarks and the right to prepare for sale, sell and advertise for sale, all inventory now or hereafter owned by Tully’s
or its licensees, covered by such license agreements; 
 (iii) The goodwill of Grantor’s business connected with and
symbolized by the Trademarks; 
 (iv) The royalties payable to Tully’s under that certain Tully’s Coffee Exclusive
License Agreement between Tully’s and TCAP, dated as of October 12, 2007, pursuant to which TCAP is obligated to remit to Tully’s one percent (1%) of the aggregate net revenues, of the Tully’s Stores in the Territories
together with all other sales of products or services made in connection with the Tully’s Business Names and Trademarks, for net revenues and sales after March 31, 2008 (all as such terms are defined in that License Agreement) (the
“TCAP Royalties”); 
 (v) All assets of TCAP, whether tangible or intangible, presently owned and hereafter acquired
personal or real property, including all accounts, chattel paper, inventory, equipment, instruments, investment property, documents, deposit accounts, letter-of-credit rights, and general intangibles (the “TCAP Assets”); 
 (vi) All common stock of TCAP (the “TCAP Shares”); and 

 (vii) The proceeds and products of the foregoing and all insurance payments pertaining to
the foregoing and proceeds thereof. 
 (b) “Obligations” means each and every debt, liability and obligation of every type and
description arising under or in connection with any Settlement and Note (as defined therein) which Grantor may now or at any time hereafter owe to UCC, whether such debt, liability or obligation now exists or is hereafter created or incurred and
whether it is or may be direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, independent, joint, several or joint and several. 
 (c) “TCAP Assets” has the meaning described in paragraph (a)(v) above. 
 (d) “TCAP Royalties” has the meaning described in paragraph (a)(iv) above. 
 (e) “TCAP Shares” has the meaning described in paragraph (a)(vi) above. 
 (f) “Territory” means the Territory, as such term is defined the Settlement. 
 (g) “Trademarks” means all trademarks, service marks, collective membership marks, trade names, trade styles and related registrations listed
on Exhibit A solely to the extent the same are used in the Territory and any which are used by or under authority of Tully’s in any country in the Territory, and all applications and renewals for any of them and the
respective goodwill associated with each and the business symbolized thereby. 
 (h) The words “hereof,” “herein” and
“hereunder” and words of like import when used in this Security Agreement shall refer to this Security Agreement as a whole and not to any particular provision of this Security Agreement and section references are to sections in this
Security Agreement unless otherwise specified. 
 2. Security Interest in Collateral. To secure the prompt and complete payment, observance and
performance when due (whether at the stated maturity, by acceleration or otherwise) of all the Obligations, Grantor hereby irrevocably assigns and pledges to UCC, and hereby grants to UCC, a security interest with power of sale to the extent
permitted by law (the “Security Interest”), in and to the Collateral, and all of Grantor’s right, title and interest therein, whether now-owned or existing or hereafter arising or acquired and wheresoever located. 
 3. Restrictions on Future Agreements. Grantor agrees that until all the Obligations shall have been satisfied in full it will not, without UCC’s prior
written consent, abandon any Trademark, or enter into any agreement, including, without limitation, any license agreement (other than as necessary to maintain or protect any Trademark), which is inconsistent with the obligations of Grantors or
UCC’s rights under this Security Agreement or would require UCC to pay any fees or otherwise incur any expenses of any kind upon foreclosure or upon termination of such agreement, and Grantor further agrees that it will not take any action, or
permit any action to be taken by any other persons to the extent that such persons are subject to its control, including licensees, or fail to take any action, which would affect the validity, priority, perfection or enforcement of the rights
transferred to UCC under this Security Agreement, and any such agreement or action if it shall take place shall be null and void and of no effect whatsoever. Any licenses shall also include terms and conditions requiring the licensee to maintain the
quality of all merchandise and services using the Trademarks at a level substantially consistent with or better than the quality of merchandise and services of Grantor as of the date hereof, as well as acknowledgement by the licensee that all
goodwill associated with the licensee’s use of the Trademarks shall, subject to UCC’s interest, be the property of Grantor, and warranties and other terms standard to trademark licenses necessary to protect Grantor’s and
UCC’s rights in the Trademarks. In the event Grantor fails to comply with the terms of this Section 3, the warranties in Section 5 or the duties set forth in Section 9, UCC shall, in addition to any other remedies available, have
the right to seek injunctive relief pursuant to this Security Agreement and Section 6 of the Settlement. 
 4. New Trademarks. Grantor represents
and warrants that the Trademarks and Licenses listed on Exhibit A constitute all of the significant trademarks, applications, trade names, service marks, service mark registrations and trademark registrations now owned and material license
agreements entered into by Grantor in or relating to the Territory. If, before the Obligations shall have been satisfied in full Grantor shall, after the date hereof, (a) obtain rights to any new trademarks, trademark registrations, trademark

 
applications, service marks, service mark registrations, or trade names in the Territory; (b) become entitled to the benefit of any trademarks,
trademark registrations, trademark applications, trade names, service marks, service mark registrations, trademark licenses or trademark license renewals in the Territory; or (c) enter into any new trademark license agreements in the Territory,
the provisions of Section 2 above shall automatically apply thereto, and Grantor shall give to UCC prompt written notice thereof of all new trademark registrations and applications. Grantor hereby authorizes UCC to modify this Security
Agreement by amending Exhibit A to include any future trademarks, trademark applications, trade names, service marks, service mark registrations, trademark registrations or license agreements that are the Trademarks or the Licenses, under
Section 2 above or under this Section 4. 
 5. Additional Representations and Warranties. Grantor hereby represents, warrants, covenants and
agrees that, except as otherwise provided in this Security Agreement: 
 (a) Subject to the rights of TCAP and Tully’s under the
Settlement, TCAP or Tully’s is and shall continue to be the sole and exclusive owner of all right, title and interest in the Collateral until the Obligations are fully satisfied and paid in full or UCC has foreclosed its interest in the
Collateral under this Security Agreement; 
 (b) Except for UCC’s security interest reflected herein and in the Settlement and except
for (i) Benaroya Capital’s subordinated rights in the Collateral under the Subordination Agreement attached hereto as Exhibit B and (ii) UCC’s continuing Asia Rights Security Interest (the “Asia Rights Security
Interest”), which Tully’s and TCAP hereby acknowledge and agree is unmodified and in full force and effect, as such security interest is described in that certain Tully’s Coffee Exclusive License Agreement (the “Original License
Agreement”), dated as of April 11, 2001, as amended hereunder, the Collateral is and will continue to be free and clear of any and all liens, mortgages, security interests, or other encumbrances or imperfections of title, and restrictions
on transfer; 
 (c) It has the full right and power to grant the security interest in the Collateral made hereby and the exclusive,
unrestricted right to sue for past, present, and future infringement of the Trademarks; 
 (d) Except for UCC’s security interest
reflected herein and except for (i) Benaroya Capital’s limited rights in the Collateral under the Subordination Agreement attached hereto as Exhibit B and (ii) UCC’s continuing Asia Rights Security Interest, which Tully’s
and TCAP hereby acknowledge and agree is in full force and effect, it has made no previous assignment, transfer or agreements in conflict herewith or constituting a present or future assignment, transfer, or encumbrance on any of the Collateral and
will not enter into any agreement that would could prevent, delay, or interfere with the exercise of UCC’s rights under this Security Agreement; 
 (e) It will not execute, and there will not be on file in any public office, any effective financing statement or other document or instrument covering the Collateral except as approved in writing by UCC; 

(f) All information furnished to UCC concerning the Collateral and proceeds thereof is, or will be at the time the same is furnished, accurate and
correct in all material respects; 
 (g) No infringement or unauthorized use presently is being made of any of the Trademarks or which has or
may reasonably be expected to impair, alone or in the aggregate, UCC’s rights in the Collateral and there are no actions, suits, claims, or proceedings threatened, pending, or in progress relating in any way to the Collateral; 
 (h) It has not engaged in any conduct, or omitted to perform any necessary act, the result of which would invalidate or result in the abandonment of any
of the Trademarks or hinder their enforcement by UCC or enforcement of UCC’s other rights hereunder; 
 (i) It will at its own expense,
and using its best efforts, protect and defend the Trademarks and other Collateral against all claims or demands of all persons other than UCC; 
 (k) It will at its own expense maintain or cause to be maintained the Trademarks including, but not limited to, by filing all applications to register and all affidavits and renewals possible with respect to issued registrations;

 (l) It will not abandon nor fail to pay any maintenance fee or annuity due and payable on any Trademark or Collateral, nor fail to file
any required affidavit in support thereof; 

 (m) It will not challenge or assist any other party in challenging or seeking to invalidate UCC’s
rights under this Security Agreement, including at any time to invalidate this Security Agreement or UCC’s rights in the Collateral on the grounds that it constitutes an assignment-in-gross; 
 (n) It will not sell, assign or otherwise transfer any of its right, title or interest in any of the Collateral except as permitted by UCC in the
Settlement Agreement or another writing and provided that to the extent it sells, assigns or otherwise transfers any of its right, title or interest in any of the Collateral to any other party, such party shall have (i) entered into a security
agreement substantially similar in form and substance to this agreement (ii) taken all other actions necessary or desirable to perfect such security interest, including, without limitation, all filings and registrations with relevant trademark
authorities and any filings under the Uniform Commercial Code or equivalent in effect in each relevant jurisdiction; 
 (o) The TCAP Shares
are uncertificated (or Tully’s has delivered to UCC any certificates related thereto) and shall not be diluted in any respect and there are no other equitable or beneficial ownership interests in TCAP, whether through equities, warrants,
options or otherwise; 
 (p) The obligations secured by the Asia Rights Security Interest are hereby amended to include the Obligations and
any failure to fulfill such Obligations hereunder is a breach under the Original License Agreement. 
 Notwithstanding the foregoing representations and
warranties, the parties expressly acknowledge and agree that TCAP contemplates assigning to a general partnership to be formed by TCAP and an entity that is majority controlled by Kouta Matsuda, TCAP’s rights and obligations under that certain
Tully’s Coffee Exclusive License Agreement between Tully’s and TCAP, dated as of October 12, 2007, and TCAP is authorized to do so, so long as the assignee agrees in writing that the assignee shall abide by the terms of this
Agreement, as if it were TCAP, and so long as TCAP remains obligated hereunder. 
  

	6.	Royalties; Term. 

 (a) Grantor hereby agrees that
any rights granted hereunder to UCC with respect to all the Collateral as described above shall be worldwide (except to the extent expressly limited to the Territory) and without any liability for royalties or other related charges from UCC to
Grantor. 
 (b) The term of the security interest granted herein shall extend until payment in full of the Obligations and, in the case of
the Trademarks, the earlier of (i) such payment and (ii) the expiration or abandonment of each of the Trademarks subject to this Security Agreement. 
 7. UCC’s Right to Inspect. UCC shall have the right, from time to time, to examine Grantor’s books, records and operations related to the Collateral, including, without limitation, Grantor’s merchandise quality control
processes relating to the Collateral upon reasonable notice and at such reasonable times and as often as may be reasonably requested. Grantor agrees (i) not to sell or assign its interest in, or grant any license under, the Collateral without
the prior written consent of UCC; and (ii) to maintain the quality of any and all merchandise in connection with which the Trademarks are used, substantially consistent with or better than the quality of said merchandise as of the date hereof.

 8. Termination of Security Interest. This Security Agreement is made for collateral purposes only. Upon payment of in full of the Obligations UCC
will, at Grantor’s sole cost and expense, execute and deliver to Grantor all termination statements, releases or other instruments as may be necessary or proper to re-vest in Tully’s and TCAP, as the case may be, (without recourse to or
warranty by UCC) full title to the Collateral granted hereby, subject to any disposition thereof which may have been made by UCC pursuant hereto. 
 9.
Duties of Grantor. Grantor shall have the duty (a) to prosecute diligently any trademark application that is part of the Trademarks pending as of the date hereof or thereafter until the Obligations shall have been paid in full, (b) to
make applications on trademarks, as appropriate, (c) to preserve and maintain all rights in the Trademarks and other Collateral; and (d) to monitor and enforce compliance with the terms of this Agreement. Any expenses incurred in
connection with such applications shall be borne by Grantor. Grantor agrees to retain an experienced trademark attorney for the filing and prosecution of all such applications and other proceedings. Grantor shall not abandon any right to file a
trademark application in any country in the Territory (or in the United States if UCC’s rights depend on filings in the 

 
United States), without the prior written consent of UCC, which consent shall not be unreasonably withheld or delayed. If Grantor fails to comply with any of
the foregoing duties, UCC shall, in addition to any other remedies available hereunder or at law or equity, have the right (but shall not be obligated) to do so in TCAP’s name to the extent permitted by law, but at Grantor’s expense, and
Grantor hereby agrees to reimburse UCC in full for all reasonable expenses, including the reasonable fees and disbursements of counsel incurred by UCC in protecting, defending and maintaining the Collateral. In the event that Grantor shall fail to
pay when due any fees required to be paid by it hereunder, or shall fail to discharge any lien prohibited hereby, or shall fail to comply with any other duty hereunder, UCC may, but shall not be required to, pay, satisfy, discharge or bond the same
for the account of the Grantor, and all monies so paid out shall be Obligations of Grantor repayable on demand, together with interest at the rate set forth in the Note. Notwithstanding the foregoing, Grantor shall be expressly excused from
liability for failure to fulfill its obligations under this Section 9, to the extent UCC’s actions or non-use on or before June 26, 2006, are found to be the sole cause for such liability. 
 10. UCC’s Right to Sue. From and after the occurrence and during continuance of an event of default, UCC shall have the right, but shall in no way be
obligated, to bring suit in its own name for its own benefit to enforce the Trademarks, and if UCC shall commence any such suit, Tully’s shall, at the request of UCC, do any and all lawful acts and execute any and all proper documents required
by UCC in aid of such enforcement. Tully’s shall, upon demand, promptly reimburse UCC for all costs and expenses incurred by UCC, together with interest as provided in Section 9. Nothing in the Settlement or any of its Exhibits shall be
interpreted or construed to limit UCC’s ability to enforce or protect the rights granted hereunder, including where necessary to institute legal action to enjoin or seek damages for activities originating outside the Territory that may have the
effect of damaging or otherwise impairing UCC’s rights in the Collateral.
 11. Waivers. No course of dealing among Grantor and UCC, and no
failure to exercise, nor any delay in exercising, on the part of UCC, any right, power or privilege hereunder or under the Note shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or
there under preclude any other or further exercise thereof the exercise of any other right, power or privilege. 
 12. Cumulative Remedies; Power of
Attorney; Effect On Other Agreements. All of UCC’s rights and remedies with respect to the Collateral, whether established hereby, by the Note, the Guaranty, the Settlement, by any other agreements or by law shall be cumulative and may be
exercised singularly or concurrently. Upon the occurrence and during the continuance of an event of default and the giving by UCC of written notice to Tully’s of UCC’s intention to enforce its right and claims against Grantor, Grantor
hereby authorizes UCC to make, constitute and appoint any officer or agent of UCC as UCC may select, in its sole discretion, as Grantor’s lawful attorney-in-fact, with power (but not the obligation) to (i) endorse Grantor’s name on
all applications, documents, papers and instruments necessary or desirable for UCC in the use of the Collateral, or (ii) take any other actions with respect to the Collateral as UCC deems in the best interest of UCC or (iii) grant or issue
any exclusive or non-exclusive license under the Collateral to anyone, or (iv) assign, pledge, convey or otherwise transfer title in or dispose of the Collateral to anyone free and clear of any encumbrance upon title thereof (other than any
encumbrance created hereby). Grantor hereby ratifies all that such attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney shall be irrevocable until the Obligations have been paid in full. Grantor acknowledges and
agrees that this Security Agreement is not intended to limit or restrict in any way the rights and remedies of UCC but rather is intended to facilitate the exercise of such rights and remedies. UCC shall have, in addition to all other rights and
remedies given it by the terms of this Security Agreement, all rights and remedies granted to UCC under its other agreements with Grantor and those otherwise allowed by law and the rights and remedies of a secured party under the Uniform Commercial
Code as enacted in any jurisdiction in which the Collateral may be located. Recourse to security will not be required at any time. 
 13. Binding Effect;
Benefits. This Security Agreement shall be binding upon Grantor and its successors and assigns, and shall inure to the benefit of UCC. Grantor’s successors and assigns shall include, without limitation, a receiver, trustee or
debtor-in-possession of or for Grantor. 

 14. Amendments, Etc. No amendment or waiver of any provision of this Security Agreement nor consent to any
departure by Grantor here from shall in any event be effective unless the same shall be in writing and signed by the party to be charged therewith, and then such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given. 
 15. Notices. All notices and other communications provided for hereunder shall be given in the manner set forth in the
Settlement (with notice to Tully’s being deemed notice to TCAP). 
 16. Severability. Whenever possible, each provision of this Security
Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Security Agreement shall be prohibited by or invalid under applicable law, then such provision shall be ineffective only
to the extent of such prohibition or invalidity, and if any provision hereof shall be found to invalidate the rights of UCC under the Original License Agreement, then such provision shall be ineffective only to the extent needed to avoid
invalidation of such rights, without invalidating the remainder of such provisions or the remaining provisions of this Security Agreement. 
 17.
Governing Law. The validity, construction, and interpretation of this Security Agreement shall be governed by the laws of the State of Washington applicable to contracts made and to be performed wholly within that state. 
 18. Venue and Consent to Jurisdiction. Venue and jurisdiction of any litigation arising out of this Security Agreement shall lie exclusively in the United States
District Court for the Western District of Washington located in Seattle, Washington. The parties hereto hereby submit to the jurisdiction of such court, and the rights granted under this paragraph may be specifically enforced by either party to
this Security Agreement and irrevocably agrees to be bound by any final judgment rendered thereby in connection with this Security Agreement or the Note or any of the other documents referenced herein from which no appeal has been taken or is
available. EACH PARTY HERETO IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS
SPECIFIED ON THE FIRST PAGE HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. 
 19. Waiver of Jury Trial. The parties agree that in the event of any litigation arising out of this Security Agreement, the matters are not suitable for
determination by a jury. All parties hereby waive their right to a jury trial on any matter litigated pursuant to this Security Agreement, and the waiver set forth herein may be specifically enforced by all other parties to this Security Agreement.

 20. Waiver of Notice, Hearing and Bond. GRANTOR WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY UCC OF ITS RIGHTS,
FROM AND AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT, TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL. GRANTOR WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF UCC IN CONNECTION WITH THE
JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH, OR LEVY UPON THE COLLATERAL TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF UCC TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER PRELIMINARY OR
PERMANENT INJUNCTION, THIS SECURITY AGREEMENT. 
 21. Rules of Construction. All parties have been actively represented by counsel throughout the
negotiations leading to the execution and delivery of this Security Agreement. Consequently, the usual rules of construction of documents against the interest of the party drafting the same are hereby waived, and the parties stipulate that this
Security Agreement and the documents contemplated thereby be construed in accordance with the intent of the parties as expressed herein or therein. 
 22.
Governing Provisions. To the extent any provisions of this Security Agreement are inconsistent with any provisions in the Settlement, Note, or Guaranty, the provisions of this Security Agreement shall govern. 

 23. Headings. Section headings are not to be considered part of this Security Agreement and are included solely
for convenience and reference and are not intended to be full or accurate descriptions of the content thereof. 
 24. Number, Gender and Persons: In
this Security Agreement, words importing the singular number only shall include the plural and vice versa, words importing gender shall include all genders and words importing persons shall include individuals, corporations, partnerships,
associations, trusts, unincorporated organizations, governmental bodies and other legal or business entities of any kind whatsoever. 
 25. Acknowledgment Regarding Licensing and Distributions. Pursuant to Section 5 of the Settlement
Agreement, UCC acknowledges and agrees that, notwithstanding any provision of this Security Agreement to the contrary, (i) Grantors contemplate that Grantors will sublicense, franchise and grant distribution rights in the Trademarks and related
rights in the Territory before the Obligations are paid in full, and that (ii) so long as UCC receives two thirds (2/3rd) of any distributions in
any form that are otherwise to be paid to TCAP, whether in cash or otherwise, on the same day that the remaining one third (1/3) is distributed to TCAP or TCAP’s designee, and so long as all sublicensees, franchisees and distributors are
notified of UCC’s security interest in the Trademarks prior to entering into any such relationship, then UCC consents to such sublicenses, franchises and distribution rights in advance. UCC further agrees that that (i) TCAP may distribute
to Tully’s or any other party that remaining one third (1/3) of any distribution from TC-P and (ii) any such distribution made before TCAP or Tully’s default under the Settlement Agreement or any Exhibit thereto shall not be part
of the Collateral and shall belong exclusively to Tully’s or any other party to whom it has been distributed, and (iii) UCC hereby release any and all of its rights with respect to such pre-default distributions. Tully’s acknowledges
and agrees that, any proceeds not paid to Tully’s prior to such a default shall be subject to Grantor’s rights to such proceeds under the Settlement Agreement and any Exhibit thereto. 
 IN WITNESS WHEREOF, Tully’s and TCAP have each caused this Security Agreement to be executed and delivered by a duly authorized representative as of the day first
above written. 
  

																	
	TULLY’S COFFEE ASIA PACIFIC, INC.	 		 	TULLY’S COFFEE CORPORATION
					
	By:	 	 	 		 	By:	 	 
		 		 	Title:	 	 	 		 		 		 	Title:	 	 

 (CONTINUED NEXT PAGE) 

			
	 STATE OF WASHINGTON
	  	)
		  	) ss.
	 COUNTY OF KING
	  	)

 On this day personally appeared before me
                    , to me known to be the individual described in and who executed the within and foregoing instrument, and acknowledged
that he/she signed the same as his/her free and voluntary act for the uses and purposes therein mentioned. 
 GIVEN UNDER MY HAND AND
OFFICIAL SEAL this              day of                     , 2007.

  

	
	
	 
	 (Signature)

	
	 (Please print name legibly)

 NOTARY PUBLIC in and for the State of Washington 
 My commission expires:                     . 
 *        *        * 
  

					
	STATE OF WASHINGTON	  	)	  	
		  	)	  	ss.
	COUNTY OF KING	  	)	  	

 On this day personally appeared before me
                    , to me known to be the individual described in and who executed the within and foregoing instrument, and acknowledged
that he/she signed the same as his/her free and voluntary act for the uses and purposes therein mentioned. 
 GIVEN UNDER MY HAND AND
OFFICIAL SEAL this              day of                     , 2007.

  

	
	
	 
	 (Signature)

	
	 (Please print name legibly)

 NOTARY PUBLIC in and for the State of Washington 
 My commission expires:                     . 

 EXHIBIT A 
 Trademarks 
 [Tully’s to insert full list of Trademarks (including domain names) here, subject to UCC’s
approval] 

 EXHIBIT B 
 Subordination Agreement 
 [to be inserted]

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