Document:

PEET'S COFFEE & TEA, INC.
                             KEY EMPLOYEE AGREEMENT

     This Key Employee Agreement ("Agreement") is entered into as of the 6th day
of  May,  2002 by and between Patrick J. O'Dea ("Executive") and PEET'S COFFEE &
TEA,  INC.  (the  "Company"),  a  Washington  corporation.

     WHEREAS,  the  Company  desires  to  employ  Executive  to provide personal
services  to  the  Company,  and  wishes  to  provide  Executive  with  certain
compensation  and  benefits  in  return  for  his  services;

     WHEREAS,  the  Company  has  adopted  the  Peet's Coffee & Tea Key Employee
Severance  Benefit Plan (the "Key Employee Plan") and the Peet's Companies, Inc.
Change of Control Option Acceleration Plan (the "Option Acceleration Plan"); and

     WHEREAS,  Executive  wishes  to  be  employed  by  the  Company and provide
personal  services  to  the  Company  in  return  for  certain  compensation and
benefits,  including  the  benefits provided under the Key Employee Plan and the
Option  Acceleration  Plan,  as  modified  herein;

     NOW,  THEREFORE,  in  consideration  of  the  mutual promises and covenants
contained  herein,  it  is  hereby  agreed  by and between the parties hereto as
follows:

1.     EMPLOYMENT  BY  THE  COMPANY.

     1.1  TITLES  AND  RESPONSIBILITIES.  Subject to terms set forth herein, the
Company  agrees  to  employ  Executive  in  the positions of President and Chief
Executive  Officer  and  Executive hereby accepts employment effective as of the
date  set  forth  above  (the  "Effective  Date").  Executive  shall work at the
Company's  Emeryville,  California  offices.  During  his  employment  with  the
Company,  Executive  will  devote  his best efforts and substantially all of his
business time and attention (except for vacation periods as set forth herein and
reasonable  periods  of  illness  or other incapacity permitted by the Company's
general  employment  policies)  to  the  business  of  the  Company.

     1.2  EXECUTIVE POSITIONS. Executive will serve in an executive capacity and
shall  perform  such  duties  as  are customarily associated with his positions,
consistent  with  the Bylaws of the Company as now constituted and as reasonably
required  by  the  Company's  Board  of  Directors  (the  "Board").

     1.3  COMPANY  EMPLOYMENT  POLICIES. The employment relationship between the
parties  shall also be governed by the general employment policies and practices
of  the  Company,  including  those  relating  to  protection  of  confidential
information  and  assignment  of  inventions, except that when the terms of this
Agreement  differ  from or are in conflict with the Company's general employment
policies  or  practices,  this  Agreement  shall  control.

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2.     COMPENSATION.

     2.1  SALARY. For services to be rendered hereunder, Executive shall receive
a  monthly  base  salary  of  $35,000  ($420,000  annualized),  less  payroll
withholdings  and  required  deductions,  payable on a biweekly basis. Executive
will  be  considered  for  annual increases in base salary, as determined in the
sole  discretion  of  the  Board or the Compensation Committee of the Board (the
"Compensation  Committee").

     2.2  EQUITY  COMPENSATION.

          (A)  STOCK  OPTION  GRANT.  Subject  to the approval of the Board, the
     Company  shall grant a stock option to Executive to purchase 300,000 shares
     of  the common stock of the Company, subject to the terms and conditions of
     the Company's 2000 Equity Incentive Plan and the corresponding Stock Option
     Agreement  issued  to  Executive (the "Option"). The Option shall vest over
     four  (4) years with twenty-five percent (25%) of the shares subject to the
     Option  vesting  on  the  first  anniversary  of the Effective Date and the
     remaining seventy-five percent (75%) of the shares vesting in equal monthly
     amounts  thereafter. The exercise price of the Option shall be equal to the
     market  closing  price  of  the  underlying common stock on the trading day
     before the date of grant. It is intended that the Option will qualify as an
     "incentive  stock option" within the meaning of Section 422 of the Internal
     Revenue  Code  of  1986,  as  amended  (an  "ISO")  to  the  maximum extent
     permissible.

          (B) PERFORMANCE - BASED STOCK OPTION GRANT. Subject to the approval of
     the Board, the Company shall grant a nonstatutory stock option to Executive
     to  purchase  300,000 shares of the common stock of the Company, subject to
     the  terms  and  conditions of the Company's 2000 Equity Incentive Plan and
     the  corresponding  Stock  Option  Agreement  issued  to  Executive  (the
     "Performance-based  Option").  The  exercise price of the Performance-based
     Option  shall be equal to the market closing price of the underlying common
     stock  on  the  trading day before the date of grant. The Performance-based
     Option is not intended to qualify as an "incentive stock option" within the
     meaning  of  Section  422 of the Internal Revenue Code of 1986, as amended.
     One  hundred  percent (100%) of the shares subject to the Performance-based
     Option shall vest on December 31, 2008; provided, however, that the vesting
     of  the  Performance-based  Option  shall  accelerate  as  follows:

               (I)  100,000 shares subject to the Performance-based Option shall
          vest:

                    (1)  on  the  twentieth (20th) market trading day out of any
               twenty-five  (25)  consecutive market trading days that the daily
               market closing price of the Company's common stock is at or above
               $30.00  per  share  (adjusted  for  post-grant  splits),  if such
               milestone is achieved after the second anniversary of the date of
               grant  but  on  or  before  December  31,  2006;  or

                    (2)  on  the  twentieth (20th) market trading day out of any
               twenty-five  (25)  consecutive market trading days that the daily
               market closing price of the Company's common stock is at or above
               $30.04  per  share  (adjusted  for  post-grant  splits),  if such
               milestone  is  achieved  during  calendar  year  2007;  or

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                    (3)  on  the  twentieth (20th) market trading day out of any
               twenty-five  (25)  consecutive market trading days that the daily
               market closing price of the Company's common stock is at or above
               $34.24  per  share  (adjusted  for  post-grant  splits),  if such
               milestone  is  achieved  during  calendar  year  2008.

               (II) 100,000 shares subject to the Performance-based Option shall
          vest:

                    (1)  on  the  twentieth (20th) market trading day out of any
               twenty-five  (25)  consecutive market trading days that the daily
               market closing price of the Company's common stock is at or above
               $30.00  per  share  (adjusted  for  post-grant  splits),  if such
               milestone is achieved after the second anniversary of the date of
               grant  but  on  or  before  December  31,  2006;  or

                    (2)  on  the  twentieth (20th) market trading day out of any
               twenty-five  (25)  consecutive market trading days that the daily
               market closing price of the Company's common stock is at or above
               $34.94  per  share  (adjusted  for  post-grant  splits),  if such
               milestone  is  achieved  during  calendar  year  2007;  or

                    (3)  on  the  twentieth (20th) market trading day out of any
               twenty-five  (25)  consecutive market trading days that the daily
               market closing price of the Company's common stock is at or above
               $41.05  per  share  (adjusted  for  post-grant  splits),  if such
               milestone  is  achieved  during  calendar  year  2008.

               (III)  100,000  shares  subject  to  the Performance-based Option
          shall  vest:

                    (1)  on  the  twentieth (20th) market trading day out of any
               twenty-five  (25)  consecutive market trading days that the daily
               market closing price of the Company's common stock is at or above
               $30.00  per  share  (adjusted  for  post-grant  splits),  if such
               milestone is achieved after the second anniversary of the date of
               grant  but  on  or  before  December  31,  2006;  or

                    (2)  on  the  twentieth (20th) market trading day out of any
               twenty-five  (25)  consecutive market trading days that the daily
               market closing price of the Company's common stock is at or above
               $40.46  per  share  (adjusted  for  post-grant  splits),  if such
               milestone  is  achieved  during  calendar  year  2007;  or

                    (3)  on  the  twentieth (20th) market trading day out of any
               twenty-five  (25)  consecutive market trading days that the daily
               market closing price of the Company's common stock is at or above
               $48.96  per  share  (adjusted  for  post-grant  splits),  if such
               milestone  is  achieved  during  calendar  year  2008.

     2.3  OTHER  BENEFITS. Executive shall accrue vacation at a rate of four (4)
weeks  per  year,  subject  to  any  Company policy regarding maximum accrual of
vacation. The Company shall reimburse Executive for financial planning expenses,
up  to  a  maximum  of  ten  thousand dollars ($10,000) per year. Executive must
provide  adequate  proof  of  expenses incurred. In addition, Executive shall be
entitled  to  all  rights  and  benefits  for  which  he  is  eligible under the

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terms and conditions of the standard Company benefits and compensation practices
which  may  be  in  effect  from time to time and provided by the Company to its
executives  generally.

     2.4  SEVERANCE  AND  CHANGE  OF  CONTROL  PLANS.  Except as modified in, or
inconsistent  with,  this Agreement, Executive is eligible for participation in,
and  subject  to the obligations and benefits pursuant to, the Key Employee Plan
and  the  Option  Acceleration  Plan  (attached  hereto  as  Exhibits  A  and B,
respectively).  Subject to the terms and conditions of the Key Employee Plan and
this  Agreement,  Executive  shall be eligible to receive the benefits listed in
the  Key  Employee Plan's Schedule of Benefits for the Company's Chief Executive
Officer,  including  participation  in an outplacement program for up to six (6)
months after a Covered Termination, at a cost not exceeding ten thousand dollars
($10,000),  provided,  however,  that  the provider of such outplacement program
must  be  reasonably  acceptable  to  the Company and Executive must provide the
Company  adequate  proof  of  the  expenses  incurred.

     2.5  INDEMNIFICATION  AND  INSURANCE. The Company shall indemnify Executive
for all actions taken in his capacity as a director, officer, agent and employee
of  the Company, to the fullest extent permitted by applicable law. In the event
the  Company  offers  any of its officers or directors a written indemnification
agreement, it shall also offer to Executive the opportunity to enter into a like
agreement.

3.     CONFIDENTIAL  INFORMATION,  RIGHTS  AND  DUTIES.

     3.1  CONFIDENTIAL  INFORMATION. Executive specifically agrees that he shall
not  at  any  time,  either  during  or subsequent to the term of the Employee's
employment  with the Company, in any fashion, form or manner, either directly or
indirectly,  unless  expressly  consented  to  in  writing  by the Company, use,
divulge,  disclose  or  communicate  to  any  person  or entity any confidential
information  of any kind, nature or description concerning any matters affecting
or  relating  to the business of the Company, including, but not limited to, the
Company's  sales  and  marketing  methods,  programs  and related data, or other
written  records  used  in  the  Company's  business;  the  Company's  computer
processes,  programs and codes; the names, addresses, buying habits or practices
of  any  of  its  clients or customers; compensation paid to other employees and
independent  contractors  and  other  terms  of  these employment or contractual
relationships; or any other confidential information of, about or concerning the
business  of  the  Company, its manner of operations, or other data of any kind,
nature  or  description. The parties to this Agreement hereby stipulate that, as
between  them,  the  above  information  and  items  are important, material and
confidential  trade  secrets that affect the successful conduct of the Company's
business and its good will, and that any breach of any term of this section is a
material  breach  of  this  Agreement.

     3.2  COMPANY  PROPERTY.  Executive agrees that all office equipment, credit
cards,  entry  cards,  identification  badges,  keys,  notebooks,  documents,
memoranda,  reports,  files,  samples,  books, correspondence, records, business
plans,  forecasts,  financial  information, specifications, agreements, lists or
other  written  and  graphic  records,  and  the  like,  including  tangible  or
intangible  computer  programs,  records  and data, affecting or relating to the
business  of the Company, that Executive might prepare, use, construct, observe,
possess or control (including copies thereof, in while or in part), shall be and
shall remain the Company's sole property (collectively "Company Property"). Upon
the  termination  of  Executive's  employment,

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or  upon  the  Company's request, Executive shall return all Company Property in
his  possession  or  control.

     3.3  NON-INTERFERENCE.  The  parties  acknowledge  that  any  wrongful
interference  with  the  Company's business, property, confidential information,
trade  secrets,  clients,  customers,  employees  or  independent contractors by
Executive  during  the  term  of  his  employment,  or  by  Executive  or any of
Executive's  agents after the term of Executive's employment shall be a material
breach  of  this  Agreement.

     3.4  REMEDIES.  Executive's  duties  under  this  Section  3  shall survive
termination  of Executive's employment with the Company. The parties acknowledge
that  a  remedy  at  law for any breach or threatened breach by Executive of the
provisions  of  this  Section  3 would be inadequate, and agree that the Company
shall  be entitled to injunctive relief in case of any such breach or threatened
breach.

4.     OUTSIDE  ACTIVITIES.

     4.1  ACTIVITIES.  Except  with  the  prior  written  consent  of the Board,
Executive will not during his employment with the Company undertake or engage in
any  other  employment,  occupation  or  business enterprise, other than ones in
which  Executive is a passive investor. Upon receiving Board approval, Executive
may  engage in civic and not-for-profit activities so long as such activities do
not  materially  interfere  with  the  performance  of  his  duties  hereunder.

     4.2  INVESTMENTS  AND INTERESTS. Executive agrees not to acquire, assume or
participate  in,  directly  or  indirectly, any material position, investment or
interest known by him to be adverse or antagonistic to the Company, its business
or  prospects,  financial  or  otherwise.

     4.3 NON-COMPETITION. During his employment by the Company, except on behalf
of  the  Company,  Executive  will  not  directly  or  indirectly, whether as an
officer,  director, stockholder, partner, proprietor, associate, representative,
consultant,  or  in  any  capacity  whatsoever  engage  in,  become  financially
interested  in,  be  employed  by or have any business connection with any other
person,  corporation,  firm,  partnership  or other entity whatsoever which were
known  by him to compete directly with the Company, throughout the world, in any
line  of  business  engaged  in  (or  planned  to be engaged in) by the Company.

5.     TERMINATION  OF  EMPLOYMENT.

     5.1  AT-WILL  EMPLOYMENT.  Executive's  employment  relationship  with  the
Company  is  at-will.  Either  Executive  or the Company shall have the right to
terminate  Executive's  employment with the Company at any time, with or without
Cause (as defined in the Key Employee Plan), and with or without advance notice.

     5.2 TERMINATION FOR CAUSE, DEATH OR DISABILITY OR VOLUNTARY TERMINATION. If
the  Company  terminates  Executive's  employment  at  any time for Cause, or if
Executive's  employment is terminated due to his death or Disability (as defined
in the Key Employee Plan), or if Executive voluntarily terminates his employment
other  than due to a "Voluntary Termination with Good Reason" (as defined in the
Key  Employee  Plan), Executive's salary shall cease on the date of termination,
and  Executive  will  not be entitled to severance pay, pay in lieu

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of  notice  or  any  other  such compensation or benefits, other than payment of
salary  and  vacation accrued through the date of termination and other benefits
as expressly required in such event by applicable law or the terms of applicable
benefit  plans.  Executive's  stock  options  shall cease vesting on the date of
termination  and  shall  be  exercisable  under  the terms of the Company's 2000
Equity  Incentive  Plan  and the corresponding Stock Option Agreements issued to
Executive.

     5.3 SEVERANCE BENEFITS. In the event (i) the Company terminates Executive's
employment  without  Cause  or  if  Executive terminates his employment due to a
Voluntary  Termination  with  Good  Reason  or  (ii)  Executive's  employment is
terminated  in  a  Change of Control Termination (as defined in the Key Employee
Plan),  Executive shall be eligible for the severance benefits provided pursuant
to a Covered Termination (if (i)) or pursuant to a Change of Control Termination
(if  (ii)), as applicable, under the Key Employee Plan (as identified in the Key
Employee Plan's Schedule of Benefits for the Company's Chief Executive Officer),
subject  to  Executive's signing and making effective a Release Agreement as set
forth  in  Section  9  below.

     5.4 CESSATION. If Executive violates any provision of Sections 3, 7 or 8 of
this  Agreement,  any  severance  payments  or  other benefits being provided to
Executive  will  cease  immediately,  and  Executive will not be entitled to any
further  compensation  from  the  Company.

6.     CHANGE  OF  CONTROL.

     6.1  DEFINITION.  Notwithstanding  the  definition  of  Change  of  Control
contained  in  Section  7(e) of the Key Employee Plan or Section 3 of the Option
Acceleration  Plan,  as applied to Executive for purposes of this Agreement, the
Key  Employee  Plan  and the Option Acceleration Plan, "Change of Control" shall
mean  the occurrence of any of the following: (i) a sale of all or substantially
all  of  the assets of the Company; (ii) a merger or consolidation involving the
Company  in  which  the  Company  is  not  the  surviving  corporation  and  the
shareholders  of  the  Company  immediately  prior  to  the  completion  of such
transaction  hold,  directly or indirectly, less than fifty percent (50%) of the
beneficial  ownership  (within  the  meaning of Rule 13d-3 promulgated under the
Securities  Exchange  Act of 1934, as amended (the "Exchange Act") or comparable
successor  rules)  of the securities of the surviving corporation (excluding any
shareholders  who  possessed  a  beneficial  ownership interest in the surviving
corporation prior to the completion of such transaction); (iii) a reverse merger
involving the Company in which the Company, is the surviving corporation but the
shares  of  common  stock  of  the  Company  (the  "Common  Stock")  outstanding
immediately  preceding  the  merger  are  converted by virtue of the merger into
other  property,  whether  in the form of securities, cash or otherwise, and the
shareholders  of  the  Company,  immediately  prior  to  the  completion of such
transaction  hold,  directly or indirectly, less than fifty percent (50%) of the
beneficial  ownership  (within  the  meaning of Rule l3d-3 promulgated under the
Exchange Act, or comparable successor rules) of the surviving entity or, if more
than  one  entity  survives  the  transaction,  the  controlling entity; (iv) an
acquisition  by  any person, entity or group within the meaning of Section 13(d)
or  14(d)  of the Exchange Act or any comparable successor provisions (excluding
any  employee  benefit  plan,  or  related trust, sponsored or maintained by the
Company  or an Affiliate of the Company) of the beneficial ownership (within the
meaning  of  Rule  13d-3  promulgated  under  the  Exchange  Act,  or comparable
successor  rules)  of  securities  of  the  Company  representing at least fifty
percent  (50%)  of the combined voting power entitled to vote in the election of
directors;  or,  (v)  in the event that the individuals who, as of the Effective
Date,

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are  members  of the Company's Board of Directors (the "Incumbent Board"), cease
for any reason to constitute at least fifty percent (50%) of the Company's Board
of  Directors.  (If  the  election,  or nomination for election by the Company's
shareholders,  of any new member of the Company's Board of Directors is approved
by  a  vote  of  at  least  fifty percent (50%) of the Incumbent Board, such new
member  of  the  Company's Board of Directors shall be considered as a member of
the  Incumbent  Board.)

     6.2  CHANGE  OF  CONTROL ACCELERATION. In the event of a Change of Control,
Executive  shall  be  eligible  for  accelerated vesting of his stock options as
described  in  the  Option Acceleration Plan, subject to Executive's signing and
making  effective  a  Release  Agreement  in  a  form acceptable to the Company.

     6.3  PARACHUTE  PAYMENTS.  In the event that the severance, acceleration of
stock  options  and  other  benefits provided for in this Agreement or otherwise
payable  to  Executive (i) constitute "parachute payments" within the meaning of
Section  28OG (as it may be amended or replaced) of the Internal Revenue Code of
1986,  as  amended  or  replaced (the "Code") and (ii) but for this Section 6.3,
would be subject to the excise tax imposed by Section 4999 (as it may be amended
or replaced) of the Code (the "Excise Tax"), then Executive's benefits hereunder
shall  be  either

          (A)  provided  to  Executive  in  full,  or

          (B)  provided  to  Executive only as to such lesser extent which would
     result  in  no  portion  of  such benefits being subject to the Excise Tax,
     whichever  of  the  foregoing  amounts,  taking into account the applicable
     federal,  state  and  local income taxes and the Excise Tax, results in the
     receipt  by  Executive  on  an  after-tax  basis, of the greatest amount of
     benefits,  notwithstanding that all or some portion of such benefits may be
     taxable  under  the  Excise Tax. Unless the Company and Executive otherwise
     agree  in  writing, any determination required under this Section 6.3 shall
     be  made  in  writing  in  good  faith  by the Company's independent public
     accountants  (the  "Accountants").  In the event of a reduction in benefits
     hereunder, Executive shall be given the choice of which benefits to reduce.
     For  purposes  of making the calculations required by this Section 6.3, the
     Accountants  may  make reasonable assumptions and approximations concerning
     applicable  taxes  and  may  rely on reasonable, good faith interpretations
     concerning  the  application  of  the Code. The Company and Executive shall
     furnish  to  the  Accountants  such  information  and  documents  as  the
     Accountants  may  reasonably request in order to make a determination under
     this  Section  6.3.  The  Company  shall bear all costs the Accountants may
     reasonably  incur  in connection with any calculations contemplated by this
     Section  6.3.

7.     RESTRICTIVE  COVENANT.

     In the event Executive's employment with the Company is terminated due to a
Change  in  Control  Termination  (as  such  term is defined in the Key Employee
Plan),  then  for  two  (2)  years  immediately  following the termination date,
Executive  shall  not, without first obtaining the prior written approval of the
Company,  directly  or  indirectly  engage  or  prepare  to engage in the coffee
business in any way or in any place, or directly or indirectly engage or prepare
to  engage  in  any  other activities in competition with the Company, or accept
employment  or  establish  a business

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relationship  with  a  business engaged in or preparing to engage in competition
with  the  Company,  in any geographical location in which the Company as of the
termination  date  either  conducts  or  plans to conduct business. If Executive
violates  this Section 7, it is agreed that any severance benefits otherwise due
to  be  received  by  Executive after such violation will immediately cease, and
further that (a) despite the cessation of such benefits, the release provided by
Executive  in connection with such benefits will remain in full force and effect
and  (b)  the  Company's remedy of cessation of payment of severance benefits to
Executive  is  non-exclusive.

8.     NONSOLICITATION.

     While  employed by the Company, and for two (2) years immediately following
the  termination  of  Executive's employment, Executive shall not to directly or
through  others  solicit,  attempt  to  solicit,  induce, or otherwise cause any
employee  or  independent  contractor  or  consultant  to  terminate  his or her
relationship  with  the  Company  in  order to become an employee, consultant or
independent  contractor to or for any other person or entity.  For two (2) years
immediately following the termination of Executive's employment, Executive shall
not directly or indirectly solicit (for a business competitive with the Company)
the business of any customer of the Company which at the time of the termination
of  Executive's  employment or one (1) year immediately prior thereto was listed
on  the  Company's  customer  list.  If Executive violates this Section 8, it is
agreed  that  any  severance  benefits otherwise due to be received by Executive
after  such  violation  will immediately cease, and further that (a) despite the
cessation of such benefits, the release provided by Executive in connection with
such  benefits will remain in full force and effect and (b) the Company's remedy
of  cessation  of  payment  of severance benefits to Executive is non-exclusive.

9.     RELEASE.

     Prior  to receiving any of the severance benefits set forth in Sections 5.3
and  6.2 of this Agreement, Executive shall execute and make effective a Release
Agreement substantially in the form attached hereto as Exhibit C (the "Release")
after  his  termination  of employment.  Unless the Release is executed and made
effective  by Executive and delivered to the Company within twenty-one (21) days
after  the  termination  of  Executive's  employment with the Company, Executive
shall  not receive any severance benefits from the Company. Additionally, unless
the  Release  is  executed  and made effective by Executive and delivered to the
Company  within  twenty-one  (21)  days  after  the  termination  of Executive's
employment with the Company, the acceleration of Executive's Options as provided
in  this  Agreement shall not apply and Executive's Options in such event may be
exercised  following  the  date  of  Executive's  termination only to the extent
provided under their original terms in accordance with the Company's 2000 Equity
Incentive  Plan (or other applicable stock option plan), the corresponding Stock
Option  Agreement  issued  to  Executive.

10.     GENERAL  PROVISIONS.

     10.1  NOTICES.  Any notices provided hereunder must be in writing and shall
be  deemed  effective  upon the earlier of personal delivery (including personal
delivery by facsimile transmission or the third day after mailing by first class
mail,  to  the  Company  at  its primary office location and to Executive at his
address  as  listed  on  the  Company  payroll.

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     10.2 SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but  if  any  provision  of  this  Agreement  is  held to be invalid, illegal or
unenforceable  in  any  respect  under  any  applicable  law  or  rule  in  any
jurisdiction,  such  invalidity,  illegality or unenforceability will not affect
any  other  provision  or  any  other  jurisdiction,  but this Agreement will be
reformed,  construed  and  enforced  in  such  jurisdiction  as if such invalid,
illegal  or  unenforceable  provisions  had  never  been  contained  herein.

     10.3  WAIVER.  If either party should waive any breach of any provisions of
this  Agreement,  he  or  it  shall  not  thereby  be  deemed to have waived any
preceding  or  succeeding  breach  of  the  same  or any other provision of this
Agreement.

     10.4  COMPLETE  AGREEMENT.  This Agreement, together with Key Employee Plan
and  the  Option  Acceleration  Plan,  constitutes  the entire agreement between
Executive  and  the Company and is the complete, final, and exclusive embodiment
of  their  agreement  and  supersedes  any  prior agreement written or otherwise
between  Executive  and  the  Company  with regard to this subject matter. It is
entered  into without reliance on any promise or representation other than those
expressly  contained  herein,  and  it cannot be modified or amended except in a
writing  signed  by  the  Executive  and  a duly authorized member of the Board.

     10.5 COUNTERPARTS. This Agreement may be executed in separate counterparts,
any  one of which need not contain signatures of more than one party, but all of
which  taken  together  will  constitute  one  and  the  same  Agreement.

     10.6  HEADINGS.  The  headings  of  the  sections  hereof  are inserted for
convenience  only  and  shall  not  be deemed to constitute a part hereof nor to
affect  the  meaning  thereof.

     10.7  SUCCESSORS  AND ASSIGNS. This Agreement is intended to bind and inure
to  the  benefit  of  and  be  enforceable  by  Executive, the Company and their
respective successors, assigns, heirs, executors and administrators, except that
Executive  may  not assign any of his duties hereunder and he may not assign any
of  his rights hereunder without the written consent of the Company, which shall
not  be  withheld  unreasonably.

     10.8  ATTORNEYS'  FEES. If either party hereto brings any action to enforce
his  or  its  rights hereunder, the prevailing party in any such action shall be
entitled  to recover his or its reasonable attorneys' fees and costs incurred in
connection  with  such  action.

     10.9  ARBITRATION.  To provide a mechanism for rapid and economical dispute
resolution,  Executive  and the Company agree that any and all disputes, claims,
or  causes  of  action,  in  law  or  equity,  arising  from or relating to this
Agreement  or  its  enforcement, performance, breach, or interpretation, will be
resolved,  to  the  fullest  extent  permitted  by  law,  by final, binding, and
confidential  arbitration  held  in  San  Francisco, California and conducted by
Judicial  Arbitration & Mediation Services/Endispute ("JAMS"), or its successor,
under  its  then-existing  Rules  and Procedures. EXECUTIVE ACKNOWLEDGES THAT BY
AGREEING TO THIS ARBITRATION PROCEDURE, BOTH EXECUTIVE AND THE COMPANY WAIVE THE
RIGHT  TO  RESOLVE  ANY  SUCH  DISPUTE  THROUGH  A  TRIAL  BY  JURY  OR JUDGE OR
ADMINISTRATIVE  PROCEEDING.  The  arbitrator  shall:  (a)  have the authority to
compel  adequate  discovery  for the resolution of the dispute and to award such

                                        9
<PAGE>

relief  as  would  otherwise  be  permitted  by  law;  and  (b)  issue a written
arbitration  decision  including  the  arbitrator's  essential  findings  and
conclusions  and a statement of the award. The arbitrator shall be authorized to
award  any  or  all  remedies that Executive or the Company would be entitled to
seek  in  a  court  of  law. The Company shall pay all JAMS' arbitration fees in
excess  of  those which would be required if the dispute were decided in a court
of  law. Nothing in this Section 10.9 is intended to prevent either Executive or
the  Company  from  obtaining  injunctive relief in court to prevent irreparable
harm  pending  the  conclusion  of  any  such  arbitration.

     10.10  GOVERNING  LAW.  All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the law of the State of
California  as  applied  to  contracts  made and to be performed entirely within
California.

     10.11  CLAIMS,  INQUIRIES  AND  APPEALS.  Notwithstanding  any  of the time
periods  set  forth  in Sections 10(b), 10(c) and 10(d) of the Key Employee Plan
relating  to  written notice periods for denial of claims, extension of time for
review  of  claims,  appeal  period  for  request of review of denial, period of
review  by  Plan Administrator upon request of review, and extension of time for
review  of  denial, all such time periods for purposes of this Agreement and for
purposes  of  the Key Employee Plan (with respect to application of the same for
Executive),  shall  be  thirty  (30)  days.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year  first  above  written.

PEET'S  COFFEE  &  TEA,  INC.

By:  /s/  Christopher  P.  Mottern
     -----------------------------
          Christopher  P.  Mottern
          President  and  Chief  Executive  Officer

Date:  May  6,  2002

ACCEPTED  AND  AGREED

PATRICK  J.  O'DEA

By:  /s/  Patrick  J.  O'Dea
     -----------------------

Date:  May  6,  2002

Exhibit  A  -  Peet's  Coffee  &  Tea  Key  Employee  Severance  Benefit  Plan

Exhibit  B  -  Peet's Companies, Inc. Change of Control Option Acceleration Plan

Exhibit  C  -  Release  Agreement

                                       10
<PAGE>
                                    EXHIBIT A
            PEET'S COFFEE & TEA KEY EMPLOYEE SEVERANCE BENEFIT PLAN
                                        1
<PAGE>
                                    EXHIBIT B
        PEET'S COMPANIES, INC. CHANGE OF CONTROL OPTION ACCELERATION PLAN

                                        1
<PAGE>
                                    EXHIBIT C
                                RELEASE AGREEMENT
I  understand  that my employment with Peet's Coffee & Tea, Inc. (the "Company")
terminated  effective  _____________________, ____ (the "Separation Date").  The
Company  has agreed that if I choose to sign this Release Agreement ("Release"),
the  Company  will  pay  me  certain  severance  benefits  (minus  the  standard
withholdings and deductions) pursuant to the terms of the Key Employee Agreement
entered  into  as  of  the _____ day of May, 2002 between myself and the Company
(the  "Agreement").  I understand that I am not entitled to such benefits unless
I  sign  this  Release,  and  it  becomes  fully  effective.  I understand that,
regardless  of  whether  I  sign this Release, the Company will pay me all of my
accrued  salary and vacation through the Separation Date, to which I am entitled
by  law.

In  consideration for the severance benefits I am receiving under the Agreement,
as  described  therein,  I hereby agree to release the Company and its officers,
directors,  agents,  attorneys,  employees, shareholders, parents, subsidiaries,
affiliates,  successors,  and  assigns,  of  and  from  any  and  all  claims,
liabilities,  demands,  causes  of  action,  costs,  expenses,  attorneys' fees,
damages,  indemnities  and obligations of every kind and nature, in law, equity,
or  otherwise,  known  or  unknown,  suspected  and  unsuspected,  disclosed and
undisclosed,  liquidated  or contingent, arising out of or in any way related to
agreements,  events,  acts  or  conduct  at  any time prior to and including the
execution  date of this Release, including but not limited to:  any and all such
claims and demands directly or indirectly arising out of or in any way connected
with my employment with the Company or the conclusion of that employment; claims
or  demands  related to salary, bonuses, commissions, incentive payments, stock,
stock  options,  or  any  ownership or equity interests in the Company, vacation
pay,  personal  time  off,  fringe  benefits,  expense reimbursements, severance
benefits, or any other form of compensation; claims pursuant to any federal, any
state  or  any  local law, statute, common law or cause of action including, but
not  limited  to,  the federal Civil Rights Act of 1964, as amended; the federal
Americans  with Disabilities Act of 1990; the federal Employee Retirement Income
Security  Act;  the California Fair Employment and Housing Act, as amended; tort
law;  contract  law;  wrongful  discharge;  discrimination;  harassment;  fraud;
misrepresentation;  defamation;  libel;  emotional  distress;  and breach of the
implied  covenant  of  good  faith  and  fair  dealing.

In  releasing  claims  unknown  to  me  at  present, I am waiving all rights and
benefits  under  Section 1542 of the California Civil Code, and any law or legal
principle  of  similar  effect in any jurisdiction:  "A GENERAL RELEASE DOES NOT
EXTEND  TO  CLAIMS  WHICH  THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS
FAVOR  AT  THE  TIME  OF  EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY  AFFECTED  HIS  SETTLEMENT  WITH  THE  DEBTOR."

I  understand that if I am forty (40) years of age or older as of the Separation
Date  this paragraph will apply and this Release will not be effective until the
ADEA  Effective  Date,  defined  below.  I  acknowledge  that I am knowingly and
voluntarily  waiving  and  releasing any rights I may have under the federal Age
Discrimination  in  Employment  Act  of  1967,  as  amended  ("ADEA").  I  also
acknowledge  that  the consideration given for the waiver in the above paragraph
is  in  addition  to  anything of value to which I was already entitled.  I have
been  advised  by this

                                        1
<PAGE>

writing, as required by the ADEA that: (a) my waiver and release do not apply to
any claims that may arise after my signing of this Release; (b) I should consult
with  an attorney prior to signing this Release; (c) I have twenty-one (21) days
within which to consider this Release (although I may choose to voluntarily sign
this  Release  earlier);  (d) I have seven (7) days after I sign this Release to
revoke it; and (e) this Release will not be effective until the eighth day after
this  Release  has  been  signed  by  me  (the  "ADEA  Effective  Date").

I understand that if I am less than forty (40) years of age as of the Separation
Date,  the  immediately preceding paragraph will not apply and this Release will
be  effective  on  the  date  I  execute  and  return  it  to  the  Company.

I  accept  and  agree  to  the  terms  and  conditions  stated  above:

Date                                                PATRICK  J.  O'DEA

                                        2
<PAGE>Exhibit 10.1 to Form 10-Q for NN, Inc.

                                                                Exhibit 10.1

                       AMENDMENT NO. 3 TO CREDIT AGREEMENT

         THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT (this "Amendment"), dated July
31, 2002, is made and entered into on the terms and conditions hereinafter set
forth, by and among NN, INC., a Delaware corporation (the "Borrower"), the
subsidiaries of the Borrower who are parties to the Credit Agreement, as
hereinafter defined (the "Guarantors"), the several lenders who are now or
hereafter become parties to the Credit Agreement (the "Lenders"), AMSOUTH BANK,
an Alabama state bank, individually and as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), and BANK ONE, KENTUCKY, NA,
individually and as co-agent for the Lenders (in such capacity, the "Co-Agent").

                                    RECITALS:

     1. Pursuant to a Credit Agreement dated as of July 20, 2001, among the
Borrower, the Guarantors, the Administrative Agent, the Lenders and the
Co-Agent, as amended by that certain Amendment No. 1 to Credit Agreement dated
October 4, 2001, and that certain Amendment No. 2 to Credit Agreement dated July
12, 2002 (as the same heretofore may have been and/or hereafter may be amended,
restated, supplemented, extended, renewed, replaced or otherwise modified from
time to time, the "Credit Agreement"), the Lenders have agreed to make Loans,
all as more specifically described in the Credit Agreement. Capitalized terms
used but not otherwise defined in this Agreement have the same meanings as in
the Credit Agreement.

     2. The parties hereto desire to amend the Credit Agreement in certain
respects, as more particularly hereinafter set forth.

                                   AGREEMENTS:

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

     1. Defined Terms. Subsection 1.1 of the Agreement is hereby amended by
amending the definition of "Revolving Commitment Period Expiration Date" to
provide as follows:

          "Revolving Commitment Period Expiration Date" shall mean July 25,
     2004.

     2. Extension Fee. Upon execution of this Amendment, the Borrower shall pay
to the Administrative Agent, for distribution to the Lenders in proportion to
their respective Percentages, an extension fee in the amount of $25,000.00.

     3. Effectiveness. This Amendment shall be effective only upon execution and
delivery by the Borrower, the Guarantors, the Administrative Agent and the
Lenders.

     4. Representations and Warranties of the Borrower and the Guarantors. As an
inducement to the Administrative Agent, the Co-Agent and the Lenders to enter
into this Amendment, the Borrower and the Guarantors hereby represent and
warrant to the Administrative Agent, the Co-Agent and the Lenders that, on and
as of the date hereof:

               (a) the representations and warranties contained in the Credit
          Agreement and the other Loan Documents are true and correct, except
          for (1) representations and warranties that expressly relate to an
          earlier date, which remain true and correct as of said earlier date,
          and (2) representations and warranties that have become untrue or
          incorrect solely because of changes permitted by the terms of the
          Credit Agreement and the other Loan Documents, and

               (b) no Default or Event of Default has occurred and is
          continuing.

     5. Effect of Amendment; Continuing Effectiveness of Credit Agreement and
Loan Documents.

               (a) Neither this Amendment nor any other indulgences that may
          have been granted to the Borrower or any of the Guarantors by the
          Administrative Agent, the Co-Agent or any Lender shall constitute a
          course of dealing or otherwise obligate the Administrative Agent, the
          Co-Agent or any Lender to modify, expand or extend the agreements
          contained herein, to agree to any other amendments to the Credit
          Agreement or to grant any consent to, waiver of or indulgence with
          respect to any other noncompliance with any provision of the Loan
          Documents.

               (b) This Amendment shall constitute a Loan Document for all
          purposes of the Credit Agreement and the other Loan Documents. Except
          to the extent amended hereby, the Credit Agreement, the other Loan
          Documents and all terms, conditions and provisions thereof shall
          continue in full force and effect in all respects.

     6. Counterparts. This Amendment may be executed in multiple counterparts or
copies, each of which shall be deemed an original hereof for all purposes. One
or more counterparts or copies of this Amendment may be executed by one or more
of the parties hereto, and some different counterparts or copies executed by one
or more of the other parties. Each counterpart or copy hereof executed by any
party hereto shall be binding upon the party executing same even though other
parties may execute one or more different counterparts or copies, and all
counterparts or copies hereof so executed shall constitute but one and the same
agreement. Each party hereto, by execution of one or more counterparts or copies
hereof, expressly authorizes and directs any other party hereto to detach the
signature pages and any corresponding acknowledgment, attestation, witness or
similar pages relating thereto from any such counterpart or copy hereof executed
by the authorizing party and affix same to one or more other identical
counterparts or copies hereof so that upon execution of multiple counterparts or
copies hereof by all parties hereto, there shall be one or more counterparts or
copies hereof to

                                       2

which is(are) attached signature pages containing signatures of all parties
hereto and any corresponding acknowledgment, attestation, witness or similar
pages relating thereto.

     7. Miscellaneous.

          (a) This Amendment shall be governed by, construed and enforced in
     accordance with the laws of the State of Tennessee, without reference to
     the conflicts or choice of law principles thereof.

          (b) The headings in this Amendment and the usage herein of defined
     terms are for convenience of reference only, and shall not be construed as
     amplifying, limiting or otherwise affecting the substantive provisions
     hereof.

          (c) Any reference herein to any instrument, document or agreement, by
     whatever terminology used, shall be deemed to include any and all
     amendments, modifications, supplements, extensions, renewals, substitutions
     and/or replacements thereof as the context may require.

          (d) When used herein, (1) the singular shall include the plural, and
     vice versa, and the use of the masculine, feminine or neuter gender shall
     include all other genders, as appropriate, (2) "include", "includes" and
     "including" shall be deemed to be followed by "without limitation"
     regardless of whether such words or words of like import in fact follow
     same, and (3) unless the context clearly indicates otherwise, the
     disjunctive "or" shall include the conjunctive "and".

                          [Signatures Begin Next Page]

                                       3

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the date first written above.

                                     BORROWER:

                                     NN, INC.,
                                     a Delaware corporation

                                     By: /s/ William C. Kelly, Jr.
                                         --------------------------------------
                                           Name: William C. Kelly, Jr.
                                           Title: Treasurer

                                     GUARANTORS:

                                     INDUSTRIAL MOLDING GP, LLC,
                                     a Delaware limited liability company

                                     By:  /s/ David L. Dyckman
                                        ---------------------------------------
                                           Name: David L. Dyckman
                                           Title: Manager

                                     INDUSTRIAL MOLDING LP, LLC,
                                     a Tennessee limited liability company

                                     By: /s/ William C. Kelly, Jr.
                                         --------------------------------------
                                           Name: William C. Kelly, Jr.
                                           Title: Treasurer/Manager

                        [Signatures Continued Next Page]

                                       4

                                     INDUSTRIAL MOLDING GROUP, L.P.,
                                     a Tennessee limited partnership

                                     By:  Industrial Molding GP, LLC, a Delaware limited
                                          liability company, its general partner

                                     By:  /s/ David L. Dyckman
                                        ---------------------------------------
                                           Name: David L. Dyckman
                                           Title: Manager

                                     DELTA RUBBER COMPANY,
                                     a Connecticut corporation

                                     By:  /s/ David L. Dyckman
                                        ---------------------------------------
                                           Name: David L. Dyckman
                                           Title: Vice President

                                     LENDERS:

                                     AMSOUTH BANK, as a Lender and as
                                     Administrative Agent

                                     By: /s/ Robert T. Page
                                        ---------------------------------------
                                           Name: Robert T. Page
                                           Title: Vice President

                                     BANK ONE, KENTUCKY, NA, as a Lender and as
                                     Co-Agent

                                     By: /s/ Thelma B. Ferguson
                                        ---------------------------------------
                                           Name: Thelma B. Ferguson
                                           Title: First Vice President

                        [Signatures Continued Next Page]

                                       5

                                     FIRSTAR BANK, N.A., as a Lender

                                     By: /s/ Russell S. Rogers
                                        ---------------------------------------
                                           Name: Russell S. Rogers
                                           Title: Vice President

                                    SUNTRUST BANK, as a Lender

                                     By: /s/ William E. Edwards III
                                        ---------------------------------------
                                           Name: William E. Edwards III
                                           Title: Group Vice President

                                     FIRST TENNESSEE BANK, NATIONAL
                                     ASSOCIATION, as a Lender

                                     By: /s/ Vincent K. Hickam
                                        ---------------------------------------
                                           Name: Vincent K. Hickam
                                           Title: Executive Vice President

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