Document:

Tully's 1999 Employee Stock Purchase Plan

 Exhibit 10.1 
  
 TULLY’S COFFEE CORPORATION 
 1999
EMPLOYEE STOCK PURCHASE PLAN 
 Tully’s Coffee Corporation (the “Company”) does hereby establish its 1999 Employee Stock
Purchase Plan (the “Plan”) as follows: 
 1. PURPOSE OF PLAN. The purpose of this Plan is to provide eligible employees who wish to
become shareholders in the Company a convenient method of doing so. It is believed that employee participation in the ownership of the business will be to the mutual benefit of both the employees and the Company. It is the intention of the Company
to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986. The provisions of the Plan shall, accordingly, be construed so as to extend and limit participation in a manner
consistent with the requirements of that Section of the Code. 
  

	 	2.	DEFINITIONS. 

 2.1 “BASE PAY” means regular
straight time earnings, plus review cycle bonuses and overtime payments, payments for incentive compensation, and other special payments except to the extent that any such item is specifically excluded by the Board of Directors of the Company (the
“Board”). 
 2.2 “ACCOUNT” shall mean the funds accumulated with respect to an individual employee as a result of
deductions from his paycheck for the purpose of purchasing stock under this Plan. The funds allocated to an employee’s account shall remain the property of the respective employee at all times but may be commingled with the general funds of the
Company. 
 2.3 “CODE” shall mean the Internal Revenue Code of 1986 as further amended. 
 3. EMPLOYEES ELIGIBLE TO PARTICIPATE. Any regular employee of the Company or any of its subsidiaries who is in the employ of the Company on one or more
offering dates is eligible to participate in the Plan, except (a) employees whose customary employment is twenty (20) hours or less per week, and (b) employees whose customary employment is for not more than five (5) months in any
calendar year. 
 4. OFFERINGS. There will be twelve separate consecutive six-month offerings pursuant to the Plan. The first offering shall
commence on January 1, 2000 and terminate June 30, 2000. Thereafter, offerings shall commence on each subsequent July 1 and January 1 and terminate each succeeding December 31 and June 30, and the 

 
final offering under this Plan shall commence on July 1, 2005 and terminate on December 31, 2005. In order to become eligible to purchase shares,
an employee must sign an Enrollment Agreement, and any other necessary papers on or before the commencement date (January 1 or July 1) of the particular offering in which he or she wishes to participate. Participation in one offering under the
Plan shall neither limit, nor require, participation in any other offering. 
 5. PRICE. The purchase price per share shall be the lesser of:
(1) 85% of the fair market value of the stock on the offering date; or (2) 85% of the fair market value of the stock on the last business day of the offering. Fair market value shall mean the closing bid price as reported on the National
Association of Securities Dealers Automated Quotation System (the “NASDAQ”), or if the stock is traded on a stock exchange, the closing price for the stock on the principal such exchange. Until such time as the stock is reported on NASDAQ
or listed on an exchange, reference to the fair market value shall be determined on such basis as shall be established or specified for that purpose by the Board or by a committee selected by the Board. Notwithstanding any provision of the Plan to
the contrary, no determination made with respect to the fair market value of common stock subject to an option shall be inconsistent with Section 423 of the Code or regulations promulgated thereunder. 
 6. OFFERING DATE. The “offering date” as used in this Plan shall be the commencement date of the offering, if such date is a regular business
day, or the first regular business day following such commencement date. A different date may be set by resolution of the Board. 
 7. NUMBER
OF SHARES TO BE OFFERED. The maximum number of shares that may be offered under the Plan shall not exceed four million two hundred thousand (4,200,000) shares of the Company; provided that a portion of the shares so authorized may be allocated to
the 1994 Stock Option Plan. The number of shares allocated to each plan shall be determined by the Board but shall not exceed four million two hundred thousand (4,200,000) shares for both plans. The shares to be sold to participants under the
Plan will be common stock of the Company. If the total number of shares allocated to this Plan for which options are to be granted on any date in accordance with Section 10 exceeds the number of shares then available under the Plan (after
deduction of all shares for which options have been exercised or are then outstanding), the Company shall make a pro rata allocation of the shares remaining available in as nearly a uniform manner as shall be practicable and as it shall determine to
be equitable. In such event, the payroll deductions to be made pursuant to the authorizations therefor shall be reduced accordingly and the Company shall give written notice of such reduction to each employee affected thereby. 
  

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	 	8.	PARTICIPATION. 

 8.1 An eligible employee may become a
participant by completing an Enrollment Agreement provided by the Company and filing it with Shareholder Services prior to the commencement of the offering to which it relates. 
 8.2 Payroll deductions for a participant shall commence on the offering date, and shall end on the termination date of such offering unless earlier
terminated by the employee as provided in Paragraph 14. 
  

	 	9.	PAYROLL DEDUCTIONS. 

 9.1 At the time a participant files
his authorization for a payroll deduction, he or she shall elect to have deductions made from his pay on each payday during the time he or she is a participant in an offering at the rate of 2%, 4%, 6%, 8%, or 10% of his base pay. 
 9.2 All payroll deductions made for a participant shall be credited to his account under the Plan. A participant may not make any separate cash payment
into such account nor may payment for shares be made other than by payroll deduction. 
 9.3 A participant may discontinue his participation
in the Plan as provided in Section 14, but no other change can be made during an offering and, specifically, a participant may not alter the rate of his payroll deductions for that offering. 
 10. GRANTING OF OPTION. On the offering date, this Plan shall be deemed to have granted to the participant an option for as many full shares as he or she
will be able to purchase with the payroll deductions credited to his account during his participation in that offering. Nothwithstanding the foregoing, no participant may purchase more than 2,250 shares of stock during any single offering.

 11. EXERCISE OF OPTION. Each employee who continues to be a participant in an offering on the last business day of that offering shall be
deemed to have exercised his option on such date and shall be deemed to have purchased from the Company such number of full shares of common stock reserved for the purpose of the Plan as his accumulated payroll deductions on such date will pay for
at the option price. 
 12. EMPLOYEE’S RIGHTS AS A SHAREHOLDER. No participating employee shall have any right as a shareholder with
respect to any shares until the shares have been purchased in accordance with Section 11 above and the stock has been issued by the Company. 
  

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	 	13.	EVIDENCE OF STOCK OWNERSHIP. 

 13.1 Promptly following the
end of each offering, the number of shares of common stock purchased by each participant shall be deposited into an account established in the participant’s name at a stock brokerage or other financial services firm designated by the Company
(the “ESPP Broker”). 
 13.2 The participant may direct, by written notice to the Company at the time of his enrollment in the
Plan, that his ESPP Broker account be established in the names of the participant and one other person designated by the participant, as joint tenants with right of survivorship, tenants in common, or community property, to the extent and in the
manner permitted by applicable law. 
 13.3 A participant shall be free to undertake a disposition (as that term is defined in
Section 424(c) of the Code) of the shares in his account at any time, whether by sale, exchange, gift, or other transfer of legal title, but in the absence of such a disposition of the shares, the shares must remain in the participant’s
account at the ESPP Broker until the holding period set forth in Section 423(a) of the Code has been satisfied. With respect to shares for which the Section 423(a) holding period has been satisfied, the participant may move those shares to
another brokerage account of participant’s choosing or request that a stock certificate be issued and delivered to him. 
 13.4 A
participant who is not subject to payment of U.S. income taxes may move his or her shares to another brokerage account of his or her choosing or request that a stock certificate be issued and delivered to him or her at any time, without regard to
the satisfaction of the Section 423(a) holding period. 
  

	 	14.	WITHDRAWAL. 

 14.1 An employee may withdraw from an
offering, in whole but not in part, at any time prior to the last business day of such offering by delivering a Withdrawal Notice to the Company, in which event the Company will refund the entire balance of his or her deductions as soon as
practicable thereafter. 
 14.2 To re-enter the Plan, an employee who has previously withdrawn must file a new Enrollment Agreement in
accordance with Section 8.1. The employee’s re-entry into the Plan will not become effective before the beginning of the next offering following the employees’ withdrawal, and if the withdrawing employee is an officer of the Company
within the meaning of Section 16 of the Securities Exchange Act of 1934, the employee may not re-enter the Plan before the beginning of the second offering following his or her withdrawal. 
 15. CARRYOVER OF ACCOUNT. At the termination of each offering the Company shall automatically re-enroll the employee in the next offering, and the

  

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balance in the employee’s account shall be used for option exercises in the new offering, unless the employee has advised the Company otherwise. Upon
termination of the Plan, the balance of each employee’s account shall be refunded to him or her. 
 16. INTEREST. No interest will be
paid or allowed on any money in the accounts of participating employees. 
 17. RIGHTS NOT TRANSFERABLE. No employee shall be permitted to
sell, assign, transfer, pledge, or otherwise dispose of or encumber either the payroll deductions credited to that employees account or any rights with regard to the exercise of an option or to receive shares under the Plan other than by will or the
laws of descent and distribution, and such right and interest shall not be liable for, or subject to, the debts, contracts, or liabilities of the employee. If any such action is taken by the employee, or any claim is asserted by any other party in
respect of such right and interest whether by garnishment, levy, attachment or otherwise, such action or claim will be treated as an election to withdraw funds in accordance with Section 14. 
 18. TERMINATION OF EMPLOYMENT. Upon termination of employment for any reason whatsoever, including but not limited to death or retirement, the balance in
the account of a participating employee shall be paid to the employee or the employee’s estate. 
 19. AMENDMENT OR DISCONTINUANCE OF
THE PLAN. The Board shall have the right to amend, modify, or terminate the Plan at any time without notice, provided that no employee’s existing rights under any offering already made under Section 4 hereof may be adversely affected
thereby, and provided further that no such amendment of the Plan shall, except as provided in Section 20, increase the shares to be offered above the total number of shares to be offered unless shareholder approval is obtained therefor.

 20. CHANGES IN CAPITALIZATION. In the event of reorganization, recapitalization, stock split, stock dividend, combination of shares,
merger, consolidation, offerings of rights, or any other change in the structure of the common shares of the Company, the Board may make such adjustment, if any, as it may deem appropriate in the number, kind, and the price of shares available for
purchase under the Plan, and in the number of shares which an employee is entitled to purchase. 
 21. SHARE OWNERSHIP. Notwithstanding
anything herein to the contrary, no employee shall be permitted to subscribe for any shares under the Plan if such employee, immediately after such subscription, owns shares (including all shares which may be purchased under outstanding
subscriptions under the Plan) possessing 5% or more of the total combined voting power or value of all classes of shares of the Company or of its parent or subsidiary corporations. For the foregoing purposes the rules of Section 425(d) of the
Code shall apply in determining share ownership. In addition, no employee shall be allowed to subscribe for any shares under the Plan 

  

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which permits him or her rights to purchase shares under all “employee stock purchase plans” (as described in Section 423 of the Code) of the
Company and its subsidiary corporations to accrue at a rate which exceeds $25,000 of the fair market value of such shares (determined at the time such right to subscribe is granted) for each calendar year in which such right to subscribe is
outstanding at any time. 
 22. ADMINISTRATION. The Plan shall be administered by the Board. The Board shall be vested with full authority to
make, administer, and interpret such rules and regulations as it deems necessary to administer the Plan, and any determination, decision, or action of the Board in connection with the construction, interpretation, administration, or application of
the Plan shall be final, conclusive, and binding upon all participants and any and all persons claiming under or through any participant. The Board may delegate any or all of its authority hereunder to such committee as it may designate. 

23. NOTICES. All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been
duly given when received by Shareholder Services of the Company or when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof. 
 24. TERMINATION OF THE PLAN. This Plan shall terminate at the earliest of the following: 
 24.1 December 31, 2005. 
 24.2 The date
of the filing of a Statement of Intent To Dissolve by the Company or the effective date or a merger or consolidation wherein the Company is not to be the surviving corporation, which merger or consolidation is not between or among corporations
related to the Company. Prior to the occurrence of either of such events, on such date as the Company may determine, the Company may permit a participating employee to exercise the option to purchase shares for as many full shares as the balance of
his account will allow at the price set forth in accordance with Section 5. If the employee elects to purchase shares, the remaining balance of such employees account will be refunded to him or her after such purchase. 
 24.3 The date the Board acts to terminate the Plan in accordance with Section 19 above. 
 24.4 The date when all shares reserved under the Plan have been purchased. 
 25. LIMITATIONS ON SALE OF STOCK PURCHASED UNDER THE PLAN. The Plan is intended to provide common stock for investment and not for resale. The Company 

  

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does not, however intend to restrict or influence any employee in the conduct of his own affairs. An employee, therefore, may sell stock purchased under the
Plan at any time he or she chooses, subject to compliance with any applicable Federal or state securities laws. THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE STOCK. 
 26. GOVERNMENTAL REGULATION. The Company’s obligation to sell and deliver shares of the Company’s common stock under this Plan is subject to
the approval of any governmental authority required in connection with the authorization, issuance, or sale of such shares. 
  

 - 7 -Form of Non-Qualified Stock Option Agreement

 Exhibit 10.4 
 August 11, 2005 
 {Optionee Name} 
 {Optionee
Address} 
 {Optionee City, State and Zip} 
 Re: Stock Option
Grant 
 Dear {Name} 
 A few weeks ago we gave
you some good news- on May 16, 2005 the Board of Directors approved a grant of stock options to you under the Tully’s Coffee Corporation 2004 Stock Option Plan (the “Plan”). As you may recall, we advised you that we would be
sending you the actual stock option agreement and some related documents at a later time. I am pleased that we are now doing so with this letter. 
 We enclose the following documents with this letter: 
  

	 	1.	Two copies of the stock option agreement for these stock options; 

  

	 	2.	A copy of the prospectus, dated December 17, 2004, relating to the common stock issuable upon exercise of options granted under the Plan; 

  

	 	3.	A copy of the Plan, which is Exhibit A to the prospectus; 

  

	 	4.	A copy of our Fiscal 2005 Annual Report on Form 10-K. 

 Please execute one copy of the stock option agreement and return the executed agreement to Mark Dringenberg in our Accounting Dept. (telephone: 206-233-2070) within 30 days after you receive these materials. You should retain the
other documents for your records. Stock option grants are effective only upon the execution of a stock option agreement between Tully’s and you, and are subject to cancellation if the stock option agreement enclosed herein is not executed and
returned to Tully’s. 
 If you have any questions regarding these materials or your stock options, please contact Kris Galvin, our CFO,
or Kathy Hasegawa, our controller. 
 On behalf of the Board of Directors, I am pleased to provide you this opportunity to become a
shareholder of Tully’s Coffee Corporation. 
 Sincerely, 
 John D. Dresel 
 President and Chief Operating Officer 

 TULLY’S COFFEE CORPORATION 
 (the “Company”) 
 NON-QUALIFIED STOCK OPTION AGREEMENT FOR PURCHASE OF
STOCK 
 We are pleased to inform you that the Company has granted to you (the “Optionee”) an option to purchase shares of the
Company’s common stock (“Option”) under the 2004 Stock Option Plan (the “Plan”) on the terms and subject to the conditions set forth in this Stock Option Agreement. 
 This Stock Option Agreement is made and entered into pursuant to a specific grant of options approved by the Company’s Board of Directors or the
Compensation Committee thereof as of the Date of Option Grant set forth below. This Stock Option Agreement cancels, supercedes, and replaces any other oral or written agreement, letter or other document between the parties related to this Option.

 FOR VALUABLE CONSIDERATION, the Company does hereby grant to the Optionee, in accordance with the terms and conditions hereof, as of the
Date of Option Grant, the right and option to purchase the number of shares of common stock of the Company (the “Option Shares”) for the Exercise Price Per Share as set forth below, which right and option shall vest and become exercisable
according to the Vesting Schedule set forth below: 
  

							
	Name of Optionee:	  		  		  	
	Number of Option Shares:	  		  		  	
	Exercise Price Per Share:	  		  		  	
	Date of Option Grant:	  	May 16, 2005	  		  	
	Expiration Date:	  		  		  	
	Vesting Schedule:	  		  		  	

 EXECUTED as of August 11, 2005. 
  

			
	 TULLY’S COFFEE CORPORATION

		
	By	 	  

		 	Kristopher S. Galvin
		 	Executive Vice President and CFO

 By signing below and entering into this Stock Option Agreement, Optionee agrees to the terms hereof, and all
obligations and responsibilities as described in the Plan and the attached Terms and Conditions, which shall constitute part of this Stock Option Agreement. 
  

			
	OPTIONEE
	
	  

	 Address:
	 	  

	  

 TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTION AGREEMENT 
 THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS 
 COVERING SECURITIES THAT HAVE BEEN REGISTERED 
 UNDER THE SECURITIES ACT OF 1933. 
 Capitalized Terms used in this Stock Option Agreement (the “Agreement”), if not otherwise 
 defined, have the meanings given them in the Plan. 
 1.
Time of Exercise of Option. Until it expires or is terminated as provided in Section 2 hereof, the Option may be exercised from time to time to purchase the number of whole shares of common stock as to which it has become exercisable.
Section 2.6 of the Plan sets forth provisions affecting the exercise and termination of the Option in connection with certain circumstances, including Merger, Consolidation, Tender Offer, Takeover Bid, Sale of Assets or Dissolution as set forth
therein. 
 2. Termination of Employment or Service. 
 2.1 General Rule. Except as provided in this Section 2, the Option may not be exercised unless at the time of exercise the Optionee is employed by or is serving as a director of the Company, and shall have
been so employed or provided such service continuously since the Date of Option Grant. For purposes of this Agreement, the Optionee is considered to be employed by or in the service of the Company if the Optionee is employed by or serving as a
director of the Company or any subsidiary of the Company (each, an “Employer”). 
 2.2 Termination Generally. If the
Optionee’s employment by or service with the Company terminates for any reason other than for cause, resignation in lieu of dismissal, total disability, death or due to a Change of Control Event, as provided in Sections 2.3, 2.4, 2.5, 2.6 or
2.7 hereof, then the Option may be exercised at any time before the earliest of (a) the Expiration Date, (b) the date that is three years after the date of termination, and (c) ten years after the Date of Option Grant, but only if and
to the extent the Optionee was entitled to exercise the Option at the date of termination (provided that all other conditions to exercise set forth herein shall have been met at the date of exercise of the Option). 
 2.3 Termination for Cause or Resignation in Lieu of Dismissal. 
 (a) If the Optionee is terminated for cause or resigns in lieu of dismissal, the Option shall be deemed to have terminated as of the time of the first act that led or would have led to the termination for cause or
resignation in lieu of dismissal, and the Optionee shall thereupon have no right to purchase any shares of common stock pursuant to the exercise of the Option, and any such exercise shall be null and void. 
 (b) Termination for “cause” shall include (i) the violation by the Optionee of any reasonable rule or policy of the Company; (ii) any
willful misconduct or gross negligence by the Optionee in the responsibilities assigned to him or her; (iii) any willful failure to perform his or her job as required to meet the objectives of the Company; (iv) any wrongful conduct of

 
an Optionee that has an adverse impact on the Company or that constitutes a misappropriation of the assets of the Company; (v) unauthorized disclosure
of confidential information; (vi) the Optionee’s performing services for any other company or person that competes with the Company while he or she is employed by or provides services to the Company, without the written approval of the
president or chief executive officer of the Company; or (vii) removal as a director of the Company. 
 (c) “Resignation in lieu of
dismissal” shall mean a resignation by the Optionee as an employee or director, or both, if (i) the Company has given prior notice to the Optionee of its intent to dismiss (or seek removal of) the Optionee for circumstances that constitute
cause, or (ii) within two months of the Optionee’s resignation, the Board of Directors of the Company or the president or chief executive officer of the Company determines that such resignation was related to an act that would have led to
a termination for cause. 
 2.4 Resignation. If the Optionee resigns as an employee or director of the Company, the Optionee’s
right to exercise his or her option shall be suspended for a period of two months from the date of resignation, unless the president or chief executive officer of the Company or the Board of Directors determines otherwise in writing. Thereafter,
unless there is a determination that the Optionee resigned in lieu of dismissal, the option may be exercised at any time before the earlier of (a) the Expiration Date (which shall have been extended for the period during which the Option has
been suspended) or (b) the date that is three years after the date of resignation, to the extent the Optionee was entitled to exercise the Option at the date of resignation (provided all other conditions to exercise set forth herein shall have
been met at the date of exercise of the Option). 
 2.5 Termination Because of Total Disability. If the Optionee’s employment or
service to the Company terminates because of a permanent and total disability (as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended), the Option may be exercised at any time before the earlier of (a) the
Expiration Date or (b) the date that is three years after the date of such termination, but only if and to the extent the Optionee was entitled to exercise the Option at the date of termination (provided that all other conditions to exercise
set forth herein shall have been met at the date of exercise of the Option). 
 2.6 Termination Because of Death. If the Optionee dies
while employed by or in the service of the Company, the Option may be exercised at any time before the earlier of (a) the Expiration Date or (b) the date that is 12 months after the date of death, but only if and to the extent the Optionee
was entitled to exercise the Option at the date of termination. The Option may be exercised only by the person or persons to whom the Optionee’s rights under the Option shall pass by the Optionee’s will or by the applicable laws of descent
and distribution (provided all other conditions to exercise set forth herein shall have been met at the date of exercise of the Option). 
 2.7 Termination Because of a “Change of Control Event.” The Option shall terminate upon the occurrence of a Change of Control Event, as defined in Section 2.7(e) (6) of the Plan and subject to the terms set forth
therein.  

 2.8 Effect of Leave of Absence; Transfer of Employment. Absence on leave approved by the Employer
or on account of illness or disability shall not be deemed a termination or interruption of employment or service. Vesting of the Option shall continue during any medical, family, or military leave of absence taken in accordance with the policies of
the Company. Vesting of the Option and the Expiration Date therefor shall be suspended during any other leave of absence, whether paid or unpaid, except as otherwise determined by the Board of Directors or appropriate committee thereof. A transfer
of employment or other relationship between or among the Company and any subsidiaries of the parent or the Company shall not be deemed to constitute a termination of employment or other cessation of relationship with the Employer. 
 2.9 Effect of Listing or Quotation of Common Stock. Effective as of the later of (a) the date on which the Company’s common stock is
listed or quoted on a national securities exchange or market or (b) the expiration of any restrictive period applicable to the Option under the requirements of Section 9 below, the three year exercise period referenced in Sections 2.2 and
2.4 above will be reduced to three months and in Section 2.5 to twelve months. 
 2.10 Failure to Exercise Option. To the extent
that the Option of any deceased Optionee or any Optionee whose employment or service terminates is not exercised within the applicable exercise period, all further rights to purchase shares pursuant to the Option shall cease and terminate.

 3. Recapitalizations. The Option shall be adjusted for recapitalizations, stock splits, stock dividends, and the like as described in
Section 2.10 of the Plan. 
 4. Method of Exercise of Option. Subject to the provisions of Section 1 above, the Option may be exercised in
whole or in part; provided, however, that no fewer than 100 shares (or the remaining shares then purchasable under the Option, if less than 100 shares) may be purchased on any exercise of the Option. The Option shall be exercised by delivery to the
Secretary of the Company or his or her designated agent of notice, substantially in the form attached hereto as Annex 1, of the number of Option Shares with respect to which the Option is being exercised, together with payment in full
of the exercise price and any applicable withholding taxes. Payment of the option exercise price shall be made in cash or bank certified or cashier’s check for the number of Option Shares being purchased. Before the issuance of shares of common
stock upon the exercise of the Option, the Optionee shall pay to the Company the amount of any applicable federal, state or local tax withholding obligations. The Company may withhold any distribution in whole or in part until the Company is so
paid. The Company shall have the right to withhold such amount from any other amounts due or to become due from the Company to the Optionee, including salary (subject to applicable law) or to retain and withhold a number of shares having a market
value not less than the amount of such taxes required to be withheld by the Company to reimburse it for any such taxes and cancel (in whole or in part) any such shares so withheld. 
 5. Nonassignability of Option by Optionee. The Option is nonassignable and may not be transferred, pledged or hypothecated in any manner by the Optionee, either voluntarily or by operation of law, except by
will or the applicable laws of descent and distribution; shall not be subject to execution, attachment or similar process; and shall be exercisable during the 

 
Optionee’s lifetime only by the Optionee. Any purported transfer or assignment in violation of this provision shall be void. The Option and any and all
rights granted to the Optionee hereunder and not theretofore duly exercised shall automatically terminate and expire upon any purported assignment or transfer or upon the bankruptcy or insolvency of Optionee or Optionee’s estate. 
 6. Conditions on Company’s Obligations. 
 6.1
No Violations of Law. The Company shall not be obligated to issue any Option Shares upon exercise of the Option if the Company is advised by its legal counsel that such issuance would violate applicable state or federal laws, including
securities laws and the requirements of any stock exchange or market on which the common stock may then be listed. The Company will use its reasonable best efforts to take steps required by state or federal law and applicable regulations in
connection with issuance of the Option Shares. The inability of the Company to obtain, from any regulatory body having jurisdiction, the authority deemed by the Company’s counsel to be necessary for the lawful issuance and sale of any Option
Shares hereunder, or to qualify for an exemption from registration for the issuance and sale of any shares hereunder, shall relieve the Company of any liability with respect to the nonissuance or sale of such shares as to which such requisite
authority or qualification shall not have been obtained or satisfied. 
 6.2 Compliance with Securities Laws. As a condition to the
exercise of the Option, the Company may require the Optionee to represent and warrant at the time of exercise that the Option Shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in
the opinion of counsel for the Company, such a representation is required by any relevant provision of the aforementioned laws. The Company may place a stop-transfer order against any shares of common stock on the stock records of the Company, and a
legend may be stamped on stock certificates to the effect that the shares of common stock may not be pledged, sold or otherwise transferred unless an opinion of counsel is provided (concurred in by counsel for the Company) stating that such transfer
is not in violation of any applicable law or regulation. The Board of Directors (or a committee thereof) also may require such other action or agreement by the Optionee as may from time to time be necessary to comply with the federal and state
securities laws. THIS PROVISION SHALL NOT OBLIGATE THE COMPANY TO UNDERTAKE REGISTRATION OF THE COMMON STOCK ISSUABLE UPON EXERCISE OF THE OPTION. 
 7.
No Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any shares of common stock until the date on which the Optionee becomes the holder of record of those shares. No adjustment shall be made for
dividends or other rights for which the record date occurs before the date the Optionee becomes the holder of record. 
 8. No Right to Employment or
Service. Nothing in the Plan or this Agreement shall confer upon the Optionee any right to be continued in the employment of the Company or interfere in any way with the Company’s right to terminate the Optionee’s employment at will at
any time, for any reason, with or without cause, without any pre- or post-termination warning, discipline or procedure, or to decrease the Optionee’s compensation or benefits, or 

 
confer upon the Optionee any right to be retained or employed by the Company or to the continuation, extension, renewal or modification of any compensation,
contract or arrangement with or by the Company. Neither Optionee nor any other person shall have any claim or right to be granted additional options under the Plan. Optionee shall have no rights to or interest in any option except as set forth
herein. 
 9. Market Stand-off. The Optionee agrees, in connection with any public equity offering by the Company, (a) not to sell or otherwise
dispose of any securities of the Company in compliance with terms of the lock-up or similar agreement proposed by the underwriters for such offering and (b) to execute an agreement in the form proposed; provided that (x) substantially all
of the Company’s officers and directors enter into identical agreements, (y) the restrictive period does not exceed 180 days following the offering, and (z) the failure to execute a form of agreement shall not affect the
enforceability of this covenant. To enforce this covenant, the Company may impose stop-transfer instructions with respect to the securities of the Optionee until the end of the restrictive period. 
 10. Successors of Company. Subject to Section 2.7 hereof, this Agreement shall be binding upon and shall inure to the benefit of any successor of the Company
but, except as provided herein, the Option may not be assigned or otherwise transferred by the Optionee. 
 11. Notices. Any notices under this
Agreement must be in writing and will be effective when actually delivered or, if mailed, three days after deposit into the United States mail by registered or certified mail, postage prepaid. Mail shall be directed to the Company at its principal
executive offices, Attention: Secretary, and to Optionee at the address stated on the facing page of this Agreement, or to such address as a party may certify by notice to the other party. 
 12. Amendments. The Company may at any time amend this Agreement if the amendment does not adversely affect the Optionee. Otherwise, this Agreement may not be
amended without the written consent of the Optionee and the Company. 
 13. Governing Law. This Agreement shall be governed by the laws of the State
of Washington. 
 14. Complete Agreement. This Agreement constitutes the entire agreement between the Optionee and the Company, both oral and written
concerning the matters addressed herein, and all prior agreements or representations concerning the matters addressed herein, whether written or oral, express or implied, are terminated and of no further effect. This Agreement and the Option
represented hereby is granted pursuant to and is governed by the Plan, amended from time to time. In the event of any inconsistency or ambiguity between this Agreement and the Plan, the provisions of the Plan, as interpreted by the Board of
Directors or designated committee thereof, shall control. 

 Annex 1 
 Form of Notice of Exercise of Stock Option 
 Date:
                             
 To: Tully’s Coffee Corporation 
 I hereby exercise the non-statutory stock option granted to me by
Tully’s Coffee Corporation (the “Company”) on May 16, 2005, subject to all the terms and provisions thereof and of the 2004 Stock Option Plan referred to therein, and notify the Company of my desire to purchase
                     shares of common stock of the Company at the exercise price of
$             per share, or an aggregate exercise price of $            . 
 I hereby deliver the full exercise price and all applicable withholding taxes with respect to this exercise as follows: 
                                      cash, or

                                      bank certified
or cashier’s check. 
 I further agree to execute such other documents as the Company may request in connection with the exercise of
this stock option. 
  

							
		 	By:
                                         
                                   	 	
			
		 	Print Name:
                                         
                      	 	
			
		 	Address:
                                         
                           	 	
			
		 	                                       
                                         
                   	 	
			
		 	SSN:

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