TULLY?S COFFEE CORPORATION SUMMARY OF EMPLOYMENT

Name:

Ron Gai (“Employee”)

Position:

Vice President, Wholesale Division

Reports To:

President, Chief Executive Officer

Responsibilities:

Responsibilities include all aspects of Wholesale channel distribution (grocery, food service, office coffee services, mass feeders and direct accounts) for Tully’s Coffee Corporation (“Company”) within the U.S. market, including strategy/business development, customer relations, distributorship relations, employee staffing and financial performance against planned targets. Member of Executive Leadership Team. This Summary of Employment supersedes in its entirety that certain Employment Letter issued to Employee dated May 6, 2002.

Base Salary:

$100,000.00 annually, effective April 7, 2003. Employee shall be eligible for annual salary adjustments. Effective April 7, 2003, Employee will also be participating in the Company’s Deferred Compensation Plan (“Plan”) and as such will be deferring 10 percent of salary ($10,000.00 annual deferment) until conditions outlined within the Plan are achieved.

Car Allowance:

$600.00/month and subject to statutory tax withholdings. Employee is responsible for all auto expenses including gas, insurance, maintenance, etc.

Bonus Potential:

Employee shall be eligible for an annual bonus award (percentage of base salary) based on a Board approved Company EBITDA target for each fiscal year. The annual bonus award and payout is at the sole discretion of the Board. The payout targets will be as follows:

FY 2004 & Beyond

% EBITDA

% Bonus

Less than 100%

Discretionary: up to $15,000

100%

35.0% payout

125%

50.0% payout

Greater than 125%

50.0% plus sliding scale

Note: There will be a ratable calculation for bonus payout between EBITDA targets.

Employee shall no longer participate in any bonus plan tied to grocery channel p