TULLY'S COFFEE EXCLUSIVE LICENSE AGREEMENT

Exhibit 10.8

TULLY’S COFFEE EXCLUSIVE LICENSE AGREEMENT

THIS AGREEMENT, effective as of the 11th day of April, 2001, is entered into between TULLY’S COFFEE CORPORATION, a Washington corporation, doing business at 3100 Airport Way South, Seattle, Washington 98134 U.S.A. (“Licensor”), and UCC UESHIMA COFFEE COMPANY, Ltd., a company organized under the laws of Japan (“Licensee”).

RECITALS

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

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

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

D. Licensee currently engages in the wholesale and retail sale of coffee and related products. Subject to the terms and conditions of this Agreement, Licensee is interested in acquiring the sole, perpetual exclusive license to use Licensor’s know how, trade secrets, proprietary trade dress and designs, tradenames and trademarks (registered and unregistered) Business Names, and Trademarks in association with the operation of Tully’s Stores in the territories identified in Schedule C (referred to herein as the “Territories”).

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

1. Grant. Subject to the terms and conditions of this Agreement and effective immediately upon payment of the License Fee (this sum being the net amount after applicable tax withholdings in Japan and subject to refunding to Licensee of the amount upon which Licensor successfully receives a tax credit), Licensor hereby grants to Licensee, under all its current or future intellectual property rights, the sole, exclusive and perpetual license to operate Tully’s Stores in the Territories and to use all such designs, formats, signs, equipment, layout, systems, procedures, copyrights, know how, trade secrets, proprietary trade dress and designs, tradenames and trademarks (registered and unregistered), the Business Names, and the Trademarks for Tully’s Stores in the Territories, including the U.S. rights in the same to the extent such rights relate to use of the same in the Territories, and, for the purpose of the security interest granted Section 19 below, the goodwill associated with any of the foregoing (collectively, the “Asia Rights”) only in association with the Licensee or authorized sublicensee’s operation of Tully’s Stores and as otherwise provided in this Section 1. The Asia Rights include the rights to utilize in the Territories the now owned or hereafter acquired registered and unregistered intangible proprietary rights used by Licensor in its operations of Tully’s Stores whether registered or unregistered. The rights conferred by this Agreement include the current or future right to sell packages of roasted coffee, roasted coffee beans, tea, herbal tea and related goods under the Business Names and with the Trademarks in third party retail locations other than Tully’s Stores in the Territories, provided such off site sales are (a) conducted in a manner that is consistent with the Tully’s brand concept and image of high quality, premium, gourmet specialty coffee, (b) otherwise complies

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with the terms of this Agreement, and (c) that all such sales are subject to the royalty and service fees provided for in this Agreement.

Licensee may sublicense (without any permission from Licensor) the right conferred by this Agreement to any entity in which Licensee holds—directly or indirectly—at least fifty percent of the actual or beneficial voting control of such subsidiary. Otherwise, upon the prior written consent of Licensor (which consent shall not unreasonably be withheld), Licensee may sublicense all or part of the rights conferred upon Licensee by this Agreement. Licensor’s consent shall be subject to, among other things, the execution and delivery of such documents and agreements as Licensor shall find reasonably necessary to protect Licensor’s interests with respect to such proposed sublicense.

2. Operation and Development of Stores.  Licensor will furnish to Licensee standard basic plans and specifications for Tully’s Store’s (the “Standard Specifications”) for use in the Territories, including specifications for general interior design, color schemes, finish materials, furniture, equipment and signs. Licensee agrees that all of Licensee’s stores in the Territories which are identified to the public as a Tully’s Store or which utilize any of the Business Names or Trademarks (referred to herein as a “Licensee Tully’s Store”) shall materially comply with Licensor’s Standard Specifications as announced by Licensor from time to time. Notwithstanding the foregoing, Licensee Tully’s Stores may be modified to the extent necessary to comply with applicable ordinances, building codes, permit requirements, lease or deed requirements and restrictions, and with due consideration to local market conditions and tendencies (the foregoing being collectively referred to herein as “Local Regulations and Conditions”).

3. Equipment, Fixtures and Signs.  Licensee agrees to use in the operation of each Licensee Tully’s Store equipment, fixtures, and furniture that are materially consistent with Licensor’s Standard Specifications with due consideration for the Local Regulations and Conditions. Licensee further agrees to place or display at the premises of each Store (interior and exterior) only such signs, emblems, logos, lettering, and display materials that are consistent with Licensor’s Standard Specifications. Licensee agrees to purchase all equipment, fixtures, furniture and signs (“Store Furnishings”) used in connection with the operation of Tully’s Stores from Licensor provided that the price, applicable taxes, delivery cost to the applicable store, and other terms for such purchases from Licensor shall be competitive with the price, applicable taxes, delivery cost to the applicable store, and other terms Licensee can obtain such items from other sources. In the event Licensor’s price and terms for such items are not competitive with other sources with respect to any proposed purchase of such items, Licensee shall be entitled to purchase such items from other sources. In the event Licensor fails to respond to any request from Licensee for prices and terms with respect to any purchase of Store Furnishings within fourteen calendar days, Licensee shall then have the right to immediately purchase such items from other sources.

4. Training and Operating Assistance.

a. Initial Training.  Prior to the opening of Licensee’s first Tully’s Store in the Territories, Licensor shall train one or more Licensee managers in the operation of a Tully’s Store. Training shall be conducted at Licensor’s training headquarters at a time which is mutually acceptable to the parties. Licensee and Licensor shall share the cost for any travel and living expenses which Licensee and the manager(s) incur in connection with such training. Licensor shall provide at its own cost all materials and personnel and facilities for such training.

b. Additional Training.  Upon Licensee’s request Licensor will conduct additional training for Licensee’s employees at Licensee’s travel and living cost and expense (not more than five of Licensee’s employees at any one time semiannually). Licensor shall provide at its own cost all materials, personnel and facilities for such training.

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

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

e. Annual Meetings.  Except as otherwise hereinafter agreed to by the parties, Licensor and Licensee agree that the parties shall meet at least annually on or about the anniversary date of the signing of this Agreement to review the status of the operations of the Licensee Tully’s Stores and Licensor’s operation and licensing of Tully’s Stores in the United States and elsewhere. The first such meeting shall take place at a location to be designated by Licensee. Thereafter, Licensor and Licensee shall take turns designating the location of such annual meetings.

5. Store Image and Operating Standards.

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

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

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

d. Use of Materials Imprinted With Trademarks.  Licensee shall in the operation of each Tully’s Store in the Territories use containers, napkins, uniforms, packaging, and other forms and materials imprinted with the Trademarks as prescribed from time to time by Licensor except as otherwise consented to by Licensor in writing.

6. Specifications, Standards, and Procedures.  With due consideration given to Local Regulations and Conditions, Licensee agrees to comply with Licensor’s specifications, standards and general procedures for the operation of Tully’s Stores including without limitation the following:

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

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

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

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

8. Management of Store.  All stores shall at all times be under the direct, on-premises supervision of Licensee or a trained and competent employee thereof. Licensee agrees to use its best efforts to promote and enhance the business of the Tully’s Stores in the Territories.

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

10. Trade Secrets of Licensor.  Licensor will take commercially reasonable steps to safeguard the trade secrets of Licensor provided under this Agreement. Licensee acknowledges that its knowledge of the operation of a Tully’s Store will be derived from information disclosed to Licensee by Licensor pursuant to the License and that certain of such information, including without limitation all recipes and Licensor’s Standard Specifications is proprietary, confidential, and a trade secret of Licensor. Except for disclosing such information to sublicensees authorized under Section 1 hereof, Licensee agrees that Licensor will maintain the absolute confidentiality of all such information during and after the term of the License, and that they will not use any such information in any other business or in any manner not specifically authorized or approved in writing by Licensor.

11. Business Names and Trademarks.

a. Ownership of Names and Marks . Licensee acknowledges and agrees that Licensor is the owner of all Business Names and Trademarks licensed to Licensee by this Agreement, that Licensee’s right to use the Business Names and Trademarks is derived solely from this Agreement and is limited to the operation of Licensee Tully’s Stores in the Territories and as otherwise provided for in this Agreement. Licensee agrees that after the termination or expiration of the License, Licensee will not directly or indirectly at any time or in any manner identify itself or any other business operation of Licensee as a Tully’s Store, a former Tully’s Store, or as a Licensee of or otherwise associated with Licensor, or use in any manner or for any purpose any Business Name or Trademark or other indicia of a Tully’s Store.

b. Limitations on Licensee’s Use of Business Names and Trademarks . Licensee agrees to use the Business Names and Trademarks as the sole service mark and trademark and trade name identification of each Licensee Tully’s Store, except as otherwise consented to in writing by Licensor.

12. License Fee.  Upon the execution of this Agreement by the parties and the satisfaction or waiver of the conditions precedent set forth in Sections 20 b. and c. below, Licensee shall immediately pay to Licensor the sum of Twelve Million United States Dollars (USD 12,000,000) (the “License Fee”) in cash or by wire transfer of immediately available funds (this sum being the net amount after

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applicable tax withholdings in Japan and subject to refunding to Licensee of the amount upon which Licensor successfully receives a tax credit). The License Fee shall be fully earned upon payment.

13. Royalty and Service Fee.

a. Amount and Payment of Royalty and Service Fee.  Upon payment of the License Fee, the licensing fee shall be deemed fully paid up for the first seven years. Commencing on the eight anniversary of the date of this Agreement, Licensee agrees to pay to Licensor a * royalty and service fee of * of the aggregate net revenues of the Tully’s Stores in the Territories together with all other sales of products or services made in connection with the Tully’s Business Names and Trademarks, *.

b. Definition of Net Revenues . As used in this Agreement, the term “net revenues” shall mean and include the actual gross charges for all products and services of any kind or nature sold in connection with the Tully’s Business Names or Trademarks, for cash or credit, whether such purchases are made in, upon, or from the premises of any Licensee Tully’s Store, or through or by means of the business conducted therein or otherwise by Licensee or any sublicensee thereof, but excluding sales, use, service, or excise taxes collected from customers and paid to the appropriate taxing authority.

c. Interest on Late Payments . All royalties and service fees, amounts due for products purchased from Licensor, and any other amounts owed to Licensor by Licensee pursuant to the License shall be subject to a late payment interest calculated at an annual rate equal to twelve percent (12%) during delinquency.

d. Reporting Requirements.  During the first eight years of this Agreement, upon request by Licensor (not more than semi-annually), Licensee shall furnish to Licensor a report setting forth new store openings, net revenues and comparable store sales (totaled or reasonably grouped) for Tully Stores in the Territories. Commencing on the eighth anniversary of the date of this Agreement, and continuing thereafter during the remaining term of this Agreement, Licensee shall furnish to Licensor * reports setting forth new store openings, net revenues and comparable store sales (totaled or reasonably grouped) for Tully’s Store in the Territories (“* Reports”).

14. Inspections and Audits.

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

b. Licensor’s Right to Audit . Commencing on the eighth anniversary of this Agreement, Licensor shall have the right, upon prior written notice, to audit or cause to be audited the * Reports. Licensee shall fully cooperate with representatives of Licensor and independent accountants hired by Licensor conducting any such audit including without limitation providing all back up records, information and financial statements related to the calculation of net revenues. In the event any such audit, taking into account local variations in generally accepted accounting principles, shall disclose an understatement of the net revenues of the Licensee Tully’s Stores for any period or periods, Licensee shall pay to Licensor, within fifteen (15) calendar days after receipt of the audit report, the royalty and service fee due on the amount of such understatement. Further, in the event such audit is made necessary by the failure of Licensee to furnish *as herein required, or if an understatement of net revenues for any period is determined by any such audit to be greater than five percent (5%), Licensee shall reimburse Licensor for the reasonable cost of such audit, including, without limitation, the charges of any independent accountant and the travel and lodging expenses.

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15. Termination of License.

a. By Licensee . If Licensee is in substantial compliance with this Agreement and Licensor breaches this Agreement and fails to cure such breach within cure periods described below, Licensee may terminate this Agreement subject to its compliance with Section 15 d. below.

b. By Licensor . Subject to compliance with Section 15 d. below, Licensor may terminate this Agreement if Licensee:

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

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

(3) Makes an unauthorized assignment of the License or ownership of Licensee as hereinafter defined in the section entitled “Assignment, Transfer, and Encumbrance;”

(4) Fails to comply with any provision of this Agreement (other than a payment default for which the remedy shall be an action for damages) or any other mandatory specification, standard, or operating procedure prescribed by Licensor.

c. Unilateral Termination by Licensee.  Notwithstanding Section 15 d. below, this Agreement may be terminated by Licensee effective upon one year’s prior written notice to Licensor, provided that such termination will not have any effect on payments previously received by Licensor or Licensee’s obligations under this Agreement with respect to royalty and service fees which arise prior to the effective date of the termination under this Section 15 c.

d. Termination Procedures.  Prior to exercising a right to terminate this Agreement under either Section 15 a. or 15 b. above, Licensor or Licensee, as applicable, shall give written notice to the other party (the “Party in Breach”) of any alleged breach of this Agreement which gives rise to a right of termination as provided in either Section 15 a. or b. above. The Party in Breach shall then have thirty calendar days after the receipt of such written notice cure the alleged breach (the “Cure Period”). In the event that the alleged breach is not cured by the Party in Breach within the Cure Period, the parties shall commence a mandatory mediation regarding the alleged breach within thirty calendar days of the end of the Cure Period. Upon the earlier of (1) the completion of the required mediation or (2) sixty calendar days following the end of the Cure Period (unless otherwise extended by agreement of the parties) if for any reason the parties are unable to arrange the mediation, the party alleging the default shall, if no acceptable resolution of the alleged default shall have been reached,