Eighth Amendment to Lease Agreement between Tully's Coffee Corporation and Rainier Commons, LLC

Exhibit 10.7(i)

EIGHTH AMENDMENT TO LEASE AGREEMENT

THIS EIGHTH AMENDMENT TO LEASE AGREEMENT is made and entered into as of the 7^th day of October, 2004, between RAINIER COMMONS, LLC, a Washington limited liability company (“Lessor”), and TULLY’S COFFEE CORPORATION, a Washington corporation (“Lessee”).

RECITALS

A. Pursuant to that certain Lease Agreement dated August 16, 1999, entered into between Kent Central, LLC (“KCL”) and Lessee, as modified by those certain amendments described in the attached Exhibit B (collectively, the “KCL Lease”), KCL agreed to lease to Lessee certain premises as further described in the Lease (the “Original Lease Premises”) on the real property located at 3100 Airport Way South, Seattle, Washington, which is legally described as set forth on the attached Exhibit A (the “Property”). On July 17, 2003, Lessor purchased the Property from KCL, and thereby assumed all of KCL’s rights and obligations under the Lease. Lessor and Lessee modified the lease by the Sixth Amendment to Lease Agreement dated as of June 26, 2003, which became effective upon the July 17, 2003 closing of the purchase of the Property from KCL (the “Sixth Amendment”) and further modified the lease by the Seventh Amendment to Lease Agreement dated as of July 23, 2004 (the “Seventh Amendment”). The KCL Lease, as modified by the Sixth Amendment and Seventh Amendment, is referred to herein as the Lease.

B. Lessor and Lessee have agreed to make certain modifications to the Lease on the terms and conditions set forth in this Eighth Amendment to Lease Agreement (the “Eighth Amendment”).

AGREEMENT

NOW, THEREFORE, in consideration of foregoing and the promises made below, and other good and valuable consideration, the parties agree as follows:

1. Definitions. Except as otherwise stated in this Eighth Amendment, terms which are defined in the Lease shall have the same meanings for this Eighth Amendment.

2. Amendments. Effective as provided herein, the Lease is hereby amended as follows:

2.1 Modifications of Premises. Lessor and Lessee wish to remove from the Tully’s Premises approximately 6,460 square feet of space as described on Exhibit E (the “Building 5 and Building 5A Space” and to add approximately 6,636 square feet of space as described on Exhibit E (the “Building 8 Level 4 Space”) to the Tully’s Premises, as follows:

a) Lessor shall make improvements to the Building 8 Level 4 Space as provided in Exhibit F (the “Building 8 Level 4 Improvements”). Lessor shall pay all costs and expenses related to the Building 8 Level 4 Improvements. Lessor shall complete the

Building 8 Level 4 Improvements as soon as reasonably practicable, but not later than October 31, 2004. Lessor shall notify Lessee in writing when the Building 8 Level 4 Improvements are completed (the “Building 8 Level 4 Availability Notice”) and shall provide Lessee with a copy of any required certificates of occupancy at that time.

b) Lessee shall inspect the Building 8 Level 4 Space within three business days after receiving the Building 8 Level 4 Availability Notice and the parties shall jointly prepare a punch list as to any omissions or defects in the Building 8 Level 4 Improvements requiring remedial action by Lessor. Lessor shall remedy the punch list items. The Building 8 Level 4 Space shall be added to the Tully’s Premises and removed from the Available Space, and may be occupied by Lessee, commencing on the later of (i) the date of Lessee’s inspection and (ii) the date of completion of remedial action for all punch list items that would otherwise have prevented occupancy.

c) Within fifteen business days after the Building 8 Level 4 Space is added to the Tully’s Premises, Lessee shall remove its property from the Building 5 and Building 5A Space. Lessee shall notify Lessor in writing when Lessee has completed the removal of its property (the “Building 5 and Building 5A Vacancy Notice”). The Building 5 and Building 5A Space shall be removed from the Tully’s Premises as of the date of the Building 5 and Building 5A Vacancy Notice, and thereafter the Building 5 and Building 5A Space shall be included in the Available Space. Lessee shall remove all of Lessee’s property from the Building 5 and Building 5A Space as provided herein, but shall not be required to make any other repairs or restoration to the Building 5 and Building 5A Space and Lessor shall otherwise accept the Building 5 and Building 5A Space “as is.”

d) The modification of the Tully’s Premises to include the Building 8 Level 4 Space and to exclude the Building 5 and Building 5A Space shall not result in any change to the amount of Rent and Monthly Operating Expenses payable by Lessee under the Lease,

2.2 Modified Premises. Exhibit C sets forth the Tully’s Premises as provided in the Sixth Amendment. Upon completion of the undertakings set forth in this Eighth Amendment, the Tully’s Premises shall be as set forth in Exhibit D. The square footage areas set forth in Exhibits C and Exhibit D are approximations accepted by the parties for purposes of administering the Lease and any remeasurement of these premises or recomputation of square footage shall not result in any change to the amount of Rent or Monthly Operating Expenses payable by Lessee under the Lease.

2.3 Nitrogen Tanks. Lessor consents to the placement by Lessee of a nitrogen storage tank on the Property (the “Tank”) at the location shown on Exhibit F attached hereto, and to connect the Tank to the nitrogen gas transmission lines on the Property, subject to the following:

a) Lessee shall be responsible for obtaining any permits required to have the storage tank on the Property and shall not place Tank on the Property until such permits are received.

b) Lessee shall pay to Lessor any increase in the cost of Lessor’s insurance as a result of the presence on the Property of the nitrogen tank.

c) In the event that at any time, the Tank is determined not to be in compliance with applicable hazardous materials, fire, safety or building codes and regulations (the “Codes”), Lessee shall take such remedial actions as may be required to bring the Tank in compliance with the Codes, or shall remove the Tank .

d) In the event that the location of the Tank interferes with Lessor’s proposed use of the Property, Lessee agrees to move the Tank to another location on the Property, as selected by Lessor, and meeting Lessee’s requirements, at Lessor’s cost, within thirty (30) days after Lessor notifies Lessee in writing that the Tanks interfere with Lessor’s proposed use of the Property and Lessor identifies the new location.

e) Lessee shall indemnify, defend, hold harmless and protect Lessor, its members, managers, employees, officers, agents, and representatives (hereinafter the “Indemnified Parties”) from and against any and all losses, costs, expenses (including reasonable attorneys’ fees), obligations, liabilities, claims (including but not limited to any claim for damage to property or injury or death of any persons), whether direct, contingent or consequential and no matter how arising, in any way related to or arising from the presence of the Tank on the Property, with counsel chosen by Lessor.

3. No Other Changes. Except as modified by this Eighth Amendment and as otherwise agreed upon herein, all other terms of the Lease, including without limitation all exhibits thereto, remain unchanged and in full force and effect.

4. Conflict and Construction; Definitions. In the event of any conflict between the terms of this Eighth Amendment and the terms of the Lease, the terms and provisions of this Eighth Amendment shall prevail. Capitalized terms not otherwise defined in this Eighth Amendment shall have the meanings set forth in the Lease.

5. Successor and Assigns. The terms and provisions of this Eighth Amendment shall bind and inure to the benefit of Lessor and Lessee and their respective successors and assigns. This Eighth Amendment may not be assigned by either party except in connection with an assignment of the Lease in accordance with the terms of the Lease.

6. Counterparts; Facsimile. This Eighth Amendment of Lease Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Executed counterparts may be executed and transmitted via facsimile and such version shall be deemed an original.

IN WITNESS WHEREOF, Lessor and Lessee have executed this Eighth Amendment effective as the date set forth above.

On this 7th day of October, 2004, before me personally appeared BRETT GOLDFARB, the Voting Member of RAINIER COMMONS, LLC, who executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said limited liability company, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year first above written.

On this 7th day of October, 2004, before me personally appeared SHIMON MIZRAHI, the Voting Member of RAINIER COMMONS, LLC, who executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said limited liability company, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year first above written.

On this 7th day of October 2004, before me personally appeared KRISTOPHER S. GALVIN the Executive Vice President of TULLY’S COFFEE CORPORATION, who executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year first above written.

EXHIBIT A

LEGAL DESCRIPTION OF PROPERTY

PARCEL 2:

Lots 1 through 6, Block 233, Seattle Tidelands, in King County, Washington, as shown on the official maps on file in the Office of the Commissioner of Public Lands at Olympia, Washington;

TOGETHER WITH Lots 1 through 12, Block 17, Hanford’s Addition to South Seattle, according to the plat thereof recorded in Volume 1 of Plats, page 37, in King County, Washington;

TOGETHER WITH ALL of vacated alley in said Block 17, as vacated under City of Seattle Ordinance No. 38522;

TOGETHER WITH Lots 1 through 12, Block 16, Hanford’s Addition to South Seattle, according to the plat thereof recorded in Volume 1 of Plats, page 37, in King County, Washington;

TOGETHER WITH ALL of vacated alley in said Blocks 16, as vacated under City of Seattle Ordinance No. 38521;

TOGETHER WITH ALL of vacated South Winthrop Street between said Blocks 16 and 17, as vacated under City of Seattle Ordinance No. 38522;

TOGETHER WITH that portion of vacated South Hanford Street adjoining Block 16, as vacated under City of Seattle Ordinance No. 69571 and would attach by operation of law;

TOGETHER WITH that portion of vacated Tenth Avenue South, as vacated under City of Seattle Ordinance No. 95836, and described as follows:

BEGINNING at the intersection of the production south of the East line of Block 16 of said Plat of Hanford’s Addition to South Seattle and the Westerly right-of-way line of the Seattle Freeway (Primary State Highway No. 1); thence Northerly along said Westerly right-of-way line to the production east of the North line of Lot 12, Block 17 of said plat; thence West along said produced line to the East line of Block 17; thence South along said East line and the same produced and along the East line of Block 16 to the POINT OF BEGINNING; EXCEPT from the above described Parcel 2 any portion lying within the Northern Pacific Railway Company right-of-way; EXCEPT that portion as conveyed to the State of Washington for Primary State Highway No. 1 by deed recorded under Recording No.  ###-###-####.

EXHIBIT B

AMENDMENTS TO THE LEASE AGREEMENT

AMENDMENTS TO THE ORIGINAL LEASE

1. First Lease Amendment dated December 17, 1999, entered into between KCL and Lessee;

2. Second Lease Amendment dated June 6, 2000, entered into between KCL and Lessee;

3. Third Lease Amendment dated November 7, 2000, entered into between KCL and Lessee;

4. Fourth Lease Amendment dated February 21, 2001, entered into between KCL and Lessee; and

5. Fifth Lease Amendment dated November 1, 2002, entered into between KCL and Lessee.

AMENDMENTS BETWEEN LESSEE AND LESSOR

1. Sixth Amendment to Lease Agreement dated as of June 26, 2003, entered into between Lessor and Lessee, and effective as of July 17, 2003

2. Seventh Amendment to Lease Agreement dated as of July 23, 2004, entered into between Lessor and Lessee

EXHIBIT C: PREMISES AFTER SIXTH LEASE AMENDMENT

Exhibit C to Sixth Amendment to Lease Agreement

EXHIBIT D: PREMISES AFTER EIGHTH LEASE AMENDMENT

Exhibit E

Modifications to the Tully’s Premises Under the Eighth Amendment

Building 5 and Building 5A Space:

Building 8 Level 4 Space:

Exhibit G

Nitrogen Bulk Storage Area

Page 12

Exhibit F

Lessor Improvements to the Building 8 Level 4 Space