TULLYS COFFEE CORP
EXHIBIT 10.5
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="me1541_amendment_no._2_to_business_loan_agreement_and_note"> </A>
<A NAME="toc_me1541_1"> </A>
<BR></FONT><FONT SIZE=2><B>AMENDMENT NO. 2 TO BUSINESS LOAN AGREEMENT AND NOTE    <BR>  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;This Amendment No.&nbsp;2 to Business Loan Agreement and Note (this "Amendment") is entered into effective as of July&nbsp;1, 2001, between Tully's Coffee
Corporation ("Borrower") and Bank of America, N.A. ("Lender"") with reference to the following: </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B><I>RECITALS  </I></B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;Borrower
and Lender are parties to that certain Business Loan Agreement dated as of June&nbsp;28, 2000, which was amended by Amendment No.&nbsp;1 dated as of
February&nbsp;16, 2001 (collectively, the "Loan Agreement"). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;Borrower
executed a Promissory Note with an original Principal Amount of $6,000,000.00 in favor of Lender dated as of June&nbsp;28, 2000 (the "Note"). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;&nbsp;The
parties hereto now desire to amend the Loan Agreement and the Note on the terms and conditions set forth below: </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B><I>AGREEMENT  </I></B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, the parties hereto agree as follows: </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;Definitions.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Capitalized terms used but not defined in this Amendment shall have the meanings
ascribed to them in the Loan Agreement and / or the Note. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;Amendments.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;The Loan Agreement, Exhibit&nbsp;A to the Loan Agreement and the Note shall be amended
as follows: </FONT></P>

<UL>
<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;All
references to the Principal Amount of the Revolving Line of Credit, whether in the Promissory Note, the Loan Agreement, or Exhibit&nbsp;A to the Loan
Agreement, shall be amended to $2,500,000.00. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;Section&nbsp;1(b)
of Exhibit&nbsp;A to the Loan Agreement shall be amended to read in full as follows: </FONT></P>

<UL>

<P><FONT SIZE=2>"(b)&nbsp;Commitment
Amount: 'Commitment Amount' shall mean $2,500,000.00. If the principal amount of loans outstanding at any time exceeds the Commitment Amount, the Borrower will
immediately pay to Lender the amount of such excess." </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.3&nbsp;All
references to the Availability Period and to the Maturity of the Revolving Line of Credit, whether in the Promissory Note, the Loan Agreement, or
Exhibit&nbsp;A to the Loan Agreement, shall be amended to October&nbsp;1, 2001. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.4&nbsp;The
interest rate shall be increased, and the VARIABLE INTEREST RATE section of the Note shall be amended to read as follows: </FONT></P>

<UL>

<P><FONT SIZE=2>VARIABLE
INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an index which is the Lender's publicly announced Prime Rate (the "Index"). The
interest rate change will not occur more often than each day the Prime Rate changes. Lender will tell Borrower the current Index rate upon Borrower's request. Borrower understands that Lender may make
loans based on other rates as well. The Interest rate change will not occur more often than each day. The interest rate to be applied to the unpaid principal balance of this Note will be at a rate of
1.000&nbsp;percentage points over the Index. NOTICE: Under no circumstances will the interest rate on this Note be more than the maximum rate allowed by applicable law. </FONT></P>

</UL>
</UL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;Amendment Fee.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Borrower will pay a $1,500.00 Amendment Fee on July&nbsp;1, 2001, which shall be
fully earned and non-refundable unless Borrower satisfies all obligations of the Note and the Loan Agreement on or before that date. </FONT></P>

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<P><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;4.</FONT><FONT SIZE=2><I>&nbsp;&nbsp;Representations and Warranties.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Borrower represents and warrants to Lender that (i)&nbsp;except as
otherwise waived by Lender in writing, no Event of Default under the Loan Agreement and the Note, and no event which, with notice or lapse of time or both, would become an Event of Default, has
occurred and is continuing; (ii)&nbsp;except as otherwise waived by Lender in writing, Borrower's representations and warranties made under the Loan Agreement are true as of the date hereof;
(iii)&nbsp;the making and performance by Borrower of this Amendment have been duly authorized by all necessary corporate
action; and (iv)&nbsp;no consent, approval, authorization, permit or license is required in connection with the making or performance of this Agreement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. </FONT></P>

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<TD COLSPAN=3><FONT SIZE=2>BANK OF AMERICA, N.A.</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3><FONT SIZE=2>TULLY'S COFFEE CORPORATION</FONT></TD>
</TR>
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<TD WIDTH="5%"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="41%" ALIGN="CENTER"><FONT SIZE=2><BR>
/s/&nbsp;</FONT><FONT SIZE=2>NANCY NUERENBERG</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Nancy Nuerenberg<BR></FONT> <FONT SIZE=2><I>Senior Vice President</I></FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="41%"><FONT SIZE=2><BR>
/s/&nbsp;</FONT><FONT SIZE=2>TOM T. O'KEEFE</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Name:&nbsp;Tom T. O'Keefe<BR>
Title:&nbsp;&nbsp;</FONT><FONT SIZE=2><I>Chairman&nbsp;&amp; CEO</I></FONT></TD>
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