EXHIBIT
10.33


 


SECOND AMENDMENT


TO CREDIT AGREEMENT


 


THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the
“Amendment”) is made and dated as of the 11th day of March, 2003 by and between
DIEDRICH COFFEE, INC., a Delaware corporation (the “Company”), and BANK OF THE
WEST (the “Lender”).


 


RECITALS


 


A.                                   Pursuant
to that certain Credit Agreement dated as of September 3, 2002 by and between
the Company and the Lender (as amended, extended and replaced from time to
time, the “Credit Agreement,” and with capitalized terms used herein and not
otherwise defined used with the meanings given such terms in the Credit
Agreement), the Lender agreed to extend credit to the Company on the terms and
subject to the conditions set forth therein.


 


B.                                     The
Company has requested the Lender to amend the Credit Agreement in certain
respects and the Lender has agreed to do so on the terms and subject to the
conditions set forth herein.


 


NOW, THEREFORE, in consideration of the above Recitals
and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:


 


AGREEMENT


 


1.                                       Financial
Covenants.  To reflect the agreement
of the parties hereto to modify certain of the financial covenants applicable
to the Company, as of the Effective Date (as defined in Paragraph 5
below):


 


(a)                                  Paragraph
13(m) of the Credit Agreement is hereby to read in its entirety as follows:


 


“13(m)             Minimum EBITDA.  Permit EBITDA of the Company and its
Subsidiaries on a consolidated basis to be less than:  (1) as of the end of the Fourth Quarter of the Fiscal Year ending
on July 2, 2003 and the First Quarter of the Fiscal Year ending on or about
July 2, 2004, in each case calculated for such fiscal quarter and the
immediately preceding three fiscal quarters, $3,000,000.00; and (2) as of the
end of the Second Quarter of the Fiscal Year ending on or about July 2, 2004
and each fiscal quarter thereafter, in each case calculated for such fiscal
quarter and the immediately preceding three fiscal quarters, $3,500,000.00.”


 


(b)                                 Paragraph
13(n) of the Credit Agreement is hereby amended to read in its entirety as
follows:


 


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“13(n)               Profitability.


 


(1)                                  Permit
the combined net income of the Company and its Subsidiaries, determined in
accordance with GAAP, as of the end of any fiscal quarter, other than the First
Quarter of any Fiscal Year or the Third Quarter of the Fiscal Year ending on
July 2, 2003, to be less than $1.00 for such fiscal quarter; and


 


(2)                                  Permit
losses as of the end of the First Quarter of any Fiscal Year to be more than
$400,000.00 for such First Quarter.”


 


(c)                                  A
new Paragraph 13(q) is hereby added to the Credit Agreement to read in
its entirety as follows:


 


“13(q)               Cash Flow
Coverage Ratio.  Permit as of the
end of any fiscal quarter the ratio of Cash Flow, calculated for such fiscal
quarter and the immediately preceding three fiscal quarters, to CPLTD,
calculated for such fiscal quarter and the immediately preceding three fiscal
quarters, in each case for the Company and its Subsidiaries on a consolidated
basis, to be less than 1.75 to 1.00.”


 


(d)                                 The
following new definitions are hereby added to Paragraph 16 of the Credit
Agreement in proper alphabetical order to read in their entirety as follows:


 


“‘Cash Flow’ shall
mean, with respect to any Person for any fiscal period:  (1) net income after tax (exclusive of any
extraordinary gains), plus (2) interest expense, amortization expense, and
depreciation expense, and minus (3) dividends and distributions, all as
determined in accordance with GAAP.”


 


“‘CPLTD’ shall
mean, with respect to any Person for any fiscal period, the current portion of
long term debt plus the current portion of capitalized leases, plus interest
expense, as determined by such Person’s balance sheet for such fiscal period in
accordance with GAAP.”


 


2.                                       Fiscal
Year 2003 Expansion Line.  The
parties hereto hereby acknowledge and agree that notwithstanding anything else
contained in the Credit Agreement, as of the Effective Date, the credit
facility provided under Paragraph 2 of the Credit Agreement is hereby
terminated and the principal amount of any and all FY 2003 Expansion Line Loans
outstanding as of the Effective Date is immediately due and payable without
amortization.


 


3.                                       Fiscal
Year 2004 Expansion Line.  With
respect to the credit facility provided under Paragraph 3 of the Credit
Agreement, the parties hereto hereby acknowledge and agree, notwithstanding
anything else contained in the Credit Agreement, that the Lender will not make
any FY 2004 Expansion Line Loan until the Lender has received and reviewed the
Company’s Annual Report on Form 10-K for the Fiscal Year ending on July 2, 2003
(the “ FY 2003 Annual Report”) required to be delivered pursuant to Paragraph
12(a)(1) of the Credit Agreement and that unless:  (i) the EBITDA of the Company and its Subsidiaries on a
consolidated basis as of the last day of the Fiscal Year ending of July 2, 2003
is equal to or greater than $3,200,000.00, and (ii) the net income of the
Company and its Subsidiaries on a consolidated basis for the Fiscal Year ending
on July 2, 2003 is equal to or greater than $975,000.00, each calculated using
the financial information contained in the FY 2003 Annual Report, the credit
facility provided under Paragraph 3


 


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of the Credit Agreement shall be terminated and no FY 2004 Expansion
Line Loans shall be made under the Credit Agreement.  After the Lender has received and reviewed the FY 2003 Annual
Report, the Lender shall promptly notify the Company in writing whether the
financial tests set forth above have been met. 
If the Lender notifies the Company that such financial tests have been
met, the Company may on and after the date the Company receives such notice,
request FY 2004 Expansion Line Loans subject to the terms and conditions set
forth in the Credit Agreement, including, without limitation, the provisions
set forth in Paragraphs 3 and 10(b) of the Credit Agreement.


 


4.                                       Effective
Date.  This Amendment shall be
effective as of the date first written above upon the date that the Lender
shall have received:


 


(a)                                  This
Amendment, duly executed by all parties signatory hereto;


 


(b)                                 Such
corporate resolutions, incumbency certificates and other authorizing documentation
for the Company and the Guarantors as the Lender may request; and


 


(c)                                  An
amendment fee in an amount equal to $10,000.00.


 


5.                                       Reaffirmation
of the Loan Documents.  The Company
and each of the Guarantors, by executing this Amendment as provided below,
hereby affirms and agrees that:  (a) the
execution and delivery by it of and the performance of its obligations under
this Amendment shall not in any way amend, impair, invalidate or otherwise
affect any of its obligations under the Loan Documents to which it is party
except to the extent expressly amended hereby, (b) the term “Obligations” as
used in the Loan Documents include, without limitation, the Obligations of the
Company under the Credit Agreement as amended by this Amendment, and (c) except
as expressly amended hereby, the Loan Documents remain in full force and effect
as written.


 


6.                                       Representations
and Warranties.  The Company and
each of the Guarantors by executing this Amendment as provided below, hereby
represents and warrants to the Lender that:


 


(a)                                  It
has the requisite power and authority and the legal right to execute, deliver
and perform this Amendment and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Amendment.


 


(b)                                 This
Amendment has been duly executed and delivered on its behalf and constitutes
its legal, valid and binding obligation enforceable against it in accordance
with its terms.


 


(c)                                  There
does not exist a Event of Default or Potential Default.


 


(d)                                 None
of such Persons has any existing claims, counterclaims, defenses, personal or
otherwise, or rights of setoff whatsoever with respect to any of the Loan
Documents, and the Loan Documents, as amended hereby, constitute valid, legal,
binding and enforceable obligations of such Persons, as appropriate.


 


7.                                       No
Other Amendment.  Except as
expressly amended hereby, the Credit Agreement and other Loan Documents shall
remain in full force and effect as written.


 


8.                                       Counterparts.  This Amendment may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement.


 


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[Signatures Page
Following]


 


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IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed as of the day and year first above written.


 


	
   

  	
  DIEDRICH COFFEE, INC.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew C. McGuinness

  	
   

  
	
   

  	
  Name:

  	
  Matthew C. McGuinness

  
	
   

  	
  Title:

  	
  Chief Financial Officer and Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew Kimble

  	
   

  
	
   

  	
  Name:

  	
  Matthew Kimble

  
	
   

  	
  Title:

  	
  Assistant Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF THE WEST

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce Young

  	
   

  
	
   

  	
   

  	
  Bruce Young

  
	
   

  	
   

  	
  Vice President

  



 


ACKNOWLEDGED AND AGREED
TO:


 


	
  COFFEE PEOPLE WORLDWIDE, INC.,

  a Delaware corporation

  
	
   

  
	
  By:

  	
  /s/ Matthew C. McGuinness

  	
   

  
	
  Name:

  	
  Matthew C. McGuinness

  
	
  Title:

  	
  President

  
	
   

  	
   

  
	
  By:

  	
  /s/ Matthew Kimble

  	
   

  
	
  Name:

  	
  Matthew Kimble

  
	
  Title:

  	
  Assistant Secretary

  
	
   

  
	
  COFFEE PEOPLE, INC.,

  an Oregon corporation

  
	
   

  
	
  By:

  	
  /s/ Matthew C. McGuinness

  	
   

  
	
  Name:

  	
  Matthew C. McGuinness

  
	
  Title:

  	
  President

  
	
   

  	
   

  
	
  By:

  	
  /s/ Matthew Kimble

  	
   

  
	
  Name:

  	
  Matthew Kimble

  
	
  Title:

  	
  Assistant Secretary

  



 


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  GLORIA JEAN’S, INC.,

  a Delaware corporation

  	
   

  
	
   

  
	
  By:

  	
  /s/ Matthew C. McGuinness

  	
   

  
	
  Name:

  	
  Matthew C. McGuinness

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Matthew Kimble

  	
   

  
	
  Name:

  	
  Matthew Kimble

  	
   

  
	
  Title:

  	
  Assistant Secretary

  	
   

  
	
   

  
	
  EDGLO ENTERPRISES, INC.,

  an Illinois corporation

  	
   

  
	
   

  
	
  By:

  	
  /s/ Matthew C. McGuinness

  	
   

  
	
  Name:

  	
  Matthew C. McGuinness

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Matthew Kimble

  	
   

  
	
  Name:

  	
  Matthew Kimble

  	
   

  
	
  Title:

  	
  Assistant Secretary

  	
   

  
	
   

  
	
  GLORIA JEAN’S GOURMET COFFEES
  CORP.,

  an Illinois corporation

  	
   

  
	
   

  
	
  By:

  	
  /s/ Matthew C. McGuinness

  	
   

  
	
  Name:

  	
  Matthew C. McGuinness

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Matthew Kimble

  	
   

  
	
  Name:

  	
  Matthew Kimble

  	
   

  
	
  Title:

  	
  Assistant Secretary

  	
   

  
	
   

  
	
  GLORIA JEAN’S GOURMET COFFEES
  FRANCHISING CORP.,

  an Illinois corporation

  	
   

  
	
   

  
	
  By:

  	
  /s/ Matthew C. McGuinness

  	
   

  
	
  Name:

  	
  Matthew C. McGuinness

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Matthew Kimble

  	
   

  
	
  Name:

  	
  Matthew Kimble

  	
   

  
	
  Title:

  	
  Assistant Secretary

  	
   

  
				



 


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