**EXHIBIT10.33**

 

**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 betweenDIEDRICH COFFEE, INC., a Delaware corporation (the “Company”), and BANK OF THEWEST (the “Lender”).

 

**RECITALS**

 

A.                                   Pursuantto that certain Credit Agreement dated as of September 3, 2002 by and betweenthe Company and the Lender (as amended, extended and replaced from time totime, the “Credit Agreement,” and with capitalized terms used herein and nototherwise defined used with the meanings given such terms in the CreditAgreement), the Lender agreed to extend credit to the Company on the terms andsubject to the conditions set forth therein.

 

B.                                     TheCompany has requested the Lender to amend the Credit Agreement in certainrespects and the Lender has agreed to do so on the terms and subject to theconditions set forth herein.

 

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

 

**AGREEMENT**

 

1.                                       FinancialCovenants.  To reflect the agreementof the parties hereto to modify certain of the financial covenants applicableto the Company, as of the Effective Date (as defined in Paragraph 5below):

 

(a)                                  Paragraph13(m) of the Credit Agreement is hereby to read in its entirety as follows:

 

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

 

(b)                                 Paragraph13(n) of the Credit Agreement is hereby amended to read in its entirety asfollows:

 

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“13(n)               Profitability.

 

(1)                                  Permitthe combined net income of the Company and its Subsidiaries, determined inaccordance with GAAP, as of the end of any fiscal quarter, other than the FirstQuarter of any Fiscal Year or the Third Quarter of the Fiscal Year ending onJuly 2, 2003, to be less than $1.00 for such fiscal quarter; and

 

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

 

(c)                                  Anew Paragraph 13(q) is hereby added to the Credit Agreement to read inits entirety as follows:

 

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

 

(d)                                 Thefollowing new definitions are hereby added to Paragraph 16 of the CreditAgreement in proper alphabetical order to read in their entirety as follows:

 

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

 

“‘CPLTD’ shallmean, with respect to any Person for any fiscal period, the current portion oflong term debt plus the current portion of capitalized leases, plus interestexpense, as determined by such Person’s balance sheet for such fiscal period inaccordance with GAAP.”

 

2.                                       FiscalYear 2003 Expansion Line.  Theparties hereto hereby acknowledge and agree that notwithstanding anything elsecontained in the Credit Agreement, as of the Effective Date, the creditfacility provided under Paragraph 2 of the Credit Agreement is herebyterminated and the principal amount of any and all FY 2003 Expansion Line Loansoutstanding as of the Effective Date is immediately due and payable withoutamortization.

 

3.                                       FiscalYear 2004 Expansion Line.  Withrespect to the credit facility provided under Paragraph 3 of the CreditAgreement, the parties hereto hereby acknowledge and agree, notwithstandinganything else contained in the Credit Agreement, that the Lender will not makeany FY 2004 Expansion Line Loan until the Lender has received and reviewed theCompany’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 Paragraph12(a)(1) of the Credit Agreement and that unless:  (i) the EBITDA of the Company and its Subsidiaries on aconsolidated basis as of the last day of the Fiscal Year ending of July 2, 2003is equal to or greater than $3,200,000.00, and (ii) the net income of theCompany and its Subsidiaries on a consolidated basis for the Fiscal Year endingon July 2, 2003 is equal to or greater than $975,000.00, each calculated usingthe financial information contained in the FY 2003 Annual Report, the creditfacility provided under Paragraph 3

 

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of the Credit Agreement shall be terminated and no FY 2004 ExpansionLine Loans shall be made under the Credit Agreement.  After the Lender has received and reviewed the FY 2003 AnnualReport, the Lender shall promptly notify the Company in writing whether thefinancial tests set forth above have been met. If the Lender notifies the Company that such financial tests have beenmet, 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 setforth in the Credit Agreement, including, without limitation, the provisionsset forth in Paragraphs 3 and 10(b) of the Credit Agreement.

 

4.                                       EffectiveDate.  This Amendment shall beeffective as of the date first written above upon the date that the Lendershall have received:

 

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

 

(b)                                 Suchcorporate resolutions, incumbency certificates and other authorizing documentationfor the Company and the Guarantors as the Lender may request; and

 

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

 

5.                                       Reaffirmationof the Loan Documents.  The Companyand each of the Guarantors, by executing this Amendment as provided below,hereby affirms and agrees that:  (a) theexecution and delivery by it of and the performance of its obligations underthis Amendment shall not in any way amend, impair, invalidate or otherwiseaffect any of its obligations under the Loan Documents to which it is partyexcept to the extent expressly amended hereby, (b) the term “Obligations” asused in the Loan Documents include, without limitation, the Obligations of theCompany under the Credit Agreement as amended by this Amendment, and (c) exceptas expressly amended hereby, the Loan Documents remain in full force and effectas written.

 

6.                                       Representationsand Warranties.  The Company andeach of the Guarantors by executing this Amendment as provided below, herebyrepresents and warrants to the Lender that:

 

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

 

(b)                                 ThisAmendment has been duly executed and delivered on its behalf and constitutesits legal, valid and binding obligation enforceable against it in accordancewith its terms.

 

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

 

(d)                                 Noneof such Persons has any existing claims, counterclaims, defenses, personal orotherwise, or rights of setoff whatsoever with respect to any of the LoanDocuments, and the Loan Documents, as amended hereby, constitute valid, legal,binding and enforceable obligations of such Persons, as appropriate.

 

7.                                       NoOther Amendment.  Except asexpressly amended hereby, the Credit Agreement and other Loan Documents shallremain in full force and effect as written.

 

8.                                       Counterparts.  This Amendment may be executed in any numberof counterparts, each of which when so executed shall be deemed to be anoriginal and all of which when taken together shall constitute one and the sameagreement.

 

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[Signatures PageFollowing]

 

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IN WITNESS WHEREOF, the parties hereto have causedthis 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 AGREEDTO:

 
| **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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