Document:

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                                                                   EXHIBIT 10.32

                       FIRST AMENDMENT TO CREDIT AGREEMENT

         THIS FIRST AMENDMENT TO CREDIT AGREEMENT (hereinafter, this
"AGREEMENT") is made this 26th day of September, 2000 by and among:

                  FLEET NATIONAL BANK, FORMERLY KNOWN AS BANKBOSTON, N.A.
         (hereinafter, the "LENDER"), a bank organized under the laws of the
         United States of America; and

                  DIEDRICH COFFEE, INC, (hereinafter, "Diedrich", a Delaware
         corporation (the "Parent"), and its Subsidiaries, COFFEE PEOPLE
         WORLDWIDE, INC., (hereinafter, "CPW"), a Delaware corporation, COFFEE
         PEOPLE, INC., (hereinafter, "CPW"), an Oregon corporation, GLORIA
         JEAN'S, INC. (hereinafter, "GJI"), a Delaware corporation, EDGLO
         ENTERPRISES, INC. (hereinafter, "EDGLO"), an Illinois corporation,
         GLORIA JEAN'S GOURMET COFFEES CORP. (hereinafter, "GJGC"), an Illinois
         corporation, AND GLORIA JEAN'S GOURMET COFFEES FRANCHISING CORP.
         (hereinafter, "GJGCF"), an Illinois corporation.

         Hereinafter, CPW, CPI, GJI, EDGLO, GJGC, and GJGCF shall be referred to
collectively, jointly, and severally, as the "BORROWERS".

                                   BACKGROUND

         Reference is hereby made to a certain loan arrangement (hereinafter,
the "LOAN ARRANGEMENT") entered into by and between the Lender and the
Borrowers, evidenced by, among other things, the following documents,
instruments, and agreements (hereinafter, together with this Agreement and all
documents, instruments, and agreements executed incidental hereto, and
contemplated hereby, collectively the "LOAN DOCUMENTS") (Reference to the
"Lender" in Paragraphs 1-7 below refers to BankBoston, N.A.):

                  1. Revolving Note (hereinafter, the "REVOLVING NOTE") dated
         July 7, 1999 in the maximum principal amount of $3,000,000.00 made by
         the Borrowers payable to the Lender;

                  2. Term Note (hereinafter, the "TERM NOTE") dated July 7, 1999
         in the original principal amount of $12,000,000.00 made by the
         Borrowers payable to the Lender;

                  3. Credit Agreement (hereinafter, the "CREDIT AGREEMENT")
         dated July 7, 1999, entered into by and between the Lender and the
         Borrowers;

                  4. Security Agreement (hereinafter, the "SECURITY AGREEMENT")
         dated July 7, 1999 pursuant to which each of the Borrowers granted the
         Lender a security interest in the Collateral (as defined in the
         Security Agreement);

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                  5. Trademark Security Agreement (hereinafter, the "TRADEMARK
         SECURITY AGREEMENT") dated July 7, 1999 pursuant to which each of the
         Borrowers granted the Lender a security interest in the Collateral (as
         defined in the Trademark Security Agreement);

                  6. Securities Pledge Agreement (hereinafter, the "PLEDGE
         AGREEMENT") dated July 7, 1999 pursuant to which each of the Borrowers
         granted the Lender a security interest in the Ownership Interests (as
         defined in the Pledge Agreement); and

                  7. Letter Agreements dated June 27, 2000 and August 17,
         2000(hereinafter, the "LETTER AGREEMENTS") pursuant to which certain
         provisions of the Credit Agreement were amended and the Lender agreed
         to forbear from exercising its rights and remedies.

         Capitalized terms used herein and not otherwise defined shall have the
meanings as set forth in the Credit Agreement.

         The Borrowers acknowledge and agree that, as of the date hereof the
Borrowers are not in compliance with certain financial covenants contained in
Section 5.1, 5.2, and 5.3 of the Credit Agreement and have requested that the
Lender waive certain Events of Default arising on account of such non-compliance
as of June 30, 2000 and modify certain terms and conditions of the Loan
Documents hereinafter, the "FINANCIAL COVENANT DEFAULTS"). The Lender has agreed
to do so, BUT ONLY upon the terms and conditions set forth herein.

         Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and among
the Lender and the Borrowers, as follows:

                         ACKNOWLEDGMENT OF INDEBTEDNESS

1. The Borrowers each hereby acknowledge and agree that, in accordance with the
terms and conditions of (i) the Loan Documents, (ii) this Agreement, and (iii)
all documents, instruments, and agreements executed incidental to, and
contemplated by, this Agreement, the Borrowers are jointly and severally liable
to the Lender as of September 25, 2000, as follows:

     (a) Revolving Note:

         (i)   Principal:                                         $0.00
         (ii)  Interest:                                          $0.00

     (b) Legal Fees & Expenses
         (Pursuant to Paragraph 11 hereof):                  $12,747.07

     (c) Costs & Expenses (The Recovery Group)
         (Pursuant to Paragraph 11 hereof):                  $88,857.35

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     (d) LC Exposure Amount:                                $293,000.00

     (e) Term Note:

         (i)   Principal:                                $10,000,000.00
         (ii)  Interest:                                    $238,557.21

                   GRAND TOTAL                           $10,633,161.63

     (f) All interest accruing from and after September 25, 2000 under the
         Revolving Note, and the Term Note, respectively, and all late fees,
         reasonable costs, expenses, and costs of collection (including
         reasonable attorneys' fees and the allocated costs of the Lender's
         in-house counsel) incurred by the Lender from and after September 25,
         2000 in connection the Loan Documents, including, without limitation,
         all reasonable attorney's fees and expenses incurred in connection with
         the negotiation and preparation of this Agreement and all documents,
         instruments, and agreements incidental hereto.

     (g) Hereinafter all amounts due as set forth in this Paragraph 1, and
         elsewhere payable under this Agreement, shall be referred to
         collectively as the "OBLIGATIONS".

                                WAIVER OF CLAIMS

2. The Borrowers each hereby acknowledge and agree that they have no offsets,
defenses, claims, or counterclaims against the Lender or the Lender's officers,
directors, employees, attorneys, representatives, predecessors, successors, and
assigns with respect to the Obligations, or otherwise, and that if any of the
Borrowers now have, or ever did have, any offsets, defenses, claims, or
counterclaims against the Lender or the Lender's officers, directors, employees,
attorneys, representatives, predecessors, successors, and assigns, whether known
or unknown, at law or in equity, from the beginning of the world through this
date and through the time of execution of this Agreement, all of them are hereby
expressly WAIVED, and the Borrowers each hereby RELEASE the Lender and the
Lender's officers, directors, employees, attorneys, representatives,
predecessors, successors, and assigns from any liability therefor.

               RATIFICATION OF LOAN DOCUMENTS; FURTHER ASSURANCES

3.  The Borrowers:

     (a) Hereby ratify, confirm, and reaffirm all and singular the terms and
         conditions of the Loan Documents. The Borrowers further acknowledge and
         agree that except as specifically modified in this Agreement, all terms
         and conditions of those documents, instruments, and agreements shall
         remain in full force and effect; and

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<PAGE>   4

     (b) Shall, from and after the execution of this Agreement, execute and
         deliver to the Lender whatever additional documents, instruments, and
         agreements that the Lender reasonably may require in order to vest or
         perfect the Loan Documents and the collateral granted therein more
         securely in the Lender and to otherwise give effect to the terms and
         conditions of this Agreement.

                               WAIVER OF DEFAULTS

4. In consideration for the Borrowers promise to perform each and every term and
   condition of this Agreement, the Lender hereby waives the Financial Covenant
   Defaults. The Borrowers acknowledge and agree that this waiver of the
   Financial Covenant Defaults is a one-time waiver and shall apply only to the
   defaults specified herein which have occurred under the Loan Documents prior
   to the execution of this Agreement, and shall not constitute a waiver of any
   default or Event of Default occurring or continuing after the execution of
   this Agreement.

                         SUBORDINATION OF CERTAIN LIENS

5. The Borrowers shall use their best, good faith efforts to obtain, within
   sixty (60) days from the date of this Agreement, an executed UCC-1 Amendment
   which subordinates that certain UCC-1 Financing Statement naming "Diedrich
   Coffee, a Delaware corporation" as Debtor and "Shops at Park Place LLC" as
   Secured Party, which was filed with the office of the California Secretary of
   State on February 27, 1998 as document number 9806160519, to any and all
   UCC-1 Financing Statements filed in favor of the Lender which name any of the
   Borrowers as "Debtor". The subordination contemplated hereby shall be on such
   terms and conditions as are satisfactory to the Lender in its sole and
   exclusive discretion.

                                 LOAN ADVANCES

6. The Borrowers acknowledge and agree that, except as expressly set forth
herein, the Lender has no obligation to make any further Credit Extensions under
the Credit Agreement, and that if, in response to a request from the Borrowers,
the Lender does make any Credit Extension (as determined in its sole and
absolute discretion), the Lender shall not be obligated thereafter to make any
further Credit Extension(s) under the Credit Agreement.

           AMENDMENTS TO CREDIT AGREEMENT/REPAYMENT OF THE OBLIGATIONS

7. From and after the execution of this Agreement, the Credit Agreement shall be
   amended, and the Borrowers shall repay the principal balance of the
   Obligations, as follows:

     (a) Section 2.1(a) of the Credit Agreement is hereby amended by deleting
         same in its entirety and substituting the following therefor:

         (a) REVOLVING LOANS. THE LENDER AGREES, SUBJECT TO THE TERMS OF THIS
         AGREEMENT, TO MAKE REVOLVING CREDIT LOANS (THE "REVOLVING LOANS") TO
         THE BORROWER FROM TIME TO TIME AND AFTER THE DATE HEREOF UNTIL THE
         EXPIRATION DATE IN AN AGGREGATE PRINCIPAL AMOUNT AT ANY TIME

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         OUTSTANDING UP TO, BUT NOT EXCEEDING, $1,293,000, MINUS THE LC EXPOSURE
         AMOUNT AT SUCH TIME (THE "REVOLVER COMMITMENT"). THE PROCEEDS OF ALL
         REVOLVING LOANS SHALL BE USED SOLELY TO SATISFY ANY LC DRAW OBLIGATIONS
         IN ACCORDANCE WITH SECTION 2.8(D) OF THIS AGREEMENT. SUBJECT TO THE
         TERMS OF THIS AGREEMENT, FROM TIME TO TIME, AND AFTER THE DATE HEREOF
         UNTIL THE EXPIRATION DATE, THE BORROWERS MAY BORROW, REPAY AND REBORROW
         REVOLVING LOANS. THE REVOLVING LOANS SHALL BE EVIDENCED BY A PROMISSORY
         NOTE IN THE FORM OF EXHIBIT 2.1(A) HERETO DELIVERED TO THE LENDER ON
         THE DATE HEREOF (AS MAY BE AMENDED, RENEWED, SUBSTITUTED OR REPLACED
         FROM TIME TO TIME, THE "REVOLVING NOTE").

     (b) The Borrowers shall make scheduled payments in reduction of the
         principal balance of the Term Note, in the following amounts during the
         corresponding time periods:

                       TIME PERIOD                   AMOUNT OF PRINCIPAL PAYMENT
                       -----------                   ---------------------------
         Commencing February 1, 2001 and continuing
         on the like day of each calendar month              $ 25,000.00
         through and including June 1, 2001:

         Commencing July 1, 2001 and continuing on
         the like day of each calendar month through         $100,000.00
         and including August 1, 2002:

     (c) In all events, the Borrowers shall make such additional payments in
         reduction of the outstanding Obligations in amounts sufficient to
         ensure that the outstanding principal balance of the Term Note shall be
         no more than the following amounts, by the specified dates:(1)

                                      (b)
                                                     AMOUNT OF PRINCIPAL BALANCE
            SPECIFIED DATE                                     (TERM NOTE)
            --------------                           ---------------------------
         As at March 31, 2001:                                $9,667,000.00

         As at June 30, 2001:                                 $9,167,000.00

         As at September 30, 2001:                            $7,955,100.00

     (d) In all events, the entire outstanding balance of the Obligations,
         including all principal and interest (accrued and hereafter accruing)
         on the Term Note and the Revolving Note, and all costs, expenses, and
         costs of collection (including attorneys' fees) shall be due and
         payable in full on or before 5:00 P.M. on September 1, 2002, unless
         sooner due in accordance with the terms of the Loan Documents.

---------------
(1) Nothing contained herein shall limit the payments required to be made by the
    Borrowers under the Credit Agreement or this Agreement.

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     (e) Section 2.7(b) of the Credit Agreement is hereby amended by deleting
         same in its entirety and substituting the following therefor:

         (b) MANDATORY PAYMENTS IN CONNECTION WITH PREPAYMENT EVENTS. IF AT ANY
             TIME ANY PORTION OF THE TERM LOAN IS OUTSTANDING, THE BORROWERS
             SHALL, NOT LATER THAN 10 DAYS FOLLOWING EACH DAY ANY NET SALE
             PROCEEDS ARE RECEIVED BY ANY BORROWER OR ANY OF ITS SUBSIDIARIES
             FROM ANY ASSET SALES, PAY TO THE LENDER 50% OF THE AMOUNT OF SUCH
             NET SALE PROCEEDS (EACH SUCH PAYMENT TO THE LENDER BEING REFERRED
             TO HEREIN AS A "SALE PROCEEDS PAYMENT"), PROVIDED, HOWEVER, THAT
             (I) THE NET SALE PROCEEDS NOT PAID TO THE LENDER SHALL BE
             REINVESTED IN THE BUSINESS OF THE BORROWERS, AND (II) ASSET SALES
             SHALL BE PERMITTED ONLY IF: (X) NO DEFAULT EXISTS AT THE TIME OF
             SUCH ASSET SALE, AND (Y) SUCH ASSET SALES ARE MADE IN COMPLIANCE
             WITH THE TERMS OF THIS CREDIT AGREEMENT, INCLUDING, WITHOUT
             LIMITATION, SECTION 7.4.

     (f) Section 2.7(c) of the Credit Agreement is hereby amended by deleting
         same in its entirety and substituting the following therefor:

         (c) MANDATORY PAYMENTS IN CONNECTION WITH DEBT OR EQUITY ISSUANCES. IF
             AT ANY TIME ANY PORTION OF THE TERM LOAN IS OUTSTANDING, THE
             BORROWERS SHALL, NOT LATER THAN 30 DAYS FOLLOWING SUCH TIME AS WHEN
             ANY NET DEBT/EQUITY PROCEEDS ARE RECEIVED BY ANY BORROWER OR ANY OF
             ITS SUBSIDIARIES IN EXCESS OF $1,000,000 IN THE AGGREGATE AS TO ALL
             DEBT ISSUANCES AND EQUITY ISSUANCES OF ALL COMPANIES IN ANY FISCAL
             YEAR, PAY TO THE LENDER THE AMOUNT OF SUCH NET DEBT/EQUITY PROCEEDS
             (EACH SUCH PAYMENT TO THE LENDER BEING REFERRED TO HEREIN AS A
             "DEBT/EQUITY PROCEEDS PAYMENT").

     (g) Section 2.8(b)(i)(B) of the Credit Agreement is hereby amended by
         deleting same in its entirety and substituting the following therefor:

         (b) AFTER GIVING EFFECT TO SUCH ISSUANCE, EXTENSION OR RENEWAL, (1) THE
             AGGREGATE OUTSTANDING PRINCIPAL AMOUNT OF THE REVOLVING LOANS SHALL
             NOT EXCEED THE AVAILABLE REVOLVER COMMITMENT AND (2) THE SUMS OF
             THE AGGREGATE LC EXPOSURE AMOUNT SHALL NOT EXCEED $1,293,000.

     (h) The Borrowers have advised the Lender that they intend to enter into a
         Sale Leaseback transaction with respect to two (2) Motor Moka
         facilities located in Portland, Oregon, being Unit Nos. 22029 and
         22031, respectively, and have requested that the Lender amend the
         Credit Agreement to provide for such transactions. Accordingly, the
         following text shall be added to the last sentence of Section 7.2 of
         the Credit Agreement: "PROVIDED, HOWEVER, THAT COFFEE PEOPLE MAY
         CONDUCT A SALE LEASEBACK WITH RESPECT TO TWO (2) CERTAIN "MOTOR MOKA"
         FACILITIES LOCATED IN PORTLAND, OREGON, BEING UNIT NOS. 22029 AND
         22031, PROVIDED THAT SUCH SALE LEASEBACK SHALL BE IN ACCORDANCE WITH
         THE TERMS HEREOF."

     (i) The amount "$1,000,000" as it appears in Section 7.3(f) of the Credit
         Agreement is deleted and the amount "$2,000,000" shall be inserted in
         its stead.

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     (j) Section 7.4(b)(ii) of the Credit Agreement is hereby amended by
         deleting same in its entirety and substituting the following therefor:

         (ii) ANY OTHER SALE OF TANGIBLE ASSETS (OTHER THAN THE SALE OF ALL OR
              SUBSTANTIALLY ALL OF THE ASSETS OF ANY COMPANY AND OTHER THAN, IN
              ANY FOUR-QUARTER PERIOD, THE SALE OF GREATER THAN 14% OF THE VALUE
              OF CONSOLIDATED NET ASSETS AS OF ANY DATE THEREIN) FOR NOT LESS
              THAN THE FAIR MARKET VALUE THEREOF (EACH SUCH PERMITTED SALE BEING
              REFERRED TO AS A "PERMITTED SALE"), PROVIDED THAT PRIOR NOTICE
              THEREOF IS GIVEN TO THE LENDER, IF REQUIRED, PURSUANT TO SECTION
              6.1(L) AND THE SALE PROCEEDS PAYMENT WITH RESPECT THERETO IS MADE,
              IF AND TO THE EXTENT REQUIRED, PURSUANT TO SECTION 2.7 OF THIS
              AGREEMENT.

     (k) Section 8.1 of the Credit Agreement is hereby amended by adding the
         following text as an additional Event of Default:

         (l) A MATERIALLY ADVERSE CHANGE IN THE FINANCIAL CONDITION OF ANY OF
             THE BORROWERS, AS DETERMINED BY THE LENDER IN ITS SOLE AND
             EXCLUSIVE DISCRETION.

     (l) The definition of "DEBT ISSUANCE" contained in Section 1 of the Credit
         Agreement is hereby amended by deleting same in its entirety and
         substituting the following therefor:

         DEBT ISSUANCE: THE ISSUANCE OF CONSOLIDATED FUNDED INDEBTEDNESS
         SUBORDINATED TO THE OBLIGATIONS OF THE BORROWERS WITH RESPECT TO THE
         LOANS, THE NOTES AND OTHER OBLIGATIONS, ON SUCH TERMS OF SUBORDINATION
         AS ARE SATISFACTORY TO THE LENDER IN ITS SOLE AND EXCLUSIVE DISCRETION,
         AND PURSUANT TO DOCUMENTATION CONTAINING TERMS OF SUBORDINATION WITH
         RESPECT TO THE RIGHT OF PAYMENT, ACCRUAL AND REPAYMENT OF INTEREST, AND
         EXERCISE OF REMEDIES, IN FORM AND SUBSTANCE SATISFACTORY TO THE LENDER
         IN ITS SOLE AND EXCLUSIVE DISCRETION.

     (m) The definition of "EXPIRATION DATE" contained in Section 1 of the
         Credit Agreement is hereby amended by deleting same in its entirety and
         substituting the following therefor:

         EXPIRATION DATE: SEPTEMBER 1, 2002, OR SUCH EARLIER DATE ON WHICH THE
         REVOLVER COMMITMENT OF THE LENDER SHALL TERMINATE IN ACCORDANCE WITH
         THE TERMS HEREOF.

     (n) The definition of "REFERENCE PERIOD" contained in Section 1 of the
         Credit Agreement is hereby amended by deleting same in its entirety and
         substituting the following therefor:

         REFERENCE PERIOD: EACH PERIOD OF FOUR CONSECUTIVE FISCAL QUARTERS OF
         THE BORROWERS ENDING ON OR AFTER THE QUARTERLY DATE FOR THE SECOND
         FISCAL QUARTER OF FISCAL YEAR 1999; PROVIDED, HOWEVER, SOLELY WITH
         RESPECT TO THE FINANCIAL COVENANTS CONTAINED IN SECTION 5.1, 5.2, AND
         5.3, THAT: (i) FOR THE FIRST FISCAL QUARTER OF FISCAL YEAR 2001,
         REFERENCE PERIOD SHALL MEAN AND REFER TO THE FIRST FISCAL QUARTER OF
         FISCAL YEAR 2001, (ii) FOR THE SECOND QUARTER OF FISCAL YEAR 2001,
         REFERENCE PERIOD SHALL REFER TO THE PRIOR TWO FISCAL QUARTERS, (iii)
         FOR THE THIRD QUARTER OF FISCAL YEAR 2001, REFERENCE PERIOD SHALL REFER
         TO THE PRIOR THREE FISCAL QUARTERS, AND (iv) FOR THE FOURTH QUARTER OF
         THE FISCAL YEAR 2001, AND FOR EACH FISCAL QUARTER THEREAFTER, ON A
         ROLLING BASIS, REFERENCE PERIOD SHALL REFER TO THE PRIOR FOUR
         CONSECUTIVE FISCAL QUARTERS OF THE BORROWERS.

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     (o) The definition of "TERM LOAN MATURITY DATE" contained in Section 1 of
         the Credit Agreement is hereby amended by deleting same in its entirety
         and substituting the following therefor:

         TERM LOAN MATURITY DATE: SEPTEMBER 1, 2002, OR SUCH EARLIER DATE ON
         WHICH THE REVOLVER COMMITMENT OF THE LENDER SHALL TERMINATE IN
         ACCORDANCE WITH THE TERMS HEREOF.

                        AMENDMENT OF FINANCIAL COVENANTS

8. Section 5.1 of the Credit Agreement is hereby amended by deleting same in its
   entirety and substituting the following therefor:

         5.1 MAXIMUM LEVERAGE RATIO. THE RATIO OF CONSOLIDATED FUNDED
         INDEBTEDNESS AT ANY DATE TO CONSOLIDATED EBITDA FOR THE MOST RECENTLY
         ENDED REFERENCE PERIOD ENDING ON THE QUARTERLY DATE FALLING NEAREST TO
         THE DATES IDENTIFIED IN THE TABLE BELOW TO BE GREATER THAN THE RATIO
         SPECIFIED BELOW OPPOSITE SUCH DATE.

                   DATE                           MAXIMUM LEVERAGE RATIO
                   ----                           ----------------------
                 9/30/00                                (153.0):1.0
                 12/31/00                                15.0:1.0
                 3/31/01                                  7.0:1.0
                 6/30/01                                  4.8:1.0
                 9/30/01                                  4.6:1.0
                 12/31/01                                 4.8:1.0
                 3/31/02                                  4.6:1.0
               6/30/02 AND                                4.2:1.0
           FOR EACH REFERENCE
           PERIOD THEREAFTER

9. Section 5.2 of the Credit Agreement is hereby amended by deleting same in its
entirety and substituting the following therefor:

         5.2 MINIMUM FIXED CHARGES COVERAGE RATIO. THE RATIO OF CONSOLIDATED
         CASH FLOW FOR ANY REFERENCE PERIOD ENDING ON ANY QUARTERLY DATE FALLING
         NEAREST TO THE DATES IDENTIFIED IN THE TABLE BELOW TO CONSOLIDATED
         FINANCIAL OBLIGATIONS FOR SUCH REFERENCE PERIOD TO BE LESS THAN THE
         RATIO SPECIFIED BELOW OPPOSITE SUCH DATE.

                                                            MINIMUM FIXED
                          DATE                          CHARGES COVERAGE RATIO
                          ----                          ----------------------
                        9/30/00                               (0.1):1.0
                        12/31/00                                0.5:1.0
                        3/31/01                                 0.8:1.0
                        6/30/01                                 0.8:1.0
                        9/30/01                                 0.9:1.0
                        12/31/01                                0.7:1.0
                        3/31/02                                 0.7:1.0
                        6/30/02 AND                             0.8:1.0
                     FOR EACH REFERENCE
                     PERIOD THEREAFTER

                                       8

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10. Section 5.3 of the Credit Agreement is hereby amended by deleting same in
its entirety and substituting the following therefor:

         5.3 MINIMUM INTEREST COVERAGE RATIO. THE RATIO OF CONSOLIDATED EBITDAR
         FOR ANY REFERENCE PERIOD ENDING ON ANY QUARTERLY DATE FALLING NEAREST
         TO THE DATES IDENTIFIED IN THE TABLE BELOW TO CONSOLIDATED INTEREST
         EXPENSE FOR SUCH REFERENCE PERIOD TO BE LESS THAN THE RATIO SPECIFIED
         BELOW OPPOSITE SUCH DATE.

                        DATE                     MINIMUM INTEREST COVERAGE RATIO
                        ----                     -------------------------------
                      9/30/00                               0.8:1.0
                      12/31/00                              1.0:1.0
                      3/31/01                               1.2:1.0
                      6/30/01                               1.2:1.0
                      9/30/01                               1.2:1.0
                      12/31/01                              1.2:1.0
                      3/31/02                               1.2:1.0
                 6/30/02 AND 1.2:1.0
                 FOR EACH REFERENCE
                 PERIOD THEREAFTER

                        FINANCIAL PROJECTIONS / REPORTING

11. The Borrowers have furnished the Lender with its cash flow projections for
the fiscal year ending 2001 (the "CASH FLOW PROJECTIONS"), a copy of which
projections are attached hereto as Exhibit "A". The Borrowers hereby certify to
the Lender that the Cash Flow Projections are based upon good faith estimates
and assumptions believed by management of the Borrowers to be reasonable at the
time made.

12. In addition to all other reporting requirements contained in the Loan
Documents, the Borrowers shall also submit to the Lender monthly financial
statements, on a consolidating basis, within thirty (30) days of the close of
each calendar month, a statement of income, cash flow, and balance sheet for the
immediately preceding month and year-to-date period. Simultaneously

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<PAGE>   10

with the furnishing of such financial statements, the Borrowers shall submit to
the Lender (i) a detailed reconciliation analysis of the actual monthly and
year-to-date results compared to the projected results to be delivered to the
Lender, and as further amended to reflect any interest and/or fees that are
incurred as a result of this Agreement, and (ii) a detailed written explanation
of any and all material variances.

                                MODIFICATION FEE

13. In consideration of the Lender's agreement to enter into this Agreement, the
Borrowers shall be obligated to pay to the Lender the sum of $25,000.00 as a
modification fee (hereinafter, the "MODIFICATION FEE").

     (a) The Modification Fee shall:

         (i)    Be fully earned by the Lender upon the execution of this
                Agreement;

         (ii)   Constitute one of the Obligations; and

         (iii)  Be retained by the Lender under all circumstances and not
                applied in reduction of any of the other Obligations.

     (b) The Borrowers shall pay the Modification Fee at such time as the
         Borrowers shall remit to the Lender the first Sale Proceeds Payment (in
         accordance with Section 2.7(b) of the Credit Agreement, which payment
         shall be in addition to the payment of the Sale Proceeds Payment) after
         the date hereof; provided, however, that the Modification Fee shall be
         paid to the Lender by no later than March 31, 2001.

                                COSTS / EXPENSES

14. The Borrowers shall pay to the Lender:

     (a) On or before the execution of this Agreement the sum of $12,747.07 in
         reimbursement for reasonable costs, expenses, and costs of collection
         (including reasonable attorneys' fees and expenses) incurred by the
         Lender to Riemer & Braunstein, LLP through September 22, 2000, in
         connection with the protection, preservation, and enforcement by the
         Lender of its rights and remedies under the Loan Documents, including,
         without limitation, the negotiation and preparation of this Agreement;

     (b) The sum of $88,857.35 (the "RECOVERY GROUP FEES") in reimbursement of
         costs and expenses incurred by the Lender through September 15, 2000,
         in connection with services rendered by The Recovery Group, Inc. The
         Borrowers hereby expressly acknowledge and agree that the Recovery
         Group Fees are absolutely due and owing to the Lender, and constitute
         one of the Obligations under the Credit Agreement. The Recovery Group
         Fees shall be paid to the Lender by the Borrowers in four equal
         installments of $22,214.34 due on or before the last

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<PAGE>   11

         Business Day of October 2000, November 2000, December 2000, and January
         2001, and the failure of the Borrowers to pay the Recovery Group Fees,
         as and when due, shall constitute an Event of Default under the Credit
         Agreement.

     (c) On demand for any and all other reasonable costs, expenses, and costs
         of collection (including reasonable attorneys' fees and expenses)
         incurred by the Lender in connection with the protection, preservation,
         and enforcement by the Lender of its rights and remedies under the Loan
         Documents, including, without limitation, reimbursement of all costs
         and expenses for: (i) services rendered by The Recovery Group, Inc.
         from and after September 15, 2000, and (ii) all attorneys' fees and
         expenses incurred by the Lender from and after September 22, 2000.

                                     NOTICES

15. If to the Lender:    Fleet National Bank
                         100 Federal Street
                         Providence, Rhode Island 02110
                         Attn.: Mr. Anthony D. Healey
                                Vice President
                         Telecopier No. (617) 434-1508

    With a copy to:      Steven T. Greene, Esquire
                         Riemer & Braunstein LLP
                         Three Center Plaza
                         Boston, Massachusetts 02108
                         Telecopier No. (617) 880-3456

    If to the Borrowers: Diedrich Coffee, Inc.
                         2144 Michelson Drive
                         Irvine, California 92612
                        Attn: Matthew McGuinness
                        Telecopier No. (949) 756-1144
   With a copy to:      John M. Williams, Esquire
                        Gibson, Dunn & Crutcher, LLP
                        4 Park Plaza
                        Irvine, California 92614
                        Telecopier No. (949) 451-4220

                                     WAIVERS

16. NON-INTERFERENCE. From and after the occurrence of any Event of Default, the
Borrowers agree not to interfere with the exercise by the Lender of any of its
rights and remedies. The Borrowers further agree that they shall not seek to
distrain or otherwise hinder,

                                       11

<PAGE>   12

delay, or impair the Lender's efforts to realize upon any of the collateral
granted to the Lender under the Loan Documents, or otherwise to enforce the
Lender's rights and remedies pursuant to the Loan Documents. This provision
shall be specifically enforceable by the Lender. 2.

17. AUTOMATIC STAY. The Borrowers hereby expressly assent to any motion filed by
the Lender seeking relief from the automatic stay in connection with any
Petition for Relief filed by or against any one or more of the Borrowers under
the United States Bankruptcy Code.

18. JURY TRIAL. The Borrowers hereby make the following waiver knowingly,
voluntarily, and intentionally, and understand that the Lender, in entering into
this Agreement, is relying on such a waiver: THE BORROWERS EACH HEREBY
IRREVOCABLY WAIVE ANY PRESENT OR FUTURE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE
OR CONTROVERSY IN WHICH ANY OF THE BORROWERS BECOME A PARTY (WHETHER SUCH CASE
OR CONTROVERSY IS INITIATED BY OR AGAINST THE BORROWERS OR IN WHICH THE
BORROWERS ARE JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT
OF, OR IS IN RESPECT OF, ANY RELATIONSHIP BETWEEN THE BORROWERS, OR ANY OTHER
PERSON, AND THE LENDER.

                                ENTIRE AGREEMENT

19. This Agreement shall be binding upon the Borrowers and the Borrowers'
respective employees, representatives, successors, and assigns, and shall inure
to the benefit of the Lender and the Lender's successors and assigns. This
Agreement and all documents, instruments, and agreements executed in connection
herewith incorporate all of the discussions and negotiations between the
Borrowers and the Lender, either expressed or implied, concerning the matters
included herein and in such other documents, instruments and agreements, any
statute, custom, or usage to the contrary notwithstanding. No such discussions
or negotiations shall limit, modify, or otherwise affect the provisions hereof.
No modification, amendment, or waiver of any provision of this Agreement, or any
provision of any other document, instrument, or agreement between the Borrowers
and the Lender shall be effective unless executed in writing by the party to be
charged with such modification, amendment, or waiver, and if such party be the
Lender, then by a duly authorized officer thereof.

                            CONSTRUCTION OF AGREEMENT

20. In connection with the interpretation of this Agreement and all other
documents, instruments, and agreements incidental hereto:

     (a) All rights and obligations hereunder and thereunder, including matters
         of construction, validity, and performance, shall be governed by and
         construed in accordance with the law of the Commonwealth of
         Massachusetts and are intended to take effect as sealed instruments.

                                       12

<PAGE>   13

     (b) The captions of this Agreement are for convenience purposes only, and
         shall not be used in construing the intent of the Lender and the
         Borrowers under this Agreement.

     (c) In the event of any inconsistency between the provisions of this
         Agreement and any other document, instrument, or agreement entered into
         by and between the Lender and the Borrowers, the provisions of this
         Agreement shall govern and control.

     (d) The Lender and the Borrowers have prepared this Agreement and all
         documents, instruments, and agreements incidental hereto with the aid
         and assistance of their respective counsel. Accordingly, all of them
         shall be deemed to have been drafted by the Lender and the Borrowers
         and shall not be construed against either the Lender or the Borrowers.

                         ILLEGALITY OR UNENFORCEABILITY

21. Any determination that any provision or application of this Agreement is
invalid, illegal, or unenforceable in any respect, or in any instance, shall not
affect the validity, legality, or enforceability of any such provision in any
other instance, or the validity, legality, or enforceability of any other
provision of this Agreement.

                               INFORMED EXECUTION

22. The Borrowers warrant and represent to the Lender that the Borrowers:

     (a) Have read and understand all of the terms and conditions of this
         Agreement;

     (b) Intend to be bound by the terms and conditions of this Agreement;

     (c) Are executing this Agreement freely and voluntarily, without duress,
         after consultation with independent counsel of their own selection; and

     (d) Acknowledge and agree that the modifications provided to the Borrowers
         by the Lender pursuant to this Agreement constitute a fair and
         reasonable time frame within which all Obligations are to be paid in
         full.

                                       13

<PAGE>   14

         IN WITNESS WHEREOF, this First Amendment to Credit Agreement has been
executed this 26th day of September, 2000.

FLEET NATIONAL BANK                          DIEDRICH COFFEE, INC.

By: /s/ ANTHONY D. HEALEY                    By: /s/  MATHEW C. McGUINNESS
    ----------------------------------           -------------------------------
Title: Vice President                        Title: Sr. Vice President and
                                                    Chief Financial Officer

                                             COFFEE PEOPLE WORLDWIDE, INC.

                                             By: /s/ MATHEW C. McGUINNESS
                                                 -------------------------------
                                             Title: Sr. Vice President and
                                                    Chief Financial Officer

                                             COFFEE PEOPLE, INC.

                                             By: /s/ MATHEW C. McGUINNESS
                                                 -------------------------------
                                             Title: Sr. Vice President and
                                                    Chief Financial Officer

                                             GLORIA JEAN'S, INC.

                                             By: /s/ MATHEW C. McGUINNESS
                                                 -------------------------------
                                             Title: Sr. Vice President and
                                                    Chief Financial Officer

                                             EDGLO ENTERPRISES, INC.

                                             By: /s/ MATHEW C. McGUINNESS
                                                 -------------------------------
                                             Title: Sr. Vice President and
                                                    Chief Financial Officer

                        [CONTINUATION OF SIGNATURE PAGE]

                                             GLORIA JEAN'S GOURMET COFFEES CORP.

                                             By: /s/ MATHEW C. McGUINNESS
                                                 -------------------------------
                                             Title: Sr. Vice President and
                                                    Chief Financial Officer

                                             GLORIA JEAN'S GOURMET COFFEES
                                                FRANCHISING CORP.

                                             By: /s/ MATHEW C. McGUINNESS
                                                 -------------------------------
                                             Title: Sr. Vice President and
                                                    Chief Financial Officer

                                       14<PAGE>   1

                                                                   EXHIBIT 10.33

September 22, 2000

J. Michael Jenkins
27562 Gable Street
Capistrano Beach, CA  92624

Dear Mike:

         We are pleased to offer you the position of President and Chief
Executive Officer of Diedrich Coffee, Inc. (the "Company"). This is a critical
position with responsibility for increasing shareholder value, aggressively
growing the Company and evolving the Company's strategic vision. Additionally,
this position carries Board Member and Company Officer responsibility. As you
know, we are currently the second largest specialty Coffee Company in the United
States with plans to expand significantly in the future. We view this as a
unique opportunity to create something really special.

Our offer is as follows:

o    Base salary - $5,769.23 per week (paid on a bi-weekly basis) which equates
     to $300,000 annually at the completion of one full year of employment.
     Wages are reviewed annually as anniversary dates are reached.
o    Incentive/Bonus plan - Recognizing that the fiscal budget will be in place
     when you commence, we will guarantee a $100,000 bonus for fiscal 2000/2001
     provided that you are still employed by the Company on the first
     anniversary of the date hereof. Prior to the beginning of fiscal 2001/2002,
     the Compensation Committee of the Board of Directors will present a bonus
     plan based on specific objectives and targets. This plan will be
     competitive with the market and the Company.
o    Stock Options - The Company will issue you options to purchase 500,000
     shares of common stock of Diedrich Coffee. The strike price will be the
     closing share price of Diedrich Coffee's common stock as reported on the
     NASDAQ national stock market on Friday September 22, 2000. These options
     will vest over 4 years at a rate of 25% per year. These options would fully
     vest in the event of a change of control, as defined in the stock option
     agreement. This option grant will be subject to stockholder approval, which
     will be sought at the annual meeting to be held before the end of this
     calendar year. The Board reviews issuance of additional stock options
     annually.
o    Vacation - You will be entitled to 3 weeks of vacation during your first
     year of employment. Additional vacation time will be earned as plan
     eligibility requirements are met.

<PAGE>   2

o    Benefits - You will participate in the company's executive benefits plan. A
     copy is attached. The benefit program may be modified from time to time.
o    401(k) participation based on plan eligibility criteria.
o    Employment at will - you may resign at any time and Diedrich Coffee may
     terminate your employment at any time, with or without cause or notice.
o    Termination not for cause - Should your employment be terminated for
     reasons other than cause (cause is defined as: i) willful or gross neglect
     of duties for which employed, or ii) willful misconduct or gross negligence
     in the performance of such duties, all of such facts to be determined in
     good faith by the Board of Directors of the Company, after you have been
     given written notice of your purported willful misconduct or gross
     negligence and have failed to alter your inappropriate conduct within 30
     days after you have received such written notice, or iii) a termination due
     to you committing a felony for which you are convicted with no further
     rights of appeal) you will be entitled to bi-weekly payments equal to one
     year of your then current salary. In any event, these payments would cease
     if you accept other employment or accept work as an independent contractor.
     Additionally, this benefit would not apply in the event of your death or
     inability to perform the job due to disability.
o    Position reports directly to the Board of Directors of Diedrich Coffee.
o    Start date will be September 27, 2000.

We look forward to your early response in becoming part of our team and feel you
will enjoy your return to Orange County. Please confirm your acceptance of this
offer by signing and returning an executed copy to Matt Kimble.

Very truly yours,

John Martin
Chairman of the Board, Diedrich Coffee Inc.

I accept the position of President and Chief Executive Officer, Diedrich Coffee
Inc., effective September 27, 2000 on the above terms and conditions.

/s/ J. MICHAEL JENKINS                      September 22, 2000
------------------------------------        ------------------
    J. Michael Jenkins                             Date

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