Exhibit 10.49

 

MODIFICATION, EXTENSION AND RENEWAL OF PROMISSORY NOTE

 

$1,000,000.00

 

October 31, 2003

 

For value received, the undersigned (the “Makers,” whether one or more), promise
to pay to the order of JOHN C. WOOLEY AND JEFFREY J. WOOLEY (the “Payee”), at
203 Colorado, Austin, Travis County, Texas 78701, or such other location as the
Payee designates to the Makers in writing, the principal sum of ONE MILLION AND
NO/100 DOLLARS ($1,000,000.00), or the outstanding principal amount advanced
hereunder, whichever is less, in legal and lawful money of the United States of
America, with interest thereon from the date hereof through the maturity date of
this Note (whether by acceleration or otherwise) (the “Maturity Date”) at the
rate of six percent (6.0%) per annum (calculated on the basis of the actual
number of days elapsed but computed as if each year consisted of 360 days), the
interest being payable as hereinafter specified.  After the Maturity Date until
paid, unpaid principal and accrued unpaid interest shall bear interest at a rate
per annum equal to the lesser of (i) eighteen percent (18%), or (ii) the Maximum
Lawful Rate.  As used herein, the term “Maximum Lawful Rate” shall mean the
greater of (i) the highest non-usurious rate of interest permitted by applicable
United States law, or (ii) a rate per annum equal to the applicable weekly
ceiling described in Chapter 303 of the Texas Finance Code, as amended, as such
indicated rate ceiling is in effect from time to time, but in no event greater
than twenty-four (24.0%) per annum.  Unless precluded by law, changes in the
Maximum Lawful Rate created by statute or governmental action during the term of
this Note shall be immediately applicable to this Note on the effective date of
such changes.  If the applicable law ceases to provide for a Maximum Lawful
Rate, the Maximum Lawful Rate shall be equal to eighteen percent (18%) per
annum, unless the loan evidenced by this Note is subject to Regulation Z of the
Board of Governors of the Federal Reserve System, 12 C. F. R. §226 and is
secured by a dwelling, in which case the Maximum Lawful Rate shall be equal to
twenty-four percent (24.0%) per annum.

 

Notwithstanding the foregoing, if, at any time, the rate of interest applicable
to this Note (but for the limitation thereof to the Maximum Lawful Rate) exceeds
the Maximum Lawful Rate, the rate of interest to accrue on this Note shall be
limited to the Maximum Lawful Rate, but any subsequent reductions in such rate
of interest applicable to this Note (but for the limitation thereof to the
Maximum Lawful Rate) shall not reduce the rate of interest to accrue on this
Note below the Maximum Lawful Rate until the total amount of interest which
would have accrued if a varying rate per annum equal to the rate of interest
applicable to this Note (but for the limitation thereof to the Maximum Lawful
Rate) had at all times been in effect.

 

If the Maximum Lawful Rate is increased by statute or other governmental action
subsequent to the date hereof, then the Makers agree that the new Maximum Lawful
Rate will be applicable hereto from the effective date of the new Maximum Lawful
Rate, unless such application is precluded by statute or governmental action or
by the general law of the jurisdiction governing the transaction evidenced
hereby.

 

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This Note is in renewal, extension and modification of that one certain
Modification, Renewal and Extension of Promissory Note between Maker and Payee
dated effective August 8, 2003, which renewed and extended the term of that
certain Promissory Note in the original principal amount of $1,000,000.00
between Maker and Payee dated effective April 8, 2003.  The only change the
parties wish to make to the previous note is to extend the maturity date from
October 31, 2003 to January 16, 2004.  The parties intend all other terms to
remain the same.

 

TERMS OF PAYMENT:

 

The accrued interest on this Note shall be due and payable in monthly
installments, commencing on November 8, 2003, and continuing regularly
thereafter on the same day of each calendar month until January 16, 2004, when
the entire amount of this Note, principal and accrued interest then remaining
unpaid, shall be due and payable.  Interest shall be calculated on the unpaid
principal to the date each installment is paid and each such payment shall be
credited to the discharge of the interest accrued, the reduction of principal,
and other authorized charges, if any, in such manner and order as the Payee
shall determine in its sole discretion.

 

PAYMENT ON NON-BUSINESS DAYS:

 

If any payment hereunder falls due on a Saturday, Sunday or public holiday on
which commercial banks in Austin, Texas are permitted or required by law to be
closed, the time for such payment shall be extended to the next day on which the
Payee is open for business, and such extension of time shall be included in the
calculation of interest accruing and payable hereunder.

 

PREPAYMENT:

 

The Makers reserve the right to prepay this Note in any amount at any time prior
to maturity without penalty.  Interest shall be calculated on the unpaid
principal to the date of any prepayment and any such prepayment shall be applied
first toward the payment of accrued interest and next to the principal
installments of this Note in the inverse order of maturity.

 

SECURITY FOR PAYMENT:

 

Payment of this Note is secured by, and this Note is entitled to the benefits
of, all security agreements, assignments, deeds of trust, mortgages and lien
instruments executed by the Makers (or any of them), or other similar
instruments, guaranties, endorsements or other agreements, executed by any other
person or entity (the “Collateral Agreements,” whether one or more) to secure,
guarantee or otherwise provide for the payment hereof, in favor of or for the
benefit of the Payee, including any previously executed and any now or hereafter
executed.  Without limiting the foregoing, the Collateral Agreements include
Security Agreement dated of even date herewith executed by the Makers and Payee
covering certain of the Makers’ personal property.

 

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USE OF PROCEEDS:

 

This Note represents funds advanced to the Makers at the Makers’ special
instance and request and used to provide working capital for the Makers.

 

REPRESENTATIONS AND WARRANTIES:

 

The Makers expressly represent and warrant to the Payee that it is a corporation
duly organized and existing under the laws of the State of Texas; that it
possesses full power and authority to own its property and to conduct its
business as now conducted and as presently proposed to be conducted; that the
execution and delivery of this Note will not contravene any provisions of its
articles incorporation, bylaws or any other agreement relating to its form of
entity; that the officer executing this Note is the legally qualified and acting
officer of said corporation and is expressly authorized to execute this Note by
appropriate resolution of the Board of Directors of said corporation.

 

LIMITATION OF INTEREST:

 

All agreements and transactions among the Makers and the Payee, whether now
existing or hereafter arising, whether contained herein or in any other
instrument, and whether written or oral, are hereby expressly limited so that in
no contingency or event whatsoever, whether by reason of acceleration of the
maturity hereof, late payment, prepayment, or otherwise, shall the amount of
interest contracted for, charged or received by the Payee from the Makers for
the use, forbearance, or detention of the principal indebtedness or interest
hereof, which remains unpaid from time to time, exceed the Maximum Lawful Rate,
it particularly being the intention of the parties hereto to conform strictly to
the applicable usury laws of the State of Texas (or applicable United States law
to the extent that it permits the Payee to contract for, charge or receive a
greater amount of interest than under Texas law).  Any interest payable
hereunder or under any other instrument relating to the indebtedness evidenced
hereby that is in excess of the Maximum Lawful Rate, shall, in the event of
acceleration of maturity, late payment, prepayment, or otherwise, be applied to
a reduction of the unrepaid indebtedness hereunder and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of such
unrepaid indebtedness, such excess shall be refunded to the Makers.  To the
extent not prohibited by applicable law, determination of the Maximum Lawful
Rate shall at all times be made by amortizing, prorating, allocating and
spreading in equal parts during the full term of this loan, all interest at any
time contracted for, charged or received from the Makers in connection with this
loan, so that the actual rate of interest on account of such indebtedness is
uniform throughout the term thereof.

 

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SUCCESSORS AND ASSIGNS:

 

As used herein, the term “Payee” shall include the successors and assigns of the
Payee and any subsequent owner and holder of this Note, and the term “Makers”
shall include co-makers, endorsers, guarantors, sureties and their respective
successors and assigns.

 

DEFAULT AND COLLECTION:

 

Subject to the express notice and cure provisions contained in this Note, it is
expressly provided that, upon default in the punctual payment of this Note, or
any part hereof, principal or interest, as the same shall become due and
payable, or upon default in the performance of or compliance with any of the
terms of any of the Collateral Agreements, or if the Payee deems the Payee
insecure, either because the prospect of timely payment of this Note becomes
impaired, or because the prospect of timely performance of any of the Collateral
Agreements becomes impaired, at the option of the Payee, the entire indebtedness
evidenced hereby shall be matured, and in the event default is made in the
prompt payment of this Note when due or declared due, and the same is placed in
the hands of an attorney for collection, or suit is brought on the same, or the
same is collected through probate, bankruptcy or other judicial proceedings,
then the Makers jointly and severally agree and promise to pay all reasonable
attorney’s fees, court costs and collection costs incurred by the Payee.

 

NOTICE AND CURE RIGHTS:

 

In the event of any default under the Collateral Agreements or this Note, the
Makers and each Guarantors named below shall be entitled to receive written
notice of any such default and a period of fifteen (15) days after such notice
is sent by the Payee within which to cure such default prior to the Payee’s
being entitled to exercise any remedy which may arise due to the occurrence of
such default, other than the right to withhold making further advances of funds
during the period any such default remains uncured.  However, nothing herein
shall obligate the Payee to give the Makers more than one (1) notice of default
during any ninety (90) day period.  The provisions of this paragraph shall
control over any inconsistent provision in any of the Collateral Agreements; and
any right to accelerate the maturity of this Note contained in any of the
Collateral Agreements is subject to prior compliance with this paragraph.

 

WAIVERS AND CONSENTS:

 

Subject to the express notice and cure provisions contained in this Note, each
of the Makers waives presentment for payment, notice of intent to accelerate,
notice of acceleration, protest and notice of protest, dishonor and diligence in
collecting and the bringing of suit against any other party, and agrees to all
renewals, extensions, partial payments, releases and substitutions of security,
in whole or in part, with or without notice, before or after maturity.  The
Payee may remedy any default, without waiving the same, or may waive any default
without waiving any prior or subsequent default.

 

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GOVERNING LAWS AND VENUE:

 

This Note is governed by and is to be construed and enforced in accordance with
the laws of the State of Texas and of the United States.  The Makers agree and
consent to the jurisdiction of the District Courts of Travis County, Texas, and
of the United States District Court for the Western District of Texas (Austin
Division) and acknowledge that such courts shall constitute proper and
convenient forums for the resolution of any actions among the Makers and the
Payee with respect to the subject matter hereof, and agree that such courts
shall be the exclusive forums for the resolution of any actions among the Makers
and the Payee with respect to the subject matter hereof.

 

 

Schlotzsky’s, Inc.,
a Texas corporation

 

 

 

 

 

 

By:

/s/ JOYCE CATES

 

 

Joyce Cates,

 

 

Senior Vice President - Franchise Operations

 

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