Exhibit
10.50


 


PROMISSORY
NOTE


 


	
  $2,500,000.00

  	
   

  	
  November 14,
  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
TWO MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00), 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 Applicable Interest Rate
(hereinafter defined), the interest being payable as hereinafter specified.


 


Prior to maturity, the term “Applicable
Interest Rate” means a varying rate per annum equal to the lower
of (w) the sum of the Index (hereinafter defined) and 250 basis points or
(x) the Maximum Lawful Rate.  After
maturity, the term “Applicable Interest Rate” means a
varying rate per annum equal to the lower of (y) sum of the Index plus 500
basis points (but never less than 6% per annum) or (z) the Maximum Lawful Rate.
The rate per annum at which interest accrues hereunder shall be adjusted
without notice to the Makers on the effective date of any change in the Index
or the Maximum Lawful Rate, as the case may be.


 


The term “Index” means the annual lending rate
of interest announced from time to time by J.P. Morgan Chase & Co., New
York, New York, as its prime rate, or in the event no such rate is announced,
then a comparable rate reasonably selected by the Payee and specified in a
written notice to the Makers.  The Index
in effect as of November 14, 2003 (the date this Note was printed) is
4.0%.  The Makers understand that the
Index may not be the lowest rate of interest charged to or paid by customers of
the Payee or of any financial institution, that the Index is not necessarily
more favorable than another rate or index, and that rates on other loans or
credit facilities may be based on indices other than the Index.


 


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.


 


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


 


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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.


 


Interest on this
Note shall be calculated at a daily rate based on a year of 360 days, with the
daily rate so determined being applied for the actual number of days elapsed,
provided that in no event shall the amount or rate of interest payable
hereunder exceed that calculated under or constituting the Maximum Lawful Rate.


 


TERMS OF PAYMENT:


 


The accrued
interest on this Note shall be due and payable in monthly installments,
commencing on December 15, 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.


 


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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.


 


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.


 


NO SETOFF:


 


The Makers
covenant and agree that it will not exercise any right which it might otherwise
have at common law, or otherwise, to setoff amounts due and owing to such
Makers hereunder against amounts which are or may be due and owing to any one
or more of the Makers by the Payee.


 


REPRESENTATIONS
AND WARRANTIES:


 


The Makers
expressly represent and warrant to the Payee that it is a limited liability
company duly organized and existing under the laws of the State of Delaware and
qualified to conduct business as a foreign limited liability company in good
standing 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 certificate of formation, LLC
Agreement or any other agreement relating to its form of entity; that the
representative executing this Note is the legally qualified and acting representative
of said company and is expressly authorized to execute this Note by appropriate
resolution.


 


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


 


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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.


 


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
guarantor 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.


 


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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.


 


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 Franchisor, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joyce V. Cates

  	
   

  
	
   

  	
   

  	
  Joyce V. Cates,

  	
   

  
	
   

  	
   

  	
  Senior Vice President

  	
   

  



 


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DISCLAIMER OF ORAL
AGREEMENTS


 


DEBTOR (whether
one or more):                    SCHLOTZSKY’S
FRANCHISOR, LLC, a Delaware limited liability company


 


	
  LENDER:

  	
   

  	
  JOHN C. WOOLEY AND
  JEFFREY J. WOOLEY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Collectively called
  the “Parties”)

  



 


 


	
  Lender has agreed to
  loan Debtor:

  	
   

  
	
   

  	
  Amount:

  	
  $2,500,000.00

  
	
   

  	
  Note Date:

  	
  November 14, 2003

  
				



 


 


and the Parties
agree to incorporate the terms of all the loan documents connected with such
loan as a part of this Loan Agreement.


 


The following
notice is being provided in compliance with §26.02 of the Texas Business and
Commerce Code, which provides that certain “loan agreements” must be in writing
to be enforceable.  As used in the
notice, the term “Loan Agreement” means one or more promises, promissory notes,
agreements, undertakings, security agreements, deeds of trust, or other
documents, or commitments, or any combination of these actions or documents,
executed in connection with this loan from Lender.


 


NOTICE


 


THIS WRITTEN LOAN
AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.


 


THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.


 


This notice shall
be deemed to be a part of each document which is executed by any Debtor or
Obligor and which comprises a part of the Loan Agreement.


 


The term “Debtor
or Obligor” means any individual or entity which (i) is primarily obligated to
pay the loan or (ii) otherwise is or becomes obligated to pay the loan (for
example, as cosigner or guarantor) or (iii) has pledged any property as
security for the loan.


 


[Rest of Page
Intentionally Left Blank]


 


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The undersigned
Debtor or Obligor acknowledges receipt of a copy of this notice and agrees that
all documents comprising the Loan Agreement are subject to the provision of
§26.02 of the Texas Business and Commerce Code.


 


DATE:  As Of November 14, 2003


 


 


	
  DEBTOR OR OBLIGOR:

  	
  LENDER:

  
	
   

  	
   

  
	
  Schlotzsky’s
  Franchisor, LLC,

  	
  /s/
  John C. Wooley

  	
   

  
	
  a Delaware limited
  liability company

  	
  John C. Wooley

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/Joyce
  V.Cates

  	
   

  	
  /s/
  Jeffrey J. Wooley

  	
   

  
	
   

  	
  Joyce
  V. Cates

  	
   

  	
  Jeffrey
  J. Wooley

  	
   

  
	
   

  	
  Senior
  Vice President

  	
   

  	
   

  	
   

  



 


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