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.


 

















 


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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