**Exhibit 10.54**
**MODIFICATION, EXTENSION AND RENEWAL OF PROMISSORY NOTE**   $1,000,000.00 As of April 16, 2004
     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 otherlocation as the Payee designates to the Makers in writing, the principal sum ofONE MILLION AND NO/100 DOLLARS ($1,000,000.00), or the outstanding principalamount advanced hereunder, whichever is less, in legal and lawful money of theUnited States of America, with interest thereon from the date hereof throughthe 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 thebasis of the actual number of days elapsed but computed as if each yearconsisted of 360 days), the interest being payable as hereinafter specified.After the Maturity Date until paid, unpaid principal and accrued unpaidinterest 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, theterm “Maximum Lawful Rate” shall mean the greater of (i) the highestnon-usurious rate of interest permitted by applicable United States law, or(ii) a rate per annum equal to the applicable weekly ceiling described inChapter 303 of the Texas Finance Code, as amended, as such indicated rateceiling is in effect from time to time, but in no event greater thantwenty-four (24.0%) per annum. Unless precluded by law, changes in the MaximumLawful Rate created by statute or governmental action during the term of thisNote shall be immediately applicable to this Note on the effective date of suchchanges. 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 Boardof Governors of the Federal Reserve System, 12 C. F. R. §226 and is secured bya dwelling, in which case the Maximum Lawful Rate shall be equal to twenty-fourpercent (24.0%) per annum.
     Notwithstanding the foregoing, if, at any time, the rate of interestapplicable to this Note (but for the limitation thereof to the Maximum LawfulRate) exceeds the Maximum Lawful Rate, the rate of interest to accrue on thisNote shall be limited to the Maximum Lawful Rate, but any subsequent reductionsin such rate of interest applicable to this Note (but for the limitationthereof to the Maximum Lawful Rate) shall not reduce the rate of interest toaccrue on this Note below the Maximum Lawful Rate until the total amount ofinterest which would have accrued if a varying rate per annum equal to the rateof interest applicable to this Note (but for the limitation thereof to theMaximum Lawful Rate) had at all times been in effect.
     If the Maximum Lawful Rate is increased by statute or other governmentalaction subsequent to the date hereof, then the Makers agree that the newMaximum Lawful Rate will be applicable hereto from the effective date of thenew Maximum Lawful Rate, unless such application is precluded by statute orgovernmental action or by the general law of the jurisdiction governing thetransaction evidenced hereby.
 

 

     This Note is in renewal, extension, rearrangement and modification, butnot extinguishment, of that one certain Modification, Extension and Renewal ofPromissory Note (“Third Renewed Note”) between Maker and Payee dated effectiveJanuary 16, 2004, and one certain Modification, Extension and Renewal ofPromissory Note (“Second Renewed Note”) between Maker and Payee dated effectiveOctober 31, 2003, and one certain Modification, Extension and Renewal ofPromissory Note (“First Renewed Note”) between Maker and Payee dated effectiveAugust 8, 2003, which renewed and extended the term of (but did not extinguish)that certain Promissory Note (the “Original Note”) in the original principalamount of $1,000,000.00 between Maker and Payee dated effective April 8, 2003.The only change the parties wish to make to the Third Renewed Note is to extendthe maturity date from April 16, 2004, to July 16, 2004. The parties intendall other terms and the security for this indebtedness to remain the same. TheOriginal Note, First Renewed Note, Second Renewed Note and Third Renewed Noteare referred to herein collectively as the “Renewed Notes”.
TERMS OF PAYMENT
     The accrued interest on this Note shall be due and payable in monthlyinstallments, commencing on May 8, 2004, and continuing regularly thereafter onthe same day of each calendar month until July 16, 2004, when the entire amountof this Note, principal and accrued interest then remaining unpaid, shall bedue and payable. Interest shall be calculated on the unpaid principal to thedate each installment is paid and each such payment shall be credited to thedischarge of the interest accrued, the reduction of principal, and otherauthorized charges, if any, in such manner and order as the Payee shalldetermine in its sole discretion.
PAYMENT ON NON-BUSINESS DAYS:
     If any payment hereunder falls due on a Saturday, Sunday or public holidayon which commercial banks in Austin, Texas are permitted or required by law tobe closed, the time for such payment shall be extended to the next day on whichthe Payee is open for business, and such extension of time shall be included inthe calculation of interest accruing and payable hereunder.
PREPAYMENT:
     The Makers reserve the right to prepay this Note in any amount at any timeprior to maturity without penalty. Interest shall be calculated on the unpaidprincipal to the date of any prepayment and any such prepayment shall beapplied first toward the payment of accrued interest and next to the principalinstallments 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 thebenefits of, all security agreements, assignments, deeds of trust, mortgagesand lien instruments executed by the Makers (or any of them), or other similarinstruments, guaranties, endorsements or other agreements, executed by anyother person or entity (the “Collateral
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Agreements,” whether one or more) to secure, guarantee or otherwiseprovide for the payment hereof, in favor of or for the benefit of the Payee,including any previously executed and any now or hereafter executed. Withoutlimiting the foregoing, the Makers ratify and confirm that the CollateralAgreements include, and this Note is entitled to the benefits of “Indebtedness”under, that certain Security Agreement dated as of April 8, 2003, executed bythe Makers and Payee covering certain of the Makers’ personal property.
USE OF PROCEEDS:
     The Original Note, as modified by the Renewed Notes, represents fundsadvanced to the Makers at the Makers’ special instance and request and used toprovide working capital for the Makers.
REPRESENTATIONS AND WARRANTIES:
     The Makers expressly represent and warrant to the Payee that it is acorporation 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 conductits business as now conducted and as presently proposed to be conducted; thatthe execution and delivery of this Note will not contravene any provisions ofits articles incorporation, bylaws or any other agreement relating to its formof entity; that the officer executing this Note is the legally qualified andacting officer of said corporation and is expressly authorized to execute thisNote by appropriate resolution of the Boarof Directors of said corporation.
LIMITATION OF INTEREST:
     All agreements and transactions among the Makers and the Payee, whethernow existing or hereafter arising, whether contained herein or in any otherinstrument, and whether written or oral, are hereby expressly limited so thatin no contingency or event whatsoever, whether by reason of acceleration of thematurity hereof, late payment, prepayment, or otherwise, shall the amount ofinterest contracted for, charged or received by the Payee from the Makers forthe use, forbearance, or detention of the principal indebtedness or interesthereof, which remains unpaid from time to time, exceed the Maximum Lawful Rate,it particularly being the intention of the parties hereto to conform strictlyto the applicable usury laws of the State of Texas (or applicable United Stateslaw to the extent that it permits the Payee to contract for, charge or receivea greater amount of interest than under Texas law). Any interest payablehereunder or under any other instrument relating to the indebtedness evidencedhereby that is in excess of the Maximum Lawful Rate, shall, in the event ofacceleration of maturity, late payment, prepayment, or otherwise, be applied toa reduction of the unrepaid indebtedness hereunder and not to the payment ofinterest, or if such excessive interest exceeds the unpaid balance of suchunrepaid indebtedness, such excess shall be refunded to the Makers. To theextent not prohibited by applicable law, determination of the Maximum LawfulRate shall at all times be made by amortizing, prorating, allocating andspreading in equal parts during the full term of this loan, all interest at anytime contracted for, charged or received from the Makers in connection withthis loan, so that the actual rate of interest on account of such indebtednessis uniform throughout the term thereof.
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SUCCESSORS AND ASSIGNS:
     As used herein, the term “Payee” shall include the successors and assignsof the Payee and any subsequent owner and holder of this Note, and the term“Makers” shall include co-makers, endorsers, guarantors, sureties and theirrespective 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 thisNote, or any part hereof, principal or interest, as the same shall become dueand payable, or upon default in the performance of or compliance with any ofthe terms of any of the Collateral Agreements, or if the Payee deems the Payeeinsecure, either because the prospect of timely payment of this Note becomesimpaired, or because the prospect of timely performance of any of theCollateral Agreements becomes impaired, at the option of the Payee, the entireindebtedness evidenced hereby shall be matured, and in the event default ismade in the prompt payment of this Note when due or declared due, and the sameis placed in the hands of an attorney for collection, or suit is brought on thesame, or the same is collected through probate, bankruptcy or other judicialproceedings, then the Makers jointly and severally agree and promise to pay allreasonable attorney’s fees, court costs and collection costs incurred by thePayee.
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 writtennotice of any such default and a period of fifteen (15) days after such noticeis sent by the Payee within which to cure such default prior to the Payee’sbeing entitled to exercise any remedy which may arise due to the occurrence ofsuch default, other than the right to withhold making further advances of fundsduring the period any such default remains uncured. However, nothing hereinshall obligate the Payee to give the Makers more than one (1) notice of defaultduring any ninety (90) day period. The provisions of this paragraph shallcontrol over any inconsistent provision in any of the Collateral Agreements;and any right to accelerate the maturity of this Note contained in any of theCollateral 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 toaccelerate, notice of acceleration, protest and notice of protest, dishonor anddiligence in collecting and the bringing of suit against any other party, andagrees to all renewals, extensions, partial payments, releases andsubstitutions of security, in whole or in part, with or without notice, beforeor 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 accordancewith the laws of the State of Texas and of the United States. The Makers agreeand 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 andconvenient forums for the resolution of any actions among the Makers and thePayee with respect to the subject matter hereof, and agree that such courtsshall be the exclusive forums for the resolution of any actions among theMakers and the Payee with respect to the subject matter hereof.      Schlotzsky’s, Inc.,