**Exhibit10.50**

** **

**PROMISSORYNOTE**

 
| $2,500,000.00 |   | November 14,  2003 |
|---------------|--------|--------------------|

 

For valuereceived, the undersigned (the “Makers,” whether one or more), promise to payto 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 ofTWO MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00), or theoutstanding principal amount advanced hereunder, whichever is less, in legaland lawful money of the United States of America, with interest thereon fromthe date hereof through the maturity date of this Note (whether by accelerationor otherwise) (the “Maturity Date”) at the Applicable Interest Rate(hereinafter defined), the interest being payable as hereinafter specified.

 

Prior to maturity, the term **“ApplicableInterest Rate”** means a varying rate per annum equal to the lowerof (w) the sum of the Index (hereinafter defined) and 250 basis points or(x) the Maximum Lawful Rate.  Aftermaturity, the term **“Applicable Interest Rate”** means avarying rate per annum equal to the lower of (y) sum of the Index plus 500basis 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 adjustedwithout notice to the Makers on the effective date of any change in the Indexor the Maximum Lawful Rate, as the case may be.

 

The term **“Index”** means the annual lending rateof interest announced from time to time by J.P. Morgan Chase & Co., NewYork, 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 awritten notice to the Makers.  The Indexin effect as of November 14, 2003 (the date this Note was printed) is4.0%.  The Makers understand that theIndex may not be the lowest rate of interest charged to or paid by customers ofthe Payee or of any financial institution, that the Index is not necessarilymore favorable than another rate or index, and that rates on other loans orcredit facilities may be based on indices other than the Index.

 

The term “MaximumLawful Rate” shall mean the greater of (i) the highest non-usurious rate ofinterest permitted by applicable United States law, or (ii) a rate per annumequal to the applicable weekly ceiling described in Chapter 303 of the TexasFinance Code, as amended, as such indicated rate ceiling is in effect from timeto time, but in no event greater than twenty-four (24.0%) per annum.  Unless precluded by law, changes in theMaximum Lawful Rate created by statute or governmental action during the termof this Note shall be immediately applicable to this Note on the effective dateof such changes.  If the applicable lawceases to provide for a Maximum Lawful Rate, the Maximum Lawful Rate shall beequal to eighteen percent (18%) per annum.

 

Notwithstandingthe 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 MaximumLawful Rate, the rate of interest to accrue on this Note shall be limited tothe Maximum Lawful Rate, but any subsequent reductions in such rate of interestapplicable to this Note (but for the limitation thereof to the Maximum LawfulRate) shall not reduce the rate of interest to accrue on this Note below theMaximum Lawful Rate until the total amount of interest which would have accruedif

 

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a varying rate perannum equal to the rate of interest applicable to this Note (but for thelimitation thereof to the Maximum Lawful Rate) had at all times been in effect.

 

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

 

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

 

TERMS OF PAYMENT:

 

The accruedinterest on this Note shall be due and payable in monthly installments,commencing on December 15, 2003, and continuing regularly thereafter on thesame day of each calendar month until January 16, 2004, when the entire amountof this Note, principal and accrued interest then remaining unpaid, shall bedue and payable.  Interest shall becalculated on the unpaid principal to the date each installment is paid andeach such payment shall be credited to the discharge of the interest accrued,the reduction of principal, and other authorized charges, if any, in suchmanner and order as the Payee shall determine in its sole discretion.

 

PAYMENT ONNON-BUSINESS DAYS:

 

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

 

PREPAYMENT:

 

The Makers reservethe right to prepay this Note in any amount at any time prior to maturitywithout penalty.  Interest shall becalculated on the unpaid principal to the date of any prepayment and any suchprepayment shall be applied first toward the payment of accrued interest andnext to the principal installments of this Note in the inverse order ofmaturity.

 

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SECURITY FORPAYMENT:

 

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

 

USE OF PROCEEDS:

 

This Noterepresents funds advanced to the Makers at the Makers’ special instance andrequest and used to provide working capital for the Makers.

 

NO SETOFF:

 

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

 

REPRESENTATIONSAND WARRANTIES:

 

The Makersexpressly represent and warrant to the Payee that it is a limited liabilitycompany duly organized and existing under the laws of the State of Delaware andqualified to conduct business as a foreign limited liability company in goodstanding under the laws of the State of Texas; that it possesses full power andauthority to own its property and to conduct its business as now conducted andas presently proposed to be conducted; that the execution and delivery of thisNote will not contravene any provisions of its certificate of formation, LLCAgreement or any other agreement relating to its form of entity; that therepresentative executing this Note is the legally qualified and acting representativeof said company and is expressly authorized to execute this Note by appropriateresolution.

 

LIMITATION OFINTEREST:

 

All agreements andtransactions among the Makers and the Payee, whether now existing or hereafterarising, whether contained herein or in any other instrument, and whetherwritten or oral, are hereby expressly limited so that in no contingency orevent whatsoever, whether by reason of acceleration of the maturity hereof,late payment, prepayment, or otherwise, shall the amount of interest contractedfor, charged or received by the Payee from the Makers for the use, forbearance,or detention of the principal indebtedness or interest hereof, which remainsunpaid from time to time, exceed the Maximum Lawful Rate, it particularly beingthe intention of the parties hereto to conform strictly to the applicable usurylaws of the State of Texas (or applicable United States law to the extent thatit permits the Payee to contract for, charge or receive a

 

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greater amount ofinterest than under Texas law).  Anyinterest payable hereunder or under any other instrument relating to theindebtedness evidenced hereby that is in excess of the Maximum Lawful Rate,shall, in the event of acceleration of maturity, late payment, prepayment, orotherwise, be applied to a reduction of the unrepaid indebtedness hereunder andnot to the payment of interest, or if such excessive interest exceeds theunpaid balance of such unrepaid indebtedness, such excess shall be refunded tothe Makers.  To the extent notprohibited by applicable law, determination of the Maximum Lawful Rate shall atall times be made by amortizing, prorating, allocating and spreading in equalparts during the full term of this loan, all interest at any time contractedfor, charged or received from the Makers in connection with this loan, so thatthe actual rate of interest on account of such indebtedness is uniformthroughout the term thereof.

 

SUCCESSORS ANDASSIGNS:

 

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

 

DEFAULT AND COLLECTION:

 

Subject to theexpress notice and cure provisions contained in this Note, it is expresslyprovided that, upon default in the punctual payment of this Note, or any parthereof, principal or interest, as the same shall become due and payable, orupon default in the performance of or compliance with any of the terms of anyof the Collateral Agreements, or if the Payee deems the Payee insecure, eitherbecause the prospect of timely payment of this Note becomes impaired, orbecause the prospect of timely performance of any of the Collateral Agreementsbecomes impaired, at the option of the Payee, the entire indebtedness evidencedhereby shall be matured, and in the event default is made in the prompt paymentof this Note when due or declared due, and the same is placed in the hands ofan attorney for collection, or suit is brought on the same, or the same iscollected through probate, bankruptcy or other judicial proceedings, then theMakers jointly and severally agree and promise to pay all reasonable attorney’sfees, court costs and collection costs incurred by the Payee.

 

NOTICE AND CURERIGHTS:

 

In the event ofany default under the Collateral Agreements or this Note, the Makers and eachguarantor shall be entitled to receive written notice of any such default and aperiod of fifteen (15) days after such notice is sent by the Payee within whichto cure such default prior to the Payee’s being entitled to exercise any remedywhich may arise due to the occurrence of such default, other than the right towithhold making further advances of funds during the period any such defaultremains uncured.  However, nothingherein shall obligate the Payee to give the Makers more than one (1) notice ofdefault during any ninety (90) day period. The provisions of this paragraph shall control over any inconsistentprovision in any of the Collateral Agreements; and any right to accelerate thematurity of this Note contained in any of the Collateral Agreements is subjectto prior compliance with this paragraph.

 

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WAIVERS ANDCONSENTS:

 

Subject to theexpress notice and cure provisions contained in this Note, each of the Makerswaives presentment for payment, notice of intent to accelerate, notice ofacceleration, protest and notice of protest, dishonor and diligence incollecting and the bringing of suit against any other party, and agrees to allrenewals, 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, withoutwaiving the same, or may waive any default without waiving any prior orsubsequent default.

 

GOVERNING LAWS ANDVENUE:

 

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

 
|   | 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 ORALAGREEMENTS

 

DEBTOR (whetherone or more):                    SCHLOTZSKY’SFRANCHISOR, 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 Partiesagree to incorporate the terms of all the loan documents connected with suchloan as a part of this Loan Agreement.

 

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

 

NOTICE

 

THIS WRITTEN LOANAGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BECONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORALAGREEMENTS OF THE PARTIES.

 

THERE ARE NOUNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

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

 

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

 

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The undersignedDebtor or Obligor acknowledges receipt of a copy of this notice and agrees thatall 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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