Document:

<PAGE>

                      SECOND AMENDMENT TO CREDIT AGREEMENT

         THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the "AMENDMENT"), dated as
of May 1, 2000 is among SCHLOTZSKY'S, INC., a Texas corporation ("BORROWER"),
each of the Lenders party to the Agreement referred to below, and WELLS FARGO
BANK TEXAS, NATIONAL ASSOCIATION, a national banking association (successor by
consolidation to Wells Fargo Bank (Texas), National Association), as Agent for
itself and the other Lenders (in such capacity, together with its successors in
such capacity the "AGENT") and as the Issuing Bank.

                                    RECITALS:

         A. Borrower, Agent, Lenders and Issuing Bank have previously entered
into that certain Credit Agreement dated as of December 7, 1999, as amended by
that certain First Amendment to Credit Agreement dated as of December 31, 1999
(the Credit Agreement as so amended is hereinafter referred to as the
"AGREEMENT").

         B. Borrower, Agent, Lenders and Issuing Bank now desire to amend the
Agreement to amend Section 9.1 of the Agreement as hereinafter more specifically
provided.

         NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:

                                   ARTICLE I.

                                   DEFINITIONS

          1.1 DEFINITIONS. All capitalized terms not otherwise defined herein,
shall have the same meanings as in the Agreement, as amended hereby.

                                   ARTICLE II.

                                    AMENDMENT

          2.1 AMENDMENT TO DEBT COVENANT. Effective as of the date hereof
Section 9.1 of the Agreement is hereby amended to read in its entirety as
follows:

                  "Section 9.1 DEBT. The Borrower will not incur, create,
         assume, or permit to exist, and will not permit any Subsidiary to
         incur, create, assume, or permit to exist, any Debt, except:

                           (a) Debt to the Lenders and the Issuing Bank pursuant
                  to the Loan Documents;

                           (b) Debt listed on SCHEDULE 9.1;

                                      -1-
<PAGE>

                           (c) Debt not to exceed $1,000,000 in the aggregate at
                  any time outstanding secured by purchase money Liens permitted
                  by SECTION 9.2;

                           (d) Intercompany Debt among the Borrower and the
                  wholly-owned domestic Subsidiaries; provided that the
                  obligations of each obligor of such Debt shall be subordinated
                  in right of payment to the Obligations from and after such
                  time as any portion of the Obligations shall become due and
                  payable (whether at stated maturity, by acceleration or
                  otherwise) and shall have such other terms and provisions as
                  the Agent may reasonably require; and

                           (e) Unsecured Debt in addition to Debt that is
                  specifically described in CLAUSES (a) through (d) of this
                  SECTION 9.1 which in the aggregate does not exceed One Million
                  Dollars ($1,000,000) at any time outstanding."

                                  ARTICLE III.

                              CONDITIONS PRECEDENT

          3.1 CONDITION. The effectiveness of this Amendment is subject to the
satisfaction of the following conditions precedent:

                  (a) Agent shall have received all of the following, each dated
         (unless otherwise indicated) the date of this Amendment, in form and
         substance satisfactory to the Agent:

                           (i) This Amendment executed by all parties hereto.

                  (b) NO DEFAULT. No Default shall have occurred and be
         continuing.

                  (c) REPRESENTATIONS AND WARRANTIES. All of the representations
         and warranties contained in Article VII of the Agreement, as amended
         hereby and in the other Loan Documents shall be true and correct on and
         as of the date of this Amendment with the same force and effect as if
         such representations and warranties had been made on and as of such
         date, except to the extent such representations and warranties speak to
         a specific date.

                  (d) AMENDMENT FEE. Borrower shall have paid to the Agent for
         the benefit of the Lenders who execute this Amendment an amendment fee
         in the amount of $10,000.00.

                                   ARTICLE IV.

                  RATIFICATIONS, REPRESENTATIONS AND WARRANTIES

          4.1 RATIFICATIONS. The terms and provisions set forth in this
Amendment shall modify

                                      -2-
<PAGE>

and supersede all inconsistent terms and provisions set forth in the
Agreement and except as expressly modified and superseded by this Amendment,
the terms and provisions of the Agreement and the other Loan Documents are
ratified and confirmed and shall continue in full force and effect. Borrower,
Lenders, Issuing Bank and Agent agree that the Agreement as amended hereby
and the other Loan Documents shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms.

          4.2 REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to the Lenders, Agent and Issuing Bank that (i) the execution, delivery
and performance of this Amendment and any and all other Loan Documents executed
and/or delivered in connection herewith have been authorized by all requisite
corporate action on the part of Borrower and will not violate the articles of
incorporation or bylaws of Borrower, (ii) the representations and warranties
contained in the Agreement, as amended hereby, and any other Loan Document are
true and correct on and as of the date hereof as though made on and as of the
date hereof, except to the extent such representations and warranties speak to a
specific date, (iii) no Event of Default has occurred and is continuing and no
event or condition has occurred that with the giving of notice or lapse of time
or both would be an Event of Default, and (iv) Borrower is in full compliance
with all covenants and agreements contained in the Agreement as amended hereby.

                                   ARTICLE V.

                                  MISCELLANEOUS

          5.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Amendment or any other Loan Document including any
Loan Document furnished in connection with this Amendment shall survive the
execution and delivery of this Amendment and the other Loan Documents, and no
investigation by the Lenders, Agent or Issuing Bank or any closing shall affect
the representations and warranties or the right of the Lenders or Agent or
Issuing Bank to rely upon them.

          5.2 REFERENCE TO AGREEMENT. Each of the Loan Documents, including the
Agreement and any and all other agreements, documents, or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.

          5.3 SEVERABILITY. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

          5.4 APPLICABLE LAW. This Amendment and all other Loan Documents
executed pursuant hereto shall be deemed to have been made and to be performable
in Austin, Travis County, Texas and shall be governed by and construed in
accordance with the laws of the State of Texas.

                                      -3-
<PAGE>

          5.5 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and shall
inure to the benefit of the Lenders, Agent, Issuing Bank and Borrower and their
respective successors and assigns, except Borrower may not assign or transfer
any of its rights or obligations hereunder without the prior written consent of
the Lenders.

          5.6 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.

          5.7 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS,
DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS
AMENDMENT REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES HERETO.

                                      -4-
<PAGE>

         Executed as of the date first written above.

                             BORROWER:

                             SCHLOTZSKY'S, INC.

                             By:
                                ----------------------------------------------
                                   Name:
                                        --------------------------------------
                                   Title:
                                         -------------------------------------

                             Address for Notices:

                             203 Colorado St.
                             Austin, TX  78701
                             Fax No.:  (512) 236-3740
                             Telephone No.:  (512) 236-3600
                             Attention:  Chief Financial Officer

                             AGENT, ISSUING BANK AND LENDER:

                             WELLS FARGO BANK TEXAS, NATIONAL
                             ASSOCIATION

                             By:
                                ----------------------------------------------
                                   Name:  Keith Smith
                                   Title: Vice President

                             Address for Notices:

                             111 Congress Avenue, Suite 300
                             Austin, TX  78701
                             Fax No.:  (512) 344-7318
                             Telephone No.:  (512) 344-7011
                             Attention:  Keith Smith

                                      -5-
<PAGE>

                             OTHER LENDERS:

                             FROST NATIONAL BANK

                             By:
                                ----------------------------------------------
                                   Name:
                                        --------------------------------------
                                   Title:
                                         -------------------------------------

                             Address for Notices:

                             2728 North Harwood, Suite 100
                             Dallas, TX  75201
                             Fax No.:  (214) 515-4955
                             Telephone No.:  (214) 515-4907
                             Attention:  Shannon Bettis

                             TEXAS CAPITAL BANK, NATIONAL
                             ASSOCIATION

                             By:
                                ----------------------------------------------
                                   Name:
                                        --------------------------------------
                                   Title:
                                         -------------------------------------

                             Address for Notices:

                             2100 McKinney Avenue, Suite 900
                             Dallas, TX  75201
                             Fax No.:  (214) 932-6604
                             Telephone No.:  (214) 932-6675
                             Attention:  Tim Monter

                                      -6-
<PAGE>

                            OBLIGATED PARTIES CONSENT

         Each of the undersigned Obligated Parties (i) consent and agree to this
Amendment; and (ii) agree that the Loan Documents to which it is a party shall
remain in full force and effect and shall continue to be the legal, valid and
binding obligation of such Obligated Party enforceable against it in accordance
with their respective terms.

                             OBLIGATED PARTIES:

                             RAD Acquisition Corp.
                             Schlotzsky's Real Estate, Inc.
                             Schlotzsky's Restaurants, Inc.
                             DFW Restaurant Transfer Corp.
                             Schlotzsky's Equipment Corporation
                             SREI Turnkey Development, L.L.C.
                             56th & 6th, Inc.

                             By:
                                ----------------------------------------------
                                      Name:
                                           -----------------------------------
                                      Title:
                                            ----------------------------------

                                      -7-<PAGE>

                       THIRD AMENDMENT TO CREDIT AGREEMENT

         THIS THIRD AMENDMENT TO CREDIT AGREEMENT (the "AMENDMENT"), dated as of
September 30, 2000 is among SCHLOTZSKY'S, INC., a Texas corporation
("BORROWER"), each of the Lenders party to the Agreement referred to below, and
WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION, a national banking association
(successor by consolidation to Wells Fargo Bank (Texas), National Association),
as Agent for itself and the other Lenders (in such capacity, together with its
successors in such capacity the "AGENT") and as the Issuing Bank.

                                    RECITALS:

         A. Borrower, Agent, Lenders and Issuing Bank have previously entered
into that certain Credit Agreement dated as of December 7, 1999, as amended by
(a) that certain First Amendment to Credit Agreement dated as of December 31,
1999, and (b) that certain Second Amendment to Credit Agreement dated as of May
1, 2000 (the Credit Agreement as so amended is hereinafter referred to as the
"AGREEMENT").

         B. Borrower, Agent, Lenders and Issuing Bank now desire to amend the
Agreement (a) to add certain real property as Collateral, (b) to extend the
Revolving Credit Loan Termination Date to December 31, 2000, (c) to modify
certain financial covenants, (d) to modify the applicable interest rates, and
(e) to make such other modifications, in each case, as hereinafter more
specifically provided.

         NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         1.1 DEFINITIONS. All capitalized terms not otherwise defined herein,
shall have the same meanings as in the Agreement, as amended hereby.

                                   ARTICLE II

                                   AMENDMENTS

         2.1 AMENDMENT TO SECTION 1.1. Effective as of the date hereof, the
following definitions in Section 1.1 of the Agreement are amended and restated
to read in their entirety as follows:

                  "COLLATERAL" means the property in which liens have been
         granted pursuant to the Borrower Pledge Agreement and the Borrower
         Security Agreement or pursuant to any Subsidiary Pledge Agreement or
         Subsidiary Security Agreement executed by Subsidiary (including any
         Subsidiary added in accordance with SECTION 8.10), or pursuant to any
         Mortgages executed by the Borrower or any Subsidiary whether such Liens
         are now existing or hereafter arise.

<PAGE>

                  "CONTINGENT LIABILITIES" means, at any particular time, the
         contingent liabilities of the Borrower and its Subsidiaries determined
         on a consolidated basis in accordance with GAAP; provided however,
         solely for the purpose of SECTION 10.6, "Contingent Liabilities" will
         not include that portion of contingent liabilities of the Borrower
         incurred in connection with a transaction in which the Borrower
         received cash to the extent of cash received.

                  "FIXED CHARGE COVERAGE RATIO" means, for each Fiscal Quarter,
         the quotient determined by dividing (i) the sum of (a) EBITDA, plus (b)
         rent expense in each case for such Fiscal Quarter and the prior three
         (3) Fiscal Quarters, plus (c) as long as the Fiscal Quarter ended June
         30, 2000 is included in the prior three (3) Fiscal Quarters,
         $6,900,000, and otherwise $0.00 by (ii) the sum of (x) the aggregate
         interest expense and rent expense of the Borrower and its consolidated
         Subsidiaries, plus (y) that portion of Long-Term Debt of the Borrower
         and its consolidated Subsidiaries that should be classified as current
         in accordance with GAAP, in each case for such Fiscal Quarter and the
         prior three (3) Fiscal Quarters.

                  "GAAP" means generally accepted accounting principles, applied
         on a consistent basis, as set forth in Opinions of the Accounting
         Principles Board of the American Institute of Certified Public
         Accountants and/or in statements of the Financial Accounting Standards
         Board and/or their respective successors and which are applicable in
         the circumstances as of September 30, 2000. Accounting principles are
         applied on a "consistent basis" when the accounting principles applied
         in a current period are comparable in all material respects to those
         accounting principles applied in a preceding period.

                  "LEVERAGE RATIO" means, as of any Fiscal Quarter end the ratio
         of Funded Debt to the sum of (i) EBITDA, plus (ii) as long as the
         Fiscal Quarter ended June 30, 2000 is included in the prior three (3)
         Fiscal Quarters, $6,900,000, and otherwise $0.00, in each case for such
         Fiscal Quarter and the prior three (3) Fiscal Quarters.

                  "LOAN DOCUMENTS" means this Agreement, the Notes, the
         Guaranties, the Borrower Security Agreement, the Borrower Pledge
         Agreement, the Subsidiary Security Agreement, the Subsidiary Pledge
         Agreement, the Contribution and Indemnification Agreement, the Existing
         LC Guaranty, the Mortgages, and all other promissory notes, guaranties
         and other instruments, documents and agreements now or hereafter
         executed and delivered pursuant to or in connection with this
         Agreement, as such instruments, documents and agreements may be
         amended, modified, renewed, extended, or supplemented from time to
         time.

                  "REVOLVING CREDIT COMMITMENT" means, as to each Lender, the
         obligation of such Lender to make Revolving Credit Loan Advances as
         described in ARTICLE II hereunder in an aggregate principal amount at
         any one time outstanding up to but not exceeding the amount set forth
         opposite the name of such Lender on Schedule 1.1(a) hereto under the
         heading "Revolving Credit Commitment," as the

                                          2
<PAGE>

         same may be reduced pursuant to Section 2.1 or 2.9 or terminated
         pursuant to Section 2.9 or 11.12.

                  "REVOLVING CREDIT LOAN TERMINATION DATE" means 8:00 A.M. San
         Francisco, California time on December 31, 2000, or such earlier date
         and time on which the Revolving Credit Commitments terminate as
         provided in this Agreement.

         2.2 ADDITIONS TO SECTION 1.1. Effective as of the date hereof, the
following definitions are added to Section 1.1 of the Agreement in alphabetical
order to read in their entirety as follows:

                  "MORTGAGES" means all deeds of trust, mortgages, leasehold
         deeds of trusts and other instruments, documents and agreements
         executed and delivered by the Borrower or any Subsidiary in favor of
         the Agent for the benefit of the Lenders, which creates a Lien on such
         Person's interests in the Real Property, as the same may be amended,
         restated, supplemented or modified from time to time.

                  "REAL ESTATE LOANS" has the meaning set forth in SECTION
2.9(b)(i).

                  "REAL PROPERTY" means, collectively, the fee owned real
         property, interests in fee owned real property, the real property
         leased and the leasehold interests in leased real property of the
         Borrower or any of its Subsidiaries as identified on SCHEDULE 1.1(c)
         attached hereto, and all improvements and fixtures thereon and all
         appurtenances thereto, whether now existing or hereinafter arising.

         2.3 AMENDMENT TO SECTION 2.1. Effective as of the date hereof, Section
2.1 of the Agreement is amended and restated to read in its entirety as follows:

                  Section 2.1 COMMITMENTS. Subject to the terms and conditions
         of this Agreement, each Lender has made one or more Revolving Credit
         Loan Advances to the Borrower in an aggregate principal amount at any
         time outstanding up to but not exceeding the amount of such Lender's
         Revolving Credit Commitment as then in effect, provided that the
         aggregate amount of all Revolving Credit Loan Advances at any time
         outstanding shall not exceed the Revolving Credit Commitments. The
         Borrower may not reborrow any amounts repaid hereunder and all amounts
         paid on the Revolving Credit Loan shall permanently reduce the
         Revolving Credit Commitment by such amount. No additional Revolving
         Credit Loan Advances will be requested by the Borrower or made by any
         Lender on or after September 30, 2000. Revolving Credit Loan Advances
         made by each Lender shall be made and maintained at such Lender's
         Applicable Lending Office.

         2.4 AMENDMENT TO SECTION 2.8. Effective as of the date hereof, Section
2.8 of the Agreement is amended and restated to read in its entirety as follows:

                  "Base Rate Margin" shall mean (i) for Revolving Credit Loan,
         two percent (2%) and (ii) for the Term Loan, (a) during the period
         commencing September 30, 2000 and ending on but not including the first
         Adjustment Date, two percent

                                         3
<PAGE>

         (2%) per annum, and (b) during each period, from and including one
         Adjustment Date to but excluding the next Adjustment Date (herein a
         "CALCULATION PERIOD"), the percent per annum set forth in the table
         below in this SECTION 2.8 under the heading "BASE RATE MARGIN"
         opposite the Debt to EBITDA Ratio calculated for the completed four
         (4) Fiscal Quarters which immediately preceded the beginning of the
         applicable Calculation Period.

         <TABLE>
         <CAPTION>
         -------------------------------------------------------------- -----------------
                                   Debt to EBITDA Ratio                  Base Rate Margin
         -------------------------------------------------------------- -----------------
         <S>                                                             <C>
         Greater than or equal to 6.0 to 1.0                                    2%
         -------------------------------------------------------------- -----------------
         Greater than or equal to 4.0 to 1.0 but less than 6.0 to 1.0           1%
         -------------------------------------------------------------- -----------------
         Less than 4.0 to 1.0                                                   0%
         -------------------------------------------------------------- -----------------
         </TABLE>

                  Upon delivery of the Quarterly Certificate pursuant to SECTION
         8.1(c) commencing with such Quarterly Certificate delivered at the end
         of the Fiscal Quarter ending on September 30, 2000, the Base Rate
         Margin shall automatically be adjusted as set forth in the table above,
         such automatic adjustment to take effect as of the first Business Day
         after the receipt by the Agent of the related Quarterly Certificate
         (each such Business Day when the Base Rate Margin is adjusted pursuant
         to this sentence or below, herein an "ADJUSTMENT DATE"). If the
         Borrower fails to deliver such Quarterly Certificate which so sets
         forth the Debt to EBITDA Ratio within the period of time required by
         SECTION 8.1(c), the Base Rate Margin shall automatically be adjusted to
         the highest applicable percentage set forth in the grid above, such
         automatic adjustment to take effect as of the first Business Day after
         the last day on which the Borrower was required to deliver the
         applicable Quarterly Certificate in accordance with SECTION 8.1(c) and
         to remain in effect until subsequently adjusted in accordance herewith
         upon the delivery of a Quarterly Certificate.

         2.5 AMENDMENT TO SECTION 2.9(b)(i). Effective as of the date hereof,
Section 2.9(b)(i) of the Agreement is amended and restated to read in its
entirety as follows:

                  (i) On the date the Borrower or any Subsidiary receives loans
         from lenders secured by mortgages on restaurants or other real property
         owned by the Borrower or any of its Subsidiaries as of September 30,
         2000 (the "REAL ESTATE LOANS"), the Revolving Credit Commitments shall
         automatically be reduced by the amount of such funds received, and the
         Borrower shall simultaneously prepay the amount by which the unpaid
         principal amount of the Revolving Credit Loan Advances exceeds the
         Revolving Credit Commitments (after giving effect to such reduction).

         2.6 ADDITION TO SECTION 5.3. Effective as of the date hereof, a new
subsection (c) is added Section 5.3 of the Agreement to read in its entirety as
follows:

                                          4

<PAGE>

                  (c) Upon receipt of the cash portion of Net Proceeds from the
         sale of any restaurants, stores or other real property owned by the
         Borrower or any Subsidiary as of September 30, 2000 or upon funding of
         any Real Estate Loan (in each case, the "SUBJECT NET PROCEEDS"), if the
         Revolving Credit Commitments have been reduced to $0.00, then the
         Borrower shall promptly prepay the outstanding Term Loan by the amount
         equal to 75% of the Subject Net Proceeds (less any amounts applied to
         the Revolving Credit Loan Advances). Upon receipt by Agent of such
         Subject Net Proceeds or portions thereof, the Agent will release its
         Lien on the Real Property which is subject of such sale or Real Estate
         Loan.

         2.7 ADDITION TO ARTICLE VII. Effective as of the date hereof, a new
Section 7.20 is added to Article VII of the Agreement to read in its entirety as
follows:

                  Section 7.20 REAL PROPERTY. The Real Property described on
         SCHEDULE 1.1(c) attached hereto consists of all stores or restaurants
         owned or leased by the Borrower or any Subsidiary which each has (a) a
         net book value of at least $300,000 and (b) is not encumbered by a Lien
         other than the Lien of the Agent.

         2.8 ADDITIONS TO ARTICLE VIII. Effective as of the date hereof, new
Sections 8.13 and 8.14 are added to Article VIII of the Agreement to read in
their entirety as follows:

                  Section 8.13 POST-CLOSING ITEMS. If, on or before November 15,
         2000, (i) the outstanding Revolving Credit Loan Advances have not been
         paid in full or (ii) the Borrower has not received signed commitment
         letters from lenders for financing or signed sale contracts from buyers
         for the purchase of restaurants or other real property owned by the
         Borrower or any Subsidiary in an aggregate amount sufficient to pay in
         full the outstanding Revolving Credit Loan Advances, the Borrower
         agrees that it shall, and shall cause each Subsidiary, to:

                           (a) Use its commercially reasonable best efforts to
                  obtain and deliver to the Agent on or before December 31, 2000
                  from each landlord of each leased Real Property, consents to
                  the grant by the Borrower and the Subsidiaries of a Lien to
                  the Agent in the leased Real Property and other agreements
                  from such landlord, in each case in form and substance
                  reasonably satisfactory to the Agent;

                           (b) Deliver to the Agent as soon as available but in
                  any event on or before December 31, 2000, with respect to each
                  parcel of the Real Property, a title insurance commitment
                  issued by a title insurance company selected by the Borrower
                  and reasonably acceptable to the Agent, and all documentation
                  evidencing any exceptions to title reflected thereon, all of
                  which shall be in form and substance reasonably satisfactory
                  to the Agent;

                           (c) Deliver to the Agent on or before December 31,
                  2000, with respect to each parcel of the Real Property, a
                  survey of such Real Property and certified by a licensed
                  surveyor selected by the Borrower and

                                          5
<PAGE>

                  reasonably acceptable to the Agent, in form and substance
                  reasonably satisfactory to the Agent;

                           (d) Deliver to the Agent as soon as available but in
                  any event on or before December 31, 2000, with respect to each
                  parcel of the Real Property, a phase I environmental report
                  for such Real Property, prepared by a third party
                  environmental engineer selected by the Borrower and reasonably
                  acceptable to the Agent;

                           (e) Deliver to the Agent as soon as available but in
                  any event on or before December 31, 2000, with respect to each
                  parcel of the Real Property, an appraisal for such Real
                  Property by a licensed appraiser selected by the Agent in form
                  and substance satisfactory to the Agent;

                           (f) Deliver to the Agent as soon as available but in
                  any event on or before February 15, 2001, with respect to each
                  parcel of the Real Property, a lender's title insurance policy
                  (together with any required endorsements thereto) issued by a
                  title insurer selected by the Borrower and reasonably
                  satisfactory to the Agent in an amount equal to the fair
                  market value of the underlying property as determined by the
                  appraisal described in SUBSECTION (e) above; and

                           (g) Deliver to the Agent such additional approvals,
                  opinions, documents, instruments or agreements related to the
                  items described in CLAUSES (a) through (f) above as the Agent
                  may reasonably request.

                  Section 8.14 LANDLORD WAIVERS. With respect to all locations
         of Collateral and on or before December 31, 2000, the Borrower shall,
         and shall cause each Subsidiary to, use its commercially reasonable
         best efforts to cause each landlord of real property leased by the
         Borrower or any Subsidiary to execute and deliver instruments
         satisfactory in form and substance to the Agent by which landlord
         waives or subordinates its rights, if any, in the Collateral.

         2.9 AMENDMENT TO SECTION 9.5(e). Effective as of the date hereof,
Section 9.5(e) of the Agreement is amended and restated to read in its entirety
as follows:

                  (e) (i) loans to Schlotzsky's National Advertising
         Association, Inc. not to exceed $8,000,000 for the Fiscal Quarter
         ending September 30, 2000 and $7,000,000 thereafter, and (ii) loans to
         Schlotzsky's N.A.M.F., Inc. not to exceed $500,000 in the aggregate at
         any time outstanding; provided that such loans are evidenced by
         promissory notes, which original promissory notes shall be endorsed and
         delivered to the Agent in accordance with the Loan Documents;

         2.10 AMENDMENT TO SECTION 10.1. Effective as of the date hereof,
Section 10.1 of the Agreement is amended and restated to read in its entirety as
follows:

                  Section 10.1 CONSOLIDATED WORKING CAPITAL. As of the last day
         of any Fiscal Quarter, the Borrower will maintain a Consolidated
         Working Capital of not

                                          6
<PAGE>

         less than (a) $4,500,000 for the Fiscal Quarter ending September 30,
         2000 and (b) $10,000,0000 thereafter, in each case minus any payments
         made pursuant to SECTION 5.3(c) of this Agreement.

         2.11 AMENDMENT TO SECTION 10.2. Effective as of the date hereof,
Section 10.2 of the Agreement is amended and restated to read in its entirety as
follows:

                  Section 10.2 LEVERAGE RATIO. As of the last day of any Fiscal
         Quarter, the Borrower will maintain a Leverage Ratio of not greater
         than (a) 3.35 to 1.00 beginning as of the Fiscal Quarter ending
         September 30, 2000 through and including the Fiscal Quarter ending June
         30, 2001, (b) 3.00 to 1.00 for the Fiscal Quarter ending September 30,
         2001 and (c) 2.75 to 1.00 thereafter.

         2.12 AMENDMENT TO SECTION 10.3. Effective as of the date hereof,
Section 10.3 of the Agreement is amended and restated to read in its entirety as
follows:

                  Section 10.3 CONSOLIDATED NET WORTH. As of September 30, 2000,
         the Borrower will maintain a Consolidated Net Worth in an amount not
         less than Seventy-Two Million Dollars ($72,000,000), and for the last
         day of each Fiscal Quarter thereafter, not less than the sum of (i) the
         minimum Consolidated Net Worth required for the prior Fiscal Quarter,
         plus (ii) 100% of Consolidated Net Income (not less than zero dollars
         [$0.00]) for the Fiscal Quarter then ended.

         2.13 AMENDMENT TO SECTION 10.4. Effective as of the date hereof,
Section 10.4 of the Agreement is amended and restated to read in its entirety as
follows:

                  Section 10.4 FIXED CHARGE COVERAGE RATIO. As of the last day
         of any Fiscal Quarter, the Borrower will maintain a Fixed Charge
         Coverage Ratio for the preceding four (4) Fiscal Quarters then ended of
         not less than (a) 1.10 to 1.00 beginning as of the Fiscal Quarter
         ending September 30, 2000 through and including the Fiscal Quarter
         ending June 30, 2001, (b) 1.20 to 1.00 for the Fiscal Quarter ending
         September 30, 2001 and (c) 1.35 to 1.00 thereafter.

         2.14 AMENDMENT TO SECTION 10.5. Effective as of the date hereof,
Section 10.5 of the Agreement is amended and restated to read in its entirety as
follows:

                  Section 10.5 CAPITAL EXPENDITURES. The Borrower will not
         permit the aggregate amount of Capital Expenditures of Borrower and the
         Subsidiaries to exceed (a) $6,000,000 during the Fiscal Year ending
         December 31, 2000, (b) $9,000,000 during the Fiscal Year ending
         December 31, 2001, and (c) $6,000,000 during any Fiscal Year
         thereafter.

         2.15 AMENDMENT TO SECTION 10.6. Effective as of the date hereof,
Section 10.6 of the Agreement is amended and restated to read in its entirety as
follows:

                  Section 10.6 CONTINGENT LIABILITIES. The Borrower will not
         permit at any time the aggregate amount of Contingent Liabilities to
         exceed (a) $32,000,000 as

                                          7
<PAGE>

         of September 30, 2000 through and including December 30, 2000 and (b)
         $30,000,000 thereafter.

         2.16 TERMINATION OF LC COMMITMENT. The Borrower and the Lenders agree
that each Lender's LC Commitment under the Agreement is terminated.

         2.17 AMENDMENT TO SCHEDULE 1.1(a). Effective as of the date hereof, all
references in the Agreement to "Schedule 1.1(a)" shall be deemed to be
references to the SCHEDULE 1.1(a) attached hereto.

         2.18 ADDITION OF SCHEDULE 1.1(c). Effective as of the date hereof, all
references in the Agreement to "Schedule 1.1(c)" shall be deemed to be
references to the SCHEDULE 1.1(c) attached hereto.

         2.19 AMENDMENT TO SCHEDULE 7.14. Effective as of the date hereof, all
references in the Agreement to "Schedule 7.14" shall be deemed to be references
to the SCHEDULE 7.14 attached hereto.

         2.20 AMENDMENT TO SCHEDULE 9.5(g). Effective as of the date hereof, all
references in the Agreement to "Schedule 9.5(g)" shall be deemed to be
references to the SCHEDULE 9.5(g) attached hereto.

                                   ARTICLE III

                              CONDITIONS PRECEDENT

         3.1 CONDITIONS. The effectiveness of this Amendment is subject to the
satisfaction of the following conditions precedent:

                  (a) Agent shall have received all of the following, each dated
         (unless otherwise indicated) the date of this Amendment, in form and
         substance satisfactory to the Agent:

                           (i) This Amendment executed by all parties hereto;

                           (ii) Mortgages on the Real Property executed by the
                  Borrower and its Subsidiaries, in form and substance
                  satisfactory to the Agent;

                           (iii) Resolutions of the Board of Directors of the
                  Borrower certified by its secretary or assistant secretary
                  which authorize the execution, delivery and performance by the
                  Borrower of this Amendment, the Mortgages and the other Loan
                  Documents executed in connection herewith;

                           (iv) A certificate of incumbency certified by the
                  secretary or the assistant secretary of the Borrower
                  certifying the names of the officers thereof authorized to
                  sign this Amendment, the Mortgages and the other Loan
                  Documents together with specimen signatures of such officers;

                                          8
<PAGE>

                           (v) Resolutions of the Board of Directors or
                  comparable authority of each of the Obligated Parties
                  certified by its secretary or assistant secretary which
                  authorize the execution, delivery and performance by each of
                  the Obligated Parties of this Amendment, the Mortgages and the
                  Loan Documents executed in connection herewith; and

                           (vi) A certificate of incumbency certified by the
                  secretary or the assistant secretary of each Obligated Party
                  certifying the names of the officers thereof authorized to
                  sign this Amendment, the Mortgages and the other Loan
                  Documents together with specimen signatures of such officers.

                  (b) No Default. No Default shall have occurred and be
         continuing.

                  (c) Representations and Warranties. All of the representations
         and warranties contained in Article VII of the Agreement, as amended
         hereby and in the other Loan Documents shall be true and correct on and
         as of the date of this Amendment with the same force and effect as if
         such representations and warranties had been made on and as of such
         date, except to the extent such representations and warranties speak to
         a specific date.

                  (d) Amendment Fee. Borrower shall have paid to the Agent for
         the benefit of the Lenders an amendment fee in the amount of
         $58,013.56.

                  (e) Additional Documentation. The Agent shall have received
         such additional approvals, opinions or documents as the Agent may
         request.

                                   ARTICLE IV

                                 LIMITED WAIVER

         4.1 LIMITED WAIVER. By execution of this Amendment, Agent and the
Lenders waive any Events of Default which would arise under the Agreement solely
by reason of Borrower's failure to comply with the notification requirements and
delivery of certain documents pursuant to Section 8.10 of the Agreement with
respect to Schlotzsky's Brands I, L.L.C., a Delaware limited liability company,
and Schlotzsky's Brand Products, L.P., a Texas limited partnership
(collectively, the "SB EVENTS OF DEFAULT"). Except as otherwise specifically
provided for in this SECTION 4.1, nothing contained herein shall be construed as
a waiver by the Agent or any Lender of any covenant or provision of the
Agreement, the other Loan Documents, this Amendment, or any other contract or
instrument among the Borrower, the Agent and the Lenders, and the failure of the
Agent or any Lender at any time or times hereafter to require strict compliance
by Borrower of any provision thereof shall not waive, affect or diminish any
right of the Agent or any Lender to thereafter demand strict compliance
therewith. The Agent and the Lenders reserve all rights granted under the
Agreement, the other Loan Documents, this Amendment and any other contract or
instrument among the Borrower, the Agent and the Lenders.

                                          9
<PAGE>

                                    ARTICLE V

                  RATIFICATIONS, REPRESENTATIONS AND WARRANTIES

         5.1 RATIFICATIONS. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Agreement and except as expressly modified and superseded by this Amendment,
the terms and provisions of the Agreement and the other Loan Documents are
ratified and confirmed and shall continue in full force and effect. Borrower,
Lenders, Issuing Bank and Agent agree that the Agreement as amended hereby and
the other Loan Documents shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms.

         5.2 REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to the Lenders, Agent and Issuing Bank that (i) the execution, delivery
and performance of this Amendment and any and all other Loan Documents executed
and/or delivered in connection herewith have been authorized by all requisite
corporate action on the part of Borrower and will not violate the articles of
incorporation or bylaws of Borrower, (ii) except for the SB Events of Default,
the representations and warranties contained in the Agreement, as amended
hereby, and any other Loan Document are true and correct on and as of the date
hereof as though made on and as of the date hereof, except to the extent such
representations and warranties speak to a specific date, (iii) except for the SB
Events of Default, no Default has occurred and is continuing, and (iv) Borrower
is in full compliance with all covenants and agreements contained in the
Agreement as amended hereby.

                                   ARTICLE VI

                                  MISCELLANEOUS

         6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in this Amendment or any other Loan Document including any Loan
Document furnished in connection with this Amendment shall survive the execution
and delivery of this Amendment and the other Loan Documents, and no
investigation by the Lenders, Agent or Issuing Bank or any closing shall affect
the representations and warranties or the right of the Lenders, Agent or Issuing
Bank to rely upon them.

         6.2 REFERENCE TO AGREEMENT. Each of the Loan Documents, including the
Agreement and any and all other agreements, documents, or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.

         6.3 SEVERABILITY. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

         6.4 APPLICABLE LAW. This Amendment and all other Loan Documents
executed pursuant hereto shall be deemed to have been made and to be performable
in Austin, Travis

                                          10
<PAGE>

County, Texas and shall be governed by and construed in accordance with the
laws of the State of Texas.

         6.5 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and shall
inure to the benefit of the Lenders, Agent, Issuing Bank and Borrower and their
respective successors and assigns, except Borrower may not assign or transfer
any of its rights or obligations hereunder without the prior written consent of
the Lenders.

         6.6 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.

         6.7 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS,
DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS
AMENDMENT REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES HERETO.

                  [Remainder of Page Intentionally Left Blank]

                                        11
<PAGE>

         Executed as of the date first written above.

                             BORROWER:

                             SCHLOTZSKY'S, INC.

                             By:
                                -------------------------------------------
                                    Name:
                                         ----------------------------------
                                    Title:
                                          ---------------------------------

                             Address for Notices:

                             203 Colorado St.
                             Austin, TX  78701
                             Fax No.:  (512) 236-3650
                             Telephone No.:  (512) 236-3600
                             Attention:  Chief Financial Officer

                             AGENT, ISSUING BANK AND LENDER:

                             WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION

                             By:
                                -------------------------------------------
                                    Keith Smith
                                    Vice President

                             Address for Notices:

                             111 Congress Avenue, Suite 300
                             Austin, TX  78701
                             Fax No.:  (512) 344-7318
                             Telephone No.:  (512) 344-7011
                             Attention:  Keith Smith

                                           12
<PAGE>

                             OTHER LENDERS:

                             FROST NATIONAL BANK

                             By:
                                -------------------------------------------
                                    Name:
                                         ----------------------------------
                                    Title:
                                          ---------------------------------

                             Address for Notices:

                             2728 North Harwood, Suite 100
                             Dallas, TX  75201
                             Fax No.:  (214) 515-4955
                             Telephone No.:  (214) 515-4907
                             Attention:  Shannon Bettis

                             TEXAS CAPITAL BANK, NATIONAL
                             ASSOCIATION

                             By:
                                -------------------------------------------
                                    Name:
                                         ----------------------------------
                                    Title:
                                          ---------------------------------

                             Address for Notices:

                             2100 McKinney Avenue, Suite 900
                             Dallas, TX  75201
                             Fax No.:  (214) 932-6604
                             Telephone No.:  (214) 932-6675
                             Attention:  Tim Monter

                                         13
<PAGE>

                            OBLIGATED PARTIES CONSENT

         Each of the undersigned Obligated Parties (i) consent and agree to this
Amendment; and (ii) agree that the Loan Documents to which it is a party shall
remain in full force and effect and shall continue to be the legal, valid and
binding obligation of such Obligated Party enforceable against it in accordance
with their respective terms.

                            OBLIGATED PARTIES:

                            RAD ACQUISITION CORP.
                            SCHLOTZSKY'S REAL ESTATE, INC.
                            SCHLOTZSKY'S RESTAURANTS, INC.
                            DFW RESTAURANT TRANSFER CORP.
                            SCHLOTZSKY'S EQUIPMENT CORPORATION
                            SREI TURNKEY DEVELOPMENT, L.L.C.
                            56TH & 6TH, INC.
                            SCHLOTZSKY'S BRANDS, INC.

                             By:
                                -------------------------------------------
                                    Name:
                                         ----------------------------------
                                    Title:
                                          ---------------------------------

                            SCHLOTZSKY'S BRANDS I, L.L.C.

                             By:
                                -------------------------------------------
                                    Name:
                                         ----------------------------------
                                    Title:
                                          ---------------------------------

                            SCHLOTZSKY'S BRAND
                            PRODUCTS, L.P.

                            By:    Schlotzsky's Brands, Inc.,
                                   as general partner

                                   By:
                                      -------------------------------------
                                         Name:
                                              -----------------------------
                                         Title:
                                               ----------------------------

                                   14

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