PIZZA INN INC /MO/
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>0004.txt
<TEXT>


     Page  1  of  11
                                 PROMISSORY NOTE
$8,125,000.00     Dallas,  Texas
                                                               December 28, 2000
FOR  VALUE  RECEIVED,  the  undersigned  PIZZA INN, INC., a Missouri corporation
("Borrower"), promise(s) to pay to the order of WELLS FARGO BANK TEXAS, NATIONAL
ASSOCIATION ("Lender"), at the Disbursement and Operations Center in El Segundo,
California,  or  at  such other place as may be designated in writing by Lender,
the  principal  sum  of  EIGHT  MILLION  ONE  HUNDRED  TWENTY-FIVE  THOUSAND AND
NO/100THS DOLLARS ($8,125,000.00) or so much thereof as may from time to time be
owing hereunder by reason of advances by Lender to or for the benefit or account
of Borrower, with interest thereon, per annum, at the Applicable Rate calculated
in accordance with the terms and provisions of the Fixed Rate Agreement attached
hereto  as  Exhibit  A  and  a Fixed Rate Notice described on Exhibit B attached
            ----------                                        ---------
hereto  (based  on  a  360-day  year  and  charged  on  the basis of actual days
elapsed).  All  sums  owing  hereunder are payable in lawful money of the United
States  of  America,  in  immediately  available  funds.
All  terms  used  herein with initial capital letters and not defined shall have
the meanings specified in the Fixed Rate Agreement attached hereto as Exhibit A.
                                                                      ---------
Accrued  and  unpaid interest on this Note ("Note") shall be payable as follows:
(i)     in  the case of all advances subject to the Prime Rate Advances, on each
Monthly  Payment  Date;
(ii)     in  the case of Eurodollar Advances of this Note on the last day of the
Interest  Period  applicable  thereto  and,  with respect to any Interest Period
exceeding  three  (3) months, on the last day of the third (3rd) month after the
commencement  of  such  Interest  Period;  and
(iii)     on  the  Maturity  Date.
If  the  Loan  Conversion occurs, the outstanding principal balance of this Note
shall  be payable in monthly installments on each Monthly Payment Date occurring
after  the  effective  date  of  the  Loan Conversion in an amount sufficient to
amortize  the  then  unpaid  principal  at  the  Applicable Rate  hereunder on a
straight  line  basis  over  an  amortization  term  of  twenty  (20)  years.
The  outstanding  principal  balance of this Note, together with all accrued and
unpaid  interest,  shall  be  due  and  payable  in  full  on the Maturity Date.
This  Note  is secured by, among other things, that certain Construction Deed of
Trust  with  Absolute  Assignment  of  Leases  and Rents, Security Agreement and
Fixture  Filing  ("Deed  of  Trust")  dated  of  even date herewith, executed by
Borrower,  as  grantor,  to  a  trustee  for  the  benefit  of  Lender.
In order to assure timely payment to Lender of accrued interest, principal, fees
and  late  charges due and owing under the loan evidenced by this Note, Borrower
hereby irrevocably authorizes Lender to directly debit Borrower's demand deposit
account  with Lender for payment when due of all such amounts payable to Lender.
Borrower  represents  and warrants to Lender that Borrower is the legal owner of
said  account. Written confirmation of the amount and purpose of any such direct
debit  shall be given to Borrower by Lender not less frequently than monthly. In
the  event  any  direct  debit  hereunder  is  returned  for insufficient funds,
Borrower  shall  pay  Lender  upon  demand,  in immediately available funds, all
amounts  and  expenses  due  and  owing  to  Lender.
If  a Default (as defined in the Loan Agreement) occurs, THEN Lender may, at its
                                                         ----
sole option, declare all sums owing under this Note immediately due and payable;
provided,  however,  that  if  any of the Loan Documents or the Master Agreement
--------   -------
provide  for automatic acceleration of payment of sums owing hereunder, all sums
---
owing  hereunder  shall  be automatically due and payable in accordance with the
terms  of  that  document.
If  any attorney is engaged by Lender to enforce or defend any provision of this
Note  or the Loan Documents, or as a consequence of any Default, with or without
the  filing of any legal action or proceeding, then Borrower shall pay to Lender
immediately upon demand all reasonable attorneys' fees and all costs incurred by
Lender  in connection therewith, together with interest thereon from the date of
such  demand  until  paid  at  the  rate of interest applicable to the principal
balance  owing  hereunder  as  if such unpaid attorneys' fees and costs had been
added  to  the  principal.
No  previous  waiver and no failure or delay by Lender in acting with respect to
the  terms  of  this Note or the Loan Documents shall constitute a waiver of any
breach,  default, or failure of condition under this Note or the Loan Documents.
A  waiver of any term of this Note or the Loan Documents must be made in writing
and  shall be limited to the express written terms of such waiver.  In the event
of any inconsistencies between the terms of this Note and the terms of any other
Loan  Documents,  the  terms  of  this  Note  shall  prevail.
If  this  Note  is  executed  by more than one person or entity as Borrower, the
obligations of each such person or entity shall be joint and several.  No person
or  entity  shall be a mere accommodation maker, but each shall be primarily and
directly  liable  hereunder.  If Borrower is a partnership, each general partner
of  Borrower  shall  be  jointly  and  severally liable hereunder, and each such
general  partner  hereby  waives  any  requirement of law that in the event of a
default  hereunder  Lender  exhaust  any  assets  of Borrower before proceedings
against such general partner's assets.  Except as otherwise provided in any Loan
Document,  Borrower,  and  any endorsers and guarantors hereof, severally waive:
presentment;  demand;  notice  of  dishonor;  notice  of default or delinquency;
notice of intention to accelerate; notice of acceleration; notice of protest and
nonpayment;  notice of costs, expenses or losses and interest thereon; notice of
late charges; and diligence in taking any action to collect any sums owing under
this  Note  or  in  proceeding  against  any of the rights or interests in or to
properties  securing  payment  of  this  Note.  Borrower,  and  any endorsers or
guarantors  hereof,  agree  that  the  time  for  any  payments hereunder may be
extended  from  time  to  time  without notice and consent, to the acceptance of
further  collateral,  and/or  the  release  of  any  existing collateral for the
payment  of this Note, all without in any manner affecting their liability under
or with respect to this Note.  No extension of time for the payment of this Note
or any installment hereof shall affect the liability of Borrower under this Note
or  any  endorser  or  guarantor hereof even though Borrower or such endorser or
guarantor  is  not  a  party  to  such  agreement.
Time  is of the essence with respect to every provision hereof.  This Note shall
be  construed  and  enforced  in accordance with the laws of the State of Texas,
except  to  the extent that federal laws preempt the laws of the State of Texas,
and  all persons and entities in any manner obligated under this Note consent to
the  jurisdiction of any federal or state court within the State of Texas having
proper  venue  and also consent to service of process by any means authorized by
Texas  or  federal  law.  This  Note  is  performable  in  Dallas County, Texas.
It is expressly stipulated and agreed to be the intent of Borrower and Lender at
all  times  to  comply  with  applicable Texas law governing the maximum rate or
amount  of  interest  payable  on this Note or the indebtedness ("Indebtedness")
evidenced  hereby  or  evidenced  or  secured  by  the  other Loan Documents (or
applicable  United  States  Federal  law to the extent that it permits Lender to
contract  for,  charge,  take,  reserve, or receive a greater amount of interest
than  under  Texas law) and that this section shall control every other covenant
and  agreement  in  this  Note.  If  the  applicable  law  is  ever  judicially
interpreted  so  as  to render usurious any amount called for under this Note or
under  any  of  the  other  Loan  Documents,  or contracted for, charged, taken,
reserved  or  received with respect to the Indebtedness, or Lender's exercise of
the  option  to  accelerate  the  maturity  of  this  Note, or any prepayment by
Borrower  results in Borrower having paid or Lender having received any interest
in  excess  of  that  permitted  by  applicable  law,  then it is Borrower's and
Lender's  express intent that all excess amounts theretofore collected by Lender
shall  be  credited  on  the  principal  balance  of  this  Note  and  all other
Indebtedness  (or,  if  this  Note and all other Indebtedness have been or would
thereby  be paid in full, refunded to Borrower), and the provisions of this Note
and  the  other  Loan  Documents  immediately be deemed reformed and the amounts
thereafter  collectible  hereunder and thereunder reduced, without the necessity
of  the execution of any new documents, so as to comply with the applicable law,
but  so  as  to  permit  the recovery of the fullest amount otherwise called for
hereunder  or  thereunder; provided, however, if this Note has been paid in full
before  the  end of the stated term of this Note, then Borrower and Lender agree
that  Lender  shall,  with  reasonable  promptness  after Lender discovers or is
advised  by  Borrower  that  interest was received in an amount in excess of the
Maximum  Lawful  Rate,  either refund such excess interest to Borrower or credit
such  excess  interest  against any other Indebtedness then owing by Borrower to
Lender.  Borrower  hereby  agrees  that  as  a  condition precedent to any claim
seeking  usury  penalties  against  Lender,  that  Borrower will provide written
notice  to Lender, advising Lender in reasonable detail of the nature and amount
of  the  violation,  and Lender shall have sixty (60) days after receipt of such
notice  in  which  to  correct such usury violation, if any, by either refunding
such  excess  interest to Borrower or crediting such excess interest against any
other  indebtedness  then owing by Borrower to Lender.  All sums contracted for,
charged  or  received  by  Lender  for  the use, forbearance or detention of the
Indebtedness  shall,  to the extent permitted by applicable law, be amortized or
spread,  using  the  actuarial  method,  throughout  the  stated  term  of  the
Indebtedness  until  payment  in  full so that the rate or amount of interest on
account of the Indebtedness does not exceed the Maximum Lawful Rate from time to
time  in  effect  and  applicable  to  the  Indebtedness  for  so  long  as  the
Indebtedness is outstanding.  In no event shall the provisions of Chapter 346 of
the  Texas  Finance Code (which regulates certain revolving credit loan accounts
and  revolving  triparty  accounts)  apply to the Indebtedness.  Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents,
it  is  not  the  intention of Lender to accelerate the maturity of any interest
that  has  not  accrued  at the time of such acceleration or to collect unearned
interest  at  the  time  of  such  acceleration.
As  used  herein,  the  term "Maximum Lawful Rate" shall mean the maximum lawful
rate  of  interest  which  may  be  contracted  for, charged, taken, received or
reserved  by Lender in accordance with the applicable laws of the State of Texas
(or applicable United States Federal law to the extent that it permits Lender to
contract for, charge, take, receive or reserve a greater amount of interest than
under  Texas  law),  taking into account all Charges (as herein defined) made in
connection  with  the  transaction  evidenced  by  this  Note and the other Loan
Documents.  As  used herein, the term "Charges" shall mean all fees and charges,
if  any,  contracted  for,  charged,  received,  taken  or reserved by Lender in
connection  with  the  transactions  relating  to  this  Note and the other Loan
Documents  or  the  Indebtedness, which are treated as interest under applicable
law.  To  the  extent that Lender is relying on Chapter 303 of the Texas Finance
Code,  as  amended,  to  determine  the  Maximum  Lawful  Rate  payable  on  the
Indebtedness, Lender will utilize the weekly ceiling from time to time in effect
as  provided  in  Chapter  303, as amended.  To the extent United States Federal
law  permits  Lender to contract for, charge, take, receive or reserve a greater
amount  of  interest  than  under  Texas  law, Lender will rely on United States
Federal  law  instead  of  such  Chapter  303,  as  amended,  for the purpose of
determining  the  Maximum Lawful Rate.  Additionally, to the extent permitted by
applicable  law  now  or hereafter in effect, Lender may, at its option and from
time  to  time,  implement any other method of computing the Maximum Lawful Rate
under  such  Chapter  303,  as  amended, or under other applicable law by giving
notice,  if required, to Borrower as provided by applicable law now or hereafter
in effect.  Borrower and Lender hereby agree that any and all suits alleging the
contracting  for, charging or receiving of usurious interest shall lie in Dallas
County,  Texas,  and  each  irrevocably  waive  the  right to venue in any other
county.
Notwithstanding  anything  in  this  Note  to  the  contrary, if at any time (i)
interest  at  the  Applicable  Rate, and (ii) the Charges computed over the full
term  of  this  Note,  exceed the Maximum Lawful Rate, then the rate of interest
payable  hereunder,  together  with all Charges, shall be limited to the Maximum
Lawful  Rate; provided, however, that any subsequent reduction in the Applicable
              --------  -------
Rate shall not cause a reduction of the rate of interest payable hereunder below
the  Maximum  Lawful  Rate  until the total amount of interest earned hereunder,
together  with all Charges, equals the total amount of interest which would have
accrued  at  the  Applicable Rate if such interest rate had at all times been in
effect.  Changes  in  the  Applicable  Rate resulting from a change in the Prime
Rate  shall  be  subject  to  the  provisions  of  this  paragraph.
All  notices  or other communications required or permitted to be given pursuant
to  this Note shall be given to the Borrower or Lender at the address and in the
manner  provided  for  in  the  Loan  Agreement.
THIS NOTE AND ALL THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT OF
BORROWER  AND  LENDER  AND  SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS  AND  UNDERSTANDINGS,  WHETHER  WRITTEN OR ORAL, RELATING TO THE
SUBJECT  MATTER  HEREOF  AND  THEREOF  AND  MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE  OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF  BORROWER  AND  LENDER.  THERE  ARE  NO  ORAL AGREEMENTS BETWEEN BORROWER AND
LENDER.  The provisions of this Note and the other Loan Documents may be amended
or  revised  only by an instrument in writing signed by the Borrower and Lender.
Addendum  to  Promissory Note and Exhibit A are attached hereto and incorporated
-----------------------------     ---------
herein  by  reference.
                                   "BORROWER"
PIZZA  INN,  INC.,
a  Missouri  corporation
By:/s/Ronald W. Parker
Name: Ronald W. Parker
Title: President

                           ADDENDUM TO PROMISSORY NOTE
THIS  ADDENDUM  is  attached  to and made a part of that certain promissory note
executed  by PIZZA INN, INC., a Missouri corporation ("Borrower") and payable to
the  order of WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION, ("Lender"), dated as
of  December  28,  2000,  in  the principal amount of  EIGHT MILLION ONE HUNDRED
TWENTY-FIVE  THOUSAND  AND  NO/100  DOLLARS  ($8,125,000.00)  ("Note").
The  following  arbitration  provision  is  hereby  incorporated  into the Note:
                              A R B I T R A T I O N
                              ---------------------
1.     ARBITRATION.  Upon the demand of any party, any dispute shall be resolved
       -----------
by  binding arbitration (except as set forth in Paragraph 5 below) in accordance
with  the terms of this Note.  A "Dispute" shall mean any action, dispute, claim
or  controversy  of  any  kind, whether in contract or tort, statutory or common
law,  legal  or  equitable,  now  existing  or  hereafter  arising  under  or in
connection with, or in any way pertaining to, this Note and each other document,
contract  and instrument required hereby or now or hereafter delivered to Lender
in  connection  herewith  (collectively,  the  "Loan  Documents"),  or any past,
present  or  future  extensions  of credit and other activities, transactions or
obligations  of  any  kind  related  directly  or  indirectly to any of the Loan
Documents,  including  without  limitation,  any  of  the  foregoing  arising in
connection  with  the  exercise  of  any  self-help, ancillary or other remedies
pursuant  to  any  of  the  Loan Documents. Any party may by summary proceedings
bring an action in court to compel arbitration of a Dispute. Any party who fails
or refuses to submit to arbitration following a lawful demand by any other party
shall  bear  all  costs  and expenses incurred by such other party in compelling
arbitration  of  any  Dispute.
2.     GOVERNING  RULES.  Arbitration  proceedings  shall be administered by the
       ----------------
American  Arbitration  Association  ("AAA")  or  such other administrator as the
parties  shall  mutually  agree  upon  in  accordance  with  the  AAA Commercial
Arbitration  Rules.  All  Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding  any  conflicting  choice  of  law  provision in any of the Loan
Documents. The arbitration shall be conducted in Dallas, Texas.  If there is any
inconsistency  between  the  terms  hereof  and  any  such  rules, the terms and
procedures  set  forth  herein  shall  control.  All  statutes  of  limitation
applicable  to  any  Dispute  shall  apply  to  any arbitration proceeding.  All
discovery  activities shall be expressly limited to matters directly relevant to
the Dispute being arbitrated. Judgment upon any award rendered in an arbitration
may  be entered in any court having jurisdiction; provided however, that nothing
contained  herein  shall be deemed to be a waiver by any party that is a bank of
the protections afforded to it under Section 91 of Title 12 of the United States
Code  or  any  similar  applicable  state  law.
3.     NO WAIVER; PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE.  No provision
       ----------------------------------------------------------
hereof shall limit the right of any party to exercise self-help remedies such as
setoff,  foreclosure against or sale of any real or personal property collateral
or  security,  or to obtain provisional or ancillary remedies, including without
limitation,  injunctive  relief,  sequestration,  attachment, garnishment or the
appointment  of  a receiver from a court of competent jurisdiction before, after
or  during the pendency of any arbitration or other proceeding.  The exercise of
any  such  remedy  shall  not waive the right of any party to compel arbitration
hereunder.
4.     ARBITRATOR  QUALIFICATIONS AND POWERS; AWARDS. Arbitrators must be active
       ---------------------------------------------
members of the Texas State Bar, with expertise in the substantive law applicable
to  the  subject  matter  of  the Dispute.  Arbitrators are empowered to resolve
Disputes  by  summary  rulings  in  response to motions filed prior to the final
arbitration  hearing.  Arbitrators  (i) shall resolve all Disputes in accordance
with  the  substantive  law  of the State of Texas, (ii) may grant any remedy or
relief  that a court of the State of Texas could order or grant within the scope
hereof  and  such  ancillary relief as is necessary to make effective any award,
and  (iii)  shall  have  the  power  to award recovery of all costs and fees, to
impose  sanctions  and  to take such other actions as they deem necessary to the
same  extent a judge could pursuant to the Federal Rules of Civil Procedure, the
Texas  Rules  of  Civil Procedure or other applicable law.  Any Dispute in which
the  amount  in  controversy  is $5,000,000 or less shall be decided by a single
arbitrator  who  shall not render an award of greater than $5,000,000 (including
damages,  costs,  fees and expenses). By submission to a single arbitrator, each
party  expressly waives any right or claim to recover more than $5,000,000.  Any
Dispute  in  which the amount in controversy exceeds $5,000,000 shall be decided
by  majority  vote  of  a panel of three arbitrators; provided however, that all
three  arbitrators  must actively participate in all hearings and deliberations.
5.     JUDICIAL REVIEW.  Notwithstanding anything herein to the contrary, in any
       ---------------
arbitration  in  which  the  amount  in  controversy  exceeds  $25,000,000,  the
arbitrators  shall  be  required  to make specific, written findings of fact and
conclusions of law.  In such arbitrations (i) the arbitrators shall not have the
power  to make any award which is not supported by substantial evidence or which
is  based  on  legal  error, (ii) an award shall not be binding upon the parties
unless  the  findings  of  fact  are  supported  by substantial evidence and the
conclusions  of  law are not erroneous under the substantive law of the State of
Texas,  and  (iii) the parties shall have in addition to the grounds referred to
in  the  Federal  Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (1) whether the findings of fact rendered by the
arbitrators  are  supported  by  substantial  evidence,  and  (2)  whether  the
conclusions  of  law  are  erroneous  under  the substantive law of the State of
Texas.  Judgment confirming an award in such a proceeding may be entered only if
a  court determines the award is supported by substantial evidence and not based
on  legal  error  under  the  substantive  law  of  the  State  of  Texas.
6.     MISCELLANEOUS.  To  the  maximum  extent  practicable,  the  AAA,  the
       -------------
arbitrators  and  the  parties  shall  take  all action required to conclude any
       --
arbitration  proceeding  within  180  days of the filing of the Dispute with the
AAA.  No arbitrator or other party to an arbitration proceeding may disclose the
existence,  content or results thereof, except for disclosures of information by
a  party  required  in the ordinary course of its business, by applicable law or
regulation,  or  to  the extent necessary to exercise any judicial review rights
set  forth  herein. If more than one agreement for arbitration by or between the
parties  potentially  applies  to  a  Dispute,  the  arbitration  provision most
directly  related  to  the  Loan  Documents or the subject matter of the Dispute
shall  control.  If any provision of this Note shall be held to be prohibited by
or invalid under applicable law, such provision shall be ineffective only to the
extent  of such prohibition or invalidity, without invalidating the remainder of
such  provision  or  any  remaining  provisions  of this Note.  This arbitration
provision  shall survive termination, amendment or expiration of any of the Loan
Documents  or  any  relationship  between  the  parties.
                                                                       EXHIBIT A
                              FIXED RATE AGREEMENT
Exhibit  A  to  Promissory Note ("Note"), dated December 28, 2000, made by PIZZA
----------
INN, INC., a Missouri corporation, as Borrower, to the order of WELLS FARGO BANK
--
TEXAS,  NATIONAL  ASSOCIATION,  as  Lender.
                                 R E C I T A L S
                                 ---------------
Borrower has requested and Lender has agreed to provide a fixed rate option as a
basis  for  calculating  the  applicable rate of interest on amounts owing under
this Note.  Borrower acknowledges the following:  (i) it understands the process
of exercising the fixed rate option as provided herein; (ii) amounts owing under
this  Note  may bear interest at different rates and for different time periods;
and  (iii)  absent  the  terms  and  conditions  hereof,  it  would be extremely
difficult  to  calculate Lender's additional costs, expenses, and damages in the
event  of  a  Default  or  prepayment  by  Borrower hereunder.  Given the above,
Borrower  agrees  that the provisions herein (including, without limitation, the
Fixed  Rate  Price  Adjustment  defined below) provide for a reasonable and fair
method  for  Lender to recover its additional costs, expenses and damages in the
event  of  a  Default  or  prepayment  by  Borrower.
1.     RATES  AND  TERMS DEFINED.  Various rates and terms not otherwise defined
       -------------------------
herein  are  defined  and  described  as  follows:
"Additional  Costs"  has  the  meaning  specified  in  paragraph  4  below.
 -----------------
"Adjusted  Eurodollar  Rate"  means, for any Eurodollar Advance for any Interest
 --------------------------
Period,  the  rate per annum (rounded upwards, if necessary, to the nearest 1/16
 -
of  1%)  determined  by Lender to be equal to the quotient of (a) the Eurodollar
Rate for such Eurodollar Advance for such Interest Period divided by (b) 1 minus
the  Reserve  Requirement  for such Eurodollar Advance for such Interest Period.
"Advance"  means  any advance of funds by Lender pursuant to the Loan Agreement.
 -------
"Advance Request Form" means, a certificate, in form and substance acceptable to
 --------------------
Lender,  properly  completed  and  signed by the Borrower requesting an Advance.
"Applicable  Lending Office" means, for each Type of Advance, the lending office
 --------------------------
of  the  Lender  or  such other office of Lender as Lender may from time to time
specify  to the Borrower as the office by which its Advances of such Type are to
be  made  and  maintained.
"Applicable  Rate" means:  (a) during the period that an Advance is a Prime Rate
 ----------------
Advance,  the  Prime Rate plus the Prime Rate Margin applicable to such Advance;
and  (b) during the period that an Advance is a Eurodollar Advance, the Adjusted
Eurodollar  Rate  plus  the  Eurodollar  Rate Margin applicable to such Advance.
"Basle Accord" means the proposals for risk-based capital framework described by
 ------------
the  Basic  Committee  on  Banking  Regulations and Supervisory Practices in its
paper  entitled  "International  Convergence  of Capital Measurement and Capital
Standards"  dated July 1988, as amended, supplemented and otherwise modified and
in  effect  from  time  to  time,  or  any  replacement  thereof.
"Business Day" means (a) any day on which commercial banks are not authorized or
 ------------
required  to  close  in  Dallas,  Texas, and (b) with respect to all borrowings,
payments,  Conversions,  Continuations,  Interest  Periods,  and  notices  in
connection  with  Eurodollar Advances, any day which is a Business Day described
in clause (a) above and which is also a day on which dealings in Dollar deposits
   ----------
are  carried  out  in  the  London  interbank  market.
"Continue,"  "Continuation,"  and  "Continued"  shall  refer to the continuation
 --------     ------------          ---------
pursuant  to  a  Eurodollar  Advance  as  a Eurodollar Advance from one Interest
 ---
Period  to  the  next  Interest  Period.
 ---
"Convert," "Conversion," and "Converted" shall refer to a conversion pursuant to
 -------    ----------        ---------
one  Type  of  Advance  into  another  Type  of  Advance.
"Default  Rate"  means the lesser of (i) the Maximum Lawful Rate or (ii) the sum
 -------------
of  the  Prime  Rate  in  effect  from  day  to  day  plus three and twenty-five
one-hundredths  percent  (3.25%).
"Dollars"  and  "$"  mean  lawful  money  of  the  United  States  of  America.
 -------         -
"Eurodollar  Advances" means Advances the interest rates on which are determined
 --------------------
on  the basis of the rates referred to in the definition of "Adjusted Eurodollar
Rate".
"Eurodollar Rate" means, for any Eurodollar Advance for any Interest Period, the
 ---------------
rate  per  annum quoted by the Reference Bank at approximately 11:00 A.M. London
time  (or  as soon thereafter as practicable) two (2) Business Days prior to the
first  day  of  such  Interest  Period for the offering by the Reference Bank to
leading  banks  in the London interbank market of Dollar deposits in immediately
available  funds  having  a  term  comparable  to such Interest Period and in an
amount  comparable  to the principal amount of the Eurodollar Advance to be made
by  the  Reference  Bank  to  which  such  Interest  Period  relates.
"Eurodollar  Rate  Margin"  means  one  and  one-half  percent  (1.50%).
 ------------------------
"Governmental  Authority" means any nation or government, any state or political
 -----------------------
subdivision thereof, and any entity exercising executive, legislative, judicial,
regulatory  or  administrative  functions  of  or  pertaining  to  government.
"Interest  Period"  means  the period commencing, with respect to any Eurodollar
 ----------------
Advances,  on  the  date  such  Eurodollar  Advances  are made or Converted from
 -
Advances of another Type or, in the case of each subsequent, successive Interest
 -
Period  applicable  to  a Eurodollar Advance, the last day of the next preceding
Interest  Period  with  respect  to  such Advance, and ending on the numerically
corresponding  day  in  the  first,  second,  third  or  sixth  calendar  month
thereafter,  as  the  Borrower may select, except that each such Interest Period
which  commences on the last Business Day of a calendar month (or on any day for
which  there  is  no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Business Day of the appropriate subsequent
calendar  month.  Notwithstanding the foregoing:  (a) each Interest Period which
would  otherwise  end on a day which is not a Business Day shall end on the next
succeeding  Business  Day  or, if such succeeding Business Day falls in the next
succeeding  calendar month, on the next preceding Business Day; (b) any Interest
Period  which  would  otherwise extend beyond the Maturity Date shall end on the
Maturity  Date;  and  (d)  no  more  than three (3) Interest Periods shall be in
effect  at  the  same  time.
"Loan  Agreement" is that certain Construction Loan Agreement dated of even date
 ---------------
with  this  Note  between  Borrower  and  Lender.
"Loan  Conversion"  the conversion of the Loan from the Construction Loan to the
 ----------------
Mini-Perm  Loan  all  in  accordance  with  the  terms  of  the  Loan Agreement.
"Loan  Documents"  are  the  documents  defined  as  such in the Loan Agreement.
 ---------------
"Master  Agreement"  has  the  meaning  specified  in  the  Loan  Agreement.
 -----------------
"Maturity  Date"  means  (a)  at  all times prior to Loan Conversion, January 1,
 --------------
2002,  and  (b)  if  Loan  Conversion  occurs on or before January 1, 2002, then
 ---
December  28,  2007.
 ---
"Monthly  Payment  Date"  means  the  seventh  (7th) day of each calendar month.
 ----------------------
"Prime  Rate"  means,  at  any  time,  the  rate of interest per annum then most
 -----------
recently  established  by  Wells  Fargo  Bank Texas, National Association as its
 -----
prime  rate,  which  rate  may  not  necessarily  be the lowest rate of interest
 ---
charged  by Wells Fargo Bank Texas, National Association to its borrowers.  Each
 ---
change  in  any  interest  rate  provided  for  herein based upon the Prime Rate
resulting  from  a  change in the Prime Rate shall take effect without notice to
the  Borrower  at  the  time  of  such  change  in  the  Prime  Rate.
"Prime  Rate Advances" means Advances that bear interest at rates based upon the
 --------------------
Prime  Rate.
"Prime  Rate  Margin"  means a deduction of (a) one-half of one percent (-0.50%)
 -------------------
prior  to Loan Conversion and (b) three-fourths of one percent (-.75%) following
 -
Loan  Conversion.
"Reference Bank" means Wells Fargo Bank Texas, National Association.  If for any
 --------------
reason  Wells Fargo Bank Texas, National Association shall no longer participate
in  the  Eurodollar  market,  then  "Reference  Bank" shall thereafter mean such
financial  institution  as Lender may from time to time specify to the Borrower.
"Regulation  D"  means  Regulation  D  of  the Board of Governors of the Federal
 -------------
Reserve  System  as  the  same may be amended or supplemented from time to time.
 ----
"Regulatory  Change" means any change after the date of this Agreement in United
 ------------------
States  federal,  state, or foreign laws or regulations (including Regulation D)
or the adoption or making after such date of any interpretations, directives, or
requests  applying  to  a class of banks including Lender of or under any United
States  federal  or  state,  or any foreign, laws or regulations (whether or not
having  the  force  of  law)  by any court or governmental or monetary authority
charged  with  the  interpretation  or  administration  thereof.
"Reserve Requirement" means, for any Eurodollar Advance for any Interest Period,
 -------------------
the average maximum rate at which reserves (including any marginal, supplemental
or emergency reserves) are required to be maintained during such Interest Period
under  Regulation  D  by  member banks of the Federal Reserve System in New York
City  with  deposits  exceeding  one  billion  Dollars  against  "Eurocurrency
Liabilities"  as such term is used in Regulation D.  Without limiting the effect
of  the  foregoing,  the  Reserve  Requirement  shall reflect any other reserves
required  to  be  maintained  by  such  member banks by reason of any Regulatory
Change  against  (i)  any  category  of  liabilities  which includes deposits by
reference to which the Adjusted Eurodollar Rate is to be determined, or (ii) any
category  of  extensions  of  credit  or  other  assets which include Eurodollar
Advances.
"Type"  means  a  type of Advance consisting of either a Prime Rate Advance or a
 ----
Eurodollar  Advance.
 -
Terms used with initial capital letters and not otherwise defined shall have the
meanings  specified  in  the  Loan  Agreement.
2.     APPLICABLE  RATE.  The  unpaid  principal  amount of this Note shall bear
       ----------------
interest  at a varying rate per annum equal from day to day to the lesser of (a)
the  Maximum  Lawful  Rate,  or  (b)  the  Applicable  Rate.  If at any time the
Applicable  Rate  for  any Advance shall exceed the Maximum Lawful Rate, thereby
causing  the  interest  accruing  on  such  Advance to be limited to the Maximum
Lawful  Rate,  then  any  subsequent  reduction  in the Applicable Rate for such
Advance  shall not reduce the rate of interest on such Advance below the Maximum
Lawful  Rate  until  the  aggregate  amount  of interest accrued on such Advance
equals the aggregate amount of interest which would have accrued on such Advance
if  the  Applicable  Rate  had  at all times been in effect.  Accrued and unpaid
interest  on  the  Advances  shall  be  due  and  payable  as  follows:
     (i)     in  the  case  of  all Prime Rate Advances, on each Monthly Payment
Date;
(ii)     in  the  case  of  all  Eurodollar  Advances,  on  the last day of each
Interest  Period  applicable  thereto,  and  with respect to any Interest Period
exceeding  three  (3)  months,  on  the  last  day  of the third month after the
commencement  of  such  Interest  Period;  and
     (iii)     on  the  Maturity  Date.
During such time as a Default exists under the Loan Agreement or any of the Loan
Documents;  or  from  and after the date on which all sums owing under this Note
become  due and payable by acceleration or otherwise; or from and after the date
on  which the property encumbered by the Deed of Trust or any portion thereof or
interest  therein,  is  sold,  transferred,  mortgaged, assigned, or encumbered,
whether  voluntarily  or  involuntarily,  or  by  operation of law or otherwise,
without Lender's prior written consent (whether or not the sums owing under this
Note  become  due  and  payable by acceleration); or from and after the Maturity
Date;  then  at  the  option of Lender, the interest rate applicable to the then
outstanding  principal  balance  of this Note shall be the lesser of the Default
Rate  or  the  Maximum  Lawful  Rate.
3.     CONVERSIONS  AND  CONTINUATIONS.  The  Borrower shall have the right from
       -------------------------------
time  to  time  to Convert all (but not less than all) of an Advance of one Type
into an Advance of another Type or to Continue Eurodollar Advances as Eurodollar
Advances  by  giving  the  Lender  written  notice at least one (1) Business Day
before Conversion into a Prime Rate Advance and at least three (3) Business Days
before  Conversion into or Continuation of a Eurodollar Advance, specifying: (a)
the  Conversion  or  Continuation  date,  (b)  the  amount  of the Advance to be
Converted  or  Continued, (c) in the case of Conversions, the Type of Advance to
be Converted into, and (d) in the case of a Continuation of or Conversion into a
Eurodollar  Advance,  the  duration  of  the Interest Period applicable thereto;
provided  that  (i)  except  for  Conversions  into  Prime  Rate  Advances,  no
Conversions  shall  be  made while a Default has occurred and is continuing, and
(ii)  no  more  than  three  (3) Interest Periods shall be in effect at the same
time.  All notices by the Borrower under this paragraph shall be irrevocable and
shall be given to the Lender not later than 10:00 A.M. Dallas, Texas time on the
day  which is not less than the number of Business Days specified above for such
notice.  If  the  Borrower shall fail to give the Lender the notice as specified
above for Continuation or Conversion of a Eurodollar Advance prior to the end of
the  Interest  Period  with  respect  thereto,  such Eurodollar Advance shall be
Converted  automatically  into  a Prime Rate Advance on the last day of the then
current  Interest  Period  for  such  Eurodollar  Advance.
4.     ADDITIONAL  COSTS.
       -----------------
(a)     The  Borrower  shall  pay  directly to the Lender from time to time such
amounts  as  the  Lender  may determine to be necessary to compensate it for any
costs  incurred  by  the  Lender  which  the  Lender  reasonably  determines are
attributable  to  its making or maintaining of any Eurodollar Advances hereunder
or  its  obligation  to make any of such Advances hereunder, or any reduction in
any amount receivable by the Lender hereunder in respect of any such Advances or
     such  obligation  (such  increases  in  costs  and  reductions  in  amounts
receivable  being  herein  called  "Additional  Costs"),  resulting  from  any
                                    -----------------
Regulatory  Change  which:
(i)     changes the basis of taxation of any amounts payable to the Lender under
     this  Note  in respect of any of such Advances (other than taxes imposed on
the overall net income of the Lender or its Applicable Lending Office for any of
such  Advances  by the jurisdiction in which the Lender has its principal office
or  such  Applicable  Lending  Office);
(ii)     imposes  or  modifies  any  reserve,  special deposit, minimum capital,
capital  ratio,  or  similar requirement relating to any extensions of credit or
other  assets  of,  or any deposits with or other liabilities or commitments of,
the  Lender  (including  any of such Advances or any deposits referred to in the
definition  of  "Eurodollar  Rate");
(iii)     imposes  any  other  condition  affecting  this  Note  or  any of such
extensions  of  credit  or  liabilities  or  commitments.
Lender  will  notify  the  Borrower of any event occurring after the date hereof
which  will  entitle  the  Lender  to compensation pursuant to this paragraph as
promptly  as  practicable  after  it obtains knowledge thereof and determines to
request  such  compensation  (provided  that  any  claim  by  the  Lender  for
compensation  pursuant  to  this paragraph shall be made within ninety (90) days
after  the  initial occurrence of the event giving rise to such claim), and will
designate  a  different  Applicable  Lending Office for the Advances affected by
such event if such designation will avoid the need for, or reduce the amount of,
such  compensation  and will not, in the sole opinion of the Lender, violate any
law,  rule,  or  regulation  or  be  in  any  way disadvantageous to the Lender,
provided  that the Lender shall have no obligation to so designate an Applicable
Lending Office located in the United States of America.  Lender will furnish the
Borrower  with  a  certificate  setting  forth  the basis and the amount of each
request  of  the  Lender  for  compensation under this paragraph.  If the Lender
requests  compensation from the Borrower under this paragraph, the Borrower may,
by notice to the Lender suspend the obligation of the Lender to make or Continue
making,  or  Convert  Advances  into, Advances of the Type with respect to which
such  compensation  is requested until the Regulatory Change giving rise to such
request  ceases  to  be  in  effect (in which case the provisions of paragraph 7
below  shall  be  applicable).
(b)     Without  limiting  the  effect  of  the  foregoing  provisions  of  this
paragraph  4,  in the event that, by reason of any Regulatory Change, the Lender
either  (i)  incurs  Additional Costs based on or measured by the excess above a
specified  level of the amount of a category of deposits or other liabilities of
the  Lender  which  includes deposits by reference to which the interest rate on
Eurodollar  Advances  is  determined  as  provided in this Note or a category of
extensions  of  credit  or  other assets of the Lender which includes Eurodollar
Advances  or  (ii)  becomes  subject  to  restrictions  on  the amount of such a
category  of  liabilities  or  assets  which it may hold, then, if the Lender so
elects  by  notice  to  the  Borrower,  the  obligation of the Lender to make or
Continue making, or Convert Advances into, Advances of such Type hereunder shall
     be  suspended until such Regulatory Change ceases to be in effect (in which
case  the  provisions  of  paragraph  7  below  shall  be  applicable).
(c)     Determinations  and  allocations  by  the  Lender  for  purposes of this
paragraph  4  of the effect of any Regulatory Change on its costs of maintaining
its  obligations  to  make  Advances  or of making or maintaining Advances or on
amounts  receivable  by it in respect of Advances, and of the additional amounts
required  to  compensate the Lender in respect of any Additional Costs, shall be
conclusive,  provided  that such determinations and allocations are made in good
faith  and  on  a  reasonable  basis  and  without  duplication  of  the Reserve
Requirement.
5.     LIMITATION  ON  TYPES  OF  ADVANCES.  Anything  herein  to  the  contrary
       -----------------------------------
notwithstanding,  if  with  respect  to any Eurodollar Advances for any Interest
Period  therefor, the Lender determines (which determination shall be conclusive
if  made  in  good  faith)  that  quotations  of interest rates for the relevant
deposits  referred  to  in  the  definition  of  "Eurodollar Rate" are not being
provided  in the relative amounts or for the relative maturities for purposes of
determining  the  rate  of  interest for such Advances as provided in this Note,
then  the  Lender  shall  give the Borrower prompt notice thereof specifying the
relevant  amounts  or  periods, and so long as such condition remains in effect,
the  Lender  shall be under no obligation to make additional Eurodollar Advances
or  to  Convert  Prime  Rate  Advances into Eurodollar Advances and the Borrower
shall,  on  the  last  day(s)  of  the  then  current Interest Period(s) for the
outstanding  Eurodollar  Advances,  either  prepay  such  Eurodollar Advances or
Convert such Eurodollar Advances into Prime Rate Advances in accordance with the
terms  of  this  Note.  The  Lender  shall be deemed to have acted in good faith
under  this  paragraph if the Lender is giving notice to its customers generally
of  the  occurrence  of  either  of  the conditions specified in this paragraph.
6.     ILLEGALITY.  Notwithstanding  any  other  provision  of this Note, in the
       ----------
event  that  it becomes unlawful for the Lender or its Applicable Lending Office
to  (a)  honor  its  obligation  to  make  Eurodollar  Advances hereunder or (b)
maintain  Eurodollar  Advances  hereunder, then the Lender shall promptly notify
the  Borrower thereof and the Lender's obligation to make or maintain Eurodollar
Advances  and  to Convert Prime Rate Advances into Eurodollar Advances hereunder
shall  be  suspended  until  such time as the Lender may again make and maintain
Eurodollar  Advances (in which case the provisions of paragraph 7 below shall be
applicable).
7.     TREATMENT OF AFFECTED ADVANCES.  If the Eurodollar Advances of the Lender
       ------------------------------
(such  Eurodollar  Advances being hereinafter called "Affected Advances") are to
                                                      -----------------
be  Converted  pursuant  to  paragraphs  4  or  6  hereof, the Lender's Affected
Advances  shall  be automatically Converted into Prime Rate Advances on the last
day(s)  of the then current Interest Period(s) for the Affected Advances (or, in
the  case of a Conversion required by paragraphs 4 or  6 hereof, on such earlier
date  as  the  Lender  may  specify  to the Borrower), and, unless and until the
Lender  gives  notice  as  provided  below  that  the circumstances specified in
paragraphs  4  or  6  hereof which gave rise to such Conversion no longer exist:
(a)     To  the  extent  that  the  Lender's  Affected  Advances  have  been  so
Converted,  all  payments  and prepayments of principal which would otherwise be
applied  to the Lender's Affected Advances shall be applied instead to its Prime
Rate  Advances;  and
(b)     All Advances which would otherwise be made or Continued by the Lender as
Eurodollar  Advances  shall be made as or Converted into Prime Rate Advances and
all  Advances  of  the Lender which would otherwise be Converted into Eurodollar
Advances  shall  remain  as  Prime  Rate  Advances.
8.     COMPENSATION.  The  Borrower shall pay to the Lender, upon the request of
       ------------
the  Lender,  which  request  shall be made within one hundred eighty (180) days
after the occurrence of any event specified in subsection (a) or (b) below, such
                                               --------------    ---
amount  or  amounts  as  shall  be  sufficient (in the reasonable opinion of the
Lender)  to  compensate  it  for  any loss, cost, or expense incurred by it as a
result  of:
(a)     Any  payment,  prepayment  or Conversion of a Eurodollar Advance for any
reason  on  a  date  other  than  the  last  day  of an Interest Period for such
Eurodollar  Advance;  or
(b)     Any failure by the Borrower for any reason to borrow, Convert, or prepay
a  Eurodollar Advance on the date for such borrowing, Conversion, or prepayment,
specified  in  the relevant notice of borrowing, prepayment, or Conversion under
this  Agreement.
Without  limiting  the effect of the preceding sentence, such compensation shall
include  an  amount  equal  to the excess, if any, of (i) the amount of interest
which  otherwise would have accrued on the principal amount so paid or Converted
or  not  borrowed  for  the period from the date of such payment, Conversion, or
failure  to  borrow  to  the last day of the Interest Period for such Eurodollar
Advance  (or,  in  the case of a failure to borrow, the Interest Period for such
Eurodollar  Advance  which  would  have commenced on the date specified for such
borrowing)  at  the  applicable  rate  of  interest  for such Eurodollar Advance
provided  for  herein minus (ii) the interest component of the amount the Lender
would  have  bid  in  the  London  interbank  market.
9.     CAPITAL  ADEQUACY.  If,  after  the  date  hereof,  the Lender shall have
       -----------------
determined  in  good faith that the adoption or implementation of any applicable
law,  rule,  or  regulation  regarding  capital  adequacy  (including,  without
limitation,  any law, rule, or regulation implementing the Basle Accord), or any
change therein, or any change in the interpretation or administration thereof by
any central bank or other Governmental Authority charged with the interpretation
or  administration thereof, or compliance by the Lender (or its parent) with any
guideline,  request,  or  directive  regarding  capital adequacy (whether or not
having  the  force  of  law) of any central bank or other Governmental Authority
(including,  without limitation, any guideline or other requirement implementing
the  Basle  Accord), has or would have the effect of reducing the rate of return
on  the  Lender's  (or its parent's) capital as a consequence of its obligations
hereunder  or  the  transactions contemplated hereby to a level below that which
the  Lender  (or  its  parent)  could  have  achieved  but  for  such  adoption,
implementation,  change  or  compliance  (taking into consideration the Lender's
policies  with respect to capital adequacy) by an amount deemed by the Lender to
be  material, then from time to time, within ten (10) Business Days after demand
by  the  Lender,  the Borrower shall pay to the Lender such additional amount or
amounts  as  will  compensate  the  Lender  (or  its parent) for such reduction;
provided  that  any  claim  by  the  Lender  for  compensation  pursuant to this
paragraph  shall be made within ninety (90) days after the initial occurrence of
the  event  giving  rise  to  such  claim.  A certificate of the Lender claiming
compensation  under  this  paragraph  and setting forth the additional amount or
amounts  to  be  paid  to  it  hereunder  shall be conclusive, provided that the
determination  thereof  is  made  in  good  faith and on a reasonable basis.  In
determining  such amount or amounts, the Lender may use any reasonable averaging
and  attribution  methods.
10.     BORROWING  PROCEDURE.  The Borrower shall give Lender notice by means of
        --------------------
an  Advance Request Form of each requested Advance at least one (1) Business Day
before  the  requested  date  of  each Prime Rate Advance and at least three (3)
Business  Days before the requested date of each Eurodollar Advance, specifying:
(a)  the requested date of such Advance (which shall be a Business Day), (b) the
amount  of  such  Advance, (c) the Type of the Advance, and (d) in the case of a
Eurodollar  Advance,  the  duration  of  the  Interest  Period for such Advance.
Lender  at its option may accept telephonic requests for Advances, provided that
such  acceptance  shall not constitute a waiver of Lender's right to delivery of
an  Advance Request Form in connection with subsequent Advances.  Any telephonic
request for an Advance by the Borrower shall be promptly confirmed by submission
of a properly completed Advance Request Form to Lender.  Each Eurodollar Advance
shall  be in the minimum amount of One Hundred Thousand Dollars ($100,000) or an
integral multiple of Fifty Thousand Dollars ($50,000).  Not later than 1:00 p.m.
Dallas, Texas time on the date specified for each Advance hereunder, and subject
to  the  other  terms and conditions of this Note, Lender will make each Advance
available  to  the  Borrower  by  depositing  the same, in immediately available
funds,  in  an  account  of the Borrower (designated by the Borrower) maintained
with  the  Bank.  All  notices  by  the  Borrower  under this paragraph shall be
irrevocable  and shall be given not later than 10:00 A.M. Dallas, Texas, time on
the  day  which is not less than the number of Business Days specified above for
such  notice.  No more than three (3) Interest Periods shall be in effect at the
same  time  for  Advances.
11.     MISCELLANEOUS.  As  used  in  this  Exhibit,  the  plural shall mean the
        -------------
singular  and  the  singular  shall  mean  the  plural  as the context requires.
Addresses for the Fixed Rate Notice shall be the same as those for notices under
the  Loan  Agreement  executed  in  connection  with  this  Note.
This  Agreement  is executed concurrently with and as part of this Note referred
to  and  described  first  above.
                                   "BORROWER"
PIZZA  INN,  INC.,
a  Missouri  corporation



By: /s/Ronald W. Parker
Name: Ronald W. Parker
Title: President


DALLAS_1\3422781\1
01/15/2001  -  4814-129
DALLAS_1\3422781\1
01/15/2001  -  4814-129



</TEXT>
</DOCUMENT>
