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<SEC-DOCUMENT>0000718332-05-000053.txt : 20051028
<SEC-HEADER>0000718332-05-000053.hdr.sgml : 20051028
<ACCEPTANCE-DATETIME>20051027174736
ACCESSION NUMBER:		0000718332-05-000053
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20050626
FILED AS OF DATE:		20051028
DATE AS OF CHANGE:		20051027
EFFECTIVENESS DATE:		20051028

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PIZZA INN INC /MO/
		CENTRAL INDEX KEY:			0000718332
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-GROCERIES & RELATED PRODUCTS [5140]
		IRS NUMBER:				470654575
		STATE OF INCORPORATION:			MO
		FISCAL YEAR END:			0626

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-12919
		FILM NUMBER:		051160942

	BUSINESS ADDRESS:	
		STREET 1:		3551 PLANO PARKWAY
		CITY:			THE COLONY
		STATE:			TX
		ZIP:			75056
		BUSINESS PHONE:		469-384-5000

	MAIL ADDRESS:	
		STREET 1:		3551 PLANO PARKWAY
		CITY:			THE COLONY
		STATE:			TX
		ZIP:			75056

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PANTERAS CORP
		DATE OF NAME CHANGE:	19901126

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CONCEPT DEVELOPMENT INC
		DATE OF NAME CHANGE:	19870212
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>doc1.txt
<TEXT>
26

                                  SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934


FILED  BY  THE  REGISTRANT     [X]
FILED  BY  A  PARTY  OTHER  THAN  THE  REGISTRANT     [  ]
CHECK  THE  APPROPRIATE  BOX:
     [  ]     PRELIMINARY  PROXY  STATEMENT
     [  ]     CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
              14A-B(E)(2))
     [X]      DEFINITIVE  PROXY  STATEMENT
     [  ]     DEFINITIVE  ADDITIONAL  MATERIALS
     [  ]     SOLICITING  MATERIAL  PURSUANT  TO  240.14A-12


<PAGE>


                                 PIZZA INN, INC.
                 (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

PAYMENT  OF  FILING  FEE  (CHECK  THE  APPROPRIATE  BOX):

[X]     NO  FEE  REQUIRED.

[ ]     FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(1) AND 0-11.
     1)  TITLE  OF  EACH  CLASS  OF  SECURITIES  TO  WHICH  TRANSACTION APPLIES:
     2)  AGGREGATE  NUMBER  OF  SECURITIES  TO  WHICH  TRANSACTION  APPLIES:
     3)  PER  UNIT  PRICE  OR  OTHER  UNDERLYING  VALUE  OF TRANSACTION COMPUTED
PURSUANT  TO  EXCHANGE ACT RULE 0-11 (SET FOR THE AMOUNT ON WHICH THE FILING FEE
IS  CALCULATED  AND  STATE  HOW  IT  WAS  DETERMINED):
     4)  PROPOSED  MAXIMUM  AGGREGATE  VALUE  OF  TRANSACTION:
     5)  TOTAL  FEE  PAID:

[  ]     FEE  PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
[  ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT RULE
0-11(A)(2)  AND  IDENTIFY  THE  FILING  FOR  WHICH  THE  OFFSETTING FEE WAS PAID
PREVIOUSLY.  IDENTIFY  THE  PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR
THE  FORM  OR  SCHEDULE  AND  THE  DATE  OF  ITS  FILING.
     1) AMOUNT PREVIOUSLY PAID:
     2)  FORM,  SCHEDULE  OR  REGISTRATION  STATEMENT  NO.:
     3)     FILING  PARTY:
     4)     DATE  FILED:
<PAGE>



                                 PIZZA INN, INC.
                              3551  PLANO  PARKWAY
                          THE  COLONY,  TEXAS  75056
                                (469)  384-5000

                   NOTICE  OF  ANNUAL  MEETING  OF  SHAREHOLDERS

                        TO  BE  HELD  DECEMBER  14,  2005

To  our  Shareholders:

     The  2005 Annual Meeting of Shareholders of Pizza Inn, Inc. (the "Company")
will be held at the Company's corporate offices, 3551 Plano Parkway, The Colony,
Texas  75056,  on  Wednesday, December 14, 2005, at 10:00 a.m., Dallas time, for
the  following  purposes:

     1.  To  elect a board of directors to hold office until the next succeeding
annual  meeting  of shareholders or until their respective successors shall have
been  elected  and  qualified;

     2.     To  ratify  the  appointment  of  BDO  Seidman, LLP as the Company's
independent  registered  public  accounting  firm  for  fiscal  year  2006;

     3.  To transact such other business as may properly come before the meeting
or  any  postponement  or  adjournment  thereof.

     These  items are more fully described in the proxy statement, which is part
of  this  notice.  We  have  not  received  notice  of other matters that may be
properly presented at the annual meeting.  A copy of the Company's Annual Report
for  the  fiscal year ended June 26, 2005 is also enclosed.  Except as expressly
incorporated  by reference herein, such Annual Report does not constitute a part
of  the  materials  used  for  the  solicitation  of  proxies.

Please read the enclosed proxy statement carefully.  Complete, date and sign the
proxy,  and  mail  it  in  the  stamped  envelope enclosed for your convenience.

Only  shareholders  of  record  at the close of business on October 14, 2005 are
entitled  to  notice  of,  and  to vote at, this meeting and any postponement or
adjournment  thereof.

                                       By  Order  of  the  Board  of  Directors,

                                             /s/ Rod J. McDonald
                                                 Rod  J.  McDonald
The  Colony,  Texas                              Corporate  Secretary
November  11,  2005

     WHETHER  OR  NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE,
DATE,  AND SIGN THE ENCLOSED PROXY, AND MAIL IT IN THE STAMPED ENVELOPE ENCLOSED
FOR  YOUR CONVENIENCE.  THE ENCLOSED PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS
USE.

                             YOUR VOTE IS IMPORTANT.

<PAGE>
                                 PIZZA INN, INC.
                              3551  PLANO  PARKWAY
                           THE  COLONY,  TEXAS  75056
                                (469)  384-5000

                                PROXY  STATEMENT
                     FOR THE ANNUAL MEETING OF SHAREHOLDERS

                        TO  BE  HELD  DECEMBER  14,  2005

     Pizza  Inn,  Inc.,  a  Missouri  corporation (the "Company"), is soliciting
proxies to be voted at the Annual Meeting of Shareholders (the "Annual Meeting")
to  be  held at the Company's corporate offices, 3551 Plano Parkway, The Colony,
Texas 75056, on Wednesday, December 14, 2005, at 10:00 a.m., Dallas time, and at
any  postponement or adjournment thereof.  This Proxy Statement and the enclosed
form  of proxy are first being sent or given to the Company's shareholders on or
about  November  11,  2005.

     If  the  proxy is signed and returned before the Annual Meeting, it will be
voted  in  accordance  with the directions on the proxy or, if no directions are
made, by the proxies named therein in their discretion. A shareholder may revoke
a  proxy  at  any  time  before  it is voted by execution of a subsequent proxy,
voting the shares in person at the Annual Meeting or by giving written notice to
Pizza Inn, Inc., c/o Securities Transfer Corporation, 2591 Dallas Parkway, Suite
102,  Frisco,  Texas  75034  at  any time prior to the close of the polls at the
Annual  Meeting  stating  that  the  proxy  has been revoked. If you hold shares
through  a  bank  or brokerage firm, you must contact the bank or firm to revoke
any  prior  voting  instructions.  The  Company must receive the notice or a new
proxy  card  before  the  vote  is  taken  at  the  Annual  Meeting.

                         OUTSTANDING  CAPITAL  STOCK

     The record date for shareholders entitled to notice of, and to vote at, the
Annual  Meeting  is  October  14,  2005.  At the close of business on that date,
there  were  10,108,494  outstanding  shares  of  common  stock,  $.01 par value
("Common  Stock").  No  other  class of securities of the Company is entitled to
notice  of,  or  to  vote  at,  the  Annual  Meeting.

                    ACTION  TO  BE  TAKEN  AT  THE  MEETING

     The  accompanying  proxy, unless the shareholder otherwise specifies in the
proxy,  will  be  voted:

     1.  FOR  the election of the director nominees named herein, to hold office
until  the  next  succeeding  annual  meeting  of  shareholders  or  until their
respective  successors  shall  have  been  elected  and  qualified;

     2.  FOR  the  ratification  of  the  appointment of BDO Seidman, LLP as the
Company's  independent  registered  public accounting firm for fiscal year 2006;
and

     3.  In  the  discretion of the proxy holders, as to the transaction of such
other  business  as  may properly come before the meeting or any postponement or
adjournment  thereof.

     The  Board  of Directors is not presently aware of any other business to be
brought  before  the  Annual  Meeting.

                                QUORUM AND VOTING

     A  majority  of  the  outstanding  shares  entitled  to  vote at the Annual
Meeting,  represented  in  person  or by proxy, shall constitute a quorum at the
Annual  Meeting.  If a quorum is not present, in person or by proxy, the meeting
may  be  postponed  or  adjourned  from time to time until a quorum is obtained.
Each  outstanding  share  entitled to vote under the provisions of the Company's
Restated  Articles of Incorporation shall be entitled to one vote on each matter
submitted  to  a vote at the Annual Meeting.  Cumulative voting for the election
of  directors is not permitted.  Thus, a shareholder is not entitled to cumulate
his  votes  and  cast them all for any single nominee or to spread his votes, so
cumulated,  among  more  than  one  nominee.  The  election of each nominee as a
director requires the affirmative vote of the holders of record of a majority of
the  outstanding  shares  entitled  to  vote  on  the  election of directors and
represented  in  person  or  by proxy at the Annual Meeting at which a quorum is
present.

     For  the  election  of  directors,  votes  withheld do not affect whether a
nominee  has  received  sufficient  votes  to  be  elected.  For  the purpose of
determining  whether  the  shareholders  have  approved  matters  other than the
election  of directors, abstentions are treated as shares present or represented
and  voting,  so abstaining has the same effect as a negative vote.  Shares held
by  brokers  who  do  not  have  discretionary authority to vote on a particular
matter  and  who  have not received voting instructions from their customers are
not  counted  or  deemed  to  be  present  or  represented  for  the  purpose of
determining whether shareholders have approved that matter, but they are counted
as  present for the purpose of determining the existence of a quorum.  Shares as
to  which  voting instructions are given as to at least one of the matters to be
voted  on  shall  also  be deemed to be so represented.  If the proxy states how
shares  will  be  voted  in the absence of instructions by the shareholder, such
shares  shall  be  deemed  to  be  represented  at  the  meeting.

     The  enclosed  proxy,  if  properly executed and returned, will be voted as
directed  or  stated  on the proxy or, in the absence of such direction, for the
election  of  the  nominees as directors and each other matter on the proxy.  If
any  other  matters properly come before the meeting, the enclosed proxy will be
voted  by  the  proxy  holders  in  accordance with their best judgment in their
discretion.  The Board believes that all the nominees will be available to serve
as  directors.  If  any  nominee  is  unable to serve or for good cause will not
serve,  the Board may recommend a substitute nominee or leave a vacancy and fill
the vacancy later.  The shares represented by all valid proxies may be voted for
the  election  of  a  substitute  if  one  is  nominated.





                      [This space intentionally left blank]












                                  PROPOSAL ONE:

                              ELECTION OF DIRECTORS

     The  Company's  Restated  Articles of Incorporation and Bylaws provide that
each  director  serves  a  one-year  term,  with all directors subject to annual
election.  The  Board  has  nominated  each of the seven incumbent directors for
election  at  the  Annual Meeting.  If elected, each director nominee shall hold
office  until  the  next  annual meeting, or until his successor shall have been
elected  and  qualified.  Each  nominee has expressed his intention to serve the
entire  term for which election is sought.  If any nominee is unable to serve or
for  good cause will not serve, the proxies may be voted (1) for the election of
another  nominee  to  be  designated by the Board, or (2) for the balance of the
nominees,  leaving  a  vacancy.

THE  BOARD  OF  DIRECTORS  RECOMMENDS  A VOTE FOR EACH OF THE NOMINEE DIRECTORS.

     Following  is  the biographical information, as of October 14, 2005, of the
nominee  directors  and  the  year  in  which  each  director was first elected.


     NOMINEES

     Bobby L. Clairday, 61, is an Area Developer of Pizza Inn restaurants and he
is  President,  a  Director and sole shareholder of Clairday Food Services, Inc.
and  Advance Food Services, Inc., franchisees operating Pizza Inn restaurants in
Arkansas.  From  1990 until his election as a Director of the Company in January
1993,  Mr.  Clairday was an ex-officio member of the Board of Directors, serving
as  a  representative  of  the  Company's  franchisees.  He  has  served  as the
President  of  the  Pizza  Inn Franchisee Association and as a member of various
committees  and  associations  affiliated  with the Pizza Inn restaurant system.
Mr.  Clairday  has  been a franchisee of the Company for over twenty years and a
director  for  over  nine  years.

     John  D.  Harkey,  Jr.,  45,  is  Chairman of the Board and Chief Executive
Officer  of  Consolidated Restaurant Companies, Inc. and has been manager of the
investment  firm  Cracken,  Harkey,  Street  & Hartnett since 1997. From 1992 to
1998,  Mr.  Harkey  was  a  partner with the law firm Cracken & Harkey, LLP. Mr.
Harkey  was  founder  and  managing director of Capstone Capital Corporation and
Capstone  Partners,  Inc.  from 1989 until 1992.  He is also a director of Total
Entertainment  Restaurant  Corporation,  Leap  Wireless International, Inc., and
Loral  Space & Communications, Inc.  Mr. Harkey was elected to the board in June
2005.

     Robert  B.  Page,  45,  is  a franchisee of Shoney's, Inc., a family dining
restaurant  chain.  From  November 2000 until September 2002, Mr. Page was Chief
Operations  Officer of Gordon Biersch Brewery Restaurant Inc., a group of casual
dining  restaurants.  From 1993 through 2000 he worked for Romacorp, Inc., which
owns  Tony  Roma's,  a  chain  of  casual dining restaurants, where he was Chief
Executive  Officer  and a board member from 1998 through 2000, and President and
Chief Operations Officer from 1993 through 1998. Mr. Page was elected a director
of the Company in February 2004, and was appointed as the Company's Acting Chief
Executive  Officer  in  January  2005,  a  position  he  held  until March 2005.

     Ramon  D. Phillips, 72, is the former Chairman of the Board, President, and
Chief  Executive  Officer  of  Hallmark  Financial  Services,  Inc., a financial
services company.  He served as Chairman, President, and Chief Executive Officer
of  Hallmark from 1989 through 2000, and as Chairman through August 2001.  Prior
to  Hallmark,  Mr.  Phillips  had over fifteen years experience in the franchise
restaurant  industry,  serving  as  Controller  for Kentucky Fried Chicken, Inc.
(1969-1974)  and  as  Executive  Vice  President and Chief Financial Officer for
Pizza  Inn,  Inc. (1974-1989).  He was elected a director of the Company in 1990
and  served  through  2002.  He  served  as an advisory director in 2002 and was
re-elected  as  a  director  in  February  2004.

     Steven  J.  Pully,  45,  is  the President of Newcastle Capital Management,
L.P.,  the  general  partner of Newcastle Partners, L.P. Mr. Pully is also Chief
Executive  Officer and a director of New Century Equity Holdings Corp., Chairman
of  the  Board  of  Whitehall Jewelers, Inc., and was Chief Executive Officer of
Pinnacle  Frames and Accents, Inc. from January 2003 through June 2004. Prior to
joining  Newcastle  Capital  Management,  L.P.  in  late  2001, from May 2000 to
December  2001,  he  was  a  managing  director  in the mergers and acquisitions
department of Banc of America Securities, Inc. and from January 1997 to May 2000
he  was  a  member of the investment banking department of Bear Stearns where he
became  a  senior  managing  director  in  1999. Prior to becoming an investment
banker,  Mr.  Pully  practiced  securities  and corporate law at the law firm of
Baker  &  Botts.  Mr.  Pully  is a CPA, a CFA and a member of the Texas Bar. Mr.
Pully  was  appointed  a  director  in  December  2002.

     Mark E. Schwarz, 45, is the Chairman, Chief Executive Officer and Portfolio
Manager  of  Newcastle Capital Management, L.P., a private investment management
firm  he founded in 1993 that is the general partner of Newcastle Partners, L.P.
Mr. Schwarz was appointed Chairman of the Board of the Company in February 2004.
Mr.  Schwarz  is  also  Chairman  of  the  Board  and Chief Executive Officer of
Hallmark  Financial  Services,  Inc.,  Chairman of the Board of Bell Industries,
Inc.  and  New  Century  Equity  Holdings  Corp.,  and  a  director  of  Nashua
Corporation,  S  L  Industries, Inc. and Web Financial Corporation.  Mr. Schwarz
was  appointed  a  director  in  December  2002.

     Timothy P. Taft, 47, was appointed President and Chief Executive Officer in
March  2005.  Prior  to  joining  the  Company, Mr. Taft served as President and
Chief  Operating  Officer of Whataburger, Inc. from October 2000 through October
2005.  Prior  to  that,  he  served  in various senior management positions with
Whataburger,  Inc. beginning in 1994.  Mr. Taft was elected to the board in June
2005.

     Except  as noted, each nominee has been engaged in the principal occupation
described  during  the  past five years. There are no family relationships among
any  of our directors or executive officers. Company stock ownership for each of
these  individuals  is  shown  under  the heading "Security Ownership of Certain
Beneficial  Owners,  Directors  and  Executive  Officers"  and  is  based  upon
information  furnished  by  the  respective  individuals.

               INFORMATION REGARDING THE BOARD AND ITS COMMITTEES

     The  business of the Company is managed under the direction of the Board of
Directors.  Each director is expected to make reasonable efforts to attend board
meetings,  meetings  of  committees  of  which such director is a member and the
Annual  Meeting  of Shareholders.  The Board of Directors intends to comply with
the  corporate  governance  guidelines  set  forth  by  The  Nasdaq Stock Market
("Nasdaq")  listing  standards  and  Securities  and Exchange Commission ("SEC")
rules  adopted  to  implement  provisions of the Sarbanes-Oxley Act of 2002 (the
"Sarbanes-Oxley  Act") in order to assure that the Board will have the necessary
practices  in  place to review and evaluate the Company's business operations as
needed  and  to make decisions that are independent of the Company's management.
The  Board  has  five  standing  committees:  an  Executive  Committee, an Audit
Committee,  a  Compensation  Committee, a Finance Committee and a Nominating and
Governance  Committee.  A sixth committee, the Strategic Planning Committee, was
created  in  April 2004 for the limited purpose discussed below and dissolved by
the  Board  on  June 23, 2005.  Current copies of the charters for certain Board
committees,  including the Nominating and Governance Committee, are available to
security  holders  on  the  Company's  website  at  http://www.pizzainn.com.
                                                    -----------------------

     The  Board  met  nine  times  during  the  last fiscal year.  All directors
attended  75%  or  more  of the Board meetings and meetings of the committees on
which  they  served  and  all  seven  directors attended the prior year's annual
meeting.  Below  is a table that provides membership and meeting information for
each  of  the  Board  committees  during  fiscal  year  2005:

                                                           NOMINATING STRATEGIC
NAME         EXECUTIVE   AUDIT   COMPENSATION   FINANCE   & GOVERNANCE PLANNING
- -------------------------------------------------------------------------------
Mr. Schwarz     X*
Mr. Clairday
Mr. Page        X          X2           X2          X*          X2           X**
Mr. Parker      X1
Mr. Phillips    X          X*           X          X           X            X**
Mr. Powell                 X
Mr. Pully                               X*         X           X*
Mr. Taft

NUMBER  OF
 MEETINGS  IN
 FISCAL 2005    4          4            6          4           5             53
- ------------------------------------------------------------------------------
1  -  Mr. Page  replaced  Mr.  Parker  as a member of the Executive Committee in
December  2004.
2  -  Mr.  Page  resigned his membership on these committees effective as of his
appointment  as  Acting  Chief  Executive  Officer on   January 4, 2005.  He was
reappointed  to  the  Audit  Committee  on  June  27,  2005.
3  -  Includes  meetings with the Company's management team.  This Committee was
dissolved  by  the  Board  on  June  23,  2005.
*   Committee  Chairman
**  Committee  Co-Chairman

     Independent  directors  meet at least twice annually apart from other Board
members  and  management  representatives.  Each  of  the  Company's  current
directors,  other  than  Mr.  Clairday and Mr. Taft, qualify as "independent" in
accordance  with published Nasdaq listing requirements.  On January 4, 2005, the
Board  appointed Mr. Page as Acting Chief Executive Officer of the Company.  Mr.
Page  served in that capacity until the appointment of Mr. Taft as President and
CEO  on  March  31,  2005.  According  to published Nasdaq listing requirements,
during  his  term  as  Acting  CEO,  Mr.  Page did not qualify as an independent
director.

     Below  is a description of the functions performed by each committee of the
Board.  Each  of  the  committees has authority to engage legal counsel or other
experts  or  consultants  as  it  deems  appropriate  to  carry  out  its
responsibilities.  The  Board  has determined that each member of each committee
meets  the  applicable  laws  and  regulations  regarding  "independence"  when
applicable and that each member is free of any relationship that would interfere
with  his  individual  exercise  of  independent  judgment.

     Executive  Committee.  This  committee  will consider issues as directed by
     --------------------
the  Chairman  of  the  Board.  It  also may exercise the authority of the Board
between  Board  meetings,  except  to  the  extent  that the Board has delegated
authority  to  another  committee  or  to other persons, and except as otherwise
limited  by  Missouri  law.

     Audit  Committee.  The  Company  has a separately designated standing audit
     ----------------
committee  established  in accordance with Section 3(a)(58)(A) of the Securities
Exchange  Act of 1934.  The responsibilities of this committee include reviewing
the financial reports and other financial information provided by the Company to
any  governmental body or the public; the Company's systems of internal controls
regarding  finance,  accounting, legal compliance and ethics that management and
the  Board  have  established;  the Company's auditing, accounting and financial
reporting  processes  generally;  and such other functions as the Board may from
time  to  time assign to the committee.  In performing its duties, the committee
seeks  to  maintain  an  effective  working  relationship  with  the  Board, the
independent  accountant  and management of the Company.  The specific duties and
functions  of  the Audit Committee are set forth in the Audit Committee Charter.
The  Charter is reviewed annually and updated as necessary to reflect changes in
regulatory  requirements,  authoritative  guidelines, and evolving practices.  A
copy  of  the  Audit  Committee  Charter is attached as an exhibit to this proxy
statement.

     Compensation Committee.  The primary responsibilities of this committee are
     ----------------------
to (a) review and recommend to the Board the compensation of the Chief Executive
Officer  and  other  officers  of  the  Company, (b) review executive bonus plan
allocations,  (c)  oversee and advise the Board on the adoption of policies that
govern  the  Company's  compensation  programs,  (d)  oversee  the  Company's
administration of its equity-based compensation and other benefit plans, and (e)
approve  grants  of stock options to officers and employees of the Company under
its  stock  plans.  The  Compensation  Committee's  role  includes producing the
report  on  executive  compensation  required by SEC rules and regulations.  The
specific duties and functions of the Compensation Committee are set forth in its
charter.  This  charter is reviewed annually and updated as necessary to reflect
changes  in  regulatory  requirements,  authoritative  guidelines  and  evolving
practices.

     Finance  Committee.  The  primary responsibilities of this committee are to
     ------------------
(a) monitor present and future capital requirements and opportunities pertaining
to  the  Company's business and (b) review and provide guidance to the Board and
management  about  all  proposals  concerning  major  financial  policies of the
Company.  The  Finance  Committee's  role  includes  designating  officers  and
employees  who  can  execute  documents  and act on behalf of the Company in the
ordinary  course  of  business under previously approved banking, borrowing, and
other  financing  arrangements.

     Nominating  and Governance Committee.  The primary responsibilities of this
     ------------------------------------
committee  are  to  (a) recommend the slate of director nominees for election to
the  Board,  (b)  identify  and recommend candidates to fill vacancies occurring
between  annual  shareholder  meetings,  and  (c) review, evaluate and recommend
changes  to  the  Company's  corporate governance practices.  The Nominating and
Governance Committee's role includes periodic review of the compensation paid to
non-employee  directors  for  annual  retainers  and  meeting  fees  and  making
recommendations to the Board for any adjustments.  The specific responsibilities
and  functions  of  the Nominating and Governance Committee are set forth in its
Charter.

     From time to time the Nominating and Governance Committee reviews the Board
to  assess  the  skills  and  characteristics  required  of Board members in the
context  of  the  current  composition  of  the Board.  This assessment includes
issues  of  diversity  in numerous factors, understanding of and achievements in
the  restaurant  industry,  board  service,  business,  finance,  marketing  and
community  involvement.  These  factors, and any other qualifications considered
useful  by  the Nominating and Governance Committee, are reviewed in the context
of  an assessment of the perceived needs of the Board at a particular point.  As
a result, the priorities and emphasis of the Nominating and Governance Committee
and  of  the  Board may change from time to time to take into account changes in
business and other trends, and the portfolio of skills and experience of current
and  prospective Board members.  Therefore, while focused on the achievement and
the ability of potential candidates to make a positive contribution with respect
to  such  factors,  the  Nominating and Governance Committee has not established
specific  minimum  criteria  or  qualifications  that  a  nominee  must possess.

     Consideration  of  new Board nominee candidates typically involves a series
of  internal  discussions,  review  of  information  concerning  candidates  and
interviews  with  selected candidates.  In general, candidates for nomination to
the  Board are suggested by Board members or by employees.  In 2005, the Company
did  not  employ  a search firm or pay fees to other third parties in connection
with  seeking  or  evaluating  Board  nominee  candidates.  The  Nominating  and
Governance  Committee  will  consider  director  candidates  recommended  by
shareholders.  The  Nominating  and  Governance  Committee  evaluates candidates
proposed  by  shareholders using the same criteria as for other candidates.  The
name  of  any  recommended  candidate  for  director,  together  with  a  brief
biographical  sketch, a document indicating the candidate's willingness to serve
if  elected  and  evidence of the nominating person's ownership of Company stock
should  be  sent  to  the  Corporate  Secretary  of the Company using one of the
methods set forth in "Communications from Shareholders to the Board," below. The
Company  has  not  received  any  shareholder  director  nominations.

     Strategic  Planning Committee.  This committee was constituted on April 21,
     -----------------------------
2004  specifically  to  work  with the Company's senior management to create and
implement  a  strategic  plan for the Company.  The Strategic Planning Committee
and  Company  management assembled and analyzed data pertaining to the Company's
business plan, competitive environment and objectives and other factors relevant
to  the  Company's  concepts,  products  and  services, ultimately preparing and
recommending  plans,  timetables,  strategies,  options  and  procedures for the
Company's  long-term  growth  and success.  The Strategic Planning Committee was
dissolved  by  the Board on June 23, 2005; however, it is subject to reformation
from  time  to  time  as  the  Board  may  deem  necessary.

     Communications  from  Shareholders  to  the  Board

     The Board recommends that shareholders initiate any communications with the
Board in writing and send them in care of the Corporate Secretary.  Shareholders
can send communications by e-mail to corporate_secretary@pizzainn.com, by fax to
                                     --------------------------------
(469)  384-5061  or  by mail to Corporate Secretary, Pizza Inn, Inc., 3551 Plano
Parkway,  The  Colony,  TX 75056.  This centralized process assists the Board in
reviewing and responding appropriately to shareholder communications.  The names
of  specific  intended  Board members should be noted in the communication.  The
Board has instructed the Corporate Secretary to forward such correspondence only
to the intended recipients; however, the Board has also instructed the Corporate
Secretary, prior to forwarding any correspondence, to review such correspondence
and,  in  his  discretion,  not to forward certain items if they are deemed of a
commercial  or  frivolous  nature  or  otherwise  inappropriate  for the Board's
consideration.  In such cases, that correspondence may be forwarded elsewhere in
the  Company  for  review  and  possible  response.

     Code  of  Ethics

     The  Company  has  adopted  a  code of ethics that applies to the Company's
principal  executive  officer, principal financial officer, principal accounting
officer  or controller or persons performing similar functions.  The Company has
posted  the  text  of  such  code  of  ethics  on  the  Company's  website  at
http://www.pizzainn.com.
             ----------

     Director  Compensation

     During  fiscal  year  2005,  each  non-employee  director  received  as
compensation  for  serving  on  the  Board  and  committees  of  the  Board:

- -     An  annual  retainer  of  $17,000;

      An  annual  retainer  of  $6,000  for  the  Chairman  of  the  Board;  and

      A  per meeting fee of $1,000 for Board meetings and $250 fee for committee
meetings.

     While  Acting  CEO  of  the  Company, Mr. Page received no compensation for
serving  as a director, except that he, like all Company directors, was eligible
to  receive  reimbursement  of  any  expenses  incurred  in  attending Board and
committee  meetings.  Mr.  Parker  received the standard director's compensation
effective  as  of December 14, 2004, the day after his last day of employment by
the  Company,  through  the 2004 Annual Meeting of shareholders on June 23, 2005
when he did not stand for re-election. Previously, Mr. Parker was not paid for
serving  as  a  member  of  the  Board.  As an employee of the Company, Mr. Taft
receives  no  compensation  for  his  service  as  a  director.

     Members of the Strategic Planning Committee received a per diem fee of $500
for  each  day  they  were  directly  engaged  in  the  discharge  of  committee
responsibilities.  As  of  the  date  of  this  proxy  statement, the Company is
withholding  Board  fees  otherwise  due  to  Mr.  Clairday and offsetting those
amounts  against the Advance Foods Debt (defined below in "Certain Relationships
and  Related  Transactions"),  and  the  Company  is  actively pursuing with Mr.
Clairday  alternative  methods  to  pay  the  Company  in  full.

     In  addition  to  annual  and  meeting  fees, each non-employee director is
eligible  to  receive  stock option awards under the 2005 Non-Employee Directors
Stock  Option  Award Plan (the "2005 Directors Plan").  Under the 2005 Directors
Plan,  eligible  directors  receive, as of the first day of the Company's fiscal
year,  options  for  Common  Stock equal to twice the number of shares of Common
Stock  purchased  during  the  preceding fiscal year or purchased by exercise of
previously granted options during the first ten days of the current fiscal year.
On the first day of the first fiscal year immediately following the day on which
a  non-employee  director  first  became  eligible  to  participate  in the 2005
Directors  Plan,  that  director  would receive options to acquire two shares of
Common  Stock for each share of Common Stock owned by such director on the first
day  of  the  fiscal  year.  Stock options granted under the 2005 Directors Plan
have an exercise price equal to the market price of the Common Stock on the date
of grant and are first exercisable one year after grant.  Each eligible director
will be entitled to options for no more than 40,000 shares per fiscal year under
the  terms  of  the  2005  Directors  Plan.

     In  fiscal  year  2005  stock options for 25,000 shares were granted to Mr.
Schwarz  and  stock options for 17,858 shares were granted to Mr. Pully pursuant
to  the  2005  Directors Plan, all at an exercise price of $2.85 per share.  See
"Equity  Compensation  Plan  Information"  below.

                               EXECUTIVE OFFICERS

     The following table sets forth certain information, as of October 14, 2005,
regarding  the  Company's  executive  officers:
                                                                     EXECUTIVE
                                                                       OFFICER
    NAME               AGE          POSITION                             SINCE
    ----               ---          --------                             -----

 Timothy P. Taft        47    President  and  Chief  Executive  Officer   2005
 Ward T. Olgreen        46    Senior Vice President of Franchise
                               Operations and Concept Development         1995
 Shawn M. Preator       36    Chief  Financial  Officer                   1999
 Rod J. McDonald        44    Corporate  Secretary  and  General  Counsel 2004
 Danny K. Meisenheimer  45     Vice  President  of  Marketing
 Jack A. Odachowski     55     Vice President of Supply Chain Management  2005




                 BIOGRAPHIES OF NON-DIRECTOR EXECUTIVE OFFICERS

     Ward T. Olgreen was appointed Senior Vice President of Franchise Operations
and  Concept  Development  in  December 2002. He was appointed Vice President of
Concept  Development  in  February  1999  and  Senior  Vice President of Concept
Development  in July 2000. He joined the Company in September 1991 and served in
a variety of operational positions until his appointment in January 1995 as Vice
President  of  International  Operations  and  Brand  R&D.

     Shawn M. Preator was appointed Chief Financial Officer in October 2002. Mr.
Preator  was  appointed  Vice President in June 2000. He was elected Controller,
Treasurer  and  Assistant  Secretary  in April 1999. Previously, Mr. Preator had
been  Assistant Controller for the Company since July 1998. Prior to joining the
Company,  Mr.  Preator was a Senior Financial Analyst at LSG/Sky Chefs, Inc., an
international  airline  caterer,  from  September  1996  to  July 1998. Prior to
September  1996, Mr. Preator worked for the accounting firm Ernst & Young LLP in
its  audit  department.  Mr.  Preator  is  a  CPA.


     Rod  J.  McDonald  was appointed Corporate Secretary and General Counsel in
August  2004.  Mr.  McDonald  joined the Company in September 1997 and served as
Assistant  General  Counsel  of  the  Company  until  his appointment as General
Counsel.  Prior  to  joining  the  Company,  he was Vice President and Assistant
General  Counsel  for TCBY Enterprises, Inc. He served as Acting Chief Executive
Officer  of  the  Company  in  December  2004  and  January  2005.

     Danny  K. Meisenheimer was appointed Vice President of Marketing in January
2003  after  joining the Company in December 2002. Prior to joining the Company,
Mr.  Meisenheimer  served  as  Vice President of Marketing for Furr's Restaurant
Group,  Inc.  since  1995.  Mr.  Meisenheimer joined the Marketing Department of
Furr's  in  1991.

     Jack  A. Odachowski was appointed Vice President of Supply Chain Management
in  September 2005. Prior to joining the Company, he served as Vice President of
Purchasing  and  Distribution  for RTM Restaurant Group from 2000 through August
2005.  Previously, Mr. Odachowski was Vice President of International Purchasing
and  Distribution  for  Wendy's  International,  Inc.

           SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS
                              AND EXECUTIVE OFFICERS

     The following table sets forth certain information known to the Company, as
of  October  14,  2005, with respect to the beneficial ownership of Common Stock
by:  (a)  each person known to the Company to be a beneficial owner of more than
five  percent  of  the  outstanding  Common  Stock;  (b)  each director, nominee
director  and  executive  officer  named  in  the  section  entitled  "Summary
Compensation  Table;"and (c) all directors and executive officers as a group (13
persons).  Except  as  otherwise  indicated, and subject to applicable community
property  laws,  each of the persons named in the table below is believed by the
Company  to  possess sole voting and investment power with respect to the shares
of  Common  Stock  beneficially  owned  by  such  person.  Information as to the
beneficial  ownership of Common Stock by directors and executive officers of the
Company  has  been furnished by the respective directors and executive officers.



      NAME                                  SHARES                       PERCENT
  AND ADDRESS OF                         BENEFICIALLY                   OF CLASS
 BENEFICIAL OWNER                           OWNED                       --------
 ----------------                           -----

 Newcastle  Partners,  L.P.(a)
 Newcastle  Capital  Management,  L.P.
 Newcastle  Capital  Group,  L.L.C.
 300  Crescent  Court,  Ste.  1110
 Dallas,  TX  75201                       3,811,245                       37.80%

 Ronald  W.  Parker  (b)
 7108  Round  Hill  Road
 McKinney,  TX  75070                       851,821                        8.44%

 Mark  E.  Schwarz  (a)(c)                3,861,245                       38.18%
 Robert  B.  Page                                 0                           0%
 Bobby  L.  Clairday  (d)                    48,900               Less  than  1%
 Ramon  D.  Phillips  (e)                    11,590               Less  than  1%
 Steven  J.  Pully (a)(c)                    26,787               Less  than  1%
 John  D.  Harkey,  Jr.                      10,000               Less  than  1%
 Timothy  P.  Taft  (c)                     105,450                        1.04%
 Ward  T. Olgreen (c)                       124,985                        1.23%
 Shawn  M.  Preator (c)                      50,849               Less  than  1%
 Danny  K.  Meisenheimer                        922               Less  than  1%
 Rod  J.  McDonald  (c)                      21,877               Less  than  1%
 B. Keith  Clark  (f)                         4,000                Less  than 1%

 All  Such  Directors  and
   Executive  Officers  as  a  Group      4,294,410                       41.45%


(a)     Newcastle  Capital  Management, L.P. is the general partner of Newcastle
Partners,  L.P.,  Newcastle  Capital  Group,  L.L.C.  is  the general partner of
Newcastle  Capital  Management,  L.P., and Mr. Schwarz is the managing member of
Newcastle  Capital  Group,  L.L.C.  Accordingly,  each  of  Newcastle  Capital
Management,  L.P.,  Newcastle  Capital  Group, L.L.C. and Mark E. Schwarz may be
deemed  to  beneficially  own  the  shares of Common Stock beneficially owned by
Newcastle  Partners,  L.P.  In  addition,  Newcastle  Partners,  L.P., Newcastle
Capital  Management,  L.P., Newcastle Capital Group, L.L.C., Mr. Schwarz and Mr.
Pully  are  members  of  a  Section  13d  reporting  group  and may be deemed to
beneficially own shares of Common Stock owned by the other members of the group.
Newcastle  Partners, L.P., Mr. Schwarz and Mr. Pully also directly own shares of
Common  Stock.  Mr. Pully disclaims beneficial ownership of the shares of Common
Stock  beneficially owned by Newcastle Partners, L.P.  Mr. Schwarz directly owns
20,000  shares  of  Common  Stock,  including  options to acquire 30,000 shares.

(b)     Mr.  Parker  was  President  and  Chief Executive Officer of the Company
until  December  13,  2004.

(c)     Includes  vested  options  and options vesting within 60 days of October
14,  2005  under the Company's stock option plans, as follows: 30,000 shares for
Mr.  Schwarz;  17,858  shares  for Mr. Pully; 50,000 shares for Mr. Taft; 52,000
shares for Mr. Olgreen; 41,000 shares for Mr. Preator; and 19,000 shares for Mr.
McDonald.

(d)     Mr.  Clairday  shares voting and investment power for 18,200 shares with
his  wife.

(e)     Mr.  Phillips  shares  voting and investment power for 5,333 shares with
the  other  shareholders  of  Wholesale  Software  International,  Inc.

(f)     Mr.  Clark  was  Senior Vice President, Secretary and General Counsel of
the  Company  until  July  7,  2004.



                             AUDIT COMMITTEE REPORT

     The  Audit Committee of the Board is responsible for providing independent,
objective oversight of the Company's accounting functions and internal controls.
The  Audit  Committee  is  currently composed of three independent directors and
acts  under  a  written  charter  approved and adopted by the Board on April 15,
2003.  The  Audit Committee reviews its Charter on an annual basis.  Each of the
members  is independent as defined by Nasdaq's listing standards and as required
by  the  Sarbanes-Oxley  Act.  After  a  full  review  and  analysis,  the Board
positively reaffirmed that each member is independent within the meaning of Rule
4200(a)(14) of the listing standards of the Nasdaq and the rules and regulations
of  the  SEC,  as  such  requirements are defined as of the mailing date of this
proxy  statement.  The  Board  annually  reviews  the  Nasdaq listing standards'
definition  of  independence  for  audit  committee  members and makes an annual
determination  of  the  independence  of  Audit  Committee  members.

     On  January  18, 2005, the Company notified Nasdaq that, due to one vacancy
on the Audit Committee that resulted from the resignation of Robert B. Page as a
member,  the  Company  failed  to  comply  with  the audit committee composition
requirements  under  Marketplace Rule 4350(d)(2)(A), and would be relying on the
cure  period  provided  under  Marketplace  Rule  4350(d)(4).  As  previously
disclosed,  Mr.  Page  resigned  in  connection  with  and  effective  as of his
appointment  on  January  4,  2004  as the Acting Chief Executive Officer of the
Company.

     On  January  18,  2005,  the  Company  received  notice  from  Nasdaq that,
consistent  with  Marketplace  Rule  4350(d)(4), the Company would be provided a
cure  period until the earlier of the Company's next annual shareholders meeting
or  January  4,  2006  in  order  to  regain compliance with the audit committee
requirements  and  that the Company would be included in a list of non-compliant
Nasdaq  companies at www.nasdaq.com on or after January 25, 2005.  Following the
election  of  directors  at  the  2004  Annual  Meeting, the Board appointed Mr.
Phillips,  Mr.  Harkey  and Mr. Page to the Audit Committee to regain compliance
with  Nasdaq  audit  committee  requirements.  The Company believes that each of
these  individuals  is independent within the meaning of Rule 4200(a)(14) of the
Nasdaq  listing  standards  and  the  rules  and  regulations  of  the  SEC.

     The Board of Directors has determined that at least one member of the Audit
Committee, Mr. Phillips, is an "audit committee financial expert," as defined by
SEC  rules  and  regulations.  This  designation  results  from  a  disclosure
requirement  of  the  SEC  related to Mr. Phillips' experience and understanding
with  respect to certain accounting and auditing matters.  The SEC believes this
designation  does not impose upon Mr. Phillips any duty, obligation or liability
that  is  greater  than  is  generally  imposed  on him as a member of the Audit
Committee  and  the  Board,  and  that  his  designation  as  an audit committee
financial  expert  pursuant  to  this  SEC requirement does not affect the duty,
obligation or liability of any other member of the Audit Committee or the Board.
For  an  overview of Mr. Phillips' relevant experience, see the section entitled
"Continuing  Directors"  above.

     The  Audit Committee reviewed and discussed the Company's audited financial
statements with management.  It also discussed with BDO Seidman, LLP the matters
required  to  be  discussed  by  Statement  on  Auditing  Standards  No.  61,
"Communications  with  Audit  Committees",  as  amended by Statement on Auditing
Standards  No.  90.  In  addition,  BDO  Seidman, LLP also provided to the Audit
Committee  the  written  disclosures  and  the  letter  required by Independence
Standards  Board  Standard  No.  1,  "Independence  Discussions  with  Audit
Committees,"  and  the  Committee  discussed  with  BDO Seidman, LLP that firm's
independence.

     The  Audit  Committee is responsible for recommending to the Board that the
Company's  financial  statements  be  included  in  the Company's annual report.
Management  is  responsible  for the preparation, presentation, and integrity of
the  Company's  financial  statements,  accounting  and  financial  reporting
principles,  internal controls and procedures designed to ensure compliance with
accounting  standards,  applicable  laws,  and  regulations.  The  Company's
independent  auditor,  BDO  Seidman,  LLP,  is  responsible  for  performing  an
independent  audit  of  the  consolidated financial statements and expressing an
opinion  on  the  conformity of those financial statements to generally accepted
accounting  principles.

     Based  on  the  discussions with BDO Seidman, LLP concerning the audit, the
financial  statement  review,  and  other  such  matters  deemed  relevant  and
appropriate by the Audit Committee, the Audit Committee recommended to the Board
that  the  audited financial statements be included in the Company's 2005 Annual
Report on Form 10-K for the fiscal year ended June 26, 2005, for filing with the
Securities  and  Exchange  Commission.

     In  accordance  with the rules of the SEC, the foregoing information, which
is  required  by paragraphs (a) and (b) of Regulation S-K Item 306, shall not be
deemed  to be "soliciting material", or to be "filed" with the SEC or subject to
the  SEC's  Regulation  14A,  other  than  as  provided  in that Item, or to the
liabilities  of  Section  18 of the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically requests that the information
be  treated  as soliciting material or specifically incorporates it by reference
into  a  document  filed  under  the  Securities Act of 1933, as amended, or the
Securities  Exchange  Act  of  1934,  as  amended.

Submitted  by  the  Audit  Committee:  Ramon  D.  Phillips,  Chairman
                                       John  D.  Harkey,  Jr.
                                       Robert  B.  Page


                                  PROPOSAL TWO:

              RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS

     The  Audit  Committee has selected BDO Seidman, LLP, independent registered
accounting  firm,  as  the  independent  auditors of the Company for fiscal year
2006.  BDO Seidman, LLP has been the Company's independent registered accounting
firm  since fiscal year 2004. As a matter of good corporate governance the Audit
Committee  has  determined  to  submit  its  selection  to  shareholders  for
ratification.  In the event that this selection of auditors is not ratified by a
majority  of  the  shares  of  Common Stock present or represented at the Annual
Meeting,  the Audit Committee will review its future selection of auditors. Even
if the selection is ratified, the Audit Committee in its discretion may select a
different  registered  public  accounting firm at any time during the year if it
determines  that such a change would be in the best interests of the Company and
our  shareholders.

     For  fiscal  2004, the Audit Committee selected BDO Seidman, LLP to replace
PricewaterhouseCoopers, LLP, which was the Company's independent auditor for the
fiscal year ending June 29, 2003. The decision to change accountants was made by
vote  of  the  Audit Committee, and the dismissal of PricewaterhouseCoopers, LLP
became  effective  on  October 8, 2003. During fiscal years 2002 and 2003, there
were  no  disagreements  between  the  Company's  senior  management  and
PricewaterhouseCoopers, LLP's senior audit personnel on any matter of accounting
principles  or  practices,  financial statement disclosure, or auditing scope or
procedure  such  that would have caused PricewaterhouseCoopers, LLP to have made
reference  to  the  subject  matter of such disagreements in connection with its
audit  report.  The  Company  does  not  anticipate  that  a  representative  of
PricewaterhouseCoopers  LLP  will  be present at the Annual Meeting, nor does it
anticipate that any such representative will be available to make a statement or
to  answer  questions.

     A  representative  of  BDO  Seidman,  LLP  is expected to be present at the
Annual  Meeting, to be available to respond to appropriate questions and to have
an  opportunity  to  make  a  statement.

     THE  BOARD  OF  DIRECTORS  RECOMMENDS  A  VOTE  FOR THE RATIFICATION OF THE
SELECTION OF BDO SEIDMAN, LLP AS THE COMPANY'S INDEPENDENT REGISTERED ACCOUNTING
FIRM  FOR  FISCAL  YEAR  2006.

                        FEES PAID TO INDEPENDENT AUDITORS

     The  following  table  shows the fees the Company paid or accrued for audit
and  other  services  provided by PricewaterhouseCoopers, LLP in fiscal 2004 and
2005  and  BDO  Seidman,  LLP  in  fiscal  2004  and  2005.

                               PRICEWATERHOUSECOOPERS            BDO SEIDMAN
                                2004        2005             2004           2005
- --------------------------------------------------------------------------------
Audit  Fees                       --         --            $74,718       $82,980
Audit-Related  Fees            12,500      6,500             3,050        21,350
Tax Fees                        9,300         --               950         7,575
All Other Fees                    --          --                --            --
                            ----------------------------------------------------
    Total                     $21,800     $6,500           $78,718 $     111,905



     Audit Fees.  This category represents aggregate fees billed by BDO Seidman,
LLP  for  professional  services  rendered for the audit of the Company's annual
financial  statements  for  the  years  ended  June  27, 2004 and June 26, 2005,
respectively,  and  the  reviews  of  the  financial  statements included in the
Company's  Forms  10-Q  for  those  years.

     Audit-Related  Fees.  These  fees consist of assurance and related services
that  are  reasonably  related  to the performance of the audit or review of the
Company's  financial  statements.  This  category  includes  fees related to the
performance  of  audits  and  attest  services  not  required  by  statute  or
regulations, audits of the Company's benefits plans and accounting consultations
regarding  the  application  of  generally  accepted  accounting  principles  to
proposed  transactions.  Fees paid to PricewaterhouseCoopers, LLP in fiscal 2005
were for providing consents for the use of the firm's reports relating to fiscal
year  2003  financial statements in the Company's Forms 10-K and 11-K. Fees paid
to  PricewaterhouseCoopers,  LLP in fiscal 2004 also include services related to
the  transfer of audit-related materials from PricewaterhouseCoopers, LLP to BDO
Seidman,  LLP.

     Tax  Fees.  These fees consist of fees billed by PricewaterhouseCoopers LLP
for  fiscal  year  2004 for tax return preparation and foreign tax analysis, and
for  a  change in tax accounting method, and fees billed by BDO Seidman, LLP for
tax  services  during  fiscal  years  2004  and  2005.

     All  Other  Fees.  No  fees  falling  within  this  category  were  paid to
PricewaterhouseCoopers,  LLP  or  BDO  Seidman, LLP during fiscal years 2004 and
2005.

     In  considering  and authorizing these payments to the independent auditors
for  services  unrelated  to performance of the audit of the Company's financial
statements,  the  Committee  has determined that all such services undertaken by
the  independent  auditors  are  not inconsistent with the independent auditor's
performance  of  the  audit  and  financial  statement  review functions and are
compatible  with  maintaining  the  independent  auditor's  independence.

     Policy  of  the  Audit  Committee for Pre-Approval of Audit and Permissible
Non-Audit  Services  of  the  Independent  Auditor

     The  Audit  Committee  is  responsible for appointing, setting compensation
for,  and  overseeing  the work of, the independent auditor.  In accordance with
Audit  Committee policy and the requirements of law, all services to be provided
by  PricewaterhouseCoopers,  LLP  and  BDO  Seidman, LLP are pre-approved by the
Audit  Committee.  Pre-approval  applies  to  audit  services,  audit-related
services,  tax  services  and  other  services.  In  some cases, pre-approval is
provided  by  the  full  Audit  Committee  for  up  to  a year, and relates to a
particular  defined  task  or scope of work and is subject to a specific budget.
In  other cases, the Chairman of the Audit Committee has the delegated authority
from  the  Audit  Committee  to  pre-approve  additional  services,  and  such
pre-approvals  are  then  communicated  to  the full Audit Committee.  In fiscal
2005,  100%  of  all  audit  services  and  non-audit  services performed by BDO
Seidman,  LLP  were  pre-authorized  by  the  Audit  Committee.

                           SUMMARY COMPENSATION TABLE

     The  following  table  sets  forth  the  annual  compensation  of the Chief
Executive  Officer and the other four most highly compensated executive officers
of  the Company for the fiscal years ended June 26, 2005, June 27, 2004 and June
29,  2003  (designated  as  years  2005,  2004  and  2003,  respectively).




<PAGE>
                                                                  LONG-TERM
                                ANNUAL COMPENSATION          COMPENSATION AWARDS
                                  -------------------       --------------------
                                                               SECURITIES UNDER-
       NAME                                       OTHER ANNUAL     LYING OPTIONS
(AND PRINCIPAL POSITION)    YEAR    SALARY  BONUS COMPENSATION (B) (# OF SHARES)
- -----------------------    ------  ------- ------- ------------   --------------
  Ronald W. Parker (a)      2005  $266,539 $ 68,750  $ 45,198                 --
   (President  and  Chief   2004   550,000  275,000   176,084                 --
    Executive  Officer)     2003   537,755  275,000   179,910                 --

  Rod  J.  McDonald  (c)    2005     6,635       --        --                 --
  (Acting Chief Executive   2004        --       --        --                 --
   Officer)                 2003        --       --        --                 --

  Robert B. Page (d)        2005    48,077       --        --                 --
  (Acting Chief Executive   2004        --       --        --                 --
   Officer)                 2003        --       --        --                 --

  Timothy P. Taft (e)       2005         1       --        --            500,000
  (President and Chief      2004        --       --        --                 --
   Executive Officer)       2003        --       --        --                 --

  B.  Keith  Clark  (f)     2005     6,635       --     2,981                 --
  (Senior  Vice  President, 2004   195,000   26,500     5,961                 --
   Secretary  and  General  2003   186,035   53,325     2,993                 --
   Counsel)

  Ward T. Olgreen           2005   168,000   33,600     6,731                 --
  (Senior  Vice  President  2004   168,000   33,600     7,539                 --
   of Franchise Operations  2003   160,904   34,700     3,769                 --
   and Concept Development)

  Shawn  M.  Preator        2005   150,000   30,000     5,961                 --
  (Chief Financial Officer  2004   150,000   30,000     5,961                 --
                            2003   139,650   42,750     3,042                 --

  Danny K. Meisenheimer    2005    136,102   15,000        --                 --
  (Vice President of       2004    136,102   27,000        --                 --
   Marketing)              2003(g)  65,244   13,000        --                 --


     (a)     Mr. Parker was President and Chief Executive Officer of the Company
until December 13, 2004.  Figures shown for fiscal 2005 are through December 13,
2004,  Mr.  Parker's  last  date  of  employment.

     (b)  Includes  for Mr. Parker, a payment of $37,500 for life and disability
insurance  benefits,  secondary  medical  benefits  and  supplemental retirement
benefits  and  payments  of  $150,000 and $165,266 for such benefits in 2004 and
2003,  respectively.

     (c)  Mr.  McDonald, Secretary and General Counsel of the Company, served as
Acting  Chief  Executive Officer in December 2004 and January 2005. Compensation
figures  are  for  the  period  during which Mr. McDonald served as Acting Chief
Executive  Officer.

     (d) Mr. Page, one of the Company's non-employee directors, served as Acting
Chief  Executive  Officer  from  January  2005  through March 2005. Compensation
figures  are  for  the  period  during  which  Mr.  Page  served as Acting Chief
Executive  Officer.

     (e) Mr. Taft was named President and Chief Executive Officer of the Company
on March 31, 2005. Mr. Taft's Employment Agreement with the Company, dated March
31,  2005,  provides for a net salary of $1.00 for the first 12 months and for a
bonus  in  the  first  12 months to be set by the Board. As of the end of fiscal
year  2005  no  bonus  payment had been made. He was granted options to purchase
500,000  shares  of the Company's common stock pursuant to a Non-Qualified Stock
Option  Agreement dated March 31, 2005. See "Executive Employment Contracts" and
"Equity  Compensation  Plan  Information"  below  for  more  detail.

     (f)  Mr.  Clark was Senior Vice President, Secretary and General Counsel of
the  Company  until July 7, 2004. Figures shown for fiscal 2005 are through July
7,  2004,  Mr.  Clark's  last  date  of  employment.

     (g)  Includes compensation for Mr. Meisenheimer from his employment date of
December  31,  2002.

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                     AND  FISCAL  YEAR-END  OPTION  VALUES

     The  following  table  sets  forth  information  regarding  stock  options
exercised  during fiscal year 2005 and unexercised stock options held at the end
of  fiscal  year  2005  by  the  Chief Executive Officer and the other four most
highly compensated executive officers of the Company.  The closing bid price for
the  Company's  Common  Stock,  as  reported  by  the  National  Association  of
Securities  Dealers  Automated  Quotation System, was $---2.75 on June 24, 2005,
the  last  trading  day  of  the  Company's  fiscal  year.

                                                                       VALUE  OF
                                                    NUMBER  OF       UNEXERCISED
                                                   UNEXERCISED      IN-THE-MONEY
                                                   OPTIONS  AT       OPTIONS  AT
                       SHARES                    FISCAL  YEAR END   FISCAL  YEAR
                    ACQUIRED  ON                (EXERCISABLE/  END (EXERCISABLE/
     NAME           EXERCISE  (#) VALUE REALIZED UNEXERCISABLE)(#)UNEXERCISABLE)
  ---------        -------------  -------------  ---------------- --------------

Ronald  W. Parker (a)      --            --               --  (e)             --
                                                          --  (u)             --

Rod J. McDonald (b)        --            --           19,000  (e)       $  1,250
                                                          --  (u)             --

Robert B. Page (c)        --            --                --  (e)             --
                                                          --  (u)             --

Timothy  P.  Taft (d)      --            --           50,000  (e)       $ 12,500
                                                     450,000  (u)       $112,500

B.  Keith  Clark (e)   30,000       $22,800               --  (e)             --
                                                          --  (u)             --

Ward  T. Olgreen          --             --            52,000 (e)       $ 15,000
                                                           -- (u)             --

Shawn  M.  Preator         --            --            41,000 (e)       $ 15,000
                                                           -- (u)             --

Danny  K.  Meisenheimer   --            --                 -- (e)             --
                                                           -- (u)             --

(e)     Denotes  exercisable  options.
(u)     Denotes  unexercisable  options.

(a)   Mr.  Parker was President and Chief Executive Officer of the Company until
December  13,  2004.
(b) Mr. McDonald, Secretary and General Counsel of the Company, served as Acting
Chief  Executive  Officer  in  December  2004  and  January  2005.
(c)  Mr.  Page,  one of the Company's non-employee directors, served as Acting
Chief  Executive  Officer  from  January  2005  through  March  2005.
(d)   Mr.  Taft  was  appointed  President  and  Chief  Executive Officer of the
Company  on  March  31,  2005.
(e)   Mr.  Clark was Senior Vice President, Secretary and General Counsel of the
Company  until  July  7,  2004.





                      [This space intentionally left blank]







                        OPTION GRANTS IN LAST FISCAL YEAR

     The  following table sets forth information regarding stock options granted
during  fiscal  year  2005, pursuant to the Company's 2005 Employee Stock Option
Award  Plan  or  by  individual  non-plan  option grants, to the Chief Executive
Officer  and  the  other  four most highly compensated executive officers of the
Company.



                  INDIVIDUAL GRANTS

                                                            POTENTIAL REALIZABLE
                                                                VALUE AT ASSUMED
                                                                 ANNUAL RATES OF
                   % OF TOTAL OPTIONS                                STOCK PRICE
                   OPTIONS   GRANTED TO     EXERCISE            APPRECIATION FOR
                             EMPLOYEES IN   PRICE    EXPIRATION      OPTION TERM
                   GRANTED #  FISCAL YEAR   ($/SHARE)   DATE     5%          10%
                   --------- -------------  ---------  ------   ----        ----
Ronald W. Parker (a)  --         --            --         --      --          --

Rod J. McDonald (b)   --         --            --         --      --          --

Robert B. Page (c )   --         --            --         --      --          --

Timothy P. Taft (d) 500,000     100%         $2.50  03/31/15 $786,118 $1,992,178

B. Keith Clark (e)    --         --            --         --      --          --

Ward T. Olgreen       --         --            --         --      --          --

Shawn M. Preator      --         --            --         --      --          --

Danny K. Meisenheimer --         --            --         --      --          --

(a)     Mr.  Parker  was  President  and  Chief Executive Officer of the Company
until  December  13,  2004.

(b) Mr. McDonald, Secretary and General Counsel of the Company, served as Acting
Chief  Executive  Officer  in  December  2004  and  January  2005.

(c)  Mr.  Page,  one of the Company's non-employee directors, served as Acting
Chief  Executive  Officer  from  January  2005  through  March  2005.

(d)     Options  granted  pursuant  to  a  Nonqualified  Stock  Option Agreement
entered  into between Mr. Taft and the Company on March 31, 2005. See "Executive
Employment  Contracts"  and  "Equity  Compensation  Plan  Information"  below.

(e)     Mr.  Clark  was  Senior Vice President, Secretary and General Counsel of
the  Company  until  July  7,  2004.

                      EQUITY COMPENSATION PLAN INFORMATION

     The  following  table  sets forth information as of June 26, 2005 regarding
the  Company's  equity  compensation  plans.

<TABLE>
<CAPTION>


                                                                             Number of Securities
                                                                          remaining available for
                                                                            future issuance under
                         Number of securities to      Weighted-average        equity compensation
                         be issued upon exercise     exercise price of         plans (excluding
                         of outstanding options     outstanding options     securities reflected in
<S>                      <C>                      <C>                       <C>                      <C>
Plan Category            warrants and rights (a)   warrants and rights           column (a) (b)
                         -----------------------  ------------------------  --------------------- ------

 Equity compensation
 plans approved by
  security holders. . .           310,958                  $  3.10                1,457,142

  Equity compensation
  plans not approved by
  security holders. . .           500,000                  $  2.50                        -
                       --------------------------------------------------------------------
  Total . . . . . . . .           810,958                  $  2.73                1,457,142
</TABLE>

     (a) In fiscal year 2005 stock options for 25,000 shares were granted to Mr.
Schwarz and stock options for 17,858 shares were granted to Mr. Pully, all at an
exercise price of $2.85 per share. All such options were granted pursuant to the
2005 Non-Employee Director Stock Option Award Plan. No options have been granted
pursuant  to  the  2005  Employee  Stock Option Award Plan. As of June 26, 2005,
there  were  268,100  vested and unexercised stock options outstanding under the
1993  Employee Stock Award Plan and the 1993 Outside Directors Stock Award Plan,
at  various  exercise  prices.  The  1993 Employee Stock Award Plan and the 1993
Outside  Directors  Stock  Award  Plan  expired in September 2003 and no further
options  may  be  granted  under  either  plan.

     (b)  Under  the  2005 Employee Stock Option Award Plan 1,000,000 shares are
authorized  and  available for future option grants. Under the 2005 Non-Employee
Director  Stock Option Award Plan 500,000 shares were authorized and 457,142 are
available  for  future  option  grants  as of June 26, 2005. There are no shares
available  for  grant  under  the  1993  Employee  Stock Award Plan and the 1993
Outside  Directors  Stock  Award  Plan, both of which expired in September 2003.


             COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     The  Compensation  Committee  (the  "Committee")  administers the Company's
executive compensation program.  In this regard, the role of the Committee is to
oversee  our  compensation  plans  and policies, annually review and approve all
executive  officers'  compensation  decisions,  and  administer our stock option
plans  (including  reviewing  and  approving  stock  option  grants to executive
officers).  The Committee's charter reflects these various responsibilities, and
the  Committee  and  the  Board periodically review and revise the charter.  The
Committee's  membership  is  determined by the Board and is composed entirely of
independent  directors.  The Committee meets at scheduled times during the year,
and  it  also  considers  and  takes  action  by written consent.  The Committee
Chairman  reports  on  Committee  actions and recommendations at Board meetings.
The  Company's Human Resources Department supports the Committee in its work and
in  some cases acts pursuant to delegated authority to fulfill various functions
in  administering  the  Company's  compensation  programs.  In  addition,  the
Committee  has the authority to engage the services of outside advisers, experts
and  others  to  assist  the  Committee.

     The  Compensation Committee and the Board have adopted a charter to conform
to  the  Compensation  Committee's  responsibilities  under  the  revised Nasdaq
standards, new rules adopted by the SEC and the provisions of the Sarbanes-Oxley
Act.

     Compensation  Philosophy  and  Practice

     In  its  administration  and periodic review of executive compensation, the
Compensation  Committee  believes  in  aligning  the  interests of the executive
officers  with  those  of  the  Company's  shareholders. To accomplish this, the
Compensation  Committee  seeks  to structure and maintain a compensation program
that  is directly and materially linked to operating performance and enhancement
of  shareholder  value.

     Tax  Deductibility  under  Section  162(m)

     As  noted,  the  Company's  compensation policy is primarily based upon the
practice  of  pay-for-performance.  Section  162(m) of the Internal Revenue Code
imposes  a  limitation on the deductibility of nonperformance-based compensation
in  excess  of $1 million paid to the Chief Executive Officer and the other most
highly  compensated  executive  officers  of  the  Company.  The  Compensation
Committee  currently  believes  that  the  Company should be able to continue to
manage  its  executive compensation program for these officers so as to preserve
the  related  federal  income  tax  deductions.


CHIEF  EXECUTIVE  OFFICER

     The  compensation  of  Ronald  W.  Parker as Chief Executive Officer of the
Company  was  based  on  his  employment  agreement,  which  was entered into on
December  16,  2002. Mr. Parker's employment with the Company was terminated for
cause  on  December  13,  2004.

     Mr.  Parker's employment agreement had been approved by the then members of
the  Board  of  Directors  of  the  Company  and  the  Compensation Committee as
constituted  on  December 16, 2002. The employment agreement provided for a term
through  December  31,  2007.  Under  his  employment  agreement,  Mr.  Parker's
compensation  was  to  be determined by the Compensation Committee, the Board or
the  Stock  Award  Plan  Committee  (whose  function  has  been  assumed  by the
Compensation  Committee),  based  on  the  recommendations  of  the Compensation
Committee.  The  Compensation  Committee's  recommendations  with respect to Mr.
Parker's  compensation,  however,  were  subject  to  other  provisions  in  his
employment  agreement,  including the provisions that provided that Mr. Parker's
total  annual compensation could not be reduced to less than an annual salary of
$550,000  and  a mandatory minimum annual bonus equal to $275,000. Additionally,
Mr.  Parker  was  entitled  to  receive  under  his employment agreement certain
defined benefits, which, in fiscal 2005, totaled approximately $45,198, prorated
through  December  13,  2004,  his  last  date  of employment. The bonus program
established  in  Mr.  Parker's  employment  agreement was based on the Company's
performance  in  the  areas  of  revenue growth, net income, new store openings,
store  sales,  Company stock price, store closings and Company expenses, subject
to  payment  of  the  minimum  bonus  described  above.

     The  Compensation Committee authorized payment to Mr. Page of an annualized
salary of $250,000 for his services as Acting Chief Executive Officer.  Mr. Page
was  the  Acting  Chief Executive Officer from January 4, 2005 through March 31,
2005.  Mr. Page did not have an employment contract.  In establishing Mr. Page's
compensation,  the  Compensation  Committee considered Mr. Page's qualifications
and  experience,  compensation  of  chief executives at similar companies in the
quick  serve and casual dining restaurant segments and the nature and complexity
of  the  issues  to  be  encountered by Mr. Page during his term as Acting Chief
Executive  Officer.  Mr.  Page  was  not  paid  a  bonus.

     On  March  31,  2005,  the  Company  and  Timothy  P.  Taft entered into an
Executive  Compensation  Agreement  approved  by the Executive Committee and the
Compensation  Committee.  The  agreement  provides  for a term through March 31,
2007,  with  a  net salary in the first 12 months of $1.00.  Mr. Taft's bonuses,
benefits  and salary in the second 12 months of the agreement are established by
the  Compensation  Committee  or  the Board, subject to certain minimum amounts.
Mr.  Taft  was  also  granted 500,000 options to acquire shares of Common Stock.
See  "Executive  Employment  Contracts"  below  for  more  detail.

     In  structuring Mr. Taft's employment agreement, the Compensation Committee
and  Executive  Committee  sought  to  offer a competitive and fair compensation
package tied to Mr. Taft's experience and qualifications while also aligning his
interests  with  those  of the Company's shareholders.  A significant portion of
Mr. Taft's compensation is materially and directly linked to Company performance
as  a  result of the granting of options to him.  The options vest in increments
from  2005  through  2008.  The  Compensation Committee believes that Mr. Taft's
salary  in  the  second  12 months, bonus amounts and benefits are comparable to
those  offered  to  chief  executive  officers at similar companies in the quick
serve  and  fast  casual  dining  restaurant  segments.

OTHER  EXECUTIVE  OFFICERS

     Subject  to existing employment agreements, salaries of the other executive
officers  are  reviewed  annually  and  adjusted based on competitive practices,
changes in level of responsibilities and individual performance measured against
goals.

STOCK  OPTIONS

     The  Company  established  the  2005  Employee  Stock  Option  Award  Plan
("Employee  Option  Plan")  for the purpose of aligning employee and shareholder
interests.  Under  the  Employee  Option Plan, stock options may be granted from
time  to  time  to certain executive officers, as well as other employees, based
upon  their  relative  positions and responsibilities, as well as historical and
expected  contributions to Company growth.  During fiscal year 2005, the Company
did  not  grant stock options to employees pursuant to the Employee Option Plan.

     On  March  31,  2005, the Company and Mr. Taft entered into a Non-Qualified
Stock  Option  Award  Agreement  as  a  part of Mr. Taft's employment agreement,
pursuant  to  which  Mr.  Taft  was awarded options for 500,000 shares of Common
Stock  at  an  exercise price of $2.50 per share.  See "Equity Compensation Plan
Information"  above  and "Executive Employment Contracts" below for more detail.

Submitted  by  the  Compensation  Committee:  Steven  J.  Pully,  Chairman
                                              Ramon  D.  Phillips

                         EXECUTIVE EMPLOYMENT CONTRACTS

     Ronald W. Parker, Ward T. Olgreen and Shawn M. Preator each entered into an
employment  agreement  with  the  Company  on December 16, 2002.  The agreements
provided  for  terms  extending  through  December  31,  2007 for Mr. Parker and
December  31,  2005  for  Mr.  Olgreen  and  Mr.  Preator, and provided that the
respective  executive's compensation be determined each year by the Compensation
Committee subject to certain minimum amounts.  The agreements also provided that
each  executive  may  be  terminated  with  or  without  cause.

     Mr.  Parker's  agreement provided that his compensation would be determined
each  year  by  the  Compensation  Committee,  the Board or the Stock Award Plan
Committee,  provided that he would receive an annual salary of not less than his
then  current  salary  of  $550,000 and a bonus of not less than $275,000, based
upon certain criteria defined in the agreement. The agreement also provided that
Mr.  Parker  could  terminate  the  agreement  within  12 months of a "change of
control"  of  the  Company,  as  defined  in the agreement, and that he could be
terminated  with  or  without  cause. Mr. Parker's employment was terminated for
cause  by  the  Board  on  December  13,  2004.

     On  April  22,  2005,  Mr.  Preator  and  Mr.  Olgreen each entered into an
Executive  Compensation  Agreement  with  the  Company, replacing the employment
agreements  executed on December 16, 2002.  The agreements executed on April 22,
2005  each  provided  for  a  term  through  December  31,  2005.  Mr. Preator's
agreement  provides  for  salary of not less than his current salary of $150,000
and  a  bonus  of  not  less than $30,000.  Mr. Olgreen's agreement provides for
salary  of  not less than his current salary of $168,000 and a bonus of not less
than  $33,600.  Under  the  agreements  each executive may be terminated with or
without  cause and each executive may terminate his employment for any reason or
no  reason  at  all.

     Under  the agreements executed on April 22, 2005, if the Company terminates
Mr.  Olgreen's or Mr. Preator's employment without cause, he will be entitled to
a  lump  sum  payment equal to six months of the executive's then current annual
salary  plus  a  lump  sum  payment  equal  to  any  unpaid bonus the respective
executive would have been entitled to receive had he worked through December 31,
2005.  Upon  such  a  termination  each would receive for a period of six months
following  the  date  of  termination  of  employment,  all of the medical, life
insurance  and  other  benefits  then  currently  provided  to  the  respective
executive,  and a lump sum payment of the value of any accrued vacation days and
any unpaid "extra days" as defined in the Company's employee policy manual, that
the  executive  would  have been entitled to receive if the executive had worked
through December 31, 2005.  If the Company terminates Mr. Olgreen or Mr. Preator
for  cause  the  Company  shall pay the respective executive salary plus accrued
bonus,  accrued  vacation  days and any unpaid "extra days" due to the executive
through  the  date of termination.  If Mr. Preator or Mr. Olgreen terminates his
employment  with  or  without  any reason through December 31, 2005, the Company
will  pay  to  the  executive  a  lump  sum  payment  equal to six months of the
executive's  then  current  annual  salary  plus a lump sum payment equal to any
unpaid  bonus  the  executive  would have been entitled to receive had he worked
through  December  31,  2005.  Upon such a termination each would also receive a
lump sum payment of the value of any accrued vacation days and any unpaid "extra
days"  as  defined  in  the Company's employee policy manual, that the executive
would have been entitled to receive if the executive had worked through December
31,  2005.

     Timothy  P.  Taft  entered into an employment agreement with the Company on
March  31,  2005.  The  agreement  is  for a term that currently extends through
March  31,  2007, and provides for a net salary in the first 12 months of $1.00.
Salary  in the second 12 months is determined by the Board, subject to a minimum
amount  of  $300,000,  and  bonuses  are determined by the Board, subject in the
second  12  months to a minimum amount of $200,000.  The agreement also provides
for  a grant of 500,000 non-qualified stock options, with 50,000 of such options
vesting immediately and the remainder vesting over three years.  Mr. Taft may be
terminated  with  or  without cause, with the definition of cause including, but
not limited to, breach of a monetary obligation to the Company, violation of the
compensation  agreement,  fraud against the Company and failure to substantially
perform  required  duties,  each  as  described  in  the  agreement.

     If  the  Company terminates Mr. Taft's employment for cause, or if Mr. Taft
terminates  his  employment voluntarily, he will be entitled to a payment in the
amount  of  any  unpaid  salary  accrued  through  the  date of termination, any
unreimbursed  expenses  properly  incurred  prior to the date of termination and
rights  granted  to  him  under  any  executive  benefit  plan.  If  the Company
terminates  Mr.  Taft's employment without cause, he will be entitled to payment
of  the  amounts  described above, and, either (a) during the first 12 months of
the  agreement  an  amount  equal  to  $25,000  for  each full month he has been
employed or (b) commencing on the first anniversary of his employment, an amount
equal to 12 months of his then base salary. If the Company terminates Mr. Taft's
employment  within  six  months  of  a  change of control he will be entitled to
receive  payment  of  all amounts payable under the agreement for termination or
resignation  with  or  without  cause, plus all then unvested stock options will
become  immediately exercisable and remain exercisable for 90 days following the
date  of  termination  of  employment.  Mr. Taft may terminate his agreement for
"good  reason"  at any time within six months after a "change of control" of the
Company  occurs,  as  those  terms  are  defined  in  the  agreement.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Company  Policies.  It  is  our  policy  that  all employees must avoid any
activity  that is or has the appearance of being hostile, adverse or competitive
with  the  Company,  or  that  interferes  with  the proper performance of their
duties,  responsibilities or loyalty to the Company. These policies are included
in our Code of Business Conduct, which covers the Company's directors, executive
officers  and other employees. The Code of Business Conduct can be viewed on the
Company's  website  at  http://www.pizzainn.com.  Each  director  and  executive
officer  is  instructed  to  always  inform  the  Board when confronted with any
situation  that  may  be perceived as a conflict of interest, even if the person
does  not  believe that the situation would violate the Company's guidelines. If
in a particular circumstance it is concluded that there is or may be a perceived
conflict  of interest, the Board will instruct the Company's legal department to
work  with  the relevant business units within the Company to determine if there
is  a conflict of interest. Any waivers to these conflict rules with regard to a
director  or  executive  officer  require the prior approval of the Board or the
Audit  Committee.

     Nasdaq  Rules.  Conflict  of  interest  situations are also governed by the
Nasdaq rules defining "independent" director status. Each of our directors other
than  Messrs.  Clairday and Taft qualify as "independent" in accordance with the
Nasdaq  rules.  The  Nasdaq rules include a series of objective tests that would
not  allow  a  director to be considered independent if the director had certain
employment,  business  or  family  relationships  with  the  Company. The Nasdaq
independence  definition  includes  a requirement that the Board also review the
relations  of each independent director to the Company on a subjective basis. In
accordance with that review, the Board has made a subjective determination as to
each  independent  director  that no relationships exist that, in the opinion of
the Board, would interfere with the exercise of independent judgment in carrying
out  the  responsibilities  of  a  director. In making these determinations, the
directors  reviewed  and discussed information provided by the directors and the
Company  with  regard to each director's business and personal activities as the
may  relate  to  the  Company  and  the  Company's  management.

     SEC  Rules.  In  addition  to  the  Company  and  Nasdaq policies and rules
described  above,  the SEC has specific disclosure requirements covering certain
types of transactions involving the Company and a director, executive officer or
other  specified party. Specifically, other than as set forth below, we have not
engaged  in  any  transaction,  or  series  of  similar  transactions, since the
beginning  of fiscal year 2005, or any currently proposed transaction, or series
of similar transactions, to which the Company or any of its affiliates was or is
to  be a party, in which the amount involved exceeds $60,000 and in which any of
our  directors,  executive  officers,  nominees  for  election  as  a  director,
beneficial  owners  of  more than 5% of the Company's common stock or members of
their  immediate  family  had,  or  will  have,  a  direct  or indirect material
interest.

     In  addition,  other  than  as  specifically  set forth herein, none of the
following persons has been indebted to the Company or its affiliates at any time
since  the  beginning  of  fiscal 2005: any director or executive officer of the
Company;  any  nominee  for  election as a director; any member of the immediate
family of any of the directors, executive officers or nominees for director; any
corporation or organization of which any of the directors, executive officers or
nominees  is  an executive officer or partner or is, directly or indirectly, the
beneficial  owner of 10% or more of any class of equity securities (except trade
debt  entered  into  in the ordinary course of business); and any trust or other
estate  in  which  any  of  the  directors,  executive  officers or nominees for
director  has  a substantial beneficial interest or for which such person serves
as  a  trustee  or  in  a  similar  capacity.

     Relationships.  The  Company  is  a  business  organization  with  diverse
operations,  and it engages in hundreds of purchase, sale and other transactions
annually.  Other  than  as  specifically  set  forth herein we currently have no
business  arrangements  with  corporations  and  other  organizations in which a
Company  director,  executive  officer  or  nominee  for  director may also be a
director,  trustee  or  investor  or  have  some  other  direct  or  indirect
relationship.

     Bobby  L.  Clairday  is  President  and  sole  shareholder of Clairday Food
Services,  Inc.  and is sole shareholder of Advance Food Services, Inc., both of
which  are franchisees of the Company.  Mr. Clairday also holds area development
rights  in  his  own  name.  Mr.  Clairday  currently operates 10 restaurants in
Arkansas,  either  individually  or  through  the  corporations noted above.  As
franchisees,  the  two  corporations purchase a majority of their food and other
supplies  from  the  Company's  distribution  division.  In  fiscal  year  2005,
purchases  by  these  franchisees  made up 6.3% of the Company's food and supply
sales.  Royalty  payments,  license  fees  and  area  development  fees from Mr.
Clairday  and  such franchisees made up 3.8% of the Company's franchise revenues
in  fiscal  year  2005.

     As  of  September  1,  2005  Advance  Food Services, Inc. and Clairday Food
Services,  Inc.  collectively owed the Company approximately $923,000, primarily
for royalties and purchases of products from the Company's distribution division
("Clairday Debt").  Of the total amount of the Clairday Debt outstanding on that
date,  approximately  $584,000  represents  normal  30-day  purchase and payment
cycles  for  these franchisees.  The balance of the Clairday Debt, approximately
$339,000,  represents amounts incurred by Advance Foods, Inc. during a period in
1996  and  1997 following Mr. Clairday's sale of that company to unrelated third
parties  and  prior  to his reacquisition of the company in 1997 ("Advance Foods
Debt").  The  Company  carries  the  Advance Foods Debt on its books as past due
trade  receivables,  with  no  interest  accrual.  Mr. Clairday has made limited
payments  toward  reduction  of  the Advance Foods Debt, and the Company  has on
occasion  set  off  certain  payments  due  Mr.  Clairday or Advance Foods, Inc.
against  the  Advance  Foods  Debt, reducing the balance owed.  The last payment
made  by Mr. Clairday toward the Advance Foods Debt was $5,232 in June 2000, and
the  last  set-off  applied  by  the  Company against the Advance Foods Debt was
$7,250 in board fees due Mr. Clairday for 2005.  At June 26, 2005, the amount of
the  Advance  Foods  Debt  was  $339,000.  As  of the mailing date of this proxy
statement,  the  Company  continues  to withhold Board fees otherwise due to Mr.
Clairday and is offsetting those amounts against the Advance Foods Debt, and the
Company  is  actively  pursuing with Mr. Clairday alternative methods to pay the
Company  in  full.

     Ramon Phillips is an owner and officer of Wholesale Software International,
Inc.  a  franchisee  of  the  Company  that currently operates one restaurant in
Oklahoma.  Purchases  by  this  franchisee comprised 0.4% of the Company's total
food  and supply sales in fiscal 2005.  Royalties from this franchisee comprised
0.3%  of  the Company's total franchise revenues in fiscal 2005.  As of June 26,
2005  this  franchisee's  accounts  payable  to  the  Company  was approximately
$39,000,  representing  a  normal  30-day  purchase  and  payment  cycle.

             SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section  16(a)  of the Securities Exchange Act of 1934 ("Act") requires the
Company's executive officers and directors and the persons who own more than ten
percent of the Common Stock to file initial reports of ownership of Common Stock
and  reports of changes of ownership with the Securities and Exchange Commission
and  the  National  Association  of  Securities Dealers, Inc. and to furnish the
Company  with  copies  of  such  reports.  The Company believes that, during the
preceding  fiscal  year,  all of the Company's executive officers, directors and
holders  of  more  than 10% of Common Stock timely filed all reports required by
Section  16(a)  of  the  Act.


                              SHAREHOLDER PROPOSALS
                           FOR THE 2006 ANNUAL MEETING

     If  a  shareholder  wishes  to  present a proposal at the Annual Meeting of
Shareholders  tentatively  scheduled for December 13, 2006, the shareholder must
deliver  his or her proposal to the Company at its principal executive offices a
reasonable  time before the Company begins to print and mail its proxy materials
for  such  Annual  Meeting  in order to have that proposal included in the proxy
materials  of  the  Company  for  such  Annual  Meeting  of  Shareholders.  If a
shareholder  wishes  to  present  a  proposal  at  the  2006  Annual  Meeting of
Shareholders  outside the processes of Rule 14a-8 of the Securities Exchange Act
of  1934,  as amended, the shareholder must notify the Company in writing of his
or  her intent to make such presentation no later than 50 calendar days nor more
than  75 calendar days prior to the 2006 Annual Meeting (provided, however, that
in  the  event that less than 65 calendar days notice or prior public disclosure
of  the  date  of  the  meeting  is given or made to shareholders, notice by the
shareholder to be timely must be so received no later than the close of business
on  the  15th calendar day following the day on which such notice of the date of
the  meeting  was  mailed  or  such  public disclosure was made, whichever first
occurs)  and  otherwise  in accordance with the advance notice provisions in the
Company's  bylaws or the Company may have the right to determine  and declare to
the  meeting  that such proposal was not properly  brought before the meeting in
accordance  with  the  bylaws  of  the Company and/or exercise its discretionary
voting  authority  when  such  proposal  is  presented  at the Annual Meeting of
Shareholders,  without  including  any  discussion of that proposal in the proxy
materials  for  the  Annual  Meeting.

     To  be  in  proper  form, a shareholder's notice must include the specified
information  concerning  the  proposal  or nominee as described in the Company's
Bylaws.  A  shareholder  who  wishes  to  submit  a  proposal  or  nomination is
encouraged  to  seek independent counsel with regard to the Company's Bylaws and
SEC  requirements.  The Company may not consider any proposal or nomination that
does not meet its Bylaw requirements and the SEC's requirements for submitting a
proposal  or  nomination.  Notices  of  intention  to  present  proposals at the
Company's  2006  Annual  Meeting  of  Shareholders  should  be  addressed to the
Corporate  Secretary, Pizza Inn, Inc., 3551 Plano Parkway, The Colony, TX 75056,
or  by  fax to (469) 384-5061, or by e-mail to corporate_secretary@pizzainn.com.
                                               --------------------------------
The  Company  reserves  the  right  to  reject, rule out of order, or take other
appropriate  action with respect to any proposal that does not comply with these
and  other  applicable  requirements.

                             STOCK PERFORMANCE GRAPH

     The following graph compares the cumulative annual total shareholder return
(change  in  share price plus reinvestment of any dividends) on the Common Stock
versus  two  indexes for the past five fiscal years.  The graph assumes $100 was
invested on the last trading day of the fiscal year ending June 27, 1999.  Prior
to the first quarter of fiscal year 1998 and subsequent to the second quarter of
fiscal  year  2001,  the  Company did not pay cash dividends on its Common Stock
during  the applicable period.  The Dow Jones Equity Market Index is a published
broad  equity  market  index.  The Dow Jones Travel and Leisure U.S. Restaurants
and  Bars Index is compiled by Dow Jones and Company, Inc., and replaces the Dow
Jones  Entertainment  and  Leisure  Restaurant  Index  charted  in this graph in
previous  years.  The  Dow  Jones U.S. Restaurants and Bars Index is composed of
104  public  companies,  including the Company, engaged in restaurant or related
businesses.


<TABLE>
<CAPTION>



Pizza Inn -NASNM

                                                               Cumulative Total Return
<S>                              <C>                      <C>        <C>        <C>        <C>        <C>
                                               6/25/2000  6/24/2001  6/30/2002  6/29/2003  6/27/2004  6/26/2005



PIZZA INN, INC. . . . . . . . .                   100.00      64.25      37.90      63.66      83.50      81.43
DOW JONES US EQUITY MARKET. . .                   100.00      85.38      70.30      71.23      85.05      92.23
DOW JONES US RESTAURANTS & BARS                   100.00     102.57     121.65     109.41     134.30     158.40

</TABLE>


                                  MISCELLANEOUS

     The  accompanying  proxy  is  being solicited on behalf of the Company. The
cost  of solicitation has been or will be borne by the Company. Proxies may also
be solicited by directors, officers and employees of the Company in person or by
telephone,  telefax,  or  email  without compensation for those activities other
than  reimbursement  for  out-of-pocket  expenses. Arrangements may also be made
with  brokerage  houses  and other custodians, nominees, and fiduciaries for the
forwarding  of  solicitation materials to the beneficial owners of stock held of
record  by  such  persons  and  the  Company  may  reimburse them for reasonable
out-of-pocket  expenses  of  such  solicitation.

     A  COPY  OF  THE  COMPANY'S  ANNUAL REPORT ON FORM 10-K EXCLUDING EXHIBITS,
DATED  SEPTEMBER  25,  2005,  IS BEING FURNISHED TO SHAREHOLDERS WITH THIS PROXY
STATEMENT.  COPIES  OF  SUCH EXHIBITS WILL BE FURNISHED UPON WRITTEN REQUEST AND
UPON  REIMBURSEMENT  OF  THE  COMPANY'S  REASONABLE EXPENSES FOR FURNISHING SUCH
EXHIBITS.  REQUESTS  SHOULD BE ADDRESSED TO PIZZA INN, INC., 3551 PLANO PARKWAY,
THE  COLONY,  TEXAS  75056,  ATTENTION:  CORPORATE  SECRETARY.

<PAGE>


<PAGE>

     This  Proxy,  when  properly  executed, will be voted by the Proxies in the
manner  designated  below.  IF THIS PROXY IS RETURNED SIGNED BUT WITHOUT A CLEAR
VOTING  DESIGNATION,  THE  PROXIES  WILL  VOTE  FOR  ITEM  1  AND  ITEM  2.

                                        Please  mark  Your  votes  as  indicated
                                                                IN THIS EXAMPLE.

                                                                          [X]

THE  BOARD  OF  DIRECTORS  RECOMMENDS  A  VOTE  FOR  ITEM  1  AND  ITEM  2.

Item  1.       ELECTION  OF  DIRECTORS
                                          NOMINEES:  BOBBY L. CLAIRDAY,
                                                     JOHN D. HARKEY,  JR.
                                                     ROBERT  B. PAGE
                                                     RAMON D. PHILLIPS
                                                     STEVEN J. PULLY
                                                     TIMOTHY P.TAFT
                                                     MARK E. SCHWARZ
                                              (OR ANY SUBSTITUTE NOMINEE
                                               OR SUBSTITUTE NOMINEES, IF
                                               ANY OF THE FOREGOING  PERSONS
                                               IS UNABLE  TO  SERVE  OR  FOR
                                               GOOD CAUSE WILL NOT SERVE)

            WITHHELD
     FOR     FOR  ALL     WITHHELD  FOR: (Write that nominee's name in the space
    [  ]        [  ]              provided  below).
                          ______________________________________________________

Item  2.     RATIFICATION  OF  INDEPENDENT  PUBLIC  ACCOUNTANTS

     FOR     AGAINST          ABSTAIN
    [  ]        [  ]              [  ]




                                      If  you  plan  to  attend  the  Annual
                                          Meeting,  please  mark  the  WILL
                                          ATTEND  block.

                                                        WILL
                                                       ATTEND
                                                         [  ]



                                                Date _______________, 2005


                                                ___________________________
                                                Signature


                                                ___________________________
                                                Signature  if  held  jointly

                                   NOTE:  Please  sign  as  name appears hereon.
                                   Joint  owners  should  each  sign.  When
                                   signing as attorney, executor, administrator,
                                trustee,  or  guardian, please give full  title.


                              FOLD AND DETACH HERE

PROXY
     (1)     THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
                                 PIZZA INN, INC.
                               3551 PLANO PARKWAY
                             THE COLONY, TEXAS 75056
               ANNUAL MEETING OF SHAREHOLDERS ON DECEMBER 14, 2005

<PAGE>
     The undersigned, revoking all proxies heretofore given, hereby appoints Rod
J.  McDonald  and  Shawn  M.  Preator,  or  either  of  them,  as proxies of the
undersigned,  with  full  power  of  substitution and resubstitution, to vote on
behalf of the undersigned the shares of Pizza Inn, Inc. (the "Company") that the
undersigned is entitled to vote at the Annual Meeting of Shareholders to be held
at  10:00  a.m.,  Dallas time, on Wednesday, December 14, 2005, at the Company's
corporate  offices,  3551  Plano  Parkway,  The  Colony, Texas 75056, and at all
adjournments  thereof,  as fully as the undersigned would be entitled to vote if
personally  present,  as  specified on the reverse side of this card and on such
other  matters  as  may  properly  come  before  the meeting or any adjournments
thereof.  In  their  discretion,  the  Proxies  are authorized to vote upon such
other  business  as  may  properly  come  before  the  meeting.

<PAGE>







</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1
<SEQUENCE>2
<FILENAME>doc2.txt
<TEXT>
                         CHARTER OF THE AUDIT COMMITTEE
                            OF THE BOARD OF DIRECTORS
                               OF PIZZA INN, INC.



     This  Charter  identifies  the  purpose, composition, meeting requirements,
committee  responsibilities,  annual  evaluation procedures, investigations, and
studies  of the Audit Committee (the "Committee") of the Board of Directors (the
"Board")  of  Pizza  Inn,  Inc.,  a  Missouri  corporation  (the  "Company").

I.     PURPOSE

     The  Committee  has  been  established  to:  (a)  assist  the  Board in its
oversight  responsibilities  regarding  (1)  the  integrity  of  the  Company's
financial  statements,  (2)  the  Company's compliance with legal and regulatory
requirements,  and  (3)  the  independent  accountant's  qualifications  and
independence;  (b)  prepare  the report required by the United States Securities
and  Exchange Commission (the "SEC") for inclusion in the Company's annual proxy
statement;  (c)  retain  and terminate the Company's independent accountant; (d)
approve  audit  and  non-audit  services  to  be  performed  by  the independent
accountant;  and  (e) perform such other functions as the Board may from time to
time  assign  to  the  Committee.  In performing its duties, the Committee shall
seek  to  maintain  an  effective  working  relationship  with  the  Board,  the
independent  accountant,  and  management  of  the  Company.

II.     COMPOSITION

     The  Committee shall be composed of at least three, but not more than five,
members (including a Chairperson), all of whom shall be "independent directors,"
as  such  term  is defined by the Sarbanes-Oxley Act of 2002 ("Act"), and in the
rules  and regulations of the SEC and the Nasdaq stock exchange.  The members of
the  Committee  and  the Chairperson shall be selected annually by the Board and
serve  at  the  pleasure  of  the  Board.  A  Committee  member  (including  the
Chairperson)  may  be  removed at any time, with or without cause, by the Board.
No  person  may  be  made a member of the Committee if his or her service on the
Committee  would  violate  any  restriction  on  service  imposed by any rule or
regulation  of  the  SEC or any securities exchange or market on which shares of
the  common stock of the Company are traded.  All members of the Committee shall
have  a  working  familiarity with basic finance and accounting practices and be
able  to  read  and  understand  financial  statements  at  the  time  of  their
appointment.  Committee  members  may enhance their familiarity with finance and
accounting  by participating in educational programs conducted by the Company or
an  outside  consultant.  The Chairperson will maintain regular liaison with the
chief  executive  officer,  chief financial officer, and the lead partner of the
independent  accountant.

     Except for Board and Committee fees, a member of the Committee shall not be
permitted  to  accept  any  fees  paid  directly or indirectly for services as a
consultant,  legal  or  financial  advisor,  or any other fees prohibited by the
rules  of  the  SEC  and the Nasdaq stock exchange.  In addition, members of the
Committee  shall  not  be  an  affiliated person (as defined by the Act, SEC, or
Nasdaq) of the Company or any of its subsidiaries.  Members of the Committee may
receive  his  or her Board and Committee fees in cash, Company stock or options,
or  other  in-kind  consideration as determined by the Board or the Compensation
Committee, as applicable, in addition to all other benefits that other directors
of  the  Company  receive.



III.     MEETING  REQUIREMENTS

     The  Committee  shall  meet  as  necessary  to  enable  it  to  fulfill its
responsibilities.  The  Committee  shall  meet  at  the call of its Chairperson,
preferably  in  conjunction with regular Board meetings.  The Committee may meet
by  telephone  conference  call  or  by  any other means permitted by law or the
Company's Bylaws.  A majority of the members of the Committee shall constitute a
quorum.  The  Committee  shall  act  on  the  affirmative  vote of a majority of
members  present  at a meeting at which a quorum is present.  Without a meeting,
the  Committee  may  act  by  unanimous  written  consent  of  all members.  The
Committee shall determine its own rules and procedures, including designation of
a chairperson pro tempore, in the absence of the Chairperson, and designation of
a  secretary.  The  secretary  need  not  be a member of the Committee and shall
attend Committee meetings and prepare minutes.  The Committee shall keep written
minutes  of  its  meetings,  which shall be recorded or filed with the books and
records  of  the Company.  Any member of the Board shall be provided with copies
of  such  Committee  minutes  if  requested.

     The  Committee  may  ask members of management, employees, outside counsel,
the  independent  accountant, or others whose advice and counsel are relevant to
the issues then being considered by the Committee, to attend any meetings and to
provide  such  pertinent  information  as  the  Committee  may  request.

     The Chairperson of the Committee shall be responsible for leadership of the
Committee,  including  preparing  the agenda, presiding over Committee meetings,
making Committee assignments, and reporting the Committee's actions to the Board
from  time  to  time  (but  at  least once each year) as requested by the Board.

     As  part of its responsibilities to foster free and open communication, the
Committee  should  meet  periodically  with  management  and  the  independent
accountant  in  separate  executive  sessions  to  discuss  any matters that the
Committee  or  any  of  these  groups believe should be discussed privately.  In
addition,  the  Committee,  or  at  least  its Chairperson, should meet with the
independent  accountant  and  management  as  necessary  to review the Company's
financial  statements  prior  to  their  public  release  consistent  with  the
provisions set forth below in Section IV.  The Committee may also meet from time
to time with the Company's investment bankers, investor relations professionals,
and  financial  analysts  who  follow  the  Company.

IV.     COMMITTEE  RESPONSIBILITIES

     In  carrying  out its responsibilities, the Committee believes its policies
and  procedures  should  remain  flexible,  in  order  to best react to changing
conditions  and  to  ensure  to  the  Board  and shareholders that the corporate
accounting  and  reporting  practices  of the Company are in accordance with all
requirements  and  are  of  the  highest  quality.  In  carrying  out  these
responsibilities,  the  Committee  will:

A.     Oversight  of  the  Financial  Reporting  Process
       -------------------------------------------------

1.     In consultation with the independent accountant discuss the integrity and
quality  of  the  organization's  financial reporting process, both internal and
external.

2.     Consider  the  independent  accountant's  judgments about the quality and
appropriateness  of  the  Company's  accounting  principles  as  applied  in its
financial  reporting.  Consider alternative accounting principles and estimates.

3.     Annually  review  major  issues  regarding  the  Company's  accounting
principles and practices and its presentation of financial statements, including
the  adequacy  of  internal  controls  and  plans  by  management to address any
material  internal  control  deficiencies.

4.     Discuss  with  management  and  legal  counsel  the  status  of  pending
litigation,  taxation matters, compliance policies, and other areas of oversight
applicable  to  the  legal  and  compliance  area  as  may  be  appropriate.

5.     Meet  at  least  annually  with  the  chief  financial  officer  and  the
independent  accountant  in  separate  executive  sessions.

6.     Review  analyses prepared by management and the independent accountant of
significant financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements, including any analysis of the
effect  of  alternative  methods  under generally accepted accounting principles
("GAAP")  on  the  Company's  financial  statements  and  a  description  of any
transactions as to which management obtained Statement on Auditing Standards No.
50  letters.

7.     Review  with  management  and  the  independent  accountant the effect of
regulatory  and accounting initiatives, as well as off-balance sheet structures,
on  the  Company's  financial  statements.

B.      Review  of  Documents  and  Reports
        -----------------------------------

1.     Review and discuss with management the Company's annual audited financial
statements  and  quarterly financial statements (including disclosures under the
section  entitled  "Management's  Discussion and Analysis of Financial Condition
and  Results  of  Operation")  and  any  reports  or other financial information
submitted  to any governmental body, or the public, including any certification,
report,  opinion, or review rendered by the independent accountant, considering,
as  appropriate,  whether  the  information  contained  in  these  documents  is
consistent  with  the  information  contained  in  the  financial statements and
whether  the  independent  accountant  and  legal counsel are satisfied with the
disclosure  and  content  of  such  documents.

2.     Review  and  discuss  with  management  and  the  independent  accountant
earnings  press releases, as well as financial information and earnings guidance
provided  to  analysts  and  rating agencies.  The Committee need not discuss in
advance  each  earnings  release  but  should  generally  discuss  the  types of
information  to  be  disclosed  and  the  type of presentation to be made in any
earnings  release  or  guidance.

3.     Review  reports  from  management  and  the independent accountant on the
Company's  subsidiaries and affiliates, compliance with the Company's code(s) of
conduct,  applicable  law,  and  insider  and  related  party  transactions.

4.     Review  with management and the independent accountant any correspondence
with  regulators or government agencies and any employee complaints or published
reports  that raise material issues regarding the Company's financial statements
or  accounting  policies.

5.     Assist  management  in preparing and approving the report required by the
rules  of  the  SEC  to  be  included  in  the Company's annual proxy statement.

6.     Submit  the  minutes  of all meetings of the Committee to, or discuss the
matters  discussed  at  each  Committee  meeting  with,  the  Board.

7.     Review  the audited financial statements and discuss them with management
and  the  independent accountant.  These discussions shall include consideration
of  the  quality  of  the  Company's  accounting  principles  as  applied in its
financial  reporting,  including  review  of  audit  adjustments, whether or not
recorded,  and  any  such  other  inquiries as may be appropriate.  Based on the
review,  the  Committee  shall  make  its  recommendation to the Board as to the
inclusion  of  the  Company's  audited  consolidated financial statements in the
Company's  annual  report  on  Form  10-K.

8.     Review  any  restatements  of  financial statements that have occurred or
were  recommended.

C.      Independent  Accountant  Matters
        --------------------------------

1.     Interview  and  retain the Company's independent accountant, consider the
accounting firm's independence and effectiveness, and approve the engagement fee
and  other  compensation  to  be  paid  to  the  independent  accountant.

2.     On  an  annual  basis,  the  Committee  shall  evaluate  the  independent
accountant's  qualifications,  performance, and independence.  To assist in this
undertaking,  the Committee may request that the independent accountant submit a
report  (which  report  shall  be  reviewed by the Committee) describing (a) the
independent  accountant's  internal quality-control procedures, (b) any material
issues  raised  by  the  most  recent  internal  quality-control review, or peer
review, of the accounting firm or by any inquiry or investigations by government
or  professional  authorities  within the preceding five years respecting one or
more independent audits carried out by the independent accountant, and any steps
taken  to  deal  with any such issues, and (c) all relationships the independent
accountant  has  with  the  Company  and relevant third parties to determine the
independent  accountant's  independence.  In  making  its  determination,  the
Committee  shall  consider  auditing,  consulting,  tax  services,  information
technology services, and other professional services rendered by the independent
accountant  and  its affiliates.  The committee should also consider whether the
provision of any of these non-audit services is compatible with the independence
standards  under  the  guidelines  of  the SEC and of the Independence Standards
Board  and shall pre-approve the retention of the independent accountant for any
non-audit  services.

3.     Review on an annual basis the experience and qualifications of the senior
members  of  the  audit  team.  Discuss  the  knowledge  and  experience  of the
independent  accountant and the senior members of the audit team with respect to
the  Company's industry.  The Committee shall ensure the regular rotation of the
lead  audit  partner  and  audit  review partner as required by law and consider
whether  there  should  be  a  periodic  rotation  of  the Company's independent
accountant.

4.     Review  the  performance  of  the  independent accountant and approve any
proposed  discharge  of  the  independent accountant when circumstances warrant.

5.     Establish  and  periodically  review  the  Company's  hiring policies for
employees  or  former  employees of the independent accountant to ensure that no
conflicts exist by virtue of the Company's employment during the previous twelve
months,  in  a  senior  management position, former employees of the independent
auditor.

6.     Review  with  the independent accountant any problems or difficulties the
auditor  may  have encountered and any "management" or "internal control" letter
provided  by  the  independent  accountant  and  the  Company's response to that
letter.  Such  review  should  include:

(a)     any  difficulties encountered in the course of the audit work, including
any  restrictions  on  the scope of activities or access to required information
and  any  disagreements  with  management;

(b)     any  accounting  adjustments  that  were  proposed  by  the  independent
accountant  that  were  not  agreed  to  by  the  Company;

(c)     communications  between  the  independent  accountant  and  its national
office  regarding  any  issues  on  which it was consulted by the audit team and
matters  of  audit  quality  and  consistency;  and

(d)     any  changes  required  in  the  planned  scope  of  the  audit.

7.     Communicate with the independent accountant regarding critical accounting
policies  and practices to be used in preparing the audit report, and such other
matters as the SEC and the Nasdaq stock market may direct by rule or regulation.

8.     Oversee  the  independent  accountant relationship by discussing with the
independent  accountant the nature and rigor of the audit process, receiving and
reviewing  audit  reports  and ensuring that the independent accountant has full
access  to  the  Committee  (and the Board) to report on any and all appropriate
matters.

9.     Following  completion of the annual audit, review separately with each of
management  and  the  independent  accountant  any  significant  difficulties
encountered  during  the  course of the audit, including any restrictions on the
scope  of  work  or  access  to  required  information

10.     Discuss  with  the independent accountant prior to the audit the general
planning  and  staffing  of  the  audit.

11.     Obtain a representation from the independent accountant that Section 10A
of  the  Securities  Exchange  Act  of  1934  has  been  followed.

12.     Discuss  any matters required by Statement on Auditing Standards No. 61.

D.  Internal  Control  Matters
    --------------------------

1.     Discuss with management policies with respect to risk assessment and risk
management.  Although it is management's duty to assess and manage the Company's
exposure  to  risk,  the  Committee  needs to discuss guidelines and policies to
govern the process by which risk assessment and management is handled and review
the  steps  management  has  taken  to  monitor  and  control the Company's risk
exposure.

2.     Establish  regular  and separate systems of reporting to the Committee by
each  of  management  and  the  independent accountant regarding any significant
judgments  made  in management's preparation of the financial statements and the
view  of  each  as  to  the  appropriateness  of  such  judgments.

3.     Review with the independent accountant and management the extent to which
changes  or  improvements  in  financial  or  accounting  practices  have  been
implemented.  This  review should be conducted at an appropriate time subsequent
to  implementation  of  changes  or  improvements,  as decided by the Committee.

4.     Advise  the  Board  about  the  Company's  policies  and  procedures  for
compliance  with  applicable  laws  and regulations and the Company's code(s) of
conduct.

5.     Establish procedures for receiving accounting complaints and concerns and
anonymous  submissions  from  employees  and  others  regarding  questionable
accounting  matters.

6.     Periodically discuss with the chief executive officer and chief financial
officer  (a) significant deficiencies in the design or operation of the internal
controls  that  could adversely affect the Company's ability to record, process,
summarize, and report financial data, and (b) any fraud that involves management
or  other  employees  who  have  a  significant  role  in the Company's internal
controls.

7.     Take  reasonable steps to ensure that no officer, director, or any person
acting  under  their direction fraudulently influences, coerces, manipulates, or
misleads  the  independent  accountant  for  purposes of rendering the Company's
financial  statements  materially  misleading.

     While  the  Committee has the responsibilities and powers set forth in this
Charter,  it  is  not  the duty of the Committee to plan or conduct audits or to
determine  that the Company's financial statements are complete and accurate and
are  in  accordance  with generally accepted accounting principles.  This is the
responsibility  of  management  and  the  independent  accountant.

V.  ANNUAL  EVALUATION  PROCEDURES

     The  Committee  shall annually assess its performance to confirm that it is
meeting  its  responsibilities under this Charter.  In the review, the Committee
shall  consider,  among  other  things, (a) the appropriateness of the scope and
content  of  this  Charter,  (b)  the  appropriateness  of matters presented for
information  and  approval,  (c)  the  sufficiency  of time for consideration of
agenda  items,  (d)  frequency  and  length  of meetings, and (e) the quality of
written  materials  and presentations.  The Committee may recommend to the Board
such  changes  to this Charter as the Committee deems appropriate. The Committee
may  also  evaluate  its  objectivity,  knowledge of the Company's business, and
judgment,  as  well  as  members'  attendance, preparation, and participation in
meetings.

VI.  INVESTIGATIONS  AND  STUDIES

     The  Committee  shall  have  the authority and sufficient funding to retain
special  legal, accounting or other consultants (without seeking Board approval)
to  advise the Committee.  The Committee may conduct or authorize investigations
into  or  studies of matters within the Committee's scope of responsibilities as
described  herein,  and  may  retain, at the expense of the Company, independent
counsel  or  other  consultants  necessary  to  assist the Committee in any such
investigations  or  studies.

VII.  MISCELLANEOUS

     Nothing contained in the Charter is intended to expand applicable standards
of liability under statutory or regulatory requirements for the directors of the
Company or members of the Committee.  The purposes and responsibilities outlined
in this Charter are meant to serve as guidelines rather than as inflexible rules
and  the  Committee  is  encouraged  to  adopt  such  additional  procedures and
standards  as  it  deems  necessary  from  time  to  time  to  fulfill  its
responsibilities.  This  Charter, and any amendments thereto, shall be displayed
on  the Company's web site and a printed copy of such shall be made available to
any  shareholder  of  the  Company  who  requests  it.

Adopted  by  the Audit Committee and approved by the Board of Directors on April
15,  2003.
















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