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EXHIBIT 10.1
 
AMENDMENT, REDEMPTION AND CONVERSION AGREEMENT

 
 

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THIS AMENDMENT, REDEMPTION AND CONVERSION AGREEMENT (the “Agreement”) is dated
as of September 22, 2009, by and between Spicy Pickle Franchising, Inc., a
Colorado corporation (the “Company”) and each holder of Preferred Stock
identified on the signature pages hereto (each, including its successors and
assigns, an “Executing Holder” and collectively, the “Executing Holders”).

WHEREAS, the Company originally issued shares of Series A Variable Rate
Convertible Preferred Stock (“Preferred Stock”) to various purchasers, including
the Executing Holders, through a Securities Purchase Agreement Dated December
14, 2007 (the “Purchase Agreement”);

WHEREAS, the term “Transaction Documents” shall have the same meaning herein as
set forth in the Purchase Agreement (which shall include without limitation, the
Purchase Agreement, the Certificate of Designation, the Warrants, the Lock-up
Agreements, the Registration of Rights Agreement, all schedules and exhibits
thereto and any other documents or agreements executed in connection with the
transaction contemplated in the Purchase Agreement);

WHEREAS, this Agreement is one part of three simultaneous transactions, all of
which are contingent upon the execution of the others and none of which shall be
executed without the execution of the others (the “Simultaneous Transactions”);

WHEREAS, the Simultaneous Transactions shall include, along with this
Agreement,  an agreement for a new and additional financing by the Company on
terms as set forth in Exhibit A, attached (the “New Financing”); and the
issuance of new warrants to Midtown Partners & CO, LLC and its assigns, which
acted as the placement agent with respect to the Transaction Documents
(“Midtown”), replacing its current warrants (which it received pursuant to its
placement agent agreement) with new warrants registered under its name to
purchase up to the same number of warrants as Midtown would have otherwise been
entitled to purchase, as of the date of this Agreement, with a new exercise
price equal to $0.20 (“New Midtown Warrants”);

WHEREAS, the Company desires to have all of the remaining outstanding shares of
Preferred Stock converted to common stock of the Company, par value $0.001 per
share (“Common Stock”) or redeemed in cash, pursuant to the terms hereof;

 
NOW THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Executing Holder
agree as follows:

1.    
Defined Terms.  Any capitalized terms not otherwise defined herein shall have
the same meaning as ascribed to it in the Transaction Documents.

2.    
Amendments.  Subject to the terms and conditions herein, the Transaction
Documents are hereby amended as follows:

a.    
 The definition of “Exercise Price” in Section 2(b) of each of the Warrants is
hereby deleted and replaced in its entirety with the following:

 
“The exercise price per share of the Common Stock under this Warrant shall be
$0.20, subject to adjustment hereunder (the “Exercise Price”).”

 

 
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b.    
The “Termination Date” of each of the Warrants is hereby amended and extended
until September 22, 2014.

c.    
The definition of “Exempt Issuance” in the Purchase Agreement is hereby amended
to add the following as new clause “g”:  “(g) solely for purposes of Section
3(b) of the Warrants, shares of Common Stock issued in the “New Financing” (as
defined in that certain Amendment, Redemption and Conversion Agreement dated
September 22, 2009 among the Company and investors signatory thereto).”

3.    
Conversion and Redemption of Shares of Preferred Stock.  Each Executing Holder
shall select its choice of one of the following options (with the choice of each
Executing Holder being recorded on the respective signatory pages attached
hereto and incorporated herein by reference):

a.    
At the Closing (as defined below), the Executing Holder shall sell and the
Company shall redeem 23.41% of the current unconverted shares of Preferred Stock
of said Executing Holder for $8,500.00 per share of the Preferred Stock in
certified funds; and the Executing Holder shall convert the balance of its
shares of Preferred Stock into Common Stock at a rate of $1.25 per share and the
Company shall deliver said shares.  The exact disbursement of shares of Common
Stock and of funds for each Executing Holder choosing this option is listed on
the respective signatory pages (“Option A”); OR

b.    
At the Closing, the Executing Holder shall convert all of its shares of
Preferred Stock for twice as many Conversion Shares as said Executing Holder
would have otherwise currently been entitled to receive under the Transaction
Documents, and the Company shall deliver said shares.  The exact number of
shares of Common Stock to be issued to the respective Executing Holder at the
time of conversion in exchange for the conversion of all of the Executing
Holder’s shares of Preferred Stock is listed on the Executing Holder’s signatory
page (“Option B”).

 
4.    
Closing.  The closing (“Closing”) hereunder with respect to the transactions
contemplated herein shall occur on or before October 15, 2009 (“Closing
Deadline”) at a time and place as designated in the sole discretion of the
Company.  The Company shall notify each Executing Holder the business day before
the Closing is to occur.  If the Closing does not occur on or before the Closing
Deadline, then this Agreement and all of the Simultaneous Agreements shall
automatically terminate and be rendered null and void.  At the time of the
Closing, the Company shall distribute, or cause to be distributed, to the
Executing Holders funds and stock, and except as expressly amended herein and in
accordance herewith, the Executing Holders shall convert all of their remaining
shares of Preferred Stock (not redeemed) into Common Stock in accordance with
the procedure for conversion under the Certificate of Designation, using the
same Notice of Conversion form from the Certificate of Designation which is
attached hereto as Exhibit B.    Shares of Common Stock issuable upon conversion
of each Executing Holder’s Preferred Stock on the Closing shall be issued
without any legends, electronically, pursuant to such Executing Holder’s
electronic DWAC delivery instructions on its signature page hereto and on the
Notice of Conversion.   Cash payments for shares of Preferred Stock being
redeemed pursuant to the terms hereof shall be made on the date of the Closing,
via wire transfer, pursuant to the instructions set forth on such Executing
Holder’s signature page hereto (or such other wiring information provided in
writing to the Company by such Executing Holder).

5.    
Governing Law.  All questions concerning the construction, validity, enforcement
and interpretation of the Transaction Documents shall be governed by and
construed and enforced in

 
 
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accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof.  Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York.  Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding.  Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof.  Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other
manner permitted by law.   If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its reasonable attorneys’ fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.

 
6.    
Representations and Warranties.  The Company hereby makes to the Executing
Holders the following representations and warranties:

 
a.    
Authorization; Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its obligations hereunder and
thereunder.  The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company, its board of directors or its stockholders in
connection therewith.  This Agreement has been duly executed by the Company and,
when delivered in accordance with the terms hereof will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 
b.    
No Conflicts.  The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby do not and will not: (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or

 
 
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without notice, lapse of time or both) of, any material agreement, credit
facility, debt or other material instrument (evidencing a Company or Subsidiary
debt or otherwise) or other material understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or reasonably be expected to result in a Material Adverse
Effect.

 
c.   
Equal Consideration.  Except as set forth in this Agreement, no consideration
has been offered or paid to any person to amend or consent to a waiver,
modification, forbearance or otherwise of any provision of any of the
Transaction Documents.

 
7.    
Effectiveness.  The foregoing waivers shall not be effective unless and until
all Executing Holders shall have agreed to the terms and conditions
hereunder.  The waivers, amendments, agreements and obligations of the Executing
Holders set forth herein shall be null and void in the event the transactions
contemplated hereby are not consummated on or before October 15, 2009. In
addition, the respective obligations, amendments, agreements and waivers of the
Executing Holders hereunder are subject to the following conditions being met:
(a) the accuracy in all material respects of the representations and warranties
of the Company contained herein (except for those representations and warranties
that are qualified by materiality or Material Adverse Effect, which shall be
true and correct in all respects) and (b) the performance by the Company of all
if its obligations, covenants and agreements required to be performed hereunder.
Except as expressly set forth above, all of the terms and conditions of the
Transaction Documents shall continue in full force and effect after the
execution of this Agreement and shall not be in any way changed, modified or
superseded by the terms set forth herein.

 
8.    
Publicity.  The Company shall, on or before 8:30 AM (NY time) on the 1st Trading
Day following the date hereof, issue a Current Report on Form 8-K, reasonably
acceptable to the Executing Holders, disclosing the material terms of the
transactions contemplated hereby, and shall attach this Agreement and all other
related agreements thereto. The Company shall consult with the Executing Holders
in issuing any other press releases with respect to the transactions
contemplated hereby.

 
9.    
Construction. The parties agree that each of them and/or their respective
counsel has reviewed and had an opportunity to revise this Agreement and,
therefore, the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments hereto.

10.    
Amendment.  This Agreement may not be modified or amended or the provisions
hereof waived except with the written consent of the Company and the respective
Executing Holder(s).

11.    
Entire Agreement.  This Agreement, together with its exhibit(s), contain the
entire understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into
this Agreement.

12.    
Successors and Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns.

 
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13.    
Independent Nature of Executing Holders’ Obligations and Rights.  The
obligations of each Executing Holder under this Agreement are several and not
joint with the obligations of any other Executing Holder, and no Executing
Holder shall be responsible in any way for the performance or non-performance of
the obligations of any other Executing Holder.  Nothing contained herein, and no
action taken by any Executing Holder pursuant hereto, shall be deemed to
constitute the Executing Holders a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Executing Holders
are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated by this Agreement.  Each Executing Holder shall
be entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement, and it shall not be
necessary for any other Executing Holder to be joined as an additional party in
any proceeding for such purpose.  Each Executing Holder has been represented by
its own separate legal counsel in their review and negotiation of this
Agreement.

14.    
Execution.  This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.  In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.

15.    
Headings.  The headings used in this Agreement are for the convenience of
reference only and shall not, for any purpose, be deemed as part of this
Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW]

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatures as of the date first
indicated above.

THE COMPANY:
SPICY PICKLE FRANCHISING, INC.

By:                                                                             
Name: Marc Geman
Title: Chief Executive Officer

Address/Facsimile Number/Email Address for Notice:
90 Madison Street, Suite 700
Denver, CO 80206
Phone: (303) 951-2530
Facsimile Number: (303) 297-1903
Email Address: Marc.Geman@spicypickle.com

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR EXECUTING HOLDERS FOLLOWS]

 
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[EXECUTING HOLDER SIGNATURE PAGES TO AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

[Signatures and identifying information for the following:]

Executing Holder
# of Shares of Preferred Stock
Option Selected
Enable Growth Partners LP
341
Option A - $678,606 cash
1,775,915 shares of common stock
Enable Opportunity Partners LP
51
Option A - $101,492 cash
1,020,000 shares of common stock
Pierce Diversified Strategy Master Fund LLC, ENA
10
Option A - $19,900 cash
52,080 shares of common stock
Presley Reed and Patricia Stacey Reed, Tenants in Common
120
Option B – 2,400,000 shares of common stock
Steven and Judith Combs
12
Option B – 240,000 shares of common stock
Marketbyte LLC Defined Benefit Plan Trust
12
Option B – 240,000 shares of common stock
Marilyn D. Herter Trust
12
Option B – 240,000 shares of common stock
Desert lake Advisors Inc. Defined Benefit Plan
12
Option B – 240,000 shares of common stock
David Andrew Piper and Deborah Cooke-Smith
12
Option B – 240,000 shares of common stock
Raymond J. BonAnno and Joan E. BonAnno, JTWROS
12
Option B – 240,000 shares of common stock
Keith and Angela Oxenreider, JTIC
12
Option B – 240,000 shares of common stock
R. James BonAnno, Jr.
12
Option B – 240,000 shares of common stock
Mark Abdou
7.46
Option B – 149,200 shares of common stock
Bristol Investment Fund, Ltd.
13.42
Option B – 268,400 shares of common stock

 
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EXHIBIT A

TERMS OF NEW OFFERING

Securities…………………..
25 Units, each Unit consisting of 769,231 shares of Common Stock and a warrant
to purchase an additional 384,615 shares of Common Stock, at a price of $100,000
per Unit.

Minimum Offering………..
18 Units ($1,800,000)

Description of warrants……
Each warrant will represent the right to purchase one share of Common Stock. The
initial exercise price of the warrants will be equal to 120%  of the price per
share of Common Stock calculated as the average of the VWAP for the 10 trading
days prior to the subscription related thereto.  Each warrant will expire on the
5th anniversary of the completion of this offering.

Investors……………………
The offering is being made only to accredited investors.

Pre-Conditions……………..
All Executing Holders must have agreed to convert and/or permit the Company to
redeem all of their respective Preferred Stock pursuant to the Agreement, and
the Transaction Documents must be amended per that agreement with the Executing
Holders.  The exercise price of all warrants issued with the placement of the
Series A Convertible Preferred Stock must have been reset per agreement with the
Executing Holders.

Future Financings…………..
From the closing of this offering and for a period of 60 days, the Company will
not undertake any further equity or equity-linked financings.

Use of Proceeds…………….
We anticipate raising approximately $2,500,000 in this offering, which may be
reduced by such amount as we may determine in our sole discretion.  We will use
the net proceeds for working capital and redemption of certain shares of
existing Series A Convertible Preferred securities.

OTC trading symbol…………
SPKL.OB

 
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EXHIBIT B

NOTICE OF CONVERSION

(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF PREFERRED
STOCK)

The undersigned hereby elects to convert the number of shares of  Series A
Variable Rate Convertible Preferred Stock indicated below into shares of common
stock, par value $0.001 per share (the “Common Stock”), of Spicy Pickle
Franchising, Inc., a Colorado corporation (the “Corporation”), according to the
conditions hereof, as of the date written below. If shares of Common Stock are
to be issued in the name of a Person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as may be required by the Corporation in
accordance with the Purchase Agreement. No fee will be charged to the Holders
for any conversion, except for any such transfer taxes.

Conversion calculations:
 
Date to Effect Conversion: _____________________________________________
 
Number of shares of Preferred Stock owned prior to Conversion: _______________
 
Number of shares of Preferred Stock to be Converted: ________________________
 
Stated Value of shares of Preferred Stock to be Converted: ____________________
 
Number of shares of Common Stock to be Issued: ___________________________
 
Applicable Conversion Price:____________________________________________
 
Number of shares of Preferred Stock subsequent to Conversion: ________________
 
 
or
DWAC Instructions:
Broker no: _________
Account no: ___________
 
 
[HOLDER]
 
By:___________________________________
     Name:
     Title:

 
 

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