EXHIBIT 10.2
SECURITY AGREEMENT WITH PRESLEY AND PATRICIA STACEY REED
AND RAYMOND AND JOAN BONANNO DATED DECEMBER 5, 2011
EXECUTION VERSION
SECURITY AGREEMENT
This SECURITY AGREEMENT (the "Agreement"), dated as of December 5, 2011, is by
and between Spicy Pickle Franchising, Inc., a Colorado corporation (the
"Grantor"), Presley Reed and Patricia Stacey Reed (collectively, the "Reeds"),
and Raymond BonAnno and Joan BonAnno (collectively, the "BonAnnos", and together
with the Reeds, the "Secured Parties").
Each of the Grantor, the Reeds, and the
BonAnnos are sometimes individually referred to herein as a "Party" and
sometimes collectively as the "Parties."
Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Loan Agreement.
Recitals
WHEREAS, the Reeds hold (i) a Convertible Promissory Note, dated September 30,
2009, as amended on May 10, 2010, issued by the Grantor; (ii) a Convertible
Promissory Note, dated May 10, 2010, issued by the Grantor; (iii) and a
Convertible Promissory Note, dated April 15, 2011, issued by the Grantor
(collectively, the "Reed Debt");
WHEREAS, the BonAnnos hold (i) a Convertible Promissory Note, dated September
30, 2009, as amended on May 10, 2010, issued by the Grantor; and (ii) a
Convertible Promissory Note, dated April 15, 2011, issued by the Grantor;
(collectively, the "BonAnno Debt");
WHEREAS, the Grantor has entered into a Loan Agreement with the Secured Parties,
dated of even date herewith (the "Loan Agreement");
WHEREAS, in connection with the Loan Agreement, the Grantor has issued Senior
Secured Promissory Notes to the Secured Parties, dated of even date herewith
(the "Notes");
WHEREAS, in connection with the Loan Agreement and the Notes, the Grantor and
the Secured Parties have entered into a Revenue Participation Agreement, dated
of even date herewith (the "Revenue Participation Agreement").
WHEREAS, as a condition to the consummation of the transactions contemplated by
the Loan Agreement and the Notes and to induce the Secured Parties to consummate
the transactions set forth in the Loan Agreement and the Notes, the Grantor has
agreed to secure its obligations under the Notes, the Reed Debt, and the BonAnno
debt by entering into this Agreement.
Agreement
NOW, THEREFORE, the Grantor and the Secured Parties hereby agree as follows:
1.
Grant of Security Interest.
The Grantor hereby pledges, collaterally
assigns and grants to the Secured Parties as security for all present and future
obligations, indebtedness and liabilities of all kinds of the Grantor to the
Secured Parties under the Reed Debt, the BonAnno Debt, the Notes, the Loan
Agreement, the Revenue Participation Agreement, and the transaction contemplated
by any of the foregoing (collectively referred to as the "Secured Obligations"),
a continuing security
interest in, all right, title and interest of the Grantor in and to all of the
following property, whether now owned or existing or hereafter acquired or
arising, regardless of where located and howsoever the Grantor's interests
therein arise, whether by ownership, security interest, claim or otherwise:
All assets of the Company, tangible or intangible, including, but not limited
to,