8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 31, 2018

SPENDSMART NETWORKS, INC.

DELAWARE	000-27145	33-0756798
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

805 Aerovista Place, Suite 205

San Luis Obispo, CA 93401

(Address of principal executive offices)

(866) 497-6081

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):

☐ 

Written communications pursuant to Rule 425 under the Securities Act of 1933 (17 CFR 230.425)

☐ 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ 

Pre-commencement communications pursuant to Rule 13e-4(e) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)

Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01. Entry into a Material Definitive Agreement.

As previously disclosed in the Company’s Current Report on Form 8-K filed on October 11, 2017, the Company and Eclipse Marketing LLC (the “Purchaser”) entered into a Stock Purchase Agreement dated as of October 5, 2017 (the “Purchase Agreement”) pursuant to which the Company agreed to sell to the Purchaser all of its operating assets (the “Asset Sale”). The Asset Sale was to be effected by the sale to Purchaser of all the capital stock of SpendSmart Networks, Inc., the wholly owned California subsidy of the Company (the “Subsidiary”). Pursuant to the First Amendment to Stock Purchase Agreement, the purchase price for the Asset Sale was changed to $2,150,000 payable (a) $1,400,000 in cash less outstanding balances of Company credit cards and certain liabilities and (b) the delivery of a secured promissory note of the Purchaser in the principal amount of $750,000 providing for $20,000 per month payments and having a fifteen month term. The note is secured by the assets of the Subsidiary pursuant to a Security Agreement between the Company and the Purchaser.

Item. 2.01. Completion of Acquisition or Disposition.

The consummation of the Asset Sale referenced in Item 1.01 was completed on January 31, 2018, and the Company received net cash of $1,234,093.34.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b) Effective January 31, 2018, Charles Gerencser resigned as Chief Revenue Officer.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

Exhibit No.	Description
4.1	Secured Promissory Note of Eclipse Marketing LLC dated January 31, 2018
10.1	First Amendment to Stock Purchase Agreement dated as of October 5, 2017
10.2	Security Agreement dated as of January 31, 2018 between the Company and Eclipse Marketing LLC

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EXHIBIT INDEX

Exhibit No.	Description
4.1	Secured Promissory Note of Eclipse Marketing LLC dated January 31, 2018
10.1	First Amendment to Stock Purchase Agreement dated as of October 5, 2017
10.2	Security Agreement dated as of January 31, 2018 between the Company and Eclipse Marketing LLC

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SPENDSMART NETWORKS, INC.
Date: February 1, 2018	By:	/s/ Luke Wallace
		Chief Executive Officer

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EX-4.1

EXHIBIT 4.1

SECURED PROMISSORY NOTE

FOR VALUE RECEIVED, and subject to the terms and conditions set forth herein, Eclipse Marketing LLC, a Delaware limited liability company (the “Maker”), hereby unconditionally promises to pay to the order of SpendSmart Networks, Inc., a Delaware corporation (the “Noteholder”, and together with the Maker, the “Parties”), the principal amount of $750,000 (the “Debt”), together with all accrued interest thereon, as provided in this Secured Promissory Note (the “Note”, as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with its terms).

1.           Definitions. Capitalized terms used herein shall have the meanings set forth in this Section 1.

“AAA” has the meaning set forth in Section 7.3(a).

“Applicable Rate” means 3%.

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in Detroit, Michigan are authorized or required by law to close.

“Company” means SpendSmart Networks, Inc., a California corporation.

“Debt” has the meaning set forth in the introductory paragraph.

“Effective Date” means January 31, 2018.

“Governmental Authority” means the government of any nation or any political subdivision thereof, whether at the national, state, territorial, provincial, municipal or any other level, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining to, government (including any supranational bodies such as the European Union or the European Central Bank).

“Law” as to any Person, means any law (including common law), statute, ordinance, treaty, rule, regulation, policy or requirement of any Governmental Authority and authoritative interpretations thereon, whether now or hereafter in effect, in each case, applicable to or binding on such Person or any of its properties or to which such Person or any of its properties is subject.

“Maker” has the meaning set forth in the introductory paragraph.

“Maturity Date” means the date that is the fifteen-month anniversary of the Effective Date.

“Non-Payment Default” has the meaning set forth in Section 6.3(a).

“Note” has the meaning set forth in the introductory paragraph.

“Noteholder” has the meaning set forth in the introductory paragraph.

“Parties” has the meaning set forth in the introductory paragraph.

“Person” means any individual, corporation, limited liability company, trust, joint venture, association, company, limited or general partnership, unincorporated organization, Governmental Authority or other entity.

“Security Agreement” means the Security Agreement, dated as of the date hereof, by and between the Company and Noteholder, as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with its terms.

“Senior Debt” means the principal of, premium, if any, interest (including interest accruing subsequent to the filing of a petition initiating any proceeding under any state, federal or foreign bankruptcy law, whether or not a claim for post-petition interest is allowable as a claim in any such proceeding) and rent payable on or termination payment with respect to or in connection with, and all fees, costs, expenses, reimbursement amounts, indemnities and other amounts accrued or due on or in connection with, senior debt facilities or other working capital financings owed of the Maker or the Company, whether outstanding on the date of this Note or thereafter created, incurred, assumed, guaranteed or in effect guaranteed by the Maker and/or the Company (including all deferrals, renewals, extensions or refundings of, or amendments, modifications or supplements to, the foregoing).

2.           Final Payment Date; Optional Prepayments.

2.1           Final Payment Date. The aggregate unpaid principal amount of the Debt, all accrued and unpaid interest and all other amounts payable under this Note shall be due and payable on the Maturity Date.

2.2           Optional Prepayment. The Maker may prepay the Debt in whole or in part at any time or from time to time without penalty or premium by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment.

3.           Security Agreement. The Maker’s performance of its obligations hereunder is secured by a security interest in the collateral specified in the Security Agreement.

4.           Interest.

4.1           Interest Rate. Except as otherwise provided herein, the outstanding principal amount of the Debt made hereunder shall bear interest at the Applicable Rate from the Effective Date until the Debt is paid in full, whether at maturity, upon acceleration, by prepayment or otherwise.

4.2           Computation of Interest. All computations of interest shall be made on the basis of a year of 365 days and the actual number of days elapsed. Interest shall accrue on the Debt on the Effective Date and shall not accrue on the Debt on the day on which it is paid.

4.3           Interest Rate Limitation. If at any time and for any reason whatsoever, the interest rate payable on the Debt shall exceed the maximum rate of interest permitted to be charged by the Noteholder to the Maker under applicable Law, that portion of each sum paid attributable to that portion of such interest rate that exceeds the maximum rate of interest permitted by applicable Law shall be deemed a voluntary prepayment of principal.

5.           Payment Mechanics.

5.1           Payment Dates. The Debt shall be payable in monthly installments of $20,000 beginning on the last day of the calendar month that follows the month in which the Effective Date occurs and every last-day of each calendar month thereafter; provided that all amounts outstanding under this Note, including all accrued and unpaid interest, shall be due and payable on the Maturity Date.

5.2           Manner of Payment. All payments of interest and principal shall be made in lawful money of the United States of America on the date on which such payment is due by cashier’s check, certified check or by wire transfer of immediately available funds to the Noteholder’s account at a bank specified by the Noteholder in writing to the Maker from time to time.

5.3           Application of Payments. All payments made hereunder shall be applied first, to accrued interest and second, to the payment of the principal amount outstanding under the Note.

5.4           Business Day Convention. Whenever any payment to be made hereunder shall be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension will be taken into account in calculating the amount of interest payable under this Note.

6.           Subordination. Notwithstanding any provision in this Note to the contrary, the following provisions apply to the Parties and, to the extent contemplated below, relieve the Maker of its payment obligations hereunder. For the avoidance of doubt, neither the Maker nor the Company shall be liable for any amount or damage that arises from or in connection with compliance with, or acts or omissions made in accordance with or permitted by, this Article.

6.1           Agreement to Subordinate. The Noteholder agrees that the Debt is and shall be subordinate, to the extent and in the manner hereinafter set forth, to the prior payment or satisfaction of all Senior Debt, including any such Senior Debt incurred, created, assumed or guaranteed after the date hereof, and that the subordination is for the benefit of and enforceable by the holders of such Senior Debt.

6.2           Liquidation; Dissolution; Bankruptcy. The holders of the Senior Debt shall first be entitled to receive payment in full of all amounts due on or in respect of such Senior Debt (including interest after commencement of any bankruptcy proceeding at the rate specified in the documentation for the applicable Senior Debt) or provision shall be made for such amount, or other payments satisfactory to the holders of Senior Debt, before the Noteholder shall be entitled to receive any payment with respect to the Debt, in the event of any distribution to creditors of the Maker and/or the Company, as applicable, in (a) any liquidation or dissolution; (b) any bankruptcy, reorganization, insolvency, receivership or similar proceeding: (c) any assignment for the benefit of creditors; or (d) any marshalling of assets or liabilities.

6.3           Default on Senior Debt.

(a)           The Maker shall not make any payment in respect of the Debt if a payment default on Senior Debt occurs and is continuing, the maturity of all or any portion of Senior Debt has been accelerated due to the occurrence of an event of default in accordance with its terms, or any other default (a “Non-Payment Default”) occurs and is continuing on all or any portion of Senior Debt that permits the holder of such Senior Debt to accelerate its maturity.

(b)           Payments on the Note may and will be resumed: (i) in the case of a payment default on or acceleration of Senior Debt, on the date on which such default is cured or waived and any such acceleration is rescinded or on which such Senior Debt is discharged or paid in full or other payment satisfactory to the holders of such Senior Debt; and (ii) in the case of a Non-Payment Default, on the date on which such default is cured or waived or on which such Senior Debt is discharged or paid in full or other payment satisfactory to the holders of such Senior Debt.

6.4           When Distribution Must be Paid Over. If a payment or distribution is made to the Noteholder that because of this Article should not have been made, the Noteholder shall hold it in trust for the holders of Senior Debt, segregated from other funds and property held by the Noteholder, and pay it over to them (or their proper representative) as their interests may appear.

6.5           Impairment of Subordination. No right of any holder of Senior Debt to enforce the subordination of this Note shall be impaired by any act or failure to act by the Maker, the Company or the Noteholder or by the failure of the Maker, the Company or the Noteholder to comply with this Note.

6.6           Authorization to Effect Subordination. The Noteholder, by accepting this Note, authorizes and directs the Maker on the Noteholder’s behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article and appoints the Maker to act as the Noteholder’s attorney-in-fact for any and all such purposes. Without limiting the foregoing, the Noteholder will, at any time and from time and at the Noteholder’s expense, promptly execute and deliver all further instruments, documents and agreements, and take all further action, that may be necessary or desirable or that the Maker may reasonably request in order to protect any right or interest granted or purported to be granted hereby or to enable the Maker, the Company or any holder of Senior debt to exercise its rights and remedies hereunder.

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6.7           Waivers. The Noteholder hereby waives promptness, diligence, notice of acceptance and any other notice with respect to the Senior Debt and this Article and any requirement that any holder of Senior Debt protect, secure, perfect or insure any security interest or any property subject thereto or exhaust any right or take any action against the Maker, the Company, any other Person or any collateral. The Parties agree that the rights and interests of the holders of Senior Debt hereunder and the obligations and agreements of the Noteholder under this Article shall remain in full force and effect regardless of: (a) any lack of validity or enforceability of the Senior Debt, or any other agreement or instrument relating thereto; (b) any change in the time, manner, place or terms of payment, or in any other term of, all or any part of the Senior Debt, or any other amendment or waiver of or any consent to modify the Senior Debt, including, without limitation, any increase in the obligations under the Senior Debt from additional extensions of credit or otherwise; (c) any taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or other modification of any guaranty, for the Senior Debt; (d) any manner of application of collateral, including proceeds, to the Senior Debt, or any manner of sale or other disposition of any collateral for the Senior Debt or any other assets of the Maker or the Company; (e) any modification or termination of the corporate structure or existence of the Maker or the Company; or (f) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Maker, the Company or a subordinated creditor.

6.8           Reinstatement. The provisions of this Article shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Senior Debt is rescinded or must otherwise by returned upon the insolvency, bankruptcy or reorganization of the Maker, the Company or otherwise, all as though such payment had not been made.

6.9           No Waiver; Remedies. No failure or delay by any holder of Senior Debt to exercise any of its rights and remedies under this Article shall constitute a waiver thereof, nor shall any partial exercise of any right or remedy preclude any further exercise of such right or of any other right. The remedies herein are cumulative and not exclusive of any remedies provided by law.

6.10           Continuing Agreement; Assignments. The provisions of this Article constitute a continuing agreement and shall remain in full force and effect until payment in full of the Senior Debt, be binding on the Noteholder and its respective successors and assigns, and inure to the benefit of, and be enforceable by, the holders of the Senior Debt and their respective successors and assigns Any holder of Senior Debt may assign or otherwise transfer all or a part of its rights and obligations under the Senior Debt to any other Person and such Person shall thereupon be vested with all the rights granted in this Article to such holder of Senior Debt in respect thereof.

7.           Miscellaneous.

7.1           Notices. All notices, requests or other communications required or permitted to be delivered hereunder shall be delivered in writing, to such address and otherwise in accordance with that certain Stock Purchase Agreement, dated October 5, 2017, by and between the Parties (“SPA”). Notwithstanding any provision in this Note to the contrary, the Noteholder acknowledges and agrees that, in the event the Noteholder becomes liable for payments due to the Maker under the SPA, the Maker may, in its sole discretion, offset the amounts due from the Maker hereunder by the amount of such payments.

7.2           Governing Law. This Note, the Security Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Note and the Security Agreement and the transactions contemplated hereby and thereby shall be governed by the laws of the State of Michigan without giving effect to any choice or conflict of law provision or rule (whether of the State of Michigan or any other jurisdiction).

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7.3           Arbitration.

(a)           Except for claims seeking injunctive or other equitable relief, any controversy or claim arising out of or relating to this Note or the Security Agreement or a breach of either of the foregoing, shall be settled by binding arbitration in Detroit, Michigan (or such other location as may be agreed to by the parties) to be administered by the American Arbitration Association (“AAA”) in accordance with its then-prevailing Commercial Rules of Arbitration. The Maker and the Noteholder shall select an arbitrator from a list provided by the AAA that is mutually satisfactory to them. If the Maker and the Noteholder are unable to agree on an arbitrator, then each (i.e., the Maker on the one hand and the Noteholder on the other) shall choose an arbitrator from a list provided by the AAA. The two arbitrators so selected shall then select a third arbitrator mutually satisfactory to them from the list provided by the AAA. The single arbitrator so selected by the aforesaid procedure shall hear the dispute and decide it. The arbitrator selected shall not be a present or former officer, employee, consultant or representative of any of the parties or any of their affiliates. The arbitrator shall have a background and training in the general areas of law covered by this Note and the Security Agreement. The arbitrator shall have the right to award costs, fees and expenses, including, without limitation, the arbitrator’s fees and reasonable attorneys’ fees, to the prevailing party. A party shall be entitled to have a judgment entered on the determination or decision of the arbitrator in any court of competent jurisdiction. The award of the arbitrator shall be binding and final on all parties.

(b)           EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS NOTE OR THE SECURITY AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS NOTE, THE SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS NOTE CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS NOTE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

7.4           Counterparts; Integration; Effectiveness. This Note and any amendments, waivers, consents or supplements hereto may be executed in counterparts, each of which shall constitute an original, but all taken together shall constitute a single contract. This Note and the Security Agreement constitute the entire contract between the Parties with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect thereto. Delivery of an executed counterpart of a signature page to this Note by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Note.

7.5           Successors and Assigns. This Note shall inure to the benefit of and be binding upon the parties hereto and their permitted assigns.

7.6           Amendments and Waivers. No term of this Note may be waived, modified or amended except by an instrument in writing signed by both of the parties hereto. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given.

7.7           Headings. The headings of the various Sections and subsections herein are for reference only and shall not define, modify, expand or limit any of the terms or provisions hereof.

7.8           Severability. If any term or provision of this Note or the Security Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Note or the Security Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Maker has executed this Note as of the Effective Date.

Eclipse Marketing LLC

By_____________________

Name: Michael C. Skaff

Title: Authorized Person

ACKNOWLEDGED AND AGREED:

SpendSmart Networks, Inc.

By____________________

Name: Luke Wallace

Title: Chief Executive Officer

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EX-10.1

EXHIBIT 10.1

FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT

This First Amendment to Stock Purchase Agreement (“Amendment”) is effective as of November 15, 2017 and amends that certain Stock Purchase Agreement, dated as of October 5, 2017 (“SPA”), by and between SpendSmart Networks, Inc., a Delaware corporation (“Seller”), and Eclipse Marketing LLC, a Delaware limited liability company (“Buyer”). In consideration of the mutual benefits to be derived herefrom, Seller and Buyer amend the SPA as follows:

1.           The definition of “Ancillary Documents” in Article I is hereby deleted in its entirety and replaced with the following: “Ancillary Documents” means a transition services agreement in form and substance reasonably satisfactory to Buyer, the Note, a security agreement securing the payment obligations under the aforementioned promissory note with the assets of the Company in form and substance reasonably satisfactory to Buyer and Seller, and other documents, certificates and agreements to be delivered in connection with this Agreement or otherwise requested by Buyer, in form and substance satisfactory to Buyer.

2.           The following defined term and associated definition is hereby added to Article I: “Note” means a promissory note with a principal amount of $750,000, subject to increase in accordance with Section 2.02, requiring $20,000 per month payments and having a fifteen-month term, in form and substance reasonably satisfactory to Buyer and Seller.

3.           Section 2.02 is hereby deleted in its entirety and replaced with the following: The aggregate purchase price for the Shares shall be $2,150,000 (the “Purchase Price”) and payable as follows: at Closing, (a) the Buyer shall pay $1,400,000 less outstanding balances of Company credit cards as reasonably determined by Buyer as of Closing and those amounts that are described in Exhibit D attached hereto (the “Closing Date Payment”) by wire transfer of immediately available funds to an account designated by Seller to Buyer in writing and (b) the Buyer shall deliver the Note. In the event a 338(h)(10) or 336(e) election is made, the parties agree to allocate the Purchase Price for tax purposes as provided in Section 6.05. Notwithstanding the foregoing or any provision in this Agreement to the contrary, the parties acknowledge and agree that the principal amount due under the Note from Buyer to Seller shall increase by $5,000 for each business day between January 31, 2018 and the Closing Date, if any, unless the failure to close the transactions contemplated hereby by January 31, 2018 is due to the failure of Seller to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing or is otherwise at Seller’s election.

4.           The following is added as a new Section 5.14: Within five (5) business days of Closing, Seller shall pay all Transaction Expenses and Indebtedness that are described in Exhibit E and shall, promptly thereafter, provide Buyer with evidence of same.

5.           The following is added as a new Section 7.02(v): Seller shall have established admin user accounts (e.g., user ID and password) and user accounts (e.g., user ID and password) in, and otherwise provide access to, all Company systems and technology, vendor, payroll, banking and credit card accounts, including, without limitation, password management systems, software accounts and bank accounts. In addition, Seller shall have established Charles Gerencser as a signer on all Company bank accounts and authorized contract on all major vendor accounts.

6.           The first sentence of Section 8.04(a) is hereby deleted in its entirety and replaced with the following: Seller shall not be liable to the Buyer Indemnitees under Section 8.02(a) until the aggregate amount of all Losses in respect of indemnification under Section 8.02(a) exceeds $250,000 (the “Basket”), in which event Seller shall be required to pay or be liable for all such Losses in excess of the Basket.

7.           Section 8.04(e) is hereby deleted in its entirety and replaced with the following: Any indemnification obligation of the Seller pursuant to Section 8.02 shall be effected by wire transfer of immediately available funds from the Seller to an account designated in writing by the applicable Buyer Indemnitee within fifteen (15) days after the determination thereof. Notwithstanding the foregoing, in lieu of receiving such payment from the Seller, the Buyer may, in its sole discretion, offset the amounts due from the Buyer to the Seller under the Note by the amount of such payment.

8.           Section 9.01(b)(ii) is hereby deleted in its entirety and replaced with the following: (ii) any of the conditions set forth in Section 7.01 or Section 7.02 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by January 31, 2018, unless such failure shall be due to the failure of Buyer to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing;

9.           Section 9.01(c)(ii) is hereby deleted in its entirety and replaced with the following: (ii) any of the conditions set forth in Section 7.01 or Section 7.03 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by January 31, 2018, unless such failure shall be due to the failure of Seller to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; or

10.           As amended hereby, the SPA remains valid and in full force and effect.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF , the parties hereto have caused this Amendment to be executed as of the date first written above by their respective officers thereunto duly authorized.

SpendSmart Networks, Inc.	Eclipse Marketing LLC
Signature:	Signature:
Name: Luke Wallace	Name: Michael C. Skaff
Title: Chief Executive Officer	Title: Authorized Person

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EXHIBIT D

Reconciliation of cash purchase price for the SSPC CA corporation vs. amount to be funded at closing:
Amount of cash purchase price:	$1,400,000.00
Less:
Assumption of AMEX card	56,075.94
Assumption of CB&T credit card	69,901.24
Amount of payroll, taxes and benefits - 1/25 - 1/31	39,929.00
Total cash purchase price reductions	$165,906.18
Amount to be wired to SSPC at closing	$1,234,093.82

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EXHIBIT E

Vendor	Pay at close
27 Holdings LLC	$5,576.00
Alicia Streger	$581.00
BizQuest	$1,330.00
Brian Greenwood	$2,500.00
City of San Luis Obispo	$2.55
Corporation Service Company	$477.52
Crushed Grape	$553.00
Crystal Springs	$830.00
Dan Bantly	$24,500.00
Darren Poore	$2,500.00
David Fowler V	$2,500.00
Digital West	$550.00
Digital West Account #992	$730.30
Executive Janitorial	$1,655.00
Experian Membership	$527.55
Fitch Even	$587.50
Franchise Direct	$420.00
Franchise for Professionals	$1,960.00
Franchise Opportunities	$3,275.00
Gaspar Zavala	$2,500.00
Gusto	$15,000.00
Imurgent	$15,271.76
Inferior Elements	$3,160.00
ITransition, Inc.	$4,556.25
J. Carroll	$0.06
Jake Thompson	$78.40
James Campfield	$2,500.00
John D. Ott	$14,108.26
John Ellis	$9.80
John Rusin	$171.03
Jon Goodman	$259.80
Judy Clay	$2,500.00
MFV Exposition & Franchise Expo	$2,250.00
Mike Williams	$78.40
More Office Solutions	$41.75
Otaviano Mologni	$5,000.00
Plum Grove Printers	$301.36
Proven Franchises	$1,500.00
Rajarshi Chatterjee	$900.00
Sales Gravy	$250.00
Salesforce.com	$4,076.70
Samsung SDS America	$325.00
Scott O’Brien	$53.83
Security Servvices, LLC, A Neustar Company	$750.00
Shernelle Gerson	$2,500.00
Smart and Bigger	$655.00
Sprint	$1,037.09
Todd Durkin	$4,509.80
Trademark DB Corp	$996.00
TroyGould PC	$25,813.00
Ubiquity	$750.00
Valley VIP Deals	$6,000.00
Verizon	$406.32
Vivint	$597.70
YV Analytics	$950.00
Total - Vendor	$170,912.72
Held Payroll
11/15	$3,506.00
11/30	$7,569.00
12/15	$13,863.00
12/31	$16,984.00
1/15	$12,545.00
Total - Held Payroll	$54,467.00
PTO for Former Employees
Alex Minicucci	$28,000.00
Tim Boris	$9,421.72
Total - Former Employee PTO	$37,421.72
Total of items to be paid by SpendSmart DE	$262,801.44

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EX-10.2

EXHIBIT 10.2

SECURITY AGREEMENT

This Security Agreement, dated as of January 31st , 2018 (as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “Agreement”), is made by SpendSmart Networks, Inc., a California corporation (the “Grantor”), in favor of SpendSmart Networks, Inc., a Delaware corporation (the “Secured Party”).

WHEREAS, as of the date hereof, Eclipse Marketing LLC, a Delaware limited liability company (“Company”), owns all of the issued and outstanding shares of stock of the Grantor;

WHEREAS, on the date hereof, the Secured Party has entered into a Secured Promissory Note with the Company with an aggregate unpaid principal amount of $750,000 (such note, the “Note”); and

WHEREAS, this Agreement is given by the Grantor in favor of the Secured Party to secure the payment and performance of all of the Secured Obligations.

NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.            Definitions. For purposes of this Agreement, the following terms shall have the following meanings:

“Collateral” has the meaning set forth in Section 2.

“Event of Default” means the failure by the Company to make a payment that becomes due and owing under the Note within fifteen days after receipt by the Company from the Secured Party of such payment being overdue pursuant to the terms of the Note.

“Proceeds” means “proceeds” as such term is defined in the UCC and, in any event, shall include, without limitation, all dividends or other income from the Collateral, collections thereon or distributions with respect thereto.

“Secured Obligations” has the meaning set forth in Section 3.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of Michigan or, when the laws of any other state govern the method or manner of the perfection or enforcement of any security interest in any of the Collateral, the Uniform Commercial Code as in effect from time to time in such state.

2.           Grant of Security Interest. The Grantor hereby pledges and grants to the Secured Party, and hereby creates a continuing lien and security interest in favor of the Secured Party in and to all of its right, title and interest in and to the following, wherever located, whether now existing or hereafter from time to time arising or acquired (collectively, the “Collateral”):

(a)           all fixtures and personal property of every kind and nature including all accounts, goods, documents, instruments, promissory notes, chattel paper (whether tangible or electronic), letters of credit, letter-of-credit rights, securities and all other investment property, general intangibles (including all payment intangibles), money, deposit accounts, and any other contract rights or rights to the payment of money; and

(b)           all Proceeds and products of each of the foregoing, all books and records relating to the foregoing, all supporting obligations related thereto, and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to the Grantor from time to time with respect to any of the foregoing.

3.           Secured Obligations. The Collateral secures the due and prompt payment and performance of the obligations of the Company under the Note (all such obligations being herein collectively called the “Secured Obligations”).

4.           Perfection of Security Interest and Further Assurances.

(a)           The Grantor hereby irrevocably authorizes the Secured Party at any time and from time to time to file in any relevant jurisdiction any financing statements and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including any financing or continuation statements or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by the Grantor hereunder, without the signature of the Grantor where permitted by law, including the filing of a financing statement describing the Collateral as all assets now owned or hereafter acquired by the Grantor, or words of similar effect.

(b)           The Grantor agrees that at any time and from time to time, at the expense of the Secured Party, the Grantor will promptly execute and deliver all further instruments and documents, obtain such agreements from third parties, and take all further action, that the Secured Party may reasonably request, in order to create and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable the Secured Party to exercise and enforce its rights and remedies hereunder or under any other agreement with respect to any Collateral.

5.           Voting and Distributions.

(a)           The Secured Party agrees that unless an Event of Default shall have occurred and be continuing, the Grantor may, to the extent the Grantor has such right as a holder of the Collateral consisting of securities, other equity interests or indebtedness owed by any obligor, vote and give consents, ratifications and waivers with respect thereto, and from time to time, upon request from the Grantor, the Secured Party shall deliver to the Grantor suitable proxies so that the Grantor may cast such votes, consents, ratifications and waivers.

(b)           The Secured Party agrees that the Grantor may, unless an Event of Default shall have occurred and be continuing, receive and retain all dividends and other distributions with respect to the Collateral consisting of securities, other equity interests or indebtedness owed by any obligor.

6.           Remedies Upon Default. If any Event of Default shall have occurred and be continuing, the Secured Party, without any other notice to or demand upon the Grantor, may assert all rights and remedies of a secured party under the UCC or other applicable law, including, without limitation, the right to take possession of, hold, collect, sell, lease, deliver, grant options to purchase or otherwise retain, liquidate or dispose of all or any portion of the Collateral. If notice prior to disposition of the Collateral or any portion thereof is necessary under applicable law, written notice mailed to the Grantor at its notice address as provided in Section 8 hereof thirty days prior to the date of such disposition shall constitute reasonable notice, but notice given in any other reasonable manner shall be sufficient. So long as the sale of the Collateral is made in a commercially reasonable manner, the Secured Party may sell such Collateral on such terms and to such purchaser(s) as the Secured Party in its absolute discretion may choose, without assuming any credit risk and without any obligation to advertise or give notice of any kind other than that necessary under applicable law.

7.           Amendments. None of the terms or provisions of this Agreement may be amended, modified, supplemented, terminated or waived, and no consent to any departure by the Grantor therefrom shall be effective unless the same shall be in writing and signed by the Secured Party and the Grantor, and then such amendment, modification, supplement, waiver or consent shall be effective only in the specific instance and for the specific purpose for which made or given.

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8.           Addresses For Notices. All notices and other communications provided for in this Agreement shall be in writing and shall be given in the manner and become effective as set forth in the Note, and addressed to the respective parties at their addresses as specified on the signature pages hereof or as to either party at such other address as shall be designated by such party in a written notice to each other party (it being understood that notices and other communications addressed to the Grantor and delivered to the Company in accordance with the Note shall be deemed to be in compliance with this Section as a notice and/or other communication delivered to the Grantor).

9.           Continuing Security Interest; Further Actions. This Agreement shall create a continuing lien and security interest in the Collateral and shall (a) subject to Section 10, remain in full force and effect until payment and performance in full of the Secured Obligations, (b) be binding upon the Grantor, its successors and assigns, and (c) inure to the benefit of the Secured Party and its successors, transferees and assigns.

10.           Termination; Release. On the date on which all Secured Obligations have been paid and performed in full, the Secured Party will, at the request of the Grantor, (a) duly assign, transfer and deliver to or at the direction of the Grantor (without recourse and without any representation or warranty) such of the Collateral as may then remain in the possession of the Secured Party, together with any monies at the time held by the Secured Party hereunder, and (b) execute and deliver to the Grantor a proper instrument or instruments acknowledging the satisfaction and termination of this Agreement and the rights granted hereunder.

11.           Governing Law. This Agreement and the Note and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or the Note and the transactions contemplated hereby and thereby shall be governed by the laws of the State of Michigan without giving effect to any choice or conflict of law provision or rule (whether of the State of Michigan or any other jurisdiction).

12.           Arbitration. Except for claims seeking injunctive or other equitable relief, any controversy or claim arising out of or relating to this Agreement or the Note or a breach of either of the foregoing, shall be settled by binding arbitration in Detroit, Michigan (or such other location as may be agreed to by the parties) to be administered by the American Arbitration Association (“AAA”) in accordance with its then-prevailing Commercial Rules of Arbitration. Each Party shall select an arbitrator from a list provided by the AAA that is mutually satisfactory to them. If the Parties are unable to agree on an arbitrator, then each (i.e., the Grantor on the one hand and the Secured Party on the other) shall choose an arbitrator from a list provided by the AAA. The two arbitrators so selected shall then select a third arbitrator mutually satisfactory to them from the list provided by the AAA. The single arbitrator so selected by the aforesaid procedure shall hear the dispute and decide it. The arbitrator selected shall not be a present or former officer, employee, consultant or representative of any of the parties or any of their affiliates. The arbitrator shall have a background and training in the general areas of law covered by this Agreement and the Note. The arbitrator shall have the right to award costs, fees and expenses, including, without limitation, the arbitrator’s fees and reasonable attorneys’ fees, to the prevailing party. A party shall be entitled to have a judgment entered on the determination or decision of the arbitrator in any court of competent jurisdiction. The award of the arbitrator shall be binding and final on all parties. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE NOTE IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

13.           Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement. This Agreement and the Note constitute the entire contract among the parties with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect thereto.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

SpendSmart Networks, Inc., as Grantor

By____________________

Name: Michael C. Skaff

Title: Authorized Person

Address for Notices: 300 Park Street,

Suite 400, Birmingham, MI 48009

SpendSmart Networks, Inc.,

as Secured Party

By:__________________

Name: Luke Wallace

Title: Chief Executive Officer

Address for Notices: 805 Aerovista,

Suite 205, San Luis Obispo, CA 93401

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