Document:

Exhibit 10.1

SPIN-OFF AND ASSET TRANSFER AGREEMENT

 

This AMENDED AND RESTATED SPIN-OFF AGREEMENT (this “Agreement”),
is dated as of December 31, 2015, by and among TRUNITY HOLDINGS, Inc., a Delaware corporation (“Parent” or “PUBCO”),
TRUNITY, INC. (“OP SUB” or “Subsidiary”), a Delaware corporation and a wholly owned subsidiary of Parent,
and TRUNITY, INC. (“PRIVCO”), a newly formed Florida “C” corporation which was formed for the purpose of
holding all of the education software and services business activities and assets previously held by TRUNITY HOLDINGS, INC. and
TRUNITY, INC., both Delaware corporations. Tax Treatment of the transaction should be evaluated separately by the shareholders
and their tax advisors and no representation as to the tax impact is provided by any of the parties herein.

 

RECITALS

 

A. On December 31, 2015, the
parties hereto entered into a Spin-Off Agreement, which memorializes and documents an agreement among the parties previously
disclosed as a part of a restructuring plan for PUBCO, whose details with respect to the spin out of the educational business
activities as set forth herein. This agreement and the underlying terms have been authorized by a vote of the majority of the
PUBCO Board of Directors and a vote of 90% of the shares available to vote as represented by the holdings of the Series X
Preferred stock.

 

B. In accordance with the terms hereof, PUBCO will make a pro rata
distribution to PRIVCO, a private company, of all of the outstanding shares of capital stock of OP SUB and, as well as any other
assets relating to the educational software and services businesses of PUBCO, immediately thereafter, PRIVCO will make a pro rata
distribution of 100% of its shares to the common shareholders of PUBCO as of the record date of December 18, 2015 effecting a Spin-Off
of all of the educational software and services business assets and operations of PUBCO into PRIVCO. These assets are detailed
on Exhibit A to this agreement. The holders of the Series X Preferred Stock shall have no interest in PRIVCO or OP SUB

 

C. As a consequence of the Spin-Off, neither
OP SUB nor PRIVCO will be a Subsidiary (as defined herein) of PUBCO, and the companies will have no further relationship, except
to cooperate on any litigation, financial reporting, tax related matters or other actions required for regulatory matters.

 

D. Parent and PRIVCO desire to allocate certain rights and responsibilities
with respect to their debt obligations (as defined herein) and other responsibilities of Parent/PUBCO, Subsidiary/OP SUB and the
PRIVCO (as defined herein) and successors for periods before and after the Spin-Off and to provide for certain other matters.

 

E. The Parties have specifically notified their shareholders, and
interested parties, of the financial condition of the PUBCO, OP SUB, and PRIVCO, through disclosure in the PUBCO’s SEC Filings,
including but not limited to Form 10Q for the Period ended 9/30/15, Form 8K filed on December 15, 2015, and Form 8K filed on December
21, 2015, as well as in press releases to the general public. Included in these disclosures was an offer to creditors to convert
their debt obligations to common stock in the PUBCO, as well as an allocation of shares of PRIVCO based on the holdings as of December
18, 2015, the record date. That offer to convert debt was concluded on December 18, 2015. Copies of these documents are included
in the Exhibits to this document.

 

     

     

    

 

F. The Parties agree that all obligations of the PUBCO will remain
with the PUBCO, and that all obligations of the OP SUB will remain with the OP SUB, at the time of the Spin Out, or by the decision
of the Board of Directors of the newly formed PRIVCO, those obligations shall become an obligation of PRIVCO. Any obligation of
PUBCO that is to be transferred to OP SUB as a part of the Spin Out, or to PRIVCO, must be supported by a mutual consent agreement
of all parties, including the creditor, demonstrating a desire by the creditor to be included in the obligations of the OP SUB
or PRIVCO, at the time of the Spin Out.

 

G. The obligations as of this date for all parties are listed in
this document, with those PUBCO obligations that shall remain with the PUBCO listed on Exhibit X, those that shall remain with
the OP SUB at the time of the spin out into the PRIVCO listed on Exhibit Y, and those obligations of PUBCO that have agreed to
be transferred into the OP SUB or PRIVCO listed on Exhibit Z of this agreement.

 

H. The parties shall have taken these steps
to further enhance the support of the PRIVCO upon completion of the Spin out. First, under the same terms of the debt conversion
agreement previously offered, and completed as of December 18, 2015, the Board of Directors of PRIVCO shall reserve 1,437,341
of its common stock shares for use in future debt conversions, or other corporate needs as determined by the Board of Directors
of PRIVCO. Secondly, PUBCO shall issue to PRIVCO, 253,691 common stock shares, a number of shares equal to those otherwise
used in the debt conversion as if all of the debts of OP SUB would have been converted. Those shares, along with the special reserve
shares, shall be held for use in future debt conversions, or other corporate needs as determined by the Board of Directors of
PRIVCO. These details are included in Exhibit H of this agreement.

 

I. The “Spin-out
date” or “Spin-off date” shall be December 31, 2015. For other actions the effective date for the actions detailed
in this agreement shall be the earlier of the announced or approved date as documented in the filings of the PUBCO with the SEC.

 

J. The parties agree that the business that
is being spun out of the Company is essentially 100% of the business that has been the Company’s sole activity since the
2012 reverse merger that created the publicly held educational software and services business. Consequently, all shareholders
have had full access to the financials of the business of the Spin out, including the most recent Form 10Q for the period ending
September 30, 2015, and the further updates contained in its recent Form 8K filings, which note the financial condition
of the Company in detail. While the conversion of debt during the effort that ended on December 18, 2015 was substantial, and
the elimination of the overhead of a public company will reduce costs, the financial condition of PRIVCO is still weak, and its
survival uncertain.

 

Accordingly, the parties agree as follows:

 

     

     

    

 

ARTICLE I

 

Definitions

 

1.1 Definitions. In addition to the terms defined elsewhere herein,
as used in this Agreement, the following terms will have the meanings specified below when used in this Agreement with initial
capital letters:

 

“Action” means any controversy, claim, action, litigation,
arbitration, mediation or any other proceeding by or before any Governmental Entity, arbitrator, mediator or other Person acting
in a dispute resolution capacity, or any investigation, subpoena or demand preliminary to any of the foregoing.

 

“Affiliate” means, with respect to a Person, another
Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control
with, such Person.

 

“Business Day” means any day on which commercial banks
in New York, New York are not required or authorized to be closed by Law or executive order.

 

“Cash and Cash Equivalents” means all cash, cash equivalents,
including certificates of deposit or bankers’ acceptances maturing within one year from the date of acquisition thereof,
marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or an agency thereof, and
investments in money market funds with assets of $5,000 or greater, and other liquid investments, including all deposited but uncleared
bank deposits.

 

“GAAP” means United States generally accepted accounting
principles as in effect from time to time, consistently applied.

 

“Governmental Entity” means any arbitrator, court, judicial,
legislative, administrative or regulatory agency, commission, department, board, bureau, body or other governmental authority or
instrumentality or any Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining
to government, whether foreign, federal, state or local.

 

“Trunity Financial Instruments” means all credit facilities,
guarantees, commercial paper, interest rate swap agreements, foreign currency forward exchange contracts, comfort letters, letters
of credit and similar instruments used solely for the purposes of the conduct of Trunity’s business under which Parent or
any of its Subsidiaries has any primary, secondary, contingent, joint, several or other Liability after the Spin-Off Date.

 

“Indebtedness” means, of any Person at any date (x)
any obligation of such Person (A) with respect to indebtedness of such Person for borrowed money or for the deferred purchase price
of property or services, including all accrued and unpaid interest, premiums, penalties and fees thereon (other than accounts payable,
accrued expenses (including book overdrafts) and other current liabilities arising in the ordinary course of business) and/or (B)
evidenced by a note, bond, debenture or similar instrument (including a purchase money obligation) or under any lease or similar
arrangement that would be required to be accounted for by the lessee as a capital lease in accordance with GAAP, (y) any guarantee
(or keepwell agreement) by such Person of any indebtedness of others described in the preceding clause (x), and (z) all obligations
to reimburse any bank or other Person for amounts paid under a letter of credit or similar instrument.

 

“Law” means any statute, law, ordinance, rule or regulation
of any Governmental Entity.

 

     

     

    

 

“Liability” or “Liabilities” mean all debts,
liabilities and obligations whether absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued,
known or unknown, whenever arising, and whether or not the same would properly be reflected on a balance sheet; provided that,
except for references in Articles IV and VI.

 

“Order” means any order, judgment, ruling, decree, writ,
permit, license or other requirement of any Governmental Entity.

 

“Parent Financial Instruments” means all credit facilities,
guarantees, commercial paper, interest rate swap agreements, foreign currency forward exchange contracts, comfort letters, letters
of credit and similar instruments related to Parent’s business under which OP SUB or any of its Subsidiaries has any primary,
secondary, contingent, joint, several or other Liability after the Spin-Off Date.

 

“Parent Group” means, as the context may require, (i)
Parent, (ii) any one or more of those members of the affiliated group (as defined in Section 1504 of the Code) which file a consolidated
federal income Tax Return with Parent, and/or (iii) any one or more of the corporations which file consolidated or combined state
or local Tax Returns with Parent.

 

“Person” means any individual or legal entity, including
any partnership, joint venture, corporation, trust, unincorporated organization, limited liability company or Governmental Entity.

 

“Post-Closing Period” means all taxable periods or portions
of periods beginning after the Spin-Off Date.

 

“Pre-Closing Period” means all taxable periods or portions
of periods ending on or before the Spin-Off Date.

 

“Record Date” means the close of business on the date
to be determined by the Board of Directors of Parent as the record date for determining stockholders of Parent entitled to receive
the Spin-Off, which date will be a business day preceding the day of the Spin-Off Date.

 

“Spin-Off Date” means the date on which the Spin-Off
occurs

 

“Taxes” means (a) any federal, state, local or foreign
income, excise, gross receipts, gross income, ad valorem, profits, gains, property, capital, sales, transfer, use, payroll, employment,
severance, withholding, intangibles, franchise, backup withholding, or other tax, charge, levy, duty or like assessment, imposed
by a Tax Authority together with all penalties and additions and interest thereon and (b) any liability for Taxes described in
clause (a) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law) or pursuant to
agreement, successor liability or otherwise, but does not include any Liabilities owed to, or imposed by, the Pension Benefit Guaranty
Corporation under ERISA on account of the Parent Pension Plan or Other Parent Plan Obligations.

 

“Tax Authority” means, with respect to any Tax, the
governmental entity or political subdivision thereof that imposes such Tax and agency (if any) charged with the collection of such
Tax for such entity or subdivision.

 

“Tax Benefit” means any decrease in Taxes paid or payable,
any increase in any Tax attribute or any other beneficial Tax consequence.

 

     

     

    

  

“Tax Contest” means an audit, review, examination or
any other administrative or judicial proceeding with the purpose or effect of redetermining any Taxes (including any administrative
or judicial review of any claim for refund).

 

“Tax Detriment” means any increase in Taxes paid or
payable, any decrease in any Tax attribute or any other adverse Tax consequence.

 

“Tax Return” means a report, return, statement or other
information (including any attached schedules or any amendments to such report, return or other information) required to be supplied
to or filed with a Tax Authority with respect to any Tax, including an information return, claim for refund, amended return or
declaration of estimated Tax.

 

1.3 Interpretation. (a) When a reference is made in this Agreement
to Articles, Sections, Exhibits or Schedules, such reference will be to an Article or Section or Exhibit or Schedule to this Agreement
unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and
will not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes”
or “including” are used in this Agreement, they will be deemed to be followed by the words “without limitation.”
Unless the context otherwise requires, (i) “or” is disjunctive but not necessarily exclusive, (ii) words in the singular
include the plural and vice versa, (iii) the use in this Agreement of a pronoun in reference to a party hereto includes the masculine,
feminine or neuter, as the context may require, and (iv) terms used herein which are defined in GAAP have the meanings ascribed
to them therein. This Agreement will not be interpreted or construed to require any Person to take any action, or fail to take
any action, that would violate any applicable Law.

 

(b) The parties have participated jointly in negotiating and drafting
this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement will be construed
as if drafted jointly by the parties, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue
of the authorship of any provision of this Agreement.

 

ARTICLE II

 

Spin-Off

 

2.1 Special Dividend - A Spin out of the legacy
educational software and services businesses shall occur as of December 31, 2015, subject to regulatory approvals, such that all
legacy assets of education businesses including those held at the PUBCO, including the shares of OP SUB owned by PUBCO as well
as those assets held in the OP SUB shall be transferred into a newly formed Florida “C” corporation which is intended
to be a private company and whose shares shall NOT be registered at this time. The share allocation of the PRIVCO shall be such
that the shares are held pro-rata with the common stock of the PUBCO on the record date, December 18, 2015, except that a special
reserve of 1,437,341 shares, 14.3% of the total number of shares of PRIVCO at the time of the Spin out, shall be
held in reserve for the future settlement of debt obligations consistent with the terms of the debt conversion offered to all
creditors, which was concluded on December 18, 2015. The special reserve shares may be issued at the sole discretion of the Board
of Directors of the PRIVCO, or cancelled at a future date, and PUBCO shall have no control over the utilization of those shares.
PUBCO, OP SUB and PRIVCO will use their respective commercially reasonable efforts to cause the PRIVCO to gain access to Financing
to be consummated by PRIVCO such that they will have sufficient capital to meet their debt obligations and operating needs, and
cause their respective employees, accountants, counsel and other representatives to reasonably cooperate with each other in carrying
out the transactions contemplated by the, including delivering all documents and instruments deemed reasonably necessary by PUBCO,
OP SUB or PRIVCO and taking all actions reasonably necessary in connection with the Financing.

 

     

     

    

 

2.2 Financial Instruments. (a) OP SUB will, at its expense, take
or cause to be taken all actions, and enter into such agreements and arrangements, as will be reasonably necessary to effect the
release of and substitution for Parent, as of the Spin-Off Date, from all primary, secondary, contingent, joint, several and other
Liabilities in respect of the OP SUB, Subsidiary or to the extent related to OP SUB, Subsidiary or any of its educational software
and systems business. Further, PRIVCO shall hold PUBCO harmless from any liabilities, collection efforts or litigation costs, and
underlying payments of obligations, as a result of liabilities that were created for the benefit of OP SUB or PRIVCO.

 

(b) Parent will, at its expense, take or cause to be taken all actions,
and enter into (or cause its Subsidiaries to enter into) such agreements and arrangements, as will be necessary to effect the release
of and substitution for OP SUB, Subsidiary and each of its Subsidiaries, as of the Spin-Off Date, from all primary, secondary,
contingent, joint, several and other Liabilities, if any, in respect of Parent Financial Instruments to the extent related to Parent
or any of its Subsidiaries (other than OP SUB, or Subsidiary) or Parent’s business.

 

(c) The parties’ rights and obligations under this Section
2.2 will continue to be applicable to all OP SUB, or Subsidiary Financial Instruments and Parent Financial Instruments identified
at any time by Parent or PRIVCO, whether before, on or after the Spin-Off Date.

 

(d) Any costs or damages from litigation resulting from this transaction,
or the underlying liabilities created by any of the parties prior to this closing shall be borne by PRIVCO, and PRIVCO shall hold
PUBCO harmless from any costs, including damages, litigation costs or other items, relating to any of these matters.

 

2.3 Record Date and Spin-Off Date. Subject to the satisfaction,
or to the extent permitted by applicable Law, waiver of the conditions set forth herein, the Board of Directors of Parent, consistent
with Delaware law, will have set the Record Date for the shares to be issued in the Spin-off as December 18, 2015, and the Spin-Off
Date to be effected as of December 31, 2015, and will have taken any necessary or appropriate procedures in connection with the
Spin-Off.

 

2.4 PRIVCO Share Issuance. Immediately prior to the Spin-Off Date,
PUBCO and OP SUB will take, or cause to be taken, all actions necessary to issue to PRIVCO all shares of OP SUB Common Stock, and
an issuance of shares of PUBCO common stock to be held in special reserve by the PRIVCO, such that the number of shares is equal
to those which would have been issued to debt holders of OP SUB, had all debt holders converted into common stock within the terms
offered in the debt conversion offer which was concluded on December 18, 2015.

 

2.6 Delivery of Shares. On or prior to the Spin-Off Date, Parent
will authorize the transfer of all of the outstanding shares of the OP SUB Common Stock to be distributed to the PRIVCO in connection
with the Spin-Off. After the Spin-Off Date PRIVCO will issue to all shareholders of record as of December 18, 2015, shares in the
PRIVCO, pro-rata, assuming a total of ten million common stock shares (10,000,000), less those shares held in special reserve for
future debt settlement. Such shares shall be delivered as soon as practical after the spin out date by the PRIVCO management.

  

2.8 Fractional Shares. No certificate or scrip representing fractional
shares will be issued as part of the Spin-Off. Each holder of Parent Common Stock who otherwise would have been entitled to a round
up to the next whole number of shares at no additional cost.

 

     

     

    

 

ARTICLE III

 

Taxes

 

3.2 Preparation of Tax Returns. (a) The taxable period of the OP
SUB will be treated as ending at the close of business on December 31, 2015; if the taxable period does not end on the Spin-Off
Date, the Parties will apportion all tax items between the Pre-Closing Period and the Post-Closing Period based on the closing
of the books method. PRIVCO and PUBCO shall fully cooperate in the preparation of tax returns, and any other regulatory filings,
and will share information openly, and any reviews, approvals or other related actions shall not be unreasonable withheld.

 

(b) For all Pre-Closing Periods, Parent will prepare or cause to
be prepared, and timely file or cause to be timely filed, the Consolidated Return and all other Tax Returns that are filed on a
consolidated, combined or unitary basis and include the OP SUB. With respect to the taxable period that includes the Spin-Off Date,
Parent will include the OP SUB in such Tax Returns to the extent permitted by Law, but only for the Pre-Closing Period as determined
in accordance with Section 3.2(a). Parent will provide PRIVCO with a copy of each Tax Return prepared by or on behalf of the Parent
pursuant to this Section 3.2(b), together with any supporting schedules, but only as such Tax Return and supporting schedules pertain
to the OP SUB at least 30 days before the date such Tax Return is to be filed.

 

(c) The filing of all Tax Returns relating to the OP SUB for Post-Closing
Periods will be the responsibility of PRIVCO.

 

(d) Except as may be required by Law or
otherwise provided herein, PRIVCO will not amend any income Tax Return that (i) was previously filed on a consolidated,
combined or unitary basis, and (ii) included the OP SUB, without Parent’s prior written consent, which consent will not
be unreasonably withheld.

 

3.3 Cooperation and Exchange of Information. (a) Parent and PRIVCO
will, and will cause each its members to, retain adequate records, documents, accounting data and other information (including
computer data) necessary for the preparation and filing of all Tax Returns required to be filed by any member of the Parent or
the PRIVCO and for any Tax Contest relating to such Tax Returns or to any Taxes payable by the Parent or PRIVCO.

 

(b) Each of the parties will provide the other parties with such
cooperation and information as is reasonably requested in (i) filing any Tax Return, (ii) determining a liability for Taxes or
a right to a refund of Taxes, or (iii) participating in or conducting any Tax Contest or other proceeding in respect of Taxes.
Such cooperation and information will include the furnishing or making available of records, personnel, books of account, powers
of attorney or other materials necessary or helpful for the preparation of such Tax Returns, determination of the right to a refund,
the conduct of audit examinations or the defense of claims by Tax Authorities as to the imposition of Taxes.

 

     

     

    

 

(c) The obligations set forth above in Sections 3.3(a) and 3.3(b)
will continue until the longer of (i) the time of a Final Determination or (ii) expiration of all applicable statutes of limitations,
to which the records and information relate. For purposes of the preceding sentence, each party will assume that no applicable
statute of limitations has expired unless such party has received notification or otherwise has actual knowledge that such statute
of limitations has expired.

 

(d) Any information obtained under this Section 3.3 will be kept
confidential, except as may be otherwise necessary in connection with the filing of Tax Returns, in conducting a Tax Contest or
other proceeding, or as required by Law.

 

3.6 Tax Contests. (a) Each party that may be entitled to indemnification
under this Agreement (a “Tax Indemnified Party”) will provide prompt written notice to the other parties of any pending
or threatened Tax audit, assessment or proceeding or other Tax Contest of which the Tax Indemnified Party becomes aware for which
the Tax Indemnified Party is indemnified pursuant to this Agreement; provided, however, that any delay or failure to give such
prompt written notice will not affect the indemnifying party’s indemnification obligations under this Agreement except to
the extent the indemnifying party’s defense of such Tax Contests is adversely prejudiced by such delay. Written notice provided
pursuant to this Section 3.6(a) will contain factual information (to the extent known) describing any asserted Tax liability in
reasonable detail and will be accompanied by copies of any notice and other documents received from any Tax Authority in respect
of any such matters.

 

(b) Each of Parent and PRIVCO will promptly notify the other in
writing if it obtains knowledge that any Tax Authority has begun to investigate or inquire into the Spin-Off (whether or not such
investigation or inquiry is a formal or informal investigation or inquiry, and whether or not the party obtaining such knowledge
has any obligation to indemnify the other with respect to such matter); provided, however, that any delay or failure to give such
prompt written notice will not affect the indemnifying party’s indemnification obligations under this Agreement except to
the extent the indemnifying party’s defense of such Tax Contest is adversely prejudiced by such delay. Such notice will contain
factual information (to the extent known) describing any asserted Tax liability in reasonable detail and will be accompanied by
copies of any notice and other documents received from any Tax Authority in respect of any such matters. Each of the parties will
(i) consult with the other from time to time as to the conduct of such investigation or inquiry, (ii) provide the other with copies
of all correspondence provided on its behalf (or on behalf of any member of the Parent or PRIVCO) to such Tax Authority with respect
to such investigation or inquiry, and (iii) arrange for a representative of the other to be present at (but not participate in,
except as otherwise provided in Section 3.6(d) below) all meetings with such Tax Authority pertaining to such investigation or
inquiry.

 

ARTICLE IV

 

Employee Matters

 

4.1 Employee Matters. (a) Employees and former employees of PUBCO,
or OP SUB are currently provided benefits under employee benefit plans, programs, policies or arrangements that are sponsored and
maintained by a third party provider. On and after the Spin-Off Date, employees and former employees of PUBCO and OP SUB will become
the sole obligation of PRIVCO, and no further obligation, or remaining obligation, shall be assigned to PUBCO. Immediately prior
to the Spin-Off Date, PUBCO and OP SUB will cause all parties to, withdraw from and cease its participation in the third party
provider program and PUBCO will have no further obligations in any form to either the third party provider, or the parties covered
under that relationship. Any legacy costs related to any and all employee, consultant or advisor matter incurred prior to the
Spin-off date shall be the responsibility of PRIVCO, except for those costs related to the consulting agreements included in the
Newco4pharmacy, LLC assets.

 

     

     

    

 

ARTICLE V

 

5.1 Representations

 

Each party to this Agreement has full power and authority to execute
and deliver this Agreement and to consummate the Spin-Off. The execution and delivery of this Agreement and the consummation of
the Spin-Off have been duly and validly authorized by each party to this Agreement including by the Parent’s Board of Directors,
and no other proceedings on the part of such party or any other person are necessary to authorize the execution and delivery by
such party of this Agreement or the consummation of the Spin-Off. This Agreement has been duly and validly executed and delivered
by the parties hereto, and (assuming the valid execution and delivery of this Agreement by the other parties hereto and thereto)
constitutes the legal, valid and binding agreement of such party enforceable against it in accordance with its terms, except as
such obligations and their enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors’ rights generally, (ii) by general principles of equity, or (iii) the power of
a court to deny enforcement of remedies based on public policy.

 

5.2 Litigation Matters.

 

(a) For a period of five years after the Closing Date, each party
hereto will, to aid each other party hereto in the defense of any third-party Action relating to PRIVCO’S business, make
available during normal business hours, but without unreasonably disrupting their respective businesses, all personnel and records
in their possession, custody and/or control relating to PRIVCO’s business reasonably necessary to permit the effective defense
or investigation of such Action. If information other than that pertaining to PRIVCO’s business is contained in such records,
Parent and PRIVCO will make reasonable efforts to protect any confidential information, including but not limited to entering into
appropriate confidentiality agreements. To the extent any such Action relates solely to PUBCO, OP SUB, PRIVCO or any of its
Subsidiaries’ businesses prior to the Spin-out date, all such documented costs will be borne by PRIVCO. To the extent
any such Action relates solely to Parent’s or any of its Subsidiaries’ businesses that were not in place at the time
of the Spin out (other than PRIVCO or any of its Subsidiaries) after the Spin-out date, all such documented costs will be borne
by Parent. To the extent any such Action relates to Parent’s or any of its Subsidiaries’ businesses (other than PRIVCO
or any of its Subsidiaries) and PUBCO or any of its Subsidiaries’ businesses, all such documented costs will be allocated
proportionately, based on their respective business interest in such action, between PRIVCO and PUBCO.

 

5.3 Other Cooperation. Parent and PRIVCO will comply fully with
all notification, reporting and other requirements under any Law or Order applicable to the Spin-Off. Parent and PRIVCO will use
their commercially reasonable efforts to obtain, as soon as practicable, the authorizations that may be or become necessary for
the performance of their respective obligations under this Agreement and the consummation of the Spin-Off and will cooperate fully
with each other in promptly seeking to obtain such authorizations, except that no such party hereto will be required to make any
material expenditure in connection with its obligations under this Section 5.4. Where the cooperation of third parties such as
insurers or trustees would be necessary in order for a party hereto to completely fulfill its obligations under this Agreement,
such party will use commercially reasonable efforts to cause such third parties to provide such cooperation, except that no party
hereto will be required to make any material expenditure in connection therewith.

 

     

     

    

 

5.4 Expenses. Whether or not the Spin-Off is consummated, all costs,
fees and expenses incurred in connection with this Agreement and the Spin-Off will be borne by the party incurring such costs,
unless otherwise provided herein.

 

5.5 Confidentiality. The parties hereto will keep strictly confidential
any and all proprietary, technical, business, marketing, sales and other information disclosed to another party hereto in connection
with the performance of this Agreement (the “Confidential Information”), and will not disclose the same or any part
thereof to any third party, or use the same for their own benefit or for the benefit of any third party. The obligations of secrecy
and nonuse as set forth herein will survive the termination of this Agreement for a period of five years. Excluded from this provision
is any information available in the public domain and any information disclosed to any of the parties by a third party who is not
in breach of confidential obligations owed to another person or entity. Notwithstanding the foregoing, each party hereto may disclose
Confidential Information (a) to its bankers, attorneys, accountants and other advisors subject to the same confidentiality obligations
imposed herein and (b) as may be required by law from time to time.

 

ARTICLE VI

 

Indemnification

 

6.1 Indemnity by Parent. Following the Closing, Parent will indemnify
and hold PRIVCO, its Subsidiaries and each of their respective officers, directors, employees, agents and representatives and each
of the successors and assigns of any of the foregoing harmless from and against and will promptly defend such parties from and
reimburse such parties for any and all losses, damages, costs, expenses, Liabilities, obligations and claims of any kind, including
reasonable attorneys’ fees and other costs and expenses, but excluding Taxes, which are covered by Article III (“Damages”)
which such parties may directly or indirectly at any time suffer or incur or become subject to, as a result of or in connection
with (a) any breach by Parent of any representation in this Agreement, (b) the failure by Parent to perform any covenant to be
performed by it or its Subsidiaries under this Agreement in whole or in part after the Spin-Off Date, (c) the conduct of any business
of Parent or its Subsidiaries other than PRIVCO’s business, including any indemnity or Liability thereof or any amount due
or to become due in respect of the foregoing, and (d) any Pension Plan Obligation or any Other Parent Plan Obligations.

 

6.2 Indemnity by PRIVCO. Following the Closing, PRIVCO will, on
behalf of its successors and assigns, indemnify and hold Parent, its Subsidiaries and each of their respective officers, directors,
employees, agents and representatives and each of the successors and assigns of any of the foregoing (“Parent Indemnified
Parties”) harmless from and against, and will promptly defend such parties from and reimburse such parties for, any and all
Damages which such parties may directly or indirectly at any time suffer or incur or become subject to, as a result of or in connection
with (a) any breach by PRIVCO of any representation in this Agreement, (b) the failure by PRIVCO to perform any covenant to be
performed by it or its Subsidiaries under this Agreement in whole or in part after the Spin-Off Date and (c) the conduct of any
business of PRIVCO or its Subsidiaries, including any indemnity or Liability thereof or any amount due or to become due in respect
of the foregoing.

 

     

     

    

 

With regard to the liability resulting from payables
assumed by the PUBCO in conjunction with the spin out, any costs of litigation shall be the responsibility of PRIVCO, in total,
including legal fees and any costs over and above the represented liability of any account or creditor over any above the actual
obligation assume. For example, if the amount owed to Vendor A is $20,000, as represented by the schedules and supporting documents
herein, and litigation should ENSUE at a cost of $100,000, including any damages, the full $100,000 shall be borne by PRIVCO. Any
actual amounts paid for the underlying liability by PUBCO shall not exceed the $20,000 represented, and in fact, if any discounts
are negotiated by PUBCO, the benefits of those discounts shall belong solely with PUBCO and shall NOT be used as offsets against
the real and actual costs of litigation, or damages as a result of litigation.

 

6.3 Insurance Coverage. The indemnification to which any party is
entitled hereunder will be net of all insurance proceeds actually received, if any, by the indemnified party with respect to the
losses for which indemnification is provided in Section 6.1 or Section 6.2.

 

6.4 Right of Party to Indemnification. Each party entitled to indemnification
hereunder will be entitled to indemnification for losses sustained in accordance with the provisions of this Article VI regardless
of any Law or public policy that would limit or impair the right of the party to recover indemnification under the circumstances.

 

6.5 Indemnification Procedures. Any party seeking indemnification
under this Article VI for a third party claim (the “Indemnified Party”) must notify the party from whom such indemnity
is sought (the “Indemnifying Party”) in writing of any claim, demand, action or proceeding for which indemnification
will be sought; provided, however, that the failure to so notify will not adversely impact the Indemnified Party’s right
to indemnification hereunder except to the extent that such failure to notify actually prejudices, or prevents the Indemnifying
Party’s ability to defend such claim, demand, action or proceeding. The Indemnifying Party will have the right at its expense
to assume the defense thereof using counsel reasonably acceptable to the Indemnified Party. The Indemnified Party will have the
right (i) to participate, at its own expense, with respect to any claim, demand, action or proceeding that is being diligently
defended by the Indemnifying Party and (ii) to assume the defense of any claim, demand, action or proceeding at the cost and expense
of the Indemnifying Party if the Indemnifying Party fails or ceases to defend the same. In connection with any such claim, demand,
action or proceeding the parties will cooperate with each other and provide each other with access to relevant books and records
in their possession. If a firm written offer is made to the Indemnifying Party to settle any such claim, demand, action or proceeding
solely in exchange for monetary sums to be paid by the Indemnifying Party (and such settlement contains a complete release of the
Indemnified Party and its Subsidiaries and their respective directors, officers and employees) and the Indemnifying Party proposes
to accept such settlement and the Indemnified Party refuses to consent to such settlement, then (i) the Indemnifying Party will
be excused from, and the Indemnified Party will be solely responsible for, all further defense of such claim, demand, action or
proceeding, (ii) the maximum liability of the Indemnifying Party relating to such claim, demand, action or proceeding will be the
amount of the proposed settlement if the amount thereafter recovered from the Indemnified Party on such claim, demand, action or
proceeding is greater than the amount of the proposed settlement, and (iii) the Indemnified Party will pay all attorneys’
fees and legal costs and expenses incurred after rejection of such settlement by the Indemnified Party; provided, however, that
if the amount thereafter recovered by the third party from the Indemnified Party is less than the amount of the proposed settlement,
the Indemnified Party will be reimbursed by the Indemnifying Party for such attorneys’ fees and legal costs and expenses
up to a maximum amount equal to the difference between the amount recovered by the third party and the amount of the proposed settlement.

 

     

     

    

 

ARTICLE VII

 

Conditions

 

7.1 Parent Conditions to the Distribution. The obligations of Parent
pursuant to this Agreement to effect the Spin-Off are subject to the fulfillment (or waiver by Parent pursuant to Section 7.2)
on or prior to the Spin-Off Date (provided that certain of such conditions will occur substantially contemporaneous with the Spin-Off)
of the following conditions:

 

(a) the Parent and the Subsidiary shall have completed the debt
conversion proposal made to all creditors of both the Parent and the Subsidiary, as described in the Parent’s Form 8k filed
with the Securities and Exchange Commission dated December 15, 2015, and a subsequent Form 8K dated December 21, 2015;

 

7.2 Waiver of PUBCO Conditions. The conditions set forth in Section
7.1 hereof (excluding the condition set forth in Section 7.1(b)) may be waived in the sole discretion of the Board of Directors
of Parent. The conditions set forth in Section 7.1 (excluding the condition set forth in Section 7.1(b)) are for the sole benefit
of Parent and will not give rise to or create any duty on the part of Parent or the Board of Directors of Parent to waive or not
waive any such conditions.

 

ARTICLE VIII

 

Termination

 

8.1 Termination. This Agreement may be terminated by Parent, in
its sole discretion, prior to the date the Board of Directors of Parent declares a dividend giving effect to the Spin-Off.

 

8.2 Effect of Termination. If this Agreement is terminated as provided
in Section 8.1, then this Agreement will forthwith become void and there will be no liability on the part of any party to any other
party or any other Person in respect hereof regardless of the circumstances.

 

ARTICLE IX

 

Miscellaneous

 

9.1 Survival. All representations and warranties of the parties
contained in this Agreement or made pursuant to this Agreement will expire as of the Spin-Off Date without further action by the
parties, with the result that if the Spin-Off Date occurs, no party will have any liability or obligation in respect thereof, whether
asserted before or after the Spin-Off Date, other than for actual fraud. The agreements contained herein that by their terms apply
or are to be performed in whole or in part after the Spin-Off Date will survive indefinitely.

 

9.2 Amendment. This Agreement may be amended, modified or supplemented
only by the written agreement of the parties hereto or thereto.

 

9.3 Waiver of Compliance. Except as otherwise provided in this Agreement,
the failure by any Person to comply with any obligation, covenant, agreement or condition under such agreements may be waived by
the Person entitled to the benefit thereof only by a written instrument signed by the Person granting such waiver, but such waiver
or failure to insist upon strict compliance with such obligation, covenant, agreement or condition will not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure. The failure of any Person to enforce at any time any of the provisions
of such agreements will in no way be construed to be a waiver of any such provision, nor in any way to affect the validity of such
agreements or any part thereof or the right of any Person thereafter to enforce each and every such provision. No waiver of any
breach of such provisions will be held to be a waiver of any other or subsequent breach.

 

     

     

    

 

9.4 Notices. All notices required or permitted pursuant to this
Agreement must be in writing and will be deemed to be properly given when actually received by the Person entitled to receive the
notice at the address stated below, or at such other address as a party may provide by notice to the other:

 

If to Parent or PUBCO:

 

Trunity Holdings, Inc.

1355 Peachtree Street

Suite 1150

Atlanta, Georgia 30309

404-254-6980

 

If to Trunity, Inc., or Subsidiary, or PRIVCO:

 

Trunity Inc.

12555 Orange Drive, Suite 202

Davie, Florida 33330

 

9.5 Third Party Beneficiaries. Except as otherwise provided in this
Agreement, nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Parties or their
respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement.

 

9.6 Successors and Assigns. This Agreement will be binding upon
and will inure to the benefit of the signatories hereto and their respective successors and permitted assigns. None of the parties
may assign this Agreement, or any of their rights or liabilities thereunder, without the prior written consent of the other parties
thereto, and any attempt to make any such assignment without such consent will be null and void. Any such assignment will not relieve
the party making the assignment from any liability under such agreements.

 

9.7 Severability. The illegality or partial illegality of any or
all of this Agreement or any provision hereof, will not affect the validity of the remainder of such agreements, or any provision
thereof, and the illegality or partial illegality of any such agreements will not affect the validity of any such agreements in
any jurisdiction in which such determination of illegality or partial illegality has not been made, except in either case to the
extent such illegality or partial illegality causes such agreements to no longer contain all of the material provisions reasonably
expected by the parties to be contained therein.

 

9.8 Governing Law. This Agreement will be governed by and construed
in accordance with the internal Laws of the State of Delaware applicable to contracts made and wholly performed within such state,
without regard to any applicable conflict of laws principles.

 

     

     

    

 

9.9 Submission to Jurisdiction; Waivers. Each party irrevocably
agrees that any legal action or proceeding with respect to this Agreement, the Spin-Off, any provision hereof, the breach, performance,
validity or invalidity hereof or for recognition and enforcement of any judgment in respect hereof brought by another party hereto
or its successors or permitted assigns may only be brought and determined in any federal or state court located in the State of
Delaware, and each party hereby irrevocably submits with regard to any such action or proceeding for itself and in respect to its
property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each party hereby irrevocably waives,
and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to
this Agreement, the Spin-Off, any provision hereof or the breach, performance, enforcement, validity or invalidity hereof, (a)
any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure
to lawfully serve process, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal
process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by applicable Laws, that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is
improper and (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

 

9.10 Specific Performance. The parties hereby acknowledge and agree
that the failure of any party to perform its agreements and covenants hereunder, including its failure to take all actions as are
necessary on its part to the consummation of the Spin-Off, will cause irreparable injury to the other parties for which damages,
even if available, will not be an adequate remedy. Accordingly, each party hereby consents to the issuance of injunctive relief
by any court of competent jurisdiction to compel performance of such party’s obligations and to the granting by any court
of the remedy of specific performance of its obligations hereunder.

 

9.11 Counterparts. This Agreement may be executed in two or more
counterparts, all of which will be considered one and the same agreement and will become effective when counterparts have been
signed by each of the parties and delivered to the other parties, it being understood that each party need not sign the same counterpart.

 

9.12 Entire Agreement. This Agreement (including
the documents and the instruments referred to in this Agreement), constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement.

 

     

     

    

 

IN WITNESS WHEREOF, each of the signatories hereto has caused this
Agreement to be signed by its duly authorized officer as of the date first above written.

 

TRUNITY HOLDINGS, INC. (PUBCO)

 

	By:	/s/ Stephen Keaveney	 
	Name:	Stephen Keaveney	 
	Title:	Chairman and Chief Executive Officer	 

 

Trunity, Inc., a Delaware corporation (OP SUB)

 

	By:	/s/ Nicole Fernandez-McGovern	 
	Name:	Nicole Fernandez-McGovern 
	Title:	Chief Executive Officer	 

 

Trunity, Inc., a Florida corporation (PRIVCO)

 

	By:	/s/ Joakim Lindblom	 
	Name:	Joakim Lindblom 
	Title:	Chief Executive Officer	 

 

     

     

    

 

EXHIBIT A - LIST OF ASSETS TO BE TRANSFERRED IN SPIN OUT TO PRIVCO

 

The entire operations, assets, liabilities, revenue, intellectual
property, trademarks and business operations of the educational software and business solutions owned by Trunity Holdings, Inc.,
as well as all capital stock and ownership in Trunity, Inc., a Delaware corporation, a wholly owned subsidiary.

 

 

     

     

    

 

EXHIBIT B - LIST OF LITIGATION MATTERS

 

THE COMPANY HAS BEEN NAMED AS DEFENDENT
IN A COLLECTIONS SUIT BY NCSE SEEKING A TOTAL OF $170,000. WHILE WE BELIEVE WE HAVE COUNTER CLAIMS THAT OFFSET THE ENTIRE AMOUNT,
AND MAY ACTUALLY RECOVER AMOUNTS IN EXCESS OF THE AMOUNT SOUGHT, WE ARE TAKING AN ADDITIONAL RESERVE OF $100,000 IN SUPPORT OF
THE AMOUNTS CLAIMED. FURTHER, WHILE WE WILL HAVE SOME COSTS ASSOCIATED WITH THE LITIGATION, PRIVCO HAS AGREED TO INDEMNIFY AND
HOLD PUBCO HARMLESS FOR ANY OF THESE COSTS AND IS REQUIRED TO REIMBURSE US, OR SHARE THE COSTS ON GOING.

 

     

     

    

 

 

EXHIBIT C - FINANCIALS FROM FORM 10Q FOR THE QUARTER ENDED SEPTEMBER
30, 2015 - THE FULL FILING CAN BE FOUND AT:

 

https://www.sec.gov/Archives/edgar/data/802257/000157570515000072/tnty_3q15.htm

 

TRUNITY
HOLDINGS, INC. AND SUBSIDIARY

Condensed
Consolidated Balance Sheets

(Unaudited) 

 

	 	 	September 30,	 	December 31,
	 	 	2015	 	2014
	ASSETS	 	 	 	 	 	 	 	 
	Current assets	 	 	 	 	 	 	 	 
	Cash	 	$	51,905	 	 	$	14,119	 
	Accounts receivable	 	 	37,100	 	 	 	3,020	 
	Debt issuance costs	 	 	—	 	 	 	33,692	 
	Prepaid expenses and other current assets	 	 	126,065	 	 	 	106,799	 
	Total current assets	 	 	215,070	 	 	 	157,630	 
	 	 	 	 	 	 	 	 	 
	Property and equipment	 	 	 	 	 	 	 	 
	Fixtures and equipment	 	 	76,095	 	 	 	76,095	 
	Less accumulated depreciation	 	 	(64,908	)	 	 	(56,379	)
	Total property and equipment, net	 	 	11,187	 	 	 	19,716	 
	 	 	 	 	 	 	 	 	 
	Capitalized software development costs	 	 	 	 	 	 	 	 
	Costs incurred	 	 	4,321,810	 	 	 	4,232,313	 
	Less accumulated amortization	 	 	(3,819,678	)	 	 	(3,457,907	)
	Total capitalized software development costs, net	 	 	502,132	 	 	 	774,406	 
	 	 	 	 	 	 	 	 	 
	Other assets	 	 	 	 	 	 	 	 
	Other long term assets	 	 	12,300	 	 	 	12,895	 
	 	 	 	 	 	 	 	 	 
	TOTAL ASSETS	 	$	740,689	 	 	$	964,647	 
	 	 	 	 	 	 	 	 	 
	LIABILITIES	 	 	 	 	 	 	 	 
	Current liabilities	 	 	 	 	 	 	 	 
	Accounts payable	 	$	1,138,425	 	 	$	984,841	 
	Accrued interest	 	 	310,652	 	 	 	106,274	 
	Accrued payroll expenses	 	 	252,332	 	 	 	75,535	 
	Accrued expenses	 	 	248,242	 	 	 	120,559	 
	Debentures Series A, B, C, D, E and F	 	 	1,968,601	 	 	 	1,457,163	 
	Convertible debenture, net	 	 	—	 	 	 	115,463	 
	 Convertible promissory note	 	 	52,500	 	 	 	45,089	 
	Deferred revenue	 	 	245,555	 	 	 	324,169	 
	Total current liabilities	 	 	4,216,307	 	 	 	3,229,093	 
	 	 	 	 	 	 	 	 	 
	TOTAL LIABILITIES	 	 	4,216,307	 	 	 	3,229,093	 
	 	 	 	 	 	 	 	 	 
	Commitments and Contingencies	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	STOCKHOLDERS’ EQUITY (DEFICIT)	 	 	 	 	 	 	 	 
	Preferred stock $0.0001 par value- 50,000,000 shares authorized;   None issued and outstanding	 	 	 	 	 	 	 	 
	Common Stock, $0.0001 par value – 200,000,000 shares authorized, 63,628,821 and 54,803,131 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively	 	 	6,363	 	 	 	5,480	 
	Additional paid-in capital	 	 	14,789,623	 	 	 	14,220,266	 
	Other comprehensive income	 	 	39,878	 	 	 	17,974	 
	Accumulated deficit	 	 	(18,311,482	)	 	 	(16,508,166	)
	Total Stockholders’ Equity (Deficit)	 	 	(3,475,618	)	 	 	(2,264,446	)
	 	 	 	 	 	 	 	 	 
	TOTAL LIABILITIES AND STOCKHOLDERS’
    EQUITY (DEFICIT)	 	$	740,689	 	 	$	964,647	 

 

The
accompanying Notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

 

     

     

    

 

TRUNITY
HOLDINGS, INC. AND SUBSIDIARY 

Condensed
Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

 

	 	 	Three Months Ended
 September 30,	 	Nine Months Ended
 September 30,
	 	 	 	2015	 	 	 	2014	 	 	 	2015	 	 	 	2014	 
	 	 	 		 	 	 		 	 	 		 	 	 		 
	Net sales	 	$	206,004	 	 	 	110,219	 	 	$	391,141	 	 	 	195,539	 
	Cost of sales	 	 	111,569	 	 	 	82,398	 	 	 	201,591	 	 	 	151,332	 
	Gross profit	 	 	94,435	 	 	 	27,821	 	 	 	189,550	 	 	 	44,207	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Research and development	 	 	172,289	 	 	 	222,934	 	 	 	553,938	 	 	 	666,217	 
	Selling, general and administrative	 	 	221,560	 	 	 	526,535	 	 	 	706,421	 	 	 	1,915,052	 
	Total operating expenses	 	 	393,849	 	 	 	749,469	 	 	 	1,260,359	 	 	 	2,581,269	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Loss from operations	 	 	(299,414	)	 	 	(721,648	)	 	 	(1,070,809	)	 	 	(2,537,062	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Interest expense	 	 	(167,706	)	 	 	(84,097	)	 	 	(718,507	)	 	 	(275,782	)
	Loss on debt extinguishment	 	 	(14,000	)	 	 	(65,869	)	 	 	(14,000	)	 	 	(65,869	)
	Total other expenses	 	 	(181,706	)	 	 	(149,966	)	 	 	(732,507	)	 	 	(341,651	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net loss	 	 	(481,120	)	 	 	(871,614	)	 	 	(1,803,316	)	 	 	(2,878,713	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other comprehensive gain :	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Foreign currency translation adjustments	 	 	9,096	 	 	 	126	 	 	 	21,904	 	 	 	8,007	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Comprehensive loss	 	$	(472,024	)	 	 	(871,488	)	 	$	(1,781,412	)	 	 	(2,870,706	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net loss per share - Basic and Diluted	 	$	(0.01	)	 	 	(0.02	)	 	$	(0.03	)	 	 	(0.06	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Weighted average number of common shares -

Basic and
    Diluted:	 	 	61,144,799	 	 	 	50,856,901	 	 	 	57,010,630	 	 	 	48,895,940	 

 

The
accompanying Notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

 

     

     

    

 

TRUNITY
HOLDINGS, INC. AND SUBSIDIARY 

Condensed
Consolidated Statement of Changes in Stockholders’ Equity (Deficit)

Nine
Months Ended September 30, 2015

(Unaudited)

 

	 	 	Par $0.0001
 Common
 Shares	 	Common
 Stock	 	Paid-in
 Capital	 	Accumulated Comprehensive Income	 	Accumulated Deficit	 	Total
 Stockholders’
 Equity (Deficit)
	Balance at January 1, 2015	 	 	54,803,131	 	 	$	5,480	 	 	$	14,220,266	 	 	$	17,974	 	 	$	(16,508,166	)	 	$	(2,264,446	)
	Common stock issued upon conversion of debenture	 	 	8,825,690	 	 	 	883	 	 	 	141,631	 	 	 	—	 	 	 	—	 	 	 	142,514	 
	Discount related to issuance of debt with warrants and allocated fair value to beneficial conversion feature	 	 	—	 	 	 	—	 	 	 	274,122	 	 	 	—	 	 	 	—	 	 	 	274,122	 
	Share compensation expense	 	 	—	 	 	 	—	 	 	 	139,604	 	 	 	—	 	 	 	—	 	 	 	139,604	 
	Loss on extinguishment of debt	 	 	—	 	 	 	—	 	 	 	14,000	 	 	 	—	 	 	 	—	 	 	 	14,000	 
	Foreign currency translation gain	 	 	—	 	 	 	—	 	 	 	—	 	 	 	21,904	 	 	 	—	 	 	 	21,904	 
	Net loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(1,803,316	)	 	 	(1,803,316	)
	Balance at September 30, 2015	 	 	63,628,821	 	 	 	6,363	 	 	 	14,789,623	 	 	 	39,878	 	 	 	(18,311,482	)	 	$	(3,475,618	)

 

The
accompanying Notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

 

     

     

    

 

TRUNITY
HOLDINGS, INC. AND SUBSIDIARY

Condensed
Consolidated Statements of Cash Flows

(Unaudited)

 

	 	 	Nine Months Ended
	 	 	September 30,	 	September 30,
	 	 	2015	 	2014
	Cash Flows from Operating Activities:	 	 	 	 	 	 	 	 
	Net Loss	 	$	(1,803,316	)	 	$	(2,878,713	)
	Adjustments to reconcile net loss to net cash used in operating activities:	 	 	 	 	 	 	 	 
	Depreciation and amortization	 	 	370,300	 	 	 	421,167	 
	Share-based compensation expense	 	 	139,604	 	 	 	372,181	 
	Accretion and amortization for debt discounts and issuance costs	 	 	521,017	 	 	 	202,690	 
	Loss on debt extinguishment	 	 	14,000	 	 	 	65,869	 
	Shares issued in exchange for services	 	 	—	 	 	 	70,000	 
	Warrants issued in exchange for services	 	 	—	 	 	 	20,752	 
	Fair value of embedded conversion feature	 	 	1,091	 	 	 	—	 
	Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 
	Accounts receivable	 	 	(34,080	)	 	 	(21,353	)
	Prepaid expenses and other current assets	 	 	(3,761	)	 	 	(86,085	)
	Accounts payable	 	 	153,584	 	 	 	484,797	 
	Accrued interest and other liabilities	 	 	458,863	 	 	 	86,860	 
	Deferred revenue	 	 	(78,614	)	 	 	(33,967	)
	Deposits	 	 	(13,005	)	 	 	(2,895	)
	Deferred rent	 	 	—	 	 	 	(2,515	)
	Net Cash Used in Operating Activities	 	$	(274,317	)	 	$	(1,301,212	)
	 	 	 	 	 	 	 	 	 
	Cash Flows from Investing Activities:	 	 	 	 	 	 	 	 
	Payment for patent and trademark applications	 	 	(1,400	)	 	 	—	 
	Payment of platform development costs	 	 	(89,497	)	 	 	(491,772	)
	Net Cash Used in Investing Activities	 	$	(90,897	)	 	$	(491,772	)
	 	 	 	 	 	 	 	 	 
	Cash Flows from Financing Activities:	 	 	 	 	 	 	 	 
	Proceeds from issuance of debentures	 	 	402,000	 	 	 	175,000	 
	Proceeds from notes payable related parties	 	 	50,000	 	 	 	3,809	 
	Repayment of convertible note	 	 	(49,000	)	 	 	—	 
	Proceeds from issuance of convertible note payable	 	 	—	 	 	 	152,500	 
	Sale of common stock, net of issuance costs	 	 	—	 	 	 	658,700	 
	Net Cash Provided by Financing Activities	 	$	403,000	 	 	$	990,009	 
	 	 	 	 	 	 	 	 	 
	Net Increase (Decrease) in Cash	 	 	37,786	 	 	 	(802,975	)
	Cash, Beginning of Period	 	 	14,119	 	 	 	812,064	 
	Cash, End of Period	 	$	51,905	 	 	$	9,089	 
	 	 	 	 	 	 	 	 	 
	Supplemental Disclosure of Cash Flow Information:	 	 	 	 	 	 	 	 
	Cash paid during the period for interest	 	$	—	 	 	$	9,603	 
	 	 	 	 	 	 	 	 	 
	Non-cash Investing and Financing Transactions:	 	 	 	 	 	 	 	 
	Conversion of debt to common stock shares	 	$	142,514	 	 	$	100,000	 
	Discount related to issuance of debt with warrants and allocated fair value to beneficial conversion feature	 	$	274,122	 	 	$	110,557	 

 

The
accompanying Notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

 

     

     

    

 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

 

 

 

NOTE
1 – ORGANIZATION, BASIS OF PRESENTATION AND NATURE OF OPERATIONS

 

The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (“U.S.
GAAP”) and the rules and regulations of the Securities and Exchange Commission
(the “Commission”) for interim financial information. Accordingly, they do not include all of the information required
by U.S. GAAP for complete financial statement presentation and should be read in conjunction with the audited consolidated financial
statements and related footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December
31, 2014 (the “2014 Annual Report”), filed with the Commission on April 15, 2015. It is management’s opinion,
however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair
financial statements presentation.

 

The
accompanying condensed consolidated financial statements include the accounts of Trunity Holdings, Inc. (“Trunity”
or the “Company”) and its wholly owned subsidiary Trunity, Inc. (“Trunity, Inc.” or the “Company”),
as of September 30, 2015 and December 31, 2014 and for the three and nine months ended September 30, 2015 and 2014. All intercompany
accounts have been eliminated in the consolidation. Certain amounts reported in prior periods have been reclassified to conform
to the current presentation.

 

The
Company is a “C” Corporation organized under the laws of Delaware with principal offices located in Davie, Florida.
The Company was formed on July 28, 2009 to develop a cloud-based platform that focuses on collaborative knowledge management,
publishing and education delivery platform – the Trunity eLearning Platform (the “Platform”) –
which provides an end-to-end solution for the rapidly growing digital textbook, eLearning and enterprise training marketplaces.

 

The
financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred net losses,
working capital deficiencies, and negative operating cash flows since its inception. To the extent the Company continues to experience
working capital deficiencies and negative cash flows in the future, it will continue to require additional capital to fund operations.
The Company has historically obtained additional capital investments under various debt and Common Stock issuances. Although management
continues to pursue its financing plans, there is no assurance that the Company will be successful in generating sufficient revenues
to provide positive cash flow or that financing at acceptable terms, if at all will be available. In addition, the Company has
defaulted on the majority its lease and debt obligations as of September 30, 2015. Although the Company is currently in negotiations
related to these defaults, there is no assurance that any negotiations will be successful in reducing the Company’s liabilities
under default. Based on these factors, these conditions raise substantial doubt about the Company’s ability to continue
as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability
and classification of recorded asset amounts or the amounts or classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.

 

NOTE
2 – SIGNIFICANT ACCOUNTING POLICIES

 

There
was no material changes during the quarter ended September 30, 2015 in the Company’s significant accounting policies to
those previously disclosed in the 2014 Annual Report.

 

Recently
Issued Accounting Pronouncements

 

In
April 2015, the Financial Accounting Standards Board issued a new pronouncement that requires that debt issuance costs related
to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability.
The pronouncement becomes effective for the Company in the first quarter of 2016. Early adoption is permitted. The Company believes
adoption of the pronouncement will not have a significant impact on the financial statements or its results of operations.

 

     

     

    

 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

 

 

 

NOTE
3 – INTANGIBLE ASSETS

 

Intangible
assets are recorded at cost and consist of the Trunity eLearning Platform software development costs which include direct labor,
including taxes and benefits. Amortization is computed using the straight-line method over three years. Amortization of three
years is based on management’s best estimate of useful life of current technology in this industry.

 

Intangible
assets were comprised of the following at September 30, 2015:

 

	Trunity eLearning Platform Software

Development Cost	 	Estimated
 Life	 	Gross
 Cost	 	Accumulated
 Amortization	 	Net Book
 Value
	Internal costs capitalized for the twelve months ended December 31, 2012	 	3 years	 	 	548,031	 	 	 	(548,031	)	 	$	—	 
	Internal costs capitalized for the twelve months ended December 31, 2013	 	3 years	 	 	519,733	 	 	 	(408,928	)	 	$	110,805	 
	Internal costs capitalized for the twelve months ended December 31, 2014	 	3 years	 	 	598,285	 	 	 	(279,175	)	 	$	319,110	 
	Internal costs capitalized for the nine months ended September 30, 2015	 	3 years	 	 	89,497	 	 	 	(17,280	)	 	$	72,217	 
	Carrying value as of September 30, 2015	 	 	 	 	 	 	 	 	 	 	 	$	502,132	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Carrying value as of December 31, 2014	 	 	 	 	 	 	 	 	 	 	 	$	774,406	 

 

Estimated
future amortization expense is as follows for the following periods:

  

	Remainder of 2015	 	 	$	100,626	 
	2016	 	 	 	296,754	 
	2017	 	 	 	99,658	 
	2018	 	 	 	5,094	 
	Total future amortization expense	 	 	$	502,132	 
	 	 	 	 	 	 	 

Amortization
expense for intangible assets as $109,432 and $361,771 for the three and nine months ended September 30, 2015 and $129,961 and
$401,204 for the three and nine months ended September 30, 2014.

 

NOTE
4 – SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES

  

The
following is a summary of significant related party transactions during the three and nine months ended September 30, 2015 and
2014.

 

Summary
of Related Party Obligations

 

As
of September 30, 2015 and December 31, 2014 the Company has $689,413 and $559,413, respectively of the debentures that
are held by related parties. It also has $27,500 of convertible promissory notes that are held by a related party as of September
30, 2015 and December 31, 2014. The Company has accrued interest of $106,806 and $26,380 due to related parties as of September
30, 2015 and December 31, 2014.

 

     

     

    

 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

 

 

 

NOTE
4 – SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES - Continued

 

Interest
expense incurred by the Company associated with these related party obligations was $24,727 and $81,838 for the three and
nine month period ended September 30, 2015 and $11,372 and $32,551 for the three and nine month period ended  September
30, 2014.

 

Transactions
with Officers – The Company’s Chief Executive Officer and Chief Financial Officer, Nicole Fernandez-McGovern,
is one of the managing principals of both RCM Financial, a financial consulting firm, and Premier Financial Filings, a full-service
financial printer; companies which have provided contracted financial services to Trunity and their related expenses have been
included within general and administrative expenses . For the three and nine months ended September 30, 2015 and 2014,
RCM Financial provided outside accounting and tax professional services to Trunity, which resulted in fees of $6,960 and $17,886,
respectively. Premier Financial Filings provided services to the Company resulting in fees of $7,981 and $9,021, respectively
for the nine months ended September 30, 2015 and 2014.

 

During
the nine months ended September 30, 2015, Ms. Fernandez-McGovern was issued, in exchange for $30,000 of consideration, Series
F Convertible Debentures resulting in 30,000 warrants at $0.15 being issued to her. Ms. Fernandez- McGovern is also the holder
of a Series D Convertible Debenture and July 2014 Convertible Promissory Note
in the principal amount of $42,822 issued in exchange for $42,500 of consideration. See
Note 5 for further details of the terms of the debentures and promissory note.

 

The
Company’s Chief Education Officer, Cutler Cleveland, currently authors on the Trunity eLearning Platform. In his capacity
as an author, he has accrued royalties for the three and nine months ended September 30, 2015 and 2014 of $16,470
and $18,536 respectively which is included in cost of sales.

 

At
September 30, 2015, the Company’s Chief Technology Officer, Joakim Lindblom, is the holder of a Series D Convertible
Debenture in the principal amount of $92,106 issued in exchange for $81,270 of consideration. See Note 5 for further
details of the terms of the debenture.

 

Transactions
with Board Members – During the nine months ended September 30, 2015, an investment of $100,000 was made by a board
member and founder, Les Anderton , for a Series F Convertible Debenture, resulting in 100,000 warrants at an exercise price
of $0.15. In addition, Mr. Anderton is the holder of $280,053 of Series E Convertible Debentures, Series D Convertible Debenture
and July 2014 Convertible Promissory Note issued to him in exchange for $265,370 of consideration. See Note 5 for further
details of the terms of the debentures and promissory note.

 

In
exchange for $10,000 of consideration, board member Ivan Berkowitz is a holder of a July
2014 Convertible Promissory Note. See Note 5 for further details of the terms of this promissory note.

 

Credit
Agreement

 

Effective
January 1, 2015, Les Anderton provided a new $1.5 million line of credit, at a 10% interest rate, to the Company on the same terms
as in his prior credit agreement with a maturity date of the earlier of December 31, 2015 or the closing of a Company financing
with gross proceeds of at least $5 million. The line of credit is used to fund working capital needs. As of September 30, 2015,
a $50,000 advance included within accrued expenses was  made under the line of credit.

 

     

     

    

 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

 

 

 

NOTE
5 – CONVERTIBLE DEBT

 

The
following is a summary of convertible debentures outstanding as of September 30, 2015:

 

	 	 	Face Value	 	Initial Discount	 	Accumulated Amortization	 	Debt Extinguishment	 	Carrying Value
	Convertible Promissory Notes	 	$	52,500	 	 	$	(14,629	)	 	$	14,629	 	 	$	—	 	 	$	52,500	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Series A Debentures	 	 	145,637	 	 	 	(74,943	)	 	 	74,943	 	 	 	—	 	 	 	145,637	 
	Series B Debentures	 	 	161,932	 	 	 	(69,135	)	 	 	69,135	 	 	 	—	 	 	 	161,932	 
	Series C Debentures	 	 	350,833	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	350,833	 
	Series D Debentures	 	 	763,199	 	 	 	(34,650	)	 	 	34,650	 	 	 	—	 	 	 	763,199	 
	Series E Debentures	 	 	145,000	 	 	 	(145,000	)	 	 	145,000	 	 	 	—	 	 	 	145,000	 
	Series F Debentures	 	 	402,000	 	 	 	(271,206	)	 	 	271,206	 	 	 	—	 	 	 	402,000	 
	Total Debentures	 	$	1,968,601	 	 	$	(594,934	)	 	$	594,934	 	 	$	—	 	 	$	1,968,601	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total	 	$	2,021,101	 	 	$	(609,563	)	 	$	609,563	 	 	$	—	 	 	$	2,021,101	 

 

The following is a summary of convertible debentures outstanding as of December 31, 2014:

 

	 	 	Face Value	 	Initial Discount	 	Amortization	 	Debt Extinguishment	 	Carrying Value
	Convertible Promissory Notes	 	$	52,500	 	 	$	(14,629	)	 	$	7,218	 	 	$	—	 	 	$	45,089	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Series A Debentures	 	 	167,540	 	 	 	(74,943	)	 	 	74,943	 	 	 	—	 	 	 	167,540	 
	Series B Debentures	 	 	161,932	 	 	 	(69,135	)	 	 	69,135	 	 	 	—	 	 	 	161,932	 
	Series C Debentures	 	 	350,833	 	 	 	(72,869	)	 	 	—	 	 	 	72,869	 	 	 	350,833	 
	Series D Debentures	 	 	763,199	 	 	 	(267,285	)	 	 	9,992	 	 	 	237,227	 	 	 	743,133	 
	Series E Debentures	 	 	145,000	 	 	 	(145,000	)	 	 	33,725	 	 	 	—	 	 	 	33,725	 
	Total Debentures	 	$	1,588,504	 	 	$	(629,232	)	 	$	187,795	 	 	$	310,096	 	 	$	1,457,163	 

 

	 	 	Face Value	 	Initial Discount	 	Amortization	 	Stock Settled Debt Obligation	 	Carrying Value
	Convertible Debenture	 	$	113,128	 	 	$	(66,423	)	 	$	3,336	 	 	$	65,422	 	 	$	115,463	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total	 	$	1,754,132	 	 	$	(710,284	)	 	$	198,349	 	 	$	375,518	 	 	$	1,617,715	 

 

     

     

    

 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

 

 

  

NOTE
5 – CONVERTIBLE DEBT - Continued

 

January-September
2015 Unsecured Redeemable Debentures (Series F)

 

In
2015, the Company borrowed from accredited investors and related parties (the “Debenture Holders”) $402,000 ($130,000
was provided by an officer and board member of the Company) pursuant to an Unsecured Redeemable Debenture Series F (the “Series
F Debentures”) that required payment of interest at the end of the three-month Debenture term in the amount of 10% of the
principal amount. The holders of the Series F Debentures also received warrants to acquire 402,000 shares of Common Stock for
an exercise price of $0.15 per share, exercisable over three years.. In addition, the Company will issue the Debenture Holders
warrants (the “2015 Warrant”) to purchase 402,000 shares of the Company’s Common Stock at a price per 2015 Warrant
Share to be determined. The Company incurred no commission costs in connection with these transactions. The Series F Debentures
are convertible into Common Stock at $.03 per share as to principal plus accrued interest upon an event of default.

 

The
Company allocated the face value of the Series F Debentures to the warrants and the debentures based on their relative fair values,
allocated $2,702 to the warrants, and determined that there were aggregate beneficial conversion features of $268,504. The fair
value of the warrants was determined using the Black-Scholes-Merton (“BSM”) valuation model and the following assumptions:
volatility – 38.96% to 45.08%, risk free rate – 0.83% to 1.13 %, dividend rate – 0.00%. The amounts allocated
to the warrants and beneficial conversion features totaling $271,206 were recorded as a discount against the Series F Debentures,
with offsetting entry to additional paid-in capital. The discounts are being amortized into interest expense over the term
of the Series F Debentures.

 

As
of September 30, 2015, the carrying value of the Series F Debentures was $402,000 as the discount had been fully amortized. During
the three and nine months ended September 30, 2015, the Company recorded amortization of the discount of $37,315 and $271,206,
respectively and interest expense of $20,356 and $48,742, respectively. During the three months ended September 30, 2015, the
Company defaulted on some of the Series F debentures and as a result began accruing daily interest at a default rate of 18% per
annum.

 

During
the three months ended September 30, 2015, $319,000 of the Series F Debentures matured without payment creating an event of default.
Consequently, the aggregate principal amount of these debentures plus accrued interest is convertible into Common Stock
at $.03 per share. As of September 30, 2015, the Debentures were convertible into an aggregate of 10,633,333 shares. At
this time, the Company is in discussion with the Debenture Holders and no notices of conversion of these debentures have been
received as of December 7, 2015.

 

November
and December 2014 Unsecured Redeemable Debentures (Series E)

 

In
October and November 2014, the Company borrowed from accredited investors and a related party (the “Debenture Holders”)
$145,000 pursuant to an Unsecured Redeemable Debenture Series E (the “Series E Debentures”) that required payment
of interest at the end of the nine-month Debenture term in the amount of 15% of the principal amount. The holders of the Series
E Debentures also received warrants to acquire 145,000 shares of Common Stock for an exercise price of $0.15 per share, exercisable
over four years equal. In addition, the Company will issue the Debenture Holders warrants (the “2015 Warrant”) to
purchase 145,000 shares of the Company’s Common Stock at a price per 2015 Warrant Share to be determined. The Company incurred
no commission costs in connection with these transactions. The Series E Debentures are convertible into Common Stock at $.03 per
share as to principal plus accrued interest upon an event of default.

 

     

     

    

 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

 

 

 

NOTE
5 – CONVERTIBLE DEBT - Continued

 

The
Company allocated the face value of the Series E Debentures to the warrants and the debentures based on their relative fair values,
allocated $7,945 to the warrants, and determined that there were aggregate beneficial conversion features of $137,055. The fair
value of the warrants was determined using the BSM valuation model and the following assumptions: volatility – 42.31% to
44.28%, risk free rate – 1.63% to 1.75% %, dividend rate – 0.00%. The amount allocated to the warrants and beneficial
conversion features totaling $145,000 was recorded as a discount against the Series E Debentures, with offsetting entry to additional
paid-in capital. The discounts are being amortized into interest expense over the term of the Series E Debentures.

 

As
of September 30, 2015, the carrying value of the Series E Debentures was $145,000 as the discount had been fully amortized. During
the three and nine months ended September 30, 2015, the Company recorded amortization of the discount of $0 and $145,000, respectively
and interest expense of $6,225 and $28,879, respectively. During the three months ended September 30, 2015, the Company defaulted
in redeeming the Series E debentures and as a result began accruing daily interest at a default rate of 18% per annum.

 

During
the three months ended September 30, 2015, all of the Series E Debentures matured without payment creating an event of default.
Consequently, aggregate principal amount of these debentures plus accrued interest is convertible into Common Stock at $.03 per
share. As of September 30, 2015, the Debentures were convertible into an aggregate of 5,558,333 shares. At this time, the Company
is in discussion with the Debenture Holders, the majority of which are related parties, and no notices of conversion of these
debentures have been received as of December 7, 2015.

 

July
to November 2014 Convertible Debentures (Series D) 

 

During
the months of July through November 2014, the Company issued Series D Convertible Debentures (the “Series D Debentures”)
with an aggregate face value of $763,199 in exchange for $176,718 of cash plus accrued interest ($35,000 was provided by the CEO
and CFO), in settlement of a Series A Convertible Debenture with outstanding principal and accrued interest of $26,477, and in
settlement of Series B Convertible Debentures with aggregate outstanding principal and accrued interest of $560,003, of which
$287,159 represented a conversion of notes payable-related parties to the Founders. The Series D Debentures accrue interest at
an annual rate of 12%, mature in July through November 2015, and are convertible into the Company’s Common Stock at a conversion
rate of $0.165 per share. The holders of the Series D Debentures also received warrants to acquire 3,332,000 shares of Common
Stock for an exercise price of $0.20 per share, exercisable over five years.

 

The
Company allocated the face value of the Series D Debentures to the warrants and the debentures based on their relative fair values,
allocated $145,334 to the warrants, and determined that there were aggregate beneficial conversion features of $126,543. The fair
value of the warrants was determined using the BSM valuation model and the following assumptions: volatility – 43.63% to
44.28%, risk free rate – 1.60% to 1.69% %, dividend rate – 0.00%. The amount allocated to the warrants and beneficial
conversion features totaling $271,877 was recorded as a discount against the Series D Debentures, with offsetting entry to additional
paid-in capital. A portion of the discount resulting in $237,227 was fully expensed upon execution of the new debentures
as debt extinguishment costs and the remaining amount of $34,650 is being amortized into interest expense over the term of the
Series D Debentures.

 

As
of September 30, 2015, the carrying value of the Series D Debentures was $763,199 and there was no remaining unamortized discount.
During the three and nine months ended September 30, 2015, the Company recorded amortization of the discount related to the Series
D Debentures of $5,617 and $22,982, respectively and interest expense of $22,404 and $67,984, respectively.
During the three and nine months ended September 30, 2014, the Company recorded amortization of the discount related to the Series
D Debentures of $2,395 and $2,395, respectively and interest expense of $3,441 and $3,441, respectively. 

 

     

     

    

 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

 

 

 

NOTE
5 – CONVERTIBLE DEBT – Continued

 

During
the three months ended September 30, 2015, all of the Series D Debentures matured without payment creating an event of default.
Consequently, aggregate principal amount of these debentures plus accrued interest is convertible into Common Stock at $.165 per
share. As of September 30, 2015, the Debentures were convertible into an aggregate of 4,833,333 shares. At this time, the Company
is in discussion with the Debenture Holders, the majority of which are related parties, and no notices of conversion of these
debentures have been received as of December 7, 2015.

 

August
2014 and November Convertible Debentures (Series C) 

  

In
August 2014, the Company issued Series C Convertible Debentures (the “Series C Debentures”) with an aggregate face
value of $350,833 in exchange for the cancellation of Series B Convertible Debentures with outstanding principal and accrued interest
of $350,833. The Series C Debentures accrue interest at an annual rate of 10%, mature in July and November 2015, and are convertible
into the Company’s Common Stock at a conversion rate of $0.20 per share. The holders of the Series C Debentures also received
warrants to acquire 1,500,000 shares of Common Stock for an exercise price of $0.20 per share, exercisable over five years.

 

The
Company allocated the face value of the Series C Debentures to the warrants and the debentures based on their relative fair values,
and allocated $72,869 to the warrants, which was recorded as a discount against the Series C Debentures, with offsetting entry
to additional paid-in capital. The fair value of the warrants was determined using the BSM valuation model and the following assumptions:
volatility – 43.74% and 44.28%, risk free rate – 1.62% and 1.67%, dividend rate – 0.00%. The discount was fully
expensed upon execution of the new debentures as debt extinguishment costs.

 

As
of September 30, 2015, the carrying value of the Series C Debentures was $350,833 interest expense for the three and nine months
ended September 30, 2015 of $9,651 and $27,193 respectively was recorded and no amortization expense was recorded as it was fully
expensed in the prior period.

 

During
the three months ended September 30, 2015, all of the Series C Debentures matured without payment creating an event of default.
Consequently, aggregate principal amount of these debentures plus accrued interest is convertible into Common Stock at $.20 per
share. As of September 30, 2015, the Debentures were convertible into an aggregate of 1,754,165 shares. At this time, the Company
is in discussion with the Debenture Holders, the majority of which are related parties, and no notices of conversion of these
debentures have been received as of December 7, 2015.

 

October
and November 2012 Convertible Debentures (Series B)

 

In
October and November 2012, the Company issued Convertible Debentures (“Series B Debentures-Issuance II”) with an aggregate
face value of $624,372 of which $565,372 represented a conversion of notes payable-related parties to the Founders. In 2013, two
of the founders sold a portion of their debenture totaling $141,800 of their aggregate face to third parties. The Series B Debentures-Issuance
II matured in October and November 2014, bore interest at an annual rate of 10%, and were convertible at the option of the holders
into Units, each consisting of a) one share of Common Stock and b) one warrant to purchase one share of Common Stock at $0.40
per share (“Unit”). The number of Units issuable upon conversion of the Series B Debentures-Issuance II is determined
by dividing the then outstanding principal and accrued but unpaid interest by a) $0.35 if a Liquidity Event, as defined in the
debenture agreements, occurs within nine months of the closing of the offering of
the Series B Debentures-Issuance II, or b) $0.32 if a Liquidity Event does not occur within nine months of the closing of the
offering of the Series B Debentures-Issuance II.

 

     

     

    

 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

 

 

 

NOTE
5 – CONVERTIBLE DEBT – Continued

  

In
October and November 2014, all but one of the holders of the Series B Debentures-Issuance II exchanged the debentures with
an aggregate face value of $464,440 and accrued interest of $51,317 for either a Series C or D Debenture with an aggregate
face value of $513,757. The Company recorded a loss on early extinguishment of debt of $212,261, primarily related to fair
value of the warrants in relation to the debt (relative fair value) on the debt exchange transaction. The Company has
defaulted on its obligation to pay the remaining principal amount of a debenture due October and November 2014. The total
amount due on this debenture, including interest, is $193,155 and is currently accruing interest at a default rate of 12% per
annum. The Company has negotiated restructured terms with the majority of the debenture holders and is attempting to complete
the formal restructuring of this debt obligation.

 

As
of September 30, 2015, the net carrying value of the outstanding Series B Debentures-Issuance II totaled $161,932 and no unamortized
discount remains therefore no amortization expense was recorded for the three and nine months ended September 30, 2015. As of
September 30, 2014, the net carrying value of the outstanding Series B Debentures-Issuance II totaled $611,047 and the related
amortization expense of $28,867 and $92,368 was recorded for the three and nine months ended September 30, 2014, respectively.
During the three and nine months ended September 30, 2015, interest expense of $4,897 and $14,534, respectively was recorded on
the Series B Debentures-Issuance II. During the three and nine months ended September 30, 2014, the Company recorded interest
expense on the remaining Series B Debentures-Issuance II of $15,609 and $46,828, respectively. There was no unamortized debt issuance
costs related to the Series B Debentures-Issuance II remaining and therefore no amortization expense was recorded during
the three and nine months ended September 30, 2015 and 2014, respectively.

 

July
2012 Convertible Debentures (Series A) 

 

In
July 2012, the Company issued Convertible Debentures (the “Series A Debentures”) with an aggregate face value of $215,300
Canadian Dollars (US$197,344 as of September 30, 2014). The Series A Debentures matured in July 2014, bore interest at an annual
rate of 10% through July 2014 and upon default accrued interest at 12% per annum. The Series A Debentures are convertible at the
option of the holders into Units, each consisting of a) one share of Common Stock and b) one warrant to purchase one share of
Common Stock at 0.40 Canadian Dollars per share (“Unit”). The number of Units issuable upon conversion of the Series
A Debentures is determined by dividing the then outstanding principal and accrued but unpaid interest by a) 0.35 Canadian Dollars
if a Liquidity Event, as defined in the Debenture agreement, occurs within nine months of the closing of the offering of the July
Notes, or b) 0.32 Canadian Dollars if a Liquidity Event does not occur within nine months of the closing of the offering of the
Series A Debentures.

 

In
July 2014, a holder of a Series A Debenture exchanged the debenture with a face value of $25,000 Canadian Dollars (US$23,360),
and accrued interest of $3,336 Canadian Dollars (US$3,117) for a Series D Convertible Debenture with a face amount of US$26,477.
The Company recorded a loss on early extinguishment of debt of US$6,728, primarily related to fair value of the warrants in relation
to the debt (relative fair value) on the debt exchange transaction. The Company has defaulted on its obligation to pay the remaining
principal amount of debentures due October and November 2014. The total amount due on these debentures, including interest is
US$220,031 and is currently accruing interest at a default rate of 12% per annum. The Company has negotiated restructured terms
with the majority of the debenture holders and is attempting to complete the formal restructuring of these debt obligations.

 

     

     

    

 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

 

 

 

NOTE
5 – CONVERTIBLE DEBT – Continued

 

As
of September 30, 2015, the net carrying value of the outstanding Series A Debentures totaled $145,637 and no unamortized discount
remains, therefore no amortization expense was recorded for the three and nine months ended September 30, 2015. During the three
and nine months ended September 30, 2015, the Company recorded interest expense on the Series A Debentures of $4,369 and $14,076
respectively. As of September 30, 2014, the net carrying value of the outstanding Series A Debentures totaled $173,858. For the
three and nine months ended September 30, 2014, the Company recorded amortization of the discount of $3,533 and $24,730, respectively;
and interest expense on the Series A of $5,192 and $15,009, respectively. There was no unamortized debt issuance costs related
to the Series B Debentures-Issuance II therefore no amortization expense was recorded during the three and nine months ended September
30, 2015. During the three and nine months ended September 30, 2014 $1,650 and $6,602 was recorded, respectively.

 

November
2014 Convertible Debenture with Peak One Opportunity Fund, L.P.

 

In
November 2014, the Company entered into a Securities Purchase Agreement with Peak One Opportunity Fund, L.P. (“Peak”)
pursuant to which the Company sold to Peak for $112,500 a Convertible Debenture (the “Peak Debenture”) in the principal
amount of $125,000 (the “Principal Amount”) due on November 6, 2017 (the “Maturity Date”). Pursuant to
the Peak Debenture, the Company agreed to pay interest on the Principal Amount outstanding from time to time in arrears (i) upon
conversion or (ii) on the Maturity Date, at the rate of 5% per annum. The Company has the option to redeem the Peak Debenture
prior to the Maturity Date at any time or from time to time by paying the Principal Amount plus accrued interest and a redemption
premium of 20% of principal if the redemption is between 91-180 days after issuance and 40% of principal after 180 days Beginning
91 days after the issue date, Peak may convert the principal and accrued interest (the “Conversion Amount”) into shares
of Common Stock at a conversion price for each share of Common Stock (the “Conversion Price”) equal to 65% of the
lowest closing bid price (as reported by Bloomberg LP) of Common Stock for the 20 trading days immediately preceding the date
of conversion of the Peak Debenture (subject to equitable adjustments resulting from any stock splits, stock dividends, recapitalizations
or similar events).

 

The
Company paid issuance costs of $10,000 and issued 137,500 shares of restricted common stock to cover the expenses incurred and
analysis performed by Peak in connection with the transaction. The fair value of the 137,500 shares of restricted stock of $24,750,
and $10,000 of issuance costs added to the principal, were recorded as deferred issuance costs to be amortized into interest expense
over the term of the Peak Debenture.

 

The
Peak Debenture was convertible into a variable number of shares based upon a fixed dollar amount and therefore treated
as stock settled debt in accordance with ASC 480. On the date of issuance, the Company recorded the fair value of the financial
instrument of $66,423 as a stock settled debt obligation along with debt discount of $12,500 to be amortized into interest expense
through the maturity date.

 

During
the three and nine months ended September 30, 2015, the Company recognized $39,601 and $63,087, respectively, of amortization
of the discounts; $17,831 and $33,005 respectively, of amortization of deferred financing fees; and a loss on the redemption of
$14,000 of the debenture.

 

During
the nine months ended September 30, 2015, Peak converted $90,000 of principal into 8,825,690 shares of Common Stock and the Company
redeemed the remaining principal amount of $35,000 in exchange for $49,000 of cash resulting in a loss on redemption of
$14,000. Upon conversion and payment to Peak, the Company recorded the fair value of the stock settled debt of $155,631 to additional
paid-in capital. The deferred financing costs were accelerated to interest expense through the date of conversion, which is included
$17,831 and $34,750 for the three and nine months ended September 30, 2015 as noted above. As of September 30, 2015, the Peak
Debenture is fully redeemed.

 

     

     

    

 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

 

 

  

NOTE
5 – CONVERTIBLE DEBT – Continued

  

July
2014 Convertible Promissory Notes

 

In
July 2014, the Company issued Convertible Promissory Notes with an aggregate face value of $52,500 for cash ($27,500 was provided
by the CEO and CFO and two board members). The Convertible Promissory Notes accrue interest at an annual rate of 10%, mature in
July 2015, and are convertible into the Company’s Common Stock at a conversion rate of $0.165 per share. The holders of
the Convertible Promissory Notes also received warrants to acquire 318,182 shares of Common Stock for an exercise price of $0.50
per share, exercisable over five years.

 

The
Company allocated the proceeds from the Convertible Promissory Notes to the warrants and the notes based on their relative fair
values, allocated $6,117 to the warrants, and determined that there were aggregate beneficial conversion features of $8,512. The
fair value of the warrants was determined using the BSM valuation model and the following assumptions: volatility – 43.99%
to 44.08%, risk free rate – 1.66 to 1.74% %, dividend rate – 0.00%. The amount allocated to the warrants and beneficial
conversion features; totaling $14,629, was recorded as a discount against the Convertible Promissory Notes with an offsetting
entry to additional paid-in capital. The discounts are being amortized into interest expense over the term of the Convertible
Promissory Notes.

 

During
the three and nine months ended September 30, 2015, the Company recorded amortization of the discount of $156 and $7,411, respectively.
During the three and nine months September 30, 2015, the Company recorded interest expense of $1,303 and $3,912, respectively.
As of September 30, 2015, the carrying value of the Convertible Promissory Notes was $52,500 due to the fact that there was
no remaining unamortized discount.

 

NOTE
6 – STOCK SETTLED DEBT OBLIGATION

 

The
Company determined that the conversion feature included in the November 2014 Peak Debenture required liability treatment
because it was convertible into a fixed dollar amount based on a variable conversion rate. Because of the uncertainty
regarding the number of shares of Common Stock that may be issuable upon the conversion of the convertible debt, the
conversion option is required to be accounted for separately and presented as a stock settled debt obligation on the
Company’s balance sheet, with subsequent changes in fair value reported in the Company’s statement of
operations. On the date of issuance, the Company recorded a stock settled debt obligation of $66,423 with an offsetting
discount against the convertible debt to be amortized into interest expense through the maturity of the convertible debt.
During the three months ended September 30, 2015, the holder of the Peak Debenture elected to convert $90,000 of principal
into 8,825,690 shares of Common Stock and the Company repaid the remaining principal balance of $35,000 in cash. The Company
adjusted the stock settled debt obligation to its fair value on the dates of conversion and settlement, and reclassified
their fair value, totaling $65,422, to additional paid in capital. The Company used Monte Carlo simulations and the following
assumptions in estimating the fair value of the embedded conversion option through the settlement dates:

  

	Expected Volatility	 	 	37.2% - 44.50%	 
	Expected Term	 	 	2.28 -2.85 Years	 
	Risk-Free Interest Rate	 	 	0.51% - 1.02%	 
	Dividend Rate	 	 	—	 

 

     

     

    

 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

 

 

 

NOTE 6 – STOCK SETTLED DEBT
OBLIGATION – Continued

 

The
following table presents changes in Level 3 liabilities measured at fair value for the quarter ended September 30, 2015. Both
observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within
the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include
changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g.,
changes in unobservable long-dated volatilities) inputs.

 

	 	 	Stock Settled
	 	 	Debt Obligation
	Balance at December 31, 2014	 	$	65,422	 
	Change in fair value	 	 	1,091	 
	Fair value recorded to APIC related to conversion of debenture	 	 	(66,153	)
	Balance at September 30, 2015	 	$	—	 

 

NOTE
7 – SHARE-BASED COMPENSATION

 

In
2009, the Company approved the 2009 Employee, Director and Consultant Stock Option Plan (the “2009 Plan”) and authorized
an option pool of 5,500,000 shares that was subject to a 3 for 1 reverse stock split, resulting in an authorized option pool of
1,833,333. Stock options typically vest over a three-year period and have a life of ten years from the date granted. In 2009,
the Company accelerated the option vesting of certain employees who terminated their employment, but agreed to work in a consulting
capacity. In exchange for the accelerated vesting, the employees agreed to shorter expiration periods for their options. As of
September 30, 2015, there were 364,567 shares available for awards under this plan.

 

In 2012, the Company approved the 2012
Employee, Director and Consultant Stock Option Plan (the “2012 Plan”) and authorized an option pool of 7,500,000 shares.
Stock options typically vest over a three-year period and have a life of ten years from the date granted. As of September 30,
2015, there were 4,643,000 shares available for awards under this plan.

 

On
February 12, 2014, Arol Buntzman resigned from his positions as Chairman, Director and Chief Executive Officer (CEO) of the Company.
The Company’s Board of Directors has commenced a search for a permanent CEO and has appointed Nicole Fernandez-McGovern,
the Company’s Chief Financial Officer, as CEO to serve until a permanent CEO is hired.

 

As
a result of Mr. Buntzman’s resignation pursuant to the December 2013 non-qualified stock option agreement between him
and the Company, which granted to him options to purchase up to 4,000,000 shares of Common Stock outside of the
Company’s 2009 and 2012 stock option plans (the “Option Agreement”), options to purchase 1,500,000
shares of stock were automatically cancelled, leaving 2,500,000 outstanding options. These options covered 1,000,000 shares
at an exercise price of $0.30 per share and three tranches of 500,000 shares each at an exercise price of $0.40, $0.60 and
$0.70 per share, respectively. The Company believes that some or all of the remaining options under the Option Agreement,
representing 1,500,000 shares in three tranches of 500,000 shares each at exercise prices of $0.40, $0.60 and $0.70,
respectively, should be cancelled based on the circumstances of Mr. Buntzman’s resignation. Mr. Buntzman disputes the
Company’s position. If the dispute is not settled, the matter is subject to binding arbitration. No demand for
arbitration has been filed by either party.

 

During
the three and nine months ended September 30, 2015, the Company issued to employees, directors or consultants 40,000 and 170,000,
respectively, options to acquire shares of Common Stock. During the three and nine months ended September 30, 2014, the Company
issued to employees, directors or consultants 195,000 and 1,329,000, respectively, to acquire shares of Common Stock.

 

     

     

    

 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

 

 

 

NOTE
7 – STOCK-BASED COMPENSATION – Continued

 

The
grant-date fair value of options is estimated using the BSM valuation model. The per share weighted average fair value of stock
options granted during 2015 was $0.07 and was determined using the following assumptions: expected price volatility is 49.6%,
risk-free interest rate of 1.06%, zero expected dividend yield, and 6.5 years expected life of options. The expected term of options
granted is based on the simplified method in accordance with Securities and Exchange Commission Staff Accounting Bulletin 107,
and represents the period of time that options granted are expected to be outstanding. The Company makes assumptions with respect
to expected stock price volatility based on the average historical volatility of peers with similar attributes. In addition, the
Company determines the risk free rate by selecting the U.S. Treasury with maturities similar to the expected terms of grants,
quoted on an investment basis in effect at the time of grant for that business day.

 

In
July 2015, the Company’s board of directors approved the modification of outstanding options to acquire 3,306,666 shares,
reducing the then-applicable exercise price from $0.11 per share, to $0.01 per share, the market price at the time. The
Company compared the fair value of the options immediately prior to the modification to their fair value immediately after the
modification and determined that the option holders received incremental compensation of $17,456, of which $14,700 was related
to fully vested options and recognized as expense on the date of modification, and $2,756 will be recognized as stock based compensation
expense over remaining vesting periods through January 2018.

 

As
of September 30, 2015, there was approximately $28,426 of total unrecognized stock compensation expense, related to unvested stock
options under both Plans. This expense is expected to be recognized over the remaining weighted average vesting periods of the
outstanding options of .42 years.

 

A
summary of options issued, exercised and cancelled for the three and nine months ended September 30, 2015 is as follows:

  

	 	 	Shares	 	Weighted-Average Exercise

Price ($)	 	Weighted-Average Remaining Contractual Term	 	Aggregate Intrinsic

Value ($)
	Outstanding at December 31, 2014	 	 	 	6,810,766	 	 	 	0.26	 	 	 	8.11	 	 	 	—	 
	Granted	 	 	 	170,000	 	 	 	0.02	 	 	 	10.00	 	 	 	—	 
	Exercised	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Cancelled	 	 	 	(125,000	)	 	 	0.19	 	 	 	—	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Outstanding at September 30, 2015	 	 	 	6,855,766	 	 	 	0.21	 	 	 	7.42	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Exercisable at September 30, 2015	 	 	 	6,602,971	 	 	 	0.35	 	 	 	7.45	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

     

     

    

 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

 

 

  

NOTE
8 – WARRANTS TO PURCHASE COMMON STOCK

 

During
the nine months ended September 30, 2015, the Company issued, in connection with the issuance of debentures, warrants
to purchase 528,500 shares of the Company’s Common Stock at an exercise price of $0.15 and $0.20. All warrants outstanding
as of September 30, 2015 are scheduled to expire at various dates through 2019.

 

The
grant-date fair value of warrants is estimated using the BSM valuation model. The per share weighted average fair value of the
warrants granted during 2015 was $0.17 and was determined using the following assumptions: expected price volatility ranging between
38.96% to 49.60%, risk-free interest rate ranging between 0.83% to 1.13%, zero expected dividend yield, and 3.0 year life of warrants.
The Company makes assumptions with respect to expected stock price volatility based on the average historical volatility of peers
with similar attributes. In addition, the Company determines the risk-free rate by selecting the U.S. Treasury with maturities
similar to the expected terms of grants, quoted on an investment basis in effect at the time of grant for that business day.

 

A
summary of warrants issued, exercised and expired for the nine months ended September 30, 2015 follows:

 

	 	 	Common
    Stock Purchase Warrants	 	Weighted-Average Exercise

Price ($)	 	Weighted-Average Remaining Contractual Term
	Outstanding at December 31, 2014	 	 	17,308,258	 	 	 	0.70	 	 	 	2.04	 
	Granted	 	 	528,500	 	 	 	0.16	 	 	 	3.00	 
	Exercised	 	 	—	 	 	 	—	 	 	 	—	 
	Expired	 	 	(9,912,169	)	 	 	1.00	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Outstanding and exercisable at September 30, 2015	 	 	7,924,589	 	 	 	0.31	 	 	 	3.69	 

  

NOTE
9 – STOCKHOLDER’S EQUITY

 

Discount
related to issuance of debt with warrants and allocated fair value to beneficial conversion feature

 

During
the nine months ended September 30, 2015, the Company raised gross proceeds of $402,000 pursuant to the issuance of an Unsecured
Redeemable Debenture Series F (the “Series F Debentures”) with detachable stock warrants. The Company allocated the
value of the Series F Debentures and the warrants based on their relative fair values, which resulted in a discount to the carrying
value of the Series F Debentures. As a result of the allocation a beneficial conversion feature was created totaling $274,122,
which was recorded as a discount against the Series F Debentures, with an offsetting entry to additional paid-in-capital. The
discounts are being amortized into interest expense over the term of the Series F Debentures.

 

     

     

    

 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

 

 

  

NOTE
10 – POTENTIALLY DILUTIVE SECURITIES

 

Options,
warrants and convertible debt were all considered anti-dilutive for the  nine months ended September 30, 2015 and 2014
due to net losses that the Company reported. The following table sets forth the securities that were not included in the diluted
net loss per share calculation because their effect was anti-dilutive as of the periods presented:

 

	 	 	Nine Months Ended
	 	 	September 30, 2015	 	September 30, 2014
	 	 	 	 	 
	Options	 	 	6,855,766	 	 	 	6,685,766	 
	Warrants	 	 	7,924,589	 	 	 	14,859,012	 
	Convertible Debt and Accrued Interest	 	 	29,830,639	 	 	 	6,629,100	 
	 	 	 	 	 	 	 	 	 
	Total Potentially Dilutive Securities	 	 	44,610,994	 	 	 	28,173,878	 

  

NOTE
11 – COMMITMENTS AND CONTINGENCIES

 

Leases

 

On
August 9, 2013, the Company commenced a lease for 8,713 square feet for its former corporate offices located in Portsmouth, New
Hampshire which had a five-year term ending on September 8, 2018. The monthly rental payments for the first year were $10,165
per month and were scheduled to increase on each anniversary at a rate of 3% per annum. The Company was required to pay its proportionate
share of the building’s common area maintenance (“CAM”), real estate taxes, utilities serving the premises and
the cost of premises janitorial service estimated to be $5,210 on a monthly basis.

 

On
August 11, 2014, the landlord declared the Company in default based on its failure to pay rent and other charges due since July
2014. The Company vacated the premises on August 22, 2014, and moved its office to smaller, less expensive premises in the neighboring
area. Past due amounts owed on the lease through the date of surrender of the premises total approximately $51,000. Total payments
from the date of surrender through the end of the lease would be approximately $900,000 if the space was not occupied however
on January 1, 2015 the space was leased to a new tenant controlled by the former CEO thereby mitigating the liability to the Company.
The Company is attempting to negotiate a settlement of the lease with the landlord based on an offset for the fair market rental
value of the premises and a discount to present value, as well as a discount based on the Company’s precarious financial
condition. In addition, the Company has accrued all past due amounts fully and an additional amount based on an offer of settlement
presented to the landlord. There can be no assurance that settlement of this lease will not have a material adverse effect on
the Company. No legal demands have been filed by either party.

 

In April 2015, the Company
executed a lease that commenced on May 1, 2015 for office space located in Davie, Florida. The lease has monthly payments of $954
per month for a nine-month term and has an option to extend for another nine-month term.

 

NOTE
12 – SUBSEQUENT EVENTS

 

During the fourth quarter of 2015,
$83,000 of the Series F Debentures matured without payment creating an event of default. Consequently the aggregate principal
amount of these debentures plus accrued interest is convertible into Common Stock at .03 per share.

 

As of November 23 2015, the Debentures
were convertible into an aggregate of 276,667 shares. The Company is in discussion with the Debenture Holders and no notices of
conversion of these debentures have been received as of November 23, 2015. See Note 5 for the terms of the Series F Debentures.

 

     

     

    

 

Liquidity
and Capital Resources

 

Liquidity
is the ability of a company to generate sufficient cash to satisfy its needs for operations. At September 30, 2015, we had negative
working capital of $4,001,237 as compared to negative working capital of $3,071,463 at December 31, 2014. Based on these factors,
these conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

Our
current assets at September 30, 2015 totaled $51,905 in cash and $37,000 accounts receivable, which compared to $14,119
in cash and $3,020 in accounts receivable at December 31, 2014. Our current liabilities of $4,216,307 at September 30, 2015 and
$3,229,093 at December 31, 2014 included accounts payables, notes payable – related parties, accrued interest, professional
fees and vacation expense and amounts owed to shareholders for working capital loans, convertible note payables and deferred revenue.

 

Net
cash used in operating activities was $274,317 for the nine months ended September 30, 2015, as compared to $1,301,212 for
the nine months ended September 30, 2014. Working capital changes consumed cash of $482,986 for the current period compared
to $424,841 for the nine months ended September 30, 2014. The increase was mainly attributed to the increase in interest
expense as a result of the default rates for servicing of the debt. In addition, our net loss was impacted by non-cash
expenses related to depreciation and amortization, stock-based compensation and accounting for accretion for debt discounts
and issuance costs, as well as accounting for the loss on debt extinguishment for our debentures and convertible
debt.

 

Net
cash used in investing activities was $90,897 for the nine months ended September 30, 2015, as compared to net cash used of $491,772
for the same nine months in 2014. The reduction in net cash used in our investing activities was largely due to the fact that
we have completed much of the development on the next generation Trunity eLearning Platform and expect to have a full commercial
launch of Version 3.0 in the beginning of 2016.

 

Net
cash provided by financing activities for the nine months ended September 30, 2015 was $403,000 as compared to $990,009 for the
nine months ended September 30, 2014. This decrease was due to more proceeds being raised from the sale of common stock and issuance
of debentures in the first and second quarter of 2014.

 

We have concluded that,
notwithstanding a substantial increase in sales of its products and services in recent months, particularly in international markets,
we will not be able to implement its business plan unless it is able to promptly (i) substantially reduce its debt burden, which
is now over $4 million, including accounts payable, debenture obligations and other commitments, most of which are past due, and
(ii) raise substantial additional capital. Further, we concluded that the our education technology business (the “Trunity
Business”) will be best developed through a privately held company, without the additional cost and complexity associated
with operating as a public company.

 

Consistent with these
goals, on November 11, 2015, we entered into a nonbinding letter of intent (“LOI”) with Newco4Pharmacy LLC, a Georgia
limited liability company (“N4P"). Under the terms of the LOI, we would acquire 100% of the membership interests of
N4P in exchange for newly authorized preferred stock, which would be issued to the N4P members and be convertible at the election
of the holders into a number of shares of common stock of the Company equal to 85–90% (depending on the ultimate level of
debt conversion) of the shares outstanding at the time (the “Acquisition”). We will acquire all of the goodwill and
underlying business plan of N4P, which contemplates a rollup of businesses in the compounding pharmacy industry, including all
potential acquisition documents. A condition of the closing of the Acquisition is conversion of at least 90% of the our debts
(other than liability to professionals) into equity at a price of $.03 per share. Shortly after closing of the N4P Acquisition,
the Trunity Business would be spun out to a separate privately held company (“New Trunity”) owned by the legacy Trunity
shareholders (including those who acquired shares by debt conversion) proportionate to their shares of Trunity (the “Spin
Out”). Following the Acquisition,we principally would be owned and managed by the former N4P members, will retain responsibility
for paying certain of the our debts. The remaining debts will be the responsibility of New Trunity following the Spin Out.

 

As of the date of this
Report, the majority of the our debt holders have agreed to convert their debts into common stock conditioned upon closing of
the Acquisition. We believe that the Acquisition will be closed by mid-December 2015; however, there can be no assurance that
this will occur. Regardless of whether or not the Acquisition is consummated, we will need to raise substantial capital in the
coming weeks in order to continue operations; however, there could be no assurance that this capital will be available on terms
acceptable to us or at all.

 

We
do not have any commitments for capital expenditures during the next 12 months nor do we have any committed external sources of
capital. We do not believe our working capital is sufficient to fund our operations and permit us to satisfy our obligations as
they become due and as a result we may not be able to continue operations. We have continued to expand our business and our expenses
are much greater than revenues despite our focused cost-control efforts. Even if we are successful in substantially increasing
our revenues from expected sales, we will still need to raise substantial additional working capital. We do not have any firm
commitments to provide the additional capital which is needed and there are no assurances that we will be able to secure capital
on terms acceptable to us, if at all. Our ability to significantly increase our revenues and successfully raise additional working
capital is key to our ability to continue as a going concern. If we are not successful in both of these efforts, we may be forced
to significantly curtail or cease our operations.

 

     

     

    

 

EXHIBIT D - FORM 8K FILED ON DECEMBER 15, 2015

 

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): December 9, 2015

 

TRUNITY
HOLDINGS, INC.

(Exact name of registrant
as specified in its charter)

 

	Delaware	000-53601	87-0496850
	(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

  

12555 Orange Drive

Davie, Florida 33330

(Address of principal
executive offices, including zip code)

 

(866) 723-4114

(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:

 

	☐	Written communications pursuant to Rule 425 under the Securities Act (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(c) under the Exchange Act (17 CFR 240.13e-4(c))

  

     

     

    

 

Unless otherwise indicated in this Current
Report or the context otherwise requires, all references in this Current Report to “Trunity Holdings,” “Trunity,”
the “Company, ”us,” “our” or “we” are to Trunity Holdings, Inc.

 

Item 1.01 Entry into a Material Definitive
Agreement.

 

On December 9, 2015, the
Company entered into a Securities Exchange Agreement (the “Agreement”) with Newco4Pharmacy, LLC, a Georgia limited
liability company (“N4P”). Pursuant to the terms of the Agreement, the Company acquired 100% of the membership interests
of N4P in exchange for newly authorized preferred stock, which will be issued to the N4P members and be convertible into a number
of shares of common stock of the Company equal to approximately 90% of the shares outstanding at the time (the “Acquisition”).
Per the Agreement, the Company will acquire all of the assets, goodwill and the business plan of N4P, including a letter of intent
for a potential acquisition.

 

N4P’s business plan
contemplates a roll-up of businesses in the compounding pharmacy industry. The plan envisions multiple acquisitions of businesses
who have traditionally operated locally, but who have specialty formulations that may have a larger market, nationally or internationally,
with a significant sales and marketing presence. N4P also intends to seek compounding pharmacies that serve the veterinary markets,
as well as for humans. To achieve its goals, it intends to acquire a number of pharmacies across the US with the eventual objective
of establishing a national online pharmacy. The online pharmacy will be named, True Nature Pharmacy and will be a wholly owned
subsidiary, which will sell the product mix nationally through online and mail order marketing distribution channels. Lastly, N4P
intends to change the name of the Company to True Nature Holdings, Inc., but will maintain the current stock symbol, TNTY.

 

A condition of the closing
of the Acquisition was conversion of at least 90% of the Company’s debts into equity at a price of $.03 per share. It has
received commitments from a majority of the debt holders to complete this conversion, and is in the process of communicating with
the remaining debt holders. After conversion of debts, there will be approximately 190 million shares outstanding, with the debt
holders receiving around 70% of outstanding shares issued, and existing equity holders having around 30% shares outstanding. All
of these shareholders will be subject to the effect of a planned restructuring of Trunity’s equity, to include a reverse
split of the common stock in a range that is estimated to be approximately 19 to 1, such that when completed each holder of 19
shares will have one outstanding share and total shares outstanding for the Company will be approximately 12,000,000. As the restructuring
plan is implemented over the next few weeks, details regarding the conversions will be communicated.

 

The foregoing description
of the Agreement is qualified in its entirety by reference to the Securities Exchange Agreement attached hereto as Exhibit 10.1
to this Form 8-K and incorporated herein by reference.

 

Shortly after closing
of the Acquisition, pursuant to the Agreement, the Company’s legacy business, which is currently held in a wholly owned subsidiary,
will be spun out into a separate privately held company (“New Trunity”) owned by the legacy Trunity shareholders (including
those who acquired shares by debt conversion) proportionate to their shares of Trunity (the “Spin Out”). The N4P holders
will not participate in the ownership of the Spin Out and each shareholder of the Company on the effective date will receive one
share of the Spin-Out, or a pro-rata percentage depending on the ultimate share structure adopted by the Spin-Out.

 

 

    2 

     

    

 

Following the
Acquisition, Nicole Fernandez-McGovern, the Company’s Chief Executive Officer will resign from her current position in
order to allow the new owners, N4P, to manage the Company as they will retain the responsibility for paying certain of its
debts. Ms. Fernandez-McGovern will remain as the Chief Executive Officer of the operating subsidiary that is intended to be
spun out and   any remaining debts of the operating subsidiary will be the responsibility of New Trunity following the Spin
Out.

 

In conjunction with the
Spin Out, the Company intends to a) reduce its shares outstanding through a reverse split of its common stock, estimated at 19
to one, depending on the amount of debt converted into stock, and b) increase its authorized shares to 500 million common, and
100 million shares of preferred, with the rights of the preferred stock to be established at the discretion of the Board of Directors.
Upon completion, the Company intends to have approximately 12,000,000 shares outstanding, with N4P holders owning 10,000,000 upon
conversion of the Preferred X issued to it in the acquisition, and the legacy shareholders (along with the converting debt holders)
owning not less than 1,000,000, and as much as 1,750,000 common shares, with the final number to be determined based on the amount
of debt converted. Final details will be published in subsequent Form 8k filings as these actions are completed.

 

The Board of Directors of the Company
(the “Board”) believes the Acquisition and the Spin Out are in the best interest of the stockholders and the creditors
of the Company. While considering the approval of the Acquisition and the Spin Out, the Board considered the following factors:

 

	·  	The
Company currently had over $4 million in debt obligations, including accounts payable, debenture obligations and other commitments,
many of which are, or soon will, be in default. As such, the Board considered the need to address the interests of these creditors
and their ability to enforce rights that could result in material adverse consequences to the Company;  
	 	 
	·	The
Board, after making substantial efforts to raise capital over many months, was unable to find the funding needed to continue to
operate the legacy Trunity business, and believed that no such funding could be secured until the Company substantially improved
its balance sheet, primarily by a sizable reduction in its debt obligations;  
	 	 
	·	The
Board, after a review of the Company’s business plan and expenses, current and projected, concluded that operating the Company
as a public company, with the associated accounting, legal and administrative expenses, would make it difficult to allow it to
achieve profitably or repay its obligations to creditors;  
	 	 
	·	The
other financing options considered by the Board did not result in letters of intent or viable offers primarily because of the
financial condition of the Company;  
	 	 
	·	The
N4P Acquisition and Spin Out plan was approved by the majority of the Company’s creditors and allows the stockholders of
the Company the opportunity to continue to benefit from the legacy Trunity business activity as owners of the private entity while
also participating in the value proposition associated with the N4P business plan and acquisition strategy that will hold the
business going forward.  

 

The Board considered these
and other factors when considering the Transaction and the Spin Out. There can be no assurance that the Spin Out will be completed
successfully, or that the legacy Trunity business will be more successful without the costs associated with being a public company.
In addition, Newco4Pharmacy, LLC does not have an operating history, and there can be no assurance that it will be able to successfully
implement its business plan, execute the planned acquisitions or operate profitably.

 

 

    3 

     

    

 

Accounting Treatment of the Transaction

 

Notwithstanding
the fact that the Company was the legal acquirer under the Transaction and remains the registrant for Securities and Exchange Commission
("SEC") reporting purposes, N4P is considered the accounting acquirer.  Thus, the Transaction will be accounted
for in accordance with the acquisition method of accounting.

  

Item 2.01 Completion of Acquisition
or Disposition of Assets.

 

The
Transaction was completed on December 9, 2015. No Company stockholder approval was required by Delaware law or other rules or regulations.
The information set forth in Item 1.01 above is hereby incorporated by reference.

 

Item 3.02 Unregistered Sales of Equity
Securities.

 

As
described in Item 1.01 above, pursuant to the Securities Exchange Agreement, the Company issued shares of Series X Preferred Stock
to the Newco4Pharmacy, LLC unit holders. The offer and sale of the shares of Series X Preferred Stock in connection with the Securities
Exchange Agreement were made in reliance on an exemption from registration under the Securities Act, pursuant to Section 4(2) thereof.
The terms of the Series X Preferred Stock are set forth in Item 5.03 below.

 

Item 5.01 Changes in Control of Registrant.

 

Upon
the closing of the Transaction, a change of control of the Company occurred, with Newco4Pharmacy acquiring shares that resulted
in control of the Company by NewCo4Pharmacy members. As of December 10, 2015 and after giving effect to the Transaction, Newco4Pharmacy
held approximately 90% of the outstanding voting rights of the Company’s capital stock, though this percentage may be reduced
to 85% if all debt holders of the Company and its operating subsidiary were to convert into common stock at $.03 per share.

 

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

 

(c) Appointment of Executive Officers

 

On
December 9, 2015, Stephen Keaveney became the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer

 

Mr.
Keaveney is a career executive working in entrepreneurial organizations experiencing high growth or change. From August 2014 to
present, Mr. Keaveney was the Chief Financial Officer of Connectivity Wireless. From March 2013 to April 2014, Mr. Keaveney was
CFO of Innotrac Corporation, a $125 million rapidly growing ecommerce fulfillment business (NASDAQ: INOC). While at Innotrac, Mr.
Keaveney helped engineer the $114 million take private leveraged buy-out. Prior to that, from September 2010 to March 2013, Mr.
Keaveney was the Chief Financial Officer of BeavEx, Inc., a $300 million Logistics business, with 5,000 drivers in 100 locations
serving 47 states. While there, Mr. Keaveney led a restructuring of the business changing IT strategy, bonus structures, financial
reporting and budgeting to increase EBITDA from $4M to $10M EBITDA. BeavEx achieved a successful exit for the founder selling to
a private equity buyer. Mr. Keaveney secured $45M of debt financing and completed four acquisitions growing revenue by 50%.

 

 

    4 

     

    

 

He
began his career working in his family cable television business. He worked with Deloitte in NYC and earned a CPA and MBA. Spending
16 years of his career in Europe, Keaveney was one of the Founders of Cable Management Ireland (CMI). CMI rolled up 28 cable television
businesses and exited through a successful trade sale to Liberty Media for $100 million after 10 years of building the business.
CMI employed 150 people, was backed by Advent International.

 

Mr.
Keaveney was a founder of eTel Group, a private equity backed rollup that acquired 13 telecom businesses in Eastern Europe and
exited through a trade sale to Telecom Austria for $130 million. Mr. Keaveney managed the fundraising of $175 million of equity
for Airtricity, a successful European renewable energy business, which exited through a trade sale to SSE and Eon for $4.2 Billion.

 

He
resides in Atlanta and holds an MBA in Finance from Pepperdine University (1989), a BA in Accounting from Villanova University
(1986) and is a Certified Public Accountant (CPA) in the State of Pennsylvania.

 

Consulting Agreement

 

On
December 1, 2015, N4P entered into a consulting agreement with Stephen Keaveney to provide Chief Executive Officer services to
N4P. The consulting agreement has a term of twelve months and provides for compensation of $10,000 per month. The Company has agreed
to assume the obligations associated with this consulting agreement as compensation for Mr. Keaveney until such time as the new
Board of Directors can consider a new agreement. The consulting agreement is attached hereto as Exhibit 10.2 to this Form 8-K and
incorporated herein by reference.

 

(d) Board of Directors

 

Pursuant
to the Securities Exchange Agreement, each of the following former members of the Board will continue to serve on the Board (in
the now indicated classes of the Board):

 

Richard H. Davis,
58; and

Ivan Berkowitz, 68

 

Pursuant
to the Securities Exchange Agreement and as a result of Board action on December 9, 2015, the following individuals were appointed
to the Board:

 

Steven Keaveney, 51;

Jeff S. Cosman, 44;
and

William L. Ross, Ph.D.,
69

 

Messrs.
Cosman and Ross will not receive compensation for their services on the Board of Directors at this time. Their biographies are
set forth below.

 

    5 

     

    

 

Jeff S. Cosman, Director

 

Mr.
Cosman joined the Board on December 9, 2015. He has more than 10 years’ experience in the solid waste industry from local
operations up to corporate accounting and finance.

 

From
December 2010 to May 2015, Mr. Cosman was the Founder of Legacy Waste Solutions, LLC. From May 2014 to Present, Mr. Cosman is the
CEO and Chairman of Meridian Waste Management, (Ticker: MRDN).  Mr. Cosman has a history of entrepreneurial adventures starting
with Market Street Capital, JC Waste Solutions, Legacy Waste Solutions and Dynamic Molecular Solutions. In 2010, Mr. Cosman began
formally working on creating mobile apps with the development of cConnects.

 

Mr.
Cosman holds a B.B.A. in Managerial Finance and Banking & Finance, as well as a Bachelors of Accountancy from the University
of Mississippi. Mr. Cosman was drafted by the New York Mets and played professional baseball in the minor leagues from 1993-1996.
From February 1997 to February 1999, Jeff Cosman played an active role in the consolidation efforts when Republic Services acquired
168 companies in 30 months, going from $500MM in Revenue to over $2.1BN. 

  

William L. Ross, Ph.D.

 

Dr.
Ross joined the Board on December 9, 2015. Dr. Ross currently serves as a Consultant to various client companies. He has served
as an advisor to corporations with regard to staffing, conflict resolution and has provided training on corporate development.
Over the last 40 years he ran a professional multidisciplinary mental health practice. He has been a licensed psychologist for
the past 35 years, including service with the US Health Service, and the Department of Defense, providing consulting services to
soldiers and their families as a Military Family Life Consultant from 2008 to 2012. He has authored numerous online courses related
to Social and Emotional Learning (SEL), and has advised investors, including both publicly traded and not-for-profit entities,
on potential acquisitions and mergers. He completed a bachelor’s degree in psychology from Miami University of Ohio in 1967;
he received a master’s degree in psychology from Howard University in 1969, and a PhD in psychology in 1977.

 

Item 5.03 Amendment to Articles of Incorporation.

 

Certificate of Designation - Series X Preferred Stock

 

On December
10, 2015, the Company filed with the Secretary of State of the State of Delaware a Certificate of Designation of Series X Preferred
Stock designating 1,000 shares of Series X Preferred Stock.

 

Rank. With respect to the
distribution of assets upon liquidation, dissolution or winding up of the Company, the Series X Preferred Stock ranks pari passu
with the Company’s Common Stock.

 

Dividends. The Company
may not declare, pay, or set aside for payment any dividend payable in cash, property, or evidences of indebtedness, on shares
of common stock unless and until the Company shall have declared and paid a dividend on the Series X Preferred Stock in an amount
at least equal to an amount at least equal to the product of (A) the amount proposed to be paid in common stock, multiplied by
(B) the Series X Preferred Stock conversion rate.

 

 

    6 

     

    
 

Voting Rights. Except for certain matters delineated in the Certificate of Designation,
Holders of Series X Preferred Stock shall vote together with holders of common stock as a single class on all matters submitted
for consideration by holders of voting securities. Each share of Series X Preferred Stock shall entitle the holder thereof to
a number of votes equal to the conversion rate, rounded to the next highest share. The conversion rate will allow the Series X
Preferred Stock holders to control approximately 90% of the vote of the Company.

 

It is expected that all of the Series X
Preferred Stockholders will convert their shares into common stock upon the filing of an Amended Certificate of Incorporation which
will, among other things, increase the number of authorized shares of the Company to permit the conversion. The Company believes
this will occur prior to December 31, 2015. The foregoing description of the Series X Preferred Stock is qualified in its entirety
by reference to the Series X Certificate of Designation attached hereto as Exhibit 3.1 to this Form 8-K and incorporated herein
by reference.

 

Item 7.01Regulation FD
Disclosure.

 

On
December 14, 2015 the Company issued a press release outlining the actions taken to restructure the Company, generally as described
in this filing. A copy of the Company’s press release is attached hereto as Exhibit 99.1.

 

Item 9.01 Financial
Statements and Exhibits.

 

		(a)	Financial Statements of Business Acquired.

 

The financial statements
required by this Item are not being filed herewith. To the extent such information is required by this Item, it will be filed by
amendment to this Current Report on Form 8-K not later than 71 days after the date on which this Current Report on Form 8-K is
required to be filed.

 

(d) The following exhibits are filed with
this report:

 

Exhibit Number                                           Description

 

	3.1	 	Certificate of Designation
	 	 	 
	10.1	 	Securities Exchange Agreement, dated December 9, 2015, between the Company and members of Newco4Pharmacy, LLC.
	 	 	 
	10.2	 	Consulting Agreement, dated December 1, 2015, between Newco4Pharmacy, LLC and Steven Keaveney.
	 	 	 
	99.1	 	Press Release of Trunity Holding, Inc., dated December 15, 2015   

    7 

     

    
 

SIGNATURES

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

 

	 	TRUNITY HOLDINGS, INC.
	 	 
	Date: December 15, 2015	By: 	/s/ Stephen Keaveney
	 	 	Stephen Keaveney
Chief Executive Officer & Chief Financial Officer

 

    8 

     

    

 

EXHIBIT E - FORM 8K FILED ON DECEMBER 21, 2015

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): December 18, 2015

 

TRUNITY
HOLDINGS, INC.

(Exact name of registrant
as specified in its charter)

 

	Delaware	000-53601	87-0496850
	(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

  

12555 Orange Drive

Davie, Florida 33330

(Address of principal
executive offices, including zip code)

 

(866) 723-4114

(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:

 

	☐	Written communications pursuant to Rule 425 under the Securities Act (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(c) under the Exchange Act (17 CFR 240.13e-4(c))

  

     

     

    

 

TRUNITY HOLDINGS, INC. UPDATE ON PRIOR ANNOUNCEMENTS

 

Unless otherwise indicated in this Current Report or the context
otherwise requires, all references in this Current Report to “Trunity Holdings,” “Trunity,” the “Company,
”us,” “our” or “we” are to Trunity Holdings, Inc.

 

Item 1.01 Entry into a Material Definitive
Agreement.

 

On December 15, 2015
the Company filed a Form 8k in which it disclosed a series of events, including an acquisition, a planned change in the capital
structure of the Company, and a planned spin-out of its operating subsidiary and related educational solution business and assets
to its shareholders of record as of December 18, 2015. This filing updates shareholders on those events.

 

On December 9, 2015, the
Company entered into a Securities Exchange Agreement (the “Agreement”) with Newco4Pharmacy, LLC, a Georgia limited
liability company (“N4P”). Pursuant to the terms of the Agreement, the Company acquired 100% of the membership interests
of N4P in exchange for newly authorized preferred stock, which will be issued to the N4P members and be convertible into a number
of shares of common stock of the Company equal to approximately 90% of the shares outstanding (the “Acquisition”).
Per the Agreement, the Company has acquired all of the assets, goodwill and the business plan of N4P, including a letter of intent
for a planned acquisition.

 

The Company, and the former
shareholders of N4P, with the approval of the Board of Directors, have agreed to modify the terms to provide that N4P members shall
convert its Preferred X stock into 10,000,000 shares of common stock, and that number shall be equal to 85% of the shares outstanding,
with the balance of 15% to be allocated to the shareholders of record on December 18, 2015 including those debt holders who have
agreed to convert their debt into stock, as well as shares allocated to the spin out. No conversion of the Preferred X shall occur
until the completion of the spin out and the conversion of debt and related share issuance. This increases the amount and percentage
of shares to legacy shareholders, and debt holders who agreed to convert, from 10%, to 15%.

 

Another provision of the
Agreement was a requirement that at least 90% of the debts of the Company be converted into equity at $.03 per share. This condition
has been waived by the N4P holders. Of the original $4,036,227 debts it had before the conversion began, only $1,368,637, remain
with $600,426 at the public, holding company level, and $768,211 attributable to the obligations of the holding company, 34% of
the total original debt before the debt conversion effort began.

 

As of December 18, 2015,
including existing equity holders of 63,628,821 (36% of the total), and 114,526,684 shares (64% of the total) allocated to the
conversion of debt of the public holding company, and for the obligations of the operating subsidiary in the spin out, there will
be 178,155,505 shares outstanding immediately prior to the spin out. In addition, if exercised, there would be an additional 7,924,589
shares underlying previously issued warrants, and 6,855,766 shares attributable to previously issued stock options. The warrants
and options in place will remain, and will not be canceled, though they will be modified as a result of the restructuring in share
number and strike price, along with all other equity and debt instruments of the Company upon completion of the announced restructuring.

 

The shareholders of record
as of December 18, 2015 shall receive a pro-rata interest in the spin out. All shareholders immediately before completion of the
restructuring will own a pro-rata share of 15% of the restructured public company shares, after giving effect to the conversion
of the Preferred X owned by the N4P holders as a result of the acquisition of N4P by the Company.

 

As of the close of business
on December 18, 2015, within the obligations of the public, holding company, a total of $2,251,052 of the Company’s debenture
and note holders have converted, for a total of 75,035,067 shares issued. This leaves only $600,426 of payables at the public holding
company level, and the Company believes it will be able to rework, or convert, those debts at a later time.

 

As of the close of business
on December 18, 2015, within the educational solutions business operating subsidiary that be spun-out, a total of $416,538 of the
obligations have been converted, for a total of 13,884,600 shares issued. This leaves $768,211 of obligations remaining at the
operating level. Conversions of debt at the operating subsidiary level are continuing to be discussed, and if all were to convert
25,607,018 additional shares would be issued. The Company has decided to issue the remaining shares allocated for conversion of
the debts to the operating subsidiary as if all the debt had converted. This should better position the subsidiary to be better
able to operate after the spin out into a private company.

 

 

     2

     

    

 

After conversion of debts
at the public holding company and the operating subsidiary, and the allocation of shares to the operating subsidiary, subject to
the spin out, there will be 178,155,505 million shares outstanding, before the conversion of the Preferred X, or the effect of
the restructuring. These shareholders will be subject to the effect of the announced restructuring of all of the Company’s
debt and equity instruments, to include a reverse split of the common stock of 100.93 to 1, such that each holder of 101 shares
will have one outstanding share, and total shares outstanding for the Company will be 11,765,000. Also all fractional shares will
be rounded up to the next whole number of shares and the shares will be in addition to the 11,765,000 shares described herein.

 

The total outstanding
share count will include 10,000,000 shares owned by N4P’s former members, and 1,765,000 shares that the legacy shareholders
of the public company will own, including legacy equity holders in the public company, those debt holders in the public company
who have agreed to convert, and the shares allocated to conversion of debt, and recapitalization of the operating subsidiary upon
its spin out into a private company. This will complete the agreed upon share exchange such that the N4P holders will own 85% of
the shares and the legacy holders will own 15%.We intend to complete the restructuring as of December 30, 2015, or at the earliest
possible date thereafter, subject to regulatory approval.

 

The holders of previously
issued warrants and options will be notified of the effect of the restructuring and the reverse split.

 

The ownership of the spin
out company containing the operations and assets of the educational solutions business shall be the same as the ownership of the
public company immediately prior to the spin out and the conversion of the Preferred X owned by the N4P members. N4P’s former
members will not participate in this ownership. The spin out will have 10,000,000 shares outstanding at the time of the spin out,
and the allocation of shares will be 17.82 shares issued for every one share in the public company held immediately before the
spin out. Also all fractional shares will be rounded up to the next whole number of shares and the shares will be in addition to
the 11,765,000 shares described herein.

 

Shares in the spin out
will be issued to those holders of record as of December 18, 2015, as soon as practical after the spin out. The Company intends
to complete the spin out on December 30, 2015, or at the earliest possible date thereafter, subject to regulatory approval.

 

Subject to regulatory
approval, the restructured public company will be named True Nature Holdings, Inc., and will consist of 500,000,000 authorized
common shares, and 100,000,000 shares of preferred stock authorized. There will be 11,765,000 shares of common stock issued and
outstanding as of the completion of the restructuring, and no shares of preferred stock will be issued. It is a Delaware “C”
corporation. Its offices are located at 1355 Peachtree Street, Suite 1150, Atlanta, Georgia 30309, Georgia and its Chairman and
CEO is Stephen Keaveney.

 

The spin out company will
be named Trunity, Inc., a Florida “C” corporation, and it will have 100,000,000 authorized common shares and 10,000,000
shares of preferred stock authorized. There will be 10,000,000 shares of common stock outstanding at the time of the spin out,
and no preferred shares issued. The issued shares will be allocated to the legacy equity owners of the public company, including
those who converted their debt, as of the record date, December 18, 2015 and with the shares allocated for conversion of its debts,
as if already converted, but reserved for such use. Its offices are located at Davie, Florida, and its CEO is Nicole Fernandez-McGovern.

 

After the spin out there
will be no relationship between the public company and the spin out.

 

Item 5.01 Changes in Control of Registrant.

 

Upon the closing of the
Transaction, a change of control of the Company occurred, with N4P acquiring shares that resulted in control of the Company by
N4P members. As of December 10, 2015 and after giving effect to the Transaction, and the modifications described herein, Newco4Pharmacy
now has 85% of the outstanding voting rights of the Company, and the legacy shareholders have 15%.

 

Item 7.01 Regulation FD Disclosure.

 

On December 17, 2015 the Company issued a press release outlining
the actions taken to restructure the Company, generally as described in this filing. On December 21, it issued a press release
further describing its actions. A copy of the Company’s press releases is attached hereto as Exhibit 99.1 and Exhibit 99.2.

 

     3

     

    

  

SIGNATURES

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

 

	 	TRUNITY HOLDINGS, INC.
	 	 
	Date: December 21, 2015	By: 	/s/ Stephen Keaveney
	 	 	Stephen Keaveney
Chief Executive Officer & Chief Financial Officer

   

     4

     

    

 

EXHIBIT F - FORM OF DEBT CONVERSION USED IN DEBT CONVERSION EFFORT

 

2015 Conversion
Agreement AND RESTRUCTURING PLAN

 

Trunity Holdings, Inc.

 

November 25, 2015

 

Re: Conversion of Debt and
or Debenture

 

Ladies and Gentlemen:

 

You have informed me that
Trunity Holdings, Inc. (the “Company”, “TNTY”) intends to implement a restructuring plan (the “2015
Restructuring Plan”) that includes the following steps:

 

A) The Company intends
to acquire the assets and ownership interests of Newco4Pharmacy, LLC (the “Seller”, or “Newco”)
for 1,000 shares of Series X Preferred Stock (the “Acquisition”);

 

B) we also intend to move
all the current business operations and assets out of the Company (known as a “spin-out”) to a private company (“AssetCo”,
for the purpose of this agreement), and all of the shareholders, including newly issued shares from the conversion of debts, will
own the AssetCo on a pro-rata basis with their share of ownership in the Company, immediately prior to the spin-out, and;

 

C) the Company’s
capital structure will be restructured so that upon conversion of the Preferred X, the existing shareholders will have at least
10% of the shares of the Company, and under certain conditions as much as 15% of the shares of the Company, after the restructuring,
and immediately before the spin-out.

 

I understand that the closing
of the Acquisition of Newco is anticipated to occur on November 30, 2015 (the “Closing Date”) or soon thereafter
as possible, upon agreement by the above parties. The spin-out of AssetCo, and conversion of the Series X Preferred Stock, is expected
to occur by December 31, 2015, subject to regulatory and other approvals.

 

You have further advised
me that Seller has conditioned the closing of the Acquisition upon: (a) the conversion of all or substantially all outstanding
debt and/or debentures into approximately ______ shares of common stock of the Company immediately following the Acquisition
and (b) the transfer, prior to the Acquisition, of all assets and rights of the Company into a newly organized subsidiary of the
Company AssetCo. To induce the Seller to complete the Acquisition, the undersigned, [Insert full name of entity executing conversion
agreement](“Holder”), is irrevocably (i) executing and delivering this Conversion Agreement to the Company
for the purpose of converting any and all of the debt and/or debentures held by Holder into common stock of the Company and common
stock of AssetCo on and subject to the terms and conditions of this Conversion Agreement and (ii) releasing any and all claims
Holder may have against the Company through the date hereof.

 

Holder has previously
entered into a Debenture Agreement dated November __, 2015, by and between the Company and Holder (the “Debenture Agreement”).

 

Effective on the anticipated
Closing Date of November 30, 2015, $___________ principal owed by the Company to Holder and all accrued and unpaid interest thereon
will be converted into solely the right to receive upon delivery of [________] shares of the Company’s common stock and
upon completion of the spin out transaction pro-rata shares of AssetCo’s common stock (the “Conversion Shares”).
In the event the closing of the Acquisition occurs after the Closing Date, no additional interest shall accrue under the subject
debt instruments and no change shall be made in the number of Conversion Shares issued to Holder.

 

     

     

    

 

Holder agrees to accept
delivery of the Conversion Shares in full payment, accord, and satisfaction of the debenture and/or debt and all obligations of
the Company due to Holder under the Transaction Documents or otherwise. Holder acknowledges and agrees that upon delivery of the
Conversion Shares: (i) the Company will no longer be indebted to Holder, (ii) the Company will have no further obligations
to Holder under the Transaction Documents, and (iii) that each of the Transaction Documents will be terminated and of no further
force and effect.

 

Holder also agrees to approve
the implementation and completion of the restructuring plan as described, and that the shares issued as a result of this conversion
of debt will be voted in favor of the restructuring in any shareholder vote, or proxy.

 

Effective upon delivery
of the Conversion Shares, Holder releases, acquits, and forever discharges the Company, and its past, present, and future officers,
directors, partners, agents, employees, attorneys, heirs, successors, assigns, parents, subsidiaries, affiliates, and representatives
(collectively, the “Releasees”) of and from any and all actions, causes of action, claims, suits, damages, judgments,
and demands whatsoever in law and/or equity, known or unknown, accrued or unaccrued, suspected or unsuspected, fixed or contingent,
liquidated or unliquidated, matured or unmatured, developed or undeveloped, discoverable or undiscoverable, which Holder had, now
has, or may later have or claim to have, against the Releasees, or any of them, involving or arising out of any act or failure
to act, or any transaction, event, circumstance, occurrence, or state of facts, which existed, occurred, or transpired, or which
is alleged to have existed, occurred, or transpired, at any time from the beginning of time through and including the Closing Date,
including without limitation, all matters arising out of or related to the offer, sale, and issuance of the Conversion Shares,
the Transaction Documents, this Conversion Agreement, and all other matters whatsoever which have or allegedly have occurred or
transpired at any time from the beginning of time through and including the Closing Date, excluding only the rights of Holder to
receive the securities as provided pursuant to this Conversion Agreement.

 

Holder agrees to execute
and deliver such other documents and instruments to evidence the termination of the obligations under the Transaction Documents,
without any additional consideration therefor, as the Company may reasonably request.

 

	 	[INSERT FULL NAME OF HOLDER]
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

     

     

    

 

EXHIBIT G - FORM OF DEBT ASSIGNMENT

 

AGREEMENT
FOR ASSISNGMENT
OF DEBT

 

On
this 31st day
of December, 2015,
the following parties
enter into this
agreement calling
for the assignment
of debt, between
the following parties:

 

Whereas
the COMPANY
is Trunity
Holdings, Inc., and
the operating subsidiary
is Trunity
Inc., and both
are Delaware
corporations;

 

Whereas,
the person, individual,
or corporate entity,
(the “VENDOR”)
is:

NAME

ADDRESS

CITY,
STATE ZIP

COUNTY

 

Whereas
the VENDOR
agrees that $is
owed as
of this date,
including all fees,
interest, or other
costs as referenced
on the attached
schedule of debt.
The obligation
may currently
be owed
by Trunity
Holdings, Inc. (OTC:TNTY),
a Delaware
corporation, or by
its operating subsidiary,
Trunity Inc.,
which is also
a Delaware
corporation. The
VENDOR hereby
agrees to allow
the obligation of
the COMPANY
to be assigned,
without exception or
any conditions, to
the newly formed
corporation, Trunity
Inc., a Florida
corporation, and acknowledges
that all obligations
to pay the
debt shall rest
solely with Trunity,
Inc., a Florida
corporation. The
VENDOR fully
releases the COMPANY,
whether it is
Trunity Holdings,
Inc., or the
operating subsidiary,
Trunity, Inc., both
Delaware corporations,
from any and
all obligations as
a result of the
debt.

 

And
the parties fully
acknowledge that Trunity
Holdings, Inc. has
announced plans for
a restructuring of
its operations, and
structure, to include
a spin out
its educational business
assets and operations
from its holding
company and
its operating subsidiary,
into a newly
formed corporation,
Trunity, Inc.,
a Florida corporation.

 

The VENDOR
agrees that it
has read the
Company’s form
10Q for the
period ending 9/30/2015,
which can be found at: http://www.sec.gov/Archives/edgar/data/802257/000157570515000072/tnty_3q15.htm
and specifically is
aware of
the following language
found in the
liquidity section of
the report:

 

Liquidity
and Capital Resources

 

We
have concluded that,
notwithstanding a substantial
increase in sales
of its products
and services in
recent months, particularly
in international markets,
we will
not be able
to implement its
business plan unless
it is able
to promptly (i)
substantially reduce its
debt burden, which
is now over
$4 million, including
accounts payable, debenture
obligations and other
commitments, most
of which are
past due, and
(ii) raise substantial
additional capital. Further,
we concluded
that our education
technology business (the
“Trunity Business”) will
be best developed
through a privately
held company,
without the additional
cost and complexity
associated with operating
as a public
company.

 

Consistent with these goals, on November 11, 2015, we
entered into a nonbinding letter of intent (“LOI”) with Newco4Pharmacy LLC; a Georgia limited liability company (“N4P”).
Under the terms of the LOI,
we would acquire 100% of the membership interests of N4P in exchange for newly authorized preferred stock, which would be issued to the N4P members and be convertible at the election of the
holders into a number of shares of common stock of the Company equal to 85–90% (depending on the ultimate level of debt conversion) of the shares outstanding at the time (the “Acquisition”). We will acquire all of the goodwill and underlying business plan of N4P, which contemplates a rollup of businesses in the compounding pharmacy industry, including all potential acquisition documents. A condition of the closing of the Acquisition is conversion of at least 90%
of our debts (other than
liability to professionals) into
equity at a price of $.03 per share. Shortly after closing of the N4P Acquisition, the Trunity Business would be spun out to a separate privately held company (“New Trunity”) owned by the legacy Trunity
shareholders (including those who acquired shares by debt conversion) proportionate
to their shares of
Trunity (the “Spin Out”). Following the Acquisition, we principally would be owned and managed by the
former N4P members, will retain responsibility for paying certain of our debts. The remaining debts will be
the responsibility of New Trunity following the Spin Out.

 

     

     

    

 

As
of the date
of this Report,
the majority of
our debt holders
have agreed to
convert their debts
into common
stock conditioned upon
closing of the
Acquisition. We
believe that the
Acquisition will be
closed by mid-December
2015; however,
there can be
no assurance that
this will occur.
Regardless of whether
or not the
Acquisition is consummated,
we will
need to raise
substantial capital in
the coming weeks
in order to
continue operations; however,
there could be
no assurance that
this capital will
be available on
terms acceptable to
us or at
all.

 

We
do not have
any commitments
for capital expenditures
during the next
12 months nor
do we
have any committed
external sources of
capital. We
do not believe
our working capital
is sufficient to
fund our operations
and permit us
to satisfy our
obligations as they
become due
and as a
result we
may not
be able to
continue operations. We
have continued to
expand our business
and our expenses
are much
greater than revenues
despite our focused
cost-control efforts. Even
if we
are successful in
substantially increasing our
revenues from expected
sales, we
will still need
to raise substantial
additional working capital.
We do
not have any
firm commitments to
provide the additional
capital which is
needed and there
are no assurances
that we
will be able
to secure capital
on terms acceptable
to us, if
at all. Our
ability to significantly
increase our revenues
and successfully raise
additional working capital
is key to
our ability to
continue as a
going concern. If
we are
not successful in
both of these
efforts, we
may be
forced to significantly
curtail or cease our
operations.

 

On
December 15,
2015, the Company
filed a Form
8k with
the SEC,
which can be
found here: http://www.sec.gov/Archives/edgar/data/802257/000157570515000076/tnty_8k.htm.
This document discussed the
restructuring, including this
language:

 

The
Board of
Directors of the
Company (the
“Board”) believes
the Acquisition and
the Spin Out
are in the
best interest of
the stockholders and
the creditors of
the Company.
While considering the
approval of the
Acquisition and the
Spin Out, the
Board considered
the following factors:

 

	●		The Company currently had over $4 million in debt obligations, including accounts
payable, debenture obligations and other commitments, many of which are, or soon will, be in default. As such, the Board considered
the need to address the interests of these creditors and their ability to enforce rights that could result in material adverse
consequences to the Company;
	 	 	 
	●		The Board, after making substantial efforts to raise capital over many months, was
unable to find the funding needed to continue to operate the legacy Trunity business, and believed that no such funding could
be secured until the Company substantially improved its balance sheet, primarily by a sizable reduction in its debt obligations;
	 	 	 
	●		The Board, after a review of the Company’s business plan and expenses, current
and projected, concluded that operating the Company as a public company, with the associated accounting, legal and administrative
expenses, would make it difficult to allow it to achieve profitably or repay its obligations to creditors;
	 	 	 
	●		The other financing options considered by the Board did not result in letters of intent
or viable offers primarily because of the financial condition of the Company;
	 	 	 
	●		The N4P Acquisition and Spin Out plan was approved by the majority of the Company’s
creditors and allows the stockholders of the Company the opportunity to continue to benefit from the legacy Trunity business activity
as owners of the private entity while also participating in the value proposition associated with the N4P business plan and acquisition
strategy that will hold the business going forward.

 

     

     

    

 

The Board considered these and other factors when considering the Transaction and the Spin Out. There can be no assurance that the Spin Out will be completed successfully, or that the legacy Trunity
business will be more successful without the costs associated with being a public company. In addition, Newco4Pharmacy, LLC does not have an operating history, and there can be no assurance that it will be able to successfully implement its business plan, execute the planned acquisitions or operate profitably.

 

The VENDOR
hereby agrees to
all provisions of
this agreement, and
agrees the signature
below is a
representative of the
debt holder who
has full authority
to make
this agreement, and
that the VENDOR
hereby holds the
COMPANY, where
it by Trunity
Holdings, Inc., or
the operating subsidiary,
Trunity, Inc., which
are both Delaware
corporations, harmless
from any costs
or obligations from
this agreement, or
the underlying debt.

 

Signed this
31st day of
December, 2015

 

FOR
THE VENDOR:

 

	 	 	 	 
	VENDOR NAME	 
	 	 
	 	 	 
	SIGNING AUTHORITY SIGNATURE	 
	 	 
	 	 	 
	PRINT NAME OF SIGNER	 
	 	 
	FOR THE COMPANY:	 
	 	 
	 	 	 
	STEPHEN KEAVENEY, CEO	 
	TRUNITY HOLDINGS, INC. (A DELAWARE CORPORATION)	 
	 	 
	 	 	 
	NICOLE FERNANDEZ-MCGOVERN	 
	TRUNITY, INC. (A DELAWARE CORPORATION)	 
	 	 
	AND FOR THE ENTITY ACCEPTING RESPONSIBILITY THE OBLIGATION:	 
	 	 
	 	 	 
	NICOLE FERNANDEZ- MCGOVERN	 
	TRUNITY INC. (A FLORIDA CORPORATION)	 

  

     

     

    

EXHIBIT H - SCHEDULE OF PUBLIC COMPANY (HOLDING COMPANY) DEBT
THAT CONVERTED INTO EQUITY 

 

PAGE ONE OF TWO

 

	Debenture Holder	 	Total Owned and Converted	 	Conversion

Amount into shares
	Series A	 	 	 	 	 	 	 	 
	1841104 Ontario Ltd.	 	 	108,970.00	 	 	 	3,632,333	 
	JA Development Inc.	 	 	26,915.00	 	 	 	897,167	 
	Purling Holdings Ltd.	 	 	53,831.00	 	 	 	1,794,367	 
	Forbes Anderson	 	 	16,149.00	 	 	 	538,300	 
	Series B	 	 	 	 	 	 	 	 
	 Les Anderton	 	 	199,596.00	 	 	 	6,653,200	 
	Series C	 	 	 	 	 	 	 	 
	Stephen McKnight	 	 	136,880.00	 	 	 	4,562,667	 
	Edward Gomez	 	 	136,880.00	 	 	 	4,562,667	 
	Series D	 	 	 	 	 	 	 	 
	WHI, Inc. Retirement Savings Plan Trust	 	 	30,713.00	 	 	 	1,023,767	 
	Kenneth Block (New)	 	 	46,812.00	 	 	 	1,560,400	 
	Kenneth Block (Original)	 	 	34,777.00	 	 	 	1,159,233	 
	Kevin McGovern & Nicole Fernandez McGovern	 	 	40,621.00	 	 	 	1,354,033	 
	Lewis Bingham	 	 	115,794.00	 	 	 	3,859,800	 
	Lewis Bingham	 	 	51,540.00	 	 	 	1,718,000	 
	Clay Dalton	 	 	6,900.00	 	 	 	230,000	 
	Staci Cummings Trust	 	 	35,880.00	 	 	 	1,196,000	 
	Staci Cummings IRA	 	 	82,800.00	 	 	 	2,760,000	 
	Paul Anderson Trust	 	 	20,286.00	 	 	 	676,200	 
	Diane Austin	 	 	13,554.00	 	 	 	451,800	 
	Joakim F. Lindblom	 	 	104,032.00	 	 	 	3,467,733	 
	Les Anderton	 	 	220,308.00	 	 	 	7,343,600	 

 

     

     

    

 

EXHIBIT H - SCHEDULE OF PUBLIC COMPANY (HOLDING COMPANY) DEBT
THAT CONVERTED INTO EQUITY 

 

PAGE TWO OF TWO

 

	Debenture Holder	 	Total Owned and Converted	 	Conversion

Amount into shares
	Milena Naymark	 	 	32,529.00	 	 	 	1,084,300	 
	Dennis and Verlene Palmer	 	 	20,520.00	 	 	 	684,000	 
	Series E	 	 	 	 	 	 	 	 
	 LES V ANDERTON TRUST	 	 	62,750.00	 	 	 	2,091,667	 
	 KENNETH J BLOCK	 	 	62,400.00	 	 	 	2,080,000	 
	 GENIE LABORDE/THE GRIFFIN FAMILY TRUST	 	 	24,960.00	 	 	 	832,000	 
	 LES V ANDERTON TRUST	 	 	30,700.00	 	 	 	1,023,333	 
	Series F	 	 	 	 	 	 	 	 
	Kevin and Nicole McGovern	 	 	18,233.00	 	 	 	607,767	 
	Kevin and Nicole McGovern	 	 	17,228.00	 	 	 	574,267	 
	KENNETH J BLOCK	 	 	18,218.00	 	 	 	607,267	 
	Neil Druks	 	 	29,563.00	 	 	 	985,433	 
	Derek Zielin	 	 	23,650.00	 	 	 	788,333	 
	Mitch Baruchowitz-IRA EQUITY TRUST COMPANY DBA	 	 	29,988.00	 	 	 	999,600	 
	Mitch Baruchowitz HTDY	 	 	29,863.00	 	 	 	995,433	 
	Les V Anderton Trust	 	 	33,922.00	 	 	 	1,130,733	 
	Les V Anderton Trust	 	 	17,813.00	 	 	 	593,767	 
	Les V Anderton Trust	 	 	37,840.00	 	 	 	1,261,333	 
	Les V Anderton Trust	 	 	28,900.00	 	 	 	963,333	 
	JAMES S OR SHIRLEY SALTZMAN	 	 	7,959.00	 	 	 	265,300	 
	JAMES S OR SHIRLEY SALTZMAN	 	 	14,684.00	 	 	 	489,467	 
	Furst Associates	 	 	22,700.00	 	 	 	756,667	 
	FM Partners	 	 	13,620.00	 	 	 	454,000	 
	Eagle Partners	 	 	9,080.00	 	 	 	302,667	 
	Furst Associates	 	 	33,840.00	 	 	 	1,128,000	 
	FM Partners	 	 	20,304.00	 	 	 	676,800	 
	Eagle Partners	 	 	13,536.00	 	 	 	451,200	 
	Larry Waldinger	 	 	14,112.00	 	 	 	470,400	 
	Larry Waldinger	 	 	22,890.00	 	 	 	763,000	 
	Larry Waldinger	 	 	11,105.00	 	 	 	370,167	 
	Promissory Notes	 	 	 	 	 	 	 	 
	Les Anderton	 	 	11,247.00	 	 	 	374,900	 
	Ivan Berkowitz	 	 	11,416.00	 	 	 	380,533	 
	Edward Gomez	 	 	28,499.00	 	 	 	949,967	 
	Kevin McGovern & Nicole Fernandez McGovern	 	 	8,560.00	 	 	 	285,333	 
	Interest on old Promissory note Kenny Block	 	 	2,685.00	 	 	 	89,500	 
	 	 	 	 	 	 	 	 	 
	TOTAL	 	$	2,385,523.00	 	 	 	74,951,733	 

 

NOTE: THESE ARE UNAUDITED, AND
ESTIMATES WITHOUT A REVIEW OF FINAL DOCUMENTS. ALL PARTIES AGREE TO PROVIDE A FINAL REVIEW AND MAKE ANY ADJUSTMENTS NEEDED WITHIN
THE NEXT 60 DAYS SO THAT FINAL NUMBERS CAN BE INCORPORATED INTO AN AUDIT OF THE PUBLIC COMPANY.

 

     

     

    

 

EXHIBIT X - LIST OF LIABILITIES ASSUMED BY PUBCO

 

	Schedule X - Debts Assumed by True Nature Holdings, Inc. (PUBCO)	 	 
	 	 	Trunity
	 	 	Holdings
	Carlton Fields Attorney At Law	 	$	228,292	 
	NCSE (INCLUDES PARTIAL ALLOCATION FOR LITIGATION
    COSTS)	 	$	105,511	 
	Marcum LLP	 	$	30,951	 
	Cherry, Bekaert, & Holland, LLP	 	$	26,720	 
	Arol Buntzman	 	$	8,836	 
	Crone Kline Rinde LP	 	$	5,445	 
	VStock Transfer, LLC	 	$	1,060	 
	Remaining Two Debentures That Did Not Convert	 	$	138,171	 
	TOTAL	 	$	544,986	 

 

NOTE: THESE ARE UNAUDITED, AND ESTIMATES WITHOUT
A REVIEW OF FINAL DOCUMENTS. ALL PARTIES AGREE TO PROVIDE A FINAL REVIEW AND MAKE ANY ADJUSTMENTS NEEDED WITHIN THE NEXT 60 DAYS
SO THAT FINAL NUMBERS CAN BE INCORPORATED INTO AN AUDIT OF THE PUBLIC COMPANY.

 

     

     

    

 

EXHIBIT Y - LIST OF LIABILITIES ASSUMED BY PRIVCO

 

	 	 	Trunity
	 	 	Inc.
	WaveSense Group	 	$	128,900	 
	Nicole Fernandez-McGovern	 	$	112,567	 
	Joakim Lindblom	 	$	103,350	 
	Kane Management Group LLC	 	$	78,654	 
	Ostin Company	 	$	66,252	 
	Robert Kaufman	 	$	60,943	 
	Les Anderton - Shareholder Line of Credit	 	$	50,861	 
	Cutler Cleveland	 	$	49,483	 
	TeleSoftas	 	$	48,560	 
	Accrued Expenses	 	$	45,000	 
	Alexander Sergeev	 	$	45,457	 
	Garcia Technology Solutions	 	$	36,000	 
	Elite Financial Communications Group, LLC	 	$	35,000	 
	Treasury Shares-Les Anderton	 	$	30,601	 
	230 Commerce Way, LLC	 	$	21,544	 
	RCM Financial	 	$	16,996	 
	Acelia Vidaurre	 	$	16,704	 
	Venkon Corp	 	$	15,930	 
	Les Anderton	 	$	13,546	 
	Thomas B. Shea	 	$	13,190	 
	WallStreetWriter, LLC	 	$	13,500	 
	Premier Financial Filings	 	$	8,251	 
	Phillip Flower	 	$	7,669	 
	OfficeTeam	 	$	7,009	 
	Robert J Bowman 	 	$	5,865	 
	Les Anderton	 	$	3,146	 
	Meredith W Enterprises LLC	 	$	2,457	 
	Flamingo commons LLC	 	$	2,003	 
	Iron Mountain Intellectual Property Management	 	$	1,905	 
	Ivan Berkowitz	 	$	1,626	 
	Clifford H Kraft	 	$	1,400	 
	Escrowtech	 	$	1,470	 
	Dave Brooks CPA	 	$	1,125	 
	AT&T	 	$	552	 
	David Parker	 	$	480	 
	John Englander	 	$	419	 
	Leslie Kim Cavanaugh	 	$	223	 
	Sheri German	 	$	223	 
	Donald Bittar	 	$	252	 
	The Hartford	 	$	631	 
	TOTAL	 	$	1,049,742	 

 

NOTE: THESE ARE UNAUDITED, AND ESTIMATES, WITHOUT
A REVIEW OF FINAL DOCUMENTS. ALL PARTIES AGREE TO PROVIDE A FINAL REVIEW AND MAKE ANY ADJUSTMENTS NEEDED WITHIN THE NEXT 60 DAYS
SO THAT FINAL NUMBERS CAN BE INCORPORATED INTO AN AUDIT OF THE PUBLIC COMPANY.

 

THESE MAY INCREASE BY AMOUNTS CREATED AS A RESULT
OF ANY LITIGATION COSTS, INCLUDING THOSE BORNE BY PUBCO FOR WHICH PRIVCO HOLDS PUBCO HARMLESS AND AGREES TO REIMBURSE.

 

     

     

    

 

EXHIBIT Z - LIST OF LIABILITIES TRANSFERRED FROM PUBCO TO OP SUB

 

	Schedule Z	 	 	 	 
	Debts Assigned from PUBCO to PRIVCO	 	$	58,033	 

 

NOTE: THESE ARE UNAUDITED, AND ESTIMATES WITHOUT A REVIEW OF FINAL DOCUMENTS. ALL PARTIES AGREE TO PROVIDE
A FINAL REVIEW AND MAKE ANY ADJUSTMENTS NEEDED WITHIN THE NEXT 60 DAYS SO THAT FINAL NUMBERS CAN BE INCORPORATED INTO AN AUDIT
OF THE PUBLIC COMPANY.Exhibit

EMPLOYMENT AGREEMENT

AGREEMENT effective January 1, 2016 between Glacier Bancorp, Inc., (“Company”), Glacier Bank (“Bank”) and Michael J. Blodnick (“Executive”).

RECITALS

		
	A.
	Executive has served as President and Chief Executive Officer of the Company and Chief Executive Officer of its wholly owned Subsidiary Glacier Bank.

		
	B.
	The Company and the Bank desire Executive to continue his employment at the Company and the Bank under the terms and conditions of this Agreement.

		
	C.
	Executive desires to continue his employment at the Company and the Bank under the terms and conditions of this Agreement.

AGREEMENT

		
	1.
	Employment. The Company and the Bank agree to employ Executive and Executive accepts employment by the Company and the Bank on the terms and conditions set forth in this Agreement. Executive’s title will be President and Chief Executive Officer of the Company and Chief Executive Officer of the Bank. During the term of this Agreement, Executive will serve as a director of the Company and a director of the Bank.

		
	2.
	Term. The term of this Agreement is one year, beginning on January 1, 2016 and terminating on December 31, 2016 (“Term”).  

		
	3.
	Duties. The Company will employ Executive as its President and Chief Executive Officer and the Bank will employ Executive as its Chief Executive Officer. Executive will faithfully and diligently perform his assigned duties, which include but are not limited to the following:

		
	(a)
	Company Performance. Executive will be responsible for all aspects of the Company’s and Bank’s performance, including without limitation, directing that daily operational and managerial matters are performed in a manner consistent with the Company’s policies.

		
	(b)
	Development and Preservation of Business. Executive will be responsible for the development and preservation of banking relationships, investor relationships and other business development efforts (including appropriate civic and community activities) of the Bank and the Company.

		
	(c)
	Report to Board. Executive will report directly to the Company’s board of directors. The Company’s board of directors may, from time to time, modify Executive’s title or add, delete, or modify Executive’s performance responsibilities to accommodate management succession, as well as any other management objectives of the Bank or the Company. Executive will assume any additional positions, duties and responsibilities as may reasonably be requested of Executive with or without additional compensation, as appropriate and consistent with Sections 3(a) and 3(b) of this Agreement.

		
	4.
	Extent of Services. Executive will devote all of his working time, attention and skill to the duties and responsibilities set forth in Section 3. To the extent that such activities do not interfere with his duties under Section 3, Executive may participate in other businesses as a passive investor, but (a) Executive may not actively participate in the operation or management of those businesses, and (b) Executive may not, without the Company’s prior written consent, make or maintain any investment in a business with which the Company, the Bank or their subsidiaries or divisions has an existing competitive or commercial relationship.  Executive may serve on the board of directors of one or more non-profit organizations or for-profit organizations, provided that Executive shall be prohibited from serving on the board of directors of any financial institutions, banks, bank holding companies or companies with which the Company, the Bank or any of their subsidiaries or divisions has an existing competitive or commercial relationship.

		
	5.
	Company and Bank Board. During the Term of this Agreement, the Company will use its best efforts to nominate and recommend Executive for election to the Company’s board of directors.  During the Term of this Agreement, Executive will serve as a director of the Bank.

		
	6.
	Salary. During the Term of this Agreement, Executive will receive an annual salary of $710,140.29, to be paid in accordance with the Company’s regular payroll schedule. 

		
	7.
	Short Term Incentive Plan.  Executive shall be eligible to participate in the Glacier Bancorp, Inc. 2015 Short Term Incentive Plan (“STIP”).  Executive shall be eligible for cash incentives pursuant to the STIP based on the Company meeting certain financial goals (i.e. Threshold, Target and Max) set by the Company’s board of directors at the following levels:

	
					
	Cash Incentive Opportunity as a Percentage of Salary

	 
	 
	 
	 
	 

	 
	Threshold
	Target
	Max
	 

	 
	0%
	60%
	90%
	 

All STIP cash incentives shall be awarded and paid in accordance with and subject to the Company’s STIP plan documents, as adopted and amended from time to time by the Company’s board of directors.  Executive acknowledges having been provided a copy of the Company’s STIP plan documents prior to entering into this Agreement.   

2

		
	8. 
	Long Term Incentive Plan.  Executive shall be eligible to participate in the Glacier Bancorp, Inc. 2015 Stock Incentive Plan (“LTIP”).  Executive shall be eligible for equity awards pursuant to the LTIP based on the Company meeting certain financial goals (i.e. Threshold, Target and Max) set by the Company’s board of directors at the following levels:

	
					
	Equity Opportunity as a Percentage of Salary

	 
	 
	 
	 
	 

	 
	Threshold
	Target
	Max
	 

	 
	0%
	50%
	75%
	 

All LTIP equity awards shall be made in accordance with and shall be subject to all terms and conditions of the Company’s LTIP plan documents, as adopted and amended from time to time by the Company’s board of directors.  Executive acknowledges having been provided a copy of the Company’s LTIP plan documents prior to entering into this Agreement.   
    
		
	9.
	Income Deferral. Executive will be eligible to participate in any program available to the Company’s senior management for income deferral, for the purpose of deferring receipt of any or all of the compensation he may become entitled to under this Agreement.

		
	10.
	Vacation and Benefits.

		
	(a)
	Vacation and Holidays. Executive will accrue up to 160 hours of paid vacation each year, which accrual shall occur ratably over the Company’s payroll periods, in addition to all holidays observed by the Bank. Accrual of vacation time shall be in accordance with the Company’s Employee Manual. Executive may carry over, in the aggregate, up to 160 hours of unused vacation to a subsequent year; provided, however, Executive may not accumulate in excess of 160 hours of paid vacation at any given time (the "Cap").  Should  Executive’s accumulation of paid vacation reach the Cap of 160 hours, Executive will no longer accrue additional paid vacation until Executive uses some of Executive's accumulated vacation time and Executive’s accumulated paid vacation balance drops below the Cap.  Each calendar year, Executive shall take at least five (5) consecutive days of vacation.

		
	(b)
	Benefits. Executive will be entitled to participate in any group life insurance, disability, medical, dental, health and accident insurance plans, profit sharing and pension plans and in other employee fringe benefit programs the Company may have in effect from time to time for its similarly situated employees, in accordance with and subject to any policies adopted by the Company’s board of directors with respect to the plans or programs, including without limitation, any incentive or employee stock option plan, deferred compensation plan, 401(k) plan, and Supplemental Executive Retirement Plan (SERP). The Company through this Agreement does not obligate itself to make any particular benefits available to its employees.  The Company’s change, modification, or termination 

3

of any of its benefits during the Term of this Agreement shall not be a breach of this Agreement.  

		
	(c)
	Business Expenses. Subject to any applicable Company policies or the rules and regulations of the Internal Revenue Service, the Company will reimburse Executive for ordinary and necessary expenses which are consistent with past practice at the Company (including, without limitation, travel, entertainment, and similar expenses) and which are incurred in performing and promoting the Bank’s and the Company’s business. Executive will present from time to time itemized accounts of these expenses.  Reimbursement will be made as soon as practicable but no later than the last day of the calendar year following the calendar year in which the expenses were incurred.  The amount of expenses eligible for reimbursement in one calendar year will not affect the amount of expenses eligible for reimbursement in any other calendar year.

		
	(a)
	Directors and Officers Insurance; Indemnification.  Executive will be covered by the Company’s and/or Bank’s directors and officers liability insurance policy in effect from time to time.   To the extent permitted by the Company’s Bylaws and the Montana Business Corporation Act, the Company will indemnify Executive in the event Executive is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that Executive is or was a director, officer or employee of the Bank or the Company. 

		
	11.
	Termination of Employment.

		
	(a)
	Termination by the Company for Cause. If the Company and the Bank terminate Executive’s employment for Cause (defined below) before this Agreement terminates, the Company will pay Executive, within 10 business days following Executive’s termination of employment, or on the next regularly scheduled pay date, whichever is earlier, the salary earned and expenses reimbursable under this Agreement incurred through the date of termination. Executive will have no right to receive compensation or other benefits for any period after termination under this Section 11(a).

		
	(b)
	Termination by the Company without Cause or by Executive for Good Reason. If the Company and the Bank terminate Executive’s employment without Cause before the expiration of the Term of this Agreement, or Executive terminates Executive’s employment for Good Reason (defined below) before the expiration of the Term of this Agreement, the Company will pay Executive a payment equal to the base salary, set forth in Section 6, above, to which Executive would have been entitled for the remainder of the Term of the Agreement if Executive’s employment had not terminated. Payment by the Company to Executive pursuant to this Section 11(b) is conditioned upon Executive executing and not revoking a release of any and all claims which Executive could assert against the Company and the Bank relating to Executive’s employment or the termination of Executive’s employment in a form acceptable to the Company.  All payments 

4

made pursuant to this Section 11(b) shall be completed no later than March 15 of the calendar year following the calendar year in which Executive’s employment terminates.  

		
	(c)
	Death or Disability. This Agreement terminates (1) if Executive dies or (2) if Executive is unable to perform his duties and obligations under this Agreement for a period of 90 consecutive days as a result of a physical or mental disability arising at any time during the Term of this Agreement, unless with reasonable accommodation Executive could continue to perform Executive’s essential functions under this Agreement and making these accommodations would not pose an undue hardship on the Company or result in a direct threat to the health or safety of Executive or others. If termination occurs under this Section 11(c), the Company shall pay Executive or Executive’s estate, within 10 business days following Executive’s termination of employment, all salary earned and expenses reimbursable through the date Executive’s employment terminated.  Neither Executive nor Executive’s estate will have any right to receive compensation or other benefits for any period after termination under this Section 11(c).

		
	(d)
	Termination Related to a Change in Control.  The following provisions shall survive the expiration of the Term of this Agreement and the termination of Executive’s employment.

		
	(1)
	Termination by Company. If the Company, or its successor in interest by merger, or its transferee in the event of a purchase in an assumption transaction (for reasons other than Executive’s death, disability, or for Cause) terminates Executive’s employment without Cause, as defined in Section 11(g): (A) within three (3) years following a Change in Control (as defined below); or (B) before a Change in Control but on or after the date that any party either announces or is required by law to announce any prospective Change in Control transaction and a Change in Control occurs within six months after the termination, then Company will provide Executive with the payment described in Section 11(d)(3) below, provided that Executive executes and does not revoke a release of any and all claims which Executive could assert against the Company or the Bank relating to Executive’s employment or the termination of Executive’s employment in a form acceptable to the Company.  

		
	(2)
	Termination by Executive. If Executive terminates Executive’s employment with Good Reason, as defined in Section 11(h), within three (3) years following a Change in Control, the Company will provide Executive with the payment described in Section 11(d)(3) below, provided that Executive executes and does not revoke a release of any and all claims which Executive could assert against the Company or the Bank relating to Executive’s employment or the termination of Executive’s employment in a form acceptable to the Company.

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	(3)
	Payments. If Section 11(d)(1)(A) or Section 11(d)(2) is triggered in accordance with its terms, the Company will: (i) subject to Sections 11(e) and 11(j) below, beginning within 30 days after Executive’s separation from service as defined by Treasury Regulation § 1.409A-1(h) (“Separation from Service”), pay Executive in 36 substantially equal monthly installments in an overall amount equal to 2.99 times the Executive’s annual salary (determined as of the day before the date Executive’s employment was terminated) and (ii) subject to Sections 11(e) and 11(j) below, if Section 11(d)(1)(B) is triggered in accordance with its terms, beginning within 30 days after a Change in Control, the Company will pay Executive in 36 substantially equal monthly installments in an overall amount equal to 2.99 times the Executive’s annual salary (determined on the day before the date Executive’s employment was terminated). 

		
	(e)
	Limitations on Payments Related to Change in Control. The following apply notwithstanding any other provision of this Agreement:

		
	(1)
	the total of the payments described in Section 11(d)(3) will be less than the amount that would cause them to be a “parachute payment” within the meaning of Section 280G(b)(2)(A) of the Internal Revenue Code;

		
	(2)
	the payment described in Section 11(d)(3) will be reduced by any compensation (in the form of cash or other benefits) received by Executive from the Company or its successor after the Change in Control and/or after Executive’s termination of employment; and

		
	(3)
	Executive’s right to receive the payments described in Section 11(d)(3) terminates (i) immediately if before the Change in Control transaction closes, Executive terminates his employment without Good Reason, or the Company terminates Executive’s employment for Cause, or (ii) three years after a Change of Control occurs.

		
	(4)
	Notwithstanding anything to the contrary in this or any other agreement or plan, including Section 11(e)(1) of this Agreement, to the extent that any payment or distribution of any type to or for the benefit of the Executive by the Company (or by any affiliate of the Company, any person or entity who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company’s assets (within the meaning of Section 280G of the Internal Revenue Code, and the regulations thereunder), or any affiliate of such person or entity, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Total Payments”), is or will be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code (the “Excise Tax”), then the Total Payments shall be reduced (but not below zero) only if and to the extent that a reduction in the Total Payments would result in the Executive retaining a larger amount, on an after-tax 

6

basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Executive received the entire amount of such Total Payments. Unless the Executive shall have given prior written notice specifying a different order to the Company to effectuate the foregoing, the Company shall reduce or eliminate the Total Payments, by first reducing or eliminating the portion of the Total Payments which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as defined herein). Any notice given by the Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Executive’s rights and entitlements to any benefits or compensation.

The determination of whether the Total Payments shall be reduced as provided in this Section and the amount of such reduction shall be made at the Company’s expense by the Company’s independent auditors (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation to the Company and the Executive within ten (10) days of the last day of Executive’s employment. If the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to the Total Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such payments and, absent manifest error, such Determination shall be binding, final and conclusive upon the Company and the Executive. If the Accounting Firm determines that an Excise Tax would be payable, the Executive shall have the right to accept the Determination of the Accounting Firm as to the extent of the reduction, if any, pursuant to this Section, or to have such Determination reviewed by another accounting firm selected by the Executive, at the expense of the Company, in which case the determination of such second accounting firm shall be binding, final and conclusive upon the Company and Executive.

		
	(f)
	Return of Company and Bank Property. If and when Executive ceases, for any reason, to be employed by the Company and the Bank, Executive must return to the Company all keys, pass cards, identification cards, cell phones, blackberries or other smart phones, tablets, electronic storage devices, company credit cards  and any other property of the Company and the Bank. At the same time, Executive also must return to the Company and the Bank all originals and copies (whether in memoranda, designs, devices, electronic storage devices, tapes, manuals, and specifications) which constitute proprietary or confidential information or material of the Company, the Bank or their subsidiaries or divisions. The obligations in this paragraph include, without limitation, the return of documents and other materials which may be in Executive’s desk at work, in Executive’s car, in place of residence, or in any other location under Executive’s control.

    

7

		
	(g)
	Cause. “Cause” means any one or more of the following:

		
	(1)
	Willful misfeasance or gross negligence in the performance of Executive’s duties;

		
	(2)
	Conviction of a crime in connection with Executive’s duties, conviction of a felony or conviction of a crime of fraud, theft, conversion or dishonesty; or

		
	(3)
	Conduct demonstrably and significantly harmful to the Company or the Bank, as reasonably determined on the advice of legal counsel of the Company’s board of directors. 

		
	(h)
	Good Reason. Executive terminates employment for “Good Reason” if all four of the following criteria are satisfied:

		
	(1)
	Any one or more of the following conditions (each a “Condition”) arises without Executive’s consent:

		
	(A)
	The material reduction of Executive’s salary, unless the reduction is generally applicable to substantially all Company employees (or employees of a successor or controlling entity of the Company);

		
	(B)
	The material diminution in Executive’s authority or duties as they exist on the date of this Agreement;

		
	(C)
	The material breach of this Agreement by the Company; or

		
	(D)
	A material relocation or transfer of Executive’s principal place of employment to a location outside Flathead County, Montana; and

		
	(2)
	Executive gives notice to the Company of the Condition within 90 days of the initial existence of the Condition;

		
	(3)
	The Company fails to reasonably remedy the Condition within 30 days following receipt of the notice described in Section 11(h)(2) above; and

		
	(4)
	Executive terminates employment within 180 days following the initial existence of the Condition.

		
	(i)
	Change in Control. “Change in Control” means a change “in the ownership or effective control” or “in the ownership of a substantial portion of the assets” of the Company, within the meaning of Treas. Reg. § 1.409A-3(i)(5).

		
	(j)
	Section 409A Compliance.  Notwithstanding anything in this Agreement to the contrary, if any amounts that become due under this Agreement on account of the 

8

termination of Executive’s employment constitute “nonqualified deferred compensation” within the meaning of Internal Revenue Code Section 409A, payment of such amounts shall not commence until Executive incurs a Separation from Service (as defined in Section 11(d)(3)).  If, at the time of Executive’s Separation from Service under this Agreement, Executive is a “specified employee” (under Internal Revenue Code Section 409A), any amount that constitutes “nonqualified deferred compensation” within the meaning of Internal Revenue Code Section 409A that becomes payable to Executive on account of Executive’s Separation from Service (including any amounts payable pursuant to the preceding sentence) will not be paid until after the end of the sixth calendar month beginning after Executive’s Separation from Service (the “409A Suspension Period”). Within 14 calendar days after the end of the 409A Suspension Period, Executive shall be paid a lump sum payment in cash equal to any payments delayed because of the preceding sentence, together with interest on them for the period of delay at a rate not less than the average prime interest rate published in the Wall Street Journal on any day chosen by the Company during that period. Thereafter, Executive shall receive any remaining payments as if there had not been an earlier delay.

		
	12.
	Confidentiality. Executive will not, during the Term of this Agreement and for a period of five years after Executive’s employment with the Bank or Company has terminated, use for Executive’s own purposes or disclose to any other person or entity any confidential business information concerning the Bank or Company or their business operations, unless (1) the Bank or Company consents to the use or disclosure of confidential information; (2) the use or disclosure is consistent with Executive’s duties under this Agreement, or (3) disclosure is required by law or court order. For purposes of this Agreement, confidential business information includes, without limitation, trade secrets (as defined under the Montana Uniform Trade Secrets Act, Montana Code § 30-14-402), customer information, various confidential information on investment management practices, marketing plans, pricing structure and technology of either the Bank or Company. Executive will also treat the terms of this Agreement as confidential business information.

		
	13.
	Noncompetition. During the Term and the terms of any extensions or renewals of this Agreement and for a period of three years after Executive’s employment with the Bank or Company has terminated, unless such termination is the result of the Bank’s and the Company’s election not to renew Executive’s employment, Executive will not, directly or indirectly, as a shareholder, director, officer, employee, proprietor, partner, member, agent, consultant, lessor, creditor or otherwise

		
	(a)
	provide management, supervisory or other similar services to any person or entity conducting a banking or lending business in counties in which the Bank or Company or a subsidiary of Company had a branch or office during the term of this Agreement; 

9

		
	(b)
	persuade or entice, or attempt to persuade or entice any employee of the Bank, the Company or a subsidiary of the Company to terminate his/her employment with the Bank, the Company or a subsidiary of the Company;

		
	(c)
	persuade or entice or attempt to persuade or entice any person or entity with whom Executive had pre-termination communications to change, terminate, cancel, rescind or revoke its banking or contractual relationships with the Bank, Company or a subsidiary of Company.

		
	14.
	Enforcement. 

		
	(a)
	The Company, Bank and Executive stipulate that, in light of all of the facts and circumstances of the relationship between Executive and the Company and Bank, the agreements referred to in Sections 12 and 13 (including without limitation their scope, duration and geographic extent) are fair and reasonably necessary for the protection of the Company's and Bank’s confidential information, goodwill and other protectable interests. If a court of competent jurisdiction should decline to enforce any of those covenants and agreements, Executive, the Company and Bank request the court to reform these provisions to restrict Executive’s use of confidential information and Executive’s ability to compete with the Company or Bank to the maximum extent, in time, scope of activities and geography, the court finds enforceable.

		
	(b)
	Executive acknowledges the Bank and the Company will suffer immediate and irreparable harm that will not be compensable by damages alone if Executive repudiates or breaches any of the provisions of Sections 12 or 13 or threatens or attempts to do so. For this reason, under these circumstances, the Company or the Bank, in addition to and without limitation of any other rights, remedies or damages available to it at law or in equity, will be entitled to obtain temporary, preliminary and permanent injunctions in order to prevent or restrain the breach, and neither the Company nor the Bank will be required to post a bond as a condition for the granting of this relief.

		
	15.
	Effect of Covenants. Executive specifically acknowledges the receipt of adequate consideration for the covenants contained in Sections 12 and 13 and that the Company and the Bank are entitled to require Executive to comply with these Sections. These Sections will survive termination of this Agreement. Executive represents that if Executive’s employment is terminated, whether voluntarily or involuntarily, Executive has experience and capabilities sufficient to enable Executive to obtain employment in areas which do not violate this Agreement and that the Company’s or Bank’s enforcement of a remedy by way of injunction will not prevent Executive from earning a livelihood.

		
	16.
	Jury Waiver.  THE PARTIES TO THIS AGREEMENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF 

10

CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF EITHER PARTY OR ANY EXERCISE BY ANY PARTY OF THEIR REPECTIVE RIGHTS UNDER THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT, AND ANY CLAIM OR DEFENSE ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE).
 
		
	17.
	Miscellaneous Provisions.

		
	(a)
	Entire Agreement. This Agreement constitutes the entire understanding and agreement between the parties concerning its subject matter and supersedes all prior agreements, correspondence, representations, or understandings between the parties relating to its subject matter.

		
	(b)
	Binding Effect. This Agreement will bind and inure to the benefit of the Company and its subsidiaries and their successors and assigns.  Subject to the limitation on assignment set forth in Section 17(e), this Agreement will bind and inure to the benefit of Executive and Executive’s heirs, legal representatives, successors and assigns.

		
	(c)
	Litigation Expenses.      In the event of any dispute or legal or equitable action arising from this Agreement, the prevailing party shall be entitled to all of its out-of-pocket expenses and costs including, without limitation, reasonable attorneys’ fees and costs.

		
	(d)
	Waiver. The failure of any party to insist upon strict performance of any of the terms and provisions of this Agreement shall not be construed as a waiver or relinquishment of any such terms or conditions or of any other term or condition and the same shall be and remain in full force and effect.  Any waiver by a party of its rights under this Agreement must be written and signed by the party waiving its rights. A party’s waiver of the other party’s breach of any provision of this Agreement will not operate as a waiver of any other breach by the breaching party.

		
	(e)
	Assignment. The services to be rendered by Executive under this Agreement are unique and personal. Accordingly, Executive may not assign any of Executive’s rights or duties under this Agreement.  Any such assignment or attempted assignment shall be void.

		
	(f)
	Amendment. This Agreement may be modified only through a written instrument signed by all parties to this Agreement.

		
	(g)
	Severability. The provisions of this Agreement are severable. The invalidity of any provision will not affect the validity of other provisions of this Agreement.

11

		
	(h)
	Governing Law and Venue. This Agreement will be governed by and construed in accordance with Montana law, except to the extent that certain regulatory matters may be governed by federal law. The parties must bring any legal proceeding based on, arising out of, under or in connection with this Agreement in Flathead County, Montana.

		
	(i)
	Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which taken together will constitute one and the same instrument.

		
	(j)
	Attorney Representation.  Executive is aware that in any contract, including this Agreement, the interests of the parties may conflict and that there may be issues upon which only an attorney is qualified to advise.  Executive acknowledges that Executive was free to and was encouraged to retain an attorney to thoroughly discuss all aspects of this Agreement.   Executive further acknowledges that Executive had an opportunity to read and review this Agreement and that Executive is knowingly, voluntarily and of Executive’s own free will entering into this Agreement.

Signed this 4th day of January, 2016.

	
			
	Company:
	GLACIER BANCORP, INC.

	 
	 
	 

	 
	By:
	/s/ Dallas I. Herron

	 
	 
	Dallas I. Herron, Chairman

	
			
	Attest:
	 

	 
	 
	 

	By:
	/s/ LeeAnn Wardinsky
	 

	 
	LeeAnn Wardinsky, Secretary
	 

	
			
	Bank:
	GLACIER BANK

	 
	 
	 

	 
	By:
	/s/ Dallas I. Herron

	 
	 
	Dallas I. Herron, Chairman

	
			
	Attest:
	 

	 
	 
	 

	By:
	/s/ LeeAnn Wardinsky
	 

	 
	LeeAnn Wardinsky, Secretary
	 

	
			
	Executive:
	 

	 
	 
	/s/ Michael J. Blodnick

	 
	 
	Michael J. Blodnick

12

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