UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

x           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                                               For the fiscal year ended December 31, 2012
OR
¨           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                                               For the transition period from _________ to _________
Commission File Number 000-53601

TRUNITY HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
   
Delaware
87-0496850
(State or other jurisdiction of incorporation)
(I.R.S. Employer Identification Number)

   
15 Green Street, Newburyport
Massachusetts 01950
01950
(Address of principal executive offices)
(Zip Code)

(866) 723-4114
 (Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None
 
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 Par Value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.YES ¨   NO   x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.YES ¨   NO   x
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x   NO   ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x   NO   ¨
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non accelerated filer, or a smaller reporting company.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
 
 
¨ LARGE ACCELERATED FILER
¨ ACCELERATED FILER
 
¨ NON-ACCELERATED FILER
x SMALLER REPORTING COMPANY
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES ¨   NO   x
 
As of June 30, 2012, the aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant based on the last sales price was $5,353,664 (21,414,657 shares of Common Stock at a closing price of $0.25).
 
As of April 15, 2013, the registrant had 37,026,447 shares of Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:  None

 
 
 

TRUNITY HOLDINGS, INC.

TABLE OF CONTENTS


   
PAGE
PART I
   
     
Item 1.
Business
3
Item 1A.
Risk Factors
17
Item 1B.
Unresolved Staff Comments
25
Item 2.
Properties
25
Item 3.
Legal Proceedings
25
Item 4.
Mine Safety Disclosures
26
     
PART II
   
     
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
26
Item 6.
Selected Financial Data
28
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
28
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
34
Item 8.
Financial Statements and Supplementary Data
34
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
57
Item 9A. Controls and Procedures 58
Item 9B.
Other Information
58
     
PART III
   
     
Item 10.
Directors, Executive Officers and Corporate Governance
59
Item 11.
Executive Compensation
63
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
65
Item 13.
Certain Relationships and Related Transactions, and Director Independence
67
Item 14.
Principal Accountant Fees and Services
69
     
PART IV
 
 
     
Item 15.
Exhibits
70

 
1
 

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
 
 
In addition to historical information, this Annual Report on Form 10-K contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements.  Factors that might cause such a difference include, but are not limited to, those discussed in the sections entitled “Business”, “Risk Factors”, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof.  We undertake no obligation to revise or publicly release the results of any revision of these forward-looking statements.  Readers should carefully review the risk factors described in this Annual Report and in other documents that we file from time to time with the Securities and Exchange Commission.
 
In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “proposed,” “intended,” or “continue” or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other “forward-looking” information. There may be events in the future that we are not able to accurately predict or control. You should be aware that the occurrence of any of the events described in these risk factors and elsewhere in this Annual Report could substantially harm our business, results of operations and financial condition, and that upon the occurrence of any of these events, the trading price of our securities could decline. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates, levels of activity, performance or achievements.
 
Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this report.
 
We cannot give any guarantee that these plans, intentions or expectations will be achieved. All forward-looking statements involve risks and uncertainties, and actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those factors described in the “Risk Factors” section of this Annual Report. Moreover, new risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this Report are based on information available to us on the date of this Report. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this Report.


 
2
 
 
PART I  

ITEM 1.  BUSINESS
 
General

Trunity Holdings, Inc. (“Trunity” or the “Company”) is a Delaware corporation headquartered in Newburyport, Massachusetts. The Company’s wholly-owned subsidiary, Trunity, Inc., a Delaware corporation (“Trunity, Inc.”), also based in Newburyport, Massachusetts has developed a collaborative knowledge management, publishing and education delivery platform which provides an end-to-end solution for the rapidly growing e-textbook, e-learning, enterprise training, and education marketplaces. As a result of the platforms innovative multitenant cloud-based architecture, Trunity enables a unique integration of academic content with learning management systems. It allows content from multiple sources to be assembled into customized living textbooks and courseware and delivered with real-time updates directly to the student on any internet-enabled computer or smart mobile device. All content powered by Trunity is seamlessly integrated with learning management, social collaboration, standards and measurement tagging, real-time analytics, and royalty tracking functionality. The content is available to be purchased or shared via the Trunity Knowledge Exchange Store or within private communities powered by the Trunity platform. Content modularization capabilities allow products to be mixed and matched and purchased in whole or in part (similar to the iTunes model of purchasing individual songs and making custom playlists).

The Trunity Knowledge Exchange delivers quality content from various sources, such as traditional publishers, collaborative crowd-sourced communities, individual authors, teachers, as well as institutional repositories and content partners. Trunity’s platform currently hosts a growing community of over 4,300 expert contributors made up of the world’s top scientists and educators, who create peer-reviewed educational content. Trunity has customers both domestically but also internationally having won a significant national project to provide 1.5M students in Ukraine with its core learning management and Knowledge Exchange platform. Trunity also hosts many National Science Foundation (NSF) and NASA funded projects including The National Council for Science and the Environment (NCSE), University of New Hampshire EPSCoR, Encyclopedia of Earth (EoE) and Climate Adaptation and Mitigation E-Learning (CAMEL), all of whom also serve as core content contributors into the Trunity Knowledge Exchange. In addition, Trunity completed a significant project for The National Academy of Sciences to develop and deploy an online collaboration workspace for scientists to exchange and publish scientific findings from the investigation of declassified satellite earth imagery. We believe that Trunity’s cloud-based platform, which tightly integrates expert validated learning content with learning management (as described in greater detail below), is poised to make major inroads into the education marketplace.
 
Description of Products and Services

Trunity offers a Learning Content Management System (LCMS) that has been built from the ground up atop a robust knowledge gathering and management platform. This platform currently comprises four tightly integrated components:
 
 
1.
Content : functionality for collaboratively gathering, organizing and publishing knowledge content, such as for encyclopedias, knowledge bases and e-textbooks.
     
 
2. 
Learning Management : functionality for teaching and learning management, such as assignments, quizzes, exams, grading, and reporting.
     
 
3. 
Collaboration : functionality for collaboration and online social interaction, such as messaging, forums, commenting, rating, tagging and sharing.
     
 
4.
Trunity Knowledge Exchange : store functionality for distributing and monetizing living content, such as royalty tracking, real-time updates and analytics.
 
Connecting these components is an integrated core that includes identity/profile management, single sign-on, productivity dashboards, knowledge taxonomy management, content exchange, e-commerce and search functionality. Depending on the application, all or any subset combination or all of the functional components can be deployed for a specific customer solution. Also, the Trunity platform can be used as a stand-alone solution or may be integrated with existing data systems.

All components of content within the system are treated as assets – from textbooks and lectures to assignments to exams – and may be shared, modified and re-used effortlessly on a per-permission/policy/fee basis via Trunity’s integrated publishing and e-commerce infrastructure.
 
 
3
 
 
Content

Trunity’s platform brings authoring, peer review, and publishing workflow 100% online, allowing subject matter experts, publishers, and educators to contribute content, and create and assemble various types of education products from all digital media types including, text, audio, video, dynamic illustrations, html based applications, lesson plans, and exams etc. Product modularization capabilities improve the reusability of individual modules for a variety of purposes. Modules from various sources can be combined to create customized e-textbooks and courseware.

Learning Management

In addition to Trunity’s content capability, the platform facilitates learning for both 100% online and blended educational environments.   With features found in most existing learning management system (LMS) platforms, Trunity allows professors to manage their course schedules, administer exams and quizzes, provide and grade assignments and more.  The platform also allows students to collect all their grades, submit assignments and projects, and maintain them in a personal online profile.  An ePortfolio enables students to share selected items (such as projects) with other classmates or with potential employers.

Collaboration

The Trunity platform enables collaboration with several social networking features in the form of student-to-student, student-to-teacher, or teacher-to-teacher. Collaboration has been shown to greatly aid the learning process for students as well as instructors.  Whether it is the ability to rate content, add comments or engage in discussion forums, the Trunity platform is designed with the understanding that education works best when communication flows freely.  With this level of communication, course material and virtual textbooks can be updated in real-time if new information becomes available. Students can also see a list of their colleagues that are taking courses with them.  This fosters a community feel for the students from day one, whether the class is on campus or online.

Trunity Knowledge Exchange

The Trunity Knowledge Exchange allows content on the Trunity platform to be purchased in whole or in part. It allows content to be mixed and matched into customized e-textbooks and courseware (similar to the iTunes model of purchasing individual songs and making custom playlists). Customized courseware can be added to the Trunity Knowledge Exchange or made available in private communities powered by the Trunity platform. Automatic royalty tracking keeps track of payments to the original authors and curators according to the value of their contribution. When the original content source is updated, all instances of where that content is used within the Trunity Knowledge Exchange receive the update. Purchased content may also receive updates according to publisher mandate and user opt-in functionalities.
 
Key Differentiation

Key value propositions provided by the Trunity platform include:

Transforming the world of publishing
 
·
bringing authoring, peer review and publishing workflow 100% online
   
·
reducing time, environmental impact, and cost to produce and deliver
   
·
driving the shift to modularized content to broaden its application and audience
   
·
individual expert authors the tools and marketplace to share their knowledge
   
·
give direct insight into how content is used, enabling real-time updates
   
·
providing authors a much higher percentage of the royalties from their work
 
 
4
 
 
Transforming education and student engagement
 
·
giving teachers the ability to create and recombine content to deliver customized learning experiences
   
·
making content searchable by popular metrics and standards
   
·
integrating social collaboration, networking and learning management with the content/courseware

Transforming access to knowledge and learning
 
·
cloud-based platform provides access anytime, anywhere, on any device in the connected world
   
·
equal opportunity access to learning resources from the best and brightest authors and educators
 
The traditional publishing model lags in its timeliness to market and in its ability to remain up-to-date. Printed textbooks are expected to last anywhere from three to five years. For dynamic subjects such as environmental science, biology, engineering, medicine, law and political science, the majority of these textbooks are dated and contain factual errors by the time they are published. Also, single authoritative sources and the standardization of content does not address localization, differences in learning and teaching styles, or offer the breadth of voice that is a major requirement of the Common Core standard.
 
In contrast, Trunity’s crowd sourced publishing model offers educators access to a rich and dynamic source of educational content that can be customized to meet a full range learning abilities and teaching styles. While aiming to be internationally competitive, educational content can also be made both personal and local, bridging the gap between personal experience and formal instruction and a broader world view. Content on the Trunity platform maintains it's integrity through a quality and peer-review process.  Experts from around the globe who wish to contribute content and author on the platform go through an approval process where their credentials are verified. Once approved these experts, under their own names, may author and peer-review in the areas of their expertise. They may publish any size of resource from an entire book to a module containing a single learning concept and make these available in whole or in part on the Trunity Knowledge Exchange.

This content is then selected by teaching professionals to be incorporated into a virtual textbook that is assembled as needed. Through analytics tied to each content module, authors are able to see how their content is being used and to view comments. Author updates are available immediately. When the original content source is updated, all instances of where that content is used within the Trunity Knowledge Exchange receive the update. Educators can choose the updates they wish to include for their courses already in session. Purchased content within a student’s lifelong personal library may also receive updates according to publisher mandate and user opt-in functionality. Automatic royalty tracking keeps track of payments to the original authors and curators according to the value of their contribution each time a content module is purchased by or on behalf of a student. Trunity retains 30%-50% of the revenue, paying content contributors up to 70% of the royalty.
 
 
5
 
 
The flexible multitenant nature of the Trunity platform allows every customer instance to be customized, organized and branded according to the customer’s needs, while allowing content to be dynamically shared within and between organizations, as described above. The Trunity platform allows many types of inter- and intra-organization topologies to be created and dynamically updated, serving and keeping current with the evolving needs of customers. This functionality enables the creation of new and innovative solutions for customers such as schools, districts, textbooks publishers, government agencies, NGOs and businesses, and is the basis for Trunity’s integrated ecosystem-centric solution, as described below. To our knowledge, none of the above-described functionality is currently provided by any of our competitors.

Trunity has developed a highly differentiated patent-pending technology platform that integrates all of the essential web services in one fully hosted solution to capture, publish and socialize content. Key competitive features and functionality of the platform include:
Fully integrated
 
 
·
content, learning management and social collaboration/learning/networking in a single coherent fully integrated solution
   
·
flexible multi-tenant architecture allows easy integration across institutions, departments, classrooms, collections, libraries, etc.
   
·
single sign-on/dynamic content integration/exchange with 3 rd party platforms/solutions via well-defined modern APIs
 
Streamlined & on-demand
 
·
streamlined feature set provides what’s needed for most deployments, avoiding the steep learning curve of bloated LMS’
   
·
cloud-based and on-demand, allowing fast deployments on an individual teacher, department, school or district level
 
 
6
 
 
Flexible knowledge exchange
 
·
many-to-many, one-to-many and peer-to-peer exchange of content modules, courseware, books, etc.
   
·
flexible remixing with automatic updating of content, plus usage stats and feedback to original content creators/owners
   
·
e-commerce system automatically tracks and distributes royalties to original content across multiple remixed generations of content
 
Publisher agnostic
 
·
level playing field in which all publishers can play without fear of giving their competition a built-in advantage
 
Advanced crowdsourcing
 
·
cost efficiency  of crowd sourcing, with quality control and meta-tagging needed for educational standards
   
·
flexible workflow adaptable for teacher-to-teacher, expert content creation and other crowdsourcing applications
 
 
7
 
 
User centric
 
·
single user ID gives an integrated 360° view across all classes, schools, institutions and content that the user touches
   
·
personal life-long library allows each user life-long access to all learning materials, courses, class work, and social connections
 
Future proof & device agnostic
 
·
html5 content core, highly scalable schema-less database technology & API centric architecture provides future proofing
   
·
designed to support all major end-user devices, allowing deployment in heterogeneous “bring your own device” environments

Trunity Solutions and Applications

We believe that the unique architecture and capabilities of the Trunity platform enable new and innovative solutions and applications to be created to address longstanding problems and unmet needs within the education marketplace, some of which are described here. All items below, except for those specifically noted as “soon to be launched”, are currently available in use.

The core Trunity platform is offered to customers on a SaaS licensing basis. Trunity also offers the Knowledge Exchange store (both Trunity branded and white-labeled) and e-commerce functionality for purchase and sale of content (virtual textbooks, learning objects, etc.). In addition, Trunity provides professional services for customization, branding and deployment of customer solutions. Trunity also works with partners that provide professional services and/or provides the Trunity solution to customers on an OEM basis.
 
 
8
 
 
Trunity leverages these conditions by offering a collaborative knowledge management and publishing platform that dynamically brings together educational content from multiple sources with learning management functionality to deliver a fully integrated solution into the classroom. Course material or virtual textbooks can be created from a wide array of content types. These content types include:
 
·
Imported digital content from traditional textbook publishers (soon to be available)
   
·
Virtual textbooks created by authors using the Trunity platform
   
·
Custom content entered by professors and instructors
   
·
Crowd-sourced content (e.g. from repositories such as the Encyclopedia of Earth)

In addition to traditional print content, the Trunity platform supports multimedia files, teaching resources and social collaboration items such as discussion forums, blogs and comments specifically tagged to the content.
 
Content may be readily integrated into various types of applications, including virtual textbooks, courseware and learning management (the Trunity platform also enables third party learning management tools to be integrated into its solution as well).
 
Analytics, comments, and other metrics are available to authors and publishers in order to track, in real-time, how their content is being used in classrooms. This allows issues to be quickly identified and corrected on the fly. New editions are automatically made available without requiring any effort on the part of publishers or school systems to manage editions through the channel.
 
Textbook Authoring

The textbook market in higher education and K-12 is facing a significant transformation. As technology allows information to be created, updated and distributed more rapidly, we believe that the seemingly glacial pace of creating and delivering printed textbooks will soon become antiquated. What is needed is an approach that takes advantage of low cost computers and tablets along with increasing availability of high bandwidth that enables more information to live in ‘the cloud.’ At the same time, there is a strong desire from schools to tightly integrate learning content with learning management functionality, which heretofore has been delivered as a separate standalone solution.

 
9
 
 
Trunity provides next-generation online collaborative textbook authoring tools for authors (as well as publishers who wish to use this capability). Authoring can be done on a more traditional workflow basis, or it can be done on a collaborative crowd-sourced basis, complete with integrated peer review and editorial quality control. Schools, professors and course curators can use complete textbooks as the basis for courses or they can mix-and-match a la carte content from multiple textbooks to provide highly customized learning experiences. All delivery platforms, including Windows, MacOS, iOS, Android, Kindle are currently supported on the Trunity platform.
 
Authors/publishers control rights for their content, and, when a user within the system wishes to use the content (either through Trunity’s integrated Live Cross Publishing toolbar or via the Knowledge Exchange Store), the system automatically mediates the transaction and charges/distributes payments (authors/publishers set sharing policies in the interface when they publish content, which includes for free, by permission only, or for a fee; authors/publishers keep 50-70% of the fee, while Trunity charges a 30-50% transaction fee depending on agreement or relationship with the author or publisher). Users can pull content in this manner from multiple sources, mixing and matching content to create virtual textbooks and courseware, which in turn may be deployed and resold to other users, with the original authors automatically compensated through the system wherever their content is being used.

Content Collections

Trunity supports the creation of knowledge collections via crowd-sourcing of educational knowledge from subject matter experts. Content is reviewed, approved and organized via online peer and editorial review processes, combining the efficiency of crowd-sourcing with the quality assurance of traditional publishing methods. This content is searchable and accessible publically and can easily be integrated into virtual textbooks and courseware (as well as other content collections).

Trunity’s patent pending Live Cross Publishing technology allows easy exchange of content (by permission or for a fee) between any two customers using the Trunity platform and ensures that the author updates gets automatically revised wherever it is being used. This functionality assures that the content never goes out of date no matter where and how it is used, and saves schools and organizations the often massive cost of keeping content up to date.
  
 
10
 
 
Course Creation & Collaboration

With Trunity, courses can be created by leveraging content from textbook publishers, which can then be organized and customized by departments or instructors. Built-in navigation enables content to be organized into multi-layered modules or chapters, creating unified courseware that is fully integrated with the core online textbook content. Trunity offers collaboration through built-in forums, blogs and commenting support. Students can share questions, answers, comments, etc., on message boards that are only available to students within the class.
 
E-Commerce

Our e-commerce functionality is designed to track all sales in real-time, and reimburses authors, publishers and distributors accordingly. We believe that the white-label e-commerce functionality will soon allow universities and learning solution providers to integrate Trunity-powered content purchases into their offerings.
 
Solutions for Business

The same platform that enables a new style of learning environment for classrooms also serves businesses. Trunity enables companies to educate and engage their customers, business partners and employees. Companies and their customers converse through forums, with customers sharing experiences and establishing best practices. The company can solicit feedback with surveys and forums. Business partners can take exams to become certified to sell the company’s products, and employees can share project information, HR policies, training materials and more leveraging Trunity’s content management capabilities. As with the education market, all of this is provided in a Software as a Service (“SaaS”) environment, freeing the corporate IT groups to focus on mission critical applications.
 
Strategy

Trunity has both a viral as well as a more traditional sales/partnership marketing strategy. The value of the Trunity community grows with each additional customer that adopts the Trunity platform driving increased traffic, content and collaboration possibilities to other users on the network. Trunity is also partnering with significant system integration firms and channel partners. Trunity has developed significant partner’s to deliver digital content to schools in the US and around the globe. Trunity also is the beneficiary of many grants and partnerships with organizations like the NSF and NASA and leverages those to further its business. Much of Trunity's direct sales efforts focus on securing very large deployments of the platform, including whole country adoptions such as the OpenWorld project in Ukraine covering 1.5 million students in grades 5 th -9 th .
 
 
11
 
 
Market Opportunity

The North American market for online learning products will grow to $27.2 billion by 2016, up from the $21.9 billion reached in 2011, according to a new report by Ambient Insight called, "The North America Market for Self-paced eLearning Products and Services: 2011-2016 Forecast and Analysis." The traditional textbook publishing market exceeds $13 billion domestically alone. With the advent of the iPad and tablet computing, the entire industry is undergoing a massive market swing to electronic publishing. Even so, the dominant publishers still follow a traditional approach to authoring, editorial review, production and distribution of content, delivering e-textbooks that are essentially only electronic versions of the physical textbook. This conservative "status quo" approach does little to reduce costs and time-to-market, and doesn't take advantage of powerful capabilities that the new technology medium is able to offer, presenting a major market opportunity for Trunity's faster, less expensive, better integrated and much more powerful solution.
 
Trunity disrupts this entire model by crowd sourcing the content and allowing the professor teaching the class to select the content required and create an on-the-fly virtual textbook. This eliminates the publisher and allows scientists and experts to self-publish short articles or case studies giving students a much higher quality product. In addition to disrupting the traditional publishing and distribution model (e.g. by crowdsourcing and peer-reviewing educational content from subject matter experts and allowing educators to create from this content custom virtual textbooks complete with learning management and collaboration functionality).Trunity's "publishing marketplace" approach also provides traditional   publishers a neutral "publisher agnostic" channel to sell content into schools, whereby they can take advantage of the powerful functionality provided by the platform. Based on increasing demand by customers for functionality (e.g. mixing and matching content from different publishers into customized curriculum, etc.) that current publishers are unable meet, we believe this will be an increasingly attractive option for publishers as well as a significant added market opportunity for Trunity.
 
Our History

Trunity, Inc. was formed on July 28, 2009 through the acquisition of certain intellectual property by its three founders, Terry B. Anderton, Dr. Joakim Lindblom and Les V. Anderton.  In early 2012, the Company became a publicly-traded company through a reverse merger with Brain Tree International, Inc., a Utah corporation (“BTI”).

BTI was incorporated on July 26, 1983 to specialize in the development of high technology products or applications including, but not limited to, electronics, computerized technology, new technological product fields, and precious metals.  At the time of the reverse merger, BTI was a shell company with no assets.

On January 24, 2012, Trunity Holdings, Inc. (“THI” or the “Company”), Trunity, Inc. (“Trunity”) and Trunity Acquisition Corporation (“TAC”), a wholly-owned subsidiary of THI, all Delaware corporations, entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, on January 24, 2012, TAC merged with and into Trunity, with Trunity remaining as the surviving corporation and a wholly-owned subsidiary of THI (the “Merger”). As consideration for the Merger, as of the closing of the Merger, (i) each of the 961,974 shares of common stock of THI owned by Trunity were cancelled, (ii) each issued and outstanding share of common stock of Trunity was converted into the right to receive one share of the common stock of THI; and (iii) each share of TAC was converted into one share of Trunity common stock. As a result of the Merger, the former shareholders of Trunity hold 99% of the common stock of THI.
 
In order to facilitate the reverse merger transaction, immediately prior to execution of the Merger Agreement, Trunity acquired a 90.1% interest in Brain Tree International, Inc., a Utah corporation (“BTI”), pursuant to a Stock Purchase Agreement with the three principal shareholders of THI, as a result of which Trunity acquired 961,974 BTI shares for the price of $325,000 plus 325,000 shares of Trunity common stock. As part of the transaction, on January 24, 2012, immediately prior to the Merger, BTI reincorporated in Delaware and changed its name from Brain Tree International, Inc. to Trunity Holdings, Inc. Pursuant to the reincorporation, 105,064 minority shares of BTI automatically converted into the same number of shares of THI.

 
12
 

Description of Revenues Sources
 
Trunity derives the majority of its revenue from four sources: license revenue; professional services; transaction revenue from the sale of virtual textbooks and related content; and advertising within the Trunity domain.
 
—
Licensing Revenue – Trunity charges a subscription based license fee for the use of our Trunity Connect and Trunity Learn cloud-based software. Trunity charges on a per user basis between $5/user in the K-12 marketplace to $15/user in the higher education marketplace. We charge a flat fee on a monthly basis in the commercial enterprise sector ranging from $1,000 - $5,000/month depending on the number of users and other factors including bandwidth and storage requirements. We typically enter into a minimum of a one-year contract with both our educational and commercial enterprise customers.
   
—
Transaction Revenue – Trunity sells virtual textbooks, lesson plans and other related content through our on-line Knowledge Exchange content store. We do not own the content; however, we make a margin of 30 – 50% on all content sold through the Trunity Knowledge Exchange store. Trunity expects this source of revenue to be a significant source of future growth for the Company going forward.
   
—
Professional Services – Trunity provides specialized services and consulting to its customers. These services including data migration, creative and engineering services required to utilize our software products effectively. We charge between $85 to $200/hour based on the skill set and time commitment required by the customer.
   
—
Advertising Revenue – We have over 1,000,000 page views per month on knowledge collection sites hosted on the Trunity platform. Some of these sites are publicly available and host advertising provided currently by Google Adwords. This generates approximately $1,000/month in revenue.
 
Current and Potential Customers
 
Our customers include Ukraine Government’s Open World National Project, University of New Hampshire, Boston University, National Council for Science and the Environment, Westfield Bank of Massachusetts, among several others. We are aggressively pursuing new opportunities, as we will need to substantially increase revenues in order to achieve profitability. We have recently hired internal marketing and sales staff to accelerate our pursuit of new opportunities. Additionally, we hired BrandAid, a sales and marketing firm, to help us market ourselves and secure business in the pharmaceutical industry. We are also pursuing a reseller relationship with several significant systems integrators and resellers in the markets that we have targeted. We intend to work with large resellers to leverage their market presence and install bases.

Research and Development

The Company is in the development stage and it is presently undertaking research and development of its platform.  Trunity has spent approximately $1,833,714 on research and development during the last two fiscal years.  Based on our current state of development we anticipate exiting the development stage in the beginning of 2013.

 
13
 
 
Intellectual Property
 
Trunity relies on a combination of patent, copyright, trademark and trade secret laws, as well as confidentiality and invention agreements with its employees, independent contractors and clients to protect information which the Company believes is proprietary or constitute trade secrets.

In addition, Trunity has filed two patent applications (comprising eight unique concepts), which in 2012 were converted from provisional to full patent applications:
 
●
System and Method for Virtual Textbook Creation and Remuneration : United States Patent Application #13585948; filed August 15, 2012; inventors are Kevin H. Eaton, Halldor F. Utne, Joakim F. Lindblom; assigned to Trunity, Inc.
   
●
System and Method for Dynamic Cross Publishing of Content Across Multiple Sites : United States Patent Application # 13679007; filed November 16, 2012; inventor is Joakim F. Lindblom; assigned to Trunity, Inc.
 
We are working on four additional patent applications which we expect to file in 2013. There can be no assurance that any of these patents will ultimately be issued.
 
Competition

Trunity faces substantial competition from numerous other companies, most of whom have financial and other resources substantially greater than ours. Trunity’s principal competitors consist of educational publishing companies and open source platforms such as Houghton Mifflin Harcourt, Pearson, McGraw-Hill, Blackboard, Inc., and Moodle. These and other competitors may prove more successful in offering similar products and/or may offer alternative products that prove superior in performance and/or more popular with potential customers than the our products. Trunity’s ability to commercialize its products and grow and achieve profitability in accordance with its business plan will depend on its ability to satisfy its customers and withstand increasing competition by providing high-quality products at reasonable prices. There can be no assurance that we will be able to achieve or maintain a successful competitive position.

Employees
 
As of April 8, 2013, Trunity has 10 employees, of which all are full-time employees.  None of our employees are represented by a labor union or subject to a collective bargaining agreement.

 
14
 
 
Consultants
 
In an effort to contain our initial operating expenses while gaining access to the specialized services we need to rapidly grow our company, we expect to rely heavily on outside consultants to provide us with a wide range of expertise. Our current consulting arrangements include:

·
In March 2012,  we entered into a consulting agreement with RCM Financial Consulting, principally owned by Nicole Fernandez-McGovern, to provide a variety of services to the Company, including general accounting compliance, internal and external financial reporting requirements, and treasury and management consulting. As compensation for these services, Trunity paid the firm approximately $93,000 based on hourly billings for services performed.  Ms. Fernandez-McGovern became the Company’s Chief Financial Officer in April 2013. We will continue to  use her firm’s services on an as needed basis for accounting personnel other than her.
   
·
In 2012, Trunity, Inc. e ntered into a consulting agreement with Magdiel Rodriguez to provide a variety of services as Chief Enterprise Risk Officer. Mr. Rodriguez is responsible for establishing the organizational structure for risk management, leading and overseeing  the implementation of programs, regulatory compliance and market requirements for Trunity’s e-commerce business and providing leadership and oversight of the overall security infrastructure of the Company
   
·
In 2012, Trunity entered into a consulting agreement with Peter Banks, to provide a variety of services as Senior Vice-President of Education. Dr. Banks extensive background as an educator will aid the Company in driving recruitment of new authors on the Trunity platform, thereby growing the content on the Trunity Knowledge Exchange.
   
·
In 2012, Trunity entered into a consulting agreement with American Capital Ventures to assist in their investor relations and financial marketing efforts, which we see as an imperative campaign given the Company’s recent entry into the public markets.
 
Management

Trunity’s management consists of experienced sales, marketing and engineering professionals from the networking, technology and software industry. Biographical and other information on our executive officers and directors is set forth in “Item 10. Directors, Executive Officers, and Corporate Governance” of this Report.

 
15
 
 
Impact of JOBS Act
 
On April 5, 2012, the Jumpstart Our Business Startup Act of 2012 (the “JOBS Act”) was enacted into law. Under the JOBS Act, Congress established a new statutorily defined category of registrant referred to as an “emerging growth company” (“EGC”) which, among other things, affords such registrants with relief from certain disclosure requirements under the Securities Exchange Act of 1934 (the “Exchange Act”) for so long as they continue to qualify as an EGC.
 
A registrant qualifies as an EGC if it has total annual gross revenues of less than $1 billion as of the end of its most recent completed fiscal year and has not filed for its initial public offering of common equity securities under the Securities Act of 1933 (the “Securities Act”) prior to December 9, 2011. Under this definition, we qualify as an EGC.
 
For so long as we qualify as an EGC: 
  
 
—
We will not be required to comply with the auditor attestation over internal control requirements under §404(b) of the Sarbanes-Oxley Act of 2002 (“SOX”).
     
 
—
We may elect to comply with the following scaled-back executive compensation disclosure requirements (“Reduced Executive Compensation Disclosures”):  (a) EGCs are not required to comply with the annual “say on pay” and “say on golden parachute” advisory voting requirements and rules promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), (b) EGCs are not required to include the disclosures that will be required under future rules to be promulgated under the Dodd-Frank Act as to the relationship between executive compensation and company performance,  and the ratio of CEO pay to median employee pay, and (c) EGCs may elect to provide the same level of executive compensation disclosures as required by Smaller Reporting Companies (as defined under Rule 12b-2 promulgated under the Exchange Act and referred to herein as “SRCs”), which includes, among other things, the omission of Compensation Disclosure and Analysis discussion, inclusion of fewer tables, and disclosure of compensation for only the CEO and the two next highest paid officers.
     
 
—
We may elect on a one-time basis not to comply with new or revised accounting principles that apply to public companies, as long as we comply once the rules become applicable for private companies. We are required to make an irrevocable election which will continue for so long as we retain our status as an EGC status.
     
 
—
We will not be required to comply with any Public Company Accounting Oversight Board rules regarding mandatory audit firm rotation and auditor discussion and analysis should such rules be adopted.
 
As an EGC, we are not required to take advantage of all of the benefits made available to us under the JOBS Act described above, but may instead opt-in to certain of those scaled-back disclosures and phased-in requirements as we so desire. However, as discussed above, we are not permitted to selectively opt-in with respect to compliance with new or revised accounting rules or pronouncements. Accordingly, we have irrevocably elected to opt out of compliance with any new or revised accounting principles until any such rules become applicable to private companies.
 
Under the JOBS Act, we will retain our status as an EGC until the earliest of: (1) the last day of the fiscal year during which we have total annual gross revenues of $1,000,000,000 (as may be adjusted under the JOBS Act) or more; (2) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act; (3) the date on which we have, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (4) the date on which we are deemed to be a “large accelerated filer” under Rule 12b-2 promulgated under the Exchange Act.
 
It should be noted that we also currently qualify as a SRC. As a result, in the event that we are no longer an EGC, we will continue to be exempt from the auditor attestation requirements of SOX and eligible to comply with the Reduced Executive Compensation Disclosures for so long as we qualify as a SRC. We also may elect to provide other scaled-back disclosures applicable to SRCs (not just those relating to Reduced Executive Compensation Disclosures).

 
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Where You Can Find Additional Information

The Company is subject to the reporting requirements under the Exchange Act. The Company files with, or furnishes to, the SEC quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports and will furnish its proxy statement.  These filings are available free of charge on the Company’s website, http://www.trunity.com , shortly after they are filed with, or furnished to, the SEC.
 
The SEC maintains an Internet website, http://www.sec.gov , that contains reports, proxy and information statements and other information regarding issuers.
 
ITEM 1A.  RISK FACTORS
 
Investing in our common stock is speculative and involves a high degree of risk. Prospective investors should carefully consider the following risks and uncertainties and all other information contained or referred to in this Annual Report before investing in our common stock. We believe that the risks and uncertainties described below are all of the material risks we face; however, additional risks and uncertainties that we are unaware of, or that we currently deem immaterial, also may become important factors that affect us. Our business, financial condition or results of operations could be materially and adversely affected by some or all of the matters described below or other currently unknown factors. In that case, the value of our Common Stock could decline, and investors could lose all of their investment.
 
Risks Related to Our Business
 
General; We Have Limited Operating History.
 
Trunity was formed in 2009 and has a limited operating history with substantial operating losses. The Company has yet to generate any significant revenues, and the commercial value of its products and services is uncertain. There can be no assurance that the Company will ever be profitable. Further, the Company is subject to all the risks inherent in a new business including, but not limited to: intense competition, lack of sufficient capital, loss of protection of proprietary technology and trade secrets, difficulties in commercializing its products, managing growth and hiring and retaining key employees; adverse changes in costs and general business and economic conditions; and the need to achieve product acceptance, to enter and develop new markets and to develop and maintain successful relationships with customers.
 
 
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Intellectual Property .
 
The Company relies primarily on a combination of trade secrets, patents, copyright and trademark laws, and confidentiality procedures to protect its proprietary technology, which is its principal asset.
 
The Company’s ability to compete effectively will depend to a large extent on its success in protecting its proprietary technology, both in the United States and abroad. There can be no assurance that (i) any patent that the Company applies for will be issued, (ii) any patents issued will not be challenged, invalidated, or circumvented, (iii) that the Company will have the financial resources to enforce its patents or (iv)the patent rights granted will provide any competitive advantage. The Company could incur substantial costs in defending any patent infringement suits or in asserting its patent rights, including those granted by third parties, and the Company might not be able to afford such expenditures.
 
Although the Company has entered into confidentiality and invention agreements with its key personnel, there can be no assurance that these agreements will be honored or that the Company will be able to protect its rights to its non-patented trade secrets and know-how effectively. There can be no assurance that competitors will not independently develop substantially equivalent or superior proprietary information and techniques or otherwise gain access to the Company’s trade secrets and know-how. In addition, the Company may be required to obtain licenses to patents or other proprietary rights from third parties. If the Company does not obtain required licenses, it could encounter delays in product development or find that the development, manufacture or sale of products requiring these licenses could be foreclosed.
 
Need for Additional Funds.
 
We currently have enough cash on hand or commitments from investors to fund operations for approximately the next two months. Consequently, we are in the process of raising substantial additional funds. Without such additional funds, we may have to cease operations. The Company will require substantial additional funding for its contemplated research and development activities, commercialization of its products and services and ordinary operating expenses. Adequate funds for these purposes may not be available when needed or on terms acceptable to the Company. Insufficient funds may require the Company to delay or scale back its activities or to cease operations.
 
Going Concern.
 
The financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred net losses and negative operating cash flow since its inception. To the extent the Company may have negative cash flows in the future, it will continue to require additional capital to fund operations. The Company obtained additional capital investments under various debt and common stock issues. Although management continues to pursue its financing plans, there is no assurance that the Company will be successful in obtaining sufficient revenues to generate positive cash flow. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
  
 
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Competition.
 
The Company faces substantial competition from numerous other companies, most of whom have financial and other resources substantially greater than those of the Company. The Company’s principal competitors consist of educational publishing companies and open source platforms such as Houghton Mifflin Harcourt, Pearson, Blackboard, Inc., and Moodle. These and other competitors may prove more successful in offering similar products and/or may offer alternative products that prove superior in performance and/or more popular with potential customers than the Company’s products. The Company’s ability to commercialize its products and grow and achieve profitability in accordance with its business plan will depend on its ability to satisfy its customers and withstand increasing competition by providing high-quality products at reasonable prices. There can be no assurance that the Company will be able to achieve or maintain a successful competitive position.
 
Operational failures in our network infrastructure could disrupt our remote hosting and application services, could cause us to lose clients, sales to potential clients and could result in increased expenses and reduced revenues.
 
Unanticipated problems affecting our network systems could cause interruptions or delays in the delivery of the hosting services and other application services we provide to some of our clients. We provide remote hosting and other application services through computer hardware that is currently located in third-party co-location facilities in various locations in the United States. We do not control the operation of these co-location facilities. Lengthy interruptions in our hosting service or other application services could be caused by the occurrence of a natural disaster, power loss, vandalism or other telecommunications problems at the co-location facilities or if these co-location facilities were to close without adequate notice. Although we have developed redundancies in some of our systems, we are exposed to the risk of network failures in the future. We currently do not have adequate computer hardware and systems to provide alternative service for most of our hosting or application service clients in the event of an extended loss of service at the co-location facilities. Though some of our co-location facilities are served by data backup redundancy at other facilities, they are not equipped to provide full disaster recovery to all of our hosting and application services clients. If there are operational failures in our network infrastructure that cause interruptions, slower response times, loss of data or extended loss of service for our hosting and application services clients, we may be required to issue credits or pay penalties, current clients may terminate their contracts or elect not to renew them, and we may lose sales to potential clients. If we determine that we need additional hardware and systems, we may be required to make further investments in our network infrastructure, reducing our operating margins and diverting capital from other efforts.
 
Because we generally recognize revenues ratably over the term of our contract with a client, downturns or upturns in sales will not be fully reflected in our operating results until future periods.
 
When our products are fully launched we will recognize most of our revenues from clients monthly over the terms of their agreements, which are expected to be 12 months. As a result, much of the revenue we will report in each quarter is attributable to agreements entered into during previous quarters. Consequently, a decline in sales, client renewals, or market acceptance of our products in any one quarter would not necessarily be fully reflected in the revenues in that quarter, and would negatively affect our revenues and profitability in future quarters. This ratable revenue recognition also makes it difficult for us to rapidly increase our revenues through additional sales in any period, as revenues from new clients generally are recognized over the applicable agreement term.
 
 
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Governmental Incentives.
 
The Company’s business plan relies to some extent on the availability of federal and state incentives for K12 schools to implement online course offerings. There can be no assurance that some or all of these incentives will not be substantially reduced or eliminated, nor can there be any assurance that any currently proposed incentives will actually take effect.
  
Government regulation of the Internet and eCommerce is evolving and unfavorable changes could substantially harm our business and results of operations.
 
As Internet commerce continues to evolve, increasing regulation by federal, state or foreign agencies becomes more likely. Existing and future laws and regulations may impede the growth and use of the Internet or other online services. These regulation and laws may address pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, the provision of online payment services, broadband residential Internet access and the characteristics and quality of products and services. It is not clear how existing laws governing issues such as property ownership, sales, and other taxes, libel and personal privacy apply to the Internet and e-Commerce. Unfavorable resolution of these issues could have a material adverse effect on the Company’s business, results of the operations and financial condition.
 
Management and Dependence on Key Personnel.
 
The success of the Company will depend in large part upon the skill and efforts of its founders and executive officers, Terry B. Anderton and Joakim Lindblom and other key personnel, including those who may be hired. Loss of any such personnel, whether due to resignation, death, and disability or otherwise, could have a material adverse effect on the Company. In addition, as we seek to expand our organization, the hiring of qualified sales, technical and support personnel could be difficult due to the limited number of qualified professionals. Failure to attract, integrate and retain key personnel would result in disruptions to our operations, including adversely affecting the timeliness of product releases, the successful implementation and completion of company initiatives and the results of our operations.
 
Our current principal shareholders and management own a significant percentage of our stock and will be able to exercise significant influence over our affairs.
 
Our founders, including our executive officers and directors, as of April 16, 2013, beneficially own approximately 16.9% of the issued and outstanding Common Stock. Consequently, these shareholders may be able to determine the composition of the Board of Directors, retain the voting power to approve matters requiring shareholder approval and continue to have control over the Company’s operations. The interests of these shareholders may be different from the interests of other shareholders on these matters. The concentration of ownership could also have the effect of delaying or preventing a change in control or otherwise discourage a potential acquirer from attempting to obtain control of the Company.
 
 
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Calamities.
 
Although the Company maintains insurance which it considers prudent, there can be no assurance that such insurance will prove adequate in the event of actual casualty losses or broader calamities such as terrorist attacks, earthquakes, financial crises, economic depressions or other catastrophic events, which are either uninsurable or not economically insurable. Any such losses could have a material adverse effect on the Company.
 
If our products contain errors, new product releases are delayed or our services are disrupted, we could lose new sales and be subject to significant liability claims.
 
Because our software products are complex, they may contain undetected errors or defects, known as bugs. Bugs can be detected at any point in a product’s life cycle, but are more common when a new product is introduced or when new versions are released. We have frequent new product and functionality releases, and those releases may be delayed from their scheduled date due to a wide range of factors. Finally, our service offerings may be disrupted causing delays or interruptions in the services provided to our clients. In the past, we have encountered defects in our product releases, product development delays and interruptions in our service offerings. Despite our product testing, planning and other quality control efforts, we anticipate that our products and services may encounter undetected defects, release delays and service interruptions in the future. Significant errors in our products, delays in product releases or disruptions in the provision of our services could lead to:
 
●
delays in or loss of market acceptance of our products;
   
●
diversion of our resources;
   
●
a lower rate of license renewals or upgrades;
   
●
injury to our reputation; and
   
●
increased service expenses or payment of damages.
  
Because our clients use our products to store, retrieve and utilize critical information, we may be subject to significant liability claims if our products do not work properly or if the provision of our services is disrupted. Such claims could result in significant expenses, disrupt sales and affect our reputation and that of our products. We cannot be certain that the limitations of liability set forth in our licenses and agreements would be enforceable or would otherwise protect us from liability, and our insurance may not cover all or any of the claims. A material liability claim against us, regardless of its merit or its outcome, could result in substantial costs, significantly harm our business reputation and divert management’s attention from our operations.
 
 
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If we fail to keep pace with rapid technological changes, our competitive position will suffer.
 
The eLearning industry is characterized by rapid technological change. Failure to respond to technological advances could make our business less efficient, or cause our products to be of a lesser quality than those of our competitors. These advances could also allow competitors to provide higher quality services at lower costs than we can provide. Thus, if we are unable to adopt or incorporate technological advances, our services will become uncompetitive.
 
We could lose revenues if there are changes in the spending policies or budget priorities for government funding of research institutions, foundations, universities and other education providers.
 
Most of our customers and potential customers are research institutions, foundations, universities and other education providers who depend substantially on government funding. Accordingly, any general decrease, delay or change in federal, state or local funding for colleges, universities, schools and other education providers could cause our current and potential customers to reduce their purchases of our products and services, or to decide not to renew service contracts, either of which could cause us to lose revenues. In addition, a specific reduction in governmental funding support for products such as ours would also cause us to lose revenues. The severe economic downturn experienced in the U.S. and globally has caused many of our clients to experience severe budgetary pressures, which has and will likely continue to have a negative impact on sales of our products. Continuing unfavorable economic conditions may result in further budget cuts and lead to lower overall spending, including information technology spending, by our current and potential clients, which may cause our revenues to decrease.
 
Security Breaches Could Damage Our Business.
 
Concerns over the security of transactions conducted on the Internet and the privacy of users may inhibit the growth of the Internet, social networking sites, online services and online commerce. Failure to successfully prevent security breaches could significantly harm the Company’s business and expose the Company to litigation. Anyone who is able to circumvent the Company’s security measures could misappropriate proprietary information, including personal data, cause interruptions in the Company’s operations or damage its brand and reputation. The Company cannot assure the investors that its financial systems and other technological resources are completely secure from security breaches or sabotage. The Company may have to incur significant costs to protect against security breaches or to alleviate problems caused by breaches. Further, any well-publicized compromise of the Company’s security or the security of any other Internet provider could deter people from using the Company’s services or the Internet to conduct transactions that involve transmitting confidential information or downloading sensitive materials. The occurrence of one or more of these events could have a material adverse effect on the Company’s business, results of operations and financial condition.

 
22
 
 
Risks Related to our Foreign Business
 
We are currently doing business in several foreign countries, including India and Ukraine, and we plan to expand our operations into many more countries, mostly in the Third World.  While we believe that these international operations have a substantial profit potential, these operations are subject to significant additional risks not faced in our domestic operations, including, but not limited to, risks relating to legal systems which may not adequately protect contract and intellectual property rights, as well as risks relating to potential financial crises and currency exchange controls.  There can be no assurance that these international risks will not materially adversely affect our business.

Risks Related to our Common Stock; Liquidity Risks
 
Volatility of Stock Price.
 
The market prices for securities of emerging and development stage companies such as the Company have historically been highly volatile. Difficulty in raising capital as well as future announcements concerning the Company or its competitors, including the results of testing, technological innovations or new commercial products, government regulations, developments concerning proprietary rights, litigation or public concern as to safety of potential products developed by the Company or others, may have a significant adverse impact on the market price of the Company’s stock.
 
We Have No Intention to Pay Dividends on Our Common Stock.
 
For the near-term, we intend to retain any remaining future earnings, if any, to finance our operations and do not anticipate paying any cash dividends with respect to our Common Stock.
 
Our Common Stock is Quoted on the OTC Bulletin Board (“OTCBB”) and There is Minimal Liquidity in the Trading Market for Our Common Stock.
 
Our Common Stock is quoted on the OTCBB under the symbol “TNTY” (which was changed from “BNTE” in February 2012 as a result of the Merger). There has been only minimal trading of our common stock since the Merger, and no assurance can be given as to when, if ever, an active trading market will develop or, if developed, that it will be sustained. As a result, investors may be unable to sell their shares of our Common Stock.
 
 
23
 
 
Possible Depressive Effect on Price of Securities of Future Sales of Common Stock.
 
As a result of the Merger, the Company has issued to the former Trunity shareholders 33,231,037 shares of the Company’s Common Stock. These shares are no longer restricted securities subject to Rule 144. The sale or availability for sale of substantial amounts of Common Stock in the public market under Rule 144 or otherwise could materially adversely affect the prevailing market prices of the Company’s Common Stock and could impair the Company’s ability to raise additional capital through the sale of its equity securities.
 
Possible Adverse Effects of Authorization and Issuance of Preferred Stock.
 
The Company’s Board of Directors is authorized to issue up to 50,000,000 shares of preferred stock. The Board of Directors has the power to establish the dividend rates, liquidation preferences, voting rights, redemption and conversion terms and privileges with respect to any series of preferred stock. The issuance of any series of preferred stock having rights superior to those of the Common Stock may result in a decrease in the value or market price of the Common Stock and could further be used by the Board as a device to prevent a change in control favorable to the Company. Holders of preferred stock to be issued in the future may have the right to receive dividends and certain preferences in liquidation and conversion rights. The issuance of such preferred stock could make the possible takeover of the Company or the removal of management of the Company more difficult, and adversely affect the voting and other rights of the holder of the Common Stock, or depress the market price of the Common Stock.
  
Disclosures Relating to Low Priced Stocks; Restrictions on Resale of Low Price Stocks and on Broker-Dealer Sale; Possible Adverse Effect of “Penny Stock” Rules on Liquidity for the Company’s Securities.
 
Since the Company has net tangible assets of less than $1,000,000, transactions in the Company’s securities are subject to Rule 15g-9 under the Exchange Act which imposes additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000 or $300,000 together with their spouses). For transactions covered by this Rule, a broker-dealer must make a special suitability determination for the purchaser and shall receive the purchaser’s written consent to the transaction prior to the sale. Consequently, this Rule may affect the ability of broker-dealers to sell the Company’s securities, and may affect the ability of shareholders to sell any of the Company’s securities in the secondary market.
 
The Commission has adopted regulations which generally define a “penny stock” to be any non-NASDAQ equity security of a small company that has a market price (as therein defined) less than $5.00 per share, or with an exercise price of less than $5.00 per share subject to certain exceptions, and which is not traded on any exchange or quoted on NASDAQ. For any transaction by broker-dealers involving a penny stock (unless exempt), the rules require delivery, prior to a transaction in a penny stock, of a risk disclosure document relating to the penny stock market. Disclosure is also required to be made about compensation payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in an account and information on the limited market in penny stocks.

 
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ITEM 1B.  UNRESOLVED STAFF COMMENTS
 
Not applicable.

ITEM 2.  PROPERTIES

The Company does not own any real property. In August, 2010, the Company entered into a lease agreement for 6,400 square feet of office space of its headquarters located at 15 Green Street, Newburyport, Massachusetts. This lease is effective through July 2013 at a rental rate of $7,600 per month.  We are under current negotiations for a new facility that we believe will be adequate to serve our needs for the foreseeable future.
 
ITEM 3.  LEGAL PROCEEDINGS
 
In February 2012, Trunity and our CEO Terry Anderton were served with a complaint filed by an ex-Trunity, employee, William Horn, in the Nashua, New Hampshire, Superior Court. The plaintiff served as Executive Vice President of Marketing & Business Development from March until August 2011 at an annual salary of $100,000. He asserts whistleblower status and alleges that he was wrongfully terminated because of his allegations that the Company had violated securities, tax and employment laws. The complaint seeks unspecified damages under the New Hampshire Whistleblower Act and common law, including reinstatement, back pay and attorney’s fees and costs. In May 2012, we responded to the complaint by denying all material allegations and filing a counterclaim against the plaintiff for breach of contract, tortious interference with contractual and business relations, breach of fiduciary duty and violation of the Uniform Trade Secrets Act. Discovery has begun; a deposition of Mr. Horn was conducted on March 25, 2013.  Trial of the case is scheduled for September 2013. Based on the preliminary information available to us, we believe that the complaint is without merit and intend to vigorously defend the case and prosecute the counterclaim.
 
There are no other material pending legal proceedings to which we are a party or to which any of our property is subject and, to the best of our knowledge, no such actions against us are contemplated or threatened.

 
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ITEM 4.  MINE SAFETY DISCLOSURES

None.

PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our Common Stock is quoted on the Over-the-Counter Bulletin Board (“OTCBB”) under the symbol “TNTY” (which was changed from “BNTE” in February 2012 as a result of the Merger). There has been no material trading in our stock.

The following table sets forth, for the period indicated, the quarterly high and low per share sales prices for the common stock.
 
Fiscal Year 2012  
High
   
Low
 
             
  First quarter   $ 5.00     $ 5.00  
  Second quarter   $ 5.00     $ 3.00  
 Third quarter   $ 3.00     $ 3.00  
 Fourth quarter   $ 3.00     $ 0.29  
 
The last sale price of our common stock as reported on the OTC Bulletin Board on April 12, 2013 was $0.90. As of April 9, 2013, there were 379 record holders of the Company’s Common Stock.

  Dividends
 
The Company has never declared or paid any cash dividends on its common stock.  We have never paid cash dividends on our common stock. Under Delaware law, we may declare and pay dividends on our capital stock either out of our surplus, as defined in the relevant Delaware statutes, or if there is no such surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. If, however, the capital of our company, computed in accordance with the relevant Delaware statutes, has been diminished by depreciation in the value of our property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, we are prohibited from declaring and paying out of such net profits and dividends upon any shares of our capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets shall have been repaired. The Company does not intend to declare or pay any cash dividends on its common stock in the foreseeable future.  The holders of the Company’s common stock are entitled to receive only such dividends (cash or otherwise) as may be declared by the Company’s Board of Directors.
 
 
26
 

Equity Compensation Plans

For information on the Company’s equity compensation plans, see “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

Recent Sales of Unregistered Securities
 
During 2012, the Company raised gross proceeds of approximately $875,000 through the sale of 2,462,211 shares of its common stock to accredited investors in a private placement at an average price of $.35 per share.  The Company incurred stock issuance costs of approximately $45,000 consisting chiefly of commissions paid to broker-dealers who assisted with the offering.

 During the beginning of 2013, the Company raised gross proceeds of approximately $275,000 through the sale of 687,500 shares of its common stock to accredited investors in a private placement at an average price of $.40 per share.  The Company incurred stock issuance costs of approximately $8,000 consisting chiefly of commissions paid to broker-dealers who assisted with the offering.

These private placement offerings were conducted under the exemption from registration provided by Section 4(2)of the Securities Act of 1933.  The net offering proceeds were used for working capital purposes.

Purchases by Issuer and Its Affiliates

None.

 
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ITEM 6.  SELECTED FINANCIAL DATA

This Item is not required for Smaller Reporting Companies.

ITEM 7.   MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein.
 
Overview
 
Trunity is a Delaware corporation with its principal office in Newburyport, Massachusetts. It was formed on July 28, 2009 to develop a cloud-based knowledge-sharing platform that focuses on e-learning, virtual textbooks, enterprise training and the education marketplace. The Company was formed though the acquisition of certain intellectual property by its three founders. The Company is in the development stage and it is presently undertaking research and development of its platform. Our core products, Knowledge, Learn and Connect, are in full production and fully operational, and are currently in use by paying customers; however, our revenues are well below the level needed for profitability. We believe that our focused marketing efforts described in “Business” above as well as the impact of positive “word of mouth” from satisfied users will enable us to substantially increase revenues; however, there can be no assurance that we will ever achieve profitability.
 
Except as specifically noted to the contrary, the following discussion relates only to Trunity since, as a result of the Merger, the only historical financial statements presented for the Company in periods following the merger with BTI will be those of the operating entity, Trunity, Inc.
 
Critical Accounting Policies
 
Basis of Accounting
 
The financial statements of the Company are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires our management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and related notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. We believe the following critical accounting policies affect its more significant judgments and estimates used in the preparation of financial statements.
 
 
28
 
 
Development Stage Operations

The Company has operated as a development stage enterprise since its inception by devoting substantially all of its efforts to business development. Based on our current plan we anticipate exiting development stage in the beginning of 2013.

Going Concern
 
The financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred net losses and negative operating cash flow since its inception. To the extent the Company may have negative cash flows in the future; it will continue to require additional capital to fund operations. The Company obtained additional capital investments under various debt and common stock issues. Although management continues to pursue financing plans, there is no assurance that the Company will be successful in obtaining additional funding or sufficient revenues to generate positive cash flow. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. We may not be able to obtain financing or capital on commercially acceptable terms or at all.
 
Revenue Recognition
 
The Company’s revenue model consists of Software as a Service (SaaS) licensing and hosting revenue, for sites using the Company’s platform, as well as consulting, and advertising revenue. All SaaS revenue is recognized ratably over the contract period.

Consulting revenues are earned for web site development services and are recognized on a time and materials basis, billed in accordance with contractual milestones negotiated with the customer. Revenues are recognized as the services are performed and amounts are earned in accordance with FASB ASC Topic 605 Revenue Recognition. We consider amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable, and collectability is probable. In certain contracts, revenue is earned upon achievement of certain milestones indicated in the client agreements. Services under these contracts are typically provided in less than a year and represent the contractual milestones or output measure, which reflect the earnings pattern.

Advertising revenue is earned from search engine providers based on search activity for sites hosted by the Company.

Revenues recognized in excess of billings are recorded as Unbilled Revenue (an asset). Billings in excess of revenues recognized are recorded as Deferred Revenue (a liability) until revenue recognition criteria are met. Client prepayments are deferred and recognized over future periods as services are delivered or performed.

 
29
 
 
Accounts Receivable
 
We estimate credit loss reserves for accounts receivable on an individual receivable basis. A specific impairment allowance reserve is established based on expected future cash flows and the financial condition of the debtor. We charge off customer balances in part or in full when it is more likely than not that we will not collect that amount of the balance due. We consider any balance unpaid after the contract payment period to be past due. We believe all accounts receivable due at December 31, 2012 and 2011 to be collectible.
  
Accounting for Uncertainty in Income Taxes
 
Income taxes are accounted for in accordance with FASB ASC Topic 740, “Income Taxes” (“ASC 740”) . Under ASC 740, income taxes are recognized for the amount of taxes payable for the current year and deferred tax assets and liabilities for the future tax consequence of events that have been recognized differently in the financial statements than for tax purposes. Deferred tax assets and liabilities are established using statutory tax rates and are adjusted for tax rate changes. We consider accounting for income taxes critical to our operations because management is required to make significant subjective judgments in developing our provision for income taxes, including the determination of deferred tax assets and liabilities, and any valuation allowances that may be required against deferred tax assets.
 
ASC 740 clarifies the accounting for uncertainty in income tax recognized in an entity’s financial statements and requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. For those tax positions where it is not “more likely than not” that a tax benefit will be sustained, no tax benefit is recognized. Where applicable, associated interest and penalties are also recorded. This interpretation also provides guidance on de-recognition, classification, accounting in interim periods, and expanded disclosure requirements.
 
Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our financial statements. Our evaluation was performed for the tax period from July 28, 2009 (inception) to December 31, 2012. We may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments are expected to be minimal and immaterial to our financial results. In the event we have received an assessment for interest and/or penalties, it would be classified in the financial statements as selling, general and administrative expense. The tax years 2009, through 2012 are subject to examination by federal and state taxing authorities.
 
 
30
 
 
Taxes on Revenue Producing Transactions
 
The Company earns revenues through various services. Service revenue is taxable in some jurisdictions throughout the United States and The Company could be responsible for collecting those taxes subject to state or local requirements. The Company is not aware of any transactions which would necessitate the fiduciary responsibility of collecting and remitting sales based taxes.
 
Website Development
 
We have adopted the provisions of FASB Accounting Standards Codification No. 350 Intangible-Goodwill and Other. Research and development costs incurred in the planning stage of a website are expensed, while development costs of the website to be sold, leased, or otherwise marketed are subject are capitalized and amortized over the estimated three year life of the asset. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product's technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company's products are released soon after technological feasibility has been established. Therefore, costs incurred subsequent to achievement of technological feasibility are usually not significant, and generally most software development costs have been expensed as incurred. During the period July 28, 2009 (Inception) to December 31, 2012, we incurred and capitalized $1,516,669 in website development costs. Amortization for these costs recorded during the period July 28, 2009 (Inception) to December 31, 2012 was $688,347.
   
Stock-Based Compensation
 
We recognize compensation costs to employees under FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation. Under FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation cost for stock options is estimated at the grant date based on each option's fair-value as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model. Share based compensation arrangements may include stock options, restricted share plans, performance based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.
 
Equity instruments issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 505, Equity Based Payments to Non-Employees. In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the FASB Accounting Standards Codification.
 
 
31
 
 
Derivative Financial Instruments

The Company assesses whether it has embedded derivatives in accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”. The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value.
 
For derivative instruments that hedge the exposure to changes in the fair value of an asset or a liability and that are designated as fair value hedges, both the net gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in earnings in the current period. Derivatives that do not qualify as hedges must be adjusted to fair value through current income.
  
Common Stock Purchase Warrants
 
The Company accounts for common stock purchase warrants in accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”. As is consistent with its handling of stock compensation and embedded derivative instruments, the Company’s cost for stock options is estimated at the grant date based on each option's fair-value as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model value method for valuing the impact of the expense associated with these warrants.
 
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
 
Stockholders’ Equity
 
Shares of common stock issued for other than cash have been assigned amounts equivalent to the fair value of the service or assets received in exchange.
 
 
32
 
 
Results of Operations
  
Years ended December 31, 2012 and 2011

During 2012 and 2011, we focused on the development of our platform technology and bringing that platform to our target markets. Revenues decreased 47% from $299,074 in 2011 to $159,359 in 2012. A decline in our service revenue in comparison to the prior year made up the majority of this decrease as we continued to focus on the development of platform and strategic partner relationships. We believe that our revenue will increase during 2013 based upon our revenue recognition from licensing revenue, from new and existing relationships, specific marketing efforts and “word of mouth” from satisfied users of our platform; however, there can be no assurance that this expected revenue increase will occur.

Our total operating expenses for 2012 of $2,387,390 increased 12 . 7% from 2011, primarily as a result of an increase in marketing and sales expenses due to the Company’s increased efforts to enhance brand awareness in the educational market in order to generate new sales , offset by a decrease in research and development and administrative costs.  Salary expenses included in operating expenses for 2012 of $1,068,565 represents an increase of 38.3% over the comparable period in 2011 due to the increase in the number of employees as the Company continues to grow and develop the platform’s content.  Research and development and administrative expenses declined to $894,157 from $939,557 as the Company concentrated its development efforts on the marketing of its products. Amortization and depreciation expenses for 2012 were $667,127 and $50,257, respectively, compared to $800,904 and $44,736 for the prior year period. The decrease in amortization expense is as a result of the initial investment cost for the platform being fully amortized as of the end of the second quarter , offset by an increase for the debentures issued in the third and fourth quarter which generated discount costs. We expect that our general and administrative expenses will continue to increase in future periods as our business expands. As a result of the increase in operating expenses and decline in sales, the Company experienced a loss from operations that was approximately $2.3 million in 2012 and $1.9 million in 2011.
 
Interest expense was $141,930 in 2012 and $466,345 in 2011. The decrease was mainly due to the Company’s long-term debt outstanding from 2010 through mid-2011 being converted into equity in mid-2011, offset by working capital loans from related parties and the newly issued debentures interest recorded during the current year period. Included in the 2011 interest expense was a one-time $293,092 non-cash expense related to the early retirement of this debt recorded in 2011.
 
Net losses remained consistent in 2012 and 2011 at approximately $2.4 million in each year. As research and development costs are expected to continue into 2013 at the historical levels, the Company will generate substantial net losses until we are able to successfully penetrate our markets with our products, as to which there can be no assurance.
 
Liquidity and Capital Resources
 
We have financed our operations since inception through the sale of debt and equity securities. As of December 31, 2012 and 2011 we had working capital deficits of $891,160 and $497,760, respectively. Our increase of negative working capital of approximately 79% is primarily attributable to decreases in cash and increases in accrued expenses and debt to generate cash for operations.

 
33
 
 
Our current assets at 2012, included cash and accounts receivable, net. Our current liabilities at the end of 2012, included accounts payables, notes payable of related parties, convertible note payable, accrued expenses representing accrued interest, professional fees and vacation expense and amounts owed to shareholders for working capital loans and deferred revenue.

Net cash used in operating activities was $1,448,425 for 2012, as compared to $1,373,915 for 2011 and $5,758,562 for the period from July 28, 2009 (inception) to December 31, 2012.  Working capital changes utilized cash of $61,106 in the current period as compared to $222,919 for 2011 due to the conversion of working capital loans from related parties. In addition , net income was adjusted for non-cash items by an increase of $126,648 in the current year as compared to 2011 due to additional stock compensation expense as a result of more issuances of options to employees and directors of the Company and accretion for debt discount and issuance costs , offset by a reduction in amortization as of a result of the initial platform costs being fully expensed. The increase in cash used for operating activities for the period from July 28, 2009 (inception) to December 31, 2012 is as a result of continued working capital requirements resulting in a use of cash of $780,083 and adjustments to non-cash items of $2,797,856 for stock compensation expense, accretion costs for debt discounts and depreciation and amortization expenses all related to the development of our Company.
 
Net cash used in investing activities was approximately $564,372 for 2012, as compared to net cash used of $397,903 for 2011 and $3,292,642 for the period from July 28, 2009 (inception) to December 31, 2012, which primarily reflects our website development investments, acquisition of our subsidiary and purchase of additional equipment.

Net cash provided by financing activities for 2012 was approximately $1,903,386 as compared to the $1,892,209 for 2011. This reflects proceeds from the private sale of our securities, issuance of our convertible debentures and proceeds from notes payable to related parties. Net cash provided by financing activities for the period from July 28, 2009 (inception) to December 31, 2012, was approximately $7,905,217 and proceeds from the private sale of our securities, issuance of our convertible debentures and proceeds from notes payable to related parties.

During 2012, we raised gross proceeds of approximately $875,000 through the sale of 2,462,211 shares of our common stock to investors at an average price of $0.35 per share.  These sales of shares occurred at various times throughout 2012.  The Company incurred stock issuance costs of approximately $45,000 consisting chiefly of commissions paid to broker-dealers who assisted with the offering. Working capital was also raised from loans made to the Company by its founders, which were approximately $505,000 in 2012.

During 2011, we raised gross proceeds of $1,769,576 through the sale of 6,857,538 shares of our common stock to investors at an average price of $0.26 per share.  These sales of shares occurred at various times throughout 2011.  The Company incurred stock issuance costs of approximately $112,000 consisting chiefly of commissions paid to broker-dealers who assisted with the offering.  These funds were used to fund operations and to cover the balance of the cash needed to close the Merger.  Working capital was also raised from loans made to the Company by its founders, which were $117,620 in 2011.  In 2011, the Company converted $4,063,811 of its long-term debt to common stock, thereby reducing interest expense and future principal obligations.

In 2013 to date, the Company has privately sold 687,500 shares of common stock raising $275,000  at a price of $0.40 per share.  The Company incurred stock issuance costs of approximately $8,000 consisting chiefly of commissions paid to broker-dealers who assisted with the offering.
   
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This Item is not required for a Smaller Reporting Company.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
 
34
 
 
TRUNITY, INC.
 
CONTENTS
  
  Page
   
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 36
   
BALANCE SHEETS AS OF DECEMBER 31, 2012 AND DECEMBER 31, 2011
 37
   
CONSOLIDATED STATEMENT OF OPERATIONS  AND COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011 AND FOR THE PERIOD FROM JULY 28, 2009 (INCEPTION) TO DECEMBER 31, 2012
 38
   
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIENCY) FOR THE PERIOD FROM  JULY 28, 2009 (INCEPTION) TO DECEMBER 31, 2012
 39
   
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011 AND CUMULATIVE FROM INCEPTION (JULY 28, 2009) TO DECEMBER 31, 201 2
 40
   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 41
 
 
35
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 

 
To the Board of Directors and
Stockholders of Trunity Holdings, Inc.
 
We have audited the accompanying balance sheets of Trunity Holdings, Inc.  (a development stage company)  as of December 31, 2012 and 2011, and the related statements of operations and comprehensive loss, stockholders’ (deficit) equity, and cash flows for each of the years in the two-year period ended December 31, 2012 and the period from inception on July 28, 2009 to December 31, 2012. Trunity Holdings, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Trunity Holdings, Inc. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2012 and the period from inception on July 28, 2009 to December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.
 
 
/s/ Cherry Bekaert LLP Fort Lauderdale, Florida
 
April 16, 2013
 
 
36
 
 
TRUNITY HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Balance Sheets

    December 31,  
    2012      2011  
ASSETS
           
Current assets
           
Cash
  $ 13,724     $ 123,135  
Accounts receivable
    1,615       2,800  
Prepaid expenses and other current assets
    -       6,460  
Deposits
    -       175,000  
Total current assets
    15,339       307,395  
                 
Property and equipment
               
Fixtures and equipment
    178,348       162,006  
Less accumulated depreciation
    (125,621 )     (75,365 )
      52,727       86,641  
Capitalized software development costs
               
Costs incurred
    3,114,295       2,566,264  
Less accumulated amortization
    (2,463,347 )     (1,796,220 )
      650,948       770,044  
Other assets
               
Debt issuance costs
    60,305       -  
                 
TOTAL ASSETS
  $ 779,319     $ 1,164,080  
                 
LIABILITIES
               
Current liabilities
               
Accounts payable
  $ 619,304     $ 473,848  
Accrued interest and other liabilities
    133,235       210,348  
Notes payable-related party
    70,761       85,825  
Convertible note payable
    49,024       -  
Deferred revenue
    28,267       -  
Stock subscribed
    -       25,000  
Deferred rent, current portion
    5,907       10,134  
Total current liabilities
    906,498       805,155  
                 
Long-term liabilities
               
Deferred rent, long term portion
    -       5,914  
Debentures Series A and B, carrying value
    776,007       -  
Total long-term liabilities
    776,007       5,914  
                 
Total Liabilities
    1,682,505       811,069  
                 
Commitments and Contingencies
               
                 
STOCKHOLDERS'  (DEFICIT) EQUITY
               
Common stock, $0.001 par value - 50,000,000 share authorized, 36,131,432 and 32,641,953 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively.
    36,131       32,642  
Additional paid-in-capital
    8,405,482       7,228,386  
Other comprehensive loss
    (8,299 )     -  
Deficit accumulated during development stage
    (9,336,500 )     (6,908,017 )
                 
Total Stockholders' (Deficit) Equity
    (903,186 )     353,011  
                 
TOTAL LIABILTIES AND STOCKHOLDERS' (DEFICIT) EQUITY
  $ 779,319     $ 1,164,080  

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

 
37
 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statement of Operations and Comprehensive Loss

     Years Ended December 31,       For the Period
From July 28, 2009
(Inception) to
December 31,
 
   
2012
   
2011
   
 2012
 
                   
Net Sales
  $ 159,359     $ 299,074     $ 648,866  
Cost of sales
    58,522       104,236       242,627  
Gross Profit
    100,837       194,838       406,239  
                         
Operating Expenses:
                       
Research and development
    894,157       939,557       4,442,197  
Selling, general and administrative
    1,493,233       1,178,075       4,130,950  
      2,387,390       2,117,632       8,573,147  
                         
Loss From Operations
    (2,286,553 )     (1,922,794 )     (8,166,908 )
                         
Other Income (Expense):
                       
Interest expense
    (141,930 )     (466,345 )     (1,169,592 )
                         
Net Loss
    (2,428,483 )     (2,389,139 )     (9,336,500 )
                         
Other Comprehensive loss:
                       
Foreign currency translation loss
    (8,299 )     -       (8,299 )
Total Other Comprehensive Loss
  $ (8,299 )   $ -     $ (8,299 )
Comprehensive Loss
  $ (2,436,782 )   $ (2,389,139 )   $ (9,344,799 )
Net Loss per Share - Basic and Diluted
  $ (0.07 )   $ (0.08 )        
                         
Comprehensive Loss
                       
Weighted Average Number of Shares Outstanding During the Period - Basic and Diluted
    35,051,373       31,200,285          
 
The accompanying Notes are an integral part of the Consolidated Financial Statements

 
38
 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statement of Changes in Stockholders' Equity (Deficiency) 
Period From July 28, 2009 (Date of Inception) to December 31, 2012
 
                                 
Deficit
       
                                 
Accumulated
   
Total
 
   
Par $ .001
               
Stock
   
Accumulated
   
during the
   
Stockholders'
 
   
Common
   
Common
   
Paid in
   
Subscription
   
Comprehensive
   
Development
   
Equity
 
   
Shares*
   
Stock
   
Capital
   
Receivable
   
Loss
   
Stage
   
(Deficiency)
 
Balance at July 28, 2009 (date of inception)
    -     $ -     $ -     $ -     $ -     $ -     $ -  
Issuance of founders' stock
    7,300,667       7,301       (5,901 )     -       -       -       1,400  
Sale of common stock
    880,000       880       459,120       (50,000 )     -       -       410,000  
Stock issuance costs
    -       -       (40,825 )     -       -       -       (40,825 )
Common stock issued to investors in a debt offering
    822,000       822       410,260       -       -       -       411,082  
Shares issued for stock offering services
    33,333       33       30,792       -       -       -       30,825  
Employee stock based compensation
    -       -       64,941       -       -       -       64,941  
Net loss
    -       -       -       -       -       (2,015,490 )     (2,015,490 )
Balance at December 31, 2009
    9,036,000     $ 9,036     $ 918,387     $ (50,000 )   $ -     $ (2,015,490 )   $ (1,138,067 )
Sale of common stock
    1,282,005       1,282       655,218       50,000       -       -       706,500  
Stock issuance costs
    -       -       (12,160 )     -       -       -       (12,160 )
Employee stock based compensation
    -       -       40,990       -       -       -       40,990  
Net loss
    -       -       -       -       -       (2,503,388 )     (2,503,388 )
Balance at December 31, 2010
    10,318,005     $ 10,318     $ 1,602,435     $ -     $ -     $ (4,518,878 )   $ (2,906,125 )
Sale of common stock
    6,857,538       6,858       1,742,717                       -       1,749,575  
Shares issued for stock offering services
    1,698,318       1,698       (1,698 )     -       -       -       -  
Stock issuance costs
    -       -       (111,775 )     -       -       -       (111,775 )
Common stock issued for accrued interest  conversion of 8% convertible promissory notes
    64,009       64       76,747       -       -       -       76,811  
Common stock issued upon conversion  of 8% convertible promissory notes
    513,750       514       615,986       -       -       -       616,500  
Common stock issued upon conversion  of 9% convertible promissory notes
    1,458,333       1,458       436,042       -       -       -       437,500  
Common stock issued for accrued interest upon conversion of note sold to  an outside investor
    160,000       160       39,840       -       -       -       40,000  
Common stock issued upon conversion of a  note sold to an outside investor
    400,000       400       99,600       -       -       -       100,000  
Common stock issued to founders upon  conversion of Trunity, LLC note
    7,200,000       7,200       1,792,800       -       -       -       1,800,000  
Common stock issued upon conversion of lines  of credit with founders
    3,972,000       3,972       989,028       -       -       -       993,000  
Employee stock based compensation (benefit)
    -       -       (53,336 )     -       -       -       (53,336 )
Net loss
    -       -       -       -       -       (2,389,139 )     (2,389,139 )
Balance at December 31, 2011
    32,641,953     $ 32,642     $ 7,228,386     $ -     $ -     $ (6,908,017 )   $ 353,011  
Sale of common stock
    3,164,479       3,164       943,157       -       -       -       946,321  
Reverse recapitalization related to acquisition
    325,000       325       (325,325 )     -       -       -       (325,000 )
Employee stock based compensation
    -       -       226,807       -       -       -       226,807  
Warrants issued for services
    -       -       37,453       -       -       -       37,453  
Debt beneficial conversion feature,  net of issuance costs
    -       -       295,004       -       -       -       295,004  
Foreign currency translation loss
    -       -       -       -       (8,299 )     -       (8,299 )
Net loss
    -       -       -       -       -       (2,428,483 )     (2,428,483 )
Balance at December 31, 2012
    36,131,432     $ 36,131     $ 8,405,482     $ -     $ (8,299 )   $ (9,336,500 )   $ (903,186 )

* As adjusted for a 1 for 3 reverse stock split that occurred in 2011 - see Note 7.
 
The accompanying Notes are an integral part of the Consolidated Financial Statements.

 
39
 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statement of Cash Flows
                   
               
Cumulative from
 Inception
(July 28, 2009 ) to
 December 31,
2012
 
   
Years Ended
 
   
December 31,
 
   
2012
   
2011
 
Cash Flows from Operating Activities:
                 
Net Loss
  $ (2,428,483 )   $ (2,389,139 )   $ (9,336,500 )
Adjustments to reconcile net loss to net cash used in operating activities:
                       
Depreciation and amortization
    717,384       845,640       2,588,968  
Stock compensation expense
    122,107       (53,336 )     129,427  
Accretion for debt discounts and issuance costs
    79,461       -       79,461  
Changes in operating assets and liabilities:
                       
Accounts receivable
    1,185       2,198       (1,615 )
Prepaid expenses and other assets
    6,460       30,310       4  
Deposits
    (150,000 )     (175,000 )     (325,000 )
Other long-term assets
    -       19,632       -  
Accounts payable
    145,456       169,825       595,108  
Accrued interest and other liabilities
    39,876       201,158       477,411  
Deferred revenue
    28,267       (78,703 )     28,267  
Deferred rent
    (10,138 )     -       5,907  
Accrued interest included in notes payable
    -       53,500       -  
Net Cash Used In Operating Activities
    (1,448,425 )     (1,373,915 )     (5,758,562 )
Cash Flows From Investing Activities:
                       
Purchase of fixed assets
    (16,342 )     (70,804 )     (178,348 )
Payment of platform development costs
    (548,030 )     (327,099 )     (3,114,294 )
Net Cash Used In Investing Activities
    (564,372 )     (397,903 )     (3,292,642 )
Cash Flows From Financing Activities
                       
Net advances on line of credit related parties
    -       56,367       (105,987 )
Proceeds from notes payable related parties
    505,526       178,041       3,443,720  
Repayments on notes payable related parties
    (177,500 )     -       (177,500 )
Proceeds from issuance of debenture, net issuances cost
    523,081       -       523,081  
Sale of common stock
    1,323,534       1,769,576       4,657,918  
Stock issuance costs
    (271,255 )     (111,775 )     (436,015 )
Net Cash Provided By Financing Activities
    1,903,386       1,892,209       7,905,217  
Net  Decrease  in Cash and Cash Equivalents
    (109,411 )     120,391       (1,145,987 )
Cash, Beginning of Period
    123,135       2,744       -  
Cash, End of Period
  $ 13,724     $ 123,135     $ 13,724  
                         
Supplemental Disclosure of Cash Flow Information:
                       
Cash paid during the period for interest
  $ -     $ 160,000     $ 405,904  
                         
Non-cash Investing and Financing Transactions:
                       
Conversion of debt to common stock shares
  $ -     $ 4,063,811     $ 4,063,811  
Issuance of stock in acquisition of subsidiary
  $ 325     $ -     $ 325  

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

 
40
 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY
 (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012  
 
Note 1 – Organization, Basis Of Presentation And Nature Of Operations

The accompanying audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission for financial information.

The accompanying consolidated financial statements include the accounts of Trunity Holdings, Inc. and its wholly owned subsidiary Trunity, Inc., for the year ended December 31, 2012, the prior year period and for the period from July 28, 2009 (inception) to December 31, 2012. All intercompany accounts have been eliminated in the consolidation.

Trunity, Inc. (“the Company”) is a “C” Corporation organized under the Laws of Delaware with principal offices in Newburyport, Massachusetts. It was formed on July 28, 2009 to develop a cloud-based knowledge sharing platform that focuses on e-learning, virtual textbooks, customer experience and education marketplace. The Company formed though the acquisition of certain intellectual property by its three founders. The Company is in the development stage and it is presently undertaking research and development of its platform.   The Company’s core products, Knowledge, Learn and Connect, are in production and operational, and are currently in use by a limited number of paying customers; however, our revenues are well below the level needed for profitability.

Note 2 – Summary of Significant Accounting Policies

Basis of Accounting - The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires our management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and related notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. We believe the following critical accounting policies affect its more significant judgments and estimates used in the preparation of financial statements.

Development Stage Operations - The Company has operated as a development stage enterprise since its inception by devoting substantially all of its efforts to business development. We currently anticipate exiting from the development stage during the beginning of 2013.
 
Going Concern - The financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred net losses and negative operating cash flow since its inception. To the extent the Company may have negative cash flows in the future; it will continue to require additional capital to fund operations. The Company obtained additional capital investments under various debt and common stock issues. Although management continues to pursue its financing plans, there is no assurance that the Company will be successful in obtaining sufficient revenues to generate positive cash flow. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Revenue Recognition - The Company’s revenue model consists of Software as a Service (SaaS) licensing and hosting revenue, for sites using the Company’s platform, as well as consulting, and advertising revenue.  All SaaS Revenue is recognized ratably over the contract period.

 
41
 
 
TRUNITY HOLDINGS, INC. AND SUBSIDIARY
 (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012

Note 2 – Summary of Significant Accounting Policies- Continued

Consulting revenues are earned for web site development services and are recognized on a time and materials basis, billed in accordance with contractual milestones negotiated with the customer.  Revenues are recognized as the services are performed and amounts are earned in accordance with FASB ASC Topic 605 Revenue Recognition. We consider amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable, and collectability is probable. In such contracts, revenue is earned upon achievement of certain milestones indicated in the client agreements.  Services under these contracts are typically provided in less than a year and represent the contractual milestones or output measure, which reflect the earnings pattern.

Advertising revenue is earned from search engine providers based on search activity for sites hosted by the Company.

Revenues recognized in excess of billings are recorded as Unbilled Revenue (an asset). Billings in excess of revenues recognized are recorded as Deferred Revenue (a liability) until revenue recognition criteria are met. Client prepayments are deferred and recognized over future periods as services are delivered or performed.

Cash and Cash Equivalents - Cash and cash equivalents may include highly liquid investments that are readily convertible to known amounts of cash, and which are subject to an insignificant risk of changes in value due to interest rate, market price, or penalty on withdrawal. Amounts on deposit and available upon demand, or negotiated to provide for daily liquidity without penalty, are classified as Cash and cash equivalents.

Accounts Receivable - We estimate credit loss reserves for accounts receivable on an individual receivable basis. A specific impairment allowance reserve is established based on expected future cash flows and the financial condition of the debtor.  We charge off customer balances in part or in full when it is more likely than not that we will not collect that amount of the balance due.  We consider any balance unpaid after the contract payment period to be past due.  We believe all accounts receivable due at December 31, 2021 and 2011 to be collectible.

Property and Equipment - Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets (generally three to seven years). Expenditures for major betterments and additions are capitalized, while replacement, maintenance and repairs, which do not extend the lives of the respective assets, are expensed as incurred.

Deposits - In April 2011, the Company signed a letter of intent to purchase a majority ownership stake in another company. The terms of this agreement call for certain actions to be undertaken by both parties. In 2011, the Company has made deposits of $175,000 pursuant to this agreement.  In 2012, the Company has made deposits of $150,000 pursuant to this agreement These deposits are not refundable in the event that either party does not or cannot fulfill its required actions.

Accounting for Uncertainty in Income Taxes - Income taxes are accounted for in accordance with FASB ASC Topic 740, “Income Taxes” (“ASC 740”).  Under ASC 740, income taxes are recognized for the amount of taxes payable for the current year and deferred tax assets and liabilities for the future tax consequence of events that have been recognized differently in the financial statements than for tax purposes. Deferred tax assets and liabilities are established using statutory tax rates and are adjusted for tax rate changes. We consider accounting for income taxes critical to our operations because management is required to make significant subjective judgments in developing our provision for income taxes, including the determination of deferred tax assets and liabilities, and any valuation allowances that may be required against deferred tax assets.

 
42
 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY
 (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012

Note 2 – Summary of Significant Accounting Policies- Continued

ASC 740 clarifies the accounting for uncertainty in income tax recognized in an entity’s financial statements and requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements.   For those tax positions where it is not “more likely than not” that a tax benefit will be sustained, no tax benefit is recognized. Where applicable, associated interest and penalties are also recorded. This interpretation also provides guidance on de-recognition, classification, accounting in interim periods, and expanded disclosure requirements.

Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our financial statements. Our evaluation was performed for the tax period from July 28, 2009 (inception) to December 31, 2012. We may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments are expected to be minimal and immaterial to our financial results. In the event we have received an assessment for interest and/or penalties, it would be classified in the financial statements as selling, general and administrative expense. The tax years 2009 through 2012 are subject to examination by federal and state taxing authorities.

Taxes on Revenue Producing Transactions – The Company earns revenues through various services.  Service revenue is taxable in some jurisdictions throughout the United States and The Company could be responsible for collecting those taxes subject to state or local requirements.  The Company is not aware of any transactions which would necessitate the fiduciary responsibility of collecting and remitting sales based taxes.
 
Website Development - The Company has adopted the provisions of FASB Accounting Standards Codification No. 350 Intangible-Goodwill and Other. Research and development costs incurred in the planning stage of a website are expensed, while development costs of the website to be sold, leased, or otherwise marketed are subject are capitalized and amortized over the estimated three year life of the asset. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product's technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company's products are released soon after technological feasibility has been established. Therefore, costs incurred subsequent to achievement of technological feasibility are usually not significant, and generally most software development costs have been expensed as incurred . During the period July 28, 2009 (Inception) to December 31, 2012, the Company incurred and capitalized $1,516,669 in website development costs. Amortization for these costs recorded during the period July 28, 2009 (Inception) to December 31, 2012 was $688,347.

Derivative Financial Instruments - The Company assesses whether it has embedded derivatives in accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”. The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value.

For derivative instruments that hedge the exposure to changes in the fair value of an asset or a liability and that are designated as fair value hedges, both the net gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in earnings in the current period. Derivatives that do not qualify as hedges must be adjusted to fair value through current income.
 
Comprehensive Loss - The Company has adopted ASC Topic 220, "Comprehensive Income." This statement establishes standards for reporting comprehensive income and its components in a financial statement. Comprehensive income as defined includes all changes in equity (net assets) during a period from non-owner sources. Items included in the Company’s comprehensive loss consist of unrealized losses on available-for-sale securities.
 
Common Stock Purchase Warrants - The Company accounts for common stock purchase warrants in accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”. As is consistent with its handling of stock compensation and convertible debt, the Company has elected the intrinsic value method for valuing the impact of the expense associated with these warrants.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Stockholders’ Equity - Shares of common stock issued for other than cash have been assigned amounts equivalent to the fair value of the service or assets received in exchange.

Common stock share amounts in these financial statements have been retroactively adjusted for the effects of a 1 for 3 reverse stock split that occurred in 2011, as required by ASC Topic 505-20 (see Note 7).
 
 
43
 
 
TRUNITY HOLDINGS, INC. AND SUBSIDIARY
 (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012

Note 2 – Summary of Significant Accounting Policies- Continued
 
Warrants - The Company accounts for common stock purchase warrants in accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”. As is consistent with its handling of stock compensation and embedded derivative instruments, the Company’s cost for stock options is estimated at the grant date based on each option's fair-value as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model value method for valuing the impact of the expense associated with these warrants. Amortization expense for the years ended December 31, 2012 and 2011 was approximately $667,127 and $800,904, respectively.
 
Financial Instruments and Fair Values - The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument.  In determining fair value, we use various valuation methodologies and prioritize the use of observable inputs. We assess the inputs used to measure fair value using a three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market:

•
Level 1 — inputs include exchange quoted prices for identical instruments and are the most observable.

•
Level 2 — inputs include brokered and/or quoted prices for similar assets and observable inputs such as interest rates.

•
Level 3 — inputs include data not observable in the market and reflect management judgment about the assumptions market participants would use in pricing the asset or liability.

The use of observable and unobservable inputs and their significance in measuring fair value are reflected in our hierarchy assessment.

The carrying amount of cash, trade receivables and other assets approximates fair value due to the short-term maturities of these instruments.  Because cash and cash equivalents are readily liquidated, management  classifies these values as Level 1.

The fair values of all other financial instruments, including debt, approximate their book values as the instruments are short-term in nature or contain market rates of interest.  Because there is no ready market or observable transactions, management classifies all other financial instruments as level 3.
 
Note 3 – Recent Accounting Pronouncements

In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”), to require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of equity. The standard does not change the items which must be reported in other comprehensive income, how such items are measured or when they must be reclassified to net income. This standard is effective for interim and annual periods beginning after December 15, 2011 and is to be applied retrospectively. The FASB has deferred the requirement to present reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income. Companies are required to either present amounts reclassified out of other comprehensive income on the face of the financial statements or disclose those amounts in the notes to the financial statements. During the deferral period, there is no requirement to separately present or disclose the reclassification adjustments into net income. The effective date of this deferral will be consistent with the effective date of the ASU 2011-05. The implementation of ASU 2011-05 did not have a material effect on the Company’s consolidated financial statements.

In July 2012, the FASB issued authoritative guidance that allows companies the option to perform a qualitative assessment to determine whether impairment testing of indefinite-lived intangible assets is necessary. Under this guidance, an entity is required to perform a quantitative impairment test if qualitative factors indicate that it is more likely than not  that indefinite-lived intangible assets are impaired.  The qualitative factors are consistent with the guidance established for goodwill impairment testing and include identifying and assessing events and circumstances that would most significantly impact, individually or in aggregate, the carrying value of the indefinite-lived intangible assets. The implementation did is not have a material impact on the Company’s consolidated financial statements.

 
44
 
 
TRUNITY HOLDINGS, INC. AND SUBSIDIARY
 (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012



Note 4 – Property and Equipment

A summary of property and equipment at December 31, 2012 and 2011 is as follows:

 
 
2012
   
2011
 
             
Furniture and fixtures
  $ 13,402     $ 12,154  
IT Equipment and software
    164,946       149,852  
                 
Total Property and Equipment
    178,348       162,006  
                 
Less:  Accumulated depreciation
    (125,621 )     (75,365 )
                 
Net Property and Equipment
  $ 52,727     $ 86,641  

The amounts charged to operations for depreciation for the years ended December 31, 2012 and 2011 was approximately $50,256 and $44,735, respectively.

Note 5 – Intangible Assets

Intangible assets were comprised of the following at December 31, 2012 from Inception:
 
 
Trunity platform
 Estimated Life
 
Gross Cost
   
Accumulated
Amortization
   
Net Book Value
 
                     
Assets acquired from Trunity, LLC
 3 years
  $ 1,775,000     $ (1,775,000 )   $ -  
                           
Internal costs capitalized for period from July 28, 2009 (inception) to December 31, 2009
 3 years
    121,820       (121,820 )   $ -  
                           
Internal costs capitalized for the twelve months ended December 31, 2010
 3 years
    342,345       (288,287 )   $ 57,057  
                           
Internal costs capitalized for the twelve months ended December 31, 2011
 3 years
    327,100       (163,550 )   $ 163,550  
                           
Internal costs capitalized for the twelve months ended December 31, 2012
 3 years
    540,030       (117,689 )   $ 430,341  
                           
Carrying value as of December 31, 2012
            $ 650,948  
 
 
45
 
 
TRUNITY HOLDINGS, INC. AND SUBSIDIARY
 (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012

Note 5 – Intangible Assets- Continued

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

For the period ending December 31, 2012:
     
2013
  $ 348,768  
2014
    237,194  
2015
    64,986  
Total future amortization expense
  $ 650,948  
 
The Company’s Trunity Platform technology was acquired from a related company, Trunity, LLC, and was valued at management’s best estimate of its value at that time of the transaction.  Trunity, LLC was wholly owned by the three founders of the Company.  Subsequent internal costs capitalized consist of direct labor,   including taxes and benefits.  Amortization of three years is based on management’s best estimate of useful life of current technology in this industry.

Note   6- Notes Payable

At December 31, 2012, outstanding notes payable was made up of the following:

Note Holder
 
Principal
   
Accrued Interest
   
Outstanding as of
 December 31,
2012
 
Notes Payable– Related Parties
  $ 53,977     $ --     $ 53,977  
Loan from investor
    66,784       5,000       71,784  
Total notes payable – current liabilities
                  $ 125,761  

At December 31, 2011, outstanding notes payable is made up of the following:

Note Holder
 
Principal
   
Accrued Interest
   
Outstanding as of
 December 31,
2011
 
Trunity LLC
  $ --     $ 141,996     $ 141,996  
Notes Payable to Founders
    69,041       --       69,041  
   Payable to Related Parties
                    211,037  
                         
Loan from investor
    16,784       --       16,784  
Total notes payable – current liabilities
                  $ 227,821  

Notes Payable to Founders – In 2009, the Company entered into line of credit agreements with two of the founders to borrow up to $0.9 million, as needed, to fund working capital needs of the Company. These notes carried an interest rate of 10% and are to expire in September and December 2013.  In July 2011, all principal and interest due on these notes was converted to shares of common stock in the Company.

 
46
 
 
TRUNITY HOLDINGS, INC. AND SUBSIDIARY
 (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012

Note   6- Notes Payable- Continued

At December 31, 2011 and 2012, the notes payable to founders consists of short-term loans with the three founders.  Credit agreements exist with Terry Anderton and Les Anderton that allow the Company to borrow up to $0.9 million, as needed, to fund working capital needs. These agreements carry an interest rate of 10% and were extended by the board indefinitely subsequent to the initial expiration date of December of 2012.  The loans have no repayment terms but are expected to be settled in the second quarter of 2013

Trunity, LLC Note - Trunity, LLC was formed by the three founders of the Company to acquire the technology platform used by the Company. The assets of Trunity, LLC, which consisted chiefly of the rights to the technology platform, was sold to the Company for $1.8 million in the form of a Note bearing interest of 8% payable with 120 monthly installments, maturing in June 2019. In July 2011, all principal due on this note was converted to common shares of the Company and distributed to the three owners of Trunity, LLC.  In 2011, the Company made $153,500 in interest payments to the three founders.  In 2012, the Company converted the interest payable of $141,996 to the founders into debentures. See Note 8 for further discussion.
 
Short-term loan from Investor - In 2011, an investor in the Company made a short-term loan of $16,784 to the Company to cover its working capital needs.  There are no documented terms for this loan.  The Company has treated the loan as interest free and it expects to repay the loan in a short period of time.

In 2012, an investor in the Company made a short-term loan of $50,000 to the Company to cover its working capital needs.  There are no documented terms for this loan however the Company has agree to pay by the end of the second quarter of 2013 interest expense of $5,000.

Conversion of Notes to common shares of the Company - During the year ended December 31, 2011, the Company converted all of its long-term outstanding debt, totaling $3.8 million, to its common shares. Of the amount converted, $2.8 million was debt held by the three founders. Outside investors converted the remaining $1 million of debt.  The Company incurred non-cash expenses of approximately $293,000 to convert this debt.  This charge is primarily the unamortized discount incurred with the issuance of the Company’s first debt offering in 2009.

In October 2010, the Company issued a single $100,000 promissory note to an investor.  The note called for fixed interest of $5,000 per month. This note had a maturity of January 8, 2011. Additionally, 100,000 warrants to purchase shares of Company stock were issued to this investor. See note 9 below, for a description of these warrants. In August 2011, this note with accrued but unpaid interest was converted to common shares.

Interest expense recognized for the years ended December 31, 2012 and 2011 was $141,930 and $173,253, respectively.

Note 7 – Derivative

The Company’s convertible debt issued in November 2012 with a face value of $42,500 provides for conversion of the note into the Company’s common stock at a conversion rate equal to the average of the lowest three trading prices during the ten trading days immediately preceding the conversion date.  Because of the uncertainty regarding the number of common shares that may be issuable upon the conversion of the convertible debt, the embedded conversion option is required to be accounted for separately and presented as a derivative liability on the Company’s balance sheet, with subsequent changes in fair value reported in the Company’s statement of operations.  The Company determined the fair value of derivative liabilities using Monte Carlo simulations. The Company used the following assumptions in estimating the fair value of the derivative liabilities on the issuance date and as of December 31, 2012.

 
47
 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY
 (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012

Note 7 – Derivative- Continued
 
   
Issuance
Date
   
December 31,
2012
 
Expected Volatility
    51.08 %     52.67 %
Expected Term
 
0.75 Years
   
0.6 Years
 
Risk Free Interest Rate
    0.19 %     0.16 %
Dividend Rate
    0 %     0 %

The Company recorded an initial derivative liability of $32,622 with an offsetting discount against the convertible debt to be amortized into interest expense through the maturity of the convertible debt.  From the dates of issuance to December 31, 2012, the fair value of the derivative liability did not change and no expense or income was recognized for the change in fair value of the derivative liability.
 
Note 8- Convertible Debt

July 2012 Convertible Debentures- In July 2012, the Company issued convertible debentures (“Notes”) with an aggregate face value of $215,300 Canadian Dollars ($217,173 as of December 31, 2012).  The notes mature in July 2014, bear interest at an annual rate of 10%, and 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 notes 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 agreements, occurs within six months of the closing of the offering of the notes, or b) 0.32 Canadian Dollars if a Liquidity Event does not occur within six months of the closing of the offering of the notes.  The Company recorded a beneficial conversion feature based on the intrinsic value of the conversion feature equal to the excess of the fair value of one Unit over the conversion rate of 0.32 Canadian Dollars.  The fair value of one Unit was estimated based on the most recent sale of common stock in a private placement immediately preceding the issuance of the Notes and, for the warrant contained in one Unit, using a Black Scholes valuation model and the following assumptions: volatility – 50.50%, risk free rate - 0.22%, dividend rate – 0.00%.  The Company recorded a discount against the debt for the beneficial conversion feature totaling $84,788, which is being amortized into interest expense through the maturity dates of the Notes.  For the third and fourth quarter of 2012, the Company recorded amortization of the discount of $17,664.  As of December 31, 2012, the carrying value of the Notes totaled $150,050, net of unamortized discount of $67,123.  Total interest expense on the Notes totaled $9,926 for the third and fourth quarter of 2012.
 
In connection with the issuance of the July 2012 Notes, the Company paid transactions fees to brokers consisting of cash of $85,237, and warrants to purchase 43,497 shares over a two-year period for an exercise price of 0.40 Canadian Dollars.  The Company estimated the fair value of the warrants using a Black Scholes valuation model and the following assumptions: volatility – 50.49%, risk free rate - 0.22%, dividend rate – 0.00%.  The Company allocated a portion of the fair value of the consideration totaling $52,869, to debt issuance costs, which was capitalized and is being amortized into interest expense over the two-year terms of the notes.  The remaining portion of the fair value of the transactions costs, totaling $36,126 was allocated to equity, treated as equity issuance costs, and recorded against additional paid in capital.  Amortization of debt issuance costs totaled $11,015 third and fourth quarter of 2012.

September 2012 Convertible Debentures- In September 2012, the Company issued convertible debentures (“Notes”) with an aggregate face value of $330,900.  The notes mature in September 2014, bear interest at an annual rate of 10%, and 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 per share (“Unit”).  The number of units issuable upon conversion of the notes 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 six months of the closing of the offering of the notes, or b) $0.32 if a Liquidity Event does not occur within six months of the closing of the offering of the notes.  The Company recorded a beneficial conversion feature based on the intrinsic value of the conversion feature equal to the excess of the fair value of one Unit over the conversion rate of $0.32.  The fair value of one Unit was estimated based on the most recent sale of common stock in a private placement immediately preceding the issuance of the Notes and, for the warrant contained in one Unit, using a Black Scholes valuation model and the following assumptions: volatility – 50.50%, risk free rate - 0.22%, dividend rate – 0.00%.  The Company recorded a discount against the debt for the beneficial conversion feature totaling $115,712, which is being amortized into interest expense through the maturity dates of the Notes.  For the third and fourth quarter of 2012, the Company recorded amortization of the discount of $19,285.  As of December 31, 2012, the carrying value of the Notes totaled $234,473, net of unamortized discount of $96,427.  Total interest expense on the Notes totaled $12,697 for third and fourth quarter of 2012.
 
In connection with the issuance of the September 2012 Notes, the Company paid cash transactions fees to brokers totaling $30,456.  The Company allocated a portion of the transaction fees totaling $19,806, to debt issuance costs, which was capitalized and is being amortized into interest expense over the two-year terms of the notes.  The remaining portion of the fair value of the transactions costs, totaling $10,650 was allocated to equity, treated as equity issuance costs, and recorded against additional paid in capital.  Amortization of debt issuance costs totaled for the third and fourth quarter of 2012 was $3,301 for 2012.
 
 
48
 
 
TRUNITY HOLDINGS, INC. AND SUBSIDIARY
 (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012

Note 8- Convertible Debt- Continued

October and November 2012 Convertible Debentures- In October and November 2012, the Company issued convertible debentures (“Notes”) with an aggregate face value of $624,372 of which $313,440 represented a conversion of notes payable- related parties to the Founders. The notes mature in October and November 2014, bear interest at an annual rate of 10%, and 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 per share (“Unit”).  The number of units issuable upon conversion of the notes 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 six months of the closing of the offering of the notes, or b) $0.32 if a Liquidity Event does not occur within six months of the closing of the offering of the notes.  The Company recorded a beneficial conversion feature based on the intrinsic value of the conversion feature equal to the excess of the fair value of one Unit over the conversion rate of $0.32.  The fair value of one Unit was estimated based on the most recent sale of common stock in a private placement immediately preceding the issuance of the Notes and, for the warrant contained in one Unit, using a Black Scholes valuation model and the following assumptions: volatility – 50.50%, risk free rate - 0.22%, dividend rate – 0.00%.  The Company recorded a discount against the debt for the beneficial conversion feature totaling $254,004, which is being amortized into interest expense through the maturity dates of the Notes.  For the quarter ended December 31, 2012, the Company recorded amortization of the discount of $21,116 including $1,334 for notes payable -related parties.  As of December 31, 2012, the carrying value of the Notes totaled $391,484, net of unamortized discount of $232,887.  Total interest expense on the Notes for the fourth quarter of 2012 was $10,531, including $9,423 of interest expense for notes-related parties.

In connection with the issuance of the October and November 2012 Notes, the Company paid no cash transactions fees to brokers.

The following is a summary of convertible debentures outstanding as of December 31, 2012:

   
Face Value
   
Initial Discount
   
Amortization
   
Carrying Value
 
July 2012 Notes
  $ 217,173     $ (84,788 )   $ 17,664     $ 150,049  
September 2012 Notes
    330,900       (115,712 )     19,285       234,473  
October & November Notes
    59,000       (13,317 )     1,334       47,017  
November – Related Party Notes
    565,372       (240,687 )     19,783       344,468  
Total
  $ 1,172,445     $ (454,504 )   $ 58,066     $ 776,007  

Note 9 – Stockholders’ (Deficit) Equity
 
The Company has one class of stock, common, which has a par value of $0.001 per share. The Company has authorized up to 50,000,000 shares to be issued. During 2011, the Company implemented a 1 for 3 reverse share split of its shares. This transaction had the effect of reducing the number of outstanding shares from 38,874,291 to 12,958,135. The previous periods were adjusted to reflect the stock split.

Issuance of Founders’ Stock - Shortly after the formation of the Company in 2009, a total of 7,300,667 shares were issued to founders of the Company and others at the direction of the founders.

 
49
 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012

Note 9 – Stockholders’ Equity- Continued

Sales of Common Stock - During 2009, the Company raised gross proceeds of approximately $460,000 through the sale of 880,000 shares of its common stock to accredited investors at an average price of $0.52 per share. The sale of these shares took place throughout 2009. The Company incurred stock issuance costs in the period that totaled $40,825 of which $30,825 was from the issuance of 33,333 shares to brokers in exchange for services related to the share offering.

During 2010, the Company raised gross proceeds of approximately $653,000 through the sale of 1,282,005 shares of its common stock to accredited investors at an average price of $0.51 per share. The Company incurred stock issuance costs in the year that totaled $12,160.

During 2011, the Company raised gross proceeds of approximately $1.7 million through the sale of 6,857,538 shares of its common stock at an average price of $0.26 per share.  These sales of shares occurred at various times throughout 2011. The Company incurred stock issuance costs of approximately $112,000 consisting chiefly of commissions paid to broker-dealers who assisted with the offering.  In addition to the cash issuance costs 1,698,318 shares of the Company’s common stock were issued to the lead advisor as per a contractual arrangement.

During 2012, the Company raised gross proceeds of approximately $875,000 through the sale of 2,462,211 shares of its common stock to accredited investors in a private placement at an average price of $.35 per share.  The Company incurred stock issuance costs of approximately $45,000 consisting chiefly of commissions paid to broker-dealers who assisted with the offering.

Shares issued with the conversion of long-term debt in 2011 - The Company converted all of its long-term debt to shares of its common stock.  These conversions happened throughout 2011 and are summarized in the table below.

Note Holder
 
Principal
   
Accrued Interest
   
Debt Amounts
Converted in 2011
   
Shares of
Common Stock
Received
   
Price per Share
 
                               
Trunity LLC
  $ 1,800,000     $ --     $ 1,800,000       7,200,000     $ 0.25  
Note Payable to Founders
    855,379       137,621       993,000       3,972,000       0.25  
   Notes payable -related parties
  $ 2,655,379     $ 137,621     $ 2,793,000     $ 11,172,000     $ 0.25  
                                         
8% Convertible Notes
    616,500       76,811       693,311       577,759       1.20  
9% Convertible Notes
    437,500       --       437,500       1,458,333       0.30  
Note held by outside investor
    100,000       40,000       140,000       560,000       0.25  
Notes payable to investors
  $ 1,154,000     $ 116,811     $ 1,270,811     $ 2,596,092     $ 0.49  
                                         
Total Notes Payable
  $ 3,809,379     $ 254,432     $ 4,063,811     $ 13,768,092     $ 0.30  
 

 
50
 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY
 (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012

Note 9 – Stockholders’ (Deficit) Equity- Continued

Common stock committed not yet issued – On December 29, 2011, the Company entered into a payment agreement and mutual release with an investment-banking firm that had been hired to provide strategic guidance and secure investors in the Company. The settlement calls for the Company to pay the firm $25,000 upon the Company’s next capital raise, and to issue the firm 100,000 shares of common stock.  The Company valued the shares at $0.25 and has reflected this $50,000 total settlement as an administrative expense in the statement of operations. The Company issued these shares to the investment firm in early 2012.

Reverse Merger Transaction -  Trunity acquired a 90.1% interest in Brain Tree International, Inc., a Utah corporation (“BTI”), pursuant to a Stock Purchase Agreement with the three principal shareholders of Trunity Holdings, Inc., 961,974 of BTI shares were purchased for the price of $325,000 plus 325,000 shares of Trunity common stock. As part of the transaction, on January 24, 2012, immediately prior to the Merger, BTI reincorporated in Delaware and changed its name from Brain Tree International, Inc. to Trunity Holdings, Inc. Pursuant to the reincorporation, 105,064 minority shares of BTI automatically converted into the same number of shares of THI.

Warrants for Services - During the year ended December 31, 2012, in connection with services rendered, the Company issued warrants to purchase 250,000 and 25,000 shares of the Company’s common stock at an exercise price of $0.50 and $0.25 per share, respectively. The Company recognized expense of $37,453 related to warrants granted for services rendered during the period and valued them at the grant date using the Black Scholes valuation model.

Note 10 – Stock Based Compensation

In 2009, the Company approved the 2009 Employee, Director and Consultant Stock Option Plan (The Plan) and authorized an option pool of 5,500,000 shares. Stock options typically vest over a 3 year period and have a life of 10 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 December 31, 2012, there were 63,333 shares available for awards under this plan.

In 2012, the Company approved the 2012 Employee, Director and Consultant Stock Option Plan (The Plan) and authorized an option pool of 7,500,000 shares. Stock options typically vest over a 3 year period and have a life of 10 years from the date granted.  As of December 31, 2012, there were 2,900,000 shares available for awards under this plan.

During the year ended December 31, 2012, the Company issued options to acquire 5,570,000 shares of common stock at exercise prices of $0.30 and $0.25 per share to employees, directors, and consultants. During the year ended December 31, 2011, the Company issued options to acquire 610,277 shares of common stock at exercise prices of $0.35 per share to employees, directors, and consultants.

The grant-date fair value of options is estimated using the Black Scholes option pricing model.  The per share weighted average fair value of stock options granted during 2012 was $.19 and $.17 and was determined using the following assumptions:  expected price volatility 57% and 51%, risk-free interest rate ranging from 1.04% to 1.61%, zero expected dividend yield, and six years expected life of options. The per share weighted average fair value of stock options granted during 2011 was $.13 and was determined using the following assumptions:  expected price volatility 57%, risk-free interest rates ranging from  1.4% to 2.9%, zero expected dividend yield, and six 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.

 
51
 
 
TRUNITY HOLDINGS, INC. AND SUBSIDIARY
 (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
 
Note 10 – Stock Based Compensation- Continued
 
As of December 31, 2012, there was approximately $162,399 of total unrecognized stock compensation expense, related to unvested stock options under the Plan.  This expense is expected to be recognized over the remaining weighted average vesting periods of the outstanding options of 2.07 years.

A summary of options issued, exercised and cancelled for the years ended December 31, 2012 and 2011 are as follows (shares have been retroactively adjusted for the 1 for 3 reverse stock split in 2011):
 
 
 
 
 
Shares
 
Weighted-Average
Exercise
Price
   
Weighted-
Average
Remaining
Contractual Term
 
Aggregate
Intrinsic
Value
Outstanding at January 1, 2011
1,210,000
  $
0.33
     
3.22
 
-
Granted
  885,000
  $
0.28
     
8.56
   
Cancelled
(311,667)
                 
Outstanding at December 31, 2011
1,783,333
  $
0.32
     
6.08
 
-
Granted
       5,830,000
  $
0.35
     
9.6
   
Cancelled
   (228,715
)                
Outstanding at December 31, 2012
7,384,618
  $
0.34
     
8.30
   
Exercisable at December 31, 2012
1,285,848
  $
0.33
     
4.35
 
-
 
Note 11 – Warrants to Purchase Common Stock

During the years ended December 31, 2012 and 2011, in connection with services rendered, the issuance of convertible debt, and the sale of common stock the Company issued warrants to purchase 80,997 and 17,900 shares of the Company’s common stock at exercise prices of $1.00 and $3.00 per share, respectively. The Company recognized expense of $37,453 related to warrants granted for services rendered during the period and valued them at the grant date using the Black Scholes valuation model. In connection with the issuance of the July 2012 Notes “(See Note 7)”, the Company issued warrants to purchase 43,497 shares over a two-year period for an exercise price of $0.40 Canadian Dollars.  The Company recorded expense of $3,758 related to the issuance of the Notes as debt issuance costs. All warrants are still outstanding as of December 31, 2012 and expire at various dates through 2016.
 
A summary of warrants issued, exercised and expired for the years ended December 31, 2012 and 2011 follows:
 
 
 
 
 
Shares
 
Weighted-Average
ExercisePrice
   
Weighted-
Average
Remaining
Contractual Term
 
Outstanding at January 1, 2011
63,050
  $
3.00
     
0.63
 
Granted
17,900
  $
3.00
     
1.14
 
Outstanding at December 31, 2011
80,950
  $
3.00
     
0.75
 
Granted
580,997
  $
1.00
     
2.35
 
Outstanding at December 31, 2012
661,947
  $
1.25
     
2.15
 
Exercisable at December 31, 2012
661,947
  $
1.25
     
2.15
 

 
52
 

TRUNITY HOLDINGS, INC. AND SUBSIDIARY
 (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012

Note 12 – Income Taxes
 
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes plus operating loss carryforwards. The tax effects of significant items comprising the Company’s net deferred tax assets and liabilities are as follows:

   
As of December 31,
 
   
2012
   
2011
 
             
Deferred Tax Assets:
           
Net operating loss carryforward
  $ 3,594,979     $ 2,660,673  
Charitable contributions carryforward
    5,028       5,010  
Deferred Revenue
    11,103       -  
Interest accrued but unpaid
    -       55,578  
 Deferred Tax Assets
  $ 3,611,110     $ 2,721,261  
                 
Deferred Tax Liabilities
               
   Property and Equipment
  $ (6,956 )   $ -  
Stock-based compensation
    (17,489 )     (22,043 )
Deferred Tax Liabilities
  $ (24,445 )   $ (22,043 )
                 
Valuation Allowances
    (3,586,667 )     (2,699,218 )
Total Net deferred tax assets
  $  -     $ -  
 
At December 31, 2012 the Company has gross deferred tax assets of $9.13 million (tax effected $3.6 million). The Company is in a domestic cumulative taxable loss position for the three year period ended December 31, 2012, which is considered significant evidence that the Company may not be able to realize some portion or all of these deferred taxes in the future. The Company has decided that based on all available evidence that a full valuation allowance should be taken against the entire gross deferred tax assets of $9.13 million (tax effected $3.6 million).

The Company has federal operating loss carryforwards of $9.15 million that can be carryforward for twenty years. The operating losses will begin to expire in 2029 through 2033. The company’s ability to utilize the net operating losses is contingent on generating sufficient future taxable income prior to their expiration. As a result, an equivalent amount of taxable income would need to be generated in order to fully realize the net deferred tax assets. However due to the Company’s limited operating history and uncertainty of achieving sufficient profits to utilize the net operating loss carryforwards the Company has recorded a valuation allowance of $9.13 million (tax effected $3.6 million) related to the net deferred tax assets. The Company will continue to monitor and update its assumptions and forecasts of future taxable income to determine if a valuation allowance will continue to be needed.
 
T he Company’s effective income tax rate is lower than what would be expected if the federal statutory rate were applied to the loss from operations primarily because of the effect of the state tax benefit, net of federal benefit, and the change in the valuation allowance provided against deferred tax assets. The change in the valuation allowance for the year ended December 31, 2012 was $887,448.

 
53
 
 
TRUNITY HOLDINGS, INC. AND SUBSIDIARY
 (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012

Note 12 – Income Taxes - Continued

Uncertain Tax Positions
 
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered in income.  Deferred tax assets are reduced by a valuation allowance if it is more likely than not that the tax benefits will not be realized.  Management has evaluated the effect of the guidance provided by U S Generally Accepted Accounting Principles on Accounting for Uncertainty in Income Taxes.  Management has evaluated all other tax positions that could have a significant effect on the financial statements and determined the Company had no uncertain income tax positions at December 31, 2012.

Note 13 – Related Parties
 
The Company’s three founders, Terry Anderton, Les Anderton, and Joakim Lindblom have a number of transactions that warrant disclosure per ASC 850, Related Party Disclosures.

Loans - The Trunity, LLC Note with the Company is beneficially owned by the three founders of the Company. The loan balance at December 31, 2011 was approximately $142,000, consisting entirely of accrued but unpaid interest. Terms of the loan were disclosed in Note 6.

Stock Options - In 2011, Mr. Lindblom was granted additional options to purchase an additional 333,333 and 60,000 shares at strike prices of $0.30 and $0.25, respectively.  All share amounts have been adjusted for the 1 for 3 reverse stock split that occurred in 2011.
 
In 2012, Mr. Lindblom was granted additional options to purchase additional 250,000 and 800,000 shares both at a strike price of $0.35.  M r. Terry Anderton was granted options to purchase additional 400,000 and 2,400,000 shares both at a strike of price of $0.35. Mr. Les Anderton was granted options to purchase additional 70,000 and 400,000 shares both at a strike of price of $0.35.
 
Corporate Rental - The company pays monthly rent to Mr. Anderton for his guest house used by corporate employees who work for extended periods of time at the corporate offices located in New Hampshire but reside elsewhere.
 
Credit Agreements – The Company has credit agreements with Terry Anderton and Les Anderton that allow the Company to borrow up to $0.9 million, as needed, to fund working capital needs. These agreements carry an interest rate of 10% and will expire in September and December of 2012 however these agreements have been extended with board consent indefinitely.  At December 31, 2011, Terry Anderton, Les Anderton, and Joakim Lindblom have advanced the Company loans of $22,041, $25,000 and $22,000, respectively. During 2012, Terry Anderton, Les Anderton, and Joakim Lindblom have advanced the Company 10% interest loans of $10,066, $28,401 and $15,510, respectively, which all remain outstanding at the end of the period.
 
Founder Stock Transactions - Upon forming the Company in 2009, 3,333,333 shares were issued to both Terry Anderton and Les Anderton for a total of 6,666,667 shares (as adjusted for a 1 for 3 reverse stock split in 2011). At December 31, 2012: Terry Anderton directly owned and controlled 4,550,412 shares; Les Anderton directly and indirectly, with his wife, controlled 4,907,683 shares; and Joakim Lindblom directly owned and controlled 467,000 shares.
 
I n 2011, various notes with the founders were converted to shares of common stock in the Company. The following shares (after the 1 for 3 reverse split of its common shares) were issued to the founders upon conversion of the Trunity, LLC note payable and notes payable to the founders.

Shares Issued Upon Conversion
 
   
Trunity,
LLC Note
   
Notes Payable to Founders
 
Terry Anderton
    3,200,000       856,000  
Les Anderton
    3,200,000       3,116,000  
Joakim Lindblom
    800,000       --  
     Total
    7,200,000       3,972,000  
 
 
54
 
 
TRUNITY HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012

Note 13 – Related Parties - Continued

In 2012, various notes with the founders were converted to debentures with the Company.

Conversion to Debentures
   
Notes Payable
 to Founders
 
Terry Anderton
  $ 261,932  
Les Anderton
    222,170  
Joakim Linblom
    81,270  
    Total
  $ 565,372  
 
Note 14 – Commitments and Contingencies

Leases
 
In 2010, the Company entered into a lease agreement for 6,400 square feet of office space located in Newburyport, Massachusetts. This lease is effective from August 2010 through July 2013. This agreement provided a free rent period of the first four months of the term. The minimum lease payments payable over the remaining life of that agreement are:
 
   
2013
   
Total
 
Remaining lease payments by year
  $ 53,203     $ 53,203  
 
For the years ending December 31, 2012 and 2011, the Company recognized approximately $89,000 and $87,000, respectively, in rent expense.
 
Legal
 
In February 2012, Trunity and our CEO Terry Anderton were served with a complaint filed by an ex-Trunity, employee, William Horn, in the Nashua, New Hampshire, Superior Court. The plaintiff served as Executive Vice President of Marketing & Business Development from March until August 2011 at an annual salary of $100,000. He asserts whistleblower status and alleges that he was wrongfully terminated because of his allegations that the Company had violated securities, tax and employment laws. The complaint seeks unspecified damages under the New Hampshire Whistleblower Act and common law, including reinstatement, back pay and attorney’s fees and costs. In May 2012, we responded to the complaint by denying all material allegations and filing a counterclaim against the plaintiff for breach of contract, tortious interference with contractual and business relations, breach of fiduciary duty and violation of the Uniform Trade Secrets Act. Discovery has begun; a deposition of Mr. Horn was conducted on March 25, 2013.  Trial of the case is scheduled for September 2013. Based on the preliminary information available to us, we believe that the complaint is without merit and intend to vigorously defend the case and prosecute the counterclaim.
 
There are no other material pending legal proceedings to which we are a party or to which any of our property is subject and, to the best of our knowledge, no such actions against us are contemplated or threatened.
 
 
55
 
 
TRUNITY HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
   
Note 15 – Subsequent Events

During the beginning of 2013, the Company raised gross proceeds of $275,000 through the sale of 687,500 shares of its common stock to accredited investors in a private placement at an average price of $.40 per share.  The Company incurred stock issuance costs of approximately $8,000 consisting chiefly of commissions paid to broker-dealers who assisted with the offering.
 
On March 20, 2013, Trunity Holdings, Inc.’s wholly-owned subsidiary Trunity, Inc. (“Trunity”) entered into a transaction pursuant to which the Trunity Platform was selected by the Ukraine Government’s Open World National Project to serve as the foundation for the country’s national educational network for public school students in grades five through nine, representing approximately 1,500,000 students.
 
In connection with the transaction, Trunity entered into a share purchase agreement and a project agreement providing it with a 15% stake in EDUCOM, a Ukrainian limited liability company (the “JV Company”), and the JV Company entered into a license agreement with Trunity providing the JV Company with a five-year renewable license to use the Trunity Platform in exchange for a license fee of $400,000, of which $100,000 was paid upon signing and the $300,000 balance is expected in April 2013. Trunity expects to generate substantial revenue from the Ukrainian joint venture, above and beyond the initial license fee, through the sale of content from the Trunity Knowledge Exchange and from the Ukrainian Knowledge Exchange to be established by Trunity in connection with the venture.
 
 
56
 

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Previous Independent Accountants
 
On January 24, 2012, upon closing of the Merger, the Board of Directors of the Company approved changing the Company’s independent registered public accounting firm from Madsen & Associates CPAs, Inc., Murray, Utah   (“Madsen”) to Cherry, Bekaert LLP, formerly Cherry, Bekaert & Holland, L.L.P., Fort Lauderdale, Florida (“CBH”). The dismissal of Madsen, as approved by the Company’s Board of Directors, was effective immediately.
 
Madsen’s reports on the Company’s financial statements for the fiscal years ended June 30, 2010 and 2011, and for the period from July 26, 1983 (date of inception) to June 30, 2011 contained no adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting principle.
 
During the Company’s fiscal years ended June 30, 2010 and 2011 and through January 24, 2012, there were no disagreements between the Company and Madsen on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Madsen, would have caused Madsen to make reference thereto in its report on the financial statements for such years.
 
During the Company’s fiscal years ended June 30, 2010 and 2011 and through January 24, 2012, there were no “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-K.
 
New Independent Accountants
 
On January 24, 2012, the Company engaged CB as its independent registered public accounting firm for the Company’s fiscal year ended June 30, 2012.
 
During the years ended June 30, 2010 and 2011 and the subsequent interim period through January 24, 2012, the Company did not consult with CB regarding either (i) the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on the Company’s financial statements or (ii) any matter that was either the subject of a disagreement or event identified in response to (a)(1)(iv) of Item 304 of Regulation S-K, or a reportable event as that term is used in Item 304(a)(1)(v) of Item 304 of Regulation S-K.

On May 18, 2012, our Board of Directors voted to change the fiscal year to end on December 31, 2012.
 
 
57
 
 
ITEM 9A. CONTROLS AND PROCEDURES.
 
Evaluation of Disclosure Controls and Procedures . We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on their evaluation as of the end of the period covered by this Annual Report on Form 10-K, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
 
Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
 
·
·
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
 
·  
 
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
·  
 
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
 
Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Management's assessment included an evaluation of the design of our internal control over financial reporting. Based on this assessment, our management has concluded that as of December 31, 2012, our internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
 
Changes in Internal Control over Financial Reporting. During the fourth quarter of 2012 there were no changes that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
ITEM 9B.  OTHER INFORMATION

None.

 
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PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
In connection with the Merger, the prior officers and directors of Trunity, Terry B. Anderton and Dr. Joakim Lindblom, remained in such positions, and on January 24, 2012, the effective date of the Merger, Jude Blake, David Breukelman, and Chris Outwater were also appointed to the Board. On October 1, 2012, Peter M. Banks, Ph.D. and Richard H. Davis were appointed to the Board.  In March 2013, Messrs. Outwater and Banks resigned from our Board.  As a result, our Board of Directors currently consists of five members.
 
The following table sets forth the names, ages and positions of our current officers and directors:
 
Name
 
Age
 
Position(s)
         
Terry B. Anderton
 
50
 
Chief Executive Officer, Chairman, President, Chief Financial Officer, Treasurer, Director
Dr. Joakim Lindblom
 
51
 
Executive Vice President, Chief Technology Officer, Secretary, Director
Nicole Fernandez-McGovern   40   Chief Financial Officer and Treasurer
Jude Blake
 
56
 
Director
David Breukelman
 
52
 
Director
Richard H. Davis
 
56
 
Director

For each director of the Company, the following sets forth the name, age as of March 31, 2013, principal occupation for at least the past five years and the names of any other public companies for which the director served in directorship capacity in the last five years:

Terry B. Anderton . Mr. Anderton has been Trunity’s Chief Executive Officer since founding Trunity in 2009. He has over 20 years of executive experience in technology companies. Previously, Mr. Anderton co-founded and was the President and CEO of NitroSecurity, Boston, Massachusetts, from June 2004 to October 2007.  NitroSecurity was acquired by McAfee/Intel in 2011. Before founding NitroSecurity, Mr. Anderton served in executive positions with Imaging Automation, Xcert International, McAfee, NMI and Cabletron Systems. Mr. Anderton holds a B.S. in Business Administration from Daniel Webster College, Nashua, New Hampshire.

Dr. Joakim Lindblom . Dr. Lindblom is a co-founder of Trunity and has been Chief Technology Officer since inception. He has over 20 years of experience in computer systems development, systems architecture and emerging technologies. Dr. Lindblom is responsible for all technical aspects of our software and systems architecture. Previously, Dr. Lindblom was VP for Platform Development and Strategy for ManyOne Networks from 2004 – 2009, and VP of Partner Development for that company from 2002 to 2004. Dr. Lindblom was a Business and Technology Consultant for Nokia Networks from 2000 to 2002. As part of Lindblom Consulting/Scientific during the years 1993 – 2000, Dr. Lindblom served as Technology, Scientific and Business Consultant for several dozen Silicon Valley and European technology and scientific companies. From 1990 to 1992, Dr. Lindblom was Project Scientist for NASA’s UHRXS Space Station project at Stanford University. Scientific instrumentation developed by Dr. Lindblom at Stanford University formed the basis for several scientific missions flown on sounding rockets, the Space Shuttle and in deep space, including two missions that Dr. Lindblom himself directed. Dr. Lindblom received his B.S. in Physics from California Institute of Technology, Pasadena, California, and his Ph.D. in Astrophysics from Stanford University, California.
 
 
59
 
 
Jude Blake . Ms. Blake joined our Board immediately following the Merger. She has more than 30 years of experience in strategic marketing leadership in a variety of industries, including telecom/cable, beverages and packaged goods. Since 2005, Ms. Blake has served in advisory roles for a broad range of businesses, organizations and start-up ventures, where she provides strategic direction on critical issues and growth strategies. Ms. Blake was elected as Trustee of the University System of New Hampshire in July of 2008 and serves on its Executive Committee. From 2001 to 2005, Ms. Blake was the Chief Marketing Officer and Executive Vice-President, Consumer Markets for Cablecom GmbH, in Zurich, Switzerland. Prior to joining Cablecom, Ms. Blake was Vice President of Marketing, Programming, Sales and Service for Ameritech New Media, the cable television subsidiary of SBC Communications, Inc. Previously, she served in executive marketing positions for General Mills, the Pepsi-Cola Company and the G. Heileman Brewing Company. Ms. Blake holds a BS from the Whittemore School of Business and Economics at University of New Hampshire, and holds an MBA in Finance from the Wharton School, University of Pennsylvania. We selected Ms. Blake to join our Board because she brings valuable experience in marketing and higher education. Our growth strategy requires focused marketing efforts, and higher education is one of our key target markets.
 
David Breukelman . Mr. Breukelman joined our Board immediately following the Merger. Since its founding in 1994, he has been the President of Business Arts Inc., Toronto, Canada, a company focused on creating and incubating world class companies in the imaging space. He is Lead Director of Gedex Inc., Mississauga, Canada, which owns a highly advanced resource and sub-surface discovery system. Mr. Breukelman is also the founder of Arius3D Inc., Mississauga, Ontario, a world leader in the field of three dimensional capture and communication. Mr. Breukelman and his family have helped found and build some of Canada’s most innovative technology companies including Sciex and IMAX. Early in his career, Mr. Breukelman held executive and management roles at The Bank of Nova Scotia and Bank of America. Mr. Breukelman graduated with an M.B.A. from The University of Western Ontario’s Richard Ivey School and a B.A. from Victoria College at the University of Toronto. He has served as a director of a number of companies as well as Canada’s Royal Conservatory of Music. We believe that Mr. Breukelman’s experience in successfully managing and advising startup technology companies makes him a valuable addition to our Board. We also believe that he will help our efforts to penetrate the Canadian market.

Richard H. Davis .   Mr. Davis has over 30 years of experience in finance, investment banking and venture capital. He received a B.S. degree in economics from Florida State University in 1982. He joined First Equity Corporation (“First Equity”) in Miami that same year. First Equity operated as a regional full-service brokerage and investment bank. Mr. Davis’ duties included equity deal structure and brokerage-related activities. After First Equity was acquired in 2001, Mr. Davis joined the corporate finance department of William R. Hough & Company (“Hough”), where he continued structuring equity finance and private acquisitions. Hough was acquired in 2004 by RBC Dain Rauscher (“Dain”), a global investment banking firm. Dain consolidated Hough’s corporate finance activities into its New York offices. Mr. Davis elected to remain in Miami and joined Martinez-Ayme Securities, assuming the newly-created position of managing director of corporate finance. In February 2008, Mr. Davis became a director of PowerVerde Inc., a Phoenix, Arizona-based producer of emissions-free electric power generation systems. Since August 2011, Mr. Davis has also served on a part-time basis as Chief Executive Officer of PowerVerde.  Mr. Davis’s demonstrated knowledge and experience in finance and investment banking make him a valued member of the Company’s Board.

 
60
 
 
Arrangements for Nomination as Directors and Changes in Procedures for Nomination; Election of Directors

No arrangement or understanding exists between any director or nominee and any other persons pursuant to which any individual was or is to be selected or serve as a director.  No director has any family relationship with any other director or with any of the Company’s executive officers.
 
Our Chairman Terry Anderton is also the Chief Executive Officer, President, Chief Financial Officer and Treasurer of the Company. Our Director Joakim Lindblom is also the Executive Vice President, Chief Technology Officer and Secretary of the Company.
 
Holders of our Common Stock are entitled to one vote for each share held on all matters submitted to a vote of the stockholders, including the election of directors. Cumulative voting with respect to the election of directors is not permitted by our Certificate of Incorporation.
 
Our Board of Directors shall be elected at the annual meeting of the shareholders or at a special meeting called for that purpose. Each director shall hold office until the next annual meeting of shareholders and until the director’s successor is elected and qualified.
 
  Committees
 
Our Board has established a compensation / stock option committee that is comprised of Jude Blake and David Breukelman. Our board intends to establish an audit committee in the near future.

Executive officers:

We have three executive officers: Terry Anderton, Chief Executive Officer; Joakim Lindblom, Chief Technology Officer; and Nicole Fernandez-McGovern, Chief Financial Officer. The biographies of Messrs. Anderton and Linblom are set forth above.

         Nicole Fernandez-McGovern . Ms. Fernandez-McGovern became our Chief Financial Officer in April 2012. From March 2012 to March 2013, she provided financial consulting services to Trunity through her firm RCM Financial Consulting.
 
Ms. Fernandez McGovern has over fifteen years of extensive accounting and finance experience in several publicly traded companies across multiple industries.  Her expertise includes all aspects of SEC reporting, technical accounting, treasury and strategic cash flow management, audits, budgeting and financial planning. Ms. Fernandez is responsible for all aspects of our financials reporting, general accounting, treasury and investor relations aspects of the business. Ms. Fernandez-McGovern’s most recent experience includes being a principal at RCM Financial Consulting where she served as interim CFO for various companies by assisting them with the compliance of XBRL interactive data submissions, preparation of quarterly and annual SEC filings, including responses to SEC comment letters and completion of S1 filings, managing treasury process and activity, participated in compliance of Sarbanes-Oxley control requirements and assisted in presentation of board and bank reporting requirements. Nicole has worked for companies such as Elizabeth Arden, Inc., and Ryder System, Inc. where she was involved in all aspects of the SEC and financial reporting process. At both companies she worked closely with senior management in the preparation of board, bank and investor presentations and coordinated the audit process with outside international firms. Nicole’s career began with KPMG in the audit and assurance practice where she managed various large scale engagements for both public and privately held companies. Nicole has a Master of Business Administration with a concentration in Accounting and International Business and a Bachelor of Business Administration with a concentration in accounting, both from the University of Miami. She is also a Certified Public Accountant in the State of Florida and is fluent in Spanish.

 
61
 
 
Code of Ethics
 
We have adopted a Code of Business Conduct and Ethics, which applies to our board of directors, our executive officers and our employees, and outlines the broad principles of ethical business conduct we adopted, covering subject areas such as:
 
•
compliance with applicable laws and regulations,
   
•
handling of books and records,
   
•
public disclosure reporting,
   
•
insider trading,
   
•
discrimination and harassment,
   
•
health and safety,
   
•
conflicts of interest,
   
•
competition and fair dealing, and
   
•
protection of company assets.
 
A copy of our Code of Business Conduct and Ethics is attached as an exhibit to this Report.
 
Certain Legal Proceedings

In February 2012, Trunity and our CEO Terry Anderton were served with a complaint filed by an ex-Trunity, employee, William Horn, in the Nashua, New Hampshire, Superior Court. The plaintiff served as Executive Vice President of Marketing & Business Development from March until August 2011 at an annual salary of $100,000. He asserts whistleblower status and alleges that he was wrongfully terminated because of his allegations that the Company had violated securities, tax and employment laws. The complaint seeks unspecified damages under the New Hampshire Whistleblower Act and common law, including reinstatement, back pay and attorney’s fees and costs. In May 2012, we responded to the complaint by denying all material allegations and filing a counterclaim against the plaintiff for breach of contract, tortious interference with contractual and business relations, breach of fiduciary duty and violation of the Uniform Trade Secrets Act. Discovery has begun; a deposition of Mr. Horn was conducted on March 25, 2013.  Trial of the case is scheduled for September 2013. Based on the preliminary information available to us, we believe that the complaint is without merit and intend to vigorously defend the case and prosecute the counterclaim.

 
62
 
 
There are no other material pending legal proceedings to which we are a party or to which any of our property is subject and, to the best of our knowledge, no such actions against us are contemplated or threatened

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s executive officers, directors and beneficial owners of more than 10% of the Company’s common stock to file reports of ownership and changes in ownership with the SEC and to furnish the Company with copies of all such reports they file.  Based solely on its review of the copies of such reports received by it, or on written representations from such persons, the Company believes that, during 2012, all Section 16(a) filing requirements applicable to its executive officers, directors and 10% stockholders were complied with, except that Form 3 filings for our directors who joined the Board as a result of the January 24, 2012 Merger (Anderton, Lindblom, Breukelman, Blake and Outwater) were filed on February 10, 2012, and the Form 3’s for Messrs. Davis and Banks, who joined the Board on October 1, 2012, were filed on January 17 and 24, 2013, respectively.

ITEM 11.  EXECUTIVE COMPENSATION

Summary of Executive Compensation 

The following table sets forth the compensation of the Company’s Chief Executive Officer and each other executive officer serving as such whose annual compensation exceeded $100,000, for services in all capacities to the Company in 2012, except as otherwise indicated.  The value attributable to any option awards is computed in accordance with FASB ASC Topic 718. The assumptions made in the valuations of the option awards are included in Note 6(D) of the Notes to our Financial Statements appearing later in this report. 
 
SUMMARY COMPENSATION TABLE
Name and
Principal Position
 
 
 
 
Year
 
 
Salary ($)
 
Bonus ($)
 
Stock Awards($)
   
Option    Awards($)
 
 
Non-Equity Incentive Plan Compensation($)
 
Non-Qualified Deferred Compensation
Earnings ($)
 
All Other
Compensation($)
 
   
Total ($)
 
Terry B. Anderton
  Chief Executive
   Officer, Chairman
President(1)
 
2012
  $ 176,166     -0-     -0-   $   476,000     -0-     -0-     -0-   $   652,166
                                                   
Dr. Joakim Lindblom
  Executive Vice
 President, Chief  Technology Officer and Secretary (2)
 
2012
  $ 98,748     -0-     -0-   $   178,290     -0-     -0-     -0-   $   277,038
 
 1           Mr. Anderton has served as our Chief Executive Officer, Chairman and President since its formation in July 28, 2009. 
   
2             Mr. Lindblom served as our Chief Technology Officer  since its formation in July 28, 2009. 

 
63
 
 
Executive Employment, Termination and Change of Control Arrangements
 
We do not have any employment contracts for our executive officers; however our Board’s compensation committee is reviewing our executive compensation structure, and we intend to implement employment contracts for our executive officers in the second quarter of 2013.
 
The current base salaries for our executive officers are $180,000 for Mr. Anderton, $140,000 for Mr. Lindblom and $165,000 for Ms. Fernandez-McGovern. In connection with the hiring of Ms. Fernandez-McGovern in April 2013, she received a 10 year option to purchase 500,000 shares of common stock at an exercise price of $0.35 per share to be vested in equal thirds over a three year period.
 
   Outstanding Equity Awards at December 31, 2012
 
Name
 
Number of
Securities Underlying Unexercised Options (#) Exercisable
   
Number of Securities
 Underlying Unexercised
 Options (#) Unexercisable
   
Equity Incentive
 Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
   
Option
 Exercise Price
($)
 
Option
Expiration Date
Terry B. Anderton
    --       400,000 (1)     --     $ 0.35  
01/31/2022
Terry B. Anderton
    --       2,400,000 (2)     --     $ 0.35  
10/2/2022
Dr. Joakim Lindblom
    333,333 (3)     --       --     $ 0.33  
08/01/2019
Dr. Joakim Lindblom
    33,333 (4)     66,667 (4)     --     $ 0.33  
03/02/2020
Dr. Joakim Lindblom
    185,692 (5)     147,641 (5)     --     $ 0.25  
05/01/2021
Dr. Joakim Lindblom
    28,384 (6)     31,616 (6)     --     $ 0.25  
08/01/2021
Dr. Joakim Lindblom
    --       250,000 (7)     --     $ 0.35  
01/31/2022
Dr. Joakim Lindblom
    --       800,000 (8)     --     $ 0.35  
10/02/2022

(1)
 
These options vest over a three year period with: (i) 133,699 vesting on January 31, 2013, and (ii) 266,301 vesting each month over a 24 month period from February 1, 2013 through January 31, 2015.
     
(2)
 
These options vest over a three year period with: (i) 800,000 vesting on October 2, 2013, and (ii) 1,600,000 vesting each month over a 24 month period from October 3, 2013 through October 2, 2016.
     
(3)
 
These options were fully vested on August 1, 2012.
     
(4)
 
These options vest over a three year period with: (i) 33,333 vesting on March 2, 2011, and (ii) 66,667 vesting each month over a 24 month period from March 3, 2012 through March 2, 2013.
     
(5)
 
These options vest over a three year period with: (i) 111,111 vesting on May 1, 2012, and (ii) 222,222 vesting each month over a 24 month period from May 2, 2012 through May 1, 2014.
     
(6)
 
These options vest over a three year period with: (i) 20,000 vesting on August 1, 2012, and (ii) 40,000 vesting each month over a 24 month period from August 2, 2012 through August 1, 2015.
     
(7)
 
These options vest over a three year period with: (i) 83,333 vesting on January 31, 2013, and (ii) 166,667 vesting each month over a 24 month period from February 1, 2013 through January 31, 2015.
     
(8)
 
These options vest over a three year period with: (i) 266,667 vesting on October 2, 2013, and (ii) 533,333 vesting each month over a 24 month period from October 3, 2013 through October 2, 2016.
 
 
64
 
 
Pension Benefits; Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans
 
The Company does not offer pension benefits, non-qualified contribution or other deferred compensation plans to its executive officers.
 
Compensation of Directors
 
The following table sets forth, for the year ended December 31, 2012, information relating to the compensation of each director of the Company who served during the fiscal year and who was not a named executive officer. Compensation received or accrued by Terry B. Anderton and Dr. Joakim Lindblom are fully reflected in the tables above.
 
Name
 
Fees Earned or
Paid in Cash ($)
   
Stock Awards
($)
   
Option Awards
($)
   
Non-Equity
 Incentive Plan Compensation ($)
   
Nonqualified
Deferred
 Compensation Earnings ($)
   
All Other
Compensation ($)
   
Total ($)
 
Peter M. Banks
  $ -0-     $ - 0-     $ 84,940     $ -0-     $ -0-     $ -0-     $ 84,940  
Jude Blake
  $ -0-     $ -0-     $ 8,410     $ -0-     $ -0-     $ -0-     $ 8,410  
David Breukelman
  $ -0-     $ -0-     $ 16,820     $ -0-     $ -0-     $ -0-     $ 16,820  
Richard H. Davis
  $ -0-     $ -0-     $ -0-     $ -0-     $ -0-     $ -0-     $ -0-  
Chris Outwater
  $ -0-     $ -0-     $ -0-     $ -0-     $ -0-     $ -0-     $ -0-  
 
Narrative to Director Compensation Table
 
We have not established standard compensation arrangements for our directors and the compensation payable to each individual for their service on our Board is determined from time to time by our Board of Directors based upon the amount of time expended by each of the directors on our behalf. Neither Mr. Davis or Mr. Outwater received any compensation for their services as a director in 2012.

Compensation Committee Interlocks and Insider Participation

Our Board established a compensation committee consisting of Ms. Blake and Mr. Brukelman in March 2013. No officer (including officers serving on the Board) or other employee participated in the Board’s deliberations concerning our executive officers’ compensation in 2012.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
The following table sets forth certain information as of April 16, 2013 regarding the beneficial ownership of our Common Stock by (i) each person (including any “group” as such term is used in Section 13(d)(3) of the Exchange Act) known by us to be a beneficial owner of more than 5% of our Common Stock, (ii) each of our directors and “named executive officers;” and (iii) all of our directors and executive officers as a group.  To our knowledge, no other person beneficially owns more than 5% of our Common Stock.  At April 16, 2013, we had 37,026,447 shares of Common Stock outstanding.

 
65
 

We have determined beneficial ownership in accordance with the rules of the SEC.  Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of our common stock that they beneficially own.
 
Name and Address of Beneficial Owner
 
Amount and Nature
of Beneficial Ownership
of Shares Owned
 
Percent of Class
 
           
Aureus Investments LC
4866 S. Viewmont St.
Holladay, Utah 84117
   
4,907,683
 (1)
  13.3%  
             
Global Social Ventures
15W621 Indian Hill Woods
Naperville, IL 60563
   
2,462,584
    6.7%  
             
RRM Ventures LLC
4544 Holladay Blvd
Salt Lake City, UT 84117
 
   
2,067,859
    5.6%  
             
Officers and Directors
           
             
Terry B. Anderton
   
  4,711,143
  (2)
  12.7%  
             
Dr. Joakim Lindblom
   
1,177,582
 (3)
 3.2 %  
             
Nicole Fernandez-McGovern     125,000   0.3%  
             
David Breukelman
   
100,000
  (4)
   0.3%  
             
Jude Blake
   
50,000
  (5)
   0.1%  
             
Richard H. Davis
   
100,000
     0.3%  
             
All Directors and Executive Officers as a group
(6 persons)
   
                 6,263,725
         16.9 %  
_________________
 
(1)
As disclosed in a Schedule 13D filed on February 16, 2012, Aureus Investments LC, a Utah limited liability company, directly owns 4,907,683 shares of our Common Stock. Aureus Investments LC is wholly-owned subsidiary of AFT 101 Irrevocable Trust, whose sole trustee and beneficiary is Debra Anderton, wife of Les Anderton. Les Anderton disclaims beneficial ownership of these shares.
 
(2)
Includes 160,731 shares that are subject to currently exercisable stock options.
   
(3)
Includes 785,582 shares that are subject to currently exercisable stock options.
   
(4)
Includes 100,000 shares that are subject to currently exercisable stock options.
   
(5)
Includes 50,000 shares that are subject to currently exercisable stock options.
 
 
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Equity Compensation Plan Information

The Company has two plans under which stock options are currently outstanding or pursuant to which stock options may be granted, the 2009 Employee, Director and Consultant Stock Option Plan and the 2012 Employee, Director and Consultant Stock Option Plan. The terms of each plan are substantially the same.
 
Options granted under each plan may be incentive stock options qualified under Section 422 of the Internal Revenue Code or non-qualified stock options. In October 2012, the Company approved the 2012 Employee, Director and Consultant Stock Option Plan (“the Plan”) and authorized an additional option pool of 7,500,000 shares. Under the terms of both plans stock options typically vest over a 3 year period and have a life of 10 years from the date granted. The Company has the right to accelerate the option vesting of certain employees who terminated their employment subsequent to issuance, but agree to work in a consulting capacity.
 
The following table provides information regarding the shares of Common Stock authorized for issuance under the Company’s equity compensation plans as of December 31, 2012:
 
Plan
Expiration
 
Original Number
of Shares
   
Options Granted,
Net of Forfeitures
 During 2012
   
Options Outstanding
at December 31, 2012
   
Weighted-average
exercise price
of outstanding
options
   
Number of securities
remaining available
 for future issuance
 under equity
compensation plans
 
2009 Plan
 August 1, 2019
    1,833,333       1,001,285 (1)     2,784,619 (1)   $ 0.35       63,333 (2)
2012 Plan
October 2, 2022
    7,500,000       4,600,000       4,600,000     $ 0.35       2,900,000  
 
 
(1)
As of December 31, 2012 there were 951,285 shares outstanding that were issued out of the 2009 Stock Plan as non-qualified options.
 
 
(2)
As of December 31, 2012 there were 63,333 shares available for issuance as qualified options under the 2009 Stock Plan.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
In 2012, various notes with the founders were converted to convertible debentures with the Company. Terry Anderton, Les Anderton and Joakim Lindblom converted their notes payable – related party due to the Company in October 2012 to convertible debentures in the amount of $565,372.

 Credit agreements exist with Terry B. Anderton and Les V. Anderton that allow Trunity to borrow up to $0.9 million, as needed, to fund working capital needs. These agreements carried an interest rate of 10% and expired in September and December of 2012; however, these agreements have been extended indefinitely with Board consent.  At December 31, 2011, Terry Anderton, Les Anderton, and Joakim Lindblom had Company loans of $22,041, $25,000 and $22,000, respectively. At December 31, 2012, Terry Anderton, Les Anderton, and Joakim Lindblom had Company loans of $10,066, $28,401 and $15,510, respectively, which all remain outstanding at the end of the period.

 
67
 
 
Reverse Merger with BTI

Trunity, Inc. was formed on July 28, 2009 through the acquisition of certain intellectual property by its three founders, Terry B. Anderton, Dr. Joakim Lindblom and Les V. Anderton.  In early 2012, the Company became a publicly-traded company through a reverse merger with Brain Tree International, Inc., a Utah corporation (“BTI”). At the time of the reverse merger, BTI was a shell company with no assets.

On January 24, 2012, the Company, Trunity, Inc. and Trunity Acquisition Corporation (“TAC”), a wholly-owned subsidiary of the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, on January 24, 2012, TAC merged with and into Trunity, Inc. with Trunity, Inc. remaining as the surviving corporation and a wholly-owned subsidiary of the Company (the “Merger”). As consideration for the Merger, as of the closing of the Merger, (i) each of the 961,974 shares of common stock of the Company owned by Trunity, Inc. was cancelled, (ii) each issued and outstanding share of common stock of Trunity, Inc. was converted into the right to receive one share of the common stock of the Company; and (iii) each share of TAC was converted into one share of Trunity common stock. As a result of the Merger, the former shareholders of Trunity, Inc. held 99% of the common stock of the Company.
 
In order to facilitate the reverse merger transaction, immediately prior to execution of the Merger Agreement, Trunity, Inc. acquired a 90.1% interest in BTI pursuant to a Stock Purchase Agreement among BTI and the three principal shareholders of the Company. As a result of the transaction, Trunity, Inc. acquired 961,974 BTI shares for the price of $325,000 plus 325,000 shares of Trunity, Inc. common stock. As part of the transaction, on January 24, 2012, immediately prior to the Merger, BTI reincorporated in Delaware and changed its name from Brain Tree International, Inc. to Trunity Holdings, Inc. Pursuant to the reincorporation, 105,064 minority shares of BTI automatically converted into the same number of common stock of the Company.

Director Independence
 
We do not have securities listed on a national securities exchange or in an inter-dealer quotation system. As such, there is no requirement that a majority of the members of our Board of Directors be independent. Nonetheless, our Board of Directors, in the exercise of reasonable business judgment, determined that a majority of our directors should qualify as independent directors pursuant to SEC rules and regulations and the independence standards of the listing requirements of The NASDAQ Stock Market. Under these standards, a director is not “independent” if he or she has certain specified relationships with the Company or any other relationships that, in the opinion of the Board, would interfere with his exercise of independent judgment as a director.
 
In particular and subject to some exceptions, the NASDAQ rules generally provide that a director will not be independent if:
 
●
the director is, or in the past three years has been, employed by the Company or any of its subsidiaries;
   
●
the director has an immediate family member who is, or in the past three years has been, an executive officer of the Company or any of its subsidiaries;
   
●
the director or a member of the director’s immediate family has received payments from the Company of more than $120,000 during any period of twelve consecutive months within the past three years other than for service as a director;
   
●
the director or a member of the director’s immediate family is a current partner of our independent auditors, or is, or in the past three years, has been, employed by our independent auditors in a professional capacity and worked on the Company’s audit;
   
●
the director or member of the director’s immediate family is, or in the past three years has been, employed as an executive officer of a Company where the Company’s executive officer serves on the compensation committee; or
   
●
the director or a member of the director’s immediate family is a partner in, or a controlling stockholder or an executive officer of, an entity that makes payments to or receive payments from the Company in an amount which, in any fiscal year during the past three years, exceeds the greater of $200,000 or 5% of the other entity’s consolidated gross revenues.
 
 
68
 
 
Based on its review of the foregoing standards, the Board of Directors has affirmatively determined that our independent directors are: David Breukelman, Jude Blake and Richard Davis.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
The following table presents fees billed for professional audit services rendered by Cherry, Bekaert, L.L.P. (“CB”), the Company’s current principal accounting firm, for the audit of the Company’s annual financial statements for 2011 and 2012, review of the quarterly financial statements for 2011 and 2012 and fees billed for other services rendered by CB in 2011 and 2012.
   
2011
   
2012
 
Audit fees
  $ 67,170     $ 68,500  
Audit-related fees
  $ 21,150     $ -0-  
Tax fees
  $ -0-     $ -0-  
All other fees
  $ -0-     $ -0-  
Total
  $ 88,320     $ 68,500  

Audit Fees — This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.
 
Audit-Related Fees — This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the Securities and Exchange Commission and other accounting consulting.
 
Tax Fees — This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
 
All Other Fees — This category consists of fees for other miscellaneous items.

In accordance with existing requirements of the Sarbanes-Oxley Act, our Board of Directors has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure, the Board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the Board, or, in the period between meetings, by a designated member of Board. Any such approval by the designated member is disclosed to the entire Board at the next meeting. The audit and tax fees paid to the auditors with respect to 2011 were pre-approved by the entire Board of Directors. This includes audit services, audit-related services, tax services and other services. All of the fees listed above have been approved by the Board.
 
 
69
 
 
PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
Exhibit Number
 
Exhibit Description
     
3.1
 
Certificate of Incorporation of Trunity Holdings, Inc. dated as of January 18, 2012 *
     
3.2
 
Bylaws of Trunity Holdings, Inc. *
     
3.3
 
Certificate of Ownership and Merger dated as of January 24, 2012, between Trunity Holdings, Inc. and Brain Tree International, Inc.**
     
4.1   Form of Series A 10% Unsecured Convertible Redeemable Debenture Due July 2014**
     
4.2   Form of Series B 10% Unsecured Convertible Redeemable Debenture Due August 2014**
     
10.1
 
Stock Purchase Agreement between dated as of January 24, 2012 by and among George Norman, Donna Norman, Lane Clissold, Trunity Holdings, Inc. and Trunity, Inc. *
     
10.2
 
Agreement and Plan of Merger, dated as of January 24, 2012 by and among Brain Tree International, Inc. and Trunity Holdings, Inc. *
     
10.3
 
Agreement and Plan of Merger, dated as of January 24, 2012 by and among Trunity Holdings, Inc., Trunity, Inc. and Trunity Acquisition Corporation  *
     
10.4
 
Trunity Holdings, Inc. 2012 Employee, Director and Consultant Stock Option Plan.**
     
10.5
 
Investment Project Contract dated as of March 20, 2013, among Trunity, InnSoluTech LLP and Educom Ltd.**
     
10.6
 
Share Purchase Agreement dated as of March 20, 2013, between Trunity and InnSoluTech LLP.**
     
10.7
 
License Agreement dated as of March 20, 2013, between Trunity and Educom Ltd.**
     
10.8   Form of Indemnification Agreement between Trunity and its Directors**
     
14   Code of Ethics**
     
21
 
Subsidiaries of the Company **
     
31.1
 
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 **
     
31.2   Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 **
     
32
 
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to U.S.C. Section 1350 **
     
101 INS
 
XBRL Instance Document***
     
101 SCH
 
XBRL Schema Document***
     
101 CAL
 
XBRL Calculation Linkbase Document***
     
101 DEF
 
XBRL Definition Linkbase Document***
     
101 LAB
 
XBRL Labels Linkbase Document***
     
101 PRE
 
XBRL Presentation Linkbase Document***

*  Filed with the Company’s Current Report on Form 8-K filed with the SEC on January 31, 2012.
 
** Filed herewith.
 
*** The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

 
70
 
 
SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
 
TRUNITY HOLDINGS, INC.
 
       
Dated:  April 16, 2013    
By:  
/s/ Terry B. Anderton     
 
   
Terry B. Anderton
On Chief Executive Officer
 
                
 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
 
Signature
 
Title
 
Date
         
/s/ Dr. Joakim Lindblom
 
Executive Vice President, Chief Technology Officer, Secretary a nd Director
 
April 16, 2013
   
 
   
         
/s/ David Breukelman
 
Director
 
April 16, 2013
         
         
/s/ Jude Blake
 
Director
 
April 16, 2013
         
         
/s/ Richard H. Davis
 
Director
 
April 16, 2013
 
 
 
69
 
Exhibit 3.3
STATE OF DELAWARE
CERTIFICATE OF OWNERSHIP

 SUBSIDIARY INTO PARENT
 Section 253
CERTIFICATE OF OWNERSHIP
MERGING
 
BRAIN TREE INTERNATIONAL, INC.
a Utah corporation
 
INTO
 
TRUNITY HOLDINGS, INC.
a Delaware corporation

(Pursuant to Section 253 of the General Corporation Law of Delaware)

Trunity Holdings Inc. (“Trunity”), a corporation incorporated on the 18th day of  January, 2012 pursuant to the provisions of the General Corporation Law of the State of Delaware (the “Corporation”);

DOES HEREBY CERTIFY that this Corporation owns 90.1% of the capital stock of Brain Tree International Inc. (“Brain Tree”), a corporation incorporated on the 26 th day of July, 1983, pursuant to the provisions of the Utah Revised Business Corporation Act by a resolution of its Board of Directors duly adopted by unanimous written consent signed on the 24th day of January, 2012, determined to and did merge into itself said Brain Tree, which resolution is in the following words to wit:

WHEREAS this Corporation lawfully owns 90.1% of the outstanding stock of Brain Tree International, Inc., a corporation organized and existing under the laws of  Utah; and

WHEREAS , this Corporation desires to merge into itself the said Brain Tree, pursuant to the Agreement and Plan of Merger which is attached as Exhibit “A,” and to be possessed of all of the estate, property rights, privileges and franchises of said corporation,

NOW, THEREFORE, BE IT RESOLVED, that this Corporation merge into itself said Brain Tree and assume all of its liabilities and obligations;

FURTHER RESOLVED that Brain Tree relinquishes its corporate name and assumes in place thereof the name Trunity Holdings, Inc.;

FURTHER RESOLVED, that an authorized officer of this Corporation be and he/she is hereby directed to make and execute a certificate of ownership setting forth a copy of the resolution to merge said Brain Tree and assume its liabilities and obligations, and the date of adoption thereof, and to file the same in the office of the Secretary of State of Delaware, and a certified copy thereof in the office of the Recorder of Deeds of Kent County; and

FURTHER RESOLVED , that the officers of this Corporation be and they hereby are authorized and directed to do all acts and things whatsoever, whether within or without the State of Delaware; which may be in any way necessary or proper to effect said merger.

IN WITNESS WHEREOF , said parent Corporation has caused its corporate seal to be affixed and this certificate to be signed by an authorized officer this 24th day of January, 2012.

 
 
TRUNITY HOLDINGS, INC.
   
 
By: /s/ Terry Anderton
 
Name: Terry Anderton
 
Title:  President
 
 
 
 

 
Exhibit 4.1
 
TRUNITY HOLDINGS, INC.

ACCREDITED INVESTOR
SUBSCRIPTION AGREEMENT
 
This Accredited Investor Subscription Agreement (“Agreement”) is entered into as of the ____ day of _____________, 2012, by and between Trunity Holdings, Inc. a Delaware corporation (the “Company”), and the undersigned investor (“Investor”).  If more than one person signs this Agreement as an investor, then all references to Investor in this Agreement include the co-investor(s), jointly and severally.
 
1.            Subscription .
 
1.1           Investor hereby irrevocably agrees to purchase from the Company a Series B Unsecured Redeemable Convertible Debenture (the “Debenture”) in the principal amount of $______________, subject to acceptance by the Company.  The Debenture shall be convertible into units of the Company’s securities (“Units”) at a price of $.35 per Unit.  Each Unit shall consist of one share of the Company’s Common Stock (a “Share”) and a two-year warrant (a “Warrant”) to purchase one Share of Common Stock (a “Warrant Share”) at an exercise price of $.40 per share.  The Debenture, Shares, Warrants and Warrant Shares are referred to hereafter as the “Securities.”
 
1.2           Investor will pay the total purchase price to the Company in immediately available funds immediately upon the Company’s acceptance of this Agreement.
 
2.            Approval and Acceptance .  The effectiveness of this Agreement is subject to acceptance by the Company by signing below where indicated.  If this Agreement is not approved and accepted, then the Company will notify Investor and return any funds Investor may have delivered to the Company promptly after non-acceptance.
 
3.            Disclosure .  Investor acknowledges that Investor received, carefully read and understands the following documents relating to the Company (the “Disclosure Documents”):
 
 
·
Term Sheet summarizing the Offering of Debentures, attached as Exhibit “A” ;
 
 
·
Report on Form 8-K/A filed by the Company with the Securities and Exchange Commission on May 9, 2012, as amended on June 7, 2012, including risk factors and Company financial information, available at www.sec.gov (the “8-K Report”);
 
 
·
Report on Form 10-Q filed by the Company with the Securities and Exchange Commission on May 21, 2012, available at www.sec.gov ;
 
 
·
Form of Debenture, attached as Exhibit “B ”.
 
 
·
Form of Warrant, attached as Exhibit “C” .
 
 
 
 
 
Investor also acknowledges and agrees that:
 
 
·
The Company has made available to Investor, or to Investor’s attorney, accountant or representative, all other documents that Investor has requested;
 
 
·
Investor has requested all documents and other information that Investor has deemed necessary or appropriate for purposes of evaluating a potential investment in the Company and purchasing the Debenture;
 
 
·
The Company has provided satisfactory answers to all questions concerning the potential investment in the Company; and
 
 
·
Investor has carefully considered and has, to the extent Investor believes such discussion necessary, discussed with Investor’s professional legal, tax and financial advisers the suitability of an investment in the Company for Investor’s particular tax and financial situation.
 
4.            Investor Status .  Investor certifies that Investor is an “ Accredited Investor ” as defined in Regulation D of the Securities Act of 1933, as indicated on Exhibit “D” attached.
 
5.            Other Securities Issues .  Investor represents and warrants to the Company that:
 
5.1            Risk of Loss .  Investor recognizes that the Company is a startup enterprise with a limited operating history and substantial accumulated losses and that an investment in the Company is speculative and involves substantial risks that could result in the loss of Investor’s entire investment.  Investor has carefully read and understood the Risk Factors set forth in the 8-K Report.  Investor is able, without impairing Investor’s financial condition, to hold the Securities for an indefinite period and to suffer a complete loss of Investor’s investment in the Securities.
 
5.2            No Minimum .  Investor acknowledges and understands that there is no minimum principal amount of Debentures which must be sold in the subject offering of up to $1,809,700 principal amount of Debentures (the “Offering”) and that, consequently, upon closing of the sale contemplated by this Agreement the Company may immediately use the purchase funds as working capital.  Investor recognizes that his investment may be jeopardized by the Company’s failure to raise sufficient funds after closing on his Debenture purchase and that due to such failure the Company may have to cease operations.
 
5.3            Investment Intent .  Investor certifies that he is purchasing the Debenture for investment for Investor’s own account and not on behalf of any other person, nor with a view to, or for resale or other distribution of the Securities.
 
5.4            No Registration .  Investor acknowledges and understands that the Securities (a) have not been registered under either federal or state securities laws, (b) are being offered and sold to Investor pursuant to exemptions from registration under the Securities Act of 1933 and comparable state securities exemptions, and (c) no federal or state agency has made any finding or determination as to the fairness of this Offering for investment, nor any recommendation or endorsement of the Securities.
 
 
 
 
 
5.5            Limited Reliance .  Investor has relied solely on the information contained in this Agreement and the Disclosure Documents in making a decision to acquire the Debenture.  Investor has not relied on any representations or warranties made by anyone apart from those set forth in this Agreement and in the Disclosure Documents.
 
5.6            Legend .  Investor consents to the placement of a legend on the certificates that represent the Shares in substantially the following form:
 
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR REGISTERED NOR QUALIFIED UNDER ANY STATE SECURITIES LAWS.  SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION, SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED.”
 
and any other legend the Company determines is authorized or required pursuant to this Agreement.
 
5.7            Restrictions on Transfer .  Investor understands and acknowledges that, in addition to the restrictions on transfer of the Securities, as set forth herein, (a) no assignment, sale, transfer, exchange or other disposition of the Securities or other securities of the Company can be made except in accordance with applicable federal and state securities laws; (b) the Securities may not be sold or otherwise distributed in the absence of registration of the Securities or an exemption from the registration requirements of federal and state securities laws; and (c) the Company is not obligated to take any actions to register the Securities or make available any exemptions from federal or state registration requirements.
 
5.8            Residence and Information .  Investor certifies that Investor is a resident of the state set forth below and that all information in this Agreement and provided pursuant to this Agreement is true and correct in all material aspects.
 
5.9            Independent Advice .  Investor understands that this Agreement contains provisions that may have significant legal, financial and tax consequences for Investor.  Investor acknowledges that the Company has recommended that Investor seek independent legal, tax and financial advice before entering into this Agreement.
 
6.            Indemnification by Investor .  Investor agrees to indemnify and hold harmless the Company and its officers, directors, agents, representatives and employees from and against all liability, damage, loss, cost, fees, and expense (including reasonable paralegal and attorneys’ fees, whether incurred pre-suit, or related to litigation or any appellate proceeding) which any of them incurs directly or indirectly by reason of (a) the failure of the Investor to fulfill any of the terms or conditions of this Agreement, (b) any inaccuracy or omission in the information furnished to the Company by Investor, or (c) any breach of any representation or warranty made by the Investor in this Agreement (including all exhibits hereto), or in any document provided by the Investor to the Company in connection with the subject matter of this Agreement.
 
 
 
 
 
7.            Confidentiality .  Investor recognizes that, due to the nature of Investor’s relationship with the Company, Investor will have access to, and that there will be disclosed during the course of such relationship, Confidential Information owned by the Company.  As used, “Confidential Information” means all nonpublic information, data, and materials relating to any business or other activity of the Company (and any third party which the Company is under an obligation to keep confidential and that is maintained by the Company as confidential) or used by the Company or such third parties in their business or other activity, either now or in the future.  Investor expressly acknowledges and agrees that disclosure of the Confidential Information of the Company would severely affect the Company’s business and/or the business of the Company’s clients and provide the recipient of the Confidential Information with a substantial and unfair competitive advantage.  Therefore, during the term of Investor’s relationship with the Company and at all times thereafter, regardless of the circumstances surrounding any termination of this relationship, Investor agrees to keep secret the Confidential Information and all confidential matters relating to the Company entrusted to Investor or learned by Investor and to not use or attempt to use for any purpose whatsoever (other than the furtherance of the Company’s business), or disclose to any person, any Confidential Information.
 
8.            Transfer Restrictions .  Investor understands that the Securities are “restricted securities” under the Securities Act of 1933 in that the Securities will be acquired from the Company in a transaction not involving a public offering, and that the Securities may not be resold without registration or an exemption under the Act.  In this connection, Investor understands the resale limitations imposed by the Act and is familiar with SEC Rule 144, as presently in effect, and, to the extent this Rule applies, the conditions which must be met in order for that Rule to be available for resale of “restricted securities.”
 
9.            Arbitration .  If any dispute, controversy, or claim arises between the parties out of or in relation to this Agreement, or the breach, termination, or invalidity thereof, both parties by mutual negotiation shall attempt to come to a reasonable settlement of the same as soon as possible.  If the parties are unable to reach a settlement within 30 days from the first notification of the dispute in writing, the same shall be settled by binding arbitration.  The appointing authority shall be the American Arbitration Association (“AAA”) office located in Boston, Massachusetts, and the case shall be administered by the same authority in accordance with its procedures for cases under the AAA’s Commercial Arbitration Rules.  The place of arbitration shall be Boston, Massachusetts, or such other location as the parties may agree.  The number of arbitrators shall be one, unless the parties cannot agree on a single arbitrator.  In such event, the parties shall each choose one arbitrator, and these two arbitrators shall choose a third arbitrator who shall preside over the proceedings.  The award rendered by the arbitrators shall be final and binding upon both parties concerned, and judgment upon the award may be entered in any court having jurisdiction thereof.  The allocation of the expenses of the arbitration shall be effected by the arbitration decision.  Notwithstanding the foregoing, either party may seek injunctive relief in any court of competent jurisdiction.
 
10.            General Provisions .  This Agreement will be enforced, governed and construed exclusively under the laws of the State of Delaware.  The parties consent to the jurisdiction of and venue in any appropriate court in Essex County, Massachusetts, for enforcement of any arbitration award. This Agreement is binding upon Investor, Investor’s heirs, estate, legal representatives, successors and assigns, and is for the benefit of the Company, its successors and assigns.  If any portion of this Agreement is held to be invalid, the remaining terms of this Agreement shall remain in full force and effect to the extent possible.  This Agreement constitutes the entire agreement of the parties, and supersedes all previous agreements, written or oral, with regard to Investor’s purchase of a Debenture.  Any agreement to waive or modify any term of this Agreement must be in writing signed by both parties.  This Agreement may be executed in two or more counterparts, all of which shall constitute but one and the same instrument.  Except as specifically provided to the contrary, all monetary references herein are to United States Dollars.,
 
 
 
 
 
11.            Florida Residents .  The Securities referred to herein will be sold to, and acquired by, the holder in a transaction exempt under Section 517.061, Florida Statutes .  The securities have not been registered for sale in the State of Florida.  In addition, all Florida residents have the privilege of voiding their purchase within three days after the first tender of consideration is made by the purchaser to the Company, an agent of the Company, or an escrow agent or within three days after the availability of that privilege is communicated to such purchaser, whichever occurs later.  The availability of that privilege is hereby communicated to Investor.
 
12.             Forward-Looking Statements .  Investor acknowledges and understands the following:  The Disclosure Documents provided to prospective Investors contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Such forward-looking statements are based on the beliefs of the Company’s management as well as on assumptions made by and information currently available to the Company as of the date of the Disclosure Documents.  When used in the Disclosure Documents, the words “plan,” “will,” “may,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “project” and similar expressions, as they relate to the Company, are intended to identify such forward-looking statements.  Although the Company believes these statements are reasonable, prospective Investors should be aware that actual actions, operations and results could differ materially from those indicated by such forward-looking statements as a result of the risk factors included in the Disclosure Documents or other factors.  Prospective Investors should consider carefully these factors, as well as the other information and data included in the Disclosure Documents.  The Company cautions each prospective Investor, however, that this list of factors may not be exhaustive and that these or other factors, many of which are outside of the Company’s control, could have a material adverse effect on the Company and its ability to achieve its objectives.  Furthermore, the Company may not update or revise the forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.  Prospective Investors are cautioned not to place undue reliance on any of the forward-looking statements included in the Disclosure Documents.  All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements set forth above.
 
 
[Signature page to follow]
 
 
 
 
 
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT



 
 
___________________________
Print or Type Name of Investor

 
___________________________
Signature


 
___________________________
Print Name, Title


 
___________________________
date


 
___________________________
Address
 


_____________________________
(If Investor is not a US Citizen, please attach Form W-8BEN, Certificate of Foreign Status of Beneficial Owner)
Social Security Number/FEIN
 

 
ACCEPTANCE OF SUBSCRIPTION

This Subscription Agreement has been approved by the Company’s Board of Directors and is accepted for and on behalf of Trunity Holdings, Inc., as of ______________, 2012.
 
TRUNITY HOLDINGS, INC.



By:                                                                                                           
 
Name:                                                                                                
 
Title:                                                                                                           


 
 
 
EXHIBIT “A”

$1,809,700 Private Placement
of Trunity Holdings, Inc.
Series B Unsecured Redeemable Convertible Debentures (the “Debentures”)

August 1, 2012

TERM SHEET

Offered Debentures:
$ 1,809,700 principal amount of Series B Debentures
   
Maturity Date:
August 31, 2014
   
Interest Rate:
10% per year, payable quarterly in cash or stock, at the option of the holder
   
Conversion Price:
$.35 per Unit, with each Unit comprising one share of common stock and one two-year warrant to purchase a share of common stock for $.40 per share
   
Minimum Purchase:
$25,000, subject to reduction in discretion of Board
   
Commissions:
10% to Martinez-Ayme Securities, Inc. (“MAS”) for investors procured by MAS or by other concerns; no commissions for investors procured by Company affiliates.
   
Other Offering Expenses:
$7,500
   
Shares Outstanding at July 31, 2012: 1
36,103,983
   
Shares to be Outstanding Upon Conversion of Series A and Series B Debentures 2
41,818,268
   
No Minimum:
There is no minimum amount required to be raised in this Offering.  All subscription funds will be paid directly to the Company.
   
Use of Proceeds:
Working capital
   
Termination Date:
This Offering will terminate on September 30, 2012, unless extended by the Company in its sole discretion until no later than October 31, 2012.  The Company may terminate this Offering at any time in its sole discretion

 
1 Excludes (i) options and warrants to purchase 3,119,515 shares, with expiration dates ranging from August 2012 to February 2017 and exercise prices ranging from $.25 to $3.00; and (ii) 1,174,422 shares (543,714 investor conversion shares, 543,714 investor warrant shares and 86,994 broker’s warrant shares) underlying CAD$190,300 principal amount of Series A Debentures issued by the Company in Canada on July 25, 2012, on terms substantially equivalent to those set forth herein.
 
2   Excludes warrants underlying the Series A Debentures (including broker’s warrants) to purchase 630,708 shares of common stock expiring two years from conversion and warrants to purchase 5,170,571 shares of common stock underlying the $1,809,700 maximum principal amount of Series B Debentures offered.
 
 
 
 
 
EXHIBIT “B”
 
FORM OF DEBENTURE


THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (B) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE SELLER FURNISHES TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR SUCH OTHER EVIDENCE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY TO SUCH EFFECT.

Original Issue Date:   August ___, 2012

SERIES B 10% UNSECURED CONVERTIBLE REDEEMABLE DEBENTURE
 
DUE AUGUST ___, 2014
 
THIS SERIES B 10% UNSECURED DEBENTURE is one of a series of duly authorized and validly issued 10% Unsecured Convertible Redeemable Debentures of Trunity Holdings Inc., a Delaware corporation (the “ Company ”), having its principal place of business at 15 Green Street, Newburyport, Massachusetts 01950, designated as its 10% Unsecured Convertible Redeemable Debentures due August ___, 2014 (this debenture, the “ Debenture ” and, collectively with the other debentures of such series, the “ Debentures ”).
 
FOR VALUE RECEIVED, the Company hereby acknowledges itself indebted to, and promises to pay to, _______________________ or its registered assigns (the “ Holder ”), or shall have paid pursuant to the terms hereunder, the principal sum of $______________ on August ___, 2014 (the “ Maturity Date ”) or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with the provisions hereof.  This Debenture is subject to the following additional provisions:
 
Section 1 .                    Definitions .  For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Subscription Agreement for this Debenture and (b) the following terms shall have the following meanings:
 
“ Alternate Consideration ” shall have the meaning set forth in Section 5(b).
 
“ Bankruptcy Event ” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
 
 
 
 
 
“ Business Day ” means any day except any Saturday, any Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
 
“ Common Stock ” means the common stock in the capital of the Company.
 
“ Conversion Date ” shall have the meaning set forth in Section 4(a).
 
“ Conversion Price ” shall have the meaning set forth in Section 4(b).
 
“ Conversion Schedule ” means the Conversion Schedule in the form of Schedule 1 attached hereto.
 
“ Conversion Shares ” means, collectively, the shares of Common Stock issuable upon conversion of this Debenture in accordance with the terms hereof.
 
“ Debenture Register ” shall have the meaning set forth in Section 2(c).
 
“ Event of Default ” shall have the meaning set forth in Section 7(a).
 
“ Fundamental Transaction ” shall have the meaning set forth in Section 5(b)
 
“ Interest Conversion Shares ” shall have the meaning set forth in Section 2(a).
 
“ Interest Payment Date ” shall have the meaning set forth in Section 2(a).
 
“ Interest Share Amount ” shall have the meaning set forth in Section 2(a).
 
“ Massachusetts Courts ” shall have the meaning set forth in Section 8(d).
 
“ Notice of Conversion ” shall have the meaning set forth in Section 4(a).
 
“ Optional Redemption ” shall have the meaning set forth in Section 6(a)
 
“ Optional Redemption Amount ” means the sum of: (a) 110% of the then outstanding principal amount of the Debenture; (b) accrued but unpaid interest in respect of the Debenture; and (c) all liquidated damages and other amounts due in respect of the Debenture.
 
“ Optional Redemption Date ” shall have the meaning set forth in Section 6(a).
 
“ Optional Redemption Notice ” shall have the meaning set forth in Section 6(a).
 
 
 
 
 
“ Optional Redemption Notice Date ” shall have the meaning set forth in Section 6(a).
 
“ Optional Redemption Period ” shall have the meaning set forth in Section 6(a).
 
“ Original Issue Date ” means the date of the first issuance of the Debentures, regardless of any transfers of any Debenture and regardless of the number of instruments which may be issued to evidence such Debentures.
 
“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
 
“ Share Delivery Date ” shall have the meaning set forth in Section 4(c)(ii).
 
“ Subscription Agreement ” means the Subscription Agreement of even date between the Company and the original Holder, as amended, modified or supplemented from time to time in accordance with its terms.
 
“ Subsidiary ” shall mean any entity a majority of whose equity is directly or indirectly owned by the Company.
 
“ Trading Day ” means a day on which the New York Stock Exchange is open for business.
 
“ Unit ” means a unit of the Company’s securities consisting of one share of Common Stock and one Warrant.
 
“ Warrant ” means a warrant to purchase one share of Common Stock at a price of $0.40 per share expiring two years from the date of issuance, in the form attached as Annex B.
 
“ Warrant Shares ” means the shares of Common Stock issuable upon exercise of the Warrants.
 
Section 2.                        Interest .
 
a)            Payment of Interest in Cash or Kind . The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture at the rate of 10% per annum, payable quarterly on September 30, December 31, March 31 and June 30, beginning on the first such date after the Original Issue Date, on each Conversion Date (as to the principal amount then being converted), on each Optional Redemption Date (as to the principal amount then being redeemed) and on the Maturity Date (each such date, an “ Interest Payment Date ”) (if any Interest Payment Date is not a Business Day, then the applicable payment shall be due on the next succeeding Business Day), in cash or, at the Holder’s option, in duly authorized, validly issued, fully paid and non-assessable shares of Common Stock (the dollar amount to be paid in shares, the “ Interest Share Amount ”).  Payment of interest in shares of Common Stock shall occur by delivery to the Holder of a number of shares of Common Stock to be applied against such Interest Share Amount equal to the quotient of (x) the applicable Interest Share Amount divided by (y) the Conversion Price (the “ Interest Conversion Shares ”).
 
b)            Holder’s Election to Pay Interest in Cash or Shares of Common Stock .  Subject to the terms and conditions herein, the decision whether to pay interest hereunder in cash or shares of Common Stock shall be at the sole discretion of the Holder.  In the absence of written notice to the contrary delivered by the Holder to the Company at least 30 days before an Interest Payment Date, the interest due on that date shall be paid in shares of Common Stock calculated in accordance with Section 2 hereof.
 
 
 
 
 
c)            Interest Calculations . Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid interest and other amounts which may become due hereunder, has been made.  With respect to a conversion pursuant to Section 4, the payment of interest in shares of Common Stock shall occur pursuant to Section 4(c)(ii) herein and, solely for purposes of the payment of interest in shares, the Interest Payment Date shall be deemed the Conversion Date.  Interest shall cease to accrue with respect to any principal amount converted, provided that, the Company actually delivers the Conversion Shares within the time period required by Section 4(c)(ii) herein.  Interest hereunder will be paid to the person in whose name this Debenture is registered on the records of the Company regarding registration and transfers of this Debenture (the “ Debenture Register ”).
 
Section 3.                        Registration of Transfers and Exchanges .
 
a)            Different Denominations . This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different authorized denominations, as requested by the Holder surrendering the same.  No service charge will be payable for such registration of transfer or exchange.
 
b)            Investment Representations . This Debenture has been issued subject to certain investment representations of the original Holder set forth in the Subscription Agreement and may be transferred or exchanged only in compliance with the Subscription Agreement and applicable federal and state securities laws and regulations.
 
c)            Reliance on Debenture Register . Prior to due presentment for transfer to the Company of this Debenture, the Company and any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.
 
Section 4.                        Conversion .
 
a)            Voluntary Conversion . At any time after the Original Issue Date and until this Debenture is no longer outstanding, this Debenture shall be convertible, in whole or in part, into Units at the option of the Holder, at any time and from time to time.  The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “ Notice of Conversion ”), specifying therein the principal amount of this Debenture to be converted and the date on which such conversion shall be effected (such date, the “ Conversion Date ”).  If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder.  To effect conversions hereunder, the Holder shall not be required to physically surrender this Debenture to the Company unless the entire principal amount of this Debenture, plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Debenture in an amount equal to the applicable conversion.  The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s).  The Company may deliver an objection to any Notice of Conversion within 5 Business Days of deemed delivery of such Notice of Conversion.  In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less than the amount stated on the face hereof.
 
 
 
 
 
b)            Conversion Price .  The conversion price in effect on any Conversion Date shall be equal to $0.35, subject to adjustment herein (the “ Conversion Price ”).
 
c)            Mechanics of Conversion .
 
i.              Units Issuable Upon Conversion of Principal Amount .  The number of Units issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be converted by (y) the Conversion Price.
 
ii.              Delivery of Certificates Upon Conversion . Not later than five Trading Days after each Conversion Date (the “ Share Delivery Date ”), the Company shall deliver, or cause to be delivered, to the Holder (A) certificates representing the Conversion Shares and Warrants representing the number of Units being acquired upon the conversion of this Debenture, and (B) with respect to accrued and unpaid interest on the principal amount of this Debenture so converted (i) a bank check or (ii) Interest Conversion Shares in accordance with Section 2.
 
iii.              Failure to Deliver Certificates .  In the case of any Notice of Conversion, if certificates representing the Conversion Shares and Warrants (and, if applicable, the Interest Conversion Shares) are not delivered to or as directed by the applicable Holder by the fifth Trading Day after the Conversion Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificates, to rescind such Conversion, in which event the Company shall promptly return to the Holder any original Debenture delivered to the Company and the Holder shall promptly return to the Company the Common Stock and Warrant certificates representing the principal amount of this Debenture unsuccessfully tendered for conversion to the Company.
 
iv.              Obligation Absolute .  The Company’s obligations to issue and deliver the Conversion Shares and Warrants upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided , however , that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder.  In the event the Holder of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of this Debenture shall have been sought and obtained.  In the absence of such injunction, the Company shall issue Conversion Shares and Warrants, upon a properly noticed conversion.  Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 7 hereof for the Company’s failure to deliver Conversion Shares and Warrants within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.  The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
 
 
 
 
 
v.              Reservation of Shares Issuable Upon Conversion .  The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Debenture and exercise of the Warrants and payment of interest on this Debenture, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Debentures), not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the outstanding principal amount of this Debenture and exercise of all of the Warrants issuable upon conversion and payment of interest hereunder.  The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue in accordance with the terms of this Debenture or the exercise of the Warrant in accordance with its terms, be duly authorized, validly issued, fully paid and non-assessable.
 
vi.              Fractional Shares . No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Debenture.  As to any fraction of a share which Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.
 
vii.              Transfer Taxes .  The issuance of certificates for Conversion Shares and Warrants on conversion of this Debenture shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Debenture so converted and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.
 
 
 
 
 
Section 5.                        Certain Adjustments .
 
a)            Stock Dividends and Stock Splits .  If the Company, at any time while this Debenture is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment of interest on, the Debentures), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re classification. In addition, the exercise price of the Warrants to be issued upon subsequent conversion of the Debenture shall be adjusted in proportion to such adjustment to the Conversion Price.
 
b)            Fundamental Transaction . If, at any time while this Debenture is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “ Fundamental Transaction ”), then, upon any subsequent conversion of this Debenture, the Holder shall have the right to receive the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had converted the Debenture immediately prior to such Fundamental Transaction and had held the Conversion Shares and Warrants on the effective date of such Fundamental Transaction (the “ Alternate Consideration ”).  To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new Debenture consistent with the foregoing provisions and evidencing the Holder’s right to convert such Debenture into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 5(b) and ensuring that this Debenture (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
 
 
 
 
 
c)            Calculations .  All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.  For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.
 
d)            Notice to the Holder .
 
i.              Adjustment to Conversion Price .  Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
 
ii.              Notice to Allow Conversion by Holder .  If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Debenture, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Debenture Register, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.  The Holder is entitled to convert this Debenture during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice.
 
 
 
 
 
Section 6.                        Optional Redemption and Forced Conversion .
 
a)            Optional Redemption at Election of Company .  Subject to the provisions of this Section 6(a), the Company may deliver at any time a notice to the Holder (an “ Optional Redemption Notice ” and the date such notice is deemed delivered hereunder, the “ Optional Redemption Notice Date ”) of its irrevocable election to redeem any part or all of the then outstanding principal amount of this Debenture for cash in an amount equal to the Optional Redemption Amount on the 20th Business Day following the Optional Redemption Notice Date (such date, the “ Optional Redemption Date ”, such 20 Business Day period, the “ Optional Redemption Period ” and such redemption, the “ Optional Redemption ”).
 
b)            Redemption Procedure .  The payment of cash pursuant to an Optional Redemption shall be payable in full on the Optional Redemption Date.  Notwithstanding anything herein contained to the contrary, if any portion of the Optional Redemption Amount remains unpaid after such date, the Holder may elect, by written notice to the Company given at any time thereafter and upon return of funds paid by the Company on any portion of such Optional Redemption Amount, to invalidate such Optional Redemption, ab initio, and, with respect to the Company’s failure to honor the Optional Redemption, the Company shall have no further right to exercise any Optional Redemption. Notwithstanding anything to the contrary in this Section 6, the Company’s determination to redeem in cash under Section 6(a) shall be applied ratably among the Holders of then outstanding Debentures. The Holder may elect to convert the outstanding principal amount of the Debenture pursuant to Section 4 prior to actual payment in cash for any Optional Redemption under this Section 6 by the delivery of a Notice of Conversion to the Company during the Option Redemption Period.  The Company covenants and agrees that it will honor all Notices of Conversion tendered during the Option Redemption Period.
 
Section 7.                        Events of Default .
 
a)           “ Event of Default ” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
i.             any default in the payment of (A) the principal amount of any Debenture or (B) interest and other amounts owing to a Holder on any Debenture, as and when the same shall become due and payable (whether on a Conversion Date, the Maturity Date, by Optional Redemption or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within five Business Days;
 
ii.             the Company shall fail to observe or perform any other covenant or agreement contained in the Debentures which failure is not cured, if possible to cure, within 10 Business Days after notice of such failure sent by the Holder or by any other Holder to the Company; and
 
 
 
 
 
iii.             the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X)  shall be subject to a Bankruptcy Event.
 
b)            Remedies Upon Event of Default .  If any Event of Default occurs, the outstanding principal amount of this Debenture, plus accrued but unpaid interest and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash.  Commencing five Business Days after the occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the interest rate on this Debenture shall accrue at an interest rate equal to the lesser of 12% per annum or the maximum rate permitted under applicable law.  Upon the payment in full of this Debenture, the Holder shall promptly surrender this Debenture to or as directed by the Company.  In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.  Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 7(b).  No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
 
Section 8.                        Miscellaneous .
 
a)             Notices .  Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, by any form of electronic communication by means of which a written or typed copy is produced at the address of the Company, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other facsimile number or address as the Company may specify for such purpose by notice to the Holder delivered in accordance with this Section 8(a).  Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, by any form of electronic communication by means of which a written or typed copy is produced at the address of the Holder, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of the Holder appearing on the books of the Company, or if no such facsimile number or address appears, at the principal place of business of the Holder.  Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified on the signature page prior to 5:30 p.m. (New York City time), (ii) the date immediately following the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified on the signature page between 5:30 p.m. (New York City time) and 11:59 p.m. (New York City time) on any date, (iii) the next day following the date of transmission if sent by other electronic means; (iv) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service or (v) upon actual receipt by the party to whom such notice is required to be given.
 
b)            Absolute Obligation . Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and accrued interest, as applicable, on this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed.  This Debenture is a direct debt obligation of the Company.  This Debenture ranks pari passu with all other Debentures now or hereafter issued under the terms set forth herein.
 
 
 
 
 
c)            Lost or Mutilated Debenture .  If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, reasonably satisfactory to the Company.
 
d)            Governing Law .  All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflict of laws thereof.  Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Debenture (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in Suffolk County, Massachusetts (the “ Massachusetts Courts ”).  Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Massachusetts Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such Massachusetts Courts, or such Massachusetts Courts are improper or inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Debenture and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Debenture or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Debenture, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
 
e)            Waiver .  Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture.  The failure of the Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture.  Any waiver by the Company or the Holder must be in writing.
 
 
 
 
 
f)            Severability .  If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.
 
g)            Next Business Day .  Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
h)            Headings .  The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall not be deemed to limit or affect any of the provisions hereof.
 
i)            Assumption .  Any successor to the Company or any surviving entity in a Fundamental Transaction shall (i) assume, prior to such Fundamental Transaction, all of the obligations of the Company under this Debenture and the other Transaction Documents pursuant to written agreements in form and substance satisfactory to the Holder (such approval not to be unreasonably withheld or delayed) and (ii) issue to the Holder a new debenture of such successor entity evidenced by a written instrument substantially similar in form and substance to this Debenture, including, without limitation, having a principal amount and interest rate equal to the principal amount and the interest rate of this Debenture and having similar ranking to this Debenture, which shall be satisfactory to the Holder (any such approval not to be unreasonably withheld or delayed).  The provisions of this Section 8(i) shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations of this Debenture.
 
j)            Time of the Essence .  Time shall be of the essence of this Debenture.
 
k)            Currency .  All monetary references herein are to United States Dollars.
 

*********************

(Signature Pages Follow)


 
 
 
 
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above indicated.
 
 
TRUNITY HOLDINGS INC.
 
 
By:                                                                                     
Name:
Title:
Facsimile No. for delivery of Notices:                                                                                     


 
 
 

 
ANNEX A

NOTICE OF CONVERSION
 
The undersigned hereby elects to convert principal under the Series B 10% Unsecured Convertible Redeemable Debenture due August ___, 2014 of Trunity Holdings Inc., a Delaware corporation (the “ Company ”) in the original principal amount of $__________ (the "Debenture"), into Units of the Company, each Unit consisting of one share of Common Stock and a Warrant to purchase a share of Common Stock for $.40 per share, according to the conditions hereof, as of the date written below.  If shares of Common Stock and Warrants are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith.  No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.
 
Capitalized terms not otherwise defined herein shall have the meanings set forth in the Debenture.
 
Conversion calculations:
Date to Effect Conversion:                                                                                     
 
 
Principal Amount of Debenture to be Converted:
 
 
Payment of Interest in Common Stock __ yes  __ no
If yes, $_____ of Interest Accrued on Account of Conversion at Issue.
 
 
Number of shares of Common Stock and Warrants to be issued:
 
 
Signature:                                                                                     
 
 
Name:                                                                                     
 
Address for Delivery of Common Stock and Warrant Certificates:
 
 
 
 
 
 
Or
 
DWAC Instructions:
 
Broker No:                                                                
Account No:                                                                

 
 
 
 
 
ANNEX B

FORM OF WARRANT
 

 
 
 
 

Schedule 1

CONVERSION SCHEDULE

The Series B 10% Unsecured Convertible Redeemable Debenture due on August ___, 2014 in the original principal amount of $____________ is issued by Trunity Holdings Inc., a Delaware corporation.  This Conversion Schedule reflects conversions made under Section 4 of the above referenced Debenture.
 
Dated:

Date of Conversion
(or for first entry, Original Issue Date)
Amount of Conversion
Aggregate Principal
 Amount Remaining
Subsequent to Conversion
(or original Principal Amount)
Company Attest
 
       
       
       
       
       
       
       

 
 
 
 
EXHIBIT “C”

FORM OF WARRANT


 
NEITHER THIS WARRANT NOR THE WARRANT STOCK (AS HEREINAFTER DEFINED) HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR THE SECURITIES LAWS OF ANY STATE.  THIS WARRANT AND THE WARRANT STOCK MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE ACT AND SUCH LAWS.  THIS LEGEND SHALL BE ENDORSED UPON ANY WARRANT ISSUED IN EXCHANGE FOR THIS WARRANT.


Warrant No. ____
 
WARRANT
 
For the Purchase of Common Stock of
 
TRUNITY HOLDINGS, INC.
 
a Delaware corporation
 
VOID AFTER 5:00 P.M., EASTERN STANDARD TIME, ON _____________, ______.


_______ Shares
___________, _____

FOR VALUE RECEIVED, TRUNITY HOLDINGS, INC. , a Delaware corporation (the “ Company ”), hereby certifies that _____________, an individual (the “ Holder ”) is entitled, subject to the provisions of this warrant (“ Warrant ”), to purchase from the Company up to 50,000 shares of common stock (the “ Common Shares ”), par value $0.0001 per share (the “ Common Stock ”), of the Company at an exercise price per Common Share equal to $0.40 per Common Share  (the “ Exercise Price ”), during the period commencing on the date hereof and expiring at 5:00 P.M., Eastern Standard time, on ____________, _______.
 
The number of Common Shares to be received upon the exercise of this Warrant may be adjusted from time to time as hereinafter set forth.  The Common Shares deliverable upon such exercise, or the entitlement thereto upon such exercise, and as adjusted from time to time, are hereinafter sometimes referred to as “ Warrant Stock .”  The Warrants issued on the same date hereof bearing the same terms and conditions as this Warrant shall be collectively referred to as the “ Warrants .”
 
The Holder agrees with the Company that this Warrant is issued, and all the rights hereunder shall be held subject to, all of the conditions, limitations and provisions set forth herein.
 
 
 
 
 
 
1.
EXERCISE OF WARRANT
 
(a)            By Payment of Cash.   This Warrant may be exercised by its presentation and surrender to the Company at its principal office (or such office or agency of the Company as it may designate in writing to the Holder hereof), commencing on ________, 20__ (“ Date of Issuance ”) and expiring at 5:00 P.M., Eastern Standard time, on ________, 20__ (“ Expiration Date ”), with the Warrant Exercise Form attached hereto duly executed and accompanied by payment (either in cash or by certified or official bank check or by wire transfer, payable to the order of the Company) of the Exercise Price for the number of shares specified in such Form.
 
The Company agrees that the Holder hereof shall be deemed the record owner of such Common Shares as of the close of business on the date on which this Warrant shall have been presented and payment made for such Common Shares as aforesaid whether or not the Company or its transfer agent is open for business.  Certificates for the Common Shares so purchased shall be delivered to the Holder hereof within a reasonable time, not exceeding 15 days, after the rights represented by this Warrant shall have been so exercised.  If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder hereof to purchase the balance of the shares purchasable hereunder as soon as reasonably possible.
 
(b)            Cashless Exercise.   In lieu of the payment method set forth in Section 1(a) above, the Holder may elect to exchange all or some of this Warrant for the Common Shares equal to the value of the amount of this Warrant being exchanged on the date of exchange.  If the Holder elects to exchange this Warrant as provided in this Section 1(b), the Holder shall tender to the Company this Warrant for the amount being exchanged, along with written notice of the Holder’s election to exchange some or all of this Warrant, and the Company shall issue to the Holder the number of Common Shares computed using the following formula:
 
X  =  Y (A-B)  
A
 
Where:                      X =           The number of Common Shares to be issued to the Holder.
 
 
Y =
The number of Common Shares purchasable under the amount of this Warrant being exchanged (as adjusted to the date of such calculation).

A =           The Market Price of one Common Share.

B =           The Exercise Price (as adjusted to the date of such calculation).
 
The Warrant exchange shall take place on the date specified in the notice or if the date the notice is received by the Company is later than the date specified in the notice, on the date the notice is received by the Company.
 
As used herein in the phrase “ Market Price ” at any date shall be deemed to be the last reported sale price or the closing price of the Common Stock on any exchange (including the National Association of Securities Dealers Automated Quotation System (“ Nasdaq ”)) on which the Common Stock is listed or the closing price as quoted on the OTC Bulletin Board, or, in the case no such reported sale takes place on such day, the average of the last reported sales prices or quotations for the last five trading days, in either case as officially reported or quoted by the principal securities exchange or the OTC Bulletin Board, and if the Common Stock is not listed or quoted as determined in good faith by resolution of the Board of Directors of the Company, based on the best information available to it.
 
 
 
 
 
(c)            “Easy Sale” Exercise.   In lieu of the payment method set forth in Section 1(a) above, when permitted by law and applicable regulations (including rules of Nasdaq and Financial Industry Regulatory Authority (“ FINRA ”)), the Holder may pay the aggregate Exercise Price (the “ Exercise Amount ”) through a “same day sale” commitment from the Holder (and if applicable a broker-dealer that is a member of the FINRA (a “ FINRA Dealer ”)), whereby the Holder irrevocably elects to exercise this Warrant and to sell a portion of the shares so purchased to pay the Exercise Amount and the Holder (or, if applicable, the FINRA Dealer) commits upon sale (or, in the case of the FINRA Dealer, upon receipt) of such shares to forward the Exercise Amount directly to the Company.
 
 
2.
COVENANTS BY THE COMPANY
 
The Company covenants and agrees as follows:
 
(a)            Reservation of Shares.   During the period within which the rights represented by this Warrant may be exercised, the Company shall, at all times, reserve and keep available out of its authorized capital stock, solely for the purposes of issuance upon exercise of this Warrant, such number of its Common Shares as shall be issuable upon the exercise of this Warrant.  If at any time the number of authorized Common Shares shall not be sufficient to effect the exercise of this Warrant, the Company will take such corporate action as may be necessary to increase its authorized but unissued Common Shares to such number of shares as shall be sufficient for such purpose.  The Company shall have analogous obligations with respect to any other securities or property issuable upon exercise of this Warrant.
 
(b)            Valid Issuance, etc.   All Common Shares which may be issued upon exercise of the rights represented by this Warrant included herein will be, upon payment thereof, validly issued, fully paid, non-assessable and free from all taxes, liens and charges with respect to the issuance thereof.
 
(c)            Taxes.   All original issue taxes payable in respect of the issuance of Common Shares upon the exercise of the rights represented by this Warrant shall be borne by the Company, but in no event shall the Company be responsible or liable for income taxes or transfer taxes upon the issuance or transfer of this Warrant or the Warrant Stock.
 
(d)            Fractional Shares.   The Company shall not be required to issue certificates representing fractions of Common Shares.  In lieu of any fractional interests, the Company shall make a cash payment equal to the Exercise Price multiplied by such fraction.
 
 
 
 
 
3.
EXCHANGE OR ASSIGNMENT OF WARRANT
 
This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company for other Warrants of different denominations, entitling the Holder to purchase in the aggregate the same number of Common Shares purchasable hereunder.  Subject to the provisions of this Warrant and the receipt by the Company of any required representations and agreements, upon surrender of this Warrant to the Company with the Warrant Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without additional charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled.  In the event of a partial assignment of this Warrant, the new Warrants issued to the assignee and the Holder shall make reference to the aggregate number of shares of Warrant Stock issuable upon exercise of this Warrant.
 
 
4.
RIGHTS OF THE HOLDER
 
The Holder shall not, by virtue hereof, be entitled to any voting or other rights of a stockholder of the Company, either at law or in equity, and the rights of the Holder are limited to those expressed in this Warrant.
 
 
5.
ADJUSTMENT OF EXERCISE PRICE
 
(a)            Stock Splits, Subdivisions or Combinations; Common Stock Dividends; Reclassification.   If the Company, at any time while this Warrant is outstanding, (a) shall fix a record date for the effectuation of a split, subdivision or combination of the outstanding shares of Common Stock, (b) shall pay a stock dividend on its Common Stock, or (c) issue by reclassification of shares of Common Stock any shares of capital stock of the Company, then (i) the Exercise Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding after such event and (ii) the number of shares of the Warrant Stock shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such event.  Any adjustment made pursuant to this Section 5(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution or, in the case of a subdivision or re-classification, shall become effective immediately after the effective date thereof.
 
(b)            Subscription Rights.   If the Company, at any time while this Warrant is outstanding, shall fix a record date for the distribution to holders of its Common Stock, evidence of its indebtedness or assets or rights, options, warrants or other security entitling them to subscribe for or purchase, convert to, exchange for or otherwise acquire any security (excluding those referred to in Section 5(a) above), then in each such case the Exercise Price at which this Warrant shall thereafter be exercisable shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the per-share Market Price on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of Common Stock as determined by the Board of Directors in good faith, and the denominator of which shall be the Exercise Price as of such record date; provided, however, that in the event of a distribution exceeding 10% of the net assets of the Company, such fair market value shall be determined by an appraiser selected in good faith by the registered owners of a majority of the Warrant Stock then outstanding; and provided, further, that the Company, after receipt of the determination by such appraiser shall have the right to select in good faith an additional appraiser meeting the same qualifications, in which case the fair market value shall be equal to the average of the determinations by each such appraiser.  Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.
 
 
 
 
 
(c)            Rounding.   All calculations under this Section 5 shall be made to the nearest cent or the nearest l/l00th of a share, as the case may be.
 
(d)            Notice of Adjustment.   Whenever the Exercise Price is adjusted pursuant to this Section 5, the Company shall promptly deliver to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.  Such notice shall be signed by the chairman, president or chief financial officer of the Company.
 
(e)            Treasury Shares.   The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock by the Company.
 
(f)            Change of Control; Compulsory Share Exchange.   In case of (A) any Change of Control Transaction (as defined below) or (B) any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property (each, an “ Event ”), lawful provision shall be made so that the Holder shall have the right thereafter to exercise this Warrant for shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such Event, and the Holder shall be entitled upon such Event to receive such amount of shares of stock and other securities, cash or property as the shares of the Common Stock of the Company into which this Warrant could have been exercised immediately prior to such Event (without taking into account any limitations or restrictions on the exercisability of this Warrant) would have been entitled; provided, however, that in the case of a transaction specified in (A), above, in which holders of the Company’s Common Stock receive cash, the Holder shall have the right to exercise the Warrant for such number of shares of the surviving company equal to the amount of cash into which this Warrant is then exercisable, divided by the fair market value of the shares of the surviving company on the effective date of such Event.  The terms of any such Event shall include such terms so as to continue to give to the Holder the right to receive the securities, cash or property set forth in this Section 5(f) upon any exercise or redemption following such Event, and, in the case of an Event specified in (A), above, the successor corporation or other entity (if other than the Company) resulting from such reorganization, merger or consolidation, or the person acquiring the properties and assets, or such other controlling corporation or entity as may be appropriate, shall expressly assume the obligation to deliver the securities or other assets which the Holder is entitled to receive hereunder.  The provisions of this Section 5(f) shall similarly apply to successive Events. “ Change of Control Transaction ” means the occurrence of any (i) merger or consolidation of the Company with or into another entity, unless the holders of the Company’s securities immediately prior to such transaction or series of transactions continue to hold at least 50% of such securities following such transaction or series of transactions, (ii) a sale, conveyance, lease, transfer or disposition of all or substantially all of the assets of the Company in one or a series of related transactions or (iii) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (i) or (ii).
 
 
 
 
 
(g)            Notice of Certain Events .  If:
 
(i)           the Company shall declare a dividend (or any other distribution) on its Common Stock;
 
(ii)           the Company shall declare a special nonrecurring cash dividend on or a redemption of its Common Stock;
 
(iii)           the Company shall authorize the granting to the holders of all of its Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights;
 
(iv)           the approval of any stockholders of the Company shall be required in connection with any capital reorganization, reclassification of the Company’s capital stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; or
 
(v)           the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company;
 
then the Company shall cause to be filed at each office or agency maintained for the purpose of exercise of this Warrant, and shall cause to be delivered to the Holder, at least 30 calendar days prior to the applicable record or effective date hereinafter specified, a notice (provided such notice shall not include any material non-public information) stating (a) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (b) the date on which such reorganization, reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, transfer or share exchange; provided, however, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.  Nothing herein shall prohibit the Holder from exercising this Warrant during the 30-day period commencing on the date of such notice.
 
 
 
 
 
(h)            Increase in Exercise Price.   In no event shall any provision in this Section 5 cause the Exercise Price to be greater than the Exercise Price on the date of issuance of this Warrant, except for a combination of the outstanding shares of Common Stock into a smaller number of shares as referenced in Section 5(a) above.
 
 
6.
RESTRICTIONS ON EXERCISE
 
(a)            Investment Intent.   Unless, prior to the exercise of the Warrant, the issuance of the Warrant Stock has been registered with the Securities and Exchange Commission pursuant to the Act, the Warrant Exercise Form shall be accompanied by a representation of the Holder to the Company to the effect that such shares are being acquired for investment and not with a view to the distribution thereof, and such other representations and documentation as may be required by the Company, unless in the opinion of counsel to the Company such representations or other documentation are not necessary to comply with the Act.
 
 
7.
RESTRICTIONS ON TRANSFER
 
(a)            Transfer to Comply with the Securities Act of 1933.   Neither this Warrant nor any Warrant Stock may be sold, assigned, transferred or otherwise disposed of except as follows:  (1) to a person who, in the opinion of counsel satisfactory to the Company, is a person to whom this Warrant or the Warrant Stock may legally be transferred without registration and without the delivery of a current prospectus under the Act with respect thereto and then only against receipt of an agreement of such person to comply with the provisions of this Section 7 with respect to any resale, assignment, transfer or other disposition of such securities; (2) to any person upon delivery of a prospectus then meeting the requirements of the Act relating to such securities and the offering thereof for such sale, assignment, transfer or disposition; or (3) to any “affiliate” (as such term is used in Rule 144 promulgated pursuant to the Act) of the Holder.
 
(b)            Legend.   Subject to the terms hereof, upon exercise of this Warrant and the issuance of the Warrant Stock, all certificates representing such Warrant Stock shall bear on the face or reverse thereof substantially the following legend:
 
“The securities which are represented by this certificate have not been registered under the Securities Act of 1933, and may not be sold, transferred, hypothecated or otherwise disposed of until a registration statement with respect thereto is declared effective under such act, or the Company receives an opinion of counsel for the Company that an exemption from the registration requirements of such act is available.”
 
 
8.
LOST, STOLEN OR DESTROYED WARRANTS
 
In the event that the Holder notifies the Company that this Warrant has been lost, stolen or destroyed and provides (a) a letter, in form reasonably satisfactory to the Company, to the effect that it will indemnify the Company from any loss incurred by it in connection therewith, and/or (b) an indemnity bond in such amount as is reasonably required by the Company, the Company having the option of electing either (a) or (b) or both, the Company may, in its sole discretion, accept such letter and/or indemnity bond in lieu of the surrender of this Warrant as required by Section 1 hereof.
 
 
 
 
 
9.
SUBSEQUENT HOLDERS
 
Every Holder hereof, by accepting the same, agrees with any subsequent Holder hereof and with the Company that this Warrant and all rights hereunder are issued and shall be held subject to all of the terms, conditions, limitations and provisions set forth in this Warrant, and further agrees that the Company and its transfer agent, if any, may deem and treat the registered holder of this Warrant as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary.
 
 
10.
NOTICES
 
Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be effective upon personal delivery, via facsimile (upon receipt of confirmation of error-free transmission and mailing a copy of such confirmation, postage prepaid by certified mail, return receipt requested) or two business days following deposit of such notice with an internationally recognized courier service, with postage prepaid and addressed the other party at the following address, or at such other addresses as a party may designate by five days advance written notice to the other party hereto.
 
Company:
Trunity Holdings, Inc.
15 Green Street
Newburyport, Mass.  01950
Attention:  Terry Anderton, Chief Executive Officer
Fax:                                                                
Holder :
 
 
 
Fax:                                                                

 
11.
GOVERNING LAW; JURISDICTION
 
This Warrant shall be governed by and interpreted in accordance with the laws of the State of Delaware, without regard to its principles of conflict of laws.  Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Warrant may be brought against any party in the federal courts of Massachusetts or the state courts of the State of Massachusetts, and each of the parties consents to the jurisdiction of such courts and hereby waives, to the maximum extent permitted by law, any objection, including any objections based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions.
 
( Signature appears on the following page. )
 
 
 
 
IN WITNESS WHEREOF , the Company has caused this Warrant to be signed on its behalf, in its corporate name, by its duly authorized officer, all as of the day and year first above written.
 
 
TRUNITY HOLDINGS, INC.
 
 
 
By:                                                                
Terry Anderton
Chief Executive Officer
 

 
 
 
 
 
 
TRUNITY HOLDINGS, INC.
 
WARRANT EXERCISE FORM
 
 
The undersigned hereby irrevocably elects (A) to exercise the Warrant dated __________, 20__ (the “ Warrant ”), pursuant to the provisions of Section 1(a) of the Warrant, to the extent of purchasing _________ shares of the common stock, par value $0.0001 per share (the “ Common Stock ”), of Trunity Holdings, Inc. and hereby makes a payment of $________ in payment therefor, or (B) to exercise the Warrant to the extent of purchasing _________ shares of the Common Stock, pursuant to the provisions of Section 1(b) of the Warrant.  In exercising the Warrant, the undersigned hereby confirms that the Common Stock to be issued hereunder is being acquired for investment and not with a view to the distribution thereof.  Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below.  Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below.
 
 
 
Name of Holder
 
 
 
Signature of Holder
or Authorized Representative
 
 
Signature, if jointly held
 
 
 
Name and Title of Authorized
Representative
 
 
 
 
Address of Holder
 
 
 
Date

 
 
 
 

 
 
EXHIBIT “D”
TRUNITY HOLDINGS , INC.

ACCREDITATION
 
The undersigned represents and warrants that the he/she/it is an Accredited Investor pursuant to one or more of the following categories (initial applicable categories and sign below):
 
 
________
a.
A natural person (i.e., not an entity) whose individual net worth or joint net worth with spouse at the time of purchase, excluding homes, home furnishings and automobiles, and reflecting a deduction of all current debts and obligations to pay money, including   but not limited to   home mortgage   debt, exceeds $1,000,000.
 
 
________
b.
A natural person (i.e., not an entity) who had an individual income in excess of $200,000 in each of the two most recent years or joint income with spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same level of income in the current year.
 
 
________
c.
Any organization described in Section 501(c)(3) of the Internal Revenue Code, or any corporation, limited liability the Company, Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.
 
 
________
d.
A private business development company (as defined in Section 202(a)(22) of the Investment Advisers Act of 1940).
 
 
________
e.
Any bank as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the “Act”), or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; any insurance the Company as defined in Section 2(13) of the Act; any investment the Company registered under the Investment Company Act of 1940 (the “1940 Act”) or a business development the Company as defined in Section 2(a)(48) of the 1940 Act; any Small Business Investment The Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; or any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act which is either a bank, savings and loan association, insurance the Company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self directed plan, with investment decisions made solely by persons that are accredited Investors.
 
 
________
f.
Any trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person.  For purposes of this exemption, a sophisticated person is one who has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of the prospective investment.
 
 
________
g.
Any entity in which all the equity owners are accredited investors under the above subsections.
 

Signature and Title (if any) of Investor
 
 
Exhibit 4.2
 
 
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT OR (B) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE SELLER FURNISHES TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR SUCH OTHER EVIDENCE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY TO SUCH EFFECT.

[UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE WHICH IS FOUR MONTHS AND A DAY AFTER THE LATER OF (i) [INSERT THE CLOSING DATE], AND (ii) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY."]

Original Issue Date:   July ___, 2012

10% UNSECURED CONVERTIBLE REDEEMABLE DEBENTURE
 
DUE JULY ___, 2014
 
THIS 10% UNSECURED DEBENTURE is one of a series of duly authorized and validly issued 10% Unsecured Convertible Redeemable Debentures of Trunity Holdings Inc., a Delaware corporation (the “ Company ”), having its principal place of business at 15 Green Street, Newburyport, Massachusetts 01950, designated as its 10% Unsecured Convertible Redeemable Debentures due July ___, 2014 (this debenture, the “ Debenture ” and, collectively with the other debentures of such series, the “ Debentures ”).
 
FOR VALUE RECEIVED, the Company hereby acknowledges itself indebted to, and promises to pay to, _______________________ or its registered assigns (the “ Holder ”), or shall have paid pursuant to the terms hereunder, the principal sum of CAD$______________ 1 on July ___, 2014 (the “ Maturity Date ”) or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with the provisions hereof.  This Debenture is subject to the following additional provisions:
 
Section 1.                          Definitions .  For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Subscription Agreement for this Debenture and (b) the following terms shall have the following meanings:
 
“ Alternate Consideration ” shall have the meaning set forth in Section 5(b).
 
“ Bankruptcy Event ” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
 
 
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“ Business Day ” means any day except any Saturday, any Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the province of Ontario and the State of New York are authorized or required by law or other governmental action to close.
 
“ Common Stock ” means the common stock in the capital of the Company.
 
“ Conversion Date ” shall have the meaning set forth in Section 4(a).
 
“ Conversion Price ” shall have the meaning set forth in Section 4(b).
 
“ Conversion Schedule ” means the Conversion Schedule in the form of Schedule 1 attached hereto.
 
“ Conversion Shares ” means, collectively, the shares of Common Stock issuable upon conversion of this Debenture in accordance with the terms hereof.
 
“ Debenture Register ” shall have the meaning set forth in Section 2(c).
 
“ Event of Default ” shall have the meaning set forth in Section 7(a).
 
“ Fundamental Transaction ” shall have the meaning set forth in Section 5(b)
 
“ Interest Conversion Shares ” shall have the meaning set forth in Section 2(a).
 
“ Interest Payment Date ” shall have the meaning set forth in Section 2(a).
 
“ Interest Share Amount ” shall have the meaning set forth in Section 2(a).
 
“ New York Courts ” shall have the meaning set forth in Section 8(d).
 
“ Notice of Conversion ” shall have the meaning set forth in Section 4(a).
 
“ Optional Redemption ” shall have the meaning set forth in Section 6(a)
 
“ Optional Redemption Amount ” means the sum of: (a) 110% of the then outstanding principal amount of the Debenture; (b) accrued but unpaid interest in respect of the Debenture; and (c) all liquidated damages and other amounts due in respect of the Debenture.
 
 
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“ Optional Redemption Date ” shall have the meaning set forth in Section 6(a).
 
“ Optional Redemption Notice ” shall have the meaning set forth in Section 6(a).
 
“ Optional Redemption Notice Date ” shall have the meaning set forth in Section 6(a).
 
“ Optional Redemption Period ” shall have the meaning set forth in Section 6(a).
 
“ Original Issue Date ” means the date of the first issuance of the Debentures, regardless of any transfers of any Debenture and regardless of the number of instruments which may be issued to evidence such Debentures.
 
  “ Securities Act ” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
 
“ Share Delivery Date ” shall have the meaning set forth in Section 4(c)(ii).
 
“ Subscription Agreement ” means the Subscription Agreement, accepted by the Company as of July ___, 2012 between the Company and the original Holder, as amended, modified or supplemented from time to time in accordance with its terms.
 
“ Subsidiary ” shall mean any entity a majority of whose equity is directly or indirectly owned by the Company.
 
“ Trading Day ” means a day on which the New York Stock Exchange is open for business.
 
“ Unit ” means a unit of the Company’s securities consisting of one share of Common Stock and one Warrant.
 
“ Warrant ” means a warrant to purchase one share of Common Stock at a price of CAD$0.40 per share expiring two years from the date of issuance, in the form attached as Annex B.
 
“ Warrant Shares ” means the shares of Common Stock issuable upon exercise of the Warrants.
 
Section 2.                          Interest .
 
a)   Payment of Interest in Cash or Kind . The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture at the rate of 10% per annum, payable quarterly on September 30, December 31, March 31 and June 30, beginning on the first such date after the Original Issue Date, on each Conversion Date (as to the principal amount then being converted), on each Optional Redemption Date (as to the principal amount then being redeemed) and on the Maturity Date (each such date, an “ Interest Payment Date ”) (if any Interest Payment Date is not a Business Day, then the applicable payment shall be due on the next succeeding Business Day), in cash or, at the Holder’s option, in duly authorized, validly issued, fully paid and non-assessable shares of Common Stock (the dollar amount to be paid in shares, the “ Interest Share Amount ”).  Payment of interest in shares of Common Stock shall occur by delivery to the Holder of a number of shares of Common Stock to be applied against such Interest Share Amount equal to the quotient of (x) the applicable Interest Share Amount divided by (y) the Conversion Price (the “ Interest Conversion Shares ”).
 
 
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b)   Holder’s Election to Pay Interest in Cash or Shares of Common Stock .  Subject to the terms and conditions herein, the decision whether to pay interest hereunder in cash or shares of Common Stock shall be at the sole discretion of the Holder.  In the absence of written notice to the contrary delivered by the Holder to the Company at least 30 days before an Interest Payment Date, the interest due on that date shall be paid in shares of Common Stock calculated in accordance with Section 2 hereof.
 
c)   Interest Calculations . Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid interest and other amounts which may become due hereunder, has been made.  With respect to a conversion pursuant to Section 4, the payment of interest in shares of Common Stock shall occur pursuant to Section 4(c)(ii) herein and, solely for purposes of the payment of interest in shares, the Interest Payment Date shall be deemed the Conversion Date.  Interest shall cease to accrue with respect to any principal amount converted, provided that, the Company actually delivers the Conversion Shares within the time period required by Section 4(c)(ii) herein.  Interest hereunder will be paid to the person in whose name this Debenture is registered on the records of the Company regarding registration and transfers of this Debenture (the “ Debenture Register ”).
 
Section 3.                          Registration of Transfers and Exchanges .
 
a)   Different Denominations . This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different authorized denominations, as requested by the Holder surrendering the same.  No service charge will be payable for such registration of transfer or exchange.
 
b)   Investment Representations . This Debenture has been issued subject to certain investment representations of the original Holder set forth in the Subscription Agreement and may be transferred or exchanged only in compliance with the Subscription Agreement and applicable U.S. and Canadian federal, state and provincial securities laws and regulations.
 
c)   Reliance on Debenture Register . Prior to due presentment for transfer to the Company of this Debenture, the Company and any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.
 
Section 4.                          Conversion .
 
a)   Voluntary Conversion . At any time after the Original Issue Date and until this Debenture is no longer outstanding, this Debenture shall be convertible, in whole or in part, into Units at the option of the Holder, at any time and from time to time.  The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “ Notice of Conversion ”), specifying therein the principal amount of this Debenture to be converted and the date on which such conversion shall be effected (such date, the “ Conversion Date ”).  If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder.  To effect conversions hereunder, the Holder shall not be required to physically surrender this Debenture to the Company unless the entire principal amount of this Debenture, plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Debenture in an amount equal to the applicable conversion.  The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s).  The Company may deliver an objection to any Notice of Conversion within 5 Business Days of deemed delivery of such Notice of Conversion.  In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less than the amount stated on the face hereof .
 
 
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b)   Conversion Price .  The conversion price in effect on any Conversion Date shall be equal to CAD$0.35, subject to adjustment herein (the “ Conversion Price ”); provided , however , that, unless a Liquidity Event (as defined in the Subscription Agreement) has occurred on or prior to the Liquidity Deadline (as defined in the Subscription Agreement), then the Conversion Price will, immediately after the Liquidity Deadline, be reduced to CAD$0.32, without any further action on the part of the Holder.
 
c)   Mechanics of Conversion .
 
i.   Units Issuable Upon Conversion of Principal Amount .  The number of Units issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be converted by (y) the Conversion Price.
 
ii.   Delivery of Certificates Upon Conversion . Not later than five Trading Days after each Conversion Date (the “ Share Delivery Date ”), the Company shall deliver, or cause to be delivered, to the Holder (A) certificates representing the Conversion Shares and Warrants representing the number of Units being acquired upon the conversion of this Debenture, and (B) with respect to accrued and unpaid interest on the principal amount of this Debenture so converted (i) a bank check or (ii) Interest Conversion Shares in accordance with Section 2.
 
iii.   Failure to Deliver Certificates .  In the case of any Notice of Conversion, if certificates representing the Conversion Shares and Warrants (and, if applicable, the Interest Conversion Shares) are not delivered to or as directed by the applicable Holder by the fifth Trading Day after the Conversion Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificates, to rescind such Conversion, in which event the Company shall promptly return to the Holder any original Debenture delivered to the Company and the Holder shall promptly return to the Company the Common Stock and Warrant certificates representing the principal amount of this Debenture unsuccessfully tendered for conversion to the Company.
 
 
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iv.   Obligation Absolute .  The Company’s obligations to issue and deliver the Conversion Shares and Warrants upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided , however , that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder.  In the event the Holder of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of this Debenture shall have been sought and obtained.  In the absence of such injunction, the Company shall issue Conversion Shares and Warrants, upon a properly noticed conversion.  Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 7 hereof for the Company’s failure to deliver Conversion Shares and Warrants within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.  The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
 
v.   Reservation of Shares Issuable Upon Conversion .  The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Debenture and exercise of the Warrants and payment of interest on this Debenture, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Debentures), not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the outstanding principal amount of this Debenture and exercise of all of the Warrants issuable upon conversion and payment of interest hereunder.  The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue in accordance with the terms of this Debenture or the exercise of the Warrant in accordance with its terms, be duly authorized, validly issued, fully paid and non-assessable.
 
vi.   Fractional Shares . No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Debenture.  As to any fraction of a share which Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.
 
vii.   Transfer Taxes .  The issuance of certificates for Conversion Shares and Warrants on conversion of this Debenture shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Debenture so converted and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.
 
 
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Section 5.                          Certain Adjustments .
 
a)   Stock Dividends and Stock Splits .  If the Company, at any time while this Debenture is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment of interest on, the Debentures), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re classification. In addition, the exercise price of the Warrants to be issued upon subsequent conversion of the Debenture shall be adjusted in proportion to such adjustment to the Conversion Price.
 
b)   Fundamental Transaction . If, at any time while this Debenture is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “ Fundamental Transaction ”), then, upon any subsequent conversion of this Debenture, the Holder shall have the right to receive the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had converted the Debenture immediately prior to such Fundamental Transaction and had held the Conversion Shares and Warrants on the effective date of such Fundamental Transaction (the “ Alternate Consideration ”).  To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new Debenture consistent with the foregoing provisions and evidencing the Holder’s right to convert such Debenture into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 5(b) and ensuring that this Debenture (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
 
 
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c)   Calculations .  All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.  For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.
 
d)   Notice to the Holder .
 
i.   Adjustment to Conversion Price .  Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
 
ii.   Notice to Allow Conversion by Holder .  If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Debenture, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Debenture Register, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.  The Holder is entitled to convert this Debenture during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice.
 
Section 6.                          Optional Redemption and Forced Conversion .
 
a)   Optional Redemption at Election of Company .  Subject to the provisions of this Section 6(a), the Company may deliver at any time a notice to the Holder (an “ Optional Redemption Notice ” and the date such notice is deemed delivered hereunder, the “ Optional Redemption Notice Date ”) of its irrevocable election to redeem any part or all of the then outstanding principal amount of this Debenture for cash in an amount equal to the Optional Redemption Amount on the 20th Business Day following the Optional Redemption Notice Date (such date, the “ Optional Redemption Date ”, such 20 Business Day period, the “ Optional Redemption Period ” and such redemption, the “ Optional Redemption ”).
 
 
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b)   Redemption Procedure .  The payment of cash pursuant to an Optional Redemption shall be payable in full on the Optional Redemption Date.  Notwithstanding anything herein contained to the contrary, if any portion of the Optional Redemption Amount remains unpaid after such date, the Holder may elect, by written notice to the Company given at any time thereafter and upon return of funds paid by the Company on any portion of such Optional Redemption Amount, to invalidate such Optional Redemption, ab initio , and, with respect to the Company’s failure to honor the Optional Redemption, the Company shall have no further right to exercise any Optional Redemption. Notwithstanding anything to the contrary in this Section 6, the Company’s determination to redeem in cash under Section 6(a) shall be applied ratably among the Holders of then outstanding Debentures. The Holder may elect to convert the outstanding principal amount of the Debenture pursuant to Section 4 prior to actual payment in cash for any Optional Redemption under this Section 6 by the delivery of a Notice of Conversion to the Company during the Option Redemption Period.  The Company covenants and agrees that it will honor all Notices of Conversion tendered during the Option Redemption Period.
 
Section 7.                          Events of Default .
 
a)   “ Event of Default ” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
i.   any default in the payment of (A) the principal amount of any Debenture or (B) interest and other amounts owing to a Holder on any Debenture, as and when the same shall become due and payable (whether on a Conversion Date, the Maturity Date, by Optional Redemption or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within five Business Days;
 
ii.   the Company shall fail to observe or perform any other covenant or agreement contained in the Debentures which failure is not cured, if possible to cure, within 10 Business Days after notice of such failure sent by the Holder or by any other Holder to the Company; and
 
iii.   the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X)  shall be subject to a Bankruptcy Event.
 
b)   Remedies Upon Event of Default . If any Event of Default occurs, the outstanding principal amount of this Debenture, plus accrued but unpaid interest and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash.  Commencing five Business Days after the occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the interest rate on this Debenture shall accrue at an interest rate equal to the lesser of 12% per annum   or the maximum rate permitted under applicable law.  Upon the payment in full of this Debenture, the Holder shall promptly surrender this Debenture to or as directed by the Company.  In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.  Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 7(b).  No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
 
 
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Section 8.                          Miscellaneous .
 
a)   Notices .  Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, by any form of electronic communication by means of which a written or typed copy is produced at the address of the Company, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other facsimile number or address as the Company may specify for such purpose by notice to the Holder delivered in accordance with this Section 8(a).  Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, by any form of electronic communication by means of which a written or typed copy is produced at the address of the Holder, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of the Holder appearing on the books of the Company, or if no such facsimile number or address appears, at the principal place of business of the Holder.  Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified on the signature page prior to 5:30 p.m. (New York City time), (ii) the date immediately following the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified on the signature page between 5:30 p.m. (New York City time) and 11:59 p.m. (New York City time) on any date, (iii) the next day following the date of transmission if sent by other electronic means; (iv) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service or (v) upon actual receipt by the party to whom such notice is required to be given.
 
b)   Absolute Obligation . Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and accrued interest, as applicable, on this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed.  This Debenture is a direct debt obligation of the Company.  This Debenture ranks pari passu with all other Debentures now or hereafter issued under the terms set forth herein.
 
c)   Lost or Mutilated Debenture .  If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, reasonably satisfactory to the Company.
 
 
10
 
 
d)   Governing Law .  All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflict of laws thereof.  Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Debenture (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “ New York Courts ”).  Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Debenture and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Debenture or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Debenture, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
 
e)   Waiver .  Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture.  The failure of the Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture.  Any waiver by the Company or the Holder must be in writing.
 
f)   Severability .  If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.
 
 
11
 
 
g)   Next Business Day .  Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
h)   Headings .  The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall not be deemed to limit or affect any of the provisions hereof.
 
i)   Assumption .  Any successor to the Company or any surviving entity in a Fundamental Transaction shall (i) assume, prior to such Fundamental Transaction, all of the obligations of the Company under this Debenture and the other Transaction Documents pursuant to written agreements in form and substance satisfactory to the Holder (such approval not to be unreasonably withheld or delayed) and (ii) issue to the Holder a new debenture of such successor entity evidenced by a written instrument substantially similar in form and substance to this Debenture, including, without limitation, having a principal amount and interest rate equal to the principal amount and the interest rate of this Debenture and having similar ranking to this Debenture, which shall be satisfactory to the Holder (any such approval not to be unreasonably withheld or delayed).  The provisions of this Section 8(i) shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations of this Debenture.
 
j)   Time of the Essence .  Time shall be of the essence of this Debenture.
 
*********************

(Signature Pages Follow)


 
12
 
 
1 This Debenture is payable in Canadian Dollars, and all money references in this Debenture are to Canadian Dollars.

 
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above indicated.
 
 
TRUNITY HOLDINGS INC.
 
 
By:                                                                                     
Name:
Title:
Facsimile No. for delivery of Notices:                                                                                     



 
13
 
 
ANNEX A

NOTICE OF CONVERSION
 
The undersigned hereby elects to convert principal under the 10% Unsecured Convertible Redeemable Debenture due July ___, 2014 of Trunity Holdings Inc., a Delaware corporation (the “ Company ”) in the original principal amount of $__________ (the "Debenture"), into Units of the Company, each Unit consisting of one share of Common Stock and a Warrant to purchase a share of Common Stock for CAD$0.40 per share, according to the conditions hereof, as of the date written below.  If shares of Common Stock and Warrants are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith.  No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.
 
Capitalized terms not otherwise defined herein shall have the meanings set forth in the Debenture.
 
Conversion calculations:
Date to Effect Conversion:
 
 
Principal Amount of Debenture to be Converted:
 
 
Payment of Interest in Common Stock __ yes  __ no
If yes, $_____ of Interest Accrued on Account of Conversion at Issue.
 
 
Number of shares of Common Stock and Warrants to be issued:
 
 
Signature:                                                                                     
 
 
Name:
 
 
Address for Delivery of Common Stock and Warrant Certificates:
 
 
 
 
 
 
Or
 
 
DWAC Instructions:
 
Broker No:                                                                
Account No:                                                                           

 
 
 
14
 
 
ANNEX B

FORM OF WARRANT
 

 

 
15
 
 
Schedule 1

CONVERSION SCHEDULE

The 10% Unsecured Convertible Redeemable Debenture due on July ___, 2012 in the original principal amount of $____________ is issued by Trunity Holdings Inc., a Delaware corporation.  This Conversion Schedule reflects conversions made under Section 4 of the above referenced Debenture.
 
Dated:

Date of Conversion
(or for first entry, Original Issue Date)
Amount of Conversion
Aggregate Principal Amount Remaining Subsequent to Conversion
(or original Principal Amount)
Company Attest
 
       
       
       
       
       
       
       
 
 
 
16
 
Exhibit 10.4
 
 

Trunity Holdings, Inc., 15 Green Street, Newburyport, MA 01950
 


TRUNITY HOLDINGS, INC.

2012 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN

1.  
DEFINITIONS .

Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this 2012 Employee, Director and Consultant Stock Option Plan of Trunity Holdings, Inc., have the following meanings:

Administrator means the Board of Directors, unless it has delegated power to act on its behalf to a committee.

Acquisition has the meaning provided in Section 16.B.

Affiliate means a corporation which, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect.

Board of Directors means the Board of Directors of the Company.

Code means the United States Internal Revenue Code of 1986, as amended.

Committee means the Committee to which the Board of Directors has delegated power to act under or pursuant to the provisions of the Plan.

Common Stock means shares of the Company's common stock, $0.001 par value.

Company means Trunity Holdings, Inc., a Delaware corporation.

Disability or Disabled means permanent and total disability as defined in Section 22(e)(3) of the Code.

Fair Market Value of a Share of Common Stock means:

(1) If the Common Stock is listed on a national securities exchange or traded in the over-the-counter market and sales prices are regularly reported for the Common Stock, the average of the closing or last prices of the Common Stock on the Composite Tape or other comparable reporting system for the ten (10) consecutive trading days immediately preceding the applicable date;

(2) If the Common Stock is not traded on a national securities exchange but is traded on the over-the-counter market, if sales prices are not regularly reported for the Common Stock for the ten (10) days referred to in clause (1), and if bid and asked prices for the Common Stock are regularly reported, the average of the mean between the bid and the asked price for the Common Stock at the close of trading in the over-the-counter market for the ten (10) days on which Common Stock was traded immediately preceding the applicable date; and

 
 
 
 
Trunity Holdings, Inc., 15 Green Street, Newburyport, MA 01950
 
(3) If the Common Stock is neither listed on a national securities exchange nor traded in the over-the-counter market, in connection with an Incentive Stock Option, such value as the Administrator, in good faith, shall determine; and in connection with a Non-Qualified Option, the value determined by the Administrator by the reasonable application of a reasonable valuation method, based on factors that may include the value of tangible and intangible assets, the present value of anticipated future cash flows, the market value of entities engaged in substantially similar businesses, recent arm's length transactions in the Common Stock, and other relevant factors such as control and marketability discounts. The Committee may utilize any independent appraisal, including appraisals conducted for the Company or for use in other of its plans, as of a date that is no more than 12 months prior to the date of the grant.

ISO means an option meant to qualify as an incentive stock option under Code Section 422.

Key Employee means an employee of the Company or of an Affiliate (including, without limitation, an employee who is also serving as an officer or director of the Company or of an Affiliate), designated by the Administrator to be eligible to be granted one or more Options under the Plan.

Non-Qualified Option means an option which is not intended to qualify as an ISO.

Option means an ISO or Non-Qualified Option granted under the Plan.

Option Agreement means an agreement between the Company and a Participant executed and delivered pursuant to the Plan.  

Participant means a Key Employee, director or consultant to whom one or more Options are granted under the Plan. As used herein, "Participant" shall include "Participant's Survivors" where the context requires.

Participant's Survivors means a deceased Participant's legal representatives and/or any person or persons who acquired the Participant's rights to an Option by will or by the laws of descent and distribution.

Plan means this 2012 Employee, Director and Consultant Stock Option Plan of Trunity Holdings, Inc.

Shares means shares of the Common Stock as to which Options have been or may be granted under the Plan or any shares of capital stock into which the Shares are changed or for which they are exchanged within the provisions of Section 3 of the Plan. The Shares issued upon exercise of Options granted under the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or both.

2. PURPOSES OF THE PLAN .

The Plan is intended to encourage ownership of Shares by Key Employees, directors and certain consultants to the Company in order to attract such people, to induce them to work for the benefit of the Company or of an Affiliate and to provide additional incentive for them to promote the success of the Company or of an Affiliate. The Plan provides for the issuance of ISOs and Non-Qualified Options.  
 
 
 
 
 
Trunity Holdings, Inc., 15 Green Street, Newburyport, MA 01950
 
3. SHARES SUBJECT TO THE PLAN .

The number of Shares subject to this Plan as to which Options may be granted from time to time shall be 7,500,000, or the equivalent of such number of Shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with Section 16 of the Plan.

If an Option ceases to be "outstanding", in whole or in part, the Shares which were subject to such Option shall be available for the granting of other Options under the Plan. Any Option shall be treated as "outstanding" until such Option is exercised in full, or terminates or expires under the provisions of the Plan, or by agreement of the parties to the pertinent Option Agreement.

4. ADMINISTRATION OF THE PLAN .

The Administrator of the Plan will be the Board of Directors, except to the extent the Board of Directors delegates its authority to a Committee of the Board of Directors. Following the date on which the Common Stock is registered under the Securities and Exchange Act of 1934, as amended (the "1934 Act"), the Plan is intended to comply in all respects with Rule 16b-3 or its successors, promulgated pursuant to Section 16 of the 1934 Act with respect to Participants who are subject to Section 16 of the 1934 Act, and any provision in this Plan with respect to such persons contrary to Rule 16b-3 shall be deemed null and void to the extent permissible by law and deemed appropriate by the Administrator. Subject to the provisions of the Plan, the Administrator is authorized to:

a.           Interpret the provisions of the Plan or of any Option or Option Agreement and to
make all rules and determinations which it deems necessary or advisable for the
administration of the Plan;

b.           Determine which employees of the Company or of an Affiliate shall be designated
as Key Employees and which of the Key Employees, directors and consultants
shall be granted Options;

c.           Determine the number of Shares for which an Option or Options shall be granted;
and

d. Specify the terms and conditions upon which an Option or Options may be granted;
provided, however, that all such interpretations, rules, determinations, terms and conditions shall be made and prescribed in the context of preserving the tax status under Code Section 422 of those Options which are designated as ISOs. Subject to the foregoing, the interpretation and construction by the Administrator of any provisions of the Plan or of any Option granted under it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is other than the Board of Directors.

5. ELIGIBILITY FOR PARTICIPATION .

The Administrator will, in its sole discretion, name the Participants in the Plan, provided, however, that each Participant must be a Key Employee, director or consultant of the Company or of an Affiliate at the time an Option is granted. Notwithstanding any of the foregoing provisions, the Administrator may authorize the grant of an Option to a person not then an employee, director or consultant of the Company or of an Affiliate. The actual grant of such Option, however, shall be conditioned upon such person becoming eligible to become a Participant at or prior to the time of the execution of the Option Agreement evidencing such Option. ISOs may be granted only to Key Employees. Non-Qualified Options may be granted to any Key Employee, director or consultant of the Company or an Affiliate. The granting of any Option to any individual shall neither entitle that individual to, nor disqualify him or her from, participation in any other grant of Options.  

 
 
 
 
 
Trunity Holdings, Inc., 15 Green Street, Newburyport, MA 01950
   
6. TERMS AND CONDITIONS OF OPTIONS .

Each Option shall be set forth in writing in an Option Agreement, duly executed by the Company and by the Participant. The Administrator may provide that Options be granted subject to such conditions as the Administrator may deem appropriate including, without limitation, subsequent approval by the stockholders of the Company of this Plan or any amendments thereto. The Option Agreements shall be subject to at least the following terms and conditions:

A. Non-Qualified Options : Each Option intended to be a Non-Qualified Option shall be subject to the terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards for any such Non-Qualified Option:

 
a. Option Price: The option price (per share) of the Shares covered by each Option shall be determined by the Administrator but shall not be less than the Fair Market Value of a Share.  

b. Each Option Agreement shall state the number of Shares to which it pertains;

 
c. Each Option Agreement shall state the date or dates on which it first is exercisable and the date after which it may no longer be exercised, and unless otherwise provided in the Option Agreement, shall not become exercisable except immediately preceding an Acquisition, in accordance with Section 16.B. An Option Agreement may provide that the Option rights accrue or become exercisable in installments over a period of months or years, or upon the attainment of stated goals;

 
d. Exercise of any Option may be conditioned upon the Participant's execution of a Share purchase agreement in form satisfactory to the Administrator providing for certain protections for the Company and its other shareholders including requirements that:

i.  
The Participant's or the Participant's Survivors' right to sell the Shares may be restricted;

ii.  
The Participant and any transferee holder of the Shares may be required to vote the Shares in favor of any Acquisition approved by the Board of Directions; and

iii.  
The Participant or the Participant's Survivors may be required to execute letters of investment intent and must also acknowledge that the Shares will bear legends noting any applicable restrictions.
 
 
 
 
 
Trunity Holdings, Inc., 15 Green Street, Newburyport, MA 01950

 
 
B. ISOs : Each Option intended to be an ISO shall be issued only to a Key Employee and be subject to at least the following terms and conditions, with such additional restrictions or changes as the Administrator determines are appropriate but not in conflict with Code Section 422 and relevant regulations and rulings of the Internal Revenue Service:

 
a. Minimum standards: The ISO shall meet the minimum standards required of Participants who are granted Non-Qualified Options, as described above, except clause (a) thereunder.

 
b. Option Price: Immediately before the Option is granted, if the Participant owns, directly or by reason of the applicable attribution rules in Code Section 424(d):

i.  
Ten percent (10%) or less of the total combined voting power of all classes of share capital of the Company or an Affiliate, the Option price (per share) of the Shares covered by each Option shall not be less than one hundred percent (100%) of the Fair Market Value (per share) of the Shares on the date of the grant of the Option.

ii. More than ten percent (10%) of the total combined voting power of all classes of share capital of the Company or an Affiliate, the Option price (per share) of the Shares covered by each Option shall not be less than one hundred ten percent (110%) of the said Fair Market Value on the date of grant.

c. Term of Option:  For Participants who own

 
i. Ten percent (10%) or less of the total combined voting power of all classes of share capital of the Company or an Affiliate, each Option shall terminate not more than ten (10) years from the date of the grant or at such earlier time as the Option Agreement may provide;

 
ii. More than 10% of the total combined voting power of all classes of share capital of the Company or an Affiliate, each Option shall terminate not more than five (5) years from the date of the grant or at such earlier time as the Option Agreement may provide.

 
d. Medium of Payment: The Option price shall be payable upon the exercise of the Option and only in such form as the Administrator determines and as is permitted by Section 422 of the Code.

 
e. Limitation on Yearly Exercise: The Option Agreements shall restrict the amount of Options which may be exercisable in any calendar year (under this or any other ISO plan of the Company or an Affiliate) so that the aggregate Fair Market Value (determined at the time each ISO is granted) of the stock with respect to which ISOs are exercisable for the first time by the Participant in any calendar year does not exceed one hundred thousand dollars ($100,000), provided that this Section (e) shall have no force or effect if its inclusion in the Plan is not necessary for Options issued as ISOs to qualify as ISOs pursuant to Section 422(d) of the Code.

 
f. Limitation on Grant of ISOs: No ISOs shall be granted after the earlier of ten (10) years from the date of the adoption of the Plan by the Company and the date of the approval of the Plan by the shareholders of the Company.
 
 
 
 
 
Trunity Holdings, Inc., 15 Green Street, Newburyport, MA 01950
 
7. EXERCISE OF OPTION AND ISSUE OF SHARES .

An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company at its principal office address, together with the tender of the full purchase price for the Shares as to which such Option is being exercised, and upon compliance with any other condition(s) set forth in the Option Agreement. Such written notice shall be signed by the person exercising the Option, shall state the number of Shares with respect to which the Option is being exercised and shall contain any representation required by the Plan or the Option Agreement.  Full payment of the purchase price for the Shares as to which such Option is being exercised shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock having a fair market value equal as of the date of the exercise to the cash exercise price of the Option, determined in good faith by the Administrator, or (c) at the discretion of the Administrator, by delivery of the grantee's personal recourse note bearing interest payable not less than annually at no less than 100% of the Applicable Federal Rate, as defined in Section 1274(d) of the Code, or (d) at the discretion of the Administrator, in accordance with a so-called cashless exercise plan established with a securities brokerage firm and approved by the Administrator, or (e) at the discretion of the Administrator, by any combination of (a), (b), (c) and (d) above. Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422 of the Code.

The Company shall then reasonably promptly deliver the Shares as to which such Option was exercised to the Participant (or to the Participant's Survivors, as the case may be). In determining what constitutes "reasonably promptly," it is expressly understood that the delivery of the Shares may be delayed by the Company in order to comply with any law or regulation which requires the Company to take any action with respect to the Shares prior to their issuance. The Shares shall, upon delivery, be evidenced by an appropriate certificate or certificates for fully paid, non-assessable Shares.

The Administrator shall have the right to accelerate the date of exercise of any installment of any Option; provided that the Administrator shall not accelerate the exercise date of any installment of any Option granted to any Key Employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to Section 19) if such acceleration would violate the annual vesting limitation contained in Section 422(d) of the Code, as described in Section 6.B.(e).

8. RIGHTS AS A SHAREHOLDER .

No Participant to whom an Option has been granted shall have rights as a shareholder with respect to any Shares covered by such Option, except after due exercise of the Option and provision for payment of the full purchase price for the Shares being purchased pursuant to such exercise and registration of the Shares in the Company's share register in the name of the Participant.

 
 
 
 
Trunity Holdings, Inc., 15 Green Street, Newburyport, MA 01950

 
9. ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS .

By its terms, an Option granted to a Participant shall not be transferable by the Participant other than by will or by the laws of descent and distribution and shall be exercisable, during the Participant's lifetime, only by such Participant (or by his or her legal representative). Such Option shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of any Option or of any rights granted thereunder contrary to the provisions of this Plan, or the levy of any attachment or similar process upon an Option, shall be null and void.

10. EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" .

Except as otherwise provided in the pertinent Option Agreement, in the event of a termination of service (whether as an employee, director or consultant) with the Company or an Affiliate before the Participant has exercised all Options, the following rules apply:

 
a. A Participant who ceases to be an employee, director or consultant of the Company or of an Affiliate (for any reason other than termination "for cause", Disability, or death for which events there are special rules in Sections 11, 12, and 13, respectively), may exercise any Option granted to him or her to the extent that the right to purchase Shares has accrued on the date of such termination of service, at any time during a period ending three (3) months after the Participant's termination of employment, director status or consultancy, except as otherwise may be provided in the pertinent Option Agreement.

 
b.In no event may an Option Agreement provide, if the Option is intended to be an ISO, that the time for exercise be later than three (3) months after the Participant's termination of employment.

 
c.The provisions of this section, and not the provisions of Section 12 or 13, shall apply to a Participant who subsequently becomes disabled or dies after the termination of employment, director status or consultancy, provided, however, in the case of a Participant's death within three (3) months after the termination of employment, director status or consulting, the Participant's Survivors may exercise the Option within one (1) year after the date of the Participant's death, but in no event after the date of expiration of the term of the Option.

 
d.Notwithstanding anything herein to the contrary, if subsequent to a Participant's termination of employment, termination of director status or termination of consultancy, but prior to the exercise of an Option, the Board of Directors determines that, either prior or subsequent to the Participant's termination, the Participant engaged in conduct which would constitute "cause", then such Participant shall forthwith cease to have any right to exercise any Option.

 
e.A Participant to whom an Option has been granted under the Plan who is absent from work with the Company or with an Affiliate because of temporary disability (any disability other than a permanent and total Disability as defined in Section 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant's employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide.
 
 
 
 
 
 
Trunity Holdings, Inc., 15 Green Street, Newburyport, MA 01950

 
 
f. Options granted under the Plan shall not be affected by any change of employment or other service within or among the Company and any Affiliates, so long as the Participant continues to be an employee, director or consultant of the Company or any Affiliate, provided, however, if a Participant's employment by either the Company or an Affiliate should cease (other than to become an employee of an Affiliate or the Company), such termination shall affect the Participant's rights under any Option granted to such Participant in accordance with the terms of the Plan and the pertinent Option Agreement.

11. EFFECT OF TERMINATION OF SERVICE "FOR CAUSE" .
Except as otherwise provided in the pertinent Option Agreement, the following rules apply if the Participant's service (whether as an employee, director or consultant) with the Company or an Affiliate is terminated "for cause" prior to the time that all of his or her outstanding Options have been exercised:

 
a.All outstanding and unexercised Options as of the date the Participant is notified his or her service is terminated "for cause" will immediately be forfeited, unless the Option Agreement provides otherwise.

 
b.For purposes of this Section 11 and Section 10, "cause" shall include (and is not limited to) dishonesty with respect to the employer, insubordination, substantial malfeasance or non-feasance of duty, unauthorized disclosure of confidential information, and conduct substantially prejudicial to the business of the Company or any Affiliate. The determination of the Administrator as to the existence of cause will be conclusive on the Participant and the Company.

 
c."Cause" is not limited to events which have occurred prior to a Participant's termination of service, nor is it necessary that the Administrator's finding of "cause" occur prior to termination. If the Administrator determines, subsequent to a Participant's termination of service but prior to the exercise of an Option, that either prior or subsequent to the Participant's termination the Participant engaged in conduct which would constitute "cause", then the right to exercise any Option is forfeited.

 
d.Any definition in an agreement between the Participant and the Company or an Affiliate, which contains a conflicting definition of "cause" for termination and which is in effect at the time of such termination, shall supersede the definition in this Plan with respect to such Participant.

12. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY .
Except as otherwise provided in the pertinent Option Agreement, a Participant who ceases to be an employee, director or consultant of the Company or of an Affiliate by reason of Disability may exercise any Option granted to such Participant:

a.  
To the extent that the right to purchase Shares has accrued on the date of his or her Disability; and
 
 
 
 
 
 
Trunity Holdings, Inc., 15 Green Street, Newburyport, MA 01950

 
 
b.  
In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion of any additional rights as would have accrued had the Participant not become Disabled prior to the end of the accrual period which next ends following the date of Disability. The proration shall be based upon the number of days of such accrual period prior to the date of Disability.

A Disabled Participant may exercise such rights only within a period of not more than one (1) year after the date that the Participant became Disabled, notwithstanding that the Participant might have been able to exercise the Option as to some or all of the Shares on a later date if he or she had not become Disabled and had continued to be an employee, director or consultant or, if earlier, within the originally prescribed term of the Option.

The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.

13. EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT .

Except as otherwise provided in the pertinent Option Agreement, in the event of the death of a Participant to whom an Option has been granted while the Participant is an employee, director or consultant of the Company or of an Affiliate, such Option may be exercised by the Participant's Survivors:
a.  
To the extent exercisable but not exercised on the date of death; and

 
b.In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion of any additional rights which would have accrued had the Participant not died prior to the end of the accrual period which next ends following the date of death. The proration shall be based upon the number of days of such accrual period prior to the Participant's death.

If the Participant's Survivors wish to exercise the Option, they must take all necessary steps to exercise the Option within one (1) year after the date of death of such Participant, notwithstanding that the decedent might have been able to exercise the Option as to some or all of the Shares on a later date if he or she had not died and had continued to be an employee, director or consultant or, if earlier, within the originally prescribed term of the Option.

14. PURCHASE FOR INVESTMENT .
Unless the offering and sale of the Shares to be issued upon the particular exercise of an Option shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended (the "1933 Act"), the Company shall be under no obligation to issue the
Shares covered by such exercise unless and until the following conditions have been fulfilled, unless the exercise of the Option is made in connection with an Acquisition:

a.  
The person(s) who exercise such Option shall warrant to the Company, at the time of such exercise or receipt, as the case may be, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing their Shares issued pursuant to such exercise or such grant:
 
 
 
 
 
 
Trunity Holdings, Inc., 15 Green Street, Newburyport, MA 01950

 
"The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.”

 
b. The Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise in compliance with the 1933 Act without registration thereunder.

The Company may delay issuance of the Shares until completion of any action or obtaining of any consent which the Company deems necessary under any applicable law (including, without limitation, state securities or "blue sky" laws).

15. DISSOLUTION OR LIQUIDATION OF THE COMPANY .

Upon the dissolution or liquidation of the Company, all Options granted under this Plan which as of such date shall not have been exercised will terminate and become null and void; provided, however, that if the rights of a Participant or a Participant's Survivors have not otherwise terminated and expired, the Participant or the Participant's Survivors will have the right immediately prior to such dissolution or liquidation to exercise any Option to the extent that the right to purchase Shares has accrued under the Plan as of the date immediately prior to such dissolution or liquidation.

16. ADJUSTMENTS .

Upon the occurrence of any of the following events, a Participant's rights with respect to any Option granted to him or her hereunder which have not previously been exercised in full shall be adjusted as hereinafter provided, unless otherwise specifically provided in the written agreement between the Participant and the Company relating to such Option:

A.  
Stock Dividends and Stock Splits . If the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, the number of shares of Common Stock deliverable upon the exercise of such Option shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination or stock dividend.

B.  
Consolidations or Mergers . If the Company is consolidated with or acquired by another entity in a merger, or sale of all or substantially all of the Company's assets (an "Acquisition"), immediately preceding such Acquisition, all outstanding, but unvested, Options may, in the sole and absolute discretion of the Administrator, become fully vested and, if the Administrator so elects at least one (1) month prior to the closing of the Acquisition, the Administrator or the board of directors of any entity assuming the obligations of the Company hereunder (the "Successor Board"), shall, as to outstanding Options, either (i) make appropriate provision for the continuation of such Options by substituting on an equitable basis for the Shares then subject to such Options either the consideration payable with respect to the outstanding shares of Common Stock in connection with the Acquisition or securities of any successor or acquiring entity; or (ii) upon written notice to the Participants, provide that all Options must be exercised within a specified number of days of the date of such notice, at the end of which period the Options shall terminate; or (iii) terminate all Options in exchange for a cash payment equal to the excess of the Fair Market Value of the shares subject to such Options over the exercise price thereof.
 
 
 
 
 
 
Trunity Holdings, Inc., 15 Green Street, Newburyport, MA 01950


C.  
Recapitalization or Reorganization . In the event of a recapitalization or reorganization of the Company (other than a transaction described in Section 16.B above) pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, a Participant upon exercising an Option shall be entitled to receive for the purchase price paid upon such exercise the securities he or she would have received if he or she had exercised such Option prior to such recapitalization or reorganization.

 
D.  
Modification of ISOs . Notwithstanding the foregoing, any adjustments made pursuant to Sections A, B or C with respect to ISOs shall be made only after the Administrator, after consulting with counsel for the Company, determines whether such adjustments would constitute a "modification" of such ISOs (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holders of such ISOs. If the Administrator determines that such adjustments made with respect to ISOs would constitute a modification of such ISOs, it may refrain from making such adjustments, unless the holder of an ISO specifically requests in writing that such adjustment be made and such writing indicates that the holder has full knowledge of the consequences of such "modification" on his or her income tax treatment with respect to the ISO.

17. ISSUANCES OF SECURITIES .

Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price of shares subject to Options. Except as expressly provided herein, no adjustments shall be made for dividends paid in cash or in property (including without limitation, securities) of the Company.

18. FRACTIONAL SHARES .

No fractional share shall be issued under the Plan and the person exercising such right shall receive from the Company cash in lieu of such fractional share equal to the fair market value thereof determined in good faith by the Board of Directors of the Company.

19. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS: TERMINATION OF ISOs .

The Administrator, at the written request of any Participant, may in its discretion take such actions as may be necessary to convert such Participant's ISOs (or any portions thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the Participant is an employee of the Company or an Affiliate at the time of such conversion. Such actions may include, but not be limited to, extending the exercise period or reducing the exercise price of the appropriate installments of such Options. At the time of such conversion, the Administrator (with the consent of the Participant) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Administrator in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give any Participant the right to have such Participant's ISO's converted into Non-Qualified Options, and no such conversion shall occur until and unless the Administrator takes appropriate action.  The Administrator, with the consent of the Participant, may also terminate any portion of any ISO that has not been exercised at the time of such termination.

 
 
 
 
Trunity Holdings, Inc., 15 Green Street, Newburyport, MA 01950
 
20. WITHHOLDING .

Upon the exercise of a Non-Qualified Option for less than the then Fair Market Value or the making of a Disqualifying Disposition (as defined in Section 21), the Company may withhold from the Participant's wages, if any, or other remuneration, or may require the Participant to pay additional federal, state, and local income tax withholding and employee contributions to employment taxes in respect of the amount that is considered compensation includible in such person's gross income. The Administrator in its discretion may condition the exercise of an Option for less than the then Fair Market Value on the Participant's payment of such additional income tax withholding and employee contributions to employment taxes.

21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION .

Each Key Employee who receives an ISO must agree to notify the Company in writing immediately after the Key Employee makes a Disqualifying Disposition of any shares acquired pursuant to the exercise of an ISO. A Disqualifying Disposition is any disposition (including any sale) of such shares before the later of (a) two years after the date the Key Employee was granted the ISO, or (b) one year after the date the Key Employee acquired Shares by exercising the ISO.  
If the Key Employee has died before such stock is sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.

22. TERMINATION OF THE PLAN .

The Plan will terminate on October 1, 2022, the date which is ten (10) years from the earlier of the date of its adoption and the date of its approval by the stockholders of the Company. The Plan may be terminated at an earlier date by vote of the stockholders of the Company; provided, however, that any such earlier termination will not affect any Options granted or Option Agreements executed prior to the effective date of such termination.

23. AMENDMENT OF THE PLAN .

The Plan may be amended by the stockholders of the Company. The Plan may also be amended by the Administrator, including, without limitation, to the extent necessary to qualify any or all outstanding Options granted under the Plan or Options to be granted under the Plan for favorable federal income tax treatment (including deferral of taxation upon exercise) as may be afforded incentive stock options under Section 422 of the Code, to the extent necessary to ensure the qualification of the Plan under Rule 16b-3, and to the extent necessary to qualify the Shares issuable upon exercise of any outstanding Options granted, or Options to be granted, under the Plan for listing on any national securities exchange or quotation in any national automated quotation system of securities dealers. Any amendment approved by the Administrator which is of a scope that requires stockholder approval in order to ensure favorable federal income tax treatment for any incentive stock options or requires stockholder approval in order to ensure the compliance of the Plan with Rule 16b-3 shall be subject to obtaining such stockholder approval.  Any modification or amendment of the Plan shall not, without the consent of a Participant, affect his or her rights under an Option previously granted to him or her. With the consent of the Participant affected, the Administrator may amend outstanding Option Agreements in a manner not inconsistent with the Plan.  

 
 
 
 
Trunity Holdings, Inc., 15 Green Street, Newburyport, MA 01950

 
24. EMPLOYMENT OR OTHER RELATIONSHIP .

Nothing in this Plan or any Option Agreement shall be deemed to prevent the Company or an Affiliate from terminating the employment, consultancy or director status of a Participant, nor to prevent a Participant from terminating his or her own employment, consultancy or director status or to give any Participant a right to be retained in employment or other service by the Company or any Affiliate for any period of time.

25. GOVERNING LAW .

This Plan shall be construed and enforced in accordance with the law of the State of Delaware.
 
 
 
 
 
 
 
 

Exhibit 10.5
 

 
 
 
 
 
 
 
ДОГОВІР
ПРО РЕАЛІЗАЦІЮ ІНВЕСТИЦІЙНОГО ПРОЕКТУ
 
між
 
Компанією «Труніті»
 
та
 
Компанією «Іннсолютеч»
 
та
 
Товариством з обмеженою відповідальністю
« ЕДУКОМ»
 
 
 
 
Київ 2013
 
 
 
 
 
 
CONTRACT
ON REALIZATION OF THE INVESTMENT PROJECT
 
between
 
Trunity, Inc.
 
and
 
InnSoluTech LLP
 
and
 
Limited Liability Company
«EDUCOM»
 
 
 
 
Kyiv 2013
 
 
 
 
 
 
 
 
ДОГОВІР
про реалізацію інвестиційного проекту
 
 
CONTRACT
on realization of the investment project
 
 
м. Київ, Україна «___»_____ 2013 року
 
 
Kyiv, Ukraine                                         18, 03 __, 2013
 
 
Компанія «Труніті» , юридична особа, яка зареєстрована та діє відповідно до законодавства Сполучених Штатів Америки, офіс якої зареєстрований за адресою 2711, Центервільроад, оф.400, м. Вілмінгтон, Нью Кастл, 19808, Делавер, Сполучені Штати Америки в особі _____________ ____________________ , який (яка) діє на підставі ___________________ ______________ з однієї сторони, далі в тексті іменується «Сторона-1»,
та
Компанією «ІннСолюТеч» , юридична особа (партнерство ) , яке зареєстрована та діє відповідно до законодавства Англії та Уельсу , за реєстраційним номером OC 382538,   офіс якої зареєстровано за адресою Віннінгтон Хаус, 2 Вудберрі Грув Норс Фінчлі, Лондон, Об’єднане Королівство N12 0DR   в особі __________ ______________________, який (яка) діє на підставі ____________ ___________ __________, з другої сторони, далі в тексті іменується «Сторона-2»,
та
Товариство з обмеженою відповідальністю «ЕДУКОМ » , юридична особа, яка зареєстрована та діє відповідно до законодавства України, офіс якої зареєстровано за адресою Україна, 03110, м. Київ, бул. Івана Лепсе – вул. Академіка Каблукова, будинок 51/16, в особі __ Director Romanchuck SV ________, який діє на підставі _______ in the capacity of ___________ , з третьої сторони, далі в тексті іменується «Компанія»,
разом далі в тексті – «Сторони», а кожна окремо – «Сторона»,
усвідомлюючи природу даного договору, значення своїх дій та їх юридичні наслідки, діючи добровільно, без фізичного, психічного та будь-якого іншого примусу, намагаючись врегулювати саме ті відносини, що відповідають заявленим цілям,
уклали даний договір про реалізацію інвестиційного проекту про наступне:
 
Trunity, Inc. , a legal entity, registered and operating according to the legislation of the United States of America, which has its registered office at the address: 2711, Centerville road, Suite 400, city of Wilmington, County of New Castle, 19808, State of Delaware, USA, represented by __ Terry Anderton ___________, acting on the basis of ____ _corporate charter_ ____ on the one hand, hereinafter referred to as «the Party-1»,
and
InnSoluTech LLP , legal entity (partnership) incorporated and registered in England and Wales with legal status, registration number OC382538, has its registered office at the address: Winnington House, 2 Woodberry Grove, North Finchley, London, United Kingdom, N12 0DR, represented by _________________________________, acting on the grounds of _________________________________, on the second hand, hereinafter referred to as «the Party-2»,
 
and
Limited Liability Company «EDUCOM» , a legal entity registered and operating according to the legislation of Ukraine which has its registered office at the address: 51/16, Ivana Lepse Blvd. – Akademika Kablukova Str., city of Kyiv, 03110, Ukraine, represented by _________________________________, acting on the grounds of _________________________________, on the third hand, hereinafter referred to as «the Company»,
together hereinafter referred to as «the Parties», and each separately hereinafter referred to as «the Party»,
understanding the nature of the present contract, realizing the value of the actions and legal consequences, acting freely, with no physical, psychological or other compulsion, wishing to settle those relations which meet the required purposes,
have concluded the present contract on realization of the investment project as follows:
 
 
 
 
 
 
 
 
ПРЕАМБУЛА
 
 
PREAMBLE
 
 
Сторона-1 має досвід реалізації освітніх програм, заснованих на сучасних технологіях, та володіє відповідною інтелектуальною   власністю. Сторона-2 має необхідну команду фахівців і спеціалістів та досвід адміністрування проектів у галузі інформаційно-комунікаційних технологій.
Сторони зацікавлені у співробітництві та вирішили взаємодіяти на партнерських засадах, викладених у даному Договорі.
The Party-1 has an experience on realization of the educational programs based on modern technologies, and owns the appropriate intellectual property. The Party-2 has the competent group of specialists and experts and experience in administration of projects in the field of information and telecommunication technologies.
The Parties are interested in collaboration and decided to co-operate on the grounds of partnership, specified in this Contract.
 
1
 
ВИЗНАЧЕННЯ ТЕРМІНІВ
 
 
DEFINITION OF TERMS
 
 
В даному Договорі наступні терміни, якщо інше не визначено прямо, мають наступне значення:
In this Contract the following terms, unless otherwise agreed directly, have the following meanings:
1.1
«Договір» − даний Договір про реалізацію інвестиційного проекту з усіма Додатками.
« Contract» means the present Contract on realization of the investment project with all Attachments.
1.2
«Додаток» − будь-який додаток до Договору, який є його невід’ємною частиною, якщо він вчинений в письмовій формі та підписаний уповноваженими представниками Сторін.
 
« Attachment» means any attachment to the contract, which is its integral part, if it is concluded in writing and signed by the authorized representatives of the Parties.
 
1.3
«Проект » – процес спільного виконання Сторонами своїх зобов’язань за Договором.
«Project» means the process of joint execution of obligations by the Parties under the present Contract.
1.4
«Старт Проекту» − момент початку реалізації Проекту, який визначається відповідно до Ліцензійного договору, та з якого умови Договору набирають обов’язковості.
« Project start» means the moment of beginning of realization of the Project, defined according to the License agreement, and starting from which the terms of the present Contract should be obligatory.
1.5
«Платформа» – об’єкт права інтелектуальної власності, а саме сукупність комп’ютерних програм та частин програм у вигляді платформи Trunity (відповідної версії), що належить Стороні-1 на праві власності.
«Platform» means an object of incorporeal rights, namely aggregate of the computer programs and parts of the programs in the form of Trunity platform (appropriate version), which belongs to the Party -1 on the right of ownership.
 
 
 
 
 
1.6
«Ліцензія» – виключний та невідкличний дозвіл Сторони-1 на право використання Компанією Платформи в порядку та у межах, визначених Ліцензійним договором.
« License» means an exclusive and irrevocable permission of the Party-1 on a right for using the Platform by the Company in order of and within the limits, provided by the License Agreement.
1.7
«Ліцензійний договір» – окремо укладений Сторонами договір про передачу Стороною-1 Ліцензії Компанії. Сторони зобов’язуються укласти Ліцензійний договір після підписання Договору, але до Старту Проекту.
 
« License Agreement» – means the Contract on transfer of the License from the Party-1 to the Company, concluded by the Parties separately. Parties are obliged to conclude License agreement after the signing of the Contract but before Project start.
1.8
«Договір купівлі-продажу частки » −   окремо укладений між Стороною-2 та Стороною-1 договір про передачу Стороною-2 Стороні-1 частки у статутному капіталі Компанії. Умови Договору купівлі-продажу частки погоджено Сторонами у Додатку № 1.
 
"Share purchase agreement" - separately agreement on transferring share in the share capital of the Company from Party-2 to Party-1 signed between Party-2 and Party-1. Parties agreed the terms of Share purchase agreement in Attachment № 1.
1.9
«Конфіденційна інформація» – будь-які відомості (повідомлення, дані), в тому числі інформація, що становить комерційну таємницю, представлені Сторонами одна одній у письмовому або іншому вигляді за умови, що Сторона, що розкриває таку інформацію, вкаже на конфіденційність названих відомостей (повідомлень, даних), в тому числі письмово або шляхом проставлення на носії інформації відповідного грифу конфіденційності.
 
« Confidential information» means any information (notification, data), including information, that is a commercial secret, represented by the Parties to each other in writing or in other form, provided that the Party , disclosing such information , should point at confidentiality of the information mentioned above (notification, data), including in written form or by indication on the data carrier of the corresponding mark of confidentiality.
 
1.10
« Режим захисту конфіденційної інформації» – передбачений Договором комплекс правових, організаційних, технічних та інших заходів щодо охорони інформації, включаючи обмеження доступу до неї та носіїв інформації.
« Mode of protection of confidential information» means a complex of legal, organizational, technical and other measures concerning protection of information, including access restriction to it, and data carriers, provided by the Contract.
1.11
«Розголошення конфіденційної інформації» – будь-які дія або бездіяльність, в результаті яких Конфіденційна інформація в будь-якій можливій формі (усній, письмовій, іншій формі, в тому числі з використанням технічних засобів) стає відомою третім особам без згоди Сторони, яка розкрила таку інформацію.
« Disclosure of confidential information» means any action or inactivity, as a result of which Confidential information in any form (such as verbal, written, other form, including with use of technical facilities) becomes known to the third persons without the consent of the Party, disclosing such information.
 
 
 
 
 
 
 
1.12
« Чинне законодавство » − будь-який чинний нормативний документ Англії , нормативний акт, Договір, зведення законів, судове рішення, наказ, надпис, судова заборона в будь-якій юрисдикції, інші законодавчі або адміністративні заходи, будь-які рішення органів місцевого самоврядування, що мають силу закону і застосовуються до відносин Сторін.
« Current legislation » means such documents: any current normative document of England, by-law, the Contract, the Code of laws, the court decision, order, inscription, injunction, other legislative or administrative measures, any decisions of the bodies of local self-government, which are legally valid and used to the relations of the Parties.
 
1.13
«Форс-мажорні обставини» − непередбачені та непереборні події, що відбуваються незалежно від волі Сторін (війна, воєнні дії, громадські безпорядки, блокада, ембарго, інші міжнародні санкції, страйк, локаут, пожежа, аварія, паводок, блискавка, смерч, ураган, землетрус, інше стихійне лихо чи сезонне природне явище, інші дії держав, або інші обмеження прав власності, прийняті відповідним державним органом або органом місцевого самоврядування тощо) і призводять до ускладнення/неможливості виконання Договору. Не можуть визнаватись форс-мажорними обставинами рішення власників Сторін, якщо вони спрямовані на зміну чи припинення прав і обов’язків за цим Договором.
Незважаючи   на   вищесказане , нездатність   Сторони   зробити   оплату   в   установленому порядку , з будь-якої причини, не вважається   форс-мажорними обставинами . Сторона, що вимагає   відшкодування   форс-мажорних обставин має докласти всі можливі зусилля , щоб   усунути перешкоду   і   відновити виконання   у   найкоротші практично можливі строки .
« Force-majeure circumstances» means unexpected and irresistible events, which take place regardless of will of the Parties (war, military actions, public disorders, blockade, embargoes, other international approvals, strike, lock-out, fire, accidents, flood, lightning, tornado, hurricane, earthquake, other natural disasters or seasonal natural phenomenon, other actions of the states, as well as other limitations of property rights, approved by the corresponding body or body of local self-government and etc.) and result in complication/impossibility of execution of the Contract. Decision of proprietors of the Parties cannot be admitted as force-majeure circumstances, if they are aimed to the change or termination of rights and duties under the present Contract.   Notwithstanding the foregoing, the inability of a Party to make a payment due hereunder, for whatever reason, shall not be deemed a force majeure event.  The party claiming force majeure shall make every reasonable effort to remove the obstacle and to resume performance at the earliest practicable time.
 
1.14
Посилання в Договорі на пункти/розділи, є посиланнями на пункти/розділи Договору.
Reference to items/sections in the Contract is references to items/sections of the Contract.
1.15
Будь-які граматичні, синтаксичні та інші помилки, описки тощо не повинні тлумачитись Сторонами всупереч цілям Договору.
Any grammatical, syntactic and other mistakes, as well as slips etc. should not be interpreted by the Parties in conflict with the purposes of the Contract.
 
 
 
 
 
 
 
2
 
ПРЕДМЕТ ДОГОВОРУ
 
 
SUBJECT OF THE CONTRACT
 
2.1
Договір визначає взаємні зобов’язання, основні етапи та порядок координації дій Сторін щодо заявлених цілей Договору, та регулює комплекс правовідносин, які виникають у зв’язку з цим.
 
The Contract determines the mutual obligations, basic stages and order of co-ordination of actions of the Parties regarding the stated aims of the Contract, and regulates the complex of legal relationships arise up in this connection.
2.2
Виконання Сторонами Договору передбачає вчинення дії та укладення окремих угод, що передбачені у Договорі та Додатках до нього. Укладаючи такі угоди, Сторони зобов’язуються дотримуватися умов, визначених у Договорі та відходити від них виключно у разі досягнення взаємної згоди Сторін. Разом з цим дане положення не має трактуватися як завада щодо визначення умов угод, виконання яких необхідне відповідно до Чинного законодавства.
 
Execution by the Parties of the Contract provides for accomplishing of an action and signing of separate agreements which are provided in the Contract and Attachments hereto. While signing such agreements, the Parties are under obligation to keep to the terms settled in the Contract, and to diverge away from them only in case of achievement of mutual consent of the Parties. Therewith, this provision should not be interpreted as an obstacle regarding the determination of terms of agreements, execution of which is needed in accordance with the current legislation
 
3
 
ЕТАПИ РЕАЛІЗАЦІЇ ПРОЕКТУ
 
 
EXECUTION PHASES OF THE PROJECT
 
3.1
Сторони погодили наступні етапи реалізації Проекту:
The Parties have coordinated the following execution phases of the Project:
A
Передача   права на використання Платформи Стороною-1 Компанії шляхом укладення Ліцензійного договору з відкладальною умовою.
Transfer of the licensed rights to the   Platform by the Party-1 to the Company by signing of License agreement with precedent condition.
 
B
Публічне анонсування реалізації Сторонами Проекту.
Public announcement of realization of the Project by the Parties.
C
Старт Проекту.
Start of the Project.
 
 
 
 
 
D
Набрання сили Ліцензійним договором.
License agreement entry into force.
E
Укладення Сторонами Договору купівлі-продажу частки.
Share purchase agreement conclusion by Parties.
F
Введення в дію Платформи та запуск її як інфраструктурної частини Проекту має бути таким   чином , щоб   підтримувався   зв'язок   і   сумісність з   глобальною платформою   Trunity . Здійснюється силами команди, сформованої на час початку етапу Компанією за інформаційної, консультаційної та, у разі необхідності, кадрової підтримки Сторони-1.
Implementation of the Platform and its start up as the infrastructural part of the Project shall be in a manner that maintains connectivity and compatibility with the global Trunity Platform. It is carried out by forces of the team, formed by Company at the time of beginning of the stage, with informative, consultative and, if necessary, personnel support of the Party-1.
 
3.2
Сторона-1 зобов’язується на етапі введення в дію Платформи та після його завершення надавати підтримку функціонування Платформи як частини Проекту на умовах і у формі, визначених в Ліцензійному договору та/або окремому контракті.
The Party-1 is under obligation on stage of implementation of the Platform and after its completion to render support of the Platform functioning as parts of the Project subject to the terms and in the form, specified in the License agreement and/or separate contract.
3.3
Фінансові взаємовідносини Сторін регулюються згідно Додатку № 2 до Договору.
Financial mutual relations of the Parties are regulated according to the Attachment № 2 to the Contract.
3.4
У випадку змін у Проекті, які відбуваються через зміну нормативно-правового регулювання або зміни концепції Проекту, якщо такі зміни знаходяться поза межами волі Сторін, Сторони узгоджуватимуть зміни до етапів участі у Проекті відповідно до зміни обставин.
In case of changes in the Project, which take place due to modifications in normative legal regulation or alterations of the Project concept, if such changes are out of the scopes of will of the Parties, the Parties will co-ordinate such changes to the stages of participation in the Project according to the change of circumstances.
 
 
 
 
 
 
 
4
 
ПУБЛІЧНЕ АНОНСУВАННЯ ТА КОНФІДЕНЦІЙНІСТЬ
 
 
PUBLIC ANNOUNCEMENT AND CONFIDENTIALITY
 
4.1
Сторони погодили необхідність публічного анонсування Проекту. При цьому жодна зі Сторін без попереднього узгодження (по можливості) з іншими Сторонами не випускає жодних прес-релізів та не робить жодних інших публічних повідомлень або заяв. Всі коментарі щодо Проекту подаються від імені Компанії. При цьому кожна зі Сторін дає коментарі щодо тих аспектів Проекту, за які дана Сторона відповідальна, як це випливає з умов Договору, а саме: Сторона-1 – щодо Платформи, Сторона-2 здійснює остаточну корекцію коментарів в цілому.
The Parties have coordinated the necessity of public announcement of the Project. Thus none of the Parties shall issue any press release or make any other public reports or statements without the previous coordination (if possible) with other Parties. All comments concerning the Project are made on behalf of the Company. Thus each of the Parties makes comments with regard to those aspects of the Project, for which this Party is liable, as it follows from terms of the Contract, and namely: the Party-1 – with regard to the Platform, the Party-2 carries out the final correction of comments as a whole.
4.2
З метою врегулювання взаємовідносин Сторін на період співробітництва (даний період підтверджується відповідними документами, якими можуть бути: договори, замовлення, акти, угоди, укладені між Сторонами і т.п.), Сторони беруть на себе зобов'язання щодо нерозголошення конфіденційної інформації. Це означає, що кожна Сторона, а також всі її працівники, агенти та консультанти докладатимуть максимум зусиль для збереження Конфіденційної інформації, та не будуть в будь-який спосіб використовувати в своїй діяльності та/або надавати третім особам будь-яку Конфіденційну інформацію, отриману від іншої Сторони, без погодження з іншою Стороною.
For the purpose of settlement of mutual relations of the Parties for the period of cooperation (this period is confirmed by the corresponding documents which can be: contracts, orders, acts, agreements signed between the Parties, etc.), Parties undertake the obligation with regard to the nondisclosure of confidential information. It means that each Party, as well as all its employees, agents and consultants will apply maximum efforts for preserving the confidential information, and in any way will not use any confidential information obtained from the other Party, in its activity and/or give to the third persons, without coordination with and consent of the other Party.
 
4.3
Сторони дійшли згоди, що вся інформація, яка в період співробітництва Сторін була передана/розкрита від однієї Сторони до іншої, є конфіденційною, окрім випадків, прямо визначених Договором. Якщо виконання Договору потребує розголошення певної інформації, що визнана конфіденційною, таке розголошення здійснюється в мінімальних необхідних обсягах і тільки перед мінімальним необхідним колом осіб.
The Parties have agreed , that all information which was passed/disclosed from one Party to the other within the period of cooperation of the Parties, is confidential, except for the cases specifically established by the Contract. If execution of the Contract requires disclosure of certain information that is acknowledged as a confidential one, such disclosure is accomplished in minimum necessary volumes and only in front of the minimum necessary circle of persons.
 
 
 
 
 
 
4.4
Для цілей даного Договору під Конфіденційною інформацією Сторонами вважаються наступні відомості відносно Сторін: Інформація   про предмет   інтелектуальної   власності; інформація про контрагентів та представників; особиста інформація засновників, партнерів та працівників; відомості, що відносяться до предмету діяльності; ноу-хау; відомості щодо фінансового стану та управління фінансами; будь-яка інформація про структуру; інформація про будь-яку власність, що належить Стороні; відомості про ефективність основної діяльності; відомості про плани розвитку та інші комерційні задуми; відомості про перспективні методи управління, майбутні зміни організаційної структури; інформація та знання про технологічні процеси, проекти, методи і технології Сторони, що розкриває; списки представників, посередників, постачальників, покупців, консигнаторів, комісіонерів та інших контрагентів; схеми захисту бланків і документів; інформація про службове листування і саме листування, будь-яка інша інформація, що названа конфіденційною, і, якщо передається в письмовій, електронній або будь-якій іншій матеріальній формі, містить позначку «Конфіденційно», або інше подібне позначення, що вказує на її конфіденційний характер.
For purposes of the present Contract, the Parties have deemed the following information with regard to the Parties as Confidential information: information about the subject intellectual property; information about contractors and representatives; personal information of founders, partners and employees; information relating to the subject of activity; know-how; information with regard to the financial condition and financial management; any information about the structure; information about any property belonging to the Party; information about efficiency of the principal activity; information about the plans of development and other commercial projects; information about the prospective methods of management, future changes of organizational structure; information and knowledge about technological processes, projects, methods and technologies of the disclosing Party; lists of representatives, intermediaries, suppliers, buyers, consignees, commission agents and other contractors; charts of defense of forms and documents; information about official correspondence and the correspondence itself, any other information assumed as adopted confidential one, and, if it is passed in writing, electronic or any other material form, it should contain a mark «Confidentially», or other similar denotation, specifying its confidential character.
 
4.5
Сторони визнають документами, що містять Конфіденційну інформацію, зокрема, але не обмежуючись: статутні та установчі документи; фінансову звітність у будь-якій формі; будь-які документи, що підтверджують право власності на нерухоме майно та об’єкти інтелектуальної власності; договори за участю Сторони; внутрішні акти, в тому числі листи , факси та електронні листив яких міститься Конфіденційна інформація, а також будь-які витяги та копії з таких документів.
The Parties have assumed as the documents containing Confidential information, in particular, but not limited to: regulations and constituent documents; financial reporting in any form; any documents confirming the right of ownership on the real estate and objects of intellectual property; contracts with participation of the party; internal acts, including letters, faxes, and emails containing Confidential information, as well as any extracts and copies from such documents.
 
 
 
 
 
 
4.6
Кожна Сторона інформує всіх своїх працівників, агентів, консультантів та інших пов’язаних осіб про те, що будь-які відомості, отримані від іншої Сторони, є конфіденційними, дає їм наступні інструкції: докладати максимальні зусилля для збереження їх конфіденційності; не розкривати їх будь-яким третім особам, крім випадків, коли така інформація повинна бути розкрита державним органам за їх правомірним запитом відповідно до Чинного законодавства, за умови, що неможливо відмовити у такому запиті на законних підставах, та попереджає про їх персональну відповідальність за порушення своїх зобов’язань стосовно збереження конфіденційності.
Each Party shall inform all employees, agents, consultants and other related persons that any information obtained from the other Party is confidential, and give them the following instructions: to apply maximum efforts for preserving their confidentiality; do not disclose them to any third persons, except for the cases when such information should be disclosed to the state bodies by their legitimate query according to the Current legislation, provided that it is impossible to refuse in such a query on the legal grounds, and he should notify about their personal responsibility for violation of their duties with regard to preserving of confidentiality.
 
4.7
Дія даного розділу не розповсюджується на відомості, які відповідно до Чинного законодавства не можуть бути віднесені до Конфіденційної інформації, крім тих, які прямо зазначені як Конфіденційна інформація в даному розділі.
The action of this section does not extend to the information, which in accordance with the Current legislation cannot be referred to as confidential information, except for those, expressly provided as confidential information in this section.
4.8
Не може розцінюватись як розголошення Конфіденційної інформації передача (з обов’язковим попереднім погодженням з іншою Стороною) такої інформації правоохоронним або податковим органам, їх представникам, що діють у межах наданих повноважень, в обсязі, який правомірно вимагається названими органами згідно їх запитів. При цьому Конфіденційна інформація, запитувана уповноваженими на те органами державної влади, іншими державними органами або органами місцевого самоврядування може бути передана зазначеним органам тільки за умови, що обов'язок по її наданню встановлений законом, та що відповідний запит оформлений відповідно до вимог законодавства України.
Delivery of such information (with obligatory previous coordination with the other Party) to law enforcement or tax authorities or their representatives, operating within the limits of the given authorities, in a volume, which is legitimately required by the stated bodies according to their queries, cannot be considered as disclosure of Confidential information. Thus confidential information, requested by the authorized public authorities, and other state government bodies or agencies of local self-government, can be passed to the stated bodies only provided that a duty on its granting is established by the law, and that a corresponding query is drawn according to the requirements of the Ukrainian legislation.
 
4.9
Всі положення даного розділу зберігають свою дію після розірвання (припинення) Договору.
All provisions of this section shall be valid after dissolution (termination) of the Contract.
 
 
 
 
 
 
 
5
 
ДОКУМЕНТИ ТА ПОВІДОМЛЕННЯ
 
 
DOCUMENTS AND NOTIFICATIONS
 
5.1
Листування, передача запитів, інструкцій, коментарів, документів (за виключенням випадків, прямо визначених у Договорі), іншої інформації між Сторонамин в процесі виконання Договору, якщо інший порядок не узгоджено додатково, може вестись, в тому числі, за допомогою телефонного, електронного та факсимільного зв’язку. Кожна зі Сторін зобов’язується приймати отримані від іншої Сторони електронною поштою повідомлення та документи і керуватись інформацією, що міститься в них незалежно від того, будуть такі повідомлення та документи підписані електронним цифровим підписом, чи ні.
Correspondence, delivery of queries, instructions, comments, documents (except for the cases expressly established in the Contract), other information between the Parties in the course of execution of the Contract, if the other order is not agreed additionally, can be made, without limitation, by telephone, electronic and facsimile communication. Each of the Parties is under obligation to accept notifications and documents received from the other Party by e-mail, and to follow the information contained in them regardless of that if such notifications and documents are signed by an electronic digital signature, or not.
5.2
Цим Сторони зобов’язуються передавати посадовим особам під підпис або направляти один одному виключно рекомендованим листом з повідомленням про вручення, або за допомогою офіційної кур'єрської служби, наступні документи: a) претензії щодо передбачуваного порушення Договору; b); повідомлення, щодо обставин, пов’язаних з припиненням, пролонгацією або зміною Договору.
Вказані документи, що направлені всупереч визначеному порядку, вважаються такими, що не направлені, і можуть не розглядатись Стороною, що їх отримала.
Hereby the Parties are under obligation to deliver for signing by the officials or send to each other by the registered mail with delivery confirmation, or by recognized courier ' service, the following documents: a) claims with regard to alleged breach of the Contract; b); notifications, with regard to the circumstances, related to the termination, prolongation or change of the Contract.
The mentioned documents, directed in violation of the established order, are considered to be unsent, and cannot be examined by the Party, that has received them.
 
6
 
ЗАПЕВНЕННЯ ТА ГАРАНТІЇ
 
 
WARRANTIES AND AFFIRMATIONS
 
6.1
Даним кожна зі Сторін підтверджує, що на час підписання Договору та в будь-який момент його дії:
Hereby each of the Parties confirms, that for the time of signing of the Contract and in any moment of its action:
 
 
 
 
 
 
A
має необхідну у відповідності до Чинного законодавства правоздатність для укладення та виконання положень Договору;
has a legal capacity for signing and execution of provisions of the Contract, necessary according to the Current legislation;
 
B
укладення Договору отримало належне схвалення а) кожного із державних органів країни реєстрації Сторони, згода яких вимагається для укладення даного Договору; б) всіх уповноважених органів управління Сторони;
signing of the Contract has got the proper approval of a) each of the state bodies of the country of registration of the Party, the consent of which is required for signing of this Contract; b) all authorized bodies of government of the Party;
C
Договір не суперечить попереднім угодам, укладеним Стороною з третіми особами.
 
The Contract does not conflict with the previous agreements signed by the Party with the third persons.
6.2
Представники Сторін підтверджують, що: однаково розуміють значення та умови даного Договору, його правові наслідки; представники Сторін не визнані в установленому порядку недієздатними (повністю або частково), не перебувають у хворобливому стані, не страждають на момент укладання Договору на захворювання, що перешкоджають усвідомленню його суті; вільно володіють мовою, якою викладено Договір; текст Договору прочитаний представниками Сторін і повністю відповідає волевиявленню Сторін; Договір спрямований на реальне настання правових наслідків, що обумовлені ним; Договір не має характеру фіктивного та удаваного правочину.
Representatives of the Parties confirm that they identically understood the meaning and terms of this Contract, its legal consequences; representatives of the Parties are not acknowledged in accordance with the established procedure as legally incompetent (fully or in part), they are not in sick condition, they do not have any diseases which prevent from understanding of its essence at the moment of signing of the Contract; they have a good command of the language present in the Contract; text of the Contract has been read by representatives of the Parties and it fully expresses will of the Parties; the Contract is aimed at the real beginning of law consequences, specified herewith; the Contract does not have a character of fictional and imaginary legal action.
6.3
Сторони надають одна одній згоду на обробку (збирання, реєстрацію, накопичення, зберігання, адаптування, зміну, поновлення, використання і поширення (розповсюдження, реалізацію, передачу), знеособлення, знищення) персональних даних іншої Сторони, або фізичних осіб, які є посадовими особами/працівниками/ уповноваженими особами такої Сторони, а також здійснювати інші дії, визначені Чинним законодавством щодо захисту персональних даних, потреба у виконанні яких викликана договірними зобов’язаннями Сторін.
The Parties give to each other a consent for processing (collection, registration, accumulation, storage, adaptation, change, renewal, use and distribution (distribution, realization, transmission), depersonalization, elimination) of the personal data of the other Party, or physical persons who are officials/employees/authorized representatives of such Party, as well as to accomplish other actions determined by the Current legislation with regard to the personal data protection, which should be executed due to the contractual obligations of the Parties.
 
 
 
 
 
 
 
6.4
Сторони беруть на себе зобов’язання не вчиняти по відношенню одна до одної дій, які у відповідності до Чинного законодавства визнаються недобросовісною конкуренцією, в тому числі не вчиняти дії, які можуть дискредитувати іншу Сторону, завдати шкоди її діловій репутації, правам та інтересам її працівників.
The Parties undertake the obligation not to accomplish relative to each other any actions which in accordance with the Current legislation are acknowledged by unfair competition, including not accomplishing any actions, which can discredit the other Party, inflict harm to its goodwill, rights and interests of its employees.
 
6.5
У випадку, якщо протягом строку дії Договору будь-яка із зазначених вище гарантій та/або тверджень виявиться недійсною, то Сторона, гарантії та/або твердження якої виявляться недійсними, зобов’язана негайно повідомити про це іншу Сторону.
In case if during the term of validity of the Contract any of the warranties and/or affirmations stated above shall become invalid, the Party, the warrantees and/or affirmations of which shall become invalid, is under obligation to immediately inform the other Party about it.
 
7
 
ВІДПОВІДАЛЬНІСТЬ СТОРІН
 
 
RESPONSIBILITY OF THE PARTIES
 
7.1
У випадку невиконання зобов’язань за Договором, включаючи зобов’язання, що випливають із заяв, порук та гарантій, передбачених Договором, Сторона має право вимагати виконання за Договором.
 
In the case of non-performance of obligations under the Contract, including the obligations, which follow from statements, cautions and guarantees, provided by the Contract, the Party has a right to require execution of obligations under the Contract.
7.2
У випадку невиконання або неналежного виконання однією із Сторін своїх зобов’язань вона відшкодовує потерпілій Стороні спричинені цим прямі (реальні) збитки.
In the case of non-performance or improper performance by one of the Parties of obligations this Party should compensate to the offended Party direct (actual) damages, caused by such way.
7.3
При виникненні загрози неналежного виконання зобов’язання Сторона негайно повідомляє іншу Сторону про таку загрозу.
 
In the case of occurring of threat of the improper performance of obligations the Party should inform immediately other Party about such threat.
7.4
Сторона, що подає неправдиві відомості, приховує обставини, які унеможливлюють укладення Договору, спричиняють недійсність окремих його положень, недійсність в цілому або виникнення правовідносин, що ним не передбачені, несе за це відповідальність, передбачену Чинним законодавством, включаючи відшкодування збитків, спричинених зазначеними діями іншій Стороні.
If the Party represents untruthful information, hides the circumstances, which can result in impossibility of conclusion of the Contract and invalidity of separating its provisions, ineffectiveness on the whole or origin of legal relationships, which are not foreseen, this Party should bear responsibility, provided by Current legislation, including reimbursement of damages caused by the above actions to other Party.
 
 
 
 
 
 
 
7.5
В разі виявлення факту порушення з боку Сторони правил поводження з Конфіденційною інформацією, за наявності відповідних доказів, в разі розголошення відомостей, щодо яких було допущено порушення, остання вважається винною у збитках, заподіяних розголошенням, якщо не доведе інше.
In the case of finding of a fact of violation of rules on use of Confidential information from the side of the Party, including disclosure of information, which violation was assumed in relation to, this Party is considered guilty for damages caused by disclosure, if no evidence of the contrary of such statement.
 
7.6
Сторони звільняються від виконання своїх зобов’язань на час дії форс-мажорних обставин, за умови попередження іншої Сторони протягом 7 (семи) календарних днів з моменту настання таких обставин. Достатнім доказом дії форс-мажорних обставин буде документ, виданий компетентним органом.
The Parties become free of execution of obligations during the period of force-majeure circumstances, on conditions of notification of other Party within 7 (seven) calendar days from the moment of beginning of such circumstances. The document issued by a competent body will be sufficient evidence of action of force-majeure circumstances.
7.7
Сторони приймають до уваги, що невиконання, неналежне або несвоєчасне виконання зобов’язань може бути викликане іншими причинами, ніж ті, що можуть бути визнані форс-мажорними обставинами. В цьому випадку, за згодою Сторін такі причини можуть бути визнані поважними, а порушення таким, що не відбулося.
The Parties are taken into consideration, that non-performance, improper or delayed performance of obligations can be caused by other reasons, than those which can be acknowledged as force-majeure circumstances. In this case, by mutual consent of the Parties such reasons can be acknowledged valid, and there are no any violations of obligations.
 
8
 
РОЗВ'ЯЗАННЯ СПОРІВ
 
 
SETTLEMENT OF DISPUTES
 
8.1
Всі спори, розбіжності або вимоги, що виникають з Договору або у зв’язку з ним, в тому числі такі, що стосуються його трактування, виконання, порушення, припинення або недійсності, вирішуються шляхом переговорів. У випадку, якщо Сторони не знайдуть компромісу, спір підлягає розгляду у Лондонському Міжнародному Арбітражному Суді відповідності до його регламенту.
All disputes, differences or claims which arise under the Contract or connected with the present Contract, including concerning its interpretation, execution, violation, termination or invalidity, should be settled by negotiations. In the case if the Parties will not make a compromise, a dispute is subject to settlement in the London Court of International Arbitration with its regulation.
 
 
 
 
 
 
8.2
У випадку арбітражного розгляду або   розгляду судом спору, пов’язаного з виконанням Сторонами Договору, кожна Сторона має право підтверджувати обставини, на які вона посилається як на підставу своїх вимог та заперечень, роздруківками листів та документів, направлених іншій Стороні або отриманих від іншої Сторони електронною поштою, що посвідчені підписом та/або печаткою Сторони, яка надає до суду або до арбітражної комісії такі роздруківки, а також копіями документів, направлених іншій Стороні або отриманих від іншої Сторони за допомогою факсимільного зв’язку, що посвідчені печаткою Сторони, яка надає в суд або до арбітражної комісії такі копіії документів. Сторони погоджуються, що посвідчені в передбаченому даним пунктом порядку роздруківки та копії документів будуть допускатись в якості письмових доказів.
In the case of arbitration or litigation of a dispute related to performance of obligations under the Contract by the Parties, every Party has a right to confirm the circumstances, on which it refers as the grounds of its requirements and objections by printing of letters and documents, which were sent to other Party or received from other Party by e-mail, certified by a signature and/or seal of the Party, which represents such printings to the court or arbitration panel as well as copies of the documents, which were sent to other Party or received from other Party by fax, certified by the seal of the Party, which represents such copies of documents to a court or arbitration panel. The Parties agree that printings and copies of documents certified in the order provided by this article will be assumed as written evidence.
 
 
9
 
ТЕРМІН ДІЇ ТА ПРИПИНЕННЯ ДОГОВОРУ
 
 
TERMS OF VALIDITY AND TERMINATION OF THE CONTRACT
 
9.1
Договір набуває чинності з моменту підписання його уповноваженими представниками Сторін та скріплення печатками Сторін (у разі наявності) та діє до повного виконання Сторонами зобов’язань, взятих на себе підписанням Договору.
The Contract comes into effect from the moment of its signing by the authorized representatives of the Parties and sealing of the Parties (in the case if it is available) and is valid until execution of the obligations under the Contract in full by the Parties.
9.2
Договір припиняє свою дію в разі припинення без правонаступництва однієї із Сторін, розірвання та в разі виникнення інших обставин, що зумовлюють неможливість його виконання відповідно до Чинного законодавства.
The Contract is terminated in the case of termination without legal succession of one of the Parties, dissolution as well as in the case of origin of other circumstances resulting in impossibility of its execution according to the Current legislation.
9.3
Данний договір припиняє свою дію в разі розірвання, скасування або визнання недійсним Ліцензійного договору. Ця умова не розповсюджує свою дію на випадок, коли Сторони погоджують змінити порядок використання Платформи шляхом заміни Ліцензійного договору на інші правовідносини.
This contract shall be terminated in the case of dissolution, termination or confession, as invalid the License agreement. This clause does not diffuse operating on a case, when Parties co-ordinate to permit the use of Platform the way of replacement of the License agreement on other legal relationships.
 
 
 
 
 
 
9.4
Даний Договір може бути достроково припинений виключно за взаємною згодою Сторін шляхом підписання відповідної угоди.
The present Contract may be terminated before the appointed time only by mutual consent of the Parties by way of signing of the corresponding Agreement.
 
10
 
ЗАКЛЮЧНІ ПОЛОЖЕННЯ
 
 
FINAL PROVISIONS
 
10.1
Відносини, які виникають під час та у зв’язку з укладенням, виконанням, припиненням Договору, та не врегульовані у ньому, регулюються Чинним законодавством.
Relations, which arise up during the period and in connection with the conclusion, execution, termination of the Contract, and are not regulated in this Contract, should be regulated by the Current legislation.
10.2
Договір може бути змінений або доповнений виключно за взаємною згодою Сторін.
The Contract can be amended only by mutual consent of the Parties.
 
10.3
Після підписання Договору всі попередні угоди, переговори і листування, що стосуються його предмета, втрачають силу , за винятком   Ліцензійної угоди   і Договору купівлі-продажу від того ж числа
 
Term of validity of all previous agreements, negotiations and correspondence in relation to subject of the Contract are expired after signing of the Contract, except for the License Agreement and Share Purchase Agreement of even date.
 
10.4
Недійсність окремих положень Договору не має своїм наслідком недійсність інших його положень та Договору в цілому, якщо можна припустити, що Договір був би укладений й без включення до нього недійсного положення. У випадку, якщо будь-яке положення цього Договору стає недійсним з будь-яких причин, Сторони без зволікання проводять переговори з метою зміни недійсного положення таким чином, щоб після зміни воно було дійсним та максимально відображало наміри Сторін при укладенні Договору відносно відповідного питання.
Invalidity of separate provisions of the Contract does not affect the validity of other provisions and the Contract in full, if it is possible to assume that the Contract can be concluded without including of invalid provisions to it. In the case if some provision of this Contract becomes invalid for any reasons, the Parties carry on negotiations without the delay for the purpose of change of invalid provision thus, that after the change it was valid and it can represent maximally intentions of the Parties at the conclusion of the Contract Treaty in relation to the corresponding matter.
10.5
Жодна зі Сторін не має права передавати свої права або обов’язки за цим Договором третій стороні без письмової згоди іншої Сторони.
None of the Parties has the authority to assign its rights or duties under the present Contract to any third party without the written consent of the other Party.
 
 
 
 
 
 
10.6
Всі обов’язки, що виникають за Договором, є дійсними та обов’язковими для виконання Сторонами в повному обсязі.
All duties which arise up under the Contract are valid and obligatory for execution by the Parties in full.
10.7
У випадку зміни зазначених у Договорі реквізитів, Сторони зобов'язані негайно повідомити про це один одного в письмовій формі.
In case the banking details stated in the Contract are changed, the Parties are under an obligation to inform immediately to each other in a written form.
10.8
Договір складено українською та англійською мовами в 2 (двох) оригінальних примірниках рівної юридичної сили, по одному для кожної зі Сторін. Англійський текст має пріоритет.
The Contract is drawn up in Ukrainian and English in 2 (two) original copies, which have identical legal force, one copy for each of the Parties. English text has priority.
10.9
Договір не є договором про спільну діяльність в розумінні Чинного законодавства.
The present Contract is not a Contract on joint activity from the point of view of the Current legislation.
 
11
 
БАНКІВСЬКІ РЕКВІЗИТИ ТА МІСЦЕЗНАХОДЖЕННЯ СТОРІН
 
 
BANKING DETAILS AND ADDRESSES OF THE PARTIES
 
11.1
Компанія «Труніті»
Trunity, Inc.
 
Адреса: 2711, Центервільроад, оф.400, м. Вілмінгтон, Нью Кастл, 19808, Делавер, Сполучені Штати Америки.
Банк:
Address: 2711, Centerville road, Suite 400, city of Wilmington, County of New Castle, 19808, State of Delaware, USA
 
________ Chief Executive Officer ____________
(__ x/Terry Anderton _______/__ Terry Anderton ____)
     
11.2
Компанія «ІннСолюТеч»
InnSoluTech LLP
 
Адреса:   Віннінгтон Хаус, 2 Вудберрі Грув Норс Фінчлі, Лондон, Об’єднане Королівство N12 0DR
Реєстраційний номер OC 382538
 
Address: Winnington House, 2 Woodberry Grove, North Finchley, London, United Kingdom, N12 0DR
Registration number OC382538
 
___________________________________
(______________________/______________________)
     
11.3
Товариство з обмеженою відповідальністю «ЕДУКОМ»
Limited Liability Company «EDUCOM»
 
Адреса: Україна, 03110, м. Київ, бул. Івана Лепсе – вул. Академіка Каблукова, будинок 51/16.
Ідентифкаційний код: 34914117
Р/Р : 26004000028955 в ПАТ «Укрсоцбанк» в м. Києві ,   МФО : 300023
Address: 51/16, Ivana Lepse Blvd. – Akademika Kablukova Str., city of Kyiv, 03110, Ukraine.
ID 34914117
Operating account: 26004000028955 PJSC “Ukrsotsbank” Kyiv,  MFO (sort code) : 300023
 
________ Director _________
(____ x/ Romanchuck SV _____/___ Romanchuck SV ____)


 
 
 


 
Додаток № 2
до Договору
 про реалізацію інвестиційного проекту
від «___»_________ 2013 року
 
Attachment No. 2
to the Contract
 on realization of the investment project
of ___ March 18 __ 2013
 
 
 
м. Київ, Україна «___»_____ 2013 року
 
 
Kyiv, Ukraine                                            _18, 03 __, 2013
 
 
 
ФІНАНСОВІ УМОВИ
 
 
FINANCIAL TERMS
 
 
Компанія «Труніті» , юридична особа, яка зареєстрована та діє відповідно до законодавства Сполучених Штатів Америки, офіс якої зареєстрований за адресою 2711, Центервільроад, оф.400, м. Вілмінгтон, Нью Кастл, 19808, Делавер, Сполучені Штати Америки в особі _____________ ____________________ , який (яка) діє на підставі ___________________ ______________ з однієї сторони, далі в тексті іменується «Сторона-1»,
та
Компанією «ІннСолюТеч» , юридична особа (партнерство ) , яке зареєстрована та діє відповідно до законодавства Англії та Уельсу , за реєстраційним номером OC 382538, офіс якої зареєстровано за адресою Віннінгтон Хаус, 2 Вудберрі Грув Норс Фінчлі, Лондон, Об’єднане Королівство N12 0DR   в особі ___________________ _____________, який (яка) діє на підставі ___ ____________________ __________, з другої сторони, далі в тексті іменується «Сторона-2»,
та
Товариство з обмеженою відповідальністю «ЕДУКОМ» , юридична особа, яка зареєстрована та діє відповідно до законодавства України, офіс якої зареєстровано за адресою Україна, 03110, м. Київ, бул. Івана Лепсе – вул. Академіка Каблукова, будинок 51/16, в особі ______ Director Romanchuck SV _______,   який діє на підставі ______ in the capacity of ____________ , з третьої сторони, далі в тексті іменується «Компанія»,
разом далі в тексті – «Сторони», а кожна окремо – «Сторона»,
 
усвідомлюючи значення своїх дій та їх юридичні наслідки, діючи добровільно, без фізичного, психічного та будь-якого іншого примусу, намагаючись врегулювати саме ті відносини, що відповідають заявленим цілям,
уклали даний Додаток про наступне:
 
Trunity, Inc. , a legal entity, registered and operating according to the legislation of the United States of America, which has its registered office at the address: 2711, Centerville road, Suite 400, city of Wilmington, County of New Castle, 19808, State of Delaware, USA, represented by _____ Terry Anderton _____, acting on the basis of ___ _corporate charter __________ on the one hand, hereinafter referred to as «the Party-1»,
and
InnSoluTech LLP , legal entity (partnership) incorporated and registered in England and Wales with legal status, registration number OC382538, has its registered office at the address: Winnington House, 2 Woodberry Grove, North Finchley, London United Kingdom, N12 0DR, represented by _________________________________, acting on the grounds of _________________________________, on the second hand, hereinafter referred to as «the Party-2»,
 
and
Limited Liability Company «EDUCOM» , a legal entity registered and operating according to the legislation of Ukraine which has its registered office at the address: 51/16, Ivana Lepse Blvd. – Akademika Kablukova Str., city of Kyiv, 03110, Ukraine, represented by _________________________________, acting on the grounds of _________________________________, on the third hand, hereinafter referred to as «the Company»,
 
 
together hereinafter referred to as «the Parties», and each separately hereinafter referred to as «the Party»,
realizing the value of the actions and legal consequences, acting freely, with no physical, psychical or other compulsion, wishing to settle those relations which meet the required purposes,
have concluded the present Attachment as follows:
 
 
 
 
 
1
Сторона-2 має забезпечити сплату на користь Стороні-1 та Компанії сум на умовах викладених нижче. Даний обов’язок включає також відповідальність за виплату сум, що підлягають виплаті на користь Стороні-1 Компанією.
Party-2 shall provide payment to or on behalf of Party-1 and the Company of the amounts set forth below. This obligation includes also responsibility for settlements on benefit of Party-1 by Company.
2
Протягом 5 робочих днів після   підписання   цієї Угоди   Сторона-2 перераховує Стороні-1 ліквідні кошти   у розмірі 100,000 $   щоб   покрити 25%   оплати за Ліцензію  .
Протягом 14 календарних днів з дати Старту проекту Сторона-2 перераховує Стороні-1 кошти у сумі $300  000 , що покриває остаточну вартість ліцензії.
In 5 business days after  signing of this Agreement, Party--2 shall transfer to Party-1 immediately available funds in the amount of $ 100,000 to cover 25% of the License fee.
 
Withhin 14 calendar days after the date of Project Start Party-2 shall transfer to Party-1 funds in the amount of $ 300,000 to cover the rest of the License Fee.
3
Сторони погодили, що після закінчення 5 (п’ятирічного) строку дії Ліцензійного Договору вартість Ліцензії складатиме 1/5 (одну п’яту частину) суми, визначеної у пункті 2 даного Додатку, за кожен календарний рік користування Ліцензією З урахуванням індексу інфляції за останній попередній рік строку дії ліцензії з урахуванням   (1)   інфляції, розрахованої Міністерством праці США   індекс споживчих цін , і   (2)   пропорційно   до загального числа   студентів, що використовують платформу   протягом   року   ( наприклад, 1,8 мільйон   студентів, що використовують платформу ,   буде дорівнювати   щорічному   ліцензійному збору   $ 80 000   х 1,8   млн. /1.5   млн.   =   $ 96   000) .
 
The Parties agree that after 5 (five year) term of the License agreement cost of License will be 1/5 (one fifth) of the amount determined in point 2 of this Attachment, for each calendar year of using License, adjusted for inflation in the last previous year of the license’ validity period, adjusted for (1) inflation as calculated by U.S. Department of Labor Consumer Price Index, and (2) prorated for the total number of students using the platform during that year (for instance, 1.8 million students using the platform would equal an annual license fee of $ 80 000 x 1.8 million/1.5 million = $96 000).
 
 
 
 
 
 
 
 
4
Сторона 2   зобов'язується сплачувати   всі   поточні витрати   Компанії   і   Платформи , які   не оплачуються   урядом   України . Якщо   компанія   вирішить придбати   додаткові   операції операційні сервіси платформи   такі   послуги , як   хостинг   та   інші   послуги   Сторони-1 , що   викладені   в   Ліцензійній угоді , витрати   ( у тому числі подорожі і розваги ) виплачується   Стороною -2   Стороні -1 . Жоден з   видатків, передбачених   цим   пунктом 4 , не   повинен бути відшкодований   Компанією .
 
Party-2 shall pay all operating expenses of the Company and the Platform which are not paid by the Ukraine government.  If the Company elects to purchase added platform operation services such as hosting and other services from Party-1 beyond that set forth in the License agreement, the related expenses (also including Travel and Entertainment) shall be paid by Party-2 to Party 1.  None of the expenses covered by this point 4 shall be reimbursed by the Company.
 
5
 
 
 
 
 
 
 
 
 
 
 
 
6
Сторона-2 гарантує Стороні-1, що нараховані Стороні-2   відповідно Частці   частка річного прибутку Компанії   від реалізації Проекту буде   їй виплачена в повному обсязі протягом 60 днів після закінчення кожного звітного року. В тому випадку, якщо учасниками Компанії буде прийнято рішення про реінвестування нарахованих дивідентів в розвиток Компанії, Сторона-2 бере на себе зобов’язання перерахувати всю сумму нарахованої частки річного прибутку Компанії   в інший спосіб за домовленостю Сторони-1 і Сторони-2, як це зазначено вище.
 
Сторони погодили, що у випадку поновлення ліцензії після першого 5-річного терміну її дії, сума нарахованої і виплаченої Стороні-1 частки річного прибутку Компанії зараховується в якості оплати вартості ліцензії . Це означає, що окремій сплаті підлягає частки річного прибутку Компанії, що перебільшує вартість ліцензії. Разом з цим Сторона-1 як партнер Проекту завжди гарантовано отримає вартість ліцензії.
 
Party-2 guarantees to Party-1 that its share of the Company’s accrued annual profit gained from Project realization will be paid to it in full within 60 days of the end of each fiscal year. In the case when members decide to reinvest the accrued profits to the development of the Company, Party-2 takes the obligation to pay the full amount of accrued annual profit payable to Party-1 as set forth above.
 
 
 
 
 
 
 
The Parties agreed that, if the license is renewed after the initial 5-year term of the License Agreement, the amount of accrued and paid annual profit rate to Party-1 from the participation in the Company will be deemed to have been received through payment for the license. This means that the annual profit rate will be paid to Party-1 in the amount that  exceeds the license fee. At the same time Party-1 as a partner of the Project is guaranteed to get the license fee in any case.
 
 
7
Умови цього Договору мають переважну силу перед фінансовими умовами Ліцензійної угоди.
Financial terms of this contract shall prevail over Financial terms of License agreement.
     
 
 
 
 
 
 
 
БАНКІВСЬКІ РЕКВІЗИТИ ТА МІСЦЕЗНАХОДЖЕННЯ СТОРІН
 
 
BANKING DETAILS AND ADDRESSES OF THE PARTIES
 
 
Компанія «Труніті»
Trunity, Inc.
 
Адреса: 2711, Центервільроад, оф.400, м. Вілмінгтон, Нью Кастл, 19808, Делавер, Сполучені Штати Америки.
Банк:
Address: 2711, Centerville road, Suite 400, city of Wilmington, County of New Castle, 19808, State of Delaware, USA
 
____ Chief Executive Officer_ ______
(__ _x/Terry Anderton_ _____/___ Terry Anderton _________)
 
       
 
Компанія «ІннСолюТеч»
InnSoluTech LLP
 
 
Адреса:   Віннінгтон Хаус, 2 Вудберрі Грув Норс Фінчлі, Лондон, Об’єднане Королівство N12 0DR
Реєстраційний номер OC 382538
 
Address: Winnington House, 2 Woodberry Grove, North Finchley, London, United Kingdom, N12 0DR
Registration number OC382538
 
 
___________________________________
(______________________/______________________)
 
       
 
Товариство з обмеженою відповідальністю «ЕДУКОМ»
Limited Liability Company «EDUCOM»
 
 
Адреса: Україна, 03110, м. Київ, бул.   Івана Лепсе – вул. Академіка Каблукова, будинок 51/16.
Ідентифкаційний код: 34914117
Р/Р : 26004000028955 в ПАТ «Укрсоцбанк» в м. Києві ,   МФО : 300023
Address: 51/16, Ivana Lepse Blvd. – Akademika Kablukova Str., city of Kyiv, 03110, Ukraine.
ID 34914117
Operating account: 26004000028955 PJSC “Ukrsotsbank” Kyiv,  MFO (sort code) : 300023
 
 
______ _ Director __ _____________
(____ x/ Romanchuck SV ____________/____   Romanchuck SV ______)
 

 
 
 
 
 
Exhibit 10.6
 

 
 
Attachment # 1
to Contract on realization of the investment project
signed _________2013
 
 
Додаток № 1
до Договору про реалізацію інвестиційного проекту
від «___»_____ 2013 року
 
 
 
SHARE PURCHASE AGREEMENT
 
ДОГОВІР КУПІВЛІ-ПРОДАЖУ ЧАСТКИ
 
 
 
______________, _______              ______201__
 
 
_________, ______          «____»____201__року
 
InnSoluTech LLP , legal entity ( partnership) incorporated and registered in England and Wales with legal status, registration number OC382538, has its registered office at the address: Winnington House, 2 Woodberry Grove, North Finchley, London, United Kingdom, N12 0DR, hereinafter referred to as «Vendor», represented by __________________________________________, acting on the grounds of _________________________________________, on the one hand, and
Trunity, Inc. , a legal entity, registered and operating according to the legislation of the United States of America, which has its registered office at the address: 2711, Centerville road, Suite 400, city of Wilmington, County of New Castle, 19808, State of Delaware, hereinafter referred to as «Purchaser» represented by __________________________________________, acting on the basis of _________________________________________ on the second hand,
Компанія «Іннсолютеч» , юридична особа ( партнерство), яке зареєстрована та діє відповідно до законодавства Англії та Уельсу , за реєстраційним номером OC 382538, офіс якої зареєстровано за адресою Віннінгтон Хаус, 2 Вудберрі Грув Норс Фінчлі, Лондон, Об’єднане Королівство N12 0DR , далі в тексті «Продавець»,   в особі ___________________ __________________, який (яка) діє на підставі ____________ _________________________ , з однієї сторони, та
Компанія «Труніті» , юридична особа, яка зареєстрована та діє відповідно до законодавства Сполучених Штатів Америки за адресою 2711, Centerville road, Suite 400, city of Wilmington, County of New Castle, 19808, State of Delaware,   далі в тексті «Покупець», в особі ___________ ___________________________ __, який (яка) діє на підставі _______ ___________________________ ______, з іншої сторони,
 
 
 
PREAMBLE
 
 
ПРЕАМБУЛА
 
The Vendor holds 100 % of all issued shares of the Limited Liability Company “ EDUCOM ” a legal entity, registered and operating according to the legislation of Ukraine which has its registered office at the address: 51/16, Ivana Lepse Blvd. – Akademika Kablukova Str., city of Kyiv, 03110, Ukraine, EDRPOU 34914117 (hereinafter referred to as “Company”).
 
Purchaser agrees to purchase and Vendor agrees to sell to the Purchaser, the part of 15% of all issued shares of the Company that comprises 8100,00 UAH (hereinafter referred to as “the Shares”), subject to and in accordance with the terms and conditions under in this Agreement (hereinafter referred to as “Share Purchase Agreement”.
That is why, the Parties hereto have agreed as follows:
Продавець є власником частки, яка складає 100 % всього статутного капіталу Товариства з обмеженою відповідальністю « ЕДУКОМ », юридичної особи, яка зареєстрована та діє відповідно до законодавства України за адресою Україна, 03110, м. Київ, бул. Івана Лепсе – вул. Академіка Каблукова, будинок 51/16, ЄДРПОУ 34914117   (далі в тексті «Компанія») .
Покупець має бажання придбати, а Продавець погоджується продати частку, а саме 15% всього статутного капіталу Компанії, що в грошовому еквіваленті складає 8100,00 грн. (далі в тексті «Частка») в порядку та на умовах, викладених в цьому Договорі (далі в тексті «Догові купівлі-продажу частки») .
 
Тому Сторони домовилися про наступне:
 
 
 
 
 
 
 
1
 
SUBJECT OF THE
SHARE PURCHASE AGREEMENT
 
 
ПРЕДМЕТ ДОГОВОРУ КУПІВЛІ-ПРОДАЖУ ЧАСТКИ
 
1.1
The Vendor agrees to sell to the Purchaser, and the Purchaser agrees to purchase the Shares at the price and on the terms and conditions as set forth herein below.
Продавець погоджується продати, а Покупець погоджується придбати Частку за ціною, в порядку та на умовах, викладених нижче.
 
2
 
PRICE AND PAYMENT CONDITIONS
 
 
ЦІНА ТА ПОРЯДОК ОПЛАТИ
 
2.1
Cost of the Shares and terms of payments is set out in Attachment № 1.
Вартість Частки та порядок оплати встановлюються в Додатку №1.
 
3
 
COMPLETION OF SHARE PURCHASE AGREEMENT
 
 
ВИКОНАННЯ ДОГОВОРУ КУПІВЛІ-ПРОДАЖУ ЧАСТКИ
 
3.1
Completion of the Share Purchase Agreement shall take place on the date of this Share Purchase Agreement at the business office of the Vendor, whereupon the Vendor shall deliver to the Purchaser:
(a)           duly completed and executed instruments of transfer in respect of the Shares, sufficient to transfer the full legal and beneficial title in the Shares in favor of the Purchaser;
(b)           duly completed and executed minutes of the general meeting of shareholders of the Company, approving the agreement for transferring of the Shares from the Vendor to the Purchaser accordance to this Share Purchase Agreement.
Виконання Договору купівлі-продажу частки здійснюється на вказану в ньому дату за місцезнаходженням Продавця, де Продавець повинен передати Покупцю наступне:
(a) належним чином підписані та оформлені документи, необхідні для перереєстрації Частки на Покупця;
 
(b) належним чином оформлений протокол загальних зборів учасників Компанії, який передбачає погодження на передачу Частки від Продавця Покупцю на умовах, викладених в Договорі купівлі-продажу частки .
 
4
 
OWNERSHIP RIGHTS
 
 
ПЕРЕХІД ПРАВА ВЛАСНОСТІ
 
4.1
The ownership rights in respect of the Share shall be transferred to the Vendor in the moment of state registration of the respective changes in the Charter of Company in the country of Company’s registration.
Право власності на Частку переходить до Покупця з моменту державної реєстрації змін до статуту Компанії у країні реєстрації Компанії.
 
 
 
 
 
 
 
5
 
TERMS ON PARTICIPATION OF THE PURCHASER IN THE MANAGEMENT OF COMPANY
 
 
ПРАВА ПОКУПЦЯ ЩОДО УЧАСТІ В УПРАВЛІННІ КОМПАНІЄЮ
 
5.1
Since the transition to the Purchaser ownership share in the share capital (fund) of the Company it acquires the following rights.
З моменту переходу до Покупця права власності на частку у статутному капіталі (фонді) Компанії він набуває наступних прав.
5.2
The Company shall have a Governing Board.  Purchaser will have the right to nominate candidates for a post of leading representative of Governing Board of the Company and other members of the above mentioned body in proportion to the share size of the Purchaser in Company ’ ’ s authorized capital
В Компанії буде створено Правління . Покупець буде мати право висувати кандидатури на посаду керівного представника Правління Компанії та інших членів зазначеного органу, пропорційно розміру частки Покупця в статутному капіталі Компанії.
 
5.3
Company’s Governing Board means the collegiate body of the Company consisting of 5 (five) members and will have supervisory powers concerning the executive body of the Company. The powers of the Governing Board and election period of its members will be defined in the Articles of Association of the Company and/or in a separate Provision and will require approval of such changes to the Articles of Association of the Company and/or approval of the Provision by General Meeting of participants of the Company. The decision concerning creation of such body, amendments to the Articles of Association of the Company in connection with the Governing Board creation and/or approval of Provision are considered adopted if the participants of the Company voted and such participants will collectively have more than 50 percent from total quantity of votes of the Company.
Під Правлінням Компанії Сторони розуміють колегіальний орган Компанії, що складатиметься з 5 (п’яти) членів, та який матиме наглядові повноваження щодо виконавчого органу Компанії. Повноваження Правління, строк на який будуть обиратись його члени буде визначатись в статуті Компанії та/або в окремому Положенні та буде потребувати затвердження таких змін до статуту та/або затвердження Положення Загальними зборами учасників Компанії. При цьому рішення щодо створення такого органу, внесення відповідних змін до статуту Компанії у зв’язку із створенням Правління та/або затвердженням положення про нього вважається прийнятим, якщо за нього проголосують учасники Компанії, що володіють у сукупності більш як 50 відсотками загальної кількості голосів учасників Компанії .
5.4
The Governing Board , will coordinate the annual budget of the Company prepared by the executive body of the Company. Approval of the annual budget shall require a vote "for" by a majority of the Governing Board members. After approval by the Governing Board it will be submitted for approval to the participants of General Meeting of the Company.
Правління буде погоджувати річний бюджет Компанії, підготовлений виконавчим органом Компанії. Погодження річного бюджету буде відбуватись шляхом голосування «за» простою більшістю голосів членів Правління. Після погодження зазначеного бюджету Правлінням, він буде передаватись на затвердження Загальних зборів учасників Компанії .
5.5
Any cost-based item (item of expenditure), which is not included in the budget at the amount of more than $ 25,000 (twenty five thousand dollars) or several items of expenditure at the total amount of $ 25,000 (twenty five thousand dollars) which were not previously approved must be approved by a majority vote of the Governing Board .
Будь-яка витратна стаття, що не входить у бюджет, розміром понад $ 25 000 (двадцять п’ять тисяч доларів США) або кілька витратних статей на загальну суму $25 000 (двадцять п’ять тисяч доларів США), попередньо не схвалені Загальними зборами учасників Компанії повинні затверджені більшістю членів Правління .
5.6
Any debt instruments, credit lines or any other financial instruments which are provided to the Company and have priority in comparison with ordinary shares, or those who create asset pledges or obligations for the Company in any form or any kind, must be approved by a majority of the Governing Board.
Будь-який з боргових інструментів, кредитних ліній або будь-яких інших фінансових інструментів, які забезпечуються під заставу Компанії, та які мають пріоритет над волею рядових учасників, або ті, що створюють зобов’язання для Компанії в будь-якій формі або у будь-якому вигляді, повинні бути схвалені більшістю членів Правління .
 
 
 
 
 
 
 
5.7
The Purchaser shall be entitled to receive all material information about the business and financial activity of the Company. On request of the Purchaser the Company is required to represent an information concerning the annual balance sheets, financial statements, minutes of participants of General Meetings of the company in the order and under conditions, provided by documents of the Company.
Покупець має право одержувати всю документальну інформацію про діяльність Компанії. На вимогу Покупця Компанія зобов'язана надавати йому для ознайомлення річні баланси, звіти про діяльність Компанії, протоколи зборів учасників в порядку та на умовах, що будуть передбачені статутними документами Компанії .
 
5.8
Profit of Company resulting from economic activity remains in its full disposal after:
 
reimbursement of material and similar expenses as well as labor costs;
payment of interest on bank loans and bonds;
 
payment of taxes to the budget and other payments provided by legislation.
The order of distribution of profit and reimbursement of costs shall be established and agreed by participants of General Meeting of the Company.
Прибуток Компанії в результаті господарської діяльності залишається у її повному розпорядженні після:
- відшкодування матеріальних та аналогічних витрат, а також витрати на робочу силу;
- виплата відсотків по банківських кредитах і облігаціях;
- сплати податків до бюджету та інших виплат, передбачених законодавством.
Порядок розподілу прибутку і відшкодування витрат, повинні бути встановлені і узгоджені учасниками Загальних зборів Компанії.
 
6
 
WARRANTIES
 
 
ГАРАНТІЇ
 
6.1
Each of the Parties represents and warrants to the other Party that it has full power and authority to enter into and perform this Share Purchase Agreement.
Кожна із Сторін заявляє та гарантує іншій   Стороні, що вона має всі необхідні повноваження для укладення і виконання Договору купівлі-продажу частки.
6.2
The Vendor represents and warrants to the Purchaser that:
(a)           there is no encumbrance, claim, charge, lien and/or equity on, over or affecting any and all of the Shares held by it, and there is no agreement or arrangement to give or create any such encumbrance, claim, charge, lien and/or equity, and no claim has been or will be made at any time by any person to be entitled to any of the foregoing;
 
 
(b)           all of the Shares held by the Vendor represents 15 per centum of the total issued and paid-up share capital of Company;
( c)           the Company has no liabilities.
Продавець заявляє та гарантує Покупцю, що:
 
(a) на момент укладення Договору купівлі-продажу частки Частка є вільною від будь – яких обтяжень, зобов’язань, вимог та не є предметом будь – яких судових спорів, не перебуває під арештом, а також на дату укладання Договору купівлі-продажу частки відсутній договір чи інша домовленість, яка може призвести до виникнення таких обтяжень, зобов’язань, вимог, судових спорів чи арешту, а також відсутні претензії, заявлені або такі, що будуть заявлені в будь-який час іншими особами, які можуть призвести до вищевикладених наслідків;
(b) Частка являє собою 15% всього зареєстрованого та сплаченого статутного капіталу Компанії;
(с) Компанія не має боргів.
6.3
The Vendor will take all necessary and proper actions aimed to register the respective changes in the Charter of Company.
Продавець зобов’язується докласти всіх необхідних зусиль для реєстрації відповідних змін до Статуту Компанії.
 
 
 
 
 
 
 
7
 
APPLICATIONS
 
 
ЗАЯВИ
7.1
Purchaser claims that it is duly notified by Vendor of the nature of business of the Company and the financial condition of its affairs, as well as all other circumstances concerning alienated Shares that may affect the decision on its acceptance.
Покупець стверджує, що повідомлений Продавцем належним чином про характер господарської діяльності Компанії і фінансовий стан його справ, а також про всі інші обставини щодо відчужуваної Частки, які можуть вплинути на рішення щодо її приймання.
7.2
Parties confirm that this Share Purchase Agreement meets their true intentions and character is fictitious and imaginary transaction entered into in accordance with the true will of the Parties, without any use of physical or mental pressure and favorable conditions for the Parties and is not the result of difficult circumstances agreement is made without the use of deception or concealment of facts, which are essential, equally sides understand the importance of the conditions of the Share Purchase Agreement, its nature and legal consequences wish the onset of precisely those legal consequences created by this Share Purchase Agreement and show that the agreement identified all the essential conditions, as evidenced by the signatures of Parties to the Share Purchase Agreement.
Сторони підтверджують, що Договір купівлі-продажу частки відповідає їх дійсним намірам і не носить характеру фіктивного та удаваного правочину, укладається у відповідності зі справжньою волею Сторін, без будь-якого застосування фізичного чи психічного тиску та на вигідних для Сторін умовах і не є результатом впливу тяжких обставин, укладається без застосування обману чи приховування фактів, які мають істотне значення, Сторони однаково розуміють значення, умови Договору купівлі-продажу частки, його природу і правові наслідки, бажають настання саме тих правових наслідків, що створюються даним Договором купівлі-продажу частки, а також свідчать, що договором визначені всі істотні умови, про що свідчать підписи Сторін на Договорі купівлі-продажу частки.
7.3
Parties confirm that all agreed on the essential conditions of sale of shares, and does not have any comments, additions or disagreements regarding the Share Purchase Agreement.
Сторони підтверджують, що домовились про всі істотні обставини купівлі-продажу частки, і не мають жодних зауважень, доповнень або суперечностей відносно умов Договору купівлі-продажу частки.
 
8
 
COSTS
 
 
ВИТРАТИ
 
8.1
Each Party shall bear its own costs in relation to the preparation, execution and performance of this Share Purchase Agreement.
Покупець самостійно несе витрати пов’язані з підготовкою, оформленням та виконанням цього Договору купівлі-продажу частки.
8.2
Any duty, tax, levy or other charge payable in connection with any matter contemplated herein shall be borne by Purchaser for its own account.
 
Всі мита, податки, збори чи інші витрати, оплата яких здійснюється внаслідок будь-яких дій, зазначених в Договорі купівлі-продажу частки, сплачуються Покупцем за власний рахунок.
 
 
 
 
 
 
9
 
RESPONSIBILITY OF THE PARTIES
 
 
ВІДПОВІДАЛЬНІСТЬ СТОРІН
 
9.1
In case any of the Parties fail to comply with the provisions of this Share Purchase Agreement, the defaulting Party will be obliged to reimburse to another Party the resulting damages and losses.
У випадку порушення однією зі сторін своїх обов’язків за Договором купівлі-продажу частки, Сторона, що допустила таке порушення зобов’язана відшкодувати іншій заподіяні збитки та інші витрати.
 
10
 
GOVERNING LAW AND ARBITRATION
 
 
ПРАВО, ЩО ЗАСТОСОВУЄТЬСЯ ТА ВИРІШЕННЯ СПОРІВ
 
10.1
Parties agreed that their relationship arising out of this Share Purchase Agreement shall be governed by the law of England, and relations between the Parties regarding registration actions concerning the Company and relations between the Parties as participants of the Company arising from the entry of the Purchaser to the members of the Company are regulated by Ukrainian law.
Сторони погодили, що їх взаємовідносини, що виникають з даного Договору купівлі-продажу частки, регулюються правом Англії, а відносини Сторін щодо реєстраційних дій щодо Компанії та відносини Сторін як учасників Компанії, що виникають внаслідок входження Покупця до складу учасників Компанії регулюються правом України.
 
10.2
Disputes between the Parties concerning the implementation of the Share Purchase Agreement, and which were not resolved by negotiations shall be settled in London Court of International Arbitration pursuant to its regulations.
Спори між Сторонами, що стосуються виконання умов Договору купівлі-продажу частки, та які не були вирішені шляхом переговорів, підлягають вирішенню Лондонському Міжнародному Третейському Суді відповідності до його регламенту.
10.3
Disputes between the Parties as participant of the company are resolved in accordance with the laws of Ukraine.
Спори між Сторонами як учасниками Компанії вирішуються відповідно до чинного законодавства України.
 
11
 
SEVERABILITY
 
 
НЕДІЙСНІТЬ ПОЛОЖЕНЬ ДОГОВОРУ КУПІВЛІ-ПРОДАЖУ ЧАСТКИ
 
11.1
If any provision of this Share Purchase Agreement thereof to any situation or circumstance shall be invalid or unenforceable, the remainder of this Share Purchase Agreement shall not be affected, and each remaining provision shall be valid and enforceable to the fullest extent.
Якщо внаслідок будь-якої ситуації чи обставини окремі положення цього Договору купівлі-продажу частки будуть визнані недійсними або нікчемними, це не тягне за собою втрату чинності іншими положеннями Договору купівлі-продажу частки, і такі положення залишаються чинними в повному обсязі.
 
12
 
VARIATIONS
 
 
ВНЕСЕННЯ ЗМІН ДО ДОГОВОРУ
 
12.1
No variations hereof shall be effective unless mutually agreed between the parties and made in writing.
Внесення змін до цього Договору купівлі-продажу частки можливе виключно за взаємною згодою сторін, про що укладається відповідна додаткова угода.
 
 
 
 
 
 
13
 
FORCE MAJEURE
 
 
ФОРС - МАЖОР
 
13.1
No party shall be liable to the others for any non-performance or delay in performance of any of its obligations under this Share Purchase Agreement resulting from any Act of God, flood, fire, war, riot, civil commotion, natural catastrophe, strike, act of government, change of law, or any other supervening event of whatsoever nature beyond the reasonable control of that party.   Notwithstanding the foregoing, the inability of a Party to make a payment due hereunder, for whatever reason, shall not be deemed a force majeure event.   The party claiming force majeure shall make every reasonable effort to remove the obstacle and to resume performance at the earliest practicable time.
Жодна зі сторін не відповідає за невиконання чи неналежне виконання своїх обов’язків за цим Договором купівлі-продажу частки, якщо таке невиконання чи неналежне виконання стало наслідком дії непереборної сили, повені, пожежі, військових дій, заколотів, громадських заворушень, природних катаклізмів, страйків, дій уряду, змін законодавства та інших обставин непереборної сили, які за своєю природою не залежали від волі такої сторони. Жодне з положень договору не може тлумачитись як таке, що надає можливість визначати неспроможність здійснення оплати форс-мадорними обставинами. Сторона, що посилається на дію обставин непереборної сили повинна докласти всіх зусиль для усунення перешкод та належного виконання своїх зобов’язань в найкоротші строки.
 
14
 
ENTIRE CONTRACT
 
 
ЗАКЛЮЧНІ ПОЛОЖЕННЯ
 
14.1
For the avoidance of doubt, unless terminated in accordance with the terms herein, this Share Purchase Agreement shall continue in full force and effect notwithstanding completion of the sale and purchase in so far as any obligation hereunder remains to be fulfilled.
З метою уникнення непорозумінь, якщо не зазначено інше, цей Договір купівлі-продажу частки діє до повного виконання сторонами своїх зобов’язань.
 
14.2
Neither party shall assign its rights and obligations hereunder without the prior consent in writing of the other party.
Жодна   із сторін не може передавати свої права та обов’язки, що виникають з цього Договору купівлі-продажу частки, без відповідної письмової згоди іншої сторони.
14.3
This Share Purchase Agreement is concluded in English and Ukrainian languages, in two copies, one copy for each Party, both copies being of equal legal power. In case of different interpretations, arising from translation, the English version prevails.
Договір купівлі-продажу частки укладено українською та англійською мовами в двох автентичних примірниках, по одному для кожної зі сторін. В разі виявлення розбіжностей, які виникли внаслідок перекладу – англійська версія має пріоритет.
     
 
IN WITNESS THEREOF, the parties have arranged their signatures in duplicates on this Agreement, whereof they have taken one each.
НА ПІДТВЕРДЖЕННЯ ВИКЛАДЕНОГО ВИЩЕ, сторони поставили свої підписи на кожному з екземплярів.
 
Signed by:
 
for the Vendor ____________________________
 
_______________________________________
 
Підпис :
 
від імені Продавця _________________________
 
_________________________________________
 
 
Signed by:
 
for Purchaser __________________________
 
_______________________________________
 
 
Підпис :
 
від імені Покупця ________________________
 
_________________________________________


 
 
 


 
Attachment No. 1
to Share purchase agreement
signed ___________________ 2013
 
Додаток № 1
до Договору купівлі-продажу частки
від «___»________2013 року
 
 
_________                                __________, 2013
 
 
_____________«___»_____ 2013 року
 
 
 
COST OF SHARES AND TERMS OF PAYMENT
 
 
ВАРТІСТЬ ТА ПОРЯДОК ОПЛАТИ ЧАСТКИ
 
 
InnSoluTech LLP , legal entity ( partnership) incorporated and registered in England and Wales with legal status, registration number OC382538, has its registered office at the address: Winnington House, 2 Woodberry Grove, North Finchley, London, United Kingdom, N12 0DR, hereinafter referred to as «Vendor», represented by __________________________________________, acting on the grounds of _________________________________________, on the one hand, and
Trunity, Inc. , a legal entity, registered and operating according to the legislation of the United States of America, which has its registered office at the address: 2711, Centerville road, Suite 400, city of Wilmington, County of New Castle, 19808, State of Delaware, hereinafter referred to as «Purchaser» represented by __________________________________________, acting on the basis of _________________________________________ on the second hand,
have concluded the present Attachment as follows:
Компанія «Іннсолютеч» , юридична особа ( партнерство), яке зареєстрована та діє відповідно до законодавства Англії та Уельсу , за реєстраційним номером OC 382538, офіс якої зареєстровано за адресою Віннінгтон Хаус, 2 Вудберрі Грув Норс Фінчлі, Лондон, Об’єднане Королівство N12 0DR, далі в тексті «Продавець»,   в особі ___________________ _________________, який (яка) діє на підставі ____________ ________________________ , з однієї сторони, та
Компанія «Труніті» , юридична особа, яка зареєстрована та діє відповідно до законодавства Сполучених Штатів Америки за адресою 2711, Centerville road, Suite 400, city of Wilmington, County of New Castle, 19808, State of Delaware,   далі в тексті «Покупець», в особі ___________ ___________________________ __, який (яка) діє на підставі _______ _____________ ____________________, з іншої сторони ,
уклали даний Додаток про наступне:
 
1
Parties agreed that the cost of Contract on realization of the investment project signed _________2013 increases in the cost of Shares and cost of the Shares included in cost of Contract on realization of the investment project signed _________2013.
 
Сторони погодили, що вартість Договору про реалізацію інвестиційного проекту від «___»_____ 2013 року збільшується на вартість Частки, та вартість Частки включена у вартість Договору про реалізацію інвестиційного проекту   від «___»_____ 2013 року.
2
To avoid any doubt, the Parties have determined that the transfer of funds under this Agreement is not expected.
Для виключення будь-яких сумнівів, Сторони визначили, що передання грошових коштів за даним Договором не передбачається.
 
IN WITNESS THEREOF, the parties have arranged their signatures in duplicates on this Agreement, whereof they have taken one each.
НА ПІДТВЕРДЖЕННЯ ВИКЛАДЕНОГО ВИЩЕ, сторони поставили свої підписи на кожному з екземплярів.
 
Signed by:
 
for the Vendor ____________________________
 
_______________________________________
 
Підпис :
 
від імені Продавця _________________________
 
_________________________________________
 
 
Signed by:
 
for Purchaser __________________________
 
_______________________________________
 
 
Підпис :
 
від імені Покупця ________________________
 
_________________________________________
 
 
 
 
Exhibit 10.7

 
 
 
ЛІЦЕНЗІЙНА УГОДА
 
 
LICENSE AGREEMENT
 
 
м. Київ, Україна «___»_____ 2013 року
 
 
Kyiv, Ukraine                                           «___»_____2013
 
 
Компанія «Труніті» , юридична особа, яка зареєстрована та діє відповідно до законодавства Сполучених Штатів Америки, офіс якої зареєстровано за адресою 2711, Центервільроад, оф.400, м. Вілмінгтон, Нью Кастл, 19808, Делавер, Сполучені Штати Америки, далі в тексті «Ліцензіар», в особі __________ _________________________ ___, який (яка) діє на підставі _______ _________________________ ______, з однієї сторони,
та
Товариство з обмеженою відповідальністю «ЕДУКОМ » , юридична особа, яка зареєстрована та діє відповідно до законодавства України, офіс якої зареєстровано за адресою Україна, 03110, м. Київ, бул. Івана Лепсе – вул. Академіка Каблукова, будинок 51/16, в подальшому «Ліцензіат», в особі ______________________________________ , який діє на підставі ______________________________________ , з іншої сторони,
разом далі в тексті – «Сторони», а кожна окремо – «Сторона»,
усвідомлюючи природу даної Ліцензійної угоди, значення своїх дій та їх юридичні наслідки, діючи добровільно, без фізичного, психічного та будь-якого іншого примусу, намагаючись врегулювати саме ті відносини, що відповідають заявленим цілям,
уклали   дану   Ліцензійну угоду про наступне:
Trunity, Inc. , a legal entity, registered and operating under the laws of the United States of America, having its registered office at the address: 2711, Centerville road, Suite 400, city of Wilmington, County of New Castle, 19808, State of Delaware, hereinafter referred to as the “Licensor” represented by ______________________________________, acting on the basis of ______________________________________, on the one hand, and
Limited Liability Company «EDUCOM» , a legal entity registered and operating according to the legislation of Ukraine which has its registered office at the address: 51/16, Ivana Lepse Blvd. – Akademika Kablukova Str., city of Kyiv, 03110, Ukraine, hereinafter referred to as the “Licensee” represented by ______________________________________, acting on the basis of ______________________________________, on the other hand,
jointly hereinafter referred to as «the Parties», and each separately hereinafter referred to as «the Party»,
understanding the nature of the present Agreement, realizing the value of the actions and legal consequences, acting freely, with no physical, psychical or other compulsion, wishing to settle those relations which meet the required purposes,
have concluded the present License agreement as follows:
 
 
ПРЕАМБУЛА
 
 
PREAMBLE
 
 
Приймаючи до уваги, що Ліцензіат має потребу у використанні певного продукту інтелектуальної власності.
Враховуючи, що Ліцензіар володіє продуктом інтелектуальної власності, параметри якого повністю задовольняють потреби Ліцензіата.
Таким чином, з метою договірного врегулювання всіх попередніх домовленостей Сторін щодо істотних умов та для забезпечення взаємних економічних та підприємницьких інтересів, Сторони домовилися про викладене нижче:
Whereas the Licensee needs to have specific product of intellectual property.
 
Considering that Licensor owns the product of intellectual property, criteria fully satisfy the needs of the Licensee
 
Thus, with the purpose of agreementual settling of all previous negotiations of the Parties on essential conditions and to ensure mutual economic and business interests, the Parties agreed on the following:
 
 
 
 
 
 
1
 
ВИЗНАЧЕННЯ ТЕРМІНІВ
 
 
DEFINITION OF TERMS
 
 
В даному Ліцензійній угоді наступні терміни, якщо інше не визначено прямо, мають наступне значення:
In this License agreement the following terms, unless otherwise agreed directly, have the following meanings:
1.1
« Ліцензійна угода » − даний Ліцензійна угода про передачу виключних майнових прав на Платформу на території України.
«License agreement» - present License agreement on transfer of exclusive property rights on the Platform in Ukraine
1.2
«Додаток» − будь-який додаток до Ліцензійної угоди, який є його невід’ємною частиною, якщо він вчинений в письмовій формі та підписаний уповноваженими представниками Сторін.
« Attachment» means any attachment to the License agreement, which is its integral part, if it is concluded in writing and signed by the authorized representatives of the Parties.
 
1.3
«Проект » – створення спеціалізованого ресурсу у галузі почтакової і середньої шкільної освіти (1-11 класи) .
« Project » − means public educational resource within Ukraine’s primary and secondary education system (grades 1 – 11) development.
1.4
«Старт Проекту» - момент початку реалізації Проекту, який буде визначено додатково .
« Project start» - the date when the Project implementation starts, and which will be determined additionally.
1.5
« Платформа» – об’єкт права інтелектуальної власності, а саме сукупність комп’ютерних програм та частин програм у вигляді Платформи Trunity (відповідної версії), що належить Ліцензіару.
«Platform» means an object of intellectual property rights, namely aggregate of the computer programs and parts of the programs in the form of Trunity platform (appropriate version), which belongs to the Licensor on the right of ownership.
1.6
«Ліцензія» – виключний та невідкличний дозвіл Ліцензіара на право використання Ліцензіатом Платформи в порядку та у межах, визначених Ліцензійною угодою .
« License» means an exclusive and irrevocable permission of the Licensee to use the Platform in accordance with the License Agreement.
 
1.7
«Дозволене використання» - використання Платформи в освітньому ресурсі в початкових і середніх школах загальнодержавної системи освіти України (класи 1 - 11) Дозволеними користувачами.   Платформа буде використана Ліцензіатом в Україні для цілей доставки освітнього контенту в Україні.
Дозволене використання , не включає   (і)  використання студентами вищих навчальних закладів освіти  як всередині, так і поза межами України, (іі) використання студентами або іншими особами за межами України з неукраїнською програмою-орієнтованою освітою, і (ііі) використовується для освітніх або не-освітніх цілей за межами початкової та середньої освіти (класи 1 – 11).
Разом з цим, для забезпечення мети Ліцензії, відповідний доступ до Платформи надається особам, які не є складовою системи початкової та середньої освіти, однак пов’язані з нею. Такі особи також включені до переліку Дозволених користувачів.
« Permitted Use» means using the Platform in public education for Ukraine’s primary and secondary education system (grades 1 – 11) by Permitted users. Platform will be used for purposes of delivering educational content in Ukraine.
 
Specifically excluded from the Permitted Use, among other excluded uses, are (i) use by students or others within higher or adult education both inside and outside Ukraine, (ii) use by students or others outside Ukraine from non-Ukrainian-curriculum-centered education, and (iii) use for educational or non-educational purposes outside of primary and secondary education (grades 1 – 11).
 
At the same time for the purpose of the License relevant access to the Platform is given to persons who are not the part of primary and secondary education system but connected with it. Such persons are put into a list of Permitted users.
1.8
«Дозволений користувач » – для цілей Ліцензійної угоди визнаються:
А) учні державних початкових і середніх рівнів системи освіти України (1-11 клас) у кількості до 1,5 млн. осіб;
B ) куратори – вчителі та інші особи, яким надано право визначення та забезпечення доступу користувачів до Проекту;
C ) батьки учнів – особи, яким надається інформація про учня;
D ) правовласники контенту Проекту – особи, яким наається доступ до статистики використання їхнього контенту;
E ) інші особи, яким надане право доступу до Проекту на оплатній основі.
Перевищення кількості Дозволених користувачів категорії А не є порушенням Ліцензійної угоди, а є підставою для зміни вартості Ліцензії, відповідно до Додатку №1.
Фінансові умови залучення до Проекту Дозволених користувачів категорії E буде визначено Сторонами окремо.
« Permitted User » for the purpose of Agreement means:
A) students of elementary and secondary school level of education of Ukraine (1-11 grade) in number up to 1.5 million;
B) supervisers – teachers and other persons that have the right to confirm a user access to the Project;
C) students’ parents – person who gains access to information about student;
D) content rightholders – person who gains access to owned content statistics;
E) other persons who get paid access to the Project.
Excess of category A users above the limit number shall not be taken to be a breach of Agreement, but shall result in additional payment according to Attachment 1.
Financial terms of category E users shall be determined by the Parties further in a separate agreement.
 
 
 
 
 
1.9
«Конфіденційна інформація» – будь-які відомості (повідомлення, дані), в тому числі інформація, що становить комерційну таємницю, представлені Сторонами одна одній у письмовому або іншому вигляді за умови, що Сторона, що розкриває таку інформацію, вкаже на конфіденційність названих відомостей (повідомлень, даних), в тому числі письмово або шляхом проставлення на носії інформації відповідного грифу конфіденційності.
« Confidential information» means any information (notification, data), including information, that is a commercial secret, represented by the Parties to each other in writing or in other form, provided that the Party , disclosing such information , should point at confidentiality of the information mentioned above (notification, data), including in written form or by indication on the data carrier of the corresponding mark of confidentiality.
 
1.10
« Чинне законодавство » − будь-який чинний нормативний, підзаконний акт України, зведення законів, судове рішення, наказ, надпис, судова заборона в будь-якій юрисдикції, інші законодавчі або адміністративні заходи, будь-які рішення органів місцевого самоврядування, що мають силу закону і застосовуються до відносин Сторін.
« Current legislation » means such documents: any current normative document of Ukraine, by-law, the Agreement, the Code of laws, the court decision, order, inscription, injunction, other legislative or administrative measures, any decisions of the bodies of local self-government, which are legally valid and used to the relations of the Parties.
 
1.11
«Форс-мажорні обставини» − непередбачені та непереборні події, що відбуваються незалежно від волі Сторін (війна, воєнні дії, громадські безпорядки, блокада, ембарго, інші міжнародні санкції, страйк, локаут, пожежа, аварія, паводок, блискавка, смерч, ураган, землетрус, інше стихійне лихо чи сезонне природне явище, валютні обмеження, інші дії держав, або інші обмеження прав власності, прийняті відповідним державним органом або органом місцевого самоврядування тощо) і призводять до ускладнення/неможливості виконання Ліцензійної угоди. Не можуть визнаватись форс-мажорними обставинами рішення власників Сторін, якщо вони спрямовані на зміну чи припинення прав і обов’язків за Ліцензійною угодою . Незважаючи на вищесказане, нездатність Сторони зробити оплату в установленому порядку, з будь-якої причини, не вважається форс-мажорною обставиною. Сторона, що декларує настання форс-мажорних обставин докладає всі можливі зусилля, щоб усунути перешкоду і відновити виплати у найкоротші практично можливі строки.
« Force-majeure circumstances» means unexpected and irresistible events, which take place regardless of will of the Parties (war, military actions, public disorders, blockade, embargoes, other international approvals, strike, lock-out, fire, accidents, flood, lightning, tornado, hurricane, earthquake, other natural disasters or seasonal natural phenomenon, other actions of the states, as well as other limitations of property rights, approved by the corresponding body or body of local self-government and etc.) and result in complication/impossibility of performance of the License agreement. Decision of proprietors of the Parties cannot be admitted as force-majeure circumstances, if they are aimed to the change or termination of rights and duties under the present License agreement. Notwithstanding the foregoing, the inability of a Party to make a payment due hereunder, for whatever reason, shall not be deemed a force majeure event.  The party claiming force majeure shall make every reasonable effort to remove the obstacle and to resume performance at the earliest practicable time.
 
 
 
 
 
 
 
1.12
Будь-які граматичні, синтаксичні та інші помилки, описки тощо не повинні тлумачитись Сторонами всупереч цілям Ліцензійної угоди .
Any grammatical, syntactic and other mistakes, as well as slips etc. should not be interpreted by the Parties in conflict with the purposes of the License agreement.
 
1.13
«Істотне порушення» означає (і), нездатність здійснювати платежі за цим Ліцензійною угодою , ( іі ) нездатність виконання взятих на себе майнових не грошових зобов’язань по цій Ліцензійній угоді або відмова від них .
« Material breach » means (i) a failure to make payments required by this Agreement, (ii) failure or refusal to honor material nonmonetary obligations under this Agreement.
 
2
 
ПРЕДМЕТ ЛІЦЕНЗІЙНОЇ УГОДИ
 
SUBJECT OF THE LICENSE AGREEMENT
 
2.1
Ліцензіар надає Ліцензіату виключні права на Дозволене використання Платформи на території України, а Ліцензіат виплачує Ліцензіару плату на умовах, передбачених Ліцензійною угодою та Додатками до нього.
Для цілей цієї Угоди виключне право означає, що Ліцензіар не передать нікому жодних прав та юридичних можливостей на Дозволене використання Платформи в Україні
Licensor grants the Licensee the exclusive rights to use the Platform in Ukraine solely for the “Permitted Use”, and Licensee shall pay to Licensor a fee under the terms provided by this License agreement and its Attachments.
For purpose of this Agreement exclusive right means that Licensor shall not transfer to any person any rights or legal opportunities for the Permitted use of the Platform.
2.2
Ліцензіар гарантує Ліцензіату наявність в нього майнових прав на Платформу, які можуть бути надані та надаються Ліцензіату, за Ліцензійною угодою .
Licensor guarantees to Licensee existence of its property rights over the Platform that can be provided and are provided to Licensee under License agreement.
2.3
За Ліцензійною угодою Ліцензіат не отримує права на підписання субліцензійних договорів щодо використання даної Платформи.
Under this License agreement, Licensee receives no rights to sign sublicenses for use of this Platform.
2.4
Права на використання Платформи, передані відповідно до Ліцензійної угоди, не можуть бути відкликані раніше закінчення строку дії самого Ліцензійної угоди за умови відмови Ліцензіата від пролонгації Ліцензійної угоди. В тому випадку, якщо дію Ліцензійної угоди буде пролонговано, заборона на відкликання прав на використання Платформи буде продовжена до закінчення строку, на який було пролонговано Ліцензійна угода .
The rights to use the Platform transferred according to the License agreement cannot be withdrawn before the expiration of the License agreement with the condition that Licensee will not prolong the License agreement. If the validity of the License agreement will be prolonged the ban on withdrawal of rights to use the Platform will be extended until the end of the term for which License agreement was prolonged.
2.5
Платформа поставляється з базовим інформаційним наповненням – освітнім електронним контентом. Базовий контент поставляється на умовах GNU General Public License (універсальна загальнодоступна ліцензія). Такі умови дозволяють копіювати, модифікувати і поширювати (у тому числі на комерційній основі) контент , але тільки в межах Дозволеного використання. Відповідно до Creative Commons  ліцензії, власник авторських прав вказує точні терміни використання (наприклад, "комерційний", "некомерційний", і т.д., як це визначено в http://creativecommons.org/), і Ліцензіат може вільно копіювати, модифікувати і поширення такого контенту в обмеження, передбачені умовами ліцензії, Creative Commons але тільки в межах Дозволеного використання.
The Platform shall be delivered along with the built-in basic digital educational content. Basic content is distributed under the GNU public license (multipurpose publicly available license)   as well as under the Creative Commons license framework. Under the GNU public license the Licensee is free to copy, modify and distribute the content (including but not limited to commercial distribution) but only for the Permitted Use.  Under the Creative Commons license framework, the copyright holder specifies exact usage terms (e.g. “commercial”, “non-commercial”, etc, as defined at http://creativecommons.org/) and Licensee is free to copy, modify and distribute such content within the restrictions specified by the Creative Commons license terms, but only for Permitted Use.
 
 
 
 
 
 
2.6
Використання додаткового комерційного контенту Ліцензіара Ліцензіатом для будь-яких інших цілей, крім Дозволеного використання , не є предметом цієї Угоди і заборонено без згоди Ліцензіара за своїм розсудом, якщо тільки такий   додатковий контент не придбаний на Trunity store. Розроблений власними силами Ліцензіата контент, а також інший правомірно отриманий контент , може використовуватися Ліцензіатом без обмежень.
Використання Платформи для будь-яких інших цілей, крім Дозволеного використання , не є предметом цієї Угоди і заборонено без згоди Ліцензіара
Use of additional commercial content of the Licensor by the Licensee for any purpose other than the Permitted Use is not subject to this agreement and is prohibited without Licensor’s consent in its sole discretion, unless such additional content is purchased through the Trunity store. Content which is developed by the Licensee as well as other content legally obtained by the Licensee may be used by the latter without any restriction.
 
Use of the Platform for any purpose other than the Permitted Use is not subject to this agreement and is prohibited without Licensor’s consent in its sole discretion
2.7
Ліцензіат та Дозволені   користувачі Платформи мають гарантоване право доступу до базового контенту. Це означає, що Ліцензіар не буде блокувати такий контент та/або вимагати додаткової оплати за доступ до такого контенту.
Licensee and end Permitted users of the Platform shall be granted access to Basic content. This means that the Licensor will not block such content and/or demand for additional remuneration for access to such content.
2.8
Ліцензіар не отримує прав на контент, який створений, придбаний, розміщений та використовується Ліцензіатом у Проекті .
The Licensor shall not be granted any rights for content createrd, purchased, posted and used by the Licensee in the Project.
2.9
Для цілей Проекту Ліцензіатом буде ствероено / придбано певна кількість програм, додатків та сервісів, які поєднуватимуться з Платформою, не змінюючи її. Такі дії знаходяться в межах Дозволеного використання та не потребують окремої згоди Ліцензіара. Ліцензіар не отримує прав на такі програми, додатки, сервіси.
For the purpose of the Project Licensee will create or purchase a number of programs, applications and services connected with the Platform without changing one. Such actions are in Permitted use and do not need any permission of Licensor. Licensor gains no rights to such programs, applications and services.
2.10
Проект або окремі його частини можуть становити собою окремі об’єкти інтелектуальної власності (нематеріальні активи), права на які (за виключенням Платформи) належатимуть Ліцензіату та можуть бути передані третім особам.
Project or parts of it shall become separated objects of intellectual property rights (non-material assets) with all rights (exceprt rights for the Platform) received by Licensor and Licensor will have the right to transfer them.
 
 
3. ПРАВА ТА ОБОВ’ЯЗКИ СТОРІН
 
 
3. RIGHTS AND LIABILITIES OF THE PARTIES
3.1
Ліцензіат має право на використання Платформи, згідно з її призначенням виключно у своїй господарській діяльності.
Licensee has the right to use the Platform in accordance with its purpose solely in its business.
 
 
 
 
 
 
3.2
За   Ліцензійною угодою Ліцензіату надаються наступні права на користування Платформою:
·   виключне право на використання як в цілому, так і будь-якої його частини, елементу, будь-яким чином та у будь-який спосіб на власний розсуд Ліцензіата , за умови, проте, що Платформа може бути використана тільки для Дозволеного використання ;
·   виключне право на внесення змін і модифікацій та доповнень до Платформи згідно з Platform Application Programming Interface (API) , включаючи адаптацію до іншого середовища або іншого круга користувачів, а також інші зміни, доповнення або скорочення, за умови, однак, що всі ці зміни відповідають  публічно задокументованим керівництву   API;
·   виключне право на внесення змін і модифікацій в Платформу, включаючи адаптацію до іншого середовища або іншого круга користувачів, а також інші зміни, доповнення або скорочення за умови, що всі ці зміни підлягають попередньому письмовому   згоди погодженню з   Ліцензіаром, який не повинен  необгрунтовано відмовити в цьому,   у разі якщо Ліцензіар не в змозі продовжувати підтримувати Платформу в зв'язку з істотним порушенням умов цієї Угоди Ліцензіаром і без можливості виправлення таких порушень, як це передбачено тут, або по причині неплатоспроможності, банкрутства або ліквідації, виключні права на такі зміни в   Платформі без письмової згоди Ліцензіара, також письмову згоду Ліцензіара не потрібно отримувати  для створеня будь-яких надбудов і доповнень, які не пов'язані зі змінами в ядрі Платформи ;
·   виключне право перешкоджати неправомірному використанню Платформи, в тому числі забороняти таке використання іншими особами;
·   виключне право на отримання доходів від використання Платформи;
·   виключне право використовувати Платформу та/або будь-яку його частину, елемент, складову, як в цілому, так і окремо при здійсненні Ліцензіатом своєї підприємницької та господарської діяльності.
Under this License agreement to Licensee are granted the following rights on using the Platform:
·   exclusive right to use as a whole or any part of it, element by any means and in any manner on sole discretion of the Licensee ; provided, however, that the Platform may be used only for the Permitted Use;
 
 
·   exclusive right to make changes, modifications and additions via the Platform Application Programming Interface (API), including adapting to a different environment or different range of users, as well as other changes, additions or reductions; provided however, that all such changes conform to the publically documented API guidelines;
 
·   exclusive right to make changes and modifications in the Platform, including adapting to a different environment or different range of users, as well as other changes, additions or reductions ; provided however, that all such changes shall be subject to Licensor’s prior written approval, which shall not be unreasonably withheld; in case Licensor  is unable to continue supporting the Platform due to material breach of this Agreement by Licensor and failure to cure such breach as provided herein, or due to insolvency, bankruptcy or dissolution, exclusive rights to make such changes to the Platform without requiring written approval from Licensor shall be granted. Written approval of the Licensor is not needed for any add-ins and add-ons that are not related to changes in the core of the Platform;
 
 
·   exclusive right to prevent misuse of Platforms, including prohibit such use by others;
 
 
·   exclusive right to receive income from the use of Platform;
·   exclusive right to use the Platform and/or any part of it, element, component, as a whole, and separately in carrying out by Licensee its business and economic activity.
3.3
Ліцензіар має право на отримання від Ліцензіата плати за передачу прав на використання Платформи, розмір та порядок сплати якої визначені в Додатку №1.
Licensor has a right to receive a fee from the Licensee for the transfer of rights on using the Platform, size and manner of payment of which are defined in Attachment№ 1.
3.4.
Ліцензіар зобов’язується здійснювати технічну підтримку та супровід роботи Платформи на умовах, передбачених окремо укладеним договором. При цьому обсяг підтримки за таким окремим договором не може бути меншим за обсяг, визначений у Додатку № 2.
Для виключення будь-яких сумнівів, Ліцензіар зобов’язується надати Ліцензіату підтримку та супровід роботи Платформи у обсягу, не меншому за обсяг, визначений у Додатку № 2, навіть у тому випадку, якщо окремий договір про підтримку не буде укладений.
Licensor agrees to provide technical support and maintenance of Platform on the conditions provided at separately concluded agreement.
In this case, the volume of support for such separate agreement shall not be less than the amount specified in Attachment № 2.
 
To avoid any doubt, the Licensor is obliged to provide to Licensee support and maintenance of the Platform in the amount not less than the amount specified in Att achment № 2 even if a separate agreement for support will not be concluded.
 
 
 
 
 
 
3.5.
Незалежно від будь-яких положень цієї Угоди, Ліцензіат не має права використовувати Платформу або будь-яку інтелектуальну власность Ліцензіара, прямо або побічно, поза межами України або в Україні для будь-яких інших цілей, крім Дозволеного використання. Виключні права на використання Платформи на території України, тільки в межах Дозволеного використання, які отримує Ліцензіат після підписання Ліцензійної угоди, включають право на надання доступу до даної Платформи третім особам – Дозволеним користувачам. Дозволені користувачі отримують доступ до Платформи на підставі ліцензії кінцевого користувача, яка по своїй суті є договором публічної оферти щодо користування Платформою. Надання доступу до Платформи Дозволеним користувачам не вважається наданням їм субліцензії для цілей цієї Ліцензійної угоди .
Notwithstanding any provision of this Agreement to the contrary, Licensee shall have no right to use the Platform or any of Licensor’s intellectual property, directly or indirectly, outside of Ukraine or within Ukraine for any purpose other than the Permitted Use. The exclusive rights to use the Platform in Ukraine for the Permitted Use, which Licensee gets after the signing of the License agreement, include the right of access to the Platform for third --party – Permitted users. Permitted users gain access to the Platform under a final user license, which essentially is a agreement of the public offer for use the Platform. Providing by Licensee of access to the Platform Permitted users is not considered as giving them sublicenses for the purpose of this Agreement.
3.6
Ліцензіат не буде прямо чи опосередковано намагатися перепроектувати Платформу.   Даний пункт має тлумачитися  з урахуванням п.2.7-2.10 Угоди.
L icensee will not directly or indirectly attempt to reverse engineer the Platform. This point has to be interpreted consistent with points 2.7-2.10 of the Agreement.
3. 7
Після підписання Ліцензійної угоди та отримання права на використання Платформи Ліцензіат матиме право на внесення відповідних змін та доповнень до Платформи з метою її якнайліпшої адаптації до Участі у Проекті. Під внесенням змін та доповнень розуміється можливість адаптування, локалізації, створення Ліцензіатом та третіми особами за замовленням Ліцензіата прикладних програм для Платформи. Всі зміни та доповнення у відповідності з цим розділом, крім тих, де зазначено використання API , вимагають попередньої письмової згоди Ліцензіара, який не повинен  необгрунтовано відмовити.
After signing of the License agreement and obtaining the right to use the Platform the Licensee has the right to make appropriate changes and amendments to the Platform with the purpose to best adapt it to the project. Under the making of changes and amendments means opportunity of adaptation, localization, creation by Licensees and third parties commissioned by Licensee applications for the Platform.  All changes and amendments pursuant to this Section other than those made using the publicly documented Application Programming Interface shall require Licensor’s prior written approval, which shall not be unreasonably withheld.
3. 8
Ліцензіар цим підтверджує, що для захисту своїх прав на використання Платформи Ліцензіат має право звернутися до суду.
Licensor hereby confirms that to protect its rights to use the Platform, Licensee has the right to apply to the court.
 
 
 
 
 
 
 
4
 
КОНТРОЛЬ НАД ВИКОРИСТАННЯМ ПРАВ
 
 
CONTROL OVER USAGE OF RIGHTS TO SOFTWARE
 
4.1
Факт передачі прав за Ліцензійною угодою від Ліцензіара Ліцензіату посвідчується Актом приймання-передачі прав на використання Платформи, що укладається в двох примірниках, по одному для кожної з Сторін.
The fact of the transfer of rights under this License agreement from Licensor to Licensee is certified by the respective acceptance certificate that shall be concluded in two copies, one for each Party.
 
4.2
Ліцензіар   має право в будь-який час здійснювати контроль над використанням Ліцензіатом наданих йому за Ліцензійною угодою прав.
Licensor is entitled to check the use of the rights granted under License agreement at any time.
4.3
 
 
 
 
4.4.
Ліцензіат зобов’язаний вживати заходів для запобігання неправомірного використання Платформи, не допускати її використання сторонніми особами, що не мають повноважень, наданих Ліцензіаром.
Ліцензіарз моменту підписання Угоди до Старту Проекту має право сформулювати технічні вимоги до хостінгу та інших технічних аспектів функціонування Платформи. Такі вимоги мають бути економічно та технічно обґрунтованими.
 
Licensee is obliged to take measures to prevent the misuse of the Platform , and to prevent its use by third parties that are not so permitted by Licensor.
 
From the moment of Agreement signing until start of the Project, Licensor has the right to lay down technical demands to hosting and other techniques of using the Platform. Such demands mustbe technically and economically reasonable.
 
 
ЗАГАЛЬНА ВАРТІСТЬ ЛІЦЕНЗІЙНОЇ УГОДИ
 
 
TOTAL VALUE OF THE LICENSE AGREEMENT
5.1
Загальна вартість Ліцензійної угоди, строки і порядок оплати встановлюється в Додатку №1.
Total value of the License agreement, terms and order of payments is set out in Attachment№ 1 .
5.2
Додаток №1 також визначає вартість користування правом на Платформу після спливу 5 років дії Ліцензійної угоди за умови пролонгації його дії.
Attachment №1 also specifies costs of rights on the Platform upon expiration of 5 years validity of the License agreement provided that the License agreement is prolonged.
 
6
 
КОНФІДЕНЦІЙНІСТЬ
 
 
CONFIDENTIALITY
6.1
Сторони визнають конфіденційною інформацію про правовідносини між ними та іншу інформацію відповідно до Ліцензійної угоди, зокрема, але не обмежуючись: зміст Ліцензійної угоди, мета та цілі правовідносин між Сторонами; характер будь-яких домовленостей між Сторонами; умови взаємовідносин між Сторонами.
 
The Parties admit the confidential information about the relationship between them and other information in accordance with this License agreement, including but not limited to the content of the License agreement, the purpose and goals of relationships between the Parties, the nature of any agreements between the Parties, and the terms of relations between the Parties.
6.2
Кожна Сторона, а також всі її працівники, агенти та консультанти докладатимуть максимум зусиль для збереження конфіденційної інформації, та не будуть в будь-який спосіб використовувати в своїй діяльності та/або надавати третім особам будь-яку Конфіденційну інформацію, отриману від іншої Сторони, без погодження з іншою Стороною.
Each Party and all of their employees, agents and consultants will make every effort to protect confidential information, and will not use it in any way in their activities and / or provide to third parties any confidential information obtained from the other Party, without approval of the other Party.
6.3
Сторони висловлюють своє бажання обмежити доступ осіб, які не являються співробітниками Сторін, до Конфіденційної інформації. Невиконання щодо зазначених осіб правил поводження з Конфіденційною інформацією є порушенням Ліцензійної угоди .
Parties express their wish to restrict access of persons who are not employees of the Parties to the Confidential Information. Failure on these persons on the handling of confidential information is a violation of License agreement.
 
 
 
 
 
 
 
7
 
ВІДПОВІДАЛЬНІСТЬ СТОРІН
 
 
LIABILITY OF THE PARTIES
7.1
За невиконання або неналежне виконання зобов’язань за Ліцензійною угодою Сторони несуть відповідальність відповідно до законодавства України.
For non-performance or improper performance of obligations under this License agreement, the Parties have responsibility according to the legislation of Ukraine.
7.2
Ліцензіар не несе відповідальності за шкоду або збитки Ліцензіата або третіх осіб, пов’язаних з використанням Платформи.
Licensor is not responsible for damage or loss of Licensee or third parties related to the use of Platform.
7.3
У випадку порушення Ліцензіатом умов використання Платформи, Ліцензіат відшкодовує Ліцензіару завдані у зв’язку з цим збитки.
In case of violation by Licensee of the conditions of use of the Platform, Licensee shall compensate to Licensor for damages caused in connection with this statement.
7.4
Якщо Ліцензіату будуть пред’явлені будь-які вимоги третіх осіб через порушення майнових авторських та/або суміжних прав третіх осіб у зв’язку з використанням Ліцензіатом переданих йому за Ліцензійною угодою прав, Ліцензіар зобов’язаний врегулювати такі вимоги третіх осіб самостійно і за власний рахунок, а також компенсувати усі документально підтверджені збитки, які були завдані Ліцензіару внаслідок пред’явлення вимог третіми особами.
If to Licensee will be filed any claims of third parties due to violation of proprietary copyright and / or related rights of third parties in connection with use by Licensee referred to it under this License agreement rights, Licensor should settle such claims by third parties independently and by its own account and compensate all documented losses incurred to Licensor as a result of a claim by third parties.
 
8
 
 
ДОКУМЕНТИ ТА ПОВІДОМЛЕННЯ
 
 
DOCUMENTS AND NOTIFICATIONS
 
8.1
Листування, передача запитів, інструкцій, коментарів, документів (за виключенням випадків, прямо визначених в Ліцензійній угоді), іншої інформації між Сторонамин в процесі виконання Ліцензійної угоди, якщо інший порядок не узгоджено додатково, може вестись, в тому числі, за допомогою телефонного, електронного та факсимільного зв’язку. Кожна зі Сторін зобов’язується приймати отримані від іншої Сторони електронною поштою повідомлення та документи і керуватись інформацією, що міститься в них незалежно від того, будуть такі повідомлення та документи підписані електронним цифровим підписом, чи ні.
Correspondence, delivery of queries, instructions, comments, documents (except for the cases expressly established in the License agreement), other information between the Parties in the course of execution of the Agreement, if the other order is not agreed additionally, can be made, without limitation, by telephone, electronic and facsimile communication. Each of the Parties is under obligation to accept notifications and documents received from the other Party by e-mail, and to follow the information contained in them regardless of that if such notifications and documents are signed by an electronic digital signature, or not.
 
8.2
Цим Сторони зобов’язуються передавати посадовим особам під підпис або направляти один одному виключно рекомендованим листом з повідомленням про вручення, в тому числі за допомогою кур'єрської служби, наступні документи: a) претензії щодо виконання Ліцензійної угоди; b); повідомлення, щодо обставин, пов’язаних з припиненням, пролонгацією або зміною Ліцензійної угоди .
Вказані документи, що направлені всупереч визначеному порядку, вважаються такими, що не направлені, і можуть не розглядатись Стороною, що їх отримала.
Hereby the Parties are under obligation to deliver for signing by the officials or send to each other by registered mail with delivery confirmation or by recognized courier ' service, the following documents: a) claims with regard to alleged breach of the License agreement; b); notifications, with regard to the circumstances, related to the termination, prolongation or change of the License agreement.
 
The mentioned documents, directed in violation of the established order, are considered to be unsent, and cannot be examined by the Party, that has received them.
 
 
 
 
 
 
 
9
 
ЗАПЕВНЕННЯ ТА ГАРАНТІЇ СТОРІН
 
ASSURANCES AND GUARANTEES OF PARTIES
9.1
Цим кожна із Сторін запевняє іншу Сторону у наступному:
укладання Ліцензійної угоди не порушує і не буде порушувати у майбутньому будь-якого іншого зобов’язання кожної зі Сторін за будь-яким іншим правочином, стороною якого виступає відповідна Сторона, включаючи, але не обмежуючись положеннями установчих/реєстраційних документів Сторони та чинного законодавства країни її реєстрації;
кожна зі Сторін здійснила всі належні дії для того, щоб особа/и, що підписала/и Ліцензійна угода від її імені, мала/и належні та дійсні повноваження на таке підписання на дату укладання Ліцензійної угоди ;
кожна зі Сторін здійснить всі належні дії для того, щоб особа/и, що буде/уть у майбутньому підписувати будь-які Додатки, Додаткові угоди до Ліцензійної угоди від її імені, мала/и належні та дійсні повноваження на таке підписання на дату укладання Додатків, Додаткових угод до Ліцензійної угоди ;
умови Ліцензійної угоди після його підписання є дійсним та чинним зобов’язанням кожної зі Сторін.
 
By this each Party assures other Party in following:
signing of this License agreement does not violate and will not violate in the future any other obligations of any Party under any other transaction, where one of the parties acting appropriate Party, including but not limited to the statutory provisions/registration documents of the Party and current law of the country of its registration;
 
 
each Party has taken all appropriate steps to ensure that the person/s who signed this License agreement on behalf of its name has/ve appropriate and valid credentials on such sign at the date of signing of License agreement;
 
Each Party takes all appropriate steps to ensure that the person/s that will in the future sign any Attachments, Additional agreements to this agreement on behalf of its name has/ve appropriate and valid credentials on such sign on the date of signing of Attachments, Additional Agreements for this License agreement;
the terms of this License agreement after its signing is a valid and enforceable liability of each Party.
 
Гарантія якості. Ліцензіар цим гарантує, що підтримка Платформи буде здійснюватися професійно підготовленим персоналом у відповідності до всіх вимог Ліцензійної угоди .
Quality Assurance. Licensor hereby warrants that Platform support will be provided by professionally trained personnel in accordance with all requirements of the License agreement.
 
10
 
ЗАСТОСОВНЕ ПРАВО ТА ВИРІШЕННЯ СПОРІВ
 
 
GOVERNING LAW AND RESOLUTION OF DISPUTES
 
10.1
Ліцензійна угода регулюється відповідно до права України.
This License agreement is governed according to the law of Ukraine.
10.2
Спори, що виникають між Сторонами в ході виконання Ліцензійної угоди, вирішуються шляхом переговорів.
Disputes arising between the Parties in the implementation of this License agreement shall be settled by negotiations.
10.3
Якщо спір неможливо вирішити шляхом переговорів, такий спір передається на розгляд до суду відповідно до чинного законодавства України.
If the dispute cannot be resolved by negotiation, the dispute shall be submitted to the court in accordance with the current legislation of Ukraine.
 
 
 
 
 
 
11
 
СТРОК ДІЇ ЛІЦЕНЗІЙНОЇ УГОДИ. ПРИПИНЕННЯ. ПРОЛОНГАЦІЯ
 
 
TERM OF LICENSE AGREEMENT.TERMINATION. PROLONGATION
11.1
Цим Сторони домовилися, що Ліцензійна угода набуває чинності з дати Старту проекту. Дата Старту проекту означає настання умов, за яких Ліцензіат може приступити до використання Платформи за призначенням. Про дату Старту проекту Ліцензіат повідомляє Ліцензіара офіційним листом в письмовій формі на офіційну адресу Ліцензіара, зазначену в Ліцензійній угоді. Дата відправлення Ліцензіатом листа вважається Стартом проекту. Для вступу Ліцензійної угоди в силу не потребується вчинення жодних додаткових дій або обґрунтування чи описання умов, що настали.
The Parties hereby agree that this License agreement shall take effect from the date of Start of the project. The date of Start of project means the date on which Licensee can begin the use of Platform. About the date of the Start of the project Licensee shall notify Licensor by official letter in written form to the official address of Licensor specified in this License agreement. The date of sending of letter Licensee by is considered Start of project. For entering of License agreement into force it is not needed any additional actions or ground or description of terms which came.
11.2
Продовження дії.
Після спливу 5 річного терміну дії Ліцензійної угоди, дія Ліцензійної угоди автоматично продовжується на тих самих умовах на кожний наступний календарний рік, у випадку, якщо жодна зі Сторін в строк не пізніше як за 180 ( тридцять сто вісімдесят) календарних днів до закінчення строку дії Ліцензійної угоди письмово не повідомить іншу Сторону про припинення дії Ліцензійної угоди .
Renewal
After the expiry of five years term of this License agreement, the License agreement is automatically renewed on the same terms for each next calendar year, if none of the Parties no later than one hundred and eighty (180) calendar days prior to the expiration of the agreement notifies in writing the other Party of termination of this License agreement.
11.3
Припинення дії . Сторони не можуть припинити дію Ліцензійної угоди раніше 5 річного терміну її дії, підписавши відповідну угоду про припинення.   за умови, проте, що будь-яка із Сторін може припинити дію цієї ліцензійної угоди на основі Істотного порушення іншою Стороною цієї Ліцензійної угоди або Договору купівлі-продажу з дати підписання її між Ліцензіаром та InnSolu   Tech LLP, або Договору про реалізацію інвестиційного проекту, з дати підписання його між Ліцензіаром, Ліцензіатом та InnSolu Tech LLP, яке не було усунуто протягом 180 днів після повідомлення про таке порушення за винятком випадків відмови здійснення платежів, де строк   спливає через 3 0 днів після повідомлення про таке порушення .
Ліцензіат має безумовне пріоритетне право на пролонгацію Ліцензійної угоди, після закінчення 5 річного періоду її дії ( за умови, відсутності істотного порушення умов догоовру ) , що означає отримання виключних прав на використання Платформи на території України на наступний, визначений в Ліцензійній угоді, період.
Termination. The Parties cannot terminate the License agreement before expiration of the 5 year period of its validity, signing appropriate agreement on termination; provided, however, that either Party may terminate this License Agreement based on a Material breach by the other Party of this License Agreement or the Share Purchase Agreement of even date between Licensor and InnSolu Tech LLP or the Agreement on Realization of the Investment Project of even date among Licensor, Licensee and InnSolu Tech LLP, which has not been cured within 180 days after notice of such breach is delivered, except for failure to make payment where cure deadline is 30 days after notice of such breach is delivered.
 
The Licensee has an absolute priority right to prolong License agreement, after 5-year period of its validity, provided that no material breach is then pending. That means getting exclusive rights to use the Platform in Ukraine for the next specified in License agreement period.
 
 
 
 
 
 
12
 
ПРИКІНЦЕВІ ПОЛОЖЕННЯ
 
 
CONCLUDING PROVISION
12.1
Ліцензійна угода складено в двох примірниках на англійській та українській мовах по одному примірнику для кожної з Сторін. При тлумаченні Ліцензійної угоди   англійська редакція має   пріорітетну юридичну силу.
License agreement is concluded in two copies in English and Ukrainian languages one copy for each Party. In the interpretation of this License agreement English version has priority validity.
12.2
У випадку банкрутства або ліквідації Ліцензіара, Ліцензіату переходить повне, безстрокове, безвідкличне право на використання останньої доступної версії Платформи, її вихідного коду, об'єктного коду та інших відповідних активів, необхідних для поточного кодування, розвитку і функціонування Платформи без обмеження у часі.
In the event of bankruptcy or liquidation of the Licensor, the Licensee shall be transferred full unlimited, irrevocable right to use latest available version of the Platform, its source code, object code and other related assets, which are required for functioning and ongoing maintenance of the platform.
 
 
БАНКІВСЬКІ РЕКВІЗИТИ ТА МІСЦЕЗНАХОДЖЕННЯ СТОРІН
 
 
BANKING DETAILS AND ADDRESSES OF THE PARTIES
 
 
Компанія «Труніті»
Trunity, Inc.
 
Адреса: 2711, Центервільроад, оф.400, м. Вілмінгтон, Нью Кастл, 19808, Делавер, Сполучені Штати Америки.
Банк:
Address: 2711, Centerville road, Suite 400, city of Wilmington, County of New Castle, 19808, State of Delaware, USA
Bank:
 
___________________________________
(______________________/______________________)
     
 
Товариство з обмеженою відповідальністю «ЕДУКОМ»
Limited Liability Company «EDUCOM»
 
Адреса: Україна, 03110, м. Київ, бул. Івана Лепсе – вул. Академіка Каблукова, будинок 51/16.
Ідентифкаційний код: 34914117
Р/Р : 26004000028955 в ПАТ «Укрсоцбанк» в м. Києві ,   МФО : 300023
Address: 51/16, Ivana Lepse Blvd. – Akademika Kablukova Str., city of Kyiv, 03110, Ukraine.
ID 34914117
Operating account: 26004000028955 PJSC “Ukrsotsbank” Kyiv,  MFO (sort code) : 300023
 
___________________________________
(______________________/______________________)
 
 
 
 

 
 
Додаток № 2
до   Ліцензійної угоди
від «___»_________ 2013 року
 
 
Attachment No. 2
to the License agreement
of ___________________ 2013
 
 
 
м. Київ, Україна «___»_____ 2013 року
 
 
Kyiv, Ukraine                                           «___»_____2013
 
 
ФІНАНСОВІ УМОВИ
FINANCIAL TERMS
1
Протягом 14 календарних днів з дати Старту проекту Ліцензіат перераховує Ліцензіару кошти у сумі $300  000 (з них $ 100 000 сплачується згідно із умовами Інвестиційного договору) .
Within 14 calendar days from the date of Project   Start, Licensee will transfer to Licensor funds in the amount of $ 300,000 [initial $100,000 – conform to investment contract].
2
після закінчення 5 (п’ятирічного) строку дії Ліцензійного Договору вартість Ліцензії складатиме 1/5 (одну п’яту частину) суми, визначеної у пункті 2 даного Додатку, за кожен календарний рік користування Ліцензією з урахуванням індексу інфляції за останній рік строку дії ліцензії з урахуванням :   (1)   інфляції, розрахованої Міністерством праці США   індекс споживчих цін , і   (2)   пропорційно   до загального числа   студентів, що використовують платформу   протягом   року   ( наприклад, 1,8 мільйон   студентів, що використовують платформу,   буде дорівнювати   щорічному   ліцензійному збору   $ 80 000   х 1,8   млн./1.5   млн.   =   $ 96   000) .
The Parties agree that after 5 (five year) term of the License agreement cost of License will be 1/5 (one fifth) of the amount determined in point 2 of this Attachment, for each calendar year of using License, adjusted for inflation in the last year of the license’ validity period adjusted for (1) inflation as calculated by U.S. Department of Labor Consumer Price Index, and (2) prorated for the total number of students using the platform during that year (for instance, 1.8 million students using the platform would equal an annual license fee of $ 80 000 x 1.8 million/1.5 million = $96 000) .
 
     
 
Компанія «Труніті»
Trunity, Inc.
 
___________________________________
(______________________/______________________)
     
 
Товариство з обмеженою відповідальністю «ЕДУКОМ»
Limited Liability Company «EDUCOM»
 
___________________________________
(______________________/______________________)
     
 
 
 
 

 
 
Додаток № 2
до   Ліцензійної угоди
від «___»_________ 2013 року
 
 
Attachment No. 2
to the License agreement
of ___________________ 2013
 
 
 
м. Київ, Україна «___»_____ 2013 року
 
 
Kyiv, Ukraine                                           «___»_____2013
 
 
УМОВИ ПІДТРИМКИ
SUPPORT TERMS
     
1
Даним Додатком визначаються загальні засади здійснення Ліцензіаром підтримки Платформи. Деталізація процедури надання всього комплексу послуг з підтримки Платформи буде відображатися в окремо укладеному договорі між Ліцензіаром та Ліцензіатом . Вказаний договір у будь-якому разі має відображати умови, викладені у цьому Додатку.
This Attachment determines general termas and conditions of Platform support performance by the Licensor. Detailed procedure of complex support of the Platform will be regulated by separate agreement between Licensor and Licensee. Such separate agreement shall in any case represent terms of this Attachment.
2
Підписання Ліцензійної угоди покладає на Ліцензіара зобов’язання по забезпеченню:
By signing the present Atachment the Lisensor bears the following obligations:
2.1
організації впровадження Платформи на початковому етапі;
organizati щт of integration of the Platform at the initial stage;
2.2
400 (чотириста) годин інженерних послуг, в тому числі по адаптації (кастомізації) Платформи для успішної реалізації Проекту;
400 (four hundred) working hours of engineerings services, including hours spent for adaptations (customisation) of the Platform for successful realization of the Project;
2.3
технічну підтримку 2 (другого) та 3 (третього) рівнів протягом першого року строку дії Ліцензії;
technical support of 2 (second) and 3 (third) levels during the first year-period of effect of the License;
2.4
надання інших послуг технічного характеру, необхідних для нормального функціонування Платформи відповідно до участі у Проекті;
Provision of other technical services, required for normal functioning of the Platform in accordance with the Project;
2.5
надання консультацій та рекомендацій по розгортанню локального впровадження Платформи.
Provision of consultations and recommendations on development of local introduction of the Platform.
3
Всі години більше вказаних 400 сплачуються за спеціальною зниженою ставкою $125/ година.
All working hours beyond the initial 400 working hours will be charged at a discounted rate of $125 per hour.
4
Технічна підтримка Платформи наступним за першим роком період буде надаватися відповідно до окремо укладеного договору і між Сторонами .
Technical support of the Platform following the first year-period will be provided in accordance with the separate agreement between the Parties.
5
Технічна підтримка 1 (першого рівня) буде здійснюватися силами та за рахунок Ліцензіата .
Technical support of 1 (first level) will be carried out by effort and at the expences of the Licensee.
6
Перший рівень підтримки. Це початковий рівень підтримки орієнтований на вирішення основних питань кінцевих користувачів. У разі неможливості вирішення проблеми силами спеціалістів першого рівня, вона переадресовується підтримці другого рівня.
First level support. It the initial level of support is aimed to support end-users in the key issues. If it is impossible to solve the problem with first level specialists it  redirects to the second support level.
 
 
 
 
 
7
Другий рівень підтримки . Це більш глибокий рівень технічної підтримки, ніж перший. Питаннями адресованими цьому рівню підтримки займаються більш досвідчені спеціалісти, які мають більш глибокі знання про функціонування Платформи. У разі неможливості вирішення проблеми силами спеціалістів другого рівня, вона переадресовується підтримці третього рівня.
Second level support - is deeper level of technical support. Questions addressed within this level of support are resolved by more experienced specialists which have more thorough knowledges about functioning of the Platform. If the issue is not resolved within second level support, it is addressed to the third level.
8
Третій рівень підтримки . Це найвищий рівень підтримки, відповідає за обробку і вирішення найскладніших питань. Питаннями адресованими цьому рівню підтримки займаються експерти, які вільно орієнтуються або приймали участь в розробці Платформи. Неможливість вирішення проблеми на даному рівні може мати наслідком внесення значних функціональних змін у Платформі.
Third level of support – highest level of support, aimed for treatment and decision of the most difficult questions. Questions addressed within this level of support are resolved by experts which are freely oriented or took part in development of the Platform. Impossibility to fix the issue at this level shall result in considerable functional changes in the Platform.
9
Складність випадків для звернення щодо підтримки буде класифікуватися відповідно до наступних визначень:
Difficulty level of the issues addressed to the support team will be classified in accordance with the followings conditions:
9.1
Складність 1 "Критична". Коли інцидент зупиняє критично важливі бізнес процеси Замовника і обхідний шлях не доступний. Такому випадку має встановлюватися пріоритет вище інших і роботи повинні розпочатися негайно.
Complication 1 "Critical" - when an incident stops critically important business processes of the Customer and any alternative solutin is not accessible. The issues of such type must be assigned highest priority and support must be started immediately.
9.2
Складність 2 "Висока". Коли інцидент зменшує функціональність критично важливих бізнес процесів Замовника і обхідний шлях неможливий.
Complication 2 "High" - when an incident critically diminishes functionality of important business processes of the Customer and alternative solution is impossible.
9.3
Складність 3 "Середня". Коли додаток викликає помилку, яка зменшує, але не забороняє доступ користувачам. Тобто користувачі можуть працювати, але потребують підтримки і допомоги.
Complication 3 "Middle" - when application causes an error, which diminishes, but does not forbid access for users. Users can work with the Platform, but need support and help for normal functioning.
9.4
Складність 4 "Низька". Коли інцидент по суті є заявкою на зміну. Тобто запитуваної функціональності в системі раніше не було. Такий випадок повинен бути занесений у систему з низьким пріоритетом.
Complication 4 "Low" - when an incident in essence is a request on changing. That requested functionality in the system did not exist before. Such requests are assigned low-priority level for the purpose of support.
10
Об’єктами підтримки будуть:
The following objects will require support:
10.1
програмний комплекс «Сервіс Деск»;
software package "Service Desk";
10.2
функціонал базової платформи «Trunity»;
functional of basic platform «Trunity»;
10.3
документація по «АР I » базової платформи «Trunity»;
documentation on "API" of basic platform «Trunity»;
10.4
адаптована версія платформи «Trunity».
adapted version of the platform «Trunity».
11
Заявки щодо надання підтримки обробляються з 9:00 до 18:00 виключно в робочі дні, тобто з понеділка по п'ятницю за винятком офіційних свят.
Requests for support are processed from 9 a.m. to 6 p.m. only on working days, from Monday to Friday, except public holidays
12
Буде встановлений наступний час відгуку служби підтримки:
Will be installed next time for Feedback of Support Service:
12.1
відгук технічної підтримки першого рівня - 30 хвилин;
feedback of technical support of the first level - 30 minutes;
 
 
 
 
 
12.2
відгук технічної підтримки другого рівня – 2 години;
feed back of technical support of the second level - 2 hours;
12.3
відгук технічної підтримки третього рівня – 1 день .
feedback of technical support of the third level - 1 day;
13
Часом вирішення проблеми буде вважається різниця між часом вирішення проблеми та часом, коли виконавець був призначений. Час вирішення проблеми у відповідності до задіяного рівня технічної підтримки:
Time of problem’s solving will be the difference between the time when problem is solved and time when the agent was appointed. Time of problem’s solving according to the involved level of technical support:
13.1
технічної підтримки першого рівня - 1 робочий день;
technical support of the first level - 1 working day;
 
13.2
технічної підтримки другого рівня - 2 робочих дні;
technical support of the second level- 2 working days;
13.3
технічної підтримки третього рівня 5 робочих днів .
technical support of the third level - 5 working days;
 
14
На час надання послуг   технічної підтримки Платформи від Сторони-1 призначається відповідальна особа - ______________________.
On the time of service support of the Platform from Party-1 is assigned a responsible person - ______________________.
15
Відповідальною за надання технічної підтримки Платформи особою від Компанії призначається - ______________________.
Responsible person for providing the technical support of the Platform assigned by the Company - ______________________.
     
 
Компанія «Труніті»
Trunity, Inc.
 
___________________________________
(______________________/______________________)
     
 
Товариство з обмеженою відповідальністю «ЕДУКОМ»
Limited Liability Company «EDUCOM»
 
___________________________________
(______________________/______________________)
     
 
 
 
 
Exhibit 10.8
 
 
DIRECTORS’ AND OFFICERS’ INDEMNIFICATION AGREEMENT

THIS AGREEMENT made as of this _____ day of ________, 2013.


B E T W E E N:

TRUNITY HOLDINGS, INC.
A body corporate incorporated
under the laws of the State of Delaware
(hereinafter called the “Corporation” or the “Indemnifying Party”)

- and –


_________________________, of the _______________________,

in the ___________________________

(hereinafter called the “Indemnified Party”)


WHEREAS:

(a)
The Indemnified Party is agreeing to serve as, or to continue to serve as, a director or officer of the Corporation;

(b)
The Corporation wishes to indemnify the Indemnified Party (to the fullest extent permitted by law) from losses, costs or damages incurred or sustained by the Indemnified Party acting in the capacity of director or officer of the Corporation; and

(c)
The Indemnified Party is willing to serve or continue to serve the Corporation on the condition that he or she be indemnified to the fullest extent permitted by law.

NOW THEREFORE , in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency whereof is mutually acknowledged, the Indemnified Party and the Corporation (hereinafter called the “Parties”) covenant and agree as follows:

1.  
Indemnity
 
(a)  
Within 30 days after written demand is presented to the Corporation, the Corporation shall indemnify and save harmless the Indemnified Party and his or her heirs and legal representatives against all costs, charges and expenses, including (a) an amount paid to settle an action or satisfy a judgment (including, without limitation, any penalties or fines levied), (b) any interest payable by the Indemnified Party thereon and (c) all damages, whether punitive, exemplary or otherwise, reasonably incurred by the Indemnified Party in respect of any civil, criminal or administrative action or proceeding to which the Indemnified Party is made a party by reason of being or having been a director or trustee or fiduciary or officer of the Corporation or for action taken by or for on behalf of the Corporation (together with Expenses (as hereinafter defined), the “Indemnified Liabilities”) if:
 
 
 
 
 
(i)  
The Indemnified Party acted honestly and in good faith and in a manner the Indemnified Party reasonably believed to be in or not opposed to the best interests of the Corporation; and
 
(ii)  
In the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the Indemnified Party had reasonable grounds for believing that his conduct was lawful.
 
(b)  
For the purposes of this Agreement, the termination of any civil, criminal or administrative action or proceeding by judgment, order, settlement or conviction (whether with or without court approval) shall not, of itself, create a presumption either that the Indemnified Party did not act honestly and in good faith and in a manner the Indemnified Party reasonably believed to be in or not opposed to the best interests of the Corporation as required by the laws governing the Corporation or that, in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the Indemnified Party did not have reasonable grounds for believing that his or her conduct was lawful.
 
(c)  
In connection with any determination as to whether the Indemnified Party is entitled to be indemnified under any provision of this Agreement or to receive contribution pursuant to this Agreement, to the extent permitted by law the burden of proof shall be on the Corporation to establish that the Indemnified Party is not so entitled.
 
(d)  
The Corporation shall indemnify the Indemnified Party if he or she fulfills the conditions contained in (a) and (b) above in the defense of any civil, criminal or administrative action or proceeding which the Indemnified Party is made a party by reason of his or her being or having been a director or officer of the Corporation, against all costs, charges and expenses, including legal and other professional fees on a full indemnification basis and expert witness fees (“Expenses”), actually and reasonably incurred by the Indemnified Party in connection with the defense of such action or proceeding within ten business days after written demand reasonably evidencing the Expenses incurred by the Indemnified Party is presented to the Corporation accompanied by an undertaking of the Indemnified Party to repay such amounts if it shall ultimately be determined that the Indemnified Party is not entitled to be indemnified against such Expenses, and the Corporation shall be required to make such payments in advance of the final disposition or conclusion of any claim against the Indemnified Party.
 
 
 
 
 
2.  
Partial Indemnity
 
If the Indemnified Party is entitled under any provisions of this Agreement to indemnification by the Corporation for some, but not all, of the Indemnified Party’s Indemnified Liabilities, the Corporation shall indemnify the Indemnified Party for the portion thereof to which the Indemnified Party is entitled.
 
3.  
Contribution
 
(a)  
Contribution payment .  To the extent the indemnification provided for under any provision of this Agreement is determined (in the manner hereinabove provided) not to be permitted under applicable law, the Corporation, in lieu of indemnifying the Indemnified Party, shall, to the extent permitted by law, contribute to the amount of any and all Indemnified Liabilities incurred or paid by the Indemnified Party for which such indemnification is not permitted.  The amount the Corporation contributes shall be in such proportion as appropriate to reflect the relative fault of the Indemnified Party, on the one hand, and of the Corporation and any and all other parties (including officers and directors of the Corporation other than the Indemnified Party) who may be at fault (collectively, including the Corporation, the “Third Parties”), on the other hand.
 
(b)  
Relative Fault .  The relative fault of the Third Parties and the Indemnified Party shall be determined by reference to the relative fault of the Indemnified Party as determined by the court or other governmental agency or to the extent such court or other governmental agency does not apportion relative fault, by another party acceptable to the Indemnified Party and the Corporation after giving effect to, among other things, the relative intent, knowledge, access to information, and opportunity to prevent or correct the relevant events, of each party, and other relevant equitable considerations.  The Corporation and the Indemnified Party agree that it would not be just and equitable if contribution were determined by pro rata allocation or by any other method of allocation that does take account of the equitable considerations referred to in this section 3(b).
 
4.  
Insurance
 
(a)  
Unless otherwise agreed between the Parties hereto and subject to the limitations contained in the Delaware General Corporation Law, , the Corporation shall purchase and maintain directly for so long as the Indemnified Party remains a director or officer of the Corporation, directors’ and officers’ liability insurance covering the Corporation for the benefit of the Indemnified Party with limits of not less than U.S. _______________ per occurrence. The Corporation shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that the Indemnified Party has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
 
 
 
 
 
(b)  
At least 60 days prior to the expiry of any such insurance, the Corporation will notify the Indemnified Party in writing whether of not it proposes to renew the insurance and whether or not it has any reason to believe the issuer of the insurance may not be prepared to renew the insurance.  The Corporation shall promptly notify in writing the Indemnified Party if at any time the insurance referred to above is not renewed, cancelled or adversely changed or if the Corporation receives any communication (whether oral or written) from the issuer of the insurance or any agent or other person acting on its behalf that the insurance will or may be cancelled or adversely changed.
 
5.  
Assignment
 
The Duties and obligations of the Corporation under this Agreement shall be binding upon, and enforceable by the Indemnified Party and the Indemnified Party’s heirs and legal representatives, against the Corporation and its successors and assigns.
 
6.  
Defense of Claims
 
(a)  
The Indemnified Party covenants and agrees, that upon becoming aware of any facts of circumstances which may give rise to any potential liability for which the Corporation may be required to indemnify the Indemnified Party pursuant to the provisions of this Agreement (a “Claim”), the Indemnified Party shall immediately deliver written notice to the President of the Corporation setting out in reasonable detail the nature of the facts relating to such Claim including therein or therewith such documentation and information as is reasonably available to the Indemnified Party and is reasonably necessary to determine whether and to what extent the Indemnified Party is entitled to indemnification hereunder; providing that failure to so notify shall not affect the Corporation’s liability under this Agreement if and except only to the extent that such omission materially prejudices the Corporation.
 
(b)  
Upon written request by the Indemnified Party for indemnification pursuant hereto, a determination, if required by applicable law, with respect to the Indemnfied Party’s entitlement thereto shall be made in the specific case by one of the following four methods, which shall be at the election of the board of directors of the Corporation (the “Board”): (1) by a majority vote of the directors of the Corporation who are not and were not a party to the Claim in respect of which indemnification is sought by the Indemnified Party (the “Disinterested Directors”), even though less than a quorum, (2) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum, (3) if there are no Disinterested Directors or if the Disinterested Directors so direct, by independent counsel (selected by the Board) in a written opinion to the Board, a copy of which shall be delivered to the Indemnified Party, or (4) if so directed by the Board, by the stockholders of the Corporation holding a majority of the outstanding voting stock of the Corporation.
 
 
 
 
 
(c)  
If any Claim is made or brought against the Indemnified Party in connection with any of the matters against which the Indemnified Party would be indemnified pursuant to this Agreement, upon receipt of the notice of the Claim, the Corporation shall, at its expense and in a timely manner, contest and defend against any such Claim and take all such steps as may be necessary or proper to prevent the resolution thereof in a manner adverse to the Indemnified Party.
 
(d)  
The Indemnified Party shall fully co-operate with the Corporation in taking all such steps, and hereby consents to the taking of such steps by or on behalf of the Corporation and the Indemnified Party.  If the Corporation does not in a timely manner undertake the contestation or defense of the Claim, the Indemnified Party may do so and such contestation or defense shall be at the expense and risk of the Corporation.
 
(e)  
If the outcome of any litigation or proceeding establishes that the Indemnified Party was not entitled to have the Claim contested or defended at the risk and expense of the Corporation, the Indemnified Party shall be liable to repay the Corporation all amounts paid by the Corporation in connection with such contestation or defense pursuant to this Section 6.
 
7.  
Scope of Agreement
 
(a)  
This Agreement is absolute and unconditional and the obligations of the Indemnifying Party will not be affected, discharged, impaired, mitigated or released by:
 
(i)  
any extension of time, indulgence or modification which the Indemnified Party may extend or make with any person making any claim against the Indemnified Party; or
 
 
 
 
 
(ii)  
the discharge or release of the Indemnified Party in any bankruptcy, insolvency, receivership, or other proceedings of creditors.
 
(b)  
No action or proceeding brought or instituted under this Agreement and no recovery pursuant thereto will be a bar or defense to any further action of proceeding, which may be brought under this Agreement.
 
(c)  
The rights of the Indemnified Party hereunder will be in addition to any other rights the Indemnified Party may have under the Bylaws or Certificate of Incorporation of the Corporation or the law or otherwise.  To the extent that a change in the law (whether by statute or judicial decision) permits greater indemnification by agreement than would be afforded currently under the Bylaws or Certificate of Incorporation of the Corporation and this Agreement, it is the intent of the parties hereto that the Indemnified Party shall enjoy by this Agreement the greater benefits so afforded by that change.  The Indemnified Party’s rights under this Agreement shall not be diminished by any amendment to the Certificate of Incorporation or Bylaws, or of any other agreement or instrument to which the Indemnified Party is not a party, and shall not diminish any other rights that the Indemnified Party now or in the future has against the Corporation.
 
8.  
Exception to Right of Indemnification
 
Notwithstanding any provision in this Agreement, the Corporation shall not be obligated under this Agreement to make any indemnity in connection with any claim made against the Indemnified Party:
 
(a)  
for which payment has actually been made to or on behalf of the Indemnified Party under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision;
 
(b)  
for an accounting of profits made from the purchase and sale (or sale and purchase) by the Indemnified Party of securities of the Corporation within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law; or
 
(c)  
in connection with any Claim (or any part of any Claim) initiated by the Indemnified Party, including any Claim (or any part of any Claim) initiated by the Indemnified Party against the Corporation or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Claim (or any part of any Claim) prior to its initiation or (ii) the Corporation provides the indemnification, in its sole discretion, pursuant to the powers vested in the Corporation under applicable law.
 
 
 
 
 
9.  
Severability
 
If any part of this Agreement or the application of such part to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such part to any other or person or circumstance, shall not be affected thereby and each provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
 
10.  
Choice of Law
 
This Agreement shall be governed and construed in accordance with the laws of the State of Delaware and the parties attorn to the non-exclusive jurisdiction of the courts of the State of Delaware in respect of any court action arising hereunder.
 
11.  
Miscellaneous
 
The Indemnifying Party and the Indemnified Party agree that they will do all such further acts, deeds and things and execute, deliver all such the documents as may be reasonably necessary or advisable for the purposes of ensuring and confirming unto the Indemnified Party the rights hereby created or intended, and of giving effect to and carrying out the intention or facilitating the performance of the terms of this Agreement.  The Indemnifying Party represents and warrants to the Indemnified Party that this Agreement constitutes a legal, valid and binding obligation of the Indemnifying Party.
 
IN WITNESS WHEREOF the Parties have executed this Agreement to have effect as of the date first above mentioned.
 
 
Trunity Holdings, Inc.
   
   
 
By:
 
Authorized Officer
   
   
 
Indemnified Party:
   
   
   
  Director and/or Officer
 
 
 
 
 
 
 
 
 
 
Exhibit 14
 
TRUNITY HOLDINGS, INC.

Code of Ethics and Business Conduct

1.       Introduction .

1.1        The Board of Directors of Trunity Holdings, Inc., a Delaware corporation (together with its subsidiaries, the “ Company ”) has adopted this Code of Ethics and Business Conduct (the “ Code ”) in order to:

(a)       promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest;

(b)       promote full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission (the “ SEC ”) and in other public communications made by the Company;

(c)       promote compliance with applicable governmental laws, rules and regulations;

(d)       promote the protection of Company assets, including corporate opportunities and confidential information;

(e)       promote fair dealing practices;

(f)       deter wrongdoing; and

(g)       ensure accountability for adherence to the Code.

1.2        All directors, officers and employees are required to be familiar with the Code, comply with its provisions and report any suspected violations as described below in Section 10, Reporting and Enforcement.

2.       Honest and Ethical Conduct .

2.1        The Company’s policy is to promote high standards of integrity by conducting its affairs honestly and ethically.

2.2        Each director, officer and employee must act with integrity and observe the highest ethical standards of business conduct in his or her dealings with the Company’s customers, suppliers, partners, service providers, competitors, employees and anyone else with whom he or she has contact in the course of performing his or her job.

3.       Conflicts of Interest .

3.1        A conflict of interest occurs when an individual’s private interest (or the interest of a member of his or her family) interferes, or even appears to interfere, with the interests of the Company as a whole. A conflict of interest can arise when an employee, officer or director (or a member of his or her family) takes actions or has interests that may make it difficult to perform his or her work for the Company objectively and effectively. Conflicts of interest also arise when an employee, officer or director (or a member of his or her family) receives improper personal benefits as a result of his or her position in the Company.

 
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3.2        Loans by the Company to, or guarantees by the Company of obligations of, employees or their family members are of special concern and could constitute improper personal benefits to the recipients of such loans or guarantees, depending on the facts and circumstances. Loans by the Company to, or guarantees by the Company of obligations of, any director or executive officer or their family members are expressly prohibited.

3.3        Whether or not a conflict of interest exists or will exist can be unclear. Conflicts of interest should be avoided unless specifically authorized as described in Subsection 3.4.

3.4        Persons other than directors and executive officers who have questions about a potential conflict of interest or who become aware of an actual or potential conflict should discuss the matter with, and seek a determination and prior authorization or approval from, their supervisor. A supervisor may not authorize or approve conflict of interest matters or make determinations as to whether a problematic conflict of interest exists without first providing the Legal Department with a written description of the activity and seeking the Legal Department’s written approval. If the supervisor is himself involved in the potential or actual conflict, the matter should instead be discussed directly with the Legal Department.  For purposes of this Code of Ethics, “Legal Department” shall mean or refer to (i) the Company’s principal outside counsel in the event that the Company does not employ inhouse counsel and (ii) if inhouse legal counsel exists, the Company’s senior inhouse legal counsel.

Directors and executive officers must seek determinations and prior authorizations or approvals of potential conflicts of interest exclusively from the Audit Committee.

4.       Compliance .

4.1        Employees, officers and directors should comply, both in letter and spirit, with all applicable laws, rules and regulations in the cities, states and countries in which the Company operates.

4.2        Although not all employees, officers and directors are expected to know the details of all applicable laws, rules and regulations, it is important to know enough to determine when to seek advice from appropriate personnel. Questions about compliance should be addressed to the Legal Department.

4.3        No director, officer or employee may purchase or sell any Company securities while in possession of material non-public information regarding the Company, nor may any director, officer or employee purchase or sell another company’s securities while in possession of material non-public information regarding that company. It is against Company policies and illegal for any director, officer or employee to use material non-public information regarding the Company or any other company to:

 
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(a)       obtain profit for himself or herself; or

(b)       directly or indirectly “tip” others who might make an investment decision on the basis of that information.

5.       Disclosure .

5.1        The Company’s periodic reports and other documents filed with the SEC, including all financial statements and other financial information, must comply with applicable federal securities laws and SEC rules.

5.2        Each director, officer and employee who contributes in any way to the preparation or verification of the Company’s financial statements and other financial information must ensure that the Company’s books, records and accounts are accurately maintained. Each director, officer and employee must cooperate fully with the Company’s Accounting and Internal Audit Departments, as well as the Company’s independent public accountants and counsel.

5.3        Each director, officer and employee who is involved in the Company’s disclosure process must:

(a)       be familiar with and comply with the Company’s disclosure controls and procedures and its internal control over financial reporting; and

(b)       take all necessary steps to ensure that all filings with the SEC and all other public communications about the financial and business condition of the Company provide full, fair, accurate, timely and understandable disclosure.

6.       Protection and Proper Use of Company Assets .

6.1        All directors, officers and employees should protect the Company’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company’s profitability and are prohibited.

6.2        All Company assets should be used only for legitimate business purposes, though incidental personal use /may be permitted. Any suspected incident of fraud or theft should be reported for investigation immediately.

6.3        The obligation to protect Company assets includes the Company’s proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks, and copyrights, as well as business and marketing plans, engineering and manufacturing ideas, designs, databases, records and any non-public financial data or reports. Unauthorized use or distribution of this information is prohibited and could also be illegal and result in civil or criminal penalties.

 
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7.       Corporate Opportunities . All directors, officers and employees owe a duty to the Company to advance its interests when the opportunity arises. Directors, officers and employees are prohibited from taking for themselves personally (or for the benefit of friends or family members) opportunities that are discovered through the use of Company assets, property, information or position.  Directors, officers and employees may not use Company assets, property, information or position for personal gain (including gain of friends or family members). In addition, no director, officer or employee may compete with the Company.

8.       Confidentiality . Directors, officers and employees should maintain the confidentiality of information entrusted to them by the Company or by its customers, suppliers or partners, except when disclosure is expressly authorized or legally required. Confidential information includes all non-public information (regardless of its source) that might be of use to the Company’s competitors or harmful to the Company or its customers, suppliers or partners if disclosed.

9.       Fair Dealing . Each director, officer and employee must deal fairly with the Company’s customers, suppliers, partners, service providers, competitors, employees and anyone else with whom he or she has contact in the course of performing his or her job. No director, officer or employee may take unfair advantage of anyone through manipulation, concealment, abuse or privileged information, misrepresentation of facts or any other unfair dealing practice.

10.       Reporting and Enforcement .

10.1        Reporting and Investigation of Violations.

(a)       Actions prohibited by this code involving directors or executive officers must be reported to the Audit Committee.

(b)       Actions prohibited by this code involving any other person must be reported to the reporting person’s supervisor or the Legal Department.

(c)       After receiving a report of an alleged prohibited action, the Audit Committee, the relevant supervisor or the Legal Department must promptly take all appropriate actions necessary to investigate.

(d)       All directors, officers and employees are expected to cooperate in any internal investigation of misconduct.

10.2        Enforcement.

(a)       The Company must ensure prompt and consistent action against violations of this Code.
 
(b)       If, after investigating a report of an alleged prohibited action by a director or executive officer, the Audit Committee determines that a violation of this Code has occurred, the Audit Committee will report such determination to the Board of Directors.

 
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(c)       If, after investigating a report of an alleged prohibited action by any other person, the relevant supervisor or the Legal Department determines that a violation of this Code has occurred, the supervisor or the Legal Department will report such determination to the General Counsel.

(d)       Upon receipt of a determination that there has been a violation of this Code, the Board of Directors or the General Counsel will take such preventative or disciplinary action as it deems appropriate, including, but not limited to, reassignment, demotion, dismissal and, in the event of criminal conduct or other serious violations of the law, notification of appropriate governmental authorities.

10.3        Waivers.

(a)       Each of the Board of Directors (in the case of a violation by a director or executive officer) and the General Counsel (in the case of a violation by any other person) may, in its discretion, waive any violation of this Code.

(b)       Any waiver for a director or an executive officer shall be disclosed as required by SEC and [NASDAQ] rules.

10.4        Prohibition on Retaliation.

The Company does not tolerate acts of retaliation against any director, officer or employee who makes a good faith report of known or suspected acts of misconduct or other violations of this Code.

 
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ACKNOWLEDGMENT OF RECEIPT AND REVIEW

[To be signed and returned to the Legal Department.]

I, _______________________, acknowledge that I have received and read a copy of the TRUNITY HOLDINGS, INC. Code of Ethics and Business Conduct. I understand the contents of the Code and I agree to comply with the policies and procedures set out in the Code.

I understand that I should approach Legal Department if I have any questions about the Code generally or any questions about reporting a suspected conflict of interest or other violation of the Code.


 
 
________________________
[NAME]
 
________________________
[PRINTED NAME]
 
________________________
[DATE]]
 
 
 
 
6
 
Exhibit 21

Subsidiaries of the Registrant

Trunity, Inc.
 
 
 
 
Exhibit 31.1
 
CERTIFICATIONS UNDER SECTION 302
 
I, Terry B. Anderton, certify that:
 
1. I have reviewed this annual report on Form 10-K of Trunity Holdings, Inc.;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 

Dated: April 16, 2013
 
/s/ Terry B. Anderton

 
 
 

 
Exhibit 31.2
CERTIFICATIONS UNDER SECTION 302
 
I, Nicole M. Fernandez-McGovern, certify that: 
 1. I have reviewed this annual report on Form 10-K of Trunity Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
Dated: April 16, 2013
 
/s/ Nicole M. Fernandez-McGovern
Exhibit 32.1
 
CERTIFICATIONS UNDER SECTION 906
 
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Trunity Holdings, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:
 
The Annual Report for the year ended December 31, 2012 (the “Form 10-K”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
Dated: April 16, 2013   /s/ Terry B. Anderton
    Terry B. Anderton
Chief Executive Officer, Chairman, President
(Principal Executive Officer)
     
 
 
/s/ Nicole M. Fernandez-McGovern
    Nicole M. Fernandez-McGovern
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.