Document:

nuva-ex1017_679.htm

Exhibit 10.17

 

[FORM OF] NUVASIVE, INC.

NOTICE OF GRANT OF PERFORMANCE CASH AWARD

 

NuVasive, Inc. (the “Company”) has granted to the participant identified below (the “Participant”) a performance cash award (the “Award”) pursuant to the NuVasive, Inc. 2014 Executive Incentive Compensation Plan (the “Plan”), which represents the right to receive – on the Settlement Date provided in the Performance Cash Award Agreement attached hereto (together with this Grant Notice, the “Agreement”) – a cash amount as set forth in, and subject to the terms and conditions of, this Agreement.  This Award is subject to all of the terms and conditions set forth in the Agreement and the Plan, each of which is incorporated herein by reference.  Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Plan or the Agreement, as appropriate, and, in the event of any inconsistency between the Plan and the Agreement, the terms of the Plan shall control.

 

		
	
Participant:[FIRST_NAME, LAST_NAME]

	
Participant ID:
	
[EMPLOYEE_IDENTIFIER]

	
Date of Grant:
	
[March 1, 2017]

	
Base Cash Amount:
	
$[TOTAL_AMOUNT_GRANTED], subject to adjustment as provided by the Agreement.

	
Initial Performance Period:
	
January 1, 2017 – December 31, 2017 (or, in the event of a Change in Control, through the last day of the Company’s last fiscal quarter ending after January 1, 2017, and before the date of a Change in Control).

	
Initial Performance Measure:

 
	
The Company’s earnings per share (“EPS”), as listed in Section 2(t) of the Plan, determined in accordance with generally accepted accounting principles in the United States (“GAAP”), adjusted to reflect the impact of the change from a basic to diluted share count, and determined excluding (1) certain litigation liability gain/expense; (2) amortization of intangible assets; (3) non-cash interest expense and gains/losses on convertible notes; (4) intangible asset impairment; (5) certain leasehold related charges; (6) acquisition related items (including expenses associated with prior mergers-and-acquisitions-related activity and as incurred); (7) integration related charges associated with the integration of acquired businesses; (8) certain one-time and business transition costs; and (9) the related tax charges and benefits associated with the exclusions (“Non-GAAP EPS”), and subject to such further adjustments as the Committee may in its discretion determine and specify in writing prior to March 30, 2017.  No adjustments shall be made in the calculation of Non-GAAP EPS which would preclude the payment of any amounts under this Award from satisfying the requirements of Code section 162(m)(4)(C) and the regulations thereunder.

	
Initial Performance Target:

 
	
$1.25 or more of Non-GAAP EPS if the Initial Performance Period ends on December 31, 2017, and $0.10 or more of Non-GAAP EPS if the Initial Performance Period ends on the last day of the Company’s last fiscal quarter ending after January 1, 2017, and before the date of a Change in Control.

	
Maximum Payment:
	
In the event the Committee determines and certifies that the Initial Performance Target is satisfied, the maximum payment that may be made to the Participant is equal to 187.5% of the Base Cash Amount.  If the Committee determines and certifies that the Initial Performance Target is not satisfied, no amounts are payable pursuant to this Award.  Such determination and certification shall be made by the Committee in writing no later than the February 28th that next follows the end of the Initial Performance Period, provided, however, that if the Initial Performance Period ends on the last day of the Company’s last fiscal quarter ending after January 1, 2017, and before the date of a Change in Control, the Committee shall make such determination and certification no later than the date immediately preceding the date of the Change in Control.  

 

 

		
	
Actual Payment:

 
	
In the event the Committee determines and certifies that the Initial Performance Target is satisfied, the actual payment made pursuant to this Award shall be determined pursuant to Section 3.

	
Vesting Date:
	
Subject to the terms and conditions of the Agreement (including, without limitation, conditions requiring continued Service with the Company through the applicable date), this Award vests on March 1, 2020 (the “Scheduled Vesting Date”).

By electronically accepting the Award according to the instructions in the Participant’s E*TRADE account (pursuant to which the Participant received this Grant Notice), the Participant agrees that the Award is governed by this Grant Notice and by the provisions of the Plan and the Agreement, both of which are made a part of this document.

 

The Participant acknowledges that copies of the Plan and the Agreement are available via the Participant’s E*TRADE account.

 

The Participant represents that the Participant has read and is familiar with the provisions of the Plan and the Agreement, and hereby accepts the Award subject to all of their terms and conditions.

 

 

 

2

 

NUVASIVE, INC.

PERFORMANCE CASH AWARD AGREEMENT

 

NuVasive, Inc. has granted to the Participant named in the Notice of Grant of Performance Cash Award (the “Grant Notice”) to which this Performance Cash Award Agreement is attached (together, the Performance Cash Award Agreement and the Grant Notice being referred to collectively herein as this “Agreement”) an Award subject to the terms and conditions set forth in this Agreement.  The Award has been granted pursuant to, and shall - in all respects - be subject to the terms and conditions of the NuVasive, Inc. 2014 Executive Incentive Compensation Plan (the “Plan”), as amended from time-to-time, the provisions of which are incorporated herein by reference.  By accepting the Award (as provided in the Grant Notice), the Participant: (a) acknowledges receipt of, and represents that the Participant has read and is familiar with, this Agreement and the Plan, (b) accepts the Award subject to all of the terms and conditions of this Agreement and the Plan, and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee or its delegate (to the extent delegation is permitted under the Plan) in the event any questions arise (and/or interpretation may be required) regarding this Agreement or the Plan.

1.Definitions and Construction.

1.1Definitions.  Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Notice or the Plan.

(a)“2019 Revenue” means the Company’s GAAP revenue as publicly reported by the Company in its earnings press release for the fiscal year ended December 31, 2019, adjusted to exclude the effect of currency fluctuations as well as any substantial acquisitions and divestitures related activity that close after January 1, 2019, and subject to such further adjustments as the Committee may in its discretion determine and specify in writing.  Notwithstanding the foregoing, in the event of a Change in Control prior to December 31, 2019, the 2019 Revenue will be determined based on the Company’s financial performance over the four consecutive fiscal quarters ending with and including the last fiscal quarter prior to such Change in Control. 

(b)“2019 Revenue Performance Multiplier” means the respective percentage calculated using (or as identified in) the table below:

			
	
2019 Revenue
Performance Goal
	
% of Goal Achieved
	
2019 Revenue Performance Multiplier

	
<$1,071
	
<85.0%
	
0.0%

	
Threshold $1,071
	
85.00%
	
50.0%

	
$1,134
	
90.00%
	
66.7%

	
$1,166
	
92.50%
	
75.0%

	
$1,197
	
95.00%
	
83.3%

	
$1,229
	
97.50%
	
91.7%

	
Target $1,260
	
100.00%
	
100.0%

	
$1,292
	
102.50%
	
112.5%

	
$1,323
	
105.00%
	
125.0%

	
$1,355
	
107.50%
	
137.5%

	
Maximum $1,386
	
110.00%
	
150.0%

If the Company achieves a 2019 Revenue that falls between the foregoing levels, the 2019 Revenue Performance Multiplier will be determined by linear interpolation between the applicable levels noted above and using the following guiding principles:

	
 
	
•
	
a 3.33% decrease in funding for every 1% of goal achieved below Target; and

	
 
	
•
	
a 5.0% incremental increase in funding for every 1% of goal achieved above 100%, up to a maximum funding of 150% of target.

The Committee shall have the authority to make appropriate adjustments to the 2019 Revenue Performance 

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Goal to account for changes in accounting standards and adopted changes in accounting principles as well as the effect of substantial acquisitions and divestitures related activity that close prior to January 1, 2019.  In each case, the 2019 Revenue Performance Multiplier shall be rounded up to the nearest tenth of a percent.

(c)“Beginning Period Average Price” means the average official closing price per share of the respective company over the twenty consecutive trading days ending with and including the first day of the TSR Performance Period (if such day is not a trading day, the immediately preceding trading day).

(d)“Ending Period Average Price” means the average official closing price per share of the respective company over the twenty consecutive trading days ending with and including the last day of the TSR Performance Period (or, if such day is not a trading day, the immediately preceding trading day).

(e)“Index Companies” means the companies that are included in the S&P 500, continuously from the beginning through the end of the TSR Performance Period.  The Committee shall have the authority to make appropriate adjustments to the extent necessary to account for extraordinary, unusual and infrequently occurring events and transactions involving an Index Company.

(f)“TSR Performance Multiplier” means the respective percentage calculated using (or as identified in) the table below:

	
TSR Percentile Ranking for TSR Performance Period
	
TSR Performance Multiplier

	
At least at the 75th percentile
	
125.0%

	
Greater than the 25th Percentile but less than the 75th percentile 
	
100.0%

	
At or below the 25th percentile
	
75.0%

 

(g)“TSR” means total shareholder return as determined by dividing (i) the sum of (A) the Ending Period Average Price minus the Beginning Period Average Price plus (B) all dividends and other distributions paid on a company’s shares during the TSR Performance Period by (ii) the Beginning Period Average Price.  In calculating TSR, all dividends are assumed to have been reinvested in shares when paid.  The Committee shall have the authority to make appropriate equitable adjustments to account for extraordinary items affecting a company’s TSR for the TSR Performance Period. 

(h)“TSR Performance Period” means the period commencing on January 1, 2017, and ending on December 31, 2019, or in the event of a Change in Control prior to December 31, 2019, ending on the date immediately preceding the date of the Change in Control.  

(i)“TSR Percentile Ranking” means the Company’s percentile ranking relative to the Index Companies, based on TSR.  TSR Percentile Ranking is determined by ordering the Index Companies (plus the Company if the Company is not one of the Index Companies) from highest to lowest based on TSR for the TSR Performance Period and counting down from the company with the highest TSR (ranked first) to the Company’s position on the list.  (If two companies are ranked equally, the ranking of the next company shall account for the tie, so that if one company is ranked first, and two companies are tied for second, the next company is ranked fourth.)  After this ranking, the TSR Percentile Ranking will be calculated using the following formula, rounded to the nearest whole percentile by application of regular rounding:

			
	
TSR Percentile Ranking =
	
(N – R)
	
* 100

	
(N – 1)

“N” represents the number of Index Companies for the TSR Performance Period (plus one if the Company is not one of the Index Companies for the TSR Performance Period).

“R” represents the Company’s ranking among the Index Companies (including the Company if the Company is not one of the Index Companies for the TSR Performance Period).

For example, if there are 100 Index Companies (including the Company), and the Company ranked 40th, the TSR Percentile Ranking would be the 61st percentile 

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(61% = (100 – 40)/(100 – 1) * 100, rounded to the nearest whole percentile by application of regular rounding).

1.2Construction.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement.  Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

2.Administration.

2.1Committee Actions.  All questions of interpretation concerning this Agreement, the Plan or any other form of agreement or other document employed by the Company in the administration of the Plan or the Award shall be determined by the Committee or its delegate.  All such determinations by the Committee or its delegate shall be final, binding and conclusive upon all persons having an interest in the Award, unless fraudulent or made in bad faith.  Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or the Award or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest in the Award.  

2.2Express Authority Required.  Only individuals expressly designated by the Committee shall have the authority to act on behalf of the Committee with respect to certain of the matters, rights, obligations, modifications, or elections allocated to the Company herein (or in the Plan).

3.Payment.  Subject to satisfaction of the Initial Performance Target and the vesting requirements of Section 4, and except as otherwise provided in Section 3.1 or 3.2, the cash amount that shall be payable in settlement of this Award on the date specified in Section 5 below shall be equal to the Base Cash Amount multiplied by the 2019 Revenue Performance Multiplier multiplied by the TSR Performance Multiplier, rounding up to the nearest whole dollar.  If the 2019 Revenue Performance Multiplier is 0%, the Award is forfeited and no cash payment will be paid.

3.1Death or Disability.  Upon the Participant’s death or termination of Service due to Disability, the cash amount that shall be payable in settlement of this Award on the date specified in Section 5 below shall be the Base Cash Amount (as provided in the Notice of Grant, with no application of the 2019 Revenue Performance Multiplier or the TSR Performance Multiplier).

3.2Change in Control.  Upon any Change in Control prior to December 31, 2019, the amount of cash that shall be paid in settlement of this Award shall be equal to the greater of (i) the Base Cash Amount (as set forth in the Notice of Grant) or (ii) such Base Cash Amount multiplied by the 2019 Revenue Performance Multiplier, multiplied by the TSR Performance Multiplier, rounding up to the nearest whole dollar. 

4.Vesting; Forfeiture.

4.1Vesting of Award.  Provided that the Participant’s Service has not terminated prior to the applicable date, the Award shall become vested upon the earliest date to occur of the following (the “Vesting Date”):

(a)the Scheduled Vesting Date (as provided in the Grant Notice);

(b)the Participant’s death;

(c)termination of the Participant’s Service due to Disability; and

(d)immediately before any Change in Control.

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4.2Leaves of Absence.

(a)If Participant takes an approved medical, FMLA (or other statutorily protected leave), or military leave (each, an “Approved Leave”) and returns from such leave for at least thirty calendar days, then Participant shall be treated as if the period of such Approved Leave had been a period of continuous Service with the Company or Affiliate, and the Award shall be settled in accordance with Section 5.

(b)In the event the Participant takes a leave of absence other than an Approved Leave, the cash amount payable as determined under Section 3, shall be prorated by multiplying such amount by a fraction the numerator of which is the number of whole months during the period commencing on January 1, 2017, and ending on the earlier of the date of a Change in Control or March 1, 2020 (the “Vesting Period”), that Participant had been in continuous Service with the Company or an Affiliate, and the denominator of which is the number of months the Vesting Period spans, rounding up to the nearest whole number.

(c)In the event of Participant’s termination of Service during any leave of absence, then the Award shall expire in accordance with the provisions set forth in Section 4.3.

4.3Forfeiture of Award Upon Termination of Service.  Except as otherwise provided in Section 4.1, the Award will terminate automatically without any further action by the Company and be forfeited without further notice and at no cost to the Company upon Participant’s termination of Service.

5.Settlement of Award.  Subject to the terms and conditions of the Plan and this Agreement, any cash amount that is determined to be payable pursuant to Section 3 shall be distributed to Participant (or Participant’s estate in the event of death) with respect to Participant’s Award within 30 days following the Vesting Date for such Award, except as otherwise provided in Section 8.1. (the “Settlement Date”).

6.Tax Withholding.  By accepting the Award (as provided in the Grant Notice), the Participant hereby authorizes withholding from payroll and any other amounts payable to the Participant, including withholding of a portion of the cash amount otherwise payable to the Participant in settlement of the Award, and otherwise agrees to make adequate provision for, any sums required to satisfy the federal, state, local and foreign tax (including any social insurance) withholding obligations of the Participating Company, if any, which arise in connection with the Award, the vesting of the Award or the payment of cash in settlement of the Award.

7.Rights as a Director, Employee or Consultant.

If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, the Participant’s employment is “at will” and is for no specified term.  Nothing in this Agreement shall confer upon the Participant any right to continue in the Service of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Participant’s Service at any time.

8.Compliance with Section 409A.

It is intended that the settlement of the Award as set forth in this Agreement qualify for exemption from, or comply with, the requirements of Section 409A, and any ambiguities herein will be interpreted to so qualify or comply.  Notwithstanding the foregoing, if it is determined that the Award fails to satisfy the requirements of the “short-term deferral” exemption and are otherwise Section 409A Deferred Compensation, it is intended that any payment or benefit which is made or provided pursuant to or in connection with this Award shall comply in all respects with the applicable requirements of Section 409A (including applicable regulations or other administrative guidance thereunder, as determined by the Committee in good faith) to avoid the unfavorable tax consequences provided therein for non‐compliance.  In connection with effecting such compliance with Section 409A, the following shall apply:

8.1Separation from Service; Required Delay in Payment to Specified Employee.  Notwithstanding anything set forth herein to the contrary, no amount payable pursuant to this Agreement on account of the Participant’s termination of Service which constitutes a “deferral of compensation” within the meaning of the 

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Treasury Regulations issued pursuant to Section 409A of the Code (the “Section 409A Regulations”) shall be paid unless and until the Participant has incurred a “separation from service” within the meaning of the Section 409A Regulations.  Furthermore, to the extent that the Participant is a “specified employee” within the meaning of the Section 409A Regulations as of the date of the Participant’s separation from service, no amount that constitutes a deferral of compensation which is payable on account of the Participant’s separation from service shall be paid to the Participant before the date (the “Delayed Payment Date”) which is first day of the seventh month after the date of the Participant’s separation from service or, if earlier, the date of the Participant’s death following such separation from service.  All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.

8.2Other Changes in Time of Payment.  Neither the Participant nor the Company shall take any action to accelerate or delay the payment of any benefits under this Agreement in any manner which would not be in compliance with the Section 409A Regulations.

8.3Amendments to Comply with Section 409A; Indemnification.  Notwithstanding any other provision of this Agreement to the contrary, the Company is authorized to amend this Agreement, to void or amend any election made by the Participant under this Agreement and/or to delay the payment of any monies and/or provision of any benefits in such manner as may be determined by the Company, in its discretion, to be necessary or appropriate to comply with the Section 409A Regulations without prior notice to or consent of the Participant.  The Participant hereby releases and holds harmless the Company, its directors, officers and stockholders from any and all claims that may arise from or relate to any tax liability, penalties, interest, costs, fees or other liability incurred by the Participant in connection with the Award, including as a result of the application of Section 409A.

8.4Advice of Independent Tax Advisor.  The Company has not obtained a tax ruling or other confirmation from the Internal Revenue Service with regard to the application of Section 409A to the Award, and the Company does not represent or warrant that this Agreement will avoid adverse tax consequences to the Participant, including as a result of the application of Section 409A to the Award.  The Participant hereby acknowledges that he or she has been advised to seek the advice of his or her own independent tax advisor prior to entering into this Agreement and is not relying upon any representations of the Company or any of its agents as to the effect of or the advisability of entering into this Agreement.

9.Miscellaneous Provisions.

9.1Termination or Amendment.  The Committee may terminate or amend the Plan or this Agreement at any time; provided, however, that no such termination or amendment may have a materially adverse effect on the Participant’s rights under this Agreement without the consent of the Participant unless such termination or amendment is necessary to comply with applicable law or government regulation, including, but not limited to, Section 409A.  No amendment or addition to this Agreement shall be effective unless in writing.

9.2Nontransferability of the Award.  Prior to the payment of cash on the applicable Settlement Date, neither this Award nor any cash amount payable under this Award shall be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution.  All rights with respect to the Award shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s guardian or legal representative.

9.3Repayment/Forfeiture.  By accepting this Award, the Participant specifically agrees that any and all payments or benefits the Participant or any other person may be entitled to receive under or as a result of this Award shall be immediately forfeited, and that the aggregate amount of any payments or benefits the Participant or any other person has received under or as a result of this Award (determined without regard to any taxes or other amounts withheld from such payments or benefits), shall be repaid to the Company within 30 days following written notice from the Company (or such shorter period as may be required by applicable law), (1) as the Company in its discretion determines may be required to comply with any applicable listing standards of a national securities exchange adopted in accordance with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations of the 

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U.S. Securities and Exchange Commission adopted thereunder or similar rules under the laws of any other jurisdiction, (2) to the extent provided pursuant to the Company’s Incentive Compensation Recoupment Policy, and (3) in the event the Committee or its delegate determines that the Participant has engaged in Prohibited Conduct (as defined below) at any time during the Recoupment Period (as defined below).  For purposes of this Section 9.3, 

(a)“Prohibited Conduct” means (1) violation of the Company’s Code of Ethical Business Conduct, Insider Trading Policy, or any Proprietary Information, Inventions Agreement, Non-Compete Agreement (or similar agreement) signed by the Participant; (2) unethical behavior (such as, without limitation, fraud, dishonesty, or misrepresentation of product benefits); (3) engaging in Competition; (4) disclosing or using in any capacity other than as necessary in the performance of duties assigned by the Company or its Affiliates any confidential information, trade secrets or other business sensitive information or material concerning the Company or its Affiliates, customers, suppliers or partners; (5) directly or indirectly employing, contacting concerning employment, or participating in any way in the recruitment for employment of (whether as an employee, officer, director, agent, consultant or independent contractor), any person who was or is an employee, representative, officer or director of the Company or any of its Affiliates at any time within the 12 months prior to termination of Participant’s employment; (6) any action or statement by Participant and/or his or her representatives that either does or could reasonably be expected to disparage the Company, its Affiliates, or their officers, employees, or directors, or undermines, diminishes or otherwise damages the relationship between the Company or any of its Affiliates and any of their respective customers, potential customers, vendors and/or suppliers that were known to Participant; or (7) breach of any provision of any employment or severance agreement with the Company or any Affiliate.  Any determination of Prohibited Conduct shall be made by the Committee or its delegate in its sole discretion and shall be binding on all parties.  Notwithstanding anything contained herein to the contrary, Prohibited Conduct shall not include communication by Participant with any government agency, commission or regulator or participation by Participant in any investigation or proceeding that may be conducted by any government agency, commission or regulator, but only to the extent that such communication is required or permitted by law.

(b)“Competition” means, either during Participant’s employment with the Company or any of its Affiliates, or within 12 months following termination of such employment, accepting employment with, or serving as a consultant or advisor or in any other capacity to a competitor of the Company, including but not limited to the DePuy Synthes division of Johnson & Johnson, Stryker Corporation, Globus Medical, Inc., Medtronic, Inc., K2M Holdings, Inc., Zimmer Biomet Holdings, Inc. or any subsidiary or Affiliate of the foregoing (a “Competitor”), including, but not limited to, employment or another business relationship with any Competitor if Participant has been introduced to trade secrets, confidential information or business sensitive information during Participant’s employment with the Company or any of its Affiliates and such information would aid the Competitor because the threat of disclosure of such information is so great that it must be assumed that such disclosure would occur.

(c)“Recoupment Period” means the period beginning on the Date of Grant and ending on the date that is 12 months after the date on which the Participant or any other person received any payment or benefit pursuant to this Award, provided, however, that if the Prohibited Conduct resulted in the Participant or any other person receiving any payment or benefit pursuant to this Award in excess of the payment or benefit that would have been received absent such Prohibited Conduct, the Recoupment Period shall end on the date that is 36 months after the date on which such payment or benefit was received.  

9.4Further Instruments.  The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement.

9.5Binding Effect.  This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.  If all or any part of any section or clause of this Agreement is determined to be invalid or unenforceable in any respect or to any degree, that section or clause shall be interpreted and enforced to the maximum extent allowed by law and shall not invalidate or impact any other sections and/or clauses that remain.

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9.6Delivery of Documents and Notices.  Any document relating to participation in the Plan or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by a Participating Company, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address of such party set forth in the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.

(a)Description of Electronic Delivery.  The Plan documents, which may include but do not necessarily include: the Plan, this Agreement, and any reports of the Company provided generally to the Company’s stockholders, may be delivered to the Participant electronically.  In addition, if permitted by the Company, the Participant may deliver electronically the Grant Notice to the Company or to such third party involved in administering the Plan as the Company may designate from time to time.  Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the Internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company.

(b)Consent to Electronic Delivery.  The Participant acknowledges that the Participant has read Section 9.6(a) of this Agreement and consents to the electronic delivery of the Plan documents and, if permitted by the Company, the delivery of the Grant Notice, as described in Section 9.6(a).  The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing.  The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails.  Similarly, the Participant understands that the Participant must provide the Company or any designated third party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails.  The Participant may revoke his or her consent to the electronic delivery of documents described in Section 9.6(a) or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail.  Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in Section 9.6(a), but has nevertheless knowingly and voluntarily chosen to do so by accepting the Award (as provided in the Grant Notice).

9.7Integrated Agreement.  This Agreement and the Plan shall constitute the entire understanding and agreement of the Participant and the Participating Company Group with respect to the subject matter contained herein or therein and supersede any prior agreements, understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to such subject matter.  To the extent contemplated herein or therein, the provisions of this Agreement and the Plan shall survive any settlement of the Award and shall remain in full force and effect.

9.8Applicable Law.  This Agreement shall be governed by the laws of the State of Delaware as such laws are applied to agreements between Delaware residents entered into and to be performed entirely within the State of Delaware.

9.9Terms and Conditions Subject to Change in the Event the Participant Transfers Outside of the United States.  Should the Participant transfer his or her residence and/or employment with the Company to another country, the Company, in its sole discretion, shall determine whether application of certain additional and/or supplemental terms and conditions is necessary or advisable in order to comply with respective laws, rules and regulations or to facilitate the operation and administration of the Award and the Plan.  In all circumstances, the Company will provide the Participant with its ordinary-course terms and conditions for such country(ies) in the form of an amendment and/or addendum, which shall thereafter be part of this Agreement.

 

9Exhibit 10.1

 

STOCK EXCHANGE AGREEMENT

 

This Stock Exchange
Agreement (“Agreement”) is entered into as of December 30, 2014, by and between Cloud9 Holdings Co. (“Seller”)
and Financial Gravity Holdings, Inc. (“Purchaser”). Purchaser and Seller may collectively be referred to as the “Parties”.

 

Recitals:

 

WHEREAS, Seller and
Seller’s Shareholders are the record owner and holder of shares of the capital stock of Cloud9 Holdings Co., a Texas corporation
(“Company”); and

 

WHEREAS, the parties
desire to enter into this Agreement pursuant to which Purchaser will purchase from Seller all outstanding shares of capital stock
of the Company.

 

NOW, THEREFORE, in
consideration of the Recitals set forth above, the terms and conditions of which are incorporated into this Agreement with the
same effect as if fully restated below, and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

1.                  
PURCHASE AND SALE: At Closing (defined below) and subject to the terms and conditions set forth in this Agreement, Purchaser
hereby agrees to purchase from Seller, and Seller hereby agrees to sell, transfer and convey to the Purchaser 40,000,000 shares
of Cloud9 Holdings Common Stock of the Company (100%) (the “Stock”).

 

2.                  
PURCHASE PRICE: The purchase price for each share of Stock shall be as outlined in Exhibit 1 which details the form
of payment.

 

3.                  
CLOSING: The closing contemplated by this Agreement for the transfer of the Stock and the payment of the Purchase Price
shall take place at 800 North Watters, Suite 120, Allen, Texas 75013, on December 31, 2014 (the “Closing”).
The certificates representing the Stock shall be duly endorsed for transfer or accompanied by an appropriate stock transfer.

 

4.                  
REPRESENTATIONS AND WARRANTIES OF SELLER: Seller hereby makes the following representations and warranties to Buyer which
shall be true and correct as of the date hereof and as of Closing:

 

		(a)	The Seller is not a party to any agreements that create rights or obligations in the Stock relating
to any third party, including voting or stockholder agreement. The Seller is the lawful owner of the Stock, free and clear of any
encumbrances, security interests or liens of any kind and has full power and authority to sell and transfer the Stock as contemplated
in this Agreement.

 

		(b)	To the Seller’s knowledge, the Company is duly organized, validly existing and in good standing
under the laws of the State of Texas and has full power and authority to own and operate its property and assets and to carry on
its business as presently conducted.

 

		(c)	The execution, delivery, and performance of this Agreement by Seller will not conflict with or
otherwise violate any contract, agreement, or restriction to which Seller or, to Seller’s knowledge, the Company is party
or by which Seller or, to Seller’s knowledge, the Company is bound.

 

		(d)	This Agreement and the agreements and instruments to be executed and delivered pursuant hereto
constitute the valid and binding obligations of Seller enforceable against Seller in accordance with their respective terms, except
as enforceability may be limited by bankruptcy, insolvency or similar laws or by equitable principles that affect the rights of
creditors generally.

 

5.                  
REPRESENTATIONS AND WARRANTIES OF BUYER: Buyer hereby makes the following representations and warranties to Seller which
shall be true and correct as of the date hereof and as of Closing:

 

		(a)	Buyer has the full power and authority to enter into this Agreement and to purchase the Stock as
set forth in this Agreement.

 

		(b)	The execution, delivery, and performance of this Agreement by Buyer will not conflict with or otherwise
violate any contract, agreement, or restriction to which Purchaser is a party or by which Buyer is bound.

 

 

 

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		(c)	This Agreement and the agreements and instruments to be executed and delivered pursuant hereto
constitute the valid and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms, except
as enforceability may be limited by bankruptcy, insolvency or similar laws or by equitable principles that affect the rights of
creditors generally.

 

6.                  
INDEMNIFICATION:

 

		(a)	Indemnification of Buyer. Seller hereby indemnifies, defends, and holds Buyer harmless from and
against any and all known or unknown claims, demands, liabilities (including, but not limited to, any transferee liabilities imposed
by law), obligations, losses, fines, penalties, damages, assessments, judgments, costs, expenses (including, but not limited to,
attorneys’ fees, court costs and other costs and expenses incurred in investigating, preparing or defending against any litigation,
claim, action, suit, proceeding or demand of any kind or character or in enforcing this Section 6(a)) accruing prior to the
Closing Date and directly or indirectly arising from or related to: (i) the operation of the business of the Company up to
the Closing Date; (ii) Seller’s transfer of the Stock under this Agreement; (iii) Seller’s breach of or failure
to perform any representation, warranty, covenant, duty or obligation made by or assigned to Seller under this Agreement; and/or
(iv) any material inaccuracy or omission in any information furnished by Seller under this Agreement.

 

		(b)	Indemnification of Seller. Buyer hereby indemnifies, defends and holds Seller harmless from and
against any and all known or unknown claims, demands, liabilities, obligations, losses, fine, penalties, damages, assessments,
judgments, costs, expense (including, but not limited to, attorneys’ fees, court costs and other costs and expenses incurred
in investigating, preparing or defending against any litigation, claim, action, suit, proceeding or demand of any kind or character
or in enforcing this Section 6(b)) accruing from and after the Closing Date and directly or indirectly arising from or related
to: (i) Buyer’s ownership of the Membership Interest; (ii) Buyer’s operation of the business of the Company
on or after the Closing Date; (iii) Buyer’s breach of or failure to perform any representation, warranty, covenant,
duty, or obligation made by or assigned to Buyer under this Agreement; and/or (iv) any material inaccuracy or omission in
any information furnished by Buyer under this Agreement.

 

7.                  
SEVERABILITY: If any part or parts of this Agreement shall be held unenforceable for any reason, the remainder of this Agreement
shall continue in full force and effect. If any provision of this Agreement is deemed invalid or unenforceable by any court of
competent jurisdiction, and if limiting such provision would make the provision valid, then such provision shall be deemed to be
construed as so limited.

 

8.                  
BINDING EFFECT: The covenants and conditions contained in this Agreement shall apply to and bind the parties and the heirs,
legal representatives, successors and permitted assigns of the Parties.

 

9.                  
BROKER’S FEES; The Parties represent that there has been no act in connection with the transaction contemplated in
this Agreement that would give rise to a valid claim against either party for a broker’s fee, finder’s fee or other
similar payment.

 

10.               
ENTIRE AGREEMENT: This Agreement constitutes the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all other agreements and understanding, oral and written, between the parties hereto with respect
to the subject matter hereof. This Agreement may be modified or amended only by an instrument in writing signed by all the parties.

 

11.               
GOVERNING LAW: This Agreement shall be governed by and construed in accordance with the laws of the State of Texas.

 

12.               
VENUE: Buyer agrees that venue for any action relating to this Agreement shall be exclusively brought in Dallas County,
Texas, and agrees to submit to the jurisdiction of the United States District Court for the Northern District of Texas or any Texas
state court, waiving any and all defenses to the jurisdiction and/or venue of said court, and agrees not to raise any questions
or issues as to the jurisdiction or venue of either or both courts in the event that suit is brought on this Agreement.

 

 

 

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13.               
NOTICE: Any notice required or otherwise given pursuant to this Agreement shall be in writing and mailed certified, return
receipt requested, postage prepaid, or delivered by overnight delivery service:

 

		(a)	If to Purchaser:

 

Mr. John Pollock

Financial Gravity Holdings, Inc.

800 North Watters Road, Suite
120

Allen, Texas 75013

 

		(b)	If to Seller:

 

Mr. Paul Boyd

Cloud9 Holdings Co.

800 North Watters Road, Suite
120

Allen, Texas 75013

 

14.               
WAIVER: The failure of either party to enforce any provisions of this Agreement shall not be deemed a waiver or limitation
of that party’s right to subsequently enforce and compel strict compliance with every provision of this Agreement.

 

IN WITNESS WHEREOF,
the parties have caused this Agreement to be executed the day and year first above written.

 

	
        PURCHASER:
	
        SELLER:

	 	 
	 	 
	/s/ John Pollock                                   	/s/ Paul F. Boyd                                        
	Chief Executive Officer	Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

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Exhibit 1

 

 

	 	 
	Shares of Financial Gravity
Holdings, Inc., Value of $1.00 per share:	438,159
	 	 
	Shares of Financial Gravity
Holdings, Inc. for each share of Cloud9 Holdings Co. equals:	0.0109
	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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