Execution Version

 

LOCK-UP AGREEMENT

 

THIS LOCK-UP AGREEMENT, as may be amended, supplemented or modified from time to
time in accordance with the terms hereof, is made as of December 3, 2018 (this
“Agreement”) by and between Non-Invasive Monitoring Systems, Inc., a Florida
corporation (the “Company”), and the undersigned investor (the “Investor”).
Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Exchange Agreement (as defined
below).

 

WHEREAS, the Company, IRA Financial Trust Company, a South Dakota trust
corporation (“IRA Trust”), IRA Financial Group LLC, a Florida limited liability
company (“IRAFG” and, together with IRA Trust, “IRA Financial”), Adam Bergman
(the “Majority Equityholder”) and Fred Horner (the “Minority Equityholder” and,
together with the Majority Equityholder, the “Equityholders”), are entering into
or have entered into an Equity Exchange Agreement (the “Exchange Agreement”)
pursuant to which NIMS shall acquire all of the issued and outstanding equity of
IRA Financial in exchange for the issuance by NIMS to the Equityholders of the
Exchange Shares (the “Exchange”);

 

WHEREAS, certain Persons will be acquiring shares of capital stock of the
Company (“Company Capital Stock”) pursuant to the Debt Exchange, the Preferred
Stock Conversion, the Equity Financing and the Exchange, with the consummation
of such acquisitions to occur immediately prior to or contemporaneously with the
closing of the Exchange (collectively, the “Transactions”); and

 

WHEREAS, as a condition and inducement to IRA Financial and the Equityholders
entering into the Exchange Agreement, the Investor agrees to be bound by the
covenants contained in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:

 

1.Definitions and Interpretation.

 

(a) Certain Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:

 

“Affiliate” means any Person who is an “affiliate” as defined in Rule 12b-2
promulgated under the Exchange Act.

 

“Agreement” has the meaning set forth in the Preamble.

 

“Board of Directors” means the Board of Directors of the Company.

 

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

 

“Consummation Date” means the date on which the closing of the applicable
Transaction shall have occurred.

 

“Covered Securities” means, with respect to any Holder, any of the following:
(i) any and all shares of Company Capital Stock which are owned by such Holder
as of the Consummation Date (the amount of which shall be set forth on Schedule
A attached hereto), (ii) any shares of Company Capital Stock issuable upon
exercise, conversion or exchange of any securities of the Company which are
owned by such Holder as of the Consummation Date, (iii) any securities of the
Company issued in respect of the shares of Company Capital Stock issued or
issuable to any of the Holders by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise and any shares of Company Capital Stock
issuable upon conversion, exercise or exchange thereof, in each case to the
extent relating to any securities of the Company which were owned by such Holder
as of the Consummation Date, and (iv) any other securities of the Company issued
or issuable to any Holder that are convertible into or exercisable or
exchangeable for Company Capital Stock, whether at the option of the Holder or
otherwise, in each case to the extent relating to any securities of the Company
which were owned by such Holder as of the Consummation Date.

 

 

 

 

“Exchange” has the meaning set forth in the Recitals.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.

 

“Exchange Agreement” has the meaning set forth in the Recitals.

 

“Holder” means the Investor and any Permitted Transferee thereof to whom Covered
Securities are transferred in accordance with Section 2(c).

 

“Investor” has the meaning set forth in the Preamble.

 

“Lock-up Period,” means each of (i) the period commencing on the Consummation
Date to and including the date that is six (6) months following the Consummation
Date (the “First Lock-up Period”); (ii) the period commencing on the
Consummation Date to and including the date that is twelve (12) months following
the Consummation Date (the “Second Lock-up Period”); and (iii) the period
commencing on the Consummation Date to and including the date that is
twenty-four (24) months following the Consummation Date (the “Third Lock-up
Period”).

 

“Permitted Transfer” has the meaning set forth in Section 2.

 

“Permitted Transferee” means, (i) with respect to any Holder who is an
individual, (x) a member of such Holder’s immediate family (which means any
relationship by blood, marriage or adoption, not more remote than first cousin)
or a trust, corporation, partnership or limited liability company for the
benefit of such individual or an immediate family member, all of the beneficial
interests of which shall be held by such Holder or one or more members of such
Holder’s immediate family, and (y) such Holder’s heirs, successors,
administrators and executor and any beneficiary pursuant to will, other
testamentary document or applicable laws of descent, (ii) with respect to any
Holder that is an entity, any Affiliate of such entity (including any investment
fund or other entity controlled or managed by such Holder) and such Holder’s
partners, limited partners, members, shareholders and other equity holders,
(iii) with respect to any Holder that is a trust, to a trustee or beneficiary of
the trust, (iv) a recipient of a bona fide gift or gifts of Covered Securities
and (v) any other Person to whom Covered Securities are transferred other than
through a sale on a stock exchange or other public trading market or quotation
system through which shares of Company Capital Stock are traded or quoted.

 

“Person” means any individual, firm, corporation, partnership, limited liability
company, trust, incorporated or unincorporated association, joint venture, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind, and shall include any successor (by merger or
otherwise) of such entity.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

 

“Transfer” means, with respect to any security, the sale, pledge, sale of any
option or contract to purchase, purchase of any option or contract to sell,
grant of any option, right or warrant to purchase, share lending arrangement or
other transfer or disposition (or any transaction or device that is designed to
or could be expected to result in the transfer or the disposition by any Person
at any time in the future), whether directly or indirectly, of such security,
and shall include the entering into of any swap, hedge or other derivatives
transaction or other transaction that transfers to another, in whole or in part,
any rights, economic benefits or consequences, or risks of ownership, including
by way of settlement by delivery of such security or other securities in cash or
otherwise.

 

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(b) Interpretation. Unless otherwise noted:

 

(i) All references to laws, rules, regulations and forms in this Agreement shall
be deemed to be references to such laws, rules, regulations and forms, as
amended from time to time or, to the extent replaced, the comparable successor
thereto in effect at the time.

 

(ii) All references to agencies, self-regulatory organizations or governmental
entities in this Agreement shall be deemed to be references to the comparable
successor thereto.

 

(iii) All references to agreements and other contractual instruments shall be
deemed to be references to such agreements or other instruments as they may be
amended from time to time.

 

Whenever the words “include,” “includes,” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation.”

 

2.Transfers. During the applicable Lock-up Period, Transfers of Covered
Securities shall not be permitted except in accordance with this Section 2 and
as set forth in Section 3:

(a) Each Holder agrees not to Transfer any portion of its Covered Securities
during the First Lock-up Period.

 

(b) Each Holder agrees that it may Transfer (i) no more than fifty percent (50%)
in the aggregate of the amount of all the Covered Securities held by such Holder
as of the Consummation Date, from the period beginning on the first calendar day
following the end of the First Lock-up Period until the last calendar day of the
Second Lock-up Period; and (ii) no more than seventy-five percent (75%) in the
aggregate of the amount of all the Covered Securities held by such Holder as of
the Consummation Date (inclusive of any Covered Securities transferred in any
prior Lock-up Period), from the period beginning on the first calendar day
following the end of the Second Lock-up Period until the last calendar day of
the Third Lock-up Period. The transfer restrictions set forth in this Agreement
shall cease to apply commencing on the first calendar day immediately following
the last day of the Third Lock-up Period.

 

(c) With respect to any Holder, the limitation on Transfers contained in
Sections 2(a) and 2(b) shall not apply to (i) Transfers to Permitted Transferees
of such Holder, (ii) Transfers to the Company, and (iii) Transfers by a Holder
and its Affiliates to any other Holder and its Affiliates; provided, however,
that any such transferee that is not a Holder shall, as a condition to such
transfer, execute and deliver to the Company a joinder agreement in form and
substance attached as Exhibit A hereto, to evidence its agreement to be bound
by, and to comply with, this Agreement as a Holder (each such Transfer described
in clauses (i)-(iii) of this Section 2(c), subject to compliance with Section 3,
a “Permitted Transfer”) and, provided further, that Transfers by a Holder and
each Permitted Transferee thereof shall be aggregated for purposes of
determining the amount of Covered Securities that may be Transferred pursuant to
Sections 2(a) and (b).

 

(d) In addition, no provision herein shall be deemed to restrict or prohibit the
exercise or exchange by any Holder of any option or warrant to acquire Covered
Securities, or any other security exchangeable or exercisable for, or
convertible into, Covered Securities; provided that such Holder does not
transfer the Covered Securities acquired on such exercise or exchange during any
Lock-Up Period, unless otherwise permitted pursuant to the terms of this
Agreement.

 

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(e) Notwithstanding any other provisions of this Section 2, any Holder shall be
permitted to make Transfers, sales, tenders or other dispositions of Covered
Securities pursuant to a tender offer for securities of the Company or any other
transaction, including, without limitation, a merger, consolidation or other
business combination, involving a change of control of the Company (including,
without limitation, entering into any lock-up, voting or similar agreement
pursuant to which such Holder may agree to Transfer, sell, tender or otherwise
dispose of Covered Securities in connection with any such transaction, or vote
any Covered Securities in favor of any such transaction in accordance with
Section 5 or otherwise), provided that all Covered Securities subject to this
Agreement that are not so Transferred, sold, tendered or otherwise disposed of
remain subject to this Agreement; and provided further that it shall be a
condition of transfer, sale, tender or other disposition that if such tender
offer or other transaction is not completed, any Covered Securities subject to
this Agreement shall remain subject to the restrictions herein.

 

3.

No Effect of Transfers in Violation of this Agreement. No Transfer of any
Covered Securities in violation of any provision of this Agreement will be
effective to pass any title to, or create any interest in favor of, any Person.
Any Holder who intentionally and knowingly attempts to so effect a Transfer in
violation of this Agreement will be deemed to have committed a material breach
of its obligations to the other Holders and to the Company hereunder.

 

4.Restrictive Legend; Stop Transfer Instruction.

 

(a) Certificates representing the Covered Securities issued on or after the
Consummation Date must bear the following legend:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCK-UP
AGREEMENT AMONG THE OWNER OF SUCH SECURITIES OF IRA FINANCIAL, INC. AND CERTAIN
OTHER PARTIES THERETO THAT MATERIALLY RESTRICTS THE TRANSFERABILITY OF THE
SECURITIES. BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH
INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE
PROVISIONS OF SAID AGREEMENT. A COPY OF THE AGREEMENT IS ON FILE WITH THE
SECRETARY OF IRA FINANCIAL, INC.”

 

(b) In order to ensure compliance with the provisions contained herein, each
Holder agrees that the Company may issue appropriate “stop transfer”
certificates or instructions with the Company’s transfer agent and registrar
against the transfer of a Holder’s Covered Securities (irrespective of the date
of issuance of such Covered Securities), or otherwise make adequate provision to
restrict the transferability of the Covered Securities, in the event of a
transfer other than in compliance with the provisions of this Agreement and that
it may make appropriate notations to the same effect in its records.

 

5.Voting Agreement. During the First Lock-up Period, each Holder agrees to vote
at any regular or special meeting of shareholders (or by written consent) all
Covered Securities held by such Holder in such manner as may be necessary to
approve the following actions, if such actions are submitted for a shareholder
vote by the Board of Directors of the Company:

 

(a) amending the Company’s Articles of Incorporation, as currently amended, to
change the legal name of the Company to IRA Financial, Inc. or such other name
as shall be acceptable to the Majority Equityholder and provide that the holders
of not less than 50% of NIMS’ voting power shall be entitled to call a special
meeting of shareholders unless the bylaws establish a lower percentage
requirement;

 

(b) voting in favor of and/or executing written consents approving the Common
Stock Charter Amendment; and

 

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(c) any other action requested by the Board of Directors as may be required to
consummate the Exchange and the other transactions set forth in the Exchange
Agreement.

 

The voting of shares of Covered Securities may be effected in person, by proxy,
by written consent or in any other manner permitted by applicable law.

 

6.Proxy Appointment. To secure each Holder’s obligations to vote his, her or its
shares of Covered Securities in accordance with this Agreement, (a) each Holder
hereby appoints the Chairman of the Board of Directors and the Chief Executive
Officer of the Company, or either of them from time to time, or their respective
designees, as such Holder’s true and lawful proxy and attorney, with the power
to act alone and with full power of substitution, to vote all of such Holder’s
Covered Securities in favor of the matters set forth in Section 5 and to execute
all appropriate instruments consistent with this Agreement with respect to such
voting on behalf of such Holder if, and only if, such Holder fails to vote all
of such Holder’s Covered Securities or execute such other instruments in
accordance with the provisions of Section 5 within five (5) days of the
Company’s written request for such Holder’s written consent or signature. The
proxy and power granted by each Holder pursuant to this Section are coupled with
an interest and are given to secure the performance of such Holder’s obligations
under Section 5. Each such proxy and power will be irrevocable during the First
Lock-up Period. The proxy and power, so long as any Holder is an individual,
will survive the death, incompetency and disability of such Holder and, so long
as any Holder is an entity, will survive the merger or reorganization of such
Holder.

 

7.Successors and Assigns; Third Party Beneficiaries. The undersigned understands
that the Company and the other parties hereto are relying upon this Agreement in
proceeding toward consummation of the Transactions. The undersigned further
understands that this Agreement is irrevocable and shall inure to the benefit of
and be binding upon the successors and permitted assigns of the parties hereto
as provided herein. No Person other than the parties hereto and their successors
and permitted assigns is intended to be a beneficiary of this Agreement. This
Agreement shall not be assigned by the Company except as provided herein. The
Company shall cause any successor or assign (whether by merger, consolidation,
sale of assets, recapitalization, reorganization or otherwise) to assume this
Agreement as a condition to any such transaction.

 

8.Termination. This Agreement shall automatically terminate and be of no further
force or effect upon the earlier to occur of (i) the termination of the Exchange
Agreement, (ii) the first day following the expiration of the Third Lock-up
Period and (iii) a Change of Control of the Company; except that Section 3 and
Sections 8 through 22 shall survive termination of this Agreement under this
Section 8. For purposes of this Section 8, “Change of Control” means either (i)
the acquisition of the Company by another Person by means of any transaction or
series of related transactions to which the Company is a party (including,
without limitation, any stock acquisition, reorganization, merger or
consolidation, but excluding any such transaction if the primary purpose of such
transaction is to change the Company’s domicile, and excluding any equity
financing the primary purpose of which is to raise operating capital for the
Company) that results in a transfer of at least 50% of the total voting power
represented by the Company’s voting securities before such acquisition; or (ii)
a sale, lease, or other conveyance of all or substantially all of the Company’s
assets.

 

9.Remedies. The Holders and the Company, in addition to being entitled to
exercise all rights granted by law, shall be entitled to specific performance of
their respective rights under this Agreement. The Company and the Holders agree
that monetary damages would not be adequate compensation for any loss incurred
by reason of breach of the provisions of this Agreement and hereby agree to
waive in any action for specific performance the defense that a remedy at law
would be adequate or that there is need for a bond.

 

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10.

Notices. All notices, demands and other communications provide for or permitted
hereunder shall be made in writing and shall be made by registered or certified
first-class mail, return receipt requested, telecopy, electronic transmission,
courier service or personal delivery:

 

  (i) If to the Company:

 

1691 Michigan Ave Suite 415

Miami Beach, FL 33139

Telecopy No.: 305-789-7556

Attn: Adam Bergman

Email:abergman@irafinancial.com

 

With a copy to:

 

Holland & Knight LLP

701 Brickell Ave, Suite 3300

Telecopy: 305-789-7556

Attention: Ira Rosner

Email: ira.rosner@hklaw.com

 

  (ii) If to the Investor, at the address set forth on the signature page
hereto;

 

  (iii) If to any Holder, as set forth in the applicable joinder agreement.

 

All such notices, demands and other communications shall be deemed to have been
duly given when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial courier service; five Business Days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied or electronically transmitted. Any party to be given
notice in accordance with this section may designate another address or Peron
for receipt of notices hereunder.

 

11.Headings. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

 

12.Governing Law; Consent to Jurisdiction. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Florida, regardless
of the laws that might otherwise govern under applicable principles of conflict
of laws. Each of the parties (i) irrevocably submits itself to the personal
jurisdiction of each state or federal court sitting in the State of Florida, as
well as to the jurisdiction of all courts to which an appeal may be taken from
such courts, in any suit, action or proceeding arising out of or relating to
this Agreement or any of the transactions contemplated herein, (ii) agrees that
every such suit, action or proceeding shall be brought, heard and determined
exclusively in the federal or state courts located in Miami-Dade County, Florida
(provided that, in the event subject matter jurisdiction is unavailable in
Miami-Dade County, Florida, then all such claims shall be brought, heard and
determined exclusively in any other state or federal court sitting in the State
of Florida), (iii) agrees that it shall not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from such court, (iv)
agrees not to bring any suit, action or proceeding arising out of or relating to
this Agreement or any of the transactions contemplated herein in any other
court, and (v) waives any defense of inconvenient forum to the maintenance of
any suit, action or proceeding so brought.

 

13.WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

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14.Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.

 

15.Rules of Construction. Unless the context otherwise requires, references to
sections or subsections refer to sections or subsections of this Agreement.
Terms defined in the singular have a comparable meaning when used in the plural,
and vice versa.

 

16.Interpretation. The parties hereto acknowledge and agree that (i) each party
hereto and its counsel reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its preparation, (ii) the rule of construction
to the effect that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of this Agreement and (iii) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto,
regardless of which party was generally responsible for the preparation of this
Agreement.

 

17.Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto with respect
to the subject matter contained herein. There are no restrictions, promises,
representations, warranties or undertakings with respect to the subject matter
contained herein, other than those set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings among the parties
with respect to such subject matter.

 

18.Further Assurances. Each of the parties shall execute such documents and
perform such further acts as may be reasonably required or desirable to carry
out or to perform the provisions of this Agreement.

 

19.Other Agreements. Nothing contained in this Agreement shall be deemed to be a
waiver of, or release from, any obligations any party hereto may have under, or
any restrictions on the transfer of securities of the Company imposed by any
other agreement.

 

20.Counterparts; Facsimile Signatures. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Facsimile or other
electronically scanned and transmitted signatures, including by .pdf or email
attachment, shall be deemed originals for all purposes of this Agreement.

 

21.Not a Voting Trust. This Agreement is not a voting trust governed by Section
607.0730 of the Florida Business Corporation Act and should not be interpreted
as such.

 

22.Amendments and Waivers. The terms of this Agreement may be amended and the
observance of any term hereof may be waived only by unanimous written consent of
the Company and the Holders.

 

23.Stock Splits, Stock Dividends & Other Issuances. In the event of any issuance
of Company Capital Stock hereafter to any Holder (including, without limitation,
in connection with any stock split, stock dividend, recapitalization,
reorganization or the like) such shares shall become subject to this Agreement
and shall be endorsed with the legend set forth in Section 4.

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Agreement on the date first written above.

 

  NON-INVASIVE MONITORING SYSTEMS, INC.                      By:   Name:    
Title:           [INVESTOR]         By:   Name:     Title:           Address    
      Fax:   Email:

 

[Signature Page to Lock-Up Agreement]

 

   

 

 

EXHIBIT A

 

Form of Joinder Agreement

 

ACKNOWLEDGMENT AND AGREEMENT

 

Joinder to Lock-Up Agreement

 

WHEREAS, the undersigned (the “Transferee”) wishes to receive, from
____________________ (the “Transferor”), ___________ shares, par value $0.01 per
share, of capital stock (the “Capital Stock”), of __________________, a Florida
corporation (the “Company”);

 

WHEREAS, the Capital Stock is subject to that certain Lock-Up Agreement, dated
as of _____________, 201_ and as further amended from time to time (the
“Agreement”), by and among the Company and the investor named therein.
Capitalized terms used herein and not otherwise defined are given the respective
meanings assigned to such terms in the Agreement;

 

WHEREAS, the Transferee has received a copy of the Agreement and has been
afforded ample opportunity to read it, and the Transferee is thoroughly familiar
with its terms; and

 

WHEREAS, pursuant to the terms of the Agreement, the Transferor may not Transfer
all or any portion of the Transferor’s Capital Stock unless in compliance with
the Agreement, including, without limitation, Section 2 and Section 3 thereof.
This Acknowledgment and Agreement constitutes a joinder agreement as
contemplated by Section 2(c) of the Agreement.

 

NOW, THEREFORE, in consideration of the mutual premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and to induce the Transferor to transfer such Capital Stock
to the Transferee and the Company to permit such transfer, the Transferee does
hereby acknowledge and agree that (i) the Transferee has been given a copy of
the Agreement and ample opportunity to read it, and is thoroughly familiar with
its terms, (ii) the Capital Stock are subject to the terms and conditions set
forth in the Agreement and (iii) the Transferee shall become a party to the
Agreement and shall be fully bound by, and subject to, all of the covenants,
terms and conditions of the Agreement as though an original party thereto.

 

Signed this _____________ day of ________ , 20 ___,

 

      Transferee:                By:     Name:     Title:  

 

   

 

 

SCHEDULE A

 

[_____________ shares of Company Capital Stock]1

 

 

1 NTD: To be completed as of the Consummation Date