Document:

EXECUTION
VERSION

 

DEBT
EXCHANGE AGREEMENT

 

This
Debt Exchange Agreement is dated as of December 21, 2018 (this “Agreement”) by and among Non-Invasive Monitoring
Systems, Inc., a Florida corporation (the “Company”), Frost Gamma Investments Trust (“FGIT”),
Hsu Gamma Investments LP, a Delaware limited partnership (“Hsu Gamma”), Marie Wolf, an individual (“Wolf”),
Jane Hsiao, an individual (“Hsu”), and Frost Real Estate Holdings, LLC, a Florida limited liability company
(“FREH” and, collectively with FGIT, Hsu Gamma, Wolf and Hsu, the “Holders” and each individually,
a “Holder”).

 

WHEREAS,
the Holders, other than FREH, hold those certain promissory notes identified below their respective names on Schedule A
hereto (collectively, the “Notes”) in the aggregate principal amount, together with all accrued and unpaid
interest thereon, as is set forth on Schedule A hereto (such amount, the “Notes Indebtedness”);

 

WHEREAS,
the Company, FGIT and Hsu Gamma are parties to that certain Note and Security Agreement, dated as of March 31, 2010 (as amended,
the “Credit Agreement”), pursuant to which the Company is indebted to each of FGIT and Hsu Gamma in the aggregate
principal amount, together with all accrued and unpaid interest thereon, as is set forth on Schedule B hereto (the “Credit
Indebtedness”);

 

WHEREAS,
the Company has accounts payable in respect of past-due rent (i) in an aggregate amount equal to $76,704.95 due to FREH (the “FREH
Rental Indebtedness”) and (ii) an aggregate amount equal to $114,912.32 due to Hialeah Warehouse Holdings, LLC, an administratively
dissolved, member-managed Florida limited liability company owned equally by Hsu Gamma and FGIT (the “HSU/FGIT Rental
Indebtedness” and, collectively with the FREH Rental Indebtedness, the “Rental Indebtedness” and,
together with the Notes Indebtedness and the Credit Indebtedness, the “Indebtedness”);

 

WHEREAS,
the Company and the Holders desire to exchange the Indebtedness for shares of the Company’s common stock, par value $0.01
per share (the “Common Stock”), on the terms and subject to the conditions set forth in this Agreement (the
“Exchange”); and

 

WHEREAS,
upon consummation of the Exchange, (i) the Company shall not be indebted to any Holder, and (ii) the Credit Agreement shall terminate
and shall be of no further force or effect, and all security interests granted by the Company thereunder shall similarly terminate
and be of no further force or effect.

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties
agree as follows:

 

    	 	 	 

     

    

 

Article
I.

 

THE
EXCHANGE

 

1.1
Exchange of Indebtedness for Common Stock. Subject to the terms and conditions contained herein, on the date hereof, each
Holder shall sell, convey, transfer, assign and deliver to the Company, free and clear of all liens and encumbrances, all Indebtedness
held by such Holder. In consideration of the transfer to the Company of such Indebtedness by such Holder, the Company shall issue
to such Holder that number of shares of Common Stock set across from such Holder’s name on Schedule C hereto, calculated
based on a price per share equal to $0.07 (with all fractional shares rounded up). The shares of Common Stock issued to a particular
Holder are referred to as the “Holder Shares”, and the aggregate number of shares of Common Stock issued to
all Holders hereunder is referred to as the “Shares”. Notwithstanding the foregoing, FREH hereby agrees that
all of its Holder Shares issuable hereunder shall be issued to FGIT and shall be included in FGIT’s Holder Shares.

 

1.2
Closing; Deliverables. The closing of the Exchange (the “Closing”) shall take place at the Company’s
offices in Miami, Florida on the date hereof or by delivery of documents required to be delivered hereby by facsimile or other
electronic transmission, including by email attachment. At Closing, (A) the Company shall deliver to each Holder a copy of the
Company’s instructions to its transfer agent instructing the transfer agent to deliver one or more stock certificates evidencing
the Shares, inclusive of such restrictive and other legends as set forth in Section 5.1, and (B) each Holder shall deliver
to the Company such instruments of transfer or other documentation and agreements evidencing the Exchange, in each case as the
Company may reasonably request.

 

Article
II.

 

Additional
Agreements

 

The
Company and each Holder shall cooperate and use their respective commercially reasonable efforts to take or cause to be taken
all actions, and do or cause to be done all things, necessary, proper or advisable under this Agreement and applicable laws and
regulations to consummate and make effective the Exchange as soon as practicable, including preparing and filing as promptly as
practicable all documentation to effect all necessary applications, notices, petitions, filings and other documents and to obtain
as promptly as practicable all permits, consents, approvals and authorizations necessary or advisable to be obtained from any
third party and/or any governmental entity in order to consummate the sale or any of the other transactions contemplated by this
Agreement.

 

Article
III.

 

Representations
and Warranties of the Company

 

The
Company represents and warrants to the Holders as of the date hereof as follows:

 

3.1
Authorization of Agreements, etc. The execution and delivery by the Company of this Agreement, the performance by the Company
of its obligations hereunder, and the issuance, sale and delivery of the Shares have been duly authorized by all requisite corporate
action and will not result in any violation of, be in conflict with, or constitute a default under, with or without the passage
of time or the giving of notice: (a) any provision of the Company’s Articles of Incorporation, as amended, or Bylaws, as
amended; (b) any provision of any judgment, decree or order to which the Company is a party or by which it is bound; (c) any material
contract or agreement to which the Company is a party or by which it is bound (as defined in Item 601(b)(10) of Regulation S-K
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)); or (d) any statute, rule or governmental
regulation applicable to the Company, except for such violations, conflicts or defaults as would not individually or in the aggregate
have a material adverse effect on the Company.

 

    	 	2	 

     

    

 

3.2
Valid Issuance of Common Stock. The Shares have been duly authorized and, when issued, sold and delivered in accordance
with this Agreement in consideration of the Exchange, will be validly issued, fully paid and nonassessable and will be free and
clear of all liens, charges and encumbrances (collectively, “Encumbrances”) of any nature whatsoever except
for (i) restrictions on transfer under this Agreement and under applicable Federal and state securities laws and (ii) Encumbrances
created by a Holder.

 

3.3
Validity. This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally,
and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

 

3.4
Brokers and Finders. Neither the Company nor any of its subsidiaries, officers, directors or employees has employed any
broker or finder or incurred any liability for any brokerage fees, commissions or finders’ fees in connection with the Exchange.

 

Article
IV.

 

Representations
and Warranties of Each Holder

 

Each
Holder, severally and not together with any other Holder, represents and warrants to the Company as of the date hereof as follows:

 

4.1
Authorization of Agreements, etc. Such Holder has full right, power, authority and capacity to enter into this Agreement
and to consummate the Exchange, and the execution and delivery by such Holder of this Agreement and the performance by such Holder
of its obligations hereunder have been duly authorized by all requisite corporate or other action and will not result in any violation
of, be in conflict with, or constitute a default under, with or without the passage of time or the giving of notice: (a) any provision
of such Holder’s organizational documents as currently in effect (if such Holder is not a natural person); (b) any provision
of any judgment, decree or order to which such Holder is a party or by which it is bound; (c) any material contract or agreement
to which such Holder is a party or by which it is bound; or (d) any statute, rule or governmental regulation applicable to such
Holder.

 

4.2
Validity. This Agreement has been duly executed and delivered by such Holder and constitutes the legal, valid and binding
obligation of such Holder, enforceable against such Holder in accordance with its terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights
generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable
remedies.

 

    	 	3	 

     

    

 

4.3
Investment Representations.

 

(a)
At the time such Holder was offered the Holder Shares, it was, and at the date hereof it is, and on each date on which it receives
the Holder Shares it will be, an “accredited investor” as defined by Rule 501(a) of Regulation D promulgated under
the Securities Act of 1933, as amended (the “Securities Act”), and, if Holder is other than a natural person,
was not organized for the specific purpose of acquiring the Holder Shares and is not required to be registered as a broker-dealer
under Section 15 of the Exchange Act;

 

(b)
Such Holder is knowledgeable, sophisticated and experienced in financial and business matters and has sufficient knowledge and
experience in investing in companies similar to the Company so as to be able to evaluate the risks and merits of its investment
in the Holder Shares and it is able financially to bear the economic risks of its investment in the Holder Shares and is able
to afford a complete loss of such investment;

 

(c)
The Holder Shares being purchased by such Holder hereunder are being acquired for such Holder’s own account solely for the
purpose of investment and not with a present view to, or for sale in connection with, any distribution or resale thereof. If Holder
is other than a natural person, such Holder is acquiring the Holder Shares in the ordinary course of its business. Such Holder
does not have any agreement or understanding, directly or indirectly, with any person to distribute any of the Holder Shares;

 

(d)
Such Holder understands and acknowledges that:

 

(i)
the Shares have not been registered under the Securities Act or any state securities laws and are being offered and sold in reliance
upon specific exemptions from the registration requirements of the Securities Act and state securities laws, and the Company is
relying upon the truth and accuracy of, and such Holder’s compliance with, the representations, warranties, covenants, agreements,
acknowledgments and understandings of such Holder contained in this Agreement in order to determine the availability of such exemptions
and the eligibility of such Holder to acquire the Holder Shares;

 

(ii)
the Holder Shares must be held by such Holder indefinitely unless a subsequent disposition thereof is registered under the Securities
Act or is exempt from such registration; and

 

(iii)
the Holder Shares will bear a legend substantially in the form set forth in Section 5.1, and the Company will make a notation
on its transfer books to such effect;

 

(e)
Such Holder is not acquiring the Holder Shares as a result of any advertisement, article, notice or other communication regarding
the Holder Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement. Such Holder further acknowledges that he, she or it, or
his, her or its affiliate, has a pre-existing relationship with the Company, such as as a holder of currently outstanding securities
of the Company;

 

    	 	4	 

     

    

 

(f)
Such Holder acknowledges that the Company has made available to such Holder all documents and information that such Holder has
requested relating to an investment in the Holder Shares, and such Holder has been afforded: (i) the opportunity to discuss this
investment with, to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Holder Shares and the merits and risks of investing in the Holder Shares;
(ii) access to information about the Company and its subsidiaries and their respective financial condition, results of operations,
business, properties, management and prospectus sufficient to enable it to evaluate its investment; and (iii) the opportunity
to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the Holder Shares; and

 

(g)
Such Holder has, in connection with its decision to acquire the Holder Shares, relied solely upon the representations and warranties
of the Company contained in this Agreement.

 

4.4
Risk of Loss. Such Holder understands that its investment in the Holder Shares involves a significant degree of risk, including
a risk of total loss of such Holder’s investment, and such Holder has full cognizance of and understands all of the risk
factors related to its purchase of the Holder Shares, including, but not limited to, those set forth in the Annual, Quarterly
and Current Reports filed by the Company with the Securities and Exchange Commission. Such Holder understands that no representation
is being made as to the future value of the Holder Shares.

 

4.5
Confidentiality. Such Holder understands that this Agreement, the information contained in all materials provided to such
Holder by the Company and its representatives, including any information conveyed orally, in connection with the Exchange (collectively
“Confidential Information”), is strictly confidential and proprietary to the Company and is being provided
to such Holder solely for such Holder’s confidential use in connection with the Exchange. Such Holder agrees to use the
Confidential Information solely for the purpose of evaluating a possible investment in the Shares, and such Holder acknowledges
that it is prohibited from distributing, divulging or discussing any Confidential Information, in whole or in part, with any person,
except such Holder’s financial, investment or legal advisors (such persons, “Authorized Advisors”), solely
to the extent necessary for such Authorized Advisors to assist such Holder with its proposed investment in the Holder Shares.
To the extent that such Holder provides, directly or indirectly, any Confidential Information to any Authorized Advisor, such
Holder shall (a) ensure that such Authorized Advisor maintain the confidentiality of the Confidential Information to the same
extent applicable to Holder as set forth in this Section 4.5 and (b) be responsible for any breaches of this Section
4.5 by its Authorized Advisors. Confidential Information does not include any information that is or becomes publicly available
through no fault of such Holder, or that such Holder is required to disclose pursuant to applicable law, regulation or legal process;
provided, however, that if such Holder or any Authorized Advisor is requested or ordered to disclose any Confidential
Information pursuant to any court or other government order or any other applicable legal procedure, it shall provide the Company
with prompt notice of any such requirement and the terms of and circumstances surrounding such requirement so that the Company
may seek an appropriate protective order or other remedy, or waive compliance with the terms of this Section 4.5, and such
Holder or such Authorized Advisor will provide such cooperation, at Company’s expense, with respect to obtaining a protective
order or other remedy as the Company will request.

 

    	 	5	 

     

    

 

4.6
Brokers and Finders. Such Holder has not employed any broker or finder or incurred any liability for any brokerage fees,
commissions or finders’ fees in connection with the Exchange.

 

Article
V.

 

Miscellaneous

 

5.1
Transfer Restrictions. Each Holder acknowledges and understands, severally and not jointly, that (i) the Shares may only
be disposed of in compliance with state and federal securities laws and (ii) in connection with any transfer of Shares, other
than pursuant to an effective registration statement or pursuant to an available exemption from the registration requirements
of the Securities Act (including Rule 144) to the Company or to an affiliate of such Holder, the Company may require the transferor
thereof to provide to the Company an opinion of counsel selected by the Company, the form and substance of which opinion shall
be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred
Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms
of this Agreement and shall have the rights of a Holder under this Agreement. Any transfer or purported transfer of the Shares
in violation of this section shall be void.

 

5.2
Legend. Each certificate that represents Shares shall have conspicuously endorsed thereon a legend in substantially the
following form:

 

This
shares of common stock evidenced by this certificate have not been registered under the Securities Act of 1933, as amended (the
“Securities Act”), or any state securities laws. Such shares may not be offered or transferred by sale, assignment,
pledge or otherwise unless (a) a registration statement for the resale of such shares under the Securities Act is currently effective
or (b) the Company has received an opinion of counsel, which opinion is satisfactory to the Company, to the effect that such registration
is not required under the Securities Act or relevant state securities laws.

 

5.3
Brokerage. Each party hereto will indemnify and hold harmless the other against and in respect of any claim for brokerage
or other commissions relative to this Agreement or to the Exchange, based in any way on agreements, arrangements or understandings
made or claimed to have been made by such party with any third party.

 

5.4
Assignment; Parties in Interest. All representations, covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the respective successors and permitted assigns of the parties
hereto whether so expressed or not. No party may assign all or any portion of such party’s rights or obligations under this
Agreement without the prior written consent of, in the case of an assignment by a Holder, the Company, and in the case of an assignment
by the Company, Holders acquiring a majority of the Shares hereunder. This Agreement is intended for the benefit of the parties
hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person or entity.

 

    	 	6	 

     

    

 

5.5
Notices. All notices, requests, consents, demands, and other communications under this Agreement shall be in writing and
shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given,
on the date of transmittal of services via facsimile to the party to whom notice is to be given (with a confirming copy delivered
within 24 hours thereafter), or on the third day after mailing if mailed to the party to whom notice is to be given, by first
class mail, registered or certified, postage prepaid, or overnight mail via a nationally recognized courier providing a receipt
for delivery and properly addressed as follows:

 

	If
    to the Company:	Non-Invasive
    Monitoring Systems, Inc.
	 	4400
    Biscayne Blvd.
	 	Miami,
    FL 33137
	 	Attn:
    James Martin, Chief Financial Officer
	 	Fax:
    (305) 575-6016
	 	 
	If
    to a Holder:	To
    the address specified on the signature page hereto.

 

Any
party may change its address for purposes of this paragraph by giving notice of the new address to each of the other parties in
the manner set forth above.

 

5.6
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida for
all purposes and in all respects, without regard to the conflict of law provisions of such state that would cause the laws of
another jurisdiction to apply. The parties hereto acknowledge and agree that venue and jurisdiction for any claim, suit or controversy
related to or arising out of this Agreement shall lie in the state or federal courts located in Miami-Dade County, Florida. THE
PARTIES HEREBY WAIVE THE RIGHT TO JURY TRIAL OF ANY MATTERS ARISING OUT OF THIS AGREEMENT OR THE CONDUCT OF THE RELATIONSHIP BETWEEN
THEM.

 

5.7
Entire Agreement. This Agreement constitutes the sole and entire agreement of the parties with respect to the subject matter
hereof.

 

5.8
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. Facsimile or other electronically scanned and transmitted
signatures, including by email attachment, shall be deemed originals for all purposes of this Agreement.

 

5.9
Amendments and Waivers. This Agreement may be amended or modified, and provisions hereof may be waived, only by a written
instrument executed by the Company and each Holder.

 

    	 	7	 

     

    

 

5.10
Severability. If any provision of this Agreement shall be declared void or unenforceable by any judicial or administrative
authority, the validity of any other provision and of the entire Agreement shall not be affected thereby.

 

5.11
Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

 

5.12
Representations. Each Holder agrees that, except for the representations and warranties contained in Article III,
the Company makes no other representations or warranties, and the Company hereby disclaims any other representations or warranties
made by itself or any of its directors, officers employees, investment bankers, financial advisors, attorneys, accountants, agents
and other representatives (collectively, “Representatives”), with respect to the execution and delivery of
this Agreement, notwithstanding the delivery or disclosure to any other party or any other party’s Representatives of any
document or other information with respect to any one or more of the foregoing. Without limiting the generality of the foregoing,
and notwithstanding any otherwise express representations and warranties made by the Company in this Agreement, each Holder agrees
that none of the Company, its subsidiaries or any of their respective Representatives makes or has made any representation or
warranty with respect to (i) any projections, forecasts, estimates, plans or budgets or future revenues, expenses or expenditures,
future results of operations (or any component thereof), future cash flows (or any component thereof) or future financial condition
(or any component thereof) of the Company or any of its subsidiaries or the future business, operations or affairs of the Company
or any of its subsidiaries heretofore or hereafter delivered to or made available to it, or (ii) any other information, statements
or documents heretofore or hereafter delivered to or made available to it with respect to the Company or any of its subsidiaries
or the business, operations or affairs of the Company or any of its subsidiaries, except to the extent and as expressly covered
by a representation and warranty made in this Agreement.

 

5.13
Termination of Credit Agreement and Security Interest in Collateral. Capitalized terms used in this Section 5.13
and not defined herein or elsewhere in this Agreement have the respective meanings ascribed thereto in the Credit Agreement. The
Credit Agreement is hereby terminated and shall be of no further force or effect. Lender acknowledges and agrees that all Obligations
have been satisfied and discharged in full, any commitment to fund any Loan is hereby terminated, and Lender’s
security interest in the Collateral is hereby terminated. Lender shall, at Borrower’s sole cost and expense, execute such
further documents and take such further actions as may be reasonably necessary to make effective the foregoing release of security
interest, including duly executing and delivering termination statements for filing in all relevant jurisdictions under the applicable
Uniform Commercial Code.

 

[signature
pages follow]

 

    	 	8	 

     

    

 

IN
WITNESS WHEREOF, the undersigned has caused this Agreement to be executed by its duly authorized representative as of the
date and year first above written.

 

	 	NON-INVASIVE
    MONITORING SYSTEMS, INC.
	 	 	 
	 	By:	/s/
    James J. Martin
	 	Name:	James
    J. Martin
	 	Title:	Chief
Financial Officer

 

[Company
Signature Page to Debt Exchange Agreement]

 

    	 

     

    

 

IN
WITNESS WHEREOF, the undersigned has caused this Agreement to be executed by their duly authorized representatives as of the
date and year first above written.

 

	 	HOLDER:

	 	 	 
	 	Frost Gamma Investments Trust

	 	 
	 	By:	/s/
    Phillip Frost, M.D.
	 	Name:	Phillip
    Frost, M.D.
	 	Title:	Trustee

 

	Contact
    Information:	Address:	 
	 	 
	 	 
	 	 
	 	 
	 	 	 
	 	Telephone:	 
	 	Facsimile:	 
	 	E-mail:	 

 

[Holder
Signature Page to Debt Exchange Agreement]

 

    	 

     

    

 

IN
WITNESS WHEREOF, the undersigned has caused this Agreement to be executed by their duly authorized representatives as of the
date and year first above written.

 

	 	HOLDER:

	 	 	 
	 	Hsu Gamma Investments LP

	 	 	 
	 	By:	/s/
    Jane H. Hsiao
	 	Name:	Jane
    H. Hsiao
	 	Title:	General
    Partner

 

	Contact
    Information:	Address:	 
	 	 
	 	 
	 	 
	 	 
	 	 	 
	 	Telephone:	 
	 	Facsimile:	 
	 	E-mail:	 

 

[Holder
Signature Page to Debt Exchange Agreement]

 

    	 

     

    

 

IN
WITNESS WHEREOF, the undersigned has caused this Agreement to be executed by their duly authorized representatives as of the
date and year first above written.

 

	 	HOLDER:

        

	 	 
	 	/s/
                                         Marie Wolf 

        

        

	 	Marie
        Wolf

 

	Contact
    Information:	Address:	 
	 	 
	 	 
	 	 
	 	 
	 	 	 
	 	Telephone:	 
	 	Facsimile:	 
	 	E-mail:	 

 

[Holder Signature Page to Debt Exchange Agreement]

 

    	 

     

    

 

IN
WITNESS WHEREOF, the undersigned has caused this Agreement to be executed by their duly authorized representatives as of the
date and year first above written.

 

	 	HOLDER:

        

	 	 
	 	/s/
                                         Jane Hsiao 

        

        

	 	Jane
        Hsiao

 

	Contact
    Information:	Address:	 
	 	 
	 	 
	 	 
	 	 
	 	 	 
	 	Telephone:	 
	 	Facsimile:	 
	 	E-mail:	 

 

[Holder Signature Page to Debt Exchange Agreement]

 

    	 

     

    

 

IN
WITNESS WHEREOF, the undersigned has caused this Agreement to be executed by their duly authorized representatives as of the
date and year first above written.

 

	 	HOLDER:
	 	 	 
	 	Frost Real Estate Holdings, LLC
	 	 	 
	 	By:	/s/
    Phillip Frost, M.D.
	 	Name:	Phillip
    Frost, M.D.
	 	Title:	President

 

	Contact
    Information:	Address:	 
	 	 
	 	 
	 	 
	 	 
	 	 	 
	 	Telephone:	 
	 	Facsimile:	 
	 	E-mail:	 

 

[Holder
Signature Page to Debt Exchange Agreement]

 

    	 

     

    

 

Schedule
A

 

Promissory
Notes and Note Indebtedness

 

	 	 	Principal	 	 	Interest	 	 	Principal and Interest	 
	Frost Gamma Investments Trust:	 	 	 	 	 	 	 	 	 	 	 	 
	Promissory note dated September 12, 2011	 	$	50,000	 	 	$	39,765.75	 	 	$	89,765.75	 
	Promissory note dated April 16, 2015	 	$	100,000	 	 	$	40,534.25	 	 	$	140,534.25	 
	Promissory note dated August 12, 2015	 	$	25,000	 	 	$	9,244.52	 	 	$	34,244.52	 
	Promissory note dated October 27, 2015	 	$	50,000	 	 	$	17,343.84	 	 	$	67,343.84	 
	Promissory note dated June 1, 2016	 	$	100,000	 	 	$	28,117.81	 	 	$	128,117.81	 
	Promissory note dated April 6, 2017	 	$	50,000	 	 	$	9,402.74	 	 	$	59,402.74	 
	Promissory note dated September 22, 2017	 	$	50,000	 	 	$	6,856.16	 	 	$	56,856.16	 
	Promissory note dated February 15, 2018	 	$	100,000	 	 	$	9,312.33	 	 	$	109,312.33	 
	Promissory note dated November 16, 2018	 	$	50,000	 	 	$	527.40	 	 	$	50,527.40	 
	 	 	 		 	 	 	Total P&I	 	 	$	736,104.79	 
	Marie Wolf:	 	 	 	 	 	 	 	 	 	 	 	 
	Promissory note dated September 12, 2011	 	$	50,000	 	 	$	41,152.05	 	 	$	91,152.05	 
	 	 	 		 	 	 	Total P&I	 	 	$	91,152.05	 
	Hsu Gamma Investments LP:	 	 	 	 	 	 	 	 	 	 	 	 
	Promissory note dated May 30, 2012	 	$	50,000	 	 	$	36,104.11	 	 	$	86,104.11	 
	Promissory note dated June 1, 2016	 	$	100,000	 	 	$	28,117.81	 	 	$	128,117.81	 
	Promissory note dated April 6, 2017	 	$	50,000	 	 	$	9,402.74	 	 	$	59,402.74	 
	Promissory note dated September 22, 2017	 	$	50,000	 	 	$	6,856.16	 	 	$	56,856.16	 
	Promissory note dated February 15, 2018	 	$	100,000	 	 	$	9,312.33	 	 	$	109,312.33	 
	 	 	 		 	 	 	Total P&I	 	 	$	439,793.15	 
	Jane Hsiao:	 	 	 	 	 	 	 	 	 	 	 	 
	Promissory note dated February 22, 2013	 	$	50,000	 	 	$	32,065.75	 	 	$	82,065.75	 
	Promissory note dated September 24, 2014	 	$	50,000	 	 	$	23,341.10	 	 	$	73,341.10	 
	Promissory note dated February 2, 2015	 	$	50,000	 	 	$	21,367.12	 	 	$	71,367.12	 
	Promissory note dated October 27, 2015	 	$	50,000	 	 	$	17,343.84	 	 	$	67,343.84	 
	Promissory note dated November 16, 2018	 	$	50,000	 	 	$	527.40	 	 	$	50,527.40	 
	 	 	 		 	 	 	Total P&I	 	 	$	344,645.21	 

 

    	 

     

    

 

Schedule
B

 

Credit
Indebtedness 

 

	 	 	Principal	 	 	Interest	 	 	Principal and Interest	 
	Frost Gamma Investments Trust	 	$	500,000.00	 	 	$	464,606.85	 	 	$	964,606.85	 
	Hsu Gamma Investments LP	 	$	500,000.00	 	 	$	464,606.85	 	 	$	964,606.85	 

 

    	 

     

    

 

Schedule
C

 

	Name	 	Indebtedness	 	 	Holder Shares	 
	Frost Gamma Investments Trust	 	$	1,834,872.75	1	 	 	26,212,468	 
	Hsu Gamma Investments LP	 	$	1,461,856.16	2	 	 	20,883,660	 
	Marie Wolf	 	$	91,152.05	 	 	 	1,302,173	 
	Jane Hsiao	 	$	344,645.21	 	 	 	4,923,503	 
	Total	 	$	3,732,526.17	 	 	 	53,321,804	 

 

 

1
Includes $57,456.16 of HSU/FGIT Rental Indebtedness and all FREH Rental Indebtedness

2
Includes $57,456.16 of HSU/FGIT Rental IndebtednessExhibit

EXHIBIT 10.1

                            
    

December 28, 2018
Bradley M. Shuster
2100 Powell Street, 12th Floor
Emeryville, CA 94608

Dear Brad:
We are pleased and excited to memorialize the terms of your continued employment with NMI Holdings, Inc. (the “Company”) on the terms and subject to the conditions set forth in this Letter (this “Letter”).

		
	1.
	Terms of Employment

At-Will Employment.  This Letter is not a contract guaranteeing employment for any specific duration.  Rather, your employment with the Company is on an at-will basis.  As an at-will employee, both you and the Company have the right to terminate your employment or role at any time with or without cause.

Title; Duties; Reporting.  Commencing as of January 1, 2019 (the “Transition Date”), your title will be Executive Chairman and you will report directly to the Board of Directors of the Company (the “Board”).  As Executive Chairman, you will have authorities, powers, duties and responsibilities as are commensurate with your role and as are customarily exercised by a person in your role in a company of the size and nature of the Company, as set forth on Exhibit A hereto.  During the first year of your employment following the Transition Date, it is expected that your services to the Company will occupy approximately 75% of your business time.  Between the first and second anniversaries of the Transition Date, it is expected that your services to the Company will occupy approximately 65% of your business time, and thereafter, it is expected that your services to the Company will occupy 50% of your business time.  You will be based in the Company’s Emeryville, CA office, subject to reasonable business travel at the Company’s request. 

		
	2.
	Compensation and Benefits

  
Annual Base Salary.  During your employment, you will be entitled to be paid an annual base salary at a rate of $650,000.00 per year during the first year following the Transition Date, which will continue as $650,000.00 per year thereafter (if applicable) (such base salary as in effect at the relevant time, your “Annual Base Salary”).  Your Annual Base Salary will be payable at times consistent with the Company’s general policies regarding compensation of employees as in effect from time to time.

Annual Discretionary Bonus.  During your employment, you will be eligible to earn an annual bonus, payable in accordance with the Company’s customary practices with respect to the payment of discretionary bonuses, as in effect from time to time.  During your employment, your target annual bonus opportunity will be 100% of your Annual Base Salary (your “Annual Bonus”).  Your Annual Bonus may be based upon the attainment of performance metrics determined by the Board or the Compensation Committee of the Board (the “Committee”).  The amount of any Annual Bonus actually paid to you will be determined by the Committee in its sole discretion.  Except as provided herein, you must be employed by the Company or one of its subsidiaries at the time of payment to receive your Annual Bonus.

Discretionary Equity Compensation.  During your employment, you will be eligible to receive equity-based compensation awards from the Company.  The number and type of equity-based compensation awards granted to you, the frequency of the grant, and the terms of such equity-based awards will be established by the Board or the Committee.

1

EXHIBIT 10.1

Employee Benefits.  During your employment, you will be eligible to participate in any health, welfare and retirement benefit programs adopted and maintained by the Company for its employees, subject to the terms and limitations of the applicable plan and the Company’s ability, in its sole discretion, at any time and from time to time, to change or terminate any of its employee benefit plans, programs or policies.

Executive Cash Allowance.  During your employment, you will be eligible to participate in the Company’s Executive Cash Allowance program as in effect from time to time, subject to the terms and limitations of the Executive Cash Allowance program and the Company’s ability, in its sole discretion, at any time and from time to time, to change or terminate the program.  Under the terms of the Executive Cash Allowance program as in effect as of the date hereof, you are eligible to receive a fixed cash amount of $38,400 per year in lieu of individualized perquisites, payable at times consistent with the Company’s payroll practices, as in effect from time to time.  

Paid Time Off.  During your employment, you will continue to receive 30 days of paid time off per year, pro-rated on a calendar year basis. 

Expense Reimbursement.  During your employment, the Company will reimburse you for all reasonable expenses incurred in your performance of your duties in accordance with the Company’s expense reimbursement policies applicable to similarly situated executives of the Company from time to time.

		
	3.
	Severance Benefits

During your employment, you will remain eligible to participate in the Company’s Severance Benefit Plan (the “Severance Plan”) at the level of “EVPs, President & CEO (without employment agreement).”  You will also remain eligible to participate in the Company’s Change in Control Severance Benefit Plan (the “CIC Plan”), and your participation letter with respect to the CIC Plan dated as of March 6, 2017, will remain in full force and effect, as it may be amended from time to time in accordance with the terms of the CIC Plan.

Enhanced Severance.  If your employment is terminated prior to January 1, 2021 under circumstances that entitle you to severance benefits under the Severance Plan, subject to your execution and non-revocation of a release of claims against the Company, you will be eligible to receive, in addition to the payments and benefits under the Severance Plan, a lump sum cash payment on the 30th day following your termination date equal to the sum of (a) the amount of base salary you would have earned from the date of your termination through December 31, 2020, (b) solely if your date of termination occurs prior to the date on which your Annual Bonus in respect of calendar year 2019 has been paid, your target Annual Bonus for calendar year 2019, (c) solely if your date of termination occurs prior to the date on which your Annual Bonus in respect of calendar year 2020 has been paid, your target Annual Bonus for calendar year 2020, and (d) solely if your date of termination occurs prior to the date on which your Annual Bonus in respect of calendar year 2021 has been paid, your target Annual Bonus for calendar year 2021.

		
	4.
	Stock Ownership Requirements

During your employment, you agree to retain in accordance with the Company’s Stock Ownership Policy, dated as of May 13, 2015, as amended from time to time, a total value of the Company’s common stock at not less than 10.0 times your annual base salary.

		
	5.
	Restrictive Covenants

Return of Company Property.  Upon a termination of your employment for any reason, you will promptly return to the Company any keys, credit cards, passes, confidential documents or material, or other property belonging to the Company, and you will also return all writings, files, records, correspondence, notebooks, notes and other documents and things (including any copies thereof) containing confidential information or relating to the business or proposed business of the Company or its affiliates or containing any trade secrets relating to the Company or its affiliates except any personal diaries, calendars, rolodexes or personal notes or correspondence.  For 

2

EXHIBIT 10.1

purposes of the preceding sentence, the term “trade secrets” will have the meaning ascribed to it under the Uniform Trade Secrets Act. You agree to represent in writing to the Company upon termination of your employment that you have complied with this paragraph.

Nondisparagement.  You agree that, following your termination of employment, you will not make any public statements which materially disparage the Company.  The Company agrees to instruct its directors and executive officers not to make any public statements which materially disparage you.  Notwithstanding the foregoing, nothing in this paragraph will prohibit you from making truthful statements when required by order of a court or other governmental or regulatory body having jurisdiction or to enforce any legal right including, without limitation, the terms of this Letter.

Confidential Information.  You acknowledge that you will have knowledge of certain trade secrets of the Company and its business plans and prospects.  You will hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company and its businesses or prospective businesses, including, without limitation, any trade secrets, research, secret data, business methods, operating procedures or programs which will have been obtained by you in connection with your services to the Company or any affiliates thereof and which will not be or become public knowledge (other than by acts by you in violation of this Letter) (collectively, the “Trade Secrets and Confidential Information”); provided, however, that you and the Company acknowledge and agree that you will be required to disclose Trade Secrets and Confidential Information to third parties in performing services for the Company under this Letter, which you may do only to the extent required, as determined within your reasonable discretion.  After termination of your services with the Company for any reason, you will not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it.

Nonsolicitation.  You agree that, while you are employed by the Company and during the one-year period following the cessation of your employment for any reason, you will not directly or indirectly (i) solicit any individual who is, on the date of termination (or was, during the six-month period prior to the date of termination), employed by the Company or any of its affiliates to terminate or refrain from renewing or extending such employment or to become employed by or become a consultant to any other individual or entity other than the Company or its affiliates, or (ii) solicit any investor or prospective investor in the Company or any business contact introduced to you in connection with your employment by the Company hereunder to curtail or cease doing business with the Company or any of its affiliates.

Severability; Blue Pencil.  You acknowledge and agree that you have had the opportunity to seek advice of counsel in connection with this Letter and the restrictive covenants contained herein are reasonable in geographical scope, temporal duration and in all other respects.  If it is determined that this paragraph or any of the paragraphs titled “Nondisparagement,” “Confidential Information,” “Nonsolicitation,” or “Equitable Remedies” (such paragraphs, the “Restrictive Covenants”) is invalid or unenforceable, the remainder of the provisions of such paragraphs will not thereby be affected and will be given full effect, without regard to the invalid portions.  If any court or other decision-maker of competent jurisdiction determines that any covenant or covenants in this Letter is unenforceable because of the duration or geographic scope of such provision, then after such determination becomes final and unappealable, the duration or scope of such provision, as the case may be, will be reduced so that such provision becomes enforceable, and in its reduced form, such provision will be enforced.

Whistleblower Rights.  Notwithstanding the foregoing, nothing in this Letter limits your ability to communicate with any federal, state, or local governmental agency, commission or body, including the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, and the Securities and Exchange Commission (collectively, a “Governmental Agency”), or self-regulatory organization or otherwise participate in any investigation or proceeding that may be conducted by any Governmental Agency or self-regulatory organization, without notice to the Company.

3

EXHIBIT 10.1

		
	6.
	409A Compliance

Any amounts payable under this Letter are intended to be exempt or excluded from the application of Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (“Section 409A”), or are otherwise intended to avoid the incurrence of tax penalties under Section 409A, and, with respect to amounts payable under this Letter that are subject to Section 409A, this Letter will in all respects be administered in accordance with Section 409A.

		
	7.
	Miscellaneous.

Governing Law.  This Letter will be governed, construed, and interpreted under the laws of the State of California, without giving effect to any conflict of laws provisions.

Arbitration.  Any disputes concerning your employment, the terms of your employment, the termination of your employment, your relationship with the Company, or the interpretation and application of this offer will be resolved on an individual basis through binding arbitration in accordance with the Mutual Agreement to Arbitrate signed by you as a condition of employment, the terms of which are incorporated herein.  Actions for temporary or preliminary injunctive relief, (including claims for a temporary protective order), in aid of arbitration or to maintain the status quo pending arbitration, may be filed in a court with jurisdiction over the matter in accordance with applicable law.

Company Policies.  You agree to comply fully with all policies and procedures in effect for employees, including but not limited to, the Employee Handbook, the Business Conduct Policy and any other memoranda and communications applicable to you pertaining to policies, procedures, rules and regulations, as currently in effect and as may be amended from time to time. 

Withholding.  All payments and benefits provided for in this Letter are subject to withholding for applicable income and payroll taxes or otherwise as required by law. 

Entire Agreement.  This Letter constitutes the entire agreement between you and the Company regarding your employment with the Company and, effective as of the Transition Date, supersedes any and all oral or written employment or compensation agreements between you and the Company or its affiliates regarding the subject matter of this Letter, including without limitation, your Amended and Restated Employment Agreement with the Company, dated as of December 23, 2015.

Please confirm acceptance of this offer by signing below and returning a signed copy of this Letter to me.  

[Signature Page Follows]

                

4

EXHIBIT 10.1

Sincerely,

             /s/ Steven L. Scheid
Steven L. Scheid
Lead Director

Acknowledged and Agreed

/s/ Bradley M. Shuster
Bradley M. Shuster

5

EXHIBIT 10.1

Exhibit A

	
	
	Executive Chairman of the Board
Longer term orientation
Board leadership in conjunction with Lead Director
Strategic direction in conjunction with CEO

	Board Role:*
Set agendas and chair meetings of the Board of Directors and shareholder meetings
Finalize materials for Board meetings
Actively lead the Board in setting and implementing company strategy and direction
Provide input to Lead Independent Director on CEO performance
Executive Role:
Coach and mentor to CEO
Contributes to strategy and operational plan prior to Board review
Leads special projects identified by the CEO and Board (reports to Board)
Member of executive team, input into operational issues
Chairman of MI industry group for any appointed term
Company ambassador 
Executive Chair Role:*
Chair meetings of the Board of Directors and contribute in setting company strategy and direction
Serve as leader of the Holding Company Board 
Play a significant and active role in representing the organization to external stakeholders (e.g., customers, investors, regulators and legislators)
In connection with the CFO, lead external financing activities & special assignments at the request of the CEO or Board
Call special meetings of the Board and lead discussions with shareholders as needed
At the request of the CEO, selectively provide guidance to management based on industry expertise and relationships, company knowledge and company contacts 
Assist in the development of strategic plans 
Lead CEO succession planning & assist in leadership development 

*Subject to and conditioned upon your re-election to the Board of Directors of the Company.

6

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