EXHIBIT 10.23

 

form of Registration Rights Agreement

 

This Registration Rights Agreement (this “Agreement”) is made and entered into
as of this ____ day of ________, 2011 (the “Effective Date”) by Vertical Health
Solutions, Inc. d/b/a OnPoint Medical Diagnostics (the “Company”) for the
benefit of the parties identified on the Schedule of Rights Holders attached
hereto as Exhibit A, as the same may be amended from time to time and relates to
shares of common stock of the Company (the “Common Stock”).

RECITALS:

WHEREAS, the Company intends to obtain capital from the issuance of Common Stock
and rights to acquire Common Stock (the “Unit Warrants” and together with the
Common Stock issued with a Unit Warrant, the “Units”) in an issuance (the
“Offering”) exempt from registration with the Commission (as such term is
hereinafter defined) of up to 5,000,000 Units for an aggregate purchase price of
$5,000,000, at a price of $1.00 per Unit.

 

WHEREAS, the Offering contemplated the execution by the Company of this
Agreement so as to provide the investors in the Offering (the “Purchasers”) the
opportunity to resell the shares issued to a Purchaser at a closing in the
Offering (the “PIPE Shares”).

 

AGREEMENTS:

Now, Therefore, in consideration of the mutual promises, representations,
warranties, covenants, and conditions set forth herein, the parties mutually
agree as follows:

1.                Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:

“Approved Market” means the Over-the-Counter Bulletin Board, the OTC Markets,
Inc., the New York Stock Exchange, the NYSE Amex Equities, the Nasdaq Global
Select Market, the Nasdaq Global Market or the Nasdaq Capital Market.

“Blackout Default Period” means a Blackout Period that (i) exceeds 20
consecutive Trading Days or a total of 30 non-consecutive Trading Days in any
12-month period or (ii) commences sooner than 60 days after the end of a prior
Blackout Period.

“Blackout Period” means, with respect to a registration, a period, in each case
commencing on the day immediately after the Company notifies the Purchasers that
they are required, because of the occurrence of an event of the kind described
in Section 4(f) hereof, to suspend offers and sales of Registrable Securities
during which the Company, in the good faith judgment of its board of directors,
determines (because of the existence of, or in anticipation of, any acquisition,
financing activity, or other transaction involving the Company, or the
unavailability for reasons beyond the Company’s control of any required
financial statements, disclosure of information which is in its best interest
not to publicly disclose, or any other event or condition of similar
significance to the Company) that the registration and distribution of the
Registrable Securities to be covered by such registration statement, if any,
would be seriously detrimental to the Company and its stockholders and ending on
the earlier of (1) the date upon which the material non-public information
commencing the Blackout Period is disclosed to the public or ceases to be
material and (2) such time as the Company notifies the selling Holders that the
Company will no longer delay such filing of the Registration Statement,
recommence taking steps to make such Registration Statement effective, or allow
sales pursuant to such Registration Statement to resume; provided, that the
Company shall limit its use of Blackout Default Periods.

“Business Day” means any day of the year, other than a Saturday, Sunday, or
other day on which the Commission is required or authorized to close.

“Commission” means the Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act.

“Common Stock” means the common stock, par value $0.001 per share, of the
Company and any and all shares of capital stock or other equity securities of:
(i) the Company which are added to or exchanged or substituted for the Common
Stock by reason of the declaration of any stock dividend or stock split, the
issuance of any distribution or the reclassification, readjustment,
recapitalization or other such modification of the capital structure of the
Company; and (ii) any other corporation, now or hereafter organized under the
laws of any state or other governmental authority, with which the Company is
merged, which results from any consolidation or reorganization to which the
Company is a party, or to which is sold all or substantially all of the shares
or assets of the Company, if immediately after such merger, consolidation,
reorganization or sale, the Company or the stockholders of the Company own
equity securities having in the aggregate more than 50% of the total voting
power of such other corporation.

“Effectiveness Period” has the meaning as set forth in Section 4(a).

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

“Family Member” means (a) with respect to any individual, such individual’s
spouse, any descendants (whether natural or adopted), any trust all of the
beneficial interests of which are owned by any of such individuals or by any of
such individuals together with any organization described in Section 501(c)(3)
of the Internal Revenue Code of 1986, as amended, the estate of any such
individual, and any corporation, association, partnership or limited liability
company all of the equity interests of which are owned by those above described
individuals, trusts or organizations and (b) with respect to any trust, the
owners of the beneficial interests of such trust.

“Final Closing Date” means the final closing of the purchase and sale of the
Units contemplated by the Memorandum.

“Holder” means each Purchaser holding PIPE Shares.

“Majority Holders” means at any time Holders representing a majority of the
Registrable Securities.

“Memorandum” means the Confidential Private Placement Memorandum with respect to
the Offering together with all addenda and supplements thereto.

“Qualified Purchaser” has the meaning as set forth in Section 3(e).

“Permitted Assignee” means (a) with respect to a partnership, its partners or
former partners in accordance with their partnership interests; (b) with respect
to a corporation, its stockholders in accordance with their interest in the
corporation; (c) with respect to a limited liability company, its members or
former members in accordance with their interest in the limited liability
company; (d) with respect to an individual party, any Family Member of such
party; (e) an entity that is controlled by, controls, or is under common control
with a transferor; or (f) a party to this Agreement.

“PIPE Shares” as defined in the Recitals.

The terms “register,” “registered,” and “registration” refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.

“Registrable Securities” means the PIPE Shares; provided, that, a security shall
cease to be a Registrable Security upon (A) sale pursuant to a Registration
Statement or Rule 144 under the 1933 Act, or (B) such security becoming eligible
for sale pursuant to Rule 144 under the 1933 Act without volume restrictions.

“Registration Filing Date” means the 30th calendar day following the Final
Closing Date.

“Registration Effectiveness Date” means the 90th calendar day following the
Final Closing Date.

“Registration Default Period” means the period during which any Registration
Event occurs and is continuing.

“Registration Statement” means the registration statement that the Company is
required to file pursuant to this Agreement to register the Registrable
Securities.

“Rule 144” means Rule 144 promulgated by the Commission under the Securities
Act.

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the 1933
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

“Securities Act” means the Securities Act of 1933, as amended, or any similar
federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.

“SEC Effective Date” means the date the Registration Statement to be filed
following the Final Closing Date is declared effective by the Commission.

“Subscription Agreement” means the Subscription Agreement dated as of the date
hereof between the Company and the Purchaser setting forth the terms and
conditions of the Company’s offer of Units and the Purchaser’s purchase of
Units.

“Trading Day” means any day on which the national securities exchange, the
Nasdaq Stock Market, the Over-the-Counter Bulletin Board or such other
securities market or quotation system, which at the time constitutes the
principal securities market for the Common Stock, is open for general trading of
securities.

2.                Term. This Agreement shall continue in full force and effect
for a period of three years from the Effective Date.

3.                Registration.

(a)             Registration on Form S-1. Not later than the Registration Filing
Date, the Company shall prepare and file with the Commission a registration
statement on Form S-1, or other applicable form, covering the resale by the
Holders of all of the then outstanding Registrable Securities, and the Company
shall use its commercially reasonable best efforts to cause such registration
statement to be declared effective by the Registration Effectiveness Date;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification, or compliance pursuant to this Section, or keep
such registration effective pursuant to the terms hereunder: (i) in any
particular jurisdiction in which the Company would be required to qualify to do
business as a foreign corporation or as a dealer in securities under the
securities or blue sky laws of such jurisdiction or to execute a general consent
to service of process in effecting such registration, qualification or
compliance, in each case where it has not already done so; or (ii) during any
Blackout Period, in which case the Registration Filing Date shall be extended to
the date immediately following the last day of such Blackout Period. Such
Registration Statement shall include the plan of distribution attached hereto as
Exhibit B. Such Registration Statement also shall cover, to the extent allowable
under the Securities Act and the rules promulgated thereunder (including Rule
416), such indeterminate number of additional shares of Common Stock resulting
from stock splits, stock dividends or similar transactions with respect to the
Registrable Securities.

(b)            Reduction of Registrable Securities Included in a Registration
Statement. Notwithstanding anything contained herein, in the event that the
Commission requires the Company to reduce the number of Registrable Securities
to be included in the Registration Statement in order to allow the Company to
rely on Rule 415, then the Company shall be obligated to include in such
Registration Statement (which may be a subsequent Registration Statement if the
Company needs to withdraw the initial Registration Statement and refile a new
Registration Statement in order to rely on Rule 415) only such limited portion
of the Registrable Securities as the Commission shall permit. Any exclusion of
Registrable Securities shall be made pro rata among the Purchasers in proportion
to the number of Registrable Securities held such persons. Any Registrable
Securities that are excluded in accordance with the foregoing terms are
hereinafter referred to as “Cut Back Securities.” In the event the Commission
requires the Company to reduce the number of Registrable Securities to be
included in the Registration Statement in order to allow the Company to rely on
Rule 415, the Company shall promptly notify the Purchasers of the number of each
Purchaser’s Cut Back Securities. To the extent Cut Back Securities exist, as
soon as may be permitted by the Commission, the Company shall be required to
file a registration statement on Form S-3 (or, if Form S-3 is not then available
to the Company, on Form S-1 or such other form of registration statement as is
then available to effect a registration for resale of the Cut Back Securities)
covering the resale of the Cut Back Securities and shall use commercially
reasonable efforts to cause such Registration Statement to be declared effective
as promptly as practicable thereafter; provided, however, that the foregoing
obligation shall cease with respect to any Cut Back Securities at such time such
Cut Back Securities are eligible for sale pursuant to Rule 144 under the 1933
Act.

(c)             Other Registrations. Prior to the SEC Effective Date, neither
the Company nor any of its security holders (other than the Holders in such
capacity pursuant hereto) may include securities of the Company in a
Registration Statement other than the Registrable Securities. Prior to the SEC
Effective Date, the Company shall not, without the prior written consent of the
Majority Holders, file any other registration statement or any amendment thereto
with the Commission under the Securities Act, other than any registration
statement on Form S-8 or Form S-4. Notwithstanding the foregoing, the Company
shall be permitted to file amendments to, and to seek the effectiveness of, the
Company’s Registration Statement on Form S-1 (File No. 333-176660).

(d)            Liquidated Damages. If the Registration Statement is not declared
effective by the Commission by the Registration Effectiveness Date (a
“Registration Event”), then the Company will make payments to each Purchaser (a
“Qualified Purchaser”), as liquidated damages, and not as a penalty, at a rate
equal to 1% of the Purchase Price per share of Registrable Securities then held
by a Qualified Purchaser monthly, for each calendar month of the Registration
Default Period (pro rated for any period less than 30 days) (the “Liquidated
Damages”); provided, however, (i) if a Registration Event occurs (or is
continuing) on a date more than six-months after the Qualified Purchaser
acquired the Registrable Securities (and thus the six-month holding period under
Rule 144(d) has elapsed), Liquidated Damages shall be paid only with respect to
that portion of the Qualified Purchaser’s Registrable Securities that cannot
then be immediately resold in reliance on Rule 144, and (ii) the maximum
aggregate Liquidated Damages payable to a Qualified Purchaser under this
Agreement shall be three percent (3%) of the aggregate Purchase Price paid by
such Qualified Purchaser pursuant to the Subscription Agreement. Each such
payment shall be due and payable within five days after the end of each calendar
month of the Registration Default Period until the termination of the
Registration Default Period and within five days after such termination. Such
payments shall constitute the Qualified Purchaser’s exclusive remedy for such
events. The Registration Default Period shall terminate upon the earlier of (i)
the filing of the Registration Statement, and (ii) the date on which all of the
Qualified Purchaser’s Registrable Securities can then be immediately resold in
reliance on Rule 144. Such payment of liquidated damages shall be made to each
Qualified Purchaser within five (5) calendar days after the Registration Default
Period either, at the Company’s sole option, (i) in cash or (ii) in additional
shares of Common Stock of the Company, such shares being valued at the average
of the volume-weighted average price (the “VWAP”) of the Common Stock as
reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. to
4:02 p.m. Eastern Time) using the VWAP over the 20 Trading Days immediately
prior to the date of occurrence of the Registration Event; provided, however,
that the payment of such liquidated damages shall not relieve the Company from
its obligations to register the Registrable Securities pursuant to this
Agreement. Notwithstanding the foregoing, there shall be no Liquidated Damages
for Cut Back Securities.

4.                Registration Procedures. The Company will keep each Holder
reasonably advised as to the filing and effectiveness of the Registration
Statement. At its expense with respect to the Registration Statement, the
Company will:

(a)             prepare and file with the Commission with respect to the
Registrable Securities, a registration statement on Form S-1, or any other form
for which the Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of the Registrable
Securities in accordance with the intended methods of distribution thereof, and
use its commercially reasonable efforts to cause such registration statement to
become and remain effective for a period of two years or for such shorter period
ending on the earlier to occur of (i) the sale of all Registrable Securities and
(ii) the availability under Rule 144 for the Holder to sell the Registrable
Securities without volume restrictions (in either case, the “Effectiveness
Period”);

(b)            if a registration statement is subject to review by the
Commission, promptly respond to all comments and diligently pursue resolution of
any comments to the satisfaction of the Commission;

(c)             prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
during the Effectiveness Period;

(d)            furnish, without charge, to each Holder of Registrable Securities
covered by such registration statement (i) one copy of such registration
statement (including any exhibits thereto other than exhibits incorporated by
reference), each amendment and supplement thereto upon the request of a Holder,
(ii) such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and any other prospectus filed
under Rule 424 under the Securities Act) as the Holders may reasonably request,
in conformity with the requirements of the Securities Act, and (iii) such other
documents as such Holder may require to consummate the disposition of the
Registrable Securities owned by such Holder, but only during the Effectiveness
Period;

(e)             use its commercially reasonable best efforts to register or
qualify such registration under such other applicable securities or blue sky
laws of such jurisdictions as any Holder of Registrable Securities covered by
such registration statement reasonably requests and as may be necessary for the
marketability of the Registrable Securities (such request to be made by the time
the applicable registration statement is deemed effective by the Commission) and
do any and all other acts and things necessary to enable such Holder to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such Holder; provided, however, that the Company shall not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph, (ii) subject itself to
taxation in any such jurisdiction, or (iii) consent to general service of
process in any such jurisdiction;

(f)             as promptly as practicable after becoming aware of such event,
notify each Holder of Registrable Securities, the disposition of which requires
delivery of a prospectus relating thereto under the Securities Act, of the
happening of any event, which comes to the Company’s attention, that will after
the occurrence of such event cause the prospectus included in such registration
statement, if not amended or supplemented, to contain an untrue statement of a
material fact or an omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and the
Company shall promptly thereafter prepare and furnish to such Holder a
supplement or amendment to such prospectus (or prepare and file appropriate
reports under the Exchange Act) so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
unless suspension of the use of such prospectus otherwise is authorized herein
or in the event of a Blackout Period, in which case no supplement or amendment
need be furnished (or Exchange Act filing made) until the termination of such
suspension or Blackout Period, and in which case the Company will use its
commercially reasonable best efforts to ensure that the use of the prospectus
may be resumed as promptly as is practicable;

(g)            comply, and continue to comply during the Effectiveness Period,
in all material respects with the Securities Act and the Exchange Act and with
all applicable rules and regulations of the Commission with respect to the
disposition of all securities covered by such registration statement;

(h)            as promptly as practicable after becoming aware of such event,
notify each Holder of Registrable Securities being offered or sold pursuant to
the Registration Statement of the issuance by the Commission of any stop order
or other suspension of effectiveness of the Registration Statement;

(i)              cause all the Registrable Securities covered by the
Registration Statement to be quoted on the OTC Bulletin Board or such other
principal securities market on which securities of the same class or series
issued by the Company are then listed or traded;

(j)              provide a transfer agent and registrar, which may be a single
entity, for the shares of Common Stock at all times;

(k)            cooperate with the Holders of Registrable Securities being
offered pursuant to the Registration Statement to issue and deliver, or cause
its transfer agent to issue and deliver, certificates representing Registrable
Securities to be offered pursuant to the Registration Statement within a
reasonable time after the delivery of certificates representing the Registrable
Securities to the transfer agent or the Company, as applicable, and enable such
certificates to be in such denominations or amounts as the Holders may
reasonably request and registered in such names as the Holders may request;

(l)              during the Effectiveness Period, refrain from bidding for or
purchasing any Common Stock or any right to purchase Common Stock or attempting
to induce any person to purchase any such security or right if such bid,
purchase or attempt would in any way limit the right of the Holders to sell
Registrable Securities by reason of the limitations set forth in Regulation M
under the Exchange Act; and

(m)          take all other reasonable actions necessary to expedite and
facilitate the disposition by the Holders of the Registrable Securities pursuant
to the Registration Statement.

5.                Suspension of Offers and Sales. Each Holder agrees that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 4(f) hereof or of the commencement of an Blackout Period,
such Holder shall discontinue the disposition of Registrable Securities included
in the Registration Statement until such Holder’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4(f) hereof or notice
of the end of the Blackout Period, and, if so directed by the Company, such
Holder shall deliver to the Company (at the Company’s expense) all copies
(including, without limitation, any and all drafts), other than permanent file
copies, then in such Holder’s possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.

6.                Registration Expenses. The Company shall pay all expenses in
connection with any registration obligation provided herein, including, without
limitation, all registration, filing, stock exchange fees, printing expenses,
all fees and expenses of complying with securities or blue sky laws, and the
fees and disbursements of counsel for the Company and of its independent
accountants; provided that, in any underwritten registration, each party shall
pay for its own underwriting discounts and commissions and transfer taxes.
Except as provided in this Section and Section 9, the Company shall not be
responsible for the expenses of any attorney or other advisor employed by a
Holder.

7.                Assignment of Rights. No Holder may assign its rights under
this Agreement to any party without the prior written consent of the Company;
provided, however, that a Holder may assign its rights under this Agreement
without such consent to a Permitted Assignee as long as: (a) such transfer or
assignment is effected in accordance with applicable securities laws; (b) such
transferee or assignee agrees in writing to become subject to the terms of this
Agreement; and (c) the Company is given written notice by such Holder of such
transfer or assignment, stating the name and address of the transferee or
assignee and identifying the Registrable Securities with respect to which such
rights are being transferred or assigned.

8.                Information by Holder. Holders included in any registration
shall furnish to the Company such information as the Company may reasonable
request in writing regarding such Holders and the distribution proposed by such
Holders. The failure of a Holder to provide such information to the Company will
suspend the Company’s obligation to register the Registrable Securities of such
Holder.

9.                Indemnification.

(a)             In the event of the offer and sale of Registrable Securities
under the Securities Act, the Company shall, and hereby does, indemnify and hold
harmless, to the fullest extent permitted by law, each Holder, its directors,
officers, partners, each other person who participates as an underwriter in the
offering or sale of such securities, and each other person, if any, who controls
or is under common control with such Holder or any such underwriter within the
meaning of Section 15 of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, and expenses to which the Holder or any such
director, officer, partner or underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities, or expenses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any untrue
statement of any material fact contained in any registration statement prepared
and filed by the Company under which shares of Registrable Securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and the Company shall
reimburse the Holder, and each such director, officer, partner, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating, defending or settling any such loss,
claim, damage, liability, action or proceeding; provided that the Company shall
not be liable in any such case (i) to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement in or omission from such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by or on behalf of such Holder specifically stating that it is for use
in the preparation thereof or (ii) if the person asserting any such loss, claim,
damage, liability (or action or proceeding in respect thereof) who purchased the
Registrable Securities that are the subject thereof did not receive a copy of an
amended preliminary prospectus or the final prospectus (or the final prospectus
as amended or supplemented) at or prior to the written confirmation of the sale
of such Registrable Securities to such person because of the failure of such
Holder or underwriter to so provide such amended preliminary or final prospectus
and the untrue statement or omission of a material fact made in such preliminary
prospectus was corrected in the amended preliminary or final prospectus (or the
final prospectus as amended or supplemented). Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Holders, or any such director, officer, partner, underwriter or controlling
person and shall survive the transfer of such shares by the Holder.

(b)            As a condition to including Registrable Securities in any
registration statement filed pursuant to this Agreement, each Holder agrees to
be bound by the terms of this Section 9 and to indemnify and hold harmless, to
the fullest extent permitted by law, the Company, its directors and officers,
and each other person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such director or
officer or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) that arises
out of or is based upon an untrue statement in or omission from such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by or on behalf of the Holder specifically stating that it is for use
in the preparation thereof, and such Holder shall reimburse the Company, and
each such director, officer, and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating,
defending, or settling and such loss, claim, damage, liability, action, or
proceeding; provided, however, that such indemnity agreement found in this
Section 9 shall in no event exceed the gross proceeds from the offering received
by such Holder. Such indemnity shall remain in full force and effect, regardless
of any investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer by any Holder of
such shares.

(c)             Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in this
Section (including any governmental action), such indemnified party shall, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the indemnifying party of the commencement of such action;
provided that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under this
Section, except to the extent that the indemnifying party is actually prejudiced
by such failure to give notice. In case any such action is brought against an
indemnified party, unless in the reasonable judgment of counsel to such
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have defenses not
available to the indemnifying party in respect of such claim, the indemnifying
party shall be entitled to participate in and to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party’s reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defenses thereof or the indemnifying party fails to defend such claim in a
diligent manner, other than reasonable costs of investigation. Neither an
indemnified nor an indemnifying party shall be liable for any settlement of any
action or proceeding effected without its consent. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement, which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such claim or litigation.
Notwithstanding anything to the contrary set forth herein, and without limiting
any of the rights set forth above, in any event any party shall have the right
to retain, at its own expense, counsel with respect to the defense of a claim.

(d)            In the event that an indemnifying party does or is not permitted
to assume the defense of an action pursuant to Sections 9(c) or in the case of
the expense reimbursement obligation set forth in Sections 9(a) and (b), the
indemnification required by Sections 9(a) and (b) hereof shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills received or expenses, losses, damages, or
liabilities are incurred.

(e)             If the indemnification provided for in this Section is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall (i) contribute to the amount paid or payable by such indemnified party as
a result of such loss, liability, claim, damage or expense as is appropriate to
reflect the proportionate relative fault of the indemnifying party on the one
hand and the indemnified party on the other (determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission relates to information supplied by the indemnifying party or the
indemnified party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission), or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, not only the proportionate relative
fault of the indemnifying party and the indemnified party, but also the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other, as well as any other relevant equitable considerations. No
indemnified party guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.

(f)             Indemnification similar to that specified in this Section (with
appropriate modifications) shall be given by the Company and each Holder of
Registrable Securities with respect to any required registration or other
qualification of securities under any federal or state law or regulation or
governmental authority other than the Securities Act.

10.             Rule 144. For a period of at least 24 months following the Final
Closing Date, the Company will use its commercially reasonable best efforts to
timely file all reports required to be filed by the Company after the date
hereof under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder, and if the Company is not
required to file reports pursuant to such sections, it will prepare and furnish
to the Purchasers and make publicly available in accordance with Rule 144(c)
such information as is required for the Purchasers to sell shares of Common
Stock under Rule 144.

11.             Independent Nature of Each Purchaser’s Obligations and Rights.
The obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and each Purchaser shall not be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. Nothing contained herein and no action taken by
any Purchaser pursuant hereto, shall be deemed to constitute such Purchasers as
a partnership, an association, a joint venture, or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to independently protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose.

12.             Miscellaneous.

(a)             Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Minnesota and the United States of
America, both substantive and remedial, without regard to conflicts of law
principles. Any judicial proceeding brought against either of the parties to
this agreement or any dispute arising out of this Agreement or any matter
related hereto shall be brought in the state or federal courts of the State of
Minnesota, by its execution and delivery of this agreement, each party to this
Agreement accepts the jurisdiction of such courts. The foregoing consent to
jurisdiction shall not be deemed to confer rights on any person other than the
parties to this Agreement.

(b)            Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, or be binding upon, the
successors, Permitted Assignees, executors and administrators of the parties
hereto. In the event the Company merges with, or is otherwise acquired by,
another publicly traded company, or a direct or indirect subsidiary of a
publicly traded company, the Company shall condition the merger or acquisition
on the assumption by such public company of the Company’s rights and obligations
under this Agreement.

(c)             Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.

(d)            Notices, etc. All notices or other communications which are
required or permitted under this Agreement shall be in writing and sufficient if
delivered by hand, by facsimile transmission, by registered or certified mail,
postage pre-paid, by electronic mail, or by courier or overnight carrier, to the
persons at the addresses set forth below (or at such other address as may be
provided hereunder), and shall be deemed to have been delivered as of the date
so delivered:

If to the Company to:

 

Vertical Health Solutions, Inc.

d/b/a OnPoint Medical Diagnostics

7760 France Avenue South, 11th Floor

Minneapolis, Minnesota 55435

Attn: William Cavanaugh

Facsimile: (888) 370-2819

 

With copy to:

 

Morgan Lewis & Bockius LLP

502 Carnegie Center

Princeton, New Jersey 08540

Attn: Emilio Ragosa, Esq.

Facsimile: (609) 919-6701

 

If to the Holders:

 

To each Holder at the address

set forth in the records of the Company

as the current address for such Holder

 

With copy to:

__________________________

__________________________

__________________________

 

 

or at such other address as any party shall have furnished to the other parties
in writing.

(e)             Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any Holder, upon any breach or default of the
Company under this Agreement, shall impair any such right, power or remedy of
such Holder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereunder occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any Holder of any breach or default under this Agreement, or any
waiver on the part of any Holder of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, or by law or otherwise afforded to any holder, shall be cumulative
and not alternative.

(f)             Severability. In the case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

(g)            Amendments. The provisions of this Agreement may be amended at
any time and from time to time, and particular provisions of this Agreement may
be waived, with and only with an agreement or consent in writing signed by the
Company and the Majority Holders. The Purchasers acknowledge that by the
operation of this Section, the Majority Holders may have the right and power to
diminish or eliminate all rights of the Purchasers under this Agreement.

 

This Registration Rights Agreement is hereby executed as of the date first above
written.

Vertical Health Solutions, Inc.

d/b/a OnPoint Medical Diagnostics

 

By: ___________________________

Name:

Its:

 

 

 
 

Exhibit A

 

Schedule of Rights Holders

 

 

Investor List Attached

 
 

Exhibit B

 

Plan of Distribution

 

The selling stockholders (and any of their donees, pledgees, transferees or
other successors-in-interest of a selling stockholder selling shares of our
common stock or interests in shares of common stock received after the date of
this prospectus from a selling stockholder as a gift, pledge, partnership
distribution or other transfer) may, from time to time, sell, transfer or
otherwise dispose of any or all of their shares of common stock or interests in
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices.

 

The Selling Stockholders may use any one or more of the following methods when
disposing of shares or interests therein:

 

-        ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;

 

-        block trades in which the broker-dealer will attempt to sell the shares
as agent, but may position and resell a portion of the block as principal to
facilitate the transaction;

 

-        purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;

 

-        an exchange distribution in accordance with the rules of the applicable
exchange;

 

-        privately negotiated transactions;

 

-        short sales effected after the date the registration statement of which
this Prospectus is a part is declared effective by the Commission;

 

-        through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise;

 

-        broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share; and

 

-        a combination of any such methods of sale.

 

The selling stockholders may, from time to time, pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock, from time to time, under
this prospectus, or under an amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors-in-interest
as selling stockholders under this prospectus. The selling stockholders also may
transfer the shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors-in-interest will be the selling
beneficial owners for purposes of this prospectus.

 

Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

 

The Company has advised the selling stockholders that they may not use shares
registered on this registration statement to cover short sales of common stock
made prior to the date on which this registration statement is declared
effective by the Securities and Exchange Commission. After the registration
statement has been declared effective, in connection with the sale of our common
stock or interests therein, the selling stockholders may enter into hedging
transactions with broker-dealers or other financial institutions, which may in
turn engage in short sales of the common stock in the course of hedging the
positions they assume. The selling stockholders may also sell shares of our
common stock short and deliver these securities to close out their short
positions, or loan or pledge the common stock to broker-dealers that in turn may
sell these securities. The selling stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions or the
creation of one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).

 

The selling stockholders will receive the aggregate proceeds from the sale of
the common stock offered by them. The aggregate proceeds to the selling
stockholders from the sale of the common stock offered by them will be the
purchase price of the common stock less discounts or commissions, if any. Each
of the selling stockholders reserves the right to accept and, together with
their agents from time to time, to reject, in whole or in part, any proposed
purchase of common stock to be made directly or through agents. We will not
receive any of the proceeds from the sale of common stock in this offering. We
may receive proceeds from holders who exercise their warrants and pay the
applicable cash exercise price in connection with those exercises.

 

The selling stockholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act of 1933,
provided that they meet the criteria and conform to the requirements of that
rule.

 

The selling stockholders and any underwriters, broker-dealers or agents that
participate in the sale of the common stock or interests therein may be
“underwriters” within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are “underwriters” within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements of
the Securities Act.

 

To the extent required, the shares of our common stock to be sold, the names of
the selling stockholders, the respective purchase prices and public offering
prices, the names of any agent, dealer or underwriter, any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.

 

In order to comply with the securities laws of some states, if applicable, the
common stock may be sold in these jurisdictions only through registered or
licensed brokers or dealers. In addition, in some states the common stock may
not be sold unless it has been registered or qualified for sale or an exemption
from registration or qualification requirements is available and is complied
with.

 

We have advised the selling stockholders that the anti-manipulation rules of
Regulation M under the Securities Exchange Act of 1934 may apply to sales of
shares in the market and to the activities of the selling stockholders and their
affiliates. In addition, we will make copies of this prospectus (as it may be
supplemented or amended from time to time) available to the selling stockholders
for the purpose of satisfying the prospectus delivery requirements of the
Securities Act. The selling stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares of common stock
against certain liabilities, including liabilities arising under the Securities
Act.

 

We will pay all expenses incident to registration other than commissions, fees
and discounts of underwriters, brokers, dealers and agents. We will pay for
offering expenses including the Commission registration fee, accounting fees,
legal fees, printing expenses and other related miscellaneous expenses. We have
agreed to indemnify the selling stockholders against liabilities, including
liabilities under the Securities Act and state securities laws, relating to the
registration of the shares offered by this prospectus.

 

We have agreed with the selling stockholders to keep the registration statement
of which this Prospectus constitutes a part effective until the earlier of (1)
such time as all of the shares covered by this prospectus have been disposed of
pursuant to and in accordance with the registration statement or (2) the date on
which the shares may be sold pursuant to Rule 144 of the Securities Act without
volume restrictions.