Exhibit 10.1

 

ONPOINT MEDICAL DIAGNOSTICS

SELLING AGENCY AGREEMENT

FOR PRIVATE PLACEMENT OF

CONVERTIBLE PROMISSORY NOTES

 

 

This Selling Agency Agreement is entered into by and between VERTICAL HEALTH
SOLUTIONS, INC. (doing business as OnPoint Medical Diagnostics), a Florida
corporation (the “Company”), and Emergent Financial Group, Inc. (the “Selling
Agent”) as of August 1, 2012.

1. DESCRIPTION OF OFFERING.

(a)The Company proposes to issue in a private placement to accredited investors
only promissory notes the principal and accrued interest of which will be
convertible into shares of the Company’s common stock (the “Convertible Notes”).
The conversion price for the Convertible Notes will be $0.25 per share (the
“Conversion Price”); provided, however that the Conversion Price shall be
reduced to the price per share at which the Company issues securities with gross
proceeds of at least $2.5 million (a “Qualified Financing”) if the offering
price per share for the Qualified Financing is less than the Conversion Price.

(b)The notes will have a maturity date in August, 2015 and will bear simple
interest at a rate of six percent per annum. The holder of the note will have
the option to convert the principal and the interest at any time prior to
maturity. Prepayment of the outstanding principal plus accrued but unpaid
interest may be made anytime without consent. The Company shall have the right
to require conversion in the event of the occurrence of: (i) a Qualified
Financing, (ii) acquisition of the Company or a sale of substantially all of its
assets, or (iii) the Company obtains $500,000 of gross revenue during any fiscal
quarter.

(c)With respect to each one dollar of principal loaned under a Convertible Note,
the purchaser shall be issued a right to purchase a share of common stock of the
Company at the purchase price of $1.25 a share. Such right will be subject to
the terms of a Warrant (the “Warrants” and together with the Convertible Notes,
the “Securities”) which will include a right of exercise during a ten year
period.

(d)The Company contemplates an aggregate of approximately $1,500,000 of the
Convertible Notes being offered (the “Offering”).

2. APPOINTMENT OF AGENT. On the basis of the warranties, representations and
agreements of the parties hereto, and the satisfaction of the conditions set
forth herein, the Company hereby appoints the Selling Agent, and the Selling
Agent hereby accepts such appointment, to act as the Company’s exclusive agent
in connection with the offer and sale of the Securities, on a best efforts
basis, which appointment will be for the period set forth in Section 6 below.
The Selling Agent will use its best efforts to solicit the subscription for the
Securities only from investors who the Selling Agent has a reasonable basis to
believe are accredited investors.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to the Selling Agent as follows:

(a)The Company will prepare a Term Sheet with respect to the Offering together
with the form of Convertible Notes and form of Warrant (collectively referred to
herein as the “Offering Documents”) for an offering under Rule 506 to purchasers
that are all “accredited investors” within the meaning of Regulation D under the
Securities Act of 1933, as amended (the “Act”). The Company will also prepare
and, subject to prior review by the Selling Agent’s legal counsel, file a Form D
and all other documents required to comply with applicable exemptions from
federal registration and state blue sky qualification with the Securities and
Exchange Commission and blue sky authorities of such states as may be requested
by the Selling Agent. The Offering Documents (including the proposed use of
proceeds) and the Form D will be subject to the Selling Agent’s approval.

(b)As of the Commencement Date of the solicitation (as defined in Section 6
below) and until and as of the date of each Closing (as hereinafter defined),
the Offering Documents will (i) contain all material statements which are
required to be made therein in accordance with the Act and the Rules and
Regulations for an offering under Rule 506 to purchasers that are all
“accredited investors” within the meaning of Regulation D; (ii) in all material
respects conform to the applicable requirements of the Act and of the Rules and
Regulations adopted under the Act (the “Rules and Regulations”) for an offering
under Rule 506 to purchasers that are all “accredited investors” within the
meaning of Regulation D; and (iii) not include any 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, provided that the
representations and warranties in this paragraph shall not apply to statements
or omissions made in reliance upon written information furnished to the Company
by the Selling Agent expressly for use in preparation of the Offering Documents.

(c)The Company is duly organized and validly existing as a corporation in good
standing under the laws of the State of Florida, with full power and authority
to own its properties and conduct its business, as described herein and in the
Company’s filings with the Securities and Exchange Commission (the “Filings”).

(d)The Company is duly qualified to do business as a foreign entity and is in
good standing in all states or jurisdictions in which the ownership or lease of
its property or the conduct of its business requires such qualification and the
failure to be so qualified would have a materially adverse effect on the
Company’s business.

(e)The Company has full legal power, right and authority to enter into this
Agreement. This Agreement has been duly authorized, executed and delivered on
behalf of the Company and it is the valid and binding obligation of the Company,
subject, as to enforcement, to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of creditors
generally, to the exercise of judicial discretion as to the availability of
equitable remedies such as specific performance and injunction and subject, as
to enforcement of the indemnification provisions, to limitations under
applicable securities laws.

(f)Except as set forth in the Filings, the Company has all licenses,
certificates, permits and other approvals from governmental authorities
necessary for the conduct of its business as it is currently being carried on
and as is described in the Filings, except those which would not have a material
adverse effect on the Company if not obtained.

(g)Except as set forth in the Filings, on the date of each Closing, the Company
will own or possess all patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service mark registrations, copyrights,
licenses, inventions, trade secrets and rights necessary for the conduct of its
business as it is currently being carried on and as is anticipated being carried
on, except those which would not have a material adverse effect on the business
of the Company if not obtained, and has not received any notice of conflict with
the asserted rights of others in respect thereof. Except as described in the
Offering Documents, to the best of the Company’s knowledge after due inquiry
previously performed in the ordinary course of business, no name which the
Company uses and no other aspect of the business of the Company involves or
gives rise to any infringement of, or license or similar fees for, any patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses, inventions,
trade secrets or other similar rights of others.

(h)Since March 31, 2012 (i) the Company has not incurred any material
liabilities or obligations, contingent or otherwise, not in the ordinary course
of business, (ii) the Company has not paid or declared any dividend or other
distribution with respect to its outstanding equity interests, (iii) there has
not been any change in the capitalization or any material increase in the
long-term debt of the Company, or any issuance of equity interests in the
Company or of options, warrants, or rights to purchase capital stock of the
Company, with the exception of warrants or S-8 shares issued in lieu of cash
payments, for services, bonuses or as part of compensation to board members,
advisory board members, key employees, consultants and employees of consultants,
and senior debt holders as principle or interest payments, (iv) no material loss
or damage (whether or not insured) to the property of the Company has been
sustained, (v) no material legal or governmental proceeding, domestic or
foreign, affecting the Company or the transactions contemplated by this
Agreement has been instituted or threatened, and (vi) there has not been any
material adverse change in the business, condition (financial and other) or
properties of the Company.

(i)Except as set forth in the Filings, the Company is not in breach, default or
violation of, and the consummation of the transactions herein contemplated will
not result in any breach of, any of the terms or conditions of, or constitute a
default or violation under, (i) the articles of incorporation, bylaws or other
governing organizational of the Company, (ii) any material indenture, agreement
or other instrument to which the Company is now a party, or, (iii) except for
such breaches, defaults or violations which would not have a material adverse
effect on the Company, any law or any order, rule or regulation applicable to
the Company of any court or of any federal or state regulatory body or
administrative agency having jurisdiction over the Company or its property.

(j)No approval, authorization, consent or order of any governmental or public
board or body, other than in connection with or in compliance with the
provisions of the Act and the securities laws of various jurisdictions, is
legally required for the sale of the Securities by the Company.

(k)Except as set forth in the Filings, there are no pending, threatened or
contemplated actions, suits or proceedings before or by any court or
governmental agency, authority or body, or any arbitrator to which the Company
is a party or of which the business or property of the Company is subject, which
are not ordinary, routine and incidental to the business of the Company or which
might result in any material adverse change in the business condition (financial
and other) or properties of the Company.

(l)As of the date hereof, the authorized capitalization of the Company consists
of 250 million shares of $0.001 par value common stock and 5,000,000 shares of
$0.001 par value preferred stock. As of August 13, 2012, the issued and
outstanding capitalization of the Company consists of 10,984,500 shares of
common stock. All outstanding securities of the Company have been duly
authorized, validly issued and fully paid and are non-assessable and have been
issued pursuant to valid exemptions from the registration requirements of the
Act and appropriate state blue sky laws. The Company will immediately notify the
Selling Agent in writing of any changes to the information set forth above.

(m)Except as described in the Filings, there are (i) no other outstanding
warrants, options, convertible securities, rights to subscribe for or purchase
any capital or other securities from the Company, (ii) so far as known to the
Company, no voting trusts or voting agreements among, or irrevocable proxies
executed by, members of the Company, (iii) no existing rights of any person or
members to require the Company to register any securities of the Company or to
participate with the Company in any registration by the Company of its ; (iv) so
far as known to the Company, no agreement among members of the Company providing
for the purchase or sale of membership interests in the Company, and (v) no
obligations (contingent or otherwise) of the Company to purchase, redeem, or
otherwise acquire membership interests in the Company or any interest therein or
pay any dividend or make any other distribution in respect thereof.

(n)The Company has good and marketable title, free and clear of all liens,
encumbrances and equities, and of all charges or claims, to all of the real and
personal property owned by it, except as described in the Filings and except
liens, encumbrances and equities, and charges or claims, which are not material
in the aggregate and do not materially affect the value of such property or
interfere with the conduct of its business. Except as stated in the Filings ,
the Company has valid and binding leases to all of the real and personal
property described in the Filings as under lease to it with such exceptions as
do not materially interfere with the conduct of its business.

(o)The Company has filed all necessary federal, state and foreign income and
franchise tax returns and has paid all taxes shown as due thereon, and the
Company has received no notice of any material tax deficiency that has been
asserted against the Company.

(p)The Company has all requisite power and authority to issue, sell and deliver
the Securities. The Company has duly taken all required action for the due and
proper authorization, issuance, sale and delivery of such shares. No preemptive
rights of shareholders of the Company exist with respect to the issuance and
sale of shares by the Company. No security holder of the Company possesses any
registration rights, except as described in the Filings.

(q)The Company has no subsidiaries, with the exception of OnPoint Medical
Diagnostics, Inc., which is wholly owned, and is not affiliated with any other
company or business entity, except as explicitly stated in the Filings.

(r)The historical financial statements of the Company filed with the SEC,
together with the related schedules and notes, fairly present the financial
position and the results of operations of the Company at the respective dates
and for the respective periods to which they apply. All historical financial
statements filed with the SEC by the Company have been prepared in accordance
with generally accepted accounting principles, consistently applied throughout
the periods indicated, except as may be otherwise stated therein and except as
the financial statements for the interim periods are subject to year-end
adjustments.

(s)Except as set forth in this Agreement, no person is entitled, directly or
indirectly, to compensation from the Company or the Selling Agent for services
as a finder in connection with the transactions contemplated by this Agreement.

(t)No labor disturbance by the employees of the Company exists or, to the
Company’s knowledge, is imminent which could reasonably be expected to have a
material adverse effect on the conduct of the business, operations, financial
condition or income of the Company.

(u)The Company has no defined benefit pension plan or other plan promulgated
pursuant to, or which is intended to comply with the provisions of, the Employee
Retirement Income Security Act of 1974, except as disclosed in the Offering
Documents.

(v)The Company maintains insurance, which is in full force and effect, of the
types and in the amounts adequate for its business and in line with the
insurance maintained by similar companies and businesses.

(w)The Company has not sold any securities in violation of the Act or any state
securities laws and the Company has not engaged in any “general advertising or
solicitation” (as such term is interpreted under the Act) in connection with the
Offering.

(x)Subject to the Selling Agent’s compliance with applicable securities laws,
the offer, sale, issuance and delivery of the Securities are or will be in
compliance with the requirements for the use of Rule 506 of Regulation D
promulgated under the Act for an offering to purchasers that are all “accredited
investors” within the meaning of Regulation D and exempt from the registration
and prospectus delivery requirements of the Act.

4. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and agrees as
follows:

(a)The Company will promptly deliver to the Selling Agent and its counsel copies
of the Offering Documents and each amendment or supplement thereto. The Selling
Agent is authorized on behalf of the Company to use and distribute copies of the
Offering Documents in connection with the solicitation of the subscriptions in
the Offering as, and to the extent, permitted by federal and applicable state
securities laws.

(b)The Company will promptly notify the Selling Agent, by telephone and in
writing of (i) the issuance of any stop order suspending the sale of the
Securities, or of the institution or notice of intended institution of any
action or proceeding for that purpose, and (ii) any other communication directed
to the Company by any public authority relating to the possible suspension of
the qualification of the offer and sale of the Securities in any state.

(c)Until the Termination Date, if any event relating to or affecting the
Company, or of which the Company shall be advised in writing by the Selling
Agent, shall occur as a result of which it is necessary, in the opinion of
counsel for the Company or the Selling Agent, to supplement or amend the
Offering Documents in order to make the Offering Documents not misleading in
light of the circumstances existing at the time it is delivered to a potential
purchaser of the Securities, the Company will forthwith prepare amended or
supplemented Offering Documents (in form satisfactory to counsel for the Selling
Agent) so that the amended or supplemented Offering Documents will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time the Offering Documents are so amended or
supplemented, not misleading.

(d)The Company shall pay, or cause to be paid, all expenses incident to the
performance of its obligations under this Agreement, including, but not limited
to, all expenses incident to the delivery of the Securities, the fees and
expenses of counsel and accountants for the Company, the cost of filing the Form
D and amendments thereto, and the cost of all blue sky compliance and filings.

(e)In the event the Company shall elect to terminate the Offering after
execution of this Agreement, the Company will pay the Selling Agent the costs
incurred by the Selling Agent for legal fees, including the preparation of this
Agreement. Such reimbursement shall not, however, exceed the sum of $1,500.

5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SELLING AGENT. The Selling
Agent hereby represents and warrants to the Company as follows:

(a)The Selling Agent is a member in good standing of the Financial Industry
Regulatory Authority (“FINRA”) and will maintain such good standing status
during the term of this Agreement. No proceedings are pending or, to the best of
the Selling Agent’s knowledge, threatened that, in any way, may revoke or limit
the Selling Agent’s authority to commence the Offering, including, but not
limited to, any proceedings or actions by FINRA, the Securities and Exchange
Commission, the Minnesota Department of Commerce or any other applicable state
blue sky authorities.

(b)The Selling Agent is a licensed broker-dealer in good standing under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder, and the laws and regulations of Minnesota and such other
states where the Securities may be offered or sold by the Selling Agent and the
Company will not be disqualified from relying on Rule 505 of Regulation D by
reason of the application of Rule 505(b)(2)(iii) to the Offering due to any act
or omission of the Selling Agent or any of its directors, officers or employees.
The representatives employed by or contracting with the Selling Agent are duly
licensed by FINRA, and are duly licensed in each of the states in which offers,
offers for sale, or sales of the Securities will be made.

(c)The Selling Agent will not solicit subscriptions by any form of general
solicitation or general advertising within the meaning of Rule 502(e) of
Regulation D and will not solicit subscriptions, other than on the basis of the
Offering Documents. The Selling Agent acknowledges that its solicitation efforts
are to be directed to holders the Selling Agent believes are accredited
investors, as defined in Rule 501 of Regulation D.

(d)The Selling Agent agrees to provide to each person or investor solicited by
the Selling Agent a copy of the Offering Documents. In connection with the
Offering, the Selling Agent will not use any solicitation material other than
the Offering Documents and will not represent to any person or investor any
material facts relating to the Offering, the Company or the business of the
Company, including its future prospects, unless such facts are contained in the
Offering Documents or have been provided to the Selling Agent in writing by the
Company specifically for such purpose.

(e)The Selling Agent has full power, right and authority to enter into this
Agreement, this Agreement has been duly authorized, executed and delivered by
the Selling Agent and it is the valid and binding obligation of the Selling
Agent, subject, as to enforcement, to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of creditors
generally, to the exercise of judicial discretion as to the availability of
equitable remedies such as specific performance and injunction, and subject, as
to enforcement of the indemnification provisions, to limitations under
applicable securities laws.

6. SOLICITATION PERIOD. Subject to applicable law, the Selling Agent shall
commence the solicitation of prospective investors as soon as is reasonably
practicable following the date on which the Offering Documents are approved for
release to potential investors by both parties to this Agreement (the
“Commencement Date”) and, unless otherwise terminated hereunder, shall continue
to solicit investment in the Securities until October 1, 2012 (the “Termination
Date”).

7. DELIVERY, PAYMENT AND CLOSING.

(a)The Selling Agent shall require the subscribers in the Offering to complete
the subscription documentation supplied for that purpose by the Company.

(b)All proceeds from the sale of the Securities shall be paid directly the
Company.

(c)The Company shall promptly deliver the Convertible Notes and Warrants to the
subscribers solicited by Selling Agent promptly following acceptance of a
subscription and provide to Selling Agent copies of such instruments and the
transmittal thereof to each subscriber.

(d)The cash compensation due Selling Agent shall be paid promptly upon
acceptance of a subscription by the Company and receipt of an invoice from the
Selling Agent.

8. SOLICITATION COMPENSATION.

(a)The Selling Agent shall receive from the Company ten percent (10%) of the
gross proceeds received from the acceptance of subscriptions solicited by
Selling Agent as a compensation for acting as selling agent. Such compensation
is to be due and payable by the Company to the Selling agent in immediately
available funds in connection with the acceptance of the subscription.

(b)The Company shall pay to the Selling Agent a non-accountable expense
reimbursement equal to three percent (3%) of the gross proceeds received from
the acceptance of subscriptions solicited by Selling Agent.

(c)Promptly following the completion of the Offering, the Selling Agent (or its
designees) shall receive a warrant to purchase a number of shares of common
stock of the Company equal to ten percent (10%) of the aggregate number of
shares issuable upon conversion of the Promissory Notes into shares of common
stock of the Company (which amount shall be inclusive of shares issuable upon
conversion of all interest which may accrue through the due date of the notes).
Such warrant shall have a term of five years following issuance, provide an
exercise price per share equal to $0.25 per share and include a cashless
exercise provision. The Company acknowledges that the Selling Agent may in the
future transfer the warrant granted to it pursuant to the terms hereof to its
various brokers that participated in the Offering. The Company hereby agrees, to
the extent permitted by applicable law, to permit the transfer of such warrant
to such brokers by the Selling agent and to work with the Selling agent in
facilitating such transfer.

9. INDEMNIFICATION.

(a)The Company (to the extent that it is not limited by judgment of a proper
court of law under the Act) shall indemnify and hold harmless the Selling Agent,
and each person who controls (as such term is defined by Rule 405 under the Act)
the Selling Agent within the meaning of the Act, against any losses, claims,
damages or liabilities, joint and several, to which the Selling Agent or such
controlling persons may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Offering Documents, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (ii) any
inaccuracy in, or breach of, the representations and warranties of the Company
contained herein or any failure of the Company to perform its obligations
hereunder or under law; and the Company will reimburse the Selling Agent and
each such controlling person for any legal or other expenses reasonably incurred
by such Selling Agent or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action, as
incurred; provided, however, that the Company will not be liable in any such
case to the extent that such loss, claim, damage or liability arises out of or
is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Selling Agent specifically for use
in the preparation of the Offering Documents or any additions or supplements
thereto. This indemnity agreement will be in addition to any liability which the
Company may otherwise have.

Theforegoing indemnity agreement is subject to the condition that, insofar as it
relates to any untrue statement, alleged untrue statement, omission or alleged
omission made in any form of the Offering Documents but eliminated or remedied
by amendment or supplement to the Offering Documents, such indemnity agreement
shall not inure to the benefit of the Selling Agent or each such controlling
person with respect to any loss, liability, claim or damage asserted by any
person who purchased the Securities which are the subject thereof, if the
Offering Documents was so amended or supplemented prior to such acceptance of
the subscription.

(b)The Selling Agent (to the extent that it is not limited by judgment of a
proper court of law under the Act), will indemnify and hold harmless the
Company, each person who controls (as such term is defined under Rule 405 under
the Act) the Company within the meaning of the Act, each of its directors, and
each of its officers, against any losses, claims, damages or liabilities, joint
and several, to which the Company, any such controlling person, director or
officer may become subject, under the act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Offering Documents, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission is made in the Offering
Documents, in reliance upon and in conformity with written information furnished
to the Company by the Selling Agent specifically for use in the preparation
thereof; and the Selling Agent will reimburse the Company, any such controlling
person, director or officer for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action, as incurred. This indemnity agreement will be in
addition to any liability which the Selling agent may otherwise have.

(c)Promptly after receipt by an indemnified party under this Section of notice
of the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this Section,
notify each indemnifying party in writing of the commencement thereof. The
indemnification provided for in this Section 9 shall not be available to any
party who fails to so notify each indemnifying party to the extent that the
indemnifying party to whom notification was not given was unaware of the action
to which the notification would have related and was prejudiced by the failure
to notify; provided, however, that the omission to so notify each indemnifying
party will not relieve any indemnifying party from any liability which it may
have to any indemnified party otherwise than under this section. In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel chosen by the indemnifying party and reasonably satisfactory to the
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, and
selection of counsel satisfactory to the indemnified party, the indemnifying
party shall not be liable to such indemnified party under this section for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.

(d)As an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding as to which indemnification hereunder
is sought, the Company will reimburse the Selling Agent on a monthly basis for
all reasonable legal fees or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company’s obligation to reimburse the
Selling agent for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is ultimately held to have
been improper, the Selling Agent shall promptly return it to the party or
parties that made such payment, together with interest, compounded daily,
determined on the basis of the base rate (or other commercial lending rate for
borrowers of the highest credit standing) announced from time to time by Wells
Fargo Bank, (“Prime Rate”). Any such interim reimbursement payments which are
not made to the Selling agent within 30 days of a request for reimbursement
shall bear interest at the Prime Rate from the date of such request.

(e)In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in Sections 9(a) or 9(b) is for any
reason held, by a court of competent jurisdiction, to be unenforceable as to any
party entitled to indemnity, the Company and the Selling Agent, or any
controlling person of the foregoing, shall contribute to the aggregate losses,
claims, damages and liabilities (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted) to which the Company and the
Selling agent, or any controlling person of the foregoing, may be subject (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company, on the one hand, and the Selling agent on the other from the
offering contemplated hereby or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and of the
Selling agent on the other in connection with the statements or omissions which
resulted in such loss, claim, damage, liability or expense, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Selling agent on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total sales commissions
received by the Selling agent. The relative fault of the Company, on the one
hand, and of the Selling agent on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Selling agent and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. No person guilty of fraudulent
misrepresentation or guilty of misstating or misrepresenting a material fact or
failing to state a material fact shall be entitled to contribution, as to any
liability arising from such fraudulent misrepresentation or omission, from any
person who was not guilty of such fraudulent or other misrepresentation or
omission.

10. TERMINATION. The Selling Agent shall have the right to terminate its
obligations under this Agreement by giving the Company notice as hereinafter
specified at any time on or prior to the termination of the Offering if the
Company shall have failed, refused or been unable to perform any agreement on
its part to be performed, if there shall have been a breach of any warranty or
representation of the Company contained herein, or because any other conditions
of the Selling Agent’s obligations set forth herein are not fulfilled. The
Company shall have the right to terminate this Agreement by giving the Selling
Agent notice as hereinafter specified at any time on or prior to termination of
the Offering if the Selling Agent shall have failed, refused or been unable to
perform any agreement on its part to be performed, if there shall have been a
breach of any warranty or representation of the Selling Agent contained herein,
or because any other conditions of the Company’s obligations set forth herein
are not fulfilled. Except as provided in Section 11, any such termination shall
be without liability of any party to any other party.

11. REPRESENTATIONS AND AGREEMENTS TO SURVIVE. The respective covenants,
agreements, representations and warranties of the Company and the Selling Agent
hereunder, as set forth in, or made pursuant to this Agreement, shall remain in
full force and effect regardless of any investigation made by or on behalf of
any such party or any of its directors or officers or any controlling person,
and shall survive delivery of and payment for the Securities. The obligation to
pay the compensation and expense reimbursement provided for in Section 8, the
expense payment provisions contained in Section 4(d), the indemnification and
contribution agreements contained in Section 9 and this Section 11 shall also
survive any termination of this Agreement.

12. NOTICES. Except as otherwise expressly provided in this Agreement or duly
noticed hereunder, all notices and other communications hereunder shall be in
writing and, if given to the Selling Agent, shall be mailed, delivered or faxed
and confirmed to Emergent Financial Group, Inc., Attention: Carlene Cooke and to
the Company at the addresses set forth on the signature page hereof.

13. MISCELLANEOUS. This Agreement shall inure to the benefit of and be binding
upon the successors of the Selling Agent and of the Company. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person or corporation, other than the parties hereto and their successors, and
the controlling persons and directors and officers referred to in Section 9, any
legal or equitable right, remedy or claim under or in respect to this Agreement
or any provision hereof. The term “successors” shall not include any purchaser
of the Securities merely by reason of such purchase. No subrogee of a benefited
party shall be entitled to any benefits hereunder. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
matters contemplated by this Agreement and supersedes all prior and
contemporaneous agreements and understandings between the parties with respect
to the matters contemplated by this Agreement. This Agreement shall be governed
by and construed in accordance with the laws of the State of Minnesota, without
regard to such state’s choice of laws provisions.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

VERTICAL HEALTH SOLUTIONS, INC.

 

  

By/s/William T. Cavanaugh

ChiefExecutive Officer

  

Address:7760 France Avenue South, 11th Floor

Minneapolis,MN 55435

  

withcopy to: Morgan, Lewis & Bockius LLP

502Carnegie Center

Princeton,NJ08540

Attn:Emilio Ragosa

 

 

 

EMERGENT FINANCIAL GROUP, INC.

 

  

By/s/Peter Voldness

ChiefExecutive Officer

  

Address:3600 American Boulevard West

Suite670 Bloomington, MN 55431