Document:

Exhibit 10.5

 

BRIDGE NOTE CONVERSION AGREEMENT

 

This BRIDGE NOTE CONVERSION AGREEMENT (this “Bridge Note Conversion Agreement”), by and between OnPoint Medical Diagnostics, Inc., a Minnesota corporation (the “Company”), Vertical Health Solutions, Inc., a publicly traded Florida corporation (“VHS”) and each of the holders of the promissory notes listed on the signature page hereto (the “Holders”, together with the Company and VHS, the “Parties”).

 

WHEREAS, the Holders own certain promissory notes (the “Notes”) issued by the Company, which are convertible into shares of the Company’s common stock, par value $0.01 per share (the “OnPoint Common Stock”), as set forth on Schedule A hereto;

 

WHEREAS, the Company has entered into that certain agreement and plan of merger, dated as of February 1, 2011 (the “Merger Agreement”), whereby a wholly-owned subsidiary of VHS, will be merger with and into the Company (the “Merger”);

 

WHEREAS, the Merger occurred on April 15, 2011;

 

WHEREAS, the Company desires to extinguish the Notes and would like to offer the Holders registration rights if such Holders agree to convert their Notes into shares of common stock, par value $0.001 per share, of VHS (the “VHS Common Stock”) at a fixed conversion price of $0.65 per share; and

 

WHEREAS, to induce the conversion by the Holders of the Notes, the Company and the Holders now desire to amend the Notes to permit conversion into shares of VHS Common Stock and provide registration rights to such Holders, and in consideration therefor, the Holders have agreed to convert all of the Notes held by the Holders.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.             Definitions.  For purposes of this Bridge Note Conversion Agreement, the “Effective Date” shall mean the date on which the Company and VHS acknowledge and accept this Bridge Note Conversion Agreement as set forth on the signature page hereto.

 

2.             Note Amendment.  Effective upon the Effective Date and immediately prior to the conversion of the Notes contemplated hereby, Section 1.04 of each Note is hereby amended and restated to read as follows:

 

“Section 1.04.  Conversion to Common Stock. The Holder shall have the option to convert all or a portion of the principal and accrued interest under this Note into shares of common stock, par value $0.001 per share, of Vertical Health Solutions, Inc. (the “Common Stock”) at any time prior to payment, at a conversion price of $0.65 per share (the “Conversion Price”).  The Company shall not issue fractional shares upon a conversion.  If the application of the Conversion Price shall contemplate issuance of less than a half share, such fractional share shall not be issued and no payment shall be made to the converting Holder and should such application result in the issuance of a half or greater fractional share, such fractional share shall be rounded up to the next full share.”

 

 

3.             Conversion of Notes.  On the Effective Date and immediately following the amendment to the Notes, each Holder hereby converts the outstanding principal amount and any accrued and unpaid interest of the related Notes into VHS Common Stock pursuant to this Section 3.  Thereafter, such Holder shall not have any further rights, obligations, interests, benefits or claims under such Notes.

 

4.             Registration Rights.  If this Bridge Note Conversion Agreement is accepted, such Holder will be a beneficiary of the Registration Rights Agreement, the form of which is attached hereto as Exhibit A.  Accordingly, pursuant to the terms and conditions of this Bridge Note Conversion Agreement, it is hereby agreed that the execution by such Holder of this Bridge Note Conversion Agreement, in the place set forth herein, shall constitute agreement to be bound by the terms and conditions of the Registration Rights Agreement, with the same effect as if each of such separate, but related agreement, were separately signed.

 

5.             This Bridge Note Conversion Agreement shall be deemed to be made under and shall be construed in accordance with the laws of the State of Minnesota without giving effect to the principals of conflict of laws thereof and shall be binding upon the Holders, the Holders’ heirs, estate, legal representatives, successors and assigns and shall inure to the benefit of the Company, its successors and assigns.

 

6.             This Bridge Note Conversion Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument, and may be executed by facsimile signatures.

 

* * * * * * *

 

 

IN WITNESS WHEREOF, this Bridge Note Conversion Agreement has been duly executed by the parties hereto.

 

 

	
 
    	
 
    	
HOLDER:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
Date:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
AGREED   AND ACCEPTED AS OF THIS          DAY
    	
 
    	
 
    
	
OF                                   ,   2011:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
ONPOINT   MEDICAL DIAGNOSTICS, INC.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name:   William Cavanaugh
    	
 
    	
 
    
	
 
    	
Title:   Chief Executive Officer
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
VERTICAL   HEALTH SOLUTIONS, INC.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name:   William Cavanaugh
    	
 
    	
 
    
	
 
    	
Title:   Chief Executive Officer
    	
 
    	
 
    

 

 

SCHEDULE A

 

SCHEDULE OF BRIDGE FINANCING NOTES

 

	
Holder:
    	
 
    	
Aggregate Principal Amount of Notes:
    	
 
    
	
Christian & Elga Lohler
    	
 
    	
$
    	
25,000
    	
 
    
	
RBC Capital Markets Corp; FBO Natalie Roberts IRA
    	
 
    	
$
    	
15,000
    	
 
    
	
Jenkins Living Trust (Scott or Barbara Jenkins)
    	
 
    	
$
    	
20,000
    	
 
    
	
Sasha C. Gentling
    	
 
    	
$
    	
50,000
    	
 
    
	
Frederick Richter
    	
 
    	
$
    	
5,000
    	
 
    
	
Daryl Skiba
    	
 
    	
$
    	
20,000
    	
 
    
	
Bruce E. Foreman
    	
 
    	
$
    	
5,000
    	
 
    
	
Marie Elizabeth Briden
    	
 
    	
$
    	
150,000
    	
 
    
	
Patricia A. Abbott
    	
 
    	
$
    	
35,000
    	
 
    
	
Radine Sally Oxley 1985 Family Trust
    	
 
    	
$
    	
15,000
    	
 
    
	
Richard L Lindstrom
    	
 
    	
$
    	
200,000
    	
 
    
	
RBC Capital Markets; FBO Gregory Rueter IRA
    	
 
    	
$
    	
25,000
    	
 
    
	
David P. Drummer
    	
 
    	
$
    	
30,000
    	
 
    
	
Bradford C Richter
    	
 
    	
$
    	
15,000
    	
 
    
	
RBC Capital Markets; FBO Mark Finley Wildgen SEP   IRA
    	
 
    	
$
    	
42,500
    	
 
    
	
Husein Y. Sarameh
    	
 
    	
$
    	
25,000
    	
 
    
	
Mark Heuer
    	
 
    	
$
    	
15,000
    	
 
    
	
Dennis J. Holland
    	
 
    	
$
    	
20,000
    	
 
    
	
Morris W. Steller
    	
 
    	
$
    	
25,000
    	
 
    
	
Paul W. Schultz
    	
 
    	
$
    	
25,000
    	
 
    
	
Ronald Runck
    	
 
    	
$
    	
15,000
    	
 
    
	
RBC Capital Markets Corp; FBO Dana Anderson IRA
    	
 
    	
$
    	
15,000
    	
 
    
	
Dennis & Roberta DeVetter
    	
 
    	
$
    	
30,000
    	
 
    
	
Katherine P. White
    	
 
    	
$
    	
20,000
    	
 
    
	
William R., Jr. Priedeman
    	
 
    	
$
    	
15,000
    	
 
    
	
Charles Christopher Bercaw
    	
 
    	
$
    	
15,000
    	
 
    
	
Robert K. McKelvey
    	
 
    	
$
    	
15,000
    	
 
    
	
Dean P. Jacklitch
    	
 
    	
$
    	
20,000
    	
 
    
	
Jeffrey M. Williams
    	
 
    	
$
    	
20,000
    	
 
    
	
Craig S Stevenson
    	
 
    	
$
    	
70,000
    	
 
    
	
David L. Hintermeister
    	
 
    	
$
    	
20,000
    	
 
    
	
TOTAL:
    	
 
    	
$
    	
1,017,500
    	
 
    

 

 

EXHIBIT A

 

FORM OF REGISTRATION RIGHTS AGREEMENTExhibit 4.23

 

AMENDMENT NO. 1 TO THE DECLARATION OF TRUST

 

This AMENDMENT NO. 1 TO THE DECLARATION OF TRUST, dated as of May 25, 2011 (this “Amendment No. 1”), among Wells Fargo Delaware Trust Company, National Association, a national banking association (as successor in interest to Wells Fargo Delaware Trust Company), as Delaware trustee (the “Delaware Trustee”), Jane E. Freedman and Paul H. McDonough, as trustees (the “Regular Trustees” and collectively with the Delaware Trustee, the “Trustees” and each a “Trustee”) and OneBeacon U.S. Holdings, Inc., a Delaware corporation, as depositor (the “Depositor”).

 

1.             The Trustees and the Depositor desire to amend Section 4 of the Declaration of Trust of OneBeacon U.S. Holdings Trust I, dated as of June 27, 2008 (the “Declaration of Trust”).  The Trustees and the Depositor hereby agree that such Section 4 be amended and restated in its entirety to read as follows:

 

4.           The Depositor, as depositor of the Trust, is hereby authorized, in its discretion, (i) to prepare, execute, and file with the Securities and Exchange Commission (the “Commission”), in each case on behalf of the Trust, (a) one or more Registration Statements on Form S-3 (the “1933 Act Registration Statements”), including any pre-effective or post-effective amendments to each such 1933 Act Registration Statement, relating to the registration under the Securities Act of 1933, as amended, of the Preferred Securities of the Trust and certain other securities, (b) any prospectus or supplement thereto relating to the Preferred Securities of the Trust required to be filed pursuant to the 1933 Act, and (c) one or more Registration Statements on Form 8-A (the “1934 Act Registration Statements”) (including all pre-effective or post-effective amendments thereto) relating to the registration of the Preferred Securities of the Trust under Section 12(b) of the Securities Exchange Act of 1934, as amended; (ii) to prepare, execute and file with the New York Stock Exchange (the “Exchange”) and execute on behalf of the Trust a listing application and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Preferred Securities to be listed on the Exchange; (iii) to prepare, execute and file on behalf of the Trust such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as shall be necessary or desirable to register the Preferred Securities under the securities or blue sky laws of such jurisdictions as the Depositor, on behalf of the Trust, may deem necessary or desirable, and (iv) to execute on behalf of the Trust that certain Underwriting Agreement relating to the Preferred Securities, among the Trust, the Depositor and the several Underwriters named therein, substantially in the form to be included as an Exhibit to any 1933 Act Registration Statement. In the event that any filing referred to in clauses (i) through (iii) above is required by the rules and regulations of the Commission, the Exchange or any other national stock exchange or state securities or blue sky laws, to be executed on behalf of the Trust by the Trustees, any Regular Trustees, in his capacity as Trustee of the Trust, is hereby authorized and directed to join in any such filing and to execute on behalf of the Trust any and all of the foregoing, it being understood that Wells Fargo Delaware Trust Company, National Association in its capacity as Trustee of the Trust, shall not be required to join in any such filing or execute on behalf of the Trust any such document unless required by the rules and regulations of the Commission, the Exchange or any other national stock exchange or state securities or blue sky laws. In connection with all of the foregoing, the Depositor hereby constitutes and appoints Jane E. Freedman and Paul H. McDonough, with each of them as its true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the Depositor or in the Depositor’s name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to each 1933 Act Registration Statement and each 1934 Act Registration Statement and to file the same, with all exhibits therewith, with the Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the Depositor might or could do in person, thereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their respective substitute or substitutes, shall or cause to have done by virtue hereof.

 

 

2.             This Amendment No. 1, together with the Declaration of Trust, constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings between the parties.

 

3.             This Amendment No. 1 shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.

 

4.             This Amendment No. 1 may be executed in one or more counterparts, each of which when so executed shall be an original and all of which when taken together shall constitute but one and the same instrument.

 

[signature page follows]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed as of the day and year first above written.

 

	
 
    	
DEPOSITOR  
    
	
 
    	
 
    
	
 
    	
ONEBEACON   U.S. HOLDINGS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Paul H. McDonough
    
	
 
    	
 
    	
Name:  Paul H. McDonough
    
	
 
    	
 
    	
Title:    Senior Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DELAWARE TRUSTEE  
    
	
 
    	
 
    
	
 
    	
WELLS   FARGO DELAWARE TRUST COMPANY, NATIONAL ASSOCIATION
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Amy L. Martin
    
	
 
    	
 
    	
Name:  Amy L. Martin
    
	
 
    	
 
    	
Title:    Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
REGULAR TRUSTEES
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ Jane E. Freedman
    
	
 
    	
 
    	
Name:  Jane E. Freedman
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ Paul H. McDonough
    
	
 
    	
 
    	
Name:  Paul H. McDonough

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