Document:

Exhibit

Execution Version

REGISTRATION RIGHTS AGREEMENT AMENDMENT NO.1
THIS AMENDMENT NO. 1 (this “Amendment”) to that certain Registration Rights Agreement made and entered into effective as of February 14, 2017 by and among VALERITAS HOLDINGS, INC., a Delaware corporation (the “Company”) and CAPITAL ROYALTY PARTNERS II L.P., CAPITAL ROYALTY PARTNERS II—PARALLEL FUND “A” L.P., PARALLEL INVESTMENT OPPORTUNITIES PARTNERS II L.P., CAPITAL ROYALTY PARTNERS II – PARALLEL FUND “B” (CAYMAN) L.P., AND CAPITAL ROYALTY PARTNERS II (CAYMAN) L.P. (together, “CRG”), WCAS CAPITAL PARTNERS IV, L.P. (“WCAS”, and together with CRG, the “Purchasers”, with each of the purchasing entities, a “Purchaser”), such agreement the “RRA,” is made and entered into effective as of September 30, 2019.  Capitalized terms used but not defined herein shall have the meanings ascribed to them in the RRA.
WHEREAS, the Purchasers and the Company entered into the RRA;
WHEREAS, Section 10(j) provides that that RRA may be amended with the written agreement of the Company and the Majority Holders;
WHEREAS, CRG, as holder of a majority of the outstanding Registrable Securities is the sole Majority Holder;
WHEREAS, the Company and the Purchasers are entering into that certain Series B Preferred Stock Purchase Agreement dated as of the date hereof (the “Series B SPA”), pursuant to which, and subject to the terms and conditions contained therein, the Purchasers shall exchange outstanding indebtedness for shares of the Company’s Series B Preferred Stock, par value $0.001 per share (the “Series B Preferred”), and the Company will issue to the Purchasers shares of Series B Preferred, which Series B Preferred is convertible into shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”);
WHEREAS, in connection therewith, the Company and the Purchasers desire to amend the RRA as provided herein to extend registration rights to the shares of Common Stock issuable upon conversion of the Series B Preferred;
NOW THEREFORE, in consideration of the foregoing premises and the respective representations and warranties, covenants and agreements contained herein, the receipt and sufficiency of which is hereby acknowledged, the Company and the Purchasers agree as follows:
1.Amendment of Definitions. 
(a)    Notwithstanding the definition in the recitals to the RRA, the definition of “Shares” in Section 1 of the RRA is hereby amended by deleting “means the shares of Preferred Stock set forth in the Recitals” and adding “means the shares of Preferred Stock” in place thereof; and
(b)    The definition of “Preferred Stock” in Section 1 of the RRA is hereby amended by deleting “means the shares of the Company’s Series A Convertible Preferred Stock issued to the Purchasers pursuant to the Purchase Agreement” and adding “means the shares of the Company’s Series A Convertible Preferred Stock issued to the Purchasers pursuant to the Series A Preferred Stock Purchase Agreement dated February 14, 2017 (the “Series A SPA”) and the shares of the Company’s Series B Convertible Preferred Stock issued to the Purchasers pursuant to the Series B Preferred Stock Purchase Agreement dated September 30, 2019 (the “Series B SPA”) or that may be issued as payment-in-kind dividends on such shares in accordance with the terms of such Series B Convertible Preferred Stock” in place thereof; and

(c)    The term “Purchase Agreement” in the last sentence of Section 1, in Section 4(k) and in Section 7, shall be deleted and replaced with “respective Series A SPA or Series B SPA, as the case may be”; with the intent being to extend the scope to cover the Series A SPA as it relates to the Series A Preferred Stock, and the Series B SPA as it relates to the Series B Preferred Stock.
2.    Demand Registration.  The first sentence of Section 3(a) is amended and restated as follows: At any time ninety (90) days after (x) the closing of the Offering (as it relates to the Series A Preferred Stock) or (b) the closing of the Exchange (as it relates to the Series B Preferred Stock), the holders of a majority of the Registrable Securities then outstanding may request registration under the Securities Act of all of the Registrable Securities that are not then registered on an existing and effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415, 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 resale by the Holders of all of the Registrable Securities (each, a “Demand Registration”).
3.    Representations and Warranties. Each of the Company and the Purchaser represents and warrants that (a) it has the corporate power and authority to execute and deliver this Amendment and (b) this Amendment constitutes the legal, valid and binding obligation of each of the above parties, enforceable against each such party in accordance with its terms.
4.    No Other Modifications. The RRA shall not be modified by this Amendment in any respect except as expressly set forth herein.
5.    Miscellaneous. Sections 11(a), (b), (c), (d), (g), (h), (i) and (j) of the RRA are hereby incorporated into this Amendment mutatis mutandis as if set forth in full herein.
[SIGNATURE PAGES TO FOLLOW]

2.

IN WITNESS WHEREOF, the undersigned have executed, or caused to be executed on their behalf by an agent there unto duly authorized, this Amendment as of the date first above written.
COMPANY:
VALERITAS HOLDINGS, INC.

By    /s/ John Timberlake    
Name:    John Timberlake
Title:    Chief Executive Officer

[Signature Page to Registration Rights Agreement Amendment]

IN WITNESS WHEREOF, the undersigned have executed, or caused to be executed on their behalf by an agent there unto duly authorized, this Agreement as of the date first above written.
CRG:
CAPITAL ROYALTY PARTNERS II L.P.
By CAPITAL ROYALTY PARTNERS II GP L.P., 
its General Partner
By CAPITAL ROYALTY PARTNERS II GP LLC, 
its General Partner
By    /s/ Nathan Hukill    
Name:    Nathan Hukill
Title:    Authorized Signatory

PARALLEL INVESTMENT OPPORTUNITIES PARTNERS II L.P.
By PARALLEL INVESTMENT OPPORTUNITIES PARTNERS II GP L.P., its General Partner
By PARALLEL INVESTMENT OPPORTUNITIES PARTNERS II GP LLC, its General Partner
By    /s/ Nathan Hukill    
Name:    Nathan Hukill
Title:    Authorized Signatory

CAPITAL ROYALTY PARTNERS II–PARALLEL FUND “A” L.P.
By CAPITAL ROYALTY PARTNERS II–PARALLEL FUND “A” GP L.P., its General Partner
By CAPITAL ROYALTY PARTNERS II–PARALLEL FUND “A” GP LLC, its General Partner
By    /s/ Nathan Hukill    
Name:    Nathan Hukill
Title:    Authorized Signatory

[Signature Page to Registration Rights Agreement Amendment]

IN WITNESS WHEREOF, the undersigned have executed, or caused to be executed on their behalf by an agent there unto duly authorized, this Agreement as of the date first above written.
CAPITAL ROYALTY PARTNERS II (CAYMAN) L.P.
By CAPITAL ROYALTY PARTNERS II (CAYMAN) GP L.P., its General Partner
By CAPITAL ROYALTY PARTNERS II (CAYMAN) GP LLC, its General Partner
By    /s/ Nathan Hukill    
Name:    Nathan Hukill
Title:    Authorized Signatory

CAPITAL ROYALTY PARTNERS II – PARALLEL FUND “B” (CAYMAN) L.P.
By CAPITAL ROYALTY PARTNERS II (CAYMAN) GP L.P., its General Partner
By CAPITAL ROYALTY PARTNERS II (CAYMAN) GP LLC, its General Partner
By    /s/ Nathan Hukill    
Name:    Nathan Hukill
Title:    Authorized Signatory

[Signature Page to Registration Rights Agreement Amendment]

IN WITNESS WHEREOF, the undersigned have executed, or caused to be executed on their behalf by an agent there unto duly authorized, this Agreement as of the date first above written.
WCAS:
WCAS CAPITAL PARTNERS IV, L.P.
By: WCAS CP IV Associates LLC, its General Partner
By    /s/ Sean Traynor
Name:    Sean Traynor
Title:    General Partner

[Signature Page to Registration Rights Agreement Amendment]Exhibit
10.1

 

Termination
Agreement

of
Lease Agreement of Biomass Power Generation Project

	Party A: 	Xi’an TCH Energy Technology Co., Ltd.
	 	 
	Party
B: 	Pucheng Xin Heng Yuan Biomass Power Generation Co., Ltd.

Party A and Party
B signed two Lease Agreements of Biomass Power Generation Project on June 29, 2010 and September 5, 2013 respectively (“Lease
Agreement”). The leased assets are biomass power generation projects of phase I and phase II with total capacity of 2 ×
12,000 KW (the “Project”).

Whereas, Party B failed
to pay the lease fee to Party A due to its long-term suspension of production resulting from the significant reduction of the raw
materials for biomass power generation in Pucheng County. This Project is no longer suitable for the biomass power generation.
Through friendly negotiation, the parties enter into below agreement to terminate the Lease Agreement in advance.

As of December 31,
2018, Party B has owed RMB 97.6 million of lease fee to Party A. Party A will waive the lease fee after January 1, 2019. Party
B will pay off the RMB 97.6 million to Party A before January 15, 2020. Party A will not return the RMB 3.8 million of cash deposit
to Party B.

Party A will transfer
the Project to Party B after receives RMB 97.6 million from Party B. The Lease Agreement will formally terminate. If Party B fails
to pay off RMB 97.6 to Party A before January 15, 2020, Party A will still  hold the ownership of the Project and the Lease
Agreement is still valid.

This agreement is
made in quadruplicate, with each party holding two copies with the same legal effect.

Party A: (signed and sealed)

Representative: Guohua Ku

Party B: (signed and sealed)

Representative: Xueyi Dong

Date: September 29, 2019.pphi-ex101_7.htm

 

Exhibit 10.1

 

NON-QUALIFIED STOCK OPTION AGREEMENT BETWEEN POSITIVE PHYSICIANS HOLDINGS, INC. AND LEWIS SHARPS, MD.

 

 

THIS AGREEMENT, dated September 27, 2019, is made by and between Positive Physicians Holdings, Inc., a Pennsylvania corporation (the “Company”) and Lewis Sharps, MD, (“Optionee”), President and CEO of the Company.

 

WHEREAS, the Company owns all of the issued and outstanding capital stock of Positive Physicians Insurance Company, a Pennsylvania domiciled stock medical malpractice insurance company (“PPIC”);

 

WHEREAS, PPIC is the surviving corporation pursuant to the conversion and merger (the “Conversions”) of three medical malpractice reciprocal insurance exchanges, effective March 27, 2019, and in accordance with the Pennsylvania Medical Professional Liability Reciprocal Exchange-To-Stock Conversion Act  (the “Act”);

 

WHEREAS, upon the effective date of the Conversions the Company entered into an employment agreement with Optionee to serve as President and CEO of the Company, a copy of which is attached hereto as Exhibit A and the terms of which are incorporated into this Agreement (the “Employment Agreement”);

 

WHEREAS, to induce Optionee to enter into the Employment Agreement, the Company agreed to issue an option (the “Option”) to purchase shares of common stock of the Company (the “Common Stock”) no sooner than six (6) months after the effective date of the Conversions as required by the Act.       

 

WHEREAS, the terms and conditions set forth herein will serve as a stock option agreement (the “Agreement”) between Optionee and the Company.  

 

NOW THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:

 

ARTICLE I

 

GRANT OF OPTION

 

1.1Grant of Option.  In consideration of the Optionee's agreement to enter into the Employment Agreement with the Company or a Subsidiary and for other good and valuable consideration, on the date hereof the Company grants to the Optionee the Option to purchase any part or all of an aggregate 216,930 shares of Common Stock upon the terms and conditions set forth in this Agreement.

 

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1.2Purchase Price.  The purchase price of the shares of Common Stock covered by the Option shall be $12.01 per share without commission or other charge, which the Board of Directors of the Company has determined is the fair market value as of the date hereof.

 

1.3Adjustments in Option.  In the event that the outstanding shares of the Common Stock subject to the Option are changed into or exchanged for a different number or kind of shares of the Company or other securities of the Company, the Board shall make an appropriate and equitable adjustment in the number and kind of shares as to which the Option or portions thereof then unexercised shall be exercisable, to the end that after such event, the Optionee's proportionate interest shall be maintained as before the occurrence of such event.  Such adjustment in the Option shall be made without change in total price applicable to the unexercised portion of the Option (except for any change in the aggregate price resulting from round off of shares quantities or process) and with any necessary corresponding adjustment in the option price per share.  Any such adjustment shall be made by the Board and shall  be final and binding upon the Optionee, the Company and all other interested persons, except to the extent that such adjustment would result in adverse consequences to the Company or the Optionee under the Internal Revenue Code of 1986, as amended, or any other applicable law, in which case, the Option shall be further adjusted to comply with such law.

 

 

ARTICLE II

 

EXERCISABILITY OF OPTIONS

 

2.1Commencement of Exercisability.  The total amount shares covered by Section 1.1 hereof shall be divided into 108,465 shares (the Time-Based Options) and 108,465 shares (the “Milestone-Based Options”).

 

(1)       The Time-Based Options shall vest in equal monthly installments over a three and one-half year period following the grant date of such Options.

 

(2)       One-Third of the Milestone-Based Options shall vest upon the achievement of each of the following milestones:

	
 
	
(i)
	
PPIC attaining an “A-” rating from A.M. Best, 

 

	
 
	
(ii)
	
the completion of acquisitions by the Company, PPIC, or any other subsidiary of the Company of risk bearing entities, including RRGs, stock and mutual insurance companies, reciprocal insurance exchanges, and reinsurance transactions and loss portfolio transfers, complementary non-risk bearing insurance companies or divisions generating income that adds to the surplus of PPIC with total acquired statutory surplus of $50 million or more, and 

 

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(iii)
	
the purchasers of shares in the initial public offering of the Company who continue to hold such shares achieving a 300% return on their investment (including all dividends and proceeds from sales of shares of Company common stock and any other distributions to shareholders of the Company).  

 

2.2Expiration of Option.

 

(a)      Unless otherwise provided in the Employment Agreement all vested Option Shares shall be exercisable for eight (8) years from the date of vesting.

 

 

ARTICLE III

 

EXERCISE OF OPTION

 

3.1Partial Exercise.  Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof becomes unexercisable under Section 2.2 hereof; provided, however, that each partial exercise shall be for the whole shares only.

 

3.2Manner of Exercise.  The Option, or any exercisable portion thereof, may be exercised solely by delivery to the office of the Secretary of the Company all of the following prior to the time when the Option or such portion becomes unexercisable under Section 2.2 hereof:

 

(a)      Notice in writing signed by the Optionee or other person then entitled to exercise the Option or any portion, stating that the Option or portion is thereby exercised, such notice complying with all applicable rules established by the Board.

 

(b)      Full payment (in cash, Common Stock, or a combination thereof, as the Board may determine) for the shares with respect to which such Option or portion thereof is exercised.

 

(c)      In the event the Option or portion thereof shall be exercised by any person or persons other than the Optionee, appropriate proof of the right of such person or persons to exercise the Option.

 

(d)      Shares also may be issued upon exercise pursuant to a broker-assisted cashless exercise program as approved by the Board.

 

3.3Conditions of Issuance of Stock.  The shares of Common Stock deliverable upon the exercise of the Option, or any portion thereof, may be either previously authorized but unissued shares or issued shares which have then been reacquired by the Company.  Such shares shall be fully paid and nonassessable.  

3

 

 

 

ARTICLE IV

 

MISCELLANEOUS

 

4.1Administration.  The Board shall have the power to interpret this Agreement and to adopt such rules for the administration, interpretation and application of the Agreement as are consistent therewith and to interpret or revoke any such rules.  All actions taken and all interpretations and determinations made by the Board in good faith shall be final and binding upon the Optionee, the Company and all other interested persons.  No member of the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Agreement or the Option.

 

4.2Options Not Transferable.  Except as set forth in the Employment Agreement, the Option shall not be transferable other than by will or the laws of descent and distribution and the Option shall be exercisable during the Optionee's lifetime only by the Optionee.

 

4.3Withholding.  All amounts which, under federal, state or local law, are required to be withheld from the amount payable with respect to any Option shall be withheld by the Company.  Whenever the Company proposes or is required to issue or transfer shares of Common Stock, the Company shall have the right to require the recipient to remit to the Company an amount sufficient to satisfy any federal, state or local withholding tax requirements prior to the delivery of any certificate or certificates for such shares.

 

4.4No Right of Continued Service.  Nothing in this Agreement shall confer upon the Optionee any right to continue in the service with the Company or its subsidiaries or shall interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to discharge the Optionee.

 

4.5Notices.  Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Company's secretary and any notice to be given to the Optionee shall be addressed to the Optionee at the address given beneath the Optionee's signature hereto.  By a notice given pursuant to this Section 4.5, either party may hereafter designate a different address for notices to be given to him.  Any notice which is required to be given to the Optionee shall, if the Optionee is then deceased, be given to the Optionee's personal representative if such representative has previously informed the Company of the Optionee's status and address  by written notice under this Section 4.5.  Any notice shall have been deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United State Postal Service.

 

4.6Titles.  Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

 

4

 

4.7Stock Option Plan.  This Option is not granted pursuant to the terms and conditions of any Company stock option plan; however, when and if the Company adopts a Company stock option plan, all Option shares shall be governed by the terms of such Company stock option plan, except to the extent that the terms and conditions of such stock option plan are inconsistent with the terms of this Agreement and the Employment Agreement, in which case the terms of this Agreement and the Employment Agreement shall control.

 

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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.

 

	
 
	
 
	
POSITIVE PHYSICIANS HOLDINGS, INC.

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Matthew Popoli

	
 
	
 
	
 
	
Matthew Popoli, Chairman of the Board

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
/s/ Lewis Sharps, MD

	
 
	
 
	
Optionee Signature

	
 
	
 
	
 
	
 

	
 
	
 
	
Optionee Name: Lewis Sharps, MD

	
 
	
 
	
 
	
 

	
 
	
 
	
850 Cassatt Road

	
 
	
 
	
100 Berwyn Park, Suite 220

	
 
	
 
	
Berwyn, PA 19312

	
 
	
 
	
Print Address

 

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