DRS/A

As submitted to the Securities and Exchange Commission on December 24, 2014 pursuant to the Jumpstart Our Business Startups Act

Registration No. 333-          

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

CONFIDENTIAL SUBMISSION NO. 3

ON

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Valeritas, Inc.

(Exact name of registrant as specified in its charter)

Delaware	3841	20-5321056
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

750 Route 202 South, Suite 600

Bridgewater, NJ 08807

(908) 927-9920

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Kristine Peterson

Chief Executive Officer

Valeritas, Inc.

750 Route 202 South, Suite 600

Bridgewater, NJ 08807

(908) 927-9920

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Peter N. Handrinos Johan V. Brigham Brandon J. Bortner Latham & Watkins LLP John Hancock Tower, 20^th Floor 200 Clarendon Street Boston, Massachusetts 02116 (617) 948-6000 Divakar Gupta Brent B. Siler Brian F. Leaf Cooley LLP 1114 Avenue of the Americas New York, New York 10036 (212) 479-6000

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities To Be Registered	Proposed Maximum Aggregate Offering Price(1)	Amount of Registration Fee(2)
Common Stock, $0.00001 par value per share	$	$

⁽¹⁾  Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. Includes the offering price of additional shares that the underwriters have the option to purchase.

⁽²⁾  Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission declares our registration statement effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to completion, dated December 24, 2014

Prospectus                    Shares   VALERITAS, INC.   Common Stock   $         per share

•       Valeritas, Inc. is offering             shares of our common stock.	•       This is our initial public offering and no public market currently exists for our shares.
•       We anticipate that the initial public offering price per share will be between $        and $            .	•       We expect our shares will trade on The NASDAQ Global Market under the symbol “VLRX.”

Investing in our common stock involves a high degree of risk. Please read “Risk Factors” beginning on page 12.

We are an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012 and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See “Prospectus summary—Implications of being an emerging growth company.”

	Price to Public	Total
Public offering price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to Valeritas, Inc.	$	$

We have granted the underwriters an option for a period of 30 days to purchase up to                additional shares of common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved of anyone’s investment in these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Delivery of the shares of common stock is expected to be made on or about                 , 2014.

Piper Jaffray

Leerink Partners Oppenheimer & Co.

The date of this prospectus is                 , 2014.

TABLE OF CONTENTS

	Page
Prospectus Summary		1
Risk Factors		12
Special Note Regarding Forward-Looking Statements		44
Use of Proceeds		46
Dividend Policy		47
Capitalization		48
Dilution		49
Selected Consolidated Financial Data		51
Management’s Discussion and Analysis of Financial Condition and Results of Operations		53
Business		71
Management		99
Executive Compensation		106
Certain Relationships and Related Party Transactions		118
Principal Stockholders		121
Description of Capital Stock		124
Shares Eligible for Future Sale		130
Material United States Federal Income Tax Considerations for Non-U.S. Holders		133
Underwriting		137
Legal Matters		143
Experts		143
Where You Can Find More Information		143
Index to Consolidated Financial Statements		F-1

We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus or in any applicable free writing prospectus is current only as of its date.

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MARKET AND INDUSTRY DATA

We obtained the industry, market and competitive position data in this prospectus from our own internal estimates and research as well as from industry and general publications, research, surveys and studies conducted by third parties. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that each of these studies and publications is reliable, we have not independently verified market and industry data from third-party sources. While we believe our internal company research is reliable and the market data are appropriate, neither such research nor data have been verified by any independent source.

TRADEMARKS, SERVICE MARKS AND TRADENAMES

We own or have rights to use a number of registered and common law trademarks, service marks and trade names in connection with our business in the United States and/or in certain foreign jurisdictions, including, but not limited to, “Valeritas,” “V-Go,” “V-Go Life,” “h-Patch,” “Mini-Ject,” “Micro-Trans” and “Floating Needle.”

Solely for convenience, the trademarks, service marks, logos and trade names referred to in this prospectus are without the ^® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names. This prospectus contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this prospectus are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks, copyrights or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

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PROSPECTUS SUMMARY

This prospectus summary discusses the key aspects of the offering and highlights certain information appearing elsewhere in this prospectus. However, as this is a summary, it does not contain all of the information that you should consider before making a decision to invest in our common stock. You are encouraged to carefully read this entire prospectus, including the information provided under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes, before investing in our common stock. Unless otherwise stated in this prospectus, references to “Valeritas,” “we,” “us,” “our” or “our company” refer to Valeritas, Inc.

Overview

We are a commercial-stage medical technology company focused on developing innovative technologies to improve the health and quality of life of people with Type 2 diabetes. We designed our first commercialized product, the V-Go Disposable Insulin Delivery Device, or V-Go, to help patients with Type 2 diabetes who require insulin to achieve and maintain their target blood glucose goals. V-Go is a small, discreet and easy-to-use disposable insulin delivery device that a patient adheres to his or her skin every 24 hours. V-Go enables patients to closely mimic the body’s normal physiologic pattern of insulin delivery by releasing a single type of insulin at a continuous preset background, or basal, rate over a 24-hour period and on demand around mealtime, or bolus dosing. The basal-bolus insulin regimen provided by V-Go enables patients to manage their diabetes with insulin, but without the need to plan their daily routine around multiple daily injections.

Insulin therapies using syringes, pens and programmable insulin pumps are often burdensome to a Type 2 diabetes patient’s daily routine, which can lead to poor adherence to prescribed insulin regimens and, as a result, ineffective diabetes management. We believe V-Go is an attractive management tool for patients with Type 2 diabetes requiring insulin because it only requires a single fill of insulin prior to use and provides comprehensive basal-bolus therapy without the burden and inconvenience associated with multiple daily injections. V-Go is available in three different dosages depending on the patient’s needs and is generally cost competitive for both patients and third-party payors when compared to insulin pens or programmable insulin pumps.

V-Go was the first insulin delivery device cleared by the U.S. Food and Drug Administration, or FDA, under its Infusion Pump Improvement Initiative, and is the only FDA-cleared mechanical basal-bolus insulin delivery device on the market in the United States. We developed V-Go based on our proprietary h-Patch platform technology, which facilitates the simple and effective subcutaneous delivery of injectable medicines to patients across a broad range of therapeutic areas. Unlike many other insulin delivery devices, V-Go is available at retail and mail order pharmacies. The Medicare Part D outpatient drug benefit defines V-Go and certain other supplies used for injecting insulin as “drugs,” which allows V-Go to be available for coverage by Part D Plans under Medicare Part D. In addition to Medicare, a majority of commercially insured patients are currently covered for V-Go under their insurance plans.

We commenced commercial sales of V-Go in the United States during 2012. In the second half of 2012, we began hiring sales representatives in selected U.S. markets. At the end of 2013, our sales team covered 62 territories primarily within the East, South, Midwest and Southwest regions of the United States. Our revenue increased from $0.6 million in 2012 to $6.2 million in 2013 and to $9.5 million for the nine months ended September 30, 2014, reflecting our territorial expansion. Our net loss was $87.6 million and $49.7 million for the year ended December 31, 2013 and the nine months ended September 30, 2014, respectively. Our accumulated deficit as of September 30, 2014 was $294.8 million. Since launching V-Go, the total number of prescriptions for, and the number of patients using, V-Go have

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increased each quarter. Based on prescription data, there were approximately 58,000 V-Go prescriptions filled during the nine months ended September 30, 2014, and we estimate that approximately 12,000 patients with Type 2 diabetes were using V-Go as of September 30, 2014.

The Market

Diabetes is a chronic, life-threatening disease that impacts an estimated 371 million people worldwide and is characterized by the body’s inability to properly metabolize glucose. Diabetes is classified into two main types. Type 1 diabetes is caused by an autoimmune response in which the body attacks and destroys the insulin-producing cells of the pancreas. Type 2 diabetes, the more prevalent form of the disease, occurs when either the body does not produce enough insulin to regulate the amount of glucose in the blood or cells become resistant to insulin and are unable to use it effectively.

We currently focus on the treatment of patients with Type 2 diabetes—a pervasive and costly disease that, according to the 2014 National Diabetes Statistics Report released by the U.S. Centers for Disease Control and Prevention, or CDC, currently affects between 90% and 95% of the 20.9 million U.S. adults diagnosed with diabetes. We believe the majority of the 12.8 million U.S. adults treating their Type 2 diabetes with more than one daily oral anti-diabetic drug, or OAD, or an injectable diabetes medicine can benefit from V-Go’s innovative approach to Type 2 diabetes management. Our near-term market consists of the approximately 5.8 million of these patients who currently take insulin, which includes 4.6 million patients who have not been able to achieve their target blood glucose goal.

Therapeutic Challenges and Limitations of Current Insulin Delivery Mechanisms

Once Type 2 diabetes has been diagnosed, physicians and patients often first seek to manage the disease through meal planning and physical activity before progressing to medications designed to manage blood glucose levels. Patients often begin medical treatment with a once-daily OAD. Within five years of diagnosis, patients with Type 2 diabetes generally move past one OAD per day to multiple daily OADs, which could also include an injectable glucagon-like peptide-1 receptor agonist, or GLP-1, which, among other actions, stimulates the release of insulin by the body. Within 10 years of diagnosis, patients generally add injectable insulin to their regimen.

Multiple studies indicate that, when taken as prescribed, a basal-bolus insulin regimen is a very effective means for lowering blood glucose levels of patients with Type 2 diabetes because it most closely mimics the body’s normal physiologic pattern of insulin delivery throughout the day. However, regardless of the type of insulin therapy, many patients with Type 2 diabetes on insulin fail to reach their target blood glucose goals, and patient non-adherence to prescribed insulin therapy is often an important contributing factor in a patient’s failure to achieve glycemic control. According to a recent study of patients with Type 2 diabetes, the most common reasons cited by patients for failing to comply with a prescribed treatment regimen include the burden of multiple daily injections, the potential embarrassment about injecting medication around family and friends or in public, and interference with the patient’s daily activities and resulting loss of freedom. Failure to comply with prescribed insulin therapy, particularly mealtime insulin therapy, reduces the overall efficacy of insulin treatment in managing a patient’s Type 2 diabetes. We believe V-Go is appealing to healthcare providers and patients because it combines the benefits of basal-bolus therapy with the convenience of a once-daily injection.

Our Solution

V-Go Disposable Insulin Delivery Device

V-Go is a simple, discreet and effective solution to help control blood glucose in adults with Type 2 diabetes by providing the following key benefits.

• Specifically Designed for Patients with Type 2 Diabetes.    V-Go is a daily-disposable mechanical device that operates without electronics, batteries, infusion sets or programming. It

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is worn on the skin under clothing and measures just 2.4 inches wide by 1.3 inches long by 0.5 inches thick, weighing approximately one ounce when filled with insulin. In a recent national study of patients with Type 2 diabetes, 72% of patients prescribed basal-bolus injectable insulin regimens reported not taking injections away from home, making it difficult for many of them to remain in compliance with their prescribed therapy. However, V-Go was designed to facilitate basal-bolus therapy compliance by patients with Type 2 diabetes.

• Simple, Effective and Innovative Approach to Insulin-Based Diabetes Management.    V-Go utilizes our proprietary h-Patch drug delivery technology to enable patients to closely mimic the body’s normal physiologic pattern of insulin delivery by predictably delivering a single type of insulin at a continuous preset basal rate over a 24-hour period and convenient and discreet on-demand bolus dosing at mealtimes. We believe V-Go’s simple and effective approach to insulin therapy facilitates patient adherence to basal-bolus insulin regimens, which leads to better patient results.

• User-Friendly Design.    In addition to its small size and dosage versatility, V-Go offers many additional user-friendly features designed to treat and improve the quality of life of patients with Type 2 diabetes requiring insulin, including:

• using a single fast-acting insulin, such as Humalog or NovoLog, rather than a combination of multiple types or premixed insulin;

• not requiring patients to carry syringes, pens or other supplies for mealtime bolus dosing;

• offering the convenience of pressing buttons for on-demand bolus dosing through clothing;

• allowing patients to easily maintain their daily routines and activities, including showering, exercising and sleeping;

• only requiring application of a new V-Go every 24 hours, which offers patients the flexibility to selectively choose an application site that best suits the day’s activities; and

• not burdening patients with the complexities associated with learning to use an electronic device or programming a pump.

• Cost Effective for Payor and Patient Alike.    V-Go is generally a cost competitive option for payors and patients when compared to insulin pens, which are the delivery method prescribed for a majority of all insulin therapies.

Next-Generation: Pre-Fill V-Go

We are developing a next-generation, single-use disposable V-Go device that will feature a separate pre-filled insulin cartridge that can be inserted by the patient into the V-Go. While the current V-Go simplifies the use of insulin for patients with Type 2 diabetes, we believe that a pre-filled V-Go will make insulin therapy even simpler by eliminating the device-filling process by the patient, which we expect could promote adoption by patients with Type 2 diabetes.

Our Strategy

Our goal is to significantly expand and further penetrate the Type 2 diabetes market and become a leading provider of devices designed for basal-bolus insulin therapy.

Our short-term business strategies include the following.

• Increase Adoption of V-Go in Our Existing Regions by Adding Sales Representatives.    At the end of 2013, our sales team covered 62 territories primarily within the East, South,

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Midwest and Southwest regions of the United States. We intend to continue to invest in the expansion of this infrastructure to increase our reach to additional healthcare providers in our existing geographies, which we believe will drive continued adoption of V-Go and increase our revenue.

• Increase Promotional Efforts to Drive Awareness of V-Go.    We intend to undertake additional marketing activities to drive awareness of V-Go to healthcare providers and patients by educating them about the convenience and health benefits associated with V-Go, which we believe will lead to increased adoption of our product.

• Expand Third-Party Reimbursement for V-Go in the United States.    We intend to enable more patients covered by commercial insurance plans to be reimbursed for V-Go as a pharmacy benefit rather than a medical benefit. In addition, while more than 70% of commercially insured lives in the United States and more than 60% of lives insured by Medicare are covered for V-Go, we intend to further expand payor adoption. We also intend to continue to deploy our reimbursement team that helps patients gain access to V-Go by supporting them throughout the reimbursement process.

• Leverage Our Scalable Manufacturing Operations to Increase Gross Margin.    We intend to leverage our scalable and flexible manufacturing infrastructure and related operational efficiencies to increase our gross margin by reducing our product costs. We believe the existing production lines of our contract manufacturer, or CMO, will have the ability to meet our current and expected near-term V-Go demand. Our CMO also has the ability to replicate additional production lines within its current facility footprint. In addition, we believe that due to shared product design features with V-Go, our production processes are readily adaptable to the manufacture of new products, including a pre-fill V-Go.

Our long-term business strategies include the following.

• Establish a National Footprint and Explore International Expansion.    We intend to explore expanding our sales and marketing infrastructure to establish nationwide access to physicians, as well as our options for international expansion through strategic collaborations, in-licensing arrangements or alliances.

• Capture Improved Economics Through the Commercialization of Pre-Fill V-Go.    We are developing and intend to commercialize our pre-fill V-Go product, which we believe will offer patients an even more simplified user experience, thereby increasing our target market to include patients with Type 2 diabetes not currently on insulin. In addition, we expect to have additional opportunities to generate revenue through the sale of insulin in connection with the pre-fill V-Go. We believe a pre-fill option will also lay the foundation for using our proprietary h-Patch technology with other injectable therapies where patients could benefit from simple, convenient and continuous drug delivery.

• Advance Our Proprietary Drug Delivery Technologies into Other Therapeutic Areas.    We have built a significant portfolio of proprietary technologies designed to simply and effectively deliver injectable medicines to patients across a broad range of therapeutic areas. We intend to continue to advance these technologies, including our pre-fill V-Go product, either by working with third parties to incorporate them into existing commercial products or by licensing the rights to them to third parties for further development and commercialization.

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Selected Risk Factors

Our business is subject to numerous risks and uncertainties of which you should be aware before you decide to invest in our common stock. These risks may prevent us from achieving our business objectives, and may adversely affect our business, financial condition, results of operations and prospects. These risks are discussed in greater detail in the section entitled “Risk Factors” beginning on page 12 of this prospectus. Certain of these risks include:

• we have incurred significant operating losses since inception and we cannot be certain that we will ever achieve profitability;

• we currently rely on sales of V-Go to generate all of our revenue, and any factors that negatively impact our sales of V-Go would also negatively impact our financial condition and operating results;

• our ability to maintain and grow our revenue depends in part on our ability to retain a high percentage of our patient customer base or the few significant wholesale customers that account for nearly all of our sales;

• the failure of V-Go to achieve and maintain market acceptance could result in our achieving sales below our expectations;

• we operate in a very competitive industry, and if we fail to compete successfully against our existing or potential competitors, many of whom have greater resources than we have, our revenue and operating results may be negatively affected;

• competitive products or other technological breakthroughs for the monitoring, treatment or prevention of diabetes or technological developments may render our product obsolete or less desirable;

• if we are unable to expand our sales and marketing infrastructure, we may fail to increase our sales to meet our anticipated levels;

• the failure to secure or retain adequate coverage or reimbursement for V-Go or any future products could hinder our commercial success;

• manufacturing risks, including risks related to manufacturing in China, may adversely affect our ability to manufacture our products and could reduce our gross margins and negatively affect our operating results;

• our ability to protect our intellectual property and proprietary technology is uncertain; and

• our product and operations are subject to extensive governmental regulation, and failure to comply with applicable requirements would cause our business to suffer.

Implications of Being an Emerging Growth Company

As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or JOBS Act, enacted in April 2012. An “emerging growth company” may take advantage of exemptions from some of the reporting requirements that are otherwise applicable to public companies that are not emerging growth companies. These exemptions include:

• being permitted to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations in this prospectus;

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• not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, in the assessment of our internal control over financial reporting;

• reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and

• exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and obtaining stockholder approval of any golden parachute payments not previously approved.

We may take advantage of these reporting exemptions until we are no longer an emerging growth company. We will remain an emerging growth company until the last day of our fiscal year following the fifth anniversary of the completion of this offering. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” or if our annual gross revenue exceeds $1.0 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period.

We have elected to take advantage of certain of the reduced disclosure obligations in the registration statement of which this prospectus is a part and may elect to take advantage of some, but not all, of the reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Recent Events

2014 Reorganization

During the second quarter of 2014, we consummated a series of transactions designed to facilitate future capital raising by simplifying our capitalization. On June 19, 2014, Valeritas Merger Sub, Inc., a Delaware corporation, and a direct, wholly owned subsidiary of Valeritas Holdings, LLC, a Delaware limited liability company, or Holdings, merged with and into us. Throughout this prospectus, we refer to this merger and related transactions as the “2014 Reorganization.” Prior to the 2014 Reorganization, Holdings was our direct wholly owned subsidiary. We survived the 2014 Reorganization as a direct, wholly owned subsidiary of Holdings. In connection with the 2014 Reorganization, all of the pre-merger holders of our Series A, B, C, C-1 and C-2 preferred stock, common stock, options to purchase common stock and preferred stock warrants, or the Prior Holders, converted their securities into preferentially equivalent units in Holdings, and we issued 9,000,000 shares of our common stock to Holdings.

As a result of this series of transactions, immediately following the 2014 Reorganization:

• our only outstanding capital stock consisted of 9,000,000 shares of our common stock issued to Holdings in connection with the 2014 Reorganization;

• our prior Series A, B, C, C-1 and C-2 preferred stock, options to purchase common stock and preferred stock warrants were no longer outstanding;

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• Holdings’ sole asset was 9,000,000 shares of our common stock; and

• the Prior Holders no longer held a direct interest in our capital stock, but rather an indirect interest (by virtue of their interest in Holdings) in the 9,000,000 shares of our common stock held by Holdings, which will only be realized upon Holdings’ liquidation.

We are currently unable to determine the number of shares of our common stock allocable to each Prior Holder upon Holdings’ liquidation because, pursuant to Holdings’ operating agreement, its liquidation will not occur for at least 18 months after the consummation of this offering, unless earlier effected with the consent of Holdings’ board of managers as provided in its operating agreement. The allocation by Holdings of its 9,000,000 shares of our common stock to the Prior Holders will be based upon the market value of our common stock at the time of its liquidation and liquidation preferences applicable to Holdings’ units.

Additionally, in connection with the 2014 Reorganization, warrants to purchase 4,665,531 shares of our common stock held by Capital Royalty Partners were cancelled. As a result of the Series D Financing described below, on August 5, 2014 we issued Capital Royalty Partners warrants to purchase 198,667 shares of our common stock exercisable at $0.01 per share. Unless previously exercised, these warrants will terminate upon the completion of this offering pursuant to their terms. As of September 30, 2014, our issued and outstanding capital stock consisted solely of 9,000,000 shares of common stock held by Holdings and 2,743,902 shares of our Series D Preferred Stock.

Series D Financing

Following the 2014 Reorganization, we entered into a preferred stock purchase and sale agreement for the private placement of up to 4,500,000 shares of our Series D Preferred Stock, or the Series D Financing. We closed the sale of the first 2,195,122 shares of Series D Preferred Stock on June 23, 2014 for gross proceeds of $22.0 million and the sale of an additional 548,780 shares on July 9, 2014 for gross proceeds of $5.4 million. Throughout this prospectus, we collectively refer to the Series D Financing and the 2014 Reorganization as the “2014 Recapitalization.”

On December 8, 2014, we sold an additional 1,756,098 shares of our Series D Preferred Stock for gross proceeds of $17.6 million. We refer to this additional issuance of Series D Preferred Stock in this prospectus as the “Second Series D Closing.”

For a further discussion of the 2014 Recapitalization, see Note 2 to our consolidated financial statements included elsewhere in this prospectus.

Corporate Information

We were initially formed in August 2006 as a limited liability company in the state of Delaware. In December 2007, we changed our organizational form and name from Valeritas, LLC to Valeritas, Inc., a Delaware corporation. Our principal executive offices are located at 750 Route 202 South, Suite 600, Bridgewater, NJ 08807. The telephone number of our principal executive office is (908) 927-9920. Our website address is www.valeritas.com. The information on our website is not incorporated by reference into this prospectus, and you should not consider information contained on our website to be a part of this prospectus or in deciding whether to purchase our common stock.

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THE OFFERING

Common stock offered by us                 shares

Common stock to be outstanding after this offering                 shares

Option to purchase additional shares The underwriters have a 30-day option to purchase up to                 additional shares of our common stock.

Use of proceeds We estimate that we will receive net proceeds from this offering of $         million, based on an assumed initial public offering price of $         per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

We currently anticipate that we will use between $         million and $         million of the net proceeds received by us to expand and support our sales and marketing infrastructure and activities for V-Go, and between $         million and $         million to fund research, development and engineering activities, and manufacturing capabilities, which we expect to include the further development of our pre-filled V-Go, although we expect that we will need to seek additional capital to complete its development and commercialization. We expect that the remaining net proceeds, if any, will be used for working capital and other general corporate purposes. See “Use of proceeds.”

Directed share program At our request, the underwriters have reserved up to                 shares of common stock, or approximately     % of the shares being offered by this prospectus (excluding the shares of common stock that may be issued upon the underwriters’ exercise of their option to purchase additional shares), for sale at the initial public offering price to our directors, officers and employees and certain other persons associated with us, as designated by us.

The number of shares available for sale to the general public will be reduced to the extent that these individuals purchase all or a portion of the reserved shares. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus. For further information regarding our directed share program, please see “Underwriting.”

Risk factors See “Risk factors” beginning on page 12 and the other information included in this prospectus for a discussion of factors you should consider carefully before deciding to invest in our common stock.

Proposed NASDAQ Global Market symbol “VLRX”

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The number of shares of our common stock to be outstanding after this offering is based on                 shares of our common stock outstanding as of                 , 2014, and excludes:

•             shares of common stock issuable upon exercise of stock options outstanding as of                 , 2014, at a weighted-average exercise price of $         per share;

•             shares of our common stock reserved for future issuance under our 2014 Incentive Compensation Plan; and

•             shares of common stock issuable upon exercise of warrants outstanding as of                 , 2014, at a weighted-average exercise price of $         per share.

Unless otherwise indicated, this prospectus reflects and assumes the following:

• the automatic conversion of all outstanding shares of our preferred stock into                 shares of our common stock, which will occur immediately prior to the closing of this offering;

• no exercise of outstanding options or warrants after                 , 2014;

• the filing of our amended and restated certificate of incorporation and the adoption of our restated bylaws, which will occur upon the closing of this offering; and

• no exercise by the underwriters of their option to purchase additional shares of our common stock.

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SUMMARY CONSOLIDATED FINANCIAL DATA

The following tables set forth, for the periods and as of the dates indicated, our summary consolidated financial and other data. The consolidated statement of operations data for the years ended December 31, 2012 and 2013 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated statement of operations data for the nine months ended September 30, 2013 and 2014 and the consolidated balance sheet data as of September 30, 2014 are derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited consolidated financial statements include, in the opinion of management, all adjustments, including normal recurring adjustments, that management considers necessary for the fair presentation of the financial information set forth in those statements. You should read the following information together with the more detailed information contained in “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and our consolidated financial statements and the related notes included elsewhere in this prospectus. Our historical results are not indicative of the results to be expected in the future, and our results of operations for the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2014 or any other future period.

	Year Ended December 31,						Nine Months Ended September 30,
	2012			2013			2013			2014
(in thousands, except share and per share data)
Statement of Operations Data:
Revenue	$	555		$	6,166		$	3,627		$	9,473
Cost of goods sold		10,924			18,175			13,667			14,346
Gross margin		(10,369	)		(12,009	)		(10,040	)		(4,873	)
Operating expense:
Research and development		5,496			6,740			5,198			4,605
Selling, general and administrative		36,304			56,671			44,566			35,607
Restructuring		—			9,399			—			—
Total operating expense		41,800			72,810			49,764			40,212
Operating loss		(52,169	)		(84,819	)		(59,804	)		(45,085	)
Other income (expense):
Interest income		5			12			12			3
Interest expense		(1,050	)		(3,171	)		(1,264	)		(5,526	)
Change in fair value of prepayment features		—			62			394			667
Other expense		—			(394	)		(8	)		—
Other income		667			713			696			201
Total other income (expense)		(378	)		(2,778	)		(170	)		(4,655	)
Net loss	$	(52,547	)	$	(87,597	)	$	(59,974	)	$	(49,740	)
Net loss attributable to common stockholders	$	(63,027	)	$	(104,205	)	$	(72,273	)	$	(58,465	)
Per Share Data:
Net loss per share of common stock(1)
Basic and diluted	$	(90.56	)	$	(126.45	)	$	(87.77	)	$	(15.16	)
Weighted average common shares outstanding(1)
Basic and diluted		695,955			824,104			823,470			3,857,650
Pro forma net loss per share of common stock(1)
Basic and diluted (unaudited)				$						$
Pro forma weighted average common shares outstanding(1)
Basic and diluted (unaudited)

⁽¹⁾  See Note 4 to our notes to consolidated financial statements included elsewhere in this prospectus for an explanation of the method used to calculate the historical and pro forma basic and diluted net loss per common share and the number of shares used in the computation of the per share amounts.

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	As of September 30, 2014
	Actual			Pro  forma(1)	Pro forma as adjusted(2)
(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	20,961		$	$
Working capital		19,096
Total assets		48,325
Total liabilities		67,933
Total stockholders’ equity/(deficit)		(19,608	)

⁽¹⁾The pro forma consolidated balance sheet data gives effect to the automatic conversion of all outstanding shares of our preferred stock into an aggregate of                 shares of common stock, which will occur immediately prior to the closing of this offering.

⁽²⁾The pro forma as adjusted consolidated balance sheet data give further effect to our issuance and sale of                 shares of common stock in this offering at an assumed initial public offering price of $         per share, the midpoint of the price range set forth on the cover of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The pro forma as adjusted information presented in the summary consolidated balance sheet data above is illustrative only and will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. Each $1.00 increase (decrease) in the assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, working capital, total assets, total liabilities and total stockholders’ equity/(deficit) by approximately $         million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 1.0 million shares in the number of shares offered by us at the assumed initial public offering price would increase (decrease) each of cash and cash equivalents, total assets, total liabilities and total stockholders’ equity/(deficit) by approximately $         million.

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RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our financial statements and the related notes and “Management’s discussion and analysis of results of operations and financial condition,” before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.

Risks Related to Our Business and Industry

We have incurred significant operating losses since inception and cannot assure you that we will achieve profitability.

Since our inception in 2006, we have incurred significant net losses. As of December 31, 2013, we had an accumulated deficit of $245.1 million, and as of September 30, 2014, we had an accumulated deficit of $294.8 million. To date, we have financed our operations primarily through sales of our preferred stock, debt financings and limited sales of our product. We have devoted substantially all of our resources to the research, development and engineering of our product, the commercial launch of V-Go, the development of a sales and marketing team and the assembly of a management team to lead our business.

To implement our business strategy we need to, among other things, grow our sales and marketing infrastructure to increase sales of our product, fund ongoing research, development and engineering activities, expand our manufacturing capabilities, and obtain regulatory clearance in other markets outside the U.S. and European Union or approval to commercialize our product currently under development. We expect our expenses to increase significantly as we pursue these objectives. The extent of our future operating losses and the timing of profitability are highly uncertain, especially given that we only recently commercialized V-Go, which makes predicting our sales more difficult. Any additional operating losses will have an adverse effect on our stockholders’ equity/(deficit), and we cannot assure you that we will ever be able to achieve or sustain profitability.

We currently rely on sales of V-Go to generate all of our revenue, and any factors that negatively impact our sales of V-Go would also negatively impact our financial condition and operating results.

V-Go is our only revenue-producing commercial product, which we introduced into the market in the first quarter of 2012. In the near term, we expect to continue to derive all of our revenue from the sale of V-Go. Accordingly, our ability to generate revenue is highly dependent on our ability to market and sell V-Go.

Sales of V-Go may be negatively impacted by many factors, including:

• problems arising from the expansion of our manufacturing capabilities, or destruction, loss, or temporary shutdown of our manufacturing facility;

• failure to become or remain the preferred basal-bolus insulin therapy among patients with Type 2 diabetes;

• failure by patients to use V-Go as directed, which could limit its effectiveness and could have an adverse impact on repeat use;

• inadequate coverage and reimbursement or changes in reimbursement rates or policies relating to V-Go or similar products or technologies by third-party payors;

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• our inability to enter into contracts with additional third-party payors on a timely basis and on acceptable terms;

• claims that V-Go, or any component thereof, infringes on patent rights or other intellectual property rights of third-parties; and

• adverse regulatory or legal actions relating to V-Go or similar products or technologies.

Because we currently rely on V-Go to generate all of our revenue, any factors that negatively impact our sales of V-Go, or that result in sales of V-Go increasing at a lower rate than expected, would also negatively impact our financial condition and operating results.

Our ability to maintain and grow our revenue depends both on retaining a high percentage of patients using V-Go and on preserving our relationships with a few significant wholesale customers that account for nearly all of our sales.

A key to maintaining and growing our revenue is the retention of a high percentage of patients using V-Go, as a significant and increasing proportion of our business is generated through refill prescriptions. During the year ended December 31, 2013, three wholesale customers accounted for approximately 90% of our total product shipments. If demand for our product fluctuates as a result of the introduction of competitive products, negative perceptions with respect to the effectiveness of V-Go, changes in reimbursement policies, manufacturing problems, perceived safety issues with our or our competitors’ products, the failure to secure regulatory clearance or approvals or for other reasons, our ability to attract and retain customers and ultimately patients could be harmed. The failure to retain a high percentage of patients using V-Go could negatively impact our revenue growth. Furthermore, the loss of any one of our significant wholesale customers or a sustained decrease in demand by any of these wholesale customers could result in a substantial loss of revenue or patients losing convenient access to V-Go, either of which would hurt our business, financial condition and results of operations.

The failure of V-Go to achieve and maintain market acceptance could result in our achieving sales below our expectations.

Our current business strategy is highly dependent on V-Go achieving and maintaining market acceptance. In order for us to sell V-Go to people with Type 2 diabetes who require insulin, we must convince them, their caregivers and healthcare providers that V-Go is an attractive alternative to other insulin delivery devices for the treatment of diabetes, including insulin pumps and pens and traditional syringes. Market acceptance and adoption of V-Go depends on educating people with diabetes, as well as their caregivers and healthcare providers, as to the distinct features, ease-of-use, positive lifestyle impact and other perceived benefits of V-Go as compared to competitive products. If we are not successful in convincing existing and potential customers of the benefits of V-Go, or if we are not able to achieve the support of caregivers and healthcare providers for V-Go, our sales may decline or we may fail to increase our sales in line with our anticipated levels.

Achieving and maintaining market acceptance of V-Go could be negatively impacted by many factors, including:

• the failure of V-Go to achieve wide acceptance among people with Type 2 diabetes who require insulin, their caregivers, insulin-prescribing healthcare providers, third-party payors and key opinion leaders in the diabetes treatment community;

• lack of availability of adequate coverage and reimbursement for patients and health care providers;

• lack of evidence supporting the safety, ease-of-use or other perceived benefits of V-Go over competitive products or other currently available insulin treatment methods;

• lack of long-term persistency of patients who do start V-Go, as future sales are heavily dependent on patient refills;

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• perceived risks associated with the use of V-Go or similar products or technologies generally;

• the introduction of competitive products and the rate of acceptance of those products as compared to V-Go; and

• any negative results of clinical studies relating to V-Go or similar competitive products.

In addition, V-Go may be perceived by people with Type 2 diabetes requiring insulin, their caregivers or healthcare providers to be more complicated, only marginally more effective or even less effective than traditional insulin-delivery methods, and people may be unwilling to change their current treatment regimens. Moreover, we believe that healthcare providers tend to be slow to change their medical treatment practices because of perceived liability risks arising from the use of new products and the uncertainty of third-party payor reimbursement. Accordingly, healthcare providers may not recommend V-Go until there is sufficient evidence to convince them to alter the treatment methods they typically recommend, such as receiving recommendations from prominent healthcare providers or other key opinion leaders in the diabetes treatment community that our product is effective in providing insulin therapy.

If V-Go does not achieve and maintain widespread market acceptance, we may fail to achieve sales at or above our anticipated levels. If our sales do not meet anticipated levels, we may fail to meet our strategic objectives.

We operate in a very competitive industry, and if we fail to compete successfully against our existing or potential competitors, many of whom have greater resources than we have, our revenue and operating results may be negatively affected.

The diabetes market, and especially the market for patients with Type 2 diabetes, is intensely competitive, subject to change and highly sensitive to promotional effort, the number of sales force representatives, the introduction of new products or technologies, or other activities of industry and diabetes-related associations and participants. V-Go competes directly with a number of insulin-delivery devices, primarily insulin pens and syringes, but also indirectly with any other currently marketed or future marketed diabetes therapeutic intervention such as oral anti-diabetic medications, other injectable anti-diabetic medications such as glucagon-like peptide-1, or GLP-1, and analogs. We do not consider programmable insulin pumps or programmable insulin patch pumps to be products that compete directly with V-Go, as those products have been primarily designed and marketed for patients with Type 1 diabetes. There are a significant number of very large global pharmaceutical companies which promote and sell anti-diabetic products which are aimed to be used either instead of insulin or to deliver insulin using insulin pens or syringes. Many of our existing and potential competitors are major global companies that are either publicly traded companies or divisions or subsidiaries of publicly traded companies that have significant resources available.

These competitors also enjoy several competitive advantages over us, including:

• greater financial and human resources for sales and marketing, managed care and reimbursement, medical affairs and product development;

• established relationships with healthcare providers and third-party payors;

• established reputation and name recognition among healthcare providers and other key opinion leaders in the diabetes industry;

• in some cases, an established base of long-time customers;

• products supported by a large volume of short-term and long-term clinical data;

• larger and more established distribution networks;

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• greater ability to cross-sell products or provide incentives to healthcare providers to use their products; and

• more experience in conducting research, development and engineering activities, manufacturing, clinical trials, and obtaining regulatory approval or clearance.

For these and other reasons, we may not be able to compete successfully against our current or potential future competitors. If this occurs, we may fail to meet our strategic objectives, and our revenue and operating results could be negatively affected.

Competitive products or other technological breakthroughs for the treatment or prevention of diabetes may render our product obsolete or less desirable.

Our ability to achieve our strategic objectives will depend, among other things, on our ability to develop and commercialize products for the treatment of diabetes, in both specialist and primary care settings, which are easy-to-train and easy-to-use, provide clinical benefits as well as equivalent or improved patient adherence and persistency, receive adequate coverage and reimbursement from third-party payors with reasonable out-of-pocket costs to patients, and are more appealing than available alternatives. Our current competition is primarily with other non-electronic insulin delivery devices such as insulin pens and syringes, but the insulin-delivery methods of patients with Type 2 could change if other non-invasive formulations of insulin are approved and successfully commercialized, such as oral insulin in pills form, inhaled insulin or buccal insulin. If longer-acting and safer GLP-1 analogs with fewer side effects are approved and successfully commercialized, they could reduce or delay the use of basal/bolus insulin in patients with Type 2 diabetes. In addition, a number of other companies are pursuing new electronic or mechanical delivery devices, delivery technologies, drugs and other therapies for the treatment and prevention of diabetes. Any technological breakthroughs in diabetes treatment or prevention could reduce the potential market for V-Go or render V-Go obsolete altogether, which would significantly reduce our sales.

Because of the size of the Type 2 diabetes market, we anticipate that companies will continue to dedicate significant resources to developing competitive products, including both drugs and devices. The frequent introduction of non-insulin drugs, for example, may delay the introduction of insulin to patients and create market confusion for us to capture the prescribers’ or payors’ attention or reduce our ability to capture sufficient patient share to realize our business objectives. In addition, the entry of multiple new products or the loss of market exclusivity on some diabetes drugs including insulin delivered in pens may lead some of our competitors to employ pricing strategies that could adversely affect the pricing of our product. If a competitor develops a product that is similar or is perceived to be superior to V-Go, or if a competitor employs strategies that place downward pressure on pricing within our industry, our sales may decline significantly or may not increase in line with our anticipated levels.

If we are unable to expand our sales and marketing infrastructure, we may fail to increase our sales to meet our anticipated levels.

Because we began commercialization of V-Go in 2012, and because our current sales force is not deployed in every state or major market in the United States, we have less experience marketing and selling our product, as well as training healthcare providers and new customers on the use of V-Go compared to other Type 2 diabetes companies. We derive all of our revenue from the sale of V-Go and we expect that this will continue for the next several years. As a result, our financial condition and operating results are and will continue to be highly dependent on the ability of our sales representatives to adequately promote, market and sell V-Go and the ability of our sales force and other training personnel to successfully train healthcare providers and new customers on the use of V-Go. If our sales and marketing representatives or training personnel fail to achieve their objectives, our sales could decrease or may not increase at levels that are in line with our anticipated levels.

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A key element of our business strategy is the continued expansion of our sales and marketing infrastructure to drive adoption of our product. The majority of patients using V-Go are trained to use the device by their healthcare provider who has been trained by our sales force using a “train the trainer” approach. Our sales force trains physicians, physicians’ assistants, nurse practitioners and any other staff in a healthcare provider’s office who interact with patients, on how V-Go works and how to train their patients to properly use V-Go. We have increased the number of sales and marketing personnel employed by us since the initial commercial launch of V-Go. We can expect to face challenges in recruiting and hiring top personnel as we manage and grow our sales and marketing infrastructure and work to retain the individuals who make up those networks due to the very competitive diabetes industry market place. If a sales and marketing representative were to depart and be retained by one of our competitors, we may fail to prevent them from helping competitors solicit business from our existing customers, which could further adversely affect our sales. In addition, if we are not able to maintain a sufficient network of training and customer care personnel, we may not be able to successfully train healthcare providers to train new patients on the use of V-Go, which could delay new sales and harm our reputation.

As we increase our sales and marketing expenditures with respect to existing or planned products, we will need to further expand the reach of our sales and marketing networks. Our future success will depend largely on our ability to continue to hire, train, retain and motivate skilled sales and marketing representatives with significant industry-specific knowledge in various areas, such as diabetes treatment techniques and technologies, as well as the competitive landscape for our product. Recently hired sales representatives require training and take time to achieve full productivity. If we fail to train recent hires adequately, or if we experience high turnover in our sales force in the future, we cannot be certain that new hires will become as productive as may be necessary to maintain or increase our sales. In addition, the expansion of our sales and marketing personnel will continue to place significant burdens on our management team.

If important assumptions about the potential market for our product are inaccurate, or if we have failed to understand what people with Type 2 diabetes who require insulin are seeking in a treatment, we may not be able to increase our revenue or achieve profitability.

Our business strategy was developed based on a number of important assumptions about the diabetes market in general, and the Type 2 diabetes market in particular, any one or more of which may prove to be inaccurate. For example, we believe that the benefits of V-Go as compared to other common insulin delivery devices, such as traditional insulin injection pens, will continue to drive growth in the market for V-Go. In addition, we believe the incidence of diabetes in the United States and worldwide is increasing rapidly. However, each of these trends is uncertain and limited sources exist to obtain reliable market data. The actual incidence of diabetes, and the actual demand for our product or competitive products, could differ materially from our anticipated levels if our assumptions are incorrect. In addition, our strategy of focusing exclusively on patients with Type 2 diabetes who require insulin may limit our ability to increase sales or achieve profitability, especially if there are any significant clinical breakthroughs or product or drug introductions that significantly delay or reduce the need for insulin therapy in patients with Type 2 diabetes.

Manufacturing risks, including risks related to manufacturing in China, may adversely affect our ability to manufacture our product and could reduce our gross margin and our profitability.

Our business strategy depends on our ability to manufacture our current and future products in sufficient quantities and on a timely basis so as to meet consumer demand, while adhering to product quality standards, complying with regulatory requirements and managing manufacturing costs. We are subject to numerous risks relating to our manufacturing capabilities, including:

• quality or reliability defects in product components that we source from third-party suppliers;

• our inability to secure product components in a timely manner, in sufficient quantities or on commercially reasonable terms;

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• our failure to increase production of products to meet demand;

• our inability to modify production lines to enable us to efficiently produce future products or implement changes in current products in response to regulatory requirements;

• difficulty identifying and qualifying alternative suppliers for components in a timely manner; and

• potential damage to or destruction of our manufacturing equipment or manufacturing facility.

In addition, we rely on our contract manufacturer in Southern China to manufacture our product. As a result, our business is subject to risks associated with doing business in China, including:

• adverse political and economic conditions, particularly those negatively affecting the trade relationship between the United States and China;

• trade protection measures, such as tariff increases, and import and export licensing and control requirements;

• potentially negative consequences from changes in tax laws;

• difficulties associated with the Chinese legal system, including increased costs and uncertainties associated with enforcing contractual obligations in China;

• historically lower protection of intellectual property rights;

• unexpected or unfavorable changes in regulatory requirements;

• changes and volatility in currency exchange rates;

• possible patient or physician preferences for more-established pharmaceutical products and medical devices manufactured in the United States; and

• difficulties in managing foreign relationships and operations generally.

These risks are likely to be exacerbated by our limited experience with our current products and manufacturing processes. As demand for our product increases, we will have to invest additional resources to purchase components, hire and train employees, and enhance our manufacturing processes. If we fail to increase our production capacity efficiently, our sales may not increase in line with our forecasts and our operating margins could fluctuate or decline. In addition, although we expect some of our product candidates in development to share product features and components with V-Go, manufacturing of these product candidates may require the modification of our production lines, the hiring of specialized employees, the identification of new suppliers for specific components, or the development of new manufacturing technologies. It may not be possible for us to manufacture these product candidates at a cost or in quantities sufficient to make these product candidates commercially viable. Any of these factors may affect our ability to manufacture our product and could reduce our gross margin and profitability.

We depend on a limited number of third-party suppliers for some of the components of V-Go, and the loss of any of these suppliers, or their inability to provide us with an adequate supply of materials, could harm our business.

We rely on a limited number of third-party suppliers to supply components of V-Go. For our business strategy to be successful, our suppliers must be able to provide us with components and finished product in sufficient quantities, in compliance with regulatory requirements and quality control standards, in accordance with agreed upon specifications, at acceptable costs and on a timely basis. Increases in our product sales, whether forecasted or unanticipated, could strain the ability of our suppliers to deliver an increasingly large supply of components in a manner that meets these various requirements.

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We do not have long-term supply agreements with most of our suppliers and, in many cases, we make our purchases on a purchase order basis. Under most of our supply agreements, we have no obligation to buy any given quantity of products, and our suppliers have no obligation to manufacture for us or sell to us any given quantity of products. As a result, our ability to purchase adequate quantities of the components for our product may be limited. Additionally, our suppliers may encounter problems that limit their ability to manufacture components for us, including financial difficulties or damage to their manufacturing equipment or facilities. If we fail to obtain sufficient quantities of high quality components to meet demand on a timely basis, we could lose customer orders, our reputation may be harmed and our business could suffer.

We generally use a small number of suppliers for our product, some parts and components of which are purchased from single-source vendors. Depending on a limited number of suppliers exposes us to risks, including limited control over pricing, availability, quality and delivery schedules. Moreover, due to the recent commercialization of our product and the limited amount of our sales to date, we do not have long-standing relationships with our manufacturers and may not be able to convince suppliers to continue to make components available to us unless there is demand for such components from their other customers. If any one or more of our suppliers cease to provide us with sufficient quantities of components in a timely manner or on terms acceptable to us, we would have to seek alternative sources of supply. Because of factors such as the proprietary nature of our product, our quality control standards and regulatory requirements, we cannot quickly engage additional or replacement suppliers for some of our critical components. Failure of any of our suppliers to deliver products at the level our business requires would limit our ability to meet our sales commitments, which could harm our reputation and could have a material adverse effect on our business. We may also have difficulty obtaining similar components from other suppliers that are acceptable to the FDA or other regulatory agencies, and the failure of our suppliers to comply with strictly enforced regulatory requirements could expose us to regulatory action including warning letters, product recalls, termination of distribution, product seizures or civil penalties. It could also require us to cease using the components, seek alternative components or technologies and modify our product to incorporate alternative components or technologies, which could result in a requirement to seek additional regulatory approvals. Any disruption of this nature or increased expenses could harm our commercialization efforts and adversely affect our operating results.

We operate at facilities in three locations, and any disruption at any of these facilities could harm our business.

Our principal offices are located in Bridgewater, New Jersey, and our only manufacturing operations are located at a contract manufacturing facility in Southern China. We also operate a facility in Shrewsbury, Massachusetts, which we primarily use for research and development. Substantially all of our operations are conducted at these locations, including our manufacturing processes, research, development and engineering activities, customer and technical support and management and administrative functions. In addition, substantially all of our inventory of component supplies and finished goods is held at these locations. Vandalism, terrorism or a natural or other disaster, such as an earthquake, fire or flood, at any of these facilities could damage or destroy our manufacturing equipment or our inventory of component supplies or finished goods, cause substantial delays in our operations, result in the loss of key information and cause us to incur additional expenses. Our contract manufacturing facility in Southern China is our only manufacturing facility, and if damaged or rendered inoperable or inaccessible due to political, social, or economic upheaval or due to natural or other disasters, would make it difficult or impossible for us to manufacture our product for a period of time and may lead to a loss of customers and significant impairment of our financial condition and operating results.

We take precautions to safeguard these facilities, including acquiring insurance, employing back-up generators, adopting health and safety protocols and utilizing off-site storage of computer data. Our insurance may not cover our losses in any particular case. In addition, regardless of the level of insurance coverage, damage to our facilities may harm our business, financial condition and operating results.

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If we do not enhance our product offerings through our research, development and engineering efforts, including the successful commercialization of our pre-fill V-Go, we may fail to effectively compete in our market or become profitable.

In order to increase our sales and market share in the Type 2 diabetes market, we must enhance and broaden our product offerings, including by commercializing our pre-fill V-Go, in response to the evolving demands of people with Type 2 diabetes who require insulin, healthcare providers and competitive pressures from new technologies and market participants. We may not be successful in developing, obtaining regulatory approval for, or marketing our product candidates, including our pre-fill V-Go. In addition, notwithstanding our market research efforts, our future products may not be accepted by consumers, their caregivers, healthcare providers or third-party payors who reimburse consumers for our product. The success of any of our product candidates, including our pre-fill V-Go, will depend on numerous factors, including our ability to:

• identify the product features that people with Type 2 diabetes, their caregivers and healthcare providers are seeking in an insulin treatment and successfully incorporate those features into our product;

• develop and introduce our product candidates in sufficient quantities and in a timely manner;

• offer products at a price that is competitive with that of other products on the market;

• adequately protect our intellectual property and avoid infringing upon the intellectual property rights of third parties;

• demonstrate the safety and efficacy of our product candidates;

• secure adequate financing to fund the research, development, engineering and marketing and sales efforts necessary to commercialize new product offerings; and

• obtain the necessary regulatory approvals for our product candidates.

With respect to our pre-fill V-Go in particular, we anticipate that we will need to seek additional sources of capital following this offering to complete its development and commercialization, which we cannot assure you we will be able to procure at reasonable terms, if at all. Any delays in our anticipated product launches may significantly impede our ability to successfully compete in our markets. In particular, such delays could cause customers to delay or forego purchases of our product, or to purchase our competitors’ products. Even if we are able to successfully develop proposed product candidates when anticipated, these product candidates, including our pre-fill V-Go, may not produce sales in excess of the costs of development, and they may be quickly rendered obsolete by changing consumer preferences or the introduction by our competitors of products embodying new technologies or features.

The safety and efficacy of our product is not supported by long-term clinical data, which could limit sales, and our product could cause unforeseen negative effects.

V-Go, the only product we currently market in the United States, has received pre-market clearance under Section 510(k) of the U.S. Federal Food, Drug, and Cosmetic Act, or FDCA. This process is shorter and typically requires the submission of less supporting documentation than other FDA approval processes and does not always require long-term clinical studies. As a result, we currently lack significant published long-term clinical data supporting the safety and efficacy of our product and the benefits they offer that might have been generated in connection with other approval processes. For these reasons, people with Type 2 diabetes who require insulin and their healthcare providers may be slower to adopt or recommend our product, we may not have comparative data that our competitors have or are generating and third-party payors may not be willing to provide coverage or reimbursement for our product. Further, future studies or clinical experience may indicate that treatment with our product is not superior to treatment with competitive products. Such results could slow the adoption of our product and significantly reduce our sales, which could prevent us from achieving our forecasted sales targets or

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achieving or sustaining profitability. Moreover, if future results and experience indicate that our product causes unexpected or serious complications or other unforeseen negative effects, we could be subject to mandatory product recalls, suspension or withdrawal of FDA clearance or approval, significant legal liability or harm to our business reputation.

Undetected errors or defects in V-Go or our future product candidates could harm our reputation, decrease market acceptance of our product or expose us to product liability claims.

V-Go or our future product candidates may contain undetected errors or defects. Disruptions or other performance problems with V-Go or these other product candidates may damage our customers’ businesses and could harm our reputation. If that occurs, we may incur significant costs, the attention of our key personnel could be diverted or other significant customer relations problems may arise. We may also be subject to warranty and liability claims for damages related to errors or defects in V-Go or our future product candidates. A material liability claim or other occurrence that harms our reputation or decreases market acceptance of V-Go or these other product candidates could harm our business and operating results.

The sale and use of V-Go or our other product candidates could lead to the filing of product liability claims if someone were to allege that V-Go or one of our product candidates contained a design or manufacturing defect. A product liability claim could result in substantial damages and be costly and time consuming to defend, either of which could materially harm our business or financial condition. While we currently maintain product liability insurance covering claims up to $5 million per incident, we cannot assure you that such insurance would adequately protect our assets from the financial impact of defending a product liability claim. Any product liability claim brought against us, with or without merit, could increase our product liability insurance rates or prevent us from securing insurance coverage in the future.

We may enter into strategic collaborations, in-licensing arrangements or alliances with third parties that may not result in the development of commercially viable products or the generation of significant future revenue.

In the ordinary course of our business, we may enter into strategic collaborations, in-licensing arrangements or alliances to develop product candidates and to pursue new markets. Proposing, negotiating and implementing strategic collaborations, in-licensing arrangements or alliances may be a lengthy and complex process. Other companies, including those with substantially greater financial, marketing, sales, technology or other business resources, may compete with us for these opportunities or arrangements. We may not identify, secure, or complete any such transactions or arrangements in a timely manner, on a cost-effective basis, on acceptable terms or at all. We have limited institutional knowledge and experience with respect to these business development activities, and we may also not realize the anticipated benefits of any such transaction or arrangement. In particular, these collaborations may not result in the development of products that achieve commercial success or result in significant revenue and could be terminated prior to developing any products.

Additionally, we may not be in a position to exercise sole decision making authority regarding the transaction or arrangement, which could create the potential risk of creating impasses on decisions, and our collaborators may have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals. We have limited control over the amount and timing of resources that our current collaborators or any future collaborators devote to our collaborators’ or our future products. Disputes between us and our collaborators may result in litigation or arbitration which would increase our expenses and divert the attention of our management. Further, these transactions and arrangements are contractual in nature and may be terminated or dissolved under the terms of the applicable agreements and, in such event, we may not continue to have rights to the products relating to such transaction or arrangement or may need to purchase such rights at a premium.

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We may seek to grow our business through acquisitions of complementary products or technologies, and the failure to manage acquisitions, or the failure to integrate them with our existing business, could impair our ability to execute our business strategies.

From time to time, we may consider opportunities to acquire other products or technologies that may enhance our product platform or technology, expand the breadth of our markets or customer base, or advance our business strategies. Potential acquisitions involve numerous risks, including:

• problems assimilating the acquired products or technologies;

• issues maintaining uniform standards, procedures, controls and policies;

• unanticipated costs associated with acquisitions;

• diversion of management’s attention from our existing business;

• risks associated with entering new markets in which we have limited or no experience; and

• increased legal and accounting costs relating to the acquisitions or compliance with regulatory matters.

We have no current commitments with respect to any acquisition. We do not know if we will be able to identify acquisitions we deem suitable, whether we will be able to successfully complete any such acquisitions on favorable terms or at all, or whether we will be able to successfully integrate any acquired products or technologies. Our inability to integrate any acquired products or technologies effectively could impair our ability to execute our business strategies.

If there are significant disruptions in our information technology systems, our reputation, financial condition and operating results could be harmed.

The efficient operation of our business depends on our information technology systems. We rely on our information technology systems to effectively manage sales and marketing data, accounting and financial functions, inventory management, product development tasks, research, development and engineering data, customer service and technical support functions. Our information technology systems are vulnerable to damage or interruption from earthquakes, fires, floods and other natural disasters, terrorist attacks, attacks by computer viruses or hackers, power losses, and computer system or data network failures.

The failure of our or our service providers’ information technology systems to perform as we anticipate or our failure to effectively implement new information technology systems, could disrupt our operations, which could have a negative impact on our reputation, financial condition and operating results.

If we fail to properly manage our anticipated growth, our business could suffer.

Our rapid growth has placed, and we expect that it will continue to place, a significant strain on our management team and on our financial resources. For example, between December 31, 2012 and September 30, 2014, our team of sales and marketing representatives grew from 11 to 64 persons. Failure to manage our growth effectively could cause us to misallocate management or financial resources, and result in losses or weaknesses in our infrastructure. Additionally, our anticipated growth will increase the demands placed on our suppliers, resulting in an increased need for us to manage our suppliers and monitor for quality assurance. Any failure by us to manage our growth effectively could impair our ability to achieve our business objectives.

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We depend on the knowledge and skills of our senior management and other key employees, and if we are unable to retain and motivate them or recruit additional qualified personnel, our business may suffer.

We have benefited substantially from the leadership and performance of our senior management, as well as other key employees. Our success will depend on our ability to retain our current management and key employees, and to attract and retain qualified personnel in the future. Competition for senior management and key employees in our industry is intense and we cannot guarantee that we will be able to retain our personnel or attract new, qualified personnel. The loss of the services of members of our senior management or key employees could prevent or delay the implementation and completion of our strategic objectives, or divert management’s attention to seeking qualified replacements. We do not maintain key man life insurance on any of our senior management or key employees. Each of our executive officers may terminate employment without notice and without cause or good reason. Our executive officers are not subject to non-competition agreements. Accordingly, the adverse effect resulting from the loss of our senior management could be compounded by our inability to prevent them from competing with us.

In addition, the sale of V-Go is logistically complex, requiring us to maintain a highly-integrated, extensive sales, marketing and training infrastructure consisting of sales and marketing representatives, training personnel and customer care personnel. We face considerable challenges in recruiting, training, managing, motivating and retaining the members of these teams, including managing geographically dispersed efforts. These challenges are exacerbated by the fact that our strategic plan requires us to rapidly grow our sales, with limited marketing and training infrastructure growth, while generating increased demand for our product. If we fail to maintain and grow a dedicated team of sales representatives and are unable to retain our sales and marketing, managed care, medical and other personnel, we could fail to take advantage of an opportunity to enhance our brand recognition and grow our revenue.

Risks Related to Our Financial Results and Need for Financing

Our future capital needs are uncertain and we may need to raise additional funds in the future, and these funds may not be available on acceptable terms or at all.

At September 30, 2014, we had $21.0 million in cash and cash equivalents. We believe that our cash on hand, together with the proceeds received from the Second Series D Closing and to be received from this offering, will be sufficient to satisfy our liquidity requirements for at least the next 12 months. However, the continued growth of our business, including the expansion of our sales and marketing infrastructure, research, development and engineering activities, including our efforts to commercialize our pre-fill V-Go, and manufacturing capabilities, will significantly increase our expenses. In addition, the amount of our future product sales is difficult to predict, especially in light of the recent commercialization of V-Go, and actual sales may not be in line with our forecasts. As a result, we expect to be required to seek additional funds in the future. Our future capital requirements will depend on many factors, including:

• the revenue generated by sales of V-Go and any other future product candidates that we may develop and commercialize;

• the costs associated with expanding our sales and marketing infrastructure;

• the expenses we incur in maintaining our manufacturing facility and adding further manufacturing equipment and capacity;

• the cost associated with developing and commercializing our proposed products or technologies, including our pre-fill V-Go;

• the cost of obtaining and maintaining regulatory clearance or approval for our current or future products;

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• the cost of ongoing compliance and regulatory requirements;

• expenses we incur in connection with potential litigation or governmental investigations;

• anticipated or unanticipated capital expenditures; and

• unanticipated general and administrative expenses.

As a result of these and other factors, we do not know whether and the extent to which we may be required to raise additional capital. We may in the future seek additional capital from public or private offerings of our capital stock, borrowings under credit lines or other sources. If we issue equity or debt securities to raise additional funds, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders. In addition, if we raise additional funds through collaborations, licensing, joint ventures, strategic alliances, partnership arrangements or other similar arrangements, it may be necessary to relinquish valuable rights to our potential future products or proprietary technologies, or grant licenses on terms that are not favorable to us.

If we are unable to raise additional capital, we may not be able to expand our sales and marketing infrastructure, enhance our current products or develop new products, take advantage of future opportunities, or respond to competitive pressures, changes in supplier relationships, or unanticipated changes in customer demand. Any of these events could adversely affect our ability to achieve our strategic objectives.

Our operating results may fluctuate significantly from quarter to quarter.

We began commercial sales of V-Go in the first quarter of 2012. Due to our limited operating history, there has been and there may continue to be meaningful variability in our operating results among quarters, as well as within each quarter. Our operating results, and the variability of these operating results, will be affected by numerous factors, including:

• our ability to increase sales of V-Go and to commercialize and sell our future products, if any, and the number of our products sold in each quarter;

• acceptance of our product by people with Type 2 diabetes who require insulin, their caregivers, healthcare providers and third-party payors;

• the pricing of our product and competitive products, the effect of third-party coverage and reimbursement policies, and the amount and level of sales discounts or rebates required to obtain or retain effective third-party payor coverage and reimbursement;

• our ability to establish and grow an effective sales and marketing infrastructure;

• the amount of, and the timing of the payment for, insurance deductibles required to be paid by patients and potential patients under their existing insurance plans;

• interruption in the manufacturing or distribution of our product;

• seasonality and other factors affecting the timing of purchases of our product;

• timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors;

• the ability of our suppliers to timely provide us with an adequate supply of components that meet our requirements;

• regulatory clearance or approvals affecting our product or those of our competitors;

• changes in healthcare rules, coverage and reimbursement under government healthcare programs, including Medicare and Medicaid; and

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• the timing of revenue recognition associated with our product sales pursuant to applicable accounting standards.

As a result of our limited operating history, and due to the complexities of the industry in which we operate, it will be difficult for us to forecast demand for our current or future products with any degree of certainty, which means it will be difficult for us to forecast our sales. In addition, we will be significantly increasing our operating expenses as we expand our business. Accordingly, we may experience substantial variability in our operating results from quarter to quarter, including unanticipated quarterly losses. If our quarterly or annual operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. Furthermore, any quarterly or annual fluctuations in our operating results may, in turn, cause the price of our common stock to fluctuate substantially. We believe that quarterly comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance.

We may not be able to generate sufficient cash to service our indebtedness, which currently consists of our credit facility with Capital Royalty Partners.

As of September 30, 2014, the aggregate principal amount of our term loan with Capital Royalty Partners, or our Term Loan, was $52.0 million. Our ability to make scheduled payments or to refinance our debt obligations depends on numerous factors, including the amount of our cash reserves and our actual and projected financial and operating performance. These amounts and our performance are subject to numerous risks, including the risks in this section, some of which may be beyond our control. We cannot assure you that we will maintain a level of cash reserves or cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our existing or future indebtedness. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness. We cannot assure you that we would be able to take any of these actions, or that these actions would permit us to meet our scheduled debt service obligations. In addition, in the event of our breach of our Term Loan, we may be required to repay any outstanding amounts earlier than anticipated. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Indebtedness—Capital Royalty Partners Term Loan.”

Our Term Loan contains restrictive and financial covenants that may limit our operating flexibility.

Our Term Loan contains certain restrictive covenants that limit our ability to incur additional indebtedness and liens, merge with other companies or consummate certain changes of control, acquire other companies, engage in new lines of business, make certain investments, pay dividends, transfer or dispose of assets, amend certain material agreements or enter into various specified transactions. We therefore may not be able to engage in any of the foregoing transactions unless we obtain the consent of the lender or terminate our Term Loan. The agreement also contains various financial covenants, including an annual minimum revenue covenant, which for 2014 and 2015 is currently $25.0 million and $50.0 million, respectively. Should we not achieve the minimum revenue threshold for either of 2014 or 2015, the Term Loan provides a cure right pursuant to which we can avoid an event of default by reducing the principal amount of the Term Loan through a repayment on or prior to April 30 of the following year in an amount equal to two times the revenue shortfall at year end, using proceeds from either newly obtained subordinated debt or an equity financing. In conjunction with the 2014 Reorganization and Series D Financing, we amended the Term Loan to provide for a conditional waiver of the minimum revenue covenant for 2014, a reduction in the minimum revenue covenant for 2015 from $50.0 million to $20.0 million and the availability of the minimum revenue covenant’s repayment cure right throughout the life of the Term Loan. These amendments to the Term Loan are conditional, however, on our consummation of an initial public offering with proceeds of at least $40.0 million by March 31, 2015. There is no guarantee that we will be able to consummate such an offering by March 31, 2015 or generate sufficient cash flow or sales to meet the financial covenants or pay the

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principal and interest under the agreement. If we satisfy the initial public offering condition in connection with this offering, the amended Term Loan does not require us to reserve any portion of the proceeds of this offering except to the extent necessary to satisfy the Term Loan’s minimum cash covenant, which requires us to maintain, at all times, a $2 million minimum daily balance of cash or cash equivalents. Furthermore, there is no guarantee that future working capital, borrowings or equity financing will be available to repay or refinance the amounts outstanding under the agreement. For additional information about the Term Loan, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Indebtedness—Capital Royalty Partners Term Loan.”

Prolonged negative economic conditions could adversely affect us, our customers and suppliers, which could harm our financial condition.

We are subject to the risks arising from adverse changes in general economic and market conditions. Economic turmoil and uncertainty about future economic conditions could adversely impact our existing and potential customers, the financial ability of health insurers to pay claims, patients’ ability or willingness to pay out-of-pocket costs, our ability to obtain financing for our operations on favorable terms, or at all, and our relationships with key suppliers.

Healthcare spending in the United States has been, and is expected to continue to be, negatively affected by the recent recession and continuing economic uncertainty. For example, patients who have lost their jobs or healthcare coverage may no longer be covered by an employer-sponsored health insurance plan, and patients reducing their overall spending may eliminate healthcare-related purchases. The recent recession and continuing economic uncertainty has also impacted the financial stability of many commercial health insurers. As a result, we believe that some insurers are scrutinizing insurance claims more rigorously and delaying or denying reimbursement more often. Since the sale of V-Go generally depends on the availability of third-party reimbursement, any delay or decline in reimbursement will adversely affect our sales.

Risks Related to Intellectual Property

Intellectual property rights may not provide adequate protection, which may permit third parties to compete against us more effectively.

Our success depends significantly on our ability to maintain and protect our proprietary rights in the technologies and inventions used in or embodied by our product. To protect our proprietary technology, we rely on patent protection, as well as a combination of copyright, trade secret and trademark laws, as well as nondisclosure, confidentiality, and other contractual restrictions in our manufacturing, consulting, employment and other third party agreements. These legal means afford only limited protection, however, and may not adequately protect our rights or permit us to gain or keep any competitive advantage.

If we are unable to secure sufficient patent protection for our proprietary rights in our product and processes, and to adequately maintain and protect our existing and new rights, competitors will be able to compete against us more effectively, and our business will suffer.

The process of applying for patent protection itself is time consuming and expensive and we cannot assure you that we have prepared or will be able to prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection on them. In addition, our patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. It is possible that defects of form in the preparation or filing of our patents or patent applications may exist, or may arise in the future, for example, with respect to proper priority claims, inventorship, claim scope or patent term adjustments. Moreover, we cannot assure you that all of our pending patent applications will issue as patents or that, if issued, they will issue in a form that will be advantageous to us. We own numerous issued patents and pending patent applications that relate to insulin-delivery methods and devices. The rights granted to us under our patents, however, including

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prospective rights sought in our pending patent applications, may not be of sufficient scope or strength to provide us with any meaningful exclusivity or commercial advantage, and competitors may be able to design around our patents or develop products that provide outcomes comparable to ours without infringing on our intellectual property rights. In addition, we may in the future be subject to claims by our former employees or consultants asserting an ownership right in our patents or patent applications, as a result of the work they performed on our behalf. If any of our patents are challenged, invalidated or legally circumvented by third parties, and if we do not exclusively own other enforceable patents protecting our product, competitors could market products and use processes that are substantially similar to, or superior to, ours, and our business will suffer.

The patent position of medical technology companies is generally highly uncertain. The degree of patent protection we require may be unavailable or severely limited in some cases and may not adequately protect our rights or permit us sufficient exclusivity, or to gain or keep our competitive advantage. For example:

• we might not have been the first to invent or the first to file patent applications on the inventions covered by each of our pending patent applications and issued patents;

• others may independently develop similar or alternative technologies or duplicate any of our technologies;

• the patents of others may have an adverse effect on our business;

• any patents we obtain or license from others in the future may not encompass commercially viable products, may not provide us with any competitive advantages or may be challenged by third parties;

• any patents we obtain or license from others in the future may not be valid or enforceable; and

• we may not develop additional proprietary technologies that are patentable.

Patents have a limited lifespan. In the United States, the natural expiration of a utility patent typically is generally 20 years after it is filed. Various extensions may be available; however, the life of a patent, and the protection it affords, is limited. Without patent protection for our insulin-delivery methods and devices, we may be open to competition from generic versions of such methods and devices.

Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our product and our technologies.

Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art, may affect patent litigation, and switch the U.S. patent system from a “first-to-invent” system to a “first-to-file” system. Under a “first-to-file” system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to the patent on an invention regardless of whether another inventor had made the invention earlier. The U.S. Patent and Trademark Office, or USPTO, recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, in particular, the first-to-file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

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In addition, patent reform legislation may pass in the future that could lead to additional uncertainties and increased costs surrounding the prosecution, enforcement, and defense of our patents and applications. Furthermore, the U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit have made, and will likely continue to make, changes in how the patent laws of the United States are interpreted. Similarly, foreign courts have made, and will likely continue to make, changes in how the patent laws in their respective jurisdictions are interpreted. We cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by United States and foreign legislative bodies. Those changes may materially affect our patents or patent applications and our ability to obtain and enforce or defend additional patent protection in the future.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Moreover, the USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. In addition, periodic maintenance fees on issued patents often must be paid to the USPTO and foreign patent agencies over the lifetime of the patent. While an unintentional lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we fail to maintain the patents and patent applications covering our product or procedures, we may not be able to stop a competitor from marketing products that are the same as or similar to our product and technologies.

We may not be able to adequately protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on our product and technologies in all countries throughout the world would be prohibitively expensive. The requirements for patentability may differ in certain countries, particularly developing countries, and the breadth of patent claims allowed can be inconsistent. In addition, the laws of some foreign countries may not protect our intellectual property rights to the same extent as laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection, but enforcement on infringing activities is inadequate.

We do not have patent rights in certain foreign countries in which a market may exist in the future. Moreover, in foreign jurisdictions where we do have patent rights, proceedings to enforce such rights could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, and our patent applications at risk of not issuing, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Thus, we may not be able to stop a competitor from marketing and selling in foreign countries products that are the same as or similar to our product.

We may in the future become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful.

The medical device industry has been characterized by frequent and extensive intellectual property litigation. Our competitors or other patent holders may assert that our product and the methods employed in our product are covered by their patents. Although we believe we have adequate defenses

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available if faced with any allegations that we infringe third-party patents, it is possible that V-Go could be found to infringe these patents. If our product or methods are found to infringe, we could be prevented from manufacturing or marketing our product.

We do not know whether our competitors or potential competitors have patents, or have applied for, will apply for, or will obtain patents that will prevent, limit or interfere with our ability to make, have made, use, sell, import or export our product. Competitors may infringe our patents or misappropriate or otherwise violate our intellectual property rights. To stop any such infringement or unauthorized use, litigation may be necessary. Our intellectual property has not been tested in litigation. A court may declare our patents invalid or unenforceable, may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question, or may interpret the claims of our patents narrowly, thereby substantially narrowing the scope of patent protection they afford.

In addition, third parties may initiate legal proceedings against us to challenge the validity or scope of our intellectual property rights, or may allege an ownership right in our patents, as a result of their past employment or consultancy with us. Many of our current and potential competitors have the ability to dedicate substantially greater resources to defend their intellectual property rights than we can. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. Competing products may also be sold in other countries in which our patent coverage might not exist or be as strong. If we lose a foreign patent lawsuit, alleging our infringement of a competitor’s patents, we could be prevented from marketing our product in one or more foreign countries.

Litigation related to infringement and other intellectual property claims such as trade secrets, with or without merit, is unpredictable, can be expensive and time-consuming, and can divert management’s attention from our core business. If we lose this kind of litigation, a court could require us to pay substantial damages, treble damages, and attorneys’ fees, and could prohibit us from using technologies essential to our product, any of which would have a material adverse effect on our business, results of operations, and financial condition. If relevant patents are upheld as valid and enforceable and we are found to infringe, we could be prevented from selling our product unless we can obtain licenses to use technology or ideas covered by such patents. We do not know whether any necessary licenses would be available to us on satisfactory terms, if at all. If we cannot obtain these licenses, we could be forced to design around those patents at additional cost or abandon the product altogether. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could cause the price of our common stock to decline.

We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors.

We could in the future be subject to claims that we or our employees have inadvertently or otherwise used or disclosed alleged trade secrets or other proprietary information of former employers, competitors, or other third parties. Although we endeavor to ensure that our employees and consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may in the future be subject to claims that we caused an employee to breach the terms of his or her non-competition or non-solicitation agreement, or that we or these individuals have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of

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a former employer or competitor. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and could be a distraction to management. If our defense to those claims fails, in addition to paying monetary damages, a court could prohibit us from using technologies or features that are essential to our product, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers or other third parties. An inability to incorporate technologies or features that are important or essential to our product may prevent us from selling our product. In addition, we may lose valuable intellectual property rights or personnel. Moreover, any such litigation or the threat thereof may adversely affect our ability to hire employees or contract with independent sales representatives. A loss of key personnel or their work product could hamper or prevent our ability to commercialize our product.

Our trademarks may be infringed or successfully challenged, resulting in harm to our business.

We rely on our trademarks as one means to distinguish our product from the products of our competitors, and we have registered or applied to register many of these trademarks. The USPTO or foreign trademark offices may deny our trademark applications, however, and even if published or registered, these trademarks may be ineffective in protecting our brand and goodwill and may be successfully opposed or challenged. Third parties may oppose our trademark applications, or otherwise challenge our use of our trademarks. In addition, third parties may use marks that are confusingly similar to our own, which could result in confusion among our customers, thereby weakening the strength of our brand or allowing such third parties to capitalize on our goodwill. In such an event, or if our trademarks are successfully challenged, we could be forced to rebrand our product, which could result in loss of brand recognition and could require us to devote resources to advertising and marketing new brands. Our competitors may infringe our trademarks and we may not have adequate resources to enforce our trademark rights in the face of any such infringement.

If we are unable to protect the confidentiality or use of our trade secrets, our competitive position may be harmed.

In addition to patent and trademark protection, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect our trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our manufacturers, consultants and vendors, and our former or current employees. We also enter into invention or assignment agreements with our employees. Despite these efforts, any of these parties may breach the agreements and disclose our trade secrets and other unpatented or unregistered proprietary information. Monitoring unauthorized uses and disclosures of our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property will be effective. In addition, we may not be able to obtain adequate remedies for any such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how. Competitors could purchase our product and attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe our intellectual property rights, design around our protected technology or develop their own competitive technologies that fall outside of our intellectual property rights. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If our intellectual property is not adequately protected so as to protect our market against competitors’ products and methods, our competitive position could be adversely affected.

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Risks Related to Our Legal and Regulatory Environment

Our product and operations are subject to extensive governmental regulation, and failure to comply with applicable requirements could cause our business to suffer.

The medical technology industry is regulated extensively by governmental authorities, principally the FDA and corresponding state regulatory agencies. The regulations are very complex, have become more stringent over time, and are subject to rapid change and varying interpretations. Regulatory restrictions or changes could limit our ability to carry on or expand our operations or result in higher than anticipated costs or lower than anticipated sales. The FDA and other U.S. governmental agencies regulate numerous elements of our business, including:

• product design and development;

• pre-clinical and clinical testing and trials;

• product safety;

• establishment registration and product listing;

• labeling and storage;

• marketing, manufacturing, sales and distribution;

• pre-market clearance or approval;

• servicing and post-marketing surveillance, including reporting of deaths or serious injuries and malfunctions that, if they recurred, could lead to death or serious injury;

• advertising and promotion;

• post-market approval studies;

• product import and export; and

• recalls and field-safety corrective actions.

Before we can market or sell a new regulated product or a significant modification to an existing product in the United States, we must obtain either clearance under Section 510(k) of the FDCA or approval of a pre-market approval, or PMA, application from the FDA, unless an exemption from pre-market review applies. In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a device legally on the market, known as a “predicate” device, with respect to intended use, technology and safety and effectiveness, in order to clear the proposed device for marketing. Clinical data is sometimes required to support substantial equivalence. The PMA pathway requires an applicant to demonstrate the safety and effectiveness of the device based on extensive data, including, but not limited to, technical, preclinical, clinical trial, manufacturing and labeling data. The PMA process is typically required for devices that are deemed to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices. Products that are approved through a PMA application generally need FDA approval before they can be modified. Similarly, some modifications made to products cleared through a 510(k) may require a new 510(k). Both the 510(k) and PMA processes can be expensive and lengthy and require the payment of significant fees, unless an exemption applies. The FDA’s 510(k) clearance process usually takes from three to 12 months, but may take longer. The process of obtaining a PMA is much more costly and uncertain than the 510(k) clearance process and generally takes from one to three years, or longer, from the time the application is submitted to the FDA until an approval is obtained. The process of obtaining regulatory clearances or approvals to market a medical device can be costly and time-consuming, and we may not be able to obtain these clearances or approvals on a timely basis, or at all for our proposed products.

We obtained initial pre-market clearance for V-Go under Section 510(k) of the FDCA in December 2010. If the FDA requires us to go through a lengthier, more rigorous examination for future products or

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modifications to our existing product than we had expected, our product introductions or modifications could be delayed or canceled, which could cause our sales to decline or to not increase in line with our forecasts. In addition, the FDA may determine that future products will require the more costly, lengthy and uncertain PMA process. Although we do not currently market any devices under PMA, the FDA may demand that we obtain a PMA prior to marketing certain of our future products. Further, even with respect to those future products where a PMA is not required, we cannot assure you that we will be able to obtain the 510(k) clearances with respect to those products.

The FDA can delay, limit or deny clearance or approval of a device for many reasons, including:

• we may not be able to demonstrate that our product is safe and effective for its intended users;

• the data from our clinical trials may be insufficient to support clearance or approval; and

• the manufacturing process or facilities we use may not meet applicable requirements.

In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay approval or clearance of our products under development or impact our ability to modify our currently cleared product on a timely basis. For example, in response to industry and healthcare provider concerns regarding the predictability, consistency and rigor of the 510(k) regulatory pathway, the FDA initiated an evaluation of the program, and in January 2011, announced several proposed actions intended to reform the review process governing the clearance of medical devices. The FDA intends these reform actions to improve the efficiency and transparency of the clearance process, as well as bolster patient safety. In addition, as part of the Food and Drug Administration Safety and Innovation Act, Congress reauthorized the Medical Device User Fee Amendments with various FDA performance goal commitments and enacted several “Medical Device Regulatory Improvements” and miscellaneous reforms which are further intended to clarify and improve medical device regulation both pre- and post-clearance or approval. Some of these proposals, if enacted, could impose additional regulatory requirements upon us which could delay our ability to obtain new 510(k) clearances, increase the costs of compliance or restrict our ability to maintain our current clearances.

Any delay in, or failure to obtain or maintain, clearance or approval for our products under development could prevent us from generating revenue from these products and adversely affect our business operations and financial results. Additionally, the FDA and other regulatory authorities have broad enforcement powers. Regulatory enforcement or inquiries, or other increased scrutiny on us, could dissuade some customers from using our product and adversely affect our reputation and the perceived safety and efficacy of our product.

Failure to comply with applicable regulations could jeopardize our ability to sell our product and result in enforcement actions such as fines, civil penalties, injunctions, warning letters, recalls of products, delays in the introduction of products into the market, refusal of the FDA or other regulators to grant future clearances or approvals, and the suspension or withdrawal of existing clearances or approvals by the FDA or other regulators. Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and negatively impact our reputation, business, financial condition and operating results.

Furthermore, we may evaluate international expansion opportunities in the future. If we expand our operations outside of the United States, we will become subject to various additional regulatory and legal requirements under the applicable laws and regulations of the international markets we enter. These additional regulatory requirements may involve significant costs and expenditures and, if we are not able to comply with any such requirements, our international expansion and business could be significantly harmed.

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Modifications to our product may require new 510(k) clearances or pre-market approvals, or may require us to cease marketing or recall the modified products until clearances are obtained.

Any modification to a 510(k)-cleared device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design, or manufacture, requires a new 510(k) clearance or, possibly, a PMA. The FDA requires every manufacturer to make this determination in the first instance, but the FDA may review any manufacturer’s decision. The FDA may not agree with our decisions regarding whether new clearances or approvals are necessary. We have made modifications to our 510(k) cleared product, and have determined based on our review of the applicable FDA guidance that in certain instances new 510(k) clearances or pre-market approvals are not required. If the FDA disagrees with our determination and requires us to submit new 510(k) notifications or PMAs for modifications to our previously cleared or approved products for which we have concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties.

Furthermore, the FDA’s ongoing review of the 510(k) program may make it more difficult for us to modify our previously cleared products, either by imposing stricter requirements on when a new 510(k) for a modification to a previously cleared product must be submitted, or applying more onerous review criteria to such submissions. Specifically, on July 9, 2012, the FDA Safety and Innovation Act of 2012 was enacted which, among other requirements, obligates the FDA to prepare a report for Congress on the FDA’s approach for determining when a new 510(k) will be required for modifications or changes to a previously cleared device. The FDA recently submitted this report and suggested that manufacturers continue to adhere to the FDA’s 1997 Guidance on this topic when making a determination as to whether or not a new 510(k) is required for a change or modification to a device. However, the practical impact of the FDA’s continuing scrutiny of these issues remains unclear.

If we or our third-party suppliers fail to comply with the FDA’s good manufacturing practice regulations, this could impair our ability to market our product in a cost-effective and timely manner.

We and our third-party suppliers are required to comply with the FDA’s Quality System Regulation, or QSR, which covers the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our product. The FDA audits compliance with the QSR through periodic announced and unannounced inspections of manufacturing and other facilities. The FDA may impose inspections or audits at any time. If we or our suppliers have significant non-compliance issues or if any corrective action plan that we or our suppliers propose in response to observed deficiencies is not sufficient, the FDA could take enforcement action against us, including any of the following sanctions:

• untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;

• customer notifications or repair, replacement, refunds, recall, detention or seizure of our product;

• operating restrictions or partial suspension or total shutdown of production;

• refusing or delaying our requests for 510(k) clearance or pre-market approval of new products or modified products;

• withdrawing 510(k) clearances or pre-market approvals that have already been granted;

• refusal to grant export approval for our product; or

• criminal prosecution.

Any of the foregoing actions could have a material adverse effect on our reputation, business, financial condition and operating results.

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A recall of our product, or the discovery of serious safety issues with our product, could have a significant adverse impact on us.

The FDA has the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture or in the event that a product poses an unacceptable risk to health. Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. A government-mandated or voluntary recall by us or one of our distributors could occur as a result of an unacceptable risk to health, component failures, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of our product would divert managerial and financial resources and have an adverse effect on our reputation, financial condition and operating results, which could impair our ability to produce our product in a cost-effective and timely manner.

Further, under the FDA’s medical device reporting, or MDR, regulations, we are required to report to the FDA any incident in which our product may have caused or contributed to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury. Repeated product malfunctions may result in a voluntary or involuntary product recall, which could divert managerial and financial resources, impair our ability to manufacture our product in a cost-effective and timely manner and have an adverse effect on our reputation, financial condition and operating results.

Depending on the corrective action we take to redress a product’s deficiencies or defects, the FDA may require, or we may decide, that we will need to obtain new approvals or clearances for the device before we may market or distribute the corrected device. Seeking such approvals or clearances may delay our ability to replace the recalled devices in a timely manner. Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties, or civil or criminal fines. We may also be required to bear other costs or take other actions that may have a negative impact on our sales as well as face significant adverse publicity or regulatory consequences, which could harm our business, including our ability to market our product in the future.

Any adverse event involving our product could result in future voluntary corrective actions, such as recalls or customer notifications, or regulatory agency action, which could include inspection, mandatory recall or other enforcement action. Any corrective action, whether voluntary or involuntary, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results.

If we are unable to achieve and maintain adequate levels of coverage and reimbursement for V-Go or any future products we may seek to commercialize, their commercial success may be severely hindered.

We have derived all of our revenue from the sale of V-Go in the United States and expect to continue to do so for the next several years. Patients who use V-Go generally rely on third-party payors, including governmental healthcare programs, such as Medicare and Medicaid, and commercial health insurers, health maintenance organizations and other healthcare-related organizations, to reimburse all or part of the costs associated with V-Go. Successful sales of V-Go and any future products depend, therefore, on the availability of adequate coverage and reimbursement from third-party payors.

Securing coverage for new technologies is challenging and uncertain. Third-party payors render coverage decisions based upon clinical and economic standards that disfavor new products when more established or lower cost therapeutic alternatives are already available or subsequently become available. Unless our product demonstrates superior efficacy profiles, it may not qualify for coverage and reimbursement. Even if we obtain coverage for a given product, the resulting reimbursement payment rates might not be adequate or may require co-payments, deductibles or co-insurance payments that patients find unacceptably high.

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Not only are third-party payors, whether governmental or commercial, developing increasingly sophisticated methods of controlling healthcare costs, in addition, no uniform policy of coverage and reimbursement for medical products, including V-Go, exists among third-party payors. Therefore, coverage and reimbursement for our product can and does differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and costly process that requires us to provide economic, scientific and clinical support for the use of our product to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained. Even where favorable coverage and reimbursement status has been attained for V-Go, less favorable coverage policies and reimbursement rates may be implemented in the future. Moreover, a third-party payor’s decision to provide coverage does not imply that an adequate reimbursement rate will be paid. There can be no assurance that our clinical data will allow for satisfactory pricing of V-Go at current levels, and the failure to obtain and maintain coverage and adequate reimbursement for V-Go would materially and adversely affect our business.

V-Go currently is covered and reimbursed under the policies of a number of third-party payors. The Medicare program recognizes V-Go under the Medicare Part D prescription drug benefit, and a number of Part D drug plans have placed our product on their pharmacy formularies or otherwise allow for individual consideration. Although V-Go is not covered under Medicare Part B, which is an outpatient medical benefit, because this benefit does not recognize disposable insulin delivery devices, other third-party payors may and have adopted different coverage policies for our product, classifying the disposable insulin delivery device as a coverable device. Some commercial payors, however, have declined to offer any coverage for V-Go, whether on a pharmacy formulary or as a medical benefit, concluding that the delivery system is experimental or investigational, or that the current evidence is insufficient. In addition, coverage policies developed by third-party payors generally can be modified or terminated by the third-party payor without cause and with little or no notice to us.

We believe that future coverage and reimbursement will likely be subject to increased restrictions both in the United States and in international markets. Healthcare cost containment initiatives that limit or deny reimbursement for V-Go would also materially and adversely affect our business. If reimbursement is not available or is available only to limited levels, we may not be able to commercialize our product profitably.

We are subject to additional federal, state and foreign laws and regulations relating to our healthcare business; our failure to comply with those laws could have a material adverse effect on our results of operations and financial condition.

Although we do not provide healthcare services, submit claims for third-party reimbursement, or receive payments directly from Medicare, Medicaid or other third-party payors for our product, we are subject to healthcare fraud and abuse regulation and enforcement by federal and state governments, which could significantly impact our business. Healthcare fraud and abuse and health information privacy and security laws potentially applicable to our operations include:

• the federal Anti-Kickback Statute, which applies to our marketing practices, educational programs, pricing policies and relationships with healthcare providers, by prohibiting, among other things, soliciting, receiving, offering or providing remuneration intended to induce the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare or Medicaid programs;

• federal civil and criminal false claims laws and civil monetary penalty laws, including civil whistleblower or qui tam actions, that prohibit, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the federal government;

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• the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, and its implementing regulations, which created federal criminal laws that prohibit, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters and, as amended by the Health Information Technology for Economic and Clinical Health Act, also imposes certain regulatory and contractual requirements regarding the privacy, security and transmission of individually identifiable health information;

• federal “sunshine” requirements imposed by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively the ACA, on device manufacturers regarding any “transfer of value” made or distributed to physicians and teaching hospitals. Failure to submit required information may result in civil monetary penalties of up to an aggregate of $150,000 per year (or up to an aggregate of $1 million per year for “knowing failures”), for all payments, transfers of value or ownership or investment interests that are not timely, accurately, and completely reported in an annual submission. The period between August 1, 2013 and December 31, 2013 was the first reporting period, and manufacturers were required to report aggregate payment data by March 31, 2014, and to report detailed payment data and submit legal attestation to the accuracy of such data by June 30, 2014. Thereafter, manufacturers must submit reports by the 90th day of each subsequent calendar year;

• federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and

• state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require device and pharmaceutical companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state laws that require drug and device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of certain health information, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

The risk of our being found in violation of these laws and regulations is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Moreover, recent health care reform legislation has strengthened these laws. For example, the ACA, among other things, amended the intent requirement of the federal anti-kickback and criminal health care fraud statutes; a person or entity no longer needs to have actual knowledge of these statutes or specific intent to violate them. In addition, the ACA provided that the government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the false claims statutes. We are unable to predict what additional federal or state legislation or regulatory initiatives may be enacted in the future regarding our business or the healthcare industry in general, or what effect such legislation or regulations may have on us. Federal or state governments may impose additional restrictions or adopt interpretations of existing laws that could have a material adverse effect on us.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available under such laws, it is possible that some of our business activities, including without limitation certain of the marketing and distribution programs for V-Go, as well as our relationships with physicians and other health care providers, some of whom recommend, purchase and/or prescribe our product, could be subject to challenge under one or more of such laws. Any action against us for violation of these

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laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from governmental health care programs, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, suspension or revocation of certifications or licenses that are required to operate our business, injunctions and other associated remedies, denial or withdrawal of product clearances, private “qui tam” actions brought by individual whistleblowers in the name of the government, and the curtailment or restructuring of our operations, any of which could impair our ability to operate our business and our financial results.

We may be liable if the FDA or other U.S. enforcement agencies determine we have engaged in the off-label promotion of our product.

Our promotional materials and training methods must comply with FDA and other applicable laws and regulations, including the prohibition of the promotion of the off-label use of our product. Healthcare providers may use our product off-label, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice of medicine. For example, although V-Go is only cleared for insulin delivery in adult patients, a physician might independently choose to use it for insulin delivery in children. If the FDA determines that our promotional materials or training constitute promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine and criminal penalties. It is also possible that other federal, state or foreign enforcement authorities might take action if they consider our promotional or training materials to constitute promotion of an unapproved use, which could result in significant fines or penalties. Although our policy is to refrain from statements that could be considered off-label promotion of our product, the FDA or another regulatory agency could disagree and conclude that we have engaged in off-label promotion. Violations of the FDCA may also lead to investigations alleging violations of federal and state health care fraud and abuse laws, as well as state consumer protection laws, which may lead to costly penalties and may adversely impact our business. In addition, the off-label use of our product may increase the risk of product liability claims. Product liability claims are expensive to defend and could result in substantial damage awards against us and harm our reputation.

Legislative or regulatory healthcare reforms may make it more difficult and costly for us to obtain reimbursement for our product or regulatory clearance or approval of our future products, and to produce, market and distribute those products after clearance or approval is obtained.

Recent political, economic and regulatory influences are subjecting the healthcare industry to fundamental changes. Both the federal and state governments in the United States and foreign governments continue to propose and pass new legislation and regulations designed to contain or reduce the cost of healthcare. Such legislation and regulations may result in decreased reimbursement for our product, which may further exacerbate industry-wide pressure to reduce the prices charged for our product. This could harm our ability to market our product and generate sales. In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our current product and future products. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of our products. Delays in receipt of or failure to receive regulatory clearances or approvals for any future products would negatively impact our long-term business strategy. In addition, the FDA is currently evaluating the 510(k) process and may make substantial changes to industry requirements, including which devices are eligible for 510(k) clearance, the ability to rescind previously granted 510(k) clearances and additional requirements that may significantly impact the process.

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In the U.S., there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that restrict or regulate post-approval activities, which may affect our ability to profitably sell V-Go or any other product candidates for which we obtain marketing approval. Such government-adopted reform measures may adversely impact the pricing of healthcare products and services in the United States or internationally and the amount of reimbursement available from third-party payors.

For example, in March 2010, the ACA was signed into law. While the goal of healthcare reform is to expand coverage to more individuals, it also involves increased government price controls, additional regulatory mandates and other measures designed to constrain medical costs. The ACA substantially changes the way healthcare is financed by both governmental and commercial insurers, encourages improvements in the quality of healthcare items and services and significantly impacts the medical device industries. The ACA, among other things, established annual fees and taxes on manufacturers of certain branded prescription drugs and medical devices (discussed in more detail below), requires manufacturers to participate in a discount program for certain outpatient drugs under Medicare Part D, and promotes programs that increase the federal government’s comparative effectiveness research. As the ACA continues to be implemented, its provisions could meaningfully change the way healthcare is delivered and financed, and could have a material adverse impact on numerous aspects of our business. Non-drug products may be covered under Medicare Part D if they meet the definition of supplies associated with the injection of insulin. The Centers for Medicare and Medicaid Services, or CMS, considers V-Go to meet this definition. Because CMS does not consider V-Go a drug under Medicare Part D, it is not required to participate in the Medicare Coverage Gap Discount Program.

In the future there may continue to be additional proposals relating to the reform of the U.S. healthcare system generally, or operation of the Medicare Part D program specifically. Certain of these proposals could limit the prices we are able to charge for our product, or the amount of reimbursement available for our product, and could limit the acceptance and availability of our product.

Our financial performance may be adversely affected by medical device tax provisions in the ACA.

The ACA imposes, among other things, an annual excise tax of 2.3% on any entity that manufactures or imports medical devices offered for sale in the United States beginning in 2013. Under these provisions, the Congressional Research Service predicts that the total cost to the medical device industry may be up to $20 billion over the next decade. We do not believe that V-Go is currently subject to this tax based on the retail exemption under applicable Treasury Regulations. However, the guidance regarding this exemption as applied to V-Go is not clear, and the availability of this exemption is subject to interpretation by the IRS, and the IRS may disagree with our analysis. In addition, future products that we manufacture, produce or import may be subject to this tax. The financial impact this tax may have on our business is unclear and there can be no assurance that our business and financial results will not be negatively impacted.

Risks Related to Our Common Stock and this Offering

After this offering, our executive officers, directors and principal stockholders, if they choose to act together, will continue to have the ability to control all matters submitted to stockholders for approval.

Upon the closing of this offering, our executive officers, directors and stockholders who owned more than 5% of our outstanding common stock before this offering and their respective affiliates, including Holdings, will, in the aggregate, hold shares representing approximately     % of our outstanding voting stock. As a result, if these stockholders were to choose to act together, they would be able to control or significantly influence all matters submitted to our stockholders for approval, as well as our management and affairs. For example, these persons, if they choose to act together, would control or significantly

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influence the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. This concentration of ownership control may:

• delay, defer or prevent a change in control;

• entrench our management and the board of directors; or

• impede a merger, consolidation, takeover or other business combination involving us that other stockholders may desire.

Additionally, following the completion of this offering, Holdings will hold approximately     % of the voting power in our company, or approximately     % if the underwriters exercise their option to purchase additional shares in full. Holdings’ governing documents require the affirmative consent of the representatives of Welsh, Carson, Anderson & Stowe XI, L.P., or WCAS, on its board of managers in connection with Holdings’ vote on matters submitted to a vote of our security holders. Accordingly, for so long as Holdings controls a majority of our voting power, Holdings, and WCAS in particular, will have significant influence with respect to our management, business plans and policies, including the appointment and removal of our officers. In particular, Holdings will be able to cause or prevent a change of control of our company or a change in the composition of our board of directors and could preclude any unsolicited acquisition of our company. This concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of our company and ultimately might affect the market price of our common stock.

If you purchase shares of common stock in this offering, you will suffer immediate dilution of your investment.

The initial public offering price of our common stock will be substantially higher than the net tangible book value per share of our common stock. Therefore, if you purchase shares of our common stock in this offering, you will pay a price per share that substantially exceeds our net tangible book value per share after this offering. To the extent shares subsequently are issued under outstanding options or warrants, you will incur further dilution. Based on an assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, you will experience immediate dilution of $         per share, representing the difference between our pro forma net tangible book value per share, after giving effect to this offering, and the assumed initial public offering price. In addition, purchasers of common stock in this offering will have contributed approximately     % of the aggregate price paid by all purchasers of our stock but will own only approximately     % of our common stock outstanding after this offering.

An active trading market for our common stock may not develop.

Prior to this offering, there has been no public market for our common stock. The initial public offering price for our common stock will be determined through negotiations with the underwriters. Although we have applied to have our common stock approved for listing on The NASDAQ Global Market, an active trading market for our shares may never develop or be sustained following this offering. If an active market for our common stock does not develop, it may be difficult for you to sell shares you purchase in this offering without depressing the market price for the shares or at all.

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The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our common stock in this offering.

Our stock price is likely to be volatile. The stock market in general and the market for smaller medical device and pharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your common stock at or above the initial public offering price. The market price for our common stock may be influenced by many factors, including:

• the success of competitive products or technologies;

• developments related to our existing or any future collaborations;

• regulatory or legal developments in the United States and other countries;

• developments or disputes concerning patent applications, issued patents or other proprietary rights;

• the recruitment or departure of key personnel;

• the level of expenses related to any of our product candidates;

• the results of our efforts to discover, develop, acquire or in-license additional product candidates or products;

• actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;

• variations in our financial results or those of companies that are perceived to be similar to us;

• changes in the structure of healthcare payment systems;

• market conditions in the pharmaceutical and biotechnology sectors;

• general economic, industry and market conditions; and

• the other factors described in this “Risk Factors” section.

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

Our management and board of directors will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. You may not agree with our decisions, and our use of the proceeds may not yield any return on your investment. We intend to use the net proceeds of this offering for working capital and general corporate purposes, including to expand and support our sales and marketing infrastructure and activities for V-Go, and fund research, development and engineering activities. However, our use of these proceeds may differ substantially from our current plans. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, cause the price of our common stock to decline and delay the development of our product candidates. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value. You will not have the opportunity to influence our decisions on how to use our net proceeds from this offering.

A significant portion of our total outstanding shares are eligible to be sold into the market in the near future, which could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of

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our common stock. After this offering, we will have outstanding             shares of common stock based on the number of shares outstanding as of             , 2014. This includes the shares that we are selling in this offering, which may be resold in the public market immediately without restriction, unless purchased by our affiliates or existing stockholders. The remaining             shares are currently restricted as a result of securities laws or lock-up agreements but will become eligible to be sold at various times beginning 180 days after this offering. Moreover, after this offering, holders of an aggregate of             shares of our common stock will have rights, subject to specified conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We also intend to register all shares of common stock that we may issue under our equity compensation plans. Once we register these shares, they can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates and the lock-up agreements described in the “Underwriting” section of this prospectus.

We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerging growth company for up to five years. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

• being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;

• not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;

• not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

• reduced disclosure obligations regarding executive compensation; and

• exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

We have taken advantage of reduced reporting burdens in this prospectus. In particular, in this prospectus, we have provided only two years of audited financial statements and have not included all of the executive compensation related information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be reduced or more volatile. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

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We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

As a public company, and particularly after we are no longer an emerging growth company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The NASDAQ Global Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, which in turn could make it more difficult for us to attract and retain qualified officers or members of our board of directors.

We are evaluating these rules and regulations, and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we will be required to furnish a report by our management on our internal control over financial reporting. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will engage in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no or few securities or industry analysts commence coverage of us, the trading price for our stock would be negatively impacted. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our target animal studies and operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

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Provisions in our amended and restated certificate of incorporation and restated bylaws and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our amended and restated certificate of incorporation and our restated bylaws that will become effective upon the closing of this offering may discourage, delay or prevent a merger, acquisition or other change in control of our company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions include those establishing:

• a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;

• no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

• the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from filling vacancies on our board of directors;

• the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

• the ability of our board of directors to alter our restated bylaws without obtaining stockholder approval;

• the required approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors;

• a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

• the requirement that a special meeting of stockholders be called only by the chairman of the board of directors, the chief executive officer, the president or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and

• advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the General Corporation Law of the State of Delaware, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

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Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation will be your sole source of gain, if any.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. Any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

We could be subject to securities class action litigation.

In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology companies have experienced significant stock price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus, including in the sections entitled “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” contains estimates, projections and forward-looking statements. Our estimates, projections and forward-looking statements are based on our management’s current assumptions and expectations of future events and trends, which affect or may affect our business, strategy, operations or financial performance. Although we believe that these estimates, projections and forward-looking statements are based upon reasonable assumptions, they are subject to numerous known and unknown risks and uncertainties and are made in light of information currently available to us. Many important factors, in addition to the factors described in this prospectus, may adversely and materially affect our results as indicated in forward-looking statements. You should read this prospectus and the documents that we have filed as exhibits to the registration statement of which this prospectus is a part completely and with the understanding that our actual future results may be materially different and worse from what we expect.

All statements other than statements of historical fact are forward-looking statements. The words “believe,” “may,” “might,” “could,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “plan” and similar words are intended to identify estimates and forward-looking statements.

Our estimates and forward-looking statements may be influenced by one or more of the following factors:

• our history of operating losses and uncertainty regarding our ability to achieve profitability;

• our reliance on V-Go to generate all of our revenue;

• our inability to retain a high percentage of our patient customer base or our significant wholesale customers;

• the failure of V-Go to achieve and maintain market acceptance;

• our inability to operate in a highly competitive industry and to compete successfully against competitors with greater resources;

• competitive products and other technological breakthroughs that may render V-Go obsolete or less desirable;

• our inability to maintain or expand our sales and marketing infrastructure;

• any inaccuracies in our assumptions about the insulin-dependent diabetes market;

• manufacturing risks, including risks related to manufacturing in Southern China, damage to facilities or equipment and failure to efficiently increase production to meet demand;

• our dependence on limited source suppliers and our inability to obtain components for our product;

• our failure to secure or retain adequate coverage or reimbursement for V-Go by third-party payors;

• our inability to enhance and broaden our product offering, including through the successful commercialization of the pre-fill V-Go;

• our inability to protect our intellectual property and proprietary technology; and

• our failure to comply with the applicable governmental regulations to which our product and operations are subject.

Other sections of this prospectus include additional factors that could adversely impact our business, strategy, operations or financial performance. Moreover, we operate in an evolving environment. New

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risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

Estimates and forward-looking statements speak only as of the date they were made, and, except to the extent required by law, we undertake no obligation to update or review any estimate, projection or forward-looking statement because of new information, future events or other factors. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC, after the date of this prospectus. See the information included under the heading “Where You Can Find Additional Information.” Estimates, projections and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. As a result of the risks and uncertainties described above, the estimates, projections and forward-looking statements discussed in this prospectus might not occur and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, but not limited to, the factors mentioned above. Because of these uncertainties, you should not place undue reliance on these forward-looking statements when making an investment decision.

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USE OF PROCEEDS

We estimate that the net proceeds from our sale of             shares of our common stock in this offering will be approximately $         million, assuming an initial public offering price of $         per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters’ option to purchase additional shares from us is exercised in full, we estimate that our net proceeds will be approximately $         million.

We currently anticipate that we will use between $         million and $         million of the net proceeds received by us to expand and support our sales and marketing infrastructure and activities for V-Go, and between $         million and $         million to fund research, development and engineering activities, and manufacturing capabilities, which we expect to include the further development of our pre-filled V-Go, although we expect that we will need to seek additional capital to complete its development and commercialization. We expect that the remaining net proceeds, if any, will be used for working capital and other general corporate purposes.

The amounts and timing of our actual expenditures will depend on numerous factors, including the factors described under “Risk Factors” beginning on page 12 in this prospectus. We therefore cannot estimate with certainty the amount of net proceeds to be used for the purposes described above. We may find it necessary or advisable to use the net proceeds for other purposes, and we will have broad discretion in the application of the net proceeds. Pending the uses described above, we plan to invest the net proceeds from this offering in short- and intermediate-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.

Each $1.00 increase (decrease) in the assumed initial public offering price of $         per share would increase (decrease) the net proceeds to us from this offering by approximately $         million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of 1.0 million in the number of shares we are offering would increase (decrease) the net proceeds to us from this offering, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, by approximately $         million, assuming the assumed initial public offering price stays the same.

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DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. We do not intend to pay cash dividends to holders of our common stock in the foreseeable future.

Our ability to pay cash dividends is restricted pursuant to the terms of our credit facility. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Indebtedness.”

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CAPITALIZATION

The following table sets forth our capitalization as of September 30, 2014, as follows:

• on an actual basis;

• on a pro forma basis to reflect (1) the automatic conversion of all outstanding shares of our preferred stock into                 shares of common stock upon the closing of this offering and (2) the filing of our amended and restated certificate of incorporation upon the closing of this offering; and

• on a pro forma as adjusted basis to give further effect to our issuance and sale of             shares of common stock in this offering at an assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Our capitalization following the closing of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this information in conjunction with our consolidated financial statements and the related notes appearing at the end of this prospectus and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other financial information contained in this prospectus.

	As of September 30, 2014
	Actual			Pro Forma	Pro Forma As Adjusted(1)
Long-term debt, less current portion	$	52,140		$	$
Stockholders’ equity/(deficit):
Series D Preferred Stock, par value $0.00001 per share; 6,000,000 shares authorized, 2,743,902 shares issued and outstanding, actual (aggregate liquidation value of $28,006 at September 30, 2014) (unaudited); no shares authorized, issued or outstanding, pro forma and pro forma as adjusted		27,439
Common stock, par value $0.00001 per share; 462,000,000 shares authorized, 9,000,000 shares issued and outstanding, actual;                 shares authorized, pro forma and pro forma as adjusted;                 shares issued and outstanding, pro forma;                 shares issued and outstanding, pro forma as adjusted		—
Additional paid in capital		247,798
Accumulated deficit		(294,845	)
Total stockholders’ equity/(deficit)		(19,608	)
Total capitalization	$	32,532		$	$

⁽¹⁾  Each $1.00 increase (decrease) in the assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, additional paid in capital, total stockholders’ equity/(deficit) and total capitalization by approximately $         million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 1.0 million shares in the number of shares offered by us at the assumed initial public offering price per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, additional paid in capital, total stockholders’ equity/(deficit) and total capitalization by approximately $         million.

The number of shares in the table above does not include:

•                 shares of common stock issuable upon exercise of stock options outstanding as of September 30, 2014, at a weighted-average exercise price of $         per share;

•                 shares of our common stock reserved for future issuance under our 2014 Incentive Compensation Plan; and

•                 of common stock issuable upon exercise of warrants outstanding as of September 30, 2014, at a weighted-average exercise price of $         per share.

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DILUTION

If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share of our common stock after this offering.

As of September 30, 2014, we had a historical net tangible book value (deficit) of $(21.0) million, or $(2.33) per share of common stock. Our historical net tangible book value per share represents total tangible assets less total liabilities, divided by the number of shares of our common stock outstanding as of September 30, 2014.

Our pro forma net tangible book value as of September 30, 2014 was $         million, or $         per share, based on shares of our common stock outstanding as of September 30, 2014, after giving effect to the automatic conversion of all outstanding shares of our preferred stock into common stock upon the closing of this offering.

After giving further effect to the sale of             shares of common stock in this offering at an assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of September 30, 2014 would have been approximately $         million, or approximately $         per share. This amount represents an immediate increase in pro forma net tangible book value of $         per share to our existing stockholders and an immediate dilution of approximately $         per share to new investors participating in this offering. We determine dilution by subtracting the pro forma as adjusted net tangible book value per share after this offering from the amount of cash that a new investor paid for a share of common stock. The following table illustrates this dilution:

Assumed initial public offering price per share				$
Historical net tangible book value (deficit) per share as of September 30, 2014	$	(2.33	)
Increase per share attributable to the conversion of our preferred stock
Pro forma net tangible book value per share as of September 30, 2014
Increase per share attributable to this offering
Pro forma as adjusted net tangible book value per share after this offering
Dilution per share to new investors in this offering				$

Each $1.00 increase (decrease) in the assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted net tangible book value per share after this offering by approximately $            , and dilution in pro forma net tangible book value per share to new investors by approximately $            , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of 1.0 million shares in the number of shares offered by us would increase (decrease) our pro forma as adjusted net tangible book value per share after this offering by approximately $         per share and decrease (increase) the dilution to new investors by approximately $         per share, assuming that the assumed initial public offering price remains the same, and after deducting the estimated underwriting discounts and commissions and the estimated offering expenses payable by us.

If the underwriters exercise their option to purchase additional shares of our common stock in full, the pro forma as adjusted net tangible book value after this offering would be $         per share, the increase in pro forma net tangible book value per share would be $         and the dilution per share to new investors would be $         per share, in each case assuming an initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus.

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The following table summarizes on the pro forma as adjusted basis described above, as of September 30, 2014, the differences between the number of shares purchased from us, the total consideration paid to us in cash and the average price per share that existing stockholders and new investors paid. The calculation below is based on an assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

	Shares Purchased				Total Consideration
	Number	Percent			Amount	Percent
Existing stockholders				%	$			%
New investors
Total			100	%	$		100	%

The foregoing tables and calculations are based on the number of shares of our common stock outstanding as of September 30, 2014, after giving effect to the automatic conversion of all outstanding shares of our preferred stock into common stock upon the closing of this offering, and exclude:

•                 shares of common stock issuable upon exercise of stock options outstanding as of September 30, 2014, at a weighted-average exercise price of $         per share;

•                 shares of our common stock reserved for future issuance under our 2014 Incentive Compensation Plan; and

•                 shares of common stock issuable upon exercise of warrants outstanding as of September 30, 2014, at a weighted-average exercise price of $         per share.

If all of our outstanding warrants and options as of September 30, 2014 had been exercised by the payment of cash for shares of our common stock at that date:

• existing investors in the table above would have held                 shares of our common stock, or     %, and would have paid $         , or     %, of the total consideration; and

• the new investors in the table above would have held                 shares of our common stock, or     %, and would have paid $         , or     %, of the total consideration.

To the extent any of these outstanding options or warrants is exercised, there will be further dilution to new investors. If all of such outstanding options and warrants had been exercised as of September 30, 2014, the pro forma as adjusted net tangible book value per share after this offering would be $        , and total dilution per share to new investors would be $        .

If the underwriters exercise their option to purchase additional shares of our common stock in full:

• the percentage of shares of common stock held by existing stockholders will decrease to approximately     % of the total number of shares of our common stock outstanding after this offering; and

• the number of shares held by new investors will increase to             , or approximately     % of the total number of shares of our common stock outstanding after this offering.

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SELECTED CONSOLIDATED FINANCIAL DATA

The following tables set forth, for the periods and as of the dates indicated, our selected consolidated financial data. The consolidated statement of operations data for the years ended December 31, 2012 and 2013 and the consolidated balance sheet data as of December 31, 2012 and 2013 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated statement of operations data for the nine months ended September 30, 2013 and 2014 and the consolidated balance sheet data as of September 30, 2014 are derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited consolidated financial statements include, in the opinion of management, all adjustments including normal recurring adjustments, that management considers necessary for the fair presentation of the financial information set forth in those statements. You should read the following information together with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus. Our historical results are not indicative of the results to be expected in the future, and our results of operations for the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2014 or any other future period.

	Year Ended December 31,						Nine Months Ended September 30,
	2012			2013			2013			2014
(in thousands, except share and per share data)
Statement of Operations Data:
Revenue	$	555		$	6,166		$	3,627		$	9,473
Cost of goods sold		10,924			18,175			13,667			14,346
Gross margin		(10,369	)		(12,009	)		(10,040	)		(4,873	)
Operating expense:
Research and development		5,496			6,740			5,198			4,605
Selling, general and administrative		36,304			56,671			44,566			35,607
Restructuring		—			9,399			—			—
Total operating expense		41,800			72,810			49,764			40,212
Operating loss		(52,169	)		(84,819	)		(59,804	)		(45,085	)
Other income (expense):
Interest income		5			12			12			3
Interest expense		(1,050	)		(3,171	)		(1,264	)		(5,526	)
Change in fair value of prepayment features		—			62			394			667
Other expense		—			(394	)		(8	)		—
Other income		667			713			696			201
Total other income (expense)		(378	)		(2,778	)		(170	)		(4,655	)
Net loss	$	(52,547	)	$	(87,597	)	$	(59,974	)	$	(49,740	)
Net loss attributable to common stockholders	$	(63,027	)	$	(104,205	)	$	(72,273	)	$	(58,465	)
Per Share Data:
Net loss per share of common stock(1)
Basic and diluted	$	(90.56	)	$	(126.45	)	$	(87.77	)	$	(15.16	)
Weighted average common shares outstanding(1)
Basic and diluted		695,955			824,104			823,470			3,857,650
Pro forma net loss per share of common stock(1)
Basic and diluted (unaudited)				$						$
Pro forma weighted average common shares outstanding(1)
Basic and diluted (unaudited)

⁽¹⁾  See Note 4 to our notes to consolidated financial statements included elsewhere in this prospectus for an explanation of the method used to calculate the historical and pro forma basic and diluted net loss per share of common stock and the number of shares used in the computation of the per share amounts.

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	As of December 31,					As of September 30, 2014
	2012		2013
(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	74,020	$	31,014		$	20,961
Working capital		75,454		39,747			19,096
Total assets		96,740		62,091			48,325
Total liabilities		15,443		63,104			67,933
Total stockholders’ equity/(deficit)		81,297		(1,013	)		(19,608	)

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes thereto included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this prospectus, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a commercial-stage medical technology company focused on developing innovative technologies to improve the health and quality of life of people with Type 2 diabetes. We designed our first commercialized product, the V-Go Disposable Insulin Delivery Device, or V-Go, to help patients with Type 2 diabetes who require insulin to achieve and maintain their target blood glucose goals. V-Go is a small, discreet and easy-to-use disposable insulin delivery device that a patient adheres to his or her skin every 24 hours. V-Go enables patients to closely mimic the body’s normal physiologic pattern of insulin delivery throughout the day and to manage their diabetes with insulin without the need to plan a daily routine around multiple daily injections.

We currently focus on the treatment of patients with Type 2 diabetes—a pervasive and costly disease that, according to the 2014 National Diabetes Statistics Report released by the U.S. Centers for Disease Control and Prevention, or CDC, currently affects between 90% to 95% of the 20.9 million U.S. adults diagnosed with diabetes. The CDC estimates that the combined direct medical and drug costs and indirect lost productivity costs of diabetes in the United States are approximately $245 billion annually. We believe the majority of the 12.8 million U.S. adults treating their Type 2 diabetes with more than one daily oral anti-diabetic drug, or OAD, or an injectable diabetes medicine can benefit from V-Go’s innovative approach to Type 2 diabetes management. Our near-term market consists of the approximately 5.8 million of these patients who currently take insulin, which includes 4.6 million patients who have not been able to achieve their target blood glucose goal.

We commenced commercial sales of V-Go in the United States during 2012. During the first half of 2012, we initiated an Early Access Program to provide a limited number of physicians with free V-Go products for patients and began shipments to major wholesalers in anticipation of commercial launch. In the second half of 2012, we began hiring sales representatives in selected U.S. markets. At the end of 2013, our sales team covered 62 territories primarily within the East, South, Midwest and Southwest regions of the United States.

Our revenue increased from $0.6 million in 2012 to $6.2 million in 2013 and to $9.5 million for the nine months ended September 30, 2014, reflecting our territorial expansion. Our net loss was $87.6 million and $49.7 million for the year ended December 31, 2013 and the nine months ended September 30, 2014, respectively. Our accumulated deficit as of September 30, 2014 was $294.8 million. Since launching V-Go, the total number of prescriptions for, and the number of patients using, V-Go have increased each quarter. Based on prescription data, there were approximately 58,000 V-Go prescriptions filled during the nine months ended September 30, 2014, and we estimate that approximately 12,000 patients with Type 2 diabetes were using V-Go as of September 30, 2014.

Financial Overview

Revenue

We generate revenue from sales of V-Go to third-party wholesalers and medical supply distributors that take delivery and ownership of V-Go and, in turn, sell it to retail pharmacies or directly to patients with

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Type 2 diabetes. We have entered into agreements with wholesale customers and third-party payors throughout the United States. These agreements may include product discounts and rebates payable by us to third-party payors upon dispensing V-Go to patients. These agreements customarily provide the customer with rights to return the product, subject to the terms of each contract. Our wholesale and medical supply distributor customers can return purchased V-Go products during a period that begins six months prior to the product’s expiration date and ends one year after the expiration date. V-Go’s expiration date is determined by adding 36 months to the date of manufacture. Additionally, returns are no longer honored after delivery to the patient. Therefore, with respect to each unit of V-Go sold, we record revenue when a patient takes possession of the product.

We record deferred revenue equal to the gross invoice sales price less estimated cash discounts and distribution fees at the time we ship V-Go to our customers. We also invoice our customers and record a related deferred cost of goods sold at that time. We defer recognition of revenue and the related cost of goods sold on shipments of V-Go until we receive third-party confirmation that a patient has taken possession of V-Go. We estimate patient prescriptions dispensed using an analysis of third-party information.

Cost of Goods Sold

We currently manufacture V-Go and the EZ Fill accessory in cleanrooms at a contract manufacturing organization, or CMO. We also have a relationship with a separate CMO that performs our final inspection and packaging functions. Any single-source components and suppliers are managed through our global supply chain operation.

Cost of goods sold includes raw materials, labor costs, manufacturing overhead expenses and reserves for anticipated scrap and inventory obsolescence. Due to our relatively low production volumes of V-Go and EZ Fill compared to our potential capacity for those products, the majority of our per-unit costs are manufacturing overhead expenses. These expenses include quality assurance, manufacturing engineering, material procurement, inventory control, facilities, equipment and operations supervision and management.

We expect our overall gross margin, which is calculated as revenue less cost of goods sold for a given period, to fluctuate in future periods as a result of increased manufacturing output as well as changes in and improvements to our manufacturing processes and expenses. We expect that improvements in manufacturing efficiencies and increases in volume up to our current capacity will generally improve our gross margins. We generally expect manufacturing inefficiencies, which we may experience if we seek to manufacture new products or attempt to add manufacturing capacity, to negatively impact gross margin.

Research and Development

Our research and development activities primarily consist of engineering and research programs associated with products under development as well as activities associated with our core technologies and processes. Our research and development expenses are primarily related to employee compensation, including salary, fringe benefits, share-based compensation and contract employee expenses. In addition, research and development includes costs and expenses associated with the validation of new manufacturing lines. Once validated, all line expense is included in cost of goods sold.

We expect our research, development and engineering expenses to increase from current levels as we initiate and advance our development projects, including the prefill V-Go.

Selling, General and Administrative

Selling, general and administrative expenses consist primarily of salary, fringe benefits and share-based compensation for our executive, financial, marketing, sales, business development, regulatory affairs and administrative functions. Other significant expenses include product demonstration samples, trade show

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expenses, professional fees for contracted clinical diabetes educators, external legal counsel, independent auditors and other consultants, insurance, facilities and information technologies expenses. We expect our selling, general and administrative expenses to increase as our business expands.

Other Income (Expense), net

Other income (expense), net primarily consists of interest expense and amortization of debt discount associated with our term loan agreement with Capital Royalty Partners, or our Term Loan, and other notes payable.

Results of Operations for the Nine Months Ended September 30, 2013 and 2014

The following is a comparison of revenue and expense categories for the nine months ended September 30, 2013 and 2014:

	Nine Months Ended September 30,						Change
	2013			2014			$			%
(in thousands except percentages)
Revenue	$	3,627		$	9,473		$	5,846			161
Cost of goods sold		13,667			14,346			679			5
Gross margin		(10,040	)		(4,873	)		5,167			51
Operating expense:
Research and development		5,198			4,605			(593	)		(11	)
Selling, general and administrative		44,566			35,607			(8,959	)		(20	)
Total operating expense		49,764			40,212			(9,552	)		(19	)
Operating loss		(59,804	)		(45,085	)		14,719			25
Other income (expense), net:
Interest income		12			3			(9	)		(75	)
Interest expense		(1,264	)		(5,526	)		(4,262	)		(337	)
Change in fair value of prepayment features		394			667			273			69
Other income (expense)		688			201			(487	)		(71	)
Total other income (expense), net		(170	)		(4,655	)		(4,485	)		(2,638	)
Net loss	$	(59,974	)	$	(49,740	)	$	10,234			17

nm = not meaningful

Revenue

We commenced commercial sales of V-Go in the United States during the first half of 2012 and hired sales representatives to cover selected territories on the East Coast of the United States during the latter half of that year. In 2013, we expanded our sales organization, which contributed to an increase in our revenue. The total number of patients using V-Go increased from approximately 5,700 at September 30, 2013 to over 12,000 at September 30, 2014. This increase in patients and, to a lesser extent price increases, contributed to a revenue increase of 161% on a period over period, comparative basis.

Cost of Goods Sold

Our cost of goods sold for the first nine months of 2014 was $14.4 million on revenue of $9.5 million, compared to $13.7 million in cost of goods sold on revenue of $3.6 million during in the same period in 2013. As a percentage of revenue, cost of goods sold decreased from 377% during the first nine months of 2013 to 151% during the first nine months of 2014.

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During the third quarter of 2013 we moved manufacturing to a CMO that uses custom-designed, semi-automated manufacturing equipment and production lines. During that time we developed a relationship with a separate CMO that performs our final inspection and packaging functions. This move resulted in a favorable impact to our cost of goods sold for the comparative periods shown.

We are in the early stages of commercialization, and as a result our cost of goods sold will not increase in direct proportion to our revenue. We have not yet been able to take full advantage of economies of scale in our manufacturing. As a result, our current cost of goods sold reflects the absorption of overhead as the largest component of costs.

Research and Development

Total research and development expenses decreased during the nine months ended September 30, 2014 compared to the same period in the prior year. The period over period favorable variance of $0.6 million was comprised of a $0.9 million decrease in departmental expense, spread evenly between contract labor, supplies and facilities expense, partially offset by a $0.3 million increase in costs during 2014 related to the development of a new production line in China.

Selling, General and Administrative

Our selling, general and administrative expenses decreased in the nine months ended September 30, 2014 as compared to the same period in 2013. During 2014, we were able to reduce our reliance on external consulting services used to assist with our marketing initiatives and other professional services by $5.5 million. That savings was partially offset by $0.6 million in expenses associated with our increased distribution of V-Go samples to physicians and for use in educational programs as we worked to expand our selling base. The remainder of the decrease was attributable to a $3.9 million reduction in employee-related expenses primarily related to reduced employee headcount and a $0.2 million decrease in administrative expense primarily related to costs associated with insurance and franchise taxes.

Other Income (Expense), Net

The increase in interest expense during the nine months ended September 30, 2014 as compared to the same period in the prior year was primarily attributable to $4.3 million of third quarter 2013 interest expense on borrowings under our Term Loan entered into during the second quarter of 2013.

The change in other income of $0.3 million during the nine months ended September 30, 2014 as compared to the same period in the prior year primarily reflected the change in the value of our Series B warrant liability of $0.7 million partially offset by a gain from the sale of equipment that we no longer use in our production process.

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Results of Operations for the Years Ended December 31, 2012 and 2013

The following is a comparison of revenue and expense categories for the years ended December 31, 2012 and 2013:

	Year Ended December 31,						Change
	2012			2013			$			%
(in thousands except percentages)
Revenue	$	555		$	6,166		$	5,611			1,011
Cost of goods sold		10,924			18,175			7,251			66
Gross margin		(10,369	)		(12,009	)		(1,640	)		(16	)
Operating expense:
Research and development		5,496			6,740			1,244			23
Selling, general and administrative		36,304			56,671			20,367			56
Restructuring		—			9,399			9,399			nm
Total operating expense		41,800			72,810			31,010			74
Operating loss		(52,169	)		(84,819	)		(32,650	)		(63	)
Other income (expense), net:
Interest income		5			12			7			140
Interest expense		(1,050	)		(3,171	)		(2,121	)		(202	)
Change in fair value of prepayment features		—			62			62			nm
Other income (expense)		667			319			(348	)		(52	)
Total other income (expense), net		(378	)		(2,778	)		(2,400	)		(635	)
Net loss	$	(52,547	)	$	(87,597	)	$	(35,050	)		(67	)

nm = not meaningful

Revenue

We commenced commercial sales of V-Go in the United States during 2012. During the first half of 2012, we began shipments to major wholesalers in anticipation of commercial launch. In the second half of 2012, we hired sales representatives to cover selected territories on the East Coast of the United States. Our revenue in 2012 was $0.6 million. In 2013, we further expanded our sales organization, allowing us to broaden our reach and contributing to an increase in our revenue to $6.2 million.

Cost of Goods Sold

During the year ended December 31, 2013, our total cost of goods sold increased by $7.3 million, or 66%, compared to the prior year. As described above, during the third quarter of 2013 we moved our manufacturing to a CMO, which resulted in a favorable impact to our cost of goods sold for the second half of 2013.

Research and Development

Our total research and development expenses increased by $1.2 million, or 23%, compared to the prior year. Employee-related costs and supply expense increased $0.3 million and $0.6 million, respectively, from the full year 2012 to 2013 due to our initiation of new internal programs during 2013. In addition, our quality group implemented a program during 2012 to facilitate interaction with users of our product in an effort to gain insight into any issues they may be experiencing. Expenses for this program correlate to contact experiences with customers, which increase as our sales and our customer base increase. As a result of the increase in sales and customer base, we experienced a $0.3 million increase for this expense during the year ended December 31, 2013 as compared to 2012.

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Selling, General and Administrative

Our selling, general and administrative expenses for the year ended December 31, 2013 increased by $20.4 million, or 56%, as compared to the prior year. Approximately $14.4 million of the $20.4 million year-over-year increase was for employee-related expense, with $13.6 million of that increase in employee costs directly relating to our sales and marketing departments. In addition, we increased our spending on marketing programs and professional fees during 2013 by $7.3 million and $0.4 million, respectively, over the comparative period in 2012. These expense increases were partially offset by a $2.1 million reduction in the cost of product samples distributed to physicians and used for educational programs.

Restructuring

In October 2013, we implemented a company-wide strategic restructuring of our operations, the 2013 Restructuring, with the intent to significantly lower cash expenditures while minimizing the impact on sales growth. The 2013 Restructuring’s cost-savings initiatives included a combination of reduced spending on marketing programs, manufacturing costs, inventory, and a reduction in work force. In connection with the 2013 Restructuring, we recorded an impairment to our long-lived assets of $5.2 million for assets related to a closed facility, contract termination costs of $3.9 million related to the termination of our relationship with certain suppliers and employee termination benefits of $0.4 million during 2013. See Note 12 in our consolidated financial statements included in this prospectus for additional discussion of the 2013 Restructuring.

Other Income (Expense), net

The period over period increase in interest expense is due to our entry into our Term Loan in May 2013. The initial tranche of $50.0 million was drawn in August 2013. Interest expense associated with this term loan was approximately $2.1 million in 2013.

During the year ended December 31, 2012, $0.4 million of other income was due to a grant received from the Massachusetts Life Sciences Foundation for research and development. Our restructuring and reduction in force initiatives undertaken during 2013 disqualified us from receiving that grant, and as a result we reversed the 2012 income and recorded other expense of $0.4 million during the year ended December 31, 2013.

Liquidity and Capital Resources

At September 30, 2014, we had $21.0 million in cash and cash equivalents. We believe that our cash on hand, together with the proceeds we received from the Second Series D Closing and expect to receive from this offering, will be sufficient to satisfy our liquidity requirements for at least the next 12 months. We expect that our sales performance and the resulting operating income or loss, as well as the status of each of our new product development programs, will significantly impact our cash management decisions. We have utilized, and may continue to utilize, debt arrangements with debt providers and financial institutions to finance our operations. Factors such as interest rates and available cash will impact our decision to continue to utilize debt arrangements as a source of cash. In the event we do not consummate this offering, we will need to seek alternative financing sources, including from debt issuance or private equity, in order to execute our business strategies.

Historically, our sources of cash have included private placements of equity securities, debt arrangements, and cash generated from operations, primarily from the collection of accounts receivable resulting from sales. Our historical cash outflows have primarily been associated with cash used for operating activities such as the purchase and growth of inventory, expansion of our sales and marketing

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and research and development activities and other working capital needs; the acquisition of intellectual property; and expenditures related to equipment and improvements used to increase our manufacturing capacity and improve our manufacturing efficiency and for overall facility expansion.

The following table shows a summary of our cash flows for the years ended December 31, 2012 and 2013, and the nine months ended September 30, 2013 and 2014:

	Year Ended December 31,						Nine Months Ended September 30,
	2012			2013			2013			2014
(in thousands)
Net cash provided by (used in):
Operating activities	$	(56,128	)	$	(85,245	)	$	(64,158	)	$	(34,088	)
Investing activities		(7,222	)		(6,820	)		(5,614	)		(1,520	)
Financing activities		69,554			49,059			49,142			25,555
Total	$	6,204		$	(43,006	)	$	(20,630	)	$	(10,053	)

Operating Activities

The increase in net cash used in operating activities for the year ended December 31, 2013 as compared to the prior year was primarily associated with increased selling, general and administrative costs associated with the continued development of demand for V-Go and costs related to a strategic corporate restructuring that took place in October 2013. Our employee headcount, employee-related expenses and working capital needs, including accounts receivable and inventory, increased significantly as a result of our continued growth of commercial operations until the restructuring in October 2013. The decrease in net cash used in operating activities for the nine months ended September 30, 2014 as compared to the nine months ended September 30, 2013 was primarily associated with increased product revenue and lower cost of goods sold as a result of manufacturing efficiencies.

Investing Activities

Net cash used in investing activities for the periods ended December 31, 2012 and 2013 and the nine months ended September 30, 2013 and 2014 was primarily related to purchases of capital equipment.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2013 and nine months ended September 30, 2013 was the result of the August 2013 drawdown of the first tranche of our Term Loan for $50.0 million, partially offset by debt issuance costs of $0.5 million and principal payments on our senior subordinated note of $0.4 million. Net cash provided by financing activities for the year ended December 31, 2012 was related to proceeds from the issuance of our Series C preferred shares for $70.1 million, partially offset by issuance costs of $0.2 million and debt repayment of $0.4 million during the period. Net cash proceeds for the nine months ended September 30, 2014 was primarily related to proceeds from the Series D Financing of $27.4 million, partially offset by issuance costs of $0.7 million and debt and capital lease repayments of $0.3 million.

Indebtedness

Capital Royalty Partners Term Loan

On May 23, 2013, we entered into a term loan agreement with Capital Royalty Partners, or the Term Loan, which provides for total borrowings of up to $100 million, structured as a senior secured loan with a six-year term. The agreement provides for the issuance of notes in three separate tranches. The Term Loan bears interest at 11% per annum and compounds annually. Until the third anniversary of the

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Term Loan, we have the option to pay quarterly interest of 7.5% in cash and 3.5% in-kind, or PIK, which interest is added to the aggregate principal amount of the loan on the last day of each quarter. Thereafter, interest on the Term Loan is payable only in cash. The first tranche of the Term Loan was $50 million, and was drawn on August 15, 2013. The potential second and third tranches of the Term Loan were $25 million each and could be drawn after reaching revenue milestones over three consecutive months prior to March 31, 2014 and September 30, 2014, respectively. We did not meet the respective revenue thresholds for the second and third tranches on those dates and therefore only drew down a total of $50.0 million under the Term Loan.

The Term Loan contains minimum revenue covenants for 2014 and 2015 of $25 million and $50 million, respectively. Should we not achieve the minimum revenue threshold for either 2014 or 2015, the Term Loan provides a cure right pursuant to which we can avoid an event of default by reducing the principal amount of the Term Loan through a repayment on or prior to April 30 of the following year equal to two times the revenue shortfall at year end, using proceeds from either newly obtained subordinated debt or an equity financing. In conjunction with the 2014 Reorganization and Series D Financing, we amended the Term Loan with Capital Royalty Partners to provide for a conditional waiver of the minimum revenue covenant for 2014, a reduction in the minimum revenue covenant for 2015 from $50.0 million to $20.0 million and the availability of the minimum revenue covenant’s repayment cure right throughout the life of the Term Loan. These amendments to the Term Loan are conditional, however, on our consummation of an initial public offering with proceeds to us of at least $40.0 million by March 31, 2015. If we satisfy the initial public offering condition in connection with this offering, the amended Term Loan does not require us to reserve any portion of the proceeds of this offering except to the extent necessary to satisfy the Term Loan’s minimum cash covenant, which requires us to maintain, at all times, a $2.0 million minimum daily balance of cash or cash equivalents.

In connection with entering into the facility in May 2013, we issued warrants to purchase 4,665,531 shares of our common stock at an exercise price of $0.01. The warrants issued in May 2013 were deemed to be permanent equity. We recorded the loan net of an original issuance discount of $3.3 million, relating to the issuance of these warrants, and net of deferred financing costs paid directly to the creditor, and therefore treated as a discount to the debt, of $0.5 million relating to the lender finance fee of 1%. The original issue discount on the loan is being amortized over the term of the loan using the effective interest method and was $3.0 million and $3.9 million at December 31, 2013 and September 30, 2014, respectively. The discount related to the issuance costs is being amortized over the term of the loan using the effective interest method and was $0.5 million and $0.4 million at December 31, 2013 and September 30, 2014, respectively. During June 2014, and in connection with the 2014 Reorganization, these warrants were cancelled and on August 5, 2014, we issued Capital Royalty Partners new warrants to purchase 198,667 shares of our common stock exercisable at $0.01 per share.

Upon a change in control or specified sales of our assets, our Term Loan must be prepaid in an amount equal to the outstanding principal balance plus accrued and unpaid interest, taking into account a prepayment premium that starts at 5% of the balance and decreases to 0% over time. Absent a change in control, the outstanding principal and accrued PIK interest will be repaid in twelve quarterly installments during the final three years of the term. We determined that the prepayment feature qualified as an embedded derivative requiring bifurcation from the debt. The derivative was initially valued at $0.6 million and recorded as a long-term liability within derivative liabilities on our consolidated balance sheet, with a corresponding discount on the note. The fair value of the derivative liability was $0.6 million and $0.4 million at December 31, 2013 and September 30, 2014, respectively. The change in fair value of $0.2 million for the nine months ended September 30, 2014 was recorded to change in fair value of prepayment features on our consolidated statement of operations. The original issue discount for the prepayment feature is being amortized using the effective interest method over the term of the loan, and was $0.6 million and $0.5 million as of December 31, 2013 and September 30, 2014, respectively.

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WCAS Capital Partners Note Payable

In 2011, concurrent with the issuance of Series C Preferred Stock, we issued a $5.0 million senior subordinated note, or WCAS Note, to WCAS Capital Partners IV, L.P. Amounts due under the WCAS Note bear interest at 10% per annum, payable semi-annually, and the full principal amount is due in September 2021. We may pay off the WCAS Note at any time without penalty. We recorded the WCAS Note as a liability net of an original issue discount of $0.6 million.

Upon a change in control, the WCAS Note must be prepaid in an amount equal to the outstanding principal balance, plus accrued and unpaid interest. We determined that the prepayment feature qualified as an embedded derivative requiring bifurcation from the debt. The derivative was initially valued at $0.7 million and recorded as a long-term liability within derivative liabilities on our consolidated balance sheets, with a corresponding discount on the WCAS Note. The fair value of the derivative liability was $0.7 million as of each of December 31, 2012 and 2013 and $0.2 million as of September 30, 2014. Any change in fair value of the prepayment features is recorded on our consolidated statements of operations.

On May 23, 2013, in connection with the entry into our Term Loan, the WCAS Note was amended such that the note now bears interest at 12% per annum, and all interest accrues as compounded PIK interest and is added to the aggregate principal amount of the loan semi-annually. The then outstanding principal amount of the note, including accrued PIK interest, is due in full in September 2021.

Contractual Obligations

The following summarizes our significant contractual obligations as of September 30, 2014:

	Payment Due by Period
(in thousands)	Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years
Purchase commitments(1)	$	7,533	$	7,533	$	—	$	—	$	—
Operating lease obligations(2)		3,743		1,152		2,331		260		—
Capital lease obligations(3)		217		153		64		—		—
Senior secured debt(4)		52,030		—		21,679		30,351		—
Other note payable(5)		5,871		—		—		—		5,871
Interest payments on long-term debt(6)		28,778		4,998		10,830		5,488		7,462
Total	$	98,172	$	13,836	$	34,904	$	36,099	$	13,333

⁽¹⁾  Represents purchase commitments with suppliers for raw materials and finished goods.

⁽²⁾  Represents operating lease commitments for office and manufacturing space in Shrewsbury, Massachusetts and Bridgewater, New Jersey and small office equipment.

⁽³⁾  Represents capital lease commitments for manufacturing equipment that expire in March 2016.

⁽⁴⁾Represents a term loan agreement with Capital Royalty Partners for $50.0 million, including accrued interest.

⁽⁵⁾Represents a $5.0 million Senior Subordinated Note Payable to WCAS Capital Partners IV, L.P., including accrued interest.

⁽⁶⁾  Represents expected interest payments on senior secured debt and other note payable.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies and Use of Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well

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as the reported revenue and expenses during the reporting periods. These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ materially from these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in the notes to our consolidated financial statements included elsewhere in this prospectus, we believe that the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our consolidated financial statements and understanding and evaluating our reported financial results.

Revenue Recognition

Our revenue is primarily generated from the sales in the United States of V-Go to third-party wholesalers and medical supply distributors that, in turn, sell it to retail pharmacies or directly to patients.

We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred and title passed, the price is fixed or determinable, and collectability is reasonably assured. These criteria are applied as follows:

• The evidence of an arrangement generally consists of contractual arrangements with our third-party wholesalers and medical supply distributor customers.

• Transfer of title and risk and rewards of ownership are passed upon shipment of product to distributors or upon delivery to patients. However, due to uncertainty of customer returns and insufficient historical data that would enable us to estimate returns, we do not consider this element to have been achieved until the prescription has been dispensed to the patient.

• The selling prices are fixed and agreed upon based on the contracts with distributors, the customer and contracted insurance payors, if applicable. For sales to customers associated with insurance providers with whom we do not have a contract, we recognize revenue upon collection of cash at which time the price is determinable. Provisions for discounts and rebates to customers are established as a reduction to revenue in the same period the related sales are recorded.

• We consider the overall creditworthiness and payment history of the distributor, customer or the contracted payor in concluding whether collectability is reasonably assured.

We have entered into agreements with wholesalers and third-party payors throughout the United States. These agreements may include product discounts and rebates payable by us to third-party payors upon dispensing V-Go to patients. Additionally, these agreements customarily provide such wholesalers and distributors with rights to return purchased products within a specific timeframe, as well as prior to such timeframe if the product is damaged in the normal course of business. Our wholesaler and medical supply distributor customers can generally return purchased product during a period that begins six months prior to the purchased V-Go’s expiration date and ends one year after the expiration date. V-Go’s expiration date is determined by adding 36 months to the date of manufacture. Returns are no longer honored after delivery to the patient. Therefore, with respect to each unit of V-Go sold, we record revenue when a patient takes possession of the product.

Revenue from product sales is recorded net of adjustments for managed care rebates, wholesale distributions fees, cash discounts, and prompt pay discounts, all of which are established at the time of

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sale. In order to prepare our consolidated financial statements, we are required to make estimates regarding the amounts earned or to be claimed on the related product sales, including the following:

• managed care rebates, which are based on the estimated end user payor mix and related contractual rebates; and

• prompt pay discounts, which are recorded based on specified payment terms, and which vary by customer.

We believe our estimates related to managed care rebates and prompt pay discounts do not have a higher degree of estimation complexity or uncertainty as the related amounts are settled within a relatively short period of time.

We are currently unable to reasonably estimate future returns due to lack of sufficient historical return data for V-Go. Accordingly, we invoice our customers, record deferred revenue equal to the gross invoice sales price less estimated cash discounts and distribution fees, and record a related deferred cost of goods sold. We defer recognition of revenue and the related cost of goods sold on shipments of V-Go until a customer’s right of return no longer exists, which is once we receive evidence that the product has been distributed to patients based on an analysis of third-party information. When we believe we have sufficient historical data to develop reasonable estimates of expected returns upon historical returns, we plan to recognize product sales upon shipment to our customers.

Inventories

Inventories consists of raw materials, work in process and finished goods, which are valued at the lower of cost or market. Cost is determined on a first in, first out, or FIFO, basis and includes material costs, labor and applicable overhead. We review our inventory for excess or obsolete inventory and write down inventory that has no alternative uses to its net realizable value. Economic conditions, customer demand and changes in purchasing and distribution can affect the carrying value of inventory. As circumstances warrant, we record lower of cost or market inventory adjustments. In some instances, these adjustments can have a material effect on the financial results of an annual or interim period. In order to determine such adjustments, we evaluate the age, inventory turns and estimated fair value of product inventory by stage of completion and record an adjustment if estimated market value is below cost.

Income Taxes

We account for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which these temporary differences are expected to be recovered or settled. A valuation allowance is established to reduce net deferred tax assets to the amount expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in results of operations in the period that includes the enactment date. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being recognized. Changes in recognition and measurement are reflected in the period in which the change in judgment occurs.

At December 31, 2013, we had net operating loss carryforwards for federal income tax purposes of $182.9 million that were available to offset future federal taxable income, if any. The federal net operating losses begin to expire in 2028. We also had net operating loss carryforwards for state income tax purposes of $40.4 million that are available to offset future state taxable income, if any. The state net operating loss carryforwards began to expire in 2013.

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The valuation allowance for deferred tax assets as of December 31, 2013 was $80.4 million. The valuation allowance is primarily related to net operating loss carryforwards that, in the judgment of our management, are not more likely than not to be realized. In making this assessment, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believed that a full valuation allowance was necessary at December 31, 2013. Utilization of the net operating loss carryforwards to offset future taxable income, if any, may be subject to an annual limitation under Section 382 of the Internal Revenue Code of 1986, as amended, due to ownership changes that may have occurred or could occur in the future. We performed a Section 382 analysis during September 2014, taking into account the 2014 Recapitalization, and have determined that the ownership changes resulting from those transactions did not limit the use of our loss carryforwards as of September 30, 2014.

Impairment of Long-Lived Assets

Long-lived tangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived tangible assets to be held and used is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If the carrying amount exceeds the undiscounted cash flows, the impairment to be recognized is measured by determining the amount by which the carrying amount exceeds the fair value of the asset. Fair value may be determined using appraisals, management estimates and discounted cash flow calculations. During the year ended December 31, 2013, we incurred asset impairment charges of $5.2 million primarily related to cost-saving restructuring initiatives implemented during the year.

Share-Based Compensation and Common Stock Valuation

Share-Based Compensation

We measure the cost of awards of equity instruments based on the grant date fair value of the awards. That cost is recognized on a straight-line basis over the period during which the employee is required to provide service in exchange for the entire award.

The fair value of stock options on the date of grant is calculated using the Black-Scholes option pricing model, based on key assumptions such as the fair value of common stock, expected volatility and expected term. Our estimates of these important assumptions are primarily based on third-party valuations, historical data, peer company data and our judgment regarding future trends and other factors. After the issuance of our Series C Preferred Stock in September 2011 and through May 2014, our board of directors used the purchase price of the Series C Preferred Stock of $1.435 as the exercise price on issuances of options to purchase our common stock. This exercise price for grants made during this period was, in all instances, above the fair value of the common stock. After the 2014 Recapitalization, our board of directors took into account a contemporaneous valuation as of June 1, 2014, but which gave effect to the 2014 Recapitalization, to establish the exercise price of option grants issued during July and September of 2014. These option grants were issued with an exercise price of $8.57, which our board determined to be the fair market value of our common stock at each grant date.

Common Stock Valuation

We have historically granted stock options at exercise prices not less than the fair value of our common stock. As there has been no public market for our common stock to date, the estimated fair value of our common stock has been determined by our board of directors. Prior to this offering, we have been a private company with no active public market for our common stock. Therefore, we have periodically

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determined for financial reporting purposes the estimated per share fair value of our common stock at various dates using contemporaneous valuations performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, also known as the Practice Aid. We performed these contemporaneous valuations on an as-needed basis. In conducting the contemporaneous valuations, we considered all objective and subjective factors that we believed to be relevant for each valuation conducted, including our best estimate of our business condition, prospects and operating performance at each valuation date. Within the contemporaneous valuations performed, a range of factors, assumptions and methodologies were used. The significant factors included:

• the prices of our preferred stock sold to or exchanged between outside investors in arm’s length transactions, and the rights, preferences and privileges of our preferred stock as compared to those of our common stock, including the liquidation preferences of our preferred stock;

• our results of operations, financial position and the status of research and development efforts;

• the composition of, and changes to, our management team and board of directors;

• the lack of liquidity of our common stock as a private company;

• our stage of development and business strategy and the material risks related to our business and industry;

• the achievement of enterprise milestones, including entering into collaboration and license agreements;

• the valuation of publicly traded companies in the life sciences and biotechnology sectors, as well as recently completed mergers and acquisitions of peer companies;

• any external market conditions affecting the life sciences, biopharmaceutical or medical technology industry sectors;

• the likelihood of achieving a liquidity event for the holders of our common stock and stock options, such as an initial public offering, or IPO, or a sale of our company, given prevailing market conditions;

• the state of the IPO market for similarly situated privately held medical technology companies; and

• any recent contemporaneous valuations prepared by an independent valuation specialist in accordance with methodologies outlined in the Practice Aid.

Common Stock Valuation Methodologies

The contemporaneous valuations discussed below were prepared in accordance with the guidelines in the Practice Aid, which prescribes several valuation approaches for setting the value of an enterprise, such as the cost, market and income approaches, and various methodologies for allocating the value of an enterprise to its common stock. The dates of our contemporaneous valuations have not always coincided with the dates of our stock-based compensation grants. In determining the fair value of our common shares, our board of directors considered, among other things, the most recent valuations of our common stock and our assessment of additional objective and subjective factors we believed were relevant as of the grant date. The additional factors considered when determining any changes in fair value between the most recent contemporaneous valuation and the grant dates included, when available, the prices paid in recent transactions involving our equity securities, as well as our stage of development, our operating and financial performance and current business conditions.

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We generally used the income and market approaches in our contemporaneous valuations, and then allocate our enterprise value using a hybrid approach, as discussed below. The income approach utilizes a discounted cash flow, or DCF, analysis, to determine the enterprise value of the company. The DCF analysis involves applying appropriate discount rates to estimated cash flows that were based on forecasts of revenue, costs and capital requirements. Our assumptions underlying the estimates were consistent with the plans and estimates that we use to manage the business. The risks associated with achievement of our forecasts were assessed in selecting the appropriate discount rates and selecting probability weightings for forecasted cash flows. The market approach utilizes the public company method to determine the enterprise value of the company. Under the public company method, the business is valued by comparing it with publicly-held companies engaged in reasonably similar lines of business. Market multiples based on current market prices are utilized together with historical and forecasted financial data of the publicly-traded guideline companies. These derived market multiples are then applied to the company’s historical or projected results to arrive at indications of enterprise value.

Methods Used to Allocate Our Enterprise Value to Classes of Securities

In accordance with the Practice Aid, we considered the various methods for allocating the enterprise value across our classes and series of capital stock to determine the fair value of our common stock at each valuation date. The methods we considered consisted of the following:

• Current Value Method.    Under the current value method, once the fair value of the enterprise is established, the value is allocated to the various series of preferred and common stock based on their respective seniority, liquidation preferences or conversion values, whichever is greatest.

• Option Pricing Method, or OPM.    Under the option pricing method, shares are valued by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class. The values of the preferred and common stock are inferred by analyzing these options.

• Probability-Weighted Expected Return Method, or PWERM.    The probability-weighted expected return method, or PWERM is a scenario-based analysis that estimates the value per share based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to us, as well as the economic and control rights of each share class.

• Hybrid Method.    The hybrid method is a PWERM where the equity value in one of the scenarios is calculated using an OPM. In the hybrid method used by us, two types of future-event scenarios were considered: an IPO and an unspecified liquidity event. The enterprise value for the IPO scenario was determined using a market approach. The enterprise value for the unspecified liquidity event scenario was determined using the OPM approach. The relative probability of each type of future-event scenario was determined by our board of directors based on an analysis of market conditions at the time, including then-current IPO valuations of similarly situated companies, and expectations as to the timing and likely prospects of the future-event scenarios.

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The following table summarizes stock-based compensation awards under our 2008 Equity Compensation Plan, or the 2008 Plan, to employees and non-employees from January 1, 2013 through June 19, 2014, the date of the 2014 Reorganization:

Grant Date	Options Granted		Exercise Price		Fair Value Per Share		Fair Value per Option(1)
February 15, 2013		90,500	$	1.435	$	0.67	$	0.55
March 1, 2013		8,849,009		1.435		0.67		0.47-0.55
March 25, 2013		100,000		1.435		0.67		0.56
June 25, 2013		30,000		1.435		0.67		0.47-0.56
July 18, 2013		125,000		1.435		0.67		0.56
October 9, 2013		34,000		1.435		0.67		0.47
October 31, 2013		1,500,000		1.435		0.67		0.46-0.49
November 21, 2013		342,500		1.435		0.67		0.47
February 4, 2014		798,683		1.435		0.11		0.05
March 1, 2014		162,500		1.435		0.11		0.05
May 14, 2014		8,000		1.435		0.11		0.05
May 27, 2014		60,000		1.435		0.11		0.05

(1) Certain grant dates have a range of fair values per option due to varying terms in the underlying stock option grants.

A brief narrative of the specific factors considered by our board of directors in determining the fair value of our common stock as of the date of grant is set forth below.

February 2013 through March 2013 Grants

During the period from February 2013 through March 2013, the board of directors granted stock options with an exercise price of $1.4345 and a fair value of common stock of $0.67 per share, which value was based on a contemporaneous valuation performed as of December 31, 2012. That valuation used a combination of income and market approaches, as discussed above, to derive an enterprise value for our company. The enterprise value was then allocated to the common shares based on an OPM approach. The aggregate enterprise value was allocated to the common stock utilizing an OPM with the following assumptions: a time to liquidity event of 1.37 years, a volatility of 60% and a risk-free interest rate of 0.24%. The time to a liquidity event was determined based upon the expected time frame for us to reach a value event either through a public offering of our stock or a sale of our company; the volatility was based on comparative volatility ranges of selected similar public companies using the time to a liquidity event as a basis; and the risk-free interest rate was based on the yields of U.S. Treasury Securities with a similar term. A discount for lack of marketability of 20% was applied to the resulting value of the common stock.

June 2013 through November 2013 Grants

During the period from June 2013 through November 2013, the board of directors granted stock options with an exercise price of $1.4345 and a fair value of common stock of $0.67 per share, which value was based on a contemporaneous valuation performed as of June 20, 2013. That valuation used a combination of income and market approaches, as discussed above, to derive an enterprise value for our company. The enterprise value was then allocated to the common shares based on an OPM approach. The aggregate enterprise value was allocated to the common stock utilizing an OPM with the following assumptions: a time to liquidity event of 1.78 years, a volatility of 60% and a risk-free interest rate of 0.33%. The time to a liquidity event was determined based upon the expected time frame for us to reach a value event either through a public offering of our stock or a sale of our company; the volatility was based on comparative volatility ranges of selected similar public companies using the time to a liquidity event as a basis; and the risk-free interest rate was based on the yields of U.S. Treasury Securities with a similar term. A discount for lack of marketability of 20% was applied to the resulting value of the common stock.

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February 2014 through May 2014 Grants

During the period from February 2014 through May 2014, the board of directors granted stock options with an exercise price of $1.4345 and a fair value of common stock of $0.11 per share, which value was based on a contemporaneous valuation performed as of March 31, 2014. That valuation used a combination of income and market approaches, as discussed above, to derive an enterprise value for our company. We then utilized a hybrid PWERM and OPM valuation methodology to allocate the enterprise value to the common stock assigning a probability to various liquidity events and also a probability to a scenario in which we remain private. Under this method, the value of the common stock is estimated based upon an analysis of future values for our company assuming various investment outcomes, the timing of which is based, in part, on the plans of our board of directors and management. Under this approach, share value is derived from the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to us, as well as the economic and control rights of each share class. The fair value of our common stock was estimated using a probability-weighted analysis of the present value of the returns afforded to common stockholders under several future stockholder exit or liquidity event scenarios, either through (1) an IPO; (2) a trade sale of our company; or (3) a stay private scenario, at cumulative amounts invested by preferred stock investors. The key valuation assumptions included those noted in the following table:

Major Assumptions	IPO		Trade Sale		Stay Private
Probability of scenario		50%		10%		40%
Discount for lack of marketability		30%		30%		30%
Timeline to liquidity		0.5 yrs		0.5 yrs		1.0 yrs
Discount rate—common stock		30%		30%		18%

None of our outstanding options as of June 19, 2014 had any intrinsic value. In connection with the 2014 Reorganization, all of the outstanding options to purchase our common stock granted prior to June 19, 2014 were converted into options to purchase limited liability company units of Holdings. Holders of limited liability company units of Holdings are entitled to their allocable portion of Holdings’ distributions and, upon the liquidation of Holdings, their allocable portion of the 9,000,000 shares of our common stock held by Holdings. See “Prospectus Summary—Recent Events.”

Stock-Based Compensation Awards Issued After the 2014 Reorganization

The following table summarizes stock-based compensation awards under our 2014 Equity Compensation Plan, or the 2014 plan, to employees and non-employees from July 1, 2014 through September 30, 2014:

Grant Date	Options Granted		Exercise Price		Fair Value Per Share		Fair Value per Option
July 8, 2014		1,274,000	$	8.57	$	8.57	$	5.82
September 11, 2014		2,500		8.57		8.57		5.82
September 15, 2014		10,000		8.57		8.57		5.82

July 2014 through September 2014 Grants

During the period from July 2014 through September 2014, the board of directors granted stock options with an exercise price of $8.57 and a fair value of common stock of $8.57 per share, which value was based on a contemporaneous valuation performed as of June 1, 2014, but which gave effect to the 2014 Recapitalization. That valuation used a combination of income and market approaches, as discussed above, to derive an enterprise value for our company. The aggregate enterprise value was then allocated to the common stock utilizing a hybrid method with the following assumptions: a time to liquidity event of 0.44 years, a volatility of 75% and a risk-free interest rate of 0.12%. The time to a liquidity event was determined based upon the expected time frame for us to reach a value event either through a public offering of our stock or a sale of our company; the volatility was based on comparative volatility ranges

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of selected similar public companies using the time to a liquidity event as a basis; and the risk-free interest rate was based on the yields of U.S. Treasury Securities with a similar term. A discount for lack of marketability of 18% was applied to the resulting value of the common stock.

The fair value of our common stock was estimated using a probability-weighted analysis of the present value of the returns afforded to common stockholders under several future stockholder exit or liquidity event scenarios, either through an IPO, a trade sale of our company or a stay private scenario, at cumulative amounts invested by preferred stock investors. The key valuation assumptions included those noted in the following table:

Major Assumptions	IPO			Trade Sale			Stay Private
Probability of scenario		60	%		10	%		30	%
Discount for lack of marketability		18	%		18	%		18	%
Timeline to liquidity		0.4 yrs			0.4 yrs			0.8 yrs
Discount rate—common stock		40	%		40	%		12	%

Initial Public Offering Price

In consultation with the underwriters for this offering, we determined the estimated price range for this offering, as set forth on the cover page of this prospectus. The midpoint of the price range is $         per share. In comparison, our estimate of the fair value of our common stock was $         per share as of the             , 2014 valuation. We note that, as is typical in IPOs, the estimated price range for this offering was not derived using a formal determination of fair value, but was determined by negotiation between us and the underwriters. Among the factors that were considered in setting this range were the following:

• an analysis of the typical valuation ranges in recent IPOs for companies in our industry;

• the general condition of the securities markets and the recent market prices of, and the demand for, publicly traded common stock of generally comparable companies;

• an assumption that there would be a receptive public trading market for biotechnology and medical device companies such as us; and

• an assumption that there would be sufficient demand for our common stock to support an offering of the size contemplated by this prospectus.

We believe that the difference between the fair value of our common stock as of             and the midpoint of the price range for this offering is the result of these factors as well as the fact that the estimated initial public offering price range necessarily assumes that the initial public offering has occurred, a public market for our common stock has been created and that our preferred stock converted into common stock in connection with the initial public offering, and therefore excludes any discount for lack of marketability of our common stock, which was factored into the June 2014 valuation.

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks in the ordinary course of our business. Our cash and cash equivalents include cash in readily available checking and money market accounts, as well as certificates of deposit. These securities are not dependent on interest rate fluctuations that may cause the principal amount of these assets to fluctuate. Additionally, the interest rate on our outstanding indebtedness is fixed and is therefore not subject to changes in market interest rates.

JOBS Act

In April 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging

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growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period, and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

Recently Adopted Accounting Standards

In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace more existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for annual periods beginning after December 15, 2016 for public business entities, and early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

In July 2013, FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, or ASU 2013-11. ASU 2013-11 clarifies guidance and eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The amendments to ASU 2013-11 are effective for interim and annual fiscal periods beginning after December 15, 2013, with early adoption permitted. We adopted ASU 2013-11 on January 1, 2014. Its adoption did not have a material impact on our results of operations, financial position or cash flows.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40)—Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, or ASU 2014-15. ASU 2014-15 provides guidance about management’s responsibility to evaluate whether there is a substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Specifically, ASU 2014-15 defines the term substantial doubt, requires an evaluation of every reporting period including interim periods, provides principles for considering the mitigating effect of management’s plan, requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, requires an express statement and other disclosures when substantial doubt is not alleviated, and requires an assessment for a period of one year after the date that the financial statements are issued or available to be issued. The amendments in ASU 2014-15 are effective for annual periods beginning after December 15, 2016 and interim periods within those reporting periods. Earlier adoption is permitted. We do not expect this ASU to have a material impact on our consolidated financial statements.

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BUSINESS

Overview

We are a commercial-stage medical technology company focused on developing innovative technologies to improve the health and quality of life of people with Type 2 diabetes. We designed our first commercialized product, the V-Go Disposable Insulin Delivery Device, or V-Go, to help patients with Type 2 diabetes who require insulin to achieve and maintain their target blood glucose goals. V-Go is a small, discreet and easy-to-use disposable insulin delivery device that a patient adheres to his or her skin every 24 hours. V-Go enables patients to closely mimic the body’s normal physiologic pattern of insulin delivery throughout the day and to manage their diabetes with insulin without the need to plan a daily routine around multiple daily injections.

We currently focus on the treatment of patients with Type 2 diabetes—a pervasive and costly disease that, according to the 2014 National Diabetes Statistics Report released by the U.S. Centers for Disease Control and Prevention, or CDC, currently affects 90% to 95% of the 20.9 million U.S. adults diagnosed with diabetes. The CDC estimates that the combined direct medical and drug costs and indirect lost productivity costs of diabetes in the United States are approximately $245 billion annually. We believe the majority of the 12.8 million U.S. adults treating their Type 2 diabetes with more than one daily oral anti-diabetic drug, or OAD, or an injectable diabetes medicine can benefit from V-Go’s innovative approach to Type 2 diabetes management. Our near-term market consists of the approximately 5.8 million of these patients who currently take insulin, which includes 4.6 million patients who have not been able to achieve their target blood glucose goal.

Insulin therapies using syringes, pens and programmable insulin pumps are often burdensome to a Type 2 diabetes patient’s daily routine, which can lead to poor adherence to prescribed insulin regimens and, as a result, ineffective diabetes management. We developed V-Go utilizing our h-Patch platform as a patient-focused solution to address the challenges of traditional insulin therapies. Our h-Patch platform facilitates the simple and effective subcutaneous delivery of injectable medicines to patients across a broad range of therapeutic areas. V-Go enables patients to closely mimic the body’s normal physiologic pattern of insulin delivery by releasing a single type of insulin at a continuous preset background, or basal, rate over a 24-hour period and on demand around mealtime, or bolus dosing. We believe V-Go is an attractive management tool for patients with Type 2 diabetes requiring insulin because it only requires a single fill of insulin prior to use and provides comprehensive basal-bolus therapy without the burden and inconvenience associated with multiple daily injections. V-Go is available in three different dosages depending on the patient’s needs and is generally cost competitive for both patients and third-party payors when compared to insulin pens or programmable insulin pumps.

V-Go was the first insulin delivery device cleared by the U.S. Food and Drug Administration, or FDA, under its Infusion Pump Improvement Initiative, which established additional device manufacturing requirements designed to foster the development of safer, more effective infusion pumps, and is the only FDA-cleared mechanical basal-bolus insulin delivery device on the market in the United States. Unlike many other insulin delivery devices, V-Go is not classified as durable medical equipment, or DME, by the Centers for Medicare and Medicaid Services, or CMS, allowing for potential Medicare reimbursement under Medicare Part D. The Medicare Part D outpatient drug benefit defines V-Go and certain other supplies used for injecting insulin as “drugs,” which allows V-Go to be available for coverage by Part D Plans under Medicare Part D. In addition to Medicare, a majority of commercially insured patients are currently covered for V-Go under their insurance plans.

We commenced commercial sales of V-Go in the United States during 2012. During the first half of 2012, we initiated an Early Access Program to provide a limited number of physicians with free V-Go products for patients and began shipments to major wholesalers in anticipation of commercial launch. In

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the second half of 2012, we began hiring sales representatives in selected U.S. markets. At the end of 2013, our sales team covered 62 territories primarily within the East, South, Midwest and Southwest regions of the United States.

Our revenue increased from $0.6 million in 2012 to $6.2 million in 2013 and to $9.5 million for the nine months ended September 30, 2014, in each case primarily reflecting our territorial expansion. Our net loss was $87.6 million and $49.7 million for the year ended December 31, 2013 and the nine months ended September 30, 2014, respectively. Our accumulated deficit as of September 30, 2014 was $294.8 million. Since launching V-Go, the total number of prescriptions for, and the number of patients using, V-Go have increased each quarter. There were approximately 58,000 prescriptions reported for V-Go filled during the months ended September 30, 2014. Based on prescription data, we estimate that approximately 12,000 patients with Type 2 diabetes were using V-Go as of September 30, 2014. We estimate that as of September 30, 2014, V-Go had been used for 2.9 million cumulative patient days.

Market Opportunity

Diabetes is a chronic, life-threatening disease that impacts an estimated 371 million people worldwide and is characterized by the body’s inability to properly metabolize glucose. Management of glucose is regulated by insulin, a hormone that allows cells in the body to absorb glucose from blood and convert it into energy. In people without diabetes, the body releases small amounts of insulin regularly over 24 hours and additional amounts of insulin when eating meals. Diabetes is classified into two main types. Type 1 diabetes is caused by an autoimmune response in which the body attacks and destroys the insulin-producing cells of the pancreas. As a result, the pancreas can no longer produce insulin, requiring patients to administer daily insulin injections to survive. Type 2 diabetes, the more prevalent form of the disease, occurs when either the body does not produce enough insulin to regulate the amount of glucose in the blood or cells become resistant to insulin and are unable to use it effectively. Type 1 diabetes is frequently diagnosed during childhood or adolescence, and the onset of Type 2 diabetes generally occurs in adulthood, but its incidence is growing among the younger population primarily due to the increasing incidence of childhood obesity. In addition, other factors commonly thought to be contributing to the prevalence and growth of Type 2 diabetes include aging populations, sedentary lifestyles, worsening diets and increased adult obesity.

The CDC estimates that between 90% and 95% of the approximately 20.9 million adults in the United States with diagnosed diabetes have the Type 2 form of the disease. The CDC further estimates that 86 million Americans had “pre-diabetes,” which means a higher than normal blood glucose level that, without intervention, is likely to result in Type 2 diabetes within 10 years. An additional 1.9 million individuals in the United States are diagnosed with diabetes every year, a rate that would result in one in every three Americans having diabetes by 2050. The CDC estimates the total cost of diagnosed diabetes of both types in the United States to be $245 billion annually, which includes direct medical costs of $176 billion.

Type 2 diabetes is a progressive disease. Data from the United Kingdom Prospective Diabetes Study suggest that individuals with Type 2 diabetes lose on average approximately 50% of the function of their beta cells, the cells that produce insulin, prior to diagnosis. If not closely monitored and properly treated, diabetes can lead to serious medical complications. According to the National Institute of Diabetes and Digestive and Kidney Diseases, or NIDDK, diabetes is the leading cause of kidney failure, non-traumatic lower limb amputations and new cases of blindness in the United States. The prevalence of other chronic disorders commonly occurring in patients with Type 2 diabetes, including high blood pressure and high cholesterol, can significantly impact a patient’s lifestyle given the various daily treatment regimens often used to treat these conditions. Diabetes has a significant impact on overall patient mortality; according to the CDC the risk for death among people with diabetes is approximately one and a half that of similarly aged people without diabetes.

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A hemoglobin A1c test, which measures a patient’s trailing three-month average blood glucose level, or A1c level, is a key indicator of how well a patient is controlling his or her diabetes. Specifically, the A1c test measures the percentage of a patient’s hemoglobin, a protein in red blood cells that carries oxygen, that is coated with sugar. A higher A1c level correlates with poorer blood sugar control and an increased risk of diabetes complications. The American Diabetes Association, or ADA, recommends a goal A1c goal of no more than 7% for most patients.

Once Type 2 diabetes has been diagnosed, physicians and patients often first seek to manage the disease through meal planning and physical activity before progressing to medications designed to manage A1c levels. Patients often begin medical treatment with a once-daily OAD. Within five years of diagnosis, patients with Type 2 diabetes generally move past one OAD per day to multiple daily OADs, which could also include an injectable glucagon-like peptide-1 receptor agonist, or GLP-1, which, among other actions, stimulates the release of insulin by the body. Within 10 years of diagnosis, patients generally add injectable insulin to their regimen.

The following diagram depicts an illustrative treatment progression of a typical patient with Type 2 diabetes, as well as the number of patients currently in each category according to the 2012 U.S. Roper Diabetes Patient Market Study.

Our near-term target market consists of the approximately 5.8 million patients with Type 2 diabetes in the United States who currently take insulin, which includes 4.6 million patients who have not been able to achieve their target A1c goal. In addition, we believe the majority of the other 7.0 million U.S. adults treating their Type 2 diabetes with more than one OAD per day or an injectable diabetes medicine can benefit from V-Go’s innovative approach to Type 2 diabetes management.

Therapeutic Challenges and Limitations of Current Insulin Delivery Mechanisms

Multiple studies indicate that, when taken as prescribed, a basal-bolus insulin regimen is a very effective means for lowering blood glucose levels of patients with Type 2 diabetes because it most closely mimics the body’s normal physiologic pattern of insulin delivery throughout the day:

• basal insulin provides approximately 50% of the daily insulin requirement—occurring regularly over 24 hours and delivering glucose into cells in all parts of the body so that it can be used for energy—however, this constant rate of insulin is inadequate to handle post-prandial glucose excursions (the change in blood glucose concentration from before to after a meal); and

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• bolus insulin provides the remaining approximately 50% of the daily insulin requirement and occurs in response to food intake or a meal to control post-prandial hyperglycemia—the exaggerated rise in blood glucose following a meal.

However, compliance with basal-bolus insulin therapy using syringes or pens has proven difficult as these therapies require the use of various forms of insulin and planning a daily routine around multiple daily injections.

The Diabetes Control and Complications Trial, a study of patients with Type 1 diabetes conducted by the NIDDK, the results of which were published in the New England Journal of Medicine in 1993, indicated that conventional insulin therapy, defined as one or two insulin injections per day without changing the insulin dose in response to blood glucose levels, is less effective in achieving recommended blood glucose levels over time than intensive insulin therapy in which a patient administers three or more insulin injections per day with varying doses depending upon blood glucose levels. Additionally, the Treating to Target in Type 2 Diabetes, a study of 708 men and women with suboptimal A1c levels published in The New England Journal of Medicine in 2009, found that 82% of patients on a basal insulin-based regimen required the addition of mealtime insulin three times daily in order to reach their A1c goal by year three of the study. We believe the outcome of these studies confirm that an important factor of any insulin therapy is its ability to mimic the body’s normal physiologic pattern of insulin delivery.

Challenges Associated with Type 2 Diabetes Management

Regardless of the type of insulin therapy, many patients with Type 2 diabetes on insulin fail to reach their A1c goal. Adding mealtime insulin to a basal-only regimen can help, but patient adherence to the prescribed treatment regimen is often a challenge. In a database analysis of 27,897 adult patients on insulin in the United States, the results of which were presented at the 2012 Annual Meeting of the American College of Clinical Pharmacy, only 20% of patients had reached the ADA’s recommended A1c goal of less than 7%. Similarly poor results were demonstrated across each patient group in the study regardless of whether they were prescribed basal-only insulin, basal-bolus insulin or a combination of both long-acting and fast-acting insulin.

Patient non-adherence to prescribed insulin therapy is often an important contributing factor in a patient’s failure to achieve target A1c goals. In a 2012 survey of 1,250 physicians who treat patients with diabetes and 1,530 insulin-treated patients (180 with Type 1 diabetes and 1,350 with Type 2 diabetes) published in Diabetic Medicine, patients reported insulin omission/non-adherence an average of 3.3 days per month. Additionally, 73% of physicians in the study reported that a typical patient did not take his or her insulin as prescribed, with an average of 4.3 days per month of non-compliance with a basal insulin regimen and 5.7 days per month of non-compliance with mealtime administration of insulin. The most common reasons cited by patients for failing to comply with a prescribed treatment regimen include the burden of multiple daily injections, the potential embarrassment about injecting medication around family and friends or in public, and interference with the patient’s daily activities and resulting loss of freedom. Similarly, in the 2011 US Roper Diabetes Patient Market Study, or the 2011 Roper Study, of 2,104 patients with diabetes, of which 692 were on insulin, 72% of respondents who had been prescribed to take three or more insulin injections per day did not inject themselves when they were away from home. Failure to comply with prescribed insulin therapy, particularly mealtime insulin therapy, reduces the overall efficacy of insulin treatment in managing a patient’s Type 2 diabetes.

Limitations of Current Insulin Therapy

OADs are the first line of diabetic therapy for patients with Type 2 diabetes, along with diet and lifestyle changes. However, given the progressive nature of Type 2 diabetes, most patients require insulin therapy within 10 years of diagnosis because oral agents fail to maintain their glycemic control. Depending on

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the progression of an individual patient’s diabetes, there are four primary types of insulin therapy prescribed today for Type 2 diabetes that seek to control or manage patients’ blood glucose levels:

• a once-daily dose of basal insulin, typically a long-acting insulin such as Levemir or Lantus;

• a twice-daily injection regimen comprised of either a daily injection of long-acting basal insulin in addition to a dose of insulin, typically a short- or fast-acting insulin, such as Humalog, Apidra or NovoLog, with the largest meal or two injections of premixed insulin, which combines long-acting and fast-acting formulations within a single insulin dose;

• intensive therapy requiring multiple daily injections, or MDI, with syringes or preloaded insulin pens; and

• continuous subcutaneous insulin infusion using programmable insulin pumps.

Conventional insulin therapy is the least expensive insulin-based diabetes treatment and is typically initiated with a once-daily dose of basal insulin. MDI intensive therapy with syringes can be effective and less costly than MDI intensive therapy with insulin pens, which offers a more convenient alternative to syringes. In addition, programmable insulin pumps offer an effective means of implementing intensive diabetes management with the goal of achieving near-normal blood glucose levels. However, we believe that patient concerns with lifestyle factors, ease of use, convenience and high costs have limited overall adherence to insulin regimens, resulting in a significant number of patients with Type 2 diabetes failing to meet their A1c goals with MDI or the use of programmable insulin pumps.

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Current insulin therapies present the following advantages and limitations for patients with Type 2 diabetes.

Basal Insulin
Description:    A once-daily dose of long-acting insulin (such as Lantus and Levemir) at bedtime or in the morning, although some patients require two basal injections (morning and bedtime).
Advantages	Limitations/Challenges
•   Easiest to train, learn and correctly administer insulin as injections and can be performed at home •   Least costly analog insulin therapy, which uses genetically altered (or chemically altered) human insulin designed to release injected insulin to more closely mimic human insulin, for patients with most favorable reimbursement coverage •   Lowest risk for patient error	•   Insulin delivery has some variability from day to day or between different patients such that insulin is not released over the entire intended delivery period •   Basal only, no impact on mealtime glucose increases •   Most patients eventually need mealtime insulin to achieve their A1c goal
Basal Insulin + 1 or Premixed Insulin
Description:    Considered a transition regimen towards MDI therapy typically consisting of a twice-daily injection regimen of either: (i) a daily injection of long-acting insulin (such as Lantus and Levemir) at bedtime (basal rate) plus an injection of fast-acting insulin (such as Humalog and NovoLog), or basal + 1, before the day’s largest meal; or (ii) premixed insulin injections before breakfast and dinner.
Advantages	Limitations/Challenges
Basal +1 and Premix •   Compared to basal only insulin regimens, provides insulin for at least one or in the case of premix, two of the patient’s meals	Basal +1 and Premix •   No insulin coverage for at least one meal each day or in the case of Basal+1, two meals each day
Premix •   Injections can normally be performed at home •   Single type of insulin used in a single device	Basal +1 •   Additional patient co-pay for additional dose of mealtime insulin Premix
	•   Patients typically use more insulin and gain more weight •   Requires planning activities and eating around injections

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MDI (Intensive Therapy)
Description:    A once-daily injection of long-acting insulin at bedtime or in the morning (basal rate) plus an injection of fast-acting insulin before meals and if appropriate with snacks (bolus dose).
Advantages	Limitations/Challenges
•   With strict adherence, can closely mimic the body’s normal physiologic pattern of insulin delivery •   Allows dosing each insulin type and meal individually •   Lower cost with favorable reimbursement coverage compared to programmable insulin pumps •   Easier to teach, learn and correctly administer compared to programmable insulin pumps	•   Frequent injections (at least four per day) •   Requires training around two different types of insulin and the need to carry two types of insulin or insulin pens •   Requires significant planning of meals and other activities •   Injections often administered outside the home creating adherence challenges especially around meals •   Requires two patient co-pays
Programmable Insulin Pumps
Description:    A continuous low dose of fast-acting insulin (basal rate) and delivery of fast-acting insulin before all meals and, as needed, snacks (bolus dose), based upon programmable settings and patient input.
Advantages	Limitations/Challenges
•   When used properly, can most closely mimic the body’s normal physiologic pattern of insulin delivery	•   Most complicated to teach, learn and correctly administer and normally requires a proactive and adherent patient
•   Customized basal and bolus insulin doses	•   Bothersome to wear and least discreet alternative
•   Eliminates the need for daily needle injections	•   Most significant risk of dosing errors due to the wide range of programmable functions and features
	•   Highest up-front and maintenance cost
	•   Reimbursement coverage for patients with Type 2 diabetes significantly less accessible than for injections

Given the reasons cited by patients for non-adherence to and the limitations of currently prescribed insulin therapy, we believe simplicity of insulin delivery contributes to adherence with therapy. In turn, when patients more fully comply with their prescribed treatment regimen, we believe that insulin therapy will be more effective. While insulin syringes, insulin pens and programmable insulin pumps are capable of facilitating basal-bolus therapy, we believe these methods of administration generally lack the simplicity of operation and lifestyle adaptability desired by patients with Type 2 diabetes. In general, programmable insulin pump therapies tend to have more advantages for Type 1 patients who require varying basal rates over a 24-hour period or more complex bolus dosing regimens. These complexities are generally not encountered by patients with Type 2 diabetes.

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The following diagram demonstrates the benefits of V-Go as compared to other currently available insulin therapies in terms of simplicity of use and ability to mimic the body’s normal physiologic pattern of insulin delivery.

We believe V-Go is appealing to healthcare providers and patients because it combines the benefits of basal-bolus therapy with the convenience of a once-daily injection. Our internal studies indicate that these characteristics help support patient compliance with basal-bolus regimens, thereby improving glycemic control. We also believe V-Go is an attractive option because it is discreet and simple to operate, yet mimics the body’s normal physiologic pattern of insulin delivery without the inconvenience associated with syringes and pens or the complexities associated with programmable pumps.

Our Solution

Simple, Discreet and Effective Type 2 Diabetes Management

V-Go fills a critical need of patients with Type 2 diabetes who, we believe, desire and benefit from an easy-to-use, more discreet, basal-bolus insulin regimen. The following image depicts V-Go to scale, measuring just 2.4 inches wide by 1.3 inches long by 0.5 inches thick and weighing approximately one ounce when filled with insulin.

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We believe V-Go provides the following key benefits.

Specifically Designed for Patients with Type 2 Diabetes

Patients with Type 2 diabetes prescribed intensive insulin therapy report the burden of multiple injections, embarrassment of injection and interference with daily activities as key factors for non-compliance with insulin therapy. Unlike programmable insulin pumps, V-Go is a daily-disposable mechanical device that operates without electronics, batteries, infusion sets or programming. It is worn on the skin under clothing and measures just 2.4 inches wide by 1.3 inches long by 0.5 inches thick, weighing approximately one ounce when filled with insulin. In the 2011 Roper Study, 72% of patients with Type 2 diabetes prescribed basal-bolus injectable insulin regimens reported not taking injections away from home, making it difficult for many of them to remain in compliance with their prescribed therapy. However, V-Go was designed to facilitate basal-bolus therapy compliance by patients with Type 2 diabetes.

The following diagram illustrates the basal and bolus operations of V-Go. The bolus operation can be completed through the patient’s shirt or blouse.

Basal	Bolus		Stop

Simple, Effective and Innovative Approach to Insulin-Based Diabetes Management

V-Go utilizes our proprietary h-Patch drug delivery technology to enable patients to closely mimic the body’s normal physiologic pattern of insulin delivery by predictably delivering a single type of insulin at a continuous preset basal rate over a 24-hour period and convenient and discreet on-demand bolus dosing at mealtimes. We believe V-Go’s simple and effective approach to insulin therapy facilitates patient adherence to basal-bolus insulin regimens, which leads to better patient results. In a series of clinical studies examining patients with Type 2 diabetes using V-Go, we observed clinically relevant reductions in A1c levels from baseline, as well as reductions in the prescribed total daily insulin dose.

User-Friendly Design

In addition to its small size and dosage versatility, V-Go offers many additional user-friendly features designed to treat and improve the quality of life of patients with Type 2 diabetes requiring insulin, including:

• using a single fast-acting insulin, such as Humalog or NovoLog, rather than a combination of multiple types or premixed insulin;

• not requiring patients to carry syringes, pens or other supplies for mealtime bolus dosing;

• offering the convenience of pressing buttons for on-demand bolus dosing through clothing;

• allowing patients to easily maintain their daily routines and activities, including showering, exercising and sleeping;

• only requiring application of a new V-Go every 24 hours, which offers patients the flexibility to selectively choose an application site that best suits the day’s activities; and

• not burdening patients with the complexities associated with learning to use an electronic device or programming a pump.

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Cost Effective for Payor and Patient Alike

V-Go is generally a cost competitive basal-bolus treatment option for payors and patients when compared to the insulin pen, which is the delivery method prescribed to a majority of patients initiating a basal analog and mealtime analog insulin therapy. V-Go is available at retail and mail order pharmacies and is covered by Medicare as well as commercial insurance plans covering a majority of patients. As a result, out-of-pocket costs for covered patients using V-Go are generally equivalent to what they would pay if taking basal-bolus injections with insulin pens or syringes. We believe a payor’s cost to treat a covered patient using V-Go for insulin therapy, after rebates paid by us to the payor and offsetting co-pays paid by the patient, is approximately the same as the cost to treat a covered patient on basal-bolus injection therapy using insulin pens and is significantly less expensive to the payor, especially in the first year, than treatment with programmable insulin pumps. Although a basal-bolus regimen using V-Go is more expensive for a patient than a regimen with insulin pens or syringes alone when the patient pays full retail price for V-Go without payor reimbursement, approximately 95% of all insulin prescriptions are filled for covered patients.

Demonstrated Results and Enhanced Patient Experience and Customer Support

The V-Go solution to Type 2 diabetes management is focused both on A1c management and on providing patients the requisite support to achieve their goal of improved health.

Improved A1c Levels and Patient Experience

User Preference Program. In 2008, we conducted a user preference program, or UPP, designed to gain feedback about V-Go. We surveyed 10 healthcare professionals and 31 patients to determine their impressions about usability, convenience, comfort, educational materials, and effectiveness of V-Go. Patients were asked to rate, on a 10-point scale, their overall experience as well as their impressions of various parameters associated with V-Go, such as ease of use, how discreet it was, how comfortable the device was to wear, whether they would recommend V-Go to a friend or family member and how helpful our patient education teams were. For each measure evaluated, V-Go received an average score of between 8.7 and 9.4, which we consider to be highly positive. We also surveyed patients about their adherence to V-Go therapy as part of the UPP and found a patient-reported adherence rate of 98%.

In order to assess the efficacy of V-Go in managing blood glucose control, we performed a retrospective analysis of the 23 patients who participated in the UPP and have Type 2 diabetes, the results of which were published in the journal Endocrine Practice in 2012. We retrospectively collected data about insulin dose, A1c, fasting blood glucose, weight, hypoglycemia, site reactions and other adverse events at each of four time points: before V-Go initiation, after 12 weeks of V-Go use, at the end of V-Go treatment, and 12 weeks after discontinuing V-Go. The retrospective analysis was done under good clinical practice, or GCP, with the approval of an institutional review board, or IRB, and with the informed consent of patients.

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As shown in the chart below, the patients with Type 2 diabetes included in our retroactive analysis not only reported using less insulin daily after 12 weeks of V-Go use, compared to before V-Go initiation, but their average A1c level decreased to 7.6% from 8.8%. Once they stopped using V-Go, their average A1c level rebounded to 8.2%, and their average daily insulin dosing increased.

The data in the chart above was derived from the UPP, which surveyed patients who received V-Go therapy from between 50 days and 336 days, with an average of 202 days. A total of 30 patients completed over 100 surveys offered at 24 hours after beginning treatment with V-Go and at 2, 4, 8 and 12 weeks after commencement of treatment. The UPP was not a clinical trial, but it did represent real-world experiences with the V-Go. The p-values in the chart above represent the probability that the reported result was achieved purely by chance. For example, a p-value of less than 0.001 means that there is a less than a 0.1% chance that the observed change was purely due to chance. Generally, a p-value less than 0.05, as was the case for each of the results observed in this study, is considered to be statistically significant.

In terms of safety and tolerability, V-Go was generally well tolerated during the UPP. The average weight of patients was steady through use of V-Go and increased slightly after treatment cessation. Two instances of hypoglycemia were reported during the UPP and were classified as serious adverse events. Neither of these patients were part of the retrospective analysis, and no other serious adverse events were observed during V-Go use based on the retrospective analysis. A total of seven patients in the retrospective analysis reported at least one application site reaction, such as irritation, redness, rash, itching, tenderness or discomfort, while one patient reported pain at injection.

The retrospective analysis suggested that average A1c improved when insulin was delivered using V-Go. The investigators suggested that possible reasons for the improvements in blood glucose levels were more efficient blood glucose lowering and better patient adherence with this insulin regimen due to the simplicity of V-Go.

Our Prospective, Observational Study. We also completed a prospective, observational study, or the Prospective Study, that was designed to analyze patients’ A1c levels at an initial, baseline level before

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using V-Go and for the 12 months following commencement of V-Go use. The interim results of the Prospective Study after nine months of patient V-Go use were presented at the 73rd Scientific Sessions of the ADA in June 2013 and at the American Association of Clinical Endocrinologists’ 23rd Scientific Congress in May 2014. The Prospective Study included the examination of Type 2 patients randomly selected across multiple clinical sites. The patients enrolled in the overall Prospective study consisted of patients who had A1c levels over 7.0%, indicating a lack of glycemic control, and treated their Type 2 diabetes with a variety of treatment regimens, including OADs, basal insulin, premix insulin, multiple daily shots of insulin or GLP-1 injection therapy.

The Prospective Study observed that A1c levels of the 59 patients who had previously used a basal insulin regimen in addition to one or more OADs decreased from a baseline of 8.7% to 8.1%, 7.9% and 7.7% for the three, six and nine months following commencement of the use of V-Go, respectively, with statistical significance at a p-value less than 0.001.

University of Massachusetts Study. In 2013, researchers at the University of Massachusetts examined 21 patients with Type 2 diabetes who lacked glycemic control and switched from MDI therapy to V-Go. The study observed that, after 88 days of V-Go use, such patients’ A1c levels decreased from 10.7% to 8.3% and total daily doses of insulin decreased from 119 units to 64 units, in each case with statistical significance at a p-value less than 0.01. These results were also presented at the 73rd Scientific Sessions of the ADA in June 2013.

Comprehensive Customer Support

The majority of patients using V-Go are trained to use the device by their healthcare provider or Clinical Diabetes Educator, or CDE, who has been trained by our sales force using a “train the trainer” approach. Our sales force trains physicians, physicians’ assistants, nurse practitioners, CDEs and any other staff in a healthcare provider’s office, who then train their patients to properly use V-Go. Additionally, we provide starter kits for new V-Go patients, which contain all the materials a patient needs to initiate basal-bolus insulin therapy with V-Go. We also offer supplemental training support and resources when healthcare providers or patients need additional V-Go training assistance.

Our Valeritas Customer Care Center, or VCC, is a live customer care center operating 24 hours a day, seven days a week. The VCC provides broad-based V-Go operational assistance to healthcare providers, patients, caregivers and pharmacists. Every patient is encouraged to call the VCC in order to opt-in for support and, once a patient does opt- in, a VCC staff-member proactively contacts the patient at various times to provide additional patient support and promote proper use of V-Go. The VCC also maintains a reimbursement team to answer a patient’s reimbursement-related questions.

We also offer two third-party clinical education programs, Empower and dLife. Empower is an on-demand clinical education service designed to provide our sales representatives with access to clinical educators who are available to help train patients on V-Go when a healthcare provider does not have the resources or the ability to train the patients. dLife is an online resource and community providing practical solutions to managing diabetes, including the V-Go Life Self-Management Program, which provides patients with access to comprehensive diabetes information and support via email. We believe these programs help increase patient adherence to V-Go.

Our Current and Future Products

We believe our technologies represent a fundamentally different approach to basal-bolus insulin delivery. To facilitate therapy compliance, we have sought to eliminate the need for complex electronics and software by utilizing mechanical technology that delivers prescribed dosages of insulin and other injectable drugs with great accuracy.

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V-Go Disposable Insulin Delivery Device

V-Go is a disposable insulin delivery device for basal-bolus therapy that deploys our innovative proprietary h-Patch technology. Unlike programmable insulin pumps, V-Go is a small, discreet, daily-disposable insulin delivery device that operates without electronics, batteries, infusion sets or programming. V-Go measures just 2.4 inches wide by 1.3 inches long by 0.5 inches thick and weighs approximately one ounce when filled with insulin.

V-Go enables patients to closely mimic the body’s normal physiologic pattern of insulin delivery by delivering a single type of insulin at a continuous preset basal rate over a 24-hour period and also providing for on-demand bolus dosing at mealtimes, without the need for electronics or programming. A patient adheres V-Go to his or her skin and presses a button that inserts a small needle that commences a continuous preset basal rate of insulin. At mealtimes, a patient can discreetly press the bolus-ready button through clothing to unlock V-Go’s bolus function and another button to deliver on-demand bolus dosing.

Each day prior to applying V-Go, a patient fills it with insulin using a filling accessory known as EZ Fill, which is included with each monthly supply of V-Go. V-Go uses a single type of fast-acting insulin, such as Humalog or NovoLog, and is available in a preset basal rate to continuously deliver 20, 30 or 40 units of insulin in one 24-hour period (0.83, 1.25 or 1.67 units per hour, respectively) and on-demand bolus dosing in two unit increments (up to 36 units per 24-hour time period). Our proprietary Floating Needle is deployed with the press of a button after V-Go is applied to the skin making the connection between the insulin reservoir and the patient’s tissue. The Floating Needle then pivots with the body’s natural movements, allowing for maximum comfort. After 24 hours of use, a patient presses a button that retracts the needle and then removes V-Go from the skin, throws it away and replaces it with a new insulin-filled V-Go for the next 24 hours.

h-Patch Controlled Delivery Technology Platform

Our proprietary hydraulic h-Patch drug delivery technology, which is a critical component of V-Go, facilitates the simple and effective delivery of injectable medicines to patients across a broad range of therapeutic areas. V-Go’s deployment of our h-Patch technology results in a device specifically designed for patients with Type 2 diabetes who, we believe, do not require complex and costly programmable insulin pumps generally designed to meet the needs of Type 1 patients.

The hydraulic approach of our h-Patch technology can be used to deliver constant basal or on-demand bolus dosing of any drug than can be delivered subcutaneously. We believe it combines the user advantages of transdermal patches with the accuracy and flexibility of conventional electronic pumps. Once activated, our h-Patch system places a custom-formulated viscous fluid under pressure, which is separately compartmentalized and therefore designed not to come into contact with the active drug. Once pressurized, the fluid is forced through a flow restrictor that is designed to control the flow rate. After passing through the flow restrictor, the viscous fluid couples with and moves a piston in a cartridge that contains active drug. The viscous fluid continually pushes the piston, dispensing the drug at the prescribed preset basal rate through a needle into the patient’s subcutaneous tissue. Bolus delivery on demand is similarly driven by viscous fluid dispensed from a separate side chamber, which allows a patient to dispense active drug in two unit increments through a user-activated bolus button. Our h-Patch basal drug delivery technology results in a simple, yet innovative, device that operates without complex controls or an infusion set.

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The operation of our h-Patch technology is depicted in the graphic below:

h-Patch technology

We will continue to explore the use of our h-Patch technology in other drug delivery applications beyond the use of insulin to treat Type 2 diabetes. We believe it has the potential to improve the utility of a variety of drugs that require frequent and cumbersome dosing regimens.

Next Generation: Pre-fill V-Go

We are developing a next-generation, single-use disposable V-Go device that will feature a separate pre-filled insulin cartridge that can be inserted by the patient into the V-Go. While the current V-Go simplifies the use of insulin for patients with Type 2 diabetes, we believe that a pre-filled V-Go will make insulin therapy even simpler by eliminating the device-filling process by the patient, which we expect could further promote adoption by patients with Type 2 diabetes. A pre-filled V-Go would also enable V-Go usage for other injectable therapeutic drugs beyond insulin that are used by patients who could benefit from simple, convenient and continuous drug delivery. Currently, the pre-fill V-Go is in the design-development stage, with a focus on ease of customer use and optimization of manufacturing efficiency.

Our Other Drug Delivery Platforms

Mini-Ject Needle-Free Technology

Mini-Ject is a fully disposable needle-free injection system that offers a variety of pre-filled options and comfortable administration within a patient-friendly, easy-to-use design. Mini-Ject can deliver a wide range of drugs, from small molecules to large proteins as well as antibodies and vaccines. Our Mini-Ject system has been cleared by the FDA under Section 510(k). While we have not yet commercialized a device with our Mini-Ject technology, we have developed devices that operate based on the technology, and we are pursuing additional applications of this technology for potential development and commercialization.

Micro-Trans Microneedle Array Patch Technology

We have also developed our Micro-Trans microneedle array patch technology to deliver drugs into the dermis layer of the skin. Each Micro-Trans patch consists of multiple small, solid needles constructed with metal or biodegradable polymers and fabricated on a single surface. The patches can be manufactured in various lengths, diameters, wall thicknesses and shapes and can be used to deliver drugs without regard to drug size, structure or a patient’s skin characteristics. Micro-Trans patches are designed to penetrate only the shallow layers of the skin, avoiding close proximity to pain receptors. We believe this characteristic makes the Micro-Trans patch comfortable for a patient to wear. We have not yet commercialized a device with this technology and it has not received regulatory approval.

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Our Strategy

Our goal is to significantly expand and further penetrate the Type 2 diabetes market and become a leading provider of devices designed for basal-bolus insulin therapy.

Short-Term

Our short-term business strategies include the following.

• Increase the Adoption of V-Go in Our Existing Regions by Adding Sales Representatives. At the end of 2013, our sales team covered 62 territories primarily within the East, South, Midwest and Southwest regions of the United States. We intend to continue to invest in the expansion of this infrastructure to increase our reach to additional healthcare providers in our existing geographies, which we believe will drive continued adoption of V-Go and increase our revenue.

• Increase Promotional Efforts to Drive Awareness of V-Go.    We intend to undertake additional marketing activities to drive awareness of V-Go to healthcare providers and patients by educating them about the convenience and health benefits associated with V-Go, which we believe will lead to increased adoption of our product.

• Expand Third-Party Reimbursement for V-Go in the United States.    We intend to enable more patients covered by commercial insurance plans to be reimbursed for V-Go as a pharmacy benefit rather than a medical benefit. In addition, while more than 70% of commercially insured lives in the United States and more than 60% of lives insured by Medicare are covered for V-Go, we intend to further expand payor adoption. We also intend to continue to deploy our reimbursement team that helps patients gain access to V-Go by supporting them throughout the reimbursement process.

• Leverage Our Scalable Manufacturing Operations to Increase Gross Margin.    We intend to leverage our scalable and flexible manufacturing infrastructure and related operational efficiencies to increase our gross margin by reducing our product costs. We believe the existing production lines of our contract manufacturer, or CMO, will have the ability to meet our current and expected near-term V-Go demand. Our CMO also has the ability to replicate additional production lines within its current facility footprint. In addition, we believe that due to shared product design features with V-Go, our production processes are readily adaptable to the manufacture of new products, including a pre-fill V-Go.

Long-Term

Our long-term business strategies include the following.

• Establish a National Footprint and Explore International Expansion.    We intend to explore expanding our sales and marketing infrastructure to establish nationwide access to physicians, as well as our options for international expansion through strategic collaborations, in-licensing arrangements or alliances.

• Capture Improved Economics Through the Commercialization of Pre-Fill V-Go.    We are developing and intend to commercialize our pre-fill V-Go product, which we believe will offer patients an even more simplified user experience, thereby increasing our target market to include patients with Type 2 diabetes not currently on insulin. In addition, we expect to have additional opportunities to generate revenue through the sale of insulin in connection with the pre-fill V-Go. We believe a pre-fill option will also lay the foundation for using our proprietary h-Patch technology with other injectable therapies where patients could benefit from simple, convenient and continuous drug delivery.

• Advance Our Proprietary Drug Delivery Technologies into Other Therapeutic Areas.    We have built a significant portfolio of proprietary technologies designed to simply and effectively deliver injectable medicines to patients across a broad range of therapeutic areas.

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We intend to continue to advance these technologies, including our pre-fill V-Go product, either by working with third parties to incorporate them into existing commercial products or by licensing the rights to them to third parties for further development and commercialization.

Sales, Marketing and Distribution

At the end of 2013, our sales team covered 62 territories primarily within the East, South, Midwest and Southwest regions of the United States. To date, we have focused our sales and marketing efforts in the regions where we have the greatest reimbursement coverage for patients. Our sales representatives call on targeted, high-volume insulin prescribers, which include endocrinologists and primary care physicians. Our sales team is supplemented by our Valeritas Customer Care Center that provides support to customers and healthcare providers. As V-Go’s market penetration continues to build momentum, we expect to further expand our sales and marketing infrastructure in the United States.

V-Go is distributed primarily through retail pharmacies and, to a lesser extent, medical supply companies. Similar to a pharmaceutical company, our overall distribution strategy focuses on making V-Go available at retail and mail-order pharmacies. We have adopted this strategy because patients with Type 2 diabetes frequently visit their local retail pharmacies to fill other prescriptions prescribed for their other chronic conditions. We have distribution agreements with all of the national and many regional wholesalers, as well as with important medical supply companies. For the year ended December 31, 2013, the wholesale distributors McKesson Corporation, Cardinal Health and AmerisourceBergen Drug Corporation represented 37%, 30% and 23%, respectively, of our total product shipments. Our agreements with our distributors allow a patient whose insurance covers V-Go as either a pharmacy benefit or a medical benefit to be able to fill his or her V-Go prescription conveniently.

A patient using V-Go requires two separate prescriptions, one for V-Go itself and one for fast-acting insulin, such as Humalog or NovoLog, in vials. As V-Go is only available by prescription, we believe that educating physicians and other healthcare providers regarding the benefits of V-Go is an important step in promoting its patient acceptance. In addition to calling on healthcare providers, our marketing initiatives include presentations and product demonstrations at local, regional and national tradeshows, including ADA Scientific Sessions and the American Association of Diabetes Educators Annual Meeting.

Reimbursement

In contrast to all other basal-bolus insulin delivery devices currently on the market in the United States, V-Go is not classified as DME and is therefore not subject to Medicare Part B. Instead, V-Go is reimbursed under Medicare Part D. As a result, a patient with Medicare, whose Medicare Part D Plan chooses to cover V-Go, can fill his or her V-Go prescription at a retail pharmacy with co-pay as the only out-of-pocket expense, rather than having to pay a generally more costly deductible and coinsurance under Medicare Part B. In addition to the 60% of patients insured by Medicare who have V-Go covered under their plans, a majority of commercially insured patients currently are covered for V-Go under their plans as either a pharmacy benefit or a medical benefit. For the year ended December 31, 2013 and the nine months ended September 30, 2014, over 90% of our V-Go prescriptions were filled by pharmacies and the remainder were filled by medical supply companies.

Manufacturing and Quality Assurance

We currently manufacture V-Go and EZ Fill in clean rooms at our CMO in Southern China in accordance with current good manufacturing practices, or cGMP. Our CMO uses custom-designed, semi-automated manufacturing equipment and production lines to meet our quality requirements. Separate CMOs in Southern China perform release testing, sterilization, inspection and packaging functions.

V-Go is produced on flexible semi-automated production lines. Our CMO operates two manufacturing lines dedicated to the manufacture of V-Go, and we expect that additional production lines will become

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available during 2014. We believe these production lines will have the ability to meet our current and expected near-term V-Go demand. We also believe our CMO has the ability to scale production even further by replicating these production lines within its current facility footprint. We also believe that, due to shared product design features, our production processes are readily adaptable to new products, including a pre-fill V-Go.

V-Go is packaged with one EZ Fill accessory per 30 V-Go devices. Due to its lower-volume requirements, one manufacturing line is dedicated to EZ Fill production, with a second line expected to become available during the first quarter of 2015.

Both V-Go and its insulin filling accessory, EZ Fill, are assembled from components that are manufactured to our specifications. Each completed device is tested to ensure compliance with our engineering and quality assurance specifications. A series of automated inspection checks, including x-ray assessments and lot-released testing, are also conducted throughout the manufacturing process to verify proper assembly and functionality. When mechanical components are sourced from outside vendors, those vendors must meet our detailed qualification and process control requirements. We maintain a team of product and process engineers, supply chain and quality personnel who provide product and production line support for V-Go and EZ-Fill. We also employ a full-time quality engineer and a supply chain professional, each of whom are located at our CMO in China.

We have received ISO 13485 certification of our quality system from BSI Group, a Notified Body to the International Standards Organization, or ISO. This certification process requires satisfaction of design control requirements. The processes utilized in the manufacturing and testing of our devices have been verified and validated to the extent required by the FDA and other regulatory bodies. As a medical device manufacturer, our manufacturing facilities and the facilities of our sterilization and other critical suppliers are subject to periodic inspection by the FDA and corresponding state and foreign agencies. We believe that our manufacturing and quality systems are robust and ensure high product quality. To date, we have had no product recalls.

Some of the parts and components of V-Go and EZ Fill are purchased from sole-source vendors, and we manage any single-source components and suppliers through our global supply chain operation. We believe that, if necessary, alternative sources of supply would, in most cases, be available in a relatively short period of time and on commercially reasonable terms.

Research, Development and Engineering

Our research, development and engineering staff has significant experience in developing insulin-delivery systems and are focused on the continuous improvement and support of current product, as well as our products in development. We have a staff of experienced engineers specializing in mechanical engineering, material science and fluid mechanics. Because we do not incorporate electronics or software into our devices, our development and engineering teams are able to focus on these other technical areas. We utilize design and analysis tools to accelerate design times and reduce development risk. Through frequent usability testing, we seek to ensure that our product not only functions properly, but also meets patient needs and desires with respect to an insulin-delivery system, while at the same time reducing our development and commercialization risks.

We spent $5.5 million and $6.7 million, respectively, on research, development and engineering activities for the years ended December 31, 2012 and 2013 and $5.2 million and $4.6 million, respectively, for the nine months ended September 30, 2013 and 2014.

Intellectual Property

From our inception, we have understood that the strength of our competitive position will depend substantially upon our ability to obtain and enforce intellectual property rights protecting our technology,

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and we have developed what we consider to be a strong intellectual property portfolio, including patents, trademarks, copyrights, trade secrets and know-how. We continue to actively pursue a broad array of intellectual property protection in the United States, and in significant markets elsewhere in North America, as well as in Europe, Australia and Asia, including China. We believe our intellectual property portfolio effectively protects the products we currently market and we are actively building our intellectual property portfolio to protect our next-generation products, as well as additional drug delivery technologies for those products.

As more fully described below, our patents and patent applications are primarily directed to our h-Patch technology or aspects thereof including the commercialized V-Go, a hydraulically driven ambulatory insulin delivery device. We also have patents and patent applications directed to other drug delivery platforms, the Mini-Ject and the Micro-Trans microneedle array patch.

In addition to patent protection, we rely on materials and manufacturing trade secrets, and careful monitoring of our proprietary information to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.

We plan to continue to expand our intellectual property portfolio by filing patent applications directed to novel drug delivery systems and methods of their use.

Patents

As of November 6, 2014, we owned 13 U.S. and 16 international issued patents and 12 U.S. and 52 international patents pending directed to various features of our commercial V-Go device, which utilizes our proprietary our h-Patch drug delivery technology. These patents are directed to the hydraulic drive for a basal-bolus delivery system as well as many of the other features of the h-Patch technology.

The following is a summary of our current and pending patents:

• U.S. Patent No. 7,530,968 and U.S. Patent No. 8,070,726 are directed to V-Go’s hydraulically driven pump system having basal and bolus fluid delivery. These patents are expected to expire in June 2024. Foreign counterparts to these patents have been granted in Australia, Canada and Japan, and we have patent applications pending in these countries and in Europe. Two U.S. continuation applications are pending.

• U.S. Patent Nos. 6,939,324 and 7,481,792 are directed to the Floating Needle and are expected to expire in August 2022 and April 2022, respectively. A Canadian counterpart to these patents has been granted and patent applications are pending in Canada and Europe. Two U.S. continuation applications are pending.

• There are allowed claims in U.S. Patent Application No. 13/500,136 directed to a fluid delivery device in which transitioning the needle from the storage position to the armed position transitions the piston from the locked position to the released position and thermally coupling the hydraulic chamber to the patient. If granted, this patent is expected to expire in August of 2032. The Singapore counterpart to this patent application has been allowed and patent applications are pending in Australia, Canada, China, Europe, Hong Kong, Israel, India, Japan and Korea.

• U.S. Patent No. 8,667,996 is directed to the closed looped filling configuration of the EZ Fill device. This patent is expected to expire in October 2032. A Chinese counterpart to this patent has been granted and patent applications are pending in Canada, China, Europe, Hong Kong, India, Japan and Korea. A U.S. continuation application is pending.

• U.S. Design Patent No. D667946, U.S. Design Patent No. D687948 and U.S. Design Patent No. D706415 are directed to the ornamental appearance of the EZ Fill device and are

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expected to expire in September 2026, August 2027 and June 2028, respectively. A Chinese counterpart to these patents has been granted.

• U.S. Patent No. 8,740,847 is directed to a fluid delivery device having a pre-filled cartridge. This patent is expected to expire in March 2032. Foreign counterparts to this patent are pending in Australia, Canada, China, Europe, Israel, India, Japan, Korea and Singapore. A U.S. continuation application is pending.

• U.S. Patent Nos. 7,914,499 and 8,821,443 are directed to fluid delivery devices having two or more fluid delivery reservoirs. These patents expire in March 2027. Foreign counterparts to these patents have been granted in Australia, China, Korea, Russia and Singapore, and we have patent applications pending in Australia, Canada, China, Europe, Hong Kong, Israel, India, Japan and Singapore. Two U.S. continuation applications are pending.

• We own eight U.S. and 12 international patents and have one patent pending for needle-free injection systems related to aspects of the Mini-Ject technology.

• We own 15 U.S. and 30 international patents and have 28 patents pending in the area of microneedle design, fabrication and drug delivery related to aspects of the Micro-Trans technology.

Trademarks

We believe we have protected our trademarks, including our trademark of V-Go, through applications in all major markets worldwide as well as the United States. Our trademark portfolio consists of 16 registered trademarks, six of which are registered in the United States, including our V-Go logo. We also have 9 trademark applications pending registration in several major markets outside the United States.

Trade Secrets and Know-How

We rely, in some circumstances, on trade secrets and know-how to protect our proprietary manufacturing processes and materials critical to our product. We seek to preserve the integrity and confidentiality of our trade secrets and know-how in part by limiting the employees and third parties who have access to certain information and requiring employees and third parties to execute confidentiality and invention assignment agreements, under which they are bound to assign to us inventions made during the term of their employment. These agreements further require employees to represent that they have no existing obligations and hold no interest that conflicts with any of their obligations under their agreements with us. We also generally require consultants, independent contractors and other third parties to sign agreements providing that any inventions that relate to our business are owned by us, and prohibiting them from disclosing or using our proprietary information except as may be authorized by us.

Competition

The medical technology and biopharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. Competition in the diabetes market is particularly intense, due largely to the fact that products designed to treat diabetes currently compete with both traditional and new products. We compete with these products based on efficacy, price, reimbursement, ease of use and healthcare provider education.

Within the diabetes market, V-Go is cleared by the FDA for adult patients who require insulin, with either Type 1 or Type 2 diabetes, although we position V-Go to compete primarily in the market for adult patients with Type 2 diabetes requiring insulin, particularly as part of a basal-bolus insulin regimen. Our primary competitors in the basal-bolus insulin therapy market are manufacturers of insulin and insulin pens, such as Novo Nordisk, Sanofi S.A. and Eli Lilly and Company.

In addition to basal-bolus insulin therapy, glucagon-like peptide-1, or GLP-1, analog injection products are another potential competitor to V-Go. GLP-1 analog injection products are used in combination with

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OADs or basal insulin injection. Some physicians, when faced with a patient who is unable to reach or maintain glucose levels at his or her goal with OADs, will add a GLP-1 through twice-daily, once-daily or once-weekly injections. As a result, we also compete with pharmaceutical manufacturers of GLP-1 analog injection products, such as AstraZeneca, Novo Nordisk and GlaxoSmithKline plc. In addition, we may compete with inhaled insulin products for bolus therapy, which have been recently introduced to the market.

In the area of basal-bolus device competition, we do not consider programmable insulin pumps to be products that compete directly with V-Go, as those products, although cleared for both Type 1 and Type 2 diabetes, have been primarily designed and marketed for patients with Type 1 diabetes. We believe that the simple and discreet design and interface of the V-Go more directly addresses the needs of patients with Type 2 diabetes. Patients with Type 2 diabetes, for example, are often taking many drugs for multiple diseases, including medications to treat high blood pressure and elevated cholesterol, and, as a result, they desire a simple to use and discreet method to deliver their insulin. We are not aware of any other disposable basal-bolus insulin delivery devices currently marketed or in development at this time.

Government Regulation

V-Go, our first commercialized product, received 510(k) clearance by the FDA in December 2010. Our product and our operations are subject to extensive regulation by the FDA and other federal and state authorities in the United States, as well as comparable authorities in foreign jurisdictions. Our product is subject to regulation as medical devices in the United States under the Federal Food, Drug, and Cosmetic Act, or FDCA, as implemented and enforced by the FDA. The FDA regulates the development, design, non-clinical and clinical research, manufacturing, safety, efficacy, labeling, packaging, storage, installation, servicing, recordkeeping, premarket clearance or approval, import, export, adverse event reporting, advertising, promotion, marketing and distribution, and import and export of medical devices to ensure that medical devices distributed domestically are safe and effective for their intended uses and otherwise meet the requirements of the FDCA.

FDA Premarket Clearance and Approval Requirements

Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a 510(k) premarket notification, or approval of a premarket approval, or PMA, application. Under the FDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness. Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the Quality System Regulation, or QSR, facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials. Class II devices are subject to the FDA’s General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls can include performance standards, postmarket surveillance, patient registries and FDA guidance documents.

While most Class I devices are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FDCA requesting permission to commercially distribute the device. The FDA’s permission to commercially distribute a device subject to a 510(k) premarket notification is generally known as 510(k) clearance. Devices deemed by the FDA to pose the greatest risks, such as life sustaining, life supporting or some implantable devices, or devices that have a new intended use, or use advanced technology that is not substantially equivalent to that of a legally marketed device, are placed in Class III, requiring approval of a PMA. Some pre-amendment devices are unclassified, but are subject to FDA’s premarket notification and clearance process in order to be commercially distributed. Our currently marketed products are Class II devices subject to 510(k) clearance.

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510(k) Marketing Clearance Pathway

To obtain 510(k) clearance, a premarket notification submission must be submitted to the FDA demonstrating that the proposed device is “substantially equivalent” to a predicate device already on the market. A predicate device is a legally marketed device that is not subject to premarket approval, i.e., a device that was legally marketed prior to May 28, 1976 (pre-amendments device) and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I, or a device that was found substantially equivalent through the 510(k) process. The FDA’s 510(k) clearance process usually takes from three to six months, but may take longer. The FDA may require additional information, including clinical data, to make a determination regarding substantial equivalence.

If the FDA agrees that the device is substantially equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market the device. If the FDA determines that the device is “not substantially equivalent” to a previously cleared device, the device is automatically designated as a Class III device. The device sponsor must then fulfill more rigorous PMA requirements, or can request a risk-based classification determination for the device in accordance with the “de novo” process, which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device. After a device receives 510(k) marketing clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change or modification in its intended use, will require a new 510(k) marketing clearance or, depending on the modification, PMA approval. The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k) or a PMA in the first instance, but the FDA can review any such decision and disagree with a manufacturer’s determination. If the FDA disagrees with a manufacturer’s determination, the FDA can require the manufacturer to cease marketing and/or request the recall of the modified device until 510(k) marketing clearance or PMA approval is obtained. Also, in these circumstances, we may be subject to significant regulatory fines or penalties. We have made and plan to continue to make additional product enhancements to our 510(k)-cleared products. We cannot be assured that the FDA would agree with any of our decisions not to submit 510(k) premarket notifications for these modifications.

V-Go is the first insulin device to be cleared under the FDA’s Infusion Pump Improvement Initiative, which established additional device manufacturing requirements designed to foster the development of safer, more effective infusion pumps. The FDA launched this initiative in 2010 to support the benefits of external infusion pumps while minimizing the risks associated with these devices. As part of the initiative, FDA issued guidance requesting the inclusion of additional information in premarket submissions for infusion pumps beyond what has traditionally been provided, including detailed engineering information, a comprehensive discussion of steps taken to mitigate risks and additional design validation testing specific to the environment in which the device is intended to be used.

In addition, the FDA is currently considering proposals to reform its 510(k) marketing clearance process, and such proposals could include increased requirements for clinical data and a longer review period. Specifically, in response to industry and healthcare provider concerns regarding the predictability, consistency and rigor of the 510(k) regulatory pathway, the FDA initiated an evaluation of the 510(k) program, and in January 2011, announced several proposed actions intended to reform the review process governing the clearance of medical devices. The FDA intends these reform actions to improve the efficiency and transparency of the 510(k) clearance process, as well as bolster patient safety.

PMA Approval Pathway

Class III devices require PMA approval before they can be marketed although some pre-amendment Class III devices for which FDA has not yet required a PMA are cleared through the 510(k) process. The PMA process is more demanding than the 510(k) premarket notification process. In a PMA the manufacturer must demonstrate that the device is safe and effective, and the PMA must be supported by

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extensive data, including data from preclinical studies and human clinical trials. The PMA must also contain a full description of the device and its components, a full description of the methods, facilities and controls used for manufacturing, and proposed labeling. Following receipt of a PMA, the FDA determines whether the application is sufficiently complete to permit a substantive review. If FDA accepts the application for review, it has 180 days under the FDCA to complete its review of a PMA, although in practice, the FDA’s review often takes significantly longer, and can take up to several years. An advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device. The FDA may or may not accept the panel’s recommendation. In addition, the FDA will generally conduct a pre-approval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the QSR. The FDA will approve the new device for commercial distribution if it determines that the data and information in the PMA constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use(s). The FDA may approve a PMA with post-approval conditions intended to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale and distribution, and collection of long-term follow-up data from patients in the clinical study that supported PMA approval or requirements to conduct additional clinical studies post-approval. The FDA may condition PMA approval on some form of post-market surveillance when deemed necessary to protect the public health or to provide additional safety and efficacy data for the device in a larger population or for a longer period of use. In such cases, the manufacturer might be required to follow certain patient groups for a number of years and to make periodic reports to the FDA on the clinical status of those patients. Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval.

Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, that affect the safety or effectiveness of the device, require submission of a PMA supplement. PMA supplements often require submission of the same type of information as a PMA, except that the supplement is limited to information needed to support any changes from the device covered by the original PMA and may not require as extensive clinical data or the convening of an advisory panel. Certain other changes to an approved device require the submission of a new PMA, such as when the design change causes a different intended use, mode of operation, and technical basis of operation, or when the design change is so significant that a new generation of the device will be developed, and the data that were submitted with the original PMA are not applicable for the change in demonstrating a reasonable assurance of safety and effectiveness. Our product is not currently approved under a PMA. However, we may in the future develop devices which will require the approval of a PMA.

Clinical Trials

Clinical trials are almost always required to support a PMA and are sometimes required to support a 510(k) submission. All clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s investigational device exemption, or IDE, regulations which govern investigational device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. If the device presents a “significant risk,” to human health, as defined by the FDA, the FDA requires the device sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human clinical trials. A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject. An IDE application must be supported by appropriate data, such as animal and laboratory test results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. The IDE will automatically become effective 30 days after receipt by the FDA unless the FDA

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notifies the company that the investigation may not begin. If the FDA determines that there are deficiencies or other concerns with an IDE for which it requires modification, the FDA may permit a clinical trial to proceed under a conditional approval.

In addition, the study must be approved by, and conducted under the oversight of, an Institutional Review Board, or IRB, for each clinical site. The IRB is responsible for the initial and continuing review of the IDE, and may pose additional requirements for the conduct of the study. If an IDE application is approved by the FDA and one or more IRBs, human clinical trials may begin at a specific number of investigational sites with a specific number of patients, as approved by the FDA. If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval from the FDA, but must still follow abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements. Acceptance of an IDE application for review does not guarantee that the FDA will allow the IDE to become effective and, if it does become effective, the FDA may or may not determine that the data derived from the trials support the safety and effectiveness of the device or warrant the continuation of clinical trials. An IDE supplement must be submitted to, and approved by, the FDA before a sponsor or investigator may make a change to the investigational plan that may affect its scientific soundness, study plan or the rights, safety or welfare of human subjects.

During a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, trial monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them. The clinical investigators in the clinical study are also subject to FDA’s regulations and must obtain patient informed consent, rigorously follow the investigational plan and study protocol, control the disposition of the investigational device, and comply with all reporting and recordkeeping requirements. Additionally, after a trial begins, we, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. Even if a clinical trial is completed, there can be no assurance that the data generated during a clinical study will meet the safety and effectiveness endpoints or otherwise produce results that will lead the FDA to grant marketing clearance or approval.

Post-Market Regulation

After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply. These include:

• establishment registration and device listing with the FDA;

• Quality System Regulation, or QSR, requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process;

• labeling regulations and FDA prohibitions against the promotion of investigational products, or “off-label” uses of cleared or approved products;

• requirements related to promotional activities;

• clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices;

• medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur;

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• correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;

• the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and

• post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.

Our manufacturing processes are required to comply with the applicable portions of the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use. The QSR also requires, among other things, maintenance of a device master file, device history file, and complaint files. As a manufacturer, we are subject to periodic scheduled or unscheduled inspections by the FDA. Our failure to maintain compliance with the QSR requirements could result in the shut-down of, or restrictions on, our manufacturing operations and the recall or seizure of our product. The discovery of previously unknown problems with our product, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls.

The FDA has broad regulatory compliance and enforcement powers. If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions:

• warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties;

• recalls, withdrawals, or administrative detention or seizure of our product;

• operating restrictions or partial suspension or total shutdown of production;

• refusing or delaying requests for 510(k) marketing clearance or PMA approvals of new products or modified products;

• withdrawing 510(k) clearances or PMA approvals that have already been granted;

• refusal to grant export approvals for our product; or

• criminal prosecution.

U.S. Anti-Kickback, False Claims and Other Healthcare Fraud and Abuse Laws

We are also subject to healthcare regulation and enforcement by the federal government and the states and foreign governments and authorities in the locations in which we conduct our business. These other agencies include, without limitation, the Centers for Medicare and Medicaid Services, or CMS, other divisions of the U.S. Department of Health and Human Services, the U.S. Department of Justice and individual U.S. Attorney offices within the Department of Justice, as well as state and local governments. Such agencies enforce a variety of laws which include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, data privacy and security, and physician sunshine laws and regulations.

The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, to induce or in return for purchasing, leasing, ordering or arranging for or

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recommending the purchase, lease or order of any good, facility, item or service reimbursable, in whole or part by Medicare, Medicaid or other federal healthcare programs. The term “remuneration” has been broadly interpreted to include anything of value, including cash, improper discounts, and free or reduced price items and services. Among other things, the Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers and formulary managers on the other. Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the Anti-Kickback Statute has been violated. The Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act, collectively the Affordable Care Act, among other things, amended the intent requirement of the federal Anti-Kickback Statute such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate, in order to have committed a violation.

The federal civil False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to or approval by the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government. A claim includes “any request or demand” for money or property presented to the U.S. government. In addition, the Affordable Care Act codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. Several pharmaceutical and other healthcare companies have been prosecuted under the federal civil False Claims Act for, among other things, allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. Other companies have been prosecuted for causing false claims to be submitted because of the companies’ marketing of products for unapproved, and thus non-covered, uses. In addition, the federal civil monetary penalties statute imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to its amendment of the Anti-Kickback Statute, the Affordable Care Act also broadened the reach of certain criminal healthcare fraud statutes created under HIPAA by amending the intent requirement such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

Also, many states have similar fraud and abuse statutes or regulations that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs.

We may be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business. HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their respective implementing regulations, imposes

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specified requirements relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA’s security standards directly applicable to business associates, defined as service providers of covered entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity. HITECH also created four new tiers of civil monetary penalties and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions. In addition, many state laws govern the privacy and security of health information in certain circumstances, many of which differ from HIPAA and each other in significant ways and may not have the same effect.

There has been a recent trend of increased federal and state regulation of payments made to physicians and other healthcare providers. The Affordable Care Act imposed, among other things, new annual reporting requirements for covered manufacturers for certain payments and “transfers of value” provided to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. Failure to submit timely, accurately and completely the required information for all payments, transfers of value and ownership or investment interests may result in civil monetary penalties of up to an aggregate of $150,000 per year and up to an aggregate of $1 million per year for “knowing failures.” Covered manufacturers were required to report detailed payment data for the first reporting period (August 1, 2013—December 31, 2013) under this law and submit legal attestation to the completeness and accuracy of such data by June 30, 2014. Thereafter, covered manufacturers must submit reports by the 90th day of each subsequent calendar year. In addition, certain states require implementation of commercial compliance programs and compliance with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, impose restrictions on marketing practices, and/or tracking and reporting of gifts, compensation and other remuneration or items of value provided to physicians and other healthcare professionals and entities.

If our operations are found to be in violation of any of the health regulatory laws described above or any other laws that apply to us, we may be subject to penalties, including potentially significant criminal, civil and/or administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, and the curtailment or restructuring of our operations.

Healthcare Reform

A primary trend in the U.S. healthcare industry is cost containment. The federal government and state legislatures have attempted to control healthcare costs in part by limiting coverage and the amount of reimbursement for particular drug products, including implementing price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products. By way of example, the Affordable Care Act contains provisions that may reduce the profitability of drug products. The Affordable Care Act, among other things, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program, extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care plans, imposed mandatory discounts for certain Medicare Part D beneficiaries and subjected manufacturers to new annual fees based on pharmaceutical companies’ share of sales to federal healthcare programs.

Other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. On August 2, 2011, the President signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in spending reductions. The Joint Select Committee did not recommend and Congress did not enact legislation to reduce the deficit by at least $1.2 trillion for the years 2013 through 2021, triggering the legislation’s automatic reduction to several government programs. This includes reductions to Medicare

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payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and will remain in effect through 2024 unless additional Congressional action is taken. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers.

We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product or additional pricing pressures.

Coverage and Reimbursement

Sales of our product depend, in significant part, on the extent to which our product is covered and reimbursed by third-party payors, such as government healthcare programs, including, without limitation, Medicare Part D plans, commercial insurance and managed healthcare organizations. Patients who use V-Go generally rely on these third-party payors to pay for all or part of the costs of our product. The containment of healthcare costs has become a priority of federal, state and foreign governments, and the prices of drug products have been a focus in this effort. Third-party payors are increasingly challenging the prices charged for drug products and medical services, examining the medical necessity, reviewing the cost effectiveness, and questioning the safety and efficacy of such products and services. If these third-party payors do not consider our product to be cost-effective compared to other available therapies, they may not cover our product or, if they do, the level of payment may not be sufficient to allow us to sell our product at a profit. In addition, the U.S. government, state legislatures and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results.

Currently, a number of third-party payors have coverage policies that permit coverage for V-Go, either under the pharmacy or medical benefit. For example, a majority of Medicare Part D plans make coverage for our product available under the outpatient prescription drug benefit. A number of private payors and Medicaid programs also permit coverage for V-Go under the pharmacy benefit. The process for determining whether a third-party payor will provide coverage for a drug product typically is separate from the process for establishing the reimbursement rate that the payor will pay for the product once coverage is approved. Third-party payors, including, without limitation, Medicare Part D plans, may limit coverage to specific drug products on an approved list, also known as a formulary, which might not include all of the FDA-approved drugs for a particular indication. Continued placement on formularies is therefore critical for reimbursement. A decision by a third-party payor not to cover our product could reduce physician utilization of our product. Moreover, a third-party payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development, sales and marketing. Additionally, coverage and reimbursement for drug products can differ significantly from payor to payor. One third-party payor’s decision to cover a particular drug product or service does not ensure that other payors will also provide coverage for the medical product or service, or will provide coverage at an adequate reimbursement rate. As a result, the coverage determination process will require us to provide scientific and clinical support for the use of our product to each payor separately and will continue to be a time-consuming process.

V-Go currently is not covered under Medicare Part B because V-Go is a disposable insulin dispensing device, which is not a recognized benefit. In addition, some private third-party payors have determined that there is insufficient data for coverage and concluded that V-Go is investigational or experimental. Those payors may determine at a future date that our product, including V-Go, will be covered and because coverage and reimbursement varies significantly from payor to payor, the process to obtain favorable recognition is time-consuming.

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We currently have contracts establishing reimbursement for V-Go with national and regional third-party payors in the United States. While we anticipate entering into additional contracts with third-party payors, we cannot guarantee that we will succeed in doing so or that the reimbursement contracts we are able to negotiate will enable us to sell our product on a profitable basis. In addition, contracts with third-party payors generally can be modified or terminated by the third-party payor without cause and with little or no notice to us. Moreover, compliance with the administrative procedures or requirements of third-party payors may result in delays in processing approvals by those third-party payors for customers to obtain coverage for V-Go. Failure to secure or retain adequate coverage or reimbursement for V-Go by third-party payors, or delays in processing approvals by those payors, could result in the loss of sales, which could have a material adverse effect on our business, financial condition and operating results.

Employees

As of September 30, 2014, we had a total of 125 employees, including 28 in our manufacturing, quality, compliance and research organization, 87 in our commercial organization and 10 in general and administrative functions.

Properties

Our corporate headquarters are located in Bridgewater, New Jersey, where we currently lease approximately 9,700 square feet of office space under a lease that expires on June 30, 2018. We also maintain a research and development facility in Shrewsbury, Massachusetts, where we currently lease approximately 73,000 square feet of space for offices, lab and pilot facilities and process and engineering under a lease that expires on October 31, 2017.

Legal Proceedings

We are currently not a party to any material legal proceedings.

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MANAGEMENT

Executive Officers and Directors

The following table sets forth the name and position of each of our executive officers and directors, including their ages as of September 30, 2014.

Name	Age		Position
Kristine Peterson		55	Chief Executive Officer and Director
John Timberlake		50	President and Chief Commercial Officer
William Duke		42	Chief Financial Officer
Geoffrey Jenkins		62	Executive Vice President, Manufacturing, Operations and Research & Development
Kurt Andrews		45	Vice President, Human Resources
Daniel Pelak		62	Chairman of the Board of Directors
John Barr		57	Director
Todd Foley		42	Director
Ittai Harel		47	Director
Steven LaPorte		64	Director
Paul Queally		50	Director
John Ryan		45	Director
Sean Traynor		45	Director

⁽¹⁾  Member of the audit committee

⁽²⁾  Member of the compensation committee

⁽³⁾  Member of the nominating and corporate governance committee

Kristine Peterson has served as our Chief Executive Officer and a member of our Board of Directors since June 2009. Prior to joining Valeritas, Ms. Peterson was Company Group Chair of the biotechnology group at Johnson & Johnson, or J&J, from 2006 until 2009. Prior to this role, Ms. Peterson was the Executive Vice President for J&J’s global strategic marketing organization from 2004 to 2006. Prior to joining J&J, she was Senior Vice President, Commercial Operations for Biovail Corporation and President for Biovail Pharmaceuticals from 2003 to 2004. Prior to that, she spent 20 years at Bristol-Myers Squibb where she held assignments of increasing responsibility in marketing, sales, and general management, including running the cardiovascular/metabolics business unit and the generics division. Ms. Peterson currently serves as a director of Amarin Corporation and Immunogen, Inc. Ms. Peterson has a B.S. and an M.B.A. from the University of Illinois at Urbana-Champaign. Ms. Peterson is qualified to serve as a director because of her role with us, and her extensive operational knowledge of, and executive level management experience in, the biopharmaceutical and medical technology industries.

John Timberlake has served as our President and Chief Commercial Officer since August 2008. Before becoming President and Chief Commercial Officer, Mr. Timberlake was a General Manager with our company from September 2006 to August 2008. Prior to joining Valeritas, Mr. Timberlake held positions of increasing responsibility from 1991 to 2006 at Sanofi-Aventis (now Sanofi), with his last role as Vice President of Diabetes Marketing, where he was responsible for the diabetes franchise, including the brands Lantus, Apidra and Amaryl. Prior to Sanofi, Mr. Timberlake had extensive experience and commercial responsibilities for new products in development across multiple therapeutic areas, including inhaled insulin and other metabolic products. Prior to working in the healthcare industry, Mr. Timberlake was a manager with Deloitte & Touche LLP, from 1986 to 1991, and was both a Certified Management Accountant and a Certified Public Accountant. He earned a B.S. in Accounting at Northwest Missouri State University, an M.S. in Management from Purdue University and an M.B.A. from E.S.C. Rouen in France.

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William Duke has served as our Chief Financial Officer since January 2014. He joined Valeritas as Corporate Controller in July 2011. Prior to joining Valeritas, Mr. Duke was Senior Director, Finance for Genzyme Corporation, a biopharmaceutical company, from January 2010 to July 2011, where he had oversight responsibility for external reporting to the Securities and Exchange Commission, internal management reporting and worldwide financial consolidation. Prior to Genzyme, he was the Director of Finance and Accounting of Haemonetics Corporation, a medical device company, from May 2008 to January 2010 and held various senior financial roles with consulting services and emerging growth organizations. Mr. Duke holds a B.S. in Accounting from Stonehill College and an M.B.A. with a concentration in Finance from Bentley University and is a Certified Public Accountant.

Geoffrey Jenkins has served as our Executive Vice President, Manufacturing, Operations and Research & Development since he joined Valeritas in April 2009. Prior to joining Valeritas, Mr. Jenkins was Vice President of Worldwide Operations for Inverness Medical, a healthcare technology company, from 2005 to 2009. From 2000 to 2005, he was President and Founding Partner of UV-Solutions, LLC, a healthcare technology company, and from 1997 to 1999 he was Chief Operating Officer of MDI Instruments, Inc., a healthcare technology company. Mr. Jenkins was also Corporate Vice President of Operations of MediSense, Inc. from 1991 to 1997. Prior to becoming Corporate Vice President of Operations, he held various other positions in Operations and Engineering Management with MediSense from 1984 to 1991. Mr. Jenkins earned a B.A. and a B.S. from Clarkson University.

Kurt Andrews has served as our Vice President, Human Resources since joining Valeritas in July 2013. Prior to joining Valeritas, he was Vice President of Human Resources at PTC Therapeutics, a biotechnology company, leading the company’s Human Resources, Information Technology and Facilities functions, from 2004 to July 2013. Additionally, from 2002 to 2004, Mr. Andrews was the Director of Human Resources at Vitex, a biotechnology company, and from 1996 to 2002 served in progressive human resources leadership roles at Applera Corporation, a biotechnology company, supporting the growth of both Applied Biosystems and Celera Genomics. Mr. Andrews received an M.A. from the Institute for Labor and Employment Relations at the University of Illinois at Urbana-Champaign and a B.A. from the University of Illinois at Urbana-Champaign.

Daniel Pelak has served as Chairman of our Board of Directors since September 2011. Mr. Pelak has over 30 years of experience as a senior executive in the medical technology industry. He has served as a Senior Industry Executive with Welsh, Carson, Anderson & Stowe, or WCAS, focusing on healthcare investments since November 2008. He was previously the Chief Executive Officer of Inner Pulse, a privately held medical device company, from September 2005 to July 2008. Before joining InnerPulse, from 2002 until 2005, he was the Chief Executive Officer of Closure Medical Corporation, a global leader in the development and manufacture of biomaterial-based medical adhesives, which was acquired by J&J in 2005. He began his industry career at Medtronic, Inc., a medical device company, where he was employed from 1976 to 2002. His executive assignments at Medtronic included Vice President of U.S. Marketing and, later in his career, worldwide responsibility for three different operating divisions as the Vice President and General Manager. Mr. Pelak is also the Chairman of the Board of Directors of K2M Group Holdings, Inc., a medical device company, and serves on the Board of Directors of the Spectranetics Corporation, Vertos Medical, Inc. and Mardil, Inc. Mr. Pelak holds a B.S. from the Pennsylvania State University. Mr. Pelak is qualified to serve as a director because of his extensive financial background and his experience in the healthcare industry, including executive level management, investment management and experience working with companies backed by private equity investors.

John Barr has served as a member of our Board of Directors since May 2012. Mr. Barr has been the Chief Executive Officer of Surgical Specialties Corporation, a wholly owned subsidiary of Angiotech Pharmaceuticals, since October 2014. From August 2013 to October 2014, Mr. Barr served as a member of our board and the Board of Directors of EarlySense Inc., a health monitoring company. During this period, Mr. Barr also worked as an independent consultant in the ophthalmic medical devices industry. Previously,

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Mr. Barr served as Global President, Surgical at Bausch and Lomb from May 2012 until August 2013. Prior to joining Bausch and Lomb, Mr. Barr was President of AGA Medical, a division of St. Jude Medical following the acquisition of AGA Medical Holdings, Inc. by St. Jude, from November 2010 until October 2011. Mr. Barr was Chief Executive Officer of AGA Medical Holdings, Inc., a manufacturer of minimally invasive devices to treat structural heart defects and vascular abnormalities, from June 2008 to November 2010 and, prior to that, served as its Chief Operating Officer. Prior to AGA Medical, Mr. Barr served as President and Chief Executive Officer of V.I. Technologies. Prior to V.I. Technologies, Mr. Barr served from June 1990 to November 1997 as President of North American Operations for Haemonetics Corporation, a medical device company, and from July 1981 to April 1990 in both financial and operational roles for Baxter Healthcare. Mr. Barr holds a Master’s Degree in management from the J.L. Kellogg Graduate School of Management and a Bachelor of Science Degree in bioengineering from the University of Pennsylvania. Mr. Barr is qualified to serve as a director because of his operational knowledge of, and executive level management experience in, the biopharmaceutical and medical technology industries.

Todd Foley has served as a member of our Board of Directors since June 2014. Mr. Foley is a Managing Partner at MPM Capital, a venture capital firm. Mr. Foley joined MPM in 1999 and was promoted to partner in 2007. He has focused primarily on biotechnology investments and currently serves on the boards of various biotechnology companies, including Chiasma, OSS Healthcare, Proteon Therapeutics, Iconic Therapeutics, Rhythm Pharmaceuticals, and Selexys Pharmaceuticals. Prior to MPM, Mr. Foley’s career in the life science industry included positions in Business Development at Genentech, a biotechnology company, and in management consulting with Arthur D. Little. He holds a B.S. in Chemistry from MIT and an M.B.A. from Harvard Business School. Mr. Foley is qualified to serve as a director because of his extensive financial background and his experience in the healthcare industry, including executive level management, and investment management.

Ittai Harel has served as a member of our Board of Directors since August 2008. Mr. Harel has been a General Partner at Pitango Venture Capital, a venture capital firm, since July 2006. Before joining Pitango, Mr. Harel was Director of Corporate Development at Nektar Therapeutics, a biopharmaceutical company, where he was responsible for strategic planning, in-licensing and M&A activities from 2003 to 2006. Prior to his period with Nektar, Mr. Harel held various management positions at IDEXX Laboratories, a multinational corporation, from 1994 to 2001 and IDGene Pharmaceuticals from 2001 to 2003. Mr. Harel holds a B.Sc. in Chemical Engineering and Biotechnology from Ben Gurion University, as well as an M.B.A. from the MIT Sloan School of Management. Mr. Harel is qualified to serve as a director because of his extensive financial background and his experience in the healthcare industry, including executive level management and investment management.

Steven LaPorte has served as a member of our Board of Directors since August 2008. Mr. LaPorte is a Venture Partner at ONSET Ventures, a venture capital firm, and currently serves as a member of the boards of AngioDynamics, Inc. and Biocontrol Ltd. (United Kingdom), both medical device companies. From 2005 to 2007, Mr. LaPorte also served as a member of the board of RITA Medical Systems, Inc. Mr. LaPorte also served as the Chief Technology Officer for Intelect Medical, a healthcare company, until its acquisition by Boston Scientific in January 2011. From 2002 until his retirement in August 2005, Mr. LaPorte served as the Vice President of NeuroVentures and Business Development at Medtronic, a medical device company. From 2000 to 2002, Mr. LaPorte served as Vice President and General Manager of Medtronic’s Drug Delivery Division; from 1994 to 2000, he held the position of Vice President and General Manager of Medtronic’s Electrophysiology Systems Division; and from 1988 to 1994 he was the Vice President of Operations for Medtronic’s Neurological Division. He began his career at Medtronic in 1978. Mr. LaPorte received his M.B.A. from the University of Minnesota and a B.S. in mathematics and computer science from the University of Wisconsin Stevens Point. Mr. LaPorte is qualified to serve as a director because of his extensive business, leadership and management experience with medical device companies, and experience with emerging technologies and the healthcare industry generally.

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Paul Queally has served as a member of our Board of Directors since September 2011. Mr. Queally is Co-President of WCAS and a member of its Executive Committee and Management Committee, with a focus on investments in the healthcare industry. Prior to joining WCAS in 1996, Mr. Queally was a General Partner at the Sprout Group, which was the private equity arm of Donaldson, Lufkin & Jenrette Securities Corporation. Mr. Queally has also served as a member of the Board of Directors of K2M Group Holdings, Inc. since 2010 and United Surgical Partners International Inc. since 1998. In addition, Mr. Queally served as a member of the Board of Directors of Concentra Managed Care, Inc. from 1992 to 2010. Mr. Queally holds a B.A. from the University of Richmond, where he is a member of the Board of Trustees, and an M.B.A. from Columbia University. Mr. Queally is qualified to serve as a director because of his significant experience working with companies backed by private equity investors, particularly in the healthcare industry, his experience with healthcare investing and his extensive financial background.

John Ryan has served as a member of our Board of Directors since September 2011. Mr. Ryan has been a Partner at ONSET Ventures, a venture capital firm, since 2008. Prior to ONSET Ventures, Mr. Ryan led the venture investing efforts in the medical device sector for Panorama Capital, JPMorgan Partners and Chase Capital Partners. Prior to that, Mr. Ryan worked with Morgan Stanley Venture Partners and before that with Morgan Stanley’s investment banking group. Mr. Ryan is a board member for a number of emerging technology companies and other for profit and not for profit organizations. Mr. Ryan holds an M.B.A. from the Harvard Business School and a Bachelor of Science degree with high honors from the University of Colorado. Mr. Ryan is qualified to serve as a director because of his extensive financial background and his experience in the healthcare industry, including executive level management and investment management.

Sean Traynor has served as a member of our Board of Directors since September 2011. Mr. Traynor currently serves as a member of the Board of Directors of K2M Group Holdings, Inc. and Universal American Financial Corporation. Since 1999, Mr. Traynor has been an investment professional at WCAS, and is currently a General Partner, where he focuses on investments in the healthcare industry. Prior to joining WCAS, Mr. Traynor worked from 1994 to 1996 in the healthcare and financial services investment banking groups at BT Alex Brown. From 1991 to 1994 Mr. Traynor served as an associate and senior associate with Coopers & Lybrand LLP (now PwC). Mr. Traynor holds a B.S. from Villanova University and an M.B.A. with distinction from the Wharton School of Business. Mr. Traynor is qualified to serve as a director because of his significant experience working with companies backed by private equity investors, particularly in the healthcare industry, as well as his experience with healthcare investing and his extensive financial background.

Board Composition and Election of Directors

Director Independence

Our board of directors currently consists of nine members. Our board of directors has determined that all of our directors except Ms. Peterson, representing eight of our nine directors, do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the rules of The NASDAQ Global Market. There are no family relationships among any of our directors or executive officers.

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Classified Board of Directors

In accordance with our amended and restated certificate of incorporation that will go into effect upon the closing of this offering, our board of directors will be divided into three classes with staggered, three-year terms. At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. Effective upon the closing of this offering, our directors will be divided among the three classes as follows:

• the Class I directors will be             ,             and             , and their terms will expire at our first annual meeting of stockholders following this offering;

• the Class II directors will be             ,             and             , and their terms will expire at our second annual meeting of stockholders following this offering; and

• the Class III directors will be             ,             and             , and their terms will expire at the third annual meeting of stockholders following this offering.

Our amended and restated certificate of incorporation that will go into effect upon the closing of this offering will provide that the authorized number of directors may be changed only by resolution of the board of directors. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of our board of directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control of our company. Our directors may be removed only for cause by the affirmative vote of the holders of at least two-thirds of our outstanding voting stock entitled to vote in the election of directors.

Board Leadership Structure

Our board of directors is currently chaired by Daniel Pelak. As a general policy, our board of directors believes that separation of the positions of Chairman and Chief Executive Officer reinforces the independence of the board of directors from management, creates an environment that encourages objective oversight of management’s performance and enhances the effectiveness of the board of directors as a whole. As such, Ms. Peterson serves as our Chief Executive Officer, while Mr. Pelak serves as the Chairman of the board of directors but is not an officer of the company. We expect and intend the positions of Chairman of the board of directors and Chief Executive Officer to continue to be held by two individuals in the future.

Role of the Board in Risk Oversight

One of the key functions of our board of directors is informed oversight of our risk management process. The board of directors does not have a standing risk management committee, but rather administers this oversight function directly through the board of directors as a whole, as well as through various standing committees of our board of directors that address risks inherent in their respective areas of oversight. In particular, our board of directors is responsible for monitoring and assessing strategic risk exposure and our audit committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The audit committee also monitors compliance with legal and regulatory requirements. Our nominating and corporate governance committee monitors the effectiveness of our corporate governance practices, including whether they are successful in preventing illegal or improper liability-creating conduct. Our compensation committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire board is regularly informed through committee reports about such risks.

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Board Committees

Our board has established three standing committees—audit, compensation and nominating and corporate governance—each of which operates under a charter that has been approved by our board. Current copies of each committee’s charter are posted on the Corporate Governance section of our website at www.valeritas.com. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of this prospectus.

Audit Committee

The audit committee’s responsibilities include:

• appointing, approving the compensation of, and assessing the independence of our registered public accounting firm;

• overseeing the work of our registered public accounting firm, including through the receipt and consideration of reports from such firm;

• reviewing and discussing with management and the registered public accounting firm our annual and quarterly financial statements and related disclosures;

• monitoring our internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics;

• discussing our risk management policies;

• establishing policies regarding hiring employees from the registered public accounting firm and procedures for the receipt and retention of accounting related complaints and concerns;

• meeting independently with our internal auditing staff, if any, registered public accounting firm and management;

• reviewing and approving or ratifying any related person transactions; and

• preparing the audit committee report required by SEC rules.

The members of our audit committee are             ,             and             .             serves as the chairperson of the committee. All members of our audit committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and NASDAQ. Our board of directors has determined that             is an “audit committee financial expert” as defined by applicable SEC rules and has the requisite financial sophistication as defined under the applicable NASDAQ rules and regulations.

Compensation Committee

The compensation committee’s responsibilities include:

• annually reviewing and approving corporate goals and objectives relevant to CEO compensation;

• determining our CEO’s compensation;

• reviewing and approving, or making recommendations to our board with respect to, the compensation of our other executive officers;

• overseeing an evaluation of our senior executives;

• overseeing and administering our cash and equity incentive plans;

• reviewing and making recommendations to our board with respect to director compensation; and

• preparing the annual compensation committee report required by SEC rules.

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The members of our compensation committee are             ,             and             .             serves as the chairperson of the committee. Our board has determined that each of and is independent under the applicable NASDAQ rules and regulations, is a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act and is an “outside director” as that term is defined in Section 162(m) of the Internal Revenue Code of 1986, as amended.

Nominating and Corporate Governance Committee

The nominating and corporate governance committee’s responsibilities include:

• identifying individuals qualified to become board members;

• recommending to our board the persons to be nominated for election as directors and to each of the board’s committees;

• reviewing and making recommendations to the board with respect to management succession planning;

• developing and recommending to the board corporate governance principles; and

• overseeing an annual evaluation of the board.

The members of our nominating and corporate governance committee             ,             and             .            serves as the chairperson of the committee. Our board has determined that         and         are independent under the applicable NASDAQ rules and regulations.

Compensation Committee Interlocks and Insider Participation

During the fiscal year ended December 31, 2013, the members of our compensation committee were Messrs. Pelak and Queally and Mr. Vaughn Kailian. Mr. Kailan, who is a managing member of MPM Capital, is a former member of our board of directors and was succeeded by Mr. Foley. Messrs. Pelak and Queally are each affiliated with certain of our principal stockholders. See “Certain Relationships and Related Person Transactions” for additional information on the securities acquired by such principal stockholders and related agreements such stockholders are party to with us. No member of our compensation committee is or has been our current or former officer or employee. None of our executive officers served as a director or a member of a compensation committee (or other committee serving an equivalent function) of any other entity, one of whose executive officers served as a director or member of our compensation committee during the fiscal year ended December 31, 2013.

Code of Ethics and Code of Conduct

We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Upon completion of this offering, our code of business conduct and ethics will be available under the Corporate Governance section of our website at www.valeritas.com. In addition, we intend to post on our website all disclosures that are required by law or the listing standards of The NASDAQ Global Market concerning any amendments to, or waivers from, any provision of the code. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of this prospectus.

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EXECUTIVE COMPENSATION

This section discusses the material components of the executive compensation program offered to our named executive officers, or NEOs, identified below. For 2013, our NEOs were:

• Kristine Peterson, Chief Executive Officer;

• John Timberlake, President and Chief Commercial Officer; and

• Geoffrey Jenkins, Executive Vice President, Manufacturing Operations & R&D.

We are an emerging growth company, within the meaning of the JOBS Act, and have elected to comply with the reduced compensation disclosure requirements available to emerging growth companies under the JOBS Act.

2013 Summary Compensation Table

The following table sets forth information concerning the compensation of our NEOs for the year ended December 31, 2013.

Name and Principal Position	Year		Salary ($)		Option Awards ($)(1)		Non-Equity Incentive Plan Compensation ($)(2)		All Other Compensation ($)(3)		Total ($)
Kristine Peterson Chief Executive Officer		2013		435,350		1,514,238		54,689		5,100		2,009,377
John Timberlake Chief Commercial Officer		2013		353,722		630,015		31,105		5,100		1,019,942
Geoffrey Jenkins Executive Vice President, Manufacturing Operations and R&D		2013		336,558		1,170,833		71,260		5,100		1,583,751

⁽¹⁾  Represents the aggregate grant-date fair value of stock options granted during 2013 computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. For a description of the assumptions used in valuing these awards, see Note 9 to our audited financial statements included elsewhere in this prospectus.

⁽²⁾  Represents amounts earned for 2013 under our annual performance bonus program. For additional information, see “Annual Performance Bonuses” below.

⁽³⁾  Represents company matching contributions to 401(k) plan accounts.

Narrative Disclosure to Summary Compensation Table

The primary elements of compensation for our NEOs are base salary, cash bonuses and long-term equity-based compensation awards. The NEOs also participate in employee benefit plans and programs that we offer to our other full-time employees on the same basis.

Base Salaries

The NEOs receive a base salary to compensate them for the satisfactory performance of services rendered to our company. The base salary payable to each NEO is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. Base salaries for our NEOs have generally been set at levels deemed necessary to attract and retain individuals with superior talent and were originally established in each NEO’s employment agreement, described in more detail below in the section titled “Employment Agreements.”

In February 2013, the compensation committee of our board of directors, or the Compensation Committee, reviewed the annual salaries of the NEOs and approved a 3% increase to each of their base salaries, effective March 4, 2013. The base salary for each NEO following the increase was $437,514 for Ms. Peterson, $355,481 for Mr. Timberlake and $338,231 for Mr. Jenkins.

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In February 2014, the Compensation Committee reviewed the annual salaries of the NEOs and approved a 2% increase for Mr. Timberlake and 3% increase for Mr. Jenkins. Following the February 2014 increases, the new base salary for Mr. Timberlake was $362,591 and for Mr. Jenkins was $348,377.

The 2013 and 2014 increases in base salary were made in recognition of our NEOs’ individual performance and contributions to company performance in those years.

Annual Performance Bonuses

We offer our NEOs the opportunity to earn annual cash bonuses that are intended to compensate them for achieving short-term company and individual performance goals. Our Compensation Committee establishes the target bonuses of our NEOs, which are evaluated from time to time.

Each NEO’s target annual bonus is typically expressed as a percentage of base salary. For 2013, Ms. Peterson’s target bonus was 50% of her base salary and Messrs. Timberlake’s and Jenkins’s target bonuses were 35% of their respective base salaries.

For 2013, annual cash bonuses were based on achievement of a combination of individual and corporate objectives. The 2013 corporate objectives related to revenue, manufacturing efficiency and quality, financial management and fundraising. The 2013 individual objectives for each NEO related to each NEO’s areas of responsibility within our company and the NEO’s ability to influence the success of those areas.

Actual payouts of our 2013 cash bonuses were determined by multiplying each NEO’s respective target amount by their base pay earnings for the fiscal year, multiplied by an individual bonus multiplier (0-150%), which was then multiplied by the company bonus multiplier (0-150%). The bonus multipliers represent the Compensation Committee’s evaluation of company performance and each NEO’s individual performance against the established targets.

Notwithstanding the establishment of the performance components and the formula for determining the cash bonus payment amounts as described above, our Compensation Committee may exercise positive or negative discretion in determining the levels of achievement of performance goals or elect to award a greater or lesser amount to our NEOs than the amount determined by the annual cash bonus formula if, in the exercise of its business judgment, our Compensation Committee determines that adjustments are warranted under the circumstances. The Compensation Committee elected not to make any positive discretionary adjustments, that were not part of the formula described above, to the bonus amounts for 2013.

The actual cash bonuses earned by our NEOs for 2013 are reported under the “Non-Equity Incentive Plan Compensation” column of the 2013 Summary Compensation Table above.

Equity Compensation

We offer stock options to our key employees, including our NEOs, as the long-term incentive component of our compensation program. We typically grant stock options to key employees when they commence employment with us and may thereafter grant additional awards in the discretion of our board of directors. Our stock options generally allow key employees to purchase shares of our common stock at a price per share equal to the fair market value of our common stock on the date of grant, as determined by the board of directors, and may be intended to qualify as incentive stock options under the Internal Revenue Code.

Stock options granted under the Valeritas, Inc. Amended and Restated 2008 Equity Compensation Plan, or the 2008 Plan, typically vest as to 25% of the shares subject to the option on the initial vesting date

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and in equal monthly installments over the following 36 months, subject to the holder’s continued employment with us. From time to time, our board of directors may also construct alternate vesting schedules as it determines are appropriate to motivate particular employees. Stock options granted to our key employees may be subject to accelerated vesting in certain circumstances, including as described below for our NEOs in the section titled “Potential Payments Upon a Change in Control.”

On June 23, 2014, we adopted the Valeritas, Inc. 2014 Incentive Compensation Plan, or the 2014 Plan, to facilitate the grant of cash and equity incentives to directors, employees (including our NEOs) and consultants of our company and certain of its affiliates and to enable our company and certain of its affiliates to obtain and retain services of these individuals, which we believe is essential to our long-term success. For additional information about the 2014 Plan, see the section titled “2014 Incentive Compensation Plan” below.

The following table sets forth the stock options granted to our NEOs during 2013 under the 2008 Plan and in 2014 under the 2014 Plan.

Named Executive Officer	2013 Options Granted (#)(1)		2014 Options Granted (#)(2)
Kristine Peterson		3,187,212		446,000	(3)
John Timberlake		1,307,733		158,000	(3)
Geoffrey Jenkins		2,362,209		195,000	(4)

⁽¹⁾  These options were granted under the 2008 Plan with exercise prices equal to the fair market value of our common stock on the date of grant, as determined by our board of directors, prior to September 2011, and from September 2011 to June 2014 at a price per share equal to the per share price paid by investors as part of the Series C financing. The options vest as to 25% of the shares subject to the option on the initial vesting date and in equal monthly installments over the ensuing 36 months.

⁽²⁾  These options were granted under the 2014 Plan with exercise prices equal to the fair market value of our common stock on the date of grant, as determined by our board of directors.

⁽³⁾  The options vest as to 50% of the shares subject to the option on January 8, 2015 and in equal monthly installments over the ensuing 24 months.

⁽⁴⁾  The options vest as to 40% of the shares subject to the option on January 8, 2015 and in equal monthly installments over the ensuing 24 months.

Retirement, Health, Welfare and Additional Benefits

Our NEOs are eligible to participate in our employee benefit plans and programs, including medical and dental benefits, flexible spending accounts and short- and long-term disability and life insurance, to the same extent as our other full-time employees, subject to the terms and eligibility requirements of those plans. Our NEOs are also eligible to participate in a tax qualified 401(k) defined contribution plan to the same extent as our other full-time employees. Currently, we match contributions made by participants in the 401(k) plan up to 2% of the employee contributions, and these matching contributions are fully vested as of the date on which the contribution is made.

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Outstanding Equity Awards at Fiscal Year-End

The following table summarizes the outstanding equity awards held by our NEOs as of December 31, 2013.

			Option Awards(1)
Name	Initial Vesting Date		Number of Securities Underlying Unexercised Options Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable(2)		Option Exercise Price ($)		Option Expiration Date
Kristine Peterson		3/1/2014		—		3,187,212		1.435		3/1/2023
		9/8/2012		1,497,710		1,164,885		1.435		2/13/2022
		8/30/2012		317,917		227,083		0.52		8/30/2021
		6/1/2010		3,500,000		—		0.25		8/5/2019
John Timberlake		3/1/2014		—		1,307,733		1.435		3/1/2023
		9/8/2012		491,616		382,367		1.435		2/13/2022
		8/30/2012		89,104		63,646		0.52		8/30/2021
		7/15/2011		106,771		18,229		0.31		7/15/2020
		8/26/2009		875,000		—		0.25		8/5/2019
		5/1/2008		175,000		—		0.32		5/1/2018
Geoffrey Jenkins		10/31/2014		—		1,200,000		1.435		10/31/2023
		3/1/2014		—		1,162,209		1.435		3/1/2023
		9/8/2012		436,909		339,818		1.435		2/13/2022
		8/30/2012		105,000		75,000		0.52		8/30/2021
		7/15/2011		115,313		19,687		0.31		7/15/2020
		4/16/2010		865,000		—		0.25		8/5/2019

⁽¹⁾  In connection with the 2014 Reorganization, each outstanding option to purchase shares of our common stock was converted into an option to purchase one common unit of Holdings. As a result, the options shown in this table are no longer outstanding. Each common unit of Holdings represents an indirect interest in the 9,000,000 shares of our common stock held by Holdings, which will only be realized by common unit holders upon Holdings’ liquidation. We are currently not able to determine the number of shares or our common stock allocable to each unit of Holdings because, pursuant to Holdings’ operating agreement, its liquidation is not likely to occur for at least 18 months after the consummation of this offering and the allocation of its 9,000,000 shares of our common stock will be based upon the then market value of our common stock and liquidation preferences applicable to Holdings’ units. The allocation by Holdings of its 9,000,000 shares of our common stock to the Prior Holders will be based upon the market value of our common stock at that time and liquidation preferences applicable to Holdings’ units. For additional information about the 2014 Reorganization, see “Prospectus Summary—Recent Changes—2014 Reorganization.”

⁽²⁾  All unvested options vest as to 25% of the total shares subject to the option on the initial vesting date and in equal monthly installments over the ensuing 36 months, subject to the holder’s continued employment with us through the applicable vesting date and potential accelerated vesting as described in the section titled “Potential Payments Upon a Change in Control” below.

Employment Agreements

We have entered into employment agreements with each of our NEOs. Certain key terms of these agreements are described below. Each of our NEOs has also signed agreements pursuant to which they have agreed to refrain from disclosing our confidential information indefinitely. We expect that each of these agreements will be amended prior to the completion of this offering.

Ms. Peterson

We entered into an employment agreement with Ms. Peterson on April 22, 2009. This agreement entitled Ms. Peterson to receive an initial annual base salary of $400,000, subject to adjustment pursuant to our employee compensation policies in effect from time to time, and an annual target bonus opportunity of 50% of her annual salary, with the amount of any such bonus based on individual and company performance, measured against objectives mutually established by Ms. Peterson and our Compensation Committee annually.

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If Ms. Peterson’s employment is terminated without cause (other than in connection with a change in control), she is entitled to receive 12 months of base salary continuation and 12 months of health and dental insurance benefit continuation. If Ms. Peterson’s employment is terminated by us without cause or if she resigns her employment for good reason, in either case, within one year following a change in control, Ms. Peterson will also be entitled to receive an amount equal to her target bonus.

Cause is defined in Ms. Peterson’s employment agreement as (i) unauthorized use or disclosure of the company’s confidential information or trade secrets, which causes material harm to the company, (ii) material breach of any agreement between the company and Ms. Peterson, (iii) material failure to comply with the company’s written policies or rules, (iv) conviction of, or plea of guilty or no contest to, a felony, (v) gross negligence or willful misconduct, (vi) continuing failure to perform assigned duties after receiving written notification of such failure, or (vii) failure to cooperate in good faith with a governmental or internal investigation of the company, if requested. A condition is not considered “cause” under (ii), (iii), (vi) and (vii) unless the company gives written notice of the condition within 90 days of its existence and the Ms. Peterson fails to remedy such condition within 30 days of receiving such notice.

Good reason is defined in the Ms. Peterson’s employment agreement as her resignation within 6 months after the occurrence of (i) a material reduction in base salary or bonus, unless such reduction applies to all members of executive management, (ii) a material diminution in her authority, duties or responsibilities, or (iii) relocation of her principal workplace resulting in an increase in distance from her residence to her workplace of more than 30 miles. A condition is not considered “good reason” unless Ms. Peterson gives written notice of the condition within 90 days of its existence and the company fails to remedy such condition within 30 days of receiving such notice.

Mr. Timberlake

We entered into an employment agreement with Mr. Timberlake on August 20, 2008. The agreement provided an annual initial base salary of $325,000, subject to adjustment pursuant to our employee compensation policies in effect from time to time, and an annual target bonus opportunity of 30% of Mr. Timberlake’s base salary based upon achievement of mutually agreed goals for each year.

If Mr. Timberlake is terminated without cause or resigns for good reason, provided that he timely executes a release of claims, he will be entitled to receive 6 months of base salary continuation, an amount equal to 6 months of his equivalent target bonus and payment of a portion of COBRA premiums for up to 6 months of continued health insurance coverage, based on active employee cost-sharing rates. In addition, in such an event, Mr. Timberlake will also be entitled to 6 months of vesting acceleration of his unvested stock option awards and will have 6 months following his termination to exercise his vested stock options.

Cause and good reason are defined for purposes of Mr. Timberlake’s employment agreement in substantially the same manner as described above for Ms. Peterson’s employment agreement.

Mr. Jenkins

We entered into an employment agreement with Mr. Jenkins on April 2, 2009. The agreement provided an initial annual base salary of $300,000, subject to adjustment pursuant to our employee compensation policies in effect from time to time, and an annual target bonus opportunity of 30% of Mr. Jenkins’s base salary based upon achievement of mutually agreed goals for each year.

If Mr. Jenkins is terminated without cause or resigns for good reason, provided that he timely executes a release of claims, he will be entitled to receive 9 months of base salary continuation and payment of a portion of COBRA premiums for up to 6 months of continued health insurance coverage, based on active employee cost-sharing rates.

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Cause and good reason are defined for purposes of Mr. Jenkins’s employment agreement in substantially the same manner as described above for Ms. Peterson’s employment agreement.

Potential Payments Upon a Change in Control

As described above, under the terms of their employment agreements, Ms. Peterson, Mr. Jenkins and Mr. Timberlake may become entitled to certain payments or benefits for certain terminations of employment that occur in connection with a change in control. In addition, the agreements governing the NEOs’ unvested stock options provide for full accelerated vesting upon a change in control.

Long-term Incentive Plans

The following summarizes the material terms of the long-term incentive plans in which our employees, including the NEOs, participate.

2014 Incentive Compensation Plan

We adopted the 2014 Plan on June 23, 2014. The 2014 Plan permits us to grant cash, stock and stock-based awards to eligible service providers. The 2014 Plan is intended to promote the interests of the company by providing eligible service providers with the opportunity to participate in incentive compensation programs designed to encourage their continued service to the company.

Eligibility and Administration

Our employees, consultants and directors, and employees, consultants and directors of our parent or subsidiaries are eligible to receive awards under the 2014 Plan. Following our initial public offering, the compensation committee of our board of directors, the full board of directors or another committee appointed by the board of directors will administer the 2014 Plan, except that the compensation committee or another committee of the board of directors consisting solely of two or more non-employee directors who qualify as independent under applicable stock exchange rules will have exclusive authority to administer the plan with respect to individuals subject to the short-swing profit liabilities under Section 16 of the Securities Act of 1934, as amended, and to grant awards to non-employee directors. The particular entity administering the plan is referred to in this summary as the plan administrator.

The plan administrator will have the authority (subject to the provisions of the 2014 Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the 2014 Plan and to make such determinations under, and issue such interpretations of, the provisions of the 2014 Plan and any outstanding awards thereunder as it may deem necessary or advisable. The plan administrator will also set the terms and conditions of all awards under the 2014 Plan, including any vesting and vesting acceleration conditions.

Limitation on Awards and Shares Available

An aggregate of 1,305,830 shares of our common stock are initially available for issuance under awards granted pursuant to the 2014 Plan. The number of shares initially available for issuance will be automatically increased on the first trading day in January of each calendar year during the term of the 2014 Plan, beginning in the first calendar year following the consummation of this offering, by an amount equal to 4% of the shares of common stock outstanding on the final trading day of the immediately preceding calendar year, subject to an annual increase limit of 2,400,000 shares. No more than 1,305,830 shares of common stock may be issued upon the exercise of incentive stock options, which amount will automatically be increased on the first trading day in January each calendar year by the number of shares of our common stock added to the share reserve on that day pursuant to automatic share increase feature of the 2014 plan. Shares issued under the 2014 Plan may be authorized but unissued or reacquired shares, or shares purchased in the open market.

If an award under the 2014 Plan is forfeited or cancelled, any shares subject to such award may, to the extent of such forfeiture, or cancellation, be used again for new grants under the 2014 Plan. If the

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exercise price of an option granted under the 2014 Plan is paid with shares of common stock, then the number of shares available for issuance under the 2014 Plan will be reduced by the net number of shares issued under the exercised option and not by the gross number of share for which the option was exercised. If shares of common stock are withheld in satisfaction of withholding taxes incurred in connection with the issuance, exercise or vesting of an award, then the authorized number of shares available for issuance under the 2014 Plan will be reduced by the net number of shares issued, exercised or vested under such award.

The 2014 Plan imposes the following limitations on the size of the awards which may be made on a per participant basis:

• No one person may receive stock options and stand-alone stock appreciation rights for more than 785,000 shares of our common stock in the aggregate per calendar year.

• No one person may receive direct stock issuances or stock-based awards (other than stock options and stand-alone stock appreciation rights) for more than 520,000 shares of our common stock in the aggregate per calendar year.

• The maximum dollar amount for which a participant may receive awards denominated in dollars and subject to one or more performance measures will be limited to $2,500,000 in the aggregate per calendar year within the applicable performance measurement period.

Awards

The 2014 Plan is divided into three incentive programs, which include (i) the discretionary grant program under which eligible persons may be granted options, including incentive stock options, or ISOs, and nonqualified stock options, or NSOs, or stock appreciation rights, or SARs; (ii) the stock issuance program under which eligible persons may be issued direct stock, restricted stock awards, restricted stock units, performance shares or other stock-based awards; and (iii) the incentive bonus program under which eligible persons may be issued performance unit awards, dividend equivalent rights or cash incentive awards.

Certain awards under the 2014 Plan may constitute or provide for a deferral of compensation, subject to Section 409A of the Internal Revenue Code, which may impose additional requirements on the terms and conditions of such awards. Awards under the 2014 Plan will be set forth in award agreements, which will detail the terms and conditions of the awards, including any applicable vesting and payment terms and post-termination exercise limitations. Awards other than cash awards generally will be settled in shares of our common stock, but the plan administrator may provide for cash settlement of any award. A brief description of each award type available for issuance under each of the discretionary grant program, stock issuance program and incentive bonus program follows.

Discretionary Grant Program

• Stock Options.    Stock options provide for the purchase of shares of our common stock in the future at an exercise price set on the grant date. ISOs, by contrast to NSOs, may provide tax deferral beyond exercise and favorable capital gains tax treatment to their holders if certain holding period and other requirements of the Internal Revenue Code are satisfied. The exercise price of a stock option may not be less than 100% of the fair market value of the underlying share on the date of grant (or 110% in the case of ISOs granted to certain significant stockholders), except with respect to certain substitute options granted in connection with a corporate transaction. The term of a stock option may not be longer than ten years (or five years in the case of ISOs granted to certain significant stockholders). The plan administrator may determine the time or times when a stock option is to become exercisable, the vesting schedule (if any) applicable to a stock option and whether a granted stock option is an ISO or NSO. The Plan Administrator will have the authority to effect, at

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any time and from time to time, with the consent of the affected option holders, the cancellation of any or all outstanding options under the 2014 Plan and to grant in substitution therefore new options covering the same or different number of shares with an exercise price per share based on the fair market value per share on the new option grant date.

• SARs.    Two types of SARs are authorized for issuance under the 2014 Plan, tandem SARs and stand-alone SARs. Tandem SARs entitle their holder to elect to exercise the underlying option in exchange for shares of common stock or, with the consent of the plan administrator, to surrender the option in exchange for an amount equal to the excess of the fair market value of the shares on the date of surrender over the aggregate exercise price of such shares. Stand-alone SARs entitle their holder, upon exercise, to receive from us an amount equal to the excess of the fair market value of the shares on the date of exercise over the aggregate base price of such shares. The base price of a stand-alone SAR will generally not be less than 100% of the fair market value of the underlying share on the date of grant and the term may not be longer than ten years. The plan administrator may determine the time or times when a SAR is to become exercisable and the vesting schedule (if any) applicable to a SAR. SARs may be settled in cash, shares of common stock or a combination of the two, as determined by the plan administrator.

• Rights as a Stockholder.    Participants will not have any stockholder rights with respect to the shares subject to options or SARs until the award vests and the shares are actually issued.

Stock Issuance Program

• Restricted Stock, RSUs, Performance Shares and Stock Payments.    Restricted stock is an award of nontransferable shares of our common stock that remain forfeitable unless and until specified conditions are met, and which may be subject to a purchase price. RSUs are contractual promises to deliver shares of our common stock in the future, which may also remain forfeitable unless and until specified conditions are met. Delivery of the shares underlying RSUs may be deferred under the terms of the award or at the election of the participant, if the plan administrator permits such a deferral. Performance shares are contractual rights to receive a range of shares of our common stock in the future based on the attainment of specified performance goals, in addition to other conditions which may apply to these awards. Conditions applicable to restricted stock, RSUs and performance shares may be based on continuing service, the attainment of performance goals and/or such other conditions as the plan administrator may determine. Stock payments are awards of fully vested shares of our common stock that may be issued for any of the following items of consideration: cash or check, past services rendered to the company or any other valid consideration. The issue price per share of common stock shall be determined by the plan administrator but shall not be less than 100% of the fair market value per share on the date of issuance.

• Rights as a Stockholder.    Participants will have full stockholder rights with respect to any shares of stock issued under the Stock Issuance Program, whether or not the participant’s interest in those shares is vested. Accordingly, participants will have the right to vote such shares and to receive any regular cash dividends paid on such shares, subject to any applicable vesting requirements, including (without limitation) the requirement that any dividends paid on shares subject to performance vesting conditions will be held in escrow by us and will not vest or be paid prior to the time those shares vest. Participants will not have any stockholder rights with respect to the shares subject to restricted stock units or share right awards until that award vests and the shares are actually issued. However, dividend equivalents (as described below) may be paid or credited, either in cash or in actual or phantom shares of stock, on outstanding restricted stock unit or share right awards, subject

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to terms and conditions the plan administrator deems appropriate. No dividend equivalents relating to restricted stock units or share right awards subject to performance vesting conditions will vest or otherwise become payable prior to the time the underlying award (or portion thereof to which the dividend equivalents units relate) vests.

Incentive Bonus Program

• Cash Awards and Performance Unit Awards.    Cash awards are cash incentive bonuses subject to vesting conditions or performance goals as determined by the plan administrator. Performance unit awards represent the holder’s right to receive cash or participate in a bonus pool, the value of which are tied to the attainment of pre-established corporate objectives and receipt of which may be based on continuing service as determined by the plan administrator.

• Dividend Equivalents.    Dividend equivalents represent the right to receive the equivalent value of dividends paid on shares of our common stock and may be granted alone or in tandem with awards. Dividend equivalents are credited as of dividend record dates during the period between the date an award is granted and the date such award vests, is exercised, is distributed or expires, as determined by the plan administrator.

Performance Awards

Performance awards include any of the foregoing awards that are granted subject to vesting and/or payment based on the attainment of specified performance objectives that may include but are not limited to: (i) revenue, organic revenue, net sales, or new-product revenue or net sales, (ii) achievement of specified milestones in the discovery and development of the company’s technology or of one or more of the company’s products, (iii) achievement of specified milestones in the commercialization of one or more of the company’s products, (iv) achievement of specified milestones in the manufacturing of one or more of the company’s products, (v) expense targets, (vi) share price, (vii) total shareholder return, (viii) earnings per share, (ix) operating margin, (x) gross margin, (xi) return measures (including, but not limited to, return on assets, capital, equity, or sales), (xii) productivity ratios, (xiii) operating income, (xiv) net operating profit, (xv) net earnings or net income (before or after taxes), (xvi) cash flow (including, but not limited to, operating cash flow, free cash flow and cash flow return on capital), (xvii) earnings before or after interest, taxes, depreciation, amortization and/or stock-based compensation expense, (xviii) economic value added, (xix) market share, (xx) working capital targets, (xxi) achievement of specified milestones relating to corporate partnerships, collaborations, license transactions, distribution arrangements, mergers, acquisitions, dispositions or similar business transactions, and (xxii) employee retention and recruiting and human resources management. Performance goals may be based upon the attainment of specified levels of performance under one or more of these measures relative to the performance of other entities and may also be based on the performance of any of our business units or divisions or any of our affiliates.

Certain Transactions

The plan administrator has broad discretion to take action under the 2014 Plan, as well as to make adjustments to the terms and conditions of existing and future awards, to prevent the dilution or enlargement of intended benefits and facilitate necessary or desirable changes in the event of certain transactions and events affecting our common stock, such as stock dividends, stock splits, mergers, acquisitions, consolidations and other corporate transactions. In addition, in the event of certain non-reciprocal transactions with our stockholders, the plan administrator will make equitable adjustments to the 2014 Plan and outstanding awards. In the event of a change in control of our company (as defined in the 2014 Plan), each outstanding award under the discretionary grant program and stock issuance program may become fully vested and exercisable in connection with the transaction, be continued or assumed by the successor entity, be replaced with a cash incentive program of the successor entity or be

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subject to other limitations as imposed by the plan administrator at the time of grant. Awards under the incentive bonus program may be structured by the plan administrator such that those awards automatically vest upon a change in control of our company or upon the holder’s subsequent termination within a specified period following a change in control and any performance-based vesting conditions may be converted into service-based vesting conditions that will vest upon the completion of a service period coterminous with the portion of the performance period remaining at the time of the change in control. Individual award agreements may provide for additional accelerated vesting and payment provisions as determined by the plan administrator.

Foreign Participants, Claw-Back Provisions, Transferability, and Participant Payments

The plan administrator has authority to adopt and implement from time to time such addenda or subplans to the 2014 Plan as it deems necessary in order to bring the 2014 Plan into compliance with applicable laws and regulations of any foreign jurisdictions in which grants or awards are to be made under the Plan or to obtain favorable tax treatment in those foreign jurisdictions for the individuals to whom the grants or awards are made. All awards will be subject to the provisions of any claw-back policy implemented by our company to the extent set forth in such claw-back policy and/or in the applicable award agreement. With limited exceptions for estate planning, domestic relations orders, certain beneficiary designations and the laws of descent and distribution, awards under the 2014 Plan are generally non-transferable prior to vesting, and are exercisable only by the participant. With regard to tax withholding, exercise price and purchase price obligations arising in connection with awards under the 2014 Plan, the plan administrator may, in its discretion, accept cash or check, shares of our common stock that meet specified conditions, a market sell order or such other consideration as it deems suitable.

Plan Expiration, Amendment and Termination

Our board of directors may amend or terminate the 2014 Plan at any time; however, stockholder approval will be required for any amendment that increases the number of shares available under the 2014 Plan or to the extent such approval is required under applicable law, regulation or stock exchange listing rule. No amendment of the 2014 Plan may adversely affect the rights of outstanding awards without the award holder’s consent. The 2014 Plan will expire on the first to occur of (i) June 9, 2024, (ii) the date on which all shares available for issuance under the 2014 Plan shall have been issued as fully vested shares or (iii) the termination of all outstanding awards in connection with a change in control. Should the 2014 Plan terminate on June 9, 2024, then all awards outstanding at that time will continue to have force and effect in accordance with the provisions of the documents evidencing the awards.

2008 Equity Compensation Plan

Our board of directors and stockholders have approved the 2008 Plan, under which we may grant stock options and other stock-based awards to employees, directors and consultants of our company and its subsidiaries. We have reserved a total of 31,935,085 shares of our common stock for issuance under the 2008 Plan.

Administration

Our board of directors administers the 2008 Plan and has the authority to determine recipients of awards and the terms of awards granted under the 2008 Plan, to interpret the 2008 Plan and awards outstanding thereunder, to make changes to awards outstanding under the 2008 Plan, provided that such changes may not impair a participant’s rights under the plan without the participant’s consent, and to address any other matters arising under the 2008 Plan. All such powers are exercised in the context of preserving the tax status of options granted under the plan that are intended to be ISOs. The board of directors may delegate its authority under the 2008 Plan to a committee. Following the effectiveness of this offering, our board of directors may delegate its general administrative authority under the 2008 Plan to its compensation committee.

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Types of Awards

The 2008 Plan provides for the grant of non-qualified and incentive stock options, stock awards, stock units, SARs and other equity-based awards to employees, directors and consultants of our company and its subsidiaries. As of the date of this prospectus, awards of ISOs and NSOs are outstanding under the 2008 Plan.

Certain Transactions

If certain changes are made in, or events occur with respect to, our common stock, the 2008 Plan and outstanding awards will be appropriately adjusted in the class, number and, as applicable, exercise price of securities as determined by the plan administrator. In the event of a change in control of our company, including a consolidation, merger, sale of all or substantially all of our assets or a liquidation or dissolution, our board of directors (or the board of a surviving entity assuming our company’s obligations under the 2008 Plan) may make appropriate provision for the continuation or equitable substitution of outstanding awards, provide for the assumption or replacement of outstanding stock options, provide for the surrender of awards for a payment, in cash or stock, equal to the excess of the fair market value of the underlying shares over the exercise or purchase price of the applicable award or provide that all stock options and SARs will terminate if not exercised within a specified number of days. The vesting and exercisability of awards may accelerate in connection with such a transaction, either by action of the plan administrator or under the terms of the applicable award agreements.

Amendment and Termination

The plan administrator may modify or amend the 2008 Plan from time to time, provided that any amendment or modification may not adversely affect a participant’s rights under the 2008 Plan without the participant’s consent. Any amendment the plan administrator determines is of a scope that requires stockholder approval will be subject to approval by our stockholders.

Director Compensation

Directors who are employees of us or our principal stockholders have not historically received compensation for their services on our board of directors. During 2013, our non-employee directors who were not employees of our principal stockholders each received annual cash retainers of $30,000 as compensation for their services on our board. In addition, we have from time to time granted stock option awards to certain non-employee directors as compensation for their service on our board. None of our non-employee directors received stock option awards during 2013. In 2014, we granted options to purchase 17,000 shares or our common stock to each of Messrs. Barr and LaPorte as compensation for their service on our board of directors. In connection with the 2014 Reorganization, these options were cancelled and converted into options to purchase limited liability company units of Holdings. Refer to “Prospectus Summary—Recent Changes—2014 Reorganization” for additional information about the 2014 Reorganization.

The following table provides information regarding the compensation earned by our non-employee directors during the year ended December 31, 2013:

Name	Fees Earned or Paid in Cash ($)		Total ($)
Daniel Pelak		—		—
John Barr		30,000		30,000
Ittai Harel		—		—
Vaughn Kailian		—		—
Steven LaPorte		30,000		30,000
Paul Queally		—		—
John Ryan		—		—
Sean Traynor		—		—

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The table below shows the aggregate numbers of option awards (exercisable and unexercisable) and unvested stock awards held as of December 31, 2013 by each non-employee director who was serving on our board of directors as of December 31, 2013.

Name	Options Outstanding at Fiscal Year End(1)
Daniel Pelak		—
John Barr		375,000
Ittai Harel		—
Vaughn Kailian		203,400
Steven LaPorte		375,000

⁽¹⁾  In connection with the 2014 Reorganization, each outstanding option to purchase shares of our common stock was converted into an option to purchase one common unit of Holdings. As a result, the options shown in this table are no longer outstanding. Each common unit of Holdings represents an indirect interest in the 9,000,000 shares of our common stock held by Holdings, which will only be realized by common unit holders upon Holdings’ liquidation. We are currently not able to determine the number of shares or our common stock allocable to each unit of Holdings because, pursuant to Holdings’ operating agreement, its liquidation is not likely to occur for at least 18 months after the consummation of this offering and the allocation of its 9,000,000 shares of our common stock will be based upon the then market value of our common stock and liquidation preferences applicable to Holdings’ units. The allocation by Holdings of its 9,000,000 shares of our common stock to the Prior Holders will be based upon the market value of our common stock at that time and liquidation preferences applicable to Holdings’ units. For additional information about the 2014 Reorganization, see “Prospectus Summary—Recent Changes—2014 Reorganization.”

In connection with this offering, we intend to approve and implement a compensation program for our non-employee directors that consists of annual retainer fees and equity based awards. The terms of this program have not yet been determined.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

The following includes a summary of transactions since January 1, 2011 to which we have been a party, in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described under “Executive Compensation.” We also describe below certain other transactions with our directors, executive officers and stockholders.

2014 Reorganization

During the second quarter of 2014, we consummated a series of transactions designed to facilitate future capital raising by simplifying our capitalization. On June 19, 2014, Valeritas Merger Sub, Inc. and Holdings merged with and into us. Prior to the 2014 Reorganization, Holdings was our direct wholly owned subsidiary. We survived the 2014 Reorganization as a direct, wholly owned subsidiary of Holdings. In connection with the 2014 Reorganization, all of the pre-merger holders of our Series A, B, C, C-1 and C-2 preferred stock, common stock, options to purchase common stock and preferred stock warrants, or the Prior Holders, converted these securities into preferentially equivalent units in Holdings, and we issued 9,000,000 shares of our common stock to Holdings, which represents Holdings’ sole asset. As of September 30, 2014, our issued and outstanding capital stock consisted solely of 9,000,000 shares of common stock held by Holdings and 2,743,393 shares of our Series D Preferred Stock.

We are currently unable to determine the number of shares of our common stock allocable to each Prior Holder upon Holdings’ liquidation because, pursuant to Holdings’ operating agreement, its liquidation will not occur for at least 18 months after the consummation of this offering, unless earlier effected with the consent of Holdings’ board of managers as provided in its operating agreement. The allocation by Holdings of its 9,000,000 shares of our common stock to the Prior Holders will be based upon the market value of our common stock at the time of liquidation and liquidation preferences applicable to Holdings’ units.

Resource Group Management Services Agreement

On September 8, 2011, in connection with our Series C Preferred Stock financing, we entered into a Resource Group Management Services Agreement with WCAS Management Corporation, or WCAS Management, an affiliate of Welsh, Carson, Anderson & Stowe XI, L.P., or WCAS XI. Messrs. Pelak, Queally and Traynor, members of our board of directors, are associated with WCAS Management. This agreement terminates on December 31, 2021. Pursuant to this agreement, we pay WCAS Management or a designated affiliate a fee equal to $125,000 per quarter for management, consulting, strategic, financial and other advisory services provided to us. We have agreed to indemnify and pay all expenses incurred by WCAS Management, WCAS XI or their affiliates in connection with the services provided under this agreement and in connection with WCAS XI’s investments in us. We paid fees of $157,534, $500,000 and $500,000 for the year ended December 2011, 2012 and 2013, respectively, and $375,000 for each of the nine months ended September 30, 2013 and 2014.

Preferred Stock Financings

Series C Preferred Stock Financing

In September 2011 and November 2012, we issued and sold to investors in private placements an aggregate of 98,293,414 shares of our Series C Preferred Stock at a purchase price of $1.435 per share, for aggregate consideration of $141.0 million and issued 7,095,930 shares relating to the cancellation of convertible debt. Concurrently with the issuance of our Series C Preferred Stock, we issued a $5,000,000 Senior Subordinated Note, or the WCAS Note, payable to WCAS Capital Partners IV, L.P. The WCAS

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Note bears PIK interest at 12% per annum, which is compounded semi-annually, and its principal plus PIK interest is due September 2021. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operation—WCAS Capital Partners Note Payable.”

Series D Preferred Stock Financing

In June 2014, in connection with the 2014 Recapitalization, we issued and sold to investors in private placements an aggregate of 2,195,122 shares of our Series D Preferred Stock at a purchase price of $10.00 per share, for aggregate consideration of $22.0 million. In July 2014, we issued and sold to investors in private placements an aggregate of 548,780 shares of our Series D Preferred Stock at a purchase price of $10.00 per share, for aggregate consideration of $5.4 million. In addition, the Second Series D Closing occurred in December 2014.

The following table sets forth the aggregate number of shares of Series C Preferred Stock and Series D Preferred Stock acquired by the listed holders of more than 5% of our capital stock. Each share of Series C Preferred Stock was converted into units of Holdings as part of the 2014 Reorganization.

Participants	Series C Preferred Stock		Series D Preferred Stock
5% or Greater Stockholders(1)
Affiliates of Welsh, Carson, Anderson & Stowe		85,213,123		1,601,666	(2)

⁽¹⁾  These shares of Series C and Series D Preferred Stock include accrued dividends as of September 30, 2014. Additional details regarding these stockholders and their equity holdings are provided in this prospectus under the caption “Principal Stockholders.”

⁽²⁾  Each share of Series D Preferred Stock is convertible into one share of our common stock either (i) automatically upon the satisfaction of certain predetermined conditions, including the consummation of this offering, or (ii) upon the consent of the requisite holders of the Series D Preferred Stock. We expect all of the outstanding shares of our Series D Preferred Stock to convert into shares of our common stock upon the consummation of this offering.

Investors’ Rights Agreement

We entered into an Investors’ Rights Agreement on June 19, 2014, with Holdings and the other holders of our preferred stock, including entities with which certain of our directors are affiliated, and WCAS and the holders of units of Holdings, including entities with which certain of our directors are affiliated. This agreement provides for certain rights relating to the registration of the shares of common stock held by Holdings, the common stock distributable to holders of units of Holdings upon liquidation of Holdings and common stock issuable upon conversion of the preferred stock, and a right of first offer to our preferred shareholders and the holders of units of Holdings to purchase future securities sold by us. In addition, the Investors’ Rights Agreement provides that we will use commercially reasonable efforts to cause the underwriters to reserve up to 20% of the shares being sold in this offering to the holders of units of Holdings in accordance with such holders’ pro rata ownership of Holdings’ units. Except for the registration rights (including the related provisions pursuant to which we have agreed to indemnify the parties to the Investors’ Rights Agreement), all rights related to us under this agreement will terminate upon completion of this offering. The registration rights will continue for five years following the completion of this offering, or for any particular stockholder with registration rights, the earlier of the time at which the stockholder can sell all shares in compliance with Rule 144 under the Securities Act or the stockholder holds 1% or less of our common stock and all securities held by that stockholder subject to registration rights may be sold without restriction pursuant to Rule 144 in a ninety-day period, or after a liquidation event as defined in our certificate of incorporation. See “Description of Capital Stock—Registration Rights” for additional information.

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Employment Agreements

We have entered into employment agreements with our named executive officers. For more information regarding the agreements with our named executive officers, see “Executive Compensation— Employment Agreements.”

Indemnification Agreements

We intend to enter into indemnification agreements with each of our directors and executive officers. These agreements, among other things, require us or will require us to indemnify each director (and in certain cases their related venture capital funds) and executive officer to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys’ fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of us, arising out of the person’s services as a director or executive officer. For further information, see “Description of Capital Stock—Limitations on Liability and Indemnification of Officers and Directors.”

Stock Option Grants to Executive Officers and Directors

We have granted stock options to our executive officers and certain of our directors as more fully described in the section entitled “Executive Compensation.”

Policies and Procedures for Related Person Transactions

Our board of directors has adopted a written related person transaction policy, to be effective upon the closing of this offering, setting forth the policies and procedures for the review and approval or ratification of related person transactions. This policy will cover, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, where the amount involved exceeds $120,000 in any fiscal year and a related person had, has or will have a direct or indirect material interest, including without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. In reviewing and approving any such transactions, our audit committee is tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction and the extent of the related person’s interest in the transaction. All of the transactions described in this section occurred prior to the adoption of this policy.

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PRINCIPAL STOCKHOLDERS

The following table sets forth information with respect to the beneficial ownership of our common stock as of September 30, 2014 by:

• each person or group of affiliated persons known by us to beneficially own more than 5% of our common stock;

• each of our named executive officers;

• each of our directors; and

• all of our executive officers and directors as a group.

The number of shares beneficially owned by each stockholder is determined under rules issued by the Securities and Exchange Commission. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power. Each applicable percentage ownership presented in the table below is based on 13,835,488 shares of our common stock outstanding as of December 15, 2014, which assumes the:

• conversion of the 4,605,488 outstanding shares of our Series D Preferred Stock as of September 30, 2014 into an equal number of shares of our common stock, which will automatically occur upon the completion of this offering; and

• exercise of the warrants issued to Capital Royalty Partners in connection with the Series D Financing into 230,000 shares of our common stock, which we expect to occur prior to the completion of this offering because, if unexercised, the warrants will automatically terminate pursuant to their terms.

In computing the number of shares beneficially owned by an individual or entity and the percentage ownership of that person, shares of common stock subject to options, warrants or other rights held by such person that are currently exercisable or will become exercisable within 60 days of September 30, 2014 are considered outstanding, although these shares are not considered outstanding for purposes of computing the percentage ownership of any other person. Unless noted otherwise, the address of all listed stockholders is 750 Route 202 South, Suite 600, Bridgewater, New Jersey 08807. Each of the stockholders listed has sole voting and investment power with respect to the shares beneficially owned by the stockholder unless noted otherwise, subject to community property laws where applicable.

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	Shares beneficially owned prior to offering					Shares beneficially owned after the offering†
Name of beneficial owner	Number		Percentage			Number	Percentage
5% or Greater Stockholders
Valeritas Holdings, LLC(1)		9,000,000		65.1	%			%
Entities affiliated with Welsh, Carson, Anderson, & Stowe XI, L.P.(2)		1,601,666		11.6	%
Named Executive Officers and Directors
Kristine Peterson(3)		232,292		1.7	%
John Timberlake(4)		82,292		*
William Duke(5)		18,281		*
Geoffrey Jenkins(6)		82,875		*
Kurt Andrews(7)		7,313		*
Daniel Pelak(8)		—		—
John Barr(9)		7,225		*
Ittai Harel(10)		—		—
Todd Foley(11)		—		—
Steven LaPorte(12)		10,483		*
Paul Queally(13)		—		—
John Ryan(14)		—		—
Sean Traynor(15)		—		—
All directors and executive officers as a group (13 individuals)(16)		440,761		3.2	%

* Less than one (1%) percent

^†  Does not include any shares of common stock that may be purchased in the directed share program.

⁽¹⁾  Represents 9,000,000 shares of our common stock held directly by Holdings. The board of managers of Holdings has direct voting and investment power over these shares. Holdings’ board of managers consists of seven members, four of whom are appointed by the holders of Holdings’ Series C Preferred Units and three of whom are appointed by holders of Holdings’ Series B Preferred Units. Pursuant to Holdings’ Amended and Restated Limited Liability Company Agreement, voting decisions with respect to our shares held by Holdings will be made with the affirmative consent of a majority of Holdings’ board of managers, provided such majority includes at least one manager appointed by each of the holders of Holdings Series B Preferred Units and Series C Preferred Units. Entities affiliated with Welsh Carson Anderson & Stowe XI, L.P. hold a majority of Holdings’ Series C Preferred Units and appointed Messrs. Daniel Pelak, Paul Queally, Sean Traynor and John Barr to serve on the board of managers of Holdings. Pursuant to Holdings’ Voting Agreement, the holders of Holdings’ Series B Preferred Units have agreed to elect a manager nominated by each of (i) MPM BioVentures IV GP, LLC or its affiliates, (ii) Pitango Venture Capital Fund V, L.P. or its affiliates and (iii) ONSET VI, L.P. or its affiliates. Messrs. Todd Foley, Ittai Harel and John Ryan were nominated by each respective fund or its affiliates and are currently on Holdings’ board of managers. The members of the board of managers of Holdings disclaim beneficial ownership of such shares to the extent attributed to them solely by virtue of serving as a manager of Holdings. Pursuant to Holdings’ Amended and Restated Limited Liability Company Agreement, Holdings will liquidate upon the earlier of (i) the affirmative vote of five members of Holdings’ board of managers and (ii) 18 months from the completion of this offering (unless extended to 21 months upon the written request of the holders of a majority of the outstanding Series B Preferred Units). Upon liquidation, holders of Holdings’ limited liability company units will be entitled to their allocable portion of our common stock held by it. The amount of our common stock distributed to a particular unit holder upon a liquidation of Holdings will be determined based upon the aggregate liquidation preference of the units held by such unit holder and the market value of our common stock at the time of liquidation. As a result, certain of its members may directly receive shares of our common stock upon Holdings’ liquidation.

⁽²⁾  Represents (i) 967,509 shares of our common stock issuable upon the conversion of Series D Preferred Stock held by Welsh Carson Anderson & Stowe XI, L.P., or WCAS, over which it has sole voting and investment power, (ii) 3,029 shares of our common stock issuable upon the conversion of Series D Preferred Stock held by WCAS Management Corporation, an affiliate of WCAS, over which WCAS Management Corporation has sole voting and investment power, and (iii) 3,682 shares of our common stock issuable upon the conversion of Series D Preferred Stock held by WCAS XI Co-Investors, LLC, an affiliate of WCAS, over which WCAS XI Co-Investors, LLC has sole voting and investment power. Voting and investment decisions over the shares held by WCAS and WCAS Capital Partners IV, L.P. are made by the managing members of WCAS XI Associates LLC and WCAS CP IV Associates LLC, their respective general partners. Messrs. Patrick J. Welsh, Russell L. Carson, Bruce K. Anderson, Anthony J. De Nicola, Paul B. Queally, Michael Donovan, Anthony Ecock, Eric J. Lee, D. Scott Mackesy, Jonathan

footnotes continued on following page

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M. Rather, Brian Regan, Thomas A. Scully, Christopher Solomon, Sanjay Swani, and Sean M. Traynor are managing members of WCAS XI Associates LLC and WCAS CP IV Associates LLC. Additionally, Robert A. Minicucci is also a managing member of WCAS CP IV Associates LLC. These individuals may be deemed to beneficially own the shares that are, or are deemed to be, beneficially owned by WCAS Capital Partners IV, L.P. and, except for Robert A. Minicucci, WCAS. Such persons disclaim beneficial ownership of such shares. Voting and investment decisions over the shares held by WCAS Management Corporation are made by its board of directors. The board of directors of WCAS Management Corporation consists of Messrs. Russell L. Carson, Anthony J. de Nicola, Paul B. Queally and Jonathan M. Rather. These individuals may be deemed to beneficially own the shares that are, or are deemed to be, beneficially owned by WCAS Management Corporation. Such persons disclaim beneficial ownership of such shares. The address for each of WCAS, WCAS Capital Partners IV, L.P. and WCAS Management Corporation is 320 Park Avenue, Suite 2500, New York, NY 10022.

⁽³⁾  Represents shares issuable upon the exercise of options that will vest within 60 days of December 15, 2014.

⁽⁴⁾  Represents shares issuable upon the exercise of options that will vest within 60 days of December 15, 2014.

⁽⁵⁾  Represents shares issuable upon the exercise of options that will vest within 60 days of December 15, 2014.

⁽⁶⁾  Represents shares issuable upon the exercise of options that will vest within 60 days of December 15, 2014.

⁽⁷⁾  Represents shares issuable upon the exercise of options that will vest within 60 days of December 15, 2014.

⁽⁸⁾  Mr. Pelak, one of our directors, is a Senior Industry Executive at WCAS. Mr. Pelak disclaims beneficial ownership of our equity securities owned by WCAS. The address for Mr. Pelak is c/o Welsh, Carson, Anderson & Stowe, 320 Park Avenue, Suite 2500, New York, NY 10022-6815.

⁽⁹⁾  Represents shares issuable upon the exercise of options that will vest within 60 days of December 15, 2014.

⁽¹⁰⁾  Mr. Harel, one of our directors, is a General Partner of the Pitango Venture Capital Group. The Pitango Venture Capital Group holds shares in our company via the following limited partnerships: Pitango Venture Capital Fund V, L.P. and Pitango Venture Capital Principals Fund V, L.P. These two limited partnerships are managed by their sole general partner, Pitango V.C. Fund V, L.P., the sole general partner of which is Pitango G.P. Capital Holdings Ltd., an Israeli company owned indirectly (through personal holding entities) by each of the following individuals: Rami Kalish, Chemi J. Peres, Aaron Mankovski, Isaac Hillel, Rami Beracha and Zeev Binman, none of which has sole voting or investment power of our company’s shares and each of which has shared voting and investment power of such shares. Mr. Harel disclaims beneficial ownership of the shares owned by such funds. The address for Mr. Harel is c/o Pitango Venture Capital, 540 Cowper Street, Suite 200, Palo Alto, CA 94301.

⁽¹¹⁾  Mr. Foley, one of our directors, is a Member of MPM BioVentures IV LLC, an entity affiliated with MPM Capital. Entities affiliated with MPM Capital own 249,932 shares of our common stock issuable upon the conversion of Series D Preferred Stock. Mr. Foley disclaims beneficial ownership of our equity securities owned by these entities because he does not have dispositive voting or investment control of these shares. Mr. Foley’s address is c/o MPM 200 Clarendon Street, 54th Floor, Boston, MA 02116.

⁽¹²⁾  Represents shares issuable upon the exercise of options that will vest within 60 days of December 15, 2014. Mr. LaPorte, one of our directors, is a Venture Partner at ONSET Ventures. Onset VI, L.P. owns 99,973 shares of our common stock issuable upon the conversion of Series D Preferred Stock. Mr. LaPorte disclaims beneficial ownership of our equity securities owned by Onset VI, L.P. because he does not have voting or investment power of these shares.

⁽¹³⁾  Mr. Queally, one of our directors, is a General Partner and the Co-President of WCAS. Mr. Queally disclaims beneficial ownership of our equity securities owned by WCAS. The address for Mr. Queally is c/o Welsh, Carson, Anderson & Stowe, 320 Park Avenue, Suite 2500, New York, NY 10022-6815.

⁽¹⁴⁾  Mr. Ryan, one of our directors, is a Partner at ONSET Ventures. Onset VI, L.P. owns 99,973 shares of our common stock issuable upon the conversion of Series D Preferred Stock held. Mr. Ryan disclaims beneficial ownership of our equity securities owned by Onset VI, L.P. because he does not have voting or investment power of these shares.

⁽¹⁵⁾  Mr. Traynor, one of our directors, is a General Partner and Investment Professional at WCAS. Mr. Traynor disclaims beneficial ownership of our equity securities owned by WCAS. The address for Mr. Traynor is c/o Welsh, Carson, Anderson & Stowe, 320 Park Avenue, Suite 2500, New York, NY 10022-6815.

⁽¹⁶⁾  Represents shares issuable upon the exercise of options that will vest within 60 days of December 15, 2014.

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DESCRIPTION OF CAPITAL STOCK

General

The following description summarizes some of the terms of our amended and restated certificate of incorporation and restated bylaws that will become effective upon the closing of this offering, our outstanding warrants, the Investors’ Rights Agreement and of the General Corporation Law of the State of Delaware, or DGCL. Because it is only a summary, it does not contain all the information that may be important to you. For a complete description, you should refer to our amended and restated certificate of incorporation, restated bylaws, warrants and the Investors’ Rights Agreement, copies of which have been or will be filed as exhibits to the registration statement of which this prospectus forms a part, as well as the relevant provisions of the DGCL. The description of our common stock and preferred stock reflects changes to our capital structure that will occur upon the closing of this offering.

Following the closing of this offering, our authorized capital stock will consist of                 shares of common stock, par value $0.00001 per share, and                  shares of preferred stock, par value $0.00001 per share.

As of September 30, 2014, we had                 shares of our common stock outstanding held of record by                  holders and                  shares of our Series D Preferred Stock convertible into                  shares of our common stock as of such date.

Common Stock

Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. An election of directors by our stockholders shall be determined by a plurality of the votes cast by the stockholders entitled to vote on the election. Subject to the supermajority votes for some matters, other matters shall be decided by the affirmative vote of our stockholders having a majority in voting power of the votes cast by the stockholders present or represented and voting on such matter. Our amended and restated certificate of incorporation and restated bylaws also provide that our directors may be removed only for cause and only by the affirmative vote of the holders of at least two-thirds in voting power of the outstanding shares of capital stock entitled to vote thereon. In addition, the affirmative vote of the holders of at least two-thirds in voting power of the outstanding shares of capital stock entitled to vote thereon is required to amend or repeal, or to adopt any provision inconsistent with, several of the provisions of our amended and restated certificate of incorporation. See below under “—Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and Bylaws—Amendment of Charter Provisions.” Holders of common stock are entitled to receive proportionately any dividends as may be declared by our board of directors, subject to any preferential dividend rights of any series of preferred stock that we may designate and issue in the future.

In the event of our liquidation or dissolution, the holders of common stock are entitled to receive proportionately our net assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights. Our outstanding shares of common stock are, and the shares offered by us in this offering will be, when issued and paid for, validly issued, fully paid and nonassessable. The rights, preferences and privileges of holders of common stock are subject to and may be adversely affected by the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

Preferred Stock

Under the terms of our amended and restated certificate of incorporation that will become effective upon the closing of this offering, our board of directors is authorized to direct us to issue shares of preferred stock in one or more series without stockholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.

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The purpose of authorizing our board of directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions, future financings and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or could discourage a third party from seeking to acquire, a majority of our outstanding voting stock. Upon the closing of this offering, there will be no shares of preferred stock outstanding, and we have no present plans to issue any shares of preferred stock.

Options

As of September 30, 2014, our outstanding options to purchase common stock consisted of options to purchase 1,286,200 shares of our common stock under our 2014 Incentive Compensation Plan.

Warrants

In March and August 2008, in connection with our Series B Preferred Stock financing, we issued warrants to investors which are immediately exercisable for 1,698,726 shares of our Series B Preferred Stock at an exercise price of $1.21286 per share. In connection with the 2014 Reorganization, these warrants were converted into equivalent securities of Holdings and, as a result, as of September 30, 2014 were no longer outstanding.

In June 2013, in connection with entering into the Term Loan, we issued warrants to Capital Royalty Partners II L.P., Capital Royalty Partners II—Parallel Fund “A” L.P. and Parallel Investment Opportunities Partners II, L.P. which are immediately exercisable for 4,665,531 shares of our common stock at an exercise price of $0.01 per share. In connection with the 2014 Reorganization, these warrants were cancelled. As a result of the Series D Financing, on August 5, 2014 we issued Capital Royalty Partners warrants to purchase 198,667 shares of our common stock exercisable at $0.01 per share. We expect Capital Royalty Partners to exercise these warrants prior to the completion of this offering because if unexercised upon the closing of this offering, the warrants automatically terminate pursuant to their terms.

Accordingly, following the closing of this offering, there will be no outstanding warrants.

Registration Rights

Upon the closing of this offering, pursuant to the Investors’ Rights Agreement, holders of                 shares of our common stock or their transferees will be entitled to the following rights with respect to the registration of such shares for public resale under the Securities Act, pursuant to the Investors’ Rights Agreement. If exercised, these registration rights would enable holders to transfer these shares without restriction under the Securities Act when the applicable registration statement is declared effective.

Subject to the 180-day lock-up restrictions described elsewhere in this prospectus, following the closing of this offering, Holdings, or a holders of a majority of our common stock issued upon the conversion of our Series D Preferred Stock, may request in writing that we effect a resale registration under the Securities Act with respect to all or part of our common stock held by them, subject to certain exceptions. If Holdings is liquidated and its registrable securities are distributed to its members, then Holdings’ registration rights under the Investors’ Rights Agreement inure to the benefit of the pre-liquidation holders of Holdings’ Series B Preferred Units and Series C Preferred Units (the holders of our Series B Preferred Stock and Series C Preferred Stock, respectively, prior to the 2014 Reorganization). If the holders requesting registration intend to distribute their shares by means of an underwriting, the managing underwriter of such offering will have the right to limit the numbers of shares to be underwritten for reasons related to the marketing of the shares.

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Piggyback Registration Rights

If at any time after this offering we propose to register any of our stock or other securities under the Securities Act, subject to certain exceptions, the holders of registrable securities under the Investors’ Rights Agreement will be entitled to notice of the registration and to include their shares of registrable securities in the registration. If our proposed registration involves an underwriting, the managing underwriter of such offering will have the right to limit the number of shares to be underwritten for reasons related to the marketing of the shares.

Form S-3 Registration Rights

If, at any time after we become entitled under the Securities Act to register our shares on a registration statement on Form S-3, Holdings or the holders of at least 20% of the registrable securities underlying our Series D Preferred Stock may request that we file a resale registration statement on Form S-3 with respect to their registrable securities provided the aggregate price to the public in the offering would be at least $5.0 million.

Expenses

Ordinarily, other than underwriting discounts and commissions, we will be required to pay all expenses incurred by us related to any registration effected pursuant to the exercise of these registration rights. These expenses may include all registration and filing fees, printing expenses, fees and disbursements of our counsel, reasonable fees and disbursements of a counsel for the selling security holders and blue sky fees and expenses.

Termination of Registration Rights

The registration rights will continue for five years following the completion of this offering, or for any particular stockholder holding registrable securities, the earlier of the time the stockholder can sell all of its registrable securities in compliance with Rule 144 under the Securities Act in a 90-day period.

Anti-takeover Effects of Delaware Law and Our Certificate of Incorporation and Bylaws

Some provisions of Delaware law, our amended and restated certificate of incorporation and our restated bylaws could make the following transactions more difficult: an acquisition of us by means of a tender offer; an acquisition of us by means of a proxy contest or otherwise; or the removal of our incumbent officers and directors. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions which provide for payment of a premium over the market price for our shares.

These provisions, summarized below, are intended to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of the increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because negotiation of these proposals could result in an improvement of their terms.

Undesignated Preferred Stock

The ability of our board of directors, without action by the stockholders, to issue up to                 shares of undesignated preferred stock with voting or other rights or preferences as designated by our board of directors could impede the success of any attempt to change control of us. These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our company.

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Stockholder Meetings

Our restated bylaws provide that a special meeting of stockholders may be called only by our chairman of the board, chief executive officer or president (in the absence of a chief executive officer), or by a resolution adopted by a majority of our directors.

Requirements for Advance Notification of Stockholder Nominations and Proposals

Our restated bylaws establish advance notice procedures with respect to stockholder proposals to be brought before a stockholder meeting and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors.

Elimination of Stockholder Action by Written Consent

Our amended and restated certificate of incorporation eliminates the right of stockholders to act by written consent without a meeting.

Staggered Board

Our board of directors is divided into three classes. The directors in each class will serve for a three-year term, one class being elected each year by our stockholders. For more information on the classified board, see “Management—Board Composition and Election of Directors.” This system of electing and removing directors may tend to discourage a third-party from making a tender offer or otherwise attempting to obtain control of us, because it generally makes it more difficult for stockholders to replace a majority of the directors.

Removal of Directors

Our amended and restated certificate of incorporation provides that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of the holders of at least two-thirds in voting power of the outstanding shares of stock entitled to vote in the election of directors.

Stockholders Not Entitled to Cumulative Voting

Our amended and restated certificate of incorporation does not permit stockholders to cumulate their votes in the election of directors. Accordingly, the holders of a majority of the outstanding shares of our common stock entitled to vote in any election of directors can elect all of the directors standing for election, if they

choose, other than any directors that holders of our preferred stock may be entitled to elect.

Delaware Anti-Takeover Statute

We are subject to Section 203 of the General Corporation Law of the State of Delaware, which prohibits persons deemed to be “interested stockholders” from engaging in a “business combination” with a publicly held Delaware corporation for three years following the date these persons become interested stockholders unless the business combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner or another prescribed exception applies. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years prior to the determination of interested stockholder status did own, 15% or more of a corporation’s voting stock. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors.

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Choice of Forum

Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative form, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim of breach of a fiduciary duty or other wrongdoing by any of our directors, officers, employees or agents to us or our stockholders; (3) any action asserting a claim against us arising pursuant to any provision of the General Corporation Law of the State of Delaware or our certificate of incorporation or bylaws; (4) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws; or (5) any action asserting a claim governed by the internal affairs doctrine. Our amended and restated certificate of incorporation also provides that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and to have consented to this choice of forum provision. It is possible that a court of law could rule that the choice of forum provision contained in our amended and restated certificate of incorporation is inapplicable or unenforceable if it is challenged in a proceeding or otherwise.

Amendment of Charter Provisions

The amendment of any of the above provisions, except for the provision making it possible for our board of directors to issue preferred stock and the provision prohibiting cumulative voting, would require approval by holders of at least two-thirds in voting power of the outstanding shares of stock entitled to vote thereon.

The provisions of Delaware law, our amended and restated certificate of incorporation and our restated bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in the composition of our board and management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests

Limitations on Liability and Indemnification of Officers and Directors

The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties, subject to certain exceptions. Our amended and restated certificate of incorporation will include a provision that eliminates the personal liability of directors for monetary damages for any breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL. The effect of these provisions will be to eliminate the rights of us and our stockholders, through stockholders’ derivative suits on our behalf, to recover monetary damages from a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior. However, exculpation will not apply to any director if the director has acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions or derived an improper benefit from his or her actions as a director.

Our amended and restated bylaws will provide that we must indemnify and advance expenses to our directors and officers to the fullest extent authorized by the DGCL. We also will be expressly authorized to carry directors’ and officers’ liability insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification and advancement provisions and insurance will be useful to attract and retain qualified directors and officers.

The limitation of liability, indemnification and advancement provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions also may have the effect of

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reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock will be American Stock Transfer & Trust Company, LLC.

Listing

We plan to apply to have our common stock listed on The NASDAQ Global Market under the symbol “VLRX.”

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SHARES ELIGIBLE FOR FUTURE SALE

Immediately prior to this offering, there was no public market for our common stock. Future sales of substantial amounts of common stock in the public market, or the perception that such sales may occur, could adversely affect the market price of our common stock.

Upon the closing of this offering, we will have outstanding an aggregate of                 shares of common stock, assuming the issuance of                 shares of common stock offered by us in this offering, the automatic conversion of all outstanding shares of our preferred stock into                 shares of our common stock and no exercise of options or warrants after September 30, 2014. Of these shares, all shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by our “affiliates,” as that term is defined in Rule 144 under the Securities Act, whose sales would be subject to the Rule 144 resale restrictions described below, other than the holding period requirement.

The remaining                 shares of common stock will be “restricted securities,” as that term is defined in Rule 144 under the Securities Act. These restricted securities are eligible for public sale only if they are registered under the Securities Act or if they qualify for an exemption from registration under Rules 144 or 701 under the Securities Act, which are summarized below. We expect that substantially all of these shares will be subject to the 180-day lock-up period under the lock-up agreements described below. Upon expiration of the lock-up period, we estimate that approximately                 shares will be available for sale in the public market, subject in some cases to applicable volume limitations under Rule 144.

In addition, of the                 shares of our common stock that were subject to stock options outstanding as of September 30, 2014, options to purchase                 shares of common stock were vested as of September 30, 2014 and, upon exercise, these shares will be eligible for sale subject to the lock–up agreements described below and Rules 144 and 701 under the Securities Act.

Lock-up Agreements

We and each of our directors and executive officers and holders of substantially all of our outstanding capital stock, have agreed that, without the prior written consent of Piper Jaffray & Co. on behalf of the underwriters, we and they will not, subject to limited exceptions, during the period ending 180 days after the date of this prospectus:

• offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for common stock; or

• enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock,

whether any transaction described above is to be settled by delivery of our common stock or such other securities, in cash or otherwise.

Upon the expiration of the applicable lock-up periods, substantially all of the shares subject to such lock-up restrictions will become eligible for sale, subject to the limitations discussed above. For a further description of these lock-up agreements, please see “Underwriting.”

Rule 144

Affiliate Resales of Restricted Securities

In general, beginning 90 days after the effective date of the registration statement of which this prospectus is a part, a person who is an affiliate of ours, or who was an affiliate at any time during the

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90 days before a sale, who has beneficially owned shares of our common stock for at least six months would be entitled to sell in “broker’s transactions” or certain “riskless principal transactions” or to market makers, a number of shares within any three-month period that does not exceed the greater of:

• 1% of the number of shares of our common stock then outstanding, which will equal approximately                      shares immediately after this offering; or

• the average weekly trading volume in our common stock on The NASDAQ Global Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

Affiliate resales under Rule 144 are also subject to the availability of current public information about us. In addition, if the number of shares being sold under Rule 144 by an affiliate during any three-month period exceeds 5,000 shares or has an aggregate sale price in excess of $50,000, the seller must file a notice on Form 144 with the Securities and Exchange Commission and NASDAQ concurrently with either the placing of a sale order with the broker or the execution directly with a market maker.

Non-Affiliate Resales of Restricted Securities

In general, beginning 90 days after the effective date of the registration statement of which this prospectus is a part, a person who is not an affiliate of ours at the time of sale, and has not been an affiliate at any time during the three months preceding a sale, and who has beneficially owned shares of our common stock for at least six months but less than a year, is entitled to sell such shares subject only to the availability of current public information about us. If such person has held our shares for at least one year, such person can resell under Rule 144(b)(1) without regard to any Rule 144 restrictions, including the 90-day public company requirement and the current public information requirement.

Non-affiliate resales are not subject to the manner of sale, volume limitation or notice filing provisions of Rule 144.

Rule 701

In general, under Rule 701, any of an issuer’s employees, directors, officers, consultants or advisors who purchases shares from the issuer in connection with a compensatory stock or option plan or other written agreement before the effective date of a registration statement under the Securities Act is entitled to sell such shares 90 days after such effective date in reliance on Rule 144. An affiliate of the issuer can resell shares in reliance on Rule 144 without having to comply with the holding period requirement, and non-affiliates of the issuer can resell shares in reliance on Rule 144 without having to comply with the current public information and holding period requirements.

The Securities and Exchange Commission has indicated that Rule 701 will apply to typical stock options granted by an issuer before it becomes subject to the reporting requirements of the Exchange Act, along with the shares acquired upon exercise of such options, including exercises after an issuer becomes subject to the reporting requirements of the Exchange Act.

Equity Plans

We intend to file one or more registration statements on Form S-8 under the Securities Act to register all shares of common stock subject to outstanding stock options and common stock issued or issuable under our stock plans. We expect to file the registration statement covering shares offered pursuant to our stock plans shortly after the date of this prospectus, permitting the resale of such shares by nonaffiliates in the public market without restriction under the Securities Act and the sale by affiliates in the public market, subject to compliance with the resale provisions of Rule 144.

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Registration Rights

Upon the closing of this offering, the holders of                 shares of common stock, which includes all of the shares of common stock issuable upon the automatic conversion of our preferred stock upon the closing of this offering, or their transferees will be entitled to various rights with respect to the registration of these shares under the Securities Act. Registration of these shares under the Securities Act would result in these shares becoming fully tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by affiliates. See “Description of Capital Stock—Registration Rights” for additional information. Shares covered by a registration statement will be eligible for sale in the public market upon the expiration or release from the terms of the lock-up agreement.

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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

FOR NON-U.S. HOLDERS

The following discussion is a summary of the material U.S. federal income tax consequences to non-U.S. holders (as defined below) of the purchase, ownership and disposition of our common stock issued pursuant to this offering, but does not purport to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or foreign tax laws are not discussed. This discussion is based on the United States Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service (“IRS”) in effect as of the date of this offering. These authorities may change or be subject to differing interpretations. Any such change may be applied retroactively in a manner that could adversely affect a non-U.S. holder of our common stock. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position regarding the tax consequences of the purchase, ownership and disposition of our common stock.

This discussion is limited to non-U.S. holders that hold our common stock as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to a non-U.S. holder’s particular circumstances, including the impact of the unearned income Medicare contribution tax. In addition, it does not address consequences relevant to non-U.S. holders subject to particular rules, including, without limitation:

• U.S. expatriates and certain former citizens or long-term residents of the United States;

• persons subject to the alternative minimum tax;

• persons holding our common stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment;

• banks, insurance companies, and other financial institutions;

• real estate investment trusts or regulated investment companies;

• brokers, dealers or traders in securities;

• “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;

• S corporations, partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes;

• tax-exempt organizations or governmental organizations;

• persons deemed to sell our common stock under the constructive sale provisions of the Code;

• persons who hold or receive our common stock pursuant to the exercise of any employee stock option or otherwise as compensation; and

• tax-qualified retirement plans.

If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships holding our common stock and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.

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THIS DISCUSSION IS FOR INFORMATION PURPOSES ONLY AND IS NOT INTENDED AS TAX ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.

Definition of a Non-U.S. Holder

For purposes of this discussion, a “non-U.S. holder” is any beneficial owner of our common stock that is neither a “U.S. person” nor a partnership for United States federal income tax purposes. A U.S. person is any of the following:

• an individual who is a citizen or resident of the United States;

• a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia;

• an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

• a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more United States persons (within the meaning of Section 7701(a)(30) of the Code), or (2) has made a valid election under applicable Treasury Regulations to continue to be treated as a United States person.

Distributions

As described in the section entitled “Dividend Policy,” we do not anticipate declaring or paying dividends to holders of our common stock in the foreseeable future. However, if we do make distributions on our common stock, such distributions of cash or property on our common stock will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and first be applied against and reduce a non-U.S. holder’s adjusted tax basis in its common stock, but not below zero. Any excess will be treated as capital gain and will be treated as described below in the section relating to the sale or disposition of our common stock.

Subject to the discussion below on backup withholding and foreign accounts, dividends paid to a non-U.S. holder of our common stock that are not effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends (or such lower rate specified by an applicable income tax treaty).

Non-U.S. holders will be entitled to a reduction in or an exemption from withholding on dividends as a result of either (a) an applicable income tax treaty or (b) the non-U.S. holder holding our common stock in connection with the conduct of a trade or business within the United States and dividends being paid in connection with that trade or business. To claim such a reduction in or exemption from withholding, the non-U.S. holder must provide the applicable withholding agent with a properly executed (a) IRS Form W-8BEN or W-8BEN-E claiming an exemption from or reduction of the withholding tax under the benefit of an income tax treaty between the United States and the country in which the non-U.S. holder resides or is established, or (b) IRS Form W-8ECI stating that the dividends are not subject to withholding tax because they are effectively connected with the conduct by the non-U.S. holder of a trade or business within the United States, as may be applicable. These certifications must be provided to the

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applicable withholding agent prior to the payment of dividends and must be updated periodically. Non-U.S. holders that do not timely provide the applicable withholding agent with the required certification, but that qualify for a reduced rate under an applicable income tax treaty, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.

Subject to the discussion below on backup withholding and foreign accounts, if dividends paid to a non-U.S. holder are effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States to which such dividends are attributable), then, although exempt from U.S. federal withholding tax (provided the non-U.S. holder provides appropriate certification, as described above), the non-U.S. holder will be subject to U.S. federal income tax on such dividends on a net income basis at the regular graduated U.S. federal income tax rates. In addition, a non-U.S. holder that is a corporation may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on its effectively connected earnings and profits for the taxable year that are attributable to such dividends, as adjusted for certain items. Non-U.S. holders should consult their tax advisors regarding their entitlement to benefits under any applicable income tax treaty.

Sale or Other Taxable Disposition

Subject to the discussions below on backup withholding and foreign accounts, a non-U.S. holder will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of our common stock unless:

• the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States to which such gain is attributable);

• the non-U.S. holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met; or

• our common stock constitutes a U.S. real property interest (“USRPI”) by reason of our status as a U.S. real property holding corporation (a “USRPHC”) for U.S. federal income tax purposes.

Gain described in the first bullet point above will generally be subject to U.S. federal income tax on a net income basis at the regular graduated U.S. federal income tax rates. A non-U.S. holder that is a foreign corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) of a portion of its effectively connected earnings and profits for the taxable year, as adjusted for certain items.

A non-U.S. holder described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on any gain derived from the disposition, which may be offset by certain U.S. source capital losses of the non-U.S. holder (even though the individual is not considered a resident of the United States) provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.

With respect to the third bullet point above, we believe we are not currently and do not anticipate becoming a USRPHC. Because the determination of whether we are a USRPHC depends on the fair market value of our USRPIs relative to the fair market value of our other business assets and our non-U.S. real property interests, however, there can be no assurance we are not a USRPHC or will not become one in the future. Even if we are or were to become a USRPHC, gain arising from the sale or other taxable disposition by a non-U.S. holder of our common stock will not be subject to U.S. federal income tax if such class of stock is “regularly traded,” as defined by applicable Treasury Regulations, on

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an established securities market, and such non-U.S. holder owned, actually or constructively, 5% or less of such class of our stock throughout the shorter of the five-year period ending on the date of the sale or other disposition or the non-U.S. holder’s holding period for such stock.

Non-U.S. holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different rules.

Information Reporting and Backup Withholding

Subject to the discussion below on foreign accounts, a non-U.S. holder will not be subject to backup withholding with respect to payments of dividends on our common stock we make to the non-U.S. holder, provided the applicable withholding agent does not have actual knowledge or reason to know such holder is a United States person and the holder certifies its non-U.S. status, such as by providing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI, or other applicable certification. However, information returns will be filed with the IRS in connection with any dividends on our common stock paid to the non-U.S. holder, regardless of whether any tax was actually withheld. Copies of these information returns may also be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which the non-U.S. holder resides or is established.

Information reporting and backup withholding may apply to the proceeds of a sale of our common stock within the United States, and information reporting may (although backup withholding generally will not) apply to the proceeds of a sale of our common stock outside the United States conducted through certain U.S.-related financial intermediaries, in each case, unless the beneficial owner certifies under penalty of perjury that it is a non-U.S. holder on IRS Form W-8BEN, W-8BEN-E or other applicable form (and the payor does not have actual knowledge or reason to know that the beneficial owner is a U.S. person) or such owner otherwise establishes an exemption.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.

Additional Withholding Tax on Payments Made to Foreign Accounts

Withholding taxes may be imposed under the Foreign Account Tax Compliance Act (“FATCA”) on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on, or gross proceeds from the sale or other disposition of, our common stock paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (1) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United States persons” or “United States-owned foreign entities” (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on payments to non-compliant foreign financial institutions and certain other account holders.

The withholding provisions described above will generally apply to payments of dividends made on or after July 1, 2014 and to payments of gross proceeds from a sale or other disposition of stock on or after January 1, 2017. Because we may not know the extent to which a distribution is a dividend for U.S. federal income tax purposes at the time it is made, for purposes of these withholding rules we may treat the entire distribution as a dividend. Prospective investors should consult their tax advisors regarding these withholding provisions.

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UNDERWRITING

The underwriters named below have agreed to buy, subject to the terms of the purchase agreement, the number of shares listed opposite their names below. The underwriters are committed to purchase and pay for all of the shares if any are purchased.

Underwriters	Number of Shares
Piper Jaffray & Co.
Leerink Partners LLC
Oppenheimer & Co. Inc.
Total

The underwriters have advised us that they propose to offer the shares to the public at $        per share. The underwriters propose to offer the shares to certain dealers at the same price less a concession of not more than $        per share. The underwriters may allow and the dealers may reallow a concession of not more than $        per share on sales to certain other brokers and dealers. After the offering, these figures may be changed by the underwriters.

We have granted to the underwriters an option to purchase up to an additional                 shares of common stock from us at the same price to the public, and with the same underwriting discount, as set forth in the table above. The underwriters may exercise this option any time during the 30-day period after the date of this prospectus, but only to cover over-allotments, if any. To the extent the underwriters exercise the option, each underwriter will become obligated, subject to certain conditions, to purchase approximately the same percentage of the additional shares as it was obligated to purchase under the purchase agreement.

At our request, the underwriters have reserved up to                 shares of common stock, or approximately     % of the shares being offered by this prospectus (excluding the additional shares of common stock that may be issued upon the underwriters’ exercise of their option to purchase shares), for sale at the initial public offering price to certain of our officers, directors and employees and certain other persons associated with us, as designated by us. The sales will be made by                                         through a directed share program. The number of shares available for sale to the general public will be reduced to the extent that these individuals purchase all or a portion of the reserved shares. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus. We have agreed to indemnify                                         and the underwriters in connection with the directed share program, including for the failure of any participant to pay for its shares.

The following table shows the underwriting fees to be paid to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the over-allotment option.

	No Exercise	Full Exercise
Per share	$	$
Total	$	$

We have agreed to indemnify the underwriters against certain liabilities, including civil liabilities under the Securities Act, or to contribute to payments that the underwriters may be required to make in respect of those liabilities.

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We and each of our directors and executive officers and substantially all of our stockholders have agreed to certain restrictions on our ability to sell additional shares of our common stock for a period of 180 days after the date of this prospectus. We have agreed not to directly or indirectly offer for sale, sell, contract to sell, grant any option for the sale of, or otherwise issue or dispose of, any shares of common stock, options or warrants to acquire shares of common stock, or any related security or instrument, without the prior written consent of Piper Jaffray & Co. The agreements provide exceptions for (1) sales to underwriters pursuant to the purchase agreement, (2) our sales in connection with the exercise of options granted and the granting of options to purchase shares under our existing stock option plans and (3) certain other exceptions.

Prior to the offering, there has been no established trading market for common stock. The initial public offering price for the shares of common stock by this prospectus was negotiated by us and the underwriters. The factors considered in determining the initial public offering price include the history of and the prospects for the industry in which we compete, our past and present operations, our historical results of operations, our prospects for future earnings, the recent market prices of securities of generally comparable companies and the general condition of the securities markets at the time of the offering and other relevant factors. There can be no assurance that the initial public offering price of the common stock will correspond to the price at which the common stock will trade in the public market subsequent to this offering or that an active public market for the common stock will develop and continue after this offering.

To facilitate the offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock during and after the offering. Specifically, the underwriters may over-allot or otherwise create a short position in the common stock for their own account by selling more shares of common stock than have been sold to them by us. The underwriters may elect to cover any such short position by purchasing shares of common stock in the open market or by exercising the over-allotment option granted to the underwriters. In addition, the underwriters may stabilize or maintain the price of the common stock by bidding for or purchasing shares of common stock in the open market and may impose penalty bids. If penalty bids are imposed, selling concessions allowed to syndicate members or other broker-dealers participating in the offering are reclaimed if shares of common stock previously distributed in the offering are repurchased, whether in connection with stabilization transactions or otherwise. The effect of these transactions may be to stabilize or maintain the market price of the common stock at a level above that which might otherwise prevail in the open market. The imposition of a penalty bid may also effect the price of the common stock to the extent that it discourages resales of the common stock. The magnitude or effect of any stabilization or other transactions is uncertain. These transactions may be effected on The NASDAQ Global Market, or NASDAQ, or otherwise and, if commenced, may be discontinued at any time.

In connection with this offering, some underwriters (and selling group members) may also engage in passive market making transactions in the common stock on NASDAQ. Passive market making consists of displaying bids on NASDAQ limited by the prices of independent market makers and effecting purchases limited by those prices in response to order flow. Rule 103 of Regulation M promulgated by the SEC limits the amount of net purchases that each passive market maker may make and the displayed size of each bid. Passive market making may stabilize the market price of the common stock at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.

Selling Restrictions

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each, a Relevant Member State, an offer to the public of any shares of our common stock may

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not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

• to any legal entity which is a qualified investor as defined in the Prospectus Directive;

• to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representative for any such offer; or

• in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of our common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer to the public” in relation to any shares of our common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase any shares of our common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

United Kingdom

Each underwriter has represented and agreed that:

• it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, or the FSMA) received by it in connection with the issue or sale of the shares of our common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and

• it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our common stock in, from or otherwise involving the United Kingdom.

Canada

The common shares may be sold only to purchasers purchasing as principal that are both “accredited investors” as defined in National Instrument 45-106 Prospectus and Registration Exemptions and “permitted clients” as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the common shares must be made in accordance with an exemption from the prospectus requirements and in compliance with the registration requirements of applicable securities laws.

Hong Kong

The common shares may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning

139

of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to common shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the common shares may not be circulated or distributed, nor may the common shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.

Where the common shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

• a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

• a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the common shares pursuant to an offer made under Section 275 of the SFA except:

• to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA;

• where no consideration is or will be given for the transfer; or

• where the transfer is by operation of law.

Switzerland

The common shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or the SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or

140

regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the common shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, or the common shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of common shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and the offer of common shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. Accordingly, no public distribution, offering or advertising, as defined in CISA, its implementing ordinances and notices, and no distribution to any non-qualified investor, as defined in CISA, its implementing ordinances and notices, shall be undertaken in or from Switzerland, and the investor protection afforded to acquirers of interests in collective investment schemes under CISA does not extend to acquirers of common shares.

United Arab Emirates

This offering has not been approved or licensed by the Central Bank of the United Arab Emirates, or the UAE, Securities and Commodities Authority of the UAE and/or any other relevant licensing authority in the UAE including any licensing authority incorporated under the laws and regulations of any of the free zones established and operating in the territory of the UAE, in particular the Dubai Financial Services Authority, or the DFSA, a regulatory authority of the Dubai International Financial Centre, or the DIFC. The offering does not constitute a public offer of securities in the UAE, DIFC and/or any other free zone in accordance with the Commercial Companies Law, Federal Law No 8 of 1984 (as amended), DFSA Offered Securities Rules and NASDAQ Dubai Listing Rules, accordingly, or otherwise. The common shares may not be offered to the public in the UAE and/or any of the free zones.

The common shares may be offered and issued only to a limited number of investors in the UAE or any of its free zones who qualify as sophisticated investors under the relevant laws and regulations of the UAE or the free zone concerned.

France

This prospectus (including any amendment, supplement or replacement thereto) is not being distributed in the context of a public offering in France within the meaning of Article L. 411-1 of the French Monetary and Financial Code (Code monétaire et financier).

This prospectus has not been and will not be submitted to the French Autorité des marchés financiers (the “AMF”) for approval in France and accordingly may not and will not be distributed to the public in France.

Pursuant to Article 211-3 of the AMF General Regulation, French residents are hereby informed that:

• the transaction does not require a prospectus to be submitted for approval to the AMF;

• persons or entities referred to in Point 2°, Section II of Article L.411-2 of the Monetary and Financial Code may take part in the transaction solely for their own account, as provided in Articles D. 411-1, D. 734-1, D. 744-1, D. 754-1 and D. 764-1 of the Monetary and Financial Code; and

• the financial instruments thus acquired cannot be distributed directly or indirectly to the public otherwise than in accordance with Articles L. 411-1, L. 411-2, L. 412-1 and L. 621-8 to L. 621-8-3 of the Monetary and Financial Code.

141

This prospectus is not to be further distributed or reproduced (in whole or in part) in France by the recipients of this prospectus. This prospectus has been distributed on the understanding that such recipients will only participate in the issue or sale of our common stock for their own account and undertake not to transfer, directly or indirectly, our common stock to the public in France, other than in compliance with all applicable laws and regulations and in particular with Articles L. 411-1 and L. 411-2 of the French Monetary and Financial Code.

142

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed upon for us by Latham & Watkins LLP, Boston, Massachusetts. Certain legal matters will be passed upon for the underwriters by Cooley LLP, New York, New York.

EXPERTS

The consolidated financial statements of Valeritas, Inc. as of December 31, 2012 and 2013, and for each of the years in the two-year period ended December 31, 2013, have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the SEC for the stock we are offering by this prospectus. This prospectus does not include all of the information contained in the registration statement. You should refer to the registration statement and its exhibits for additional information. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are not necessarily complete and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document. When we complete this offering, we will also be required to file annual, quarterly and special reports, proxy statements and other information with the SEC.

You can read our SEC filings, including the registration statement, over the Internet at the SEC’s web site at http://www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facilities at 450 Fifth Street, NW, Washington, DC 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 450 Fifth Street, NW, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

143

VALERITAS, INC.

TABLE OF CONTENTS

	Page(s)
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2012 and 2013 and September  30, 2014 (unaudited)		F-3
Consolidated Statements of Operations for the years ended December  31, 2012 and 2013 and the nine months ended September 30, 2013 (unaudited) and 2014 (unaudited)		F-4
Consolidated Statements of Stockholders’ Equity/(Deficit) for the years ended December 31, 2012 and 2013 and the nine months ended September 30, 2014 (unaudited)		F-5
Consolidated Statements of Cash Flows for the years ended December  31, 2012 and 2013 and the nine months ended September 30, 2013 (unaudited) and 2014 (unaudited)		F-6
Notes to Consolidated Financial Statements		F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Valeritas, Inc.:

We have audited the accompanying consolidated balance sheets of Valeritas, Inc. and subsidiaries as of December 31, 2012 and 2013, and the related consolidated statements of operations, stockholders’ equity/(deficit), and cash flows for each of the years in the two-year period ended December 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Valeritas, Inc. and subsidiaries as of December 31, 2012 and 2013, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Boston, Massachusetts

August 6, 2014

F-2

VALERITAS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	December 31,						September 30, 2014 Actual			September 30, 2014 Pro Forma
	2012			2013
							(Unaudited)			(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	74,020		$	31,014		$	20,961
Short-term investments		78			—			—
Accounts receivable		384			1,811			2,400
Other receivables		49			158			1,750
Inventories (note 6)		10,209			15,558			7,506
Deferred cost of goods sold		410			1,270			723
Prepaid expense and other current assets		779			591			698
Total current assets		85,929			50,402			34,038
Property and equipment, net (note 7)		10,641			11,336			12,637
Other assets		170			353			1,650
Total assets	$	96,740		$	62,091		$	48,325
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Current portion of long-term debt (note 5)	$	486		$	199		$	—
Current portion of capital lease obligation (note 15)		—			—			153
Accounts payable		3,051			2,516			5,441
Accrued expense and other current liabilities (note 8)		6,528			6,670			8,112
Deferred revenue		410			1,270			1,236
Total current liabilities		10,475			10,655			14,942
Long-term debt, less current portion (note 5)		4,029			50,964			52,140
Capital lease obligation, less current portion (note 15)		—			—			64
Deferred rent liability		239			240			209
Derivative liabilities		700			1,245			578
Total liabilities		15,443			63,104			67,933
Commitments and contingencies (note 15)
Stockholders’ equity (deficit)
Convertible preferred stock:
Series D preferred stock, $0.00001 par value, 6,000,000 shares authorized; no shares issued and outstanding at December 31, 2012 and 2013 and 2,743,902 issued and outstanding at September 30, 2014 (unaudited); (aggregate liquidation value of $28,006 at September 30, 2014) (unaudited)		—			—			27,439
Series C preferred stock, $0.00001 par value, 154,854,367 shares authorized at December 31, 2012 and 2013 and 0 shares authorized at September 30, 2014; 105,267,393 shares issued and outstanding at December 31, 2012 and 2013 and 0 shares issued and outstanding at September 30, 2014 (unaudited); (aggregate liquidation value of $173,068 and $0 at December 31, 2013 and September 30, 2014) (unaudited), respectively		150,988			150,988			—			—
Series C-1 preferred stock, $0.00001 par value per share, 77,997,380 shares authorized at December 31, 2012 and 2013 and 0 shares authorized at September 30, 2014; no shares issued and outstanding at December 31, 2012, 2013 or September 30, 2014 (unaudited), respectively; (aggregate liquidation value of $0 at December 31, 2012 and 2013 and September 30, 2014) (unaudited), respectively		—			—			—			—
Series C-2 preferred stock, $0.00001 par value, 77,602,296 shares authorized at December 31, 2012 and 2013 and 0 shares authorized at September 30, 2014; 121,951 shares issued and outstanding at December 31, 2012 and 2013 and 0 shares issued and outstanding at September 30, 2014 (unaudited); (aggregate liquidation value of $210 and $0 at December 31, 2013 and September 30, 2014) (unaudited), respectively		175			175			—			—
Series B preferred stock, $0.00001 par value, 85,386,945 shares authorized at December 31, 2012 and 2013 and 0 shares authorized at September 30, 2014; 68,483,119 shares issued and outstanding at December 31, 2012 and 2013 and no shares issued and outstanding at September 30, 2014 (unaudited); (aggregate liquidation value of $91,032 and $0 at December 31, 2013 and September 30, 2014) (unaudited), respectively		83,060			83,060			—
Series A preferred stock, $0.00001 par value, 9,550,002 shares authorized at December 31, 2012 and 2013 and 0 shares authorized at September 30, 2014; 9,550,002 shares issued and outstanding at December 31, 2012 and 2013 and no shares issued and outstanding at September 30, 2014 (unaudited), respectively; (aggregate liquidation value of $11,583 and $0 at December 31, 2013 and September 30, 2014) (unaudited), respectively		11,310			11,310			—			—
Common stock, $0.00001 par value, 462,000,000 shares authorized at December 31, 2012 and 2013 and 50,000,000 shares authorized at September 30, 2014; 817,486, 825,986, and 9,000,000 shares issued and outstanding at December 31, 2012 and 2013, and September 30, 2014, (unaudited), respectively;                 shares issued and outstanding, pro forma (unaudited)		—			—			—
Additional paid-in capital		(6,728	)		(1,441	)		247,798
Accumulated deficit		(157,508	)		(245,105	)		(294,845	)
Total stockholders’ equity/(deficit)		81,297			(1,013	)		(19,608	)
Total liabilities and stockholders’ equity (deficit)	$	96,740		$	62,091		$	48,325

See accompanying notes to consolidated financial statements.

F-3

VALERITAS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

	Year Ended December 31,						Nine Months Ended September 30,
	2012			2013			2013			2014
							(Unaudited)
Revenue	$	555		$	6,166		$	3,627		$	9,473
Cost of goods sold		10,924			18,175			13,667			14,346
Gross margin		(10,369	)		(12,009	)		(10,040	)		(4,873	)
Operating expense:
Research and development		5,496			6,740			5,198			4,605
Selling, general and administrative		36,304			56,671			44,566			35,607
Restructuring (note 12)		—			9,399			—			—
Total operating expense		41,800			72,810			49,764			40,212
Operating loss		(52,169	)		(84,819	)		(59,804	)		(45,085	)
Other income (expense), net:
Interest income		5			12			12			3
Interest expense		(1,050	)		(3,171	)		(1,264	)		(5,526	)
Change in fair value of prepayment features		—			62			394			667
Other expense		—			(394	)		(8	)		—
Other income		667			713			696			201
Total other income (expense), net		(378	)		(2,778	)		(170	)		(4,655	)
Net loss	$	(52,547	)	$	(87,597	)	$	(59,974	)	$	(49,740	)
Net loss attributable to common stockholders	$	(63,027	)	$	(104,205	)	$	(72,273	)	$	(58,465	)
Net loss per share of common stock, basic and diluted (note 4)	$	(90.56	)	$	(126.45	)	$	(87.77	)	$	(15.16	)
Weighted average common shares outstanding—basic and diluted		695,955			824,104			823,470			3,857,650
Pro forma net loss (unaudited)				$	(87,597	)				$	(49,740	)
Pro forma net loss per share of common stock, basic and diluted (note 4) (unaudited)				$	(0.42	)				$	(8.70	)
Pro forma weighted average common shares outstanding—basic and diluted (note 4) (unaudited)					206,181,128						6,658,213

See accompanying notes to consolidated financial statements.

F-4

VALERITAS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY/(DEFICIT)

(In thousands, except share data)

	Convertible Preferred Stock						Common Stock					Additional Paid-in capital			Accumulated Deficit			Total stockholders’ equity/(deficit)
	Shares			Amount			Shares			Amount
Balance—December 31, 2011		130,852,179		$	170,095			637,511		$	—	$	(7,993	)	$	(104,961	)	$	57,141
Sales of Series C Preferred Stock in November 2012, net of expense		48,866,132			70,123			—			—		(215	)		—			69,908
Conversion of bridge financing debt and accrued interest to Series C in November 2012		3,704,154			5,315			—			—		—			—			5,315
Share-based compensation expense		—			—			—			—		1,403			—			1,403
Exercise of stock warrants		—			—			28,954			—		35			—			35
Exercise of common stock options		—			—			151,021			—		42			—			42
Net loss		—			—			—			—		—			(52,547	)		(52,547	)
Balance—December 31, 2012		183,422,465			245,533			817,486			—		(6,728	)		(157,508	)		81,297
Warrants issued in connection with senior secured debt		—			—			—			—		3,267			—			3,267
Share-based compensation expense		—			—			—			—		2,017			—			2,017
Exercise of common stock options		—			—			8,500			—		3			—			3
Net loss		—			—			—			—		—			(87,597	)		(87,597	)
Balance—December 31, 2013		183,422,465			245,533			825,986			—		(1,441	)		(245,105	)		(1,013	)
Exercise of common stock options (unaudited)		—			—			127,516			—		38			—			38
Share-based compensation expense (unaudited)		—			—			—			—		2,944			—			2,944
Warrants issued in connection with senior secured debt		—			—			—			—		1,421			—			1,421
Retirement of preferred and common stock in connection with Valeritas Holdings merger (note 2) (unaudited)		(183,422,465	)		(245,533	)		(953,502	)		—		245,533			—			—
Issuance of common stock in connection with Valeritas Holdings merger (note 2) (unaudited)		—			—			9,000,000			—		—			—			—
Sales of Series D Preferred Stock in June 2014, net of expense (note 2) (unaudited)		2,195,122			21,951			—			—		(475	)		—			21,476
Sales of Series D Preferred Stock in July 2014, net of expense (note 2) (unaudited)		548,780			5,488			—			—		(222	)		—			5,266
Net loss (unaudited)		—			—			—			—		—			(49,740	)		(49,740	)
Balance—September 30, 2014 (Unaudited)		2,743,902		$	27,439			9,000,000		$	—	$	247,798		$	(294,845	)	$	(19,608	)

See accompanying notes to consolidated financial statements.

F-5

VALERITAS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended December 31,						Nine Months Ended September 30,
	2012			2013			2013			2014
							(Unaudited)
Operating activities
Net loss	$	(52,547	)	$	(87,597	)	$	(59,974	)	$	(49,740	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of property and equipment		499			1,187			838			1,025
Amortization of financing costs		94			416			103			776
Noncash interest expense		613			1,050			445			1,851
Impairment of long-lived assets		—			5,197			—			29
Share-based compensation expense		1,403			2,017			1,554			2,944
Decrease in fair value of mandatory prepayment features		—			(62	)		(394	)		(667	)
Other noncash		(244	)		(713	)		(696	)		(17	)
Changes in:
Accounts receivable		(384	)		(1,427	)		(1,140	)		(589	)
Other receivables		(49	)		(109	)		(65	)		(1,592	)
Inventories		(7,990	)		(5,349	)		(5,014	)		8,052
Deferred cost of goods sold		(410	)		(860	)		(754	)		546
Prepaid expense and other current assets		(408	)		188			116			(108	)
Other assets		129			(183	)		(211	)		—
Accounts payable		1,194			(716	)		(527	)		2,008
Accrued expense		1,595			855			800			1,459
Deferred revenue		397			860			754			(34	)
Deferred rent liability		(20	)		1			7			(31	)
Net cash used in operating activities		(56,128	)		(85,245	)		(64,158	)		(34,088	)
Investing activities
Purchases of short-term investments		(55	)		(7,762	)		(7,762	)		—
Sale and maturities of short-term investments		—			7,840			7,840			—
Acquisition of property and equipment		(7,167	)		(6,898	)		(5,692	)		(1,520	)
Net cash used in investing activities		(7,222	)		(6,820	)		(5,614	)		(1,520	)
Financing activities
Proceeds from debt		—			49,500			49,500			—
Repayment of debt		(431	)		(444	)		(361	)		(199	)
Repayment of capital lease		—			—			—			(115	)
Proceeds from issuance of Series D Preferred Stock		—			—			—			27,439
Proceeds from issuance of Series C Preferred Stock		70,123			—			—			—
Preferred stock issuance costs		(215	)		—			—			(697	)
IPO related costs		—			—			—			(911	)
Proceeds from exercise of stock options and stock warrants		77			3			3			38
Net cash provided by (used) in financing activities		69,554			49,059			49,142			25,555
Net increase (decrease) in cash and cash equivalents		6,204			(43,006	)		(20,630	)		(10,053	)
Cash and cash equivalents—beginning of period		67,816			74,020			74,020			31,014
Cash and cash equivalents—end of period	$	74,020		$	31,014		$	53,390		$	20,961
Supplemental disclosures of cash flow information
Interest paid	$	722		$	1,682		$	717		$	1,912
Noncash investing and financing transactions
Accrued property and equipment additions	$	434		$	181		$	349		$	501
Notes and interest converted to Series C Preferred Stock		5,315			—			—			—
Warrants issued creating debt discount		—			3,267			3,267			—

See accompanying notes to consolidated financial statements.

F-6

VALERITAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

1. NATURE OF OPERATIONS, ORGANIZATION AND LIQUIDITY

Nature of Operations

Valeritas, Inc. (formerly Valeritas, LLC) (Valeritas or the Company), was incorporated in the state of Delaware on December 27, 2007 when it changed its organization form and name from Valeritas, LLC, which was formed on August 2, 2006. The Company is engaged in developing innovative technologies to improve the health and quality of life of people with Type 2 diabetes. In December 2010, the FDA cleared the V-Go Disposable Insulin Delivery Device (V-Go) for certain uses.

During the period from inception through December 31, 2013, the Company devoted substantially all of its efforts to business planning, raising financing, furthering the research and development of its technologies, and commercializing the V-Go.

Principles of Consolidation

The consolidated financial statements reflect the operations of Valeritas, Inc. and its subsidiary, Valeritas Security Corporation. All significant intercompany balances and transactions have been eliminated in consolidation.

Unaudited Interim Financial Information

The accompanying interim consolidated balance sheet as of September 30, 2014, the consolidated statements of operations and consolidated statements of cash flows for the nine months ended September 30, 2013 and 2014, the consolidated statements of stockholders’ (deficit) equity for the nine months ended September 30, 2014 and the related footnote disclosures are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments (including normal recurring adjustments) necessary for the fair presentation of the Company’s financial position as of September 30, 2014 and its results of operations and its cash flows for the nine months ended September 30, 2013 and 2014. The results for the nine months ended September 30, 2014 are not necessarily indicative of the results expected for the full fiscal year or any other interim period.

Unaudited Pro Forma Balance Sheet and Loss per Share Information

The unaudited pro forma consolidated balance sheet information as of September 30, 2014 assumes the conversion of all outstanding shares of convertible preferred stock into shares of the Company’s common stock, assuming an initial public offering, or IPO, price of $         per common share (the mid-point of the price range set forth on the cover of this prospectus). The pro forma consolidated balance sheet was prepared as though the completion of the IPO contemplated by this prospectus had occurred on September 30, 2014. Shares of common stock issued in such IPO and any related net proceeds are excluded from the pro forma information.

Unaudited pro forma loss per share applicable to common stockholders is computed using the weighted-average number of common shares outstanding after giving effect to the conversion of all the outstanding convertible preferred stock into shares of common stock as if such conversion had occurred at the beginning of the period presented, or the date of original issuance, if later.

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Liquidity

The Company has generated substantial operating losses to date and is subject to a number of risks similar to those of other early stage companies, including dependence on key individuals, the difficulties inherent in the development of commercially usable products, the potential need to obtain additional capital necessary to fund the development of its products, and competition from larger companies. The Company has incurred losses each year since inception and has experienced negative cash flows from operations in each year since inception. As of December 31, 2013 and September 30, 2014, the Company had an accumulated deficit of $245,105 and $294,787 (unaudited), respectively, and intends to continue efforts to commercialize products in order to generate future revenue.

The Company believes that existing cash, cash equivalents and expected proceeds from the Second Series D Closing (see note 10) will be sufficient to fund its operations, including scheduled obligations, working capital and capital equipment requirements, through at least December 31, 2014.

2. RECENT EVENTS (unaudited)

Merger with Valeritas Holdings, LLC.

During the second quarter of 2014, the Company consummated a series of transactions designed to facilitate future capital raising by simplifying its capitalization. On June 19, 2014, Valeritas Merger Sub, Inc., a Delaware corporation, and a direct, wholly owned subsidiary of Valeritas Holdings, LLC, a Delaware limited liability company, or Holdings, merged with and into the Company (the 2014 Reorganization). Prior to the 2014 Reorganization, Holdings was the Company’s direct wholly owned subsidiary. Valeritas survived the 2014 Reorganization as a direct, wholly owned subsidiary of Holdings. In connection with the 2014 Reorganization, all of the pre-merger holders of the Company’s Series A, B, C, C-1 and C-2 preferred stock, common stock, options to purchase common stock and preferred stock warrants converted their securities into preferentially equivalent units in Holdings, and the Company issued 9,000,000 shares of common stock to Holdings. Additionally, in connection with the 2014 Reorganization, warrants to purchase 4,665,531 shares of the Company’s common stock held by Capital Royalty Partners were cancelled. As a result of the Series D Financing discussed below, on August 5, 2014 the Company issued Capital Royalty Partners warrants to purchase 198,667 shares of Valeritas, Inc. common stock exercisable at $0.01 per share. Immediately following the 2014 Reorganization, the Company’s issued and outstanding capital stock solely consisted of 9,000,000 shares of common stock held by Holdings.

Pursuant to Holdings’ Amended and Restated Limited Liability Company Agreement, Holdings will liquidate upon the earlier of the affirmative vote of five members of Holdings’ board of managers or 18 months from the completion of a public stock offering by the Company (unless extended to 21 months upon the written request of the holders of a majority of the outstanding Series B Preferred Units). Upon liquidation, holders of Holdings’ limited liability company units will be entitled to an allocable portion of Valeritas, Inc. common stock held by Holdings. The amount of Valeritas, Inc. common stock distributed to a particular unit holder upon a liquidation of Holdings will be determined based upon the aggregate liquidation preference of the units held by such unit holder and the market value of Valeritas, Inc. common stock at the time of liquidation. As a result, certain Holdings members may directly receive shares of Valeritas, Inc. common stock upon a liquidation of Holdings.

Series D Financing

Following the 2014 Reorganization, the Company entered into a preferred stock purchase and sale agreement for the private placement of up to 4,500,000 shares of the Company’s Series D Preferred Stock, or the Series D Financing. The Company closed the sale of the first 2,195,122 shares of Series D Preferred Stock on June 23, 2014 for gross proceeds of $22.0 million and the sale of an additional 548,780 shares on July 9, 2014 for gross proceeds of $5.4 million.

As part of the Series D Financing, the investors agreed to purchase an additional 1,756,098 shares of Series D Preferred Stock at the Company’s request after October 15, 2014. On November 17, 2014, the

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Company provided notice to the investors requesting the subsequent purchase of Series D Preferred Stock, and the Company expects to sell and issue these additional shares on December 8, 2014, which will result in gross proceeds of $17.6 million.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP generally requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the period. Actual results could differ from those estimates.

Basis of presentation

The Company has reclassified certain prior-period amounts to conform to the current-period presentation.

Deferred offering costs

Deferred offering costs, which primarily consist of direct incremental legal and accounting fees relating to the IPO, have been capitalized. The deferred offering costs will be offset against IPO proceeds upon the consummation of the offering. In the event the offering is terminated, deferred offering costs will be expensed.

Segment and Geographic Information

Operating segments are defined as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (CODM) or decision-making group in making decisions regarding resource allocation and assessing performance. The Company generates its revenue and has employees only in the United States and views its operations as one operating segment as the CODM reviews financial information on a consolidated basis in making decisions regarding resource allocations and assessing performance. The Company owns assets in Asia that are utilized by its contract manufacturer (CMO) in the manufacture of the Company’s products.

Geographic information for property and equipment, net of accumulated depreciation at December 31, 2012 and 2013 and September 30, 2014 is as follows:

	December 31,				September 30,
	2012		2013		2014
					(Unaudited)
North America	$	3,418	$	3,265	$	3,039
Asia		7,223		8,071		9,598
Total property and equipment, net	$	10,641	$	11,336	$	12,637

Cash and cash equivalents

The Company considers investments and interest-bearing deposits with original maturities of three months or less to be cash equivalents. At December 31, 2013 and September 30, 2014, there was $385 and $4,768 (unaudited), respectively, on deposit at banks in excess of Federal Deposit Insurance Corporation insured limits and $29,877 and $15,466 (unaudited), respectively, in a U.S. Treasury money market fund and U.S. government Agency notes that are not federally insured. No losses have been experienced on such bank deposits, money market fund or notes. The Company does not believe that it is subject to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

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Revenue recognition

The Company’s revenue is generated from V-Go sales in the United States to third-party wholesalers and medical supply distributors that, in turn, sell this product to retail pharmacies or directly to patients with diabetes.

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred and title passed, the price is fixed or determinable, and collectability is reasonably assured. These criteria are applied as follows:

• The evidence of an arrangement generally consists of contractual arrangements with third-party wholesalers and medical supply distributor customers.

• Transfer of title and risk and rewards of ownership are passed upon shipment of product to distributors or upon delivery to patients.

• The selling prices are fixed and agreed upon based on the contracts with distributors, the customer and contracted insurance payors, if applicable. For sales to customers associated with insurance providers with whom the Company does not have a contract, the Company recognizes revenue upon collection of cash, at which time the price is determinable. Provisions for discounts and rebates to customers are established as a reduction to revenue in the same period the related sales are recorded.

• The Company considers the overall creditworthiness and payment history of the distributor, customer and the contracted payor in concluding whether collectability is reasonably assured.

The Company has entered into agreements with wholesalers and third-party payors throughout the United States. These agreements may include provisions allowing for product discounts and rebates payable by us to third party payors upon dispensing V-Go to patients. Additionally, these agreements customarily provide such wholesalers and distributors with rights to return purchased products within a specific timeframe, as well as prior to such timeframe if the product is damaged in the normal course of business. Subject to certain restrictions, the Company’s wholesaler and distributor customers can return purchased product during a period that begins six months prior to V-Go’s expiration date and ends one year after the expiration date. The V-Go expiration date is determined by adding 36 months to the date of manufacture. Additionally, returns are no longer honored after delivery to the patient.

The Company is currently unable to reasonably estimate future returns due to lack of sufficient historical return data for V-Go. Accordingly, it invoices customers, records deferred revenue at gross invoice sales price less estimated cash discounts and distribution fees, and records a related deferred cost of goods sold. The Company defers recognition of revenue and the related cost of goods sold on shipments of V-Go until the product has been distributed to patients based on an analysis of third-party information. When the Company believes there is sufficient historical data to develop reasonable estimates of expected returns based upon historical returns, it plans to recognize product sales upon shipment to customers.

Major Customers and Concentration of Credit Risk

As discussed above, the Company ships product to third-party wholesalers and medical supply distributors that, in turn, sell this product to retail pharmacies or directly to patients with diabetes. Upon shipment, the Company records deferred revenue and a related receivable.

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Estimated revenue from significant customers as a percentage of the Company’s consolidated revenue was as follows:

	Year Ended December 31,						Nine Months Ended September 30,
	2012			2013			2013			2014
							(unaudited)			(unaudited)
Customer 1		32.7	%		37.4	%		35.8	%		34.6	%
Customer 2		29.6	%		30.1	%		21.7	%		26.4	%
Customer 3		20.6	%		22.5	%		33.5	%		26.9	%
Customer 4		13.4	%		3.2	%		3.6	%		3.5	%

The Company’s three largest customers accounted for receivables in excess of ten percent of gross accounts receivable at December 31, 2012 and 2013 and September 30, 2014:

	December 31,				September 30,
	2012		2013		2014
					(Unaudited)
Customer 1		27.7%		36.3%		28.9%
Customer 2		30.9%		17.4%		25.8%
Customer 3		17.5%		26.3%		29.7%

The Company believes that these customers are of high credit quality and that the Company is not subject to unusual risk with respect to such customers, and generally does not require collateral. The Company does not maintain an allowance for doubtful accounts based on its assessment of the collectability of accounts receivable as all receivables due are current and the Company has not had any instances of being unable to collect the accounts receivable.

Financial instruments which potentially subject the Company to concentrations of credit risk are cash, cash equivalents and accounts receivable. The Company’s cash and cash equivalents are on deposit at financial institutions and, at times, exceed the federal insured limits. The Company believes that the financial institutions are of high credit quality and that the Company is not subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

Inventories

Inventories consists of raw materials, work in process and finished goods, which are valued at the lower of cost or market. Cost is determined on a first in, first out, or FIFO, basis and includes material costs, labor and applicable overhead. The Company reviews its inventory for excess or obsolescence and writes down inventory that has no alternative uses to its net realizable value.

Property and equipment

Property and equipment are carried at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the respective assets. Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life of the asset. Maintenance and repairs are expensed when incurred.

Warrants

The Company has issued warrants in connection with financing arrangements. Warrants that do not qualify to be recorded as permanent equity are recorded as liabilities at their fair value using the Black-Scholes option pricing model. Warrants that do qualify to be recorded as permanent equity are recorded based on the relative fair value of the instrument using the Black-Scholes option-pricing model. The relative fair value of the warrants is recorded in additional paid-in capital and as a debt discount. The debt discount is amortized over the life of the loan.

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Income taxes

The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which these temporary differences are expected to be recovered or settled. A valuation allowance is established to reduce net deferred tax assets to the amount expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in results of operations in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being recognized. Changes in recognition and measurement are reflected in the period in which the change in judgment occurs.

Research and development expenses

Research and development expenses are expensed as incurred and are primarily comprised of the following types of costs incurred in performing research and development activities:

• manufacturing costs, including the qualification of new manufacturing lines;

• contract services;

• salaries and benefits; and

• overhead and occupancy costs.

Advertising

Advertising costs, which include promotional expenses, are included in selling, general and administrative expenses in the consolidated statements of operations and are expensed as incurred. Advertising expenses were $9.3 million, $16.3 million, $12.5 million (unaudited) and $8.2 million (unaudited) for the years ended December 31, 2012 and 2013 and nine months ended September 30, 2013 and 2014, respectively.

Impairment of long-lived assets

Long-lived tangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived tangible assets to be held and used is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If the carrying amount exceeds the undiscounted cash flows, the impairment to be recognized is measured by determining the amount by which the carrying amount exceeds the fair value of the asset. Fair value may be determined using appraisals, management estimates and discounted cash flow calculations. During the year ended December 31, 2013, the Company incurred asset impairment charges of $5.2 million primarily related to cost-saving restructuring initiatives implemented during the year (See note 12).

Share-based compensation

The Company measures the cost of awards of equity instruments based on the grant date fair value of the awards. That cost is recognized on a straight-line basis over the period during which the employee is required to provide service in exchange for the entire award.

The fair value of stock options on the date of grant is calculated using the Black-Scholes option pricing model, based on key assumptions such as the fair value of common stock, expected volatility and expected term. The Company’s estimates of these important assumptions are primarily based on third-party valuations, historical data, peer company data and the judgment of management regarding future trends and other factors.

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Earnings (Loss) per Common Share

Basic earnings (loss) per common share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per common share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and dilutive common stock equivalents outstanding for the period, determined using the treasury-stock method and the as if-converted method, for convertible securities, if inclusion of these is dilutive.

4. EARNINGS (LOSS) PER SHARE

The following table summarizes the computation of basic and diluted net loss per share of common stock of the Company for the years ended December 31, 2012 and 2013 and the nine months ended September 30, 2013 and 2014 (in thousands, except share and per share data):

	Years Ended December 31,						Nine Months Ended September 30,
	2012			2013			2013			2014
							(Unaudited)
Net loss	$	(52,547	)	$	(87,597	)	$	(59,974	)	$	(49,740	)
Preferred dividends		(10,480	)		(16,608	)		(12,299	)		(8,725	)
Net loss attributable to common stockholders—basic and diluted	$	(63,027	)	$	(104,205	)	$	(72,273	)	$	(58,465	)
Weighted average common shares outstanding—basic and diluted		695,955			824,104			823,470			3,857,650
Net loss per common share attributable to common stockholders:
Basic and diluted	$	(90.56	)	$	(126.45	)	$	(87.77	)	$	(15.16	)

The Company has reported a net loss for all periods presented. Potentially dilutive securities have been excluded from the computation of diluted weighted-average shares outstanding, because such securities would have had an antidilutive impact on net loss per share of common stock.

The following potentially dilutive securities outstanding, prior to the use of the treasury stock method or if-converted method, have been excluded from the computation of diluted weighted-average shares outstanding for the respective periods below:

	Years Ended December 31,				Nine Months Ended September 30,
	2012		2013		2013		2014
					(Unaudited)
Convertible preferred stock (Series A)		9,550,002		9,550,002		9,550,002		—
Convertible preferred stock (Series B) and accrued dividends payable in preferred B shares		72,141,120		75,055,618		74,307,956		—
Convertible preferred stock (Series C) and accrued dividends payable in preferred C shares		111,519,511		120,629,453		118,258,748		—
Convertible preferred stock (Series C-2)		121,951		121,951		121,951		—
Convertible preferred stock (Series D) and accrued dividends payable in preferred D shares		—		—		—		2,800,563
Warrants for preferred stock (Series B)		1,698,726		1,698,726		1,698,726		—
Warrants for common stock		—		4,665,531		4,665,531		198,667
Options to purchase common stock		19,389,276		28,870,680		28,556,425		1,286,200

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The unaudited pro forma basic and diluted loss per share attributable to common stockholders for the year ended December 31, 2013 and the nine months ended September 30, 2014 give effect to the assumed conversion of all shares of convertible preferred stock upon an initial public offering by treating all shares of convertible preferred stock as if they had been converted to common stock in all periods in which such shares were outstanding. The Company believes that all predetermined conditions will be met for automatic conversion for those shares of convertible preferred stock that automatically convert upon an initial public offering. For those shares of convertible preferred stock that do not automatically convert upon an initial public offering, the Company believes conversion will occur through the receipt of the consent of the requisite holders of such convertible preferred stock. Shares to be sold in the offering are excluded from the unaudited pro forma basic and diluted loss per share attributable to common stockholders calculations. As the Company incurred net losses for the year ended December 31, 2013 and the nine months ended September 30, 2014, there is no income allocation required under the two-class method or dilution attributed to pro forma weighted average shares outstanding in the calculation of pro forma diluted loss per share attributable to common stockholders.

Unaudited pro forma basic and diluted loss per share attributable to common stockholders are computed as follows (in thousands, except share and per share data):

	Year Ended December 31,			Nine Months Ended September 30,
	2013			2014
	(Unaudited)
Net loss attributable to common stockholders—basic and diluted	$	(104,205	)	$	(58,465	)
Add: accrued dividends		16,608			8,725
Proforma net loss attributable to common stockholders—basic and diluted	$	(87,597	)	$	(49,740	)
Weighted average common shares outstanding—basic and diluted		824,104			3,857,650
Add: adjustment to reflect assumed conversion of convertible preferred stock		205,357,024			2,800,563
Pro forma weighted average common shares outstanding—basic and diluted		206,181,128			6,658,213
Pro forma net loss per share of common stock—basic and diluted	$	(0.42	)	$	(7.47	)

5. DEBT

At December 31, 2012 and 2013 and September 30, 2014, the Company had the following debt outstanding (in thousands):

	December 31,				September 30,
	2012		2013		2014
					(Unaudited)
Senior subordinated note payable, long-term	$	154	$	—	$	—
Senior secured debt, net		—		45,929		45,172
Payment-in-kind (PIK) interest		—		678		2,030
Total senior secured debt, net		—		46,607		47,202
Other note payable, net		3,875		3,985		4,067
Payment-in-kind (PIK) interest		—		372		871
Total other note payable, net		3,875		4,357		4,938
Total long-term debt	$	4,029	$	50,964	$	52,140
Senior subordinated note payable, current	$	486	$	199	$	—
Total short-term debt	$	486	$	199	$	—

Senior Subordinated Note Payable

On January 12, 2007, the Company and Massachusetts Development Finance Agency (Mass Development) entered into an agreement to lend the Company $2,500 at an interest rate of 7.25% to finance the purchase of new manufacturing equipment for the Company’s research, development and

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manufacturing facility in Shrewsbury, Massachusetts. The term of the loan is seven years starting from the initial funding date (May 2007). A security interest was granted to Mass Development in the manufacturing equipment and the loan contains certain nonfinancial covenants. The note was fully repaid in April 2013.

Senior Secured Debt

On May 23, 2013, the Company entered into a term loan agreement with Capital Royalty Partners (the Term Loan) for a total of up to $100 million, structured as a senior secured loan with a six year term. The agreement provides for the issuance of notes in three separate tranches. The Term Loan bears interest at 11% per annum and compounds annually. Until the third anniversary of the Term Loan, the Company has the option to pay quarterly interest of 7.5% in cash and 3.5% paid-in-kind, or PIK, interest, which is added to the aggregate principal amount of the loan on the last day of each quarter. The first tranche was for $50 million and was drawn on August 15, 2013. The second and third tranches were for $25 million each and could be drawn after reaching revenue milestones of $6 million and $15 million over the three consecutive months prior to March 31, 2014 and September 30, 2014, respectively. The Company did not meet the revenue thresholds for the second and third tranches.

In addition, the Term Loan contains a minimum revenue covenant for 2014 of $25 million. Should the Company not achieve revenue of $25 million for the twelve months ended December 31, 2014 the agreement requires the Company to repay the Term Loan principal in an amount that is equal to two times the revenue shortfall by April 30, 2015 using proceeds from either newly obtained subordinated debt or an equity financing. In conjunction with the 2014 Reorganization and Series D Financing (see note 2), the Company and Capital Royalty Partners entered into an agreement amending the Term Loan to provide for conditional waivers of the agreement’s financial covenants, including the minimum revenue covenants, which would be waived and a prior breach cured if the Company consummates an initial public offering with proceeds to Valeritas of at least $40 million by March 31, 2015.

At the agreement date, 4,665,531 warrants for the purchase of common stock were issued at an exercise price of $0.01. Absent a change in control (see discussion below), the outstanding principal and accrued PIK interest will be repaid in twelve quarterly installments during the final three years of the term. Additionally, the Term Loan contains a minimum cash balance covenant which requires the Company to maintain a balance of at least $2.0 million in cash and cash equivalents at all times.

The warrants issued in conjunction with the drawdown of the Term Loan were deemed to be permanent equity. The Company recorded the loan net of an original issuance discount of $3,267, which was the calculated value of the issued warrants. During June 2014, and in connection with the 2014 Reorganization, these warrants were cancelled in conjunction with a pledge by the Company to issue new warrants in the Company’s common stock post 2014 Reorganization (see note 2). On August 5, 2014 the Company issued Capital Royalty Partners new warrants to purchase 198,667 shares of Valeritas, Inc. common stock exercisable at $0.01 per share. The incremental fair value of the new warrants in relation to the cancelled warrants was $1,422 (unaudited) and has been treated as an additional debt discount. The total discount is being amortized over the term of the loan using the effective interest method and was $3,035 and $3,933 (unaudited) at December 31, 2013 and September 30, 2014, respectively.

The Company recorded the loan net of deferred financing costs paid directly to the creditor (and therefore treated as a discount to the debt) of $500 relating to the lender finance fee of 1%. The discount related to the issuance costs is being amortized over the term of the loan and was $468 and $404 (unaudited) at December 31, 2013 and September 30, 2014, respectively.

Upon a change in control or certain asset sales, the Capital Royalty Partners loan must be prepaid in an amount equal to the outstanding principal balance plus accrued and unpaid interest, taking into account

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a prepayment premium that starts at 5% of the balance and decreases to 0% over time. The Company determined that the prepayment feature qualified as an embedded derivative requiring bifurcation from the debt. The derivative was initially valued at $607 and recorded as a long term liability within “derivative liabilities” in the Company’s consolidated balance sheet with a corresponding discount on the

note. The fair value of the derivative liability was $595 and $368 (unaudited) at December 31, 2013 and September 30, 2014, respectively. The change in fair value of $12 and $227 (unaudited) for the year ended December 31, 2013 and the nine months ended September 30, 2014, respectively, was recorded to “change in fair value of prepayment features” in the Company’s consolidated statement of operations. Refer to Note 14 for further details on fair value measurements. The original issue discount for the prepayment feature was $568 and $490 (unaudited) as of December 31, 2013 and September 30, 2014, respectively.

Other Note Payable

In 2011, concurrent with the issuance of Series C Preferred Stock, the Company issued a Senior Subordinated Note Payable to WCAS Capital Partners IV, L.P. in the principal amount of $5.0 million (WCAS Note). The WCAS Note originally bore interest at 10% per annum, which was paid semi-annually, and its principal is due in September 2021. The Company may pay off the WCAS Note at any time without penalty. The Company recorded the WCAS Notes net of an original issue discount of $560, equal to the fair value of the shares of Series C Preferred Stock issued to WCAS concurrent with the financing. The original issue discount on the WCAS Note is being amortized over the term of the loan on the effective interest method basis and was $517, $477 and $447 (unaudited) as of December 31, 2012 and 2013 and September 30, 2014, respectively.

Upon a change in control, the WCAS Note must be prepaid in an amount equal to the outstanding principal balance plus accrued and unpaid interest. The Company determined that the prepayment feature qualified as an embedded derivative requiring bifurcation from the debt. The derivative was initially valued at $700 and recorded as a long term liability within “derivative liabilities” in the Company’s consolidated balance sheet with a corresponding discount on the WCAS Note. The fair value of the derivative liability was $700, $650 and $210 (unaudited) as of December 31, 2012 and 2013 and September 30, 2014, respectively. The change in fair value of $50 and $440 (unaudited) for the year ended December 31, 2013 and the nine months ended September 30, 2014, respectively, was recorded to “change in fair value of prepayment features” in the Company’s consolidated statement of operations. Refer to Note 14 for further details on fair value measurements. The original issue discount for the prepayment feature was $608, $538 and $486 (unaudited) as of December 31, 2012 and 2013 and September 30, 2014, respectively.

On May 23, 2013, the WCAS Note was amended such that the note now bears interest at 12% but is accrued solely as compounded PIK interest, added to the aggregate principal amount of the loan semi-annually. The outstanding principal amount and accrued PIK interest is due September 2021.

The annual debt repayment requirements as of December 31, 2013, including payments made through September 30, 2014 are as follows (in thousands):

Year ending December 31:
2014	$	199
2015		—
2016		—
2017		12,670
2018		25,339
2019		12,669
2020		—
2021		5,372
Total	$	56,249

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6. INVENTORY

Inventory at December 31, 2012 and 2013 and September 30, 2014 consists of (in thousands):

	December 31,				September 30,
	2012		2013		2014
					(Unaudited)
Raw materials	$	6,419	$	4,568	$	2,521
Work in process		1,857		4,102		3,680
Finished goods		1,933		6,888		1,305
Total	$	10,209	$	15,558	$	7,506

7. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31, 2012 and 2013 and September 30, 2014 (in thousands):

		December 31,						September 30,
	Useful lives	2012			2013			2014
								(Unaudited)
Machinery and equipment	5-10	$	5,339		$	5,868		$	8,501
Computers and software	3		1,016			1,290			1,277
Leasehold improvements	6-10		103			181			181
Office equipment	5		89			89			89
Furniture and fixtures	5		19			206			206
Construction in process			5,450			5,874			5,558
Total			12,016			13,508			15,812
Accumulated depreciation			(1,375	)		(2,172	)		(3,175	)
Property and equipment, net		$	10,641		$	11,336		$	12,637

Depreciation and amortization expense for the years ended December 31, 2012 and 2013 and the nine months ended September 30, 2013 and 2014 was $499, $1,187, $838 (unaudited) and $1,025 (unaudited), respectively.

8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

At December 31, 2012 and 2013 and September 30, 2014, the Company’s accrued expenses and other current liabilities consisted of the following (in thousands):

	December 31,				September 30,
	2012		2013		2014
					(Unaudited)
Compensation	$	3,020	$	2,949	$	3,493
Marketing services		1,694		1,251		1,343
Copay card		122		569		528
Professional fees		439		465		389
Franchise taxes		—		429		386
Travel expenses		214		356		251
Manufacturing overhead		238		141		248
Warrants		730		17		—
Accrued interest payable		—		—		988
Other accruals		71		493		486
Total	$	6,528	$	6,670	$	8,112

F-17

9. RELATED PARTIES

On September 8, 2011, the Company entered into a Management Services Agreement with Welsh, Carson, Anderson & Stowe XI, L.P., a Series C Preferred shareholder. Certain affiliates of Welsh Carson, Anderson & Stowe XI, L.P. are also Series C Preferred shareholders. Under the terms of this agreement, the Company will receive strategic, managerial and operational advice in exchange for an annual fee of $500. The Company paid cash and incurred an expense of $500 related to this management fee for both years ended December 31, 2012 and 2013 and $375 (unaudited) for the nine months ended September 30, 2014.

On September 8, 2011, the Company issued a $5.0 million note payable to WCAS Capital Partners IV, L.P., a Series C Preferred shareholder (See discussion of “Other Note Payable” in note 5). Certain affiliates of WCAS Capital Partners IV, L.P. are also Series C Preferred shareholders.

10. STOCKHOLDERS’ EQUITY/(DEFICIT)

Common Stock, Series A, Series B, Series C, Series C-1 and Series C-2 Convertible Preferred Stock prior to 2014 Reorganization

The Company was authorized to issue up to 867,390,990 shares of stock, consisting of 405,390,990 shares of Preferred Stock, par value $0.00001 per share, and 462,000,000 shares of common stock, par value $0.00001 per share. The Preferred Stock was designated into four classes, 9,550,002 Series A Preferred Stock, 85,386,945 Series B Preferred Stock, 154,854,367 Series C Preferred Stock, 77,997,380 Series C-1 Preferred Stock, and 77,602,296 Series C-2 Preferred Stock.

In November 2012, the Company completed the second closing of its sale of Series C Preferred Shares. At the second closing, the Company issued 48,866,132 and 3,704,154 shares of Series C Preferred Stock for $70,123 in cash and the cancellation of $5,315 of convertible debt, including accrued interest of $613. As a result of not participating in the second closing, one investor had its Series C Preferred Stock (121,951 shares) converted into Series C-2 Preferred Stock. The Company incurred costs of $215 in connection with the second closing which it recorded in additional paid-in capital.

Dividend Rights

Holders of Series C Preferred Stock were entitled to receive cumulative dividends at the dividend rate per annum of 8% compounded semi-annually, payable when, as and if declared by the Board of Directors. In the event dividends were declared and paid, the dividends would have been paid through the delivery of a number of shares of Series C Preferred stock equal to the amount of the dividend paid divided by $1.435. Holders of Series C were not entitled to receive any other dividends.

Holders of Series C-1 Preferred Stock were entitled to receive cumulative dividends at the dividend rate per annum of 8% compounded semi-annually, payable when, as and if declared by the Board of Directors. In the event dividends were declared and paid, the dividends would have been paid through the delivery of a number of shares of Series C-1 Preferred Stock equal to the amount of the dividend paid divided by $1.435. Holders of Series C-1 were not entitled to receive any other dividends.

Holders of Series C-2 Preferred Stock were entitled to receive cumulative dividends at the dividend rate per annum of 8% compounded semi-annually, payable when, as and if declared by the Board of Directors. In the event dividends were declared and paid, the dividends would have been paid through the delivery of a number of shares of Series C-2 Preferred Stock equal to the amount of the dividend paid divided by $1.435. Holders of Series C-2 Preferred Stock were not entitled to receive any other dividends.

Beginning September 8, 2011, holders of Series B Preferred Stock were entitled to receive cumulative dividends at the dividend rate per annum of 4% compounded semi-annually, payable when, as and if declared by the Board of Directors. In the event dividends were declared and paid, the dividends would

F-18

have been paid through the delivery of a number of shares of Series B Preferred Stock equal to the amount of the dividend paid divided by $1.21286. Holders of Series B Preferred Stock were not entitled to receive any other dividends.

After payment of Preferred Stock dividends, the holders of common stock and Series A Preferred Stock would have been entitled to receive when, as and if declared by the Board of Directors, such dividends as could have been declared from time to time by the Board of Directors; provided, however, that (i) no dividends would have been paid on the common stock or Series A Preferred Stock so long as any shares of Series C Preferred Stock, Series C-1 Preferred Stock, Series C-2 Preferred Stock or Series B Preferred Stock remained outstanding and (ii) all such additional dividends would have been payable to all holders of Preferred Stock and common stock on an as-converted to common stock basis.

Conversion

Shares of Series A Preferred Stock were convertible at any time after issuance at the option of the holder into shares of common stock at an initial price of $1.21286 per share subject to adjustment for any stock split, dividends, combinations, recapitalizations or similar events with respect to such series of Preferred Stock.

Shares of Series B Preferred Stock were convertible at any time after issuance at the option of the holder into a number of shares of common stock equal to the Series B Invested Amounts ($1.21286) plus any accrued dividends divided by the Series B Conversion Price ($1.21286). The Series B Invested Amount and Series B Conversion Price were subject to adjustment for any stock split, dividends, combinations, recapitalizations or similar events with respect to such series of Preferred Stock. In the event that the fair market value of the common stock to be issued upon conversion exceeded $1.81929 per share, the number of shares to be issued would be equal to the number of Series B Preferred Shares converted.

Shares of Series C Preferred Stock, were convertible at any time after issuance at the option of the holder into a number of shares of common stock equal to the Series C Invested Amount ($1.435) plus the Series C accruing dividends divided by the Series C Conversion Price then in effect ($1.435); provided, however, if at the time of conversion the fair market value of the common stock to be issued upon conversion of a share of Series C Preferred Stock (including shares of Series C Preferred Stock issued on account of the Series C accruing dividends) equaled or exceeded $2.87 per share, the calculation of the conversion rate applicable to such shares of Series C Preferred Stock would not have included the Series C accruing dividends.

Shares of Series C-1 Preferred Stock were convertible at any time after issuance at the option of the holder into a number of shares of common stock equal to the Series C-1 Invested Amount ($1.435) plus the Series C-1 accruing dividends divided by the Series C-1 Conversion Price then in effect; provided, however if at the time of conversion the fair market value of the common stock to be issued upon conversion of a share of Series C-1 Preferred Stock (including shares of Series C-1 Preferred Stock issued on account of the Series C-1 accruing dividends) equaled or exceeded $2.87 per share, the calculation if the conversion rate applicable to such shares of Series C-1 Preferred Stock would not have included the Series C-1 accruing dividends. At issuance, the Series C-1 Conversion Price would have equaled either (i) the next round of financing price if the price is less than $1.425 and greater than or equal to $1.148 per share or (ii) in the event the next round financing price was less than $1.148, $1.148 multiplied by a fraction where the numerator was the number of common share equivalents outstanding immediately prior to the financing plus the number of common share equivalents the proceeds from the financing could acquire if the price was $1.148 per share and the denominator was the number of common share equivalents outstanding immediately prior to the financing plus the number of common equivalents issued in the financing.

F-19

Shares of Series C-2 Preferred Stock, were convertible at any time after issuance at the option of the holder into a number of shares of common stock equal to the Series C-2 Invested Amount ($1.435) plus the Series C-2 accruing dividends divided by the Series C-2 Conversion Price then in effect; provided, however, if at the time of the conversion the fair market value of the common stock to be issued upon conversion of a share of Series C-2 Preferred Stock (including shares of Series C-2 Preferred Stock issued on account of the Series C-2 accruing dividends) equaled or exceeded $2.87 per share, the calculation of the conversion rate applicable to such shares of Series C-2 Preferred Stock would not have included the Series C-2 accruing dividends.

In the event the Company issued any additional stock at a price less than the applicable Conversion Price, such Conversion Price would have been adjusted to a price by multiplying the Conversion Price by a fraction equal to (i) the number of shares outstanding on an as converted basis plus the number of shares of common stock that the consideration received from the issuance of the additional shares would purchase at the applicable Conversion Price; divided by (ii) the number of shares of common stock outstanding on an as converted basis plus the number of additional shares issued.

Automatic Conversion

Each share of Series C, C-1 and C-2 Preferred Stock was automatically convertible into shares of common stock upon an initial public offering, provided the offering price was for not less than $2.87 per share and the offering was for not less than $75,000 in the aggregate.

Liquidation

Upon a liquidation event, as was defined in the Fourth Amended and Restated Certificate of Incorporation, any proceeds would have been distributed to the holders of the Company’s shares in the following preferential order and amounts:

1) holders of Series C Preferred Stock and Series C-1 Preferred Stock would have received an amount equal to the greater of (a) the original issue price of $1.435 per share plus the Series C and Series C-1 accruing dividends through the date of the liquidation event but unpaid thereon, whether or not declared or (b) amount per share as would have been payable had each such share been converted into common stock immediately prior to the liquidation event;

2) holders of Series C-2 Preferred Stock would have received an amount equal to the greater of (a) the original issue price of $1.435 per share plus the Series C-2 accruing dividends through the date of the liquidation event but unpaid thereon, whether or not declared or (b) amount per share as would have been payable had each such share been converted into common stock immediately prior to the liquidation event;

3) holders of Series B Preferred Stock would have received an amount equal to the greater of (a) the original issue price of $1.21286 per share plus the Series B accruing dividends through the date of the liquidation event but unpaid thereon, whether or not declared or (b) amount per share as would have been payable had each such share been converted into common stock immediately prior to the liquidation event;

4) holders of Series A Preferred Stock would have received an amount equal to the greater of (a) the original issue price of $1.21286 per share plus the Series A accruing dividends through the date of the liquidation event but unpaid thereon, whether or not declared or (b) amount per share as would have been payable had each such share been converted into common stock immediately prior to the liquidation event;

5) the remaining proceeds available would have been distributed among the holders of common stock, pro rata based on the number of shares held by each such holder.

F-20

At December 31, 2013, the liquidation value of the Series C Preferred Stock, Series C-1 Preferred Stock, Series C-2 Preferred Stock, Series B Preferred Stock, and Series A Preferred Stock was $173,068, $0, $210, $91,032, and $11,583, respectively.

On June 19, 2014, all of the holders of the Company’s preferred stock converted their interests in these securities into equivalent securities in Holdings (See Note 2). Immediately following the 2014 Reorganization, the Company’s issued and outstanding capital stock solely consisted of 9,000,000 shares of common stock held by Holdings.

Pursuant to Holdings’ Amended and Restated Limited Liability Company Agreement, Holdings will liquidate upon the earlier of the affirmative vote of five members of Holdings’ board of managers or 18 months from the completion of a public stock offering (unless extended to 21 months upon the written request of the holders of a majority of the outstanding Series B Preferred Units). Upon liquidation, holders of Holdings’ limited liability company units will be entitled to an allocable portion of Valeritas, Inc. common stock held by Holdings. The amount of Valeritas, Inc. common stock distributed to a particular unit holder upon a liquidation of Holdings will be determined based upon the aggregate liquidation preference of the units held by such unit holder and the market value of Valeritas, Inc. common stock at the time of liquidation. The sum of all calculated liquidation values described above will be satisfied by the 9,000,000 shares of common stock held by Holdings.

Redemption

The Series C Preferred Stock, Series C-1 Preferred Stock, Series C-2 Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and common stock were not redeemable at the option of the holder.

Voting Rights

The holders of each share of Series B Preferred Stock, Series C Preferred Stock, Series C-1 Preferred Stock, and Series C-2 Preferred Stock would have had the right to one vote for each share of common stock into which such Series B Preferred Stock, Series C Preferred Stock, Series C-1 Preferred Stock, and Series C-2 Preferred Stock would then have been converted. Holders of Series A Preferred Stock were not entitled to vote on any matter except as required by General Corporation Law.

Common Stock and Series D Convertible Preferred Stock following the 2014 Reorganization (unaudited)

The Company is authorized to issue up to 56,000,000 shares of stock, consisting of 6,000,000 shares of Series D Preferred Stock, par value $0.00001 per share, and 50,000,000 shares of common stock, par value $0.00001 per share.

Common Stock

Immediately following the 2014 Reorganization (see note 2) the Company’s issued and outstanding capital stock solely consisted of 9,000,000 shares of common stock held by Holdings.

Series D Preferred Stock

Following the 2014 Reorganization, the Company entered into a preferred stock purchase and sale agreement for the private placement of up to 4,500,000 shares of the Company’s Series D Preferred Stock, or the Series D Financing. The Company closed the sale of the first 2,195,122 shares of Series D Preferred Stock on June 23, 2014 for gross proceeds of $22.0 million and the sale of an additional 548,780 shares on July 9, 2014 for gross proceeds of $5.4 million. In connection with the Series D Financing, the investors also agreed to subsequently purchase an additional 1,756,098 shares of the Company’s Series D Preferred Stock from the Company (for gross proceeds to the Company of $17.6 million). The Company’s ability to cause the purchase of these additional shares commenced October 15, 2014 and requires at least 10 business days’ prior notice from the Company to the investors, which notice the Company provided to the investors on November 17, 2014.

F-21

Series D Dividend Rights

Holders of Series D Preferred Stock are entitled to receive cumulative dividends at the dividend rate per annum of 8% compounded semi-annually, payable when, as and if declared by the Board of Directors. In the event dividends are declared and paid, the dividends will be paid through the delivery of a number of shares of Series D Preferred stock equal to the amount of the dividend paid divided by $10.00. Holders of Series D are not entitled to receive any other dividends.

Series D Conversion

Shares of Series D Preferred Stock are convertible at any time after issuance at the option of the holder into a number of shares of common stock equal to the Series D Invested Amount ($10.00) plus the Series D accruing dividends through the date of conversion divided by the Series D Conversion Price then in effect (currently $10.00). Each share of Series D Preferred Stock will automatically convert into shares of common stock upon an initial public offering.

Series D Liquidation

Holders of Series D Preferred Stock will receive an amount equal to the greater of (a) the original issue price of $10.00 per share plus the Series D accruing dividends through the date of the liquidation event but unpaid thereon, whether or not declared or (b) amount per share as would have been payable had each such share been converted into common stock immediately prior to the liquidation event.

Series D Redemption

The Series D Preferred Stock is not redeemable at the option of the holder.

Series D Voting Rights

Holders of each share of Series D Preferred Stock have the right to one vote for each share of common stock into which such Series D Preferred Stock would then have been converted.

Equity Compensation Plans

The 2008 Plan

The 2008 Plan is administered by the Compensation Committee of the Board of Directors. The Plan provides for the granting of incentive stock options, nonqualified stock options, stock awards, stock appreciation rights, and other equity awards to employees, consultants, advisors, and nonemployee members of the Board of Directors. Following an amendment to the Plan that was adopted on May 24, 2013, the Company may grant securities which are exchangeable for up to 31,935,085 shares of common stock under the Plan. The exercise price of stock options or stock appreciation rights must be equal to or greater than the fair market value at the time of the grant. Options vest as determined by the Compensation Committee and as specified in the individual grant instrument. Options granted have initial vesting periods for the first 25% that vary for each grantee with vesting of approximately 2% per month thereafter for the following three years. Options expire ten years from the date of the grant.

The entirety of the 2008 Plan was transferred to Holdings as part of the 2014 Reorganization (See note 2). Options outstanding, vesting provisions and all terms of the 2008 Plan remain intact. The existing options are now exercisable for Holdings LLC units in the same proportion within the plan as they had been just prior to the transfer. Individuals holding options in the 2008 Plan are all employees of the Company and as such the Company continues to benefit from their employment and accordingly, continues to recognize the compensation expense associated with those options in its Consolidated Statements of Operations and provide all required disclosures in the notes to the consolidated financial statements.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The fair value is then amortized on a straight-line basis over the requisite service period of the awards,

F-22

which is generally the vesting period. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility was estimated based on historical volatility of companies that are similar to the Company. The expected term was estimated based on managements’ knowledge and expectations, and issuances at similar public companies. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term which approximates the expected term of the option.

The weighted average assumptions used in the Black-Scholes option pricing model related to awards issued under the 2008 Plan for the years ended December 31, 2012 and 2013 and the nine months ended September 30, 2013 and 2014 are as follows:

	Year Ended December 31,						Nine Months Ended September 30,
	2012			2013			2013			2014
							(Unaudited)
Dividend yield		—			—			—			—
Expected volatility		122	%		109	%		110	%		99	%
Risk-free rate of return		1.1	%		1.1	%		1.0	%		1.7	%
Expected term (years)		5.9			6.0			6.0			6.1

The Company recognized share based compensation expense related to awards issued under the 2008 Plan for the years ended December 31, 2012 and 2013 and the nine months ended September 30, 2013 and 2014 of $1,403, $2,017, $1,554 (unaudited) and $1,769 (unaudited), respectively. As of December 31, 2013 and September 30, 2014, there remained $5,806 and $4,157 (unaudited), respectively, of unrecognized share-based compensation expense related to unvested stock options issued under the 2008 Plan to be recognized as expense over a weighted average period of 2.78 years and 2.18 years, respectively.

Stock option activity under the 2008 Plan as of December 31, 2012 and 2013 and September 30, 2014 was as follows:

	Number of shares			Weighted average exercise price		Weighted average remaining life		Aggregate intrinsic value
Outstanding—December 31, 2011		11,996,050		$	0.31		8.04 years	$	3,473
Granted		7,647,634			1.44
Exercised		(151,021	)		0.28				49
Canceled/forfeited		(103,387	)		0.88
Outstanding—December 31, 2012		19,389,276			0.75		7.88 years		3,411
Granted		11,071,009			1.44
Exercised		(8,500	)		0.30				3
Canceled/forfeited		(1,581,105	)		0.75
Outstanding—December 31, 2013		28,870,680			0.98		7.71 years		—
Granted (unaudited)		1,095,433			1.44
Exercised (unaudited)		(127,516	)		0.30				18
Canceled/forfeited (unaudited)		(1,576,582	)		0.70
Outstanding—September 30, 2014 (unaudited)		28,262,015			1.02		7.26 years		—
Exercisable December 31, 2013		14,719,159		$	0.61		6.52 years	$	—
Exercisable September 30, 2014 (unaudited)		17,192,166			0.78		6.43 years		—
Vested and expected to vest at December 31, 2013		28,604,306			0.98		7.69 years		—
Vested and expected to vest at September 30, 2014 (unaudited)		27,957,595			1.01		7.24 years		—

F-23

The weighted average grant date fair value of options granted under the 2008 Plan as of December 31, 2012 and 2013 and September 30, 2014 was $0.48, $0.50 and $0.05 (unaudited), respectively.

The cash received upon the exercise of options for the year ended December 31, 2013 and the nine months ended September 30, 2014 was $3 and $38 (unaudited), respectively. The cash received from any future exercises of these options will be recorded by Holdings. As of December 31, 2013, the number of shares available for future grants under the 2008 Plan was 2,717,373. The final option grant under the 2008 Plan was made on May 27, 2014. Following the 2014 Reorganization no more options may be granted under the 2008 Plan.

The 2014 Plan (unaudited)

The Company has a 2014 Equity Compensation Plan (the 2014 Plan), which is administered by the Compensation Committee of the Board of Directors. The 2014 Plan provides for the granting of incentive stock options, nonqualified stock options, stock awards, stock appreciation rights, and other equity awards to employees, consultants, advisors, and nonemployee members of the Board of Directors. The exercise price of stock options or stock appreciation rights must be equal to or greater than the fair market value at the time of the grant. Options vest as determined by the Compensation Committee and as specified in the individual grant instrument. Options granted have initial vesting periods for the first 25% that vary for each grantee with vesting of approximately 2% per month thereafter for the following three years. Options expire ten years from the date of the grant.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The fair value is then amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility was estimated based on historical volatility of publically traded companies that are similar to the Company. The expected term was estimated based on managements’ knowledge and expectations, and issuances at similar public companies. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term which approximates the expected term of the option.

The weighted average assumptions used in the Black-Scholes option pricing model related to awards issued under the 2014 Plan for the nine months ended September 30, 2014 are as follows:

	Nine Months Ended September 30, 2014
	(Unaudited)
Dividend yield		—
Expected volatility		80	%
Risk-free rate of return		1	%
Expected term (years)		6.0

F-24

The Company recognized share based compensation expense related to awards issued under the 2014 Plan for the nine months ended September 30, 2014 of $1,175 (unaudited). As of September 30, 2014, there remained $4,379 (unaudited) of unrecognized share-based compensation expense related to unvested stock options issued under the 2014 Plan to be recognized as expense over a weighted average period of 2.23 years. Stock option activity under the 2014 Plan as of September 30, 2014 was as follows:

	Number of shares			Weighted average exercise price		Weighted average remaining life		Aggregate intrinsic value
Outstanding—December 31, 2013		—		$	—		—	$	—
Granted (unaudited)		1,286,500			8.57		—		—
Exercised (unaudited)		—			—				—
Canceled/forfeited (unaudited)		(300	)		8.57				—
Outstanding—September 30, 2014 (unaudited)		1,286,200			8.57		9.77 years		5,559,323
Exercisable September 30, 2014 (unaudited)		—			—		—		—
Vested and expected to vest at September 30, 2014 (unaudited)		955,275			8.57		9.77 years		—

The weighted average grant date fair value of options granted under the 2014 Plan as of September 30, 2014 was $5.82 (unaudited). There have been no option exercises under the 2014 Plan.

Common Stock Warrants

Common stock warrant activity for the years ended December 31, 2012 and 2013 and the nine months ended September 30, 2014 is as follows:

	Number of shares			Weighted average exercise price		Weighted average remaining life		Aggregate intrinsic value
Outstanding and exercisable—December 31, 2011		28,954		$	1.21		1.04 years	$	—
Exercised		(28,954	)		1.21				—
Outstanding and exercisable—December 31, 2012		—			—		—		—
Warrants issued to Capital Royalty Partners		4,665,531			0.01		10.00 years
Outstanding and exercisable—December 31, 2013		4,665,531			0.01		9.70 years		—
Warrants cancelled in reorganization (see note 2) (unaudited)		(4,665,531	)		0.01		9.20 years		—
Warrants issued in reorganization (see note 2) (unaudited)		198,667			0.01		9.90 years		—
Outstanding and exercisable—September 30, 2014 (unaudited)		198,667			0.01		9.90 years		—

F-25

The Company used the Black-Scholes option pricing model to calculate the fair value of its equity-classified warrants issued in 2013 and 2014. Key assumptions used to apply this model upon issuance were as follows:

	2013			2014
Dividend yield		—			—
Expected volatility		80.0	%		95.0	%
Risk-free rate of return		2.81	%		2.67	%
Expected term (years)		10.0			10.0

11. INCOME TAXES

Income tax expense attributable to pretax loss from continuing operations differed from the amounts computed by applying the U.S. federal income tax rate of 34% to pretax loss from continuing operations as a result of the following:

	Year ended December 31,
	2012			2013
Computed “expected” tax expense	$	(17,866	)	$	(29,782	)
Increase (reduction) in income taxes resulting from:
Change in the valuation allowance		19,097			26,307
State taxes, net of federal benefit		(2,111	)		(153	)
Federal research and development credits		—			(151	)
Change in state rate		436			3,300
Other, net		444			479
Total income tax expense/(benefit)	$	—		$	—

The Company received a Massachusetts Life Sciences Center (MLSC) grant in 2012. The tax incentive received from the MLSC was in the form of refundable Massachusetts research and development tax credits and was recorded through other income. As a result of the restructuring that occurred during 2013, the Company determined that it would not meet the criteria necessary to retain the refund received, and therefore recorded a reversal of the majority of the refund in 2013 through other income.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2012 and 2013 are presented below (in thousands):

	December 31,
	2012			2013
Deferred tax assets:
Intangible assets	$	8,692		$	9,013
Net operating loss carryforwards		40,897			64,374
Federal and state credit carryforwards		1,567			1,937
Plant and equipment, due to depreciation and impairment		875			1,267
Inventory reserves		669			1,697
Other deductible temporary differences		1,441			2,160
Total gross deferred tax assets		54,141			80,448
Less valuation allowance		(54,141	)		(80,448	)
Net deferred tax assets	$	—		$	—

F-26

At December 31, 2013, the Company had net operating loss carryforwards for federal income tax purposes of $182,881 which are available to offset future federal taxable income, if any. The federal net operating losses begin to expire in 2028. The Company had net operating loss carryforwards for state income tax purposes of $40,358 which are available to offset future state taxable income, if any. The state net operating losses began to expire in 2013. The deferred tax asset related to intangible assets includes the tax effect of the excess of liabilities over assets on the date of conversion from an LLC to a C corporation, which became the stepped-up tax basis for the Company. The increase in intangible assets at December 31, 2013 compared to December 31, 2012 relates to research and development expenses capitalized for tax purposes, which will be amortized over a period of ten years.

The valuation allowance for deferred tax assets as of December 31, 2012 and 2013 was $54,141 and $80,448, respectively. The net change in the total valuation allowance was an increase of $19,097 in 2012 and an increase of $26,307 in 2013. The valuation allowance is primarily related to net operating loss carryforwards that, in the judgment of management, are not more likely than not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes that a full valuation allowance is necessary at December 31, 2013.

The Company did not have any unrecognized tax benefits at December 31, 2012 and 2013.

The statute of limitations for assessment by the Internal Revenue Service, or the IRS, and state tax authorities is closed for tax years prior to December 31, 2010 for federal tax purposes and for years prior to December 31, 2010 or 2009 for state tax purposes, although carryforward attributes that were generated in years prior to 2009 may still be adjusted upon examination by the IRS or state tax authorities if they either have been or will be used in a future period. The Company files income tax returns in the U.S. federal and various state jurisdictions. There are currently no federal or state audits in progress.

On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which reinstated, retroactively to January 1, 2012, certain tax benefits that had previously expired. In accordance with the financial accounting standards for income taxes, the Company is required to account for the effects of changes in tax law and rates on deferred tax balances in the period the legislation is enacted. As this legislation was enacted in January 2013, the Company’s 2012 financial statements were not affected by this legislation.

12. RESTRUCTURING

In October 2013, the Company implemented a company-wide strategic restructuring of its operations with the intent to significantly lower its cash expenditures while minimizing the impact on sales growth.

The Company’s restructuring and projected cost savings are being achieved through a combination of reduced spending on manufacturing costs and inventory, as well as a reduction in work force.

The Company accounts for costs associated with the restructuring in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 420-10, Accounting for Costs Associated with Exit or Disposal Activities. The Company records employee termination benefits as an operating expense when it communicates the benefit arrangement to the employee and it requires no significant future services, other than a minimum retention period, from the employee to earn the termination benefits. Contract termination and other related costs are based on estimates prepared at the time of the restructuring and periodically updated for changes and also includes amounts recognized as

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incurred. These costs primarily related to payments made to terminate agreements with certain suppliers. Additionally, as a result of the restructuring, the Company recognized an impairment charge equal to the remaining net book value of certain long-lived assets that the Company deemed to have no remaining useful life, which were substantially all of the fixed assets related to the terminated supply agreements discussed previously.

The components of the Company’s restructuring activity recorded in restructuring expense in the statement of operations and in accrued expenses in the accompanying consolidated balance sheet are presented below (in thousands):

	Restructuring expense – year ended December  31, 2013			Cash payments – year ended December 31, 2013		Noncash charges – year ended December 31, 2013			Restructuring liability at December 31, 2013
Contract termination costs	$	3,956		$	3,956	$	—		$	—
Employee severance, benefits and related costs		373			340		—			33
Impairment of long-lived assets		5,159			—		5,159			—
Other charges		(89	)		24		(113	)		—
Total	$	9,399		$	4,320	$	5,046		$	33

13. EMPLOYEE BENEFIT PLANS

The Company sponsors a defined contribution retirement plan for employees pursuant to Section 401(k) of the Internal Revenue Code under which eligible employees can defer a portion of their annual compensation. The Company provides an annual matching contribution based on a percentage of the employee’s contributions. The Company recorded an expense for the matching contributions to the plan for the years ended December 31, 2012 and 2013 of $217 and $400, respectively.

14. FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value Measurements

The Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during 2013 or through September 30, 2014. The fair value accounting guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows:

Level 1 – Quoted market prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 – Inputs are unobservable and reflect the Company’s assumptions as to what market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available.

The Company’s financial instruments consist primarily of cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities, debt instruments, derivative liabilities, and a warrant liability. For accounts receivable, accounts payable and accrued liabilities, the carrying amounts of these financial instruments as of December 31, 2012 and 2013 and September 30, 2014 were considered representative of their fair values due to their short term to maturity. Cash equivalents are carried at cost which approximates their fair value. The carrying values of long-term debt, including the current portion of long-term debt in short-term borrowings, approximate fair value and are principally measured using Level 2 inputs based on quoted market prices or pricing models using current market rates.

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The following tables set forth the Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2012 and 2013 and September 30, 2014. The Company did not have any nonfinancial assets or liabilities that were measured or disclosed at fair value on a recurring basis at December 31, 2012 and 2013 and September 30, 2014. The Company did not have any transfers between levels for the years ended December 31, 2012 and 2013 and for the nine months ended September 30, 2013 and 2014.

	December 31, 2012		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets:
Mutual insurance company shares	$	78		78				—
Total liabilities	$	78		78		—		—
Liabilities:
Derivative liability—WCAS	$	700		—				700
Warrant liability		730		—				730
Total liabilities	$	1,430		—		—		1,430

	December 31, 2013		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Liabilities:
Derivative liability—WCAS	$	650		—		—		650
Derivative liability—Capital Royalty Partners		595		—		—		595
Warrant liability		17		—		—		17
Total liabilities	$	1,262		—		—		1,262

	September 30, 2014		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(unaudited)
Liabilities:
Derivative liability—WCAS	$	210		—		—		210
Derivative liability—Capital Royalty Partners		368		—		—		368
Warrant liability		—		—		—		—
Total liabilities	$	578		—		—		578

The Company’s short term investments are classified within Level 1 because they are valued by unadjusted quoted prices for identical assets or liabilities in an active market.

The Company’s derivative and warrant liabilities are classified within Level 3 because they are valued with an option pricing model, where certain inputs to the model are unobservable and reflect the Company’s assumptions as to what market participants would use.

The derivative liabilities for the WCAS and Capital Royalty Partners notes were valued using the modified Black Scholes model for a puttable bond option and were classified as long-term liabilities in

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the Company’s consolidated balance sheet making up the balance of “derivative liabilities”. Certain assumptions were made by management and used in this valuation technique that are considered unobservable inputs. The risk free rates are based upon the yield on US Treasury STRIPS corresponding to the payment dates. The bond prices are equal to the fair value of the notes at issuance. The strike prices are equal to the aggregate principal amounts of the notes plus any accrued and unpaid interest thereon, plus a prepayment premium which varies based on the dates of redemption. Volatility utilized was 10%, which is the historical volatility of the Credit Suisse High Yield Bond.

The warrant liability is valued using the Black Scholes option pricing model. The fair value of the Series B Preferred Shares at December 31, 2013 is utilized as the stock price. The strike price is equal to the exercise price of the Series B Preferred Warrants. The life of the option is equal to the weighted average remaining contractual life of the warrants which was 4.66 years as of December 31, 2013. The volatility utilized is based upon the volatilities observed from publicly traded companies that are comparable to the Company. To date, the Company has not declared or paid dividends to any of its shareholders so the assumed dividend rate is zero. The short term risk-free rate utilized is the yield on US Treasury STRIPS corresponding to the life of the option.

The following table presents the Company’s liabilities measured at fair value using significant unobservable inputs (Level 3), as of December 31, 2012 and 2013 and September 30, 2014:

Balance, December 31, 2011	$	1,651
Decrease for fair value adjustment of warrant liability		(221	)
Balance, December 31, 2012		1,430
Increase for recording derivative liability—Capital Royalty		607
Decrease for fair value adjustment of derivative liability—Capital Royalty		(12	)
Decrease for fair value adjustment of derivative liability—WCAS		(50	)
Decrease for fair value adjustment of warranty liability		(713	)
Balance, December 31, 2013	$	1,262
Decrease for fair value adjustment of derivative liability—Capital Royalty (unaudited)		(227	)
Decrease for fair value adjustment of derivative liability—WCAS (unaudited)		(440	)
Decrease for fair value adjustment of warranty liability (unaudited)		(17	)
Balance, September 30, 2014 (unaudited)	$	578

The carrying values of the senior secured debt and WCAS Note at December 31, 2013 and September 30, 2014 were $46,607 and $4,357, and $47,202 (unaudited) and $4,938 (unaudited), respectively. The fair value of the senior secured debt was approximately $46,733 and $48,101 (unaudited) as of December 31, 2013 and September 30, 2014, respectively, which was based on a discounted cash flow model. The carrying value of the WCAS note approximated its respective fair value at December 31, 2012 and 2013 and September 30, 2014. The long-term debt, including the portion of long-term debt in short-term borrowings is principally measured using Level 2 inputs based on quoted market prices or pricing models using current market rates.

15. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases buildings in Shrewsbury, Massachusetts and Bridgewater, New Jersey and equipment under operating lease agreements, expiring through 2017. In addition to rental expense, the Company is obligated to pay costs of insurance, taxes, repairs and maintenance pursuant to the terms of the leases. The rental payments include the minimum rentals plus common area maintenance charges. Some of the leases include renewal options. Rental expense under operating leases amounted to $1,017, $1,078, $809 (unaudited) and $819 (unaudited) for the years ended December 31, 2012 and 2013 and the nine months ended September 30, 2013 and 2014, respectively.

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At December 31, 2013, the Company had the following minimum lease commitments, including payments made through September 30, 2014 (in thousands):

Year ending December 31:
2014	$	1,153
2015		1,151
2016		1,161
2017		1,050
2018		121
Thereafter		—
	$	4,636

Capital Leases (unaudited)

The Company is the lessee of manufacturing equipment under a capital lease that began in January 2014 and expires in March 2016. The asset under this capital lease was recorded at the present value of the minimum lease payments, which amounted to $332 upon commencement and is depreciated over the term of the lease. Depreciation expense for assets under capital leases amounted to $115 for the nine months ended September 30, 2014. The carrying value of the asset at September 30, 2014 was $217.

Minimum future lease payments under capital leases as of September 30, 2014 are as follows:

Year ending December 31:
2014	$	38
2015		153
2016		26
Thereafter		—
	$	217

Licensing Agreement

Pursuant to a formation agreement, dated as of August 22, 2006 (the Formation Agreement), BioValve and BTI Technologies Inc. (BTI), a wholly owned subsidiary of BioValve, contributed to Valeritas, LLC all of their right, title and interest in and to all of the assets, properties and rights of BioValve and BTI to the extent related to BioValve’s drug delivery/medical device initiative, consisting of patents and equipment, hereafter referred to as the Device Assets (Device Assets).

On August 22, 2008, the Formation Agreement was amended and the Company agreed to pay BioValve an amount equal to 9% of any cash upfront license or signing fees and any cash development milestone payments received by the Company in connection with licenses or grants of third party rights to the use in development or commercialization of the Rapid Infuser Technology. In certain circumstances the Company would owe 10% of such payments received. As of December 31, 2013 and September 30, 2014 (unaudited), no amounts were owed under this agreement. Although the Company believes the intellectual property rights around this technology have value, the technology licensed under this agreement is not used in the V-Go or any current products under development.

16. SUBSEQUENT EVENTS (unaudited)

On November 17, 2014, the Company provided notice to the Series D Preferred investors requesting the purchase of 1,756,098 shares of Series D Preferred Stock (see note 2). The Company expects to sell and issue these additional shares on December 8, 2014, which will result in gross proceeds of $17.6 million.

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                Shares

VALERITAS, INC.

Common Stock

PROSPECTUS

Until                 , 2014 all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Piper Jaffray

Leerink Partners

Oppenheimer & Co.

                , 2014

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table indicates the expenses to be incurred in connection with the offering described in this registration statement, other than underwriting discounts and commissions, all of which will be paid by us. All amounts are estimated except the Securities and Exchange Commission registration fee, the Financial Industry Regulatory Authority, Inc., or FINRA, filing fee and The NASDAQ Global Market listing fee.

	Amount
Securities and Exchange Commission registration fee	$	*
FINRA filing fee		*
Initial NASDAQ Global Market listing fee		*
Accountants’ fees and expenses		*
Legal fees and expenses		*
Blue Sky fees and expenses		*
Transfer Agent’s fees and expenses		*
Printing and engraving expenses		*
Miscellaneous		*
Total expenses		*

* To be filed by amendment.

Item 14. Indemnification of Directors and Officers

Section 102 of the General Corporation Law of the State of Delaware permits a corporation to eliminate the personal liability of directors of a corporation to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our amended and restated certificate of incorporation provides that no director of the Registrant shall be personally liable to it or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability, except to the extent that the General Corporation Law of the State of Delaware prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty.

Section 145 of the General Corporation Law of the State of Delaware provides that a corporation has the power to indemnify a director, officer, employee, or agent of the corporation, or a person serving at the request of the corporation for another corporation, partnership, joint venture, trust or other enterprise in related capacities against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with an action, suit or proceeding to which he was or is a party or is threatened to be made a party to any threatened, ending or completed action, suit or proceeding by reason of such position, if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, in any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, except that, in the case of actions brought by or in the right of the corporation, no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or other adjudicating court determines that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

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Our amended and restated certificate of incorporation provides that we will indemnify each person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of us) by reason of the fact that he or she is or was, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (all such persons being referred to as an “Indemnitee”), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding and any appeal therefrom, if such Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, and, with respect to any criminal action or proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful. Our amended and restated certificate of incorporation provides that we will indemnify any Indemnitee who was or is a party to an action or suit by or in the right of us to procure a judgment in our favor by reason of the fact that the Indemnitee is or was, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding, and any appeal therefrom, if the Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, except that no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to us, unless a court determines that, despite such adjudication but in view of all of the circumstances, he or she is entitled to indemnification of such expenses. Notwithstanding the foregoing, to the extent that any Indemnitee has been successful, on the merits or otherwise, he or she will be indemnified by us against all expenses (including attorneys’ fees) actually and reasonably incurred in connection therewith. Expenses must be advanced to an Indemnitee under certain circumstances.

We have entered into indemnification agreements with each of our directors and officers. These indemnification agreements may require us, among other things, to indemnify our directors and officers for some expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or officer in any action or proceeding arising out of his or her service as one of our directors or officers, or any of our subsidiaries or any other company or enterprise to which the person provides services at our request.

We maintain a general liability insurance policy that covers certain liabilities of directors and officers of our corporation arising out of claims based on acts or omissions in their capacities as directors or officers.

In any underwriting agreement we enter into in connection with the sale of common stock being registered hereby, the underwriters will agree to indemnify, under certain conditions, us, our directors, our officers and persons who control us within the meaning of the Securities Act of 1933, as amended, or the Securities Act, against certain liabilities.

Item 15.    Recent Sales of Unregistered Securities

Set forth below is information regarding shares of capital stock issued by us since January 1, 2012. Also included is the consideration received by us for such shares and information relating to the section of the Securities Act, or rule of the Securities and Exchange Commission, under which exemption from registration was claimed.

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(a) Issuance of Capital Stock.

• On September 8, 2011, we issued 49,427,282 shares of Series C Preferred Stock for aggregate consideration of $70.9 million and issued 3,391,776 shares relating to the cancellation of convertible debt, in each case to accredited investors pursuant to Section 4(a)(2) of the Securities Act and Rule 506 thereunder.

• On November 16, 2012, we issued 48,866,132 shares of Series C Preferred Stock for aggregate consideration of $70.1 million and issued 3,704,154 shares relating to the cancellation of convertible debt, in each case to accredited investors pursuant to Section 4(a)(2) of the Securities Act and Rule 506 thereunder.

• On June 19, 2014, in connection with the 2014 Reorganization, we issued 9,000,000 shares of our common stock to Valeritas Holdings, LLC, which is owned by the pre-2014 Reorganization holders of our Series A, B, C, C-1 and C-2 Preferred Stock, pursuant to Section 4(a)(2) of the Securities Act and Rule 506 thereunder.

• On June 23, 2014, we issued 2,195,122 shares of Series D Preferred Stock for aggregate consideration of $22.0 million to accredited investors pursuant to Section 4(a)(2) of the Securities Act and Rule 506 thereunder.

• On July 9, 2014, we issued 548,780 shares of Series D Preferred Stock for aggregate consideration of $5.4 million to accredited investors pursuant to Section 4(a)(2) of the Securities Act and Rule 506 thereunder.

• On August 5, 2014, we issued 198,667 warrants to purchase shares of our common stock at an exercise price of $0.01 per share to accredited investors pursuant to Section 4(a)(2) of the Securities Act and Rule 506 thereunder.

• On December 8, 2014, we issued 1,756,098 shares of Series D Preferred Stock for aggregate consideration of $17.6 million to accredited investors pursuant to Section 4(a)(2) of the Securities Act and Rule 506 thereunder.

(b) Stock Option Grants.

From January 1, 2012 through September 30, 2014, we granted stock options to purchase an aggregate of 21,091,826 shares of our common stock at a weighted-average exercise price of $1.87 per share, to certain of our employees, directors and consultants in connection with services provided to us by such persons. Of these, 287,037 options to purchase shares of common stock have been exercised through September 30, 2014, at a weighted-average exercise price of $0.29 per share.

In connection with the 2014 Reorganization, all of the outstanding options to purchase our common stock granted prior to June 19, 2014 were converted into options to purchase limited liability company units of Valeritas Holdings, LLC, or Holdings. Holders of limited liability company units of Holdings are entitled to their allocable portion of Holdings’ distributions and, upon the liquidation of Holdings, their allocable portion of the 9,000,000 shares of our common stock held by Holdings.

From June 19, 2014 through September 30, 2014, we granted 1,286,500 options at a weighted-average exercise price of $8.57 per share, to certain of our employees and directors in connection with services provided to us by such persons. As of September 30, 2014, none of these options had vested.

The issuances of stock options and the shares of common stock issuable upon the exercise of the options described in this Item 15 were issued pursuant to written compensatory plans or arrangements with our employees, directors and consultants, in reliance on the exemption provided by Rule 701 promulgated under the Securities Act, or pursuant to Section 4(a)(2) under the Securities Act, relative to transactions by an issuer not involving any public offering, to the extent an exemption from such registration was required.

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All of the foregoing securities are deemed restricted securities for purposes of the Securities Act. All certificates representing the issued shares of capital stock described in this Item 15 included appropriate legends setting forth that the securities have not been registered and the applicable restrictions on transfer.

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits.

Exhibit Number			Description of Exhibit
	1.1	*	Form of Underwriting Agreement
	3.1	**	Fifth Amended and Restated Certificate of Incorporation (currently in effect)
	3.2	**	Amended and Restated Bylaws (currently in effect)
	3.3	*	Form of Amended and Restated Certificate of Incorporation (to be effective upon the closing of this offering)
	3.4	*	Form of Amended and Restated Bylaws (to be effective upon the closing of this offering)
	4.1	*	Specimen Stock Certificate evidencing the shares of common stock
	4.2	**	Investors’ Rights Agreement, dated as of June 23, 2014, by and among the Registrant, Valeritas Holdings, LLC, the stockholders listed on Schedule A thereto and the members listed on Schedule B thereto
	4.3	*	Form of Warrant dated August 5, 2014 issued by the Registrant to entities affiliated with Capital Royalty Partners
	5.1	*	Opinion of Latham & Watkins LLP
	10.1		Term Loan Agreement, dated as of May 24, 2013, among the Registrant, as borrower, Capital Royalty Partners II L.P., Capital Royalty Partners II—Parallel Fund “A” L.P. and Parallel Investment Opportunities Partners II L.P., as lenders, and the guarantors party thereto
	10.2		Consent, Waiver and Amendment Agreement, dated as of June 19, 2014, among the Registrant, 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.
	10.3	**	Note, dated as of September 8, 2011, by and between the Registrant and WCAS Capital Partners IV, L.P.
	10.4	**	Amendment No. 1 to Note, dated May 24, 2013, by and between Registrant and WCAS Capital Partners IV, L.P.
	10.5#		2014 Incentive Award Plan and form of Notice of Grant, Stock Option Agreement and Stock Purchase Agreement thereunder
	10.6#	*	Non-Employee Director Compensation Program
	10.7#	*	Form of Indemnification Agreement for Directors and Officers
	10.8	**	Lease, dated as of December 22, 2006, by and among Valeritas, LLC, The Taming of the Shrewsbury, LLC, O’Neill Partners, LLC and Chanski, LLC, as amended on April 24, 2009, in respect of the building located at 800 Boston Turnpike, Shrewsbury, Massachusetts 01545
	10.9#	*	Employment Agreement with Kristine Peterson (to be in effect upon the closing of this offering)
	10.10#	*	Employment Agreement with John Timberlake (to be in effect upon the closing of this offering)
	10.11#	*	Employment Agreement with Geoffrey Jenkins (to be in effect upon the closing of this offering)
	10.12#	*	Employment Agreement with William Duke (to be in effect upon the closing of this offering)
	10.13#	*	Employment Agreement with Kurt Andrews (to be in effect upon the closing of this offering)

II-4

Exhibit Number			Description of Exhibit
	10.14	#*	Valeritas, Inc. Amended and Restated 2008 Equity Compensation Plan
	10.15		Series D Preferred Stock Purchase Agreement, dated June 23, 2014, as amended on July 3, 2014
	10.16	**	Voting Agreement, dated June 23, 2014, by and among the Registrant, the holders of the Registrant’s Series D Preferred Stock and Common Stock listed on Schedule A thereto and the holders of the Registrant’s Common Stock and holders of options to acquire the Registrant’s Common Stock listed on Schedule B thereto
	10.17	**	Agreement and Plan of Merger and Reorganization, dated June 9, 2014, by and among the Registrant, Valeritas Holdings, LLC and Valeritas Merger Sub, Inc.
	10.18		Amended and Restated Limited Liability Company Agreement of Valeritas Holdings, LLC, dated as of June 9, 2014
	10.19		Valeritas Holdings, LLC Voting Agreement, dated June 19, 2014
	10.20	**	Resource Group Management Services Agreement, dated September 8, 2011, by and between the Registrant and WCAS Management Corporation
	10.21	**	Formation Agreement, dated August 22, 2006, by and among the Registrant, BTI Tech, Inc. and BioValve Technologies, Inc.
	10.22	**	First Amendment to Formation Agreement, dated August 26, 2008, by and between the Registrant and BioValve Technologies, Inc.
	21.1	**	Subsidiaries of the Registrant
	23.1	*	Consent of KPMG LLP
	23.2	*	Consent of Latham & Watkins LLP (included in Exhibit 5.1)
	24.1	**	Power of Attorney (included on signature page)

* To be filed by amendment.

# Indicates management contract or compensatory plan.

** Previously filed.

(b) Financial Statement Schedules. Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or notes thereto.

Item 17. Undertakings

The undersigned registrant hereby undertakes to provide to the underwriter, at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

II-5

The undersigned hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-6

SIGNATURES AND POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933 the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bridgewater, State of New Jersey, on     , 2015.

VALERITAS, INC.
By:
	Kristine Peterson
	Chief Executive Officer and Director

Each person whose signature appears below constitutes and appoints Kristine Peterson and William Duke, and each of them singly, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and any and all additional registration statements pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agents full power and authority to do and perform each and every act in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them or their or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and as of the dates indicated.

Signature	Title	Date
	Chief Executive Officer and Director (principal executive officer)	, 2015
Kristine Peterson
	Chief Financial Officer (principal financial and accounting officer)	, 2015
William Duke
	Chairman of the Board	, 2015
Daniel Pelak
	Director	, 2015
John Barr
	Director	, 2015
Todd Foley
	Director	, 2015
Ittai Harel
	Director	, 2015
Steve LaPorte

II-7

Signature	Title	Date
	Director	, 2015
Paul Queally
	Director	, 2015
John Ryan
	Director	, 2015
Sean Traynor

II-8

EXHIBIT INDEX

Exhibit Number			Description of Exhibit
	1.1	*	Form of Underwriting Agreement
	3.1	**	Fifth Amended and Restated Certificate of Incorporation (currently in effect)
	3.2	**	Amended and Restated Bylaws (currently in effect)
	3.3	*	Form of Amended and Restated Certificate of Incorporation (to be effective upon the closing of this offering)
	3.4	*	Form of Amended and Restated Bylaws (to be effective upon the closing of this offering)
	4.1	*	Specimen Stock Certificate evidencing the shares of common stock
	4.2	**	Investors’ Rights Agreement, dated as of June 23, 2014, by and among the Registrant, Valeritas Holdings, LLC, the stockholders listed on Schedule A thereto and the members listed on Schedule B thereto
	4.3	*	Form of Warrant dated August 5, 2014 issued by the Registrant to entities affiliated with Capital Royalty Partners
	5.1	*	Opinion of Latham & Watkins LLP
	10.1		Term Loan Agreement, dated as of May 24, 2013, among the Registrant, as borrower, Capital Royalty Partners II L.P., Capital Royalty Partners II—Parallel Fund “A” L.P. and Parallel Investment Opportunities Partners II L.P., as lenders, and the guarantors party thereto
	10.2		Consent, Waiver and Amendment Agreement, dated as of June 19, 2014, among the Registrant, 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.
	10.3	**	Note, dated as of September 8, 2011, by and between the Registrant and WCAS Capital Partners IV, L.P.
	10.4	**	Amendment No. 1 to Note, dated May 24, 2013, by and between Registrant and WCAS Capital Partners IV, L.P.
	10.5	#	2014 Incentive Award Plan and form of Notice of Grant, Stock Option Agreement and Stock Purchase Agreement thereunder
	10.6	#*	Non-Employee Director Compensation Program
	10.7	#*	Form of Indemnification Agreement for Directors and Officers
	10.8	**	Lease, dated as of December 22, 2006, by and among Valeritas, LLC, The Taming of the Shrewsbury, LLC, O’Neill Partners, LLC and Chanski, LLC, as amended on April 24, 2009, in respect of the building located at 800 Boston Turnpike, Shrewsbury, Massachusetts 01545
	10.9	#*	Employment Agreement with Kristine Peterson (to be in effect upon the closing of this offering)
	10.10	#*	Employment Agreement with John Timberlake (to be in effect upon the closing of this offering)
	10.11	#*	Employment Agreement with Geoffrey Jenkins (to be in effect upon the closing of this offering)
	10.12	#*	Employment Agreement with William Duke (to be in effect upon the closing of this offering)
	10.13	#*	Employment Agreement with Kurt Andrews (to be in effect upon the closing of this offering)
	10.14	#*	Valeritas, Inc. Amended and Restated 2008 Equity Compensation Plan
	10.15		Series D Preferred Stock Purchase Agreement, dated June 23, 2014, as amended on July 3, 2014
	10.16	**	Voting Agreement, dated June 23, 2014, by and among the Registrant, the holders of the Registrant’s Series D Preferred Stock and Common Stock listed on Schedule A thereto and the holders of the Registrant’s Common Stock and holders of options to acquire the Registrant’s Common Stock listed on Schedule B thereto

Exhibit Number			Description of Exhibit
	10.17	**	Agreement and Plan of Merger and Reorganization, dated June 9, 2014, by and among the Registrant, Valeritas Holdings, LLC and Valeritas Merger Sub, Inc.
	10.18		Amended and Restated Limited Liability Company Agreement of Valeritas Holdings, LLC, dated as of June 9, 2014
	10.19		Valeritas Holdings, LLC Voting Agreement, dated June 19, 2014
	10.20	**	Resource Group Management Services Agreement, dated September 8, 2011, by and between the Registrant and WCAS Management Corporation
	10.21	**	Formation Agreement, dated August 22, 2006, by and among the Registrant, BTI Tech, Inc. and BioValve Technologies, Inc.
	10.22	**	First Amendment to Formation Agreement, dated August 26, 2008, by and between the Registrant and BioValve Technologies, Inc.
	21.1	**	Subsidiaries of the Registrant
	23.1	*	Consent of KPMG LLP
	23.2	*	Consent of Latham & Watkins LLP (included in Exhibit 5.1)
	24.1	**	Power of Attorney (included on signature page)

* To be filed by amendment.

# Indicates management contract or compensatory plan.

** Previously filed.

EX-10

Exhibit 10.1

TERM LOAN AGREEMENT

dated as of

May 24, 2013

between

VALERITAS, INC.

as Borrower,

The SUBSIDIARY GUARANTORS from Time to Time Party Hereto,

and

Capital Royalty Partners II L.P., Capital Royalty Partners II - Parallel Fund “A” L.P., and

Parallel Investment Opportunities Partners II L.P.

as Lenders

U.S. $100,000,000

TABLE OF CONTENTS

		Page
SECTION 1 DEFINITIONS			1
1.01	Certain Defined Terms		1
1.02	Accounting Terms and Principles		21
1.03	Interpretation		21
1.04	Changes to GAAP		21
SECTION 2 THE COMMITMENT			22
2.01	Commitments		22
2.02	Borrowing Procedures		22
2.03	Fees		22
2.04	Notes		22
2.05	Use of Proceeds		22
2.06	Defaulting Lenders		23
2.07	Substitution of Lenders		24
SECTION 3 PAYMENTS OF PRINCIPAL AND INTEREST			25
3.01	Repayment		25
3.02	Interest		25
3.03	Prepayments		26
SECTION 4 PAYMENTS, ETC.			28
4.01	Payments		28
4.02	Computations		29
4.03	Notices		29
4.04	Set-Off		29
SECTION 5 YIELD PROTECTION, ETC.			29
5.01	Additional Costs		29
5.02	Reserved		31
5.03	Illegality		31
5.04	Reserved		31
5.05	Taxes		31

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TABLE OF CONTENTS

(continued)

		Page
SECTION 6 CONDITIONS PRECEDENT			34
6.01	Conditions to Initial Borrowing		34
6.02	Conditions to Subsequent Borrowings		37
6.03	Conditions to Each Borrowing		37
SECTION 7 REPRESENTATIONS AND WARRANTIES			38
7.01	Power and Authority		38
7.02	Authorization; Enforceability		38
7.03	Governmental and Other Approvals; No Conflicts		39
7.04	Financial Statements; Material Adverse Change		39
7.05	Properties		39
7.06	No Actions or Proceedings		43
7.07	Compliance with Laws and Agreements		43
7.08	Taxes		43
7.09	Full Disclosure		43
7.10	Regulation		44
7.11	Solvency		44
7.12	Subsidiaries		44
7.13	Indebtedness and Liens		44
7.14	Material Agreements		44
7.15	Restrictive Agreements		44
7.16	Real Property		44
7.17	Pension Matters		45
7.18	Collateral; Security Interest		45
7.19	Regulatory Approvals		45
7.20	Small Business Concern		46
7.21	Update of Schedules		46
SECTION 8 AFFIRMATIVE COVENANTS			46
8.01	Financial Statements and Other Information		46
8.02	Notices of Material Events		47
8.03	Existence; Conduct of Business		49
8.04	Payment of Obligations		49
8.05	Insurance		50

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TABLE OF CONTENTS

(continued)

		Page
8.06	Books and Records; Inspection Rights		50
8.07	Compliance with Laws and Other Obligations		50
8.08	Maintenance of Properties, Etc.		50
8.09	Licenses		52
8.10	Action under Environmental Laws		52
8.11	Use of Proceeds		52
8.12	Certain Obligations Respecting Subsidiaries; Further Assurances		53
8.13	Termination of Non-Permitted Liens		54
8.14	Intellectual Property		54
8.15	Post-Closing Items		55
8.16	Real Property Security Documents		55
SECTION 9 NEGATIVE COVENANTS			56
9.01	Indebtedness		56
9.02	Liens		57
9.03	Fundamental Changes and Acquisitions		59
9.04	Lines of Business		59
9.05	Investments		59
9.06	Restricted Payments		60
9.07	Payments of Indebtedness		61
9.08	Change in Fiscal Year		61
9.09	Sales of Assets, Issuances of Equity, Etc.		61
9.10	Transactions with Affiliates		62
9.11	Restrictive Agreements		62
9.12	Amendments to Material Agreements		63
9.13	Preservation of Borrower Lease; Operating Leases		63
9.14	Sales and Leasebacks		64
9.15	Hazardous Material		64
9.16	Accounting Changes		64
9.17	Compliance with ERISA		64
9.18	Investment Company Act		64

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TABLE OF CONTENTS

(continued)

		Page
SECTION 10 FINANCIAL COVENANTS			65
10.01	Minimum Revenue		65
10.02	Minimum Cash		66
SECTION 11 EVENTS OF DEFAULT			66
11.01	Events of Default		66
11.02	Remedies		69
SECTION 12 MISCELLANEOUS			70
12.01	No Waiver		70
12.02	Notices		70
12.03	Expenses, Indemnification, Etc.		70
12.04	Amendments, Etc.		71
12.05	Successors and Assigns		72
12.06	Survival		74
12.07	Captions		74
12.08	Counterparts		74
12.09	Governing Law		74
12.10	Jurisdiction, Service of Process and Venue		74
12.11	Waiver of Jury Trial		75
12.12	Waiver of Immunity		75
12.13	Entire Agreement		75
12.14	Severability		75
12.15	No Fiduciary Relationship		75
12.16	Confidentiality		75
12.17	USA PATRIOT Act		76
12.18	Maximum Rate of Interest		76
12.19	Certain Waivers		76
SECTION 13 GUARANTEE			77
13.01	The Guarantee		77
13.02	Obligations Unconditional		78
13.03	Reinstatement		78
13.04	Subrogation		79
13.05	Remedies		79

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TABLE OF CONTENTS

(continued)

		Page
13.06	Instrument for the Payment of Money		79
13.07	Continuing Guarantee		79
13.08	Rights of Contribution		79
13.09	General Limitation on Guarantee Obligations		80
13.10	Collateral and Guaranty Matters		80

SCHEDULES AND EXHIBITS
Schedule 1	-	Commitments and Warrant Shares
Schedule 7.05(b)	-	Certain Intellectual Property
Schedule 7.05(c)	-	Material Intellectual Property
Schedule 7.06	-	Certain Litigation
Schedule 7.12	-	Information Regarding Subsidiaries
Schedule 7.13(a)	-	Existing Indebtedness of Borrower and its Subsidiaries
Schedule 7.13(b)	-	Liens Granted by the Obligors
Schedule 7.14	-	Material Agreements of Each Obligor
Schedule 7.15	-	Permitted Restrictive Agreements
Schedule 7.16	-	Real Property Owned or Leased by Borrower and Subsidiaries
Schedule 7.17	-	Pension Matters
Schedule 7.19	-	Regulatory Approvals
Schedule 9.05	-	Existing Investments
Schedule 9.14	-	Permitted Sales and Leasebacks
Exhibit A	-	Form of Guarantee Assumption Agreement
Exhibit B	-	Form of Notice of Borrowing
Exhibit C	-	Form of Term Loan Note
Exhibit D	-	Form of U.S. Tax Compliance Certificate
Exhibit E	-	Form of Compliance Certificate
Exhibit F	-	Form of Opinion from Corporate Counsel
Exhibit G	-	Form of Landlord Consent
Exhibit H	-	Form of Subordination Agreement

-v-

TERM LOAN AGREEMENT, dated as of May 24, 2013 (this “Agreement”), among VALERITAS, INC., a Delaware corporation (“Borrower”), the SUBSIDIARY GUARANTORS from time to time party hereto and the Lenders from time to time party hereto.

WITNESSETH:

The Borrower has requested the Lenders to make term loans to the Borrower, and the Lenders are prepared to make such loans on and subject to the terms and conditions hereof. Accordingly, the parties agree as follows:

SECTION 1

DEFINITIONS

1.01 Certain Defined Terms. As used herein, the following terms have the following respective meanings:

“Acquisition” means any transaction, or any series of related transactions, by which any Person directly or indirectly, by means of a take-over bid, tender offer, amalgamation, merger, purchase of assets, or similar transaction having the same effect as any of the foregoing, (a) acquires any business or all or substantially all of the assets of any Person engaged in any business, (b) acquires control of securities of a Person engaged in a business representing more than 50% of the ordinary voting power for the election of directors or other governing body if the business affairs of such Person are managed by a board of directors or other governing body, or (c) acquires control of more than 50% of the ownership interest in any Person engaged in any business that is not managed by a board of directors or other governing body.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“Agreement” has the meaning set forth in the introduction hereto.

“Asset Sale” is defined in Section 9.09.

“Asset Sale Net Proceeds” means the aggregate amount of the cash proceeds received from any Asset Sale, net of any bona fide fees, costs, expenses and amounts incurred or payable in connection with such Asset Sale (including, without limitation, any Indebtedness (other than the Obligations) that is required to be discharged in connection with such Asset Sale, reasonable out-of-pocket costs and expenses incurred in connection with such Asset Sale and taxes reasonably estimated to be payable within two years of the date of the consummation of such Asset Sale), plus, the monetized amount of any non-cash proceeds of an Asset Sale but only as and when so received.

“Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an assignee of such Lender.

“Bankruptcy Code” means Title II of the United States Code entitled “Bankruptcy.”

1

“Benefit Plan” means any employee benefit plan as defined in Section 3(3) of ERISA (whether governed by the laws of the United States or otherwise) to which any Obligor or Subsidiary thereof incurs or otherwise has any obligation or liability, contingent or otherwise.

“Borrower” has the meaning set forth in the introduction hereto.

“Borrower Facility” means the premises located at 800 Boston Turnpike, Shrewsbury, Massachusetts, which are leased by Borrower pursuant to the Borrower Lease.

“Borrower Landlord” means The Taming of the Shrewsbury, LLC, O’Neill Partners, LLC and Chanski, LLC as tenants in common.

“Borrower Lease” means that certain lease dated as of December 22, 2006 between the Borrower Landlord and Valeritas, LLC (predecessor to the Borrower), as amended, modified and in effect from time to time.

“Borrowing” means a borrowing consisting of Loans made on the same day by the Lenders according to their respective Commitments (including without limitation a borrowing of a PIK Loan).

“Borrowing Date” means the date of any Borrowing.

“Business Day” means a day (other than a Saturday or Sunday) on which commercial banks are not authorized or required to close in New York City.

“Capital Lease Obligations” means, as to any Person, the obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real and/or personal Property which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

“Change of Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) other than the Specified Equityholders, acting jointly or otherwise in concert, of capital stock representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Borrower or (b) the acquisition of direct or indirect Control of the Borrower by any Person or group of Persons other than the Specified Equityholders, acting jointly or otherwise in concert; in each case whether as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise.

“Claims” includes claims, demands, complaints, grievances, actions, applications, suits, causes of action, orders, charges, indictments, prosecutions, informations (brought by a public prosecutor without grand jury indictment) or other similar processes, assessments or reassessments.

2

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.

“Collateral” means the collateral provided for in the Security Documents.

“Commitment” means, with respect to each Lender, the obligation of such Lender to make Loans to the Borrower in accordance with the terms and conditions of this Agreement, which commitment is in the amount set forth opposite such Lender’s name on Schedule 1 under the caption “Commitment”, as such Schedule may be amended from time to time pursuant to Section 12.05(c). The aggregate Commitments on the date hereof equal $100,000,000. For purposes of clarification, the amount of any PIK Loans shall not reduce the amount of the available Commitment.

“Commitment Period” means the period from and including the date hereof and through and including the earlier to occur of (i) December 29, 2014 and (ii) the twentieth Business Day following the date on which a Notice of Borrowing is to be sent in accordance with Section 6.02(d)(ii).

“Commodities Account” is defined in the Security Agreement.

“Common Stock Outstanding” means, collectively, (1) outstanding Common Stock of Borrower, (2) Common Stock issuable upon conversion of outstanding Preferred Stock, including the Series C Accruing Dividends, Series C-1 Accruing Dividends, Series C-2 Accruing Dividends and Series B Accruing Dividends (each as defined in Borrower’s certificate of incorporation), (3) Common Stock issuable upon exercise of outstanding stock options and (4) Common Stock issuable upon exercise (and, in the case of warrants to purchase Preferred Stock, conversion) of outstanding warrants. Shares described in (1) through (4) above shall be included whether vested or unvested, whether contingent or non-contingent and whether exercisable or not yet exercisable.

“Compliance Certificate” has the meaning given to such term in Section 8.01(c).

“Contracts” means contracts, licenses, leases, agreements, obligations, promises, undertakings, understandings, arrangements, documents, commitments, entitlements or engagements under which a Person has, or will have, any liability or contingent liability (in each case, whether written or oral, express or implied).

“Control” means, in respect of a particular Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Control Agent” is defined in the Security Agreement.

“Copyrights” is defined in the Security Agreement.

3

“CRPPF” means Capital Royalty Partners II – Parallel Fund “A” L.P., a Delaware limited partnership.

“Cure Amount” has the meaning set forth in Section 10.01(b)(ii).

“Cure Right” has the meaning set forth in Section 10.01(b)(i)(B).

“Default” means any Event of Default and any event that, upon the giving of notice, the lapse of time or both, would constitute an Event of Default.

“Defaulting Lender” means, subject to Section 2.06, any Lender that (a) has failed to perform any of its funding obligations hereunder, including in respect of its Loans, within three (3) Business Days of the date required to be funded by it hereunder, (b) has notified the Borrower or any Lender that it does not intend to comply with its funding obligations or has made a public statement to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit, or (c) has, or has a direct or indirect parent company that has, (i) become the subject of an Insolvency Proceeding, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority.

“Deposit Account” is defined in the Security Agreement.

“Disqualified Securities” means any Equity Interest which, by its terms (or by the terms of any security or other Equity Interest into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition, (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the Maturity Date, (b) is convertible in or exchangeable for (i) debt securities or (ii) any Equity Interests referred to in clause (a) above, in each case, at any time prior to the Maturity Date, (c) contains any repurchase obligations which may come into effect prior to payment in full of all Obligations (other than Warrant Obligations, and customary contingent indemnification claims), or (d) requires the payment of cash dividends or distributions prior to the Maturity Date.

“Dollars” and “$” means lawful money of the United States of America.

“Domestic Subsidiary” means any Subsidiary that is a corporation, limited liability company, partnership or similar business entity incorporated, formed or organized under the laws of the United States, any State of the United States or the District of Columbia.

“Eligible Transferee” means and includes a commercial bank, an insurance company, a finance company, a financial institution, any investment fund that invests in loans or any other “accredited investor” (as defined in Regulation D of the Securities Act) that is principally in the business of managing investments or holding assets for investment purposes; provided that

4

“Eligible Transferee” shall not include (i) any Person that is principally in the business of managing investments or holding assets for investment purposes and has a board participation right in a company that produces, markets or sells, or develops a program to market or sell, a marketed product or product in Phase III clinical trials in competition with the Borrower, (ii) any such company referred to in clause (i), (iii) any Affiliate of any such company referred to in clause (i) or any Person referred to in clause (i).

“Environmental Law” means any federal, state, provincial or local governmental law, rule, regulation, order, writ, judgment, injunction or decree relating to pollution or protection of the environment or the treatment, storage, disposal, release, threatened release or handling of hazardous materials, and all local laws and regulations related to environmental matters and any specific agreements entered into with any competent authorities which include commitments related to environmental matters.

“Equity Interest” shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such Person, including, if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of property of, such partnership, but excluding debt securities convertible or exchangeable into such equity.

“Equivalent Amount” means, with respect to an amount denominated in one currency, the amount in another currency that could be purchased by the amount in the first currency determined by reference to the Exchange Rate at the time of determination.

“ERISA” means the United States Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means, collectively, any Obligor, Subsidiary thereof, and any Person under common control, or treated as a single employer, with any Obligor or Subsidiary thereof, within the meaning of Section 414(b), (c), (m) or (o) of the Code.

“ERISA Event” means (i) a reportable event as defined in Section 4043 of ERISA with respect to a Title IV Plan, excluding, however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event; (ii) the applicability of the requirements of Section 4043(b) of ERISA with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, to any Title IV Plan where an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such plan within the following 30 days; (iii) a withdrawal by any Obligor or any ERISA Affiliate thereof from a Title IV Plan or the termination of any Title IV Plan resulting in liability under Sections 4063 or 4064 of ERISA; (iv) the withdrawal of any Obligor or any ERISA Affiliate thereof in a complete or partial withdrawal (within the meaning of Section 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefore, or the receipt by any Obligor or any ERISA Affiliate thereof of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA; (v) the filing of a notice of intent to terminate, the treatment of a plan amendment as a termination under Section 4041 or 4041A of ERISA, or the

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commencement of proceedings by the PBGC to terminate a Title IV Plan or Multiemployer Plan; (vi) the imposition of liability on any Obligor or any ERISA Affiliate thereof pursuant to Sections 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the failure by any Obligor or any ERISA Affiliate thereof to make any required contribution to a Plan, or the failure to meet the minimum funding standard of Section 412 of the Code with respect to any Title IV Plan (whether or not waived in accordance with Section 412(c) of the Code) or the failure to make by its due date a required installment under Section 430 of the Code with respect to any Title IV Plan or the failure to make any required contribution to a Multiemployer Plan; (viii) the determination that any Title IV Plan is considered an at-risk plan or a plan in endangered to critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; (ix) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan; (x) the imposition of any liability under Title I or Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Obligor or any ERISA Affiliate thereof; (xi) an application for a funding waiver under Section 303 of ERISA or an extension of any amortization period pursuant to Section 412 of the Code with respect to any Title Plan; (xii) the occurrence of a non-exempt prohibited transaction under Sections 406 or 407 of ERISA for which any Obligor or any Subsidiary thereof may be directly or indirectly liable; (xiii) a violation of the applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a) of the Code by any fiduciary or disqualified person for which any Obligor or any ERISA Affiliate thereof may be directly or indirectly liable; (xiv) the occurrence of an act or omission which could give rise to the imposition on any Obligor or any ERISA Affiliate thereof of fines, penalties, taxes or related charges under Chapter 43 of the Code or under Sections 409, 502(c), (i) or (1) or 4071 of ERISA; (xv) the assertion of a material claim (other than routine claims for benefits) against any Plan or the assets thereof, or against any Obligor or any Subsidiary thereof in connection with any such plan; (xvi) receipt from the IRS of notice of the failure of any Qualified Plan to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Qualified Plan to fail to qualify for exemption from taxation under Section 501(a) of the Code; (xvii) the imposition of any lien (or the fulfillment of the conditions for the imposition of any lien) on any of the rights, properties or assets of any Obligor or any ERISA Affiliate thereof, in either case pursuant to Title I or IV, including Section 302(f) or 303(k) of ERISA or to Section 401(a)(29) or 430(k) of the Code; or (xviii) the establishment or amendment by any Obligor or any Subsidiary thereof of any “welfare plan”, as such term is defined in Section 3(1) of ERISA, that provides post-employment welfare benefits in a manner that would increase the liability of any Obligor.

“Event of Default” has the meaning set forth in Section 11.

“Exchange Rate” means the rate at which any currency (the “Pre-Exchange Currency”) may be exchanged into another currency (the “Post-Exchange Currency”), as set forth on such date on the relevant Reuters screen at or about 11:00 a.m. (Central time) on such date. In the event that such rate does not appear on the Reuters screen, the “Exchange Rate” with respect to exchanging such Pre-Exchange Currency into such Post-Exchange Currency shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Borrower and the Majority Lenders or, in the absence of such agreement, such Exchange Rate shall instead be determined by the Majority Lenders by any reasonable method as they deem applicable to determine such rate, and such determination shall be conclusive absent manifest error.

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“Excluded Accounts” means accounts used in the ordinary course of business for payroll, payroll taxes and other employee wage and benefit payments, pension fund accounts, 401(k) accounts, trust accounts, the certificates of deposit referred to in Section 9.02(p), and the segregated deposit accounts referred to in Section 9.02(q).

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes and branch profits Taxes, in each case imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax, (b) Other Connection Taxes, (c) U.S. federal withholding Taxes that are imposed on amounts payable to a Lender to the extent that the obligation to withhold amounts existed on the date that such Lender became a “Lender” under this Agreement, except in each case to the extent such Lender is a direct or indirect assignee of any other Lender that was entitled, at the time the assignment of such other Lender became effective, to receive additional amounts under Section 5.05, (d) any Taxes imposed in connection with FATCA, and (e) Taxes attributable to such Recipient’s failure to comply with Section 5.05(e).

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not more onerous to comply with), any regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code.

“Foreign Lender” means a Lender that is not a U.S. Person.

“Foreign Subsidiary” means a Subsidiary of Borrower that is not a Domestic Subsidiary.

“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time, set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants, in the statements and pronouncements of the Financial Accounting Standards Board and in such other statements by such other entity as may be in general use by significant segments of the accounting profession that are applicable to the circumstances as of the date of determination. Subject to Section 1.02, all references to “GAAP” shall be to GAAP applied consistently with the principles used in the preparation of the financial statements described in Section 7.04(a).

“Governmental Approval” means any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.

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“Governmental Authority” means any nation, government, branch of power (whether executive, legislative or judicial), state, province or municipality or other political subdivision thereof and any entity exercising executive, legislative, judicial, monetary, regulatory or administrative functions of or pertaining to government, including without limitation regulatory authorities, governmental departments, agencies, commissions, bureaus, officials, ministers, courts, bodies, boards, tribunals and dispute settlement panels, and other law-, rule- or regulation-making organizations or entities of any State, territory, county, city or other political subdivision of the United States.

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

“Guarantee Assumption Agreement” means a Guarantee Assumption Agreement substantially in the form of Exhibit A by an entity that, pursuant to Section 8.12(a), is required to become a “Subsidiary Guarantor” hereunder in favor of the Lenders.

“Hazardous Material” means any substance, element, chemical, compound, product, solid, gas, liquid, waste, by-product, pollutant, contaminant or material which is hazardous or toxic, and includes, without limitation, (a) asbestos, polychlorinated biphenyls and petroleum (including crude oil or any fraction thereof) and (b) any material classified or regulated as “hazardous” or “toxic” or words of like import pursuant to an Environmental Law.

“Hedging Agreement” means any interest rate exchange agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or obligations of such Person with respect to deposits or advances of any kind by third parties, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations,

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contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) obligations under any Hedging Agreement in respect of currency swaps, forwards, futures or derivatives transactions, and (k) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership or joint venture in which such Person is a general partner or a joint venturer) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any Obligation and (b) to the extent not otherwise described in clause (a), Other Taxes.

“Insolvency Proceeding” means (i) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (ii) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of any Person’s creditors generally or any substantial portion of such Person’s creditors, in each case undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code.

“Intellectual Property” means all Patents, Trademarks, Copyrights, and Technical Information, whether registered or not, domestic and foreign. Intellectual Property shall include all:

(a) applications or registrations relating to such Intellectual Property;

(b) rights and privileges arising under applicable Laws with respect to such Intellectual Property;

(c) rights to sue for past, present or future infringements of such Intellectual Property; and

(d) rights of the same or similar effect or nature in any jurisdiction corresponding to such Intellectual Property throughout the world.

“Interest-Only Period” means (i) if only one Borrowing has been made, the period from and including the first Borrowing Date and through and including the twelfth (12^th) Payment Date thereafter, and (ii) if more than one Borrowing has been made (other than Borrowings of PIK Loans), the period from and including the first Borrowing Date and through and including the sixteenth (16^th) Payment Date thereafter.

“Interest Period” means, with respect to any Borrowing, initially, the period commencing on the Borrowing Date therefor and ending on the next Payment Date, and thereafter, each period beginning on the last day of the immediately preceding Interest Period and ending on March 31, June 30, September 30 and December 31, as the case may be; provided that (i) any Interest Period that would otherwise end on a day that is not a Business Day shall end

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on the next succeeding Business Day unless such succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) the term “Interest Period” shall include any period selected by the Majority Lenders from time to time in accordance with Section 3.02(c).

“Invention” means any novel, inventive and useful art, apparatus, method, process, machine (including article or device), manufacture or composition of matter, or any novel, inventive and useful improvement in any art, method, process, machine (including article or device), manufacture or composition of matter.

“Investment” means, for any Person: (a) the acquisition (whether for cash, property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person or any agreement to make any such acquisition (including any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such sale); (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such property to such Person), but excluding any such advance, loan or extension of credit having a term not exceeding 90 days arising in connection with the sale of inventory or supplies by such Person in the ordinary course of business; (c) the entering into of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person; or (d) the entering into of any Hedging Agreement.

“IRS” means the U.S. Internal Revenue Service or any successor agency, and to the extent relevant, the U.S. Department of the Treasury.

“Knowledge” means, with respect to the Borrower, any Obligor or any of their Subsidiaries, the actual knowledge of the Chief Executive Officer (as at the date of this Agreement, Kristine Peterson), the President and Chief Commercial Officer (as at the date of this Agreement, John Timberlake), the Chief Financial Officer (as at the date of this Agreement, Jim Dentzer), the Controller (as at the date of this Agreement, William Duke), the Executive Vice President (Manufacturing, Operations and R&D) (as at the date of this Agreement, Geoffrey Jenkins), and the Vice President (Human Resources) (as at the date of this Agreement, Nancy Ryan) of the Borrower. Furthermore, “Knowledge” shall be deemed to be the actual knowledge of any such Person (and not the implied, constructive or imputed knowledge of any such Person) as of the applicable times expressly indicated, and without any obligation to make any independent investigation of, or any implied duty to investigate, such matters, or to make any inquiry of any other Person, or to search or to examine any files, records books, correspondence and the like. There shall be no personal liability on the part of any individual referred to above arising out of the Loan Documents.

“Landlord Consent” means a Landlord Consent substantially in the form of Exhibit G.

“Laws” means, collectively, all international, foreign, federal, state, provincial, territorial, municipal and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration

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thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

“Lenders” means Capital Royalty Partners II L.P., CRPFF and PIOP, together with their successors and each assignee of a Lender pursuant to Section 12.05(b) and “Lender” means any one of them.

“Lien” means any mortgage, lien, pledge, charge, encumbrance or other security interest, leases, title retention agreements, mortgages, restrictions, easements, rights-of-way, options or adverse claims (of ownership or possession) or encumbrances of any kind or character whatsoever or any preferential arrangement that has the practical effect of creating a security interest.

“Loan” means (i) each loan advanced by a Lender pursuant to Section 2.01 and (ii) each PIK Loan deemed to have been advanced by a Lender pursuant to Section 3.02(d). For purposes of clarification, any calculation of the aggregate outstanding principal amount of Loans on any date of determination shall include both the aggregate principal amount of loans advanced pursuant to Section 2.01 and not yet repaid, and all PIK Loans deemed to have been advanced and not yet repaid, on or prior to such date of determination.

“Loan Documents” means, collectively, this Agreement, the Notes, the Security Documents, each Warrant, any subordination agreement or any intercreditor agreement entered into by Lenders with any other creditors of Obligors, the Valeritas Security Side Letter and any other present or future agreement executed by Obligors for the benefit of Lenders in connection with this Agreement or any of the other Loan Documents, all as amended, restated, or otherwise modified.

“Loss” means judgments, debts, liabilities, expenses, costs, damages or losses, contingent or otherwise, whether liquidated or unliquidated, matured or unmatured, disputed or undisputed, contractual, legal or equitable, including loss of value, professional fees, including fees and disbursements of legal counsel on a full indemnity basis, and all costs incurred in investigating or pursuing any Claim or any proceeding relating to any Claim.

“Majority Lenders” means, at any time, Lenders having at such time in excess of 50% of the aggregate Commitments (or, if such Commitments are terminated, the outstanding principal amount of the Loans) then in effect, ignoring, in such calculation, the Commitments of and outstanding Loans owing to any Defaulting Lender.

“Management Gross Revenue” means for any period, revenues arrived at during such period by multiplying the wholesale acquisition cost per kit paid by the relevant customer by the number of Product commercial kits sold in a bona fide transaction and consistent with past practices.

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“Management Net Revenue” means for any period, Management Gross Revenue during such period less each of the following deductions during such period:

1. Service fees, which are recorded based on the customer that purchased the Product;

2. Prompt pay discounts or rebates, which are recorded based on the customer that purchased the Product;

3. Returns, which are based on industry norms, estimated at 1.5% of Management Gross Revenue; unless the Borrower’s actual history of returns is materially higher than 1.5%, in which case such higher amount shall be used;

4. Managed care mix discount or rebate, which is based on the estimated end user payor mix and related contractual rebates;

5. Part D mix discount or rebate, which is based on the estimated end user payor mix and related contractual rebates; and

6. Actual costs associated with copay card redemptions plus estimated projected redemption costs based on Product sold to customers but not yet in the hands of the end user (patient).

“Margin Stock” means “margin stock” within the meaning of Regulations U and X.

“Material Adverse Change” and “Material Adverse Effect” mean a material adverse change in or effect on (i) the business, financial condition, operations, performance or Property of Borrower and its Subsidiaries taken as a whole, (ii) the ability of any Obligor to perform its obligations under the Loan Documents, or (iii) the legality, validity, binding effect or enforceability of the Loan Documents or the rights and remedies of the Lenders under any of the Loan Documents. “Material Adverse Change” and “Material Adverse Effect” shall not include any change or effect relating generally to national or regional economic conditions, financial markets, and/or the industry in which the Borrower engages in business, except that any such change or effect may constitute, and shall be taken into account in determining whether there has been or would be, a Material Adverse Change or Material Adverse Effect if such changes or effects have, in any material respect, a disproportionate impact on Borrower and its Subsidiaries, taken as a whole, relative to other companies in the industry in which Borrower and its Subsidiaries operate.

“Material Agreements” means (i) the agreements which are listed in Schedule 7.14 and (ii) all other agreements held by the Obligors from time to time, the absence or termination of any of which would reasonably be expected to result in a Material Adverse Effect, provided however that “Material Agreements” exclude all: (i) licenses implied by the sale of a product; and (ii) paid-up licenses for commonly available software programs under which an Obligor is the licensee. “Material Agreement” means any one such agreement. If, at any time following the date hereof, any agreement set forth on Schedule 7.14 ceases to constitute an agreement of the type described in clause (ii) above, such agreement shall, at such time, no longer constitute a “Material Agreement”.

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“Material Indebtedness” means, at any time, any Indebtedness of any Obligor the outstanding principal amount of which, individually or in the aggregate, exceeds $1,000,000 (or the Equivalent Amount in other currencies).

“Material Intellectual Property” means, the Obligor Intellectual Property described in Schedule 7.05(c) and any other Obligor Intellectual Property after the date hereof the loss of which would reasonably be expected to have a Material Adverse Effect.

“Maturity Date” means the earlier to occur of (i) the twenty-fourth (24^th) Payment Date following the first Borrowing Date, and (ii) the date on which the Loans are accelerated pursuant to Section 11.02.

“Multiemployer Plan” means any multiemployer plan, as defined in Section 400l(a)(3) of ERISA, to which any ERISA Affiliate incurs or otherwise has any obligation or liability, contingent or otherwise.

“Note” means a promissory note executed and delivered by the Borrower to the Lenders in accordance with Section 2.04 or 3.02(d).

“Notice of Borrowing” has the meaning given to such term in Section 2.02.

“Obligations” means, with respect to any Obligor, all amounts, obligations, liabilities, covenants and duties of every type and description owing by such Obligor to any Lender, any other indemnitee hereunder or any participant, arising out of, under, or in connection with, any Loan Document, whether direct or indirect (regardless of whether acquired by assignment), absolute or contingent, due or to become due, whether liquidated or not, now existing or hereafter arising and however acquired, and whether or not evidenced by any instrument or for the payment of money, including, without duplication, (i) if such Obligor is the Borrower, all Loans, (ii) all interest, whether or not accruing after the filing of any petition in bankruptcy or after the commencement of any insolvency, reorganization or similar proceeding, and whether or not a claim for post-filing or post-petition interest is allowed in any such proceeding, and (iii) all other fees, expenses (including reasonable and documented fees, charges and disbursement of counsel), interest, commissions, charges, costs, disbursements, indemnities and reimbursement of amounts paid and other sums chargeable to such Obligor under any Loan Document.

“Obligor Intellectual Property” means Intellectual Property owned by or licensed to any of the Obligors.

“Obligors” means, collectively, the Borrower and the Subsidiary Guarantors and their respective successors and permitted assigns.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

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“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 5.05(g)).

“Patents” is defined in the Security Agreement.

“Payment Date” means each of March 31, June 30, September 30, December 31 and the Maturity Date; provided that, other than with respect to the Payment Date that is the Maturity Date, if any such date shall occur on a day that is not a Business Day, the applicable Payment Date shall be the next succeeding Business Day unless such succeeding Business Day would fall in the next calendar month, in which case such Payment Date shall end on the next preceding Business Day.

“PBGC” means the United States Pension Benefit Guaranty Corporation and any successor thereto.

“Permitted Acquisition” means any acquisition by the Borrower or any of its wholly-owned Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets of, all of the Equity Interests of, or a business line or unit or a division of, any Person; provided that:

(a) immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom;

(b) all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable Laws and in conformity with all applicable Governmental Approvals;

(c) in the case of the acquisition of all of the Equity Interests of such Person, all of the Equity Interests (except for any such securities in the nature of directors’ qualifying shares required pursuant to applicable Law) acquired, or otherwise issued by such Person or any newly formed Subsidiary of the Borrower in connection with such acquisition, shall be owned 100% by the Borrower, a Subsidiary Guarantor or any other Subsidiary, and the Borrower shall have taken, or caused to be taken, as of the date such Person becomes a Subsidiary of the Borrower, each of the actions set forth in Section 8.12, if applicable;

(d) the Borrower and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 10.01 on a pro forma basis after giving effect to such acquisition; and

(e) such Person (in the case of an acquisition of Equity Interests) or assets (in the case of an acquisition of assets or a division) (i) shall be engaged or used, as the case may be, in the same business or lines of business in which the Borrower and/or its Subsidiaries are engaged or (ii) shall have a similar customer base as the Borrower and/or its Subsidiaries.

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“Permitted Cash Equivalent Investments” means (i) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than two (2) years from the date of acquisition, (ii) time deposits or insured certificates of deposit or bankers’ acceptances having maturities of not more than two (2) years from the date of acquisition maintained with any commercial bank organized under the laws of the United States of America that is a member of the Federal Reserve System, (iii) commercial paper maturing no more than one (1) year after its creation and having the highest or second highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc. and (iv) Investments in money market investment programs administered by reputable financial institutions, the portfolios of which are limited solely to Investments of the character, quality and maturity described in the foregoing clauses (i) through (iii).

“Permitted Indebtedness” means any Indebtedness permitted under Section 9.01.

“Permitted Lien” means any Lien permitted under Section 9.02.

“Permitted Priority Debt” means Indebtedness of the Obligors, in a principal amount not to exceed at any time 80% times the face amount at such time of the Obligors’ eligible accounts receivable; provided that (a) such Indebtedness, if secured, shall not be secured by a first-priority security interest in any asset other than the Obligors’ accounts receivable and inventory, and (b) the holders or lenders thereof have executed and delivered to Lenders an intercreditor agreement reasonably satisfactory to the Majority Lenders reflecting market terms and conditions.

“Permitted Refinancing” means, with respect to any Indebtedness, any extensions, renewals and replacements of such Indebtedness; provided that such extension, renewal or replacement (i) shall not increase the outstanding principal amount of such Indebtedness except by an amount equal to accrued interest and a reasonable premium or other amount paid, and fees and expenses reasonably incurred in connection therewith, (ii) contains terms relating to outstanding principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole no less favorable in any material respect to the Borrower and its Subsidiaries or the Lenders than the terms of any agreement or instrument governing such existing Indebtedness, (iii) shall have an applicable interest rate which does not exceed the greater of (a) rate of interest of the Indebtedness being replaced and (b) the then applicable market interest rate, and (iv) shall not contain any new requirement to grant any lien or security or to give any guarantee that was not an existing requirement of such Indebtedness.

“Permitted Restrictive Agreements” has the meaning set forth in Section 7.15.

“Permitted Senior Liens” means (i) those Liens in favor of the holders of Permitted Priority Debt solely with respect to the Obligors’ accounts receivable and inventory and (ii) those Liens permitted under Sections 9.02(e) and (i).

“Permitted Shareholder Debt” means all Indebtedness evidenced by that (i) certain Note dated as of September 8, 2011 by the Borrower as maker and WCAS Capital Partners IV, L.P. (or any Affiliate or transferee thereof), as holder, or (ii) any additional notes issued by the Borrower as maker to WCAS Capital Partners IV, L.P. (or any Affiliate or transferee thereof), as

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holder, in each case as amended, amended and restated, supplemented or modified; provided that such Indebtedness shall be at all times subject to the terms and conditions of a Subordination Agreement, substantially in the form attached hereto as Exhibit H, among the Lenders and the holders of such Note; provided further that in the case of any additional notes issued by the Borrower as described in clause (ii) above, such notes shall be on substantially the same terms as that certain Note dated as of September 8, 2011 by the Borrower as maker and WCAS Capital Partners IV, L.P. (or any Affiliate or transferee thereof), as holder.

“Permitted Subordinated Debt” means Indebtedness (i) that is governed by documentation containing representations, warranties, covenants and events of default no more burdensome or restrictive than those contained in the Loan Documents, (ii) that has a maturity date later than the Maturity Date, (iii) in respect of which no cash payments of principal or interest are required or permitted prior to the Maturity Date, (iv) in respect of which the holders have agreed in favor of the Borrower and Lenders that prior to the date on which the Commitments have expired or been terminated and all Obligations (other than Warrant Obligations) have been paid in full indefeasibly in cash, such holders will not exercise any remedies available to them in respect of such Indebtedness, and (v) that is unsecured.

“Person” means any individual, corporation, company, voluntary association, partnership, limited liability company, joint venture, trust, unincorporated organization or Governmental Authority or other entity of whatever nature.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

“PIK Loan” has the meaning set forth in Section 3.02(d).

“PIK Period” means the period beginning on the first Borrowing Date through and including the earlier to occur of (i) (A) if only one Borrowing shall be made, the twelfth (12^th) Payment Date after the first Borrowing Date, and (B) if more than one Borrowing (other than PIK Borrowings) shall be made, the sixteenth (16^th) Payment Date after the first Borrowing Date, and (ii) the date on which any Event of Default shall have occurred (provided that if such Event of Default shall have been cured or waived, the PIK Period shall resume until the earlier to occur of the next Event of Default and (x) if only one Borrowing shall be made, the twelfth (12^th) Payment Date after the first Borrowing Date), or (y) if more than one Borrowing (other than PIK Borrowings) shall be made, the sixteenth (16^th) Payment Date after the first Borrowing Date.

“PIOP” means Parallel Investment Opportunities Partners II L.P., a Delaware limited partnership.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Post-Default Rate” has the meaning set forth in Section 3.02(b).

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“Prepayment Premium” means, with respect to any optional prepayment pursuant to Section 3.03(a), the amount calculated pursuant to Sections 3.03(a)(i) and (ii) with respect to such optional prepayment.

“Product” means V-Go^® and EZ Fill (and their respective successors), in a form substantially similar to that approved by the U.S. Food and Drug Administration in December 2010.

“Property” of any Person means any property or assets, or interest therein, of such Person.

“Proportionate Share” means, with respect to any Lender, the percentage obtained by dividing (a) the sum of the Commitment (or, if the Commitments are terminated, the outstanding principal amount of the Loans) of such Lender then in effect by (b) the sum of the Commitments (or, if the Commitments are terminated, the outstanding principal amount of the Loans) of all Lenders then in effect.

“Qualified Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan (i) that is or was at any time maintained or sponsored by any Obligor or any ERISA Affiliate thereof or to which any Obligor or any ERISA Affiliate thereof has ever made, or was ever obligated to make, contributions, and (ii) that is intended to be tax qualified under Section 401(a) of the Code.

“Real Property Security Documents” means the Landlord Consent and any collateral access agreements and security documents, including mortgages but excluding deeds of trust, required under Section 8.16 to be executed or delivered by an Obligor; provided that Real Property Security Documents shall not include any mortgages with respect to any leasehold interest in real property.

“Recipient” means any Lender or any other recipient of any payment to be made by or on account of any Obligation.

“Redemption Date” has the meaning set forth in Section 3.03(a).

“Redemption Price” has the meaning set forth in Section 3.03(a).

“Register” has the meaning set forth in Section 12.05(d).

“Regulation T” means Regulation T of the Board of Governors of the Federal Reserve System, as amended.

“Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System, as amended.

“Regulation X” means Regulation X of the Board of Governors of the Federal Reserve System, as amended.

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“Regulatory Approvals” means any registrations, licenses, authorizations, permits or approvals issued by any Governmental Authority and applications or submissions related to any of the foregoing.

“Requirement of Law” means, as to any Person, any statute, law, treaty, rule or regulation or determination, order, injunction or judgment of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Properties or revenues.

“Responsible Officer” of any Person means the President, Chief Executive Officer , Chief Financial Officer or Treasurer of such Person.

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any shares of any class of capital stock of the Borrower or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such shares of capital stock of the Borrower or any of its Subsidiaries or any option, warrant or other right to acquire any such shares of capital stock of the Borrower or any of its Subsidiaries.

“Revenue” means for any period, Management Net Revenue during such period that is recognized at the time the Product sold (in a bona fide transaction) to, and legal title transfers to, the Borrower’s customers, third-party wholesalers and medical supply distributors, consistent with past practices and consistently applied.

“SBA” means U.S. Small Business Administration.

“SBIC” means Small Business Investment Company.

“SBIC Act” means Small Business Investment Act of 1958, as amended.

“Security Agreement” means the Security Agreement, dated as of the date hereof, among the Obligors and the Lenders, granting a security interest in the Obligors’ personal Property in favor of the Lenders.

“Security Documents” means, collectively, the Security Agreement, each Short-Form IP Security Agreement, each Real Property Security Document, and each other security document, control agreement or financing statement required or recommended to perfect Liens in favor of the Lenders.

“Securities Account” is defined in the Security Agreement.

“Short-Form IP Security Agreements” means short-form copyright, patent or trademark (as the case may be) security agreements entered into by one or more Obligors in favor of the Lenders, each in form and substance reasonably satisfactory to the Majority Lenders (and as amended, modified or replaced from time to time).

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“Solvent” means, with respect to any Person at any time, that (a) the present fair saleable value of the Property of such Person is greater than the total amount of liabilities (including contingent liabilities) of such Person, (b) the present fair saleable value of the Property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person has not incurred and does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature and (d) such Person would not be unable to obtain a letter from its auditors that did not contain a going concern qualification.

“Specified Equityholders” means WCAS Valeritas Holdings, LLC, WCAS XI Co-Investors, LLC, WCAS Capital Partners IV, L.P., WCAS Management Corporation, their respective Affiliates and any other holders of the Borrower’s Series C Preferred Stock, as determined at the date of this Agreement.

“Specified Licensing Arrangements” means any exclusive licensing arrangement (i) with respect to the sale of the Product to end-users outside the United States only or (ii) with respect to any products developed, manufactured or sold that is not in connection with the treatment of diabetes.

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Subject to Section 11.02, notwithstanding anything to the contrary contained herein, Valeritas Security shall not constitute a Subsidiary for the purposes of Sections 8 (other than Section 8.12) or 9 herein unless Valeritas Security is a Subsidiary Guarantor; provided that for the avoidance of doubt, Valeritas Security shall only be required to be a Subsidiary Guarantor in accordance with the provisions of Section 8.12.

“Subsidiary Guarantors” means each of the Subsidiaries of the Borrower identified under the caption “SUBSIDIARY GUARANTORS” on the signature pages hereto and each Subsidiary of the Borrower that becomes, or is required to become, a “Subsidiary Guarantor” after the date hereof pursuant to Section 8.12(a) or (b). Notwithstanding anything to the contrary in any Loan Document, Valeritas Security shall only be required to become a Subsidiary Guarantor or grant a lien on any of its assets in favor of any Lender to the extent required by Section 8.12.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

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“Technical Information” means all trade secrets and other proprietary or confidential information, public information, non-proprietary know-how, any information of a scientific, technical, or business nature in any form or medium, standards and specifications, conceptions, ideas, innovations, discoveries, Invention disclosures, all documented research, developmental, demonstration or engineering work and all other information, data, plans, specifications, reports, summaries, experimental data, manuals, models, samples, know-how, technical information, systems, methodologies, computer programs, information technology and any other information.

“Title IV Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan (i) that is or was at any time maintained or sponsored by any Obligor or any ERISA Affiliate thereof or to which any Obligor or any ERISA Affiliate thereof has ever made, or was obligated to make, contributions, and (ii) that is or was subject to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA.

“Trademarks” is defined in the Security Agreement.

“Transactions” means the execution, delivery and performance by each Obligor of this Agreement and the other Loan Documents to which such Obligor is intended to be a party and the Borrowing (and the use of the proceeds of the Loans).

“U.S. Person” means a “United States Person” within the meaning of Section 7701(a)(30) of the Code.

“Valeritas Security” means Valeritas Security Corporation, a Delaware corporation.

“Valeritas Security Side Letter” means the side letter dated as of the date hereof among the Borrower, Valeritas Security and the Lenders.

“Warrant” means each warrant to purchase common stock of Borrower, issued by Borrower to the Lenders in connection with the transactions contemplated by this Agreement, which warrants shall be issued by Borrower to the Lenders on a pro rata basis in accordance with the following: (i) as of the date determined pursuant to Section 6.01(g)(iv), warrants shall be issued to the Lenders to purchase, in the aggregate, 2% of the Common Stock Outstanding as of the date determined pursuant to Section 6.01(g)(iv), regardless of whether the first Borrowing occurs, (ii) with respect to the second Borrowing, if any, warrants shall be issued to the Lenders to purchase, in the aggregate, 1% of the Common Stock Outstanding as of the date of such second Borrowing and (iii) with respect to third Borrowing, if any, warrants shall be issued to the Lenders to purchase, in the aggregate, 1% of the Common Stock Outstanding as of the date of such third Borrowing.

“Warrant Obligations” means, with respect to any Obligor, all Obligations arising out of, under or in connection with, any Warrant.

“Withdrawal Liability” means, at any time, any liability incurred (whether or not assessed) by any ERISA Affiliate and not yet satisfied or paid in full at such time with respect to any Multiemployer Plan pursuant to Section 4201 of ERISA.

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1.02 Accounting Terms and Principles. All accounting determinations required to be made pursuant hereto shall, unless expressly otherwise provided herein, be made in accordance with GAAP. All components of financial calculations made to determine compliance with this Agreement, including Section 10, shall be adjusted to include or exclude, as the case may be, without duplication, such components of such calculations attributable to any Acquisition consummated after the first day of the applicable period of determination and prior to the end of such period, as determined in good faith by the Borrower based on assumptions expressed therein and that were reasonable based on the information available to the Borrower at the time of preparation of the Compliance Certificate setting forth such calculations.

1.03 Interpretation. For all purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires, (a) the terms defined in this Agreement include the plural as well as the singular and vice versa; (b) words importing gender include all genders; (c) any reference to a Section, Annex, Schedule or Exhibit refers to a Section of, or Annex, Schedule or Exhibit to, this Agreement; (d) any reference to “this Agreement” refers to this Agreement, including all Annexes, Schedules and Exhibits hereto, and the words herein, hereof, hereto and hereunder and words of similar import refer to this Agreement and its Annexes, Schedules and Exhibits as a whole and not to any particular Section, Annex, Schedule, Exhibit or any other subdivision; (e) references to days, months and years refer to calendar days, months and years, respectively; (f) all references herein to “include” or “including” shall be deemed to be followed by the words “without limitation”; (g) the word “from” when used in connection with a period of time means “from and including” and the word “until” means “to but not including”; and (h) accounting terms not specifically defined herein shall be construed in accordance with GAAP (except for the term “property” , which shall be interpreted as broadly as possible, including, in any case, cash, securities, other assets, rights under contractual obligations and permits and any right or interest in any property, except where otherwise noted). Unless otherwise expressly provided herein, references to organizational documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, permitted by the Loan Documents.

1.04 Changes to GAAP. If, after the date hereof, any change occurs in GAAP or in the application thereof and such change would cause any amount required to be determined for the purposes of the covenants to be maintained or calculated pursuant to Section 8, 9 or 10 to be materially different than the amount that would be determined prior to such change, then:

(a) the Borrower will provide a detailed notice of such change (an “Accounting Change Notice”) to the Lenders within 30 days of such change;

(b) either the Borrower or the Majority Lenders may indicate within 90 days following the date of the Accounting Change Notice that they wish to revise the method of calculating such financial covenants or amend any such amount, in which case the parties will in good faith attempt to agree upon a revised method for calculating the financial covenants;

(c) until the Borrower and the Majority Lenders have reached agreement on such revisions, (i) such financial covenants or amounts will be determined without giving effect to such change and (ii) all financial statements, Compliance Certificates and similar documents provided hereunder shall be provided together with a reconciliation between the calculations and amounts set forth therein before and after giving effect to such change in GAAP;

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(d) if no party elects to revise the method of calculating the financial covenants or amounts, then the financial covenants or amounts will not be revised and will be determined in accordance with GAAP without giving effect to such change; and

(e) any Event of Default arising as a result of such change which is cured by operation of this Section 1.04 shall be deemed to be of no effect ab initio.

SECTION 2

THE COMMITMENT

2.01 Commitments. Each Lender agrees severally, on and subject to the terms and conditions of this Agreement (including Section 6), to make three (3) term loans (provided that PIK Loans shall be deemed not to constitute “Loans” or “term loans” for purposes of this Section 2.01) to the Borrower, each on a Business Day during the Commitment Period in Dollars in an aggregate principal amount for such Lender not to exceed such Lender’s Commitment; provided, however, that at no time shall any Lender be obligated to make a Loan in excess of such Lender’s Proportionate Share of the amount by which the then effective Commitments exceeds the aggregate principal amount of Loans outstanding at such time. Amounts of Loans repaid may not be reborrowed.

2.02 Borrowing Procedures. Subject to the terms and conditions of this Agreement (including Section 6), each Borrowing (other than a Borrowing of PIK Loans) shall be made on written notice in the form of Exhibit B given by the Borrower to the Lenders not later than 11:00 a.m. (Central time) on the date required under Section 6.01(i) or 6.02(d), as applicable (a “Notice of Borrowing”).

2.03 Fees. On each Borrowing Date, the Borrower shall pay to each Lender a financing fee in an amount equal to 1.00% of the Loans advanced by such Lender on such Borrowing Date. Such financing fee, to be determined on a pro rata basis, will be deducted from the Loan proceeds advanced by Lenders to the Borrower on the applicable Borrowing Date.

2.04 Notes. If requested by any Lender, the Loans of such Lender shall be evidenced by one or more promissory notes (each a “Note”). The Borrower shall prepare, execute and deliver to the Lenders such promissory note(s) payable to the Lenders (or, if requested by the Lenders, to the Lenders and their registered assigns) and in the form attached hereto as Exhibit C. Thereafter, the Loans and interest thereon shall at all times (including after assignment pursuant to Section 12.05) be represented by one or more promissory notes in such form payable to the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

2.05 Use of Proceeds. The Borrower shall use the proceeds of the Loans for general working capital and corporate purposes and to pay fees, costs and expenses incurred in connection with the Transactions; provided that the Lenders shall have no responsibility as to the use of any proceeds of Loans in the amount made by PIOP. No portion of any proceeds of Loans in the amount made by PIOP (i) will be used to acquire realty or to discharge an obligation relating to the prior acquisition of realty; (ii) will be used outside of the United States (except to pay for services to be rendered outside the United States and to acquire from abroad inventory, material

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and equipment or property rights for use or sale in the United States, unless prohibited by Part 107.720 of the United States Code of Federal Regulations); or (iii) will be used for any purpose contrary to the public interest (including but not limited to activities which are in violation of law) or inconsistent with free competitive enterprise, in each case, within the meaning of Part 107.720 of Title 13 of the United States Code of Federal Regulations. The Borrower will use the proceeds of the Loans in the amount made by PIOP for only those purposes specified in the SBA Form 1031 provided to the Lenders.

2.06 Defaulting Lenders.

(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:

(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 12.04.

(ii) Reallocation of Payments. Any payment of principal, interest, fees or other amounts received by the Lenders for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 11 or otherwise), shall be applied at such time or times as follows: first, as the Borrower may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement; second, if so determined by the Majority Lenders and the Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of such Defaulting Lender to fund Loans under this Agreement; third, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; fourth, so long as no Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and fifth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (A) such payment is a payment of the principal amount of any Loans in respect of which such Defaulting Lender has not fully funded its appropriate share and (B) such Loans were made at a time when the conditions set forth in Section 6 were satisfied or waived, such payment shall be applied solely to pay the Loans of all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this Section 2.06(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(b) Defaulting Lender Cure. If the Borrower and the Majority Lenders agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as necessary to cause the Loans to be held on a pro rata basis by the Lenders in accordance with their Proportionate Share, whereupon that

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Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided further that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

2.07 Substitution of Lenders.

(a) Substitution Right. In the event that any Lender (an “Affected Lender”), (i) becomes a Defaulting Lender or (ii) does not consent to any amendment, waiver or consent to any Loan Document for which the consent of the Majority Lenders is obtained but that requires the consent of other Lenders (a “Non-Consenting Lender”), either (x) the Borrower may pay in full such Affected Lender with respect to all Obligations owing to such Affected Lender (but excluding any Prepayment Premium) or (y) such Affected Lender may be substituted by any willing Lender or Affiliate of any Lender or Eligible Transferee (in each case, a “Substitute Lender”); provided that any substitution of a Non-Consenting Lender shall occur only with the reasonable consent of Majority Lenders.

(b) Procedure. To substitute such Affected Lender or pay in full the Obligations owed to such Affected Lender, the Borrower shall deliver a notice to such Affected Lender. The effectiveness of such payment or substitution shall be subject to the delivery by the Borrower (or, as may be applicable in the case of a substitution, by the Substitute Lender) of (i) payment for the account of such Affected Lender, of, to the extent accrued through, and outstanding on, the effective date for such payment or substitution, all Obligations owing to such Affected Lender (but excluding any Prepayment Premium) and (ii) in the case of a substitution, an Assignment and Acceptance whereby the Substitute Lender shall, among other things, agree to be bound by the terms of the Loan Documents.

(c) Effectiveness. Upon satisfaction of the conditions set forth in Section 2.07(a) and (b), the Control Agent shall record such substitution or payment in the Register, whereupon (i) in the case of any payment in full of an Affected Lender pursuant to Section 2.07(b)(i), such Affected Lender’s Commitments shall be terminated and (ii) in the case of any substitution of an Affected Lender, (A) such Affected Lender shall sell and be relieved of, and the Substitute Lender shall purchase and assume, all rights and claims of such Affected Lender under the Loan Documents, except that (1) the Affected Lender shall retain such rights expressly providing that they survive the repayment of the Obligations and the termination of the Commitments and (2) a Non-Consenting Lender shall be permitted to retain any Warrants issued to such Non-Consenting Lender, (B) such Substitute Lender shall become a “Lender” hereunder and (C) such Affected Lender shall execute and deliver an Assignment and Acceptance to evidence such substitution; provided, however, that the failure of any Affected Lender to execute any such Assignment and Acceptance shall not render such sale and purchase (or the corresponding assignment) invalid.

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SECTION 3

PAYMENTS OF PRINCIPAL AND INTEREST

3.01 Repayment.

(a) Repayment. During the Interest-Only Period, no payments of principal of the Loans shall be due. Borrower agrees to repay to the Lenders the outstanding principal amount of the Loans, on each Payment Date occurring after the Interest-Only Period, in equal installments. The amounts of such installments shall be calculated by dividing (i) the sum of the aggregate principal amount of the Loans outstanding on the first day following the end of the Interest-Only Period, by (b) the number of Payment Dates remaining on or prior to the Maturity Date.

(b) Application. Any optional or mandatory prepayment of the Loans shall be applied to the installments thereof under Section 3.01(a) in the inverse order of maturity. To the extent not previously paid, the principal amount of the Loans, together with all other outstanding Obligations (other than Warrant Obligations), shall be due and payable on the Maturity Date.

3.02 Interest.

(a) Interest Generally. Subject to Section 3.02(d), Borrower agrees to pay to the Lenders interest on the unpaid principal amount of the Loans and the amount of all other outstanding Obligations, in the case of the Loans, for the period from the applicable Borrowing Date, and in the case of any other Obligation, from the date such other Obligation is due and payable, in each case, until paid in full, at a rate per annum equal to 11.00%.

(b) Default Interest. Notwithstanding the foregoing, upon the occurrence and during the continuance of any Event of Default, the interest payable pursuant to Section 3.02(a) shall increase automatically by 4.00% per annum (such aggregate increased rate, the “Post-Default Rate”). Notwithstanding any other provision herein (including Section 3.02(d)), if interest is required to be paid at the Post-Default Rate, it shall be paid entirely in cash. If any Obligation is not paid when due under the applicable Loan Document, the amount thereof shall accrue interest at a rate equal to 4.00% per annum (without duplication of interest payable at the Post-Default Rate).

(c) Interest Payment Dates. Accrued interest on the Loans shall be payable in arrears on the last day of each Interest Period in cash, and upon the payment or prepayment thereof (on the principal amount so paid or prepaid); provided that interest payable at the Post-Default Rate shall be payable from time to time on demand.

(d) Paid In-Kind Interest. Notwithstanding Section 3.02(a), at any time during the PIK Period, the Borrower may elect to pay the interest on the outstanding principal amount of the Loans payable pursuant to Section 3.02 as follows: (i) only 7.50% of the 11.00% per annum interest in cash and (ii) 3.50% of the 11.00% per annum interest as compounded interest, added to the aggregate principal amount of the Loans on the last day of each Interest Period (the amount of any such compounded interest being a “PIK Loan”). Each PIK Loan shall be evidenced by a Note delivered pursuant to Section 2.04 for the applicable Borrowing in respect thereof. The principal amount of each PIK Loan shall accrue interest in accordance with the provisions of this Agreement applicable to the Loans.

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3.03 Prepayments.

(a) Optional Prepayments. The Borrower shall have the right optionally to prepay the outstanding principal amount of the Loans in whole or in part on any Payment Date (a “Redemption Date”) for an amount equal to the aggregate principal amount of the Loans being prepaid plus the Prepayment Premium plus any accrued but unpaid interest and any fees which are due and owing (such aggregate amount, the “Redemption Price”).

(i) Subject to Section 2.07 and 10.01(b)(ii), if the Redemption Date occurs:

(A) on or prior to the fourth Payment Date, the Prepayment Premium shall be an amount equal to 5.00% of the aggregate outstanding principal amount of the Loans being prepaid on such Redemption Date;

(B) after the fourth Payment Date, and on or prior to the eighth Payment Date, the Prepayment Premium shall be an amount equal to 4.00% of the aggregate outstanding principal amount of the Loans being prepaid on such Redemption Date;

(C) after the eighth Payment Date, and on or prior to the twelfth Payment Date, the Prepayment Premium shall be an amount equal to 3.00% of the aggregate outstanding principal amount of the Loans being prepaid on such Redemption Date;

(D) after the twelfth Payment Date, and on or prior to the sixteenth Payment Date, the Prepayment Premium shall be an amount equal to 2.00% of the aggregate outstanding principal amount of the Loans being prepaid on such Redemption Date;

(E) after the sixteenth Payment Date, and on or prior to the twentieth Payment Date, the Prepayment Premium shall be an amount equal to 1.00% of the aggregate outstanding principal amount of the Loans being prepaid on such Redemption Date; and

(F) after the twentieth Payment Date, the Prepayment Premium shall be an amount equal to 0.00% of the aggregate outstanding principal amount of the Loans being prepaid on such Redemption Date.

(ii) To determine the aggregate outstanding principal amount of the Loans, and how many Payment Dates have occurred, as of any Redemption Date for purposes of Section 3.03(a)(i):

(A) if, as of such Redemption Date, the Borrower shall have made only one Borrowing, the number of Payment Dates shall be deemed to be the number of Payment Dates that shall have occurred following the first Borrowing Date;

(B) if, as of such Redemption Date, the Borrower shall have made two Borrowings, then the Redemption Price shall be calculated as the sum of two amounts: (x) a Redemption Price calculated based on solely the aggregate outstanding principal amount of the

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Loans that have been borrowed in the initial Borrowing (and PIK Loans subsequently borrowed in respect of interest payments thereon), as though the applicable number of Payment Dates equals the number of Payment Dates that shall have occurred following the first Borrowing Date, and (y) a Redemption Price calculated based on solely the aggregate outstanding principal amount of the Loans that have been borrowed in the second Borrowing (and PIK Loans subsequently borrowed in respect of interest payments thereon), as though the applicable number of Payment Dates equals the number of Payment Dates that shall have occurred following the second Borrowing Date. In the case of any partial prepayment, the amount of such prepayment shall be allocated first to Loans drawn in the initial Borrowing (and PIK Loans in respect thereof), and then to Loans drawn in the second Borrowing (and PIK Loans in respect thereof); and

(C) if, as of such Redemption Date, the Borrower shall have made three Borrowings, then the Redemption Price shall be calculated as the sum of three amounts: (x) a Redemption Price calculated based on solely the aggregate outstanding principal amount of the Loans that have been borrowed in the initial Borrowing (and PIK Loans subsequently borrowed in respect of interest payments thereon), as though the applicable number of Payment Dates equals the number of Payment Dates that shall have occurred following the first Borrowing Date, (y) a Redemption Price calculated based on solely the aggregate outstanding principal amount of the Loans that have been borrowed in the second Borrowing (and PIK Loans subsequently borrowed in respect of interest payments thereon), as though the applicable number of Payment Dates equals the number of Payment Dates that shall have occurred following the second Borrowing Date, and (z) a Redemption Price calculated based on solely the aggregate outstanding principal amount of the Loans that have been borrowed in the third Borrowing (and PIK Loans subsequently borrowed in respect of interest payments thereon), as though the applicable number of Payment Dates equals the number of Payment Dates that shall have occurred following the third Borrowing Date. In the case of any partial prepayment, the amount of such prepayment shall be allocated first to Loans drawn in the initial Borrowing (and PIK Loans in respect thereof), then to Loans drawn in the second Borrowing (and PIK Loans in respect thereof), and then to Loans drawn in the third Borrowing (and PIK Loans in respect thereof).

(iii) On or prior to the Redemption Date, the Lenders may notify Borrower of a reduction in the amounts due under Section 3.03(a)(i) with respect to any portion of the Loans held by any entity licensed by the SBA as an SBIC.

(b) Mandatory Prepayments.

(i) Asset Sales. In the event of any contemplated Asset Sale not permitted under Section 9.09, the Borrower shall provide 10 days’ prior written notice of such Asset Sale to the Lenders and, if within such notice period Majority Lenders advise the Borrower that a prepayment is required pursuant to this Section 3.03(b)(i), the Borrower shall: (x) if the assets sold represent substantially all of the assets or revenues of the Borrower, or represent any specific line of business which either on its own or together with other lines of business sold over the term of this Agreement account for Revenue generated by such lines of business exceeding 10% of the Revenue of the Borrower in the immediately preceding year (in each case, other than with respect to Asset Sales in connection with or pursuant to Specified Licensing Arrangements),

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prepay the aggregate outstanding principal amount of the Loans in an amount equal to the Redemption Price applicable on the date of such Asset Sale in accordance with Section 3.03(a), and (y) in the case of all other Asset Sales (including, without limitation, all Asset Sales in connection with or pursuant to Specified Licensing Arrangements) not permitted by Section 9.09 and not described in the foregoing clause (x), prepay the Loans in an amount equal to the lesser of (a) the outstanding principal amount of the Loans in an amount equal to the Redemption Price applicable on the date of such Asset Sale in accordance with Section 3.03(a) and (b) the entire amount of the Asset Sale Net Proceeds of such Asset Sale, plus any accrued but unpaid interest and any fees which are due and owing, credited in the following order:

(A) first, in reduction of the Borrower’s obligation to pay any unpaid interest and any fees which are due and owing;

(B) second, in reduction of the Borrower’s obligation to pay any Claims or Losses referred to in Section 12.03;

(C) third, in reduction of the Borrower’s obligation to pay any amounts due and owing on account of the unpaid principal amount of the Loans;

(D) fourth, in reduction of any other Obligation; and

(E) fifth, to the Borrower or such other Persons as may lawfully be entitled to or directed by the Borrower to receive the remainder.

(ii) Change of Control. In the event of a Change of Control, the Borrower shall immediately provide notice of such Change of Control to the Lenders and, if within 10 days of receipt of such notice Majority Lenders notify the Borrower in writing that a prepayment is required pursuant to this Section 3.03(b)(ii), the Borrower shall prepay the aggregate outstanding principal amount of the Loans in an amount equal to the Redemption Price applicable on the date of such Change of Control in accordance with Section 3.03(a).

SECTION 4

PAYMENTS, ETC.

4.01 Payments.

(a) Payments Generally. Each payment of principal, interest and other amounts to be made by the Obligors under this Agreement or any other Loan Document shall be made in Dollars, in immediately available funds, without deduction, set off or counterclaim, to an account to be designated by the Majority Lenders by notice to the Borrower, not later than 4:00 p.m. (Central time) on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day).

(b) Application of Payments. Each Obligor shall, at the time of making each payment under this Agreement or any other Loan Document, specify to the Lenders the amounts payable by such Obligor hereunder to which such payment is to be applied (and in the event that Obligors fail to so specify, or if an Event of Default has occurred and is continuing, the Lenders may apply such payment in the manner they determine to be appropriate).

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(c) Non-Business Days. If the due date of any payment under this Agreement (other than of principal of or interest on the Loans) would otherwise fall on a day that is not a Business Day, such date shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.

4.02 Computations. All computations of interest and fees hereunder shall be computed on the basis of a year of 360 days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable.

4.03 Notices. Each notice of optional prepayment shall be effective only if received by the Lenders not later than 4:00 p.m. (Central time) on the date one Business Day prior to the date of prepayment. Each notice of optional prepayment shall specify the amount to be prepaid and the date of prepayment.

4.04 Set-Off.

(a) Set-Off Generally. Upon the occurrence and during the continuance of any Event of Default, the Lenders and each of their Affiliates are hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lenders or such Affiliate to or for the credit or the account of the Borrower against any and all of the Obligations (other than Warrant Obligations), whether or not the Lenders shall have made any demand and although such obligations may be unmatured. The Lenders agree promptly to notify the Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Lenders and their Affiliates under this Section 4.04 are in addition to other rights and remedies (including other rights of set-off) that the Lenders and their Affiliates may have.

(b) Exercise of Rights Not Required. Nothing contained herein shall require the Lenders to exercise any such right or shall affect the right of the Lenders to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of Borrower.

SECTION 5

YIELD PROTECTION, ETC.

5.01 Additional Costs.

(a) Change in Requirements of Law Generally. If, on or after the date hereof, the adoption of any Requirement of Law, or any change in any Requirement of Law, or any change in the interpretation or administration thereof by any court or other Governmental Authority charged with the interpretation or administration thereof, or compliance by any of the Lenders (or its lending office) with any request or directive (whether or not having the force of law) of

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any such Governmental Authority, shall impose, modify or deem applicable any reserve (including any such requirement imposed by the Board of Governors of the Federal Reserve System), special deposit, contribution, insurance assessment or similar requirement, in each case that becomes effective after the date hereof, against assets of, deposits with or for the account of, or credit extended by, a Lender (or its lending office) or shall impose on a Lender (or its lending office) any other condition affecting the Loans or the Commitment, and the result of any of the foregoing is to increase the cost to such Lender of making or maintaining the Loans, or to reduce the amount of any sum received or receivable by such Lender under this Agreement or any other Loan Document, by an amount deemed by such Lender to be material (other than (i) Indemnified Taxes and (ii) Taxes described in clause (c) or (d) of the definition of “Excluded Taxes”), then the Borrower shall pay to such Lender on demand such additional amount or amounts as will compensate such Lender for such increased cost or reduction.

(b) Change in Capital Requirements. If a Lender shall have determined that, on or after the date hereof, the adoption of any Requirement of Law regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, in each case that becomes effective after the date hereof, has or would have the effect of reducing the rate of return on capital of a Lender (or its parent) as a consequence of a Lender’s obligations hereunder or the Loans to a level below that which a Lender (or its parent) could have achieved but for such adoption, change, request or directive by an amount reasonably deemed by it to be material, then the Borrower shall pay to such Lender on demand such additional amount or amounts as will compensate such Lender (or its parent) for such reduction.

(c) Notification by Lender. The Lenders will promptly notify the Borrower of any event of which it has knowledge, occurring after the date hereof, which will entitle a Lender to compensation pursuant to this Section 5.01. Before giving any such notice pursuant to this Section 5.01(c) such Lender shall designate a different lending office if such designation (x) will, in the reasonable judgment of such Lender, avoid the need for, or reduce the amount of, such compensation and (y) will not, in the reasonable judgment of such Lender, be materially disadvantageous to such Lender. A certificate of the Lender claiming compensation under this Section 5.01, setting forth the additional amount or amounts to be paid to it hereunder, shall be conclusive and binding on the Borrower in the absence of manifest error.

(d) Notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to constitute a change in Requirements of Law for all purposes of this Section 5, regardless of the date enacted, adopted or issued.

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5.02 Reserved.

5.03 Illegality. Notwithstanding any other provision of this Agreement, in the event that on or after the date hereof the adoption of or any change in any Requirement of Law or in the interpretation or application thereof by any competent Governmental Authority shall make it unlawful for a Lender or its lending office to make or maintain the Loans (and, in the opinion of such Lender, the designation of a different lending office would either not avoid such unlawfulness or would be disadvantageous to such Lender), then such Lender shall promptly notify the Borrower thereof following which (a) the Lender’s Commitment shall be suspended until such time as such Lender may again make and maintain the Loans hereunder and (b) if such Requirement of Law shall so mandate, the Loans shall be prepaid by the Borrower on or before such date as shall be mandated by such Requirement of Law in an amount equal to the Redemption Price applicable on the date of such prepayment in accordance with Section 3.03(a).

5.04 Reserved.

5.05 Taxes.

(a) Payments Free of Taxes. Any and all payments by or on account of any Obligation shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Obligor shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 5) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(b) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of each Lender, timely reimburse it for, Other Taxes.

(c) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 5, the Borrower shall deliver to each Lender the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment.

(d) Indemnification. The Borrower shall reimburse and indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 5) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender shall be conclusive absent manifest error.

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(e) Status of Lenders.

(i) Any Lender that is entitled to an exemption from, or reduction of withholding Tax with respect to payments made under any Loan Document shall timely deliver to the Borrower such properly completed and executed documentation reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate of withholding; provided that, other than in the case of U.S. Federal withholding Taxes, such Lender has received written notice from the Borrower advising it of the availability of such exemption or reduction and containing all applicable documentation. In addition, any Lender shall deliver such other documentation prescribed by applicable law as reasonably requested by the Borrower as will enable the Borrower to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 5.05(e)(ii)(A), (B) or (D)) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing, in the event that Borrower is a U.S. Person:

(A) any Lender that is a U.S. Person shall deliver to the Borrower on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower), executed originals of IRS Form W-9 (or successor form) certifying that such Lender is exempt from U.S. Federal backup withholding tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower), whichever of the following is applicable:

(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN (or successor form) establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN (or successor form) establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(2) executed originals of IRS Form W-8ECI (or successor form);

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(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit D to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN (or successor form); or

(4) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY (or successor form), accompanied by IRS Form W-8ECI (or successor form), IRS Form W-8BEN (or successor form), a U.S. Tax Compliance Certificate, IRS Form W-9 (or successor form), and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. Federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made; and

(D) any Foreign Lender shall deliver to the Borrower any forms and information necessary to establish that the Foreign Lender is not subject to withholding tax under FATCA.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower in writing of its legal inability to do so.

(f) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 5 (including by the payment of additional amounts pursuant to this Section 5), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 5 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 5.05(f), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 5.05(f) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification

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payments or additional amounts giving rise to such refund had never been paid. This Section 5.05(f) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(g) Mitigation Obligations. If the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or to any Governmental Authority for the account of any Lender pursuant to Section 5.01 or this Section 5.05, then such Lender shall (at the request of the Borrower) use commercially reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign and delegate its rights and obligations hereunder to another of its offices, branches or Affiliates if, in the sole reasonable judgment of such Lender, such designation or assignment and delegation would (i) eliminate or reduce amounts payable pursuant to Section 5.01 or this Section 5.05, as the case may be, in the future, (ii) not subject such Lender to any unreimbursed cost or expense and (iii) not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment and delegation.

SECTION 6

CONDITIONS PRECEDENT

6.01 Conditions to Initial Borrowing. The obligation of each Lender to make a Loan as part of the first Borrowing hereunder shall not become effective until the following conditions precedent shall have been satisfied or waived in writing by the Majority Lenders:

(a) Borrowing Date. Such Borrowing shall be made not later than August 22, 2013.

(b) Amount of Initial Borrowing. The amount of such Borrowing shall equal $50,000,000 (prior to the application of the financing fee under Section 2.03).

(c) No Other Secured Debt. On the date of the initial Borrowing, no Obligor shall have any secured Indebtedness outstanding or available to be drawn, other than under this Agreement and under any Permitted Indebtedness that is secured by Permitted Liens.

(d) No Law Restraining Transactions. No applicable law or regulation shall restrain, prevent or, in the reasonable judgment of the Lenders, impose materially adverse conditions upon the Transactions.

(e) Payment of Fees. Lenders shall be satisfied with the arrangements to deduct the fees set forth herein from the proceeds advanced.

(f) Updated Lien Searches. Lenders shall be reasonably satisfied with updated Lien searches provided by the Borrower or its counsel to the Lenders within two Business Days prior to the date of the first Borrowing.

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(g) Documentary Deliveries. The Lenders shall have received the following documents, each of which shall be in form and substance reasonably satisfactory to the Lenders:

(i) Agreement. This Agreement duly executed and delivered by the Borrower and each of the other parties hereto.

(ii) Security Documents.

(A) The Security Agreement, duly executed and delivered by each of the Obligors;

(B) Each of the Short-Form IP Security Agreements, duly executed and delivered by the applicable Obligor;

(C) UCC-1 financing statements against each Obligor in its jurisdiction of formation or incorporation, as the case may be, shall have been filed;

(D) Each of the Short-Form IP Security Agreements in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, shall have been filed;

(E) duly executed control agreements in favor of the Lenders for all Deposit Accounts, Securities Accounts and Commodity Accounts owned by the Obligors in the United States as of the date hereof, in each case, other than Excluded Accounts; and

(F) Without limitation, all other documents and instruments reasonably required to perfect the Lenders’ Lien on, and security interest in, the Collateral (including any capital stock certificates and undated stock powers executed in blank) shall have been duly executed and delivered and be in proper form for filing, and shall create in favor of the Lenders, a perfected Lien on, and security interest in, the Collateral, subject to no Liens other than Permitted Liens.

(iii) Subordination Agreement. Each holder of Permitted Shareholder Debt shall have executed and delivered to the Lenders a subordination agreement, in substantially the form attached hereto as Exhibit H, satisfactory to the Lenders.

(iv) Warrants. The Warrants related to the first Borrowing for such number of shares of common stock of Borrower as indicated on Schedule 1 hereto, duly executed and delivered by the Borrower on the date that is the earlier of (A) June 20, 2013, and (B) the date of the first Borrowing; for the avoidance of doubt, Borrower shall deliver such Warrants to the Lenders regardless of whether the first Borrowing occurs.

(v) Notes. Any Notes requested in accordance with Section 2.04.

(vi) Approvals. Certified copies of all material licenses, consents, authorizations and approvals of, and notices to and filings and registrations with, any Governmental Authority (including all foreign exchange approvals), and of all third-party consents and approvals, necessary in connection with the making and performance by the Obligors of the Loan Documents and the Transactions.

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(vii) Corporate Documents. Certified copies of the constitutive documents of each Obligor (if publicly available in such Obligor’s jurisdiction of formation) and of resolutions of the Board of Directors (or shareholders, if applicable) of each Obligor authorizing the making and performance by it of the Loan Documents to which it is a party.

(viii) Incumbency Certificate. A certificate of each Obligor as to the authority, incumbency and specimen signatures of the persons who have executed the Loan Documents and any other documents in connection herewith on behalf of the Obligors.

(ix) Officer’s Certificate. A certificate, dated the date of such Borrowing and signed by the President, a Vice President or a financial officer of Borrower, confirming compliance with the conditions set forth in Section 6.03.

(x) Opinions of Counsel. (A) A favorable opinion, dated the date of such Borrowing, of counsel to each Obligor in substantially the form attached hereto as Exhibit F, reasonably satisfactory to the Lenders and their counsel and (B) to the extent not covered by the opinion described in clause (A) above, a favorable opinion on perfection of any Deposit Accounts, Securities Accounts, and Commodity Accounts subject to the control agreements described in Section 6.01(g)(ii)(E) , reasonably satisfactory to the Lenders and their counsel.

(xi) Insurance. Certificates of insurance evidencing the existence of all insurance required to be maintained by the Borrower pursuant to Section 8.05 and the designation of the Lenders as the loss payees or additional named insured, as the case may be, thereunder.

(xii) SBA Forms. Completed SBA Forms 480, 652, and 1031 (Parts A and B).

(xiii) Stock Certificate and Stock Power. All original stock certificates of stock evidencing the Borrower’s ownership interest in Valeritas Security, accompanied by stock powers undated and endorsed in blank, as well as original stock certificates of Valeritas Security’s class B common stock issued to the Lenders.

(xiv) Valeritas Security Side Letter. The Valeritas Security Side Letter, duly executed and delivered by the Borrower and Valeritas Security and each of the other parties thereto.

(h) Valeritas Security Organizational Documents. Lenders shall have received an amended and restated certificate of incorporation of Valeritas Security to provide that until the Commitments have expired or been terminated and all Obligations (other than the Warrant Obligations) have been paid in full in cash (a) Valeritas Security may only engage in any activity or purpose prohibited by Section 1 of the Valeritas Security Side Letter with the consent of the Lenders and (b) the Lenders shall have received shares of voting capital stock in Valeritas Security such that the holders of such shares shall have a consent right to any amendments to the amended and restated certificate of incorporation of Valeritas Security that has the effect of allowing Valeritas Security to engage in any activity or purpose prohibited by Section 1 of the Valeritas Security Side Letter.

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(i) Notice of Borrowing. Capital Royalty Partners II L.P. shall have received a Notice of Borrowing at least twelve (12) Business Days prior to the first Borrowing Date.

6.02 Conditions to Subsequent Borrowings. The obligation of each Lender to make a Loan as part of a Borrowing subsequent to the first Borrowing (other than any Borrowing of PIK Loans) is subject to the following conditions precedent:

(a) Borrowing Date. Such Borrowing shall be made (i) in the case of the second Borrowing, not later than June 27, 2014 and (ii) in the case of the third Borrowing, not later than December 29, 2014.

(b) Amount of Subsequent Borrowing. The amount of the second and third Borrowing shall not exceed $25,000,000 in each case.

(c) Milestones. In the case of (i) the second Borrowing, (A) the Borrower shall have received trailing Revenue from the sale of the Product of at least $6 million over the course of three consecutive months, and (B) the condition described in the foregoing clause (A) shall have been satisfied not later than March 31, 2014, and (ii) the third Borrowing, (A) the Borrower shall have received trailing Revenue from the sale of the Product of at least $15 million over the course of three consecutive months and (B) the condition described in the foregoing clause (A) shall have been satisfied not later than September 30, 2014.

(d) Notice of Borrowing. Capital Royalty Partners II L.P. shall have received a Notice of Borrowing (i) in the case of the second Borrowing, no later than (A) ninety (90) calendar days following the first date on which the conditions set forth in Section 6.02(c)(i) are satisfied, and (B) twenty (20) Business Days prior to the second Borrowing Date, and (ii) in the case of the third Borrowing, no later than (A) ninety (90) calendar days following the first date on which the conditions set forth in Section 6.02(c)(ii) are satisfied, and (B) twenty (20) Business Days prior to the third Borrowing Date.

(e) Three Borrowings. After giving effect to such Borrowing, no more than three Borrowings shall have been made; provided that, for purposes of this Section 6.02(c), “Borrowing” shall not be deemed to include any borrowing of PIK Loans.

(f) Warrants. The Warrants related to such subsequent Borrowing for such number of shares of common stock of Borrower as indicated on Schedule 1 hereto, duly executed and delivered by the Borrower on the date of such subsequent Borrowing.

6.03 Conditions to Each Borrowing. The obligation of each Lender to make a Loan as part of any Borrowing (other than with respect to a Borrowing of PIK Loans) hereunder is also subject to satisfaction of the following further conditions precedent on the applicable Borrowing Date:

(a) Commitment Period. Such Borrowing Date shall occur during the Commitment Period.

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(b) No Default; Representations and Warranties. Both immediately prior to the making of such Loan and after giving effect thereto and to the intended use thereof:

(i) no Default shall have occurred and be continuing; and

(ii) the representations and warranties made by the Borrower in Section 7 shall be true on and as of the Borrowing Date and immediately after giving effect to the application of the proceeds of the Borrowing with the same force and effect as if made on and as of such date, except that (i) the representation regarding representations and warranties that refer to a specific earlier date shall be true on such earlier date and (ii) with respect to each Borrowing made following the initial Borrowing Date, such representation regarding representations and warranties shall only be required to be true in all material respects on and as of the applicable Borrowing Date (except to the extent that such representation or warranty contains any materiality or Material Adverse Effect qualifier).

(c) Financing Fee. Except in the case of any PIK Loan, each Lender shall have received its portion of the fees payable pursuant to Section 2.03.

Each Borrowing shall constitute a certification by the Borrower to the effect that the conditions set forth in this Section 6.03 have been fulfilled as of the applicable Borrowing Date.

SECTION 7

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lenders that:

7.01 Power and Authority. Each of the Borrower and its Subsidiaries (a) is a duly organized and validly existing under the laws of its jurisdiction of organization, (b) has all requisite corporate or other power, and has all material governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted except to the extent that failure to have the same would not reasonably be expected to have a Material Adverse Effect, (c) is qualified to do business and is in good standing in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify could (either individually or in the aggregate) have a Material Adverse Effect, and (d) has full power, authority and legal right to make and perform each of the Loan Documents to which it is a party and, in the case of the Borrower, to borrow the Loans hereunder.

7.02 Authorization; Enforceability. The Transactions are within each Obligor’s corporate powers and have been duly authorized by all necessary corporate and, if required, by all necessary shareholder action. This Agreement has been duly executed and delivered by each Obligor and constitutes, and each of the other Loan Documents to which it is a party when executed and delivered by such Obligor will constitute, a legal, valid and binding obligation of such Obligor, enforceable against each Obligor in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

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7.03 Governmental and Other Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any third party, except for (i) such as have been obtained or made and are in full force and effect and (ii) filings and recordings in respect of the Liens created pursuant to the Security Documents, (b) will not violate any applicable law or regulation or the charter, bylaws or other organizational documents of Borrower and its Subsidiaries or any order of any Governmental Authority, other than any such violations that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, (c) will not, in any material respect, violate or result in a default under any indenture, material agreement or other material instrument binding upon Borrower and its Subsidiaries or assets, or give rise to a right thereunder to require any material payment to be made by any such Person, and (d) except for the Liens created pursuant to the Security Documents, will not result in the creation or imposition of any Lien on any asset of Borrower and its Subsidiaries.

7.04 Financial Statements; Material Adverse Change.

(a) Financial Statements. The Borrower has heretofore furnished to the Lenders certain financial statements as provided for in Section 8.01. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and its Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the statements previously-delivered statements of the type described in Section 8.01(b). Neither the Borrower nor any of its Subsidiaries has any material contingent liabilities or unusual forward or long-term commitments not disclosed in the aforementioned financial statements that are required to be disclosed therein under GAAP.

(b) No Material Adverse Change. Since December 31, 2012, there has been no Material Adverse Change.

7.05 Properties.

(a) Property Generally. Each Obligor has good and marketable fee simple title to, or valid leasehold interests in, all its real and personal property material to its business, subject only to Permitted Liens and except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.

(b) Intellectual Property. The Obligors represent and warrant to the Lenders as of the date hereof as follows, and the Obligors acknowledge that the Lenders are relying on such representations and warranties in entering into this Agreement:

(i) Schedule 7.05(b) contains:

(A) a complete and accurate list of all applied for or registered Patents, including the jurisdiction and patent number;

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(B) a complete and accurate list of all applied for or registered Trademarks, including the jurisdiction, trademark application or registration number and the application or registration date; and

(C) a complete and accurate list of all applied for or registered Copyrights;

(ii) Each Obligor is the absolute beneficial owner of all right, title and interest in and to Material Intellectual Property listed on Schedule 7.05(c) as owned by such Obligor with good and marketable title, free and clear of any Liens of any kind whatsoever other than Permitted Liens. Without limiting the foregoing, and except as set forth in Schedule 7.05(b):

(A) other than with respect to the Material Agreements, or as permitted by Section 9.09 below, the Obligors have not transferred ownership of Material Intellectual Property listed on Schedule 7.05(c) as owned by such Obligors, in whole or in part, to any other Person who is not an Obligor;

(B) other than (i) the Material Agreements, (ii) customary restrictions in in-bound licenses of Intellectual Property and non-disclosure agreements, or (iii) as would have been or is permitted by Section 9.09 below, there are no judgments, covenants not to sue, permits, grants, licenses, Liens (other than Permitted Liens), or other agreements or arrangements relating to Borrower’s Material Intellectual Property, including any development, submission, services, research, license or support agreements, which bind, obligate or otherwise restrict the Obligors in any manner that would reasonably be expected to have a Material Adverse Effect;

(C) the use of any of the Obligor Intellectual Property in the business of the Borrower as currently conducted or as currently contemplated to be conducted, to the Borrower’s Knowledge, does not breach, violate, infringe or interfere with or constitute a misappropriation of any valid rights arising under any Intellectual Property of any other Person;

(D) except as listed on Schedule 7.05(b), there are no pending or, to Borrower’s Knowledge, threatened in writing Claims against the Obligors asserted by any other Person relating to the Obligor Intellectual Property owned by or exclusively licensed to Obligors, including any Claims of adverse ownership, invalidity, infringement, misappropriation, violation or other opposition to or conflict with such Intellectual Property, except as would not reasonably be expected to have a Material Adverse Effect; the Obligors have not received any written notice from any Person that the Borrower’s business, the use of the Obligor Intellectual Property in the business of the Borrower as currently conducted, or the manufacture, use or sale of any product or the performance of any service by the Borrower infringes upon, violates or constitutes a misappropriation of, or may infringe upon, violate or constitute a misappropriation of, or otherwise interfere with, any other Intellectual Property of any other Person;

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(E) except as listed on Schedule 7.05(b), the Obligors have no Knowledge that the Obligor Intellectual Property owned by or exclusively licensed to Obligors is being infringed, violated, misappropriated or otherwise used by any other Person without the express authorization of the Obligors. Without limiting the foregoing, the Obligors have not put any other Person on notice of actual or potential infringement, violation or misappropriation of any of the Material Intellectual Property owned by or exclusively licensed to Obligors; the Obligors have not initiated the enforcement of any Claim with respect to any of the Obligor Intellectual Property owned by or exclusively licensed to Obligors;

(F) all relevant current and former employees and contractors of Borrower have executed written confidentiality and invention assignment Contracts with Borrower that irrevocably assign to Borrower or its designee all of their rights to any Inventions relating to Borrower’s business that are conceived or reduced to practice by such employees within the scope of their employment or by such contractors within the scope of their contractual relationship with Borrower, to the extent permitted by applicable law;

(G) to the Knowledge of the Obligors, the Obligor Intellectual Property is all the valid Intellectual Property necessary for the operation of the Borrower’s business as it is currently conducted or as currently contemplated to be conducted, except for such Intellectual Property the absence of which would not reasonably be expected to have a Material Adverse Effect;

(H) the Obligors have taken commercially reasonable precautions to protect the secrecy, confidentiality and value of its Material Intellectual Property consisting of trade secrets and confidential information, except as would not reasonably be expected to have a Material Adverse Effect.

(I) each Obligor has delivered to the Lenders accurate and complete copies of all Material Agreements relating to the Obligor Intellectual Property;

(J) there are no pending or, to the Knowledge of any of the Obligors, threatened in writing Claims against the Obligors asserted by any other Person relating to the Material Agreements, including any Claims of breach or default under such Material Agreements, except as would not reasonably be expected to have a Material Adverse Effect;

(iii) With respect to the Material Intellectual Property owned by or for which prosecution is controlled by Obligors consisting of Patents, except as set forth in Schedule 7.05(b), and without limiting the representations and warranties in Section 7.05(b)(ii):

(A) each of the issued claims in such Patents, to Borrower’s Knowledge, is valid and enforceable;

(B) the inventors claimed in such Patents have executed written Contracts with the Borrower or its predecessor-in-interest that properly and irrevocably assigns to Borrower or predecessor-in-interest all of their rights to any of the Inventions claimed in such Patents to the extent permitted by applicable law;

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(C) none of the Patents, or the Inventions claimed in them, have been dedicated to the public except as a result of intentional decisions made by the applicable Obligor;

(D) to Borrower’s Knowledge, all prior art material to such Patents was disclosed to or considered by the respective patent offices during prosecution of such Patents to the extent required by applicable law or regulation;

(E) subsequent to the issuance of such Patents, neither the Borrower nor any Subsidiary Guarantors or their predecessors in interest, have filed any disclaimer or filed any other voluntary reduction in the scope of the Inventions claimed in such Patents;

(F) no allowable or allowed subject matter of such Patents, to Borrower’s Knowledge, is subject to any competing conception claims of allowable or allowed subject matter of any patent applications or patents of any third party and have not been the subject of any interference, re-examination or opposition proceedings, nor are the Obligors aware of any basis for any such interference, re-examination or opposition proceedings;

(G) no such Patents, to Borrower’s Knowledge, have ever been finally adjudicated to be invalid, unpatentable or unenforceable for any reason in any administrative, arbitration, judicial or other proceeding, and, with the exception of publicly available documents in the applicable Patent Office recorded with respect to any Patents, the Obligors have not received any written notice asserting that such Patents are invalid, unpatentable or unenforceable; if any of such Patents is terminally disclaimed to another patent or patent application, all patents and patent applications subject to such terminal disclaimer are included in the Collateral;

(H) the Obligors have not received an opinion, whether preliminary in nature or qualified in any manner, which concludes that a challenge to the validity or enforceability of any of such Patents is more likely than not to succeed;

(I) the Obligors have no Knowledge that they or any prior owner of such Patents or their respective agents or representatives have engaged in any conduct, or omitted to perform any necessary act, the result of which would invalidate or render unpatentable or unenforceable any such Patents; and

(J) all maintenance fees, annuities, and the like due or payable on the Patents have been timely paid or the failure to so pay was the result of an intentional decision by the applicable Obligor or would not reasonably be expected to result in a Material Adverse Change.

(c) Material Intellectual Property. Schedule 7.05(c) contains an accurate list of the Obligor Intellectual Property that is material to the Borrower’s business with an indication as to whether the applicable Obligor owns or has an exclusive or non-exclusive license to such Obligor Intellectual Property.

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7.06 No Actions or Proceedings.

(a) Litigation. There is no litigation, investigation or proceeding pending or, to the Borrower’s Knowledge, threatened with respect to the Borrower and its Subsidiaries by or before any Governmental Authority or arbitrator (i) that either individually or in the aggregate would reasonably be expected to have a Material Adverse Effect, except as specified in Schedule 7.06 or (ii) that involves this Agreement or the Transactions.

(b) Environmental Matters. The operations and Property of Borrower and its Subsidiaries comply with all applicable Environmental Laws, except to the extent the failure to so comply (either individually or in the aggregate) would not reasonably be expected to have a Material Adverse Effect.

(c) Labor Matters. The Borrower has not engaged in unfair labor practices and there are no material labor actions or disputes, pending or ongoing, involving the employees of the Borrower that would reasonably be expected to have a Material Adverse Effect.

7.07 Compliance with Laws and Agreements. Each of the Obligors is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.

7.08 Taxes. Each of the Obligors has timely filed or caused to be filed all tax returns and reports required to have been filed and has paid or caused to be paid all taxes required to have been paid by it, except taxes that are being contested in good faith by appropriate proceedings and for which such Obligor has set aside on its books adequate reserves with respect thereto in accordance with GAAP and in each case, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

7.09 Full Disclosure. The Borrower has disclosed to the Lenders all Material Agreements to which any Obligor is subject, and all other matters to their Knowledge, that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished by or on behalf of the Obligors to the Lenders in connection with the negotiation of this Agreement and the other Loan Documents or delivered hereunder or thereunder, in each case, taken as a whole (as modified or supplemented by other information so furnished) contains any material misstatement of material fact or, to the Borrower’s Knowledge, omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information and other forward looking information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time, and it being understood that such projected financial information and forward looking information are not to be viewed as facts, that actual results during the period or periods covered thereby may materially differ from the projected results.

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7.10 Regulation.

(a) Investment Company Act. Neither Borrower nor any of its Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

(b) Margin Stock. Neither Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of the Loans will be used to buy or carry any Margin Stock in violation of Regulation T, U or X.

7.11 Solvency. Borrower is and, immediately after giving effect to the Borrowing and the use of proceeds thereof will be, Solvent.

7.12 Subsidiaries. Schedule 7.12 is a complete and correct list of all Subsidiaries of the Borrower as of the date hereof, each such Subsidiary is duly organized and validly existing under the jurisdiction of its organization shown in said Schedule 7.12, and the percentage ownership by Borrower of each such Subsidiary is as shown in said Schedule 7.12.

7.13 Indebtedness and Liens. Schedule 7.13(a) is a complete and correct list of all Material Indebtedness of each Obligor outstanding as of the date hereof. Schedule 7.13(b) is a complete and correct list of all Liens granted by the Borrower and other Obligors to secure the payment or performance of Material Indebtedness with respect to their respective Property and outstanding as of the date hereof.

7.14 Material Agreements. Schedule 7.14 is a complete and correct list of (i) each Material Agreement existing on the date hereof and (ii) each agreement creating or evidencing any Material Indebtedness. No Obligor is in material default under any such Material Agreement or agreement creating or evidencing any Material Indebtedness. Except as otherwise disclosed on Schedule 7.14, all material vendor purchase agreements and provider contracts of the Obligors are in full force and effect without material modification from the form in which the same were disclosed to the Lenders.

7.15 Restrictive Agreements. None of the Obligors is subject to any indenture, agreement, instrument or other arrangement of the type described in Section 9.11, except for any indenture, agreement, instrument or other arrangement described on Schedule 7.15 or otherwise permitted under Section 9.11 (each, a “Permitted Restrictive Agreement”).

7.16 Real Property.

(a) Generally. Neither Borrower nor any of its Subsidiaries owns or leases (as tenant thereof) any real property, except as described on Schedule 7.16.

(b) Borrower Lease.

(i) Borrower has delivered a true, accurate and complete copy of the Borrower Lease to Lenders.

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(ii) The Borrower Lease is in full force and effect and no default has occurred under the Borrower Lease that would reasonably be expected to have a Material Adverse Effect and, to the Knowledge of Borrower, there is no existing condition which, but for the passage of time or the giving of notice, would reasonably be expected to result in a default under the terms of the Borrower Lease that would reasonably be expected to have a Material Adverse Effect.

(iii) Borrower is the tenant under the Borrower Lease and has not transferred, sold, assigned, conveyed, disposed of, mortgaged, pledged, hypothecated, or encumbered any of its interest in, the Borrower Lease except for Permitted Liens.

7.17 Pension Matters. Schedule 7.17 sets forth, as of the date hereof, a complete and correct list of, and that separately identifies, (a) all Title IV Plans, (b) all Multiemployer Plans and (c) all material Benefit Plans. Each Benefit Plan, and each trust thereunder, intended to qualify for tax exempt status under Section 401 or 501 of the Code or other Requirements of Law so qualifies. Except for those that could not, in the aggregate, have a Material Adverse Effect, (x) each Benefit Plan is in compliance with applicable provisions of ERISA, the Code and other Requirements of Law and (y) there are no existing or pending (or to the Knowledge of any Obligor or Subsidiary thereof, threatened) claims (other than routine claims for benefits in the normal course), sanctions, actions, lawsuits or other proceedings or investigation involving any Benefit Plan to which any Obligor or Subsidiary thereof incurs or otherwise has or could have an obligation or any liability or Claim. Borrower and each of its ERISA Affiliates has met all applicable requirements under the ERISA Funding Rules with respect to each Title IV Plan, and no waiver of the minimum funding standards under the ERISA Funding Rules has been applied for or obtained. As of the most recent valuation date for any Title IV Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is at least 60%, and to the Borrower’s Knowledge, no facts or circumstances exist that could reasonably be expected to cause the funding target attainment percentage to fall below 60%. As of the date hereof, no ERISA Event has occurred in connection with which obligations and liabilities (contingent or otherwise) remain outstanding. No ERISA Affiliate would have any Withdrawal Liability as a result of a complete withdrawal from any Multiemployer Plan on the date this representation is made.

7.18 Collateral; Security Interest. Each Security Document is effective to create in favor of the Lenders a legal, valid and enforceable security interest in the Collateral subject thereto and each such security interest will be perfected to the extent required by (and has the priority required by) the applicable Security Document subject to the taking of the actions described in such Security Documents. The Security Documents collectively are effective to create in favor of the Lenders a legal, valid and enforceable security interest in all of the Borrower’s and the Subsidiary Guarantors’ assets, which security interests are first-priority except for Permitted Senior Liens.

7.19 Regulatory Approvals. Except as listed on Schedule 7.19, Borrower and its Subsidiaries hold, and will continue to hold, either directly or through licensees and agents, all material Regulatory Approvals, licenses, permits and similar governmental authorizations of a Governmental Authority necessary or required for Borrower and its Subsidiaries to conduct their operations and business in the manner currently conducted.

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7.20 Small Business Concern. The Borrower’s primary business activity does not involve, directly or indirectly, making loans to others, the purchase or discounting of debt obligations, factoring or long term leasing of equipment with no provision for maintenance or repair, and the Borrower is not classified under Major Group 65 (Real Estate) or Industry No. 1531 (Operative Builders) of the SIC Manual. Borrower acknowledges that it has been advised that PIOP is a Small Business Investment Company and licensee under the SBIC Act. The information regarding Borrower and its affiliates set forth in the SBA Form 480, Form 652, and Form 1031 is accurate and complete. The Borrower acknowledges that the Lenders are relying on the representations and warranties made by the Borrower to the SBA in the SBA Form 480 provided to the Lenders.

7.21 Update of Schedules. Schedules 7.05(b) (in respect of the lists of Patents, Copyrights and Trademarks under Section 7.05(b)(i) only), 7.05(c), 7.06, 7.12, 7.13(a) and (b), 7.14, 7.16, 7.17 and 7.19 may be updated by Borrower prior to each Borrowing Date to insure the continued accuracy of such Schedule as of such Borrowing Date, by Borrower providing to the Lenders, in writing (including via electronic means), a revised version of such Schedule in accordance with the provisions of Section 12.02. Each such updated Schedule shall be effective immediately upon the receipt thereof by the Lenders. Lenders and Borrower agree to update Schedule 1 prior to the second Borrowing and the third Borrowing to adjust the number of Warrants (in accordance with the definition thereof) to be issued at such Borrowing, which calculation shall take into account the Common Stock Outstanding as determined at such time.

SECTION 8

AFFIRMATIVE COVENANTS

Each Obligor covenants and agrees with the Lenders that, until the Commitments have expired or been terminated and all Obligations (other than the Warrant Obligations) have been paid in full indefeasibly in cash:

8.01 Financial Statements and Other Information. The Borrower will furnish to the Lenders:

(a) as soon as available and in any event within 45 days after the end of the first three fiscal quarters of each fiscal year (or 60 days, in the case of the fourth fiscal quarter), the consolidated balance sheets of the Obligors as of the end of such quarter, and the related consolidated statements of income, shareholders’ equity and cash flows of Borrower and its Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, prepared in accordance with GAAP consistently applied, all in reasonable detail, together with a certificate of a Responsible Officer of Borrower stating that such financial statements fairly present the financial condition of Borrower and its Subsidiaries as at such date and the results of operations of Borrower and its Subsidiaries for the period ended on such date and have been prepared in accordance with GAAP consistently applied, subject to changes resulting from normal, year-end audit adjustments and except for the absence of notes;

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(b) as soon as available and in any event within 120 days after the end of each fiscal year, the consolidated balance sheets of Borrower and its Subsidiaries as of the end of such fiscal year, and the related consolidated statements of income, shareholders’ equity and cash flows of Borrower and its Subsidiaries for such fiscal year, prepared in accordance with GAAP consistently applied, all in reasonable detail, accompanied by a report and opinion thereon of KPMG LLP or another firm of independent certified public accountants of recognized national standing acceptable to the Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any qualification or exception as to the scope of such audit;

(c) together with the financial statements required pursuant to Sections 8.01(a) and (b), a compliance certificate of a Responsible Officer as of the end of the applicable accounting period (which delivery may be by electronic communication including fax or email and shall be deemed to be an original authentic counterpart thereof for all purposes) in the form of Exhibit E (a “Compliance Certificate”), which Compliance Certificate shall include details of any issues that are material that are raised by auditors and evidence reasonably satisfactory to the Majority Lenders of compliance with Section 10;

(d) (i) promptly upon receipt thereof copies of all letters of representation signed by an Obligor to its auditors and (ii) copies of all auditor reports delivered for each fiscal year delivered no more frequently than annually;

(e) as soon as available but in any event within 45 days following the end of each fiscal year, a consolidated financial forecast for Borrower and its Subsidiaries for the following five fiscal years, including forecasted consolidated balance sheets, consolidated statements of income, shareholders’ equity and cash flows of Borrower and its Subsidiaries;

(f) promptly after the same are released, copies of all press releases;

(g) promptly, and in any event within five Business Days after receipt thereof by an Obligor thereof, copies of each notice or other correspondence received from any securities regulator or exchange to the authority of which Borrower may become subject from time to time concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of such Obligor except where such investigation, possible investigation or inquiry would not reasonably be expected to have a Material Adverse Effect; and

(h) the information regarding insurance maintained by Borrower and its Subsidiaries as required under Section 8.05.

8.02 Notices of Material Events. The Borrower will furnish to the Lenders written notice of the following promptly after a Responsible Officer first learns of the existence of:

(a) the occurrence of any Default;

(b) notice of the occurrence of any event with respect to its property or assets resulting in a Loss aggregating $500,000 (or the Equivalent Amount in other currencies) or more;

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(c) except where a Material Adverse Effect would not reasonably be expected to result in connection therewith, (A) any proposed acquisition of stock, assets or property by any Obligor that would reasonably be expected to result in environmental liability under Environmental Laws, and (B)(1) spillage, leakage, discharge, disposal, leaching, migration or release of any Hazardous Material required to be reported to any Governmental Authority under applicable Environmental Laws, and (2) all actions, suits, claims, notices of violation, hearings, investigations or proceedings pending, or to the best of Borrower’s Knowledge, threatened against or affecting Borrower or any of its Subsidiaries or with respect to the ownership, use, maintenance and operation of their respective businesses, operations or properties, relating to Environmental Laws or Hazardous Material;

(d) the assertion of any environmental matter by any Person against, or with respect to the activities of, Borrower or any of its Subsidiaries and any alleged violation of or non-compliance with any Environmental Laws or any permits, licenses or authorizations which would reasonably be expected to have a Material Adverse Effect;

(e) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting Borrower or any of its Affiliates that would reasonably be expected to result in a Material Adverse Effect, including, in any event, any filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting Borrower or any of its Affiliates;

(f) except where a Material Adverse Effect would not reasonably be expected to result in connection therewith, (i) on or prior to any filing by any ERISA Affiliate of any notice of intent to terminate any Title IV Plan, a copy of such notice and (ii) promptly, and in any event within ten days, after any Responsible Officer of any ERISA Affiliate knows or has reason to know that a request for a minimum funding waiver under Section 412 of the Code has been filed with respect to any Title IV Plan or Multiemployer Plan, a notice (which may be made by telephone if promptly confirmed in writing) describing such waiver request and any action that any ERISA Affiliate proposes to take with respect thereto, together with a copy of any notice filed with the PBGC or the IRS pertaining thereto;

(g) (i) the termination of any Material Agreement; (ii) the receipt by Borrower or any of its Subsidiaries of any material notice under any Material Agreement; (iii) the entering into of any new Material Agreement by an Obligor; or (iv) any material amendment to a Material Agreement;

(h) the reports and notices as required by the Security Documents;

(i) within 30 days of the date thereof, or, if earlier, on the date of delivery of any financial statements pursuant to Section 8.01, notice of any material change in accounting policies or financial reporting practices by the Obligors;

(j) promptly after the occurrence thereof, notice of any labor controversy resulting in or threatening to result in any strike, work stoppage, boycott, shutdown or other material labor disruption against or involving an Obligor;

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(k) a licensing agreement or arrangement entered into by Borrower or any Subsidiary in connection with any infringement or alleged infringement of the Intellectual Property of another Person;

(l) any other development that results in, or would reasonably be expected to result in, a Material Adverse Effect;

(m) concurrently with the delivery of financial statements under Section 8.01(b), the creation or other acquisition of any Intellectual Property by Borrower or any Subsidiary after the date hereof and during such prior fiscal year which is registered or becomes registered or the subject of an application for registration with the U.S. Copyright Office or the U.S. Patent and Trademark Office, as applicable; or

(n) such other information respecting the operations, properties, business or condition (financial or otherwise) of the Obligors (including with respect to the Collateral) as the Majority Lenders may from time to time reasonably request.

Each notice delivered under this Section 8.02 shall be accompanied by a statement of a financial officer or other executive officer of Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

8.03 Existence; Conduct of Business. Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and except where failure would not reasonably be expected to have a Material Adverse Effect, the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, amalgamation, consolidation, liquidation or dissolution permitted under Section 9.03 or Section 9.09. Without obtaining the prior written approval of PIOP, Borrower will not change within one (1) year after the first Borrowing Date, Borrower’s business activity to a business activity to which a licensee under the SBIC Act is prohibited from providing funds by the SBIC Act, as more specifically set forth under Part 107.720 of Title 13 of the United States Code of Federal Regulations. If Borrower’s business activity changes to such a prohibited business activity or the proceeds are used for ineligible business activities, Borrower will use all commercially reasonable efforts and cooperate in good faith to assist PIOP to sell or transfer its Proportionate Share of the Loans in a commercially reasonable manner; provided that in no way shall this be considered PIOP’s sole remedy if Borrower’s business activity changes to such a prohibited business activity.

8.04 Payment of Obligations. Borrower will, and will cause each of its Subsidiaries to, pay its material obligations, as and when due and payable after giving effect to any grace periods applicable thereto, but subject to any subordination provisions contained in any instrument or agreement evidencing such obligations, including (i) all material taxes, fees, assessments and governmental charges or levies imposed upon it or upon its properties or assets prior to the date on which penalties attach thereto, all lawful claims for labor, materials and supplies which, if unpaid, would by law become a Lien upon any properties or assets of Borrower or any Subsidiary not constituting a Permitted Lien, except to the extent such material taxes, fees, assessments or governmental charges or levies, or such claims are being contested in good faith

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by appropriate proceedings and are adequately reserved against in accordance with GAAP and (ii) all lawful claims which, if unpaid, would by law become a Lien upon its property not constituting a Permitted Lien. Borrower will, and will cause each of its Subsidiaries discharge all Indebtedness other than Permitted Indebtedness.

8.05 Insurance. Borrower will, and will cause each of its Subsidiaries to maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations. Upon the request of the Majority Lenders, Borrower shall furnish the Lenders from time to time with full information as to the insurance carried by it and, if so requested, copies of all such insurance policies. Borrower also shall furnish to the Lenders from time to time upon the request of the Majority Lenders a certificate from the Borrower’s insurance broker or other insurance specialist stating that all premiums then due on the policies relating to insurance on the Collateral have been paid, that such policies are in full force and effect and that such insurance coverage and such policies comply with all the requirements of this Section 8.05. The Borrower shall use commercially reasonable efforts to ensure, or cause others to ensure, that all insurance policies required under this Section 8.05 shall provide that they shall not be terminated or cancelled nor shall any such policy be materially changed in a manner adverse to the Borrower without at least 30 days’ prior written notice to the Borrower and the Lenders. Receipt of notice of termination or cancellation of any such insurance policies or reduction of coverages or amounts thereunder shall entitle the Lenders to renew any such policies, cause the coverages and amounts thereof to be maintained at levels required pursuant to the first sentence of this Section 8.05 or otherwise to obtain similar insurance in place of such policies, in each case at the expense of the Borrower.

8.06 Books and Records; Inspection Rights. Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. Borrower will, and will cause each of its Subsidiaries to, permit any representatives designated by the Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times (but not more often than once a year unless an Event of Default has occurred and is continuing); provided that such representative shall use its commercially reasonable efforts to minimize disruptions to the business and affairs of the Borrower as a result of any such visit, inspection, examination or discussion.

8.07 Compliance with Laws and Other Obligations. Borrower will, and will cause each of its Subsidiaries to, (i) comply in all material respects with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property (including Environmental Laws) and (ii) comply in all material respects with all terms of Indebtedness and all other Material Agreements, except, in each case, where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

8.08 Maintenance of Properties, Etc.

(a) Except where the failure to do so would not reasonably be expected to have a Material Adverse Effect, Borrower shall, and shall cause each of its Subsidiaries to, maintain and preserve all of its properties necessary or useful in the proper conduct of its business in good working order and condition in accordance with the general practice of other Persons of similar character and size, ordinary wear and tear and damage from casualty or condemnation excepted.

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(b) Without limiting the generality of clause (a) above, Borrower shall comply with each of the following covenants with respect to the Borrower Lease:

(i) Borrower shall diligently perform and timely observe all of the terms, covenants and conditions of the Borrower Lease on the part of Borrower to be performed and observed prior to the expiration of any applicable grace period therein provided and do everything necessary to preserve and to keep unimpaired and in full force and effect the Borrower Lease except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

(ii) Borrower shall promptly notify Lenders of the giving of any written notice by Borrower Landlord to Borrower of any default by Borrower thereunder that would allow the Borrower Landlord to terminate the Borrower Lease, and promptly deliver to Lenders a true copy of each such notice. If Borrower shall be in default under the Borrower Lease that would allow the Borrower Landlord to terminate the Borrower Lease, to the extent the Borrower fails to do so within thirty (30) days, following written notice to the Borrower, Lenders shall have the right (but not the obligation) to cause the default or defaults under the Borrower Lease to be remedied and otherwise exercise any and all rights of Borrower under the Borrower Lease, as may be necessary to prevent or cure any default and Lenders shall have the right to enter all or any portion of the Property, at such times and in such manner as Lenders reasonably deem necessary, to prevent or to cure any such default. Without limiting the foregoing, to the extent Lenders desire to cure such default or defaults as provided above, Borrower shall promptly execute, acknowledge and deliver to Lenders such instruments as may reasonably be required of Borrower to permit Lenders to cure any default under the Borrower Lease or permit Lenders to take such other action required to enable Lenders to cure or remedy the matter in default and preserve the security interest of Lenders under the Loan Documents with respect to the Borrower Facility.

(iii) Borrower shall use commercially reasonable efforts to enforce, in a commercially reasonable manner, each covenant or obligation of the Borrower Landlord in the Borrower Lease in accordance with its terms. Subject to the terms and requirements of the Borrower Lease, within sixty (60) days after receipt of written request by Lenders, Borrower shall use commercially reasonable efforts to obtain from the Borrower Landlord under the Borrower Lease and furnish to Lenders an estoppel certificate from Borrower Landlord stating the date through which rent has been paid and whether or not, to Borrower Landlord’s knowledge, there are any defaults thereunder and specifying the nature of such claimed defaults, if any, and such other matters as Lenders may reasonably request or in the form required pursuant to the terms of the Borrower Lease. Borrower shall furnish to Lenders all information that Lenders may reasonably request from time to time in the possession of Borrower (or reasonably available to Borrower) concerning the Borrower Lease and Borrower’s compliance with the Borrower Lease.

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(iv) Borrower, promptly upon obtaining Knowledge that Borrower Landlord has failed to perform the material terms and provisions under the Borrower Lease and immediately upon learning of a rejection or disaffirmance or purported rejection or disaffirmance of the Borrower Lease pursuant to any state or federal bankruptcy law, shall notify Lenders thereof. Borrower shall promptly notify Lenders of any request to which it has Knowledge that any party to the Borrower Lease makes for arbitration or other dispute resolution procedure pursuant to the Borrower Lease and of the institution of any such arbitration or dispute resolution. Borrower hereby authorizes Lenders to attend any such arbitration or dispute, and upon the occurrence and during the continuance of an Event of Default participate in any such arbitration or dispute resolution but such participation shall not be to the exclusion of Borrower; provided, however, that, in any case, Borrower shall consult with Lenders with respect to the matters related thereto. Borrower shall promptly deliver to Lenders a copy of the determination of each such arbitration or dispute resolution mechanism.

(v) Borrower shall promptly, after obtaining Knowledge of such filing notify Lenders orally of any filing by or against Borrower Landlord under the Borrower Lease of a petition under the Bankruptcy Code or other applicable law. Borrower shall thereafter promptly give written notice of such filing to Lenders, setting forth any information available to Borrower as to the date of such filing, the court in which such petition was filed, and the relief sought in such filing. Borrower shall promptly deliver to Lenders any and all notices, summonses, pleadings, applications and other documents received by Borrower in connection with any such petition and any proceedings relating to such petition.

8.09 Licenses. Borrower shall, and shall cause each of its Subsidiaries to, obtain and maintain all licenses, authorizations, consents, filings, exemptions, registrations and other Governmental Approvals necessary in connection with the execution, delivery and performance of the Loan Documents, the consummation of the Transactions or the operation and conduct of its business and ownership of its properties, except where failure to do so would not reasonably be expected to have a Material Adverse Effect.

8.10 Action under Environmental Laws. Except where failure to do so would not reasonably be expected to have a Material Adverse Effect, Borrower shall, and shall cause each of its Subsidiaries to, upon becoming aware of the presence of any Hazardous Materials or the existence of any environmental liability under applicable Environmental Laws with respect to their respective businesses, operations or properties, take all actions, at their cost and expense, as shall be necessary or advisable to investigate and clean up the condition of their respective businesses, operations or properties, including all required removal, containment and remedial actions, and restore their respective businesses, operations or properties to a condition in compliance with applicable Environmental Laws.

8.11 Use of Proceeds. The proceeds of the Loans will be used only as provided in Section 2.05. No part of the proceeds of the Loans will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board of Governors of the Federal Reserve System, including Regulations T, U and X.

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8.12 Certain Obligations Respecting Subsidiaries; Further Assurances.

(a) Subsidiary Guarantors. Subject to the relevant limitations and terms contained in the Security Documents, Borrower will take such action, and will cause each of its Subsidiaries to take such action, from time to time as shall be necessary to ensure that all Subsidiaries that are Domestic Subsidiaries of Borrower, and such Foreign Subsidiaries as are required under Section 8.12(b), are “Subsidiary Guarantors” hereunder. Without limiting the generality of the foregoing but subject to the relevant limitations and terms contained in the Security Documents, in the event that Borrower or any of its Subsidiaries shall form or acquire any new Subsidiary that is a Domestic Subsidiary or a Foreign Subsidiary meeting the requirements of Section 8.12(b), Borrower and its Subsidiaries will:

(i) cause such new Subsidiary to become a “Subsidiary Guarantor” hereunder, and a “Grantor” under the Security Agreement, pursuant to a Guarantee Assumption Agreement;

(ii) take such action or cause such Subsidiary to take such action (including delivering such shares of stock together with undated transfer powers executed in blank) as shall be necessary to create and perfect valid and enforceable first priority (subject to Permitted Liens permitted under Section 9.02(c)) Liens on substantially all of the personal property of such new Subsidiary as collateral security for the obligations of such new Subsidiary hereunder;

(iii) cause the parent of such Subsidiary to execute and deliver a pledge agreement in favor of the Lenders in respect of all outstanding issued shares of such Subsidiary; and

(iv) deliver such proof of corporate action, incumbency of officers and other documents (other than legal opinions of counsel to the Obligors) as is consistent with those delivered by each Obligor pursuant to Section 6.01 or as the Majority Lenders shall have requested.

(b) Foreign Subsidiaries. Subject to the following sentence, in the event that, at any time, Foreign Subsidiaries have, in the aggregate, (i) total revenues constituting 5% or more of the total revenues of Borrower and its Subsidiaries on a consolidated basis, or (ii) total assets constituting 5% or more of the total assets of Borrower and its Subsidiaries on a consolidated basis, promptly (and, in any event, within 30 days after such time) the Borrower shall cause one or more of such Foreign Subsidiaries to become Subsidiary Guarantors and to have their Equity Interests pledged, each in the manner set forth in Section 8.12(a), such that, after such Subsidiaries become Subsidiary Guarantors, the non-guarantor Foreign Subsidiaries in the aggregate shall cease to have revenues or assets, as applicable, that meet the thresholds set forth in clauses (i) and (ii) above. Notwithstanding the foregoing, no Foreign Subsidiary shall be required to become a Subsidiary Guarantor, grant a lien on any of its assets in favor of the Lenders, or shall have its Equity Interests pledged to secure the Obligations, to the extent that becoming a Subsidiary Guarantor, granting a lien on any of its assets in favor of the Lenders or providing such pledge would result in adverse tax consequences for Borrower and its Subsidiaries, taken as a whole; provided that, if a Foreign Subsidiary is precluded from becoming a Subsidiary Guarantor or having all of its Equity Interests pledged as a result of such adverse tax consequences, to the extent that such Foreign Subsidiary is a “first tier” Foreign Subsidiary, Borrower shall pledge (or cause to be pledged) 65% of the total number of the Equity Interests of such Foreign Subsidiary to the Lenders to secure the Obligations.

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(c) Further Assurances. Borrower will, and will cause each of its Subsidiaries (other than Valeritas Security unless it is a Subsidiary Guarantor) to, take such action from time to time as shall reasonably be requested by the Majority Lenders to effectuate the purposes and objectives of this Agreement.

Without limiting the generality of the foregoing, the Borrower will, and will cause each Person that is required to be a Subsidiary Guarantor to, take such action from time to time (including executing and delivering such assignments, security agreements, control agreements and other instruments) as shall be reasonably requested by the Majority Lenders to create, in favor of the Lenders, perfected security interests and Liens in substantially all of the personal property of such Obligor as collateral security for the Obligations; provided that any such security interest or Lien shall be subject to the relevant limitations and terms contained in the Security Documents, Section 7.18 and Section 8.15.

Notwithstanding anything to the contrary contained in any Loan Document, unless an Event of Default shall have occurred and the Majority Lenders shall have elected to exercise such remedies described in clause (iii) of Section 11.02, Valeritas Security shall not be required to become a Subsidiary Guarantor or grant a lien on any of its assets in favor of the Lenders to the extent that becoming a Subsidiary Guarantor or granting a lien on any of its assets in favor of the Lenders would result in adverse tax consequences for Valeritas Security, including as a result of Valeritas Security’s failure to qualify as a Massachusetts security corporation under Mass. Gen. L. c. 63, §38B.

8.13 Termination of Non-Permitted Liens. In the event that Borrower or any of its Subsidiaries shall become aware or be notified by the Lenders of the existence of any outstanding Lien against any Property of Borrower or any of its Subsidiaries, which Lien is not a Permitted Lien, the Borrower shall use its best efforts to promptly terminate or cause the termination of such Lien.

8.14 Intellectual Property.

(a) Notwithstanding any provision in this Agreement or any other Loan Document to the contrary, the Lenders are not assuming any liability or obligation of the Borrower, the Subsidiary Guarantors or their Subsidiaries of whatever nature, whether presently in existence or arising or asserted hereafter, except to the extent required under applicable law in connection with any Intellectual Property license agreement of the Borrower, the Subsidiary Guarantors or their Subsidiaries in the event that the Lenders foreclose on such Collateral. All such liabilities and obligations shall be retained by and remain obligations and liabilities of the Obligors, the Subsidiary Guarantors and/or their Affiliates as the case may be, except to the extent required under applicable law in connection with any Intellectual Property license agreement of the Borrower, the Subsidiary Guarantors or their Affiliates in the event that the Lenders foreclose on such Collateral. Without limiting the foregoing, the Lenders are not assuming and shall not be responsible for any liabilities or Claims of the Borrower, the Subsidiary Guarantors or their

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Affiliates, whether present or future, absolute or contingent and whether or not relating to the Obligors, the Obligor Intellectual Property, and/or the Material Agreements, and the Borrower shall indemnify and save harmless the Lenders from and against all such liabilities, Claims and Liens, except to the extent required under applicable law in connection with any Intellectual Property license agreement of the Borrower, the Subsidiary Guarantors or their Affiliates in the event that the Lenders foreclose on such Collateral. Without limiting the foregoing, this Agreement shall not constitute an agreement to assign any Contracts of, or Obligor Intellectual Property to, the Lenders, except to the extent required under applicable law in connection with any Intellectual Property license agreement of the Borrower, the Subsidiary Guarantors or their Affiliates in the event that the Lenders foreclose on such Collateral.

(b) In the event that the Obligors acquire Obligor Intellectual Property during the term of this Agreement, then the provisions of this Agreement shall automatically apply thereto and any such Obligor Intellectual Property shall automatically constitute part of the Collateral hereunder, without further action by any party, in each case from and after the date of such acquisition (except that any representations or warranties of any Obligor shall apply to any such Obligor Intellectual Property only from and after the date, if any, subsequent to such acquisition that such representations and warranties are brought down or made anew as provided herein).

(c) Borrower shall use commercially reasonable efforts to execute and deliver to the Lenders such duly executed Intellectual Property security agreements, following the Majority Lenders’ request therefor, with respect to foreign Intellectual Property, and take such other action as the Lenders may reasonably request to duly record or otherwise perfect the security interest created thereunder in that portion of the Collateral consisting of Intellectual Property located outside the United States.

8.15 Post-Closing Items.

(a) Borrower shall, with respect to the location leased by the Borrower pursuant to the Borrower Lease, use commercially reasonable efforts to deliver to the Lenders the Landlord Consent from the Borrower Landlord for such property, in form and substance reasonably satisfactory to the Lenders. Borrower shall not keep any Collateral with a fair market value in excess of $1,000,000 in the aggregate in any location (other than the location subject to the Borrower Lease) not subject to a Real Property Security Document.

8.16 Real Property Security Documents. Borrower shall promptly from time to time upon the request of the Majority Lenders, use commercially reasonable efforts to, subject to the receipt of any necessary landlord consents, execute and deliver such Real Property Security Documents with respect to each real Property owned or leased (as tenant) by Borrower and Subsidiary Guarantors in the United States.

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SECTION 9

NEGATIVE COVENANTS

Each Obligor covenants and agrees with the Lenders that, until the Commitments have expired or been terminated and all Obligations (other than the Warrant Obligations) have been paid in full indefeasibly in cash:

9.01 Indebtedness. Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, whether directly or indirectly, except:

(a) the Obligations;

(b) Indebtedness existing on the date hereof and set forth on Schedule 7.13(a) and Permitted Refinancings thereof;

(c) Permitted Priority Debt;

(d) accounts payable to trade creditors for goods and services and current operating liabilities (not the result of the borrowing of money) incurred in the ordinary course of Borrower’s or its Subsidiary’s business in accordance with customary terms and paid within the specified time, unless contested in good faith by appropriate proceedings and reserved for in accordance with GAAP;

(e) Indebtedness consisting of guarantees resulting from endorsement of negotiable instruments for collection by Borrower or any Subsidiary Guarantor in the ordinary course of business;

(f) Indebtedness (i) of Borrower to any Subsidiary Guarantor, (ii) of any Subsidiary Guarantor to Borrower or any other Subsidiary Guarantor, and (iii) of any Subsidiary that is not an Obligor to any other Subsidiary that is not an Obligor;

(g) Guarantees by Borrower of Indebtedness of any Subsidiary Guarantor and by any Subsidiary Guarantor of Indebtedness of Borrower or any other Subsidiary Guarantor, in each case, to the extent such Indebtedness is permitted by this Section 9.01;

(h) normal course of business equipment financing; provided that (i) if secured, the collateral therefor consists solely of the assets being financed, the products and proceeds thereof and books and records related thereto, and (ii) the aggregate outstanding principal amount of such Indebtedness, when added to the aggregate principal amount of the outstanding Indebtedness permitted in reliance on Section 9.01(g), does not exceed $1,000,000 (or the Equivalent Amount in other currencies) at any time;

(i) Permitted Subordinated Debt;

(j) Permitted Shareholder Debt in an aggregate outstanding principal amount not to exceed $37,500,000 (plus interest paid-in-kind thereon) at any time;

(k) outstanding letters of credit, performance bonds, bank guarantees and banker’s acceptances in an aggregate outstanding amount (i) not to exceed $5,000,000 at any time on or prior to the date on which the Borrower achieves trailing Revenue from the sale of the Product of at least $6 million over the course of three consecutive months, and (ii) not to exceed $10,000,000 at any time after such date described in clause (i);

(l) Indebtedness approved in advance in writing by the Majority Lenders;

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(m) other Indebtedness in an aggregate outstanding amount not to exceed $500,000 at any time;

(n) Investments permitted by Section 9.05; and

(o) any and all premiums, interest, fees, expenses, charges and additional or contingent interest on obligations described in the foregoing clauses in this Section 9.01.

9.02 Liens. Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on any property or asset now owned by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

(a) Liens securing the Obligations;

(b) any Lien on any property or asset of Borrower or any of its Subsidiaries existing on the date hereof and set forth in Schedule 7.13(b); provided that (i) the scope of the collateral to which such Lien applies shall not be expanded and (ii) any such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

(c) Liens described in the definition of “Permitted Priority Debt”;

(d) Liens securing Indebtedness permitted under Section 9.01(b);

(e) Liens securing Indebtedness permitted under Section 9.01(h); provided that such Liens are restricted solely to the collateral described in Section 9.01(h);

(f) Liens imposed by law which were incurred in the ordinary course of business, including (but not limited to) carriers’, shippers’, landlords’, warehousemen’s, materialmen’s, and mechanics’ liens and other similar liens arising in the ordinary course of business and which (x) do not in the aggregate materially detract from the value of the Property subject thereto or materially impair the use thereof in the operations of the business of such Person or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the Property subject to such liens and for which adequate reserves have been made if required in accordance with GAAP;

(g) pledges or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance or other similar social security legislation;

(h) deposits to secure the performance of bids, trade contracts, governmental contracts and leases, surety, stay, customs, bid and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(i) Liens securing taxes, assessments and other governmental charges, the payment of which is not yet due or is being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made;

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(j) servitudes, easements, rights of way, restrictions and other similar encumbrances on real Property imposed by applicable Laws and encumbrances consisting of zoning or building restrictions, easements, licenses, restrictions on the use of property or minor imperfections in title thereto which, in the aggregate, are not material, and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of any of the Obligors;

(k) with respect to any real Property, (A) such defects or encroachments as might be revealed by an up-to-date survey of such real Property; (B) the reservations, limitations, provisos and conditions expressed in the original grant, deed or patent of such property by the original owner of such real Property pursuant to applicable Laws; and (C) rights of expropriation, access or user or any similar right conferred or reserved by or in applicable Laws, which, in the aggregate for (A), (B) and (C), are not material, and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of any of the Obligors;

(l) Bankers’ liens, rights of setoff and similar Liens incurred on deposits made in the ordinary course of business;

(m) with respect to Patents, Trademarks, Copyrights or other Intellectual Property, licenses and sublicenses permitted by Section 9.09;

(n) earnest money deposits in connection with Permitted Acquisitions permitted by Section 9.03;

(o) Liens arising from precautionary UCC financing statement filings regarding leases and consignment arrangements entered into in the ordinary course of business;

(p) (i) that certain certificate of deposit in an aggregate amount not to exceed $50,000 plus all interest accruing thereon maintained with Bank of America, N.A. (and any successor certificate of deposit or account) to secure the Borrower’s obligations to customs authorities and (ii) that certificate of deposit in an aggregate amount not to exceed $500,000 plus all interest accruing thereon maintained with American Express TRS (and any successor certificate of deposit or account) to secure obligations in connection with the corporate charge card program maintained with American Express; and

(q) Cash deposits in segregated Deposit Accounts to secure Indebtedness permitted by Section 9.01(k) in an aggregate amount not to exceed 105% of the aggregate outstanding amount of such Indebtedness, provided that, subject to Section 3.02(d) of the Security Agreement, no creditor other than the issuing bank of such Indebtedness shall have a Lien on such segregated Deposit Accounts.

provided that, no Lien otherwise permitted under any of the foregoing Sections 9.02(b) through (p) (other than clauses (i) and (m)) shall apply to any Material Intellectual Property.

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9.03 Fundamental Changes and Acquisitions. Borrower will not, and will not permit any of its Subsidiaries to, (i) enter into any transaction of merger, amalgamation or consolidation (ii) liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution) (iii) make any Acquisition or otherwise acquire any business or substantially all the property from, or capital stock of, or be a party to any acquisition of, any Person. Notwithstanding the foregoing provisions of this Section 9.03:

(a) Borrower and its Subsidiaries may make Investments permitted under Section 9.05;

(b) any Subsidiary Guarantor may be merged, amalgamated or consolidated with or into Borrower or any other Subsidiary Guarantor;

(c) (i) Borrower or any Subsidiary Guarantor may sell, lease, transfer or otherwise dispose of any or all of its property (upon voluntary liquidation or otherwise) to Borrower or another Subsidiary Guarantor and (ii) any Subsidiary that is not an Obligor may sell, lease, transfer or otherwise dispose of any or all of its property (upon voluntary liquidation or otherwise) to another Subsidiary that is not an Obligor; and

(d) the capital stock of any Subsidiary Guarantor may be sold, transferred or otherwise disposed of to Borrower or another Subsidiary Guarantor; and

(e) Borrower and its Subsidiaries may make Permitted Acquisitions, not to exceed $5,000,000 in the aggregate.

9.04 Lines of Business. Borrower will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business other than the business engaged in on the date hereof by Borrower or any Subsidiary or a business reasonably related thereto.

9.05 Investments. Borrower will not, and will not permit any of its Subsidiaries to, make, directly or indirectly, or permit to remain outstanding any Investments except:

(a) Investments outstanding on the date hereof and identified in Schedule 9.05;

(b) operating deposit accounts with banks;

(c) extensions of credit in the nature of accounts receivable or notes receivable arising from the sales of goods or services in the ordinary course of business;

(d) Permitted Cash Equivalent Investments;

(e) Investments by Borrower and the Subsidiary Guarantors in Borrower’s wholly-owned Subsidiary Guarantors (for greater certainty, Borrower shall not be permitted to have any direct or indirect Subsidiaries that are not wholly-owned Subsidiaries);

(f) Bona fide Hedging Agreements and hedging arrangements entered into in the ordinary course of Borrower’s financial planning solely to hedge currency risks (and not for speculative purposes);

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(g) security deposits with utilities and other like Persons made in the ordinary course of business;

(h) employee loans, travel advances and guarantees in accordance with Borrower’s usual and customary practices with respect thereto (if permitted by applicable law) which in the aggregate shall not exceed $1,000,000 outstanding at any time (or the Equivalent Amount in other currencies);

(i) Investments received in connection with any Insolvency Proceedings in respect of any customers, suppliers or clients and in settlement of delinquent obligations of, and other disputes with, customers, suppliers or clients;

(j) Permitted Indebtedness;

(k) Investments permitted pursuant to Section 9.03; and

(l) Investments by Borrower in Valeritas Security, unless an Event of Default shall have occurred and be continuing.

9.06 Restricted Payments. Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except:

(a) any Obligor may declare and pay dividends or other distributions with respect to its Equity Interests payable solely in Equity Interests that are not Disqualified Securities;

(b) Borrower may purchase, redeem, retire, or otherwise acquire shares of its capital stock or other Equity Interests with the proceeds received from a substantially concurrent issue of new shares of its capital stock or other Equity Interests;

(c) for the payment of dividends by any Subsidiary to Borrower or to any Subsidiary Guarantor;

(d) the Borrower may make Restricted Payments to purchase, redeem or otherwise acquire Equity Interests of Borrower held by officers, directors and employees or former officers, directors or employees (or their transferees, estates or beneficiaries under their estates) of Borrower so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, during any fiscal year, in an amount, when combined with repurchases of Equity Interests permitted under Section 9.06(e), not to exceed $1,000,000;

(e) repurchases of Equity Interests deemed to occur upon “cashless” exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants plus any amount necessary to pay taxes due and payable in connection therewith, during any fiscal year, in an amount, when combined with purchases, redemptions or acquisitions of Equity Interests permitted under Section 9.06(d), not to exceed $1,000,000;

(f) transactions which are stock for stock exchanges and other like non-cash transactions which constitute merger consideration in connection with mergers permitted under Section 9.03; and

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(g) to the extent constituting a Restricted Payment, the payment of management, advisory, consulting or similar fees to WCAS Management Corporation and its Affiliates, during any fiscal year, in an amount not to exceed $500,000.

9.07 Payments of Indebtedness. Borrower will not, and will not permit any of its Subsidiaries to, make any payments in respect of any Indebtedness other than (i) the Obligations and (ii) subject to any applicable terms of subordination, other Permitted Indebtedness; provided that Borrower will not, and will not permit any of its Subsidiaries to acquire, repurchase, buy out, retire or prepay in whole or in part any of its outstanding Permitted Subordinated Debt.

9.08 Change in Fiscal Year. The Borrower will not, and will not permit any of its Subsidiaries to, change the last day of its fiscal year from that in effect on the date hereof, except to change the fiscal year of a Subsidiary acquired in connection with an Acquisition to conform its fiscal year to the Borrower’s.

9.09 Sales of Assets, Issuances of Equity, Etc. Unless the Borrower simultaneously makes the prepayment required under Section 3.03(b)(i), the Borrower will not, and will not permit any of its Subsidiaries to, sell, lease, exclusively license (in terms of geography or field of use), transfer, or otherwise dispose of any of its Property (including accounts receivable and capital stock of Subsidiaries) to any Person in one transaction or series of transactions, or issue any additional Equity Interests to Persons who are not holders of Equity Interests in such Person on the date hereof (any thereof, an “Asset Sale”), except for any of the following:

(a) transfers of cash in the ordinary course of its business for equivalent value;

(b) sales of inventory in the ordinary course of its business on ordinary business terms;

(c) development and other collaborative arrangements where such arrangements provide for the licenses or disclosure of Patents, Trademarks, Copyrights or other Intellectual Property rights in the ordinary course of business and consistent with general market practices where such license requires periodic payments based on per unit sales of a product over a period of time and provided that such licenses must be true licenses as opposed to licenses that are sales transactions in substance;

(d) transfers of Property by (i) any Obligor to any other Obligor and (ii) any Subsidiary that is not an Obligor to any other Subsidiary that is not an Obligor;

(e) dispositions of any Property that is damaged, obsolete or worn out or no longer used or useful in the Business;

(f) issuances of Equity Interests in Borrower;

(g) those transactions permitted by Section 9.03 and 9.06 and Asset Sales consisting of leases and licenses permitted by Section 9.02;

(h) the unwinding of any Hedging Agreement permitted by Section 9.05 pursuant to its terms;

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(i) other Asset Sales with a fair market value not in excess of $500,000 in the aggregate; and

(j) Investments by Borrower in Valeritas Security, unless an Event of Default shall have occurred and be continuing.

Lenders acknowledge and agree that the carveout in Section 9.09(e) permits Borrower to make decisions in the ordinary course of business regarding the registration of any of its Intellectual Property, including without limitation, any decisions regarding application, prosecution, abandonment, or cancellation of any such Intellectual Property, without the consent of any Lender.

9.10 Transactions with Affiliates. Borrower will not, and will not permit any of its Subsidiaries to, sell, lease, license or otherwise transfer any assets to, or purchase, lease, license or otherwise acquire any assets from, or otherwise engage in any other transactions with, any of its Affiliates (other than Valeritas Security), except for any of the following:

(a) transactions between or among Obligors;

(b) any Investment permitted by Section 9.05;

(c) any Restricted Payment permitted by Section 9.06;

(d) any Asset Sale permitted by Section 9.09;

(e) customary compensation and indemnification of, and other employment arrangements with, directors, officers and employees of Borrower or any Subsidiary in the ordinary course of business;

(f) Borrower may issue debt to Affiliates in exchange for cash, provided that the terms thereof are no less favorable (including the amount of cash received by Borrower) to Borrower than those that would be obtained in a comparable arm’s-length transaction with a Person not an Affiliate of Borrower;

(g) issuances of Equity Interests in Borrower; and

(h) operating leases permitted under Section 9.13(b)(ii).

9.11 Restrictive Agreements. Except for Permitted Restrictive Agreements and the agreements governing Permitted Priority Debt, Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to Borrower or any other Subsidiary or to Guarantee Indebtedness of Borrower or any other Subsidiary; provided that:

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(i) the foregoing shall not apply to (x) restrictions and conditions imposed by law or by this Agreement and (y) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder; and

(ii) the foregoing clause (a) shall not apply to (x) restrictions or conditions imposed by any agreement relating to secured Permitted Indebtedness if such restrictions or conditions apply only to the property or assets securing such Indebtedness and (y) customary provisions in leases, in-bound licenses of Intellectual Property and other contracts restricting the assignment thereof.

9.12 Amendments to Material Agreements. Borrower will not, and will not permit any of its Subsidiaries to, enter into any amendment to or modification of any Material Agreement or terminate any Material Agreement (unless replaced with another agreement that, viewed as a whole, is on better terms for Borrower or such Subsidiary or unless such amendment or modification would not be materially adverse to the Lenders) without in each case the prior written consent of the Lender (which consent shall not be unreasonably withheld or delayed).

9.13 Preservation of Borrower Lease; Operating Leases.

(a) Notwithstanding any provision of this Agreement to the contrary, Borrower shall not:

(i) Surrender, terminate, forfeit, or suffer or permit the surrender, termination or forfeiture of, or change, modify or amend, the Borrower Lease, nor transfer, sell, assign, convey, dispose of, mortgage, pledge, hypothecate, assign or encumber any of its interest in, the Borrower Lease;

(ii) Consent to, cause, agree to, or permit to occur any subordination, or consent to the subordination of, the Borrower Lease to any mortgage, deed of trust or other lien encumbering (or that may in the future encumber) the interest of Borrower Landlord in the Borrower Facility;

(iii) Waive, excuse, condone or in any way release or discharge Borrower Landlord of or from its material obligations, covenants and/or conditions under the Borrower Lease; or

(iv) Elect to treat the Borrower Lease as terminated or rejected under subsection 365 of the Bankruptcy Code or other applicable Law. Any such election made without Majority Lenders’ prior written consent shall be void. If, pursuant to subsection 365 of the Bankruptcy Code or other applicable law, Borrower seeks to offset, against the rent reserved in the Borrower Lease, the amount of any damages caused by the nonperformance by Borrower Landlord of any of its obligations thereunder after the rejection by Borrower Landlord of the Borrower Lease under the Bankruptcy Code or other applicable Law, then Borrower shall not effect any offset of any amounts objected to by Lenders.

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(b) Borrower will not, and will not permit any of its Subsidiaries to, make any expenditures in respect of operating leases, except for:

(i) real estate operating leases;

(ii) operating leases between any Obligor and any of its wholly-owned Subsidiaries or between any of the Obligor’s wholly-owned Subsidiaries;

(iii) to the extent constituting operating leases, leases in respect of computer and information technology equipment that are now or may hereafter used by the Obligors and their sales representatives in the ordinary course of business; provided that the aggregate payments made by Borrower and its Subsidiaries in connection with such leases shall not exceed $2,000,000 (or the Equivalent Amount in other currencies) in any fiscal year and the value of the leased equipment shall not exceed an average of $10,000 per sales representatives using such equipment on an aggregated basis; and

(iv) operating leases that would not cause Borrower and its Subsidiaries, on a consolidated basis, to make payments exceeding $2,000,000 (or the Equivalent Amount in other currencies) in any fiscal year.

9.14 Sales and Leasebacks. Except as disclosed on Schedule 9.14, Borrower will not, and will not permit any of its Subsidiaries to, become liable, directly or indirectly, with respect to any lease, whether an operating lease or a Capital Lease Obligation, of any property (whether real, personal, or mixed), whether now owned or hereafter acquired, (i) which Borrower or such Subsidiary has sold or transferred or is to sell or transfer to any other Person and (ii) which Borrower or such Subsidiary intends to use for substantially the same purposes as property which has been or is to be sold or transferred.

9.15 Hazardous Material. Borrower will not, and will not permit any of its Subsidiaries to, use, generate, manufacture, install, treat, release, store or dispose of any Hazardous Material, except in compliance with all applicable Environmental Laws or where the failure to comply would not reasonably be expected to result in a Material Adverse Change.

9.16 Accounting Changes. Borrower will not, and will not permit any of its Subsidiaries to, make any significant change in accounting treatment or reporting practices, except as required or permitted by GAAP.

9.17 Compliance with ERISA. No ERISA Affiliate shall cause or suffer to exist (a) any event that could result in the imposition of a Lien with respect to any Title IV Plan or Multiemployer Plan or (b) any other ERISA Event that would, in the aggregate, have a Material Adverse Effect. No Obligor or Subsidiary thereof shall cause or suffer to exist any event that could result in the imposition of a Lien with respect to any Benefit Plan.

9.18 Investment Company Act. Borrower will, and will cause each of its Subsidiaries, not to engage in any activities that will result in Borrower or such Subsidiary becoming an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

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SECTION 10

FINANCIAL COVENANTS

10.01 Minimum Revenue. (a) Borrower and its Subsidiaries shall have Revenue:

(i) during the twelve month period beginning on January 1, 2013, of at least $5,000,000;

(ii) during the twelve month period beginning on January 1, 2014, of at least $25,000,000;

(iii) during the twelve month period beginning on January 1, 2015, of at least $50,000,000;

(iv) during the twelve month period beginning on January 1, 2016, of at least $75,000,000;

(v) during the twelve month period beginning on January 1, 2017, of at least $100,000,000;

(vi) during the twelve month period beginning on January 1, 2018, and each twelve month period following thereafter, of at least $125,000,000.

It is acknowledged and agreed that the financial covenant described in clause (a) above shall only be tested on the last day of each applicable period referenced in clauses(a)(i) through (a)(vi) above.

(b) Cure Right. (i) Notwithstanding anything to the contrary contained in Section 11, in the event that the Borrower fails to comply with the covenants contained in Section 10.01(a)(i) or 10.01(a)(ii) (such covenants for such applicable periods being the “Specified Financial Covenants”), Borrower shall have the right, within one hundred and twenty (120) days after the end of each of the 2013 and 2014 calendar years:

(A) to issue additional shares of Equity Interests in exchange for cash (the “Equity Cure Right”), or

(B) to borrow Permitted Subordinated Debt (the “Subordinated Debt Cure Right” and, collectively with the Equity Cure Right, the “Cure Right”),

and the cash therefrom immediately shall be contributed as equity or debt (only as permitted pursuant to Section 9.01), as applicable, to Borrower, and upon the receipt by Borrower of the Cure Amount pursuant to the exercise of such Cure Right, such Cure Amount shall be deemed to constitute Revenue of Borrower for purposes of the Specified Financial Covenants and the Specified Financial Covenants shall be recalculated for all purposes under the Loan Documents. If, after giving effect to the foregoing recalculation, Borrower shall then be in compliance with the requirements of the Specified Financial Covenants, Borrower shall be deemed to have satisfied the requirements of the Specified Financial Covenants as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach of the Specified Financial Covenants that had occurred, the related Default and Event of Default, shall be deemed cured without any further action of Borrower or Lenders for all purposes under the Loan Documents.

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(ii) Notwithstanding anything herein to the contrary, (A) the Cure Right may be exercised only for the periods described in Section 10.01(a)(i) or 10.01(a)(ii), (B) the net cash proceeds of the payment received by Borrower from investors investing in or lending to Borrower pursuant to Section 10.01(b)(i) shall be equal to twice the shortfall amount required to cause the Borrower to be in compliance with the Specified Financial Covenants (such amount so received by Borrower, “Cure Amount”), (C) Borrower shall deliver a compliance certificate, evidencing compliance with the Specified Financial Covenants after giving effect to receipt of the Cure Amount and (D) upon receipt by Borrower of the Cure Amount, Borrower shall immediately prepay the Loans, without any Prepayment Premium, in an amount equal to the Cure Amount, credited in the order set forth on Section 3.03(b)(i)(A)-(E).

10.02 Minimum Cash.

Borrower and Subsidiaries shall maintain, at all times, a minimum daily balance of cash and Permitted Cash Equivalent Investments of at least the greater of (A) $2,000,000 (Two Million Dollars) and (B) to the extent Borrower has incurred Permitted Priority Debt, the minimum cash balance required of Borrower by Borrower’s Permitted Priority Debt creditors.

SECTION 11

EVENTS OF DEFAULT

11.01 Events of Default. Each of the following events shall constitute an “Event of Default”:

(a) Borrower shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

(b) any Obligor shall fail to pay any Obligation (other than an amount referred to in Section 11.01(a)) when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three (3) Business Days;

(c) any representation or warranty made or deemed made by or on behalf of Borrower or any of its Subsidiaries in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, shall: (i) prove to have been incorrect when made or deemed made to the extent that such representation or warranty contains any materiality or Material Adverse Effect qualifier; or (ii) prove to have been incorrect in any material respect when made or deemed made to the extent that such representation or warranty does not otherwise contain any materiality or Material Adverse Effect qualifier;

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(d) any Obligor shall fail to observe or perform any covenant, condition or agreement contained in Section 8.02, 8.03 (with respect to the Borrower’s existence), 8.11, 8.12 (other than clause (c) therein), 8.14, 9 or 10 or the Borrower or Valeritas Security shall fail to observe or perform any covenant, condition or agreement contained in the Valeritas Security Side Letter;

(e) any Obligor shall fail to observe or perform any covenant, condition or agreement contained in this Agreement or any other Loan Document (other than those specified in Section 11.01(a), (b) or (d)) and such failure shall continue unremedied for a period of 30 or more days after written notice thereof from the Lenders is received by a Responsible Officer of Borrower;

(f) Borrower or any of its Subsidiaries shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable after giving effect to any applicable grace or cure period as originally provided by the terms of such Indebtedness;

(g) (i) any material breach of, or “event of default” or similar event caused by any Obligor under, any Material Agreement occurs unless (x) such Obligor has an objectively reasonable defense or claim under such Material Agreement or under applicable law, (y) a bona fide good faith dispute exists between such Obligor and such counterparty with respect to such material breach or “event of default” or (z) if such Material Agreement is a distribution agreement, ninety (90) days have elapsed and such Obligor has not replaced such distribution agreement with another substantially comparable distribution agreement, (ii) any material breach of, or “event of default” or similar event under, the documentation governing any Material Indebtedness shall occur, or (iii) any other event or condition occurs (A) that results in any Material Indebtedness becoming due prior to its scheduled maturity or (B) that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of such Material Indebtedness or any trustee or agent on its or their behalf to cause such Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this Section 11.01(g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Material Indebtedness.

(h) any Obligor:

(i) becomes insolvent, or generally does not or becomes unable to pay its debts or meet its liabilities as the same become due, or admits in writing its inability to pay its debts generally, or declares any general moratorium on its indebtedness, or proposes a compromise or arrangement or deed of company arrangement between it and any class of its creditors;

(ii) commits an act of bankruptcy or makes an assignment of its property for the general benefit of its creditors or makes a proposal (or files a notice of its intention to do so);

(iii) institutes any proceeding seeking to adjudicate it an insolvent, or seeking liquidation, dissolution, winding-up, reorganization, compromise, arrangement, adjustment, protection, moratorium, relief, stay of proceedings of creditors generally (or any class of creditors), or composition of it or its debts or any other relief, under any federal, provincial or

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foreign Law now or hereafter in effect relating to bankruptcy, winding-up, insolvency, reorganization, receivership, plans of arrangement or relief or protection of debtors or at common law or in equity, or files an answer admitting the material allegations of a petition filed against it in any such proceeding;

(iv) applies for the appointment of, or the taking of possession by, a receiver, interim receiver, receiver/manager, sequestrator, conservator, custodian, administrator, trustee, liquidator, voluntary administrator, receiver and manager or other similar official for it or any substantial part of its property; or

(v) takes any action, corporate or otherwise, to approve, effect, consent to or authorize any of the actions described in this Section 11.01(h) or in Section 11.01(i), or otherwise acts in furtherance thereof or fails to act in a timely and appropriate manner in defense thereof;

(i) any petition is filed, application made or other proceeding instituted against or in respect of Borrower or any Subsidiary:

(i) seeking to adjudicate it an insolvent;

(ii) seeking a receiving order against it;

(iii) seeking liquidation, dissolution, winding-up, reorganization, compromise, arrangement, adjustment, protection, moratorium, relief, stay of proceedings of creditors generally (or any class of creditors), deed of company arrangement or composition of it or its debts or any other relief under any federal, provincial or foreign law now or hereafter in effect relating to bankruptcy, winding-up, insolvency, reorganization, receivership, plans of arrangement or relief or protection of debtors or at common law or in equity; or

(iv) seeking the entry of an order for relief or the appointment of, or the taking of possession by, a receiver, interim receiver, receiver/manager, sequestrator, conservator, custodian, administrator, trustee, liquidator, voluntary administrator, receiver and manager or other similar official for it or any substantial part of its property; and the case of each of Section 11.01(i)(i)-(iv), such petition, application or proceeding continues undismissed, or unstayed and in effect, for a period of sixty (60) days after the institution thereof; provided that if an order, decree or judgment is granted or entered (whether or not entered or subject to appeal) against Borrower or such Subsidiary thereunder in the interim, such grace period will cease to apply; provided further that if Borrower or such Subsidiary files an answer admitting the material allegations of a petition filed against it in any such proceeding, such grace period will cease to apply;

(j) any other event occurs which, under the laws of any applicable jurisdiction, has an effect equivalent to any of the events referred to in either of Section 11.01(h) or (i);

(k) one or more judgments for the payment of money shall be rendered against any Obligor or any combination thereof in an aggregate amount in excess of (i) $1,000,000 (or the Equivalent Amount in other currencies) and the same shall remain undischarged for a period of

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45 consecutive days, or (ii) $5,000,000 (or the Equivalent Amount in other currencies) and the same shall remain undischarged for a period of 60 consecutive days, in either case, during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of any Obligor to enforce any such judgment;

(l) a Material Adverse Change shall have occurred;

(m) (i) the Liens created by the Security Documents shall at any time not constitute a valid and perfected Lien on the collateral intended to be covered thereby (to the extent perfection by filing, registration, recordation or possession is required herein or therein) in favor of the Lenders, free and clear of all other Liens (other than Permitted Liens), (ii) except for expiration in accordance with its terms, any of the Security Documents or any Guarantee of any of the Obligations (including that contained in Section 13) shall for whatever reason be terminated or cease to be in full force and effect, (ii) the enforceability of any of the Security Documents or any Guarantee of any of the Obligations (including that contained in Section 13) shall be contested by any Obligor;

(n) any injunction, whether temporary or permanent, shall be rendered against any Obligor that prevents the Obligors from selling or manufacturing the Product or its commercially available successors, or any of their other material and commercially available products in the entire United States and more than sixty (60) consecutive calendar days shall have elapsed since such injunction without such injunction having been stayed, discharged, overturned or vacated.

11.02 Remedies. Upon the occurrence of any Event of Default, then, and in every such event (other than an Event of Default described in Section 11.01(h), (i) or (j)), and at any time thereafter during the continuance of such event, Majority Lenders may, by notice to the Borrower, take any or all of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other Obligations, shall become due and payable immediately (in the case of the Loans, at the Redemption Price therefor), without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Obligor, and (iii) take and perfect a security interest in all the assets of Valeritas Security in accordance with, and subject to the terms of, Section 8.12, which actions are hereby consented to by the Borrower, and at such time, the Borrower shall, and shall cause Valeritas Security to, comply with the terms of Section 8.12 and for such purpose Valeritas Security shall thereafter be a “Subsidiary” and a “Subsidiary Guarantor” hereunder; and in case of any Event of Default described in Section 11.01(h), (i) or (j), the Commitment shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other Obligations, shall automatically become due and payable immediately (in the case of the Loans, at the Redemption Price therefor), without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Obligor.

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SECTION 12

MISCELLANEOUS

12.01 No Waiver. No failure on the part of the Lenders to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under any Loan Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

12.02 Notices. All notices, requests, instructions, directions and other communications provided for herein (including any modifications of, or waivers, requests or consents under, this Agreement) shall be given or made in writing (including by telecopy) delivered, if to Borrower, another Obligor or the Lenders, to its address specified on the signature pages hereto or its Guarantee Assumption Agreement, as the case may be, or at such other address as shall be designated by such party in a notice to the other parties. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given upon receipt of a legible copy thereof, in each case given or addressed as aforesaid. All such communications provided for herein by telecopy shall be confirmed in writing promptly after the delivery of such communication (it being understood that non-receipt of written confirmation of such communication shall not invalidate such communication). Notwithstanding anything to the contrary in this Agreement, notices, documents, certificates and other deliverables to the Lenders by any Obligor may be made solely to the Control Agent and the Control Agent shall promptly deliver such notices, documents, certificates and other deliverables to the other Lenders.

12.03 Expenses, Indemnification, Etc.

(a) Expenses. Borrower agrees to pay or reimburse (i) the Lenders for all of their reasonable out of pocket costs and expenses (including the reasonable and documented out-of-pocket fees and expenses of Morrison & Foerster LLP, special counsel to the Lenders, and any sales, goods and services or other similar taxes applicable thereto, and printing, reproduction, document delivery, communication and travel costs) in connection with (x) the negotiation, preparation, execution and delivery of this Agreement and the other Loan Documents and the making of the Loans (exclusive of post-closing costs), (y) post-closing costs and (z) the negotiation or preparation of any modification, supplement or waiver of any of the terms of this Agreement or any of the other Loan Documents (whether or not consummated) and (ii) the Lenders for all of their out of pocket costs and expenses (including the fees and expenses of legal counsel) in connection with any enforcement or collection proceedings resulting from the occurrence of an Event of Default; provided, however, that the Borrower shall not be required to pay or reimburse any amounts pursuant to Section 12.03(a)(i)(x) in excess of $300,000; provided further that, so long as the conditions precedent in Section 6.01 shall have been satisfied or waived in accordance with the terms thereof, then such fees shall be fully credited from the fees paid by the Borrower pursuant to Section 2.03 on the Closing Date.

(b) Indemnification. Borrower hereby indemnifies the Lenders, their Affiliates, and their respective directors, officers, employees, attorneys, agents, advisors and controlling parties (each, an “Indemnified Party”) from and against, and agrees to hold them harmless against, any

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and all Claims or Losses of any kind (including reasonable fees and disbursements of counsel), joint or several, that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or relating to any investigation, litigation or proceeding or the preparation of any defense with respect thereto arising out of or in connection with or relating to this Agreement or any of the other Loan Documents or the transactions contemplated hereby or thereby or any use made or proposed to be made with the proceeds of the Loans, whether or not such investigation, litigation or proceeding is brought by Borrower, any of its shareholders or creditors, an Indemnified Party or any other Person, or an Indemnified Party is otherwise a party thereto, and whether or not any of the conditions precedent set forth in Section 6 are satisfied or the other transactions contemplated by this Agreement are consummated, except to the extent such Claim or Loss is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct. No Obligor shall assert any claim against any Indemnified Party, on any theory of liability, for consequential, indirect, special or punitive damages arising out of or otherwise relating to this Agreement or any of the other Loan Documents or any of the transactions contemplated hereby or thereby or the actual or proposed use of the proceeds of the Loans. Borrower, its Subsidiaries and Affiliates and their respective directors, officers, employees, attorneys, agents, advisors and controlling parties are each sometimes referred to in this Agreement as a “Borrower Party.” No Lender shall assert any claim against any Borrower Party, on any theory of liability, for consequential, indirect, special or punitive damages arising out of or otherwise relating to this Agreement or any of the other Loan Documents or any of the transactions contemplated hereby or thereby or the actual or proposed use of the proceeds of the Loans.

12.04 Amendments, Etc. Except as otherwise expressly provided in this Agreement, any provision of this Agreement may be amended, waived, modified or supplemented only by an instrument in writing signed by the Borrower and the Lenders; provided that any consent, approval, (including without limitation any approval of or authorization for any amendment, waiver, modification or supplement to any of the Loan Documents), instruction or other expression of the Lenders under any of the Loan Documents may be obtained by an instrument in writing signed in one or more counterparts by Majority Lenders; provided however, that the consent of all of the Lenders shall be required to:

(i) amend, modify, discharge, terminate or waive any of the terms of this Agreement if such amendment, modification, discharge, termination or waiver would increase the amount of the Loans, reduce the fees payable hereunder, reduce interest rates or other amounts payable with respect to the Loans, extend any date fixed for payment of principal, interest or other amounts payable relating to the Loans or extend the repayment dates of the Loans;

(ii) amend the provisions of Section 6;

(iii) amend, modify, discharge, terminate or waive any Security Document if the effect is to release a material part of the Collateral subject thereto otherwise than pursuant to the terms hereof or thereof; or

(iv) amend this Section 12.04.

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Notwithstanding anything to the contrary herein, a Defaulting Lender shall not have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.

12.05 Successors and Assigns.

(a) General. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Lenders. Any of the Lenders may assign or otherwise transfer any of their rights or obligations hereunder to an assignee in accordance with the provisions of Section 12.05(b), (ii) by way of participation in accordance with the provisions of Section 12.05(e) or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 12.05(g). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 12.05(d) and, to the extent expressly contemplated hereby, the Indemnified Parties) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders. Any of the Lenders may at any time assign to one or more Eligible Transferees all or a portion of their rights and obligations under this Agreement (including all or a portion of the Commitment and the Loans at the time owing to it) following written notice to the Borrower; provided, however, that no such assignment shall be made to Borrower, an Affiliate of Borrower, or any employees or directors of Borrower at any time. Subject to the recording thereof by the Lenders pursuant to Sections 12.05(c) and 12.05(d), from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of the Lenders under this Agreement, and correspondingly the assigning Lender shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of a Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Section 5 and Section 12.03. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 12.05(b) shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 12.05(e).

(c) Amendments to Loan Documents. To the extent that the Lender that is the Control Agent has made an assignment pursuant to Section 12.05(b) or to the extent necessary to reflect new Commitments on Schedule 1, each of the Lenders and the Obligors agrees to enter into such amendments to the Loan Documents, and such additional Security Documents and other instruments and agreements, in each case in form and substance reasonably acceptable to the Lenders and the Obligors, as shall reasonably be necessary to implement and give effect to any assignment made under this Section 12.05.

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(d) Register. The Lenders, acting solely for this purpose as agents of Borrower, shall maintain at one of its offices, which shall be the office of the Control Agent, a register for the recordation of the name and address of any assignee of the Lenders and the Commitment and outstanding principal amount of the Loans owing thereto (the “Register”). The entries in the Register shall be conclusive, absent manifest error, and Borrower may treat each Person whose name is recorded in the Register pursuant to the terms hereof as the “Lender” hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by Borrower, at any reasonable time and from time to time upon reasonable prior notice.

(e) Participations. Any of the Lenders may at any time, without the consent of, or notice to, Borrower, sell participations to any Person (other than a natural person or Borrower or any of the Borrower’s Affiliates or Subsidiaries or to any Person that would not constitute an Eligible Transferee) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of the Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower shall continue to deal solely and directly with the Lenders in connection therewith.

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that would (i) increase or extend the term of such Lender’s Commitment, (ii) extend the date fixed for the payment of principal of or interest on the Loans or any portion of any fee hereunder payable to the Participant, (iii) reduce the amount of any such payment of principal, or (iv) reduce the rate at which interest is payable thereon to a level below the rate at which the Participant is entitled to receive such interest. Subject to Section 12.05(f), Borrower agrees that each Participant shall be entitled to the benefits of Section 5 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 12.05(b). To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 4.04(a) as though it were the Lender.

(f) Limitations on Rights of Participants. A Participant shall not be entitled to receive any greater payment under Section 5.01 or 5.05 than a Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.

(g) Certain Pledges. The Lenders may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement and any other Loan Document to secure obligations of the Lenders, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release the Lenders from any of their obligations hereunder or substitute any such pledgee or assignee for the Lenders as a party hereto.

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12.06 Survival. Sections 5.01, 5.03, 5.05, 6.01(g)(iv), 12.03, 12.05, 12.09, 12.10, 12.11, 12.12, 12.13, 12.14 and Section 13 (solely to the extent guaranteeing any of the obligations under the foregoing Sections) shall survive the repayment of the Loans and the termination of the Commitment and, in the case of the Lenders’ assignment of any interest in the Commitment or the Loans hereunder, shall survive, in the case of any event or circumstance that occurred prior to the effective date of such assignment, the making of such assignment, notwithstanding that the Lenders may cease to be “Lenders” hereunder. In addition, each representation and warranty made, or deemed to be made by a notice of the Loans, herein or pursuant hereto shall survive the making of such representation and warranty.

12.07 Captions. The table of contents and captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

12.08 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart.

12.09 Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed in accordance with, the law of the State of New York, without regard to principles of conflicts of laws that would result in the application of the laws of any other jurisdiction; provided that Section 5-1401 of the New York General Obligations Law shall apply.

12.10 Jurisdiction, Service of Process and Venue.

(a) Submission to Jurisdiction. Each Obligor agrees that any suit, action or proceeding with respect to this Agreement or any other Loan Document to which it is a party or any judgment entered by any court in respect thereof may be brought initially in the federal or state courts in Houston, Texas or in the courts of its own corporate domicile and irrevocably submits to the non-exclusive jurisdiction of each such court for the purpose of any such suit, action, proceeding or judgment. This Section 12.10(a) is for the benefit of the Lenders only and, as a result, no Lender shall be prevented from taking proceedings in any other courts with jurisdiction. To the extent allowed by applicable Laws, the Lenders may take concurrent proceedings in any number of jurisdictions.

(b) Alternative Process. Nothing herein shall in any way be deemed to limit the ability of the Lenders to serve any such process or summonses in any other manner permitted by applicable law.

(c) Waiver of Venue, Etc. Each Obligor irrevocably waives to the fullest extent permitted by law any objection that it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document and hereby further irrevocably waives to the fullest extent permitted by law any claim

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that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. A final judgment (in respect of which time for all appeals has elapsed) in any such suit, action or proceeding shall be conclusive and may be enforced in any court to the jurisdiction of which such Obligor is or may be subject, by suit upon judgment.

12.11 Waiver of Jury Trial. EACH OBLIGOR AND EACH LENDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

12.12 Waiver of Immunity. To the extent that any Obligor may be or become entitled to claim for itself or its Property or revenues any immunity on the ground of sovereignty or the like from suit, court jurisdiction, attachment prior to judgment, attachment in aid of execution of a judgment or execution of a judgment, and to the extent that in any such jurisdiction there may be attributed such an immunity (whether or not claimed), such Obligor hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity with respect to its obligations under this Agreement and the other Loan Documents.

12.13 Entire Agreement. This Agreement and the other Loan Documents constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. EACH OBLIGOR ACKNOWLEDGES, REPRESENTS AND WARRANTS THAT IN DECIDING TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR IN TAKING OR NOT TAKING ANY ACTION HEREUNDER OR THEREUNDER, IT HAS NOT RELIED, AND WILL NOT RELY, ON ANY STATEMENT, REPRESENTATION, WARRANTY, COVENANT, AGREEMENT OR UNDERSTANDING, WHETHER WRITTEN OR ORAL, OF OR WITH THE LENDERS OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

12.14 Severability. If any provision hereof is found by a court to be invalid or unenforceable, to the fullest extent permitted by applicable law the parties agree that such invalidity or unenforceability shall not impair the validity or enforceability of any other provision hereof.

12.15 No Fiduciary Relationship. Borrower acknowledges that the Lenders have no fiduciary relationship with, or fiduciary duty to, Borrower arising out of or in connection with this Agreement or the other Loan Documents, and the relationship between the Lenders and the Borrower are solely that of creditor and debtor. This Agreement and the other Loan Documents do not create a joint venture among the parties.

12.16 Confidentiality. The Lenders agree to maintain the confidentiality of the Confidential Information (as defined in the Non-Disclosure Agreement (defined below)) in accordance with the terms of that certain non-disclosure agreement dated March 1, 2013 among Borrower and Capital Royalty, L.P (the “Non-Disclosure Agreement”). Each new Lender that becomes party to this Agreement and each Participant hereby agrees to be bound by the terms of the Non-Disclosure Agreement. The parties to this Agreement shall prepare a mutually agreeable press release announcing the completion of this transaction on the date hereof.

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12.17 USA PATRIOT Act. The Lenders hereby notify the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), they are required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow such Lender to identify Borrower in accordance with the Act.

12.18 Maximum Rate of Interest. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (in each case, the “Maximum Rate”). If the Lenders shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans, and not to the payment of interest, or, if the excessive interest exceeds such unpaid principal, the amount exceeding the unpaid balance shall be refunded to the applicable Obligor. In determining whether the interest contracted for, charged, or received by the Lenders exceeds the Maximum Rate, the Lenders may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Indebtedness and other obligations of any Obligor hereunder, or (d) allocate interest between portions of such Indebtedness and other obligations under the Loan Documents to the end that no such portion shall bear interest at a rate greater than that permitted by applicable Law.

12.19 Certain Waivers.

(a) Real Property Security Waivers.

(i) Each Obligor acknowledges that all or any portion of the Obligations may now or hereafter be secured by a Lien or Liens upon real property evidenced by certain documents including, without limitation, deeds of trust and assignments of rents. Lenders may, pursuant to the terms of said real property security documents and applicable law, foreclose under all or any portion of one or more of said Liens by means of judicial or nonjudicial sale or sales. Each Obligor agrees that Lenders may exercise whatever rights and remedies they may have with respect to said real property security, all without affecting the liability of any Obligor under the Loan Documents, except to the extent Lenders realize payment by such action or proceeding. No election to proceed in one form of action or against any party, or on any obligation shall constitute a waiver of Lenders’ rights to proceed in any other form of action or against any Obligor or any other Person, or diminish the liability of any Obligor, or affect the right of Lenders to proceed against any Obligor for any deficiency, except to the extent Lenders realize payment by such action, notwithstanding the effect of such action upon any Obligor’s rights of subrogation, reimbursement or indemnity, if any, against Obligor or any other Person.

(ii) To the extent permitted under applicable law, each Obligor hereby waives any rights and defenses that are or may become available to such Obligor by reason of Sections 2787 to 2855, inclusive, of the California Civil Code.

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(iii) To the extent permitted under applicable law, each Obligor hereby waives all rights and defenses that such Obligor may have because the Obligations are or may be secured by real property. This means, among other things:

(A) Lenders may collect from any Obligor without first foreclosing on any real or personal property collateral pledged by any other Obligor;

(B) If Lenders foreclose on any real property collateral pledged by any Obligor:

(1) The amount of the Loans may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price; and

(2) Lenders may collect from each Obligor even if Lenders, by foreclosing on the real property collateral, have destroyed any right that such Obligor may have to collect from any other Obligor.

(3) To the extent permitted under applicable law, this is an unconditional and irrevocable waiver of any rights and defenses each Obligor may have because the Obligations are or may be secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure.

(iv) To the extent permitted under applicable law, each Obligor waives all rights and defenses arising out of an election of remedies by Lenders, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed such Obligor’s rights of subrogation and reimbursement against the principal by the operation of Section 580d of the California Code of Civil Procedure or otherwise.

(b) Waiver of Marshaling. WITHOUT LIMITING THE FOREGOING IN ANY WAY, EACH OBLIGOR HEREBY IRREVOCABLY WAIVES AND RELEASES, TO THE EXTENT PERMITTED BY LAW, ANY AND ALL RIGHTS IT MAY HAVE AT ANY TIME (WHETHER ARISING DIRECTLY OR INDIRECTLY, BY OPERATION OF LAW, CONTRACT OR OTHERWISE) TO REQUIRE THE MARSHALING OF ANY ASSETS OF ANY OBLIGOR, WHICH RIGHT OF MARSHALING MIGHT OTHERWISE ARISE FROM ANY PAYMENTS MADE OR OBLIGATIONS PERFORMED.

SECTION 13

GUARANTEE

13.01 The Guarantee. The Subsidiary Guarantors hereby jointly and severally guarantee to the Lenders and their successors and assigns the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the principal of and interest on the Loans and all fees and other amounts from time to time owing to the Lenders by Borrower under this Agreement or under any other Loan Document and by any other Obligor under any of the Loan Documents, in each case strictly in accordance with the terms thereof (such obligations being

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herein collectively called the “Guaranteed Obligations”). The Subsidiary Guarantors hereby further jointly and severally agree that if Borrower shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Subsidiary Guarantors will promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal.

13.02 Obligations Unconditional. The obligations of the Subsidiary Guarantors under Section 13.01 are absolute and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the obligations of Borrower under this Agreement or any other agreement or instrument referred to herein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 13.02 that the obligations of the Subsidiary Guarantors hereunder shall be absolute and unconditional, joint and several, under any and all circumstances. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Subsidiary Guarantors hereunder, which shall remain absolute and unconditional as described above:

(a) at any time or from time to time, without notice to the Subsidiary Guarantors, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;

(b) any of the acts mentioned in any of the provisions of this Agreement or any other agreement or instrument referred to herein shall be done or omitted;

(c) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be modified, supplemented or amended in any respect, or any right under this Agreement or any other agreement or instrument referred to herein shall be waived or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with; or

(d) any lien or security interest granted to, or in favor of, the Lenders as security for any of the Guaranteed Obligations shall fail to be perfected.

The Subsidiary Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Lenders exhaust any right, power or remedy or proceed against Borrower under this Agreement or any other agreement or instrument referred to herein, or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations.

13.03 Reinstatement. The obligations of the Subsidiary Guarantors under this Section 13 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of Borrower in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in

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bankruptcy or reorganization or otherwise, and the Subsidiary Guarantors jointly and severally agree that they will indemnify the Lenders on demand for all reasonable costs and expenses (including fees of counsel) incurred by the Lenders in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.

13.04 Subrogation. The Subsidiary Guarantors hereby jointly and severally agree that until the payment and satisfaction in full of all Guaranteed Obligations (other than the Warrant Obligations) and the expiration and termination of the Commitment of the Lenders under this Agreement they shall not exercise any right or remedy arising by reason of any performance by them of their guarantee in Section 13.01, whether by subrogation or otherwise, against Borrower or any other guarantor of any of the Guaranteed Obligations or any security for any of the Guaranteed Obligations.

13.05 Remedies. The Subsidiary Guarantors jointly and severally agree that, as between the Subsidiary Guarantors and the Lenders, the obligations of Borrower under this Agreement and under the other Loan Documents may be declared to be forthwith due and payable as provided in Section 11 (and shall be deemed to have become automatically due and payable in the circumstances provided in Section 11) for purposes of Section 13.01 notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by Borrower) shall forthwith become due and payable by the Subsidiary Guarantors for purposes of Section 13.01.

13.06 Instrument for the Payment of Money. Each Subsidiary Guarantor hereby acknowledges that the guarantee in this Section 13 constitutes an instrument for the payment of money, and consents and agrees that the Lender, at its sole option, in the event of a dispute by such Subsidiary Guarantor in the payment of any moneys due hereunder, shall have the right to proceed by motion for summary judgment in lieu of complaint pursuant to N.Y. Civ. Prac. L&R § 3213.

13.07 Continuing Guarantee. The guarantee in this Section 13 is a continuing guarantee, and shall apply to all Guaranteed Obligations whenever arising.

13.08 Rights of Contribution. The Subsidiary Guarantors hereby agree, as between themselves, that if any Subsidiary Guarantor shall become an Excess Funding Guarantor (as defined below) by reason of the payment by such Subsidiary Guarantor of any Guaranteed Obligations, each other Subsidiary Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the next sentence), pay to such Excess Funding Guarantor an amount equal to such Subsidiary Guarantor’s Pro Rata Share (as defined below and determined, for this purpose, without reference to the properties, debts and liabilities of such Excess Funding Guarantor) of the Excess Payment (as defined below) in respect of such Guaranteed Obligations. The payment obligation of a Subsidiary Guarantor to any Excess Funding Guarantor under this Section 13.08 shall be subordinate and subject in right of payment to the prior payment in full of the obligations of such Subsidiary Guarantor under the other provisions of this Section 13 and

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such Excess Funding Guarantor shall not exercise any right or remedy with respect to such excess until payment and satisfaction in full of all of such obligations. For purposes of this Section 13.08, (i) “Excess Funding Guarantor” means, in respect of any Guaranteed Obligations, a Subsidiary Guarantor that has paid an amount in excess of its Pro Rata Share of such Guaranteed Obligations, (ii) “Excess Payment” means, in respect of any Guaranteed Obligations, the amount paid by an Excess Funding Guarantor in excess of its Pro Rata Share of such Guaranteed Obligations and (iii) “Pro Rata Share” means, for any Subsidiary Guarantor, the ratio (expressed as a percentage) of (x) the amount by which the aggregate present fair saleable value of all properties of such Subsidiary Guarantor (excluding any shares of stock of any other Subsidiary Guarantor) exceeds the amount of all the debts and liabilities of such Subsidiary Guarantor (including contingent, subordinated, unmatured and unliquidated liabilities, but excluding the obligations of such Subsidiary Guarantor hereunder and any obligations of any other Subsidiary Guarantor that have been Guaranteed by such Subsidiary Guarantor) to (y) the amount by which the aggregate fair saleable value of all properties of all of the Subsidiary Guarantors exceeds the amount of all the debts and liabilities (including contingent, subordinated, unmatured and unliquidated liabilities, but excluding the obligations of the Borrower and the Subsidiary Guarantors hereunder and under the other Loan Documents) of all of the Subsidiary Guarantors, determined (A) with respect to any Subsidiary Guarantor that is a party hereto on the date hereof, as of the date hereof, and (B) with respect to any other Subsidiary Guarantor, as of the date such Subsidiary Guarantor becomes a Subsidiary Guarantor hereunder.

13.09 General Limitation on Guarantee Obligations. In any action or proceeding involving any provincial, territorial or state corporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Subsidiary Guarantor under Section 13.01 would otherwise, taking into account the provisions of Section 13.08, be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 13.01, then, notwithstanding any other provision hereof to the contrary, the amount of such liability shall, without any further action by such Subsidiary Guarantor, the Lenders or any other Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

13.10 Collateral and Guaranty Matters. Each of the Lenders (including the Control Agent) agree:

(a) to release any Lien on any property granted to or held by the Control Agent or any Lender under any Loan Document (i) upon the payment in full in cash of all Obligations and the termination or expiration of all Commitments or (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document;

(b) to release any Subsidiary Guarantor from its obligations under Loan Documents if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder; and

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(c) to subordinate any Lien on any property granted to or held by any Lender or the Control Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 9.02(e) solely to the extent the Liens of any Lender or the Control Agent being subordinated encumber the specific assets financed by such Lien holder.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

BORROWER:
VALERITAS, INC.
By	/s/ James Dentzer
	Name: James Dentzer
	Title:   Chief Financial Officer

Address for Notices:

750 Route 202 South, Suite 100

Bridgewater, NJ 08807

Attn:	James Dentzer
Tel.:
Fax:
Email:

S-1

LENDERS:
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/ Charles Tate
		Name: Charles Tate
		Title:   Sole Member

Address for Notices: 1000 Main Street, Suite 2500 Houston, TX 77002
Attn:	General Counsel
Tel.:
Fax:
Email:

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/ Charles Tate
		Name: Charles Tate
		Title:   Sole Member

Address for Notices: 1000 Main Street, Suite 2500 Houston, TX 77002
Attn:	General Counsel
Tel.:
Fax:
Email:

S-2

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/ Charles Tate
		Name: Charles Tate
		Title: Sole Member

Address for Notices: 1000 Main Street, Suite 2500 Houston, TX 77002
Attn:	General Counsel
Tel.:
Fax:
Email:

S-3

Schedule 1

to Term Loan Agreement

COMMITMENTS

Lender	Commitment		Proportionate Share
Capital Royalty Partners II L.P.	$	25,330,857		25.3308569	%
Capital Royalty Partners II – Parallel Fund “A” L.P.	$	54,659,143		54.6591431	%
Parallel Investment Opportunities Partners II L.P.	$	29,010,000		20.0100000	%
TOTAL	$	100,000,000		100	%

WARRANT SHARES

Lender	Number of Warrant Shares of Common Stock (First Borrowing)		Number of Warrant Shares of Common Stock (Second Borrowing)1			Number of Warrant Shares of Common Stock (Third Borrowing) 2
Capital Royalty Partners II L.P.		1,181,819		[596,879	]		[611,299	]
Capital Royalty Partners II – Parallel Fund “A” L.P.		2,550,139		[1,287,949	]		[1,319,066	]
Parallel Investment Opportunities Partners II L.P.		933,573		[471,502	]		[482,893	]
TOTAL		4,665,531		[2,356,329	]		[2,413,258	]

¹  Subject to adjustment prior to the second Borrowing in accordance with Section 7.21

²  Subject to adjustment prior to the third Borrowing in accordance with Section 7.21

Schedule 7.05(b)

to Term Loan Agreement

CERTAIN INTELLECTUAL PROPERTY

PATENTS AND PATENT APPLICATIONS

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-002	US	Injection Devices			60/112,805	18-Dec-98	expired
VALT-002-101	US	Injection Devices	60/112,805	18-Dec-98	09/465,573	17-Dec-99	granted	US 6,406,455 B1	18-Jun-02
VALT-002-102	US	Injection Devices	60/112,805	18-Dec-98	10/175,541	18-Jun-02	granted	US 6,960,184	1-Nov-05
VALT-002-103	US	Injection Devices	60/112,805	18-Dec-98	11/063,500	22-Feb-05	granted	US 7,740,607	14-Jul-05
VALT-002-WO1	WO	Injection Devices	60/112,805	18-Dec-98	PCT/ US99/30172	17-Dec-99	expired
VALT-002-EP1	EP & EPP1	Injection Devices	60/112,805 & PCT/ US99/30172	18-Dec-98 18-Dec-99	99968496.2	17-Dec-99	granted/validated	1144031	26-Oct-05
VALT-003-101	US	Electroactive Pore	60/120,879	18-Feb-99	09/507,317	18-Feb-00	granted	US 6,314,317 B1	6-Nov-01
VALT-003-102	US	Electroactive Pore	60/120,879	18-Feb-99	09/878,573	11-Jun-01	granted	US 6.490.483 B2	3-Dec-02
VALT-003-103	US	Electroactive Pore	60/120,879	18-Feb-99	10/306,767	26-Nov-02	granted	US 7,187,969 B2	6-Mar-07
VALT-003-104	US	Electroactive Pore	60/120,879	18-Feb-99	11/714,079	05-Mar-07	abandoned
VALT-003-WO1	WO	Electroactive Pore	60/120,879	18-Feb-99	PCT/ US00/04273	18-Feb-00	expired
VALT-003-JP1	JP	Electroactive Pore	60/120,879 & PCT/ US00/04273	18-Feb-99 18-Feb-00	2000- 599456	18-Feb-00	abandoned
VALT-003-IL1	IL	Electroactive Pore	60/120,879 PCT/ US00/04273	18-Feb-99 18-Feb-00	144948	18-Feb-00	granted	144948	29-May-11
VALT-003-HK1	WO	Electroactive Pore	60/120,879 PCT/ US00/04273 00194640.8	18-Feb-99 18-Feb-00 18-Feb-00	02102212.6	18-Feb-00	abandoned

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-003-EP1	EP	Electroactive Pore	60/120,879 PCT/ US00/04273	18-Feb-99 18-Feb-00	00194640.8	18-Feb-00	granted	1161277	11-Oct-06
VALT-003-DE1	DE	Electroactive Pore	60/120,879 PCT/ US00/04273	18-Feb-99 18-Feb-00	00194640.8	18-Feb-00	granted	1161277	11-Oct-06
VALT-003-GB1	GB	Electroactive Pore	60/120,879 PCT/ US00/04273	18-Feb-99 18-Feb-00	00194640.8	18-Feb-00	granted	1161277	11-Oct-06
VALT-003-CA1	CA	Electroactive Pore	60/120,879 PCT/ US00/04273	18-Feb-99 18-Feb-00	2,362,814	18-Feb-00	abandoned
VALT-003-AU1	AU	Electroactive Pore	60/120,879 PCT/ US00/04273	18-Feb-99 18-Feb-00	36003/00	18-Feb-00	granted	767510	26-Feb-04
VALT-004-001	US	Injection Device			60/174,876	7-Jan-00	expired
VALT-004-101	US	Injection Device	60/174,876	7-Jan-00	09/755,906	5-Jan-01	granted	US 6,616,627 B2	9-Sep-03
VALT-004-102	US	Injection Device	60/174,876	7-Jan-00	10/658,116	8-Sep-03	granted	US 7,806,867	5-Oct-10
VALT-004-WO1	WO	Injection Device	60/174,876	7-Jan-00	PCT/ US01/00346	4-Jan-01	expired
VALT-004-EP1	EP & EPP2	Injection Device	60/174,876 PCT/ USO1/00346	7-Jan-00 4-Jan-01	1908589.3	4-Jan-01	opposed	1296730	16-Mar-11
VALT-004-DE1	DE	Injection Device	same as above	7-Jan-00 4-Jan-01	1908589.3	4-Jan-01	validated/ granted	60144229.6-08	16-Mar-11
VALT-004-CA1	CA	Injection Device	same as above	7-Jan-00 4-Jan-01	2,396,569	4-Jan-01	granted	2,396,569	23-Mar-10
VALT-004-AU1	AU	Injection Device	same as above	7-Jan-00 4-Jan-01	3644101	4-Jan-01	granted	783680	9-Mar-06
VALT-004-AU2	AU	Injection Device	same as above	7-Jan-00 4-Jan-01	2006200790	4-Jan-01	granted	2006200790	30-Oct-08
VALT-007-001	US	Injection Systems			60/250,537	30-Nov-00	expired
VALT-007-101	US	Injection Systems	60/250,410 60/250,425 60/250,537 60/250,573	30-Nov-00	10/001,002	14-Nov-02	granted	US 7,931,614	26-Apr-11
VALT-007-102	US	Injection Systems	same as above	same as above	09/999,549	30-Nov-01	abandoned

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-007-103	US	Injection Systems	same as above	same as above	10/007,061	30-Nov-01	granted	US 7,150,409	19-Dec-06
VALT-007-104	US	Injection Systems	same as above	same as above	13/053,024	21-Mar-11	pending
VALT-007-WO1	WO	Injection Systems	same as above	same as above	PCT/ US01/46029	30-Nov-01	expired
VALT-007-KR1	KR	Injection Systems	same as above & PCT/ US01/46029	30-Nov-00 30-Nov-01	2003- 7007279	30-Nov-01	abandoned
VALT-007-JP1	JP	Injection Systems	same as above	same as above	2002-552611	30-Nov-01	granted	4434583	8-Jan-10
VALT-007-JP2	JP	Injection Systems	same as above	same as above	2008-116059	30-Nov-01	abandoned
VALT-007-JP3	JP	Injection Systems	same as above	same as above	2009-188071	30-Nov-01	abandoned
VALT-007-JP4	JP	Injection Systems	same as above	same as above	2012-207418	30-Nov-2001	pending
VALT-007-EP1	EP	Injection Systems	same as above	same as above	01994145.9	30-Nov-01	pending
VALT-007-CA1	CA	Injection Systems	same as above	same as above	2,430,499	30-Nov-01	granted	2,430,499	22-May-12
VALT-007-AU1	AU	Injection Systems	same as above	same as above	2002246572	30-Nov-01	abandoned
VALT-007-AU2	AU	Injection Systems	same as above	same as above	2007202665	30-Nov-01	granted	2007202665	3-Jun-10
VALT-013	US	Sensor System			60/250,295	30-Nov-00	expired
VALT-020	US	Injection Devices			60/250,410	30-Nov-00	expired
VALT-021	US	Injection Devices			60/250,413	30-Nov-00	expired
VALT-019	US	Injector Safety Lock			60/250,425	30-Nov-00	expired
VALT-008	US	Injection Devices			60/250,573	30-Nov-00	expired
VALT-017	US	Fluid Delivery Device			60/250,403	30-Nov-00	expired

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-016	US	Fluid Delivery Systems			60/250,408	30-Nov-00	expired
VALT-014	US	Electrochemical Cell			60/250,409	30-Nov-00	expired
VALT-018	US	Fluid Delivery Systems and Methods			60/250,422	30-Nov-00	expired
VALT-015	US	Fluid Delivery Systems and Methods			60/250,927	30-Nov-00	expired
VALT-011-001	US	Fluid Delivery Systems			60/250,538	30-Nov-00	expired
VALT-011-101	US	Fluid Delivery and Measurement Systems and Methods	60/250,538 60/250,408 60/250/295 60/250,927 60/250,422 60/250,413 60/250,403 60/250,409	30-Nov-00 24-Sep-01	10/006,526	30-Nov-01	granted	US 6,939,324 B2	6-Sep-05
VALT-011-102	US	Fluid Delivery and Measurement Systems and Methods	same as above	30-Nov-00	11/219,944	6-Sep-05	granted	US 7,481,792	27-Jan-09
VALT-011-103	US	Fluid Delivery and Measurement Systems and Methods	same as above	30-Nov-00	12/336,246	16-Dec-08	pending
VALT-011-104	US	Fluid Delivery and Measurement Systems and Methods	same as above	30-Nov-00	13/743,892	17-Jan-2013	pending
VALT-011-WO1	WO	Fluid Delivery and Measurement Systems and Methods	same as above	30-Nov-01	PCT/US01/46028	30-Nov-01	expired

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-011-EP1	EP	Fluid Delivery and Measurement Systems and Methods	same as above & PCT/ US01/46028	30-Nov-00 30-Nov-01	01988242.2	30-Nov-01	pending
VALT-011-EP2	EP	Fluid Delivery and Measurement Systems and Methods	same as above & PCT/ US01/46028	30-Nov-00 30-Nov-01	12190927.9	30-Nov-01	pending
VALT-011-EP3	EP	Fluid Delivery and Measurement Systems and Methods	same as above & PCT/ US01/46028	30-Nov-00 30-Nov-01	12190928.7	30-Nov-01	pending
VALT-011-CA1	CA	Fluid Delivery and Measurement Systems and Methods	same as above	same as above	2,430,590	30-Nov-01	granted	2,430,590	14-Aug-12
VALT-011-CA2	CA	Fluid Delivery and Measurement Systems and Methods	same as above	same as above	2,782,501	30-Nov-01	pending
VALT-023-001	US	Microneedle, Microneedle arrays, and systems and methods relating to same			60/323,417	19-Sep-01	expired
VALT-023-101	US	Microneedle, Microneedle arrays, and systems and methods relating to same	60/323,417	19-Sep-01	10/251,480	19-Sep-02	granted	8,361,037	29-Jan-13

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-023-WO1	WO	Microneedle, Microneedle arrays, and systems and methods relating to same	60/323,417	19-Sep-01	PCT/US02/29913	19-Sep-02	expired
VALT-025-001	US	Microneedle systems and methods relating to same			60/323,852	21-Sep-01	expired
VALT-025-101	US	Gas Pressure Actuated Microneedle Arrays, and Systems and methods relating to same	60/323,852	21-Sep-01	10/252,739	23-Sep-02	pending
VALT-025-WO1	WO	Gas Pressure Actuated Microneedle Arrays, and Systems and methods relating to same	60/323,417	19-Sep-01	PCT/USO2/30117	23-Sep-02	expired
VALT-025-EP1	EP & EPP3	Gas Pressure Actuated Microneedle Arrays, and Systems and methods relating to same	60/323,417 & PCT/ USO2/30117	19-Sep-01 23-Sep-02	02766341.8	23-Sep-02	granted	1471953	16-Feb-11
VALT-025-CA1	CA	Gas Pressure Actuated Microneedle Arrays, and Systems and methods relating to same	60/323,852 & PCT/ USO2/30117	19-Sep-01 23-Sep-02	2,499,838	23-Sep-02	granted	2,499,838	18-Dec-12

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-027-001	US	Stacked Microneedle Systems			60/174,023	30-Dec-99	expired
VALT-027-101	US	Stacked Microneedle Systems	60/174,023	30-Dec-99	09/747,768	22-Dec-00	abandoned
VALT-027-WO1	WO	Stacked Microneedle Systems	60/174,023	30-Dec-99	PCT/US00/35144	22-Dec-00	expired
VALT-027-EP1	EP	Stacked Microneedle Systems	60/174,023 & PCT/US00/35144	30-Dec-99 22-Dec-00	00990324.6	22-Dec-00	withdrawn
VALT-027-CA1	CA	Stacked Microneedle Systems	60/174,023 & PCT/US00/35144	30-Dec-99 22-Dec-00	2,396,767	22-Dec-00	abandoned
VALT-027-AU1	AU	Stacked Microneedle Systems	60/174,023 & PCT/US00/35144	30-Dec-99 22-Dec-00	27365/01	22-Dec-00	abandoned
VALT-027-AU2	AU	Stacked Microneedle Systems	60/174,023 & PCT/US00/35144	30-Dec-99 22-Dec-00	2005222551	22-Dec-00	abandoned
VALT-027-AU3	AU	Stacked Microneedle Systems	60/174,023 & PCT/US00/35144	30-Dec-99 22-Dec-00	2009201331	22-Dec-00	abandoned
VALT-028-001	US	Microneedle Adapter			60/247,571	9-Nov-00	expired
VALT-028-101	US	Microneedle Adapter	60/247,571	9-Nov-00	09/992,656	6-Nov-01	abandoned
VALT-028-102	US	Microneedle Adapter	60/247,571	9-Nov-00	10/412,384	11-Apr-03	abandoned
VALT-028-103	US	Microneedle Adapter	60/247,571	9-Nov-00	11/997,158	22-Oct-07	abandoned
VALT-028-WO1	WO	Microneedle Adapter	60/247,571	9-Nov-00	PCT/US01/46845	8-Nov-01	expired

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-029-001	US	Microneedle Array Systems to align and form optical components			60/257,757	21-Dec-00	expired
VALT-029-101	US	Microneedle Array Systems to align and form optical components	60/257,757	21-Dec-00	10/027,115	20-Dec-01	granted	US 7,027,478 B2	11-Apr-06
VALT-029-WO1	WO	Microneedle Array Systems	60/257,757	21-Dec-00	PCT/US01/49797	20-Dec-01	expired
VALT-030-001	US	Switchable Microneedle Arrays and Systems and Methods relating to same			60/325,522	28-Sep-01	expired
VALT-030-101	US	Switchable Microneedle Arrays and Systems and Methods relating to same	60/325,522	28-Sep-01	10/260,711	30-Sep-02	abandoned
VALT-030-102	US	Switchable Microneedle Arrays and Systems and Methods relating to same	60/325,522	28-Sep-01	11/975,353	18-Oct-07	abandoned
VALT-030-WO1	WO	Switchable Microneedle Arrays and Systems and Methods relating to same	60/325,522	28-Sep-01	PCT/US02/30993	30-Sep-02	expired

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-030-EP1	EP	Switchable Microneedle Arrays and Systems and Methods relating to same	60/325,522	28-Sep-01	02780401.2	30-Sep-02	abandoned
VALT-030-CA1	CA	Switchable Microneedle Arrays and Systems and Methods relating to same	60/325,522	28-Sep-01	2,500,452	30-Sep-02	abandoned
VALT-031-001	US	Fluid Delivery Systems and Methods			60/324,412	24-Sep-01	expired
VALT-032-001	US	Microneedle with Membrane			60/325,736	28-Sep-01	expired
VALT-032-101	US	Microneedle with Membrane	60/325,736	28-Sep-01	10/261,093	30-Sep-02	abandoned
VALT-032-102	US	Microneedle with Membrane	60/325,736	28-Sep-01	10/993,927	19-Nov-04	abandoned
VALT-032-103	US	Microneedle with Membrane	60/325,736	28-Sep-01	12/152,138	12-May-08	abandoned
VALT-032-WO1	WO	Microneedle with Membrane	60/325,736	28-Sep-01	PCT/US02/31153	30-Sep-02	expired
VALT-032-EP1	EP	Microneedle with Membrane	60/325,736 & PCT/US02/31153	28-Sep-01 30-Sep-02	02773681.8	30-Sep-02	withdrawn
VALT-032-CA1	CA	Microneedle with Membrane	60/325,736 & PCT/US02/31153	28-Sep-01 30-Sep-02	2,500,453	30-Sep-02	abandoned
VALT-034-001	US	Microneedle Array Patch			60/416,740	7-Oct-02	expired
VALT-034-101	US	Microneedle Array Patch	60/416,740	7-Oct-02	10/681,777	7-Oct-03	abandoned
VALT-034-102	US	Microneedle Array Patch	60/416,740	7-Oct-02	11/975,717	19-Oct-07	granted	8,162,901	24-Apr-12
VALT-034-EP1	EP	Microneedle Array Patch	60/416,740 & PCT/US03/31847	7-Oct-02 7-Oct-03	03808167.5	7-Oct-03	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-034-WO1	WO	Microneedle Array Patch	60/416,740	7-Oct-02	PCT/US03/31847	7-Oct-03	expired
VALT-035-001	US	Hydraulically Actuated Pump for Long Duration Medicament Administration			60/465,070	23-Apr-03	expired
VALT-035-101	US	Hydraulically Actuated Pump for Long Duration Medicament Administration	60/465,070	23-Apr-03	10/831,354	23-Apr-04	granted	US 7,530,968	12-May-09
VALT-035-102	US	Hydraulically Actuated Pump for Long Duration Medicament Administration	60/465,070	23-Apr-03	12/336,363	16-Dec-08	Granted	US 8,070,726	06-Dec-11
VALT-035-103	US	Hydraulically Actuated Pump for Long Duration Medicament Administration	60/465,070	23-Apr-03	12/336,395	16-Dec-08	pending
VALT-035-104	US	Hydraulically Actuated Pump for Long Duration Medicament Administration	60/465,070	23-Apr-03	12/762,307	17-Apr-10	pending
VALT-035-WO1	WO	Hydraulically Actuated Pump for Long Duration Medicament Administration	60/465,070	23-Apr-03	PCT/US04/12797	23-Apr-04	expired

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-035-EP1	EP	Hydraulically Actuated Pump for Long Duration Medicament Administration	60/465,070 & PCT/US04/12797	23-Apr-03 23-Apr-04	04760179.4	23-Apr-04	pending
VALT-035-JP1	JP	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2006-513327	23-Apr-04	granted	4565193	13-Aug-10
VALT-035-JP2	JP	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2009-44928	23-Apr-04	abandoned
VALT-035-JP3	JP	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2012-249271	23-Apr-04	pending
VALT-035-JP4	JP	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2012-249272	23-Apr-04	pending
VALT-035-CA1	CA	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2,523,267	23-Apr-04	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-035-AU1	AU	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2004232858	23-Apr-04	granted	2004232858	22-Oct-09
VALT-035-AU2	AU	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2009202856	23-Apr-04	granted	2009202856	21-Jun-12
VALT-035-AU3	AU	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2012201924	23-Apr-04	pending
VALT-037-101	US	Methods and Devices for Delivering Agents Across Biological Barriers			11/198,024	5-Aug-05	abandoned
VALT-037-102	US	Methods and Devices for Delivering Agents Across Biological Barriers	11/198,024	5-Aug-05	12/414,330	30-Mar-09	pending
VALT-037-103	US	Methods and Devices for Delivering Agents Across Biological Barriers	11/198,024	5-Aug-05	12/617,566	12-Nov-09	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-037-AU1	AU	Methods and Devices for Delivering Agents Across Biological Barriers	11/198,024	5-Aug-05	2006278258	7-Aug-06	granted	2006278258	28-Jun-12
VALT-037-AU2	AU	Methods and Devices for Delivering Agents Across Biological Barriers	2006278258	5-Aug-05	2012203204	07-Aug-2006	pending
VALT-037-CA1	CA	Methods and Devices for Delivering Agents Across Biological Barriers	11/198,024	5-Aug-05	2,659,785	7-Aug-06	pending
VALT-037-JP1	JP	Methods and Devices for Delivering Agents Across Biological Barriers	11/198,024	5-Aug-05	2008-525284	7-Aug-06	pending
VALT-037-JP2	JP	Methods and Devices for Delivering Agents Across Biological Barriers	2008-525284	7-Aug-06	2013-000238	7-Aug-06	pending
VALT-037-EP1	EP	Methods and Devices for Delivering Agents Across Biological Barriers	11/198,024	5-Aug-05	06801016.4	7-Aug-06	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-037-EP2	EP	Methods and Devices for Delivering Agents Across Biological Barriers	06801016.4	07-Aug-2006	12177394.9	07-Aug-2006	pending
VALT-037-WO1	WO	Methods and Devices for Delivering Agents Across Biological Barriers	11/198,024	5-Aug-05	PCT/US06/030981	7-Aug-06	expired
VALT-038-001	US	Methods and Devices for Delivering GLP-1 and Uses Thereof			60/585,330	2-Jul-04	expired
VALT-038-101	US	Methods and Devices for Delivering GLP-1 and Uses Thereof	60/585,330	2-Jul-04	11/175,990	5-Jul-05	pending
VALT-038-WO1	WO	Methods and Devices for Delivering GLP-1 and Uses Thereof	60/585,330	2-Jul-04	PCT/US05/023818	5-Jul-05	expired
VALT-US1-1000	US	Multi-Cartridge Fluid Delivery Device			60/787,616	30-Mar-06	expired
VALT-WO1-1000	WO	Multi-Cartridge Fluid Delivery Device	60/787,616	30-Mar-06	PCT/US07/065363	28-Mar-07	expired
VALT-AU1-1000	AU	Multi-Cartridge Fluid Delivery Device	60/787,616 & PCT/US07/065363	30-Mar-06 28-Mar-07	2007233231	28-Mar-07	granted	2007233231	9-Jun-11
VALT-AU2-1000	AU	Multi-Cartridge Fluid Delivery Device	same as above	same as above	2011201473	28-Mar-07	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-CA1-1000	CA	Multi-Cartridge Fluid Delivery Device	same as above	same as above	2,646,324	28-Mar-07	pending
VALT-CN1-1000	CN	Multi-Cartridge Fluid Delivery Device	same as above	same as above	200780020245.9	28-Mar-07	allowed
VALT-CN2-1000	CN	Multi-Cartridge Fluid Delivery Device	same as above	same as above	201310119427.9	28-Mar-07	pending
VALT-EP1-1000	EP	Multi-Cartridge Fluid Delivery Device	same as above	same as above	07759578.3	28-Mar-07	pending
VALT-HK1-1000	HK	Multi-Cartridge Fluid Delivery Device	same as above	same as above	09105477.2	28-Mar-07	pending
VALT-IL1-1000	IL	Multi-Cartridge Fluid Delivery Device	same as above	same as above	194452	28-Mar-07	pending
VALT-IN1-1000	IN	Multi-Cartridge Fluid Delivery Device	same as above	same as above	8997/DELNP/2008	28-Mar-07	pending
VALT-JP1-1000	JP	Multi-Cartridge Fluid Delivery Device	same as above	same as above	2009-503245	28-Mar-07	pending
VALT-JP2-1000	JP	Multi-Cartridge Fluid Delivery Device	same as above	same as above	2012-255233	28-Mar-07	pending
VALT-KR1-1000	KR	Multi-Cartridge Fluid Delivery Device	same as above	same as above	10-2008-7026677	28-Mar-07	pending
VALT-RU1-1000	RU	Multi-Cartridge Fluid Delivery Device	same as above	same as above	2008143015	28-Mar-07	granted	2438719	10-Jan-12
VALT-SG1-1000	SG	Multi-Cartridge Fluid Delivery Device	same as above	same as above	200807302-5	28-Mar-07	granted	146773	31-Aug-11

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-SG2-1000	SG	Multi-Cartridge Fluid Delivery Device	same as above	same as above	201104696-8	28-Mar-07	pending
VALT-US1-1000	US	Multi-Cartridge Fluid Delivery Device	60/787,616	30-Mar-06	12/295,173	29-Sep-08	granted	US 7,914,499	29-Mar-11
VALT-102-1000	US	Multi-Cartridge Fluid Delivery Device	60/787,616	30-Mar-06	13/013,379	25-Jan-11	granted	8,361,053	29-Jan-2013
VALT-US3-1000	US	Multi-Cartridge Fluid Delivery Device	60/787,616	30-Mar-06	13/719,481	19-Dec-2012	pending
VALT-110-001	US	Microneedle Patch Applicator			61/426,199	22-Dec-10	expired
VALT-110-101	US	Microneedle Patch Applicator	61/426,199	22-Dec-2010	13/332,065	20-Dec-2011	pending
VALT-110-WO1	WO	Microneedle Patch Applicator	61/426,199	22-Dec-2010	PCT/US2011/066248	20-Dec-2011	pending
VALT-1001-100	US	Fluid Transfer Device and Method of Use			61/175,329	4-May- 09	expired
VALT-1001-101	US	Fluid Transfer Device	61/175,329	04-May-09	12/773,679	4-May-10	pending
VALT-1001-201	US	Fluid Transfer Device-Design			29/361,753	14-May-10	granted	D667946
VALT-1001-202	US	Fluid Transfer Device-Design	29/361,753	01-Aug-12	29/428,565	01-Aug-12	pending
VALT-1001-CN1	CN	Fluid Transfer Device-Design	29/361,753	14-May-10	201030616664.3	12-Nov-10	granted	ZL201030616664.3	19-Oct-11
VALT-1001-CA1	CA	Fluid Transfer Device	61/175,329 PCT/US10/33590	04-May-09 04-May-10	2,760,641	04-May-10	pending
VALT-1001-CN1	CN	Fluid Transfer Device	same as above	same as above	201080029611.9	04-May-10	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-1001-EP1	EP	Fluid Transfer Device	same as above	same as above	10772721.6	04-May-10	pending
VALT-1001-HK1	HK	Fluid Transfer Device	same as above	same as above	12108444.1	04-May-10	pending
VALT-1001-IN1	IN	Fluid Transfer Device	same as above	same as above	8394/DELNP/2011	04-May-10	pending
VALT-1001-JP1	JP	Fluid Transfer Device	same as above	same as above	2012-508830	04-May-10	pending
VALT-1001-KR1	KR	Fluid Transfer Device	same as above	same as above	10-2011-7028818	04-May-10	pending
VALT-1001-WO1	WO	Fluid Transfer Device	61/175,329	04-May-09	PCT/US10/33590	4-May-10	expired
VALT-107-001	US	Fluid Delivery Device			61/251,236	13-Oct-09	expired
VALT-107-002	US	Fluid Delivery Device			61/325,136	16-Apr-10	expired
VALT-107-WO1	WO	Fluid Delivery Device	61/251,236 61/325,136	13-Oct-09 16-Apr-10	PCT/US10/52352	12-Oct-10	expired
VALT-107-AU	AU	Fluid Delivery Device	61/251,236 61/325,136 PCT/US10/52352	13-Oct-09 16-Apr-10 12-Oct-10	2010307002	12-Oct-10	pending
VALT-107-CA	CA	Fluid Delivery Device	same as above	same as above	2,776,397	12-Oct-10	pending
VALT-107-CN	CN	Fluid Delivery Device	same as above	same as above	201080046063.0	12-Oct-10	pending
VALT-107-EP	EP	Fluid Delivery Device	same as above	same as above	10823957.5	12-Oct-10	pending
VALT-107-HK	HK	Fluid Delivery Device	same as above	same as above	13102796.7	12-Oct-10	pending
VALT-107-IL	IL	Fluid Delivery Device	same as above	same as above	218554	12-Oct-10	pending
VALT-107-IN	IN	Fluid Delivery Device	same as above	same as above	2600/DELNP/2012	12-Oct-10	pending
VALT-107-JP	JP	Fluid Delivery Device	same as above	same as above	2012-534285	12-Oct-10	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-107-KR	KR	Fluid Delivery Device	same as above	same as above	10-2012-7008581	12-Oct-10	pending
VALT-107-SG	SG	Fluid Delivery Device	same as above	same as above	201201782-8	12-Oct-10	pending
VALT-107-101	US	Fluid Delivery Device	same as above	same as above	13/500,136	04-Apr-12	pending
VALT-1002-001	US	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals			61/353,004	9-Jun-10	expired
VALT-1002-101	US	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	13/156,839	9-Jun-11	pending
VALT-1002WO1	WO	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	PCT/US11/39771	9-Jun-11	expired

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-1002- AU1	AU	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	2011264825	9-Jun-11	pending
VALT-1002- CA1	CA	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	2,799,784	9-Jun-11	pending
VALT-1002- CN1	CN	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	201180028239.4	9-Jun-11	pending
VALT-1002-EP1	EP	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	11793149.3	9-Jun-11	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-1002-IL1	IL	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	222801	9-Jun-11	pending
VALT-1002-IN1	IN	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	11298/DELNP/2012	9-Jun-11	pending
VALT-1002-JP1	JP	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	2013-514364	9-Jun-11	pending
VALT-1002-KR1	10-2013- 7000391	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	10-2013-7000391	9-Jun-11	pending
VALT-1002-SG1	SG	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	201208331-7	9-Jun-11	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-1003-001	US	Vented Needle			61/569,642	12-Dec-11	pending
VALT-1003-WO1	WO	Vented Needle	61/569,642	12-Dec-11	PCT/US2012/069054	12-Dec-2012	pending

Notes:

¹  EPP Validated States include: Austria, Belgium, France, Germany, & United Kingdom

²  EPP Validated States include: France, Ireland, & United Kingdom (Germany not included as unique patent number issued per above)

³  EPP – Validated States include: France, Ireland, Germany & United Kingdom

TRADEMARKS

Mark	Type	Serial Number	Filing Date	Status
VALERITAS	STANDARD CHARACTER MARK	77752916	June 5, 2009	Registered
V-GO DISPOSABLE INSULIN DELIVERY	DESIGN PLUS WORDS, LETTERS, AND/OR NUMBERS	77752697	June 4, 2009	Registered, Opposition
VALERITAS	DESIGN PLUS WORDS, LETTERS, AND/OR NUMBERS	77752695	June 4, 2009	Registered
V-GO (AU)	STANDARD CHARACTER MARK	1130842	July 20, 2012	Pending
V-GO (BR)	STANDARD CHARACTER MARK	840260458	September 11, 2012	Pending
V-GO (CA)	STANDARD CHARACTER MARK	1,587,483	July 25, 2012	Pending
V-GO (CN)	STANDARD CHARACTER MARK	1130842	July 20, 2012	Pending
V-GO (EP)	STANDARD CHARACTER MARK	1130842	July 20, 2012	Pending
V-GO (HK)	STANDARD CHARACTER MARK	302324475	July 24, 2012	Published
V-GO (IN)	STANDARD CHARACTER MARK	2370294	July 26, 2012	Pending
V-GO (IL)	STANDARD CHARACTER MARK	1130842	July 20, 2012	Pending
V-GO (JP)	STANDARD CHARACTER MARK	1130842	July 20, 2012	Pending
V-GO (KR)	STANDARD CHARACTER MARK	1130842	July 20, 2012	Pending
V-GO (MX)	STANDARD CHARACTER MARK	1,294,519	July 25, 2012	Pending
V-GO (RU)	STANDARD CHARACTER MARK	1130842	July 20, 2012	Pending
V-GO (SG)	STANDARD CHARACTER MARK	1130842	July 20, 2012	Pending
V-GO (ZA)	STANDARD CHARACTER MARK	2012/21399	August 8, 2012	Pending
V-GO (CH)	STANDARD CHARACTER MARK	1130842	July 20, 2012	Pending
V-GO (TW)	STANDARD CHARACTER MARK	101041558	March 16, 2013	Registered
V-GO (TR)	STANDARD CHARACTER MARK	1130842	July 20, 2012	Pending
V-GO (US)	STANDARD CHARACTER MARK	77752694	June 4, 2009	Registered
V-GO LIFE	STANDARD CHARACTER MARK	85666487	July 2, 2012	Allowed

U.S. COMMON LAW USE

Name/Picture

REGISTERED DOMAIN NAMES

Domain Name	Renewal Date
www.valeritas.com		07/21/2012
www.valeritas.net		07/21/2012
www.valeritas.org		01/05/2012

Domain Name	Renewal Date
www.vgo-insulin.com		10/03/2014
www.vgo-insulin.net		10/03/2014
www.go-vgo.com		10/03/2014
www.go-vgo.net		10/03/2014

TWITTER ACCOUNTS

@Valeritas_VGo

@VGo_Insulin

@Go_VGo

Valeritas has been unable to locate the inventors listed below to obtain assignments to BioValve for the following provisional patent applications:

Application Number	Name
•  60/112,805	John P. Willis; Thaddeus G. Minor
•  60/250,573	Ciro Dimeglio
•  60/250,409	Peter F. Marshall
•  60/250,927	Peter F. Marshall
•  60/250,408	Peter F. Marshall
•  60/250,403	Peter F. Marshall
•  60/250,422	Peter F. Marshall
•  60/250,425	Ciro Dimeglio
•  60/250,410	Ciro Dimeglio
•  60/250,413	Peter F. Marshall
•  60/257,757	Donald E. Ackley
•  60/250,538	Peter F. Marshall
•  60/250,295	David Lipson

OPPOSITION PROCEEDINGS

Valeritas instituted Opposition Proceeding No. 92054171 against VGo Communication’s pending App. Ser. No. 77948481 for the VGO mark in standard characters. The proceeding is pending.

An anonymous third party has instituted an Opposition Proceeding No. 2310-2906-2043 against Valeritas’ European Patent No. 1296730. The proceeding is pending.

THIRD PARTY PATENTS

Borrower is aware of U.S. Patent No. 6,629,954, U.S. Patent No. 6,736,795 and U.S. Patent No. 5,858,001 and have obtained written non-infringement and/or invalidity opinions for each of these patents.

Borrower is also investigating U.S. Patent No. 7,938,801 and is in the process of putting in place non-infringement and/or invalidity opinions.

Schedule 7.05(c)

to Term Loan Agreement

MATERIAL INTELLECTUAL PROPERTY

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-011-101	US	Fluid Delivery and Measurement Systems and Methods	60/250,538 60/250,408 60/250/295 60/250,927 60/250,422 60/250,413 60/250,403 60/250,409	30-Nov-00 24-Sep-01	10/006,526	30-Nov-01	granted	US 6,939,324 B2	6-Sep-05
VALT-011-102	US	Fluid Delivery and Measurement Systems and Methods	same as above	30-Nov-00	11/219,944	6-Sep-05	granted	US 7,481,792	27-Jan-09
VALT-011-103	US	Fluid Delivery and Measurement Systems and Methods	same as above	30-Nov-00	12/336,246	16-Dec-08	pending
VALT-011-104	US	Fluid Delivery and Measurement Systems and Methods	same as above	30-Nov-00	13/743,892	17-Jan-2013	pending
VALT-011-EP1	EP	Fluid Delivery and Measurement Systems and Methods	same as above & PCT/US01/46028	30-Nov-00 30-Nov-01	01988242.2	30- Nov-01	pending
VALT-011-EP2	EP	Fluid Delivery and Measurement Systems and Methods	same as above & PCT/US01/46028	30-Nov-00 30-Nov-01	12190927.9	30- Nov-01	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-011-EP3	EP	Fluid Delivery and Measurement Systems and Methods	same as above & PCT/US01/46028	30-Nov-00 30-Nov-01	12190928.7	30- Nov-01	pending
VALT-011-CA1	CA	Fluid Delivery and Measurement Systems and Methods	same as above	same as above	2,430,590	30- Nov-01	granted	2,430,590	14-Aug-12
VALT-011-CA2	CA	Fluid Delivery and Measurement Systems and Methods	same as above	same as above	2,782,501	30- Nov-01	pending
VALT-035-101	US	Hydraulically Actuated Pump for Long Duration Medicament Administration	60/465,070	23-Apr-03	10/831,354	23-Apr-04	granted	US 7,530,968	12-May-09
VALT-035-102	US	Hydraulically Actuated Pump for Long Duration Medicament Administration	60/465,070	23-Apr-03	12/336,363	16-Dec-08	Granted	US 8,070,726	06-Dec-11
VALT-035-103	US	Hydraulically Actuated Pump for Long Duration Medicament Administration	60/465,070	23-Apr-03	12/336,395	16-Dec-08	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-035-104	US	Hydraulically Actuated Pump for Long Duration Medicament Administration	60/465,070	23-Apr-03	12/762,307	17-Apr-10	pending
VALT-035-EP1	EP	Hydraulically Actuated Pump for Long Duration Medicament Administration	60/465,070 & PCT/US04/12797	23-Apr-03 23-Apr-04	04760179.4	23-Apr-04	pending
VALT-035-JP1	JP	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2006-513327	23-Apr-04	granted	4565193	13-Aug-10
VALT-035-JP2	JP	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2009-44928	23-Apr-04	abandoned
VALT-035-JP3	JP	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2012-249271	23-Apr-04	pending
VALT-035-JP4	JP	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2012-249272	23-Apr-04	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-035-CA1	CA	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2,523,267	23-Apr-04	pending
VALT-035-AU1	AU	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2004232858	23-Apr-04	granted	2004232858	22-Oct-09
VALT-035-AU2	AU	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2009202856	23-Apr-04	granted	2009202856	21-Jun-12
VALT-035-AU3	AU	Hydraulically Actuated Pump for Long Duration Medicament Administration	same as above	same as above	2012201924	23-Apr-04	pending
VALT-1001-101	US	Fluid Transfer Device	61/175,329	04-May-09	12/773,679	4-May-10	pending
VALT-1001-201	US	Fluid Transfer Device-Design			29/361,753	14-May-10	granted	D667946
VALT-1001-202	US	Fluid Transfer Device-Design	29/361,753	01-Aug-12	29/428,565	01-Aug-12	pending
VALT-1001-CN1	CN	Fluid Transfer Device-Design	29/361,753	14-May-10	201030616664.3	12-Nov-10	granted	ZL201030616664.3	19-Oct-11
VALT-1001-CA1	CA	Fluid Transfer Device	61/175,329 PCT/US10/33590	04-May-09 04-May-10	2,760,641	04-May-10	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-1001-CN1	CN	Fluid Transfer Device	same as above	same as above	201080029611.9	04-May-10	pending
VALT-1001-EP1	EP	Fluid Transfer Device	same as above	same as above	10772721.6	04-May-10	pending
VALT-1001-HK1	HK	Fluid Transfer Device	same as above	same as above	12108444.1	04-May-10	pending
VALT-1001-IN1	IN	Fluid Transfer Device	same as above	same as above	8394/DELNP/2011	04-May-10	pending
VALT-1001-JP1	JP	Fluid Transfer Device	same as above	same as above	2012-508830	04-May-10	pending
VALT-1001-KR1	KR	Fluid Transfer Device	same as above	same as above	10-2011-7028818	04-May-10	pending
VALT-107-AU	AU	Fluid Delivery Device	61/251,236 61/325,136 PCT/US10/52352	13-Oct-09 16-Apr-10 12-Oct-10	2010307002	12-Oct-10	pending
VALT-107-CA	CA	Fluid Delivery Device	same as above	same as above	2,776,397	12-Oct-10	pending
VALT-107-CN	CN	Fluid Delivery Device	same as above	same as above	201080046063.0	12-Oct-10	pending
VALT-107-EP	EP	Fluid Delivery Device	same as above	same as above	10823957.5	12-Oct-10	pending
VALT-107-HK	HK	Fluid Delivery Device	same as above	same as above	13102796.7	12-Oct-10	pending
VALT-107-IL	IL	Fluid Delivery Device	same as above	same as above	218554	12-Oct-10	pending
VALT-107-IN	IN	Fluid Delivery Device	same as above	same as above	2600/DELNP/2012	12-Oct-10	pending
VALT-107-JP	JP	Fluid Delivery Device	same as above	same as above	2012-534285	12-Oct-10	pending
VALT-107-KR	KR	Fluid Delivery Device	same as above	same as above	10-2012-7008581	12-Oct-10	pending
VALT-107-SG	SG	Fluid Delivery Device	same as above	same as above	201201782-8	12-Oct-10	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-107-101	US	Fluid Delivery Device	same as above	same as above	13/500,136	04-Apr-12	pending
VALT-1002-101	US	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	13/156,839	9-Jun-11	pending
VALT-1002-AU1	AU	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	2011264825	9-Jun-11	pending
VALT-1002-CA1	CA	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	2,799,784	9-Jun-11	pending
VALT-1002-CN1	CN	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	201180028239.4	9-Jun-11	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-1002-EP1	EP	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	11793149.3	9-Jun-11	pending
VALT-1002-IL1	IL	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	222801	9-Jun-11	pending
VALT-1002-IN1	IN	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	11298/DELNP/2012	9-Jun-11	pending
VALT-1002-JP1	JP	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	2013-514364	9-Jun-11	pending

VALT Ref. No.	Territory	Invention	Priority Application	Priority Appln. Filing Date	Application No.	Appln. Filing Date	Status	Patent No.	Issue Date
VALT-1002-KR1	10-2013- 7000391	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	10-2013-7000391	9-Jun-11	pending
VALT-1002-SG1	SG	Fluid Delivery Device Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals	61/353,004	09-Jun-10	201208331-7	9-Jun-11	pending

Schedule 7.06

to Term Loan Agreement

CERTAIN LITIGATION

An anonymous third party has instituted an Opposition Proceeding No. 2310-2906-2043 against Valeritas’ European Patent No. 1296730. The proceeding is pending.

Schedule 7.12

to Term Loan Agreement

INFORMATION REGARDING SUBSIDIARIES

Subsidiary	Jurisdiction of Organization	Direct Equity Holder	Percentage of Subsidiary held by Direct Equity Holder
Valeritas Security Corporation	Delaware	Valeritas, Inc.	99.99000099990001%

Schedule 7.13(a)

to Term Loan Agreement

EXISTING INDEBTEDNESS OF BORROWER AND ITS SUBSIDIARIES

1. Promissory Note, dated January 12, 2007, by and between Valeritas LLC and Massachusetts Development Finance Agency in the amount of $2,500,000.00. As of May 10, 2013, the principal balance outstanding was $484,387.

2. Promissory Note, dated September 8, 2011, issued by Valeritas, Inc. to WCAS Capital Partners IV, L.P., in the original principal amount of $5,000,000, as amended.

Schedule 7.13(b)

to Term Loan Agreement

LIENS GRANTED BY THE OBLIGORS

1. Security Agreement, dated January 12, 2007, by and between Valeritas LLC and Massachusetts Development Finance Agency, granting a first priority security interest in all equipment purchased with the proceeds of the loan evidenced by that certain Promissory Note, dated January 12, 2007, by and between Valeritas LLC and Massachusetts Development Finance Agency in the amount of $2,500,000.00.

Schedule 7.14

to Term Loan Agreement

MATERIAL AGREEMENTS OF EACH OBLIGOR

A. Agreements evidencing or creating any Material Indebtedness: See Schedule 7.13(a).

B. Material Agreements:

1. Manufacturing Services Agreement dated as of March 22, 2012 by and between Valeritas, Inc. and Asia Invest Limited, as amended.

2. Manufacturing Services Agreement, dated December 14, 2009, by and between Valeritas, Inc. and AML Plastics & Electronics Ltd.

3. Distribution Services Agreement, dated as of November 5, 2009, by and between Valeritas, Inc. and AmerisourceBergen Drug Corporation and Bellco Drug Corp., as amended by the Amendment to Distribution Services Agreement, dated as of December 1, 2010, by and between Valeritas, Inc. and AmerisourceBergen Drug Corporation and Bellco Drug Corp.

4. Wholesale Purchase Agreement, dated September 30, 2009, by and between Valeritas, Inc. and Cardinal Health, as amended by the Amendment to Wholesale Purchase Agreement, dated October 20, 2010, by and between Valeritas, Inc. and Cardinal Health.

5. Strategic Redistribution Center and Core Distribution Agreement, dated November 6, 2009, by and between Valeritas, Inc. and McKesson Corporation, as amended by Amendment No. 1 to Strategic Redistribution Center and Core Distribution Agreement, dated January 31, 2010, by and between Valeritas, Inc. and McKesson Corporation.

Schedule 7.15

to Term Loan Agreement

PERMITTED RESTRICTIVE AGREEMENTS

1. Promissory Note, dated September 8, 2011, issued by Valeritas, Inc. to WCAS Capital Partners IV, L.P., in the original principal amount of $5,000,000, as amended.

2. Security Agreement, dated January 12, 2007, by and between Valeritas LLC and Massachusetts Development Finance Agency.

3. Promissory Note, dated January 12, 2007, by and between Valeritas LLC and Massachusetts Development Finance Agency in the amount of $2,500,000.00.

Schedule 7.16

to Term Loan Agreement

REAL PROPERTY OWNED OR LEASED BY BORROWER AND SUBSIDIARIES

Leased Real Property

1. 800 Boston Turnpike, Shrewsbury, Massachusetts.

2. 750 Route 202 South, Suite 100, Bridgewater, NJ.

With respect to the leased premises in Bridgewater, NJ, the Company is in the process of moving from Suite 100 to Suite 600. The Company expects to complete such move within the next sixty days.

Schedule 7.17

to Term Loan Agreement

PENSION MATTERS

(a) Title IV Plans

i. Valeritas Inc. 401(k) Profit Sharing Plan, as amended.

ii. Valeritas Inc. 2008 Amended and Restated Equity Compensation Plan, as amended.

(b) Multiemployer Plans

None.

(c) Material Benefit Plans

i. Medical – PPO Plan through Blue Cross & Blue Shield of Massachusetts

ii. Medical – HMO Plan through Blue Cross & Blue Shield of Massachusetts

iii. Dental – Guardian, Policy No. 00454032

iv. Short Term Disability – Sun Life Insurance Company, Policy No. 211641

v. Long Term Disability – Sun Life Insurance Company, Policy No. 211641

vi. Life (Basic Term and AD&D) – SunLife Insurance Company, Policy No. 211641

vii. Ameriflex Flexible Spending Account Plan

Schedule 7.19

to Term Loan Agreement

None.

Schedule 9.05

to Term Loan Agreement

EXISTING INVESTMENTS

None.

Schedule 9.14

to Term Loan Agreement

PERMITTED SALES AND LEASEBACKS

None.

Exhibit A

to Term Loan Agreement

FORM OF GUARANTEE ASSUMPTION AGREEMENT

GUARANTEE ASSUMPTION AGREEMENT dated as of [DATE] by [NAME OF ADDITIONAL SUBSIDIARY GUARANTOR], a                      [corporation] [limited liability company] (the “Additional Subsidiary Guarantor”), in favor of Capital Royalty Partners II L.P., Capital Royalty Partners II – Parallel Fund “A” L.P. and Parallel Investment Opportunities Partners II L.P., as Lenders (the “Lenders”) under that certain Term Loan Agreement, dated as of May 24, 2013 (as amended, restated, supplemented or otherwise modified, renewed, refinanced or replaced, the “Loan Agreement”), among Valeritas, Inc., a Delaware corporation (“Borrower”), the lenders party thereto and the Subsidiary Guarantors party thereto.

Pursuant to Section 8.12(a) of the Loan Agreement, the Additional Subsidiary Guarantor hereby agrees to become a “Subsidiary Guarantor” for all purposes of the Loan Agreement, and a “Grantor” for all purposes of the Security Agreement. Without limiting the foregoing, the Additional Subsidiary Guarantor hereby, jointly and severally with the other Subsidiary Guarantors, guarantees to the Lenders and their successors and assigns the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of all Guaranteed Obligations (as defined in Section 13.01 of the Loan Agreement) in the same manner and to the same extent as is provided in Section 13 of the Loan Agreement. In addition, as of the date hereof, the Additional Subsidiary Guarantor hereby makes the representations and warranties set forth in Sections 7.01, 7.02, 7.03, 7.05(a), 7.06, 7.07, 7.08 and 7.18 of the Loan Agreement, and in Section 2 of the Security Agreement, with respect to itself and its obligations under this Agreement and the other Loan Documents, as if each reference in such Sections to the Loan Documents included reference to this Agreement, such representations and warranties to be made as of the date hereof.

IN WITNESS WHEREOF, the Additional Subsidiary Guarantor has caused this Guarantee Assumption Agreement to be duly executed and delivered as of the day and year first above written.

[ADDITIONAL SUBSIDIARY GUARANTOR]
By
	Name:
	Title:

Exhibit A-1

Exhibit B

to Term Loan Agreement

FORM OF NOTICE OF BORROWING

Date:	[                    ]
To:	Capital Royalty Partners II L.P. and the other Lenders
	1000 Main Street, Suite 2500
	Houston, TX 77002
	Attn: General Counsel

Re: Borrowing under Term Loan Agreement

Ladies and Gentlemen:

The undersigned, Valeritas, Inc., a Delaware corporation (“Borrower”), refers to the Term Loan Agreement, dated as of May 24, 2013 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), among Borrower, Capital Royalty Partners II L.P., Capital Royalty Partners II – Parallel Fund “A” L.P. and Parallel Investment Opportunities Partners II L.P., and other parties from time to time party thereto as lenders (“Lenders”), and the subsidiary guarantors from time to time party thereto. The terms defined in the Loan Agreement are herein used as therein defined.

Borrower hereby gives you notice irrevocably, pursuant to Section 2.02 of the Loan Agreement, of the borrowing of the Loan specified herein:

1. The proposed Borrowing Date is [                    ].

2. The amount of the proposed Borrowing is $[            ].

3. The payment instructions with respect to the funds to be made available to the Borrower are as follows:

Bank name: [                    ]

Bank Address: [                    ]

Routing Number: [                    ]

Account Number: [                    ]

Swift Code: [                    ]

The Borrower hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed borrowing of the Loan, before and after giving effect thereto and to the application of the proceeds therefrom:

a) the representations and warranties made by the Borrower in Section 7 of the Loan Agreement shall be true on and as of the Borrowing Date and immediately after giving effect to the application of the proceeds of the Borrowing with the same force and effect as if made on

Exhibit B-1

and as of such date, except that (i) the representation regarding representations and warranties that refer to a specific earlier date shall be true on such earlier date and (ii) with respect to each Borrowing made following the initial Borrowing Date, such representation regarding representations and warranties shall only be required to be true in all material respects on and as of the applicable Borrowing Date (except to the extent that such representation or warranty contains any materiality or Material Adverse Effect qualifier);

b) on and as of the Borrowing Date, there shall have occurred no Material Adverse Change since [                    ]; and

c) no Default exists or would result from such proposed borrowing.

Exhibit B-2

IN WITNESS WHEREOF, the Borrower has caused this Notice of Borrowing to be duly executed and delivered as of the day and year first above written.

BORROWER:

VALERITAS, INC.
By
	Name:
	Title:

Exhibit B-3

Exhibit C

to Term Loan Agreement

FORM OF TERM LOAN NOTE

[DATE]

U.S. $[            ] plus all compounded interest calculated pursuant to Section 3.02(d)(ii) of the Loan Agreement

FOR VALUE RECEIVED, the undersigned, Valeritas, Inc., a Delaware corporation (“Borrower”), hereby promises to pay to [Capital Royalty Partners II L.P./ Capital Royalty Partners II – Parallel Fund “A” L.P./Parallel Investment Opportunities Partners II L.P.] or its assigns (the “Lender”) at the Lender’s principal office in 1000 Main Street, Suite 2500, Houston, TX 77002, in immediately available funds, the aggregate principal sum set forth above, or, if less, the aggregate unpaid principal amount of all Loans made by the Lender pursuant to Section 2.01 of the Term Loan Agreement, dated as of May 24, 2013 (as amended, restated, supplemented or otherwise modified, renewed, refinanced or replaced, the “Loan Agreement”), among the Borrower, the Lender, the other lenders party thereto and the Subsidiary Guarantors party thereto, on the date or dates specified in the Loan Agreement, together with interest on the principal amount of such Loans from time to time outstanding thereunder at the rates, and payable in the manner and on the dates, specified in the Loan Agreement.

This Note is a Note issued pursuant to the terms of Section 2.04 of the Loan Agreement and Section 3.02(d)(ii) of the Loan Agreement to the extent the Borrower has elected to pay interest on the outstanding principal amount of this Note in kind pursuant to Section 3.02(d)(ii) of the Loan Agreement, and this Note and the holder hereof are entitled to all the benefits and security provided for thereby or referred to therein, to which Loan Agreement reference is hereby made for a statement thereof. All defined terms used in this Note, except terms otherwise defined herein, shall have the same meaning as in the Loan Agreement.

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION; PROVIDED THAT SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY.

[THIS NOTE IS SUBJECT TO THE TERMS OF THE INTERCREDITOR AGREEMENT, DATED AS OF                     , 2013 AMONG CAPITAL ROYALTY PARTNERS II L.P., CAPITAL ROYALTY PARTNERS II – PARALLEL FUND “A” L.P., PARALLEL INVESTMENT OPPORTUNITIES PARTNERS II L.P. AND [                    ].]

The Borrower hereby waives demand, presentment, protest or notice of any kind hereunder, other than notices provided for in the Loan Documents. The non-exercise by the holder hereof of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in such particular or any subsequent instance.

Exhibit C-1

THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE LOAN AGREEMENT.

THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT. TO OBTAIN (I) THE ISSUE PRICE OF THIS NOTE, (II) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, (III) THE ISSUE DATE, OR (IV) THE YIELD TO MATURITY; CONTACT [CONTACT AT ISSUER] AT [ADDRESS], OR BY PHONE AT [NUMBER].

VALERITAS, INC.
By
	Name:
	Title:

Exhibit C-2

Exhibit D

to Term Loan Agreement

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

Reference is made to the Term Loan Agreement, dated as of May 24, 2013 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), among Valeritas, Inc., a Delaware corporation (“Borrower”), Capital Royalty Partners II L.P., Capital Royalty Partners II – Parallel Fund “A” L.P. and Parallel Investment Opportunities Partners II L.P., and other parties from time to time party thereto as lenders (“Lenders”), and the subsidiary guarantors from time to time party thereto. [                    ] (the “Foreign Lender”) is providing this certificate pursuant to Section 5.05(e)(ii)(B) of the Loan Agreement. The Foreign Lender hereby represents and warrants that:

1. The Foreign Lender is the sole record owner of the Loans as well as any obligations evidenced by any Note(s) in respect of which it is providing this certificate;

2. The Foreign Lender’s direct or indirect partners/members are the sole beneficial owners of the Loans as well as any obligations evidenced by any Note(s) in respect of which it is providing this certificate;

3. Neither the Foreign Lender nor its direct or indirect partners/members is a “bank” for purposes of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the “Code”). In this regard, the Foreign Lender further represents and warrants that:

(a) neither the Foreign Lender nor its direct or indirect partners/members is subject to regulatory or other legal requirements as a bank in any jurisdiction; and

(b) neither the Foreign Lender nor its direct or indirect partners/members has been treated as a bank for purposes of any tax, securities law or other filing or submission made to any Governmental Authority, any application made to a rating agency or qualification for any exemption from tax, securities law or other legal requirements;

4. Neither the Foreign Lender nor its direct or indirect partners/members is a 10-percent shareholder of Borrower within the meaning of Section 881(c)(3)(B) of the Code; and

5. Neither the Foreign Lender nor its direct or indirect partners/members is a controlled foreign corporation receiving interest from a related person within the meaning of Section 881(c)(3)(C) of the Code.

[Signature follows]

Exhibit D-1

IN WITNESS WHEREOF, the undersigned has caused this certificate to be duly executed and delivered as of the date indicated below.

[NAME OF NON-U.S. LENDER]
By
	Name:
	Title:
Date:

Exhibit D-2

Exhibit E

to Term Loan Agreement

FORM OF COMPLIANCE CERTIFICATE

[DATE]

This certificate is delivered pursuant to Section 8.01(c) of, and in connection with the consummation of the transactions contemplated in, the Term Loan Agreement, dated as of May 24, 2013 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), among Valeritas, Inc., a Delaware corporation (“Borrower”), Capital Royalty Partners II L.P., Capital Royalty Partners II – Parallel Fund “A” L.P. and Parallel Investment Opportunities Partners II L.P., and other parties from time to time party thereto as lenders (“Lenders”), and the subsidiary guarantors from time to time party thereto. Capitalized terms used herein and not otherwise defined herein are used herein as defined in the Loan Agreement.

The undersigned, a duly authorized Responsible Officer of Borrower having the name and title set forth below under his signature, hereby certifies, on behalf of the Borrower for the benefit of the Lenders and pursuant to Section 8.01(c) of the Loan Agreement that such Responsible Officer of the Borrower is familiar with the Loan Agreement and that, in accordance with each of the following sections of the Loan Agreement, each of the following is true on the date hereof, both before and after giving effect to any Loan to be made on or before the date hereof:

In accordance with Section 8.01[(a)/(b)] of the Loan Agreement, attached hereto as Annex A are the financial statements for the [fiscal quarter/fiscal year] ended [                    ] required to be delivered pursuant to Section 8.01[(a)/(b)] of the Loan Agreement. Such financial statements fairly present in all material respects the consolidated financial position, results of operations and cash flow of the Borrower and its Subsidiaries as at the dates indicated therein and for the periods indicated therein in accordance with GAAP [(subject to the absence of footnote disclosure and normal year-end audit adjustments)]³ [without qualification as to the scope of the audit.]⁴

Attached hereto as Annex B are the calculations used to determine compliance with each financial covenant contained in Section 10 of the Loan Agreement.

No Default is continuing as of the date hereof[, except as provided for on Annex C attached hereto, with respect to each of which Borrower proposes to take the actions set forth on Annex C].

IN WITNESS WHEREOF, the undersigned has executed this certificate on the date first written above.

³  Insert language in brackets only for quarterly certifications.

⁴  Insert language in brackets only for annual certifications.

Exhibit E-1

VALERITAS, INC.
By
	Name:
	Title:

Exhibit E-2

Annex A to Compliance Certificate

FINANCIAL STATEMENTS

[see attached]

Exhibit E-3

Annex B to Compliance Certificate

CALCULATIONS OF FINANCIAL COVENANT COMPLIANCE

I.	Section 10.01(a)(i)-(vi): Minimum Revenue
A.	Revenue received during the twelve month period beginning on January 1, 2013:	$
	Is line I.A equal to or greater than $5,000,000?	Yes: In compliance;
		No: Not in compliance
B.	Revenue received during the twelve month period beginning on January 1, 2014:	$
	Is line I.B equal to or greater than $25,000,000?	Yes: In compliance;
		No: Not in compliance
C.	Revenue received during the twelve month period beginning on January 1, 2015:	$
	Is line I.C equal to or greater than $50,000,000?	Yes: In compliance;
		No: Not in compliance
D.	Revenue received during the twelve month period beginning on January 1, 2016:	$
	Is line I.D equal to or greater than $75,000,000?	Yes: In compliance;
		No: Not in compliance
E.	Revenue received during the twelve month period beginning on January 1, 2017:	$
	Is line I.E equal to or greater than $100,000,000?	Yes: In compliance;
		No: Not in compliance
F.	Revenue received during the twelve month period beginning on January 1, [2018][2019]	$
	Is line I.F equal to or greater than $125,000,000?	Yes: In compliance;
		No: Not in compliance
II.	Section 10.02: Minimum Cash
A.	Minimum daily balance of cash and Permitted Cash Equivalent Investments of Borrower and its Subsidiaries during the most recently ended fiscal quarter of Borrower:	$
B.	Minimum cash balance required by Section 10.02:	$                    5
	(i)     Minimum cash balance required of Borrower by Borrower’s Permitted Priority Debt Creditors:	$
	(ii)    $2,000,000:	$
	Is line II.A equal to or greater Line II.B?	Yes: In compliance;
		No: Not in compliance

⁵  Insert the greater of line II.B(i) and II.B(ii)

Exhibit E-4

Exhibit F

to Term Loan Agreement

FORM OF OPINION FROM CORPORATE COUNSEL

Exhibit F-1

[            ] [    ], 2013

To:

Capital Royalty Partners II L.P., as a Lender and as Control Agent

Capital Royalty Partners II – Parallel Fund “A” L.P., as a Lender

Parallel Investment Opportunities Partners II L.P., as a Lender

1000 Main Street, Suite 2500

Houston, TX 77002

Re: Valeritas, Inc.

Ladies and Gentlemen:

We have acted as special counsel for Valeritas, Inc., a Delaware corporation (the “Company”), in connection with the Term Loan Agreement dated as of May [    ], 2013 (the “Term Loan Agreement”) among the Company, as Borrower and Capital Royalty Partners II L.P., Capital Royalty Partners II – Parallel Fund “A” L.P., and Parallel Investment Opportunities Partners II L.P., as Lenders (collectively, the “Lenders”). Terms defined in the Term Loan Agreement are used as therein defined, unless otherwise defined herein. This opinion letter is being delivered to you pursuant to Section 6.01(g)(x)(A) of the Term Loan Agreement. References in this opinion letter to the “DE UCC” are to the Uniform Commercial Code as currently in effect in the State of Delaware. References in this opinion letter to the “MA UCC” are to the Uniform Commercial Code as currently in effect in the Commonwealth of Massachusetts. References in this opinion letter to the “NY UCC” are to the Uniform Commercial Code as currently in effect in the State of New York. The terms in paragraph 12 that are defined in the DE UCC and that are not capitalized have the respective meanings given to them in the DE UCC. The terms in paragraph 14 that are defined in the MA UCC and that are not capitalized have the respective meanings given to them in the MA UCC. The terms in paragraphs 11 and 13 that are defined in the NY UCC and that are not capitalized have the respective meanings given to them in the NY UCC. In addition, as used herein, “Lender Security Entitlements” means “security entitlements” (as defined in Section 8-102(a)(17) of the MA UCC) with respect to collateral described in the Security Agreement now or hereafter credited to the Account (as defined in the Control Agreement as defined below).

In connection with this opinion letter, we have examined originals, or copies certified or otherwise identified to our satisfaction, of (i) Fourth Amended and Restated Certificate of Incorporation of the Company dated as of November 16, 2012, as amended (the “Valeritas Amended Charter”), (ii) the Bylaws of the Company, as amended, (iii) the Restated Certificate of Incorporation of Valeritas Security Corporation, a Delaware corporation (“Valeritas Security”, and together, with the Company, the “Opinion Parties”) dated as of May [    ], 2013 (the “Valeritas Security Amended Charter”), (iv) the Bylaws of Valeritas Security and (v) and such

Capital Royalty Partners II L.P.

Capital Royalty Partners II – Parallel Fund “A” L.P.

Parallel Investment Opportunities Partners II L.P.

May [    ], 2013

Page 2

other documents and records, and other instruments as we have deemed appropriate for purposes of the opinions set forth herein, including the following documents (the documents referred to in clauses (a) through (h) below are referred to herein as the “Loan Documents”):

(a) the Term Loan Agreement;

(b) (i) the Term Loan Note dated as of the date hereof with the Borrower, as the maker in favor of Capital Royalty Partners II L.P., as the holder, (ii) the Term Loan Note dated as of the date hereof with the Borrower, as the maker in favor of Capital Royalty Partners II – Parallel Fund “A” L.P., as the holder and (iii) the Term Loan Note dated as of the date hereof with the Borrower, as the maker in favor of Parallel Investment Opportunities Partners II L.P., as the holder;

(c) the Security Agreement;

(d) the Short-Form Patent Security Agreement dated as of May [    ], 2013 by the Borrower in favor of the Lenders;

(e) the Short-Form Trademark, Security Agreement dated as of May [    ], 2013 by the Borrower in favor of the Lenders;

(f) the Valeritas Security Side Letter;

(g) (i) the Stock Purchase Warrant dated as of              by the Borrower as issuer and Capital Royalty Partners II L.P., as holder, (ii) the Stock Purchase Warrant dated as of              by the Borrower as issuer and Capital Royalty Partners II – Parallel Fund “A” L.P., as holder and (iii) the Stock Purchase Warrant dated as of              by the Borrower as issuer and Parallel Investment Opportunities Partners II L.P., as holder (collectively, the “Warrants”);

(h) the Account Control Agreement dated as of May [    ], 2013 (the “Control Agreement”) among the Company, Capital Advisors Group, Inc, Capital Royalty Partners II L.P. and State Street Bank and Trust Company;

(i) Good standing certificates, dated as of a recent date, with respect to the valid existence and good standing of each of the Opinion Parties, in each case, in the State of Delaware (collectively, the “Good Standing Certificates”);

Capital Royalty Partners II L.P.

Capital Royalty Partners II – Parallel Fund “A” L.P.

Parallel Investment Opportunities Partners II L.P.

May [    ], 2013

Page 3

(j) (i) Certificates dated as of a recent date, with respect to the qualification of each Opinion Party to do business in the Commonwealth of Massachusetts and (ii) a certificate dated as of a recent date, with respect to the Company’s good standing in the State of New Jersey; (“Certificates of Foreign Qualifications”); and

(k) (i) a copy of a Uniform Commercial Code financing statement (the “Company Financing Statement”) naming the Company as debtor and the Lenders as secured parties, filed in the Office of the Secretary of State of the State of Delaware (the “DE Filing Office”) on May [    ], 2013, a copy of which are attached hereto as Schedule 1.

We have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of the documents submitted to us as originals, the conformity to the original documents of all documents submitted to us as certified, facsimile or photostatic copies, and the authenticity of the originals of all documents submitted to us as copies. We have also assumed that the Loan Documents constitute valid and binding obligations of each party thereto other than the Opinion Parties party thereto.

As to any facts that are material to the opinions hereinafter expressed that we did not independently establish or verify, we have relied without investigation upon the representations of the Opinion Parties contained in the Loan Documents and upon certificates of officers of the Opinion Parties.

In rendering the opinions set forth herein, whenever a statement or opinion set forth therein is qualified by “to our knowledge,” “known to us” or by words of similar import, it is intended to indicate that, during the course of our representation of the Company in the subject transaction, no information has come to the attention of those lawyers in our firm who have rendered legal services in connection with such transaction that gives us actual knowledge of the inaccuracy of such statement or opinion. We have not undertaken any independent investigation to determine the accuracy of facts material to any such statement or opinion, and no inference as to such statement or opinion should be drawn from the fact of our representation of the Company.

We have relied upon a certificate of an officer of the Company dated the date hereof, certifying that the items listed in such certificate are (i) all of the indentures, loan or credit agreements, leases, guarantees, mortgages, security agreements, bonds, notes, other agreements or instruments (the “Valeritas Security Material Agreements”), and (ii) all of the judicial or administrative orders, writs, judgments, awards, injunctions and decrees (the “Valeritas Security Orders”), which as to any matter in (i) or (ii) affect or purport to affect the Valeritas Security Amended Charter.

Capital Royalty Partners II L.P.

Capital Royalty Partners II – Parallel Fund “A” L.P.

Parallel Investment Opportunities Partners II L.P.

May [    ], 2013

Page 4

Based upon and subject to the foregoing, and to the limitations and qualifications described below, we are of the opinion that:

1. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware.

2. Valeritas Security is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware.

3. Each Opinion Party is duly qualified to do business as a foreign corporation in the Commonwealth of Massachusetts. The Company is duly qualified to do business as a foreign corporation in the State of New Jersey.

4. Each of the Opinion Parties has the corporate power and authority to enter into and perform the Loan Documents to which it is a party, has taken all necessary corporate action to authorize the execution, delivery and performance of such Loan Documents and has duly executed and delivered such Loan Documents to which it is a party.

5. Each Loan Document to which each Opinion Party is a party is the valid and binding obligation of such Opinion Party enforceable against such Opinion Party in accordance with its terms.

6. The execution and delivery by each Opinion Party of the Loan Documents to which it is a party do not, and the performance by such Opinion Party of its obligations thereunder will not, result in a violation of the Certificate of Incorporation or Bylaws of such Opinion Party.

7. The execution and delivery by the Company of the Loan Documents to which it is a party does not, and the performance by the Company of its obligations thereunder will not, require any approval from or filing with any governmental authority of the United States, the State of New York or any provision of the Delaware General Corporation Law. The execution and delivery by Valeritas Security of the Loan Documents to which it is a party does not, and the performance by Valeritas Security of its obligations thereunder will not, require any approval from or filing with any governmental authority of the United States, the State of New York or any provision of the Delaware General Corporation Law.

8. The execution and delivery by the Company of the Loan Documents to which it is a party does not, and the performance by the Company of its obligations thereunder will not, result in any violation of any federal law of the United States or law of the State of New York or any provision of the Delaware General Corporation Law. The execution and delivery by Valeritas Security of the Loan Documents to which it is a party does not, and the performance by Valeritas Security of its obligations thereunder will not, result in any violation of any federal law of the United States or law of the State of New York or any provision of the Delaware General Corporation Law.

Capital Royalty Partners II L.P.

Capital Royalty Partners II – Parallel Fund “A” L.P.

Parallel Investment Opportunities Partners II L.P.

May [    ], 2013

Page 5

9. The extension of credit made on the date hereof and the use of the proceeds thereof in accordance with the provisions of the Term Loan Agreement do not violate the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System.

10. Neither Opinion Party is an “investment company” within the meaning of, and subject to regulation under, the Investment Company Act of 1940, as amended.

11. The Security Agreement is effective to create in favor of the Lenders, as security for the Secured Obligations, as defined in the Security Agreement, a security interest (the “Article 9 Security Interest”) in the collateral described in the Security Agreement in which a security interest may be created under Article 9 of the NY UCC (the “Article 9 Collateral”).

12. As a result of the filing of the Company Financing Statement with the DE Filing Office, the Article 9 Security Interest in that portion of the Article 9 Collateral of the Borrower in which a security interest may be perfected by the filing of a financing statement under the DE UCC has been perfected.

13. The Article 9 Security Interest in that portion of the Article 9 Collateral consisting of certificated securities represented by the certificates identified on Annex 2 to the Security Agreement will be perfected upon delivery of the certificates to the Control Agent, together with duly executed stock powers or other transfer powers in blank.

14. The provisions of the Control Agreement are effective to perfect the security interest of the Control Agent in the Lender Security Entitlements.

15. The issuance, sale and delivery of the Warrants, and the reservation, issuance and delivery of the Common Stock of the Company issuable upon the exercise of the Warrants, have been duly authorized by all required corporate action of the Company. The shares of Common Stock initially issuable upon exercise of the Warrants, upon exercise and payment in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable.

16. The offer and sale of the Warrants are exempt from the registration requirements of the Securities Act of 1933, as amended.

17. Valeritas Security has 1,000,100 authorized shares of Common Stock, par value $0.0001 per share (the “Common Stock”), 1,000,000 of which have been designated Class A Common Stock and 100 of which have been designated as Class B Common Stock. The shares of Class B Common Stock, upon issuance in accordance with (i) the Subscription Agreement dated as of May [    ], 2013 by and between Valeritas Security and Capital Royalty Partners II L.P., (ii) the Subscription Agreement dated as of May [    ], 2013 by and between Valeritas Security and Capital Royalty Partners II – Parallel Fund “A” L.P., (iii) the Subscription

Capital Royalty Partners II L.P.

Capital Royalty Partners II – Parallel Fund “A” L.P.

Parallel Investment Opportunities Partners II L.P.

May [    ], 2013

Page 6

Agreement dated as of May [    ], 2013 by and between Valeritas Security and Parallel Investment Opportunities Partners II L.P. (collectively, the “Subscription Agreements”), have been duly authorized and, upon issuance in accordance with the terms thereof, will constitute validly issued shares of Valeritas Security and will be fully paid and nonassessable. The rights, powers and preferences, and the qualifications, limitations and, restrictions thereof, of the Class B Common Stock are as stated in the Valeritas Security Amended Charter filed with the Secretary of State of the State of Delaware on May [    ], 2013, as amended from time to time in accordance with the terms thereof.

18. The Valeritas Security Amended Charter did not and will not (i) result in any breach or default of any of the provisions of any Valeritas Security Material Agreement, (ii) result in a violation of the Certificate of Incorporation of Valeritas Security dated as of December 22, 2011 or the Bylaws of Valeritas Security, (iii) result in any violation of the Delaware General Corporation Law or (iv) result in a violation of any Valeritas Security Order, except, in the case of clauses (i), (iii) and (iv) above, such conflicts, breaches, violations or defaults that, individually or in the aggregate, would not have a Material Adverse Effect.

19. The Valeritas Amended Charter and the Valeritas Security Amended Charter have been duly filed with the Secretary of State of the State of Delaware and are effective as of the date of such filing.

20. The opinions expressed above are subject to the following limitations, exceptions, qualifications and assumptions:

A. The opinions expressed herein are subject to bankruptcy, insolvency, fraudulent transfer and other similar laws affecting the rights and remedies of creditors generally and general principles of equity, including concepts of materiality, reasonableness, good faith and fair dealing.

B. Provisions of the Loan Documents relating to indemnification or exculpation may be limited by public policy or by law.

C. The opinions expressed in this opinion letter are limited to the laws of the State of New York, the General Corporation Law of the State of Delaware, the DE UCC, the MA UCC and the Federal laws of the United States of America, and we express no opinion with respect to any other laws of any state or jurisdiction. With respect to the DE UCC and MA UCC, we have, with your permission, confined our investigation of the laws of such jurisdiction(s) to an examination of the relevant provisions of the Uniform Commercial Code as in effect in such jurisdictions as set forth in the CCH Secured Transactions Guide (as updated through April 23, 2013), without regard to any case law decided thereunder or other laws or regulations related thereto.

Capital Royalty Partners II L.P.

Capital Royalty Partners II – Parallel Fund “A” L.P.

Parallel Investment Opportunities Partners II L.P.

May [    ], 2013

Page 7

D. For purposes of our opinions in paragraphs 1 and 2 hereof as to the valid existence and good standing of the Opinion Parties, we have relied solely upon the Good Standing Certificates. For purposes of our opinion in paragraph 3 hereof as to the due qualification of the Opinion Parties as foreign corporations in the Commonwealth of Massachusetts and/or the State of New Jersey, as applicable, we have relied solely upon the Certificates of Foreign Qualification. For purposes of our opinions in paragraphs 19 hereof, we have relied solely upon copies of the Valeritas Amended Charter and the Valeritas Security Amended Charter certified by the Delaware Secretary of State.

E. We have considered only such laws and regulations that in our experience are typically applicable to a transaction of the nature contemplated by the Loan Documents.

F. Certain waivers by the Opinion Parties in the Loan Documents may relate to matters that cannot, as a matter of law, be effectively waived. Without limiting the foregoing, you should be aware that under applicable law guarantors may be entitled to certain rights or protections which as a matter of statutory or common law may not be waived or altered. We express no opinion herein as to the enforceability of any provision of any Loan Document which purport to waive or alter such rights or protections, except to the extent permitted by law.

G. The enforceability of the Loan Documents, may be limited by the unenforceability under certain circumstances of provisions imposing penalties, forfeitures, late payment charges or an increase in interest rate upon delinquency in payment or an occurrence of default.

H. In connection with the opinions set forth in paragraphs 11-13, we have assumed that the Company has power to transfer, rights (to the extent necessary to grant a security interest) in the Article 9 Collateral existing on the date hereof and will have, or will have the power to transfer, rights (to such extent) in property which becomes Article 9 Collateral after the date hereof.

I. We express no opinion as to (i) the perfection of any security interest in any Collateral consisting of timber to be cut or as-extracted collateral or goods which are or are to become fixtures or (ii) the priority of any security interest.

J. In connection with the opinions set forth in paragraphs 12-13, the perfection of a security interest in any collateral consisting of “proceeds” (as defined in the Uniform Commercial Code of the applicable jurisdiction) is subject to limitations set forth in Section 9-315 of the Uniform Commercial Code of the applicable jurisdiction.

K. In rendering the opinion expressed in paragraph 16 above, we have assumed that Company has made no offer to sell the Warrants by means of any publication of any advertisement therefor or any general solicitation.

Capital Royalty Partners II L.P.

Capital Royalty Partners II – Parallel Fund “A” L.P.

Parallel Investment Opportunities Partners II L.P.

May [    ], 2013

Page 8

L. We express no opinion as to whether the stockholder consent rights set forth in the Valeritas Security Amended Charter, or any exercise thereof by the holders of Class B Common Stock, could be deemed to be participation in the management and control of the business of Valeritas Security.

M. We have assumed that the certificates representing the Class A Common Stock and Class B Common Stock will contain conspicuous legends noting the transfer restrictions contained in the Valeritas Security Amended Charter and that such restrictions on transfer were established for a reasonable purpose.

N. We assume that the Company Financing Statement has not been amended, modified or terminated in any manner.

O. We note that (i) the Loan Documents (other than the Control Agreement and the Warrants) contain provisions stating that they are to be governed by the laws of the State of New York, (ii) the Control Agreement contains a provision stating that it is to be governed by the laws of the Commonwealth of Massachusetts and (iii) the Warrants contain provisions stating that they are to be governed by the laws of the State of Delaware (each contractual choice of law clause being referred to as a “Chosen-Law Provision”). Except to the extent that such a Chosen-Law Provision is made enforceable by New York General Obligations Law Section 5-1401, as applied by a New York state court or a federal court sitting in New York and applying New York choice of law principles, no opinion is given herein as to any Chosen-Law Provision, or otherwise as to the choice of law or internal substantive rules of law that any court or other tribunal may apply to the transactions contemplated by the Loan Documents.

P. We call to your attention that, under the MA UCC, actions taken by the Control Agent (including amending any agreement relating to the Account (as defined in the Control Agreement) in a manner which either (a) eliminates the Control Agent’s “control” over the Lender Security Entitlements, (b) changes the identity of the entitlement holder of the Account (as defined in the Control Agreement), or (c) changes the law governing the Account (as defined in the Control Agreement) may adversely affect the security interest of the Control Agent in the Lender Security Entitlements We have assumed that the Account (as defined in the Control Agreement) is maintained as and constitutes a “securities account” as defined in Section 8-501(a) of the MA UCC. We have assumed that State Street Bank and Trust Company will at all times will be a “securities intermediary” within the meaning of Section 8-102(14) of the MA UCC and will at all times be acting in that capacity. We have assumed that the Account (as defined in the Control agreement) has been established and will be maintained in accordance with the provisions of the Control Agreement. We express no opinion whether or to what extent any particular item of property credited to the Account is a “financial asset” subject to the MA UCC.

Q. In connection with the opinions set forth in paragraphs paragraph 15-17, we have relied upon the representations and warranties contained in the Subscription Agreements and Section 8 of the Warrants.

Capital Royalty Partners II L.P.

Capital Royalty Partners II – Parallel Fund “A” L.P.

Parallel Investment Opportunities Partners II L.P.

May [    ], 2013

Page 9

R. We express no opinion as to:

(i) The enforceability of any provision of the Loan Documents insofar as it provides that any Person purchasing a participation from the Lender or other Person may exercise set-off or similar rights with respect to such participation or that a Lender or other Person may exercise set-off or similar rights other than in accordance with applicable law.

(ii) The enforceability of any provision of the Loan Documents permitting modification thereof only by means of an agreement in writing signed by the parties thereto.

(iii) The enforceability of any provision of the Loan Documents purporting to waive the right to trial by jury.

(iv) The enforceability of any provision of the Loan Documents purporting to grant the right to confess judgment against the Opinion Parties.

This opinion letter is effective only as of the date hereof. We do not assume responsibility for updating this opinion letter as of any date subsequent to its date, and we assume no responsibility for advising you of any changes with respect to any matters described in this opinion letter that may occur subsequent to the date of this opinion letter or from the discovery, subsequent to the date of this opinion letter, of information not previously known to us pertaining to the events occurring prior to such date.

This opinion letter is furnished by us solely for the benefit of the Lenders and their respective successors and permitted assigns and participants pursuant to the Term Loan Agreement, and this opinion letter may not be relied upon by such parties for any other purpose or by any other person or entity for any purpose whatsoever. This opinion letter is not to be quoted in whole or in part or otherwise referred to or used or furnished to any other person, except as may be required by any governmental authority or pursuant to legal process, without our express written consent.

Very truly yours,

Capital Royalty Partners II L.P.

Capital Royalty Partners II – Parallel Fund “A” L.P.

Parallel Investment Opportunities Partners II L.P.

May [    ], 2013

Page 10

Schedule 1

Exhibit G

to Term Loan Agreement

FORM OF LANDLORD CONSENT

Exhibit G-1

LANDLORD CONSENT

WHEREAS, CAPITAL ROYALTY PARTNERS II L.P., as Collateral Agent (“CRPII”, and in such capacity, “Collateral Agent”) and the lenders party thereto from time to time including CAPITAL ROYALTY PARTNERS II – PARALLEL FUND “A” L.P. and PARALLEL INVESTMENT OPPORTUNITIES PARTNERS II L.P., each in its capacity as a Lender (“each a “Lender” and collectively, the “Lenders”), has entered into a term loan agreement and a security agreement, each dated as of May __, 2013, with VALERITAS, INC. (“Debtor”) pursuant to which Lenders have been granted, with certain exceptions, a security interest in all of Debtor’s personal property, including, but not limited to, inventory, equipment and trade fixtures (hereinafter “Personal Property”) but specifically excluding building fixtures and improvements to real estate, and

WHEREAS, THE TAMING OF THE SHREWSBURY, LLC, O’NEILL PARTNERS, LLC, and CHANSKI, LLC as tenants in common (collectively, the “Landlord”) are the owners of the real property located at 800 Boston Turnpike, Shrewsbury, Massachusetts (the “Premises”); and

WHEREAS, Landlord has entered into that certain Lease Agreement dated December 22, 2007 with Debtor, as tenant (collectively, the “Lease”); and

WHEREAS, certain of the Personal Property has or may become affixed to or be located on, wholly or in part, the Premises.

NOW, THEREFORE, in consideration of any loans or other financial accommodation extended by Lenders to Debtor at any time, and other good and valuable consideration, the parties agree as follows:

(a) Landlord subordinates to Lenders all rights of security interest or other interest Landlord may now or hereafter have in any of the Personal Property whether for rent or otherwise while Debtor is indebted to Lenders;

(b) That the Personal Property may be installed in or located on the Premises and is not and shall not be deemed a fixture or part of the real estate and shall at all times be considered personal property;

(c) That Collateral Agent or its representatives may enter upon the Premises during normal business hours, and upon not less than 24-hours advance notice, to inspect the Personal Property;

(d) That Collateral Agent, at its option, upon written notice delivered to Landlord not less than ten (10) business days in advance, may enter the Premises during normal business hours for the purpose of repossessing, removing or otherwise dealing with said Personal Property; provided that neither Collateral Agent nor Lenders shall be permitted to operate the business of Debtor on the Premises or sell, auction or otherwise dispose of any Personal Property at the Premises or advertise any of the foregoing; and such license shall continue, subject to paragraph (g) below, from the date Collateral Agent enters the Premises for as long as Collateral Agent reasonably deems necessary but not to exceed a period of ten (10) days. During the period Collateral Agent occupies the Premises, it shall pay to Landlord the Rent and Additional Rent provided under the Lease relating to the Premises, prorated on a per diem basis to be determined on a thirty (30) day month, without incurring any other obligations of Debtor;

(e) Collateral Agent shall pay to Landlord any costs for damage to the Premises or the building in which the Premises is located in removing or otherwise dealing with said Personal Property and shall indemnify and hold harmless Landlord from and against (i) all claims, disputes and expenses, including reasonable attorneys’ fees, suffered or incurred by Landlord arising from Collateral Agent’s exercise of any of its rights hereunder, and (ii) any injury to third persons, caused by actions of Collateral Agent pursuant to this consent;

- 1 -

(f) Landlord agrees to give notice to Collateral Agent in writing by certified mail or facsimile of Landlord’s intent to exercise its remedies in response to any default by Debtor of any of the provisions of the Lease, to:

Capital Royalty Partners II L.P.

1000 Main Street, Suite 2500

Houston, TX 77002

Attention: General Counsel

Fax: 713.209.7351

(g) If Landlord acquires possession of the Premises after a default by Debtor, it may require that the Personal Property be removed by Collateral Agent within sixty (60) days following written notice in accordance with paragraph (f) above.

(h) If Collateral Agent fails to exercise its right to remove the Personal Property strictly in accordance with the requirements and conditions of this consent, Landlord may proceed with any remedies available to it by reason of Debtor’s default under the Lease and may remove all Personal Property from the Premises and dispose of same, without regard to this consent or Collateral Agent’s security interest in the Personal Property.

(i) Landlord shall have no obligation to preserve or protect the Personal Property or take any action in connection therewith, and Lenders waive all claims they may now or hereafter have against Landlord in connection with the Personal Property.

(j) Upon payment and performance of all indebtedness secured by the Personal Property to Lenders, Lenders shall, upon Landlord’s or Debtor’s request, execute and/or file any release or termination statement reasonably necessary to evidence Lenders’ release of the subordination herein provided by it. In no event shall this consent remain in force or effect after the date that the Lease is terminated or expires.

(k) Nothing contained herein shall be construed to amend the Lease, and the Lease remains unchanged and in full force and effect.

This consent shall be construed and interpreted in accordance with and governed by the laws of the Commonwealth of Massachusetts.

This consent may not be changed or terminated orally and is binding upon and shall inure to the benefit of Landlord, Collateral Agent, Lenders and Debtor and the heirs, personal representatives, successors and assigns of Landlord, Collateral Agent, Lenders and Debtor.

[Signature Page follows]

- 2 -

Dated this      day of     , 2013.

LANDLORD:

THE TAMING OF THE SHREWSBURY, LLC

By:

Name:

Title:

O’NEILL PARTNERS, LLC

By:

Name:

Title:

CHANSKI, LLC

By:

Name:

Title:

[Signature Page to Landlord Consent]

LENDERS:

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
		Name: Charles Tate
		Title: Sole Member

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
		Name: Charles Tate
		Title: Sole Member

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
		Name: Charles Tate
		Title: Sole Member

[Signature Page to Landlord Consent]

DEBTOR:

VALERITAS, INC.
By:
Name:	James Dentzer
Title:	Chief Financial Officer

[Signature Page to Landlord Consent]

Exhibit H

to Term Loan Agreement

FORM OF SUBORDINATION AGREEMENT

Exhibit H-1

SUBORDINATION AGREEMENT

This Subordination Agreement (this “Agreement”) is made as of May 24, 2013, among Capital Royalty Partners II L.P., a Delaware limited partnership (“CRII”), Capital Royalty Partners II – Parallel Fund “A” L.P., a Delaware limited partnership (“CRII Parallel”), Parallel Investment Opportunities Partners II L.P., a Delaware limited partnership (“Parallel Investment” and, collectively with CRII and CRII Parallel, and their successors and assigns, the “Lenders”), and WCAS Capital Partners IV, L.P., a Delaware limited partnership (“WCAS”).

Recitals

A. Valeritas, Inc., a Delaware corporation (“Borrower”), has issued in favor of WCAS the Subordinated Note (as defined below).

B. Lenders and Borrower have entered into the Senior Term Loan Agreement (as defined below) and the Senior Term Loan Security Agreement (as defined below) to grant a security interest in the Collateral (as defined below) in favor of Lenders as security for the payment of Borrower’s obligations under the Senior Term Loan Agreement.

C. To induce Lenders to make and maintain the credit extensions to Borrower under the Senior Term Loan Agreement, WCAS agrees to (i) subordinate in right and time of payment, the Subordinated Debt (as defined below) to payment in full of the Senior Debt (as defined below) on the terms and conditions herein set forth and (ii) not obtain any security interests in the Collateral to secure the Subordinated Debt.

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

1. Definitions. As used herein, the following terms have the following meanings:

“Collateral” means “Collateral” as defined in the Senior Term Loan Security Agreement.

“Enforcement Action” means, with respect to any indebtedness or obligation (contingent or otherwise) or Collateral at any time held by any Lender or holder of the Subordinated Note: commencing by judicial or non-judicial means the enforcement with respect to such indebtedness, obligation or Collateral of any of the default remedies under any of the applicable agreements or documents of such Lender or holder, the UCC or other applicable law (other than the mere issuance of a notice of default and the right by the holder of the Subordinated Note to seek specific performance with respect to any covenants in favor of the holder thereunder); repossessing, selling, leasing or otherwise disposing of all or any part of such Collateral, or exercising account debtor or obligor notification or collection rights with respect to all or any portion thereof, or attempting or agreeing to do so; or appropriating, setting off or applying to such Lender or holder’s claim any part or all of such Collateral or other property in the possession of, or coming into the possession of, such Lender or holder or its agent, trustee or bailee.

“Insolvency Event” means that Borrower shall have applied for, consented to or acquiesced in the appointment of a trustee, receiver or other custodian for it or any of its property, or made a general assignment for the benefit of creditors and, in the absence of such application, consented or acquiesced, permitted or suffer to exist the appointment of a trustee, receiver or other custodian for it or for a substantial part of its property, and such trustee, receiver or other custodian shall not have been discharged within sixty days; or permitted or suffered to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of it, and if any such case or proceeding was not commenced by it, such case or proceeding shall have been consented to or acquiesced in by it or shall have resulted in the entry of an order for relief or shall have remained for sixty (60) days undismissed.

“Permitted Subordinated Debt Payment” means any payment or distribution in respect of the Subordinated Debt which consists solely of (i) non-cash PIK Interest (as defined in the Subordinated Note on the date hereof), (ii) the payment of expenses to the holder of the Subordinated Note pursuant to Article 10 of the Subordinated Note, and (iii) a one-time payment in cash of all interest on the Subordinated Note that was accrued and unpaid prior to the date hereof, in the amount of $200,000.

“Person” means “Person” as defined in the Senior Term Loan Agreement.

“Required Lenders” means, as of the date of any determination, Lenders having more than 50% of the sum of the (a) outstanding principal amount of Loans (as defined in the Senior Term Loan Agreement) and (b) aggregate unused Commitments (as defined in the Senior Term Loan Agreement).

“Senior Term Loan Agreement” means that certain Term Loan Agreement, dated as of May 24, 2013 between Borrower and the Lenders, as amended, restated, supplemented or otherwise modified from time to time, but without giving effect to any amendment and/or restatement, supplement, renewal or other modification prohibited by this Agreement.

“Senior Term Loan Documents” means, collectively, the Loan Documents (as defined in the Senior Term Loan Agreement), in each case as amended, restated, supplemented or otherwise modified from time to time, but without giving effect to any amendment and/or restatement, supplement, renewal or other modification prohibited by this Agreement.

“Senior Term Loan Security Agreement” means that certain Security Agreement, dated as of May 24, 2013, between Borrower and the Secured Parties (as defined therein), as amended, restated, supplemented or otherwise modified from time to time, but without giving effect to any amendment and/or restatement, supplement, renewal or other modification prohibited by this Agreement.

“Senior Debt” means the Obligations (as defined in the Senior Term Loan Agreement).

“Senior Discharge Date” has the meaning set forth in Section 2.

“Subordinated Debt Documents” means, collectively, the Subordinated Note and any other loan document or agreement entered into by Borrower in connection with the Subordinated Note, as amended, restated, supplemented or otherwise modified from time to time, but without giving effect to any amendment and/or restatement, supplement, renewal or other modification prohibited by this Agreement.

2

“Subordinated Debt” means and includes all obligations, liabilities and indebtedness of Borrower owed to WCAS under the Subordinated Debt Documents, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with the Subordinated Debt Documents, including without limitation, principal, premium (if any), interest, fees, charges, expenses, costs, professional fees and expenses, and reimbursement obligations, in each case to the extent payable under the Subordinated Debt Documents.

“Subordinated Note” means the Note issued by Borrower to WCAS, dated September 8, 2011, as amended by that certain Amendment No. 1 to Note, dated as of May 24, 2013, as such note is amended, restated, supplemented or otherwise modified from time to time, but without giving effect to any amendment and/or restatement, supplement, renewal or other modification prohibited by this Agreement.

“UCC” means the Uniform Commercial Code of any applicable jurisdiction and, if the applicable jurisdiction shall not have any Uniform Commercial Code, the Uniform Commercial Code as in effect in the State of New York.

2. Payment Subordination. Notwithstanding the terms of the Subordinated Debt Documents, until all of the Senior Debt is paid in full (other than contingent indemnification obligations and the Warrant Obligations (as defined in the Senior Term Loan Agreement)) and all commitments of Lenders under the Senior Term Loan Documents have been terminated (such date, the “Senior Discharge Date”), except with respect to Permitted Subordinated Debt Payments, (a) all payments in respect of the Subordinated Debt are subordinated in right and time of payment to all payments in respect of the Senior Debt, and (b) WCAS will not demand or receive from Borrower (and Borrower will not pay) any part of the Subordinated Debt, whether by payment, prepayment, or otherwise, or accelerate the Subordinated Debt, except as permitted pursuant to this Agreement.

3. Subordination of Remedies. Until the Senior Discharge Date, WCAS will not accelerate the maturity of all or any portion of the Subordinated Debt, exercise any remedy with respect to the Collateral, or take any other Enforcement Action with respect to the Subordinated Debt.

4. Insolvency Proceedings. These provisions remain in full force and effect, despite an Insolvency Event, and Lenders’ claims against Borrower and Borrower’s estate will be fully paid before any payment is made to WCAS.

5. Distributions of Proceeds of Collateral. All realizations upon any Collateral pursuant to an Enforcement Action or otherwise subject to this Agreement shall be applied first to the Senior Debt before any payment may be made to WCAS.

3

6. Attorney-In-Fact. Until the Senior Discharge Date, WCAS irrevocably appoints Lenders as its attorney-in-fact, with power of attorney with power of substitution, in WCAS’s name or in Lenders’ name, for Lenders’ use and benefit, to do the following during an Insolvency Event:

file appropriate claims in respect of the Subordinated Debt on behalf of WCAS if WCAS does not do so at least 30 days before the time to file claims expires (provided that the Lenders shall use good faith diligent efforts promptly to give WCAS copies of such claims or notice of such action, as the case may be, but failure by Lenders to do so shall not impair the rights of the Lenders under this Agreement or otherwise result in the imposition of any liability on the Lenders hereunder) if Lenders elect, in their sole discretion, to file such claim or claims;

Such power of attorney is irrevocable and coupled with an interest.

7. Legend; Amendment of Debt.

(a) WCAS will cause Borrower to immediately put a legend on or otherwise indicate on the Subordinated Note that the Subordinated Note is subject to this Agreement.

(b) Until the Senior Discharge Date, WCAS shall not, without prior written consent of the Required Lenders, agree to any amendment, modification or supplement to the Subordinated Debt Documents, if the effect of such amendment, modification or supplement is to: (i) terminate or impair the subordination of the Subordinated Debt in favor of the Lenders, (ii) increase the interest rate in respect of the Subordinated Debt or change (to earlier dates) the dates upon which principal, interest and other sums are due under the Subordinated Note; (iii) alter the redemption, prepayment or subordination provisions of the Subordinated Note in a manner that individually or in the aggregate would be adverse to Borrower of the Subordinated Debt or Lenders; (iv) impose on Borrower any new or additional prepayment charges, premiums, reimbursement obligations, reimbursable costs or expenses, fees or other payment obligations; (v) alter the representations, warranties, covenants, events of default, remedies and other provisions in a manner which would make such provisions materially more onerous, restrictive or burdensome to Borrower; (vi) grant a lien or security interest in favor of any holder of the Subordinated Debt on any asset or Collateral to secure all or any portion of the Subordinated Debt, or (vii) otherwise increase the obligations, liabilities and indebtedness in respect of the Subordinated Debt or confer additional rights upon WCAS, which individually or in the aggregate would be materially adverse to Borrower or Lenders, provided, however, that WCAS shall be permitted to amend or modify the Subordinated Debt Documents to modify or add covenants or defaults to the extent the corresponding provisions of the Senior Term Loan Documents have been added, amended or modified.

(c) Until the Senior Discharge Date, Lenders may take such action with respect to the Senior Debt as Lenders, in their sole discretion, may deem appropriate, provided, however, that unless and until the Subordinated Note is paid in full in cash, Lenders may not, without prior written consent of WCAS, agree to any amendment, modification or supplement to the Senior Term Loan Documents, if the effect of such amendment, modification or supplement is to: (i) increase the maximum principal amount of the Senior Debt; (ii) increase the interest rates applied to the unpaid principal balance of the Senior Debt; or (iii) impose any restrictions on the making of payments with respect to the Subordinated Debt that do not already exist in the Senior Term Loan Documents as in effect on the date hereof. No action or inaction will impair or otherwise affect Lenders’ rights under this Agreement.

4

8. WCAS Acknowledgement of Lien Subordination. WCAS acknowledges and agrees that the Lenders have been granted liens upon the Collateral, and WCAS hereby consents thereto and to the incurrence of the Senior Debt. WCAS represents and warrants to the Lenders that as at the date of this Agreement, the Subordinated Debt is unsecured. WCAS agrees that it shall not obtain a lien or security interest on any asset or Collateral to secure all or any portion of the Subordinated Debt; provided further that should WCAS obtain a lien or security interest on any asset or Collateral to secure all or any portion of the Subordinated Debt for any reason, notwithstanding the respective dates of attachment and perfection of the security interests in the Collateral in favor of the Lenders or WCAS, or any contrary provision of the UCC, or any applicable law or decision to the contrary, or the provisions of the Senior Term Loan Documents or the Subordinated Debt Documents, and irrespective of whether WCAS or the Lenders hold possession of any or all part of the Collateral, all now existing or hereafter arising security interests in the Collateral in favor of WCAS in respect of the Subordinated Debt Documents shall at all times be subordinate to the security interest in such Collateral in favor of the Lenders in respect of the Senior Term Loan Documents. Additionally, WCAS shall not accept or take any guaranty of the Subordinated Debt.

Until the Senior Discharge Date, in the event of any private or public sale or other disposition of all or any portion of the Collateral, WCAS agrees that such Collateral shall be sold or otherwise disposed of free and clear of any liens in favor of WCAS in respect of the Subordinated Debt Documents. WCAS agrees that any such sale of Collateral shall not require any consent from WCAS.

9. Representations and Warranties. Each party hereto represents and warrants to each other party hereto that:

(a) all action on the part of such party, its officers, directors, partners, members and shareholders, as applicable, necessary for the authorization of this Agreement and the performance of all obligations of such party hereunder has been taken;

(b) this Agreement constitutes the legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms;

(c) the execution, delivery and performance of and compliance with this Agreement by such party will not (i) result in any material violation or default of any term of any of such party’s charter, formation or other organizational documents (such as Articles or Certificate of Incorporation, bylaws, partnership agreement, operating agreement, etc.) or (ii) violate any material applicable law, rule or regulation.

10. Term; Reinstatement. This Agreement shall remain effective until the Senior Discharge Date. If, after the Senior Discharge Date, Lenders must disgorge any payments made on the Senior Debt for any reason (including, without limitation, the bankruptcy of Borrower), this Agreement and the relative rights and priorities provided in it, will be reinstated as to all disgorged payments as though such payments had not been made, and WCAS will immediately pay Lenders all payments received in respect of the Subordinated Debt to the extent such payments or retention thereof would have been prohibited under this Agreement.

5

11. Successors and Assigns. This Agreement shall be binding upon, inure to the benefit of and be enforceable by each Lender and WCAS and in each case their respective successors or assigns. WCAS shall not sell, assign, pledge, dispose of or otherwise transfer all or any portion of the Subordinated Debt or any related document or any interest in any Collateral therefor unless prior to the consummation of any such action, the transferee thereto shall execute and deliver to Lenders an agreement of such transferee to be bound hereby, or an agreement substantially identical to this Agreement providing for the continued subjection of the Subordinated Debt, any interests of the transferee in the Collateral and the remedies of the transferee with respect thereto as provided herein with respect to WCAS and for the continued effectiveness of all of the other rights of Lenders arising under this Agreement, in each case in form satisfactory to Lenders.

12. Further Assurances. WCAS hereby agrees to execute such documents and/or take such further action as Lenders may at any time or times reasonably request in order to carry out the provisions and intent of this Agreement, including, without limitation, ratifications and confirmations of this Agreement from time to time hereafter.

13. Reliance. For the avoidance of doubt, in connection with any payment or distribution by WCAS to any Lender, WCAS shall be entitled to rely for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness or obligations of Borrower, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Agreement and for purposes of determining whether the provisions of this Agreement have been fully effectuated and carried out, and the rights and obligations of the parties hereto given effect, (i) upon any order, judgment or decree of a court of competent jurisdiction in which (x) any bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to Borrower or its property is pending or (y) any other proceeding to which the Lenders have been properly joined as parties is pending, (ii) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to WCAS or (iii) upon any trustee, agent or other representative for the holder of the applicable Senior Debt. In the event that WCAS determines, in good faith (and with a reasonable basis for so concluding), that evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Agreement, WCAS may request such Person to furnish reasonable evidence as to the amount of such Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Agreement, and, if such evidence is not furnished, WCAS may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

14. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. Executed counterparts may be delivered by facsimile.

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15. Governing Law; Waiver of Jury Trial.

(a) This Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed in accordance with, the law of the State of New York, without regard to principles of conflicts of laws that would result in the application of the laws of any other jurisdiction; provided that Section 5-1401 of the New York General Obligations Law shall apply.

(b) EACH PARTY HERETO WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN.

16. Entire Agreement; Waivers and Amendments. This Agreement represents the entire agreement with respect to the subject matter hereof, and supersedes all prior negotiations, agreements and commitments. Lenders and WCAS are not relying on any representations by the other creditor party or Borrower in entering into this Agreement. No amendment, modification, supplement, termination, consent or waiver of or to any provision of this Agreement, nor any consent to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders and WCAS. Any waiver of any provision of this Agreement, or any consent to any departure from the terms of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which given. No failure or delay on the part of any Lender or WCAS in the exercise of any power, right, remedy or privilege under this Agreement shall impair such power, right, remedy or privilege or shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude any other or further exercise of any other power, right or privilege. The waiver of any such right, power, remedy or privilege with respect to particular facts and circumstances shall not be deemed to be a waiver with respect to other facts and circumstances.

17. Legal Fees. In the event of any legal action to enforce the rights of a party under this Agreement, the party prevailing in such action shall be entitled, in addition to such other relief as may be granted, all reasonable, invoiced and out-of-pocket costs and expenses, including reasonable attorneys’ fees, incurred in such action.

18. Severability. Any provision of this Agreement which is illegal, invalid, prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent such illegality, invalidity, prohibition or unenforceability without invalidating or impairing the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

19. Notices. All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be delivered or sent by first-class mail, postage prepaid, or by overnight courier or messenger service or by facsimile, message confirmed, and shall be deemed to be effective for purposes of this Agreement on the day that delivery is made or refused. Unless otherwise specified in a notice mailed or delivered in accordance with the foregoing sentence, notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses and facsimile numbers indicated on the signature pages hereto.

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20. Loan Document. Notwithstanding anything to the contrary in the Senior Term Loan Agreement, the parties agree that this Agreement shall be a “Loan Document” under the Senior Term Loan Agreement.

[Signature pages follow.]

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IN WITNESS WHEREOF, the undersigned have executed 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
	Name: Title:

Address for Notices:

Attn:

Tel:

Fax:

LENDERS:

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
			Name: Charles Tate
			Title: Sole Member

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
			Name: Charles Tate
			Title: Sole Member

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
			Name: Charles Tate
			Title: Sole Member

Address for Notices: 1000 Main Street, Suite 2500 Houston, TX 77002
Attn:	General Counsel
Tel:
Fax:

Acknowledged and Agreed to:
BORROWER:
VALERITAS, INC.
By
	Name: James Dentzer
	Title: Chief Financial Officer

Address for Notices:

750 Route 202 South, Suite 100

Attn: James Dentzer

Bridgewater, NJ 08807

Tel:

Fax:

EX-10

Exhibit 10.2

CONSENT, WAIVER AND AMENDMENT AGREEMENT

THIS CONSENT, WAIVER AND AMENDMENT AGREEMENT (this “Agreement”), dated as of June 19, 2014, is made among VALERITAS, INC., a Delaware corporation (the “Borrower”), and the financial institutions listed on the signature pages hereof under the heading “LENDERS” (each a “Lender” and, collectively, the “Lenders”).

RECITALS

WHEREAS, the Borrower and the Lenders are parties to a Term Loan Agreement dated as of May 24, 2013 (the “Term Loan Agreement”).

WHEREAS, the Borrower has delivered to the Lenders the documents attached hereto as Exhibit A (the “Reorganization Documents”) in connection with a proposed reorganization transaction and Series D Preferred Stock financing of up to $45 million, with a $25 million initial closing (the “Series D Financing” and together, the “Transaction”) involving the Borrower, pursuant to which, among other things, two new subsidiary entities of the Borrower (“Valeritas Holdings, LLC” and “Merger Sub”, respectively) will be created, with Merger Sub then merging into the Borrower (thereafter, the “Post-Transaction Borrower”) and Valeritas Holdings, LLC becoming the parent of the Post-Transaction Borrower.

WHEREAS, the Transaction is not permitted under the terms of the Term Loan Agreement.

WHEREAS, the Borrower has requested that the Lenders approve the Borrower’s entering into the Transaction and waive any restrictions in the Term Loan Agreement as they relate to the Transaction.

WHEREAS, the Borrower further anticipates that it will not be able to meet the financial covenants set forth in Section 10 of the Term Loan Agreement and has requested that the Lenders waive and amend certain provisions in such section to extend the equity cure option and change the minimum required Revenue for calendar year 2015.

WHEREAS, the Lenders have agreed to such requests, subject to the terms and conditions hereof.

NOW THEREFORE, accordingly, the parties hereto agree as follows:

SECTION 1 Definitions; Interpretation.

(a) Terms Defined in Term Loan Agreement. All capitalized terms used in this Agreement (including in the recitals hereof) and not otherwise defined herein shall have the meanings assigned to them in the Term Loan Agreement.

(b) Interpretation. The rules of interpretation set forth in Section 1.03 of the Term Loan Agreement shall be applicable to this Agreement and are incorporated herein by this reference.

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SECTION 2 Transaction Consent. The Lenders hereby consent to the Borrower consummating the Transaction in accordance with the Reorganization Documents. Subject to Sections 5 and 6 hereafter, the Lenders hereby agree that any breach of the Term Loan Agreement under Sections 3.03, 8.12, 9.03, 9.05, 9.06 and 9.09 thereof (the “Waived Transaction Provisions”) which would be caused by the actions of the Borrower in connection with the execution or consummation of the Transaction in accordance with the Reorganization Documents is hereby waived.

SECTION 3 Financial Covenant Waiver and Amendment.

(a) Subject to Sections 5 and 7 hereafter and the execution or consummation of the Transaction, the Lenders hereby waive any obligation of Borrower to comply with Section 10.01(a)(ii) of the Term Loan Agreement (the “Waived Financial Covenant Provision”, collectively with the Waived Transaction Provisions, the “Waived Provisions”).

(b) Section 10.01(a)(iii) of the Term Loan Agreement is hereby amended and restated in its entirety as follows:

“during the twelve month period beginning on January 1, 2015, of at least $20,000,000;”

SECTION 4 Limitations of Waiver. The waivers set forth in Section 2 and 3(a) above shall be limited precisely as written and relates solely to the potential noncompliance or breach by the Borrower with Sections 3.03, 8.12, 9.03, 9.05, 9.06, 9.09 and 10.01(a)(ii) of the Term Loan Agreement. Nothing in this Agreement shall be deemed to constitute a waiver of noncompliance or breach of any other term or provision in the Term Loan Agreement or the other Loan Documents, nor prejudice any right or remedy that the Lenders may now have (except to the extent such right or remedy was based upon Defaults that will not exist after giving effect to this Agreement) or may have in the future under or in connection with the Term Loan Agreement or the other Loan Documents. Nothing contained herein shall be deemed a waiver or consent in respect of (or otherwise affect the Lenders’ ability to enforce) any Default not explicitly waived by Sections 2 and 3(a) including (a) any Default that may now exist or hereafter arise from or otherwise be related to the Waived Provisions, and (b) any Default arising at any time after the Effective Date and which is similar in type to the Waived Provisions.

SECTION 5 Conditions of Effectiveness. The effectiveness of Section 2 and 3 of this Agreement shall be subject to the satisfaction of each of the following conditions precedent (the date of such satisfaction, the “Effective Date”):

(a) Fees and Expenses. The Borrower shall have paid all fees and all invoiced costs and expenses then due in accordance with Section 9(c).

(b) Waiver Documents. The Lenders shall have received, in form and substance satisfactory to it, a counterpart of this Agreement executed by the Borrower and the Lenders.

(c) Representations and Warranties. Each of the representations and warranties made by the Borrower contained in Section 8 of this Agreement shall be true and correct in all material respects on and as of the Effective Date.

(d) Transaction Documents. The Lenders shall have received and approved all Reorganization Documents in final execution form.

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SECTION 6 Further Conditions to Transaction Waiver; Covenants. The effectiveness of Section 2 on an ongoing basis is subject to the continuing satisfaction of the following covenants of the Borrower and conditions:

(a) Warrants. The Borrower previously issued to the Lenders Common Stock Purchase Warrants to purchase shares of Common Stock of the Borrower (the “Prior Warrants”) pursuant to the terms and conditions of the Term Loan Agreement. The Lenders hereby agree that effective as of the Effective Date, the Prior Warrants are hereby terminated in their entirety and of no further force or effect. Concurrently with the consummation of the Transaction, the Post-Transaction Borrower shall issue new warrants to acquire common stock in the Post-Transaction Borrower, in the form attached hereto as Exhibit B (the “Initial Warrants”), where such Initial Warrants represent in the aggregate 1.50% of the fully diluted common stock of the Post-Transaction Borrower immediately following the consummation of the Transaction. In the event the Post-Transaction Borrower consummates an additional closing of the Series D Financing and additional shares of Series D Preferred Stock of the Post-Transaction Borrower are issued and sold up to $45 million in aggregate Series D Financing, (the “Additional Series D Financing”), or the Post-Transaction Borrower, directly or indirectly through its affiliates, consummates a similar financing transaction as the Series D Financing with the investor or investors or their affiliates providing the Series D Financing (together with the Additional Series D Financing, the “Additional Financing”), concurrently with the consummation of such closing, the Post-Transaction Borrower shall issue new warrants to acquire common stock in the Post-Transaction Borrower, in the form attached hereto as Exhibit B, where such new warrants together with the Initial Warrants represent in the aggregate 1.50% of the fully diluted common stock of the Post-Transaction Borrower immediately following the consummation of such closing, after giving effect to the next $20 million of Additional Financing after the initial Series D Financing closing. For clarity, the warrant coverage shall not include any investment by existing or new investors in the Company’s IPO (as hereafter defined).

(b) Amendment of Term Loan Agreement. The Borrower and the Lenders shall promptly, and in any case no later than 10 days following the consummation of the Transaction, amend and restate the Term Loan Agreement in form and substance satisfactory to the Lenders to, among other things,

(i) Amend Section 10.01(b) to allow the Post-Transaction Borrower to use the Cure Right for any calendar year during the term of the Term Loan Agreement;

(ii) require Valeritas Holdings, LLC (or any other holding company or direct or indirect parent of Valeritas) (“Holdco”) to become an Obligor under the Term Loan Agreement, guarantee the Obligations and pledge its assets (including its capital stock in the Post-Transaction Borrower) to secure the Obligations, and enter into any Loan Documents as necessary or appropriate for such purposes;

(iii) extend the covenants in the Term Loan Agreement, including without limitation, such covenants under Sections 8 and 9 of the Term Loan Agreement, to cover any Holdco.

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SECTION 7 Further Condition to Financial Covenant Waiver. The effectiveness of Section 3 is subject to the completion (exclusive of the proceeds raised by issuing Series D Preferred Stock in the Series D Financing) of (i) an initial public offering (“IPO”) by the Post-Transaction Borrower which results in the listing of capital stock of the Post-Transaction Borrower on a recognized national exchange and net cash proceeds to the Post-Transaction Borrower in excess of $40,000,000 (the “IPO Threshold”) on or before March 31, 2015; (ii) a private financing of the Post-Transaction Borrower of at least the sum of (x) $35,000,000 plus the greater of (y) (1) zero and (2) $35,000,000 minus aggregate proceeds from the Series D Financing, where such private financing of the Post-Transaction Borrower occurs on or before December 31, 2014 and an IPO by the Post-Transaction Borrower which results in the listing of capital stock of the Post-Transaction Borrower on a recognized national exchange and net cash proceeds to the Post-Transaction Borrower in such IPO in excess of the IPO Threshold on or before June 30, 2015; or (iii) a strategic investment by a publicly listed company (or large private company deemed satisfactory to Lender in its sole discretion) in the Post-Transaction Borrower of at least $20,000,000 on or before December 31, 2014 and an IPO by the Post-Transaction Borrower which results in the listing of capital stock of the Post-Transaction Borrower on a recognized national exchange and net cash proceeds to the Post-Transaction Borrower in excess of the IPO Threshold on or before June 30, 2015. For clarity, the IPO Threshold shall include any and all amounts invested by existing investors of the Post-Transaction Borrower in the IPO.

SECTION 8 Representations and Warranties.

The Borrower represents and warrants to the Lenders as follows:

(a) The Borrower has disclosed to the Lenders all information relating to the Transaction that could reasonably expected to be material to the Lenders’ understanding and evaluation of the Transaction.

(b) All material agreements and documents relating to the Transaction have been disclosed to the Lenders.

(c) None of the information furnished by the Borrower to the Lenders in connection with the negotiation of this Agreement, including the Reorganization Documents, contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

SECTION 9 Miscellaneous.

(a) Term Loan Agreement Otherwise Not Affected; No Waiver. Except as expressly contemplated hereby, the Term Loan Agreement shall remain unchanged and in full force and effect and is hereby ratified and confirmed in all respects. The Lenders’ execution and delivery of, or acceptance of, this Agreement and any other documents and instruments in connection

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herewith (collectively, the “Waiver Documents”) shall not be deemed to create a course of dealing or otherwise create any express or implied duty by any of them to provide any other or further amendments, consents or waivers in the future.

(b) No Reliance. The Borrower hereby acknowledges and confirms to the Lenders that the Borrower is executing this Agreement and the other Waiver Documents on the basis of its own investigation and for its own reasons without reliance upon any agreement, representation, understanding or communication by or on behalf of any other Person.

(c) Costs and Expenses. The Borrower agrees to pay to the Lenders on demand all reasonable out-of-pocket expenses incurred by the Lenders and their respective Affiliates (including the reasonable fees, charges and disbursements of counsel for the Lenders), in connection with the preparation, negotiation, execution and delivery of this Agreement and any other documents to be delivered in connection herewith.

(d) Binding Effect. This Agreement shall be binding upon, inure to the benefit of and be enforceable by the Borrower, each Lender and their respective successors and assigns.

(e) Governing Law. This Agreement and the other Waiver Documents and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Waiver Document (except, as to any other Waiver Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York.

(f) Complete Agreement; Amendments. This Agreement, together with the other Waiver Documents and the other Loan Documents, contains the entire and exclusive agreement of the parties hereto and thereto with reference to the matters discussed herein and therein. This Agreement supersedes all prior commitments, drafts, communications, discussions and understandings, oral or written, with respect thereto. This Agreement may not be modified, amended or otherwise altered except in accordance with the terms of Section 12.04 of the Term Loan Agreement.

(g) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under all applicable laws and regulations. If, however, any provision of this Agreement shall be prohibited by or invalid under any such law or regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so modified, it shall be ineffective and invalid only to the extent of such prohibition or invalidity without affecting the remaining provisions of this Agreement, or the validity or effectiveness of such provision in any other jurisdiction.

(h) Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.

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(i) Interpretation. This Agreement and the other Waiver Documents are the result of negotiations between and have been reviewed by counsel to the Lenders, the Borrower and other parties, and are the product of all parties hereto. Accordingly, this Agreement and the other Waiver Documents shall not be construed against any of the Lenders merely because of any Lender’s involvement in the preparation thereof.

(j) Loan Documents. This Agreement and the other Waiver Documents shall constitute Loan Documents.

[Remainder of page intentionally left blank]

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

THE BORROWER
VALERITAS, INC.
By	/s/ Kristine Peterson
	Name:	Kristine Peterson
	Title:	Chief Executive Officer

THE LENDERS
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/ Charles Tate
Name:	Charles Tate
Title:	Sole Member
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/ Charles Tate
Name:	Charles Tate
Title:	Sole Member
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/ Charles Tate
Name:	Charles Tate
Title:	Sole Member
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, LTD., its General Partner
By	/s/ Charles Tate
Name:	Charles Tate
Title:	Director

WITNESS:	/s/ Andrei Dorenbaum
Name:	Andrei Dorenbaum

CAPITAL ROYALTY PARTNERS II (CAYMAN) L.P.
By CAPITAL ROYALTY PARTNERS II (CAYMAN) GP, L.P., its General Partner
By CAPITAL ROYALTY PARTNERS II GP, LLC., its General Partner
By	/s/ Charles Tate
Name:	Charles Tate
Title:	Director

WITNESS:	/s/ Andrei Dorenbaum
Name:	Andrei Dorenbaum

EXHIBIT A

REORGANIZATION DOCUMENTS

[See Attached]

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

[See Attached]

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this “Agreement”) is entered into as of June 9, 2014, by and among Valeritas, Inc., a Delaware corporation (“OpCo”), Valeritas Holdings, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of OpCo (“Holdings”), and Valeritas Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Holdings (“Merger Sub”).

RECITALS

WHEREAS, as of the date hereof, OpCo’s authorized capital stock consists of (i) 462,000,000 shares of Common Stock, $0.00001 par value per share (“OpCo Common Stock”), of which 953,502 are issued and outstanding; and (ii) 405,390,990 shares of Preferred Stock, $0.00001 par value per share (“OpCo Preferred Stock” and together with OpCo Common Stock, “OpCo Stock”), of which (a) 9,550,002 shares are designated Series A Preferred Stock (“OpCo Series A Preferred Stock”), all of which are issued and outstanding; (b) 85,386,945 shares are designated Series B Preferred Stock (“OpCo Series B Preferred Stock”), 68,483,119 shares of which are issued and outstanding; (c) 154,854,367 shares are designated Series C Preferred Stock (“OpCo Series C Preferred Stock”), 105,267,393 shares of which are issued and outstanding; (d) 77,997,380 shares of which are designated Series C-1 Preferred Stock, none of which are issued and outstanding; and (e) 77,602,296 shares of which are designated Series C-2 Preferred Stock (“OpCo Series C-2 Preferred Stock”), 121,951 shares of which are issued and outstanding;

WHEREAS, as of the date hereof, Merger Sub’s authorized capital stock consists of 9,000,000 shares of common stock, $0.00001 par value per share (“Merger Sub Common Stock”), all of which are issued and outstanding and owned by Holdings;

WHEREAS, as of the date hereof, all of the limited liability company interests in Holdings are held by OpCo and OpCo is the sole member of Holdings, and at the Effective Time (as defined below) Holdings’ authorized limited liability company interests will be denominated as and consist of units, in two classes, with (i) the first class consisting of 201,326,291 units designated Common Units (“Holdings Common Units”); and (ii) the second class consisting of 200,326,291 units designated Preferred Units (the “Holdings Preferred Units” and together with the Holdings Common Units, the “Holdings Units”), of which (a) 9,550,002 will constitute a series of Holdings Preferred Units designated Series A Preferred Units (“Holdings Series A Preferred Units”); (b) 85,386,945 will constitute a series of Holdings Preferred Units designated Series B Preferred Units (“Holdings Series B Preferred Units”); and (c) 105,389,344 will constitute a series of Holdings Preferred Units designated Series C Preferred Units (“Holdings Series C Preferred Units”);

WHEREAS, at the Effective Time, except as otherwise set forth in the Amended and Restated Limited Liability Company Agreement of Holdings, the form of which is attached hereto as Exhibit A (the “Holdings Operating Agreement”), the designations, rights, powers, preferences, qualifications, limitations and restrictions of the Holdings Units with respect to Holdings will be the same in all material respects as those of the OpCo Stock with respect to OpCo;

WHEREAS, the parties hereto desire to create a new holding company structure by merging Merger Sub with and into OpCo, with (i) OpCo continuing as the surviving corporation of such merger (the “Merger”), and (ii) each outstanding share of OpCo Stock being converted in such Merger into the right to receive a like number and like class (or series, as the case may be) of units of limited liability company interest in Holdings, upon the terms and subject to the conditions set forth in this Agreement;

WHEREAS, it is a condition precedent to additional investment in OpCo established by the current lead investor in OpCo that the Merger take place prior to such additional investment; and

WHEREAS, the board of directors of each of OpCo and Merger Sub has approved and declared advisable this Agreement and the transactions contemplated hereby, including the Merger, and determined that this Agreement and the transactions contemplated hereby, including the Merger, are just and equitable and fair as to the OpCo or MergerSub, as applicable, and their respective stockholders, taken as a whole, and that it is advisable and in the best interests of OpCo or MergerSub, as applicable, and their respective stockholders, taken as a whole, to approve this Agreement and to consummate the transactions contemplated hereby, including the Merger.

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound, hereby agree as follows:

1. MERGER AND REORGANIZATION

1.1 Merger of Merger Sub into Opco. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time (as defined below), (i) Merger Sub shall be merged with and into OpCo, the separate existence of Merger Sub shall cease and OpCo will be the surviving corporation of the Merger (the “Surviving Corporation”), (ii) the certificate of incorporation and bylaws of OpCo in effect as of the Effective Time shall be the certificate of incorporation and bylaws of the Surviving Corporation immediately following the Effective Time until thereafter amended as provided by law, (iii) the directors of OpCo immediately prior to the Effective Time shall be the directors of the Surviving Corporation and the officers of OpCo immediately prior to the Effective Time shall be the officers of the Surviving Corporation, in each case, immediately following the Effective Time and until their respective successors are duly elected or appointed and qualified or until their earlier resignation or removal in accordance with the Surviving Corporation’s certificate of incorporation and bylaws; (iv) each share of OpCo Stock outstanding immediately prior to the Effective Time will be converted as set forth in Section 1.2; (v) each OpCo Option (as defined below) will be assumed by Holdings in accordance with Section 1.4.1; and (vi) each OpCo Warrant (as defined below) shall be assumed by Holdings in accordance with Section 1.4.2; (vii) all of the limited liability company interests in Holdings held by OpCo immediately prior to the Effective Time shall be canceled and extinguished without any conversion or exchange thereof subject to and in accordance with Section 1.2 below; (viii) each share of Merger Sub Common Stock outstanding immediately prior to the Effective Time will be converted as set forth in Section 1.2 below; and (ix) the Merger will, from and after the Effective Time, have all of the effects provided by this Agreement and applicable law.

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1.2 Conversion of Shares. At the Effective Time, by virtue of the Merger and without any action on the part of the parties hereto, the holders of any of the following securities or any other person or entity will have their securities converted as follows:

1.2.1 Conversion of Common Stock. Each share of OpCo Common Stock issued and outstanding immediately prior to the Effective Time, other than any Dissenting Shares (as defined below), will be converted into the right to receive one (1) Holdings Common Unit.

1.2.2 Conversion of Series A Preferred Stock. Each share of OpCo Series A Preferred Stock issued and outstanding immediately prior to the Effective Time, other than any Dissenting Shares, will be converted into the right to receive one (1) Holdings Series A Preferred Unit.

1.2.3 Conversion of Series B Preferred Stock. Each share of OpCo Series B Preferred Stock issued and outstanding immediately prior to the Effective Time, other than any Dissenting Shares, will be converted into the right to receive one (1) Holdings Series B Preferred Unit.

1.2.4 Conversion of Series C Preferred Stock. Each share of OpCo Series C Preferred Stock issued and outstanding immediately prior to the Effective Time, other than any Dissenting Shares, will be converted into the right to receive one (1) Holdings Series C Preferred Unit.

1.2.5 Conversion of Series C-2 Preferred Stock. Each share of OpCo Series C-2 Preferred Stock issued and outstanding immediately prior to the Effective Time, other than any Dissenting Shares, will be converted into the right to receive one (1) Holdings Series C Preferred Unit.

1.2.6 Merger Sub Common Stock. Each share of Merger Sub Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into one (1) share of common stock, par value $0.00001 per share, of the Surviving Corporation (“Surviving Corporation Common Stock”), and as such shall continue to be owned by Holdings and thereafter represent all of the then validly issued, fully paid, and nonassessable shares of Surviving Corporation Common Stock. As a result, Holdings shall hold 9,000,000 shares of Surviving Corporation Common Stock immediately following the Effective Time.

1.2.7 Cancellation of Holdings Units. The limited liability company interests in Holdings outstanding immediately prior to the Effective Time shall automatically, and without any action on the part of Holdings or any other person or entity, be canceled and extinguished and shall cease to exist without any conversion or exchange thereof and without any consideration being payable in respect thereof, provided, however, that OpCo shall continue and remain as a member of Holdings (having no Holdings Units or other limited liability company interest in Holdings) until such time (at or after the Effective Time) as any current holder of OpCo Stock is admitted to Holdings as a member of Holdings, whereupon simultaneously with such admission OpCo shall cease to be a member of Holdings.

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1.3 Dissenting Shares. Notwithstanding anything to the contrary contained in this Agreement, shares of OpCo Stock that are outstanding immediately prior to the Effective Time and held of record by a holder who has neither voted in favor of the Merger nor consented thereto in writing and who shall have made a proper demand in writing for appraisal of such shares of OpCo Stock (“Dissenting Shares”) in accordance with Section 262 of the Delaware General Corporation Law (the “DGCL”) shall not be converted into or represent the right to receive the Holdings Units in accordance with Section 1.2, but shall be entitled only to such rights as are granted by the DGCL to a holder of Dissenting Shares. At the Effective Time, all Dissenting Shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of Dissenting Shares shall cease to have any rights with respect thereto, except the right to receive the fair value of such Dissenting Shares in accordance with Section 262 of the DGCL. Notwithstanding the foregoing, if any Dissenting Shares shall lose their status as such (through failure to perfect, effectively withdrawing or otherwise losing their rights to appraisal of such shares of OpCo Stock), then, as of the later of the Effective Time or the date of loss of such status, such shares shall be deemed, as of the Effective Time, to have automatically been converted into and shall represent only the right to receive the applicable consideration, without interest thereon, promptly following the surrender of the certificate or certificates representing such shares of OpCo stock in accordance with Section 2.2.

1.4 Treatment of Opco Warrants and Stock Options.

1.4.1 Options. All outstanding stock options, whether vested or not, to purchase OpCo Common Stock, granted under the Valeritas, Inc. 2008 Amended and Restated Equity Compensation Plan (as amended, the “OpCo Option Plan”) that are not exercised or cancelled prior to the Effective Time (“OpCo Options”), will be assumed by Holdings. Each OpCo Option so assumed by Holdings under this Agreement will continue to have, and be subject to, the same terms and conditions set forth in the applicable OpCo Option immediately prior to the Effective Time (including, without limitation, any vesting provisions), except that:

(a) each OpCo Option to purchase one (1) share of OpCo Common Stock will be converted automatically into an option to purchase one (1) Holdings Common Unit;

(b) the per unit exercise price for the Holdings Common Units issuable upon exercise of each assumed OpCo Option will be equal to the exercise price per share of OpCo Common Stock at which such OpCo Option was exercisable immediately prior to the Effective Time; and

(c) the OpCo Option Plan shall terminate automatically as of the Effective Time, and no new grants may be made under the OpCo Option Plan. However, the terms of the OpCo Option Plan (as adjusted to reflect the conversion in Section 1.4.1(a)) will continue govern the terms of the assumed OpCo Options. Should any of the assumed OpCo option awards expire or terminate unexercised, the Holdings Common Units subject to those awards at the time of expiration or termination shall not be available for subsequent award and issuance and shall be cancelled.

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1.4.2 Warrants.

(a) At the Effective Time, each warrant to purchase shares of OpCo Common Stock (each a “Common OpCo Warrant”) that is outstanding and unexercised immediately prior to the Effective Time will be cancelled without further action by the parties hereto or the holder thereof, and shall be of no further force or effect.

(b) At the Effective Time, each outstanding warrant to purchase shares of OpCo Series B Preferred Stock (each a “Series B OpCo Warrant”, and together with the Common OpCo Warrants, the “OpCo Warrants”), whether or not exercisable, will be assumed by Holdings. Each Series B OpCo Warrant so assumed by Holdings under this Agreement will continue to have, and be subject to, the same terms and conditions set forth in the applicable Series B OpCo Warrant immediately prior to the Effective Time (including, without limitation, any vesting provisions), except that (i) each Series B OpCo Warrant will be exercisable (or will become exercisable in accordance with its terms) for that number of Holdings Series B Preferred Units equal to the number of shares of OpCo Series B Preferred Stock that were issuable upon exercise of such Series B OpCo Warrant immediately prior to the Effective Time and (ii) the per unit exercise price for the Holdings Series B Preferred Units issuable upon exercise of such assumed Series B OpCo Warrant will be equal to the exercise price per share of OpCo Series B Preferred Stock at which such Series B OpCo Warrant was exercisable immediately prior to the Effective Time.

1.5 Tax Free Transfer. The parties intend to adopt this Agreement as a tax- free transfer in accordance with the provisions of Section 721 of the Internal Revenue Code of 1986, as amended (“Code”). The parties believe that the value of the Holdings Common Units and Holdings Preferred Units to be received in the Merger is equal, in each instance, to the value of the OpCo Common Stock and OpCo Preferred Stock to be surrendered in exchange therefor. The Holdings Common Units and Holdings Preferred Units issued in the Merger will be issued solely in exchange for the OpCo Common Stock and OpCo Preferred Stock, and no other transaction other than the Merger represents, provides for or is intended to be an adjustment to, the consideration paid for the OpCo Common Stock and OpCo Preferred Stock. Except for Dissenting Shares, no consideration that would not constitute “partnership interest” within the meaning of Section 721 of the Code will be received in exchange for the OpCo Common Stock and OpCo Preferred Stock in the Merger. The parties shall not take a position on any tax returns inconsistent with this Section 1.5.

2. CLOSING MATTERS

2.1 The Closing. Subject to termination of this Agreement as provided in Section 5 below, the Closing shall take place remotely via the exchange of documents and signatures, on a date to be mutually agreed upon by the parties, which shall be no later than the second (2nd) business day after the satisfaction or waiver of the conditions set forth in Section 4. The date on which the Closing actually takes place is referred to in this Agreement as the “Closing Date.” Subject to the provisions of this Agreement, as soon as practicable on the

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Closing Date, the parties shall cause the Certificate of Merger, in the form attached hereto as Exhibit B, to be executed and filed with the Delaware Secretary of State in accordance with the requirements of the DGCL. The Merger shall become effective at the time of the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, or at such later time as may be specified in the Certificate of Merger (the “Effective Time”).

2.2 Certificates.

2.2.1 As of the Effective Time, all shares of OpCo Common Stock and OpCo Preferred Stock that are outstanding immediately prior thereto will, by virtue of the Merger and without further action, cease to exist and will be converted into the right to receive the number of Holdings Common Units or Holdings Preferred Units determined as set forth in Section 1.3. Upon its acceptance of the Holdings Common Units or Holdings Preferred Units to which it is entitled in connection with the Merger, each holder of record of OpCo Stock (other than any stockholder holding Dissenting Shares) shall be bound by the Holdings Operating Agreement.

2.2.2 As promptly as practicable following the Effective Time, OpCo shall mail to each holder of record of OpCo Stock a letter of transmittal and joinder agreement to the Holdings Operating Agreement and instructions and other documents in the form attached hereto as Exhibit C (the “Transmittal Documentation”) for use in effecting the surrender of the certificate(s) for such shares of OpCo Stock (the “OpCo Certificates”), or if such OpCo Certificate(s) are alleged to have been lost, stolen or destroyed, in lieu thereof, an affidavit of loss agreement to provide indemnification in respect of any claim that may be made against Holdings with respect to the OpCo Certificate(s) alleged to have been lost, stolen or destroyed.

2.2.3 Until Transmittal Documentation duly completed and signed by the applicable holder of OpCo Stock and OpCo Certificates representing OpCo Common Stock or OpCo Preferred Stock outstanding prior to the Merger are surrendered pursuant to Section 2.2.2 above, (i) such certificates will be deemed, for all purposes, to evidence ownership of the number of Holdings Common Units or Holdings Preferred Units which the OpCo Common Stock or OpCo Preferred Stock, respectively, is entitled to receive and (ii) the holder of such certificates shall be bound by the terms of the Holdings Operating Agreement but shall not be admitted as a member of Holdings, with the rights and privileges attributable to such membership, except that such holder shall be entitled to share in such profits and losses, to receive such distributions and to receive such allocation of income, gain, loss, deduction, or credit or similar item to the extent attributable to such holder’s Holdings Units. Immediately upon the completion and delivery by a holder of OpCo Common Stock or OpCo Preferred Stock of the Transmittal Documentation and the surrender of the applicable OpCo Certificate(s), such holder shall be admitted as a member of Holdings.

2.2.4 The Holdings Common Units and Holdings Preferred Units shall be uncertificated.

2.3 Holdings Operating Agreement. At the Effective Time, the Holdings Operating Agreement shall be automatically adopted and become effective as the limited liability company agreement of Holdings, without the need for the execution thereof by any of the

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stockholders of OpCo Stock outstanding immediately prior to the Merger who shall be entitled to receive Holdings Units and who may be admitted as members of Holdings as described in Section 2.2.3 (collectively, the “New Members”). In accordance with the Transmittal Documentation, each of the New Members shall duly appoint an officer of Holdings as its attorney-in-fact and agent for purposes of executing and delivering the Holdings Operating Agreement on behalf of such New Member. Notwithstanding any other provision to the contrary in the Holdings Operating Agreement, any officer of Holdings, acting alone, is hereby authorized to execute and deliver the Holdings Operating Agreement on behalf of Holdings, and to execute and deliver any other documents, agreements, instruments, and certificates in furtherance hereof.

3. INFORMATION STATEMENT. OpCo shall deliver to the holders of OpCo Stock an information statement accurately describing this Agreement, the Merger and the provisions of Section 262 of the DGCL (the “Information Statement”). Such Information Statement shall solicit the approval by means of written consent of the OpCo stockholders of the adoption of this Agreement and the transactions contemplated hereby, including the Merger. If the adoption of this Agreement is approved by the Requisite Stockholder Approval, OpCo shall notify each holder of OpCo Stock who is entitled to appraisal rights of the approval of the Merger and the availability of such appraisal rights and shall include in such notice a copy of Section 262 of the DGCL, as required by Section 262(d)(2) of the DGCL. In such notice, the Company will also provide the notice required by Section 228(e) of the DGCL.

4. CONDITIONS TO CLOSING.

4.1 Each party’s obligations to effect the Merger and otherwise consummate the transactions are subject to the satisfaction or waiver, at or prior to the Closing, of each of the following conditions:

4.1.1 No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other material legal restraint or prohibition issued or promulgated by a governmental authority preventing the consummation of the transactions shall be in effect, and there shall not be any law, regulation or order enacted or deemed applicable to the transactions that makes consummation of the transactions illegal.

4.1.2 Covenants. Each of OpCo, Merger Sub and Holdings shall have performed or complied in all material respects all covenants and other obligations required to be performed by or complied with under this Agreement on or prior to the Closing Date (with materiality being measured individually and on an aggregate basis with respect to all breaches of covenants and obligations).

4.1.3 Stockholder Approval. OpCo shall have obtained executed written consents from those holders of OpCo Stock evidencing the affirmative vote of the following series and classes of OpCo Stock: (i) the holders of a majority of the outstanding shares of OpCo Series C Preferred Stock and OpCo Series C-2 Preferred Stock, voting together as a single class on an as-converted to OpCo Common Stock basis; (ii) the holders of a majority of the outstanding shares of OpCo Series B Preferred Stock, voting together as a separate class on an as-converted to OpCo Common Stock basis; and (iii) the holders of a majority of the aggregate voting power of the outstanding shares of OpCo Series C Preferred Stock, OpCo

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Series C-2 Preferred Stock, OpCo Series B Preferred Stock and OpCo Common Stock, voting together as a single class on an as-converted to OpCo Common Stock basis (collectively, the “Requisite Stockholder Approval”).

4.1.4 2014 Equity Compensation Plan. The Board of Directors of OpCo shall have approved a new equity compensation plan for new grants and other stock awards to be issued following the Effective Time.

4.1.5 Lender Consent. Capital Royalty Partners II L.P. and certain of its affiliates party to the Term Loan Agreement, dated May 24, 2013, with OpCo shall have consented to the transactions contemplated under this Agreement.

5. TERMINATION OF AGREEMENT

5.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Effective Time, whether before or after the adoption of this Agreement by the Requisite Stockholder Approval or by the sole stockholder of Merger Sub, to the fullest extent permitted by applicable law, by action of the Board of Directors of OpCo.

5.2 No Liability. Any termination of this Agreement pursuant to this Section 5 will be without further obligation or liability upon any party in favor of the other party hereto.

6. MISCELLANEOUS

6.1 Governing Law. The internal laws of the State of Delaware (irrespective of its choice of law principles) will govern the validity of this Agreement, the construction of its terms, and the interpretation and enforcement of the rights and duties of the parties hereto.

6.2 Assignment; Binding Upon Successors and Assigns. Neither party hereto may assign any of its rights or obligations hereunder without the prior written consent of the other party hereto. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

6.3 Severability. If any provision of this Agreement, or the application thereof, will for any reason and to any extent be invalid or unenforceable, the remainder of this Agreement and application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to use their commercially reasonable efforts to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provision.

6.4 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be an original as regards any party whose signature appears thereon and all of which together will constitute one and the same instrument. This Agreement will become binding when one or more counterparts hereof, individually or taken together, will bear the signatures of both parties reflected hereon as signatories.

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6.5 Other Remedies. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby or by law on such party, and the exercise of any one remedy will not preclude the exercise of any other.

6.6 Amendment and Waivers. Any term or provision of this Agreement may be amended at any time prior to the Effective Time, whether before or after the adoption of this Agreement by the Requisite Stockholder Approval or by the sole stockholder of Merger Sub, by an agreement in writing signed by or on behalf of each of the parties hereto, with the authorization of the board of directors of each of OpCo and Merger Sub, provided, however, that after this Agreement is adopted by the Requisite Stockholder Approval or by the sole stockholder of Merger Sub, no amendment shall be made to this Agreement that by law requires further approval or authorization by the stockholders of OpCo or Merger Sub without such further approval or authorization. The observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a writing signed by the party to be bound thereby. The waiver by a party of any breach hereof or default in the performance hereof will not be deemed to constitute a waiver of any other default or any succeeding breach or default.

6.7 No Waiver. The failure of any party to enforce any of the provisions hereof will not be construed to be a waiver of the right of such party thereafter to enforce such provisions.

6.8 Further Assurances. Each party agrees to cooperate fully with the other parties and to execute such further instruments, documents and agreements and to give such further written assurances as may be reasonably requested by any other party to evidence and reflect the transactions described herein and contemplated hereby and to carry into effect the intents and purposes of this Agreement.

6.9 Notices. Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following: (i) at the time of personal delivery, if delivery is in person; (ii) at the time of transmission by facsimile, addressed to the other party at its facsimile number specified herein (or hereafter modified by subsequent notice to the parties hereto), with confirmation of receipt made by both telephone and printed confirmation sheet verifying successful transmission of the facsimile; (iii) one (1) business day after deposit with an express overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier requested; or (iv) three (3) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries.

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All notices for delivery outside the United States will be sent by facsimile or by express courier. Notices by facsimile shall be machine verified as received. All notices not delivered personally or by facsimile will be sent with postage and/or other charges prepaid and properly addressed to the party to be notified at the address or facsimile number as follows, or at such other address or facsimile number as such other party may designate by one of the indicated means of notice herein to the other parties hereto as follows:

If to any party hereto:

Valeritas, Inc.

750 Route 202 South, Suite 600

Bridgewater, NJ 08807

Attention: Chief Executive Officer

Telephone No.:

Facsimile No.:

with a copy (which shall not constitute notice) to:

Morgan, Lewis & Bockius LLP

502 Carnegie Center

Princeton, New Jersey 08540

Attention: Steven M. Cohen

Telephone No.:

Facsimile No.:

Ropes & Gray LLP

1211 Avenue of the Americas

New York, NY 10036-8704

Attention: Anthony J. Norris

Telephone No:

Facsimile No.:

Wilmer Cutler Pickering Hale and Dorr LLP

850 Winter Street

Waltham, MA 02451

Attention: Michael Bain

Telephone No:

Facsimile No.:

6.10 Entire Agreement. This Agreement and the exhibits hereto constitute the entire understanding and agreement of the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous agreements or understandings, inducements or conditions, express or implied, written or oral, between the parties with respect hereto. The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof.

6.11 Facsimile Signatures. This Agreement may be executed and delivered by facsimile and upon such delivery the facsimile signature will be deemed to have the same effect as if the original signature had been delivered to the other party.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

VALERITAS, INC.		VALERITAS HOLDINGS, LLC
By:	/s/ William Duke	By:
Name:	William Duke	Name:	Kristine Peterson
Title:	Chief Financial Officer	Title:	President
VALERITAS MERGER SUB, INC.
By:
Name:	Kristine Peterson
Title:	President

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

VALERITAS, INC.		VALERITAS HOLDINGS, LLC
By:		By:	/s/ Kristine Peterson
Name:	William Duke	Name:	Kristine Peterson
Title:	Chief Financial Officer	Title:	President
VALERITAS MERGER SUB, INC.
By:	/s/ Kristine Peterson
Name:	Kristine Peterson
Title:	President

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT OF

VALERITAS HOLDINGS, LLC

[See Attached]

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

VALERITAS HOLDINGS, LLC

a Delaware Limited Liability Company

THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of VALERITAS HOLDINGS, LLC, a Delaware limited liability company (the “Company”), is dated and effective as of June [17], 2014 (the “Effective Date”) and is adopted, executed and agreed to by and among the Company, Valeritas, Inc., a Delaware corporation (“Opco”), in its capacity as a member of the Company that does not hold a limited liability company interest in the Company (the “Temporary Member”), the persons and entities listed on Schedule A hereto that hold an economic interest in the Company, some or all of which may be admitted as Members of the Company, and each other Person who at any time after the Effective Date becomes a Member in accordance with the terms of this Agreement and the Act (to the extent any person listed on Schedule A has the right to receive units of limited liability company interest in the Company pursuant to the Agreement and Plan of Merger and Reorganization dated as of the date hereof among the Company and the other parties thereto (the “Merger Agreement”) but has not executed and delivered this Agreement (including pursuant to a joinder or a power of attorney or other authorization granted to an attorney in fact or agent under the Merger Agreement or other documents related thereto), such person’s acceptance of such units of limited liability company interest shall be deemed to constitute that person’s agreement to be bound by this Agreement). Any reference in this Agreement to any Member shall include such Member’s Successors in Interest to the extent such Successors in Interest have become Substitute Members in accordance with the provisions of this Agreement.

W I T N E S S E T H:

WHEREAS, the Company was formed as a limited liability company pursuant to the Act by the filing of a Certificate of Formation with the Secretary of State of the State of Delaware on June 9, 2014 (the “Original Formation Date”), and the execution of the Operating Agreement of the Company, on June 9, 2014 (the “Original Agreement”), with Opco being the sole initial member thereof;

WHEREAS, on the date hereof, a Subsidiary of the Company, Valeritas Merger Sub, Inc., a Delaware corporation (“Merger Sub”), merged with and into Opco (the “Merger”);

WHEREAS, in connection with the Merger and in accordance with the Merger Agreement, in exchange for shares of stock in Opco, each former stockholder of Opco (other than any stockholder holding Dissenting Shares (as defined in the Merger Agreement)) has the right to receive certain units of limited liability company interest in the Company, with the rights, powers and preferences set forth herein;

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WHEREAS, in accordance with the Merger Agreement, upon its acceptance of the units of limited liability company interest in the Company to which it is entitled in connection with the Merger, each former stockholder of Opco (other than any stockholder holding Dissenting Shares (as defined in the Merger Agreement)) is bound by this Agreement and upon the surrender of the certificates representing the shares of stock in Opco held by such stockholder and the completion and signing of a joinder agreement and other transmittal documents provided for completion after the Merger, such former stockholder shall be admitted as a member of the Company;

WHEREAS, upon the admission of any former stockholder of Opco as a member of the Company, the Temporary Member shall cease to be a member of the Company and the Company shall continue without dissolution; and

WHEREAS, the parties desire to enter into this Agreement in order to amend and restate the Original Agreement and to provide for, among other things, (a) the management of the business and affairs of the Company, (b) the allocation among the Unitholders (as hereinafter defined) of the profits and losses of the Company and (c) the respective rights and obligations of the parties to each other with respect to the Company.

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto, each intending to be legally bound, hereby amend and restate the Original Agreement and set forth the limited liability company agreement of the Company in its entirety as follows:

ARTICLE I.

DEFINITIONS

SECTION 1.1. Definitions. The following terms shall have the following meanings for purposes of this Agreement:

“Act” means the Delaware Limited Liability Company Act, Title 6, §§ 18-101, et seq., as it may be amended from time to time.

“Additional Member” means any Person that has been admitted to the Company as a Member pursuant to Section 5.4 by virtue of having received its Units from the Company and not from any other Member, Unitholder or Assignee.

“Additional Units” shall mean any Common Units issued (or deemed to have been issued pursuant to Section 2.10(c)(i)(E)) by the Company on or following the date hereof other than:

(A) Common Units issued pursuant to a transaction described in Section 2.10(c)(ii) hereof;

(B) Common Units issued to employees, directors, consultants and other service providers for the primary purpose of soliciting or retaining their services pursuant to plans or agreements approved by the Board up to 31,460,537 Common Units;

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(C) Common Units issued pursuant to the conversion or exercise of convertible or exercisable securities outstanding on the date hereof;

(D) Common Units issuable upon the conversion of the Preferred Units issued as of the date hereof and the Series C PIK Units and Series B PIK Units;

(E) Common Units issued in connection with a bona fide business acquisition of or by the Company, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise; or

(F) Common Units issued or deemed issued pursuant to Section 2.10(c)(i)(E) as a result of a decrease in the Conversion Price of any class or series of Preferred Units resulting from the operation of Section 2.10(c).

“Affiliate” means any Person who, directly or indirectly, controls, is controlled by or is under common control with another Person, including, without limitation, any general partner, managing member, officer or director of such Person or any venture capital or private equity fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person. For all purposes hereunder, (i) Kaiser Permanente Ventures LLC – Series A, Kaiser Permanente Ventures LLC – Series B and The Permanente Federation LLC shall be deemed to be Affiliates of each other and (ii) any entity managed by Auda Capital or Tullis Health shall be deemed to be an Affiliate of Auda Capital IV Co-Investment GMBH & Co. KG.

“Agreement” means this Amended and Restated Limited Liability Company Agreement of the Company, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof.

“Assignee” means any transferee to which a Member, Unitholder or another Assignee has transferred its interest in the Company in accordance with the terms of this Agreement, but who is not a Member.

“Board Majority of the Minority” means the affirmative vote of a majority of the Series B Managers.

“Business Day” means a day other than a Saturday or Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.

“Capital Account” means, with respect to any Unitholder, the account maintained for such Unitholder in accordance with the following provisions:

(a) To each Unitholder’s Capital Account there shall be added such Unitholder’s Capital Contributions, such Unitholder’s allocable share of Net Income and any items in the nature of income or gain which are specially allocated to such Unitholder pursuant to Section 4.3(b) hereof, and the amount of any Company liabilities assumed by such Unitholder or which are secured by any property distributed to such Unitholder.

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(b) From each Unitholder’s Capital Account there shall be subtracted the amount of cash and the Gross Asset Value of any property distributed to such Unitholder pursuant to any provision of this Agreement, such Unitholder’s allocable share of Net Losses and any items in the nature of expenses or losses which are specially allocated to such Unitholder pursuant to Section 4.3(b) hereof, and the amount of any liabilities of such Unitholder assumed by the Company or which are secured by any property contributed by such Unitholder to the Company.

(c) In the event any Unit is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred Unit.

(d) In determining the amount of any liability for purposes of subparagraphs (a) and (b) hereof, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations.

(e) The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Code Section 704(b) and the Regulations promulgated thereunder, and shall be interpreted and applied by the Board in a manner consistent with such Regulations.

“Capital Contribution” means the amount of cash and the initial Gross Asset Value of any property (other than cash) contributed from time to time to the Company by a Unitholder.

“Cash” means all unrestricted cash and marketable securities held by the Company.

“Class” or “Classes” means, the different classes of Units from time to time outstanding (which are initially the Series A Preferred Units, the Series B Preferred Units, the Series C Preferred Units and the Common Units). Except as expressly set forth in this Agreement, for purposes of voting on, consenting to or approving any matter, there shall be but a single class and a single group of Members.

“Code” means the Internal Revenue Code of 1986, as amended, from time to time, or any successor statute. Any reference herein to a particular provision of the Code shall mean, where appropriate, the corresponding provision in any successor statute.

“Common Units” means the common class of Units designated as “Common Units” and having the relative rights, preferences, privileges, limitations and qualifications set forth in this Agreement.

“Date of Issue” means (A) with respect to each of the Units issued on the date hereof, the Effective Date and (B) with respect to all Units issued after the Effective Date (if any), the actual date of issue thereof.

“Depreciation means, for each fiscal year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable for federal income tax

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purposes with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, that if the federal income tax depreciation, amortization or other cost recovery deduction for such year is zero, Depreciation shall be calculated with reference to such beginning Gross Asset Value using any reasonable method selected by the Board; provided further, that in all events the requirements of Regulations Section 1.704-3 shall be taken into account.

“Distributable Assets” means, with respect to any fiscal period, all cash receipts (including from any operating, investing, and financing activities) and other assets of the Company from any and all sources, reduced by operating expenses, contributions of capital to Subsidiaries, investments and payments required to be made in connection with any loan to the Company and any reserve for contingencies or escrow required, in the judgment of the Board acting in good faith.

“Equity Securities” means as to any Person that is a corporation, the shares of such Person’s capital stock, including all classes of common, preferred, voting and nonvoting capital stock, and, as to any Person that is not a corporation or an individual, the ownership, beneficial or membership interests in such Person, including, without limitation, the right to share in profits and losses, the right to receive distributions of cash and property, and the right to receive allocations of items of income, gain, loss, deduction and credit and similar items from such Person, whether or not such interests include voting or similar rights entitling the holder thereof to exercise control over such Person.

“GAAP” means United States generally accepted accounting principles as from time to time in effect.

“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:

(a) The initial Gross Asset Value of any asset contributed by a Unitholder to the Company shall be the gross fair market value of such asset on the date of the contribution, as determined by the contributing Unitholder and the Company.

(b) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values, as determined by the Board, as of the following times:

(i) the acquisition of additional Units after the date hereof by a new or existing Unitholder in exchange for more than a de minimis Capital Contribution, if the Board reasonably determines that such adjustment is necessary or appropriate to reflect the relative shares of the Company’s Net Income, Net Losses and distributions pursuant to this Agreement and the Act of the Unitholders;

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(ii) the distribution by the Company to a Unitholder of more than a de minimis amount of Company property as consideration for an entire or partial Unit, if the Board reasonably determines that such adjustment is necessary or appropriate to reflect the relative shares of the Company’s Net Income, Net Losses and distributions pursuant to this Agreement and the Act of the Unitholders;

(iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);

(iv) the grant of Units (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a Member capacity or by a new Member acting in a Member capacity or in anticipation of being a Member if the Board reasonably determines that such adjustment is necessary or appropriate to reflect the Unitholders’ relative shares of the Company’s Net Income, Net Losses and distributions pursuant to this Agreement and the Act;

(v) immediately following any conversion of Preferred Units into Common Units in accordance with the rights of the Preferred Unit holders; and

(vi) such other times as the Board shall reasonably determine necessary or advisable to the extent permitted under Regulations Sections 1.704-1(b) and 1.704-2;

provided, however, that if any such adjustment to the Gross Asset Values of the Company’s assets occurs pursuant to this subsection (b) at a time when the Company has outstanding “noncompensatory options” (as defined in Regulations Section 1.721-2(f)) including convertible Preferred Units, the Gross Asset Value of the assets shall be adjusted to account for such outstanding noncompensatory options in accordance with Regulations Section 1.704-1(b)(2)(iv)(d)(4).

(c) The Gross Asset Value of any Company asset distributed to a Unitholder shall be the gross fair market value of such asset on the date of distribution, as reasonably determined by the Board.

(d) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to the extent that the Board determines that an adjustment pursuant to subparagraph (b) of this definition of Gross Asset Value is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (d).

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“Investor Rights Agreement” means the Investors’ Rights Agreement dated as of June 19, 2014 among the Company, Opco and the Unitholders and other Persons party thereto.

“Liquidation Event” means (1) the closing of the sale, transfer or other disposition of all or substantially all of the Company’s assets, (2) the consummation of the merger (but not including the Merger) or consolidation of the Company or Opco with or into another entity (except (x) in the case of a merger or consolidation of the Company, a merger or consolidation in which the holders of Equity Securities of the Company immediately prior to such merger or consolidation continue to hold at least 50% of the voting power of the Equity Securities of the Company or the surviving or acquiring entity or (y) in the case of a merger or consolidation of Opco, a merger or consolidation in which the holders of Equity Securities of Opco or the Company immediately prior to such merger or consolidation continue to hold at least 50% of the voting power of the Equity Securities of Opco or the surviving or acquiring entity), (3) the closing of the transfer (whether by merger, consolidation or otherwise), in one transaction or a series of related transactions, to a Person or group of Affiliated Persons (other than (x) an underwriter of the Company’s or Opco’s Securities, (y) any person that is a holder of Series C Preferred Units on the date hereof (or any Affiliate thereof) or (z) a transferee pursuant to an exempt transfer under Section 5(f) of the Voting Agreement), of the Company’s or Opco’s Securities if, after such closing, such Person or group of Affiliated Persons would hold 50% or more of the outstanding voting Equity Securities of the Company or Opco, as the case may be (or of the surviving or acquiring entity) or (4) a liquidation, dissolution or winding up of the Company in accordance with Section 5.2; provided, however, that a transaction shall not constitute a Liquidation Event if its sole purpose is to change the state of Opco’s or the Company’s organization or to create a holding company that will be owned in substantially the same proportions by the Persons who held Opco’s or the Company’s, as the case may be, Securities immediately prior to such transaction. The treatment of any particular transaction or series of related transactions as a Liquidation Event may be waived only with the vote or written consent of (x) the Series C Required Holders, (y) the Series B Required Holders and (z) Series A Required Holders, each voting as a separate class. In any Liquidation Event, if proceeds received by the Company or the Members is other than cash, its value will be deemed its fair market value. Any Securities shall be valued as follows:

(A) Securities not subject to investment letter or other similar restrictions on free marketability covered by (B) below:

(1) If traded on a securities exchange or through the NASDAQ Global Market, the value shall be deemed to be the average of the closing prices of the securities on such exchange or system over the ten (10) trading-day period ending three (3) trading days prior to the closing of the Liquidation Event;

(2) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the ten (10) trading-day period ending three (3) trading days prior to the closing of the Liquidation Event; and

(3) If there is no active public market, the value shall be the fair market value thereof, as mutually determined by the Company (by action of the Board, which must include the affirmative vote of the Board Majority of the Minority), and the Series C Required Holders.

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(B) The method of valuation of Securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a Person’s status as an Affiliate or former Affiliate) shall be to make an appropriate discount from the market value determined as above in (A) (1), (2) or (3) to reflect the approximate fair market value thereof, as mutually determined by the Company (by action of the Board, which must include the affirmative vote of the Board Majority of the Minority), and the Series C Required Holders.

(C) The foregoing methods for valuing non-cash consideration to be distributed in connection with a Liquidation Event shall, upon approval by the requisite Members of the definitive agreements governing a Liquidation Event, be superseded by any determination of such value set forth in the definitive agreements governing such Liquidation Event.

“Member” means each Person listed as a member of the Company on Schedule B as of the date hereof and each other Person who is hereafter admitted as a Member in accordance with the terms of this Agreement and the Act, each in its capacity as a member of the Company, but shall not include any Person who has ceased to be a member of the Company. The Members shall constitute the “members” (as that term is defined in the Act) of the Company.

“Net Income” or “Net Loss” means for each fiscal year of the Company, an amount equal to the Company’s taxable income or loss for such fiscal year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

(a) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or Net Loss shall be added to such taxable income or loss;

(b) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or Net Loss shall be subtracted from such taxable income or loss;

(c) In the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (b) or (c) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as gain (if the adjustment increases the Gross Asset Value of the asset) or loss (if the adjustment decreases the Gross Asset Value of the asset) from the disposition of such asset for purposes of computing Net Income or Net Loss;

(d) Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

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(e) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, Depreciation shall be taken into account for such fiscal year;

(f) The amount of any positive adjustment to the Gross Asset Values of the Company’s assets described in paragraph (d) of the definition of “Gross Asset Value” shall be treated as an item of gain, and the amount of any negative adjustment pursuant to such paragraph shall be treated as an item of loss; and

(g) Notwithstanding any other provision of this definition of Net Income or Net Loss, any items which are specially allocated pursuant to Section 4.3(b) hereof shall not be taken into account in computing Net Income or Net Loss. To the extent permitted by the Regulations, the amounts of the items of Company income, gain, loss, or deduction available to be specially allocated pursuant to Section 4.3(b) hereof shall be determined by applying rules analogous to those set forth in this definition of Net Income or Net Loss.

“Officer” means each Person designated as an officer of the Company pursuant to and in accordance with the provisions of Section 3.6.

“Person” means any natural person, corporation, limited liability company, partnership, trust, joint stock company, business trust, unincorporated association, joint venture, governmental authority or other legal entity of any nature whatsoever.

“Preferred Units” means the classes of Units of the Company designated as the Series A Preferred Units, the Series B Preferred Units and the Series C Preferred Units.

“Public Offering” means a public offering of shares of common stock of a Subsidiary of the Company pursuant to an effective registration statement (other than on a Form S-4 or other similar form) under the Securities Act.

“Regulations” means the income tax regulations, including temporary regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

“Securities” means any debt or equity securities of any issuer, including common and preferred stock and interests in limited liability companies (including warrants, rights, put and call options and other options relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness and other property or interests commonly regarded as securities.

“Securities Act” means the Securities Act of 1933, or any successor federal statute, and the rules and regulations of the Securities and Exchange Commission thereunder, as the same may be amended from time to time.

“Series A Invested Amount” means, with respect to each Series A Preferred Unit, an amount equal to $1.21286 (in each case as adjusted for any Unit splits, Unit distributions, combinations, subdivisions, recapitalizations or the like with respect to the Series A Preferred Units).

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“Series A Liquidation Amount” means an amount equal to the greater of (i) the sum of the Series A Invested Amount, plus any distributions declared but unpaid thereon through the date of such Liquidation Event or (ii) such amount per Series A Preferred Unit as would have been payable had each such Series A Preferred Unit been converted into Common Units pursuant to Section 2.10(a)(iii) immediately prior to such Liquidation Event.

“Series A Preferred Units” means the Series A convertible preferred class of Units designated as “Series A Preferred Units” and having the relative rights, preferences, privileges, limitations and qualifications set forth in this Agreement.

“Series A Required Holders” means the Members who are holders of at least sixty percent (60%) of the then outstanding Series A Preferred Units held by Members, voting together as a separate class on an as converted to Common Units basis.

“Series B Accruing Distribution” means, with respect to each Series B Preferred Unit, a cumulative amount accruing on a daily basis beginning on the Date of Issue thereof and ending on the date that is nine (9) months following the date of an initial Public Offering of Opco at a rate equal to four percent (4%) per annum, compounded semi-annually on the sum of (x) the Series B Invested Amount, (y) the Series B Pre-Closing Accrued Amount and (z) the accrued and unpaid distributions on such Series B Preferred Unit.

“Series B Invested Amount” means, with respect to each Series B Preferred Unit, an amount equal to $1.21286 (in each case as adjusted for any Unit splits, Unit distributions, combinations, subdivisions, recapitalizations or the like with respect to the Series B Preferred Units).

“Series B Liquidation Amount” means an amount equal to the greater of (i) the sum of the Series B Invested Amount, plus the Series B Pre-Closing Accrued Amount, plus the Series B Accruing Distribution accrued through the date of such Liquidation Event but unpaid thereon, whether or not declared or (ii) such amount per Series B Preferred Unit as would have been payable had each such Series B Preferred Unit been converted into Common Units pursuant to Section 2.10(a)(ii) immediately prior to such Liquidation Event.

“Series B Pre-Closing Accrued Amount” means, with respect to each Series B Preferred Unit, an amount equal to $0.1409 (in each case as adjusted for any Unit splits, Unit distributions, combinations, subdivisions, recapitalizations or the like with respect to the Series B Preferred Units).

“Series B Preferred Units” means the Series B convertible class of preferred Units designated as “Series B Preferred Units” and having the relative rights, preferences, privileges, limitations and qualifications set forth in this Agreement.

“Series B Required Holders” means the Members who are holders of at least a majority of the then outstanding Series B Preferred Units held by Members, voting together as a separate class on an as converted to Common Units basis.

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“Series C Accruing Distribution” means, with respect to each Series C Preferred Unit, a cumulative amount accruing on a daily basis beginning on the Date of Issue thereof and ending on the date that is nine (9) months following the date of an initial Public Offering of Opco at a rate equal to eight percent (8%) per annum, compounded semi-annually on the sum of (x) the Series C Invested Amount, (y) the Series C Pre-Closing Accrued Amount and (z) the accrued and unpaid distributions on such Series C Preferred Unit.

“Series C Invested Amount” means, with respect to each Series C Preferred Unit, an amount equal to $1.435 (in each case as adjusted for any Unit splits, Unit distributions, combinations, subdivisions, recapitalizations or the like with respect to the Series C Preferred Units).

“Series C Liquidation Amount” means an amount equal to the greater of (i) the sum of the Series C Invested Amount, plus the Series C Pre-Closing Accrued Amount, plus the Series C Accruing Distribution accrued through the date of such Liquidation Event but unpaid thereon, whether or not declared or (ii) such amount per share as would have been payable had each such share been converted into Common Units pursuant to Section 2.10(a)(i) immediately prior to such Liquidation Event.

“Series C Pre-Closing Accrued Amount” means, with respect to each Series C Preferred Unit, an amount equal to $0.2697 (in each case as adjusted for any Unit splits, Unit distributions, combinations, subdivisions, recapitalizations or the like with respect to the Series C Preferred Units).

“Series C Preferred Units” means the Series C convertible preferred class of Units designated as “Series C Preferred Units” and having the relative rights, preferences, privileges, limitations and qualifications set forth in this Agreement.

“Series C Required Holders” means the Members who are holders of at least a majority of the then outstanding Series C Preferred Units held by Members, voting together as a separate class on an as converted to Common Units basis.

“Subsidiary” means, with respect to the Company or any other Person, any Person of which the Company (or such other Person) owns securities having a majority of the voting power in electing the board of directors directly or through one or more Subsidiaries (or, in the case of a partnership, limited liability company or other similar entity, securities conveying, directly or indirectly, a majority of the economic interests in such partnership or entity), including any Person of which the Company (or such other Person) or any Subsidiary serves as general partner or managing member.

“Substitute Member” means any Person that has been admitted to the Company as a Member pursuant to Section 5.4 by virtue of such Person receiving Units from a Member, a Unitholder or its Assignee and not from the Company.

“Successor in Interest” means any (i) trustee, custodian, receiver or other Person acting in any bankruptcy or reorganization proceeding with respect to; (ii) assignee for the benefit of the creditors of; (iii) trustee or receiver, or current or former officer, director or partner, or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (iv) other executor, administrator, committee, legal representative or other successor or assign of, any Unitholder, whether by operation of law or otherwise.

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“Target Balance” has the meaning set forth in Section 4.3(a).

“Unitholder” means a Member, Assignee, other Person to which the Company has issued Units or a Successor in Interest who holds any Unit.

“Units” means units of limited liability company interest in the Company from time to time outstanding hereunder (which are initially represented by the Preferred Units and the Common Units).

“Voting Agreement” means the Voting Agreement dated as of June 17, 2014 among the Company and the Unitholders party thereto.

SECTION 1.2. Terms Generally. The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All terms herein that relate to accounting matters shall be interpreted in accordance with GAAP. All references to “Sections” and “Articles” shall refer to Sections and Articles of this Agreement unless otherwise specified. The words “hereof” and “herein” and similar terms shall relate to this Agreement.

ARTICLE II.

GENERAL PROVISIONS

SECTION 2.1. Formation. The Company has been organized as a Delaware limited liability company by the execution and filing of a Certificate of Formation (as amended from time to time, the “Certificate”) by an authorized person under and pursuant to the Act, such Certificate and the execution and filing thereof being hereby ratified and approved in all respects. Any Officer, acting alone, as an “authorized person”, within the meaning of the Act, shall execute, deliver and file, or cause the execution, delivery and filing of, all certificates (and any amendments and/or restatements thereof) required or permitted by the Act to be filed with the Secretary of State of the State of Delaware. The rights, powers, duties, obligations and liabilities of the Members shall be determined pursuant to the Act and this Agreement. To the extent that the rights, powers, duties, obligations and liabilities of any Member are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control. Opco hereby continues as the Temporary Member upon its execution of a counterpart signature page of this Agreement. The Temporary Member has no Units and or other limited liability company interests in the Company and has no authority to bind the Company. Except as required by any mandatory provision of the Act, the Temporary Member shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company. Each of the Persons listed on Schedule A hereto as a “Unitholder” on the date hereof has the right to receive units of limited liability company interests in the Company pursuant to the Merger. Upon the surrender by each such Person of

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their certificate(s) representing their shares in Opco prior to the Merger and the completion and signing of a joinder agreement to this Agreement, each such Person shall be admitted to the Company as a Member and shall be listed on Schedule B hereto. Upon such admission to the Company of any former Opco stockholder, the Board shall cause Schedule B hereto to be revised to reflect such admission. Notwithstanding any provision of this Agreement to the contrary, such revision of Schedule B hereto shall not require the approval or consent of any Member or other Unitholder. Simultaneously with the admission of any former stockholder of Opco as a Member of the Company, Opco shall automatically cease to be a member of the Company and shall cease to be a party to and to have any rights or obligations under this Agreement and the Company shall continue without dissolution. The execution and delivery by the Company of the Merger Agreement are hereby ratified and approved in all respects.

SECTION 2.2. Name. The name of the Company is Valeritas Holdings, LLC, the name specified in the Certificate filed with the Secretary of State of the State of Delaware on the Original Formation Date. All Company business shall be conducted in that name or in such other names that comply with applicable law as the Board may select from time to time.

SECTION 2.3. Term. The term of the Company commenced on the Original Formation Date, the date the original Certificate was filed with the office of the Secretary of State of the State of Delaware, and shall continue in existence perpetually until termination of the Company in accordance with the provisions of Section 5.2.

SECTION 2.4. Purpose; Powers.

(a) General Powers. The nature of the business or purposes to be conducted or promoted by the Company is to engage in any lawful act or activity for which limited liability companies may be organized under the Act. The Company may engage in any and all activities necessary, desirable or incidental to the accomplishment of the foregoing. Notwithstanding anything herein to the contrary, nothing set forth herein shall be construed as authorizing the Company to possess any purpose or power, or to do any act or thing, forbidden by law to a limited liability company organized under the laws of the State of Delaware.

(b) Company Action. Subject to the provisions of this Agreement and except as prohibited by applicable law (i) the Company may, with the approval of the Board (or a duly authorized committee thereof) or a duly authorized Officer, enter into and perform any and all documents, agreements and instruments contemplated by such approval, all without any further act, vote or approval of any Member and (ii) the Board (or a duly authorized committee thereof) may authorize any Person (including any Member, Manager or Officer) to enter into and perform any document on behalf of the Company.

SECTION 2.5. Foreign Qualification. The Board shall cause the Company to comply with all requirements necessary to qualify the Company as a foreign limited liability company in any jurisdiction in which the location of its assets and properties or the conduct of its business requires such qualification unless the Board shall determine otherwise and determine that the failure so to qualify would not have a material adverse effect on the Company.

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SECTION 2.6. Registered Office; Registered Agent; Offices. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be the office of the registered agent named in the Certificate or such other office (which need not be a place of business of the Company) as the Board may designate from time to time in the manner provided by law. The registered agent of the Company in the State of Delaware shall be the registered agent named in the Certificate or such other Person or Persons as the Board may designate from time to time in the manner provided by law. The principal office of the Company shall be at such place as the Board may designate from time to time, which need not be in the State of Delaware, and the Company shall maintain records at such place. The Company may have such other offices as the Board may designate from time to time.

SECTION 2.7. Partnership Status. The Unitholders intend that the Company shall be treated as a partnership for federal, state and local income tax purposes, and each Unitholder and the Company shall file all tax returns and shall otherwise take all tax and financial reporting positions in a manner consistent with such treatment.

SECTION 2.8. Rights and Privileges of Initial Classes of Units; Voting.

(a) The limited liability company interests in the Company shall be divided into and denominated as Units. There shall be multiple Classes of Units, as follows:

(i) There is hereby created a class of Units designated as the “Series A Preferred Units”. Each Series A Preferred Unit shall be identical to all other Series A Preferred Units in all respects (other than income tax attributes) and shall entitle the holder thereof to the rights, interests, preferences and privileges of a holder of a Series A Preferred Unit as set forth in this Agreement.

(ii) There is hereby created a class of Units designated as the “Series B Preferred Units”. Each Series B Preferred Unit shall be identical to all other Series B Preferred Units in all respects (other than income tax attributes) and shall entitle the holder thereof to the rights, interests, preferences and privileges of a holder of a Series B Preferred Unit as set forth in this Agreement.

(iii) There is hereby created a class of Units designated as the “Series C Preferred Units”. Each Series C Preferred Unit shall be identical to all other Series C Preferred Units in all respects (other than income tax attributes) and shall entitle the holder thereof to the rights, interests, preferences and privileges of a holder of a Series C Preferred Unit as set forth in this Agreement.

(iv) There is hereby created a class of Units designated as the “Common Units”. Each Common Unit shall be identical to all other Common Units in all respects (other than income tax attributes) and shall entitle the holder thereof to the rights, interests, preferences and privileges of a holder of a Common Unit as set forth in this Agreement.

(b) The Members who are holders of the Common Units, Series C Preferred Units (on an as converted to Common Units basis) and Series B Preferred Units (on an as converted to Common Units basis) shall be entitled to one vote per Common Unit on any

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matters on which the Members and/or Unitholders are entitled to vote. Except as expressly set forth in this Agreement, the Series A Preferred Units, and any other Units of a Person if and so long as such Person is not a Member, shall be non-voting.

SECTION 2.9. Ownership and Issuance of Units.

(a) The ownership of outstanding Units shall be listed on Schedule A to this Agreement, as from time to time revised, amended or supplemented in accordance with this Agreement. From time to time, following the admission of any Additional Members or Substitute Members, or following the issuance, transfer or forfeiture of any Units, Schedule A (and to the extent the holder thereof has been admitted as a Member, Schedule B) shall be amended to reflect such changes. Notwithstanding any provision of this Agreement to the contrary, such revision, amendment or supplement of Schedule A or Schedule B hereto shall not require the approval or consent of any Member or other Unitholder.

(b) Subject to Section 3.10, the Board is authorized in its sole and complete discretion to cause the Company to issue, on such terms and conditions as the Board shall determine, additional Units, which Units may be of a same or different class, subclass or series from the Units which are outstanding prior to such issuance, at any time or from time to time to existing Members or to other Persons, and to admit such other Persons to the Company as additional Members pursuant to Section 5.4. In connection therewith, the Board shall have sole and complete discretion to create new classes, subclasses or series of Units (in addition to the then-existing classes or subclasses or series of Units), with such relative rights, powers, preferences, privileges and limitations as shall be fixed by the Board, and to make such revisions to the relative rights, powers, preferences, privileges and limitations of Units which are outstanding prior to such issuance subject only to the express restrictions set forth in Sections 3.10 and 5.4. Upon the issuance of any additional Units pursuant to this Section 2.9, the Board shall amend Schedule A hereto (and to the extent a holder thereof has been admitted as a Member, Schedule B hereto) to reflect such issuance and, if necessary, and subject to Sections 3.10 and 5.4, the other terms and provisions of this Agreement to reflect the creation, designation, preferences and relative, participating, optional or other special rights, powers and duties of any such new class, subclass or series of Units.

SECTION 2.10. Conversion Rights of the Preferred Units.

(a) Conversion. Subject to the terms and conditions of this Section 2.10, any holder of Preferred Units shall have the right, at its option at any time, to convert any or all of such Preferred Units into such number of Common Units per Preferred Unit as follows:

(i) Each Series C Preferred Unit shall be converted into such number of Common Units as is determined by multiplying one Series C Preferred Unit by the Series C Conversion Rate. In the case of the Series C Preferred Units, the “Series C Conversion Rate” in effect at any time shall be an amount equal to the quotient obtained by dividing (x) an amount equal to the amount of the Series

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C Invested Amount, plus the Series C Pre-Closing Accrued Amount, plus the Series C Accruing Distribution accrued and unpaid through the Conversion Time, whether declared or not, by (y) the Series C Conversion Price then in effect; provided, however, that if the aggregate fair market value of the Common Units to be received upon conversion of a Series C Preferred Unit (plus the aggregate fair market value of the Common Units to be received (or previously received) upon conversion of each Series C PIK Unit received with respect to such Series C Preferred Unit prior to the Conversion Time as if such Series C PIK Unit were also being converted at such Conversion Time) is equal to or greater than $2.87 per Unit (subject to appropriate adjustment in the event of a Unit split, Unit distribution (other than Series C PIK Units), combination, reclassification, or similar event affecting the Series C Preferred Units), then the Series C Conversion Rate in effect at such time for such Series C Preferred Unit shall be an amount equal to the greater of (x) a rate such that upon conversion of such Series C Preferred Unit (and each Series C PIK Unit received with respect to such Series C Preferred Unit prior to the Conversion Time) the holder thereof will receive a number of Common Units (when taken together with the Common Units to be received (or previously received) upon conversion of each Series C PIK Unit received with respect to such Series C Preferred Unit prior to the Conversion Time as if such Series C PIK Unit were also being converted at such Conversion Time) having an aggregate fair market value equal to $2.87 per Unit (subject to appropriate adjustment in the event of a Unit split, Unit distribution (other than Series C PIK Units), combination, reclassification, or similar event affecting the Series C Preferred Units) and (y) an amount equal to the quotient obtained by dividing (1) the Series C Invested Amount by (2) the Series C Conversion Price then in effect and the Series C Pre-Closing Accrued Amount and the Series C Accruing Distribution shall not be included in the calculation of the Series C Conversion Rate with respect to such Series C Preferred Unit. On the date hereof, the “Series C Conversion Price” per Unit is the Series C Invested Amount. Such initial Series C Conversion Price, and the rate at which Series C Preferred Units may be converted into Common Units, shall be subject to adjustment as provided below.

(ii) Each Series B Preferred Unit shall be converted into such number of Common Units as is determined by multiplying one Series B Preferred Unit by the Series B Conversion Rate. In the case of the Series B Preferred Units, the “Series B Conversion Rate” in effect at any time shall be an amount equal to the quotient obtained by dividing (x) an amount equal to the amount of the Series B Invested Amount, plus the Series B Pre-Closing Accrued Amount, plus the Series B Accruing Distribution accrued through the Conversion Time, whether declared or not, by (y) the Series B Conversion Price then in effect; provided, however, that if the aggregate fair market value of the Common Units to be received upon conversion of each Series B Preferred Unit (plus the aggregate fair market value of the Common Units to be received (or previously received) upon conversion of each Series B PIK Unit received with respect to such Series B Preferred Unit prior to the Conversion Time) exceeds $1.81929 per Unit (subject to appropriate adjustment in the event of a Unit split, Unit distribution (other than

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Series B PIK Units), combination, reclassification, or similar event affecting the Series B Preferred Units), then the Series B Conversion Rate in effect at such time for such Series B Preferred Unit shall be an amount equal to the greater of (x) a rate such that upon conversion of such Series B Preferred Unit (and each Series B PIK Unit received with respect to such Series B Preferred Unit prior to the Conversion Time) the holder thereof will receive a number of Common Units (when taken together with the Common Units to be received (or previously received) upon conversion of each Series B PIK Unit received with respect to such Series B Preferred Unit prior to the Conversion Time as if such Series B PIK Unit were also being converted at such Conversion Time) having an aggregate fair market value equal to $1.81929 per Unit (subject to appropriate adjustment in the event of a Unit split, Unit distribution (other than Series B PIK Units), combination, reclassification, or similar event affecting the Series B Preferred Units) and (y) an amount equal to the quotient obtained by dividing (1) the Series B Invested Amount by (2) the Series B Conversion Price then in effect and the Series B Pre-Closing Accrued Amount and the Series B Accruing Distribution shall not be included in the calculation of the Series B Conversion Rate with respect to such Series B Preferred Unit. On the date hereof, the “Series B Conversion Price” per Unit is the Series B Invested Amount. Such initial Series B Conversion Price, and the rate at which Series B Preferred Units may be converted into Common Units, shall be subject to adjustment as provided below.

(iii) Each Series A Preferred Unit shall be converted into such number of Common Units as is determined by multiplying one Series A Preferred Unit by the Series A Conversion Rate. In the case of the Series A Preferred Units, the “Series A Conversion Rate” in effect at any time shall be an amount equal to the quotient obtained by dividing (x) the Series A Invested Amount by (y) the Series A Conversion Price then in effect. On the date hereof, the “Series A Conversion Price” per Unit was the Series A Invested Amount. Such initial Series A Conversion Price, and the rate at which Series A Preferred Units may be converted into Common Units, shall be subject to adjustment as provided below. The Series C Conversion Rate, the Series B Conversion Rate, and the Series A Conversion Rate, and the Series C Conversion Price, the Series B Conversion Price and the Series A Conversion Price, respectively, are sometimes referred to hereinafter as the “Conversion Rate” and “Conversion Price”, as applicable to such class of Preferred Units.

(iv) Fair market value of a Common Unit shall be valued as follows:

(A) In the case of a Liquidation Event, the aggregate amount to be received with respect to a Common Unit pursuant to Section 4.4(b);

(B) In the case of an underwritten offering of securities registered pursuant to the Securities Act, the offering price with respect thereto; and

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(C) In any other circumstances, the fair market value thereof, as determined by the Board, which must include the affirmative vote of a Board Majority of the Minority; provided that if a majority of the Board, including a Board Majority of the Minority and a majority of the Series C Managers, cannot agree on a fair market value within 15 days of the written notice to the Company from a holder of Preferred Units that it wishes to convert any of its Preferred Units, then the Company shall engage an investment banking firm or valuation firm (the “Independent Valuation Firm”) to determine such fair market value (the Company shall request that the Independent Valuation Firm use its reasonable best efforts to determine such fair market value within thirty (30) days of its appointment).

(b) Mechanics of Conversion. Before any holder of Preferred Units shall be entitled to voluntarily convert the same into Common Units, such Member shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Company, and shall give written notice to the Company at its principal office, of the election to convert the same and shall state therein the name or names in which the certificate or certificates for Common Units are to be issued. The Company shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Preferred Units, or to the nominee or nominees of such holder, a certificate or certificates for the number of Common Units to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the certificate or certificates for Preferred Units to be converted, and the person or persons entitled to receive the Common Units issuable upon such conversion shall be treated for all purposes as the record holder or holders of the Common Units as of such date (the “Conversion Time”).

(c) Conversion Price Adjustments of Preferred Units for Certain Dilutive Issuances, Splits and Combinations. The Conversion Price of the Preferred Units shall be subject to adjustment from time to time as follows:

(i) (A) If the Company shall issue, on or after the date hereof, any Additional Units without consideration or for a consideration per Unit less than the Conversion Price applicable to a class of Preferred Units in effect immediately prior to the issuance of such Additional Units, the applicable Conversion Price for such Units in effect immediately prior to each such issuance shall forthwith (except as otherwise provided in this clause (i)) be adjusted to a price determined by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of Common Units Outstanding (as defined below) immediately prior to such issuance plus the number of Common Units that the aggregate consideration received by the Company for such issuance would purchase at such Conversion Price; and the denominator of which shall be the number of Common Units Outstanding immediately prior to such issuance plus the number of such Additional Units. For purposes of this Section 2.10(c)(i)(A), the term “Common Units Outstanding” shall mean and include the following: (1) outstanding Common Units, (2) Common Units issuable upon

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conversion of outstanding Preferred Units, including the Series C Accruing Distribution and Series B Accruing Distribution to the extent so included in accordance with Section 2.10(a), (3) Common Units issuable upon exercise of outstanding options and (4) Common Units issuable upon exercise (and, in the case of warrants to purchase Preferred Units, conversion) of outstanding warrants. Units described in (1) through (4) above shall be included whether vested or unvested, whether contingent or non-contingent and whether exercisable or not yet exercisable.

(B) No adjustment of the Conversion Price for the Preferred Units shall be made in an amount less than one cent per Unit, provided that any adjustments that are not required to be made by reason of this sentence shall be carried forward and either shall be taken into account in any subsequent adjustment made prior to three (3) years from the date of the event giving rise to the adjustment being carried forward, or shall be made at the end of three (3) years from the date of the event giving rise to the adjustment being carried forward. Except to the limited extent provided for in subsections (E)(3) and (E)(4), no adjustment of such Conversion Price pursuant to this Section 2.10(c)(i) shall have the effect of increasing the Conversion Price above the Conversion Price in effect immediately prior to such adjustment.

(C) In the case of the issuance of Additional Units for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting any reasonable discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof.

(D) In the case of the issuance of the Additional Units for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined by the Board irrespective of any accounting treatment.

(E) In the case of the issuance of options to purchase or rights to subscribe for Common Units, securities by their terms convertible into or exchangeable for Common Units or options to purchase or rights to subscribe for such convertible or exchangeable securities, the following provisions shall apply for purposes of determining the number of Additional Units issued and the consideration paid therefor:

(1) The aggregate maximum number of Common Units deliverable upon exercise (assuming the satisfaction of any conditions to exercisability, including without limitation, the passage of time, but without taking into account potential anti-dilution adjustments) of such options to purchase or rights to subscribe for Common Units shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner

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provided in Sections 2.10(c)(i)(C) and (c)(i)(D)), if any, received by the Company upon the issuance of such options or rights plus the minimum exercise price provided in such options or rights (without taking into account potential anti-dilution adjustments) for the Common Units covered thereby.

(2) The aggregate maximum number of Common Units deliverable upon conversion of, or in exchange (assuming the satisfaction of any conditions to convertibility or exchangeability, including, without limitation, the passage of time, but without taking into account potential anti-dilution adjustments) for, any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration equal to the consideration, if any, received by the Company for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued distributions), plus the minimum additional consideration, if any, to be received by the Company (without taking into account potential anti-dilution adjustments) upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in Sections 2.10(c)(i)(C) and (c)(i)(D)).

(3) In the event of any change in the number of Common Units deliverable or in the consideration payable to the Company upon exercise of such options or rights or upon conversion of or in exchange for such convertible or exchangeable securities, the Conversion Price of the Preferred Units, to the extent in any way affected by or computed using such options, rights or securities, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Common Units or any payment of such consideration upon the exercise of any such options or rights or the conversion or exchange of such securities.

(4) Upon the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration of any options or rights related to such convertible or exchangeable securities, the Conversion Price of the Preferred Units, to the extent in any way affected by or computed using such options, rights or securities or options or rights related to such securities, shall be recomputed to reflect the issuance of only the number of Common Units (and convertible or exchangeable

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securities that remain in effect) actually issued upon the exercise of such options or rights, upon the conversion or exchange of such securities or upon the exercise of the options or rights related to such securities.

(5) The number of Additional Units deemed issued and the consideration deemed paid therefor pursuant to Sections 2.10(c)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any change, termination or expiration of the type described in either Sections 2.10(c)(i)(E)(3) or (4).

(ii) In the event the Company should at any time or from time to time after the date hereof fix a record date for the effectuation of a split or subdivision of the outstanding Common Units or the determination of holders of Common Units entitled to receive a distribution payable in additional Common Units or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional Common Units (hereinafter referred to as “Common Unit Equivalents”) without payment of any consideration by such holder for the additional Common Units or the Common Unit Equivalents (including the additional Common Units issuable upon conversion or exercise thereof), then, as of such record date (or the date of such distribution, split or subdivision if no record date is fixed), the Conversion Price of the Preferred Units shall be appropriately decreased so that the number of Common Units issuable on conversion of each Unit of such class shall be increased in proportion to such increase of the aggregate of Common Units outstanding and those issuable with respect to such Common Unit Equivalents with the number of Units issuable with respect to Common Unit Equivalents determined from time to time in the manner provided for deemed issuances in Section 2.10(c)(i)(E).

(iii) If the number of Common Units outstanding at any time after the date hereof is decreased by a combination of the outstanding Common Units, then, following the record date of such combination, the Conversion Price for the Preferred Units shall be appropriately increased so that the number of Common Units issuable on conversion of each Unit of such class shall be decreased in proportion to such decrease in outstanding Units.

(d) Other Distributions. In the event the Company shall declare a distribution payable in securities of other Persons, evidences of indebtedness issued by the Company or other Persons, assets (excluding cash distributions) or options or rights not referred to in Section 2.10(c)(ii), then, in each such case for the purpose of this Section 2.10(d), the holders of the Preferred Units shall be entitled to a proportionate share of any such distribution as though they were the holders of the number of Common Units into which their Preferred Units are convertible as of the record date fixed for the determination of the holders of Common Units entitled to receive such distribution.

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(e) Recapitalizations. If at any time or from time to time there shall be a recapitalization of the Common Units, provision shall be made so that the holders of the Preferred Units shall thereafter be entitled to receive upon conversion of the Preferred Units the number of Securities or property of the Company or otherwise, to which a holder of the number of Common Units deliverable upon conversion of such Preferred Units immediately prior to such recapitalization would have been entitled on such recapitalization. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 2.10 with respect to the rights of the holders of the Preferred Units after the recapitalization to the end that the provisions of this Section 2.10 (including adjustment of the Conversion Price then in effect and the number of Units issuable upon conversion of the Preferred Units) shall be applicable after that event as nearly equivalently as may be practicable.

(f) No Impairment. The Company will not, without the appropriate required vote of the Members, by amendment of this Agreement or through any reorganization, recapitalization, transfer of assets, consolidation, merger, conversion, transfer, domestication, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 2.10 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the holders of the Preferred Units against impairment.

(g) No Fractional Units and Certificate as to Adjustments.

(i) No fractional Units shall be issued upon the conversion of any Preferred Units and the aggregate number of Common Units to be issued to particular Unitholders shall be rounded down to the nearest whole Unit and the Company shall pay in cash the fair market value of any fractional Units as of the time when entitlement to receive such fractions is determined. Whether or not fractional Units would be issuable upon such conversion shall be determined on the basis of the total number of Preferred Units the holder is at the time converting into Common Units and the number of Common Units issuable upon such conversion.

(ii) Upon the occurrence of each adjustment or readjustment of the Conversion Price of Preferred Units pursuant to this Section 2.10, the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Preferred Units a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of any holder of Preferred Units, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Price for such class of Preferred Units at the time in effect, and (C) the number of Common Units and the amount, if any, of other property that at the time would be received upon the conversion of a Preferred Unit.

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(h) Notices of Record Date. In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any distribution (other than a cash distribution), the Company shall mail to each holder of Preferred Units, at least ten (10) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such distribution, and the amount and character of such distribution.

(i) Waiver of Adjustment to Conversion Price. Notwithstanding anything herein to the contrary, any downward adjustment of the Conversion Price of any class of Preferred Units may be waived, either prospectively or retroactively and either generally or in a particular instance, (i) with respect to the Series C Preferred Units, by the consent or vote of the Series C Required Holders, (ii) with respect to the Series B Preferred Units, by the consent or vote of the Series B Required Holders and (iii) with respect to the Series A Preferred Units, by the consent or vote of the Series A Required Holders; provided, however, that with respect to any event that causes by operation of this Section 2.10 a downward adjustment of the Conversion Price of the Series B Preferred Units, any waiver by the Series B Required Holders of any such downward adjustment by the Series B Required Holders shall be binding upon and shall be deemed to waive any downward adjustment of the Series A Preferred Units caused by the same event. Any waiver of any downward adjustment of a Conversion Price shall bind all future holders of such class of Preferred Units affected thereby.

(j) Status of Converted Preferred Units. In the event any Preferred Units shall be converted pursuant to this Section 2.10, the Preferred Units so converted shall be cancelled and shall not be issuable by the Company.

(k) Adjustments Upon Conversion of Preferred Units. Upon any conversion of Preferred Units into Common Units in accordance with this Section 2.10, the following shall occur:

(i) The Preferred Unitholder shall be treated as having contributed to the Company with respect to the Common Unit or Units received in the conversion the balance such Unitholder had in its Capital Account to the extent attributable to the Preferred Unit or Units converted;

(ii) Immediately following the conversion, the Gross Asset Values of all of the Company’s assets shall be adjusted in accordance with subsection (b) of the definition of “Gross Asset Value”;

(iii) The conversion date shall be treated as the end of a fiscal year so that all Net Income and Net Loss (including the amount of any adjustment to the Gross Asset Values of the Company’s assets pursuant to clause (ii)) and other items specially allocable to the Members shall be allocated in accordance with Section 4.3; provided, however, that notwithstanding any provision of Section 4.3 to the contrary, Net Income and Net Loss attributable to any adjustment to the Gross Asset Value of the Company’s assets pursuant to clause

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(ii) shall first be allocated to the holders of the Preferred Units that were converted until the Capital Accounts of such Unitholders determined solely with respect to the Common Unit or Units issued upon the conversion equals such holders’ respective Target Balances determined solely with respect to such Common Unit or Units;

(iv) In the event that there is insufficient Net Income and the Net Loss attributable to the adjustment to the Gross Asset Values of the Company’s assets pursuant to clause (ii) to accomplish the allocation specified in the proviso to clause (iii), the Company shall (i) reallocate capital from the non-converting Unitholders to the holders of the Preferred Units that were converted until the Capital Accounts of the converting Unitholders with respect to the Common Unit or Units received upon the conversion equals such Unitholders’ respective Target Balances determined solely with respect to such Common Unit or Units and (ii) make “corrective allocations” of items of gross income or loss solely for income tax purposes in accordance with Regulations Section 1.704-1(b)(2)(iv)(s); and

(v) The Board shall make such other adjustments as it may in good faith determine may be necessary to comply with the provisions of the Regulations pertaining to the treatment of “non-compensatory” options under Code Sections 721 and 704.

SECTION 2.11. Limited Liability Company Agreement. For administrative convenience, certain agreements among the Company and the Unitholders are set forth in the Voting Agreement and the Investor Rights Agreement, both of which, together with this Agreement, shall constitute the limited liability company agreement of the Company for purposes of the Act. To the extent any person listed on Schedule A has the right to receive units of limited liability company interest in the Company pursuant to the Merger but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (including pursuant to a joinder or a power of attorney or other authorization granted to an attorney in fact or agent under the Merger Agreement or other documents related thereto), such person’s acceptance of such units of limited liability company interest shall be deemed to constitute that person’s agreement to be bound by the Voting Agreement and the Investor Rights Agreement. Upon written request from any Unitholder to the Company at its principal office, the Company shall supply to such Unitholder, copies of this Agreement, the Voting Agreement and the Investor Rights Agreement, free of charge.

SECTION 2.12. Unrelated Business Taxable Income, Trade and Business Income and Effectively Connected Income. The Company shall use its reasonable best efforts to ensure it does not incur: (i) “unrelated business taxable income” within the meaning of Sections 511–514 of the Code; (ii) income derived from the conduct of a trade or business outside of the United States; or (iii) income that is effectively connected with the conduct of a trade or business in the United States, including gain from the disposition of a United States real property interest within the meaning of Section 897 of the Code.

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ARTICLE III.

MANAGEMENT

SECTION 3.1. The Board of Managers; Delegation of Authority and Duties.

(a) Authority of the Board. To the fullest extent permitted by Delaware law, the Board established pursuant to Section 3.2 below shall possess full and exclusive power to manage the business and affairs of the Company (and shall be considered a “manager” for purposes of Section 18-402 of the Act). In furtherance of the foregoing, each of the Members and other Unitholders hereby consents to the exercise by the Board of all such powers and rights conferred on the Board by the Act and this Agreement with respect to the management and control of the Company. No Member, in its capacity as a Member, shall have any power or authority to act for, sign for or do any act that would bind the Company. Each Member acknowledges and agrees that, except as otherwise agreed in writing, no Member shall, in its capacity as a Member, be bound to devote any of such Member’s business time to the affairs of the Company, and that each Member and such Member’s Affiliates do and will continue to engage for such Member’s own account and for the account of others in other business ventures.

(b) Delegation by the Board. Except as provided in Sections 3.1(c) and 3.6 below, the Board shall not have the power and authority to delegate to one or more other Persons the Board’s rights and powers to manage and control the business and affairs of the Company; provided, that the Board may authorize any Person (including any Member, Officer or Manager) to enter into and perform under any document authorized by the Board on behalf of the Company.

(c) Committees. The Board may, from time to time, designate one or more committees of the Board, each of which shall be comprised of at least one Series B Manager and one Series C Manager. Any such committee, to the extent provided in the enabling resolution and until dissolved by the Board, shall have and may exercise any or all of the authority of the Board. At every meeting of any such committee, the presence of a majority of all the members thereof (including any vacancies) shall constitute a quorum, and the affirmative vote of a majority of the members of such committee present shall be necessary for the adoption of any resolution. The Board may dissolve any committee at any time.

SECTION 3.2. Establishment of the Board.

(a) Managers. There shall be and hereby is established a Board of Managers (the “Board”) whose authorized number of members (each a “Manager”) shall be seven (7). Managers shall be elected, appointed and removed by the Members specified in Section 3.2(b) hereof from time to time as set forth in Section 3.2(b) hereof. Each Manager shall remain in office until his or her death, resignation or removal, and in the event of death, resignation or removal of a Manager, the vacancy created shall be filled as provided in Section 3.2(b). All Managers shall be individuals.

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(b) Board Composition. The Managers shall be designated as provided below:

(i) for so long as any Series C Preferred Units are outstanding, the Series C Required Holders shall be entitled to elect four (4) members of the Board (the “Series C Managers”); and

(ii) for so long as any Series B Preferred Units are outstanding, the Series B Required Holders shall be entitled to elect three (3) members of the Board (the “Series B Managers”).

(c) Removal. Managers designated or elected in accordance with Section 3.2(b) shall be removed from the Board (with or without cause) only upon the vote or written consent of the requisite Member(s) that are entitled to designate or elect such Manager under Section 3.2(b) above.

(d) No Individual Authority. No Manager has the authority or power to act for or on behalf of the Company, to do any act that would be binding on the Company or to make any expenditures or incur any obligations on behalf of the Company or authorize any of the foregoing, other than acts that are expressly authorized by the Board (or a duly authorized committee thereof).

(e) Duties. The Managers, in the performance of their duties as such, shall owe to the Company fiduciary duties of the type owed by the directors of a Delaware corporation to such corporation and its stockholders under the laws of the State of Delaware. The Managers, Officers, Members and Unitholders shall not be deemed to owe fiduciary duties to creditors of the Company or its Subsidiaries.

(f) Exculpation. A Manager shall not be personally liable to the Company or any Member or Unitholder for monetary damages for breach of fiduciary duty as a Manager, except for liability (i) for any breach of the Manager’s duty of loyalty to the Company or the Members or Unitholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law or (iii) for any transaction from which the Manager derived any improper personal benefit.

SECTION 3.3. Board Meetings.

(a) Quorum; Voting. A majority of the total number of Managers (which majority shall include at least one (1) Series C Manager and one (1) Series B Manager) shall constitute a quorum for the transaction of business of the Board and the act of a majority of the Managers present at a meeting of the Board at which a quorum is present shall be the act of the Board. A Manager who is present at a meeting of the Board at which action on any matter is taken shall be presumed to have assented to the action unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the Person acting as secretary of the meeting before the adjournment thereof or shall deliver such dissent to the Company immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Manager who voted in favor of such action.

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(b) Place of Meetings; Waiver of Notice. Meetings of the Board may be held at such place or places as shall be determined from time to time by resolution of the Board or, in the case of a special meeting of the Board, by the Person(s) calling the meeting as provided herein. At all meetings of the Board, business shall be transacted in such order as shall from time to time be determined by resolution of the Board or, in the absence of such resolution, by the chairman of the meeting. Attendance of a Manager at a meeting shall constitute a waiver of notice of such meeting, except where a Manager attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

(c) Regular Meetings. Regular meetings of the Board shall be held at such times and places as shall be designated from time to time by resolution of the Board. Additional notice of such meetings shall not be required.

(d) Special Meetings. Special meetings of the Board may be called on at least 24 hours notice to each Manager by the Chairman or a majority of the Managers. Such notice need not state the purpose or purposes of, nor the business to be transacted at, such meeting, except as may otherwise be required by law or provided for in this Agreement.

(e) Notice. Notice of any special meeting of the Board or committee of the Board may be given to the Managers at their addresses known to the Company either by email or in any other manner permitted by Section 7.4.

SECTION 3.4. Chairman. The Board shall designate a Manager selected by the Series C Required Holders to serve as its Chairman. The Chairman shall preside at all meetings of the Board. If the Chairman is absent at any meeting of the Board, a majority of the Managers present shall designate another Manager to serve as interim chairman for that meeting. Except as authorized by the Board, the Chairman shall have no authority or power to act for or on behalf of the Company, to do any act that would be binding on the Company or to make any expenditure or incur any obligations on behalf of the Company or authorize any of the foregoing.

SECTION 3.5. Action by Written Consent or Telephone Conference. Any action permitted or required by the Act, the Certificate or this Agreement to be taken at a meeting of the Board or any committee designated by the Board may be taken without a meeting if a consent in writing, setting forth the action to be taken, is signed by all of the Managers or the members of such committee, as the case may be. Such consent shall have the same force and effect as a vote at a meeting, and the execution of such consent shall constitute attendance or presence in person at a meeting of the Board or any such other committee, as the case may be. Subject to the requirements of this Agreement for notice of meetings, the Managers, or members of any other committee designated by the Board, may participate in and hold a meeting of the Board or any such other committee, as the case may be, by means of a conference telephone or similar communications equipment by means of which all Persons participating in the meeting can hear each other, and participation in such meeting shall constitute attendance and presence in person at such meeting, except where a Person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

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SECTION 3.6. Officers.

(a) Designation and Appointment. The Board may, from time to time, employ and retain natural persons as may be necessary or appropriate for the conduct of the Company’s business (subject to the supervision and control of the Board), including employees, agents and other Persons (any of whom may be a Manager) who may be designated as Officers of the Company, with titles including “Chief Executive Officer,” “Chief Operating Officer,” “General Counsel,” “President,” “Vice President,” “Treasurer,” “Secretary,” “Assistant Secretary,” and “Chief Financial Officer,” as and to the extent authorized by the Board. Any number of offices may be held by the same Person. In its discretion, the Board may choose not to fill any office for any period as it may deem advisable. Officers need not be residents of the State of Delaware or Members. Any Officers so designated shall have such authority and perform such duties as the Board may, from time to time, delegate to them. The Board may assign titles to particular Officers. Each Officer shall hold office until his successor shall be duly designated and shall qualify or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. The salaries or other compensation, if any, of the Officers of the Company shall be fixed from time to time by the Board.

(b) Resignation/Removal. Any Officer may resign as such at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time is specified, at the time of its receipt by the Board. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Any Officer may be removed as such, either with or without cause at any time by the Board. Designation of an Officer shall not of itself create any contractual or employment rights.

(c) Duties of Certain Officers. The Officers of the Company who are full-time employees of the Company or a Subsidiary thereof, in the performance of their duties as such, shall owe to the Company duties of loyalty and due care of the type owed by the officers of a Delaware corporation to such corporation and its stockholders under the laws of the State of Delaware.

SECTION 3.7. Opco Board of Directors. For so long as the Company is a stockholder of Opco, the Company shall take all necessary action in its capacity as a stockholder of Opco to cause (a) the members of the board of directors of Opco to include the Series C Managers and the Series B Managers and (b) the notice, election and removal provisions in this Agreement for Managers to apply to such directors of Opco.

SECTION 3.8. Liability of Unitholders.

(a) No Personal Liability. Except as otherwise required by applicable law, and as expressly set forth in this Agreement, no Member or Unitholder shall have any personal liability whatsoever in such Person’s capacity as a Member or Unitholder, whether to the Company, to any other Member, Manager, Officer or Unitholder, to the creditors of the Company or to any other third party, for the debts, liabilities, commitments or any other obligations of the Company or for any losses of the Company.

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Each Member or Unitholder shall be liable only to make such Member’s or Unitholder’s initial Capital Contribution to the Company, if applicable, and the other payments provided expressly herein.

(b) Return of Distributions. In accordance with the Act and the laws of the State of Delaware, a holder of a limited liability company interest may, under certain circumstances, be required to return amounts previously distributed to such holder. To the fullest extent permitted by law, it is the intent of the Unitholders that no distribution to any Unitholder pursuant to Article IV hereof shall be deemed a return of money or other property paid or distributed in violation of the Act. To the fullest extent permitted by law, the payment of any such money or distribution of any such property to a Unitholder shall be deemed to be a compromise within the meaning of the Act, and the Unitholder receiving any such money or property shall not be required to return to any Person any such money or property. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Unitholder is obligated to make any such return or payment, such obligation shall be the obligation of such Unitholder and not of any Manager or other Unitholder.

SECTION 3.9. Indemnification by the Company.

To the fullest extent permitted by the General Corporation Law of the State of Delaware (the “General Corporation Law”) as if the Company were a Delaware corporation, the Company is authorized to provide indemnification of (and advancement of expenses to) agents of the Company (and any other persons to which General Corporation Law would permit the Company to provide indemnification if the Company were a Delaware corporation) through agreements with such agents or other persons, vote of Members or disinterested Managers or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law, subject only to limits created by applicable General Corporation Law (statutory or non-statutory), with respect to actions for breach of duty to the Company, the Members, and others.

Without limiting the foregoing, the Company shall, to the maximum extent permitted from time to time under the law of the State of Delaware as if the Company were a Delaware corporation, indemnify and upon request advance expenses to any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or claim, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was or has agreed to be a Manager or while a Manager is or was serving at the request of as if the Company as a director, officer, partner, trustee, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorney’s fees and expenses), judgments, fines, penalties and amounts paid in settlement incurred (and not otherwise recovered) in connection with the investigation, preparation to defend or defense of such action, suit, proceeding or claim; provided, however, that the foregoing shall not require the Company to indemnify or advance expenses to any person in connection with any action, suit, proceeding, claim or counterclaim initiated by or on behalf of such person. Such indemnification shall not be exclusive of other indemnification rights arising under any agreement, vote of Managers or Members or otherwise and shall inure to the benefit of the heirs and legal

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representatives of such person. Any person seeking indemnification under this Section 3.9 shall be deemed to have met the standard of conduct required for such indemnification unless the contrary shall be established.

Any amendment, repeal or modification of the foregoing provisions of this Section 3.9 shall not adversely affect any right or protection of a Manager, Officer, agent, or other person existing at the time of, or increase the liability of any Manager with respect to any acts or omissions of such Manager, Officer or agent occurring prior to, such amendment, repeal or modification.

It is the intent of the Company that with respect to all advancement and indemnification obligations provided by the Company as referenced in this Section 3.9, the Company shall be the primary source of advancement, reimbursement and indemnification relative to any direct or indirect Member of the Company (or any affiliate of such Member, other than the Company or any of its direct or indirect Subsidiaries). The Company shall have no right to seek contribution, indemnity or other reimbursement for any of its obligations described in this Section 3.9 from any such Member or Unitholder of the Company (or any Affiliate of such Member or Unitholder, other than the Company or any of its direct or indirect Subsidiaries).

SECTION 3.10. Protective Provisions.

(a) So long as any Series C Preferred Units are outstanding, the Company shall not, and, prior to a Public Offering of Opco, the Company shall cause Opco not to, in each case by amendment, merger, consolidation or otherwise, without the prior written consent of the Series C Required Holders:

(i) consummate a Liquidation Event, or sell, license, lease, transfer or otherwise dispose of material assets;

(ii) alter or change the rights, preferences or privileges of the Series C Preferred Units so as to affect adversely such Units;

(iii) authorize or issue, or obligate itself to issue, any Equity Security (including any other security convertible into or exercisable for any such Equity Security), other than, in the case of the Company, (x) the issuance of Series C Preferred Units with respect to Series C Accruing Distributions and (y) the issuance of Series B Preferred Units with respect to Series B Accruing Distributions and, in the case of Opco, the issuance of Series D Preferred Stock (and any pay-in-kind dividends thereon) pursuant to that certain Series D Preferred Stock Purchase Agreement dated on or about June 19, 2014 (as amended, the “Purchase Agreement”) among Opco and the purchasers party thereto;

(iv) redeem, purchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any Securities; provided, however, that this restriction shall not apply to the repurchase of Securities (A) from employees, officers, directors, consultants or other persons performing services for the Company or Opco pursuant to agreements under which the Company or

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Opco has the option to repurchase such shares upon the occurrence of certain events, such as the termination of employment or service, or pursuant to a right of first refusal or (B) that are outstanding as of the date hereof;

(v) amend, alter or repeal any provision of in the case of the Company, the Certificate or this Agreement and, in the case of Opco, the certificate of incorporation or bylaws of Opco;

(vi) incur, create, guarantee or authorize the creation of any indebtedness in excess of $25,000,000 in the aggregate;

(vii) make any loan or advance in excess of $100,000 to any other Person, unless such Person is wholly owned by the Company;

(viii) make any capital expenditure that is not already included in a budget approved by the Board or the board of directors of Opco, as the case may be;

(ix) hire or fire any executive officer, including the Chief Executive Officer and Chief Financial Officer;

(x) change the authorized number of Managers or members of the board of directors of Opco, as the case may be;

(xi) acquire or merge with another entity or enter into any other material transaction involving the acquisition of the assets of such entity;

(xii) sell, assign, license or otherwise dispose (in a single transaction or a series of related transactions) material technology, intellectual property and other material assets, other than licenses granted in the ordinary course of business;

(xiii) enter into material transactions with Affiliates of the Company or enter into any other transaction described (as if the Company were a Delaware corporation) in Section 144 of the General Corporation Law of the State of Delaware, except for (1) transactions contemplated by the Purchase Agreement or the Management Agreement dated as of September 8, 2011 (as amended, the “Management Agreement”) between Opco and WCAS Management Corporation, (2) the issuance of Equity Securities made in accordance with Section 3 or 4 of the Investor Rights Agreement, (3) transactions entered into the ordinary course of business with any employee of the Company and (4) transactions among the Company and Subsidiaries of the Company;

(xiv) make any material change in the nature of its business from that conducted as of the date hereof; or

(xv) approve or materially amend any annual budget.

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(b) So long as any Series B Preferred Units are outstanding, the Company shall not and, prior to a Public Offering of Opco, the Company shall cause Opco not to, in each case by amendment, merger, consolidation or otherwise, without the prior written consent of the Series B Required Holders:

(i) alter or change the rights, preferences or privileges of the Series B Preferred Units so as to affect adversely such Series B Preferred Units in a manner different to any adverse effect such alteration or change would have on the rights, preferences or privileges of the Series C Preferred Units;

(ii) authorize or issue, or obligate itself to authorize or issue, any securities that, with respect to their liquidation preference upon a Liquidation Event, are both (A) junior to the liquidation preference of the Series C Preferred Units upon a Liquidation Event and (B) senior to, or pari passu with, the liquidation preference of the Series B Preferred Units upon a Liquidation Event;

(iii) authorize or issue, or obligate itself to issue, (1) any Equity Security of Opco (including any other security convertible into or exercisable for any such Equity Security of Opco), in a single transaction or a series of transactions, resulting in proceeds received by Opco in an aggregate amount in excess of $100,000,000 or (2) any Equity Security of the Company (including any other security convertible into or exercisable for any such Equity Security of the Company); provided that, for the avoidance of doubt, no approval of the Series B Required Holders shall be required for (A) the Company to authorize or issue (x) any Series C PIK Units or Series B PIK Units or (y) any Common Units in connection with the conversion of Series C Preferred Units, Series B Preferred Units or Series A Preferred Units pursuant to this Agreement or (B) Opco to (x) issue Series D Preferred Stock (and any pay-in-kind dividends thereon) pursuant to the Purchase Agreement and as contemplated by Section 1.2(b) of the Purchase Agreement or (y) issue shares of common stock to employees, directors, consultants and other service providers for the primary purpose of soliciting or retaining their services pursuant to plans or agreements approved by the board of directors of Opco, in the case of clause (B), which amount shall not be included in the calculation of such $100,000,000 threshold;

(iv) redeem, purchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any Securities; provided, however, that this restriction shall not apply to the repurchase of Securities (A) from employees, officers, directors, consultants or other persons performing services for the Company or any Subsidiary pursuant to agreements under which the Company or Opco has the option to repurchase such shares upon the occurrence of certain events, such as the termination of employment or service, or pursuant to a right of first refusal or (B) that are outstanding as of the date hereof;

(v) amend, alter or repeal any provision of the bylaws of Opco with respect to determining a quorum of the board of directors of Opco;

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(vi) incur, create, guarantee or authorize the creation of any indebtedness in excess of $25,000,000 in the aggregate;

(vii) change the authorized number of Managers or members of the board of directors of Opco, as the case may be;

(viii) enter into material transactions with Affiliates of the Company or enter into any other transaction described (as if the Company were a Delaware corporation) in Section 144 of the General Corporation Law of the State of Delaware, except for (1) transactions contemplated by the Purchase Agreement or the Management Agreement, (2) the issuance of Equity Securities of the Company made in accordance with Section 3 or 4 of the Investor Rights Agreement, (3) transactions entered into the ordinary course of business with any employee of the Company and (4) transactions among the Company and Subsidiaries of the Company; or

(ix) make any material change in the nature of the Company’s principal business that are not natural extensions of such business conducted as of the date hereof; provided that no approval of the Series B Required Holders shall be required if such changes to the Company’s principal business were approved by the Board, which approval must include the affirmative vote of the Board Majority of the Minority.

(c) So long as any Series A Preferred Units are outstanding, the Company shall not (by amendment, merger, consolidation or otherwise), without the prior written consent of the Series A Required Holders:

(i) authorize or issue, or obligate itself to authorize or issue, any securities that, with respect to their liquidation preference upon a Liquidation Event, are both (i) junior to the liquidation preference of the Series C Preferred Units and Series B Preferred Units upon a Liquidation Event and (ii) senior to, or pari passu with, the liquidation preference of the Series A Preferred Units upon a Liquidation Event; or

(ii) decrease the Series A Liquidation Preference; provided that no such approval shall be required for the Company to authorize or issue, or for the Company to obligate itself to authorize or issue, any Securities having a preference pari passu or senior to the Series B Preferred Units with respect to a Liquidation Event.

(d) Notwithstanding anything to the contrary in this Section 3.10 or elsewhere in this Agreement or in the Voting Agreement or in the Investor Rights Agreement, until such time as a former stockholder of Opco is admitted as a Member of the Company as set forth in Section 2.1, such Person shall have no right to vote or consent to any matter set forth in this Section 3.10 or in any other provision of this Agreement requiring the consent of the Members, the Unitholders, or the Series A Required Holders, the Series B Required Holders or the Series C Required Holders, as

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applicable, and any holder of a Unit who has not been admitted as a Member shall have no right to vote on, consent to, or approve any matter and shall not be taken into consideration in determining whether the vote, consent, or approval of the Members, the Unitholders, the Series A Required Holders, the Series B Required Holders or the Series C Required Holders, as applicable, has been obtained.

ARTICLE IV.

CAPITAL CONTRIBUTIONS; ALLOCATIONS; DISTRIBUTIONS

SECTION 4.1. Capital Contributions. The Members and the Unitholders listed on Schedule A hereto on the date hereof are making on the date hereof the initial Capital Contributions to the Company described on Schedule C hereto. No Member or Unitholder shall be entitled (except as provided in Section 3 of the Investor Rights Agreement) to make any additional Capital Contributions without the approval of the Board or required to make any additional Capital Contributions without such Member’s express written agreement. In connection with any issuance of additional Units, the Board may accept such additional Capital Contributions as it determines in its discretion.

SECTION 4.2. Capital Accounts.

(a) Creation. There shall be established for each Unitholder on the books of the Company a Capital Account which shall be increased or decreased in the manner set forth in this Agreement.

(b) Negative Balance. A Unitholder shall not have any obligation to the Company or to any other Unitholder to restore any negative balance in the Capital Account of such Unitholder.

SECTION 4.3. Allocations of Net Income and Net Loss.

(a) Timing and Amount of Allocations of Net Income and Net Loss. Net Income and Net Loss of the Company shall be determined and allocated with respect to each fiscal year of the Company as of the end of each such year or as circumstances otherwise require or allow. The Board shall allocate the Net Income and Net Loss among the Unitholders in a manner that as closely as possible gives economic effect to the provisions of this Agreement. Subject to the other provisions of this Section 4.3, an allocation to a Unitholder of a share of Net Income or Net Loss shall be treated as an allocation of the same share of each item of income, gain, loss or deduction that is taken into account in computing Net Income or Net Loss. For the avoidance of doubt, except as otherwise provided in this Agreement, Net Income and Net Loss (and, to the extent necessary, individual items of income, gain, loss, deduction or credit) of the Company shall be allocated among the Unitholders in a manner such that, after giving effect to the regulatory allocations set forth in Section 4.3(b), the Capital Account balance of each Unitholder, immediately after making such allocation, is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made to such Unitholder if the Company were dissolved, its affairs wound up and its assets sold for cash equal to their Gross Asset Value, all Company liabilities were satisfied (limited with respect to each

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nonrecourse liability to the Gross Asset Value of the assets securing such liability), and the net assets of the Company were distributed, in accordance with Section 4.4(b) to the Unitholders immediately after making such allocation, minus (ii) such Unitholder’s share of “partnership minimum gain” (determined in accordance with the principles of Regulations Section 1.704-2(d)) and “partner nonrecourse debt minimum gain” (determined in accordance with the principles of Regulations Section 1.704-2(i)), computed immediately before the hypothetical sale of assets (for a Unitholder, the difference between the amount in clause (i) and the amount in clause (ii), the Unitholder’s “Target Balance”).

(b) Regulatory Allocations. Provisions governing the allocation of income, gain, loss, deduction and credit (and items thereof) are included in this Agreement as may be necessary to provide that the Company’s allocation provisions contain a so-called “qualified income offset” and comply with all provisions relating to the allocation of so-called “nonrecourse deductions” and “partner nonrecourse deductions” and the chargeback thereof as set forth in the Regulations under Section 704(b) of the Code.

(c) Allocations upon Transfer. For any fiscal year during which a Unitholder’s Unit(s) in the Company is assigned by such Unitholder, the portion of the Net Income and Net Loss of the Company that is allocable in respect of such Unitholder’s Unit(s) shall be apportioned between the assignor and the assignee of such Unitholder’s Unit(s) using any permissible method under Code Section 706 and the Regulations thereunder, as determined by the Board.

(d) Required Tax Allocations. All items of income, gain, loss, deduction and credit for federal income tax purposes shall be allocated to each Unitholder in the same manner as the Net Income or Net Loss (and each item of income, gain, loss and deduction related thereto) that is allocated to such Unitholder pursuant to Section 4.3(a), (b) and (c) to which such tax items relate. Notwithstanding the foregoing provisions of this Section 4.3, income, gain, loss, deduction, and credits with respect to property contributed to the Company by a Unitholder shall be allocated among the Unitholders for federal and state income tax purposes pursuant to Regulations promulgated under Section 704(c) of the Code, so as to take account of the variation, if any, between the adjusted basis for federal income tax purposes of the property to the Company and its initial Gross Asset Value at the time of contribution. In the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (b), (c), or (d) of the definition of Gross Asset Value, subsequent allocations of income, gain, loss, deduction, and credits with respect to such asset shall take account of the variation, if any, between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c) and the applicable Regulations consistent with the requirements of Regulations Section 1.704-1(b)(2)(iv)(g). Allocations pursuant to this Section 4.3(d) are solely for purposes of federal, state and local income taxes and shall not affect, or in any way be taken into account in computing, any Unitholder’s Capital Account or share of Net Income, Net Loss, other tax items or distributions pursuant to any provision of this Agreement.

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(e) Unitholders’ Tax Reporting. The Unitholders acknowledge and are aware of the income tax consequences of the allocations made by this Section 4.3 and, except as may otherwise be required by applicable law or regulatory requirements, hereby agree to be bound by the provisions of Section 4.3 in reporting their shares of Company income, gain, loss, deductions, and credits for federal, state and local income tax purposes.

SECTION 4.4. Distributions.

(a) Timing and Valuation. Subject to the provisions of Section 4.4(e), Distributable Assets shall be distributed by the Company only upon the occurrence of a Liquidation Event; provided that Additional Consideration with respect to a Liquidation Event and any Distributable Assets that are not Cash shall not be distributed upon the occurrence of a Liquidation Event and any Cash generated with respect thereto shall be distributed by the Company as soon as practicable after the receipt thereof by the Company.

(b) Priority in Distributions. Subject to Section 4.4(e), in connection with any Liquidation Event or the distribution of Distributable Assets, all of the proceeds of such Liquidation Event or such Distributable Assets, as the case may be, shall be distributed as follows:

(i) First, to the holders of the outstanding Series C Preferred Units on a pro rata basis (determined by reference to the undistributed Series C Liquidation Amount with respect to the Series C Preferred Units held by each such holder) until the aggregate cumulative amount distributed with respect to each Series C Preferred Unit pursuant to this clause (i) equals the Series C Liquidation Amount;

(ii) Second, to the holders of the outstanding Series B Preferred Units on a pro rata basis (determined by reference to the undistributed Series B Liquidation Amount with respect to the Series B Preferred Units held by each such holder) until the aggregate cumulative amount distributed with respect to each Series B Preferred Unit pursuant to this clause (ii) equals the Series B Liquidation Amount;

(iii) Third, to the holders of the outstanding Series A Preferred Units on a pro rata basis (determined by reference to the undistributed Series A Liquidation Amount with respect to the Series A Preferred Units held by each such holder) until the aggregate cumulative amount distributed with respect to each Series A Preferred Unit pursuant to this clause (iii) equals the Series A Liquidation Amount; and

(iv) Fourth, thereafter, all of the remaining Distributable Assets shall be distributed to the holders of the Common Units on a pro rata basis determined by reference to the number of such Common Units held by each such holder.

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(c) Allocation of Escrow. In the case of a Liquidation Event, if any portion of the consideration payable to the Unitholders is placed into escrow and/or is payable to the Unitholders subject to contingencies (the “Additional Consideration”), the portion of such consideration that is not placed in escrow and not subject to any contingencies (the “Initial Consideration”) shall be allocated among the Unitholders in accordance with Section 4.4(b) as if the Initial Consideration were the only consideration payable in connection with such Liquidation Event and any Additional Consideration which becomes payable to the Unitholders upon release from escrow or satisfaction of contingencies shall be allocated among the Unitholders in accordance with Section 4.4(b) above after taking into account the previous payment of the Initial Consideration as part of the same transaction.

(d) Successors. For purposes of determining the amount of distributions under this Section 4.4, each Unitholder shall be treated as having received amounts received by its predecessors and any prior holders of such Units in respect of any of such Unitholder’s Units.

(e) Tax Distributions. To the extent there is taxable income and cash is available, the Board shall cause the Company to make a tax distribution in cash no later than the 15th day of March of each year to each Unitholder (whether or not such Unitholder or such Unitholder’s investors are tax exempt) in an amount equal to the excess of (i) the product of (A) the cumulative taxable income allocable to such Unitholder (including any guaranteed payments for services that are not actually received by such Unitholder in cash and including any required tax allocations to such Unitholder under Section 4.3(d) hereof pursuant to Regulations promulgated under Section 704(c) of the Code) in excess of the cumulative taxable loss allocable to such Unitholder for all taxable years prior to the year in which such distribution is being made, as estimated in good faith by the Board and (B) the combined maximum federal, state and local marginal income tax rate (taking into account the deductibility of state and local taxes for federal income tax purposes and adjusted appropriately to take into account the varying rates applicable to capital gains, qualified dividend income and ordinary income) applicable to individual residents of New York, New York, or such other rate as determined by the Board in its good faith discretion, over (ii) all prior distributions pursuant to this Section 4.4. Tax distributions to a Unitholder shall be offset against and reduce the amount of the next succeeding distribution or distributions which such Unitholder would otherwise be entitled to receive pursuant to this Agreement. To the extent that an amount otherwise distributable to a Unitholder is so applied, it shall be treated for all purposes hereof as if such amount had actually been distributed to such Unitholder pursuant to this Agreement.

(f) Accruing Distributions. On or after a Liquidation Event, the Series C Accruing Distribution shall be paid when and if declared by the Board by delivering to the holders of Series C Preferred Units a number of Series C Preferred Units (“Series C PIK Units”) with respect to each Series C Preferred Unit held by such holder equal to (i) the amount of the Series C Accruing Distribution accrued and unpaid thereon, divided by (ii) the Series C Invested Amount. On or after a Liquidation Event, the Series B Accruing Distribution shall be paid when and if declared by the Board by delivering to the holders of Series B Preferred Units a number of Series B Preferred Units (“Series B

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PIK Units”) with respect to each Series B Preferred Unit held by such holder equal to (i) the amount of the Series B Accruing Distribution accrued and unpaid thereon, divided by (ii) the Series B Invested Amount.

(g) Limitations on Distributions. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to a Member or Unitholder on account of its Units if such distribution would violate the Act or other applicable law.

SECTION 4.5. Right of Set-Off. The Company shall have a right of setoff against all distributions of Distributable Assets in the amount of any withholding tax or other liability or obligation to which the Company or a Subsidiary may be subject as a result of any act or status of any Unitholder, or to which the Company or a Subsidiary may become subject with respect to the interest of any Unitholder. The Company may withhold distributions or portions thereof if it is required to do so by the Code or any other provision of federal, state or local tax or other law. Any amount withheld pursuant to the Code or any other provision of federal, state or local tax or other law with respect to any distribution to a Unitholder shall be treated as an amount distributed to such Unitholder for all purposes under this Agreement. Each Unitholder agrees to indemnify the Company in full for any amounts paid by the Company to a governmental entity or regulatory authority that are specifically attributable to a Unitholder or a Unitholder’s status as such (including, without limitation, any interest, penalties and expenses associated with such payments), and each Unitholder shall promptly upon notification of an obligation to indemnify the Company pursuant to this Section 4.5 make a cash payment to the Company equal to the full amount to be indemnified with interest to accrue on any portion of such cash payment not paid in full, as reasonably determined by the Company, when requested by the Company. A Unitholder’s obligation to indemnify and make contributions to the Company under this Section 4.5 shall survive the termination, dissolution, liquidation and winding up of the Company, and for purposes of this Section 4.5, the Company shall be treated as continuing in existence. To the extent that a Unitholder makes contributions to the Company under this Section 4.5, it shall receive no net credit to its Capital Account.

ARTICLE V.

WITHDRAWAL; DISSOLUTION; NEW AND SUBSTITUTE MEMBERS

SECTION 5.1. Withdrawal. No Member shall have the power or right to resign or otherwise withdraw or be expelled from the Company prior to the dissolution and winding up of the Company except pursuant to a transfer permitted under this Agreement of all of such Member’s Units to either an Assignee or the Company. Notwithstanding anything to the contrary contained in the Act, in no event shall any Member be deemed to have resigned from the Company or cease to be a Member upon the occurrence of any event unless the Member, after the occurrence of such event, indicates in a written instrument delivered to the Company that the Member has so resigned.

SECTION 5.2. Dissolution.

(a) Events. The Company shall be dissolved and its affairs shall be wound up on the first to occur of the following:

(i) the entry of a decree of judicial dissolution of the Company under Section 18-802 of the Act;

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(ii) the eighteen month anniversary of the initial Public Offering of Opco; provided that such date shall be the twenty-first month anniversary of such initial Public Offering if the Series B Required Holders request in writing to the Company prior to such eighteen month anniversary to make such change; and

(iii) upon the approval of at least five of the Managers.

The death, retirement, resignation, expulsion, incapacity, bankruptcy or dissolution of a Member, or the occurrence of any other event that terminates the continued membership of a Member in the Company, shall not, in and of itself, cause a dissolution of the Company, and the Company shall continue in existence subject to the terms and conditions of this Agreement.

(b) Actions Upon Dissolution. When the Company is dissolved, the business and property of the Company shall be wound up and liquidated by or under the direction of the Board or, in the event of the unavailability of the Board, such Member or liquidating trustee as shall be named by the Board. A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Unitholders to minimize the normal losses attendant upon a liquidation.

(c) Priority. In connection with the winding up and liquidation process, the assets of the Company shall be distributed in the following manner and order:

(i) all debts and obligations of the Company, if any, shall first be paid, discharged or provided for by adequate reserves in accordance with the Act; and

(ii) the balance shall be distributed to the Unitholders in accordance with Section 4.4(b).

(d) Cancellation of Certificate. On completion of the winding up of the Company as provided herein, the Company shall file a certificate of cancellation with the Secretary of State of the State of Delaware, cancel any other filings made and take such other actions as may be necessary to terminate the Company, and upon such certificate of cancellation becoming effective the legal existence of the Company shall terminate in accordance with the Act.

SECTION 5.3. Transfer of Units. Any proposed transfer or assignment by a Unitholder of all or part of its Units or other interests in the Company shall be subject to the restrictions on transfer set forth in the Voting Agreement and the Investor Rights Agreement. Subject to the foregoing, any Member who shall assign any Units in the Company shall cease to be a Member of the Company with respect to such Units and shall no longer have any rights or privileges of a Member with respect to such Units. Any Member, Unitholder or Assignee who

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acquires in any manner whatsoever any Units, irrespective of whether such Person has accepted and adopted in writing the terms and provisions of this Agreement, shall be deemed by the acceptance of the benefits of the acquisition thereof to have agreed to be subject to and bound by all of the terms and conditions of this Agreement. No Member shall cease to be a Member upon the collateral assignment of, or the pledging or granting of a security interest in, its Units or other interest in the Company.

SECTION 5.4. New and Substitute Members.

(a) Admission. The Board shall have the right but not the obligation to admit as a Substitute Member or an Additional Member, any Person who acquires Units, or any part thereof, from a Member, Unitholder or Assignee or from the Company; provided, that, the Board shall admit as a Substitute Member, subject to Section 5.4(b), any transferee who acquires Units or any other interest in the Company in accordance with the terms of the Voting Agreement and the Investor Rights Agreement. Concurrently with the admission of a Substitute Member or an Additional Member, the Board shall forthwith cause any necessary papers to be filed and recorded and notice to be given wherever and to the extent required showing the admission and substitution of a transferee as a Substitute Member in place of the transferring Member or the admission of such transferee upon the transfer from a Unitholder or an Assignee, or the admission of an Additional Member, all at the expense, including payment of any professional and filing fees incurred, of the Substitute Member or the Additional Member (unless otherwise approved by the Board, in which case, the Company may cover said expenses).

(b) Conditions. The admission of any Person as a Substitute Member or Additional Member shall be conditioned upon such Person’s written acceptance and adoption of all the terms and provisions of this Agreement, either by (i) execution and delivery of a counterpart signature page to this Agreement countersigned by an authorized Officer on behalf of the Company or (ii) if requested by the Board, a writing evidencing the intent of such Person to become a Substitute Member or Additional Member (in form and substance satisfactory to the Board).

ARTICLE VI.

REPORTS TO MEMBERS; TAX MATTERS

SECTION 6.1. Books of Account. Appropriate books of account shall be kept by the Board, in accordance with GAAP, at the principal place of business of the Company or a Subsidiary thereof, and each Member shall have access to all books, records and accounts of the Company as is required under the Act, in each case, under such conditions and restrictions as the Board may reasonably prescribe.

SECTION 6.2. Reports.

(a) Tax Reporting. As promptly as practicable after the close of each fiscal year of the Company, the Company shall furnish to each Unitholder all Company information necessary to enable each Unitholder to prepare its federal, state, and local income tax returns, which information shall include a Schedule K-1.

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(b) Determinations. All determinations, valuations and other matters of judgment required to be made for accounting purposes under this Agreement shall be made by the Board acting in good faith and, if so made, shall be conclusive and binding on all Members and Unitholders, their Successors in Interest and any other Person bound by this Agreement, and to the fullest extent permitted by law, no such Person shall have the right to an accounting or an appraisal of the assets of the Company or any successor thereto.

SECTION 6.3. Fiscal Year. The fiscal year of the Company shall end at the close of business on December 31 of each calendar year unless otherwise determined by the Board in accordance with Section 706 of the Code.

SECTION 6.4. Certain Tax Matters.

(a) Preparation of Returns. The Board shall cause to be prepared and filed all federal, state and local tax returns of the Company for each year for which such returns are required to be filed. The Board shall determine the appropriate treatment of each item of Company income, gain, loss, deduction and credit and the accounting methods and conventions to be used by the Company under the tax laws of the United States, the several states and other relevant jurisdictions.

(b) Tax Matters Member. The Company and each Member and each Unitholder hereby designate WCAS Valeritas Holdings, LLC as the “tax matters partner” for purposes of Section 6231(a)(7) of the Code and any analogous provisions of state law (the “Tax Matters Member”). The Tax Matters Member, on behalf of the Company and its Members and Unitholders, shall be permitted to make any filing or election under the Code, the Regulations, or any other law or regulations that it believes to be in the best interests of the Company or the Members and Unitholders. The Company shall indemnify and reimburse the Tax Matters Member for all expenses (including legal and accounting fees) incurred as Tax Matters Member pursuant to this clause (b) in connection with any examination, any administrative or judicial proceeding, or otherwise.

(c) Certain Filings. Upon the sale of Company assets or a liquidation of the Company, the Members and the Unitholders shall provide the Board with certain tax filings as reasonably requested by the Board and required under applicable law.

ARTICLE VII.

MISCELLANEOUS

SECTION 7.1. Governing Law. THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICT OF LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event of a direct conflict between the provisions of this Agreement and any mandatory provision of the Act, the applicable provision of the Act shall control. If any provision of this Agreement or the application thereof to any Person or circumstance is held invalid or unenforceable to any extent, the remainder of this Agreement and the application of that provision to other Persons or circumstances is not affected thereby and that provision shall be enforced to the greatest extent permitted by law.

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SECTION 7.2. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective Successors in Interest; provided that no Person claiming by, through or under a Member or Unitholder (whether as such Member’s or Unitholder’s Successor in Interest or otherwise), as distinct from such Member or Unitholder itself, shall have any rights as, or in respect to, a Member or Unitholder (including the right to approve, consent to or vote on any matter or to notice thereof).

SECTION 7.3. Amendments and Waivers. Subject to Section 3.10, this Agreement may only be amended or modified upon (a) the approval of a majority of the Managers and (b) the written consent of Members holding a majority of the Common Units, Series C Preferred Units (on an as converted to Common Units basis) and Series B Preferred Units (on an as converted to Common Units basis), voting together as a single class; provided, that (x) if an amendment or modification would alter or change the powers, preferences, or special rights of any class or series of Units, the Members holding a majority of such Units (on an as converted to Common Units basis) must approve such amendment or modification in writing and (y) any amendment or modification of (i) Section 3.2(e), (ii) the first sentence of Section 3.3, (iii) the first sentence of Section 3.5 or (iv) Section 3.7 shall require the written consent of the Series B Required Holders. For the avoidance of doubt, and notwithstanding anything to the contrary above, the authorization and issuance of additional Units, whether of a new or existing class, subclass or series of Units, at the direction of the Board, whether such additional Units are junior, senior or pari passu with one or more classes, subclasses or series of existing Units, and the amendment of this Agreement and Schedules A, B and C hereto to reflect the terms and relative rights, preferences or privileges of such additional Units, shall not require the approval of any Member other than as provided in Section 3.10, even if the issuance of such additional Units would have a dilutive effect on the economic, governance, voting or other rights of one or more classes, subclasses or series of Units. Each Member and each Unitholder shall be bound by any amendment, amendment and restatement, modification, waiver, or supplement to the terms and provisions of this Agreement effected in accordance with this Section 7.3, whether or not such Member or Unitholder has consented thereto.

SECTION 7.4. Notices. Whenever notice is required or permitted by this Agreement to be given, such notice shall be in writing and shall be given to any Member or Unitholder at its address or facsimile number shown in the Company’s books and records, or, if given to the Company, at the following address:

Valeritas Holdings, LLC

750 Route 202 South, Suite 100

Bridgewater, NJ 08807

Attention:

Facsimile Number:

Telephone Number:

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with a copy to (which shall not constitute notice):

Morgan, Lewis & Bockius LLP

502 Carnegie Center

Princeton, New Jersey 08540

Attention: Steven M. Cohen

Telephone No.:

Facsimile No.:

Each proper notice shall be effective upon any of the following: (i) personal delivery to the recipient, (ii) one Business Day after being sent by facsimile to the recipient (with hard copy sent to the recipient by reputable overnight courier service that same day or the next Business Day (charges prepaid)), (iii) one Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid) or (iv) five Business Days after being deposited in the mails (first class or airmail postage prepaid).

SECTION 7.5. Counterparts. This Agreement may be executed in any number of counterparts (including by means of signature pages sent by facsimile or other electronic means), all of which together shall constitute a single instrument.

SECTION 7.6. Entire Agreement. This Agreement and the other documents and agreements referred to herein or entered into concurrently herewith embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein and therein. This Agreement and such other documents and agreements supersede all prior (but not contemporaneous) agreements and understandings between the parties with respect to such subject matter.

SECTION 7.7. Jurisdiction. Any suit, action or proceeding under or with respect to this Agreement, or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Delaware and each of the Company, the Members and the Unitholders hereby submits to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding or judgment. To the fullest extent permitted by law, each of the Company, the Members and the Unitholders hereby irrevocably waives any objections which it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Delaware, and hereby further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in any inconvenient forum.

SECTION 7.8. Section Titles. Section titles and headings are for descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth in the text hereof.

SECTION 7.9. Intended Third Party Beneficiaries. Each Indemnitee that is not a direct party hereunder for purposes of Section 3.9 of this Agreement is and shall be considered an express third-party beneficiary for purposes of Section 3.9 of this Agreement and shall be entitled to enforce this Agreement to the same extent as a party hereunder.

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[remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties have executed this Amended and Restated Limited Liability Company Agreement as of the day and year first above written.

THE COMPANY:	VALERITAS HOLDINGS, LLC
	By:
		Name:
		Title:
TEMPORARY MEMBER:	VALERITAS, INC.
	By:
		Name:
		Title:

[Signature Page to Amended and Restated Limited Liability Company Agreement]

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among the Company and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

MEMBER NAME:

MEMBER SIGNATURE

DATE

Address:

[Counterpart Signature Page to Valeritas Holdings Amended and Restated Limited Liability Company Agreement]

Schedule A

UNITHOLDERS AND OUTSTANDING UNITS (AS OF JUNE 17, 2014)

Unitholder	Series A Preferred Units	Series B Preferred Units	Series C Preferred Units	Common Units
Abingworth Bioventures V LP		8,244,975	4,480,011
Advanced Technology Ventures VIII, L.P.		6,183,732	3,370,745
Agate Medical Investments Cayman L.P.		1,108,328	383,904
Agate Medical Investments L.P		3,109,937	1,045,610
Auda Capital IV Co-Investment Fund L.P.	1,052,131	265,060	608,109
Auda Capital IV Co-Investment GmbH & Co. KG	2,038,218	513,483	1,178,052
Auda Valeritas Segregated Portfolio	3,090,348	778,542	1,786,163
Bioventures Investors Limited Partnership	1,573,128
Brian Beutel		44,263
CHL Medical Partners III Side Fund, L.P.		186,423	100,319
CHL Medical Partners III, L.P,		2,039,721	1,113,147
John Curtin		22,131
Joe Fitzgerald		88,526
John E. Davis III and Betty F. Davis, JTWROS		22,131
Kenneth L. Franke and Grace L. Franke Living Trust		22,131
Elizabeth Gordon	225,000	1,030,588	124,029	450,000
Highbridge International LLC		182,213

HLM Venture Partners II, L.P.		4,122,488	2,247,163
I. I. Y. Mordechay Ltd.			121,951
Kaiser Permanente Ventures, LLC - Series A		507,383	276,574
Kaiser Permanente Ventures, LLC - Series B		317,115	172,859
Meyers Family Revocable Trust		66,394
MPM Asset Management Investors BV4 LLC		329,608	179,670
MPM BioVentures IV GmbH & Co. Beteiligungs KG		446,566	243,423
MPM BioVentures IV-QP, L.P		11,591,370	6,318,443
Evan Norton		20,613
Onset VI, L.P.		4,946,985	2,696,596
PED-VLRTS, LLC	1,004,488	253,058	576,342
Pitango Venture Capital Fund V, L.P.		12,268,990	7,299,534
Pitango Venture Capital Principals Fund V, L.P.		268,731	159,886
Southferry #2, L.P.		182,213
The Board of Trustees of the Leland Stanford Junior University (DAPER I)		41,225
The Board of Trustees of the Leland Stanford Junior University (SBSTI)		41,225
The Permanente Federation LLC - Series I		824,498	449,433
Tullis Opportunity Fund II, L.P.	283,344	71,382	165,885

Tullis Opportunity Fund, L.P.	283,345	71,382	165,885
Saint John’s University		24,735
U.S. Venture Partners IX, L.P.		4,122,487
U.S. Venture Partners X		3,994,690
USVP X Affiliates		127,797
WCAS Capital Partners IV, L.P.			439,200
WCAS Management Corporation			216,723
WCAS Valeritas Holdings, LLC			69,182,468
WCAS XI Co-Investors LLC			287,220
Kathy Aycok				3,750
Mandy Bentley				500
Joseph Brown				2,000
Michele Carter				2,500
Dan Connors				75,000
Yash Dave				1,050
Arleen DeCicco				22,250
Timothy E. Last				15,000
Steven F. Levesque				7,833
Glenda Lewis				4,063
Ronald Manning				16,016
Massachusetts Development Finance Agency				28,954
Devin V. McAllister				21,667
Lisa J. McGuinness				2,000
Heather Merolli				2,000
Deborah J. Nagy				2,000
Hung Nguyen				10,000
Michael Price				2,000
William Rebello				25,625
Tam Pham				2,000
Greg Sellman				2,500

Mike Stout	16,042
Poul Strange	48,000
Christine Tanaka	500
Oscar Tamayo	1,814
Mark D. Taylor	2,000
The Estate of Frank Baldino, Jr.	120,938
The Helen L. Levesque 2012 Trust, Helen L. Levesque, Trustee	65,500

Schedule B*

MEMBERS

Abingworth Bioventures V LP

Advanced Technology Ventures VIII, L.P.

Agate Medical Investments Cayman L.P.

Agate Medical Investments L.P

Auda Capital IV Co-Investment Fund L.P.

Auda Capital IV Co-Investment GmbH & Co. KG

Auda Valeritas Segregated Portfolio

Bioventures Investors Limited Partnership

Brian Beutel

CHL Medical Partners III Side Fund, L.P.

CHL Medical Partners III, L.P,

John Curtin

Joe Fitzgerald

John E. Davis III and Betty F. Davis, JTWROS

Kenneth L. Franke and Grace L. Franke Living Trust

Elizabeth Gordon

Highbridge International LLC

HLM Venture Partners II, L.P.

I. I. Y. Mordechay Ltd.

Kaiser Permanente Ventures, LLC - Series A

Kaiser Permanente Ventures, LLC - Series B

Meyers Family Revocable Trust

MPM Asset Management Investors BV4 LLC

MPM BioVentures IV GmbH & Co. Beteiligungs KG

MPM BioVentures IV-QP, L.P

Evan Norton

Onset VI, L.P.

PED-VLRTS, LLC

Pitango Venture Capital Fund V, L.P.

Pitango Venture Capital Principals Fund V, L.P.

Southferry #2, L.P.

The Board of Trustees of the Leland Stanford Junior University (DAPER I)

The Board of Trustees of the Leland Stanford Junior University (SBSTI)

The Permanente Federation LLC - Series I

Tullis Opportunity Fund II, L.P.

Tullis Opportunity Fund, L.P.

Saint John’s University

U.S. Venture Partners IX, L.P.

U.S. Venture Partners X

USVP X Affiliates

WCAS Capital Partners IV, L.P.

WCAS Management Corporation

WCAS Valeritas Holdings, LLC

WCAS XI Co-Investors LLC

Kathy Aycok

Mandy Bentley

Joseph Brown

Michele Carter

Dan Connors

Yash Dave

Arleen DeCicco

Timothy E. Last

Steven F. Levesque

Glenda Lewis

Ronald Manning

Massachusetts Development Finance Agency

Devin V. McAllister

Lisa J. McGuinness

Heather Merolli

Deborah J. Nagy

Hung Nguyen

Michael Price

William Rebello

Tam Pham

Greg Sellman

Mike Stout

Poul Strange

Christine Tanaka

Oscar Tamayo

Mark D. Taylor

The Estate of Frank Baldino, Jr.

The Helen L. Levesque 2012 Trust, Helen L. Levesque, Trustee

* Subject to such person’s acceptance of such units of limited liability company interest

Schedule C

CAPITAL CONTRIBUTIONS (AS OF JUNE 17, 2014)

[TO BE PROVIDED]

Unitholder Capital Contribution

FIFTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF

VALERITAS, INC.

[See Attached]

FIFTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

VALERITAS, INC.

(Pursuant to Sections 242 and 245 of the

General Corporation Law of the State of Delaware)

Valeritas, Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”),

DOES HEREBY CERTIFY:

FIRST: That the name of this corporation is Valeritas, Inc. and that this corporation was originally formed as a limited liability company named “Valeritas Therapeutics, LLC,” which was formed on August 2, 2006; that the Certificate of Formation was amended on August 3, 2006 changing the name of the limited liability company to Valeritas LLC (the “LLC”); that on December 27, 2007, a Certificate of Conversion, converting the LLC into this corporation named “Valeritas, Inc.”, and a Certificate of Incorporation of this corporation were filed with the State of Delaware; and that on August 26, 2008, an Amended and Restated Certificate of Incorporation was filed with the State of Delaware; that on March 28, 2011, a Second Amended and Restated Certificate of Incorporation was filed with the State of Delaware; and that on September 8, 2011, a Third Amended and Restated Certificate of Incorporation was filed with the State of Delaware; and that on April 26, 2012, a Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation was filed with the State of Delaware; and that on November 16, 2012, a Fourth Amended and Restated Certificate of Incorporation was filed with the State of Delaware; and that on May 24, 2013, a Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation was filed with the State of Delaware (the “Certificate of Incorporation”).

SECOND: That the Board of Directors duly adopted resolutions proposing to amend and restate the Certificate of Incorporation of this corporation, declaring said amendment and restatement to be advisable and in the best interests of this corporation and its stockholders, and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed amendment and restatement is as follows:

RESOLVED, that the Certificate of Incorporation of this corporation be amended and restated in its entirety as follows:

ARTICLE I

The name of this corporation is Valeritas, Inc.

ARTICLE II

The address of the registered office of this corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company.

ARTICLE III

The nature of the business or purposes of this corporation to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law.

ARTICLE IV

A. Authorization of Stock. This corporation is authorized to issue two classes of stock to be designated, respectively, common stock and preferred stock. The total number of shares that this corporation is authorized to issue is fifty six million (56,000,000). The total number of shares of common stock authorized to be issued is fifty million (50,000,000), par value $0.00001 per share (the “Common Stock”). The total number of shares of preferred stock authorized to be issued is six million (6,000,000) shares, par value $0.00001 per share (the “Preferred Stock”), all of which shares are designated as “Series D Preferred Stock”.

B. Rights, Preferences and Restrictions of Preferred Stock. The rights, powers, designations, preferences, and relative, participating, optional or other rights and qualifications, limitations or restrictions granted to and imposed on the Preferred Stock are as set forth below in this Article IV(B).

1. Dividend Provisions.

(a) Series D Accruing Dividends. From and after the Original Issue Date, dividends shall accrue on each issued share of Series D Preferred Stock at the rate per annum of 8% of the sum of (x) the Series D Invested Amount (as defined below) and (y) accrued and unpaid dividends on such share compounded semi-annually (the “Series D Accruing Dividends”). The Series D Accruing Dividends shall accrue on the Series D Preferred Stock from day to day, whether or not declared, and shall be cumulative. The Series D Accruing Dividends shall be paid when and if declared by the Board of Directors of this corporation (the “Board”) by delivering to the record holders of Series D Preferred Stock a number of shares of Series D Preferred Stock (“Series D PIK Shares”) with respect to each share of Series D Preferred Stock held by such holder equal to (i) the amount of the Series D Accruing Dividends accrued and unpaid thereon, divided by (ii) the Series D Invested Amount. The holders of the Series D Preferred Stock shall not be entitled to receive any other dividends with respect to the Series D Preferred Stock, whether payable in cash, property, or stock, other than in accordance with this subsection 1(a).

(b) Other Dividends. The holders of Common Stock shall be entitled to receive, when, as, and if declared by the Board, but only out of any assets legally available therefor, such dividends as may be declared from time to time by the Board; provided, however, no dividends shall be paid on the Common Stock so long as any shares of Series D Preferred Stock remain outstanding.

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2. Liquidation Preference.

(a) Series D Preference. In the event of any Liquidation Event, either voluntary or involuntary, the holders of Series D Preferred Stock shall be entitled to receive, prior and in preference to any distribution of the proceeds of such Liquidation Event (the “Proceeds”) to the holders of Common Stock by reason of their ownership thereof, an amount (the “Series D Liquidation Amount”) per share equal to the greater of (i) the sum of the Series D Invested Amount, plus the Series D Accruing Dividends accrued through the date of such Liquidation Event but unpaid thereon, whether or not declared or (ii) such amount per share as would have been payable had each such share been converted into Common Stock pursuant to subsection 3A(a)(i) immediately prior to such Liquidation Event. If, upon the occurrence of such event, the Proceeds thus distributed among the holders of the Series D Preferred Stock shall be insufficient to permit the payment to such holders of the full Series D Liquidation Amount, then the entire Proceeds legally available for distribution shall be distributed ratably among the holders of the Series D Preferred Stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive under this subsection 2(a).

(b) Remaining Proceeds. After the payment in full of the Series D Liquidation Amount, the remaining Proceeds available for distribution to stockholders shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares held by each such holder.

(c) Certain Definitions; Fair Market Value Determination.

(i) For purposes of this Certificate of Incorporation, the following definitions shall apply:

(A) “Filing Date” shall mean the date of filing and effectiveness of this Certificate of Incorporation with the Secretary of State of the State of Delaware.

(B) “IPO” shall mean the Company’s first firm commitment underwritten public offering of its Common Stock under the Securities Act of 1933, as amended.

(C) “Liquidation Event” shall mean (1) the closing of the sale, transfer or other disposition of all or substantially all of this corporation’s assets, (2) the consummation of the merger or consolidation of this corporation with or into another entity (except a merger or consolidation in which the holders of capital stock of this corporation immediately prior to such merger or consolidation continue to hold at least 50% of the voting power of the capital stock of this corporation or the surviving or acquiring entity), (3) the closing of the transfer (whether by merger, consolidation or otherwise), in one transaction or a series of related transactions, to a person or group of affiliated persons (other than (x) an underwriter of this corporation’s securities, (y) any person that is a purchaser of shares of Series D Preferred Stock (or any affiliate thereof) pursuant to the Stock Purchase Agreement or (z) or a

3

transferee pursuant to an exempt transfer under Section 5(d) of the Voting Agreement as amended from time to time (as defined in the Stock Purchase Agreement) by and among this corporation and certain stockholders party thereto, dated on or about the Filing Date, as may be amended from time to time), of this corporation’s then outstanding securities if, after such closing, such person or group of affiliated persons would hold 50% or more of the outstanding voting stock of this corporation (or the surviving or acquiring entity) or (4) a liquidation, dissolution or winding up of this corporation; provided, however, that a transaction shall not constitute a Liquidation Event if its sole purpose is to change the state of this corporation’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held this corporation’s securities immediately prior to such transaction. The treatment of any particular transaction or series of related transactions as a Liquidation Event may be waived only with the vote or written consent of the Required Holders.

(D) “Original Issue Date” shall mean the date on which the first share of Series D Preferred Stock authorized herein is issued.

(E) “Required Holders” shall mean the holders of at least a majority of the aggregate voting power of the then outstanding shares of Series D Preferred Stock on an as converted to Common Stock basis.

(F) “Series D Invested Amount” shall mean $10.00 per share for each share of Series D Preferred Stock (as adjusted for any stock splits, combinations, subdivisions, recapitalizations or the like with respect to the Series D Preferred Stock).

(G) “Stock Purchase Agreement” shall mean the Series D Stock Purchase Agreement dated on or about the Filing Date.

(ii) Fair Market Value. In any Liquidation Event, if Proceeds received by this corporation or its stockholders is other than cash, its value will be deemed its fair market value. Any securities shall be valued as follows:

(A) Securities not subject to investment letter or other similar restrictions on free marketability covered by (B) below:

(1) If traded on a securities exchange or through the NASDAQ Global Market, the value shall be deemed to be the average of the closing prices of the securities on such exchange or system over the twenty (20) trading-day period ending three (3) trading days prior to the closing of the Liquidation Event;

(2) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the twenty (20) trading-day period ending three (3) trading days prior to the closing of the Liquidation Event; and

(3) If there is no active public market, the value shall be the fair market value thereof, as mutually determined by this corporation (by action of the Board) and the Required Holders.

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(B) The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (A) (1), (2) or (3) to reflect the approximate fair market value thereof, as mutually determined by this corporation (by action of the Board) and the Required Holders.

(C) The foregoing methods for valuing non-cash consideration to be distributed in connection with a Liquidation Event shall, upon approval by the stockholders of the definitive agreements governing a Liquidation Event, be superseded by any determination of such value set forth in the definitive agreements governing such Liquidation Event.

(d) Compliance. In the event the requirements of this Section 2 are not complied with, this corporation shall forthwith either:

(i) cause the closing of such Liquidation Event to be postponed until such time as the requirements of this Section 2 have been complied with; or

(ii) cancel such transaction, in which event the rights, preferences and privileges of the holders of the Preferred Stock shall revert to and be the same as such rights, preferences and privileges existing immediately prior to the date of the first notice referred to in subsection 2(e) hereof.

(e) Notice. This corporation shall give each holder of record of Preferred Stock written notice of such impending Liquidation Event not later than twenty (20) days prior to the stockholders’ meeting called to approve such transaction, or twenty (20) days prior to the closing of such transaction, whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending transaction and the provisions of this Section 2, and this corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than twenty (20) days after this corporation has given the first notice provided for herein or sooner than ten (10) days after this corporation has given notice of any material changes provided for herein; provided, however, that subject to compliance with the General Corporation Law such periods may be shortened or waived upon the written consent of the Required Holders.

(f) Allocation of Escrow. In the case of a Liquidation Event, if any portion of the consideration payable to the stockholders of this corporation is placed into escrow and/or is payable to the stockholders of this corporation subject to contingencies, the portion of such consideration that is not placed in escrow and not subject to any contingencies (the “Initial Consideration”) shall be allocated among the holders of capital stock of this corporation in accordance with subsections 2(a) and (b) above as if the Initial Consideration were the only consideration payable in connection with such Liquidation Event and any additional consideration which becomes payable to the stockholders of this corporation upon release from escrow or satisfaction of contingencies shall be allocated among the holders of capital stock of this corporation in accordance with subsections 2(a) and (b) above after taking into account the previous payment of the Initial Consideration as part of the same transaction.

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3. Conversion.

3A. Conversion Rights.

(a) Right to Convert; Conversion Rate. Each share of Series D Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of this corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined in accordance with the procedures described in subsections 3A(a) and (c).

(i) Each share of Series D Preferred Stock shall be converted into such number of shares of Common Stock as is determined by multiplying one share of Series D Preferred Stock by the Series D Conversion Rate. The “Series D Conversion Rate” in effect at any time shall be an amount equal to the quotient obtained by dividing (x) an amount equal to the value of the Series D Invested Amount plus the Series D Accruing Dividends accrued and unpaid through the Conversion Time (as defined below), whether declared or not, by (y) the Series D Conversion Price then in effect. On the Filing Date, the “Series D Conversion Price” per share shall be the Series D Invested Amount. Such initial Series D Conversion Price, and the rate at which shares of Series D Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below.

(ii) Fair market value of a share of Common Stock shall be valued as follows:

(A) In the case of a Liquidation Event, the aggregate amount to be received with respect to a share of Common Stock pursuant to subsection 2;

(B) In the case of an underwritten offering of securities registered pursuant to the Securities Act of 1933, as amended, (1) with respect to the IPO, the Offer Price (as defined below) and (2) with respect to any other underwritten offering, the offering price with respect thereto; and

(C) In any other circumstances, the fair market value thereof, as determined by the Board and the Required Holders; provided that if the Board and the Required Holders cannot agree on a fair market value within 15 days of the written notice to this corporation from a holder of Series D Preferred Stock that it wishes to convert any of its shares of Preferred Stock, then this corporation shall engage an investment banking firm or valuation firm (the “Independent Valuation Firm”) to determine such fair market value (this corporation shall request that the Independent Valuation Firm use its reasonable best efforts to determine such fair market value within thirty (30) days of its appointment).

(b) Automatic Conversion. Each share of Series D Preferred Stock shall automatically be converted into shares of Common Stock at the then applicable

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Conversion Rate upon the earlier of (i) immediately prior to the closing of this corporation’s IPO pursuant to an effective Registration Statement (as defined below) or (ii) such other date and time, or the occurrence of an event, specified by vote or written consent of the Required Holders (immediately prior to the closing of such IPO or the date and time specified or the time of the event specified in such vote or written consent is referred to herein as the “Mandatory Conversion Time” and such conversion is referred to as a “Mandatory Conversion”). In the case of any such automatic conversion of the Series D Preferred Stock in connection with an IPO where the Offer Price (as defined below in subsection (d)(ii)) is less than the Conversion Price then applicable to the Series D Preferred Stock (appropriately adjusted for stock splits, reverse stock splits and similar type transactions or occurrences), then prior to such automatic conversion the applicable Conversion Price shall be adjusted as provided in subsection (d)(ii).

(c) Mechanics of Conversion. Before any holder of Series D Preferred Stock shall be entitled to voluntarily convert the same into shares of Common Stock, he or she shall surrender the certificate or certificates therefor, duly endorsed, at the office of this corporation or of any transfer agent for the Series D Preferred Stock, and shall give written notice to this corporation at its principal corporate office, of the election to convert the same and shall state therein the name or names in which the certificate or certificates for shares of Common Stock are to be issued. This corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series D Preferred Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Series D Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date (the “Conversion Time”). Upon a Mandatory Conversion, each holder of record of Series D Preferred Stock converted pursuant to subsection (b) of this Section 3B shall be sent written notice of such Mandatory Conversion (which, for the avoidance of doubt, need not be sent in advance of the Mandatory Conversion Time) at each such holder’s respective address as it appears on the transfer books of this corporation; provided, however, that neither the failure to provide such notice nor any defect therein shall affect the validity of the Mandatory Conversion. The shares of Series D Preferred Stock converted pursuant to subsection (b) of this Section 3B shall be converted into shares of Common Stock automatically at the Mandatory Conversion Time without regard to whether certificates representing such shares of Series D Preferred Stock have been surrendered. Upon receipt of written notice of the Mandatory Conversion, each holder of record of shares of Series D Preferred Stock so converted shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to this corporation to indemnify this corporation against any claim that may be made against this corporation on account of the alleged loss, theft or destruction of such certificate) to this corporation at the place designated in such notice. If so required by this corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to this corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. As soon as practicable after the Mandatory Conversion and the surrender of the certificate or certificates (or lost certificate affidavit and agreement) for Series D Preferred Stock so converted, this corporation shall issue

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and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of shares of Common Stock issuable on such conversion in accordance with the provisions hereof.

(d) Conversion Price Adjustments of Preferred Stock for Certain Issuances, Splits and Combinations. The Conversion Price of the Series D Preferred Stock shall be subject to adjustment from time to time as follows:

(i) Subject to subsection 3A(d)(ii), if this corporation shall issue, on or after the Original Issue Date, any Additional Stock (as defined below) without consideration or for a consideration per share less than the Conversion Price of the Series D Preferred Stock in effect immediately prior to the issuance of such Additional Stock, the Conversion Price for such shares in effect immediately prior to each such issuance shall be reduced, concurrently with such issue, to the consideration per share received by this corporation for such issue or deemed issue of the Additional Stock.

(ii) If this corporation shall, while there are any shares of Series D Preferred Stock outstanding, propose to issue or sell shares of this corporation’s capital stock in an IPO and files a registration statement in connection with such IPO (as amended, the “Registration Statement”), which Registration Statement has an estimated price range, the mid-point of which is less than the Conversion Price applicable to the Series D Preferred Stock in effect immediately prior to the filing of such Registration Statement (in each case as adjusted for any stock splits, combinations, subdivisions, recapitalizations or the like) (the “Offer Price”), the Conversion Price for such shares in effect immediately prior to the effectiveness of the IPO shall be reduced to a price equal to the Offer Price. The Offer Price used for calculating any adjustment to the Conversion Price then applicable to the Series D Preferred Stock shall be the mid-point of the estimated price range initially disclosed in such Registration Statement and no subsequent adjustments to the estimated price range shall modify the Offer Price for purposes of this subsection 3A(d)(ii); provided, however, in the event that (x) this corporation and the managing underwriters thereafter agree to file a revised estimated price range in the Registration Statement and (y) the mid-point of such revised price range (the “Revised Offer Price”) is less than the initial Offer Price, then the Revised Offer Price shall be the applicable Offer Price for purposes of calculating the Conversion Price adjustment under this subsection 3A(d)(ii). Any adjustment to the applicable Conversion Price resulting from this subsection 3A(d)(ii) shall be effective immediately prior to the effectiveness of the Registration Statement (and if such IPO is never consummated, the aforementioned adjustment shall be deemed null and void).

(iii) No adjustment of the Conversion Price for the Series D Preferred Stock shall be made in an amount less than one cent per share, provided that any adjustments that are not required to be made by reason of this sentence shall be carried forward and shall be either taken into account in any subsequent adjustment made prior to three (3) years from the date of the event giving rise to the adjustment being carried forward, or shall be made at the end of three (3) years from the date of the event giving rise to the adjustment being carried forward. Except to the limited extent provided for in subsections 3A(d)(vi)(C) and 3A(d)(vi)(D), no adjustment of such Conversion Price pursuant to this subsection 3A(d)(iii) shall have the effect of increasing the Conversion Price above the Conversion Price in effect immediately prior to such adjustment.

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(iv) In the case of the issuance of Additional Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting any reasonable discounts, commissions or other expenses allowed, paid or incurred by this corporation for any underwriting or otherwise in connection with the issuance and sale thereof.

(v) In the case of the issuance of the Additional Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined by the Board irrespective of any accounting treatment.

(vi) In the case of the issuance of options to purchase or rights to subscribe for Common Stock, securities by their terms convertible into or exchangeable for Common Stock or options to purchase or rights to subscribe for such convertible or exchangeable securities, the following provisions shall apply for purposes of determining the number of shares of Additional Stock issued and the consideration paid therefor:

(A) The aggregate maximum number of shares of Common Stock deliverable upon exercise (assuming the satisfaction of any conditions to exercisability, including without limitation, the passage of time, but without taking into account potential anti-dilution adjustments) of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subsections 3A(d)(iv) and (v)), if any, received by this corporation upon the issuance of such options or rights plus the minimum exercise price provided in such options or rights (without taking into account potential anti-dilution adjustments) for the Common Stock covered thereby.

(B) The aggregate maximum number of shares of Common Stock deliverable upon conversion of, or in exchange (assuming the satisfaction of any conditions to convertibility or exchangeability, including, without limitation, the passage of time, but without taking into account potential anti-dilution adjustments) for, any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration equal to the consideration, if any, received by this corporation for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the minimum additional consideration, if any, to be received by this corporation (without taking into account potential anti-dilution adjustments) upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in subsections 3A(d)(iv) and (v)).

(C) In the event of any change in the number of shares of Common Stock deliverable or in the consideration payable to this corporation upon exercise of such options or rights or upon conversion of or in exchange for such convertible or

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exchangeable securities, the Conversion Price of the Series D Preferred Stock, to the extent in any way affected by or computed using such options, rights or securities, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Common Stock or any payment of such consideration upon the exercise of any such options or rights or the conversion or exchange of such securities.

(D) Upon the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration of any options or rights related to such convertible or exchangeable securities, the Conversion Price of the Series D Preferred Stock, to the extent in any way affected by or computed using such options, rights or securities or options or rights related to such securities, shall be recomputed to reflect the issuance of only the number of shares of Common Stock (and convertible or exchangeable securities that remain in effect) actually issued upon the exercise of such options or rights, upon the conversion or exchange of such securities or upon the exercise of the options or rights related to such securities.

(vii) “Additional Stock” shall mean any shares of Common Stock issued (or deemed to have been issued pursuant to subsection 3A(d)(vi)) by this corporation after the Original Issue Date other than:

(A) Common Stock issued pursuant to a transaction described in subsection 3A(d)(viii) hereof;

(B) Common Stock issued to employees, directors, consultants and other service providers for the primary purpose of soliciting or retaining their services pursuant to plans or agreements approved by this corporation’s Board (including options granted prior to the Filing Date);

(C) Common Stock issuable upon the conversion of the shares of Series D Preferred Stock issued pursuant to the Stock Purchase Agreement, Common Stock issued upon a Special Mandatory Conversion, and the Series D PIK Shares;

(D) Common Stock issued in connection with a bona fide business acquisition of or by this corporation, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise; or

(E) Common Stock issued or deemed issued pursuant to subsection 3A(d)(vi) as a result of a decrease in the Conversion Price of any series of Preferred Stock resulting from the operation of Section 3A(d).

(viii) In the event this corporation should at any time or from time to time after the Original Issue Date fix a record date for the effectuation of a split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as “Common Stock Equivalents”) without payment of any consideration by such holder for the

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additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such dividend distribution, split or subdivision if no record date is fixed), the Conversion Price of the Preferred Stock shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase of the aggregate of shares of Common Stock outstanding and those issuable with respect to such Common Stock Equivalents with the number of shares issuable with respect to Common Stock Equivalents determined from time to time in the manner provided for deemed issuances in subsection 3A(d)(vi).

(ix) If the number of shares of Common Stock outstanding at any time after the Original Issue Date is decreased by a combination of the outstanding shares of Common Stock, then, following the record date of such combination, the Conversion Price for the Preferred Stock shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in outstanding shares.

(e) Other Distributions. In the event this corporation shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by this corporation or other persons, assets (excluding cash dividends) or options or rights not referred to in subsection 3A(d)(iv), then, in each such case for the purpose of this subsection 3A(e), the holders of the Series D Preferred Stock shall be entitled to a proportionate share of any such distribution as though they were the holders of the number of shares of Common Stock of this corporation into which their shares of Series D Preferred Stock are convertible as of the record date fixed for the determination of the holders of Common Stock of this corporation entitled to receive such distribution.

(f) Recapitalizations. If at any time or from time to time there shall be a recapitalization of the Common Stock (other than a subdivision, combination or merger or sale of assets transaction provided for elsewhere in this Section 3 or in Section 2) provision shall be made so that the holders of the Series D Preferred Stock shall thereafter be entitled to receive upon conversion of the Series D Preferred Stock the number of shares of stock or other securities or property of this corporation or otherwise, to which a holder of Common Stock deliverable upon conversion would have been entitled on such recapitalization. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3 with respect to the rights of the holders of the Series D Preferred Stock after the recapitalization to the end that the provisions of this Section 3 (including adjustment of the Conversion Price then in effect and the number of shares purchasable upon conversion of the Series D Preferred Stock) shall be applicable after that event as nearly equivalently as may be practicable.

(g) No Impairment. This corporation will not, without the appropriate vote of the stockholders under the General Corporation Law or Section 5 of this Article IV(B), by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by this corporation, but will at all times in good

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faith assist in the carrying out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of conversion of the holders of the Series D Preferred Stock against impairment.

(h) No Fractional Shares and Certificate as to Adjustments.

(i) No fractional shares shall be issued upon the conversion of any share or shares of the Series D Preferred Stock under Section 3, and the aggregate number of shares of Common Stock to be issued to particular stockholders, shall be rounded down to the nearest whole share and the corporation shall pay in cash the fair market value of any fractional shares as of the time when entitlement to receive such fractions is determined. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Series D Preferred Stock the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such conversion.

(ii) Upon the occurrence of each adjustment or readjustment of the Conversion Price of Series D Preferred Stock pursuant to this Section 3, this corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Series D Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. This corporation shall, upon the written request at any time of any holder of Series D Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Price for such series of Series D Preferred Stock at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property that at the time would be received upon the conversion of a share of Series D Preferred Stock.

(i) Notices of Record Date. In the event of any taking by this corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, this corporation shall mail to each holder of Series D Preferred Stock, at least ten (10) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution, and the amount and character of such dividend or distribution.

(j) Reservation of Stock Issuable Upon Conversion. This corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series D Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series D Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series D Preferred Stock, in addition to such other remedies as shall be available to the holder of such Series D Preferred Stock, this corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Certificate of Incorporation.

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(k) Notices. Any notice required by the provisions of this Section 3 to be given to the holders of shares of Series D Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at his address appearing on the books of this corporation.

(l) Waiver of Adjustment to Conversion Price. Notwithstanding anything herein to the contrary, any downward adjustment of the Conversion Price of the Series D Preferred Stock may be waived, either prospectively or retroactively and either generally or in a particular instance, by the consent or vote of the Required Holders.

(m) Status of Converted Stock. In the event any shares of Series D Preferred Stock shall be converted pursuant to this Section 3, the shares so converted shall be retired and cancelled and shall not be issuable by this corporation. This Certificate of Incorporation of this corporation shall be appropriately amended (without the need for stockholder action) to effect the corresponding reduction in this corporation’s authorized capital stock.

3B. Special Mandatory Conversion.

(a) Trigger Event. If the conditions set forth in Section 1.2(b) or Section 1.2(c), as applicable, of the Stock Purchase Agreement with respect to a Qualifying Series D Investor’s obligation to fund its Second Closing Commitment have been satisfied and such Qualifying Series D Investor does not purchase its Second Closing Commitment in accordance with the terms and conditions of Section 1.2(b) or (c) of the Stock Purchase Agreement, as applicable, each share of Series D Preferred Stock held by such Qualifying Series D Investor shall automatically, and without any further action on the part of such Qualifying Series D Investor, be converted into one-tenth (1/10) of a share of Common Stock, with cash issued in lieu of fractional shares of Common Stock in accordance with subsection 3A(h) of Article IV(B) hereof, effective upon, subject to, and concurrently with, the consummation of the Second Closing or the IPO, as applicable (the “Special Mandatory Conversion Time”). Such conversion is referred to as a “Special Mandatory Conversion.”

(b) Procedural Requirements. Upon a Special Mandatory Conversion, each Qualifying Series D Investor converted pursuant to subsection (a) of this Section 3B shall be sent written notice of such Special Mandatory Conversion (which, for the avoidance of doubt, need not be sent in advance of the Special Mandatory Conversion Time) at each such Qualifying Series D Investor’s respective address as it appears on the transfer books of this corporation, provided, however, that neither failure to provide such notice nor any defect therein shall affect the validity of the Special Mandatory Conversion. The shares of Series D Preferred Stock held by such Qualifying Series D Investor converted pursuant to subsection (a) of this Section 3B shall be converted into shares of Common Stock automatically at the Special Mandatory Conversion Time without regard to whether certificates representing such shares of Series D Preferred Stock have been surrendered. Upon receipt of written notice of the Special Mandatory Conversion, each Qualifying Series D Investor whose shares of Series D Preferred

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Stock are so converted shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to this corporation to indemnify this corporation against any claim that may be made against this corporation on account of the alleged loss, theft or destruction of such certificate) to this corporation at the place designated in such notice. If so required by this corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to this corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. All rights with respect to the Series D Preferred Stock converted pursuant to subsection (a) of this Section 3B, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the time of the Special Mandatory Conversion (notwithstanding the failure of the holder or holders thereof to surrender the certificates for such shares at or prior to such time), except only the rights of the holders thereof, upon surrender of their certificate or certificates therefor (or lost certificate affidavit and agreement), to receive the items provided for in the next sentence of this subsection (b) of this Section 3B. As soon as practicable after the Special Mandatory Conversion and the surrender of the certificate or certificates (or lost certificate affidavit and agreement) for Series D Preferred Stock so converted, this corporation shall issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of shares of Common Stock issuable on such conversion in accordance with the provisions hereof. Such converted Series D Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and this corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Series D Preferred Stock accordingly.

(c) Definitions. For purposes of this Section 3B, the following definitions shall apply: (i) all capitalized terms used but not defined in this Section 3B shall have the meaning ascribed to such terms in the Stock Purchase Agreement; and (ii) “Qualifying Series D Investor” shall mean each holder of Series D Preferred Stock listed on Schedule I to the Stock Purchase Agreement with a Second Closing Commitment.

4. Voting Rights.

(a) General Voting Rights. The holder of each share of Series D Preferred Stock shall have the right to one vote for each share of Common Stock into which such Series D Preferred Stock could then be converted (without taking into account any accrued and unpaid dividends thereon), and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any stockholders’ meeting in accordance with the Bylaws of this corporation, and shall be entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote. Fractional votes shall not, however, be permitted and any fractional voting rights available on an as converted to Common Stock basis (after aggregating all shares into which shares of Series D Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward).

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(b) Voting for the Election of Directors. The Board shall consist of a total of no more than nine (9) directors. The holders of record of the shares of Common Stock and Series D Preferred Stock, voting together as a single class, shall elect directors of this corporation in accordance with the Voting Agreement. Each holder of shares of Series D Preferred Stock shall be entitled to receive the same prior notice of any stockholders’ meeting as provided to the holders of Common Stock in accordance with the Bylaws of this corporation, as well as notice, in accordance with the Bylaws of this corporation, of all stockholder actions taken by legally available means in lieu of meeting, and shall vote together with holders of Common Stock upon any matter submitted to a vote of stockholders, except those matters required by law or by the terms hereof to be submitted to a vote of any class or series, voting as a separate class or series. Fractional votes shall not, however, be permitted, and any fractions shall be disregarded in computing voting rights. Notwithstanding the provisions of Section 223(a)(1) and 223(a)(2) of the General Corporation Law, vacancies created by removal or resignation of a director, may only be filled in accordance with the Voting Agreement. A director may be removed during his or her term of office, either with or without cause, so long as any such removal is consummated in accordance with the Voting Agreement.

5. Protective Provisions. So long as any shares of Series D Preferred Stock are outstanding, this corporation shall not (by amendment, merger, consolidation or otherwise) without first obtaining the approval (by vote or written consent, as provided by law) of the Required Holders:

(a) alter or change the powers, preferences or special rights of the shares of Series D Preferred Stock so as to affect adversely such shares;

(b) increase or decrease (other than by conversion of the Preferred Stock) the total number of authorized shares of Preferred Stock or Common Stock;

(c) authorize or issue, or obligate itself to issue, any equity security (including any other security convertible into or exercisable for any such equity security), other than (i) the issuance of shares of Series D Preferred Stock with respect to Series D Accruing Dividends, (ii) the issuance of shares of Common Stock upon conversion, if any, of the Series D Preferred Stock to Common Stock pursuant to Section 3 and (iii) the issuance of shares of Series D Preferred Stock in accordance with the Stock Purchase Agreement;

(d) amend, alter or repeal any provision of this corporation’s Fifth Amended and Restated Certificate of Incorporation or Bylaws;

(e) redeem, purchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any share or shares of capital stock of this corporation; provided, however, that this restriction shall not apply to the repurchase of shares of Common Stock (i) from employees, officers, directors, consultants or other persons performing services for this corporation or any subsidiary pursuant to agreements under which this corporation has the option to repurchase such shares upon the occurrence of certain events, such as the termination of employment or service, or pursuant to a right of first refusal or (ii) that are outstanding as of the Filing Date;

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(f) acquire or merge with another entity or enter into any other material transaction involving the acquisition of the assets of such entity;

(g) sell, assign, license or otherwise dispose (in a single transaction or a series of related transactions) material technology, intellectual property and other material assets of this corporation, other than licenses granted in the ordinary course of business;

(h) make any material change in the nature of this corporation’s business from that conducted as of the Filing Date; provided that a collaboration, license, marketing or other similar agreement or strategic partnership with a strategic investor with regards to this corporation’s products in development as of the Filing Date shall not constitute a material change to this corporation’s business;

(i) incur, create, guarantee or authorize the creation of any indebtedness in excess of $25,000,000 in the aggregate;

(j) make any loan or advance in excess of $100,000 to any other corporation, partnership, or other third party, unless such entity is wholly owned by this corporation; or

(k) enter into material transactions with affiliates of this corporation or enter into any other transaction described in Section 144 of the General Corporation Law, except for (i) transactions contemplated by the Stock Purchase Agreement, (ii) the issuance of equity securities made in accordance with Section 3 of the Investor Rights Agreement as amended from time to time (as defined in the Stock Purchase Agreement), (iii) transactions entered into the ordinary course of business with any employee of the Company and (iv) transactions among this corporation and subsidiaries of this corporation.

6. Redemption. The Series D Preferred Stock are not redeemable at the option of the holder.

C. Common Stock. The powers, designations, preferences, and relative, participating, optional or other rights and the qualifications, limitations or restrictions granted to and imposed on the Common Stock are as set forth below in this Article IV(C).

1. Dividend Rights. Subject to the prior rights of holders of all classes of stock at the time outstanding having prior rights as to dividends, the holders of the Common Stock shall be entitled to receive, when, as and if declared by the Board, out of any assets of this corporation legally available therefor, any dividends as may be declared from time to time by the Board.

2. Liquidation Rights. Upon the liquidation, dissolution or winding up of this corporation, the assets of this corporation shall be distributed as provided in Section 2 of Article IV(B) hereof.

3. Redemption. The Common Stock is not redeemable at the option of the holder.

4. Voting Rights. The holder of each share of Common Stock shall have the right to one vote for each such share, and shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of this corporation, and shall be entitled to vote upon such matters and in such manner as may be provided by law.

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ARTICLE V

Except as otherwise provided in this Certificate of Incorporation, in furtherance and not in limitation of the powers conferred by statute, the Board is expressly authorized to make, repeal, alter, amend and rescind any or all of the Bylaws of this corporation.

ARTICLE VI

The number of directors of this corporation shall be fixed pursuant to this Certificate of Incorporation.

ARTICLE VII

Elections of directors need not be by written ballot unless the Bylaws of this corporation shall so provide.

ARTICLE VIII

Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws of this corporation may provide. The books of this corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board or in the Bylaws of this corporation.

ARTICLE IX

A director of this corporation shall not be personally liable to this corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to this corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. If the General Corporation Law is amended after approval by the stockholders of this Article IX to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of this corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law as so amended.

Any repeal or modification of the foregoing provisions of this Article IX by the stockholders of this corporation shall not adversely affect any right or protection of a director of this corporation existing at the time of, or increase the liability of any director of this corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification.

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ARTICLE X

This corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

ARTICLE XI

To the fullest extent permitted by applicable law, this corporation is authorized to provide indemnification of (and advancement of expenses to) agents of this corporation (and any other persons to which General Corporation Law permits this corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law, subject only to limits created by applicable General Corporation Law (statutory or non-statutory), with respect to actions for breach of duty to this corporation, its stockholders, and others.

Without limiting the foregoing, this corporation shall, to the maximum extent permitted from time to time under the law of the State of Delaware, indemnify and upon request advance expenses to any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or claim, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was or has agreed to be a director of this corporation or while a director is or was serving at the request of this corporation as a director, officer, partner, trustee, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorney’s fees and expenses), judgments, fines, penalties and amounts paid in settlement incurred (and not otherwise recovered) in connection with the investigation, preparation to defend or defense of such action, suit, proceeding or claim; provided, however, that the foregoing shall not require this corporation to indemnify or advance expenses to any person in connection with any action, suit, proceeding, claim or counterclaim initiated by or on behalf of such person. Such indemnification shall not be exclusive of other indemnification rights arising under any by-law, agreement, vote of directors or stockholders or otherwise and shall inure to the benefit of the heirs and legal representatives of such person. Any person seeking indemnification under this Article XI shall be deemed to have met the standard of conduct required for such indemnification unless the contrary shall be established.

Any amendment, repeal or modification of the foregoing provisions of this Article XI shall not adversely affect any right or protection of a director, officer, agent, or other person existing at the time of, or increase the liability of any director of this corporation with respect to any acts or omissions of such director, officer or agent occurring prior to, such amendment, repeal or modification.

It is the intent of this corporation that with respect to all advancement and indemnification obligations provided by this corporation as referenced in this Article XI, this corporation shall be the primary source of advancement, reimbursement and indemnification relative to any direct or indirect stockholder of this corporation (or any affiliate of such stockholder, other than this corporation or any of its direct or indirect subsidiaries). This

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corporation shall have no right to seek contribution, indemnity or other reimbursement for any of its obligations described in this Article XI from any such direct or indirect shareholder of this corporation (or any affiliate of such shareholder, other than this corporation or any of its direct or indirect subsidiaries).

ARTICLE XII

In connection with repurchases by this corporation of its Common Stock from employees, officers, directors, advisors, consultants or other persons performing services for this corporation or any subsidiary pursuant to agreements under which the corporation has the option to repurchase such shares at cost upon the occurrence of certain events, such as the termination of employment, Sections 502 and 503 of the California Corporations Code shall not apply in all or in part with respect to such repurchases.

*    *    *

THIRD: The foregoing amendment and restatement was approved by the holders of the requisite number of shares of said corporation in accordance with Section 228 of the General Corporation Law.

FOURTH: That said Fifth Amended and Restated Certificate of Incorporation, which restates and integrates and further amends the provisions of this corporation’s Fourth Amended and Restated Certificate of Incorporation, has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law.

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IN WITNESS WHEREOF, this Fifth Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation on this      day of June, 2014.

VALERITAS, INC.
By:	/s/ Kristine Peterson
Name:	Kristine Peterson
Title:	Chief Executive Officer

VALERITAS, INC.

SERIES D PREFERRED

STOCK PURCHASE AGREEMENT

[See Attached]

VALERITAS, INC.

SERIES D PREFERRED

STOCK PURCHASE AGREEMENT

June [19], 2014

TABLE OF CONTENTS

			Page
1.	Purchase and Sale of Shares			1
	1.1	Sale and Issuance of Series D Preferred Stock		1
	1.2	Closing		2
	1.3	Use of Proceeds		3
2.	Representations and Warranties of the Company			3
	2.1	Organization, Good Standing and Qualification		3
	2.2	Capitalization and Voting Rights		4
	2.3	Subsidiaries		5
	2.4	Authorization		5
	2.5	Valid Issuance of Securities		6
	2.6	Governmental Consents		6
	2.7	Offering; Previous Issuances Exempt		6
	2.8	Litigation		7
	2.9	Proprietary Information Agreements		7
	2.10	Patents and Trademarks		7
	2.11	Compliance with Other Instruments		9
	2.12	Agreements; Action		9
	2.13	Related-Party Transactions		10
	2.14	Permits		10
	2.15	Environmental and Safety Laws		11
	2.16	Manufacturing, Marketing and Development Rights		11
	2.17	Disclosure		11
	2.18	Registration Rights		11
	2.19	Corporate Documents		11
	2.20	Title to Property and Assets		11
	2.21	Financial Statements		11
	2.22	Indebtedness		12
	2.23	Changes		12
	2.24	Employee Benefit Plans		13
	2.25	Tax Returns, Payments and Elections		15

-i-

TABLE OF CONTENTS

(continued)

			Page
	2.26	Insurance		15
	2.27	Minute Books		15
	2.28	Labor Agreements and Actions; Employee Compensation		15
	2.29	Section 83(b) Elections		16
	2.30	Real Property Holding Company		16
	2.31	Significant Customers and Suppliers		16
	2.32	Product Regulatory Review		16
3.	Representations and Warranties of the Investors			17
	3.1	Authorization		17
	3.2	Purchase Entirely for Own Account		17
	3.3	Disclosure of Information		17
	3.4	Investment Experience		17
	3.5	Accredited Investor		17
	3.6	Restricted Securities		17
	3.7	Disqualification Event		18
	3.8	Further Limitations on Disposition		18
	3.9	Legends		18
	3.10	Exculpation Among Investors		19
	3.11	Further Representations by Foreign Investors		19
	3.12	Appraisal Rights Waiver		19
4.	Conditions of Investors’ Obligations at Closing			19
	4.1	Representations and Warranties of Company		19
	4.2	Performance		20
	4.3	Compliance Certificate		20
	4.4	Qualifications		20
	4.5	Proceedings and Documents		20
	4.6	Secretary’s Certificate		20
	4.7	Opinion of Company Counsel		20
	4.8	Board of Directors		20
	4.9	Investors’ Rights Agreement		20

-ii-

TABLE OF CONTENTS

(continued)

			Page
	4.10	Voting Agreement		20
	4.11	Restated Certificate		20
	4.12	Stock Option Plan		20
	4.13	Amendments to Management Rights Letters		21
	4.14	Termination of Existing Agreements		21
	4.15	Consents		21
5.	Conditions of the Company’s Obligations at Closing			21
	5.1	Representations and Warranties		21
	5.2	Qualifications		21
	5.3	Investors’ Rights Agreement		21
	5.4	Voting Agreement		21
6.	Miscellaneous			21
	6.1	Survival of Representations and Warranties		21
	6.2	Successors and Assigns		21
	6.3	Governing Law		22
	6.4	Counterparts		22
	6.5	Titles and Subtitles		22
	6.6	Notices		22
	6.7	Finder’s Fee		22
	6.8	Expenses		22
	6.9	Amendments and Waivers		22
	6.10	Severability		23
	6.11	Aggregation of Stock		23
	6.12	Entire Agreement		23

-iii-

VALERITAS, INC.

SERIES D PREFERRED STOCK PURCHASE AGREEMENT

THIS SERIES D PREFERRED STOCK PURCHASE AGREEMENT (the “Agreement”) is made as of the [19th] day of June, 2014, by and among Valeritas, Inc., a Delaware corporation (the “Company”), and the investors listed on Schedule I hereto (each of which is herein referred to as an “Investor”).

WHEREAS, effective as of June [17], 2014, the Company restructured its capitalization through the merger of a wholly-owned subsidiary of Valeritas Holdings, LLC (“Holdings”) into the Company pursuant to the Agreement and Plan of Merger and Reorganization, dated June 9, 2014 (the “Merger”). As a result of the Merger, the Company became a wholly-owned subsidiary of Holdings, and the holders of capital stock of the Company outstanding immediately prior to the effective time of the Merger became holders of units of limited liability company interest in Holdings;

WHEREAS, following the effective time of the Merger, the Company authorized the sale and issuance of up to an aggregate of 4,500,000 shares of newly authorized Preferred Stock of the Company, par value $0.00001 per share, designated as “Series D Preferred Stock” (the “Shares”);

WHEREAS, the Investors desire to purchase the Shares set forth opposite each Investor’s name on Schedule I on the terms and conditions set forth herein; and

WHEREAS, the Company desires to issue and sell the Shares to the Investors on the terms and conditions set forth herein;

THE PARTIES HEREBY AGREE AS FOLLOWS:

1. Purchase and Sale of Shares

1.1 Sale and Issuance of Series D Preferred Stock.

(a) The Company shall adopt and file with the Secretary of State of Delaware on or before the Initial Closing (as defined below) the Fifth Amended and Restated Certificate of Incorporation in the form attached hereto as Exhibit A (the “Restated Certificate”).

(b) On or prior to the Initial Closing, the Company shall have authorized (i) the sale and issuance to the Investors of the Shares and (ii) the issuance of the shares of Common Stock of the Company to be issued upon conversion of the Shares (the “Conversion Shares”), in each case as set forth herein. The Shares and the Conversion Shares shall have the rights, preferences, privileges and restrictions set forth in the Restated Certificate.

(c) Subject to the terms and conditions of this Agreement, each Investor agrees, severally and not jointly, to purchase at the applicable Closing (as defined below) pursuant to Section 1.2(a) and (b) and the Company agrees to sell, issue and deliver to each Investor at such Closing, at a purchase price per share of $10.00, that number of Shares set forth opposite such Investor’s name on Schedule I hereto, in consideration of the cash to be paid by such Investors, as set forth on Schedule I hereto.

1.2 Closing.

(a) Initial Closing. On the date hereof, or at such other time and place as the Company and Investors acquiring in the aggregate at least a majority of the Shares sold pursuant to this Agreement (which majority shall include WCAS Valeritas Holdings, LLC (“WCAS”)) agree upon in writing (which time is designated as the “Initial Closing”), the Company shall sell, subject to and on the terms and conditions contained in this Agreement, a total of 2,500,000 Shares to the Investors in accordance with Schedule I hereto. At the Initial Closing, the Company shall deliver to each Investor a certificate or certificates representing the Shares that such Investor is purchasing against payment of the purchase price therefor by cash in immediately available funds.

(b) Second Closing. Following the Initial Closing, on the earliest of (i) October 15, 2014, (ii) within ten (10) business days of the date on which the Company files a registration statement with the United States Securities and Exchange Commission (“SEC”) pursuant to the Securities Act of 1933, as amended (the “Act”), and such registration statement has an estimated price range, and (iii) such time as the Investors holding at least a majority of the then outstanding Shares (which majority shall include WCAS) agree upon in writing (which time is designated as the “Second Closing”), the Company shall sell, subject to and on the terms and conditions contained in this Agreement, up to a total of 2,000,000 Shares (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or similar recapitalization affecting such shares) (the “Additional Shares”), to the Investors in accordance with each such Investor’s commitment set forth on Schedule I (hereinafter referred to as such Investor’s “Second Closing Commitment”). Each Investor may assign its Second Closing Commitment to entities affiliated with such Investor. The Company shall give at least ten (10) business days prior written notice to each Investor of its intention to consummate the Second Closing. At the Second Closing, the Company shall deliver to each Investor (or its affiliates) a certificate or certificates representing the Additional Shares that such Investor (or its affiliates) is purchasing against payment of the purchase price therefor by cash in immediately available funds. The term “Closing” shall apply to the Initial Closing and the Second Closing unless otherwise specified. The rights and obligations of the Company and the Investors to consummate the Second Closing pursuant to this Section 1.2(b) shall automatically terminate upon the earlier of (i) the consummation of a Liquidation Event or (ii) the written consent of the Investors holding at least a majority of the then outstanding Shares (which majority shall include WCAS) to exercise the rights set forth in Section 1.2(c).

(c) Initial Public Offering. In the event (i) the Company files a registration statement under the Act prior to October 15, 2014 in connection with its initial underwritten public offering of shares of Common Stock (the “IPO”), and such registration statement has an estimated price range and (ii) Investors holding at least a majority of the then outstanding Shares (which majority shall include WCAS) notify the Company in writing of such Investors’ election to abandon the consummation of the sale and purchase of the Additional Shares at the Second Closing, each Investor, or its designee, shall purchase such number of registered public shares of

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Common Stock in the IPO equal to such Investor’s Second Closing Commitment divided by the price per share of Common Stock offered to the public (the “IPO Shares”). The Company shall use its commercially reasonable efforts to cause the managing underwriter(s) of the IPO to direct to the Investors a number of registered public shares of Common Stock in the IPO equal the total IPO Shares. The Investors acknowledge that, despite the Company’s use of its commercially reasonable efforts, the managing underwriter(s) may determine in their sole discretion that it is not advisable to designate all such IPO Shares as directed shares in the IPO, in which case the number of IPO Shares may be reduced or no directed shares may be designated, as applicable. Any such reduction shall be pro rata among all participating Investors. Nothing in this Section 1.2(c) shall affect the rights and obligations of the Company and the Investors to consummate the sale and purchase of the Additional Shares in accordance with Section 1.2(b) if the Investors holding at least a majority of the then outstanding Shares (which majority must include WCAS) have not notified the Company in writing to consummate the purchase of IPO Shares as contemplated by this Section 1.2(c) in lieu of the Second Closing. For clarity, in no event will any Investor be obligated to purchase Additional Shares or IPO Shares, as the case may be, in excess of their respective Second Closing Commitment.

(d) Special Mandatory Conversion. The Investors hereby acknowledge and agree that in the event that any Investor (or its affiliates) does not purchase such Investor’s Second Closing Commitment pursuant to Section 1.2(b) or 1.2(c), then each share of Series D Preferred Stock held by such Investor shall automatically, and without any further action on the part of such Investor, be converted into one-tenth (1/10th) of a share of Common Stock, with cash issued in lieu of any fractional shares of Common Stock, all in accordance with Section 3B of Article IV(B) of the Restated Certificate.

1.3 Use of Proceeds. The Company shall use the proceeds of the sale of the Shares for working capital and general corporate purposes.

2. Representations and Warranties of the Company. The Company hereby represents and warrants to each Investor that, except as set forth on a Schedule of Exceptions (the “Schedule of Exceptions”) furnished each Investor, specifically identifying the relevant Section hereof, which exceptions shall be deemed to be representations and warranties as if made hereunder:

2.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own or lease and operate its assets and carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect. “Material Adverse Effect” means any (i) adverse effect on the issuance or validity of the Shares or the transactions contemplated hereby or on the enforceability or validity of the Restated Certificate or on the ability of the Company to perform its obligations under this Agreement or the other Ancillary Agreements (as defined below), or (ii) material adverse effect on the prospects or condition (financial or otherwise), properties, assets, liabilities, business or operations of the Company taken as a whole; provided that the completion of the Merger in and of itself shall not be deemed a Material Adverse Effect.

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2.2 Capitalization and Voting Rights. After giving effect to the Merger and the filing of the Restated Certificate, the authorized capital stock of the Company consists, or will consist immediately prior to the Initial Closing, of:

(a) 6,000,000 shares of Preferred Stock, par value $0.00001 (the “Preferred Stock”), all of which shares have been designated Series D Preferred Stock (the “Series D Preferred Stock”), none of which are issued and outstanding immediately prior to the Initial Closing. The rights, privileges and preferences of the Preferred Stock are as stated in the Restated Certificate.

(b) 50,000,000 shares of common stock, par value $0.00001, of the Company (the “Common Stock”), of which 9,000,000 shares are issued and outstanding immediately prior to the Initial Closing. The rights, privileges and preferences of the Common Stock are as stated in the Restated Certificate.

(c) All outstanding shares of Common Stock are owned by Holdings. Other than as set forth in this Section 2.2, the Company has no other shares of capital stock authorized, issued or outstanding.

(d) The outstanding shares of Common Stock are all duly and validly authorized and issued, fully paid and nonassessable, were not issued in breach of or violation of any preemptive or similar rights and were issued in accordance with the registration or qualification provisions of the Act and any relevant state securities laws, or pursuant to valid exemptions therefrom.

(e) Except for (i) the conversion privileges of the Preferred Stock as set forth in the Restated Certificate, (ii) the rights provided in Section 4 of the Investors’ Rights Agreement in the form attached hereto as Exhibit B (the “Investors’ Rights Agreement”), (iii) warrants to purchase 195,008 shares of Common Stock held by the Company’s senior lender and (iv) options to purchase 1,305,483 shares of Common Stock have been reserved for grants to employees and other service providers pursuant to the Valeritas, Inc. 2014 Equity Compensation Plan (the “2014 Option Plan”), of which, as of the date hereof, no options to purchase shares of Common Stock are outstanding, there are no outstanding options, warrants, rights (including conversion or preemptive rights), agreements or commitments for the purchase or acquisition from the Company of any shares of its capital stock or other securities. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or other similar rights with respect to the Company or which otherwise permit the holder thereof to participate in the proceeds of a sale of the Company (regardless of how structured). Except as provided in the Restated Certificate, the Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any of its equity securities or any interests therein or to pay any dividend or make any distribution in respect thereof.

(f) All outstanding securities of the Company, including, without limitation, all outstanding shares of the capital stock of the Company, all shares of the capital stock of the Company issuable upon the conversion or exercise of all options or other convertible or exercisable securities and all other securities that the Company is obligated to issue, are subject to a one hundred eighty (180) day “market stand-off” restriction upon an initial public offering of the Company’s securities pursuant to a registration statement filed with the SEC pursuant to the Act in a form substantially identical to Section 1.13 of the Investors’ Rights Agreement.

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(g) The Schedule of Exceptions sets forth a complete list of each security of the Company owned by any officer, director or, in the Company’s reasonable belief, key employee of the Company, or by any affiliate or any member of the immediate family of any such individual, together with a description of the material terms of the vesting provisions and the rights of first refusal and rights of repurchase applicable to each such security. No stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of any securities or rights exercisable or convertible for securities provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of the occurrence of any event. The term “knowledge” means, with respect to the Company, the actual knowledge upon reasonable inquiry or due investigation of the following officers and key employees: Kristine Peterson, William Duke, Kurt Andrews, Geoffrey Jenkins and John Timberlake.

(h) Except with respect to any rights granted to the Investors pursuant to the terms of the Restated Certificate, this Agreement or the Ancillary Agreements (as defined below) or the transactions contemplated hereby or thereby, no party has any right of first refusal, right of first offer, right of co-sale, preemptive right or other similar right regarding the Company’s securities. There are no provisions of the Company’s organizational documents, no agreements to which the Company is a party or is bound by other than the Restated Certificate, this Agreement or the other Ancillary Agreements, which (i) may affect or restrict the voting rights of the Investors with respect to the Shares or the Conversion Shares in their capacity as stockholders of the Company, (ii) restrict the ability of the Investors, or any successor thereto or assignee or transferee thereof, to transfer the Shares or the Conversion Shares, or (iii) entitle any party to nominate or elect any director of the Company or require any of the Company’s stockholders to vote for any such nominee or other person as a director of the Company in each case.

2.3 Subsidiaries. The Company does not presently own or control, directly or indirectly, any debt or equity interest in any other corporation, association, or other business entity. The Company is not a participant in any joint venture, partnership, or similar arrangement.

2.4 Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the Investors’ Rights Agreement, the Voting Agreement in the form attached hereto as Exhibit C (the “Voting Agreement” and together with the Investors’ Rights Agreement, the “Ancillary Agreements”) and the Restated Charter, the performance of all obligations of the Company hereunder and thereunder, and the authorization, issuance (or reservation for issuance), sale and delivery of the Shares being sold hereunder and the Conversion Shares has been taken or will be taken prior to the Initial Closing, and this Agreement and the Ancillary Agreements constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights

5

generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (iii) to the extent the indemnification provisions contained in the Investors’ Rights Agreement may be limited by applicable federal or state securities laws.

2.5 Valid Issuance of Securities. The Shares being purchased by the Investors hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, (i) will be duly and validly issued, fully paid, and nonassessable, and will be free and clear from all taxes and of any lien, claim, judgment, charge, mortgage, security interest, pledge, escrow, equity or other encumbrance (collectively, “Encumbrances”) other than restrictions on transfer under this Agreement and the Ancillary Agreements and under applicable state and federal securities laws, (ii) will not violate or cause a breach of any preemptive or similar rights and (iii) will be issued in accordance with the registration or qualification provisions of the Act and any relevant state securities laws, or pursuant to valid exemptions therefrom. The Conversion Shares have been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Restated Certificate, will be duly and validly issued, fully paid, and nonassessable and will be free and clear from all taxes and Encumbrances other than restrictions on transfer under this Agreement and the Ancillary Agreements and under applicable state and federal securities laws.

2.6 Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration, notice to or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, except (i) the filing of the Restated Certificate with the Secretary of State of Delaware; (ii) the filing pursuant to the Regulation D, promulgated by the SEC under the Act, which filing will be effected within 15 days of the sale of the Shares hereunder; or (iii) the filings required by applicable state “blue sky” securities laws, rules and regulations.

2.7 Offering; Previous Issuances Exempt. Neither the Company, nor any of its affiliates or any other person acting on the Company’s behalf, has directly or indirectly engaged in any form of general solicitation or general advertising in connection with the offer, sale or issuance of the Shares nor have any of such persons made any offers or sales of any security of the Company or its affiliates or solicited any offers to buy any security of the Company or its affiliates under circumstances that would require registration of the Shares under the Act or any other securities laws or cause this offering of the Shares to be integrated with any prior offering of securities of the Company for purposes of the Act. Subject in part to the truth and accuracy of each Investor’s representations set forth in Section 3 of this Agreement, the offer, sale and issuance of the Shares as contemplated by this Agreement are exempt from the registration requirements of any applicable state and federal securities laws (under Rule 506 promulgated under the Act, as amended, in the case of the federal securities laws), and neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption. All shares of capital stock and other securities issued by the Company prior to the Initial Closing have been issued in transactions exempt from the registration requirements under the Act and all applicable state securities or “blue sky” laws, and in compliance with all applicable corporate laws. The Company has not violated the Act or any applicable state or other securities or “blue sky” laws in connection with the issuance of any shares of capital stock or other securities prior to the Closing.

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2.8 Litigation. There is no claim, action, suit, proceeding or investigation pending or, to the Company’s knowledge, currently threatened against the Company or any of its properties before any court or arbitrator or any governmental body, agency or official. To the Company’s knowledge, there are no facts that would cause a reasonable person to believe that such a proceeding would likely result. The foregoing includes, without limitation, actions, suits, proceedings or investigations pending or threatened (or any basis therefor known to the Company) involving the prior employment of any of the Company’s employees, their use in connection with the Company’s business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or that the Company intends to initiate.

2.9 Proprietary Information Agreements. Except as set forth on Section 2.9 of the Schedule of Exceptions, each present and former employee and officer of the Company has executed a Proprietary Information and Inventions Agreement, and each present consultant to the Company has executed a Consulting Agreement, in substantially the forms provided to special counsel for the Investors (and each former employee of and consultant to the Company executed a form used by the Company at the time, copies of which have been provided to special counsel to the Investors). The Company is not aware that any of its present or former employees, officers or consultants are in violation of the aforementioned agreements, and the Company has taken commercially reasonable efforts to prevent any such violation. No present or former security holder, officer, director or employee of the Company, nor any third party, has any right, title or interest in any Proprietary Rights (as defined in Section 2.10), and all such persons who have been authors, inventors or developers of any Proprietary Rights have assigned any material rights, title or interests in or to such Proprietary Rights to the Company, and waived their moral rights in any copyrighted works comprising such Proprietary Rights. All employees and directors of the Company with access to the Company’s confidential Proprietary Rights have agreed to maintain the confidentiality of such confidential Proprietary Rights. The Company has provided the Investors with an accurate and complete list of the Company’s current employees, including a detailed description of all salary, bonus, severance obligations and deferred compensation paid or payable for each current employee of the Company who received compensation in excess of $200,000 for the fiscal year ended December 31, 2013 or is anticipated to receive compensation in excess of $200,000 for the fiscal year ending December 31, 2014.

2.10 Patents and Trademarks. Except as set forth on Section 2.10 of the Schedule of Exceptions, the Company possesses all rights, title and interests, free and clear of all liens, pledges, security interests, transfer restrictions and other encumbrances, to all material patents and patent applications (together with, all reissuances, continuations, continuations-in-part, revisions, extensions and reexaminations thereof), material inventions (whether patentable or unpatentable and whether or not reduced to practice) and all improvements thereon, except for

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improvements made by former employees subsequent to such former employee leaving the employ of the Company, trademarks, service marks, trade names and domain names (together with all translations, adaptations, derivations and combinations thereof) and including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith, copyrightable works, copyrights, trade secrets, information, proprietary rights and processes, in each case to the extent used in or otherwise necessary for its business as now conducted and as proposed to be conducted (collectively, “Proprietary Rights”) without any violation or infringement of, or other conflict with, the valid and enforceable rights of others. The Schedule of Exceptions contains a complete list of patents and pending patent applications and registrations and applications for trademarks, copyrights and domain names owned by, or exclusively licensed to, the Company, which listing specifies for each item listed the owner, the subject matter of such item, any application, patent or registration number, and the date of any application or of the issuance of any patent or registration. The Company has taken commercially reasonable actions to maintain and protect its Proprietary Rights. To the Company’s knowledge, all registered Proprietary Rights owned by, or exclusively licensed to, the Company are valid and subsisting and are in full force and effect. Section 2.10 of the Schedule of Exceptions sets forth all options, licenses, rights to collect royalties, agreements, claims, encumbrances or shared ownership of interests that might be reasonably expected to be material to the Company pursuant to which the Company receives or has received Proprietary Rights, or pursuant to which the Company has granted a license or other interest in Proprietary Rights collectively, “Licenses,” and all such Licenses are in full force and effect, the Company, to its knowledge, is not and has never been in breach thereof and, to the Company’s knowledge, the other party or parties thereto are not and never been in breach thereof. The Company has no contractual restrictions or obligations, including obligations to pay royalties, on its use or proposed use of any basal delivery products, including the V-Go product, or on any product where such products lack a controlled slip anchor spring damper mechanism for controlling a rapid drug infusion. The Company knows of no person or entity, who has infringed upon, interfered with, misappropriated or otherwise come into conflict with any Proprietary Rights, and the Company has not received any written notice with respect to any such infringement, interference, misuse or other violation of any Proprietary Rights. To the Company’s knowledge, there is no governmental prohibition or other restriction on the license, sale or use of the Proprietary Rights under applicable law other than export controls. The Company has not violated, interfered with, misappropriated, infringed or otherwise come into conflict with, and is not currently and as its business is proposed to be conducted will not be violating, interfering with, misappropriating, infringing or otherwise coming into conflict with, any valid and enforceable proprietary or intellectual property right of any other person or entity. The Company has not received any communications alleging that the Company (or any of its employees or consultants) has violated or, by conducting its business as proposed, would violate any of the proprietary or intellectual property rights of any other person or entity and the Company is not aware of any reason to believe that such an allegation may be forthcoming. There are no pending or threatened proceedings or adverse claims made with respect to any Proprietary Rights. There has never been litigation commenced or threatened in writing against the Company with respect to any Proprietary Rights. The Company is not aware that any of its employees, officers, directors or consultants is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of his or her best

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efforts to promote the interests of the Company or that would conflict with the Company’s business as presently conducted or as proposed to be conducted. Neither the execution nor delivery of this Agreement or the Ancillary Agreements, nor the carrying on of the Company’s business by the employees, officers and consultants of the Company, nor the conduct of the Company’s business as proposed, will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such employees, officers or consultants is now obligated. Without limiting the foregoing, the Company does not believe it is using or will be necessary to utilize any inventions of any of its employees, officers or consultants (or people it currently intends to hire) made prior to or outside the scope of their employment or engagement by the Company, including inventions made by any former employees whereas such inventions were made by such former employees after termination of the employee’s employment with the Company and to the Company’s knowledge, the patents and patent applications within the Proprietary Rights designate the correct inventors of the inventions claimed in those patents and patent applications.

2.11 Compliance with Other Instruments. The Company (i) has not been and is not in violation or default of any provision of its Restated Certificate or Bylaws, or of any instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound, or (ii) has not been and is not in violation or default, in any material respect, of any provision of any law, statute, rule or regulation applicable to the Company. No other party to any contract to which the Company is a party is, to the Company’s knowledge, in violation, breach or default thereof. The execution, delivery and performance of this Agreement and the Ancillary Agreements, and the consummation of the transactions contemplated hereby and thereby and the execution and filing of the Restated Certificate will not result in any such violation or default or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or contract or an event that (i) results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization, or approval applicable to the Company, its business or operations or any of its assets or properties or (ii) gives others (with notice or lapse of time or both) any rights of termination, amendment, acceleration or cancellation of, any provision thereunder.

2.12 Agreements; Action.

(a) Except for agreements explicitly contemplated hereby and by the Ancillary Agreements, there are no agreements, understandings or proposed transactions between the Company and any of its stockholders, officers, directors, affiliates, or any affiliate thereof.

(b) Section 2.12 of the Schedule of Exceptions sets forth all agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company is a party or by which it is bound (i) that may involve obligations (contingent or otherwise) of, or payments to the Company in excess of, $1,000,000, (ii) that are not terminable by the Company upon 30 days’ or less notice without penalty or premium, (iii) that include provisions materially restricting the development, manufacture or distribution of the Company’s products or services, (iv) that provide indemnification by the Company with respect

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to infringements of proprietary rights, (v) that may involve the research, development, manufacture, testing, distributions, marketing or consulting with respect to any Life Science Product (as defined below), or (vi) the breach of which would have a Material Adverse Effect on the Company (each a “Material Contract” and collectively, the “Material Contracts”). Each Material Contract is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting creditors’ rights generally and by general equitable principles. There has not occurred any material breach, violation or default or any event that, with the lapse of time, the giving of notice or the election of any person, or any combination thereof, would constitute a material breach, violation or default by the Company under any such contract or, to the knowledge of the Company, by any other person to any such contract. The Company has not been notified that any party to any Material Contract intends to cancel, terminate, not renew or exercise an option under any Material Contract, whether in connection with the transactions contemplated hereby or otherwise.

(c) The Company has not (i) declared or paid any dividends or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) made any loans or advances to any person, other than ordinary advances for travel expenses, or (iii) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business.

(d) For the purposes of subsections (b) and (c) above, all liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections.

2.13 Related-Party Transactions. No stockholder (or affiliate thereof), employee, officer, or director of the Company (a “Related Party”) or member of such Related Party’s immediate family, or any corporation, partnership or other entity in which such Related Party is an officer, director or partner, or in which such Related Party has significant ownership interests or otherwise controls, is indebted to the Company, nor is the Company indebted (or committed to make loans or extend or guarantee credit) to any of them. None of such persons has any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a material business relationship, or any firm or corporation that competes with the Company, except that such persons may own stock in (but not exceeding one percent (1%) of the outstanding capital stock of) publicly traded companies that may compete with the Company. Except for this Agreement, the Ancillary Agreements and as set forth on Section 2.13 of the Schedule of Exceptions, no Related Party or member of their immediate family is directly or indirectly interested in any Material Contract with the Company.

2.14 Permits. The Company has all franchises, permits, licenses, regulatory approvals, and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, prospects or financial condition of the Company, and the Company believes it can obtain, without undue

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burden or expense, any similar authority for the conduct of its business as planned to be conducted. The Company is not in default in any material respect under any of, such franchises, permits, licenses, regulatory approvals or other similar authority.

2.15 Environmental and Safety Laws. The Company has not been and is not in violation of any applicable statute, law or regulation relating to the environment or occupational health and safety, and there is no existing condition, situation or set of circumstances which to the Company’s knowledge could reasonably be expected to result in such violation, and no material expenditures are or will be required in order to comply with any such existing statute, law or regulation.

2.16 Manufacturing, Marketing and Development Rights. Except as set forth on Section 2.12 of the Schedule of Exceptions, the Company has not granted rights to manufacture, produce, assemble, license, market, or sell its products to any other person and is not bound by any agreement that affects the Company’s exclusive right to develop, manufacture, assemble, distribute, market or sell its products.

2.17 Disclosure. No certificates made or delivered in connection with this Agreement or the Ancillary Agreements contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements herein or therein not misleading when reviewed along with this Agreement and the Schedule of Exceptions.

2.18 Registration Rights. Except as provided in the Investors’ Rights Agreement, the Company has not granted or agreed to grant any registration rights currently in effect, including piggyback rights, to any person or entity.

2.19 Corporate Documents. Copies of the Restated Certificate, certified by the Secretary of State of the State of Delaware, and Bylaws of the Company, certified by its Secretary, have been delivered to the Investors, are true and completed copies of such instruments as amended to the date of this Agreement and are in full force and effect.

2.20 Title to Property and Assets. Except as set forth on Section 2.20 of the Schedule of Exceptions, the Company owns its property and assets free and clear of all Encumbrances, except such Encumbrances that do not materially impair the Company’s ownership or use of such property or assets. With respect to the property and assets it leases, the Company is in compliance with such leases and holds a valid leasehold interest free of any Encumbrances. The Company does not own any real property.

2.21 Financial Statements. The Company has delivered to each Investor copies of its audited financial statements (balance sheet and income and cash flow statements, including notes thereto) as of December 31, 2013 and for the fiscal year then ended, and its unaudited financial statements (balance sheet and income statement) as at and for the three-month period ended March 31, 2014 (the “Company Financial Statements”). The Company Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles applied on a consistent basis throughout the periods indicated and with each other, except that the unaudited Company Financial Statements may not contain all footnotes required by U.S. generally accepted accounting principles. The Company Financial Statements fairly present the financial condition

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and operating results of the Company as of the dates, and for the periods, indicated therein, subject in the case of the unaudited Company Financial Statements to normal year-end audit adjustments, the effect of which will not, individually or in the aggregate, be materially adverse. Except as set forth in the Company Financial Statements, the Company has no material liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to March 31, 2014 (the “Financial Statement Date”) and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under U.S. generally accepted accounting principles to be reflected in the Company Financial Statements, which, in both cases, individually or in the aggregate, are not material to the financial condition or operating results of the Company. Except as disclosed in the Company Financial Statements, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with U.S. generally accepted accounting principles. There have been no changes in the assets, liabilities, financial condition or operating results of the Company since the Financial Statement Date, except for changes occurring in the ordinary course of business.

2.22 Indebtedness. Section 2.22 of the Schedule of Exceptions sets for a true and complete summary of the indebtedness of the Company, including all indebtedness to be terminated in connection with this Agreement and the transactions contemplated hereby, and a list of each agreement and amendments thereto in respect of all such indebtedness.

2.23 Changes. Since the Financial Statement Date, except as set forth in Section 2.23 of the Schedule of Exceptions, there has not been:

(a) any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the assets, properties, financial condition, operating results, prospects or business of the Company (as such business is presently conducted and as it is proposed to be conducted);

(b) any waiver by the Company of a valuable or material right or claim or of a material debt owed to it;

(c) any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and that is not material to the assets, properties, financial condition, operating results or business of the Company (as such business is presently conducted and as it is proposed to be conducted);

(d) any material change or amendment to a Material Contract or arrangement by which the Company or any of its assets or properties is bound or subject;

(e) any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets;

(f) any resignation or termination of employment of any key employee or officer of the Company (and the Company, to its knowledge, does not know of the impending resignation or termination of employment of any such officer or key employee);

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(g) any (i) grant of any severance or termination pay to (or amendment to any such existing arrangement with) any director, officer or employee of the Company, (ii) entering into of any employment, deferred compensation, supplemental retirement or other similar agreement (or any amendment to any such existing agreement) with any director, officer or employee of the Company, (iii) increase in, or accelerated vesting and/or payment of, benefits under any existing severance or termination pay policies or employment agreements of the Company or (iv) increase in or enhancement of any rights or features related to compensation, bonus or other benefits payable to directors, officers or senior employees of the Company, other than in the ordinary course of business consistent with past practice

(h) receipt of notice that there has been a loss of, or material order cancellation by, any major customer of the Company;

(i) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its material properties or assets, except liens for taxes not yet due or payable and liens that arise in the ordinary course of business and do not materially impair the Company’s ownership or use of such property or assets;

(j) any assignment, lease or other transfer or disposition, or any other agreement or arrangement therefor by the Company of any property or equipment having a value in excess of $100,000, except in the ordinary course of business consistent with past practice;

(k) other than for employment compensation and expenditures contemplated by its operating budget approved by the Board of Directors, any expenditure by the Company (or series of related expenditures) involving more than $100,000 in the aggregate;

(l) any loans or guarantees made by the Company to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;

(m) any declaration, setting aside or payment or other distribution in respect of any of the Company’s capital stock, or any direct or indirect redemption, purchase or other acquisition of any of such stock by the Company;

(n) any Material Adverse Effect or to the Company’s knowledge, any other event or condition of any character that might be reasonably expected to result in a Material Adverse Effect; or

(o) any agreement or commitment by the Company to do any of the things described in this Section 2.23.

2.24 Employee Benefit Plans.

(a) The Schedule of Exceptions contains a list of all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) to which the Company or any person that is, together with the Company, treated as a single employer under Section 414 of the Internal Revenue Code of 1986, as

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amended (the “Code”), or Section 4001(b) of ERISA (each, an “ERISA Affiliate”), is a party, with respect to which the Company or any ERISA Affiliate has any obligation or which are maintained, contributed to or sponsored by the Company or any ERISA Affiliate for the benefit of any current or former employee, officer, director or consultant of the Company or any ERISA Affiliate (each, a “Benefit Plan”).

(b) The Company has furnished the Investors with a true and complete copy of each Benefit Plan (or a written summary of any Benefit Plan that is not in writing) and a true and complete copy of each material document, if any, prepared in connection with each Benefit Plan, including, without limitation, (i) a copy of each trust or other funding arrangement, (ii) each summary plan description and summary of material modifications, (iii) the three most recent annual reports (Form 5500 series and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with each Benefit Plan, (iv) the most recently received Internal Revenue Service determination or opinion letter for each Benefit Plan intended to qualify under Section 401(a) of the Code and (v) the most recently prepared actuarial report and financial statement in connection with each Benefit Plan (if not included in such annual report).

(c) None of the Benefit Plans is subject to Title IV of ERISA or Section 412 of the Code, and neither the Company nor any ERISA Affiliate has ever maintained or contributed to a plan that is subject to Title IV of ERISA or Section 412 of the Code.

(d) Each Benefit Plan is now and always has been operated in all material respects in accordance with its terms and the requirements of all applicable Laws, including (without limitation) ERISA, the Code and the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended through the date hereof (“COBRA”). No action, claim or proceeding is pending or, to the knowledge of the Company, threatened with respect to any Benefit Plan (other than claims for benefits in the ordinary course) and no fact or event exists that could give rise to any such action, claim or proceeding. Each Benefit Plan may be amended, terminated or otherwise discontinued at any time without material liability to the participants, the Investors, the Company or any ERISA Affiliate, other than ordinary administration expenses.

(e) Each Benefit Plan intended to qualify under Section 401(a) of the Code has received a favorable determination or opinion letter from the Internal Revenue Service with respect to its qualified status under the Code, including all amendments to the Code effected by the Tax Reform Act of 1986 and subsequent legislation, the application for such letter was accurate and complete, and nothing has occurred since the date of such letter that would adversely affect the qualified status of such Benefit Plan.

(f) No director or officer or other employee of the Company will become entitled to any retirement, severance or similar benefit or enhanced or accelerated benefit (including any acceleration of vesting or lapse of repurchase rights or obligations with respect to any employee benefit plan subject to ERISA or other benefit under any compensation plan or arrangement of the Company) solely as a result of the transactions contemplated in this Agreement; and no payment made or to be made to any current or former employee or director of the Company, or any of its affiliates by reason of the transactions contemplated hereby (whether alone or in connection with any other event, including, but not limited to, a termination of employment) will constitute an “excess parachute payment” within the meaning of Section 280G of the Code.

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2.25 Tax Returns, Payments and Elections. The Company has filed all tax returns and reports (including information returns and reports) as required by law. These returns and reports are true and correct in all material respects. The Company has timely paid all taxes and other assessments due, except those contested by it in good faith that are listed in the Schedule of Exceptions. The provision for taxes of the Company as shown in the Company Financial Statements is adequate for taxes due or accrued as of the date thereof. The Company has not elected pursuant to the Code to be treated as a Subchapter S corporation or a collapsible corporation pursuant to Section 1362(a) or Section 341(f) of the Code, nor has it made any other elections pursuant to the Code (other than elections that relate solely to methods of accounting, depreciation or amortization) that would have a material effect on the Company, its financial condition, its business as presently conducted or proposed to be conducted or any of its properties or material assets. The Company has never had any tax deficiency proposed or assessed against it and has not executed any waiver of any statute of limitations on the assessment or collection of any tax or governmental charge. None of the Company’s federal income tax returns and none of its state income or franchise tax or sales or use tax returns has ever been audited by governmental authorities. Since December 31, 2013, the Company has not incurred any taxes, assessments or governmental charges other than in the ordinary course of business and the Company has made adequate provisions on its books of account for all taxes, assessments and governmental charges with respect to its business, properties and operations for such period. The Company has withheld or collected from each payment made to each of its employees, the amount of all taxes (including, but not limited to, federal income taxes, Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be withheld or collected therefrom, and has paid the same to the proper tax receiving officers or authorized depositories.

2.26 Insurance. The Company has in full force and effect fire and casualty insurance policies, with extended coverage, sufficient in amount (subject to reasonable deductibles) to allow it to replace any of its properties that might be damaged or destroyed.

2.27 Minute Books. The minute books of the Company provided to the Investors contain a complete summary of all meetings and actions by written consent of directors and stockholders since the time of incorporation and reflect all transactions referred to in such minutes accurately in all material respects.

2.28 Labor Agreements and Actions; Employee Compensation. The Company is not bound by or subject to (and none of its assets or properties is bound by or subject to) any written or oral, express or implied, contract, commitment or arrangement with any labor union, and no labor union has requested or, to the Company’s knowledge, has sought to represent any of the employees, representatives or agents of the Company. There is no strike or other labor dispute involving the Company pending, or to the Company’s knowledge, threatened, that could have a Material Adverse Effect, nor is the Company aware of any labor organization activity involving its employees. The Company is not aware that any officer or key employee, or that any group of key employees, intends to terminate their employment with the Company, nor does the Company

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have a present intention to terminate the employment of any of the foregoing. The employment of each officer and employee of the Company is terminable at the will of the Company. The Company has complied in all material respects with all applicable state and federal equal employment opportunity and other laws related to employment. Except as set forth on Section 2.28 of the Schedule of Exceptions, the Company is not a party to or bound by any currently effective employment contract, deferred compensation agreement, bonus plan, incentive plan, profit sharing plan, retirement agreement, or other employee compensation agreement.

2.29 Section 83(b) Elections. To the Company’s knowledge, all individuals who have purchased unvested shares of the Company’s Common Stock have timely filed elections under Section 83(b) of the Code and any analogous provisions of applicable state tax laws.

2.30 Real Property Holding Company. The Company is not currently, and has not been during the prior five years, a United States real property holding corporation within the meaning of Section 897 of the Code and the Company has filed with the Internal Revenue Service all statements, if any, with its United States income tax returns which are required under Section 1.897-2(h) of the Treasury Regulations.

2.31 Significant Customers and Suppliers. No customer or supplier that was significant to the Company during the period covered by the Company Financial Statements or that has been significant to the Company thereafter, has terminated, materially reduced or threatened to terminate or materially reduce its purchases from or provision of products or services to the Company, as the case may be.

2.32 Product Regulatory Review.

(a) As to each of the products of the Company, including, without limitation, products or compounds currently under research and/or development by the Company, subject to the jurisdiction of the United States Food and Drug Administration (“FDA”) under the Federal Food, Drug and Cosmetic Act and the regulations thereunder (“FDCA”) (each such product, a “Life Science Product”), such Life Science Product is being researched, developed, manufactured, tested, distributed and/or marketed in compliance in all material respects with all applicable requirements under the FDCA and similar laws and regulations applicable to such Life Science Product, including those relating to investigational use, premarket approval, good manufacturing practices, labeling, advertising, record keeping, filing of reports and security. The Schedule of Exceptions lists each Life Science Product of the Company. The Company has not received any notice or other communication from the FDA or any other Federal, state or foreign governmental entity (i) contesting the premarket approval of, the uses of or the labeling and promotion of any Life Science Product or (ii) otherwise alleging any violation by the Company of any law, regulation or other legal provision applicable to a Life Science Product, and to the Company’s knowledge, there is no existing condition, situation or set of circumstances which could reasonably be expected to result in the occurrence of any such events.

(b) Neither the Company, nor any officer, employee or agent of the Company has made an untrue statement of a material fact or fraudulent statement to the FDA or other Federal, state or foreign governmental entity performing similar functions or failed to disclose a material fact required to be disclosed to the FDA or such other Federal, state or foreign governmental entity.

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3. Representations and Warranties of the Investors. Each Investor, severally and not jointly, hereby represents and warrants that:

3.1 Authorization. Such Investor has full power and authority to enter into this Agreement and the Ancillary Agreements, and each such Agreement constitutes its valid and legally binding obligation, enforceable in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (iii) to the extent the indemnification provisions contained in the Investors’ Rights Agreement may be limited by applicable federal or state securities laws.

3.2 Purchase Entirely for Own Account. This Agreement is made with such Investor in reliance upon such Investor’s representation to the Company, which by such Investor’s execution of this Agreement such Investor hereby confirms, that the Shares will be acquired for investment for such Investor’s own account, not as a nominee or agent, and not with a view to the distribution of any part thereof, and that such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, such Investor further represents that such Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Shares.

3.3 Disclosure of Information. Such Investor believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares. Such Investor further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Shares and the business, properties, prospects and financial condition of the Company. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 2 of this Agreement or the right of the Investors to rely thereon.

3.4 Investment Experience. Such Investor is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares. If other than an individual, Investor also represents it has not been organized for the purpose of acquiring the Shares.

3.5 Accredited Investor. Such Investor is an “accredited investor” within the meaning of SEC Rule 501 of Regulation D, as presently in effect.

3.6 Restricted Securities. Such Investor understands that the Shares will be characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the

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Act, only in certain limited circumstances. In this connection, such Investor represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act.

3.7 Disqualification Event. The purchase of the Shares by such Investor will not subject the Company to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Act.

3.8 Further Limitations on Disposition. Without in any way limiting the representations set forth above, such Investor further agrees not to make any disposition of all or any portion of the Shares unless and until:

(a) There is then in effect a Registration Statement under the Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or

(b) (i) Such Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by the Company, such Investor shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company that such disposition will not require registration of such shares under the Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances.

(c) Notwithstanding the provisions of subsections (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by an Investor that is a partnership to a partner of such partnership or a retired partner of such partnership who retires after the date hereof, or to the estate of any such partner or retired partner or the transfer by gift, will or intestate succession of any partner to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or his or her spouse, if the prospective transferee agrees in all such instances in writing to be subject to the terms hereof to the same extent as if he or she were an original Investor hereunder.

3.9 Legends. It is understood that the certificates evidencing the Shares may bear one or all of the following legend:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.

THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A STOCK PURCHASE AGREEMENT, VOTING AGREEMENT, AND INVESTORS’

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RIGHTS AGREEMENT, AS EACH MAY BE AMENDED FROM TIME TO TIME (COPIES OF WHICH MAY BE OBTAINED FROM THE COMPANY WITHOUT COST UPON WRITTEN REQUEST), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES, THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID STOCK PURCHASE AGREEMENT, VOTING AGREEMENT, AND INVESTORS’ RIGHTS AGREEMENT, INCLUDING CERTAIN RESTRICTIONS ON TRANSFER AND OWNERSHIP SET FORTH THEREIN.”

3.10 Exculpation Among Investors. Each Investor acknowledges that it is not relying upon any person, firm or corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. Each Investor agrees that no Investor nor the respective controlling persons, officers, directors, partners, agents, or employees of any Investor shall be liable to any other Investor for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Shares.

3.11 Further Representations by Foreign Investors. If an Investor is not a United States person, such Investor hereby represents that he or she has satisfied himself or herself as to the full observance of the laws of his or her jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Agreement, including (i) the legal requirements within his jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Shares. Such Investor’s subscription and payment for, and his or her continued beneficial ownership of the Shares, will not violate any applicable securities or other laws of his or her jurisdiction.

3.12 Appraisal Rights Waiver. To the extent an Investor was a holder of capital stock of the Company immediately prior to the effective time of the Merger, each such Investor hereby waives, and agrees not to exercise, its right to dissent from the Merger, and the transactions contemplated thereby, and demand appraisal rights under Section 262 of the General Corporation Law of the State of Delaware, a copy of which is attached hereto as Exhibit F. Each such Investor represents and warrants that it is aware of its rights to dissent pursuant to Section 262 of the General Corporation Law of the State of Delaware and has received and had the opportunity to read a copy of such section, which is attached hereto as Exhibit F, and this waiver, agreement, representation and warranty was a condition precedent to the Company permitting such Investor to purchase the Shares.

4. Conditions of Investors’ Obligations at Closing. The obligations of each Investor under this Agreement to purchase the Shares at the Initial Closing or Additional Shares at the Second Closing are subject to the fulfillment, on or before such Closing, of each of the following conditions, unless otherwise waived:

4.1 Representations and Warranties of Company. The representations and warranties of the Company contained in Section 2 shall be true on and as of the Initial Closing and there shall have been no Material Adverse Effect since the Financial Statement Date.

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4.2 Performance. The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before such Closing.

4.3 Compliance Certificate. The President of the Company shall deliver to each Investor at such Closing a certificate stating that the conditions specified in Sections 4.1 and 4.2 have been fulfilled.

4.4 Qualifications. All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall be duly obtained and effective as of such Closing.

4.5 Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at such Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Investors, and they shall have received all such counterpart original and certified or other copies of such documents as they may reasonably request.

4.6 Secretary’s Certificate. The Secretary of the Company shall deliver to each Investor at the Initial Closing a certificate stating that the copies of the Company’s Restated Certificate and Bylaws and Board of Director and stockholder resolutions relating to the sale of the Shares attached thereto are true and complete copies of such documents and resolutions.

4.7 Opinion of Company Counsel. The Investors shall have received from counsel for the Company an opinion, dated as of the Initial Closing, in substantially the form of Exhibit D attached to this Agreement.

4.8 Board of Directors. As of the Initial Closing, the authorized size of the Board of Directors of the Company shall be nine (9) directors, and the Board shall be comprised of Kristine Peterson, Vaughn Kailian, Ittai Harel, John Ryan, Steve LaPorte, Dan Pelak, Paul Queally, Sean Traynor and John Barr.

4.9 Investors’ Rights Agreement. The Company and each Investor shall have entered into the Investors’ Rights Agreement.

4.10 Voting Agreement. The Company, each Investor, and the other stockholders of the Company named as parties thereto shall each have entered into the Voting Agreement.

4.11 Restated Certificate. The Company shall have filed the Restated Certificate with the Secretary of State of Delaware on or prior to the Initial Closing, which shall continue to be in full force and effect as of such Closing.

4.12 Stock Option Plan. The Investors shall have received evidence satisfactory to each of them that the Company shall have pursuant to applicable duly adopted and valid Board of Directors and stockholder actions, approved the 2014 Option Plan in the form attached hereto as Exhibit E.

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4.13 Amendments to Management Rights Letters. On or prior to the Initial Closing, existing Management Rights Letters between the Company and each of (i) WCAS and its affiliates, (ii) MPM Capital and its affiliates, (iii) Pitango Venture Capital and its affiliates and (iv) ONSET VI, L.P., shall have been amended and restated and delivered to the applicable Investor, in each case, in a form satisfactory to WCAS.

4.14 Termination of Existing Agreements. Effective upon the Initial Closing, (i) any prior stockholder agreements, voting agreements, co-sale agreements, or agreements relating to rights of first offer, rights of first refusal or preemptive rights shall have been terminated and shall be of no further force and effect, and (ii) any prior registration rights agreements shall have been terminated and shall be of no further force and effect.

4.15 Consents. The Company shall have obtained all consents or waivers necessary to execute and perform its obligations under the Restated Certificate, this Agreement and the other Ancillary Agreements, to issue the Shares and the Conversion Shares, and to carry out the transactions contemplated hereby and thereby.

5. Conditions of the Company’s Obligations at Closing. The obligations of the Company to each Investor under this Agreement are subject to the fulfillment on or before such Closing of each of the following conditions by that Investor, unless otherwise waived:

5.1 Representations and Warranties. The representations and warranties of the Investors participating in a Closing contained in Section 3 shall be true on and as of such Closing.

5.2 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall be obtained and effective as of such Closing.

5.3 Investors’ Rights Agreement. Each Investor shall have executed and delivered the Investors’ Rights Agreement.

5.4 Voting Agreement. Each Investor and the other stockholders of the Company named as parties thereto shall have executed and delivered the Voting Agreement.

6. Miscellaneous.

6.1 Survival of Representations and Warranties. Unless otherwise set forth in this Agreement, the representations and warranties of the Company and the Investors contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the applicable Closing and shall in no way be affected by any investigation or knowledge of the subject matter thereof made by or on behalf of the Investors or the Company.

6.2 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any Shares). Nothing in this

21

Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

6.3 Governing Law. This Agreement shall be governed by and construed under the laws of the State of New York.

6.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

6.5 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

6.6 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iii) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at the addresses set forth on the signature pages attached hereto (or at such other addresses as shall be specified by notice given in accordance with this Section 6.6).

6.7 Finder’s Fee. Each party represents that it neither is nor will be obligated for any finders’ fee or commission in connection with this transaction. Each Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finders’ fee (and the costs and expenses of defending against such liability or asserted liability) for which such Investor or any of its officers, partners, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless each Investor from any liability for any commission or compensation in the nature of a finders’ fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

6.8 Expenses. The Company and the Investors shall pay for any and all of their own costs and expenses they incur in connection with the transactions contemplated by this Agreement; provided, however, the Company will pay the reasonable fees and documented out-of-pocket expenses of (i) Ropes & Gray LLP, counsel to WCAS, (ii) Wilmer Cutler Pickering Hale and Dorr LLP, counsel for certain other Investors that held shares of Series B Preferred Stock of the Company prior to the effective time of the Merger and (iii) DLA Piper LLP, counsel to Full Succeed International Limited, in an amount not to exceed, in the aggregate, $50,000. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the Ancillary Agreements or the Restated Certificate, the prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

6.9 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular

22

instance and either retroactively or prospectively), only with the written consent of the Company, WCAS and (i) prior to the Initial Closing, the Investors who will hold at least a majority of the Shares that will be outstanding immediately following the Initial Closing, and (ii) on or following the Initial Closing, the Investors holding at least a majority of the then outstanding Shares. Any amendment or waiver effected in accordance with this section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities who enters into a joinder to this Agreement, and the Company.

6.10 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

6.11 Aggregation of Stock. All shares of the Preferred Stock held or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

6.12 Entire Agreement. This Agreement and the documents referred to herein, including the Restated Certificate, constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein.

[Signature Pages Follow]

23

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

COMPANY:

VALERITAS, INC.

By:

Name:

Title:

Address:	750 Route 202 South, Suite 100
	Bridgewater, NJ 08807

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:

WELSH, CARSON, ANDERSON & STOWE XI, L.P.

By:

Name:

Title:

WCAS XI CO-INVESTORS LLC

By:

Name:

Title:

WCAS MANAGEMENT CORPORATION

By:

Name:

Title:

Address:
	c/o Welsh, Carson, Anderson & Stowe
	320 Park Avenue, Suite 2500
	New York, New York 10022
	Attn: Paul B. Queally

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:
FULL SUCCEED INTERNATIONAL LIMITED
By:
	Yu Le, Director

Address:	35/F, No.1333 Lujiazui Ring Road
	Ping An Finance Tower
	Pu Dong, Shanghai, PRC

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:

MPM BIOVENTURES IV-QP, L.P.

BY: MPM BIOVENTURES IV GP LLC,

ITS GENERAL PARTNER

BY: MPM BIOVENTURES IV LLC,

ITS MANAGING MEMBER

By:

Name:

Title:

Address:

MPM BIOVENTURES IV GMBH & CO. BETEILIGUNGS KG

BY: MPM BIOVENTURES IV GP LLC,

IN ITS CAPACITY AS THE MANAGING LIMITED PARTNER

BY: MPM BIOVENTURES IV LLC,

ITS MANAGING MEMBER

By:

Name:

Title:

Address:

MPM ASSET MANAGEMENT INVESTORS BV4 LLC

BY: MPM BIOVENTURES IV LLC,

ITS MANAGER

By:

Name:

Title:

Address:

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:
ONSET VI, L.P.
BY: ONSET VI MANAGEMENT, LLC,
ITS GENERAL PARTNER
By:
Name:
Title:	Managing Director

Address:

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:

PITANGO VENTURE CAPITAL FUND V, L.P.

BY: PITANGO V.C. FUND V, L.P.,

ITS GENERAL PARTNER

BY: PITANGO G.P. CAPITAL HOLDINGS LTD.,

ITS GENERAL PARTNER

By:

Name:

Title:

Address:

PITANGO VENTURE CAPITAL PRINCIPALS FUND V, L.P.

BY: PITANGO V.C. FUND V, L.P.,

ITS GENERAL PARTNER

BY: PITANGO G.P. CAPITAL HOLDINGS LTD.,

ITS GENERAL PARTNER

By:

Name:

Title:

Address:

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:
	AUDA CAPITAL IV CO-INVESTMENT GMBH & CO. KG
	By:	Auda Capital IV Co-Investment Fund GP L.P. its Managing Limited Partner
	By:	Auda Capital IV Co-Investment Fund LLC its General Partner
	By:	Auda Private Equity LLC its Managing Member
	By:
	Name:
	Title:
	AUDA CAPITAL IV CO-INVESTMENT FUND L.P.
	By:	Auda Capital IV Co-Investment Fund GP L.P. its Managing Limited Partner
	By:	Auda Capital IV Co-Investment Fund LLC its General Partner
	By:	Auda Private Equity LLC its Managing Member
	By:
	Name:
	Title:
	AUDA VALERITAS SEGREGATED PORTFOLIO
	a segregated portfolio of Auda Capital IV Co-Investment Fund SPC
	By:
	Name:
	Title:

Address:	c/o Auda International L.P.
	888 Seventh Avenue, 41st Floor
	New York, NY 10151
	Tel.:
	Fax:
	Email:

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:
	TULLIS OPPORTUNITY FUND, L.P.
	By:	Tullis Opportunity Fund, L.L.C.,
		Its general partner
		By:
		Name:	James L. L. Tullis
		Title:	Manager
	TULLIS OPPORTUNITY FUND II, L.P.
	By:	Tullis Opportunity Fund II, L.L.C.,
		Its general partner
		By:
		Name:	James L. L. Tullis
		Title:	Manager

Address:	c/o Tullis-Dickerson & Co., Inc.
	One Stamford Plaza
	263 Tresser Boulevard, 12th Floor
	Stamford, CT 06901
	Attn: James L. L. Tullis
	Fax:
	Email:

PED-VLRTS, LLC

By:

Name:

Title:

Address:

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:

ABINGWORTH BIOVENTURES V LP

BY: ABINGWORTH LLP, ITS MANAGER

By:

Name:

Title:

Address:

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:

HLM VENTURE PARTNERS II, L.P.

BY: HLM VENTURE ASSOCIATES, LLC

ITS GENERAL PARTNER

By:

Name:

Title:

Address:

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:

CHL MEDICAL PARTNERS III, L.P.

BY: CHL MEDICAL PARTNERS III, LLC,

ITS GENERAL PARTNER

By:

Name:

Title:

CHL MEDICAL PARTNERS III SIDE FUND, L.P.

BY: CHL MEDICAL PARTNERS III, LLC,

ITS GENERAL PARTNER

By:

Name:

Title:

Address:

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:

ADVANCED TECHNOLOGY VENTURES VIII, L.P.

BY: ATV ASSOCIATES VIII, L.L.C.

ITS GENERAL PARTNER

By:

Name:

Title:

Address:	500 Boylston Street, Suite 1380
	Boston, MA 02116
	617-850-9700

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:

THE PERMANENTE FEDERATION LLC - SERIES J

By:

Name:

Title:

KAISER PERMANENTE VENTURES, LLC – SERIES A

By:

Name:

Title:

KAISER PERMANENTE VENTURES, LLC – SERIES B

By:

Name:

Title:

Address:

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:

AGATE MEDICAL INVESTMENTS LP

AGATE MEDICAL INVESTMENTS (CAYMAN) LP

By: AGATE R.M. INVESTMENTS AND MEDICAL TECHNOLOGIES LTD

By:

Name:

Title:

Address:

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:

Elizabeth Gordon

Address:

Evan Norton

Address:

Joe Fitzgerald

Address:

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

INVESTORS:

SAINT JOHN’S UNIVERSITY

By:

Name:

Title:

Address:

SIGNATURE PAGE TO VALERITAS, INC.

2014 STOCK PURCHASE AGREEMENT

Schedule I

Schedule of Investors

Investor*	Shares at Initial Closing		Cash Purchase Price at Initial Closing		Shares at Second Closing		Cash Purchase Price at Second Closing		Total Shares		Total Cash Purchase Price
WCAS Valeritas Holdings, LLC		988,470	$	9,884,700		575,837	$	5,758,370		1,564,307	$	15,643,070
WCAS Capital Partners IV, L.P*
Pitango Venture Capital Fund V, L.P.		280,473	$	2,804,730		163,391	$	1,633,910		443,864	$	4,438,640
Pitango Venture Capital Principals Fund V, L.P.*
MPM BioVentures IV-QP, L.P		242,750	$	2,427,500		141,416	$	1,414,160		384,166	$	3,841,660
MPM BioVentures IV GmbH & Co. Beteiligungs KG*		9,352	$	93,520		5,448	$	54,480		14,800	$	148,000
MPM Asset Management Investors BV4 LLC*		6,903	$	69,030		4,021	$	40,210		10,924	$	109,240
Abingworth Bioventures V LP		172,472	$	1,724,720		100,475	$	1,004,750		272,947	$	2,729,470
Auda Valeritas Segregated Portfolio		149,732	$	1,497,320		87,227	$	872,270		236,959	$	2,369,590
Auda Capital IV Co-Investment GmbH & Co. KG*
Auda Capital IV Co-Investment Fund, L.P.*
Advanced Technology Ventures VIII, L.P.		31,594	$	315,940		18,406	$	184,060		50,000	$	500,000
ONSET VI, L.P.		103,601	$	1,036,010		60,354	$	603,540		163,955	$	1,639,550
HLM Venture Partners II, L.P.		86,334	$	863,340		50,295	$	502,950		136,629	$	1,366,290
Agate Medical Investments Cayman LP		6,319	$	63,190		3,681	$	36,810		10,000	$	100,000
CHL Medical Partners III, LP		12,638	$	126,380		7,362	$	73,620		20,000		200,000

CHL Medical Partners III Side Fund, LP*
The Permanente Federation LLC - Series J	34,534	$	345,340	20,118	$	201,180	54,652	$	546,520
Kaiser Permanente Ventures, LLC – Series A*
Kaiser Permanente Ventures, LLC – Series B*
PED-VLRTS, LLC	24,278	$	242,780	14,143	$	141,430	38,421	$	384,210
Elizabeth Gordon	20,218	$	202,180	11,778	$	117,780	31,996	$	319,960
Tullis Opportunity Fund, L.P.	13,785	$	137,850	8,031	$	80,310	21,816	$	218,160
Tullis Opportunity Fund II, L.P.*
Saint John’s University	328	$	3,280	191	$	1,910	519	$	5,190
Evan Norton	274	$	2,740	159	$	1,590	433	$	4,330
Full Succeed International Limited	315,945	$	3,159,450	184,055	$	1,840,550	500,000	$	5,000,000
Joe Fitzgerald	1,269	$	12,690	589	$	5,890	1,858	$	18,580
	2,500,000	$	25,000,000	1,456,388	$	14,563,880	3,956,388	$	39,563,880

* INVESTORS TO PROVIDE ALLOCATIONS AMONG ITS FUNDS

EXHIBIT A

Restated Certificate of Incorporation

EXHIBIT B

Investors’ Rights Agreement

EXHIBIT C

Voting Agreement

EXHIBIT D

Legal Opinion

EXHIBIT E

2014 Stock Plan

EXHIBIT F

SECTION 262 of the DGCL

§ 262 Appraisal rights

(a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder’s shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word “stockholder” means a holder of record of stock in a corporation; the words “stock” and “share” mean and include what is ordinarily meant by those words; and the words “depository receipt” mean a receipt or other instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title and, subject to paragraph (b)(3) of this section, § 251(h) of this title), § 252, § 254, § 255, § 256, § 257, § 258, § 263 or § 264 of this title:

(1) Provided, however, that, except as expressly provided in § 363(b) of this title, no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation, were either: (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title.

(2) Notwithstanding paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263 and 264 of this title to accept for such stock anything except:

a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;

b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;

c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or

d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a., b. and c. of this section.

(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 251(h), § 253 or § 267 of this title is not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.

(4) In the event of an amendment to a corporation’s certificate of incorporation contemplated by § 363(a) of this title, appraisal rights shall be available as contemplated by § 363(b) of this title, and the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as practicable, with the word “amendment” substituted for the words “merger or consolidation,” and the word “corporation” substituted for the words “constituent corporation” and/or “surviving or resulting corporation.”

(c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as is practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or

(2) If the merger or consolidation was approved pursuant to § 228, § 251(h), § 253, or § 267 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice or, in the case of a merger approved pursuant to § 251(h) of this title, within the later of the consummation of the tender or exchange offer contemplated by § 251(h) of this title and 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders

of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice or, in the case of a merger approved pursuant to § 251(h) of this title, later than the later of the consummation of the tender or exchange offer contemplated by § 251(h) of this title and 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.

(e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) of this section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholder’s written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition or request from the corporation the statement described in this subsection.

(f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder.

(h) After the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholder’s certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court’s decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney’s fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder’s demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such

stockholder’s demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger or consolidation, as set forth in subsection (e) of this section.

(l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.

EXHIBIT B

FORM WARRANT

[See Attached]

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION 8 OF THIS WARRANT, DIRECTLY OR INDIRECTLY.

VALERITAS, INC.

COMMON STOCK PURCHASE WARRANT

No. 2014-1 May [    ], 2014        

Warrant to Purchase [—] Shares of Warrant Stock (as defined below) (the “Warrant Share Number”).

Valeritas, Inc. (the “Company”), a Delaware corporation, hereby certifies that, subject to the terms and conditions set forth in this Stock Purchase Warrant (this “Warrant”), CAPITAL ROYALTY PARTNERS II L.P. (the “Holder”), is entitled to purchase the Warrant Share Number of shares of Warrant Stock (as defined below) from the Company at any time or from time to time during the Exercise Period for the Exercise Price (as defined below) per share, subject to adjustments as set forth in Section 4.

This Warrant is issued in connection with that certain Term Loan Agreement, dated May 24, 2013, between the Company, as Borrower, and the Lenders party thereto, as [amended by that certain Amendment to the Term Loan Agreement, dated as of the date hereof] (as amended, the “Term Loan Agreement”). As used herein, the term “Exercise Period” shall mean the period commencing on the date hereof (the “Commencement Date”), and ending at 5:00 p.m. (prevailing local time at the principal executive office of the Company) on the ten (10) year anniversary of the date hereof, provided, however, that this Warrant shall no longer be exercisable and become null and void upon the consummation of any “Termination Event” defined as (a) the consummation of the Company’s sale of its Common Stock or other securities pursuant to a registration statement under the Securities Act of 1933, as amended (other than a registration statement relating either to sale of securities to employees of the Company pursuant to its stock option, stock purchase or similar plan or a SEC Rule 145 transaction) (the “Initial Public Offering”) and (b) the consummation of a Liquidation Event, as such term is defined in the Company’s Fifth Amended and Restated Certificate of Incorporation, as amended from time to time (the “Certificate of Incorporation”). For purposes of this Warrant, any of the transactions described in subsection (b) of this paragraph shall be referred to herein as a “Corporate Transaction”). In the event of a Termination Event, the Company shall notify the Holder at least ten (10) days prior to the consummation of such Termination Event. Capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Term Loan Agreement.

1. Determination of Warrant Stock, Warrant Share Number and Warrant Exercise Price.

(a) Warrant Stock. This Warrant shall represent the right to purchase shares of Common Stock, par value $0.00001 per share, of the Company (the “Warrant Stock”).

(b) Warrant Share Number. This Warrant shall be exercisable for a number of shares of Warrant Stock equal to the Warrant Share Number at the Exercise Price at any time and from time to time from the Commencement Date until the earlier of (i) the consummation of a Termination Event and (ii) the ten (10) year anniversary of the date hereof.

(c) Exercise Price. The exercise price per share of Warrant Stock shall be equal to $0.01 (the “Exercise Price”).

2. Mechanics of Exercise of Warrant. This Warrant may be exercised by the registered holder hereof by surrender to the Company of this Warrant, with the form of subscription agreement attached hereto as Exhibit A duly executed by such Holder, accompanied by payment equal to the aggregate purchase price for the securities for which this Warrant is then being exercised. Upon exercise of the Warrant, Holder shall, upon the request of the Company become a party to any and all agreements between the Company and its stockholders governing the respective class and series of securities for which this Warrant is being exercised, including, without limitation, the Voting Agreement, dated as of May [—], 2014, among the Company and the Stockholders party thereto, as amended from time to time. Notwithstanding the provisions of the first paragraph hereof, if the Holder has not exercised this Warrant prior to the closing of a Corporate Transaction or an Initial Public Offering, this Warrant shall automatically be deemed to be exercised in full in the manner set forth in Section 3(d), without any further action on behalf of the Holder immediately prior to such closing.

3. Delivery of Certificates: Fractional Shares.

(a) Delivery of Certificates. As soon as is practicable after any exercise of this Warrant, the Company, at its own expense, will deliver to the registered holder hereof one or more certificates representing the securities to which such holder is entitled in respect of such exercise, together, in the case of any partial exercise, with a new Warrant representing the unexercised portion hereof.

(b) Fractional Shares. In the event that any exercise of this Warrant would, but for the provisions of this Section 3(b), result in the issuance of any fractional share of capital stock, then in lieu of such fractional share the registered holder hereof will be entitled to cash equal to the fair market value of such fractional share, as determined in good faith by the Company’s Board of Directors.

(c) Payment of Exercise Price. The Exercise Price may be paid at the holder’s election either by cash, certified or official bank check payable to the order of the Company, or by wire transfer to its account.

(d) Cashless Exercise. Notwithstanding the payment provisions set forth above and only in the event of an Initial Public Offering or a Corporate Transaction, in lieu of exercising this Warrant in the manner provided above in Section 2, the Holder may elect to

receive shares of Warrant Stock equal to the value of this Warrant (a “Net Exercise”) by surrender of this Warrant at the principal office of the Company, together with notice of such election, in which event the Company shall issue to Holder a number of shares of Warrant Stock computed using the following formula:

X =Y (A - B)

A

Where	X =	The number of shares of Warrant Stock to be issued to the Holder.
	Y =	The number of shares of Warrant Stock as to which the Warrant is being exercised.
	A =	The Fair Market Value of one share of Warrant Stock (at the date of such calculation).
	B =	The Exercise Price (as adjusted to the date of such calculation).

(e) Exchange Right.

(i) In lieu of exercising this Warrant pursuant to Section 2 or Net Exercising it pursuant to Section 3(d), prior to the closing of a Corporate Transaction, by written notice to the acquiring entity (the “Acquiring Person”) and the Company at least five (5) days before the date of closing of such Corporate Transaction, the Holder may assign, in whole or in part, this Warrant to the Acquiring Person and receive in exchange from the Acquiring Person immediately prior to such closing, without the payment by the Holder of any additional consideration, an amount and type of consideration equal to the amount and type of consideration that would have been payable by the Acquiring Person in the Corporate Transaction with respect to that number of shares of Warrant Stock that would have been issuable had the portion of the Warrant that is so assigned pursuant to this Section 3(e) not been assigned but instead been Net Exercised pursuant to Section 3(d).

(ii) The type of consideration paid by the Acquiring Person for the portion of this Warrant that could be Net Exercised into one share of Warrant Stock pursuant to Section 3(d) shall be the same type of consideration, whether stock, securities or other property, paid for one share of Common Stock in the Corporate Transaction, or if more than one type of consideration is paid for one share of Common Stock in the Corporate Transaction, the same types and on the same relative basis as is paid for one (1) share of common stock in the Corporate Transaction (assuming, in the case of a Corporate Transaction involving the sale or transfer of all or substantially all of its assets, that the consideration received by the Company in is distributed to the stockholders of the Company on the date of closing of such sale or transfer).

4. Certain Adjustments.

(a) Adjustment for Stock Splits and Combinations. If the Company shall from time to time after the date on which this Warrant was first issued (such date being referred to as the “Original Issue Date”) effect a subdivision of the outstanding Warrant Stock, the Exercise Price then in effect immediately before that subdivision shall be proportionately

decreased and the Warrant Share Number then in effect immediately before that subdivision shall be proportionately increased. If the Company shall at any time or from time to time after the Original Issue Date combine the outstanding Warrant Stock, the Exercise Price in effect immediately before the combination shall be proportionately increased and the Warrant Share Number then in effect immediately before the combination shall be proportionately decreased. Any adjustment under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective.

(b) Adjustment for Certain Dividends and Distributions. In the event the Company from time to time after the Commencement Date shall make or issue, or fix a record date for the determination of holders of Warrant Stock entitled to receive, a dividend or other distribution payable in additional Warrant Stock, then and in each such event the Exercise Price then in effect immediately before such event shall be decreased as of the time of such issuance (but not below zero) and the Warrant Share Number then in effect immediately before such event shall be proportionately increased or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Exercise Price then in effect by a fraction:

(i) the numerator of which shall be the total number of Warrant Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

(ii) the denominator of which shall be the total number of Warrant Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of Warrant Stock issuable in payment of such dividend or distribution;

and proportionately increasing the Warrant Share Number then in effect; provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Exercise Price and the Warrant Share Number shall be recomputed accordingly as of the close of business on such record date and thereafter the Exercise Price and the Warrant Share Number shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions.

(c) Adjustment for Reorganization. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the shares of Warrant Stock are converted into or exchanged for securities, cash or other property (other than a Corporate Transaction or a transaction covered by subsections 4(a) or 4(b) (collectively, a “Reorganization”), then, following such Reorganization, the Registered Holder shall receive upon exercise hereof the kind and amount of securities, cash or other property which the Registered Holder would have been entitled to receive pursuant to such Reorganization if such exercise had taken place immediately prior to such Reorganization. In any such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the Registered Holder, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of the Exercise Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities, cash or other property thereafter deliverable upon the exercise of this Warrant.

(d) No Impairment. The Company will not, by amendment of its charter or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment.

5. Notices of Record Date, Etc. In the event from time to time of any proposed or contemplated:

(a) taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase, or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other similar right;

(b) capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company, or any transfer of all or substantially all the assets of the Company to, or any consolidation or merger of the Company with or into, any other person or entity, in each case which constitutes a Corporate Transaction; or

(c) voluntary or involuntary dissolution, liquidation, or winding-up of the Company;

then, and in each such event the Company will send to the registered holder of this Warrant a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution, or right, and stating the amount and character of such dividend, distribution, or right, or (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation, or winding-up is anticipated to take place and the time, if any is to be fixed, as of which the holders of record of any class or series of the Company’s capital stock or other securities will be entitled to exchange such stock or other securities for other securities, cash, and/or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation, or winding-up. Such notice will be mailed at least ten (10) days prior to the earliest date specified in such notice on which any such action or transaction is to be taken or consummated.

6. Reservation of Securities Issuable on Exercise of Warrant. The Company at all times and from time to time will reserve and keep available, solely for issuance and delivery on the exercise of this Warrant, the number of shares of Warrant Stock from time to time issuable upon exercise of this Warrant. If at any time the Company does not have sufficient authorized Common Stock to comply with the foregoing sentence, the Company promptly will take all reasonable steps (including without limitation amending the Certificate of Incorporation) necessary to provide the quantity of securities sufficient to effect the exercise in full of this Warrant.

7. Transfer of Warrant. The Holder may at any time assign to an Eligible Transferee all of its rights and obligations under this Warrant upon providing the Company at least ten (10) days prior written notice of any such assignment; provided, however, that no such assignment shall be made to Borrower, an Affiliate of Borrower, or any employees or directors of Borrower

at any time, and in all cases, subject to evidence of compliance with the Securities Act of 1933, as amended, (the “Securities Act”), and applicable state securities laws. Any transferee that receives this Warrant in a transaction permitted by this Section 7 shall thereafter be deemed the Holder of this Warrant. The Company may treat the person in whose name this Warrant is registered as the holder hereof for all purposes.

8. Compliance with Securities Act. The holder hereof, by acceptance hereof, agrees that this Warrant is being acquired for investment for its own account and not with a view towards its distribution and that the holder hereof will not offer, sell or otherwise dispose of this Warrant or shares of capital stock of the Company issued upon exercise of this Warrant except under circumstances which will not result in a violation of the Securities Act and applicable state securities laws. The holder is, and all permitted transferees shall be, an “Accredited Investor” within the meaning of Rule 501 promulgated under this Securities Act 1933, as amended.

9. Loss or Mutilation. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, if requested in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement or security reasonably satisfactory to the Company, or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Company will execute and deliver, in lieu hereof, a new note of like tenor.

10. Captions. The captions of sections or subsections of this Warrant are for reference only and will not affect the interpretation or construction of this Warrant.

11. Waivers. Subject to the provisions of Section 15, no waiver of any breach or default hereunder by the Company will be valid unless in a writing signed by the registered holder hereof. No waiver of any breach or default hereunder by the registered holder hereof will be valid unless in a writing signed by the Company. No failure or other delay by the registered holder hereof, or the Company, as applicable, in exercising any right, power, or privilege hereunder will be or operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege.

12. Unenforceable Provisions. If any provision of this Warrant is invalid, illegal or unenforceable, the balance of this Warrant shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.

13. Governing Law. This Warrant will be governed by and interpreted and construed in accordance with the internal laws of the State of Delaware (without reference to principles of conflicts or choice of law).

14. No Rights as a Stockholder. Until exercise of this Warrant pursuant to the terms hereof, the Holder shall not have or exercise any rights by virtue hereof as a stockholder of the Company.

15. Legends. This Warrant and all shares of Common Stock issued upon exercise of this Warrant (unless registered under the Securities Act and any applicable state securities laws) shall be stamped or imprinted with a legend in substantially the following form:

“THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION 8 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR INDIRECTLY.”

Said legend shall be removed by the Company, upon the request of the Holder, at such time as the restrictions on the transfer of the applicable security shall have terminated.

16. Joint Action Required. This Warrant is one of several that may be issued pursuant to the Term Loan Agreement (collectively, the “Warrants”). It is the intent of the Company, the Holder and each other Lender holding a Warrant that no Lender may exercise or exchange any Warrant (including but not limited to this Warrant) in whole or in part, nor make any claim or demand or bring any suit or action with respect to any Warrant, in each case unless the Majority Lenders have agreed in writing to so exercise or exchange the Warrants, make such claim or demand, or bring such suit or action (in which case all Lenders holding Warrants shall cooperate so that, as applicable, (i) all Warrants are proportionately exercised or exchanged in the case of exercise or exchange, so that each Lender has the same percentage of its Warrant exercised or exchanged, or (ii) all Lenders holding Warrants shall collectively share in the costs and benefits of any such claim, demand, suit or action (on a pro-rata basis in accordance with their respective number of Warrant Stock purchasable). Accordingly, the Holder hereby agrees not to directly or indirectly exercise or exchange this Warrant or make or bring any such claim, demand, suit or action unless the Majority Lenders have agreed in writing to do so with respect to all Warrants.

17. Amendments and Waivers. Any term of this Warrant may be amended and the observance of any other term hereof may be waived only with the written consent of the Company and the Holder; provided, that the Majority Lenders may agree to amend or waive any term of all Warrants (with such amendment or waiver applying to each Warrant in the same manner), in which case such term of this Warrant shall be so amended or waived, as applicable, without any separate action of Holder. Holder hereby agrees that the Majority Lenders shall have such power to amend or waive terms of this Warrant.

18. Prior Warrant. The Company previously issued to Holder on June 20, 2013 a Common Stock Purchase Warrant to purchase 1,181,819 shares of Common Stock of the Company (the “Prior Warrant”). The Company and the Holder irrevocably agree that effective as of the date hereof, the Prior Warrant is hereby terminated in its entirety and of no further force or effect.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

Executed and delivered under seal on and as of the date first above written.

VALERITAS, INC.

By:

Name:

Title:

Agreed and acknowledged

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
Name:	Charles Tate
Title:	Sole Member
Address for Notices:
1000 Main Street, Suite 2500
Houston, TX 77002
Attn:	General Counsel
Tel.:
Fax:
Email:

SIGNATURE PAGE TO STOCK PURCHASE WARRANT

EXHIBIT A

SUBSCRIPTION FORM

The undersigned, the registered holder of the Warrant, hereby elects to exercise the purchase right represented by such Warrant as follows:

_____	The undersigned hereby elects to purchase                  shares of Warrant Stock (as defined in this Warrant) and herewith makes payment of $         therefor.
_____	The undersigned hereby elects to exercise this Warrant by the Net Exercise method described in Section 3(d) of this Warrant and to receive                  shares of Warrant Stock (as defined in this Warrant).

The undersigned further requests that the certificates representing such shares be issued in the name of and delivered to                      and if such shares shall not include all of the shares issuable under this Warrant, that a new Warrant of like tenor and date be delivered to the undersigned for the shares not issued.

Dated:
	Name of Registered Holder

EX-10

Exhibit 10.5

VALERITAS, INC. 2014 INCENTIVE COMPENSATION PLAN
(2nd Amended and Restated Effective December 8, 2014)

ARTICLE ONE: GENERAL PROVISIONS

I. PURPOSE OF THE PLAN

This Incentive Compensation Plan is intended to promote the interests of Valeritas, Inc., a Delaware corporation, by providing eligible persons in the Corporation’s service with the opportunity to participate in one or more cash or equity incentive compensation programs designed to encourage them to continue their service relationship with the Corporation.

Capitalized terms shall have the meanings assigned to such terms in the attached Appendix.

II. STRUCTURE OF THE PLAN

A. The Plan shall be divided into three separate equity incentive programs:

• the Discretionary Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock or stock appreciation rights tied to the value of such Common Stock,

• the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock pursuant to restricted stock awards, restricted stock units or other stock-based awards which vest upon the completion of a designated service period or the attainment of pre-established performance milestones, or such shares of Common Stock may be issued through direct purchase or as a bonus for services rendered the Corporation (or any Parent or Subsidiary), and

• the Incentive Bonus Program under which eligible persons may, at the discretion of the Plan Administrator, be provided with incentive bonus opportunities through performance unit awards and special cash incentive programs tied to the attainment of pre-established performance milestones.

B. The provisions of Articles One and Five shall apply to all incentive compensation programs under the Plan and shall govern the interests of all persons under the Plan.

III. ADMINISTRATION OF THE PLAN

A. Prior to the Underwriting Date, the Plan shall be administered by the Board. However, any or all administrative functions otherwise exercisable by the Board prior to the Underwriting Date may be delegated to a Committee.

B. Effective on the Underwriting Date, the Primary Committee shall have sole and exclusive authority to administer the Discretionary Grant, Stock Issuance and Incentive Bonus Programs with respect to Section 16 Insiders. Administration of the Discretionary Grant, Stock Issuance and Incentive Bonus Programs with respect to all other persons eligible to participate in those programs may, at the Board’s discretion, be vested in the Primary Committee or a Secondary Board Committee, or the Board may retain the power to administer those programs with respect to all such persons. However, all awards under the Plan to non-employee Board members shall be made by the Primary Committee (or subcommittee thereof). The Primary Committee shall be comprised solely of independent directors, as determined in accordance with the governance standards established by the Stock Exchange on which the Common Stock is at the time primarily traded (the “Independent Directors”). Any Awards made to the members of the Primary Committee must be authorized by a disinterested majority of the Independent Directors.

C. Members of the Committee, Primary Committee or any Secondary Committee shall serve for such period of time as the Board may determine and may be removed by the Board at any time. The Board may also at any time terminate the functions of any Secondary Committee and reassume all powers and authority previously delegated to such committee.

D. Each Plan Administrator shall, within the scope of its administrative functions under the Plan, have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Discretionary Grant, Stock Issuance and Incentive Bonus Programs and to make such determinations under, and issue such interpretations of, the provisions of those programs and any outstanding Awards thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the scope of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Grant, Stock Issuance and Incentive Bonus Programs under its jurisdiction or any Award thereunder.

E. Service on the Committee, Primary Committee or the Secondary Committee shall constitute service as a Board member, and the members of each such committee shall accordingly be entitled to full indemnification and reimbursement as Board members for their service on such committee. No member of the Committee, Primary Committee or the Secondary Committee shall be liable for any act or omission made in good faith with respect to the Plan or any Award made thereunder.

IV. ELIGIBILITY

A. The persons eligible to participate in the Plan are as follows:

(i) Employees,

(ii) non-employee members of the Board or the board of directors of any Parent or Subsidiary, and,

(iii) consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

B. The Plan Administrator shall have full authority to determine, (i) with respect to Awards made under the Discretionary Grant Program, which eligible persons are to receive such Awards, the time or times when those Awards are to be made, the number of shares to be covered by each such Award, the time or times when the Award is to become exercisable, the vesting schedule (if any) applicable to an Award, the maximum term for which such Award is to remain outstanding and the status of a granted option as either an Incentive Option or a Non-Statutory Option, (ii) with respect to Awards made under the Stock Issuance Program, which eligible persons are to receive such Awards, the time or times when the Awards are to be made, the number of shares subject to each such Award, the vesting and issuance schedule (if any) applicable to the shares which are the subject of such Award and the cash consideration (if any) payable for those shares, and (iii) with respect to Awards under the Incentive Bonus Program, which eligible persons are to receive such Awards, the time or times when the Awards are to be made, the performance objectives for each such Award, the amounts payable at designated levels of attained performance, any applicable service vesting requirements, the payout schedule for each such Award and the form (cash or shares of Common Stock) in which the Award is to be settled.

C. The Plan Administrator shall have the absolute discretion to grant options or stock appreciation rights in accordance with the Discretionary Grant Program, to effect stock issuances and other stock-based awards in accordance with the Stock Issuance Program and to grant incentive bonus awards in accordance with the Incentive Bonus Program.

V. STOCK SUBJECT TO THE PLAN

A. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including treasury shares and shares repurchased by the Corporation on the open market. The number of shares of Common Stock reserved for issuance over the term of the Plan shall initially be limited to 1,540,000 shares.

B. The number of shares of Common Stock available for issuance under the Plan shall automatically increase on the first trading day in January each calendar year during the term of the Plan, beginning on the first trading day in January of the first calendar year following the Underwriting Date, by an amount equal to four percent (4%) of the total number of shares of Common Stock outstanding as measured as of the last trading day in the immediately preceding calendar year, but in no event shall any such annual increase exceed 2,400,000 shares.

C. The maximum number of shares of Common Stock that may be issued pursuant to Incentive Options granted under Plan shall not exceed 1,540,000 shares. Such share limitation shall automatically be increased on the first trading day in January each calendar year, beginning on the first trading day in January of the calendar year following the Underwriting Date, by the number of shares of Common Stock added to the share reserve on that day pursuant to the provisions of Section V. B. of this Article One.

D. Effective on the Underwriting Date, each person participating in the Plan shall be subject the following limitations:

• no one person participating in the Plan may receive stock options and stand-alone stock appreciation rights for more than 785,000 shares of Common Stock in the aggregate per calendar year;

• no one person participating in the Plan may receive direct stock issuances (whether vested or unvested) or stock-based awards (other than stock options and stand-alone stock appreciation rights) for more than 520,000 shares of Common Stock in the aggregate per calendar year; and

• for Awards denominated in terms of cash (whether payable in cash, Common Stock or a combination of both) and subject to one or more performance-vesting conditions, the maximum dollar amount for which such Awards may be made to such person in any calendar year shall not exceed 2,500,000 dollars for each calendar year within the applicable performance measurement period, with any such performance period not to exceed five (5) years and with pro-ration based on the foregoing dollar amount in the event of any fractional calendar year included within such performance period.

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E. Shares of Common Stock subject to outstanding Awards made under the Plan shall be available for subsequent issuance under the Plan to the extent those Awards are forfeited or cancelled for any reason prior to the issuance of the shares of Common Stock subject to those Awards. Such shares shall be added back to the number of shares of Common Stock reserved for award and issuance under the Plan as follows:

(i) for each share of Common Stock subject to such an expired, forfeited, cancelled or terminated Award made under the Discretionary Grant Program, one share of Common Stock shall become available for subsequent award and issuance under the Plan,

(ii) for each share of Common Stock subject to a forfeited or cancelled Full Value Award made under the Stock Issuance or Incentive Bonus Program, one share shall become available for subsequent award and issuance, and

(iii) for each unvested share of Common Stock issued under the Discretionary Grant or Stock Issuance Program for cash consideration not less than the Fair Market Value per share of Common Stock on the Award date and subsequently repurchased by the Corporation, at a price per share not greater than the original issue price paid per share, pursuant to the Corporation’s repurchase rights under the Plan, one share shall become available for subsequent award and issuance under the Plan.

F. Should the exercise price of an option under the Plan be paid with shares of Common Stock subject to such option, then the authorized reserve of Common Stock under the Plan shall be reduced by the net number of shares issued under the exercised stock option, and not by the gross number of shares for which that option is exercised. Upon the exercise of any stock appreciation right under the Plan, the share reserve shall be reduced by the net number of shares actually issued by the Corporation upon such exercise, and not the gross number of shares as to which such right is exercised. If shares of Common Stock otherwise issuable under the Plan are withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with the issuance, exercise or vesting of an Award, then the number of shares of Common Stock available for issuance under the Plan shall be reduced by the net number of shares issued, exercised or vesting under such Award, calculated in each instance after any such share withholding.

G. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should the value of outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation or other reorganization (including, without limitation, a Change in Control transaction), then equitable adjustments shall be made by the Plan Administrator to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and class of securities by which the share reserve is to increase automatically each calendar year pursuant to the provisions Article One, Section V. B., (iii) the maximum number and/or class of securities that may be issued pursuant to Incentive Options granted under the Plan, (iv) the maximum number and/or class of securities for which any one person may receive Common Stock-denominated Awards under the Plan per calendar year, (v) the maximum number and/or class of securities for which any one person may receive stock options and stock appreciation rights under the Plan per calendar year, (vi) the maximum number and/or class of securities that may be issued pursuant to Incentive Options granted under the Plan, (vii) the number and/or class of securities and the exercise or base price per share in effect under each outstanding Award under the Discretionary Grant Program, (vii) the number and/or class of securities subject to each outstanding Award under the Stock Issuance Program and the cash consideration (if any) payable per share, (viii) the number and/or class of securities subject to each outstanding Award under the Incentive Bonus Program denominated in shares of Common Stock and (ix) the number and/or class of securities subject to the Corporation’s outstanding repurchase rights under the Plan and the repurchase price payable per share. The adjustments shall be made in such manner as the Plan Administrator deems appropriate in order to prevent the dilution or enlargement of benefits under the Plan and outstanding Awards. The adjustments shall be final, binding and conclusive.

H. Outstanding Awards under the Plan shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

VI. REPRICING PROGRAMS

The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected option holders, the cancellation of any or all outstanding options under the Plan and to grant in substitution therefore new options covering the same or different number of Common Shares but with an exercise price per share based on the Fair Market Value per Common Share on the new option grant date.

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ARTICLE TWO: DISCRETIONARY GRANT PROGRAM

I. OPTION TERMS

Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options.

A. Exercise Price.

1. The exercise price per share shall be fixed by the Plan Administrator; but shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.

2. The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of the documents evidencing the option, be payable in cash or check made payable to the Corporation. Should the Common Shares be publicly traded at the time the option is exercised, then the exercise price may also be paid as follows:

(i) in shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date,

(ii) in shares of Common Stock otherwise issuable under the option but withheld by the Corporation in satisfaction of the exercise price, with such withheld shares to be valued at Fair Market Value on the Exercise Date, or

(iii) to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions to (a) a brokerage firm (reasonably satisfactory to the Corporation for purposes of administering such procedure in compliance with the Corporation’s pre-clearance/pre-notification policies) to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale.

Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

B. Exercise and Term of Options. Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option. However, no option shall have a term in excess of ten (10) years measured from the option grant date.

C. Effect of Termination of Service.

1. The following provisions shall govern the exercise of any options granted pursuant to the Discretionary Grant Program that are outstanding at the time of the Optionee’s cessation of Service or death:

(i) Any option outstanding at the time of the Optionee’s cessation of Service for any reason other than death, Retirement, Permanent Disability and Misconduct shall remain exercisable for such period of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option, but no such option shall be exercisable after the expiration of the option term.

(ii) Any option held by the Optionee at the time of the Optionee’s cessation of Service due to Retirement or Permanent Disability shall remain exercisable until the earlier of (i) the expiration of the twelve (12)-month period following the date of Optionee’s cessation of Service and (ii) the expiration of the option term set forth in the documents evidencing the option.

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(iii) Any option held by the Optionee at the time of the Optionee’s death and exercisable in whole or in part at that time may be subsequently exercised by the personal representative of the Optionee’s estate or by the person or persons to whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance or by the Optionee’s designated beneficiary or beneficiaries of that option. Any such option shall remain so exercisable until the earlier of (i) the expiration of the twelve (12)-month period following the date of Optionee’s death, and (ii) the expiration of the option term set forth in the documents evidencing the option.

(iv) Should the Optionee’s Service be terminated for Misconduct or should the Optionee otherwise engage in Misconduct while holding one or more outstanding options granted under this Article Two, then all of those options shall terminate immediately and cease to be outstanding.

(v) During the applicable post-Service exercise period, the option may not be exercised for more than the number of vested shares for which the option is at the time exercisable. No additional shares shall vest under the option following the Optionee’s cessation of Service, except to the extent (if any) specifically authorized by the Plan Administrator in its sole discretion pursuant to an express written agreement with the Optionee. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any shares for which the option has not been exercised.

2. The Plan Administrator shall have complete discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to:

(i) extend the period of time for which the option is to remain exercisable following the Optionee’s cessation of Service from the limited exercise period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term,

(ii) include an automatic extension provision whereby the specified post-Service exercise period in effect for any option granted under this Article Two shall automatically be extended by an additional period of time equal in duration to any interval within the specified post-Service exercise period during which the exercise of that option or the immediate sale of the shares acquired under such option could not be effected in compliance with applicable federal and state securities laws, but in no event shall such an extension result in the continuation of such option beyond the expiration date of the term of that option, and/or

(iii) permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested had the Optionee continued in Service.

D. Stockholder Rights. The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become a holder of record of the purchased shares.

E. Repurchase Rights. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while such shares are unvested, the Corporation shall have the right to repurchase any or all of those unvested shares at a price per share equal to the lower of (i) the exercise price paid per share or (ii) the Fair Market Value per share of Common Stock at the time of repurchase. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right.

F. First Refusal Rights. Prior to the Underwriting Date, the Corporation shall have the right of first refusal with respect to any proposed disposition by the Optionee (or any successor in interest) of any shares of Common Stock issued under the Option Grant Program. Such right of first refusal shall be exercisable in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right.

G. Transferability of Options. The transferability of options granted under the Plan shall be governed by the following provisions:

(i) Incentive Options: During the lifetime of the Optionee, Incentive Options shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or the laws of inheritance following the Optionee’s death.

(ii) Non-Statutory Options. Non-Statutory Options shall be subject to the same limitation on transfer as Incentive Options, except that the Plan Administrator may structure one or more Non-Statutory Options so that the option may be assigned in whole or in part during the Optionee’s lifetime to one or more Family Members of the Optionee or to a trust established exclusively for the Optionee and/or one or more such Family Members, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant to a domestic relations order. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.

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(iii) Beneficiary Designations. Notwithstanding the foregoing, the Optionee may designate one or more persons as the beneficiary or beneficiaries of his or her outstanding options under this Article Two (whether Incentive Options or Non-Statutory Options), and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding those options. Such beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the option may be exercised following the Optionee’s death.

(iv) Hedging. Prior to the date the Corporation first becomes subject to the reporting requirements of Section 13 or 15(d) of the 1934 Act, outstanding options under the Plan, together with the shares of Common Stock subject to those options during the period prior to exercise, shall not be the subject of any short position, put equivalent position (as such term is defined in Rule 16a-1(h) under the 1934 Act) or call equivalent position (as such term is defined Rule 16a-1(b) of the 1934 Act).

(v) Pledges, Gifts and other Transfers. Except as otherwise provided in subparagraph (i), (ii) or (iii) above, until the date the Corporation first becomes subject to the reporting requirements of Section 13 or 15(d) of the 1934 Act, outstanding options under the Plan, together with the shares of Common Stock subject to those options during the period prior to exercise, shall not be the subject of any pledges, gifts, hypothecations or other transfers, other than pursuant to the Corporation’s repurchase rights or in connection with a Change in Control of the Corporation in which such options shall terminate and cease to be outstanding.

II. INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Five shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options when issued under the Plan shall not be subject to the terms of this Section II.

A. Eligibility. Incentive Options may only be granted to Employees.

B. Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000).

To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted.

C. 10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date, and the option term shall not exceed five (5) years measured from the option grant date.

III. STOCK APPRECIATION RIGHTS

A. Authority. The Plan Administrator shall have full power and authority, exercisable in its sole discretion, to grant stock appreciation rights in accordance with this Section III to selected Optionees or other individuals eligible to receive option grants under the Discretionary Grant Program.

B. Types. Two types of stock appreciation rights shall be authorized for issuance under this Section III: (i) tandem stock appreciation rights (“Tandem Rights”) and (ii) stand-alone stock appreciation rights (“Stand-alone Rights”).

C. Tandem Rights. The following terms and conditions shall govern the grant and exercise of Tandem Rights.

1. One or more Optionees may be granted a Tandem Right, exercisable upon such terms and conditions as the Plan Administrator may establish, to elect between the exercise of the underlying option for shares of Common Stock or the surrender of that option in exchange for a distribution from the Corporation in an amount equal to the excess of (i) the Fair Market Value (on the option surrender date) of the number of shares in which the Optionee is at the time vested under the surrendered option (or surrendered portion thereof) over (ii) the aggregate exercise price payable for such vested shares.

2. No such option surrender shall be effective unless it is approved by the Plan Administrator, either at the time of the actual option surrender or at any earlier time. If the surrender is so approved, then the distribution to which the Optionee shall accordingly become entitled under this Section III may be made in shares of Common Stock valued at Fair Market Value on the option surrender date, in cash or partly in shares and partly in cash, as the Plan Administrator shall in its sole discretion deem appropriate.

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3. If the surrender of an option is not approved by the Plan Administrator, then the Optionee shall retain whatever rights the Optionee had under the surrendered option (or surrendered portion thereof) on the option surrender date and may exercise such rights at any time prior to the later of (i) five (5) business days after the receipt of the rejection notice or (ii) the last day on which the option is otherwise exercisable in accordance with the terms of the instrument evidencing such option, but in no event may such rights be exercised more than ten (10) years after the date of the option grant.

D. Stand-Alone Rights. The following terms and conditions shall govern the grant and exercise of Stand-alone Rights:

1. One or more individuals eligible to participate in the Discretionary Grant Program may be granted a Stand-alone Right not tied to any underlying option under this Discretionary Grant Program. The Stand-alone Right shall relate to a specified number of shares of Common Stock and shall be exercisable upon such terms and conditions as the Plan Administrator may establish. In no event, however, may the Stand-alone Right have a maximum term in excess of ten (10) years measured from the grant date. Upon exercise of the Stand-alone Right, the holder shall be entitled to receive a distribution from the Corporation in an amount equal to the excess of (i) the aggregate Fair Market Value (on the exercise date) of the shares of Common Stock underlying the exercised right over (ii) the aggregate base price in effect for those shares.

2. The number of shares of Common Stock underlying each Stand-alone Right and the base price in effect for those shares shall be determined by the Plan Administrator in its sole discretion at the time the Stand-alone Right is granted. In no event, however, may the base price per share be less than the Fair Market Value per underlying share of Common Stock on the grant date. In the event outstanding Stand-alone Rights are to be assumed in connection with a Change in Control transaction or otherwise continued in effect, the shares of Common Stock underlying each such Stand-alone Right shall be adjusted immediately after such Change in Control so as to apply to the number and class of securities into which those shares of Common Stock would have been converted in consummation of such Change in Control had those shares actually been outstanding at that time. Appropriate adjustments to reflect such Change in Control shall also be made to the base price per share in effect under each outstanding Stand-alone Right, provided the aggregate base price shall remain the same. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor corporation may, in connection with the assumption or continuation of the outstanding Stand-alone Rights under the Discretionary Grant Program, substitute, for the securities underlying those assumed rights, one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in the Change in Control transaction.

3. Stand-alone Rights shall be subject to the same transferability restrictions applicable to Non-Statutory Options and may not be transferred during the holder’s lifetime, except if such assignment is in connection with the holder’s estate plan and is to one or more Family Members of the holder or to a trust established for the holder and/or one or more such Family Members or pursuant to a domestic relations order covering the Stand-alone Right as marital property. In addition, one or more beneficiaries may be designated for an outstanding Stand-alone Right in accordance with substantially the same terms and provisions as set forth in Section I.F of this Article Two.

4. The distribution with respect to an exercised Stand-alone Right may be made in shares of Common Stock valued at Fair Market Value on the exercise date, in cash or partly in shares and partly in cash, as the Plan Administrator shall in its sole discretion deem appropriate.

5. The holder of a Stand-alone Right shall have no stockholder rights with respect to the shares subject to the Stand-alone Right unless and until such person shall have exercised the Stand-alone Right and become a holder of record of the shares of Common Stock issued upon the exercise of such Stand-alone Right.

E. Post-Service Exercise. The provisions governing the exercise of Tandem, and Stand-alone Stock Appreciation Rights following the cessation of the recipient’s Service shall be substantially the same as those set forth in Section I.C of this Article Two for the options granted under the Discretionary Grant Program.

F. Net Counting. Upon the exercise of any Tandem or Stand-alone Right under this Section III, the share reserve under Section V of Article One shall be reduced by the net number of shares actually issued by the Corporation upon such exercise and not by the gross number of shares as to which such right is exercised.

IV. CHANGE IN CONTROL

A. Except as otherwise set forth in the applicable Award agreement, the following provisions shall be in effect in the event of a Change in Control transaction:

1. In the event of a Change in Control, each outstanding option or stock appreciation right under the Discretionary Grant Program shall automatically accelerate so that each such option or stock appreciation right shall, immediately prior to the effective date of that Change in Control, become exercisable as to all the shares of Common Stock at the time subject to such option or stock appreciation right and may be exercised as to any or all of those shares as fully vested shares of Common Stock. However, an outstanding option or stock appreciation right shall not become exercisable on such an accelerated basis

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if and to the extent: (i) the Plan Administrator determines, in its sole discretion, that such option or stock appreciation right is to be assumed by the successor corporation (or parent thereof) or is otherwise to be continued in full force and effect pursuant to the terms of the Change in Control transaction, or (ii) the Plan Administrator determines in its sole discretion that such option or stock appreciation right is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Change in Control on any shares as to which the option or stock appreciation right is not otherwise at that time exercisable and provides for subsequent payout of that spread in accordance with the same exercise/vesting schedule applicable to those shares, but only if such replacement cash program would not result in the treatment of the option or stock appreciation right as an item of deferred compensation subject to Code Section 409A or (iii) the acceleration of such option or stock appreciation right is subject to other limitations imposed by the Plan Administrator at the time of the grant.

2. To the extent the Plan Administrator determines, in its sole discretion, that any option or stock appreciation right outstanding under the Discretionary Grant Program on the date of a Change in Control is not to be assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect or replaced with a cash incentive program in accordance with Section IV.A.1. of this Article Two, the holder of any such option or stock appreciation right shall be entitled to receive, upon consummation of the Change in Control, a lump sum cash payment in an amount equal to the spread, if any, existing on the shares of Common Stock subject to the option or stock appreciation right at the time of the Change in Control over the aggregate exercise or base price in effect for such option or stock appreciation right. The Plan Administrator shall have the authority to determine, in its sole discretion, that any option or stock appreciation right outstanding under the Discretionary Grant Program on the date of such Change in Control that is not to be assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect or replaced with a cash incentive program in accordance with Section IV.A.1. of this Article Two shall be subject to cancellation and termination, without cash payment or other consideration due the award holder, if the Fair Market Value per share of Common Stock on the date of such Change in Control is less than the per share exercise or base price in effect for such option or stock appreciation right.

3. All outstanding repurchase rights under the Discretionary Grant Program shall automatically terminate, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of a Change in Control, except to the extent: (i) the Plan Administrator determines in its sole discretion that those repurchase rights are to be assigned to the successor corporation (or parent thereof) or are otherwise to continue in full force and effect pursuant to the terms of the Change in Control transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.

4. Each option or stock appreciation right which is assumed in connection with a Change in Control or otherwise continued in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Change in Control had those shares actually been outstanding at the time. Appropriate adjustments to reflect such Change in Control shall also be made to (i) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same, (ii) the maximum number and/or class of securities available for issuance over the remaining term of the Plan, (iii) the maximum number and/or class of securities for which any one person may be granted Awards under the Plan per calendar year, (iv) the maximum number and/or class of securities for which Incentive Options may be granted under the Plan, and (v) the number and/or class of securities subject to the Corporation’s outstanding repurchase rights under the Plan and the repurchase price payable per share. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the Plan Administrator may, in its sole discretion, provide in the document evidencing the Change in Control transaction that the successor corporation, in connection with the assumption or continuation of the outstanding options or stock appreciation rights under the Discretionary Grant Program, shall substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control transaction.

B. Immediately following the consummation of the Change in Control, all outstanding options or stock appreciation rights under the Discretionary Grant Program shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction.

C. The Plan Administrator shall have the discretionary authority to structure one or more outstanding options or stock appreciation rights under the Discretionary Grant Program so that those options or stock appreciation rights shall, immediately prior to the effective date of a Change in Control, become exercisable as to all the shares of Common Stock at the time subject to those options or stock appreciation rights and may be exercised as to any or all of those shares as fully vested shares of Common Stock, whether or not those options or stock appreciation rights are to be assumed in the Change in Control transaction or otherwise continued in effect. In addition, the Plan Administrator shall have the discretionary authority to structure one or more of the Corporation’s repurchase rights under the Discretionary Grant Program so that those rights shall immediately terminate upon the consummation of the Change in Control transaction, and the shares subject to those terminated rights shall thereupon vest in full.

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D. The Plan Administrator shall have full power and authority to structure one or more outstanding options or stock appreciation rights under the Discretionary Grant Program so that those options or stock appreciation rights shall become exercisable as to all the shares of Common Stock at the time subject to those options or stock appreciation rights in the event the Optionee’s Service is subsequently terminated by reason of an Involuntary Termination within a designated period following the effective date of any Change in Control transaction in which those options or stock appreciation rights do not otherwise fully accelerate. In addition, the Plan Administrator may structure one or more of the Corporation’s repurchase rights so that those rights shall immediately terminate with respect to any shares held by the Optionee at the time of such Involuntary Termination, and the shares subject to those terminated repurchase rights shall accordingly vest in full at that time.

E. The portion of any Incentive Option accelerated in connection with a Change in Control shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws.

V. FINANCIAL STATEMENTS

In the event there are at any time two thousand (2,000) or more holders of outstanding options under the Plan or five hundred (500) or more holders of outstanding options under the Plan who are not accredited investors, the Corporation shall provide to each such option holder, at the time the outstanding options first become held by five hundred (500) or two thousand (2,000) holders, as applicable, and at successive six (6)-month intervals thereafter, financial statements that meet the requirements of Rule 701(e)(4) under the 1933 Act and that are at the time of distribution not more than one hundred and eighty (180) days old. Such obligation shall continue until such time as the Corporation becomes subject to the reporting requirements of Section 13 or 15(d) of the 1934 Act or (if earlier) no longer relies on the exemption from such reporting requirements provided by Rule 12h-1(f) under the 1934 Act. The Corporation may require that option holders agree to keep the financial information to be provided confidential.

ARTICLE THREE: STOCK ISSUANCE PROGRAM

I. STOCK ISSUANCE TERMS

Shares of Common Stock may be issued under the Stock Issuance Program, either as vested or unvested shares, through direct and immediate issuances without any intervening option grants. Each such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to share right awards, restricted stock units or performance shares which entitle the recipients to receive the shares underlying those Awards upon the attainment of designated performance goals or the satisfaction of specified Service requirements or upon the expiration of a designated time period following the vesting of those awards or units.

A. Issue Price.

1. The issue price per share shall be fixed by the Plan Administrator, but shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the issuance date.

2. Shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance:

(i) cash or check made payable to the Corporation,

(ii) past services rendered to the Corporation (or any Parent or Subsidiary); or

(iii) any other valid consideration under the Delaware General Corporation Law.

B. Transferability. Awards under the Stock Issuance Program shall be transferable by will and by the laws of descent and distribution, and during the lifetime of the recipient, such Awards shall be transferable, by gift or pursuant to a domestic relations order, to a Family Member to the extent and in the manner determined by the Plan Administrator and set forth in the applicable agreement evidencing the Award. Notwithstanding the foregoing, the recipient of an Award under the Stock Issuance Program may designate a beneficiary of the recipient’s Award in the event of the recipient’s death on a beneficiary designation form provided by the Plan Administrator.

C. First Refusal Rights. Prior to the Underwriting Date, the Corporation shall have the right of first refusal with respect to any proposed disposition by the holder of any shares of Common Stock issued under the Stock Issuance Program. Such right of first refusal shall be exercisable in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right.

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D. Vesting Provisions.

1. Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service or upon the attainment of specified performance objectives. The elements of the vesting schedule applicable to any unvested shares of Common Stock issued under the Stock Issuance Program shall be determined by the Plan Administrator and incorporated into the Stock Issuance Agreement. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to restricted stock units or performance shares which entitle the recipients to receive the shares underlying those Awards upon the attainment of designated performance goals or the satisfaction of specified Service requirements or upon the expiration of a designated time period following the vesting of those Awards, including (without limitation) a deferred distribution date following the termination of the Participant’s Service.

2. The Plan Administrator shall also have the discretionary authority, consistent with Code Section 162(m), to structure one or more Awards under the Stock Issuance Program so that the shares of Common Stock subject to those Awards shall vest (or vest and become issuable) upon the achievement of certain pre-established corporate performance objectives based on one or more Performance Goals and measured over the performance period (not to exceed five (5) years) specified by the Plan Administrator at the time of the Award.

3. Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares, spin-off transaction, extraordinary dividend or distribution or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate. Equitable adjustments to reflect each such transaction shall also be made by the Plan Administrator to the repurchase price payable per share by the Corporation for any unvested securities subject to its existing repurchase rights under the Plan, provided the aggregate repurchase price shall in each instance remain the same.

4. The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares, subject to any applicable vesting requirements, including (without limitation) the requirement that any dividends paid on shares subject to performance-vesting conditions shall be held in escrow by the Corporation and shall not vest or actually be paid to the Award holder prior to the time those shares vest. The Participant shall not have any stockholder rights with respect to the shares of Common Stock subject to a restricted stock unit or share right award until that award vests and the shares of Common Stock are actually issued thereunder. However, dividend-equivalent units may be paid or credited, either in cash or in actual or phantom shares of Common Stock, on outstanding restricted stock unit or share right awards, subject to such terms and conditions as the Plan Administrator may deem appropriate; provided, however, that no such dividend-equivalent units relating to restricted stock unit or share right awards subject to performance-vesting conditions shall vest or otherwise become payable prior to the time the underlying award (or portion thereof to which such dividend-equivalents units relate) vests upon the attainment of the applicable performance goals and shall accordingly be subject to cancellation and forfeiture to the same extent as the underlying award.

5. Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent, the Corporation shall repay to the Participant the lower of (i) the cash consideration paid for the surrendered shares or (ii) the Fair Market Value of those shares at the time of cancellation.

6. The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock which would otherwise occur upon the cessation of the Participant’s Service or the non-attainment of the performance objectives applicable to those shares. Any such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives. However, no vesting requirements tied to the attainment of Performance Goals may be waived with respect to Awards which were intended at the time of grant to qualify as performance-based compensation under Code Section 162(m).

7. Outstanding Awards of restricted stock units or performance shares under the Stock Issuance Program shall automatically terminate, and no shares of Common Stock shall actually be issued in satisfaction of those Awards, if the performance goals or Service requirements established for such Awards are not attained or satisfied. The Plan Administrator, however, shall have the discretionary authority to issue vested shares of Common Stock under one or more

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outstanding Awards of restricted stock units or performance shares as to which the designated performance goals or Service requirements have not been attained or satisfied. However, no vesting requirements tied to the attainment of Performance Goals may be waived with respect to Awards which were intended, at the time those Awards were made, to qualify as performance-based compensation under Code Section 162(m).

8. The following additional requirements shall be in effect for any performance shares awarded under this Article Three:

(i) At the end of the performance period, the Plan Administrator shall determine the actual level of attainment for each performance objective and the extent to which the performance shares awarded for that period are to vest and become payable based on the attained performance levels.

(ii) The performance shares which so vest shall be paid as soon as practicable following the end of the performance period, unless such payment is to be deferred for the period specified by the Plan Administrator at the time the performance shares are awarded or the period selected by the Participant in accordance with the applicable requirements of Code Section 409A.

(iii) Performance shares may be paid in (i) cash, (ii) shares of Common Stock or (iii) any combination of cash and shares of Common Stock, as set forth in the applicable Award agreement.

(iv) Performance shares may also be structured so that the shares are convertible into shares of Common Stock, but the rate at which each performance share is to so convert shall be based on the attained level of performance for each applicable performance objective.

II. CHANGE IN CONTROL

A. Except as otherwise set forth in the applicable Award agreement, the following provisions shall be in effect in the event of a Change in Control transaction:

1. Each Award outstanding under the Stock Issuance Program on the effective date of an actual Change in Control transaction may, as determined by the Plan Administrator in its sole discretion, be (i) assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction, or (ii) replaced with a cash incentive program of the successor corporation which preserves the Fair Market Value of the underlying shares of Common Stock at the time of the Change in Control and provides for the subsequent vesting and payment of that value in accordance with the same vesting schedule in effect for those shares at the time of such Change in Control. However, to the extent that the Plan Administrator determines in its sole discretion that any Award outstanding under the Stock Issuance Program on the effective date of such Change in Control Transaction is not to be so assumed, continued or replaced, that Award shall vest in full immediately prior to the effective date of the actual Change in Control transaction and the shares of Common Stock underlying the portion of the Award that vests on such accelerated basis shall be issued in accordance with the applicable Award agreement, unless such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement.

2. All of the Corporation’s outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and all the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Change in Control, except to the extent (i) the Plan Administrator determines in its sole discretion that those repurchase rights are to be assigned to the successor corporation (or parent thereof) or are otherwise to continue in full force and effect pursuant to the terms of the Change in Control transaction, or (ii) such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement.

3. Each outstanding Award under the Stock Issuance Program which is assumed in connection with a Change in Control or otherwise continued in effect shall be adjusted immediately after the consummation of that Change in Control so as to apply to the number and class of securities into which the shares of Common Stock subject to that Award immediately prior to the Change in Control would have been converted in consummation of such Change in Control had those shares actually been outstanding at that time, and appropriate adjustments shall also be made to the cash consideration (if any) payable per share thereunder, provided the aggregate amount of such cash consideration shall remain the same. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the Plan Administrator may, in its sole discretion, provide in the document evidencing the Change in Control transaction that the successor corporation, in connection with the assumption or continuation of the outstanding Awards, shall substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control transaction.

B. The Plan Administrator shall have the discretionary authority to structure one or more unvested Awards under the Stock Issuance Program so that the shares of Common Stock subject to those Awards shall automatically vest (or vest and become issuable) in whole or in part immediately upon the occurrence of a Change in Control or upon the subsequent termination of the Participant’s Service by reason of an Involuntary Termination within a designated period following the effective date of that

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Change in Control transaction. The Plan Administrator’s authority under this Section II.B shall also extend to any Awards under the Stock Issuance Program which are intended to qualify as performance-based compensation under Code Section 162(m), even though the actual vesting of those Awards pursuant to this Section II.B may result in their loss of performance-based status under Code Section 162(m).

III. SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.

ARTICLE FOUR: INCENTIVE BONUS PROGRAM

I. INCENTIVE BONUS TERMS

The Plan Administrator shall have full power and authority to implement one or more of the following incentive bonus programs under the Plan:

(i) cash bonus awards (“Cash Awards”),

(ii) performance unit awards (“Performance Unit Awards”), and

(iii) dividend equivalent rights (“DER Awards”)

A. Cash Awards. The Plan Administrator shall have the discretionary authority under the Plan to make Cash Awards which are to vest in one or more installments over the Participant’s continued Service with the Corporation or upon the attainment of specified performance objectives. Each such Cash Award shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided however, that each such document shall comply with the terms specified below.

1. The elements of the vesting schedule applicable to each Cash Award shall be determined by the Plan Administrator and incorporated into the Incentive Bonus Award agreement.

2. The Plan Administrator shall also have the discretionary authority, consistent with Code Section 162(m), to structure one or more Cash Awards so that those Awards shall vest upon the achievement of pre-established corporate performance objectives based upon one or more Performance Goals measured over the performance period (not to exceed five (5) years) specified by the Plan Administrator at the time of the Award.

3. Outstanding Cash Awards shall automatically terminate, and no cash payment or other consideration shall be due the holders of those Awards, if the performance objectives or Service requirements established for those Awards are not attained or satisfied. The Plan Administrator may in its discretion waive the cancellation and termination of one or more unvested Cash Awards which would otherwise occur upon the cessation of the Participant’s Service or the non-attainment of the performance objectives applicable to those Awards. Any such waiver shall result in the immediate vesting of the Participant’s interest in the Cash Award as to which the waiver applies. Such wavier may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives. However, no vesting requirements tied to the attainment of Performance Goals may be waived with respect to Awards which were intended, at the time those Awards were made, to qualify as performance-based compensation under Code Section 162(m), except in the event of the Participant’s cessation of Service by reason of death or Permanent Disability or as otherwise provided in Section II of this Article Four.

4. Cash Awards which become due and payable following the attainment of the applicable performance objectives or satisfaction of the applicable Service requirement (or the waiver of such goals or Service requirement) may be paid in (i) cash, (ii) shares of Common Stock valued at Fair Market Value on the payment date or (iii) a combination of cash and shares of Common Stock as set forth in the applicable Award agreement.

B. Performance Unit Awards. The Plan Administrator shall have the discretionary authority to make Performance Unit Awards in accordance with the terms of this Article Four. Each such Performance Unit Award shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided however, that each such document shall comply with the terms specified below.

1. A Performance Unit shall represent either (i) a unit with a dollar value tied to the level at which pre-established corporate performance objectives based on one or more Performance Goals are attained or (ii) a participating interest in a special bonus pool tied to the attainment of pre-established corporate performance objectives based on one or more Performance Goals. The

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amount of the bonus pool may vary with the level at which the applicable performance objectives are attained, and the value of each Performance Unit which becomes due and payable upon the attained level of performance shall be determined by dividing the amount of the resulting bonus pool (if any) by the total number of Performance Units issued and outstanding at the completion of the applicable performance period.

2. Performance Units may also be structured to include a Service requirement which the Participant must satisfy following the completion of the performance period in order to vest in the Performance Units awarded with respect to that performance period.

3. Performance Units which become due and payable following the attainment of the applicable performance objectives and the satisfaction of any applicable Service requirement may be paid in (i) cash, (ii) shares of Common Stock valued at Fair Market Value on the payment date or (iii) a combination of cash and shares of Common Stock, as set forth in the applicable Award agreement.

C. DER Awards. The Plan Administrator shall have the discretionary authority to make DER Awards in accordance with the terms of this Article Four. Each such DER Award shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided however, that each such document shall comply with the terms specified below.

1. The DER Awards may be made as stand-alone awards or in tandem with other Awards made under the Plan. The term of each such DER Award shall be established by the Plan Administrator at the time of grant, but no DER Award shall have a term in excess of ten (10) years.

2. Each DER shall represent the right to receive the economic equivalent of each dividend or distribution, whether in cash, securities or other property (other than shares of Common Stock), which is made per issued and outstanding share of Common Stock during the term the DER remains outstanding. A special account on the books of the Corporation shall be maintained for each Participant to whom a DER Award is made, and that account shall be credited per DER with each such dividend or distribution made per issued and outstanding share of Common Stock during the term of that DER remains outstanding.

3. Payment of the amounts credited to such book account may be made to the Participant either concurrently with the actual dividend or distribution made per issued and outstanding share of Common Stock or may be deferred for a period specified by the Plan Administrator at the time the DER Award is made or selected by the Participant in accordance with the requirements of Code Section 409A. In no event, however, shall any DER Award made with respect to an Award subject to performance-vesting conditions under the Stock Issuance or Incentive Bonus Program vest or become payable prior to the vesting of that Award (or the portion thereof to which the DER Award relates) upon the attainment of the applicable performance goals and shall accordingly be subject to cancellation and forfeiture to the same extent as the underlying Award in the event those performance conditions are not attained.

4. Payment may be paid in (i) cash, (ii) shares of Common Stock or (iii) a combination of cash and shares of Common Stock, as set forth in the applicable Award agreement. If payment is to be made in the form of Common Stock, the number of shares of Common Stock into which the cash dividend or distribution amounts are to be converted for purposes of the Participant’s book account may be based on the Fair Market Value per share of Common Stock on the date of conversion, a prior date or an average of the Fair Market Value per share of Common Stock over a designated period, as set forth in the applicable Award agreement.

5. The Plan Administrator shall also have the discretionary authority, consistent with Code Section 162(m), to structure one or more DER Awards so that those Awards shall vest only after the achievement of pre-established corporate performance objectives based upon one or more Performance Goals measured over the performance period (not to exceed five (5) years) specified by the Plan Administrator at the time the Award is made.

II. CHANGE IN CONTROL

A. The Plan Administrator shall have the discretionary authority to structure one or more Awards under the Incentive Bonus Program so that those Awards shall automatically vest in whole or in part immediately prior to the effective date of an actual Change in Control transaction or upon the subsequent termination of the Participant’s Service by reason of an Involuntary Termination within a designated period following the effective date of such Change in Control. To the extent any such Award is, at the time of such Change in Control, subject to a performance-vesting condition tied to the attainment of one or more specified performance goals, then that performance vesting condition shall automatically be cancelled on the effective date of such Change in Control, and such Award shall thereupon be converted into a Service-vesting Award that will vest upon the completion of a Service period co-terminous with the portion of the performance period (and any subsequent Service vesting component that was originally part of that Award) remaining at the time of the Change in Control.

B. The Plan Administrator’s authority under Section II.A above shall also extend to any Award under the Incentive Bonus Program intended to qualify as performance-based compensation under Code Section 162(m), even though the automatic vesting of that Award may result in the loss of performance-based status under Code Section 162(m).

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ARTICLE FIVE: MISCELLANEOUS

I. DEFERRED COMPENSATION

A. The Plan Administrator may, in its sole discretion, structure one or more awards under the Stock Issuance Program so that the Participants may be provided with an election to defer the compensation associated with those awards for federal income tax purposes. Any such deferral opportunity shall comply with all applicable requirements of Code Section 409A.

B. To the extent the Corporation maintains one or more separate non-qualified deferred compensation arrangements which allow the participants the opportunity to make notional investments of their deferred account balances in shares of Common Stock, the Plan Administrator may authorize the share reserve under the Plan to serve as the source of any shares of Common Stock that become payable under those deferred compensation arrangements. In such event, the share reserve under the Plan shall be reduced on a share-for-share basis for each share of Common Stock issued under the Plan in settlement of the deferred compensation owed under those separate arrangements.

C. To the extent there is any ambiguity as to whether any provision of any award made under the Plan that is deemed to constitute a deferred compensation arrangement under Code Section 409A would otherwise contravene one or more requirements or limitations of such Code Section 409A and the Treasury Regulations thereunder, such provision shall be interpreted and applied in a manner that complies with the applicable requirements of Code Section 409A and the Treasury Regulations thereunder.

II. TAX WITHHOLDING

A. The Corporation’s obligation to deliver shares of Common Stock upon the issuance, exercise or vesting of an Award under the Plan shall be subject to the satisfaction of all applicable income and employment tax withholding requirements.

B. The Plan Administrator may, in its discretion, provide any or all holders of Non-Statutory Options, stock appreciation rights, restricted stock units or any other share right awards pursuant to which vested shares of Common Stock are to be issued under the Plan and any or all Participants to whom vested or unvested shares of Common Stock are issued in a direct issuance under the Stock Issuance Program with the right to use shares of Common Stock in satisfaction of all or part of the Withholding Taxes to which such holders may become subject in connection with the exercise of their options or stock appreciation rights, the issuance to them of vested shares or the subsequent vesting of unvested shares issued to them. Such right may be provided to any such holder in either or both of the following formats:

Stock Withholding: The election to have the Corporation withhold, from the shares of Common Stock otherwise issuable upon the exercise of such Non-Statutory Option or stock appreciation right or upon the issuance of fully-vested shares, a portion of those shares with an aggregate Fair Market Value equal to the percentage of the Withholding Taxes (not to exceed one hundred percent (100%)) designated by the holder. The shares of Common Stock so withheld shall reduce the number of shares of Common Stock authorized for issuance under the Plan.

Stock Delivery: The election to deliver to the Corporation, at the time the Non-Statutory Option or stock appreciation right is exercised, the vested shares are issued or the unvested shares subsequently vest, one or more shares of Common Stock previously acquired by such holder (other than in connection with the exercise, share issuance or share vesting triggering the Withholding Taxes) with an aggregate Fair Market Value equal to the percentage of the Withholding Taxes (not to exceed one hundred percent (100%)) designated by the holder. The shares of Common Stock so delivered shall neither reduce the number of shares of Common Stock authorized for issuance under the Plan nor be added to the shares of Common Stock authorized for issuance under the Plan

III. ASSUMPTION OR SUBSTITUTION OF OPTIONS

A. The shares of Common Stock reserved for issuance under the Plan may, in the sole discretion of the Plan Administrator, be used to fund one or more shares of Common Stock issuable upon the exercise of (i) any Code Section 422 incentive stock option originally granted by a corporation or other entity acquired by the Corporation (or any Parent or Subsidiary), whether by merger or asset or stock sale, and assumed by the Corporation in connection with that acquisition or (ii) any Incentive Option granted under this Plan in substitution for such incentive stock option of the acquired entity. Any such assumption or substitution of options shall not be deemed to contravene the option exercise price requirements of Section I.A of Article Two, even if the exercise price per share of Common Stock under the assumed or substituted option is less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the date such assumption or substitution is effected, provided all of the following requirements are satisfied:

(i) The excess of the aggregate Fair Market Value of the shares of Common Stock subject to the assumed or substituted option immediately after the assumption or substitution over the aggregate exercise price in effect for those shares is not greater than the excess of the aggregate fair market value of the shares of stock subject to the option immediately prior to such assumption or substitution over the aggregate exercise price payable for those shares.

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(ii) The ratio of the exercise price to the Fair Market Value per share of Common Stock subject to the assumed or substituted option immediately after such assumption or substitution is no more favorable to the Optionee than the ratio of the exercise price to the fair market value per share immediately prior to such assumption or substitution.

(iii) The assumed or substituted option does not provide the Optionee with any additional benefits the Optionee did not otherwise have under the option immediately prior to the assumption or substitution.

(iv) In the case of a substitution, the option granted by the acquired entity must be cancelled at the time of such substitution, and the Optionee must have no further rights under that cancelled option.

IV. SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.

V. EFFECTIVE DATE AND TERM OF THE PLAN

A. The Plan became effective on the Plan Effective Date, and was approved by the Corporation’s stockholders on June 20, 2014. The Plan was amended and restated effective September 11, 2014 to increase the number of shares of Common Stock reserved for issuance over the term of the Plan by 28,170 shares, from 1,305,830 shares to 1,334,000 shares, and such share increase was approved by the Corporation’s stockholders on September 11, 2014. The Plan was amended and restated effective December 8, 2014 to increase the number of shares of Common Stock reserved for issuance over the term of the Plan by 206,000 shares, from 1,334,000 shares to 1,540,000 shares, subject to the approval of the Corporation’s stockholders within twelve months. Such share increase was approved by the Corporation’s stockholders on December 8, 2014.

B. The Plan shall terminate upon the earliest to occur of (i) June 9, 2024, (ii) the date on which all shares available for issuance under the Plan shall have been issued as fully vested shares or (iii) the termination of all outstanding Awards in connection with a Change in Control. Should the Plan terminate on June 9, 2024, then all Awards outstanding at that time shall continue to have force and effect in accordance with the provisions of the documents evidencing those Awards.

VI. AMENDMENT OF THE PLAN

A. The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, no such amendment or modification shall adversely affect the rights and obligations with respect to Awards at the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification. In addition, amendments to the Plan will be subject to stockholder approval to the extent required under applicable law or regulation or pursuant to the listing standards of the Stock Exchange on which the Common Stock is at the time primarily traded, and no amendment that would reduce or limit the scope of the prohibition on repricing programs set forth in Section V of Article Two or otherwise eliminated such prohibition shall be effective unless approved by the stockholders.

B. The Primary Committee of the Board shall have the discretionary authority to adopt and implement from time to time such addenda or subplans to the Plan as it may deem necessary in order to bring the Plan into compliance with applicable laws and regulations of any foreign jurisdictions in which grants or awards are to be made under the Plan and/or to obtain favorable tax treatment in those foreign jurisdictions for the individuals to whom the grants or awards are made.

C. Awards may be made under the Plan that involve shares of Common Stock in excess of the number of shares then available for issuance under the Plan, provided no shares shall actually be issued pursuant to those Awards until the number of shares of Common Stock available for issuance under the Plan is sufficiently increased by stockholder approval of an amendment of the Plan authorizing such increase. If stockholder approval is required and is not obtained within twelve (12) months after the date the first excess Award is made, then all Awards granted on the basis of such excess shares shall terminate and cease to be outstanding.

D. The provisions of the Plan and the outstanding Awards under the Plan shall, in the event of any ambiguity, be construed, applied and interpreted in a manner so as to ensure that all Awards and Award agreements provided to Optionees or Participants who are subject to U.S. income taxation either qualify for an exemption from the requirements of Section 409A of the Code or comply with those requirements; provided, however, that the Corporation shall not make any representations that any Awards made under the Plan will in fact be exempt from the requirements of Section 409A of the Code or otherwise comply with those requirements, and each Optionee and Participant shall accordingly be solely responsible for any taxes, penalties or other amounts which may become payable with respect to his or her Awards by reason of Section 409A of the Code.

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VII. USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes.

VIII. REGULATORY APPROVALS

A. The implementation of the Plan, the grant of any Award and the issuance of shares of Common Stock in connection with the issuance, exercise or vesting of any Award made under the Plan shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the Awards made under the Plan and the shares of Common Stock issuable pursuant to those Awards.

B. No shares of Common Stock or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of applicable securities laws.

IX. NO EMPLOYMENT/SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person’s Service at any time for any reason, with or without cause.

X. RECOUPMENT

Optionees and Participants shall be subject to any clawback, recoupment or other similar policy adopted by the Board as in effect from time to time, and Awards and any cash, shares of Common Stock or other property or amounts due, paid or issued to the holder of an Award shall be subject to the terms of such policy, as in effect from time to time.

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APPENDIX

The following definitions shall be in effect under the Plan:

A. Award shall mean any of the following awards authorized for issuance or grant under the Plan: stock options, stock appreciation rights, direct stock issuances, restricted stock or restricted stock unit awards, performance shares, performance units, dividend-equivalent rights and cash incentive awards.

B. Board shall mean the Corporation’s Board of Directors.

C. Change in Control shall have the meaning assigned to such term in the Award agreement for the particular Award or in any other agreement incorporated by reference into the Award agreement for purposes of defining such term, and in the absence of such a Change in Control definition shall mean a change in ownership or control of the Corporation effected through any of the following transactions:

(i) the closing of a merger, consolidation or other reorganization approved by the Corporation’s stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction,

(ii) the closing of a stockholder-approved sale, transfer or other disposition (including in whole or in part through one or more licensing arrangements) of all or substantially all of the Corporation’s assets,

(iii) the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Corporation) acquires directly or indirectly beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation’s securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation’s existing stockholders, or

(iv) a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

In no event shall any public offering of the Company’s securities be deemed to constitute a Change in Control.

D. Code shall mean the Internal Revenue Code of 1986, as amended.

E. Committee shall mean a committee of two (2) or more Board members appointed by the Board to administer the Plan with respect to one or more administrative functions prior to the Underwriting Date.

F. Common Stock shall mean the Corporation’s common stock.

G. Corporation shall mean Valeritas, Inc., a Delaware corporation, and any corporate successor to all or substantially all of the assets or voting stock of Valeritas, Inc. which has by appropriate action assumed the Plan.

H. Discretionary Grant Program shall mean the discretionary grant program in effect under Article Two of the Plan pursuant to which stock options and stock appreciation rights may be granted to one or more eligible individuals.

I. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary, whether now existing or subsequently established), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

J. Exercise Date shall mean the date on which the Corporation shall have received written notice of the option exercise.

K. Fair Market Value per Common Share on any relevant date shall be determined in accordance with the following provisions:

(i) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value per share of Common Stock on any relevant date shall be the closing selling price per share of Common Stock at the close of regular trading hours (i.e., before after-hours trading begins) on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such

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price is reported by the National Association of Securities Dealers (if primarily traded on the Nasdaq Global or Global Select Market) or as officially quoted in the composite tape of transactions on any other Stock Exchange on which the Corporation’s common stock is then primarily traded. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

(ii) If the Common Stock is not at the time listed on any Stock Exchange, then the Fair Market Value shall be determined by the Plan Administrator through the reasonable application of a reasonable valuation method that takes into account the applicable valuation factors set forth in the Treasury Regulations issued under Section 409A of the Code; provided, however, that with respect to an Incentive Option, such Fair Market Value shall be determined in accordance with the standards of Section 422 of the Code and the applicable Treasury Regulations thereunder.

L. Family Member means, with respect to a particular Optionee or Participant, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law.

M. Full Value Award means any of the following Awards made under the Stock Issuance or Incentive Bonus Programs that are settled in shares of Common Stock: restricted stock awards (unless issued for cash consideration equal to the Fair Market Value of the shares of Common Stock on the award date), restricted stock unit awards, performance shares, performance units, cash incentive awards and any other Awards under the Plan other than (i) stock options and stock appreciation rights issued under the Discretionary Grant Program and (ii) dividend equivalent rights under the Incentive Bonus Program.

N. Incentive Bonus Program shall mean the incentive bonus program in effect under Article Four of the Plan.

O. Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

P. Involuntary Termination shall have the meaning assigned to such term in the Award agreement for the particular Award or in any other agreement incorporated by reference into the Award agreement for purposes of defining such term. In the absence of such an Involuntary Termination definition, such term shall mean the termination of the Service of any individual which occurs by reason of:

(i) such individual’s involuntary dismissal or discharge by the Corporation (or any Parent or Subsidiary) for reasons other than Misconduct, or

(ii) such individual’s voluntary resignation following (A) a change in his or her position with the Corporation (or any Parent or Subsidiary) which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected by the Corporation (or any Parent or Subsidiary) without the individual’s consent.

Q. Misconduct shall have the meaning assigned to such term in the Award agreement for the particular Award or in any other agreement incorporated by reference into the Award agreement for purposes of defining such term, and in the absence of such, Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan, to constitute grounds for termination for Misconduct.

R. 1933 Act shall mean the Securities Act of 1933, as amended.

S. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.

T. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

U. Optionee shall mean any person to whom an option is granted under the Discretionary Grant Program.

V. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

W. Participant shall mean any person who is issued (i) shares of Common Stock, restricted stock units, performance shares, performance units or other stock-based awards under the Stock Issuance Program or (ii) an incentive bonus award under the Incentive Bonus Program.

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X. Performance Goals shall mean any of the following performance criteria upon which the vesting of one or more Awards under the Plan may be based: (i) revenue, organic revenue, net sales, or new-product revenue or net sales, (ii) achievement of specified milestones in the discovery and development of the Corporation’s technology or of one or more of the Corporation’s products, (iii) achievement of specified milestones in the commercialization of one or more of the Corporation’s products, (iv) achievement of specified milestones in the manufacturing of one or more of the Corporation’s products, (v) expense targets, (vi) share price, (vii) total shareholder return, (viii) earnings per share, (ix) operating margin, (x) gross margin, (xi) return measures (including, but not limited to, return on assets, capital, equity, or sales), (xii) productivity ratios, (xiii) operating income, (xiv) net operating profit, (xv) net earnings or net income (before or after taxes), (xvi) cash flow (including, but not limited to, operating cash flow, free cash flow and cash flow return on capital), (xvii) earnings before or after interest, taxes, depreciation, amortization and/or stock-based compensation expense, (xviii) economic value added, (xix) market share, (xx) working capital targets, (xxi) achievement of specified milestones relating to corporate partnerships, collaborations, license transactions, distribution arrangements, mergers, acquisitions, dispositions or similar business transactions, and (xxii) employee retention and recruiting and human resources management. In addition, such performance goals may be based upon the attainment of specified levels of the Corporation’s performance under one or more of the measures described above relative to the performance of other entities and may also be based on the performance of any of the Corporation’s business units or divisions or any Parent or Subsidiary. Performance goals may include a minimum threshold level of performance below which no award will be earned, levels of performance at which specified portions of an award will be earned and a maximum level of performance at which an award will be fully earned. Each applicable performance goal may be structured at the time of the Award to provide for appropriate adjustments or exclusions for one or more of the following items: (A) asset impairments or write-downs; (B) litigation or governmental investigation expenses and any judgments, verdicts and settlements in connection therewith; (C) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; (D) accruals for reorganization and restructuring programs; (E) any extraordinary or nonrecurring items; (F) items of income, gain, loss or expense attributable to the operations of any business acquired by the Corporation or costs and expenses incurred in connection with mergers and acquisitions; (G) items of income, gain, loss or expense attributable to one or more business operations divested by the Corporation or the gain or loss realized upon the sale of any such business the assets thereof, (H) accruals for bonus or incentive compensation costs and expenses associated with cash-based awards made under the Plan or other bonus or incentive compensation plans of the Corporation, and (I) the impact of foreign currency fluctuations or changes in exchange rates.

Y. Permanent Disability or Permanently Disabled have the meaning assigned to such term in the Award agreement for the particular Award or in any other agreement incorporated by reference into the Award agreement for purposes of defining such term, and in the absence of such a definition shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more.

Z. Plan shall mean the Corporation’s 2014 Incentive Compensation Plan as set forth in this document and as subsequently amended or restated from time to time.

AA. Plan Administrator shall mean the particular entity, whether the Committee, Primary Committee, Board or Secondary Committee, which is authorized to administer the Discretionary Grant, Stock Issuance and Incentive Bonus Programs with respect to one or more classes of eligible persons, to the extent such entity is carrying out its administrative functions under those programs with respect to the persons under its jurisdiction.

BB. Plan Effective Date shall mean June 20, 2014, the date that the Plan was adopted by the Board.

CC. Primary Committee shall mean the committee of two (2) or more non-employee Board members appointed by the Board to administer the Discretionary Grant, Stock Issuance and Incentive Bonus Programs with respect to Section 16 Insiders.

DD. Retirement shall have the meaning assigned to such term in the Award agreement for the particular Award or in any other agreement incorporated by reference into the Award agreement for purposes of defining such term. In the absence of such a Retirement definition, such term shall mean the Award holder’s cessation of Service after attaining age sixty (60) with at least five (5) completed years of Service to the Corporation.

EE. Secondary Committee shall mean a committee of one or more Board members appointed by the Board to administer the Discretionary Grant, Stock Issuance and Incentive Bonus Programs with respect to eligible persons other than Section 16 Insiders.

FF. Section 16 Insider shall mean an officer or director of the Corporation subject to the short-swing profit liabilities of Section 16 of the 1934 Act.

GG. Service shall mean the performance of services for the Corporation (or any Parent or Subsidiary, whether now existing or subsequently established) by a person in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant or stock issuance. For purposes of the Plan, an Optionee or Participant shall be deemed to cease Service immediately upon the occurrence of the either of the following events: (i) the Optionee or Participant no longer performs services in any of the foregoing capacities for the Corporation or any Parent or Subsidiary or (ii) the entity for which the Optionee or Participant

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is performing such services ceases to remain a Parent or Subsidiary of the Corporation, even though the Optionee or Participant may subsequently continue to perform services for that entity. Service shall not be deemed to cease during a period of military leave, sick leave or other personal leave approved by the Corporation; provided, however, that should such leave of absence exceed three (3) months, then for purposes of determining the period within which an Incentive Option may be exercised as such under the federal tax laws, the Optionee’s Service shall be deemed to cease on the first day immediately following the expiration of such three (3)-month period, unless Optionee is provided with the right to return to Service following such leave either by statute or by written contract. Except to the extent otherwise required by law or expressly authorized by the Plan Administrator or by the Corporation’s written policy on leaves of absence, no Service credit shall be given for vesting purposes for any period the Optionee or Participant is on a leave of absence.

HH. Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

II. Stock Issuance Agreement shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program.

JJ. Stock Issuance Program shall mean the stock issuance program in effect under Article Three of the Plan.

KK. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

LL. 10% Stockholder shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary).

MM. Underwriting Agreement shall mean the agreement between the Corporation and the underwriter or underwriters managing the initial public offering of the Common Stock.

NN. Underwriting Date shall mean the date on which the Underwriting Agreement is executed and priced in connection with the initial public offering of the Common Stock.

OO. Withholding Taxes shall mean the applicable federal and state income and employment withholding taxes to which the holder of an Award under the Plan may become subject in connection with the issuance, exercise, vesting or settlement of that Award.

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Valeritas, Inc. 2014 INCENTIVE COMPENSATION PLAN Notice of Grant  

Notice is hereby given of the following option grant (the “Option”) to purchase shares of the Common Stock of Valeritas, Inc. (the “Corporation”):

Optionee:
Grant Date:	July 8. 2014
Vesting Commencement Date:	July 8, 2014
Exercise Price per share: $	$8.57
Number of Option Shares:
Expiration Date:	July 8, 2024
Type of Option:	Incentive Stock Option

Exercise Schedule: The Option shall become exercisable for twenty-five percent (25%) of the Option Shares upon Optionee’s completion of one (1) year of Service measured from the Vesting Commencement Date and shall become exercisable for the balance of the Option Shares in a series of thirty-six (36) successive equal monthly installments upon Optionee’s completion of each additional month of Service over the thirty-six (36) month period measured from the first anniversary of the Vesting Commencement Date. In no event shall the Option become exercisable for any additional Option Shares after Optionee’s cessation of Service.

Optionee understands and agrees that the Option is granted subject to and in accordance with the terms of the Valeritas, Inc. 2014 Incentive Compensation Plan (the “Plan”). Optionee further agrees to be bound by the terms of the Plan, the terms of the Option as set forth in the Stock Option Agreement attached hereto as Exhibit A and the Code Section 409A Waiver and Release attached hereto as Exhibit B. Optionee understands that any Option Shares purchased under the Option will be subject to the terms set forth in the Stock Purchase Agreement attached hereto as Exhibit C. Optionee hereby acknowledges receipt of a copy of the Plan in the form attached hereto as Exhibit D.

Employment at Will. Nothing in this Notice or in the attached Stock Option Agreement or in the Plan shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service at any time for any reason, with or without cause.

Definitions. All capitalized terms in this Notice shall have the meaning assigned to them in this Notice, in the attached Stock Option Agreement, or in the Plan.

DATED:
VALERITAS, INC
By:	Kristine Peterson, CEO
Optionee Signature:
Optionee Address:

ATTACHMENTS

Exhibit D: 2013 Equity Compensation Plan

Exhibit A: Stock Option Agreement

Exhibit C: Stock Purchase Agreement

Exhibit B: Code Section 409A Waiver and Release

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Valeritas, Inc. 2014 INCENTIVE COMPENSATION PLAN Stock Option Agreement  

RECITALS

A. The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board (or the board of directors of any Parent or Subsidiary) and consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

B. Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s grant of an option to Optionee.

C. All capitalized terms in this Agreement, to the extent not defined herein or in the attached Appendix, shall have the meaning assigned to them in the Plan.

NOW, THEREFORE, it is hereby agreed as follows:

1. Grant of Option. The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase up to the number of Option Shares specified in the Grant Notice, subject to the terms and conditions of this Agreement and the Plan. The Option Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at the Exercise Price.

2. Option Term. This option shall have a maximum term of ten (10) years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6.

3. Transferability. The transferability of this option shall be governed by the requirements of Article Two, Section I.G. of the Plan.

4. Dates of Exercise. This option shall become exercisable for the Option Shares in one or more installments in accordance with the Exercise Schedule set forth in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term under Paragraph 5 or 6.

5. Cessation of Service. The option term specified in Paragraph 2 shall terminate (and this option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable:

(a) Should Optionee cease to remain in Service for any reason (other than death, Retirement, Permanent Disability or Misconduct) while this option is outstanding, then Optionee (or any person or persons to whom this option is transferred pursuant to a permitted transfer under Paragraph 3) shall have a period of three (3) months (commencing with the first date following such cessation of Service) during which to exercise this option, but in no event shall this option be exercisable at any time after the Expiration Date.

(b) Should Optionee die while this option is outstanding, then this option may be exercised by (i) the personal representative of Optionee’s estate or (ii) the person or persons to whom the option is transferred pursuant to Optionee’s will or the laws of inheritance following Optionee’s death or to whom the option is transferred during Optionee’s lifetime pursuant to a permitted transfer under Paragraph 3, as the case may be. However, if Optionee dies while holding this option and has an effective beneficiary designation in effect for this option at the time of his or her death, then the designated beneficiary or beneficiaries shall have the exclusive right to exercise this option following Optionee’s death. Any such right to exercise this option shall lapse, and this option shall cease to be outstanding, upon the earlier of (i) the expiration of the twelve (12)-month period following the date of Optionee’s death or (ii) the Expiration Date.

(c) Should Optionee cease Service by reason of Retirement or Permanent Disability while this option is outstanding, then Optionee (or any person or persons to whom this option is transferred pursuant to a permitted transfer under Paragraph 3) shall have a period of twelve (12) months (commencing with the first date following such cessation of Service) during which to exercise this option. In no event shall this option be exercisable at any time after the Expiration Date.

Note: If this option is designated as an Incentive Option in the Grant Notice, exercise of this option on a date later than three (3) months following cessation of Service due to Retirement will result in the loss of Incentive Option tax treatment. In the event Incentive Option tax treatment is not available, this option will be taxed as a Non-Statutory Option upon exercise.

(d) During the limited period of post-Service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares for which this option is, at the time of Optionee’s cessation of Service, vested and exercisable

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pursuant to the Exercise Schedule specified in the Grant Notice or the special vesting acceleration provisions of Paragraph 6. This option shall not vest or become exercisable for any additional Option Shares, whether pursuant to the normal Exercise Schedule specified in the Grant Notice or the special vesting acceleration provisions of Paragraph 6, following the Optionee’s cessation of Service, except to the extent (if any) specifically authorized by the Plan Administrator pursuant to an express written agreement with the Optionee. Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this option shall terminate and cease to be outstanding for any exercisable Option Shares for which the option has not otherwise been exercised.

(e) Should Optionee’s Service be terminated for Misconduct or should Optionee otherwise engage in any Misconduct while this option is outstanding, then this option shall terminate immediately and cease to remain outstanding.

6. Change in Control.

(a) This option, to the extent outstanding at the time of a Change in Control but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Change in Control, become exercisable for all of the Option Shares at the time subject to this option and may be exercised for any or all of those Option Shares as fully vested shares of Common Stock.

(b) Except as provided in Section 6(a), the provisions of the Plan applicable to a Change of Control shall apply to the option, and, in the event of a Change of Control, the Board may take such actions as it deems appropriate pursuant to the Plan.

7. Adjustment in Option Shares. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should the value of outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution or should there occur any merger, consolidation or other reorganization (including, without limitation, a Change in Control transaction), then equitable adjustments shall be made to (i) the total number and/or class of securities subject to this option and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

8. Manner of Exercising Option.

(a) In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

(i) Execute and deliver to the Corporation a Notice of Exercise and Purchase Agreement for the Option Shares for which the option is exercised, or comply with such other procedures as the Corporation may establish from time to time.

(ii) Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

(A) cash or check made payable to the Corporation;

Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then the Exercise Price may also be paid as follows:

(B) in shares of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date;

(C) shares of Common Stock otherwise issuable under the option but withheld by the Corporation in satisfaction of the exercise price, with such withheld shares to be valued at Fair Market Value on the Exercise Date, or

(D) through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions (i) to a brokerage firm (reasonably satisfactory to the Corporation for purposes of administering such procedure in accordance with the Corporation’s pre-clearance/pre-notification policies) to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable income and employment taxes required to be withheld by the Corporation by reason of such exercise and (ii) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm on such settlement date in order to complete the sale.

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Except to the extent the sale and remittance procedure is utilized in connection with the option exercise, payment of the Exercise Price must accompany the Notice of Exercise delivered to the Corporation in connection with the option exercise.

(iii) Furnish to the Corporation appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

(iv) Execute and deliver to the Corporation such written representations as may be requested by the Corporation in order for it to comply with the applicable requirements of applicable securities laws.

(v) Make appropriate arrangements with the Corporation (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all applicable income and employment tax withholding requirements applicable to the option exercise.

(b) As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto.

(c) In no event may this option be exercised for any fractional shares.

9. Compliance with Laws and Regulations.

(a) The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for trading at the time of such exercise and issuance.

(b) The inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained. The Corporation, however, shall use its best efforts to obtain all such approvals.

10. Successors and Assigns. Except to the extent otherwise provided in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option designated by Optionee.

11. Notices. Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee’s signature line on the Grant Notice. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

12. Grant Subject to Plan Provisions. This option is granted pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan. The grant and exercise of this option are subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Plan Administrator in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (a) rights and obligations with respect to withholding taxes, (b) the registration, qualification or listing of the Common Stock, (c) changes in capitalization of the Corporation and (d) other requirements of applicable law. The Plan Administrator shall have the authority to interpret and construe the option pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder.

13. Additional Terms Applicable to an Incentive Option. In the event this option is designated an Incentive Option in the Grant Notice, the following terms and conditions shall also apply to the grant:

(a) This option shall cease to qualify for favorable tax treatment as an Incentive Option if (and to the extent) this option is exercised for one or more Option Shares: (A) more than three (3) months after the date Optionee ceases to be an Employee for any reason other than death or Permanent Disability or (B) more than twelve (12) months after the date Optionee ceases to be an Employee by reason of Permanent Disability.

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(b) No installment under this option shall qualify for favorable tax treatment as an Incentive Option if (and to the extent) the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which such installment first becomes exercisable hereunder would, when added to the aggregate value (determined as of the respective date or dates of grant) of the Common Stock or other securities for which this option or any other Incentive Options granted to Optionee prior to the Grant Date (whether under the Plan or any other option plan of the Corporation or any Parent or Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate. Should such One Hundred Thousand Dollar ($100,000) limitation be exceeded in any calendar year, this option shall nevertheless become exercisable for the excess shares in such calendar year as a Non-Statutory Option.

(c) Should the exercisability of this option be accelerated upon a Change in Control, then this option shall qualify for favorable tax treatment as an Incentive Option only to the extent the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which this option first becomes exercisable in the calendar year in which the Change in Control transaction occurs does not, when added to the aggregate value (determined as of the respective date or dates of grant) of the Common Stock or other securities for which this option or one or more other Incentive Options granted to Optionee prior to the Grant Date (whether under the Plan or any other option plan of the Corporation or any Parent or Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate. Should the applicable One Hundred Thousand Dollar ($100,000) limitation be exceeded in the calendar year of such Change in Control, the option may nevertheless be exercised for the excess shares in such calendar year as a Non-Statutory Option.

(d) Should Optionee hold, in addition to this option, one or more other options to purchase Common Stock which become exercisable for the first time in the same calendar year as this option, then the foregoing limitations on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted.

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APPENDIX

The following definitions shall be in effect under the Agreement:

A. Agreement shall mean this Stock Option Agreement.

B. Exercise Price shall mean the exercise price per Option Share as specified in the Grant Notice.

C. Exercise Schedule shall mean the schedule set forth in the Grant Notice pursuant to which the option is to become exercisable for the Option Shares in one or more installments over the Optionee’s period of Service.

D. Expiration Date shall mean the date on which the option expires as specified in the Grant Notice.

E. Grant Date shall mean the date of grant of the option as specified in the Grant Notice.

F. Grant Notice shall mean the Notice of Grant of Stock Option accompanying the Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

G. Misconduct shall have the meaning assigned to such term or substantially similar term (e.g. a definition of a termination for “cause”) set forth in any employment agreement between Optionee and the Corporation. To the extent not otherwise defined in any employment agreement between Optionee and the Corporation, the term Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Optionee adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss Optionee or any other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan or this Agreement, to constitute grounds for termination for Misconduct.

H. Notice of Exercise shall mean the notice of option exercise in the form prescribed by the Corporation.

I. Option Shares shall mean the number of shares of Common Stock subject to the option as specified in the Grant Notice.

J. Optionee shall mean the person to whom the option is granted as specified in the Grant Notice.

Valeritas, Inc. 2014 INCENTIVE COMPENSATION PLAN Stock Purchase Agreement  

AGREEMENT made this     day of             , 20     by and between Valeritas, Inc., a Delaware corporation, and                     , Optionee under the Corporation’s 2014 Incentive Compensation Plan.

All capitalized terms in this Agreement shall have the meaning assigned to them in the Plan, this Agreement or in the attached Appendix.

A. EXERCISE OF OPTION

1. Exercise. Optionee hereby purchases                 shares of Common Stock (the “Purchased Shares”) pursuant to that certain option (the “Option”) granted Optionee on             ,         (the “Grant Date”) to purchase up to                 shares of Common Stock (the “Option Shares”) under the Plan at the exercise price of $        per share (the “Exercise Price”).

2. Payment. Concurrently with the delivery of this Agreement to the Corporation, Optionee shall pay the Exercise Price for the Purchased Shares in accordance with the provisions of the Option Agreement and shall deliver whatever additional documents may be required by the Option Agreement as a condition for exercise with respect to the Purchased Shares, including an executed copy of the voting agreement identified in Article E.

3. Stockholder Rights. Until such time as the Corporation exercises the First Refusal Right, and subject to the provisions of the voting agreement identified in Article E, Optionee (or any successor in interest) shall have all the rights of a stockholder (including voting, dividend and liquidation rights) with respect to the Purchased Shares, subject, however, to the transfer restrictions of Articles B and C.

B. SECURITIES LAW COMPLIANCE

1. Restricted Securities. The Purchased Shares have not been registered under the 1933 Act and are being issued to Optionee in reliance upon the exemption from such registration provided by SEC Rule 701 for stock issuances under compensatory benefit plans such as the Plan. Optionee hereby confirms that Optionee has been informed that the Purchased Shares are restricted securities under the 1933 Act and may not be resold or transferred unless the Purchased Shares are first registered under the Federal securities laws or unless an exemption from such registration is available. Accordingly, Optionee hereby acknowledges that Optionee is acquiring the Purchased Shares for investment purposes only and not with a view to resale and is prepared to hold the Purchased Shares for an indefinite period and that Optionee is aware that SEC Rule 144 issued under the 1933 Act which exempts certain resales of unrestricted securities is not presently available to exempt the resale of the Purchased Shares from the registration requirements of the 1933 Act.

2. Restrictions on Disposition of Purchased Shares. Optionee shall make no disposition of the Purchased Shares (other than a Permitted Transfer) unless and until there is compliance with all of the following requirements:

(i) Optionee shall have provided the Corporation with a written summary of the terms and conditions of the proposed disposition.

(ii) Optionee shall have complied with all requirements of this Agreement applicable to the disposition of the Purchased Shares.

(iii) Optionee shall have provided the Corporation with written assurances, in form and substance satisfactory to the Corporation, that (a) the proposed disposition does not require registration of the Purchased Shares under the 1933 Act or (b) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or any exemption from registration available under the 1933 Act (including Rule 144) has been taken.

The Corporation shall not be required (i) to transfer on its books any Purchased Shares which have been sold or transferred in violation of the provisions of this Agreement or (ii) to treat as the owner of the Purchased Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee to whom the Purchased Shares have been transferred in contravention of this Agreement.

3. Restrictive Legends. The stock certificates for the Purchased Shares shall be endorsed with one or more of the following restrictive legends:

“The shares represented by this certificate have not been registered under the Securities Act of 1933. The shares may not be sold or offered for sale in the absence of (a) an effective registration statement for the shares under such Act, (b) a ‘no action’ letter of the Securities and Exchange Commission with respect to such sale or offer or (c) satisfactory assurances to the Corporation that registration under such Act is not required with respect to such sale or offer.”

“The shares represented by this certificate are subject to certain rights of first refusal granted to the Corporation and accordingly may not be sold, assigned, transferred, encumbered, or in any manner disposed of except in conformity with the terms of a written agreement dated             , 20     between the Corporation and the registered holder of the shares (or the predecessor in interest to the shares). A copy of such agreement is maintained at the Corporation’s principal corporate offices.”

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C. TRANSFER RESTRICTIONS

1. Restriction on Transfer. Except for any Permitted Transfer, Optionee shall not transfer, assign, encumber or otherwise dispose of any of the Purchased Shares in contravention of the First Refusal Right or the Market Stand-Off.

2. Transferee Obligations. Each person (other than the Corporation) to whom the Purchased Shares are transferred by means of a Permitted Transfer must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Corporation that such person is bound by the provisions of this Agreement and that the transferred shares are subject to (i) the First Refusal Right and (ii) the Market Stand-Off, to the same extent such shares would be so subject if retained by Optionee.

3. Market Stand-Off.

(a) In connection with any underwritten public offering by the Corporation of its equity securities pursuant to an effective registration statement filed under the 1933 Act, including the Corporation’s initial public offering, Owner shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to, any Purchased Shares without the prior written consent of the Corporation or its underwriters. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time from and after the effective date of the final prospectus for the offering as may be requested by the Corporation or such underwriters. In no event, however, shall such period exceed one hundred eighty (180) days, and the Market Stand-Off shall in no event be applicable to any underwritten public offering effected more than two (2) years after the effective date of the Corporation’s initial public offering.

(b) Owner shall be subject to the Market Stand-Off provided and only if the officers and directors of the Corporation are also subject to similar restrictions.

(c) Any new, substituted or additional securities which are by reason of any Recapitalization or Reorganization distributed with respect to the Purchased Shares shall be immediately subject to the Market Stand-Off, to the same extent the Purchased Shares are at such time covered by such provisions.

(d) In order to enforce the Market Stand-Off, the Corporation may impose stop-transfer instructions with respect to the Purchased Shares until the end of the applicable stand-off period.

D. RIGHT OF FIRST REFUSAL

1. Grant. The Corporation is hereby granted the right of first refusal (the “First Refusal Right”), exercisable in connection with any proposed transfer of the Purchased Shares. For purposes of this Article D, the term “transfer” shall include any sale, assignment, pledge, encumbrance or other disposition of the Purchased Shares intended to be made by Owner, but shall not include any Permitted Transfer.

2. Notice of Intended Disposition. In the event any Owner of Purchased Shares in which Optionee has vested desires to accept a bona fide third-party offer for the transfer of any or all of such shares (the Purchased Shares subject to such offer to be hereinafter referred to as the “Target Shares”), Owner shall promptly (i) deliver to the Corporation written notice (the “Disposition Notice”) of the terms of the offer, including the purchase price and the identity of the third-party offeror, and (ii) provide satisfactory proof that the disposition of the Target Shares to such third-party offeror would not be in contravention of the provisions set forth in Articles B and C.

3. Exercise of the First Refusal Right. The Corporation shall, for a period of twenty-five (25) days following receipt of the Disposition Notice, have the right to repurchase any or all of the Target Shares subject to the Disposition Notice upon the same terms as those specified therein or upon such other terms (not materially different from those specified in the Disposition Notice) to which Owner consents. Such right shall be exercisable by delivery of written notice (the “Exercise Notice”) to Owner prior to the expiration of the twenty-five (25)-day exercise period. If such right is exercised with respect to all the Target Shares, then the Corporation shall effect the repurchase of such shares, including payment of the purchase price, not more than five (5) business days after delivery of the Exercise Notice; and at such time the certificates representing the Target Shares shall be delivered to the Corporation.

Should the purchase price specified in the Disposition Notice be payable in property other than cash or evidences of indebtedness, the Corporation shall have the right to pay the purchase price in the form of cash equal in amount to the value of such property. If Owner and the Corporation cannot agree on such cash value within ten (10) days after the Corporation’s receipt of the Disposition Notice, the valuation shall be made by an appraiser of recognized standing selected by Owner and the Corporation or, if they cannot agree on an appraiser within twenty (20) days after the Corporation’s receipt of the Disposition Notice, each shall select an appraiser of recognized standing and the two (2) appraisers shall designate a third appraiser of recognized standing, whose appraisal shall be determinative of such value. The cost of such appraisal shall be shared equally by Owner and the Corporation. The closing shall then be held on the later of (i) the fifth (5th) business day following delivery of the Exercise Notice or (ii) the fifth (5th) business day after such valuation shall have been made.

4. Non-Exercise of the First Refusal Right. In the event the Exercise Notice is not given to Owner prior to the expiration of the twenty-five (25)-day exercise period, Owner shall have a period of thirty (30) days thereafter in which to sell or otherwise

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dispose of the Target Shares to the third-party offeror identified in the Disposition Notice upon terms (including the purchase price) no more favorable to such third-party offeror than those specified in the Disposition Notice; provided, however, that any such sale or disposition must not be effected in contravention of the provisions of Articles B and C. The third-party offeror shall acquire the Target Shares subject to the First Refusal Right and the provisions and restrictions of Article B and Paragraph C.3, and any subsequent disposition of the acquired shares must be effected in compliance with the terms and conditions of such First Refusal Right and the provisions and restrictions of Article B and Paragraph C.3. In the event Owner does not effect such sale or disposition of the Target Shares within the specified thirty (30)-day period, the First Refusal Right shall continue to be applicable to any subsequent disposition of the Target Shares by Owner until such right lapses.

5. Partial Exercise of the First Refusal Right. In the event the Corporation makes a timely exercise of the First Refusal Right with respect to a portion, but not all, of the Target Shares specified in the Disposition Notice, Owner shall have the option, exercisable by written notice to the Corporation delivered within five (5) business days after Owner’s receipt of the Exercise Notice, to effect the sale of the Target Shares pursuant to either of the following alternatives:

(i) sale or other disposition of all the Target Shares to the third-party offeror identified in the Disposition Notice, but in full compliance with the requirements of Paragraph D.4, as if the Corporation did not exercise the First Refusal Right; or

(ii) sale to the Corporation of the portion of the Target Shares which the Corporation has elected to purchase, such sale to be effected in substantial conformity with the provisions of Paragraph D.3. The First Refusal Right shall continue to be applicable to any subsequent disposition of the remaining Target Shares until such right lapses.

Owner’s failure to deliver timely notification to the Corporation shall be deemed to be an election by Owner to sell the Target Shares pursuant to alternative (i) above.

6. Recapitalization/Reorganization.

(a) Any new, substituted or additional securities or other property which is by reason of any Recapitalization distributed with respect to the Purchased Shares shall be immediately subject to the First Refusal Right, but only to the extent the Purchased Shares are at the time covered by such right.

(b) In the event of a Reorganization, the First Refusal Right shall remain in full force and effect and shall apply to the new capital stock or other property received in exchange for the Purchased Shares in consummation of the Reorganization, but only to the extent the Purchased Shares are at the time covered by such right.

7. Lapse. The First Refusal Right shall lapse upon the earliest to occur of (i) the first date on which shares of the Common Stock are held of record by more than five hundred (500) persons, (ii) a determination made by the Board that a public market exists for the outstanding shares of Common Stock or (iii) a firm commitment underwritten public offering, pursuant to an effective registration statement under the 1933 Act, covering the offer and sale of the Common Stock in the aggregate amount of at least twenty million dollars ($20,000,000). However, the Market Stand-Off shall continue to remain in full force and effect following the lapse of the First Refusal Right.

E. VOTING AGREEMENT. At the time of purchase, the Optionee shall execute a joinder to the Voting Agreement covering all of the Purchased Shares, so that Optionee is entitled to the rights, and subject to the obligations, of the “Other Stockholders” (as defined in the Voting Agreement) as if the Optionee were an original party to the Voting Agreement.

F. GENERAL PROVISIONS

1. Assignment. The Corporation may assign the First Refusal Right to any person or entity selected by the Board, including (without limitation) one or more stockholders of the Corporation.

2. At Will Employment. Nothing in this Agreement or in the Plan shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service at any time for any reason, with or without cause.

3. Notices. Any notice required to be given under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, registered or certified, postage prepaid and properly addressed to the party entitled to such notice at the address indicated below such party’s signature line on this Agreement or at such other address as such party may designate by ten (10) days advance written notice under this paragraph to all other parties to this Agreement.

4. No Waiver. The failure of the Corporation in any instance to exercise the Repurchase Right or the First Refusal Right shall not constitute a waiver of any other repurchase rights and/or rights of first refusal that may subsequently arise under the provisions of this Agreement or any other agreement between the Corporation and Optionee. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.

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5. Cancellation of Shares. If the Corporation shall make available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Purchased Shares to be repurchased in accordance with the provisions of this Agreement, then from and after such time, the person from whom such shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such shares shall be deemed purchased in accordance with the applicable provisions hereof, and the Corporation shall be deemed the owner and holder of such shares, whether or not the certificates therefor have been delivered as required by this Agreement.

G. MISCELLANEOUS PROVISIONS

1. Optionee Undertaking. Optionee hereby agrees to take whatever additional action and execute whatever additional documents the Corporation may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Optionee or the Purchased Shares pursuant to the provisions of this Agreement.

2. Agreement is Entire Contract. This Agreement constitutes the entire contract between the parties hereto with regard to the subject matter hereof. This Agreement is made pursuant to the provisions of the Plan and shall in all respects be construed in conformity with the terms of the Plan.

3. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without resort to that State’s conflict-of-laws rules.

4. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

5. Successors and Assigns. The provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and upon Optionee, Optionee’s permitted assigns and the legal representatives, heirs and legatees of Optionee’s estate, whether or not any such person shall have become a party to this Agreement and have agreed in writing to join herein and be bound by the terms hereof.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.

VALERITAS, INC.

By:

Title:

OPTIONEE

Address:

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APPENDIX

The following definitions shall be in effect under the Agreement:

A. Agreement shall mean this Stock Purchase Agreement.

B. Grant Notice shall mean the Notice of Grant of Stock Option pursuant to which Optionee has been informed of the basic terms of the Option.

C. Option Agreement shall mean all agreements and other documents evidencing the Option.

D. Owner shall mean Optionee and all subsequent holders of the Purchased Shares who derive their chain of ownership through a Permitted Transfer from Optionee.

E. Permitted Transfer shall mean (i) a gratuitous transfer of the Purchased Shares to one or more of the Optionee’s Family Members or to a trust established for Optionee or one or more such Family Members, provided and only if Optionee obtains the Corporation’s prior written consent to such transfer, (ii) a transfer of title to the Purchased Shares effected pursuant to Optionee’s will or the laws of inheritance following Optionee’s death or (iii) a transfer to the Corporation in pledge as security for any purchase-money indebtedness incurred by Optionee in connection with the acquisition of the Purchased Shares.

F. Recapitalization shall mean any of the following transactions affecting the Corporation’s outstanding Common Stock as a class without the Corporation’s receipt of consideration: any stock split, stock dividend, spin-off transaction, extraordinary distribution (whether in cash, securities or other property), recapitalization, combination of shares, exchange of shares or other similar transaction affecting the Common Stock without the Corporation’s receipt of consideration.

G. Reorganization shall mean any of the following transactions:

(i) a merger or consolidation in which the Corporation is not the surviving entity,

(ii) a sale, transfer or other disposition of all or substantially all of the Corporation’s assets,

(iii) a reverse merger in which the Corporation is the surviving entity but in which the Corporation’s outstanding voting securities are transferred in whole or in part to a person or persons different from the persons holding those securities immediately prior to the merger, or

(iv) any transaction effected primarily to change the state in which the Corporation is incorporated or to create a holding company structure.

H. SEC shall mean the Securities and Exchange Commission.

I. Voting Agreement shall mean the Voting Agreement entered into as of May [    ], 2014 by and among the Corporation, the “Investors” (as such term is defined in the Voting Agreement) and the “Other Stockholders” (as such term is defined in the Voting Agreement.

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EX-10

Exhibit 10.15

VALERITAS, INC.

SERIES D PREFERRED

STOCK PURCHASE AGREEMENT

June 23, 2014

TABLE OF CONTENTS

			Page
1.	Purchase and Sale of Shares			1
	1.1	Sale and Issuance of Series D Preferred Stock		1
	1.2	Closing		2
	1.3	Use of Proceeds		3
2.	Representations and Warranties of the Company			3
	2.1	Organization, Good Standing and Qualification		3
	2.2	Capitalization and Voting Rights		4
	2.3	Subsidiaries		5
	2.4	Authorization		5
	2.5	Valid Issuance of Securities		6
	2.6	Governmental Consents		6
	2.7	Offering; Previous Issuances Exempt		6
	2.8	Litigation		7
	2.9	Proprietary Information Agreements		7
	2.10	Patents and Trademarks		7
	2.11	Compliance with Other Instruments		9
	2.12	Agreements; Action		9
	2.13	Related-Party Transactions		10
	2.14	Permits		10
	2.15	Environmental and Safety Laws		11
	2.16	Manufacturing, Marketing and Development Rights		11
	2.17	Disclosure		11
	2.18	Registration Rights		11
	2.19	Corporate Documents		11
	2.20	Title to Property and Assets		11
	2.21	Financial Statements		11
	2.22	Indebtedness		12
	2.23	Changes		12
	2.24	Employee Benefit Plans		13
	2.25	Tax Returns, Payments and Elections		15

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TABLE OF CONTENTS

(continued)

			Page
	2.26	Insurance		15
	2.27	Minute Books		15
	2.28	Labor Agreements and Actions; Employee Compensation		15
	2.29	Section 83(b) Elections		16
	2.30	Real Property Holding Company		16
	2.31	Significant Customers and Suppliers		16
	2.32	Product Regulatory Review		16
3.	Representations and Warranties of the Investors			17
	3.1	Authorization		17
	3.2	Purchase Entirely for Own Account		17
	3.3	Disclosure of Information		17
	3.4	Investment Experience		17
	3.5	Accredited Investor		17
	3.6	Restricted Securities		17
	3.7	Disqualification Event		18
	3.8	Further Limitations on Disposition		18
	3.9	Legends		18
	3.10	Exculpation Among Investors		19
	3.11	Further Representations by Foreign Investors		19
	3.12	Appraisal Rights Waiver		19
4.	Conditions of Investors’ Obligations at Closing			19
	4.1	Representations and Warranties of Company		19
	4.2	Performance		20
	4.3	Compliance Certificate		20
	4.4	Qualifications		20
	4.5	Proceedings and Documents		20
	4.6	Secretary’s Certificate		20
	4.7	Opinion of Company Counsel		20
	4.8	Board of Directors		20
	4.9	Investors’ Rights Agreement		20

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TABLE OF CONTENTS

(continued)

			Page
	4.10	Voting Agreement		20
	4.11	Restated Certificate		20
	4.12	Stock Option Plan		20
	4.13	Amendments to Management Rights Letters		21
	4.14	Termination of Existing Agreements		21
	4.15	Consents		21
5.	Conditions of the Company’s Obligations at Closing			21
	5.1	Representations and Warranties		21
	5.2	Qualifications		21
	5.3	Investors’ Rights Agreement		21
	5.4	Voting Agreement		21
6.	Miscellaneous			21
	6.1	Survival of Representations and Warranties		21
	6.2	Successors and Assigns		21
	6.3	Governing Law		22
	6.4	Counterparts		22
	6.5	Titles and Subtitles		22
	6.6	Notices		22
	6.7	Finder’s Fee		22
	6.8	Expenses		22
	6.9	Amendments and Waivers		22
	6.10	Severability		23
	6.11	Aggregation of Stock		23
	6.12	Entire Agreement		23

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VALERITAS, INC.

SERIES D PREFERRED STOCK PURCHASE AGREEMENT

THIS SERIES D PREFERRED STOCK PURCHASE AGREEMENT (the “Agreement”) is made as of the 23rd day of June, 2014, by and among Valeritas, Inc., a Delaware corporation (the “Company”), and the investors listed on Schedule I hereto (each of which is herein referred to as an “Investor”).

WHEREAS, effective as of June 19, 2014, the Company restructured its capitalization through the merger of a wholly-owned subsidiary of Valeritas Holdings, LLC (“Holdings”) into the Company pursuant to the Agreement and Plan of Merger and Reorganization, dated June 9, 2014 (the “Merger”). As a result of the Merger, the Company became a wholly-owned subsidiary of Holdings, and the holders of capital stock of the Company outstanding immediately prior to the effective time of the Merger became holders of units of limited liability company interest in Holdings;

WHEREAS, following the effective time of the Merger, the Company authorized the sale and issuance of up to an aggregate of 4,500,000 shares of newly authorized Preferred Stock of the Company, par value $0.00001 per share, designated as “Series D Preferred Stock” (the “Shares”);

WHEREAS, the Investors desire to purchase the Shares set forth opposite each Investor’s name on Schedule I on the terms and conditions set forth herein; and

WHEREAS, the Company desires to issue and sell the Shares to the Investors on the terms and conditions set forth herein;

THE PARTIES HEREBY AGREE AS FOLLOWS:

1. Purchase and Sale of Shares

1.1 Sale and Issuance of Series D Preferred Stock.

(a) The Company shall adopt and file with the Secretary of State of Delaware on or before the Initial Closing (as defined below) the Fifth Amended and Restated Certificate of Incorporation in the form attached hereto as Exhibit A (the “Restated Certificate”).

(b) On or prior to the Initial Closing, the Company shall have authorized (i) the sale and issuance to the Investors of the Shares and (ii) the issuance of the shares of Common Stock of the Company to be issued upon conversion of the Shares (the “Conversion Shares”), in each case as set forth herein. The Shares and the Conversion Shares shall have the rights, preferences, privileges and restrictions set forth in the Restated Certificate.

(c) Subject to the terms and conditions of this Agreement, each Investor agrees, severally and not jointly, to purchase at the applicable Closing (as defined below) pursuant to Section 1.2(a) and (b) and the Company agrees to sell, issue and deliver to each Investor at such Closing, at a purchase price per share of $10.00, that number of Shares set forth opposite such Investor’s name on Schedule I hereto, in consideration of the cash to be paid by such Investors, as set forth on Schedule I hereto.

1.2 Closing.

(a) Initial Closing. On the date hereof, or at such other time and place as the Company and Investors acquiring in the aggregate at least a majority of the Shares sold pursuant to this Agreement (which majority shall include WCAS Valeritas Holdings, LLC (“WCAS”)) agree upon in writing (which time is designated as the “Initial Closing”), the Company shall sell, subject to and on the terms and conditions contained in this Agreement, a total of 2,500,000 Shares to the Investors in accordance with Schedule I hereto. At the Initial Closing, the Company shall deliver to each Investor a certificate or certificates representing the Shares that such Investor is purchasing against payment of the purchase price therefor by cash in immediately available funds.

(b) Second Closing. Following the Initial Closing, on the earliest of (i) October 15, 2014, (ii) within ten (10) business days of the date on which the Company files a registration statement with the United States Securities and Exchange Commission (“SEC”) pursuant to the Securities Act of 1933, as amended (the “Act”), and such registration statement has an estimated price range, and (iii) such time as the Investors holding at least a majority of the then outstanding Shares (which majority shall include WCAS) agree upon in writing (which time is designated as the “Second Closing”), the Company shall sell, subject to and on the terms and conditions contained in this Agreement, up to a total of 2,000,000 Shares (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or similar recapitalization affecting such shares) (the “Additional Shares”), to the Investors in accordance with each such Investor’s commitment set forth on Schedule I (hereinafter referred to as such Investor’s “Second Closing Commitment”). Each Investor may assign its Second Closing Commitment to entities affiliated with such Investor. The Company shall give at least ten (10) business days prior written notice to each Investor of its intention to consummate the Second Closing. At the Second Closing, the Company shall deliver to each Investor (or its affiliates) a certificate or certificates representing the Additional Shares that such Investor (or its affiliates) is purchasing against payment of the purchase price therefor by cash in immediately available funds. The term “Closing” shall apply to the Initial Closing and the Second Closing unless otherwise specified. The rights and obligations of the Company and the Investors to consummate the Second Closing pursuant to this Section 1.2(b) shall automatically terminate upon the earlier of (i) the consummation of a Liquidation Event or (ii) the written consent of the Investors holding at least a majority of the then outstanding Shares (which majority shall include WCAS) to exercise the rights set forth in Section 1.2(c).

(c) Initial Public Offering. In the event (i) the Company files a registration statement under the Act prior to October 15, 2014 in connection with its initial underwritten public offering of shares of Common Stock (the “IPO”), and such registration statement has an estimated price range and (ii) Investors holding at least a majority of the then outstanding Shares (which majority shall include WCAS) notify the Company in writing of such Investors’ election to abandon the consummation of the sale and purchase of the Additional Shares at the Second Closing, each Investor, or its designee, shall purchase such number of registered public shares of

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Common Stock in the IPO equal to such Investor’s Second Closing Commitment divided by the price per share of Common Stock offered to the public (the “IPO Shares”). The Company shall use its commercially reasonable efforts to cause the managing underwriter(s) of the IPO to direct to the Investors a number of registered public shares of Common Stock in the IPO equal the total IPO Shares. The Investors acknowledge that, despite the Company’s use of its commercially reasonable efforts, the managing underwriter(s) may determine in their sole discretion that it is not advisable to designate all such IPO Shares as directed shares in the IPO, in which case the number of IPO Shares may be reduced or no directed shares may be designated, as applicable. Any such reduction shall be pro rata among all participating Investors. Nothing in this Section 1.2(c) shall affect the rights and obligations of the Company and the Investors to consummate the sale and purchase of the Additional Shares in accordance with Section 1.2(b) if the Investors holding at least a majority of the then outstanding Shares (which majority must include WCAS) have not notified the Company in writing to consummate the purchase of IPO Shares as contemplated by this Section 1.2(c) in lieu of the Second Closing. For clarity, in no event will any Investor be obligated to purchase Additional Shares or IPO Shares, as the case may be, in excess of their respective Second Closing Commitment.

(d) Special Mandatory Conversion. The Investors hereby acknowledge and agree that in the event that any Investor (or its affiliates) does not purchase such Investor’s Second Closing Commitment pursuant to Section 1.2(b) or 1.2(c), then each share of Series D Preferred Stock held by such Investor shall automatically, and without any further action on the part of such Investor, be converted into one-tenth (1/10th) of a share of Common Stock, with cash issued in lieu of any fractional shares of Common Stock, all in accordance with Section 3B of Article IV(B) of the Restated Certificate.

1.3 Use of Proceeds. The Company shall use the proceeds of the sale of the Shares for working capital and general corporate purposes.

2. Representations and Warranties of the Company. The Company hereby represents and warrants to each Investor that, except as set forth on a Schedule of Exceptions (the “Schedule of Exceptions”) furnished each Investor, specifically identifying the relevant Section hereof, which exceptions shall be deemed to be representations and warranties as if made hereunder:

2.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own or lease and operate its assets and carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect. “Material Adverse Effect” means any (i) adverse effect on the issuance or validity of the Shares or the transactions contemplated hereby or on the enforceability or validity of the Restated Certificate or on the ability of the Company to perform its obligations under this Agreement or the other Ancillary Agreements (as defined below), or (ii) material adverse effect on the prospects or condition (financial or otherwise), properties, assets, liabilities, business or operations of the Company taken as a whole; provided that the completion of the Merger in and of itself shall not be deemed a Material Adverse Effect.

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2.2 Capitalization and Voting Rights. After giving effect to the Merger and the filing of the Restated Certificate, the authorized capital stock of the Company consists, or will consist immediately prior to the Initial Closing, of:

(a) 6,000,000 shares of Preferred Stock, par value $0.00001 (the “Preferred Stock”), all of which shares have been designated Series D Preferred Stock (the “Series D Preferred Stock”), none of which are issued and outstanding immediately prior to the Initial Closing. The rights, privileges and preferences of the Preferred Stock are as stated in the Restated Certificate.

(b) 50,000,000 shares of common stock, par value $0.00001, of the Company (the “Common Stock”), of which 9,000,000 shares are issued and outstanding immediately prior to the Initial Closing. The rights, privileges and preferences of the Common Stock are as stated in the Restated Certificate.

(c) All outstanding shares of Common Stock are owned by Holdings. Other than as set forth in this Section 2.2, the Company has no other shares of capital stock authorized, issued or outstanding.

(d) The outstanding shares of Common Stock are all duly and validly authorized and issued, fully paid and nonassessable, were not issued in breach of or violation of any preemptive or similar rights and were issued in accordance with the registration or qualification provisions of the Act and any relevant state securities laws, or pursuant to valid exemptions therefrom.

(e) Except for (i) the conversion privileges of the Preferred Stock as set forth in the Restated Certificate, (ii) the rights provided in Section 4 of the Investors’ Rights Agreement in the form attached hereto as Exhibit B (the “Investors’ Rights Agreement”), (iii) warrants to purchase 195,008 shares of Common Stock held by the Company’s senior lender and (iv) options to purchase 1,305,483 shares of Common Stock have been reserved for grants to employees and other service providers pursuant to the Valeritas, Inc. 2014 Equity Compensation Plan (the “2014 Option Plan”), of which, as of the date hereof, no options to purchase shares of Common Stock are outstanding, there are no outstanding options, warrants, rights (including conversion or preemptive rights), agreements or commitments for the purchase or acquisition from the Company of any shares of its capital stock or other securities. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or other similar rights with respect to the Company or which otherwise permit the holder thereof to participate in the proceeds of a sale of the Company (regardless of how structured). Except as provided in the Restated Certificate, the Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any of its equity securities or any interests therein or to pay any dividend or make any distribution in respect thereof.

(f) All outstanding securities of the Company, including, without limitation, all outstanding shares of the capital stock of the Company, all shares of the capital stock of the Company issuable upon the conversion or exercise of all options or other convertible or exercisable securities and all other securities that the Company is obligated to issue, are subject to a one hundred eighty (180) day “market stand-off” restriction upon an initial public offering of the Company’s securities pursuant to a registration statement filed with the SEC pursuant to the Act in a form substantially identical to Section 1.13 of the Investors’ Rights Agreement.

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(g) The Schedule of Exceptions sets forth a complete list of each security of the Company owned by any officer, director or, in the Company’s reasonable belief, key employee of the Company, or by any affiliate or any member of the immediate family of any such individual, together with a description of the material terms of the vesting provisions and the rights of first refusal and rights of repurchase applicable to each such security. No stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of any securities or rights exercisable or convertible for securities provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of the occurrence of any event. The term “knowledge” means, with respect to the Company, the actual knowledge upon reasonable inquiry or due investigation of the following officers and key employees: Kristine Peterson, William Duke, Kurt Andrews, Geoffrey Jenkins and John Timberlake.

(h) Except with respect to any rights granted to the Investors pursuant to the terms of the Restated Certificate, this Agreement or the Ancillary Agreements (as defined below) or the transactions contemplated hereby or thereby, no party has any right of first refusal, right of first offer, right of co-sale, preemptive right or other similar right regarding the Company’s securities. There are no provisions of the Company’s organizational documents, no agreements to which the Company is a party or is bound by other than the Restated Certificate, this Agreement or the other Ancillary Agreements, which (i) may affect or restrict the voting rights of the Investors with respect to the Shares or the Conversion Shares in their capacity as stockholders of the Company, (ii) restrict the ability of the Investors, or any successor thereto or assignee or transferee thereof, to transfer the Shares or the Conversion Shares, or (iii) entitle any party to nominate or elect any director of the Company or require any of the Company’s stockholders to vote for any such nominee or other person as a director of the Company in each case.

2.3 Subsidiaries. The Company does not presently own or control, directly or indirectly, any debt or equity interest in any other corporation, association, or other business entity. The Company is not a participant in any joint venture, partnership, or similar arrangement.

2.4 Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the Investors’ Rights Agreement, the Voting Agreement in the form attached hereto as Exhibit C (the “Voting Agreement” and together with the Investors’ Rights Agreement, the “Ancillary Agreements”) and the Restated Charter, the performance of all obligations of the Company hereunder and thereunder, and the authorization, issuance (or reservation for issuance), sale and delivery of the Shares being sold hereunder and the Conversion Shares has been taken or will be taken prior to the Initial Closing, and this Agreement and the Ancillary Agreements constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights

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generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (iii) to the extent the indemnification provisions contained in the Investors’ Rights Agreement may be limited by applicable federal or state securities laws.

2.5 Valid Issuance of Securities. The Shares being purchased by the Investors hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, (i) will be duly and validly issued, fully paid, and nonassessable, and will be free and clear from all taxes and of any lien, claim, judgment, charge, mortgage, security interest, pledge, escrow, equity or other encumbrance (collectively, “Encumbrances”) other than restrictions on transfer under this Agreement and the Ancillary Agreements and under applicable state and federal securities laws, (ii) will not violate or cause a breach of any preemptive or similar rights and (iii) will be issued in accordance with the registration or qualification provisions of the Act and any relevant state securities laws, or pursuant to valid exemptions therefrom. The Conversion Shares have been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Restated Certificate, will be duly and validly issued, fully paid, and nonassessable and will be free and clear from all taxes and Encumbrances other than restrictions on transfer under this Agreement and the Ancillary Agreements and under applicable state and federal securities laws.

2.6 Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration, notice to or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, except (i) the filing of the Restated Certificate with the Secretary of State of Delaware; (ii) the filing pursuant to the Regulation D, promulgated by the SEC under the Act, which filing will be effected within 15 days of the sale of the Shares hereunder; or (iii) the filings required by applicable state “blue sky” securities laws, rules and regulations.

2.7 Offering; Previous Issuances Exempt. Neither the Company, nor any of its affiliates or any other person acting on the Company’s behalf, has directly or indirectly engaged in any form of general solicitation or general advertising in connection with the offer, sale or issuance of the Shares nor have any of such persons made any offers or sales of any security of the Company or its affiliates or solicited any offers to buy any security of the Company or its affiliates under circumstances that would require registration of the Shares under the Act or any other securities laws or cause this offering of the Shares to be integrated with any prior offering of securities of the Company for purposes of the Act. Subject in part to the truth and accuracy of each Investor’s representations set forth in Section 3 of this Agreement, the offer, sale and issuance of the Shares as contemplated by this Agreement are exempt from the registration requirements of any applicable state and federal securities laws (under Rule 506 promulgated under the Act, as amended, in the case of the federal securities laws), and neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption. All shares of capital stock and other securities issued by the Company prior to the Initial Closing have been issued in transactions exempt from the registration requirements under the Act and all applicable state securities or “blue sky” laws, and in compliance with all applicable corporate laws. The Company has not violated the Act or any applicable state or other securities or “blue sky” laws in connection with the issuance of any shares of capital stock or other securities prior to the Closing.

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2.8 Litigation. There is no claim, action, suit, proceeding or investigation pending or, to the Company’s knowledge, currently threatened against the Company or any of its properties before any court or arbitrator or any governmental body, agency or official. To the Company’s knowledge, there are no facts that would cause a reasonable person to believe that such a proceeding would likely result. The foregoing includes, without limitation, actions, suits, proceedings or investigations pending or threatened (or any basis therefor known to the Company) involving the prior employment of any of the Company’s employees, their use in connection with the Company’s business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or that the Company intends to initiate.

2.9 Proprietary Information Agreements. Except as set forth on Section 2.9 of the Schedule of Exceptions, each present and former employee and officer of the Company has executed a Proprietary Information and Inventions Agreement, and each present consultant to the Company has executed a Consulting Agreement, in substantially the forms provided to special counsel for the Investors (and each former employee of and consultant to the Company executed a form used by the Company at the time, copies of which have been provided to special counsel to the Investors). The Company is not aware that any of its present or former employees, officers or consultants are in violation of the aforementioned agreements, and the Company has taken commercially reasonable efforts to prevent any such violation. No present or former security holder, officer, director or employee of the Company, nor any third party, has any right, title or interest in any Proprietary Rights (as defined in Section 2.10), and all such persons who have been authors, inventors or developers of any Proprietary Rights have assigned any material rights, title or interests in or to such Proprietary Rights to the Company, and waived their moral rights in any copyrighted works comprising such Proprietary Rights. All employees and directors of the Company with access to the Company’s confidential Proprietary Rights have agreed to maintain the confidentiality of such confidential Proprietary Rights. The Company has provided the Investors with an accurate and complete list of the Company’s current employees, including a detailed description of all salary, bonus, severance obligations and deferred compensation paid or payable for each current employee of the Company who received compensation in excess of $200,000 for the fiscal year ended December 31, 2013 or is anticipated to receive compensation in excess of $200,000 for the fiscal year ending December 31, 2014.

2.10 Patents and Trademarks. Except as set forth on Section 2.10 of the Schedule of Exceptions, the Company possesses all rights, title and interests, free and clear of all liens, pledges, security interests, transfer restrictions and other encumbrances, to all material patents and patent applications (together with, all reissuances, continuations, continuations-in-part, revisions, extensions and reexaminations thereof), material inventions (whether patentable or unpatentable and whether or not reduced to practice) and all improvements thereon, except for

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improvements made by former employees subsequent to such former employee leaving the employ of the Company, trademarks, service marks, trade names and domain names (together with all translations, adaptations, derivations and combinations thereof) and including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith, copyrightable works, copyrights, trade secrets, information, proprietary rights and processes, in each case to the extent used in or otherwise necessary for its business as now conducted and as proposed to be conducted (collectively, “Proprietary Rights”) without any violation or infringement of, or other conflict with, the valid and enforceable rights of others. The Schedule of Exceptions contains a complete list of patents and pending patent applications and registrations and applications for trademarks, copyrights and domain names owned by, or exclusively licensed to, the Company, which listing specifies for each item listed the owner, the subject matter of such item, any application, patent or registration number, and the date of any application or of the issuance of any patent or registration. The Company has taken commercially reasonable actions to maintain and protect its Proprietary Rights. To the Company’s knowledge, all registered Proprietary Rights owned by, or exclusively licensed to, the Company are valid and subsisting and are in full force and effect. Section 2.10 of the Schedule of Exceptions sets forth all options, licenses, rights to collect royalties, agreements, claims, encumbrances or shared ownership of interests that might be reasonably expected to be material to the Company pursuant to which the Company receives or has received Proprietary Rights, or pursuant to which the Company has granted a license or other interest in Proprietary Rights collectively, “Licenses,” and all such Licenses are in full force and effect, the Company, to its knowledge, is not and has never been in breach thereof and, to the Company’s knowledge, the other party or parties thereto are not and never been in breach thereof. The Company has no contractual restrictions or obligations, including obligations to pay royalties, on its use or proposed use of any basal delivery products, including the V-Go product, or on any product where such products lack a controlled slip anchor spring damper mechanism for controlling a rapid drug infusion. The Company knows of no person or entity, who has infringed upon, interfered with, misappropriated or otherwise come into conflict with any Proprietary Rights, and the Company has not received any written notice with respect to any such infringement, interference, misuse or other violation of any Proprietary Rights. To the Company’s knowledge, there is no governmental prohibition or other restriction on the license, sale or use of the Proprietary Rights under applicable law other than export controls. The Company has not violated, interfered with, misappropriated, infringed or otherwise come into conflict with, and is not currently and as its business is proposed to be conducted will not be violating, interfering with, misappropriating, infringing or otherwise coming into conflict with, any valid and enforceable proprietary or intellectual property right of any other person or entity. The Company has not received any communications alleging that the Company (or any of its employees or consultants) has violated or, by conducting its business as proposed, would violate any of the proprietary or intellectual property rights of any other person or entity and the Company is not aware of any reason to believe that such an allegation may be forthcoming. There are no pending or threatened proceedings or adverse claims made with respect to any Proprietary Rights. There has never been litigation commenced or threatened in writing against the Company with respect to any Proprietary Rights. The Company is not aware that any of its employees, officers, directors or consultants is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of his or her best

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efforts to promote the interests of the Company or that would conflict with the Company’s business as presently conducted or as proposed to be conducted. Neither the execution nor delivery of this Agreement or the Ancillary Agreements, nor the carrying on of the Company’s business by the employees, officers and consultants of the Company, nor the conduct of the Company’s business as proposed, will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such employees, officers or consultants is now obligated. Without limiting the foregoing, the Company does not believe it is using or will be necessary to utilize any inventions of any of its employees, officers or consultants (or people it currently intends to hire) made prior to or outside the scope of their employment or engagement by the Company, including inventions made by any former employees whereas such inventions were made by such former employees after termination of the employee’s employment with the Company and to the Company’s knowledge, the patents and patent applications within the Proprietary Rights designate the correct inventors of the inventions claimed in those patents and patent applications.

2.11 Compliance with Other Instruments. The Company (i) has not been and is not in violation or default of any provision of its Restated Certificate or Bylaws, or of any instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound, or (ii) has not been and is not in violation or default, in any material respect, of any provision of any law, statute, rule or regulation applicable to the Company. No other party to any contract to which the Company is a party is, to the Company’s knowledge, in violation, breach or default thereof. The execution, delivery and performance of this Agreement and the Ancillary Agreements, and the consummation of the transactions contemplated hereby and thereby and the execution and filing of the Restated Certificate will not result in any such violation or default or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or contract or an event that (i) results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization, or approval applicable to the Company, its business or operations or any of its assets or properties or (ii) gives others (with notice or lapse of time or both) any rights of termination, amendment, acceleration or cancellation of, any provision thereunder.

2.12 Agreements; Action.

(a) Except for agreements explicitly contemplated hereby and by the Ancillary Agreements, there are no agreements, understandings or proposed transactions between the Company and any of its stockholders, officers, directors, affiliates, or any affiliate thereof.

(b) Section 2.12 of the Schedule of Exceptions sets forth all agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company is a party or by which it is bound (i) that may involve obligations (contingent or otherwise) of, or payments to the Company in excess of, $1,000,000, (ii) that are not terminable by the Company upon 30 days’ or less notice without penalty or premium, (iii) that include provisions materially restricting the development, manufacture or distribution of the Company’s products or services, (iv) that provide indemnification by the Company with respect

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to infringements of proprietary rights, (v) that may involve the research, development, manufacture, testing, distributions, marketing or consulting with respect to any Life Science Product (as defined below), or (vi) the breach of which would have a Material Adverse Effect on the Company (each a “Material Contract” and collectively, the “Material Contracts”). Each Material Contract is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting creditors’ rights generally and by general equitable principles. There has not occurred any material breach, violation or default or any event that, with the lapse of time, the giving of notice or the election of any person, or any combination thereof, would constitute a material breach, violation or default by the Company under any such contract or, to the knowledge of the Company, by any other person to any such contract. The Company has not been notified that any party to any Material Contract intends to cancel, terminate, not renew or exercise an option under any Material Contract, whether in connection with the transactions contemplated hereby or otherwise.

(c) The Company has not (i) declared or paid any dividends or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) made any loans or advances to any person, other than ordinary advances for travel expenses, or (iii) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business.

(d) For the purposes of subsections (b) and (c) above, all liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections.

2.13 Related-Party Transactions. No stockholder (or affiliate thereof), employee, officer, or director of the Company (a “Related Party”) or member of such Related Party’s immediate family, or any corporation, partnership or other entity in which such Related Party is an officer, director or partner, or in which such Related Party has significant ownership interests or otherwise controls, is indebted to the Company, nor is the Company indebted (or committed to make loans or extend or guarantee credit) to any of them. None of such persons has any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a material business relationship, or any firm or corporation that competes with the Company, except that such persons may own stock in (but not exceeding one percent (1%) of the outstanding capital stock of) publicly traded companies that may compete with the Company. Except for this Agreement, the Ancillary Agreements and as set forth on Section 2.13 of the Schedule of Exceptions, no Related Party or member of their immediate family is directly or indirectly interested in any Material Contract with the Company.

2.14 Permits. The Company has all franchises, permits, licenses, regulatory approvals, and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, prospects or financial condition of the Company, and the Company believes it can obtain, without undue

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burden or expense, any similar authority for the conduct of its business as planned to be conducted. The Company is not in default in any material respect under any of, such franchises, permits, licenses, regulatory approvals or other similar authority.

2.15 Environmental and Safety Laws. The Company has not been and is not in violation of any applicable statute, law or regulation relating to the environment or occupational health and safety, and there is no existing condition, situation or set of circumstances which to the Company’s knowledge could reasonably be expected to result in such violation, and no material expenditures are or will be required in order to comply with any such existing statute, law or regulation.

2.16 Manufacturing, Marketing and Development Rights. Except as set forth on Section 2.12 of the Schedule of Exceptions, the Company has not granted rights to manufacture, produce, assemble, license, market, or sell its products to any other person and is not bound by any agreement that affects the Company’s exclusive right to develop, manufacture, assemble, distribute, market or sell its products.

2.17 Disclosure. No certificates made or delivered in connection with this Agreement or the Ancillary Agreements contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements herein or therein not misleading when reviewed along with this Agreement and the Schedule of Exceptions.

2.18 Registration Rights. Except as provided in the Investors’ Rights Agreement, the Company has not granted or agreed to grant any registration rights currently in effect, including piggyback rights, to any person or entity.

2.19 Corporate Documents. Copies of the Restated Certificate, certified by the Secretary of State of the State of Delaware, and Bylaws of the Company, certified by its Secretary, have been delivered to the Investors, are true and completed copies of such instruments as amended to the date of this Agreement and are in full force and effect.

2.20 Title to Property and Assets. Except as set forth on Section 2.20 of the Schedule of Exceptions, the Company owns its property and assets free and clear of all Encumbrances, except such Encumbrances that do not materially impair the Company’s ownership or use of such property or assets. With respect to the property and assets it leases, the Company is in compliance with such leases and holds a valid leasehold interest free of any Encumbrances. The Company does not own any real property.

2.21 Financial Statements. The Company has delivered to each Investor copies of its audited financial statements (balance sheet and income and cash flow statements, including notes thereto) as of December 31, 2013 and for the fiscal year then ended, and its unaudited financial statements (balance sheet and income statement) as at and for the three-month period ended March 31, 2014 (the “Company Financial Statements”). The Company Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles applied on a consistent basis throughout the periods indicated and with each other, except that the unaudited Company Financial Statements may not contain all footnotes required by U.S. generally accepted accounting principles. The Company Financial Statements fairly present the financial condition

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and operating results of the Company as of the dates, and for the periods, indicated therein, subject in the case of the unaudited Company Financial Statements to normal year-end audit adjustments, the effect of which will not, individually or in the aggregate, be materially adverse. Except as set forth in the Company Financial Statements, the Company has no material liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to March 31, 2014 (the “Financial Statement Date”) and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under U.S. generally accepted accounting principles to be reflected in the Company Financial Statements, which, in both cases, individually or in the aggregate, are not material to the financial condition or operating results of the Company. Except as disclosed in the Company Financial Statements, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with U.S. generally accepted accounting principles. There have been no changes in the assets, liabilities, financial condition or operating results of the Company since the Financial Statement Date, except for changes occurring in the ordinary course of business.

2.22 Indebtedness. Section 2.22 of the Schedule of Exceptions sets for a true and complete summary of the indebtedness of the Company, including all indebtedness to be terminated in connection with this Agreement and the transactions contemplated hereby, and a list of each agreement and amendments thereto in respect of all such indebtedness.

2.23 Changes. Since the Financial Statement Date, except as set forth in Section 2.23 of the Schedule of Exceptions, there has not been:

(a) any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the assets, properties, financial condition, operating results, prospects or business of the Company (as such business is presently conducted and as it is proposed to be conducted);

(b) any waiver by the Company of a valuable or material right or claim or of a material debt owed to it;

(c) any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and that is not material to the assets, properties, financial condition, operating results or business of the Company (as such business is presently conducted and as it is proposed to be conducted);

(d) any material change or amendment to a Material Contract or arrangement by which the Company or any of its assets or properties is bound or subject;

(e) any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets;

(f) any resignation or termination of employment of any key employee or officer of the Company (and the Company, to its knowledge, does not know of the impending resignation or termination of employment of any such officer or key employee);

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(g) any (i) grant of any severance or termination pay to (or amendment to any such existing arrangement with) any director, officer or employee of the Company, (ii) entering into of any employment, deferred compensation, supplemental retirement or other similar agreement (or any amendment to any such existing agreement) with any director, officer or employee of the Company, (iii) increase in, or accelerated vesting and/or payment of, benefits under any existing severance or termination pay policies or employment agreements of the Company or (iv) increase in or enhancement of any rights or features related to compensation, bonus or other benefits payable to directors, officers or senior employees of the Company, other than in the ordinary course of business consistent with past practice

(h) receipt of notice that there has been a loss of, or material order cancellation by, any major customer of the Company;

(i) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its material properties or assets, except liens for taxes not yet due or payable and liens that arise in the ordinary course of business and do not materially impair the Company’s ownership or use of such property or assets;

(j) any assignment, lease or other transfer or disposition, or any other agreement or arrangement therefor by the Company of any property or equipment having a value in excess of $100,000, except in the ordinary course of business consistent with past practice;

(k) other than for employment compensation and expenditures contemplated by its operating budget approved by the Board of Directors, any expenditure by the Company (or series of related expenditures) involving more than $100,000 in the aggregate;

(l) any loans or guarantees made by the Company to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;

(m) any declaration, setting aside or payment or other distribution in respect of any of the Company’s capital stock, or any direct or indirect redemption, purchase or other acquisition of any of such stock by the Company;

(n) any Material Adverse Effect or to the Company’s knowledge, any other event or condition of any character that might be reasonably expected to result in a Material Adverse Effect; or

(o) any agreement or commitment by the Company to do any of the things described in this Section 2.23.

2.24 Employee Benefit Plans.

(a) The Schedule of Exceptions contains a list of all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) to which the Company or any person that is, together with the Company, treated as a single employer under Section 414 of the Internal Revenue Code of 1986, as

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amended (the “Code”), or Section 400l(b) of ERISA (each, an “ERISA Affiliate”), is a party, with respect to which the Company or any ERISA Affiliate has any obligation or which are maintained, contributed to or sponsored by the Company or any ERISA Affiliate for the benefit of any current or former employee, officer, director or consultant of the Company or any ERISA Affiliate (each, a “Benefit Plan”).

(b) The Company has furnished the Investors with a true and complete copy of each Benefit Plan (or a written summary of any Benefit Plan that is not in writing) and a true and complete copy of each material document, if any, prepared in connection with each Benefit Plan, including, without limitation, (i) a copy of each trust or other funding arrangement, (ii) each summary plan description and summary of material modifications, (iii) the three most recent annual reports (Form 5500 series and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with each Benefit Plan, (iv) the most recently received Internal Revenue Service determination or opinion letter for each Benefit Plan intended to qualify under Section 401(a) of the Code and (v) the most recently prepared actuarial report and financial statement in connection with each Benefit Plan (if not included in such annual report).

(c) None of the Benefit Plans is subject to Title IV of ERISA or Section 412 of the Code, and neither the Company nor any ERISA Affiliate has ever maintained or contributed to a plan that is subject to Title IV of ERISA or Section 412 of the Code.

(d) Each Benefit Plan is now and always has been operated in all material respects in accordance with its terms and the requirements of all applicable Laws, including (without limitation) ERISA, the Code and the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended through the date hereof (“COBRA”). No action, claim or proceeding is pending or, to the knowledge of the Company, threatened with respect to any Benefit Plan (other than claims for benefits in the ordinary course) and no fact or event exists that could give rise to any such action, claim or proceeding. Each Benefit Plan may be amended, terminated or otherwise discontinued at any time without material liability to the participants, the Investors, the Company or any ERISA Affiliate, other than ordinary administration expenses.

(e) Each Benefit Plan intended to qualify under Section 401(a) of the Code has received a favorable determination or opinion letter from the Internal Revenue Service with respect to its qualified status under the Code, including all amendments to the Code effected by the Tax Reform Act of 1986 and subsequent legislation, the application for such letter was accurate and complete, and nothing has occurred since the date of such letter that would adversely affect the qualified status of such Benefit Plan.

(f) No director or officer or other employee of the Company will become entitled to any retirement, severance or similar benefit or enhanced or accelerated benefit (including any acceleration of vesting or lapse of repurchase rights or obligations with respect to any employee benefit plan subject to ERISA or other benefit under any compensation plan or arrangement of the Company) solely as a result of the transactions contemplated in this Agreement; and no payment made or to be made to any current or former employee or director of the Company, or any of its affiliates by reason of the transactions contemplated hereby (whether alone or in connection with any other event, including, but not limited to, a termination of employment) will constitute an “excess parachute payment” within the meaning of Section 280G of the Code.

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2.25 Tax Returns, Payments and Elections. The Company has filed all tax returns and reports (including information returns and reports) as required by law. These returns and reports are true and correct in all material respects. The Company has timely paid all taxes and other assessments due, except those contested by it in good faith that are listed in the Schedule of Exceptions. The provision for taxes of the Company as shown in the Company Financial Statements is adequate for taxes due or accrued as of the date thereof. The Company has not elected pursuant to the Code to be treated as a Subchapter S corporation or a collapsible corporation pursuant to Section 1362(a) or Section 341(f) of the Code, nor has it made any other elections pursuant to the Code (other than elections that relate solely to methods of accounting, depreciation or amortization) that would have a material effect on the Company, its financial condition, its business as presently conducted or proposed to be conducted or any of its properties or material assets. The Company has never had any tax deficiency proposed or assessed against it and has not executed any waiver of any statute of limitations on the assessment or collection of any tax or governmental charge. None of the Company’s federal income tax returns and none of its state income or franchise tax or sales or use tax returns has ever been audited by governmental authorities. Since December 31, 2013, the Company has not incurred any taxes, assessments or governmental charges other than in the ordinary course of business and the Company has made adequate provisions on its books of account for all taxes, assessments and governmental charges with respect to its business, properties and operations for such period. The Company has withheld or collected from each payment made to each of its employees, the amount of all taxes (including, but not limited to, federal income taxes, Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be withheld or collected therefrom, and has paid the same to the proper tax receiving officers or authorized depositories.

2.26 Insurance. The Company has in full force and effect fire and casualty insurance policies, with extended coverage, sufficient in amount (subject to reasonable deductibles) to allow it to replace any of its properties that might be damaged or destroyed.

2.27 Minute Books. The minute books of the Company provided to the Investors contain a complete summary of all meetings and actions by written consent of directors and stockholders since the time of incorporation and reflect all transactions referred to in such minutes accurately in all material respects.

2.28 Labor Agreements and Actions; Employee Compensation. The Company is not bound by or subject to (and none of its assets or properties is bound by or subject to) any written or oral, express or implied, contract, commitment or arrangement with any labor union, and no labor union has requested or, to the Company’s knowledge, has sought to represent any of the employees, representatives or agents of the Company. There is no strike or other labor dispute involving the Company pending, or to the Company’s knowledge, threatened, that could have a Material Adverse Effect, nor is the Company aware of any labor organization activity involving its employees. The Company is not aware that any officer or key employee, or that any group of key employees, intends to terminate their employment with the Company, nor does the Company

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have a present intention to terminate the employment of any of the foregoing. The employment of each officer and employee of the Company is terminable at the will of the Company. The Company has complied in all material respects with all applicable state and federal equal employment opportunity and other laws related to employment. Except as set forth on Section 2.28 of the Schedule of Exceptions, the Company is not a party to or bound by any currently effective employment contract, deferred compensation agreement, bonus plan, incentive plan, profit sharing plan, retirement agreement, or other employee compensation agreement.

2.29 Section 83(b) Elections. To the Company’s knowledge, all individuals who have purchased unvested shares of the Company’s Common Stock have timely filed elections under Section 83(b) of the Code and any analogous provisions of applicable state tax laws.

2.30 Real Property Holding Company. The Company is not currently, and has not been during the prior five years, a United States real property holding corporation within the meaning of Section 897 of the Code and the Company has filed with the Internal Revenue Service all statements, if any, with its United States income tax returns which are required under Section 1.897-2(h) of the Treasury Regulations.

2.31 Significant Customers and Suppliers. No customer or supplier that was significant to the Company during the period covered by the Company Financial Statements or that has been significant to the Company thereafter, has terminated, materially reduced or threatened to terminate or materially reduce its purchases from or provision of products or services to the Company, as the case may be.

2.32 Product Regulatory Review.

(a) As to each of the products of the Company, including, without limitation, products or compounds currently under research and/or development by the Company, subject to the jurisdiction of the United States Food and Drug Administration (“FDA”) under the Federal Food, Drug and Cosmetic Act and the regulations thereunder (“FDCA”) (each such product, a “Life Science Product”), such Life Science Product is being researched, developed, manufactured, tested, distributed and/or marketed in compliance in all material respects with all applicable requirements under the FDCA and similar laws and regulations applicable to such Life Science Product, including those relating to investigational use, premarket approval, good manufacturing practices, labeling, advertising, record keeping, filing of reports and security. The Schedule of Exceptions lists each Life Science Product of the Company. The Company has not received any notice or other communication from the FDA or any other Federal, state or foreign governmental entity (i) contesting the premarket approval of, the uses of or the labeling and promotion of any Life Science Product or (ii) otherwise alleging any violation by the Company of any law, regulation or other legal provision applicable to a Life Science Product, and to the Company’s knowledge, there is no existing condition, situation or set of circumstances which could reasonably be expected to result in the occurrence of any such events.

(b) Neither the Company, nor any officer, employee or agent of the Company has made an untrue statement of a material fact or fraudulent statement to the FDA or other Federal, state or foreign governmental entity performing similar functions or failed to disclose a material fact required to be disclosed to the FDA or such other Federal, state or foreign governmental entity.

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3. Representations and Warranties of the Investors. Each Investor, severally and not jointly, hereby represents and warrants that:

3.1 Authorization. Such Investor has full power and authority to enter into this Agreement and the Ancillary Agreements, and each such Agreement constitutes its valid and legally binding obligation, enforceable in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (iii) to the extent the indemnification provisions contained in the Investors’ Rights Agreement may be limited by applicable federal or state securities laws.

3.2 Purchase Entirely for Own Account. This Agreement is made with such Investor in reliance upon such Investor’s representation to the Company, which by such Investor’s execution of this Agreement such Investor hereby confirms, that the Shares will be acquired for investment for such Investor’s own account, not as a nominee or agent, and not with a view to the distribution of any part thereof, and that such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, such Investor further represents that such Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Shares.

3.3 Disclosure of Information. Such Investor believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares. Such Investor further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Shares and the business, properties, prospects and financial condition of the Company. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 2 of this Agreement or the right of the Investors to rely thereon.

3.4 Investment Experience. Such Investor is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares. If other than an individual, Investor also represents it has not been organized for the purpose of acquiring the Shares.

3.5 Accredited Investor. Such Investor is an “accredited investor” within the meaning of SEC Rule 501 of Regulation D, as presently in effect.

3.6 Restricted Securities. Such Investor understands that the Shares will be characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the

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Act, only in certain limited circumstances. In this connection, such Investor represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act.

3.7 Disqualification Event. The purchase of the Shares by such Investor will not subject the Company to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Act.

3.8 Further Limitations on Disposition. Without in any way limiting the representations set forth above, such Investor further agrees not to make any disposition of all or any portion of the Shares unless and until:

(a) There is then in effect a Registration Statement under the Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or

(b) (i) Such Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by the Company, such Investor shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company that such disposition will not require registration of such shares under the Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances.

(c) Notwithstanding the provisions of subsections (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by an Investor that is a partnership to a partner of such partnership or a retired partner of such partnership who retires after the date hereof, or to the estate of any such partner or retired partner or the transfer by gift, will or intestate succession of any partner to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or his or her spouse, if the prospective transferee agrees in all such instances in writing to be subject to the terms hereof to the same extent as if he or she were an original Investor hereunder.

3.9 Legends. It is understood that the certificates evidencing the Shares may bear one or all of the following legend:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.

THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A STOCK PURCHASE AGREEMENT, VOTING AGREEMENT, AND INVESTORS’

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RIGHTS AGREEMENT, AS EACH MAY BE AMENDED FROM TIME TO TIME (COPIES OF WHICH MAY BE OBTAINED FROM THE COMPANY WITHOUT COST UPON WRITTEN REQUEST), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES, THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID STOCK PURCHASE AGREEMENT, VOTING AGREEMENT, AND INVESTORS’ RIGHTS AGREEMENT, INCLUDING CERTAIN RESTRICTIONS ON TRANSFER AND OWNERSHIP SET FORTH THEREIN.”

3.10 Exculpation Among Investors. Each Investor acknowledges that it is not relying upon any person, firm or corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. Each Investor agrees that no Investor nor the respective controlling persons, officers, directors, partners, agents, or employees of any Investor shall be liable to any other Investor for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Shares.

3.11 Further Representations by Foreign Investors. If an Investor is not a United States person, such Investor hereby represents that he or she has satisfied himself or herself as to the full observance of the laws of his or her jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Agreement, including (i) the legal requirements within his jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Shares. Such Investor’s subscription and payment for, and his or her continued beneficial ownership of the Shares, will not violate any applicable securities or other laws of his or her jurisdiction.

3.12 Appraisal Rights Waiver. To the extent an Investor was a holder of capital stock of the Company immediately prior to the effective time of the Merger, each such Investor hereby waives, and agrees not to exercise, its right to dissent from the Merger, and the transactions contemplated thereby, and demand appraisal rights under Section 262 of the General Corporation Law of the State of Delaware, a copy of which is attached hereto as Exhibit F. Each such Investor represents and warrants that it is aware of its rights to dissent pursuant to Section 262 of the General Corporation Law of the State of Delaware and has received and had the opportunity to read a copy of such section, which is attached hereto as Exhibit F, and this waiver, agreement, representation and warranty was a condition precedent to the Company permitting such Investor to purchase the Shares.

4. Conditions of Investors’ Obligations at Closing. The obligations of each Investor under this Agreement to purchase the Shares at the Initial Closing or Additional Shares at the Second Closing are subject to the fulfillment, on or before such Closing, of each of the following conditions, unless otherwise waived:

4.1 Representations and Warranties of Company. The representations and warranties of the Company contained in Section 2 shall be true on and as of the Initial Closing and there shall have been no Material Adverse Effect since the Financial Statement Date.

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4.2 Performance. The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before such Closing.

4.3 Compliance Certificate. The President of the Company shall deliver to each Investor at such Closing a certificate stating that the conditions specified in Sections 4.1 and 4.2 have been fulfilled.

4.4 Qualifications. All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall be duly obtained and effective as of such Closing.

4.5 Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at such Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Investors, and they shall have received all such counterpart original and certified or other copies of such documents as they may reasonably request.

4.6 Secretary’s Certificate. The Secretary of the Company shall deliver to each Investor at the Initial Closing a certificate stating that the copies of the Company’s Restated Certificate and Bylaws and Board of Director and stockholder resolutions relating to the sale of the Shares attached thereto are true and complete copies of such documents and resolutions.

4.7 Opinion of Company Counsel. The Investors shall have received from counsel for the Company an opinion, dated as of the Initial Closing, in substantially the form of Exhibit D attached to this Agreement.

4.8 Board of Directors. As of the Initial Closing, the authorized size of the Board of Directors of the Company shall be nine (9) directors, and the Board shall be comprised of Kristine Peterson, Vaughn Kailian, Ittai Harel, John Ryan, Steve LaPorte, Dan Pelak, Paul Queally, Sean Traynor and John Barr.

4.9 Investors’ Rights Agreement. The Company and each Investor shall have entered into the Investors’ Rights Agreement.

4.10 Voting Agreement. The Company, each Investor, and the other stockholders of the Company named as parties thereto shall each have entered into the Voting Agreement.

4.11 Restated Certificate. The Company shall have filed the Restated Certificate with the Secretary of State of Delaware on or prior to the Initial Closing, which shall continue to be in full force and effect as of such Closing.

4.12 Stock Option Plan. The Investors shall have received evidence satisfactory to each of them that the Company shall have pursuant to applicable duly adopted and valid Board of Directors and stockholder actions, approved the 2014 Option Plan in the form attached hereto as Exhibit E.

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4.13 Amendments to Management Rights Letters. On or prior to the Initial Closing, existing Management Rights Letters between the Company and each of (i) WCAS and its affiliates, (ii) MPM Capital and its affiliates, (iii) Pitango Venture Capital and its affiliates and (iv) ONSET VI, L.P., shall have been amended and restated and delivered to the applicable Investor, in each case, in a form satisfactory to WCAS.

4.14 Termination of Existing Agreements. Effective upon the Initial Closing, (i) any prior stockholder agreements, voting agreements, co-sale agreements, or agreements relating to rights of first offer, rights of first refusal or preemptive rights shall have been terminated and shall be of no further force and effect, and (ii) any prior registration rights agreements shall have been terminated and shall be of no further force and effect.

4.15 Consents. The Company shall have obtained all consents or waivers necessary to execute and perform its obligations under the Restated Certificate, this Agreement and the other Ancillary Agreements, to issue the Shares and the Conversion Shares, and to carry out the transactions contemplated hereby and thereby.

5. Conditions of the Company’s Obligations at Closing. The obligations of the Company to each Investor under this Agreement are subject to the fulfillment on or before such Closing of each of the following conditions by that Investor, unless otherwise waived:

5.1 Representations and Warranties. The representations and warranties of the Investors participating in a Closing contained in Section 3 shall be true on and as of such Closing.

5.2 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall be obtained and effective as of such Closing.

5.3 Investors’ Rights Agreement. Each Investor shall have executed and delivered the Investors’ Rights Agreement.

5.4 Voting Agreement. Each Investor and the other stockholders of the Company named as parties thereto shall have executed and delivered the Voting Agreement.

6. Miscellaneous.

6.1 Survival of Representations and Warranties. Unless otherwise set forth in this Agreement, the representations and warranties of the Company and the Investors contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the applicable Closing and shall in no way be affected by any investigation or knowledge of the subject matter thereof made by or on behalf of the Investors or the Company.

6.2 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any Shares). Nothing in this

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Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

6.3 Governing Law. This Agreement shall be governed by and construed under the laws of the State of New York.

6.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

6.5 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

6.6 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iii) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at the addresses set forth on the signature pages attached hereto (or at such other addresses as shall be specified by notice given in accordance with this Section 6.6).

6.7 Finder’s Fee. Each party represents that it neither is nor will be obligated for any finders’ fee or commission in connection with this transaction. Each Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finders’ fee (and the costs and expenses of defending against such liability or asserted liability) for which such Investor or any of its officers, partners, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless each Investor from any liability for any commission or compensation in the nature of a finders’ fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

6.8 Expenses. The Company and the Investors shall pay for any and all of their own costs and expenses they incur in connection with the transactions contemplated by this Agreement; provided, however, the Company will pay the reasonable fees and documented out-of-pocket expenses of (i) Ropes & Gray LLP, counsel to WCAS, (ii) Wilmer Cutler Pickering Hale and Dorr LLP, counsel for certain other Investors that held shares of Series B Preferred Stock of the Company prior to the effective time of the Merger and (iii) DLA Piper LLP, counsel to Full Succeed International Limited, in an amount not to exceed, in the aggregate, $50,000. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the Ancillary Agreements or the Restated Certificate, the prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

6.9 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular

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instance and either retroactively or prospectively), only with the written consent of the Company, WCAS and (i) prior to the Initial Closing, the Investors who will hold at least a majority of the Shares that will be outstanding immediately following the Initial Closing, and (ii) on or following the Initial Closing, the Investors holding at least a majority of the then outstanding Shares. Any amendment or waiver effected in accordance with this section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities who enters into a joinder to this Agreement, and the Company.

6.10 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

6.11 Aggregation of Stock. All shares of the Preferred Stock held or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

6.12 Entire Agreement. This Agreement and the documents referred to herein, including the Restated Certificate, constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein.

[Signature Pages Follow]

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

COMPANY:
VALERITAS, INC.
By:	/s/ Kristine Peterson
Name:	Kristine Peterson
Title:	CEO

Address:	750 Route 202 South, Suite 100
	Bridgewater, NJ 08807

INVESTORS:
WELSH, CARSON, ANDERSON & STOWE XI, L.P.
By:	WCAS XI ASSOCIATES LLC, its General Partner
By:	/s/ Jonathan M. Rather
Name:	Jonathan M. Rather
Title:	Managing Member
WCAS XI CO-INVESTORS LLC
By:	/s/ Jonathan M. Rather
Name:	Jonathan M. Rather
Title:	Managing Member
WCAS MANAGEMENT CORPORATION
By:	/s/ Jonathan M. Rather
Name:	Jonathan M. Rather
Title:	Treasurer

Address:
	c/o Welsh, Carson, Anderson & Stowe
	320 Park Avenue, Suite 2500
	New York, New York 10022
	Attn: Paul B. Queally

INVESTORS:
FULL SUCCEED INTERNATIONAL LIMITED
By:	/s/ Yu Le
	Yu Le, Director

Address:	35/F, No. 1333 Lujiazui Ring Road
	Ping An Finance Tower
	Pu Dong, Shanghai, PRC

INVESTORS:
MPM BIOVENTURES IV-QP, L.P.
BY: MPM BIOVENTURES IV GP LLC, ITS GENERAL PARTNER
BY: MPM BIOVENTURES IV LLC, ITS MANAGING MEMBER
By:	/s/ Todd Foley
Name:	Todd Foley
Title:	Member

Address:	200 Clarendon Street, 54th Floor
	Boston, MA 02116

MPM BIOVENTURES IV GMBH & CO. BETEILIGUNGS KG
BY: MPM BIOVENTURES IV GP LLC, IN ITS CAPACITY AS THE MANAGING LIMITED PARTNER
BY: MPM BIOVENTURES IV LLC, ITS MANAGING MEMBER
By:	/s/ Todd Foley
Name:	Todd Foley
Title:	Member

Address:	200 Clarendon Street, 54th Floor
	Boston, MA 02116

MPM ASSET MANAGEMENT INVESTORS BV4 LLC
BY: MPM BIOVENTURES IV LLC, ITS MANAGER
By:	/s/ Todd Foley
Name:	Todd Foley
Title:	Member

Address:	200 Clarendon Street, 54th Floor
	Boston, MA 02116

INVESTORS:
ONSET VI, L.P.
BY: ONSET VI MANAGEMENT, LLC, ITS GENERAL PARTNER
By:	/s/ John Ryan
Name:	John Ryan
Title:	Managing Director

Address:	2490 Sand Hill Rd.
	Menlo Park, CA 94025

INVESTORS:
PITANGO VENTURE CAPITAL FUND V, L.P.
BY: PITANGO V.C. FUND V, L.P., ITS GENERAL PARTNER
BY: PITANGO G.P. CAPITAL HOLDINGS LTD., ITS GENERAL PARTNER
By:
Name:
Title:

Address:

PITANGO VENTURE CAPITAL PRINCIPALS FUND V, L.P.
BY: PITANGO V.C. FUND V, L.P., ITS GENERAL PARTNER
BY: PITANGO G.P. CAPITAL HOLDINGS LTD., ITS GENERAL PARTNER
By:
Name:
Title:

Address:

INVESTORS:
	AUDA CAPITAL IV CO-INVESTMENT GMBH & CO. KG
	By:	Auda Capital IV Co-Investment Fund GP L.P. its Managing Limited Partner
	By:	Auda Capital IV Co-Investment Fund LLC its General Partner
	By:	Auda Private Equity LLC its Managing Member
	By:	/s/ Stephen B. Wesson
	Name:	Stephen B. Wesson / Tim Avery
	Title:	Managing Director / CFO CCO
	AUDA CAPITAL IV CO-INVESTMENT FUND L.P.
	By:	Auda Capital IV Co-Investment Fund GP L.P. its Managing Limited Partner
	By:	Auda Capital IV Co-Investment Fund LLC its General Partner
	By:	Auda Private Equity LLC its Managing Member
	By:	/s/ Stephen B. Wesson
	Name:	Stephen B. Wesson / Tim Avery
	Title:	Managing Director / CFO CCO
	AUDA VALERITAS SEGREGATED PORTFOLIO
	a segregated portfolio of Auda Capital IV Co-Investment Fund SPC
	By:	/s/ Stephen B. Wesson
	Name:	Stephen B. Wesson / Tim Avery
	Title:	Managing Director / CFO CCO

Address:	c/o Auda International L.P.
	888 Seventh Avenue, 41st Floor
	New York, NY 10151
	Tel.: (212) 593-2306
	Fax: (212) 593-2974
	Email: crouchley@auda.com

INVESTORS:
	TULLIS OPPORTUNITY FUND, L.P.
	By:	Tullis Opportunity Fund, L.L.C., Its general partner
		By:	/s/ James L. L. Tullis
		Name:	James L. L. Tullis
		Title:	Manager
	TULLIS OPPORTUNITY FUND II, L.P.
	By:	Tullis Opportunity Fund II, L.L.C., Its general partner
		By:	/s/ James L. L. Tullis
		Name:	James L. L. Tullis
		Title:	Manager

Address:	c/o Tullis-Dickerson & Co., Inc.
	55 Old Field Point Rd.
	Greenwich, CT 06830
	Attn: James L. L. Tullis
	Fax: (203) 629-9293
	Email: jtullis@tullisfunds.com

PED-VLRTS, LLC

By:

Name:

Title:

Address:

INVESTORS:
	TULLIS OPPORTUNITY FUND, L.P.
	By:	Tullis Opportunity Fund, L.L.C., Its general partner
		By:
		Name:	James L. L. Tullis
		Title:	Manager
	TULLIS OPPORTUNITY FUND II, L.P.
	By:	Tullis Opportunity Fund II, L.L.C., Its general partner
		By:
		Name:	James L. L. Tullis
		Title:	Manager

Address:	c/o Tullis-Dickerson & Co., Inc.
	One Stamford Plaza
	263 Tresser Boulevard, 12th Floor
	Stamford, CT 06901
	Attn: James L. L. Tullis
	Fax: (203) 629-9293
	Email: jtullis@thi-funds.com

PED-VLRTS, LLC
By:	/s/ E. Gray LEE
Name:	E. Gray LEE
Title:	SVP

Address:	4525 Harding Rd.
	Suite 200
	Nashville, TN 37205

INVESTORS:
ABINGWORTH BIOVENTURES V LP
BY: ABINGWORTH LLP, ITS MANAGER
By:	/s/ JAMES ABELL
Name:	JAMES ABELL
Title:	PARTNER

Address:	38 JERMYN STREET
	LONDON
	SW1Y 6DN UK

INVESTORS:
HLM VENTURE PARTNERS II, L.P.
BY: HLM VENTURE ASSOCIATES, LLC
ITS GENERAL PARTNER
By:	/s/ Daniel J. Galles
Name:	Daniel J. Galles
Title:	Authorized Signator

Address:	222 Berkeley St.
	20th Floor
	Boston, MA 02116

INVESTORS:
CHL MEDICAL PARTNERS III, L.P.
BY: CHL MEDICAL PARTNERS III, LLC,
ITS GENERAL PARTNER
By:	/s/ GREGORY WEINHOFF
Name:	GREGORY WEINHOFF
Title:	Vice President
CHL MEDICAL PARTNERS III SIDE FUND, L.P.
BY: CHL MEDICAL PARTNERS III, LLC, ITS GENERAL PARTNER
By:	/s/ GREGORY WEINHOFF
Name:	GREGORY WEINHOFF
Title:	Vice President

Address:

INVESTORS:
ADVANCED TECHNOLOGY VENTURES VIII, L.P.
BY: ATV ASSOCIATES VIII, L.L.C.
ITS GENERAL PARTNER
By:	/s/ Jean George
Name:	Jean George
Title:	Managing Director

Address:	500 Boylston Street, Suite 1380
	Boston, MA 02116
	617-850-9700
	abruce@atvcapital.com
	dcunnane@atvcapital.com

INVESTORS:
THE PERMANENTE FEDERATION, LLC - SERIES J
By:	/s/ GLEN HENTGES
Name:	GLEN HENTGES
Title:	CFO
KAISER PERMANENTE VENTURES, LLC – SERIES A
By:	/s/ THOMAS MEIER
Name:	THOMAS MEIER
Title:	SVP & TREASURER
KAISER PERMANENTE VENTURES, LLC – SERIES B
By:	/s/ THOMAS MEIER
Name:	THOMAS MEIER
Title:	SVP & TREASURER
Address:	ONE KAISER PLAZA, 22ND FLOOR
	OAKLAND, CA 94612
	ATTN: CHRIS GRANT
	510-271-5687

INVESTORS:

/s/ Elizabeth Gordon

Elizabeth Gordon

Address:

Evan Norton

Address:

INVESTORS:

Elizabeth Gordon

Address:

/s/ Evan Norton

Evan Norton

Address:

INVESTORS:
SAINT JOHN’S UNIVERSITY
By:	/s/ Richard Adamson
Name:	Richard Adamson
Title:	Vice President & Treasurer
Address:	2850 Abbey Plaza
	PO Box 2222
	Collegeville, MN 56321

Schedule I

Schedule of Investors

Investor	Shares at Initial Closing		Cash Purchase Price at Initial Closing		Shares at Second Closing		Cash Purchase Price at Second Closing		Total Shares		Total Cash Purchase Price
Welsh, Carson, Anderson & Stowe XI, L.P.		947,275	$	9,472,750		606,255	$	6,062,550		1,553,530	$	15,535,300
WCAS XI Co-Investors, LLC		3,605	$	36,050		2,308	$	23,080		5,913	$	59,130
WCAS Management Corporation		2,966	$	29,660		1,899	$	18,990		4,865	$	48,650
Pitango Venture Capital Fund V, L.P.		264,848	$	2,648,479		169,502	$	1,695,023		434,350	$	4,343,503
Pitango Venture Capital Principals Fund V, L.P.		5,801	$	58,011		3,713	$	37,127		9,514	$	95,137
MPM Bio Ventures IV-QP, L.P.		234,247	$	2,342,470		149,918	$	1,499,180		384,165	$	3,841,650
MPM BioVentures IV, GmbH & Co. Beteiligungs KG		9,024	$	90,240		5,776	$	57,760		14,800	$	148,000
MPM Asset Management Investors BV4, LLC		6,661	$	66,610		4,263	$	42,630		10,924	$	109,240
Abingworth Bioventures V, L.P.		166,431	$	1,664,310		106,516		1,065,160		272,947	$	2,729,470
Auda Capital IV, GmbH & Co. KG		123,951	$	1,239,510		79,329	$	793,290		203,280	$	2,032,800
Auda Capital IV, L.P.		63,982	$	639,820		40,948	$	409,480		104,930	$	1,049,300
Auda Valeritas Segregated Portfolio		38,787	$	387,870		24,823	$	248,230		63,610	$	636,100
Advanced Technology Ventures VIII, L.P.		30,488	$	304,880		19,512	$	195,120		50,000	$	500,000

Investor	Shares at Initial Closing		Cash Purchase Price at Initial Closing		Shares at Second Closing		Cash Purchase Price at Second Closing		Total Shares		Total Cash Purchase Price
Onset VI, L.P.		99,973	$	999,730		63,982	$	639,820		163,955	$	1,639,550
HLM Venture Partners II, L.P.		83,310	$	833,100		53,319	$	533,190		136,629	$	1,366,290
CHL Medical Partners III, L.P.		11,223	$	112,230		7,183	$	71,830		18,406	$	184,060
CHL Medical Partners III, Side Fund, L.P.		972	$	9,720		622	$	6,220		1,594	$	15,940
The Permanente Federation, LLC - Series J		16,662	$	166,620		10,664	$	106,640		27,326	$	273,260
Kaiser Permanente Ventures, LLC - Series A		10,254	$	102,540		6,562	$	65,620		16,816	$	168,160
Kaiser Permanente Ventures, LLC - Series B		6,409	$	64,090		4,101	$	41,010		10,510	$	105,100
PED-VLRTS, LLC		23,427	$	234,270		14,994	$	149,940		38,421	$	384,210
Elizabeth Gordon		19,510	$	195,100		12,486	$	124,860		31,996	$	319,960
Tullis Opportunity Fund 1, L.P.		12,195	$	121,950		7,805	$	78,050		20,000	$	200,000
Tullis Opportunity Fund 2, L.P.		12,195	$	121,950		7,805	$	78,050		20,000	$	200,000
Saint John’s University		316	$	3,160		203	$	2,030		519	$	5,190
Evan Norton		610	$	6,100		390	$	3,900		1,000	$	10,000
Ping An		304,878	$	3,048,780		195,122	$	1,951,220		500,000	$	5,000,000
		2,500,000	$	25,000,000		1,600,000	$	16,000,000		4,100,000	$	41,000,000

EXHIBIT A

Restated Certificate of Incorporation

EXHIBIT B

Investors’ Rights Agreement

EXHIBIT C

Voting Agreement

EXHIBIT D

Legal Opinion

EXHIBIT E

2014 Stock Plan

EXHIBIT F

SECTION 262 of the DGCL

§ 262 Appraisal rights

(a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder’s shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word “stockholder” means a holder of record of stock in a corporation; the words “stock” and “share” mean and include what is ordinarily meant by those words; and the words “depository receipt” mean a receipt or other instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title and, subject to paragraph (b)(3) of this section, § 251(h) of this title), § 252, § 254, § 255, § 256, § 257, § 258, § 263 or § 264 of this title:

(1) Provided, however, that, except as expressly provided in § 363(b) of this title, no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation, were either: (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title.

(2) Notwithstanding paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263 and 264 of this title to accept for such stock anything except:

a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;

b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;

c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or

d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a., b. and c. of this section.

(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 251(h), § 253 or § 267 of this title is not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.

(4) In the event of an amendment to a corporation’s certificate of incorporation contemplated by § 363(a) of this title, appraisal rights shall be available as contemplated by § 363(b) of this title, and the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as practicable, with the word “amendment” substituted for the words “merger or consolidation,” and the word “corporation” substituted for the words “constituent corporation” and/or “surviving or resulting corporation.”

(c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as is practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or

(2) If the merger or consolidation was approved pursuant to § 228, § 251(h), § 253, or § 267 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice or, in the case of a merger approved pursuant to § 251(h) of this title, within the later of the consummation of the tender or exchange offer contemplated by § 251(h) of this title and 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders

of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice or, in the case of a merger approved pursuant to § 251(h) of this title, later than the later of the consummation of the tender or exchange offer contemplated by § 251 (h) of this title and 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.

(e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) of this section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholder’s written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition or request from the corporation the statement described in this subsection.

(f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder.

(h) After the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholder’s certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court’s decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney’s fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder’s demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such

stockholder’s demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger or consolidation, as set forth in subsection (e) of this section.

(l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.

FIRST AMENDMENT TO THE

SERIES D PREFERRED STOCK PURCHASE AGREEMENT

This First Amendment to the Series D Preferred Stock Purchase Agreement (this “Amendment”) is entered as of July 3, 2014, by and among Valeritas, Inc., a Delaware corporation (the “Company”) and the Investors set forth on the signature pages hereto (the “Undersigned Investors”). Capitalized terms used but not otherwise defined or amended in this Amendment shall have the meanings ascribed thereto in the Purchase Agreement (as defined below).

WHEREAS, the Company is party to the Series D Preferred Stock Purchase Agreement, dated as of June 23, 2014, by and among the Company and the Investors (the “Purchase Agreement”), pursuant to which the Company authorized the sale and issuance of up to 4,500,000 shares of Series D Preferred Stock, $0.00001 par value per share (the “Series D Preferred Stock”) at a per share purchase price of $10.00;

WHEREAS, the Company sold 2,500,000 Shares to the Investors at the Initial Closing and Investors committed to purchase 1,600,000 Shares at the Second Closing;

WHEREAS, the Company desires to sell, and certain Investors desire to purchase, the remaining 400,000 Shares authorized for sale under the Purchase Agreement;

WHEREAS, pursuant to Section 6.9 of the Purchase Agreement, any term of the Purchase Agreement may be amended, terminated or waived only with the written consent of the Company, WCAS and the holders of at least a majority of the then-outstanding Shares;

WHEREAS, shares of Series D Preferred Stock issued and sold by the Company at any closing under the Purchase Agreement (i) are exempt from the ROFO Investors’ (as defined in the Investors’ Rights Agreement) right of first offer with respect to future sales by the Company of its securities under Section 4(d)(v) of the Investors’ Rights Agreement and (ii) do not require the approval of the Required Holders (as defined in the Restated Certificate) pursuant to the exception set forth in Section 5(c)(iii) of the Restated Certificate; and

WHEREAS, the Company and the Undersigned Investors, who constitute WCAS and the holders of at least a majority of the outstanding Shares, desire to amend the Purchase Agreement to provide for the sale of 400,000 Shares to Pitango Venture Capital Fund V, L.P. and Pitango Venture Capital Principals Fund V, L.P. (together, “Pitango”), at the per share purchase price of $10.00.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good, valuable and sufficient consideration, the parties hereto agree as follows:

1. Purchase and Sale of Shares. Notwithstanding anything to the contrary set forth in Section 1.2(a) of the Purchase Agreement, on the date hereof, the Company shall sell a total of 243,902 Shares to Pitango. The Company and the Undersigned Investors acknowledge and agree that such sale shall be deemed part of the Initial Closing under the Purchase Agreement. The Company shall deliver to the applicable Investor a certificate or certificates representing the

Shares such Investor is purchasing hereunder against payment of the purchase price therefor, which shall be made to the Company in immediately available funds within two (2) business days following the date of this Amendment.

2. Amendments.

(a) Section 1.2(a) of the Purchase Agreement is hereby amended and replaced in its entirety with the following:

“On the date hereof, or at such other time and place as the Company and Investors acquiring in the aggregate at least a majority of the Shares sold pursuant to this Agreement (which majority shall include WCAS Valeritas Holdings, LLC (“WCAS”)) agree upon in writing (which time is designated as the “Initial Closing”), the Company shall sell, subject to and on the terms and conditions contained in this Agreement, a total of 2,743,902 Shares to the Investors in accordance with Schedule I hereto. At the Initial Closing, the Company shall deliver to each Investor a certificate or certificates representing the Shares that such Investor is purchasing against payment of the purchase price therefor by cash in immediately available funds.”

(b) Schedule I to the Purchase Agreement is hereby amended and replaced in its entirety with Schedule I attached hereto.

3. Consent of Investors. The Undersigned Investors, by executing this Amendment, hereby consent to, ratify and approve this Amendment and the transactions contemplated hereby, all in accordance with the terms of Section 6.9 of the Purchase Agreement.

4. Effect on Purchase Agreement; Effectiveness of Amendment. Except as expressly amended by this Amendment, the provisions of the Purchase Agreement shall remain in full force and effect. This Amendment shall become effective when signed by the Company, WCAS and the Investors holding a majority of the outstanding Shares.

5. Governing Law. This Amendment shall be governed by and its provisions construed and enforced in accordance with the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws.

6. Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute a single instrument.

* * * * *

IN WITNESS WHEREOF, the undersigned has caused this Amendment to be duly executed as of the date first above written.

COMPANY:
VALERITAS, INC.
By:	/s/ Kristine Peterson
Name:	Kristine Peterson
Title:	CEO

Address: 750 Route 202 South, Suite 100 Bridgewater, NJ 08807

INVESTORS:
WELSH, CARSON, ANDERSON & STOWE XI, L.P.
By:	/s/ PAUL B. QUEALLY
Name:	PAUL B. QUEALLY
Title:	Co-PRESIDENT
WCAS XI CO-INVESTORS LLC
By:	/s/ PAUL B. QUEALLY
Name:	PAUL B. QUEALLY
Title:	Co-PRESIDENT
WCAS MANAGEMENT CORPORATION
By:	/s/ PAUL B. QUEALLY
Name:	PAUL B. QUEALLY
Title:	Co-PRESIDENT

MPM BIOVENTURES IV-QP, L.P.
BY:	MPM BIOVENTURES IV GP LLC,
ITS GENERAL PARTNER
BY:	MPM BIOVENTURES IV LLC,
ITS MANAGING MEMBER
By:	/s/ Todd Foley
Name:
Title:
MPM BIOVENTURES IV GMBH & CO. BETEILIGUNGS KG
BY:	MPM BIOVENTURES IV GP LLC,
IN ITS CAPACITY AS THE MANAGING LIMITED PARTNER
BY:	MPM BIOVENTURES IV LLC,
ITS MANAGING MEMBER
By:	/s/ Todd Foley
Name:
Title:
MPM ASSET MANAGEMENT INVESTORS BV4 LLC
BY:	MPM BIOVENTURES IV LLC,
ITS MANAGER
By:	/s/ Todd Foley
Name:
Title:

PITANGO VENTURE CAPITAL FUND V, L.P.
BY:	PITANGO V.C. FUND V, L.P.,
ITS GENERAL PARTNER
BY:	PITANGO G.P. CAPITAL HOLDINGS LTD.,
ITS GENERAL PARTNER
By:
Name:
Title:
PITANGO VENTURE CAPITAL PRINCIPALS FUND V, L.P.
BY:	PITANGO V.C. FUND V, L.P.,
ITS GENERAL PARTNER
BY:	PITANGO G.P. CAPITAL HOLDINGS LTD.,
ITS GENERAL PARTNER
By:
Name:
Title:

ONSET VI, L.P.
BY:	ONSET VI MANAGEMENT, LLC,
ITS GENERAL PARTNER
By:	/s/ John F Ryan
Name:	John F Ryan
Title:	Managing Director

SCHEDULE I

Name	Shares at Initial Closing		Cash Purchase Price at Initial Closing		Shares at Second Closing		Cash Purchase Price at Second Closing		Total Shares		Total Cash Purchase Price
Welsh, Carson, Anderson & Stowe XI, L.P.		947,275	$	9,472,750		606,255	$	6,062,550		1,553,530	$	15,535,300
WCAS XI Co-Investors, LLC		3,605	$	36,050		2,308	$	23,080		5,913	$	59,130
WCAS Management Corporation		2,966	$	29,660		1,899	$	18,990		4,865	$	48,650
Pitango Venture Capital Fund V, L.P.		503,522	$	5,035,220		322,254	$	3,222,540		825,776	$	8,257,760
Pitango Venture Capital Principals Fund V, L.P.		11,029	$	110,290		7,059	$	70,590		18,088	$	180,880
MPM BioVentures IV-QP, L.P.		234,247	$	2,342,470		149,918	$	1,499,180		384,165	$	3,841,650
MPM BioVentures IV, GmbH & Co. Beteiligungs KG		9,024	$	90,240		5,776	$	57,760		14,800	$	148,000
MPM Asset Management Investors BV4, LLC		6,661	$	66,610		4,263	$	42,630		10,924	$	109,240
Abingworth Bioventures V, L.P.		166,431	$	1,664,310		106,516	$	1,065,160		272,947	$	2,729,470
Auda Capital IV, GmbH & Co. KG		123,951	$	1,239,510		79,329	$	793,290		203,280	$	2,032,800
Auda Capital IV, L.P.		63,982	$	639,820		40,948	$	409,480		104,930	$	1,049,300
Auda Valeritas Segregated Portfolio		38,787	$	387,870		24,823	$	248,230		63,610	$	636,100
Advanced Technology Ventures VIII, L.P.		30,488	$	304,880		19,512	$	195,120		50,000	$	500,000
Onset VI, L.P.		99,973	$	999,730		63,982	$	639,820		163,955	$	1,639,550
HLM Venture Partners II, L.P.		83,310	$	833,100		53,319	$	533,190		136,629	$	1,366,290
CHL Medical Partners III, L.P.		11,223	$	112,230		7,183	$	71,830		18,406	$	184,060
CHL Medical Partners III, Side Fund, L.P.		972	$	9,720		622	$	6,220		1,594	$	15,940
The Permanente Federation, LLC - Series 1		16,662	$	166,620		10,664	$	106,640		27,326	$	273,260
Kaiser Permanente Ventures, LLC - Series A		10,254	$	102,540		6,562	$	65,620		16,816	$	168,160
Kaiser Permanente Ventures, LLC - Series B		6,409	$	64,090		4,101	$	41,010		10,510	$	105,100
PED-VLRTS, LLC		23,427	$	234,270		14,994	$	149,940		38,421	$	384,210
Elizabeth Gordon		19,510	$	195,100		12,486	$	124,860		31,996	$	319,960
Tullis Opportunity Fund 1, L.P.		12,195	$	121,950		7,805	$	78,050		20,000	$	200,000
Tullis Opportunity Fund 2, L.P.		12,195	$	121,950		7,805	$	78,050		20,000	$	200,000
Saint John’s University		316	$	3,160		203	$	2,030		519	$	5,190
Evan Norton		610	$	6,100		390	$	3,900		1,000	$	10,000
Ping An		304,878	$	3,048,780		195,122	$	1,951,220		500,000	$	5,000,000
		2,743,902	$	27,439,020		1,756,098	$	17,560,980		4,500,000	$	45,000,000

EX-10

Exhibit 10.18

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

VALERITAS HOLDINGS, LLC

a Delaware Limited Liability Company

THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of VALERITAS HOLDINGS, LLC, a Delaware limited liability company (the “Company”), is dated and effective as of June 19, 2014 (the “Effective Date”) and is adopted, executed and agreed to by and among the Company, Valeritas, Inc., a Delaware corporation (“Opco”), in its capacity as a member of the Company that does not hold a limited liability company interest in the Company (the “Temporary Member”), the persons and entities listed on Schedule A hereto that hold an economic interest in the Company, some or all of which may be admitted as Members of the Company, and each other Person who at any time after the Effective Date becomes a Member in accordance with the terms of this Agreement and the Act (to the extent any person listed on Schedule A has the right to receive units of limited liability company interest in the Company pursuant to the Agreement and Plan of Merger and Reorganization dated as of the date hereof among the Company and the other parties thereto (the “Merger Agreement”) but has not executed and delivered this Agreement (including pursuant to a joinder or a power of attorney or other authorization granted to an attorney in fact or agent under the Merger Agreement or other documents related thereto), such person’s acceptance of such units of limited liability company interest shall be deemed to constitute that person’s agreement to be bound by this Agreement). Any reference in this Agreement to any Member shall include such Member’s Successors in Interest to the extent such Successors in Interest have become Substitute Members in accordance with the provisions of this Agreement.

W I T N E S S E T H:

WHEREAS, the Company was formed as a limited liability company pursuant to the Act by the filing of a Certificate of Formation with the Secretary of State of the State of Delaware on June 9, 2014 (the “Original Formation Date”), and the execution of the Operating Agreement of the Company, on June 9, 2014 (the “Original Agreement”), with Opco being the sole initial member thereof;

WHEREAS, on the date hereof, a Subsidiary of the Company, Valeritas Merger Sub, Inc., a Delaware corporation (“Merger Sub”), merged with and into Opco (the “Merger”);

WHEREAS, in connection with the Merger and in accordance with the Merger Agreement, in exchange for shares of stock in Opco, each former stockholder of Opco (other than any stockholder holding Dissenting Shares (as defined in the Merger Agreement)) has the right to receive certain units of limited liability company interest in the Company, with the rights, powers and preferences set forth herein;

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WHEREAS, in accordance with the Merger Agreement, upon its acceptance of the units of limited liability company interest in the Company to which it is entitled in connection with the Merger, each former stockholder of Opco (other than any stockholder holding Dissenting Shares (as defined in the Merger Agreement)) is bound by this Agreement and upon the surrender of the certificates representing the shares of stock in Opco held by such stockholder and the completion and signing of a joinder agreement and other transmittal documents provided for completion after the Merger, such former stockholder shall be admitted as a member of the Company;

WHEREAS, upon the admission of any former stockholder of Opco as a member of the Company, the Temporary Member shall cease to be a member of the Company and the Company shall continue without dissolution; and

WHEREAS, the parties desire to enter into this Agreement in order to amend and restate the Original Agreement and to provide for, among other things, (a) the management of the business and affairs of the Company, (b) the allocation among the Unitholders (as hereinafter defined) of the profits and losses of the Company and (c) the respective rights and obligations of the parties to each other with respect to the Company.

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto, each intending to be legally bound, hereby amend and restate the Original Agreement and set forth the limited liability company agreement of the Company in its entirety as follows:

ARTICLE I.

DEFINITIONS

SECTION 1.1. Definitions. The following terms shall have the following meanings for purposes of this Agreement:

“Act” means the Delaware Limited Liability Company Act, Title 6, §§ 18-101, et seq., as it may be amended from time to time.

“Additional Member” means any Person that has been admitted to the Company as a Member pursuant to Section 5.4 by virtue of having received its Units from the Company and not from any other Member, Unitholder or Assignee.

“Additional Units” shall mean any Common Units issued (or deemed to have been issued pursuant to Section 2.10(c)(i)(E)) by the Company on or following the date hereof other than:

(A) Common Units issued pursuant to a transaction described in Section 2.10(c)(ii) hereof;

(B) Common Units issued to employees, directors, consultants and other service providers for the primary purpose of soliciting or retaining their services pursuant to plans or agreements approved by the Board up to 31,460,537 Common Units;

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(C) Common Units issued pursuant to the conversion or exercise of convertible or exercisable securities outstanding on the date hereof;

(D) Common Units issuable upon the conversion of the Preferred Units issued as of the date hereof and the Series C PIK Units and Series B PIK Units;

(E) Common Units issued in connection with a bona fide business acquisition of or by the Company, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise; or

(F) Common Units issued or deemed issued pursuant to Section 2.10(c)(i)(E) as a result of a decrease in the Conversion Price of any class or series of Preferred Units resulting from the operation of Section 2.10(c).

“Affiliate” means any Person who, directly or indirectly, controls, is controlled by or is under common control with another Person, including, without limitation, any general partner, managing member, officer or director of such Person or any venture capital or private equity fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person. For all purposes hereunder, (i) Kaiser Permanente Ventures LLC – Series A, Kaiser Permanente Ventures LLC – Series B and The Permanente Federation LLC shall be deemed to be Affiliates of each other and (ii) any entity managed by Auda Capital or Tullis Health shall be deemed to be an Affiliate of Auda Capital IV Co-Investment GMBH & Co. KG.

“Agreement” means this Amended and Restated Limited Liability Company Agreement of the Company, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof.

“Assignee” means any transferee to which a Member, Unitholder or another Assignee has transferred its interest in the Company in accordance with the terms of this Agreement, but who is not a Member.

“Board Majority of the Minority” means the affirmative vote of a majority of the Series B Managers.

“Business Day” means a day other than a Saturday or Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.

“Capital Account” means, with respect to any Unitholder, the account maintained for such Unitholder in accordance with the following provisions:

(a) To each Unitholder’s Capital Account there shall be added such Unitholder’s Capital Contributions, such Unitholder’s allocable share of Net Income and any items in the nature of income or gain which are specially allocated to such Unitholder pursuant to Section 4.3(b) hereof, and the amount of any Company liabilities assumed by such Unitholder or which are secured by any property distributed to such Unitholder.

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(b) From each Unitholder’s Capital Account there shall be subtracted the amount of cash and the Gross Asset Value of any property distributed to such Unitholder pursuant to any provision of this Agreement, such Unitholder’s allocable share of Net Losses and any items in the nature of expenses or losses which are specially allocated to such Unitholder pursuant to Section 4.3(b) hereof, and the amount of any liabilities of such Unitholder assumed by the Company or which are secured by any property contributed by such Unitholder to the Company.

(c) In the event any Unit is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred Unit.

(d) In determining the amount of any liability for purposes of subparagraphs (a) and (b) hereof, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations.

(e) The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Code Section 704(b) and the Regulations promulgated thereunder, and shall be interpreted and applied by the Board in a manner consistent with such Regulations.

“Capital Contribution” means the amount of cash and the initial Gross Asset Value of any property (other than cash) contributed from time to time to the Company by a Unitholder.

“Cash” means all unrestricted cash and marketable securities held by the Company.

“Class” or “Classes” means, the different classes of Units from time to time outstanding (which are initially the Series A Preferred Units, the Series B Preferred Units, the Series C Preferred Units and the Common Units). Except as expressly set forth in this Agreement, for purposes of voting on, consenting to or approving any matter, there shall be but a single class and a single group of Members.

“Code” means the Internal Revenue Code of 1986, as amended, from time to time, or any successor statute. Any reference herein to a particular provision of the Code shall mean, where appropriate, the corresponding provision in any successor statute.

“Common Units” means the common class of Units designated as “Common Units” and having the relative rights, preferences, privileges, limitations and qualifications set forth in this Agreement.

“Date of Issue” means (A) with respect to each of the Units issued on the date hereof, the Effective Date and (B) with respect to all Units issued after the Effective Date (if any), the actual date of issue thereof.

“Depreciation means, for each fiscal year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable for federal income tax

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purposes with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, that if the federal income tax depreciation, amortization or other cost recovery deduction for such year is zero, Depreciation shall be calculated with reference to such beginning Gross Asset Value using any reasonable method selected by the Board; provided further, that in all events the requirements of Regulations Section 1.704-3 shall be taken into account.

“Distributable Assets” means, with respect to any fiscal period, all cash receipts (including from any operating, investing, and financing activities) and other assets of the Company from any and all sources, reduced by operating expenses, contributions of capital to Subsidiaries, investments and payments required to be made in connection with any loan to the Company and any reserve for contingencies or escrow required, in the judgment of the Board acting in good faith.

“Equity Securities” means as to any Person that is a corporation, the shares of such Person’s capital stock, including all classes of common, preferred, voting and nonvoting capital stock, and, as to any Person that is not a corporation or an individual, the ownership, beneficial or membership interests in such Person, including, without limitation, the right to share in profits and losses, the right to receive distributions of cash and property, and the right to receive allocations of items of income, gain, loss, deduction and credit and similar items from such Person, whether or not such interests include voting or similar rights entitling the holder thereof to exercise control over such Person.

“GAAP” means United States generally accepted accounting principles as from time to time in effect.

“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:

(a) The initial Gross Asset Value of any asset contributed by a Unitholder to the Company shall be the gross fair market value of such asset on the date of the contribution, as determined by the contributing Unitholder and the Company.

(b) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values, as determined by the Board, as of the following times:

(i) the acquisition of additional Units after the date hereof by a new or existing Unitholder in exchange for more than a de minimis Capital Contribution, if the Board reasonably determines that such adjustment is necessary or appropriate to reflect the relative shares of the Company’s Net Income, Net Losses and distributions pursuant to this Agreement and the Act of the Unitholders;

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(ii) the distribution by the Company to a Unitholder of more than a de minimis amount of Company property as consideration for an entire or partial Unit, if the Board reasonably determines that such adjustment is necessary or appropriate to reflect the relative shares of the Company’s Net Income, Net Losses and distributions pursuant to this Agreement and the Act of the Unitholders;

(iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);

(iv) the grant of Units (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a Member capacity or by a new Member acting in a Member capacity or in anticipation of being a Member if the Board reasonably determines that such adjustment is necessary or appropriate to reflect the Unitholders’ relative shares of the Company’s Net Income, Net Losses and distributions pursuant to this Agreement and the Act;

(v) immediately following any conversion of Preferred Units into Common Units in accordance with the rights of the Preferred Unit holders; and

(vi) such other times as the Board shall reasonably determine necessary or advisable to the extent permitted under Regulations Sections 1.704-1(b) and 1.704-2;

provided, however, that if any such adjustment to the Gross Asset Values of the Company’s assets occurs pursuant to this subsection (b) at a time when the Company has outstanding “noncompensatory options” (as defined in Regulations Section 1.721-2(f)) including convertible Preferred Units, the Gross Asset Value of the assets shall be adjusted to account for such outstanding noncompensatory options in accordance with Regulations Section 1.704-1(b)(2)(iv)(d)(4).

(c) The Gross Asset Value of any Company asset distributed to a Unitholder shall be the gross fair market value of such asset on the date of distribution, as reasonably determined by the Board.

(d) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-l(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to the extent that the Board determines that an adjustment pursuant to subparagraph (b) of this definition of Gross Asset Value is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (d).

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“Investor Rights Agreement” means the Investors’ Rights Agreement dated as of June 23, 2014 among the Company, Opco and the Unitholders and other Persons party thereto.

“Liquidation Event” means (1) the closing of the sale, transfer or other disposition of all or substantially all of the Company’s assets, (2) the consummation of the merger (but not including the Merger) or consolidation of the Company or Opco with or into another entity (except (x) in the case of a merger or consolidation of the Company, a merger or consolidation in which the holders of Equity Securities of the Company immediately prior to such merger or consolidation continue to hold at least 50% of the voting power of the Equity Securities of the Company or the surviving or acquiring entity or (y) in the case of a merger or consolidation of Opco, a merger or consolidation in which the holders of Equity Securities of Opco or the Company immediately prior to such merger or consolidation continue to hold at least 50% of the voting power of the Equity Securities of Opco or the surviving or acquiring entity), (3) the closing of the transfer (whether by merger, consolidation or otherwise), in one transaction or a series of related transactions, to a Person or group of Affiliated Persons (other than (x) an underwriter of the Company’s or Opco’s Securities, (y) any person that is a holder of Series C Preferred Units on the date hereof (or any Affiliate thereof) or (z) a transferee pursuant to an exempt transfer under Section 5(f) of the Voting Agreement), of the Company’s or Opco’s Securities if, after such closing, such Person or group of Affiliated Persons would hold 50% or more of the outstanding voting Equity Securities of the Company or Opco, as the case may be (or of the surviving or acquiring entity) or (4) a liquidation, dissolution or winding up of the Company in accordance with Section 5.2; provided, however, that a transaction shall not constitute a Liquidation Event if its sole purpose is to change the state of Opco’s or the Company’s organization or to create a holding company that will be owned in substantially the same proportions by the Persons who held Opco’s or the Company’s, as the case may be, Securities immediately prior to such transaction. The treatment of any particular transaction or series of related transactions as a Liquidation Event may be waived only with the vote or written consent of (x) the Series C Required Holders, (y) the Series B Required Holders and (z) Series A Required Holders, each voting as a separate class. In any Liquidation Event, if proceeds received by the Company or the Members is other than cash, its value will be deemed its fair market value. Any Securities shall be valued as follows:

(A) Securities not subject to investment letter or other similar restrictions on free marketability covered by (B) below:

(1) If traded on a securities exchange or through the NASDAQ Global Market, the value shall be deemed to be the average of the closing prices of the securities on such exchange or system over the ten (10) trading-day period ending three (3) trading days prior to the closing of the Liquidation Event;

(2) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the ten (10) trading-day period ending three (3) trading days prior to the closing of the Liquidation Event; and

(3) If there is no active public market, the value shall be the fair market value thereof, as mutually determined by the Company (by action of the Board, which must include the affirmative vote of the Board Majority of the Minority), and the Series C Required Holders.

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(B) The method of valuation of Securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a Person’s status as an Affiliate or former Affiliate) shall be to make an appropriate discount from the market value determined as above in (A) (1), (2) or (3) to reflect the approximate fair market value thereof, as mutually determined by the Company (by action of the Board, which must include the affirmative vote of the Board Majority of the Minority), and the Series C Required Holders.

(C) The foregoing methods for valuing non-cash consideration to be distributed in connection with a Liquidation Event shall, upon approval by the requisite Members of the definitive agreements governing a Liquidation Event, be superseded by any determination of such value set forth in the definitive agreements governing such Liquidation Event.

“Member” means each Person listed as a member of the Company on Schedule B as of the date hereof and each other Person who is hereafter admitted as a Member in accordance with the terms of this Agreement and the Act, each in its capacity as a member of the Company, but shall not include any Person who has ceased to be a member of the Company. The Members shall constitute the “members” (as that term is defined in the Act) of the Company.

“Net Income” or “Net Loss” means for each fiscal year of the Company, an amount equal to the Company’s taxable income or loss for such fiscal year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

(a) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or Net Loss shall be added to such taxable income or loss;

(b) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or Net Loss shall be subtracted from such taxable income or loss;

(c) In the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (b) or (c) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as gain (if the adjustment increases the Gross Asset Value of the asset) or loss (if the adjustment decreases the Gross Asset Value of the asset) from the disposition of such asset for purposes of computing Net Income or Net Loss;

(d) Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

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(e) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, Depreciation shall be taken into account for such fiscal year;

(f) The amount of any positive adjustment to the Gross Asset Values of the Company’s assets described in paragraph (d) of the definition of “Gross Asset Value” shall be treated as an item of gain, and the amount of any negative adjustment pursuant to such paragraph shall be treated as an item of loss; and

(g) Notwithstanding any other provision of this definition of Net Income or Net Loss, any items which are specially allocated pursuant to Section 4.3(b) hereof shall not be taken into account in computing Net Income or Net Loss. To the extent permitted by the Regulations, the amounts of the items of Company income, gain, loss, or deduction available to be specially allocated pursuant to Section 4.3(b) hereof shall be determined by applying rules analogous to those set forth in this definition of Net Income or Net Loss.

“Officer” means each Person designated as an officer of the Company pursuant to and in accordance with the provisions of Section 3.6.

“Person” means any natural person, corporation, limited liability company, partnership, trust, joint stock company, business trust, unincorporated association, joint venture, governmental authority or other legal entity of any nature whatsoever.

“Preferred Units” means the classes of Units of the Company designated as the Series A Preferred Units, the Series B Preferred Units and the Series C Preferred Units.

“Public Offering” means a public offering of shares of common stock of a Subsidiary of the Company pursuant to an effective registration statement (other than on a Form S-4 or other similar form) under the Securities Act.

“Regulations” means the income tax regulations, including temporary regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

“Securities” means any debt or equity securities of any issuer, including common and preferred stock and interests in limited liability companies (including warrants, rights, put and call options and other options relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness and other property or interests commonly regarded as securities.

“Securities Act” means the Securities Act of 1933, or any successor federal statute, and the rules and regulations of the Securities and Exchange Commission thereunder, as the same may be amended from time to time.

“Series A Invested Amount” means, with respect to each Series A Preferred Unit, an amount equal to $1.21286 (in each case as adjusted for any Unit splits, Unit distributions, combinations, subdivisions, recapitalizations or the like with respect to the Series A Preferred Units).

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“Series A Liquidation Amount” means an amount equal to the greater of (i) the sum of the Series A Invested Amount, plus any distributions declared but unpaid thereon through the date of such Liquidation Event or (ii) such amount per Series A Preferred Unit as would have been payable had each such Series A Preferred Unit been converted into Common Units pursuant to Section 2.10(a)(iii) immediately prior to such Liquidation Event.

“Series A Preferred Units” means the Series A convertible preferred class of Units designated as “Series A Preferred Units” and having the relative rights, preferences, privileges, limitations and qualifications set forth in this Agreement.

“Series A Required Holders” means the Members who are holders of at least sixty percent (60%) of the then outstanding Series A Preferred Units held by Members, voting together as a separate class on an as converted to Common Units basis.

“Series B Accruing Distribution” means, with respect to each Series B Preferred Unit, a cumulative amount accruing on a daily basis beginning on the Date of Issue thereof and ending on the date that is nine (9) months following the date of an initial Public Offering of Opco at a rate equal to four percent (4%) per annum, compounded semi-annually on the sum of (x) the Series B Invested Amount, (y) the Series B Pre-Closing Accrued Amount and (z) the accrued and unpaid distributions on such Series B Preferred Unit.

“Series B Invested Amount” means, with respect to each Series B Preferred Unit, an amount equal to $1.21286 (in each case as adjusted for any Unit splits, Unit distributions, combinations, subdivisions, recapitalizations or the like with respect to the Series B Preferred Units).

“Series B Liquidation Amount” means an amount equal to the greater of (i) the sum of the Series B Invested Amount, plus the Series B Pre-Closing Accrued Amount, plus the Series B Accruing Distribution accrued through the date of such Liquidation Event but unpaid thereon, whether or not declared or (ii) such amount per Series B Preferred Unit as would have been payable had each such Series B Preferred Unit been converted into Common Units pursuant to Section 2.10(a)(ii) immediately prior to such Liquidation Event.

“Series B Pre-Closing Accrued Amount” means, with respect to each Series B Preferred Unit, an amount equal to $0.1409 (in each case as adjusted for any Unit splits, Unit distributions, combinations, subdivisions, recapitalizations or the like with respect to the Series B Preferred Units).

“Series B Preferred Units” means the Series B convertible class of preferred Units designated as “Series B Preferred Units” and having the relative rights, preferences, privileges, limitations and qualifications set forth in this Agreement.

“Series B Required Holders” means the Members who are holders of at least a majority of the then outstanding Series B Preferred Units held by Members, voting together as a separate class on an as converted to Common Units basis.

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“Series C Accruing Distribution” means, with respect to each Series C Preferred Unit, a cumulative amount accruing on a daily basis beginning on the Date of Issue thereof and ending on the date that is nine (9) months following the date of an initial Public Offering of Opco at a rate equal to eight percent (8%) per annum, compounded semi-annually on the sum of (x) the Series C Invested Amount, (y) the Series C Pre-Closing Accrued Amount and (z) the accrued and unpaid distributions on such Series C Preferred Unit.

“Series C Invested Amount” means, with respect to each Series C Preferred Unit, an amount equal to $1.435 (in each case as adjusted for any Unit splits, Unit distributions, combinations, subdivisions, recapitalizations or the like with respect to the Series C Preferred Units).

“Series C Liquidation Amount” means an amount equal to the greater of (i) the sum of the Series C Invested Amount, plus the Series C Pre-Closing Accrued Amount, plus the Series C Accruing Distribution accrued through the date of such Liquidation Event but unpaid thereon, whether or not declared or (ii) such amount per share as would have been payable had each such share been converted into Common Units pursuant to Section 2.10(a)(i) immediately prior to such Liquidation Event.

“Series C Pre-Closing Accrued Amount” means, with respect to each Series C Preferred Unit, an amount equal to $0.2697 (in each case as adjusted for any Unit splits, Unit distributions, combinations, subdivisions, recapitalizations or the like with respect to the Series C Preferred Units).

“Series C Preferred Units” means the Series C convertible preferred class of Units designated as “Series C Preferred Units” and having the relative rights, preferences, privileges, limitations and qualifications set forth in this Agreement.

“Series C Required Holders” means the Members who are holders of at least a majority of the then outstanding Series C Preferred Units held by Members, voting together as a separate class on an as converted to Common Units basis.

“Subsidiary” means, with respect to the Company or any other Person, any Person of which the Company (or such other Person) owns securities having a majority of the voting power in electing the board of directors directly or through one or more Subsidiaries (or, in the case of a partnership, limited liability company or other similar entity, securities conveying, directly or indirectly, a majority of the economic interests in such partnership or entity), including any Person of which the Company (or such other Person) or any Subsidiary serves as general partner or managing member.

“Substitute Member” means any Person that has been admitted to the Company as a Member pursuant to Section 5.4 by virtue of such Person receiving Units from a Member, a Unitholder or its Assignee and not from the Company.

“Successor in Interest” means any (i) trustee, custodian, receiver or other Person acting in any bankruptcy or reorganization proceeding with respect to; (ii) assignee for the benefit of the creditors of; (iii) trustee or receiver, or current or former officer, director or partner, or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (iv) other executor, administrator, committee, legal representative or other successor or assign of, any Unitholder, whether by operation of law or otherwise.

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“Target Balance” has the meaning set forth in Section 4.3(a).

“Unitholder” means a Member, Assignee, other Person to which the Company has issued Units or a Successor in Interest who holds any Unit.

“Units” means units of limited liability company interest in the Company from time to time outstanding hereunder (which are initially represented by the Preferred Units and the Common Units).

“Voting Agreement” means the Voting Agreement dated as of June 19, 2014 among the Company and the Unitholders party thereto.

SECTION 1.2. Terms Generally. The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All terms herein that relate to accounting matters shall be interpreted in accordance with GAAP. All references to “Sections” and “Articles” shall refer to Sections and Articles of this Agreement unless otherwise specified. The words “hereof” and “herein” and similar terms shall relate to this Agreement.

ARTICLE II.

GENERAL PROVISIONS

SECTION 2.1. Formation. The Company has been organized as a Delaware limited liability company by the execution and filing of a Certificate of Formation (as amended from time to time, the “Certificate”) by an authorized person under and pursuant to the Act, such Certificate and the execution and filing thereof being hereby ratified and approved in all respects. Any Officer, acting alone, as an “authorized person”, within the meaning of the Act, shall execute, deliver and file, or cause the execution, delivery and filing of, all certificates (and any amendments and/or restatements thereof) required or permitted by the Act to be filed with the Secretary of State of the State of Delaware. The rights, powers, duties, obligations and liabilities of the Members shall be determined pursuant to the Act and this Agreement. To the extent that the rights, powers, duties, obligations and liabilities of any Member are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control. Opco hereby continues as the Temporary Member upon its execution of a counterpart signature page of this Agreement. The Temporary Member has no Units and or other limited liability company interests in the Company and has no authority to bind the Company. Except as required by any mandatory provision of the Act, the Temporary Member shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company. Each of the Persons listed on Schedule A hereto as a “Unitholder” on the date hereof has the right to receive units of limited liability company interests in the Company pursuant to the Merger. Upon the surrender by each such Person of

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their certificate(s) representing their shares in Opco prior to the Merger and the completion and signing of a joinder agreement to this Agreement, each such Person shall be admitted to the Company as a Member and shall be listed on Schedule B hereto. Upon such admission to the Company of any former Opco stockholder, the Board shall cause Schedule B hereto to be revised to reflect such admission. Notwithstanding any provision of this Agreement to the contrary, such revision of Schedule B hereto shall not require the approval or consent of any Member or other Unitholder. Simultaneously with the admission of any former stockholder of Opco as a Member of the Company, Opco shall automatically cease to be a member of the Company and shall cease to be a party to and to have any rights or obligations under this Agreement and the Company shall continue without dissolution. The execution and delivery by the Company of the Merger Agreement are hereby ratified and approved in all respects.

SECTION 2.2. Name. The name of the Company is Valeritas Holdings, LLC, the name specified in the Certificate filed with the Secretary of State of the State of Delaware on the Original Formation Date. All Company business shall be conducted in that name or in such other names that comply with applicable law as the Board may select from time to time.

SECTION 2.3. Term. The term of the Company commenced on the Original Formation Date, the date the original Certificate was filed with the office of the Secretary of State of the State of Delaware, and shall continue in existence perpetually until termination of the Company in accordance with the provisions of Section 5.2.

SECTION 2.4. Purpose; Powers.

(a) General Powers. The nature of the business or purposes to be conducted or promoted by the Company is to engage in any lawful act or activity for which limited liability companies may be organized under the Act. The Company may engage in any and all activities necessary, desirable or incidental to the accomplishment of the foregoing. Notwithstanding anything herein to the contrary, nothing set forth herein shall be construed as authorizing the Company to possess any purpose or power, or to do any act or thing, forbidden by law to a limited liability company organized under the laws of the State of Delaware.

(b) Company Action. Subject to the provisions of this Agreement and except as prohibited by applicable law (i) the Company may, with the approval of the Board (or a duly authorized committee thereof) or a duly authorized Officer, enter into and perform any and all documents, agreements and instruments contemplated by such approval, all without any further act, vote or approval of any Member and (ii) the Board (or a duly authorized committee thereof) may authorize any Person (including any Member, Manager or Officer) to enter into and perform any document on behalf of the Company.

SECTION 2.5. Foreign Qualification. The Board shall cause the Company to comply with all requirements necessary to qualify the Company as a foreign limited liability company in any jurisdiction in which the location of its assets and properties or the conduct of its business requires such qualification unless the Board shall determine otherwise and determine that the failure so to qualify would not have a material adverse effect on the Company.

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SECTION 2.6. Registered Office; Registered Agent; Offices. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be the office of the registered agent named in the Certificate or such other office (which need not be a place of business of the Company) as the Board may designate from time to time in the manner provided by law. The registered agent of the Company in the State of Delaware shall be the registered agent named in the Certificate or such other Person or Persons as the Board may designate from time to time in the manner provided by law. The principal office of the Company shall be at such place as the Board may designate from time to time, which need not be in the State of Delaware, and the Company shall maintain records at such place. The Company may have such other offices as the Board may designate from time to time.

SECTION 2.7. Partnership Status. The Unitholders intend that the Company shall be treated as a partnership for federal, state and local income tax purposes, and each Unitholder and the Company shall file all tax returns and shall otherwise take all tax and financial reporting positions in a manner consistent with such treatment.

SECTION 2.8. Rights and Privileges of Initial Classes of Units; Voting.

(a) The limited liability company interests in the Company shall be divided into and denominated as Units. There shall be multiple Classes of Units, as follows:

(i) There is hereby created a class of Units designated as the “Series A Preferred Units”. Each Series A Preferred Unit shall be identical to all other Series A Preferred Units in all respects (other than income tax attributes) and shall entitle the holder thereof to the rights, interests, preferences and privileges of a holder of a Series A Preferred Unit as set forth in this Agreement.

(ii) There is hereby created a class of Units designated as the “Series B Preferred Units”. Each Series B Preferred Unit shall be identical to all other Series B Preferred Units in all respects (other than income tax attributes) and shall entitle the holder thereof to the rights, interests, preferences and privileges of a holder of a Series B Preferred Unit as set forth in this Agreement.

(iii) There is hereby created a class of Units designated as the “Series C Preferred Units”. Each Series C Preferred Unit shall be identical to all other Series C Preferred Units in all respects (other than income tax attributes) and shall entitle the holder thereof to the rights, interests, preferences and privileges of a holder of a Series C Preferred Unit as set forth in this Agreement.

(iv) There is hereby created a class of Units designated as the “Common Units”. Each Common Unit shall be identical to all other Common Units in all respects (other than income tax attributes) and shall entitle the holder thereof to the rights, interests, preferences and privileges of a holder of a Common Unit as set forth in this Agreement.

(b) The Members who are holders of the Common Units, Series C Preferred Units (on an as converted to Common Units basis) and Series B Preferred Units (on an as converted to Common Units basis) shall be entitled to one vote per Common Unit on any

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matters on which the Members and/or Unitholders are entitled to vote. Except as expressly set forth in this Agreement, the Series A Preferred Units, and any other Units of a Person if and so long as such Person is not a Member, shall be non-voting.

SECTION 2.9. Ownership and Issuance of Units.

(a) The ownership of outstanding Units shall be listed on Schedule A to this Agreement, as from time to time revised, amended or supplemented in accordance with this Agreement. From time to time, following the admission of any Additional Members or Substitute Members, or following the issuance, transfer or forfeiture of any Units, Schedule A (and to the extent the holder thereof has been admitted as a Member, Schedule B) shall be amended to reflect such changes. Notwithstanding any provision of this Agreement to the contrary, such revision, amendment or supplement of Schedule A or Schedule B hereto shall not require the approval or consent of any Member or other Unitholder.

(b) Subject to Section 3.10, the Board is authorized in its sole and complete discretion to cause the Company to issue, on such terms and conditions as the Board shall determine, additional Units, which Units may be of a same or different class, subclass or series from the Units which are outstanding prior to such issuance, at any time or from time to time to existing Members or to other Persons, and to admit such other Persons to the Company as additional Members pursuant to Section 5.4. In connection therewith, the Board shall have sole and complete discretion to create new classes, subclasses or series of Units (in addition to the then-existing classes or subclasses or series of Units), with such relative rights, powers, preferences, privileges and limitations as shall be fixed by the Board, and to make such revisions to the relative rights, powers, preferences, privileges and limitations of Units which are outstanding prior to such issuance subject only to the express restrictions set forth in Sections 3.10 and 5.4. Upon the issuance of any additional Units pursuant to this Section 2.9, the Board shall amend Schedule A hereto (and to the extent a holder thereof has been admitted as a Member, Schedule B hereto) to reflect such issuance and, if necessary, and subject to Sections 3.10 and 5.4, the other terms and provisions of this Agreement to reflect the creation, designation, preferences and relative, participating, optional or other special rights, powers and duties of any such new class, subclass or series of Units.

SECTION 2.10. Conversion Rights of the Preferred Units.

(a) Conversion. Subject to the terms and conditions of this Section 2.10, any holder of Preferred Units shall have the right, at its option at any time, to convert any or all of such Preferred Units into such number of Common Units per Preferred Unit as follows:

(i) Each Series C Preferred Unit shall be converted into such number of Common Units as is determined by multiplying one Series C Preferred Unit by the Series C Conversion Rate. In the case of the Series C Preferred Units, the “Series C Conversion Rate” in effect at any time shall be an amount equal to the quotient obtained by dividing (x) an amount equal to the amount of the Series C

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Invested Amount, plus the Series C Pre-Closing Accrued Amount, plus the Series C Accruing Distribution accrued and unpaid through the Conversion Time, whether declared or not, by (y) the Series C Conversion Price then in effect; provided, however, that if the aggregate fair market value of the Common Units to be received upon conversion of a Series C Preferred Unit (plus the aggregate fair market value of the Common Units to be received (or previously received) upon conversion of each Series C PIK Unit received with respect to such Series C Preferred Unit prior to the Conversion Time as if such Series C PIK Unit were also being converted at such Conversion Time) is equal to or greater than $2.87 per Unit (subject to appropriate adjustment in the event of a Unit split, Unit distribution (other than Series C PIK Units), combination, reclassification, or similar event affecting the Series C Preferred Units), then the Series C Conversion Rate in effect at such time for such Series C Preferred Unit shall be an amount equal to the greater of (x) a rate such that upon conversion of such Series C Preferred Unit (and each Series C PIK Unit received with respect to such Series C Preferred Unit prior to the Conversion Time) the holder thereof will receive a number of Common Units (when taken together with the Common Units to be received (or previously received) upon conversion of each Series C PIK Unit received with respect to such Series C Preferred Unit prior to the Conversion Time as if such Series C PIK Unit were also being converted at such Conversion Time) having an aggregate fair market value equal to $2.87 per Unit (subject to appropriate adjustment in the event of a Unit split, Unit distribution (other than Series C PIK Units), combination, reclassification, or similar event affecting the Series C Preferred Units) and (y) an amount equal to the quotient obtained by dividing (1) the Series C Invested Amount by (2) the Series C Conversion Price then in effect and the Series C Pre-Closing Accrued Amount and the Series C Accruing Distribution shall not be included in the calculation of the Series C Conversion Rate with respect to such Series C Preferred Unit. On the date hereof, the “Series C Conversion Price” per Unit is the Series C Invested Amount. Such initial Series C Conversion Price, and the rate at which Series C Preferred Units may be converted into Common Units, shall be subject to adjustment as provided below.

(ii) Each Series B Preferred Unit shall be converted into such number of Common Units as is determined by multiplying one Series B Preferred Unit by the Series B Conversion Rate. In the case of the Series B Preferred Units, the “Series B Conversion Rate” in effect at any time shall be an amount equal to the quotient obtained by dividing (x) an amount equal to the amount of the Series B Invested Amount, plus the Series B Pre-Closing Accrued Amount, plus the Series B Accruing Distribution accrued through the Conversion Time, whether declared or not, by (y) the Series B Conversion Price then in effect; provided, however, that if the aggregate fair market value of the Common Units to be received upon conversion of each Series B Preferred Unit (plus the aggregate fair market value of the Common Units to be received (or previously received) upon conversion of each Series B PIK Unit received with respect to such Series B Preferred Unit prior to the Conversion Time) exceeds $1.81929 per Unit (subject to appropriate adjustment in the event of a Unit split, Unit distribution (other than

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Series B PIK Units), combination, reclassification, or similar event affecting the Series B Preferred Units), then the Series B Conversion Rate in effect at such time for such Series B Preferred Unit shall be an amount equal to the greater of (x) a rate such that upon conversion of such Series B Preferred Unit (and each Series B PIK Unit received with respect to such Series B Preferred Unit prior to the Conversion Time) the holder thereof will receive a number of Common Units (when taken together with the Common Units to be received (or previously received) upon conversion of each Series B PIK Unit received with respect to such Series B Preferred Unit prior to the Conversion Time as if such Series B PIK Unit were also being converted at such Conversion Time) having an aggregate fair market value equal to $1.81929 per Unit (subject to appropriate adjustment in the event of a Unit split, Unit distribution (other than Series B PIK Units), combination, reclassification, or similar event affecting the Series B Preferred Units) and (y) an amount equal to the quotient obtained by dividing (1) the Series B Invested Amount by (2) the Series B Conversion Price then in effect and the Series B Pre-Closing Accrued Amount and the Series B Accruing Distribution shall not be included in the calculation of the Series B Conversion Rate with respect to such Series B Preferred Unit. On the date hereof, the “Series B Conversion Price” per Unit is the Series B Invested Amount. Such initial Series B Conversion Price, and the rate at which Series B Preferred Units may be converted into Common Units, shall be subject to adjustment as provided below.

(iii) Each Series A Preferred Unit shall be converted into such number of Common Units as is determined by multiplying one Series A Preferred Unit by the Series A Conversion Rate. In the case of the Series A Preferred Units, the “Series A Conversion Rate” in effect at any time shall be an amount equal to the quotient obtained by dividing (x) the Series A Invested Amount by (y) the Series A Conversion Price then in effect. On the date hereof, the “Series A Conversion Price” per Unit was the Series A Invested Amount. Such initial Series A Conversion Price, and the rate at which Series A Preferred Units may be converted into Common Units, shall be subject to adjustment as provided below. The Series C Conversion Rate, the Series B Conversion Rate, and the Series A Conversion Rate, and the Series C Conversion Price, the Series B Conversion Price and the Series A Conversion Price, respectively, are sometimes referred to hereinafter as the “Conversion Rate” and “Conversion Price”, as applicable to such class of Preferred Units.

(iv) Fair market value of a Common Unit shall be valued as follows:

(A) In the case of a Liquidation Event, the aggregate amount to be received with respect to a Common Unit pursuant to Section 4.4(b);

(B) In the case of an underwritten offering of securities registered pursuant to the Securities Act, the offering price with respect thereto; and

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(C) In any other circumstances, the fair market value thereof, as determined by the Board, which must include the affirmative vote of a Board Majority of the Minority; provided that if a majority of the Board, including a Board Majority of the Minority and a majority of the Series C Managers, cannot agree on a fair market value within 15 days of the written notice to the Company from a holder of Preferred Units that it wishes to convert any of its Preferred Units, then the Company shall engage an investment banking firm or valuation firm (the “Independent Valuation Firm”) to determine such fair market value (the Company shall request that the Independent Valuation Firm use its reasonable best efforts to determine such fair market value within thirty (30) days of its appointment).

(b) Mechanics of Conversion. Before any holder of Preferred Units shall be entitled to voluntarily convert the same into Common Units, such Member shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Company, and shall give written notice to the Company at its principal office, of the election to convert the same and shall state therein the name or names in which the certificate or certificates for Common Units are to be issued. The Company shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Preferred Units, or to the nominee or nominees of such holder, a certificate or certificates for the number of Common Units to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the certificate or certificates for Preferred Units to be converted, and the person or persons entitled to receive the Common Units issuable upon such conversion shall be treated for all purposes as the record holder or holders of the Common Units as of such date (the “Conversion Time”).

(c) Conversion Price Adjustments of Preferred Units for Certain Dilutive Issuances, Splits and Combinations. The Conversion Price of the Preferred Units shall be subject to adjustment from time to time as follows:

(i) (A) If the Company shall issue, on or after the date hereof, any Additional Units without consideration or for a consideration per Unit less than the Conversion Price applicable to a class of Preferred Units in effect immediately prior to the issuance of such Additional Units, the applicable Conversion Price for such Units in effect immediately prior to each such issuance shall forthwith (except as otherwise provided in this clause (i)) be adjusted to a price determined by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of Common Units Outstanding (as defined below) immediately prior to such issuance plus the number of Common Units that the aggregate consideration received by the Company for such issuance would purchase at such Conversion Price; and the denominator of which shall be the number of Common Units Outstanding immediately prior to such issuance plus the number of such Additional Units. For purposes of this Section 2.10(c)(i)(A), the term “Common Units Outstanding” shall mean and include the following: (1) outstanding Common Units, (2) Common Units issuable upon

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conversion of outstanding Preferred Units, including the Series C Accruing Distribution and Series B Accruing Distribution to the extent so included in accordance with Section 2.10(a), (3) Common Units issuable upon exercise of outstanding options and (4) Common Units issuable upon exercise (and, in the case of warrants to purchase Preferred Units, conversion) of outstanding warrants. Units described in (1) through (4) above shall be included whether vested or unvested, whether contingent or non-contingent and whether exercisable or not yet exercisable.

(B) No adjustment of the Conversion Price for the Preferred Units shall be made in an amount less than one cent per Unit, provided that any adjustments that are not required to be made by reason of this sentence shall be carried forward and either shall be taken into account in any subsequent adjustment made prior to three (3) years from the date of the event giving rise to the adjustment being carried forward, or shall be made at the end of three (3) years from the date of the event giving rise to the adjustment being carried forward. Except to the limited extent provided for in subsections (E)(3) and (E)(4), no adjustment of such Conversion Price pursuant to this Section 2.10(c)(i) shall have the effect of increasing the Conversion Price above the Conversion Price in effect immediately prior to such adjustment.

(C) In the case of the issuance of Additional Units for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting any reasonable discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof.

(D) In the case of the issuance of the Additional Units for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined by the Board irrespective of any accounting treatment.

(E) In the case of the issuance of options to purchase or rights to subscribe for Common Units, securities by their terms convertible into or exchangeable for Common Units or options to purchase or rights to subscribe for such convertible or exchangeable securities, the following provisions shall apply for purposes of determining the number of Additional Units issued and the consideration paid therefor:

(1) The aggregate maximum number of Common Units deliverable upon exercise (assuming the satisfaction of any conditions to exercisability, including without limitation, the passage of time, but without taking into account potential anti-dilution adjustments) of such options to purchase or rights to subscribe for Common Units shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner

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provided in Sections 2.10(c)(i)(C) and (c)(i)(D)), if any, received by the Company upon the issuance of such options or rights plus the minimum exercise price provided in such options or rights (without taking into account potential anti-dilution adjustments) for the Common Units covered thereby.

(2) The aggregate maximum number of Common Units deliverable upon conversion of, or in exchange (assuming the satisfaction of any conditions to convertibility or exchangeability, including, without limitation, the passage of time, but without taking into account potential anti-dilution adjustments) for, any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration equal to the consideration, if any, received by the Company for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued distributions), plus the minimum additional consideration, if any, to be received by the Company (without taking into account potential anti-dilution adjustments) upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in Sections 2.10(c)(i)(C) and (c)(i)(D)).

(3) In the event of any change in the number of Common Units deliverable or in the consideration payable to the Company upon exercise of such options or rights or upon conversion of or in exchange for such convertible or exchangeable securities, the Conversion Price of the Preferred Units, to the extent in any way affected by or computed using such options, rights or securities, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Common Units or any payment of such consideration upon the exercise of any such options or rights or the conversion or exchange of such securities.

(4) Upon the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration of any options or rights related to such convertible or exchangeable securities, the Conversion Price of the Preferred Units, to the extent in any way affected by or computed using such options, rights or securities or options or rights related to such securities, shall be recomputed to reflect the issuance of only the number of Common Units (and convertible or exchangeable

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securities that remain in effect) actually issued upon the exercise of such options or rights, upon the conversion or exchange of such securities or upon the exercise of the options or rights related to such securities.

(5) The number of Additional Units deemed issued and the consideration deemed paid therefor pursuant to Sections 2.10(c)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any change, termination or expiration of the type described in either Sections 2.10(c)(i)(E)(3) or (4).

(ii) In the event the Company should at any time or from time to time after the date hereof fix a record date for the effectuation of a split or subdivision of the outstanding Common Units or the determination of holders of Common Units entitled to receive a distribution payable in additional Common Units or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional Common Units (hereinafter referred to as “Common Unit Equivalents”) without payment of any consideration by such holder for the additional Common Units or the Common Unit Equivalents (including the additional Common Units issuable upon conversion or exercise thereof), then, as of such record date (or the date of such distribution, split or subdivision if no record date is fixed), the Conversion Price of the Preferred Units shall be appropriately decreased so that the number of Common Units issuable on conversion of each Unit of such class shall be increased in proportion to such increase of the aggregate of Common Units outstanding and those issuable with respect to such Common Unit Equivalents with the number of Units issuable with respect to Common Unit Equivalents determined from time to time in the manner provided for deemed issuances in Section 2.10(c)(i)(E).

(iii) If the number of Common Units outstanding at any time after the date hereof is decreased by a combination of the outstanding Common Units, then, following the record date of such combination, the Conversion Price for the Preferred Units shall be appropriately increased so that the number of Common Units issuable on conversion of each Unit of such class shall be decreased in proportion to such decrease in outstanding Units.

(d) Other Distributions. In the event the Company shall declare a distribution payable in securities of other Persons, evidences of indebtedness issued by the Company or other Persons, assets (excluding cash distributions) or options or rights not referred to in Section 2.10(c)(ii), then, in each such case for the purpose of this Section 2.10(d), the holders of the Preferred Units shall be entitled to a proportionate share of any such distribution as though they were the holders of the number of Common Units into which their Preferred Units are convertible as of the record date fixed for the determination of the holders of Common Units entitled to receive such distribution.

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(e) Recapitalizations. If at any time or from time to time there shall be a recapitalization of the Common Units, provision shall be made so that the holders of the Preferred Units shall thereafter be entitled to receive upon conversion of the Preferred Units the number of Securities or property of the Company or otherwise, to which a holder of the number of Common Units deliverable upon conversion of such Preferred Units immediately prior to such recapitalization would have been entitled on such recapitalization. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 2.10 with respect to the rights of the holders of the Preferred Units after the recapitalization to the end that the provisions of this Section 2.10 (including adjustment of the Conversion Price then in effect and the number of Units issuable upon conversion of the Preferred Units) shall be applicable after that event as nearly equivalently as may be practicable.

(f) No Impairment. The Company will not, without the appropriate required vote of the Members, by amendment of this Agreement or through any reorganization, recapitalization, transfer of assets, consolidation, merger, conversion, transfer, domestication, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 2.10 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the holders of the Preferred Units against impairment.

(g) No Fractional Units and Certificate as to Adjustments.

(i) No fractional Units shall be issued upon the conversion of any Preferred Units and the aggregate number of Common Units to be issued to particular Unitholders shall be rounded down to the nearest whole Unit and the Company shall pay in cash the fair market value of any fractional Units as of the time when entitlement to receive such fractions is determined. Whether or not fractional Units would be issuable upon such conversion shall be determined on the basis of the total number of Preferred Units the holder is at the time converting into Common Units and the number of Common Units issuable upon such conversion.

(ii) Upon the occurrence of each adjustment or readjustment of the Conversion Price of Preferred Units pursuant to this Section 2.10, the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Preferred Units a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of any holder of Preferred Units, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Price for such class of Preferred Units at the time in effect, and (C) the number of Common Units and the amount, if any, of other property that at the time would be received upon the conversion of a Preferred Unit.

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(h) Notices of Record Date. In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any distribution (other than a cash distribution), the Company shall mail to each holder of Preferred Units, at least ten (10) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such distribution, and the amount and character of such distribution.

(i) Waiver of Adjustment to Conversion Price. Notwithstanding anything herein to the contrary, any downward adjustment of the Conversion Price of any class of Preferred Units may be waived, either prospectively or retroactively and either generally or in a particular instance, (i) with respect to the Series C Preferred Units, by the consent or vote of the Series C Required Holders, (ii) with respect to the Series B Preferred Units, by the consent or vote of the Series B Required Holders and (iii) with respect to the Series A Preferred Units, by the consent or vote of the Series A Required Holders; provided, however, that with respect to any event that causes by operation of this Section 2.10 a downward adjustment of the Conversion Price of the Series B Preferred Units, any waiver by the Series B Required Holders of any such downward adjustment by the Series B Required Holders shall be binding upon and shall be deemed to waive any downward adjustment of the Series A Preferred Units caused by the same event. Any waiver of any downward adjustment of a Conversion Price shall bind all future holders of such class of Preferred Units affected thereby.

(j) Status of Converted Preferred Units. In the event any Preferred Units shall be converted pursuant to this Section 2.10, the Preferred Units so converted shall be cancelled and shall not be issuable by the Company.

(k) Adjustments Upon Conversion of Preferred Units. Upon any conversion of Preferred Units into Common Units in accordance with this Section 2.10, the following shall occur:

(i) The Preferred Unitholder shall be treated as having contributed to the Company with respect to the Common Unit or Units received in the conversion the balance such Unitholder had in its Capital Account to the extent attributable to the Preferred Unit or Units converted;

(ii) Immediately following the conversion, the Gross Asset Values of all of the Company’s assets shall be adjusted in accordance with subsection (b) of the definition of “Gross Asset Value”;

(iii) The conversion date shall be treated as the end of a fiscal year so that all Net Income and Net Loss (including the amount of any adjustment to the Gross Asset Values of the Company’s assets pursuant to clause (ii)) and other items specially allocable to the Members shall be allocated in accordance with Section 4.3; provided, however, that notwithstanding any provision of Section 4.3 to the contrary, Net Income and Net Loss attributable to any adjustment to the Gross Asset Value of the Company’s assets pursuant to clause

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(ii) shall first be allocated to the holders of the Preferred Units that were converted until the Capital Accounts of such Unitholders determined solely with respect to the Common Unit or Units issued upon the conversion equals such holders’ respective Target Balances determined solely with respect to such Common Unit or Units;

(iv) In the event that there is insufficient Net Income and the Net Loss attributable to the adjustment to the Gross Asset Values of the Company’s assets pursuant to clause (ii) to accomplish the allocation specified in the proviso to clause (iii), the Company shall (i) reallocate capital from the non-converting Unitholders to the holders of the Preferred Units that were converted until the Capital Accounts of the converting Unitholders with respect to the Common Unit or Units received upon the conversion equals such Unitholders’ respective Target Balances determined solely with respect to such Common Unit or Units and (ii) make “corrective allocations” of items of gross income or loss solely for income tax purposes in accordance with Regulations Section 1.704-1(b)(2)(iv)(s); and

(v) The Board shall make such other adjustments as it may in good faith determine may be necessary to comply with the provisions of the Regulations pertaining to the treatment of “non-compensatory” options under Code Sections 721 and 704.

SECTION 2.11. Limited Liability Company Agreement. For administrative convenience, certain agreements among the Company and the Unitholders are set forth in the Voting Agreement and the Investor Rights Agreement, both of which, together with this Agreement, shall constitute the limited liability company agreement of the Company for purposes of the Act. To the extent any person listed on Schedule A has the right to receive units of limited liability company interest in the Company pursuant to the Merger but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (including pursuant to a joinder or a power of attorney or other authorization granted to an attorney in fact or agent under the Merger Agreement or other documents related thereto), such person’s acceptance of such units of limited liability company interest shall be deemed to constitute that person’s agreement to be bound by the Voting Agreement and the Investor Rights Agreement. Upon written request from any Unitholder to the Company at its principal office, the Company shall supply to such Unitholder, copies of this Agreement, the Voting Agreement and the Investor Rights Agreement, free of charge.

SECTION 2.12. Unrelated Business Taxable Income, Trade and Business Income and Effectively Connected Income. The Company shall use its reasonable best efforts to ensure it does not incur: (i) “unrelated business taxable income” within the meaning of Sections 511-514 of the Code; (ii) income derived from the conduct of a trade or business outside of the United States; or (iii) income that is effectively connected with the conduct of a trade or business in the United States, including gain from the disposition of a United States real property interest within the meaning of Section 897 of the Code.

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ARTICLE III.

MANAGEMENT

SECTION 3.1. The Board of Managers; Delegation of Authority and Duties.

(a) Authority of the Board. To the fullest extent permitted by Delaware law, the Board established pursuant to Section 3.2 below shall possess full and exclusive power to manage the business and affairs of the Company (and shall be considered a “manager” for purposes of Section 18-402 of the Act). In furtherance of the foregoing, each of the Members and other Unitholders hereby consents to the exercise by the Board of all such powers and rights conferred on the Board by the Act and this Agreement with respect to the management and control of the Company. No Member, in its capacity as a Member, shall have any power or authority to act for, sign for or do any act that would bind the Company. Each Member acknowledges and agrees that, except as otherwise agreed in writing, no Member shall, in its capacity as a Member, be bound to devote any of such Member’s business time to the affairs of the Company, and that each Member and such Member’s Affiliates do and will continue to engage for such Member’s own account and for the account of others in other business ventures.

(b) Delegation by the Board. Except as provided in Sections 3.1(c) and 3.6 below, the Board shall not have the power and authority to delegate to one or more other Persons the Board’s rights and powers to manage and control the business and affairs of the Company; provided, that the Board may authorize any Person (including any Member, Officer or Manager) to enter into and perform under any document authorized by the Board on behalf of the Company.

(c) Committees. The Board may, from time to time, designate one or more committees of the Board, each of which shall be comprised of at least one Series B Manager and one Series C Manager. Any such committee, to the extent provided in the enabling resolution and until dissolved by the Board, shall have and may exercise any or all of the authority of the Board. At every meeting of any such committee, the presence of a majority of all the members thereof (including any vacancies) shall constitute a quorum, and the affirmative vote of a majority of the members of such committee present shall be necessary for the adoption of any resolution. The Board may dissolve any committee at any time.

SECTION 3.2. Establishment of the Board.

(a) Managers. There shall be and hereby is established a Board of Managers (the “Board”) whose authorized number of members (each a “Manager”) shall be seven (7). Managers shall be elected, appointed and removed by the Members specified in Section 3.2(b) hereof from time to time as set forth in Section 3.2(b) hereof. Each Manager shall remain in office until his or her death, resignation or removal, and in the event of death, resignation or removal of a Manager, the vacancy created shall be filled as provided in Section 3.2(b). All Managers shall be individuals.

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(b) Board Composition. The Managers shall be designated as provided below:

(i) for so long as any Series C Preferred Units are outstanding, the Series C Required Holders shall be entitled to elect four (4) members of the Board (the “Series C Managers”); and

(ii) for so long as any Series B Preferred Units are outstanding, the Series B Required Holders shall be entitled to elect three (3) members of the Board (the “Series B Managers”).

(c) Removal. Managers designated or elected in accordance with Section 3.2(b) shall be removed from the Board (with or without cause) only upon the vote or written consent of the requisite Member(s) that are entitled to designate or elect such Manager under Section 3.2(b) above.

(d) No Individual Authority. No Manager has the authority or power to act for or on behalf of the Company, to do any act that would be binding on the Company or to make any expenditures or incur any obligations on behalf of the Company or authorize any of the foregoing, other than acts that are expressly authorized by the Board (or a duly authorized committee thereof).

(e) Duties. The Managers, in the performance of their duties as such, shall owe to the Company fiduciary duties of the type owed by the directors of a Delaware corporation to such corporation and its stockholders under the laws of the State of Delaware. The Managers, Officers, Members and Unitholders shall not be deemed to owe fiduciary duties to creditors of the Company or its Subsidiaries.

(f) Exculpation. A Manager shall not be personally liable to the Company or any Member or Unitholder for monetary damages for breach of fiduciary duty as a Manager, except for liability (i) for any breach of the Manager’s duty of loyalty to the Company or the Members or Unitholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law or (iii) for any transaction from which the Manager derived any improper personal benefit.

SECTION 3.3. Board Meetings.

(a) Quorum; Voting. A majority of the total number of Managers (which majority shall include at least one (1) Series C Manager and one (1) Series B Manager) shall constitute a quorum for the transaction of business of the Board and the act of a majority of the Managers present at a meeting of the Board at which a quorum is present shall be the act of the Board. A Manager who is present at a meeting of the Board at which action on any matter is taken shall be presumed to have assented to the action unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the Person acting as secretary of the meeting before the adjournment thereof or shall deliver such dissent to the Company immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Manager who voted in favor of such action.

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(b) Place of Meetings; Waiver of Notice. Meetings of the Board may be held at such place or places as shall be determined from time to time by resolution of the Board or, in the case of a special meeting of the Board, by the Person(s) calling the meeting as provided herein. At all meetings of the Board, business shall be transacted in such order as shall from time to time be determined by resolution of the Board or, in the absence of such resolution, by the chairman of the meeting. Attendance of a Manager at a meeting shall constitute a waiver of notice of such meeting, except where a Manager attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

(c) Regular Meetings. Regular meetings of the Board shall be held at such times and places as shall be designated from time to time by resolution of the Board. Additional notice of such meetings shall not be required.

(d) Special Meetings. Special meetings of the Board may be called on at least 24 hours notice to each Manager by the Chairman or a majority of the Managers. Such notice need not state the purpose or purposes of, nor the business to be transacted at, such meeting, except as may otherwise be required by law or provided for in this Agreement.

(e) Notice. Notice of any special meeting of the Board or committee of the Board may be given to the Managers at their addresses known to the Company either by email or in any other manner permitted by Section 7.4.

SECTION 3.4. Chairman. The Board shall designate a Manager selected by the Series C Required Holders to serve as its Chairman. The Chairman shall preside at all meetings of the Board. If the Chairman is absent at any meeting of the Board, a majority of the Managers present shall designate another Manager to serve as interim chairman for that meeting. Except as authorized by the Board, the Chairman shall have no authority or power to act for or on behalf of the Company, to do any act that would be binding on the Company or to make any expenditure or incur any obligations on behalf of the Company or authorize any of the foregoing.

SECTION 3.5. Action by Written Consent or Telephone Conference. Any action permitted or required by the Act, the Certificate or this Agreement to be taken at a meeting of the Board or any committee designated by the Board may be taken without a meeting if a consent in writing, setting forth the action to be taken, is signed by all of the Managers or the members of such committee, as the case may be. Such consent shall have the same force and effect as a vote at a meeting, and the execution of such consent shall constitute attendance or presence in person at a meeting of the Board or any such other committee, as the case may be. Subject to the requirements of this Agreement for notice of meetings, the Managers, or members of any other committee designated by the Board, may participate in and hold a meeting of the Board or any such other committee, as the case may be, by means of a conference telephone or similar communications equipment by means of which all Persons participating in the meeting can hear each other, and participation in such meeting shall constitute attendance and presence in person at such meeting, except where a Person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

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SECTION 3.6. Officers.

(a) Designation and Appointment. The Board may, from time to time, employ and retain natural persons as may be necessary or appropriate for the conduct of the Company’s business (subject to the supervision and control of the Board), including employees, agents and other Persons (any of whom may be a Manager) who may be designated as Officers of the Company, with titles including “Chief Executive Officer,” “Chief Operating Officer,” “General Counsel,” “President,” “Vice President,” “Treasurer,” “Secretary,” “Assistant Secretary,” and “Chief Financial Officer,” as and to the extent authorized by the Board. Any number of offices may be held by the same Person. In its discretion, the Board may choose not to fill any office for any period as it may deem advisable. Officers need not be residents of the State of Delaware or Members. Any Officers so designated shall have such authority and perform such duties as the Board may, from time to time, delegate to them. The Board may assign titles to particular Officers. Each Officer shall hold office until his successor shall be duly designated and shall qualify or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. The salaries or other compensation, if any, of the Officers of the Company shall be fixed from time to time by the Board.

(b) Resignation/Removal. Any Officer may resign as such at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time is specified, at the time of its receipt by the Board. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Any Officer may be removed as such, either with or without cause at any time by the Board. Designation of an Officer shall not of itself create any contractual or employment rights.

(c) Duties of Certain Officers. The Officers of the Company who are full-time employees of the Company or a Subsidiary thereof, in the performance of their duties as such, shall owe to the Company duties of loyalty and due care of the type owed by the officers of a Delaware corporation to such corporation and its stockholders under the laws of the State of Delaware.

SECTION 3.7. Opco Board of Directors. For so long as the Company is a stockholder of Opco, the Company shall take all necessary action in its capacity as a stockholder of Opco to cause (a) the members of the board of directors of Opco to include the Series C Managers and the Series B Managers and (b) the notice, election and removal provisions in this Agreement for Managers to apply to such directors of Opco.

SECTION 3.8. Liability of Unitholders.

(a) No Personal Liability. Except as otherwise required by applicable law, and as expressly set forth in this Agreement, no Member or Unitholder shall have any personal liability whatsoever in such Person’s capacity as a Member or Unitholder, whether to the Company, to any other Member, Manager, Officer or Unitholder, to the creditors of the Company or to any other third party, for the debts, liabilities, commitments or any other obligations of the Company or for any losses of the Company.

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Each Member or Unitholder shall be liable only to make such Member’s or Unitholder’s initial Capital Contribution to the Company, if applicable, and the other payments provided expressly herein.

(b) Return of Distributions. In accordance with the Act and the laws of the State of Delaware, a holder of a limited liability company interest may, under certain circumstances, be required to return amounts previously distributed to such holder. To the fullest extent permitted by law, it is the intent of the Unitholders that no distribution to any Unitholder pursuant to Article IV hereof shall be deemed a return of money or other property paid or distributed in violation of the Act. To the fullest extent permitted by law, the payment of any such money or distribution of any such property to a Unitholder shall be deemed to be a compromise within the meaning of the Act, and the Unitholder receiving any such money or property shall not be required to return to any Person any such money or property. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Unitholder is obligated to make any such return or payment, such obligation shall be the obligation of such Unitholder and not of any Manager or other Unitholder.

SECTION 3.9. Indemnification by the Company.

To the fullest extent permitted by the General Corporation Law of the State of Delaware (the “General Corporation Law”) as if the Company were a Delaware corporation, the Company is authorized to provide indemnification of (and advancement of expenses to) agents of the Company (and any other persons to which General Corporation Law would permit the Company to provide indemnification if the Company were a Delaware corporation) through agreements with such agents or other persons, vote of Members or disinterested Managers or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law, subject only to limits created by applicable General Corporation Law (statutory or non-statutory), with respect to actions for breach of duty to the Company, the Members, and others.

Without limiting the foregoing, the Company shall, to the maximum extent permitted from time to time under the law of the State of Delaware as if the Company were a Delaware corporation, indemnify and upon request advance expenses to any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or claim, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was or has agreed to be a Manager or while a Manager is or was serving at the request of as if the Company as a director, officer, partner, trustee, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorney’s fees and expenses), judgments, fines, penalties and amounts paid in settlement incurred (and not otherwise recovered) in connection with the investigation, preparation to defend or defense of such action, suit, proceeding or claim; provided, however, that the foregoing shall not require the Company to indemnify or advance expenses to any person in connection with any action, suit, proceeding, claim or counterclaim initiated by or on behalf of such person. Such indemnification shall not be exclusive of other indemnification rights arising under any agreement, vote of Managers or Members or otherwise and shall inure to the benefit of the heirs and legal

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representatives of such person. Any person seeking indemnification under this Section 3.9 shall be deemed to have met the standard of conduct required for such indemnification unless the contrary shall be established.

Any amendment, repeal or modification of the foregoing provisions of this Section 3.9 shall not adversely affect any right or protection of a Manager, Officer, agent, or other person existing at the time of, or increase the liability of any Manager with respect to any acts or omissions of such Manager, Officer or agent occurring prior to, such amendment, repeal or modification.

It is the intent of the Company that with respect to all advancement and indemnification obligations provided by the Company as referenced in this Section 3.9, the Company shall be the primary source of advancement, reimbursement and indemnification relative to any direct or indirect Member of the Company (or any affiliate of such Member, other than the Company or any of its direct or indirect Subsidiaries). The Company shall have no right to seek contribution, indemnity or other reimbursement for any of its obligations described in this Section 3.9 from any such Member or Unitholder of the Company (or any Affiliate of such Member or Unitholder, other than the Company or any of its direct or indirect Subsidiaries).

SECTION 3.10. Protective Provisions.

(a) So long as any Series C Preferred Units are outstanding, the Company shall not, and, prior to a Public Offering of Opco, the Company shall cause Opco not to, in each case by amendment, merger, consolidation or otherwise, without the prior written consent of the Series C Required Holders:

(i) consummate a Liquidation Event, or sell, license, lease, transfer or otherwise dispose of material assets;

(ii) alter or change the rights, preferences or privileges of the Series C Preferred Units so as to affect adversely such Units;

(iii) authorize or issue, or obligate itself to issue, any Equity Security (including any other security convertible into or exercisable for any such Equity Security), other than, in the case of the Company, (x) the issuance of Series C Preferred Units with respect to Series C Accruing Distributions and (y) the issuance of Series B Preferred Units with respect to Series B Accruing Distributions and, in the case of Opco, the issuance of Series D Preferred Stock (and any pay-in-kind dividends thereon) pursuant to that certain Series D Preferred Stock Purchase Agreement dated on or about June 23, 2014 (as amended, the “Purchase Agreement”) among Opco and the purchasers party thereto;

(iv) redeem, purchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any Securities; provided, however, that this restriction shall not apply to the repurchase of Securities (A) from employees, officers, directors, consultants or other persons performing services for the Company or Opco pursuant to agreements under which the Company or

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Opco has the option to repurchase such shares upon the occurrence of certain events, such as the termination of employment or service, or pursuant to a right of first refusal or (B) that are outstanding as of the date hereof;

(v) amend, alter or repeal any provision of in the case of the Company, the Certificate or this Agreement and, in the case of Opco, the certificate of incorporation or bylaws of Opco;

(vi) incur, create, guarantee or authorize the creation of any indebtedness in excess of $25,000,000 in the aggregate;

(vii) make any loan or advance in excess of $100,000 to any other Person, unless such Person is wholly owned by the Company;

(viii) make any capital expenditure that is not already included in a budget approved by the Board or the board of directors of Opco, as the case may be;

(ix) hire or fire any executive officer, including the Chief Executive Officer and Chief Financial Officer;

(x) change the authorized number of Managers or members of the board of directors of Opco, as the case may be;

(xi) acquire or merge with another entity or enter into any other material transaction involving the acquisition of the assets of such entity;

(xii) sell, assign, license or otherwise dispose (in a single transaction or a series of related transactions) material technology, intellectual property and other material assets, other than licenses granted in the ordinary course of business;

(xiii) enter into material transactions with Affiliates of the Company or enter into any other transaction described (as if the Company were a Delaware corporation) in Section 144 of the General Corporation Law of the State of Delaware, except for (1) transactions contemplated by the Purchase Agreement or the Management Agreement dated as of September 8, 2011 (as amended, the “Management Agreement”) between Opco and WCAS Management Corporation, (2) the issuance of Equity Securities made in accordance with Section 3 or 4 of the Investor Rights Agreement, (3) transactions entered into the ordinary course of business with any employee of the Company and (4) transactions among the Company and Subsidiaries of the Company;

(xiv) make any material change in the nature of its business from that conducted as of the date hereof; or

(xv) approve or materially amend any annual budget.

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(b) So long as any Series B Preferred Units are outstanding, the Company shall not and, prior to a Public Offering of Opco, the Company shall cause Opco not to, in each case by amendment, merger, consolidation or otherwise, without the prior written consent of the Series B Required Holders:

(i) alter or change the rights, preferences or privileges of the Series B Preferred Units so as to affect adversely such Series B Preferred Units in a manner different to any adverse effect such alteration or change would have on the rights, preferences or privileges of the Series C Preferred Units;

(ii) authorize or issue, or obligate itself to authorize or issue, any securities that, with respect to their liquidation preference upon a Liquidation Event, are both (A) junior to the liquidation preference of the Series C Preferred Units upon a Liquidation Event and (B) senior to, or pari passu with, the liquidation preference of the Series B Preferred Units upon a Liquidation Event;

(iii) authorize or issue, or obligate itself to issue, (1) any Equity Security of Opco (including any other security convertible into or exercisable for any such Equity Security of Opco), in a single transaction or a series of transactions, resulting in proceeds received by Opco in an aggregate amount in excess of $100,000,000 or (2) any Equity Security of the Company (including any other security convertible into or exercisable for any such Equity Security of the Company); provided that, for the avoidance of doubt, no approval of the Series B Required Holders shall be required for (A) the Company to authorize or issue (x) any Series C PIK Units or Series B PIK Units or (y) any Common Units in connection with the conversion of Series C Preferred Units, Series B Preferred Units or Series A Preferred Units pursuant to this Agreement or (B) Opco to (x) issue Series D Preferred Stock (and any pay-in-kind dividends thereon) pursuant to the Purchase Agreement and as contemplated by Section 1.2(b) of the Purchase Agreement or (y) issue shares of common stock to employees, directors, consultants and other service providers for the primary purpose of soliciting or retaining their services pursuant to plans or agreements approved by the board of directors of Opco, in the case of clause (B), which amount shall not be included in the calculation of such $100,000,000 threshold;

(iv) redeem, purchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any Securities; provided, however, that this restriction shall not apply to the repurchase of Securities (A) from employees, officers, directors, consultants or other persons performing services for the Company or any Subsidiary pursuant to agreements under which the Company or Opco has the option to repurchase such shares upon the occurrence of certain events, such as the termination of employment or service, or pursuant to a right of first refusal or (B) that are outstanding as of the date hereof;

(v) amend, alter or repeal any provision of the bylaws of Opco with respect to determining a quorum of the board of directors of Opco;

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(vi) incur, create, guarantee or authorize the creation of any indebtedness in excess of $25,000,000 in the aggregate;

(vii) change the authorized number of Managers or members of the board of directors of Opco, as the case may be;

(viii) enter into material transactions with Affiliates of the Company or enter into any other transaction described (as if the Company were a Delaware corporation) in Section 144 of the General Corporation Law of the State of Delaware, except for (1) transactions contemplated by the Purchase Agreement or the Management Agreement, (2) the issuance of Equity Securities of the Company made in accordance with Section 3 or 4 of the Investor Rights Agreement, (3) transactions entered into the ordinary course of business with any employee of the Company and (4) transactions among the Company and Subsidiaries of the Company; or

(ix) make any material change in the nature of the Company’s principal business that are not natural extensions of such business conducted as of the date hereof; provided that no approval of the Series B Required Holders shall be required if such changes to the Company’s principal business were approved by the Board, which approval must include the affirmative vote of the Board Majority of the Minority.

(c) So long as any Series A Preferred Units are outstanding, the Company shall not (by amendment, merger, consolidation or otherwise), without the prior written consent of the Series A Required Holders:

(i) authorize or issue, or obligate itself to authorize or issue, any securities that, with respect to their liquidation preference upon a Liquidation Event, are both (i) junior to the liquidation preference of the Series C Preferred Units and Series B Preferred Units upon a Liquidation Event and (ii) senior to, or pari passu with, the liquidation preference of the Series A Preferred Units upon a Liquidation Event; or

(ii) decrease the Series A Liquidation Preference; provided that no such approval shall be required for the Company to authorize or issue, or for the Company to obligate itself to authorize or issue, any Securities having a preference pari passu or senior to the Series B Preferred Units with respect to a Liquidation Event.

(d) Notwithstanding anything to the contrary in this Section 3.10 or elsewhere in this Agreement or in the Voting Agreement or in the Investor Rights Agreement, until such time as a former stockholder of Opco is admitted as a Member of the Company as set forth in Section 2.1, such Person shall have no right to vote or consent to any matter set forth in this Section 3.10 or in any other provision of this Agreement requiring the consent of the Members, the Unitholders, or the Series A Required Holders, the Series B Required Holders or the Series C Required Holders, as

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applicable, and any holder of a Unit who has not been admitted as a Member shall have no right to vote on, consent to, or approve any matter and shall not be taken into consideration in determining whether the vote, consent, or approval of the Members, the Unitholders, the Series A Required Holders, the Series B Required Holders or the Series C Required Holders, as applicable, has been obtained.

ARTICLE IV.

CAPITAL CONTRIBUTIONS; ALLOCATIONS; DISTRIBUTIONS

SECTION 4.1. Capital Contributions. The Members and the Unitholders listed on Schedule A hereto on the date hereof are making on the date hereof the initial Capital Contributions to the Company described on Schedule C hereto. No Member or Unitholder shall be entitled (except as provided in Section 3 of the Investor Rights Agreement) to make any additional Capital Contributions without the approval of the Board or required to make any additional Capital Contributions without such Member’s express written agreement. In connection with any issuance of additional Units, the Board may accept such additional Capital Contributions as it determines in its discretion.

SECTION 4.2. Capital Accounts.

(a) Creation. There shall be established for each Unitholder on the books of the Company a Capital Account which shall be increased or decreased in the manner set forth in this Agreement.

(b) Negative Balance. A Unitholder shall not have any obligation to the Company or to any other Unitholder to restore any negative balance in the Capital Account of such Unitholder.

SECTION 4.3. Allocations of Net Income and Net Loss.

(a) Timing and Amount of Allocations of Net Income and Net Loss. Net Income and Net Loss of the Company shall be determined and allocated with respect to each fiscal year of the Company as of the end of each such year or as circumstances otherwise require or allow. The Board shall allocate the Net Income and Net Loss among the Unitholders in a manner that as closely as possible gives economic effect to the provisions of this Agreement. Subject to the other provisions of this Section 4.3, an allocation to a Unitholder of a share of Net Income or Net Loss shall be treated as an allocation of the same share of each item of income, gain, loss or deduction that is taken into account in computing Net Income or Net Loss. For the avoidance of doubt, except as otherwise provided in this Agreement, Net Income and Net Loss (and, to the extent necessary, individual items of income, gain, loss, deduction or credit) of the Company shall be allocated among the Unitholders in a manner such that, after giving effect to the regulatory allocations set forth in Section 4.3(b), the Capital Account balance of each Unitholder, immediately after making such allocation, is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made to such Unitholder if the Company were dissolved, its affairs wound up and its assets sold for cash equal to their Gross Asset Value, all Company liabilities were satisfied (limited with respect to each

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nonrecourse liability to the Gross Asset Value of the assets securing such liability), and the net assets of the Company were distributed, in accordance with Section 4.4(b) to the Unitholders immediately after making such allocation, minus (ii) such Unitholder’s share of “partnership minimum gain” (determined in accordance with the principles of Regulations Section 1.704-2(d)) and “partner nonrecourse debt minimum gain” (determined in accordance with the principles of Regulations Section 1.704-2(i)), computed immediately before the hypothetical sale of assets (for a Unitholder, the difference between the amount in clause (i) and the amount in clause (ii), the Unitholder’s “Target Balance”).

(b) Regulatory Allocations. Provisions governing the allocation of income, gain, loss, deduction and credit (and items thereof) are included in this Agreement as may be necessary to provide that the Company’s allocation provisions contain a so-called “qualified income offset” and comply with all provisions relating to the allocation of so-called “nonrecourse deductions” and “partner nonrecourse deductions” and the chargeback thereof as set forth in the Regulations under Section 704(b) of the Code.

(c) Allocations upon Transfer. For any fiscal year during which a Unitholder’s Unit(s) in the Company is assigned by such Unitholder, the portion of the Net Income and Net Loss of the Company that is allocable in respect of such Unitholder’s Unit(s) shall be apportioned between the assignor and the assignee of such Unitholder’s Unit(s) using any permissible method under Code Section 706 and the Regulations thereunder, as determined by the Board.

(d) Required Tax Allocations. All items of income, gain, loss, deduction and credit for federal income tax purposes shall be allocated to each Unitholder in the same manner as the Net Income or Net Loss (and each item of income, gain, loss and deduction related thereto) that is allocated to such Unitholder pursuant to Section 4.3(a), (b) and (c) to which such tax items relate. Notwithstanding the foregoing provisions of this Section 4.3, income, gain, loss, deduction, and credits with respect to property contributed to the Company by a Unitholder shall be allocated among the Unitholders for federal and state income tax purposes pursuant to Regulations promulgated under Section 704(c) of the Code, so as to take account of the variation, if any, between the adjusted basis for federal income tax purposes of the property to the Company and its initial Gross Asset Value at the time of contribution. In the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (b), (c), or (d) of the definition of Gross Asset Value, subsequent allocations of income, gain, loss, deduction, and credits with respect to such asset shall take account of the variation, if any, between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c) and the applicable Regulations consistent with the requirements of Regulations Section 1.704-1(b)(2)(iv)(g). Allocations pursuant to this Section 4.3(d) are solely for purposes of federal, state and local income taxes and shall not affect, or in any way be taken into account in computing, any Unitholder’s Capital Account or share of Net Income, Net Loss, other tax items or distributions pursuant to any provision of this Agreement.

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(e) Unitholders’ Tax Reporting. The Unitholders acknowledge and are aware of the income tax consequences of the allocations made by this Section 4.3 and, except as may otherwise be required by applicable law or regulatory requirements, hereby agree to be bound by the provisions of Section 4.3 in reporting their shares of Company income, gain, loss, deductions, and credits for federal, state and local income tax purposes.

SECTION 4.4. Distributions.

(a) Timing and Valuation. Subject to the provisions of Section 4.4(e), Distributable Assets shall be distributed by the Company only upon the occurrence of a Liquidation Event; provided that Additional Consideration with respect to a Liquidation Event and any Distributable Assets that are not Cash shall not be distributed upon the occurrence of a Liquidation Event and any Cash generated with respect thereto shall be distributed by the Company as soon as practicable after the receipt thereof by the Company.

(b) Priority in Distributions. Subject to Section 4.4(e), in connection with any Liquidation Event or the distribution of Distributable Assets, all of the proceeds of such Liquidation Event or such Distributable Assets, as the case may be, shall be distributed as follows:

(i) First, to the holders of the outstanding Series C Preferred Units on a pro rata basis (determined by reference to the undistributed Series C Liquidation Amount with respect to the Series C Preferred Units held by each such holder) until the aggregate cumulative amount distributed with respect to each Series C Preferred Unit pursuant to this clause (i) equals the Series C Liquidation Amount;

(ii) Second, to the holders of the outstanding Series B Preferred Units on a pro rata basis (determined by reference to the undistributed Series B Liquidation Amount with respect to the Series B Preferred Units held by each such holder) until the aggregate cumulative amount distributed with respect to each Series B Preferred Unit pursuant to this clause (ii) equals the Series B Liquidation Amount;

(iii) Third, to the holders of the outstanding Series A Preferred Units on a pro rata basis (determined by reference to the undistributed Series A Liquidation Amount with respect to the Series A Preferred Units held by each such holder) until the aggregate cumulative amount distributed with respect to each Series A Preferred Unit pursuant to this clause (iii) equals the Series A Liquidation Amount; and

(iv) Fourth, thereafter, all of the remaining Distributable Assets shall be distributed to the holders of the Common Units on a pro rata basis determined by reference to the number of such Common Units held by each such holder.

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(c) Allocation of Escrow. In the case of a Liquidation Event, if any portion of the consideration payable to the Unitholders is placed into escrow and/or is payable to the Unitholders subject to contingencies (the “Additional Consideration”), the portion of such consideration that is not placed in escrow and not subject to any contingencies (the “Initial Consideration”) shall be allocated among the Unitholders in accordance with Section 4.4(b) as if the Initial Consideration were the only consideration payable in connection with such Liquidation Event and any Additional Consideration which becomes payable to the Unitholders upon release from escrow or satisfaction of contingencies shall be allocated among the Unitholders in accordance with Section 4.4(b) above after taking into account the previous payment of the Initial Consideration as part of the same transaction.

(d) Successors. For purposes of determining the amount of distributions under this Section 4.4, each Unitholder shall be treated as having received amounts received by its predecessors and any prior holders of such Units in respect of any of such Unitholder’s Units.

(e) Tax Distributions. To the extent there is taxable income and cash is available, the Board shall cause the Company to make a tax distribution in cash no later than the 15th day of March of each year to each Unitholder (whether or not such Unitholder or such Unitholder’s investors are tax exempt) in an amount equal to the excess of (i) the product of (A) the cumulative taxable income allocable to such Unitholder (including any guaranteed payments for services that are not actually received by such Unitholder in cash and including any required tax allocations to such Unitholder under Section 4.3(d) hereof pursuant to Regulations promulgated under Section 704(c) of the Code) in excess of the cumulative taxable loss allocable to such Unitholder for all taxable years prior to the year in which such distribution is being made, as estimated in good faith by the Board and (B) the combined maximum federal, state and local marginal income tax rate (taking into account the deductibility of state and local taxes for federal income tax purposes and adjusted appropriately to take into account the varying rates applicable to capital gains, qualified dividend income and ordinary income) applicable to individual residents of New York, New York, or such other rate as determined by the Board in its good faith discretion, over (ii) all prior distributions pursuant to this Section 4.4. Tax distributions to a Unitholder shall be offset against and reduce the amount of the next succeeding distribution or distributions which such Unitholder would otherwise be entitled to receive pursuant to this Agreement. To the extent that an amount otherwise distributable to a Unitholder is so applied, it shall be treated for all purposes hereof as if such amount had actually been distributed to such Unitholder pursuant to this Agreement.

(f) Accruing Distributions. On or after a Liquidation Event, the Series C Accruing Distribution shall be paid when and if declared by the Board by delivering to the holders of Series C Preferred Units a number of Series C Preferred Units (“Series C PIK Units”) with respect to each Series C Preferred Unit held by such holder equal to (i) the amount of the Series C Accruing Distribution accrued and unpaid thereon, divided by (ii) the Series C Invested Amount. On or after a Liquidation Event, the Series B Accruing Distribution shall be paid when and if declared by the Board by delivering to the holders of Series B Preferred Units a number of Series B Preferred Units (“Series B

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PIK Units”) with respect to each Series B Preferred Unit held by such holder equal to (i) the amount of the Series B Accruing Distribution accrued and unpaid thereon, divided by (ii) the Series B Invested Amount.

(g) Limitations on Distributions. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to a Member or Unitholder on account of its Units if such distribution would violate the Act or other applicable law.

SECTION 4.5. Right of Set-Off. The Company shall have a right of setoff against all distributions of Distributable Assets in the amount of any withholding tax or other liability or obligation to which the Company or a Subsidiary may be subject as a result of any act or status of any Unitholder, or to which the Company or a Subsidiary may become subject with respect to the interest of any Unitholder. The Company may withhold distributions or portions thereof if it is required to do so by the Code or any other provision of federal, state or local tax or other law. Any amount withheld pursuant to the Code or any other provision of federal, state or local tax or other law with respect to any distribution to a Unitholder shall be treated as an amount distributed to such Unitholder for all purposes under this Agreement. Each Unitholder agrees to indemnify the Company in full for any amounts paid by the Company to a governmental entity or regulatory authority that are specifically attributable to a Unitholder or a Unitholder’s status as such (including, without limitation, any interest, penalties and expenses associated with such payments), and each Unitholder shall promptly upon notification of an obligation to indemnify the Company pursuant to this Section 4.5 make a cash payment to the Company equal to the full amount to be indemnified with interest to accrue on any portion of such cash payment not paid in full, as reasonably determined by the Company, when requested by the Company. A Unitholder’s obligation to indemnify and make contributions to the Company under this Section 4.5 shall survive the termination, dissolution, liquidation and winding up of the Company, and for purposes of this Section 4.5, the Company shall be treated as continuing in existence. To the extent that a Unitholder makes contributions to the Company under this Section 4.5, it shall receive no net credit to its Capital Account.

ARTICLE V.

WITHDRAWAL; DISSOLUTION; NEW AND SUBSTITUTE MEMBERS

SECTION 5.1. Withdrawal. No Member shall have the power or right to resign or otherwise withdraw or be expelled from the Company prior to the dissolution and winding up of the Company except pursuant to a transfer permitted under this Agreement of all of such Member’s Units to either an Assignee or the Company. Notwithstanding anything to the contrary contained in the Act, in no event shall any Member be deemed to have resigned from the Company or cease to be a Member upon the occurrence of any event unless the Member, after the occurrence of such event, indicates in a written instrument delivered to the Company that the Member has so resigned.

SECTION 5.2. Dissolution.

(a) Events. The Company shall be dissolved and its affairs shall be wound up on the first to occur of the following:

(i) the entry of a decree of judicial dissolution of the Company under Section 18-802 of the Act;

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(ii) the eighteen month anniversary of the initial Public Offering of Opco; provided that such date shall be the twenty-first month anniversary of such initial Public Offering if the Series B Required Holders request in writing to the Company prior to such eighteen month anniversary to make such change; and

(iii) upon the approval of at least five of the Managers.

The death, retirement, resignation, expulsion, incapacity, bankruptcy or dissolution of a Member, or the occurrence of any other event that terminates the continued membership of a Member in the Company, shall not, in and of itself, cause a dissolution of the Company, and the Company shall continue in existence subject to the terms and conditions of this Agreement.

(b) Actions Upon Dissolution. When the Company is dissolved, the business and property of the Company shall be wound up and liquidated by or under the direction of the Board or, in the event of the unavailability of the Board, such Member or liquidating trustee as shall be named by the Board. A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Unitholders to minimize the normal losses attendant upon a liquidation.

(c) Priority. In connection with the winding up and liquidation process, the assets of the Company shall be distributed in the following manner and order:

(i) all debts and obligations of the Company, if any, shall first be paid, discharged or provided for by adequate reserves in accordance with the Act; and

(ii) the balance shall be distributed to the Unitholders in accordance with Section 4.4(b).

(d) Cancellation of Certificate. On completion of the winding up of the Company as provided herein, the Company shall file a certificate of cancellation with the Secretary of State of the State of Delaware, cancel any other filings made and take such other actions as may be necessary to terminate the Company, and upon such certificate of cancellation becoming effective the legal existence of the Company shall terminate in accordance with the Act.

SECTION 5.3. Transfer of Units. Any proposed transfer or assignment by a Unitholder of all or part of its Units or other interests in the Company shall be subject to the restrictions on transfer set forth in the Voting Agreement and the Investor Rights Agreement. Subject to the foregoing, any Member who shall assign any Units in the Company shall cease to be a Member of the Company with respect to such Units and shall no longer have any rights or privileges of a Member with respect to such Units. Any Member, Unitholder or Assignee who

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acquires in any manner whatsoever any Units, irrespective of whether such Person has accepted and adopted in writing the terms and provisions of this Agreement, shall be deemed by the acceptance of the benefits of the acquisition thereof to have agreed to be subject to and bound by all of the terms and conditions of this Agreement. No Member shall cease to be a Member upon the collateral assignment of, or the pledging or granting of a security interest in, its Units or other interest in the Company.

SECTION 5.4. New and Substitute Members.

(a) Admission. The Board shall have the right but not the obligation to admit as a Substitute Member or an Additional Member, any Person who acquires Units, or any part thereof, from a Member, Unitholder or Assignee or from the Company; provided, that, the Board shall admit as a Substitute Member, subject to Section 5.4(b), any transferee who acquires Units or any other interest in the Company in accordance with the terms of the Voting Agreement and the Investor Rights Agreement. Concurrently with the admission of a Substitute Member or an Additional Member, the Board shall forthwith cause any necessary papers to be filed and recorded and notice to be given wherever and to the extent required showing the admission and substitution of a transferee as a Substitute Member in place of the transferring Member or the admission of such transferee upon the transfer from a Unitholder or an Assignee, or the admission of an Additional Member, all at the expense, including payment of any professional and filing fees incurred, of the Substitute Member or the Additional Member (unless otherwise approved by the Board, in which case, the Company may cover said expenses).

(b) Conditions. The admission of any Person as a Substitute Member or Additional Member shall be conditioned upon such Person’s written acceptance and adoption of all the terms and provisions of this Agreement, either by (i) execution and delivery of a counterpart signature page to this Agreement countersigned by an authorized Officer on behalf of the Company or (ii) if requested by the Board, a writing evidencing the intent of such Person to become a Substitute Member or Additional Member (in form and substance satisfactory to the Board).

ARTICLE VI.

REPORTS TO MEMBERS; TAX MATTERS

SECTION 6.1. Books of Account. Appropriate books of account shall be kept by the Board, in accordance with GAAP, at the principal place of business of the Company or a Subsidiary thereof, and each Member shall have access to all books, records and accounts of the Company as is required under the Act, in each case, under such conditions and restrictions as the Board may reasonably prescribe.

SECTION 6.2. Reports.

(a) Tax Reporting. As promptly as practicable after the close of each fiscal year of the Company, the Company shall furnish to each Unitholder all Company information necessary to enable each Unitholder to prepare its federal, state, and local income tax returns, which information shall include a Schedule K-1.

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(b) Determinations. All determinations, valuations and other matters of judgment required to be made for accounting purposes under this Agreement shall be made by the Board acting in good faith and, if so made, shall be conclusive and binding on all Members and Unitholders, their Successors in Interest and any other Person bound by this Agreement, and to the fullest extent permitted by law, no such Person shall have the right to an accounting or an appraisal of the assets of the Company or any successor thereto.

SECTION 6.3. Fiscal Year. The fiscal year of the Company shall end at the close of business on December 31 of each calendar year unless otherwise determined by the Board in accordance with Section 706 of the Code.

SECTION 6.4. Certain Tax Matters.

(a) Preparation of Returns. The Board shall cause to be prepared and filed all federal, state and local tax returns of the Company for each year for which such returns are required to be filed. The Board shall determine the appropriate treatment of each item of Company income, gain, loss, deduction and credit and the accounting methods and conventions to be used by the Company under the tax laws of the United States, the several states and other relevant jurisdictions.

(b) Tax Matters Member. The Company and each Member and each Unitholder hereby designate WCAS Valeritas Holdings, LLC as the “tax matters partner” for purposes of Section 6231(a)(7) of the Code and any analogous provisions of state law (the “Tax Matters Member”). The Tax Matters Member, on behalf of the Company and its Members and Unitholders, shall be permitted to make any filing or election under the Code, the Regulations, or any other law or regulations that it believes to be in the best interests of the Company or the Members and Unitholders. The Company shall indemnify and reimburse the Tax Matters Member for all expenses (including legal and accounting fees) incurred as Tax Matters Member pursuant to this clause (b) in connection with any examination, any administrative or judicial proceeding, or otherwise.

(c) Certain Filings. Upon the sale of Company assets or a liquidation of the Company, the Members and the Unitholders shall provide the Board with certain tax filings as reasonably requested by the Board and required under applicable law.

ARTICLE VII.

MISCELLANEOUS

SECTION 7.1. Governing Law. THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICT OF LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event of a direct conflict between the provisions of this Agreement and any mandatory provision of the Act, the applicable provision of the Act shall control. If any provision of this Agreement or the application thereof to any Person or circumstance is held invalid or unenforceable to any extent, the remainder of this Agreement and the application of that provision to other Persons or circumstances is not affected thereby and that provision shall be enforced to the greatest extent permitted by law.

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SECTION 7.2. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective Successors in Interest; provided that no Person claiming by, through or under a Member or Unitholder (whether as such Member’s or Unitholder’s Successor in Interest or otherwise), as distinct from such Member or Unitholder itself, shall have any rights as, or in respect to, a Member or Unitholder (including the right to approve, consent to or vote on any matter or to notice thereof).

SECTION 7.3. Amendments and Waivers. Subject to Section 3.10, this Agreement may only be amended or modified upon (a) the approval of a majority of the Managers and (b) the written consent of Members holding a majority of the Common Units, Series C Preferred Units (on an as converted to Common Units basis) and Series B Preferred Units (on an as converted to Common Units basis), voting together as a single class; provided, that (x) if an amendment or modification would alter or change the powers, preferences, or special rights of any class or series of Units, the Members holding a majority of such Units (on an as converted to Common Units basis) must approve such amendment or modification in writing and (y) any amendment or modification of (i) Section 3.2(e), (ii) the first sentence of Section 3.3, (iii) the first sentence of Section 3.5 or (iv) Section 3.7 shall require the written consent of the Series B Required Holders. For the avoidance of doubt, and notwithstanding anything to the contrary above, the authorization and issuance of additional Units, whether of a new or existing class, subclass or series of Units, at the direction of the Board, whether such additional Units are junior, senior or pari passu with one or more classes, subclasses or series of existing Units, and the amendment of this Agreement and Schedules A, B and C hereto to reflect the terms and relative rights, preferences or privileges of such additional Units, shall not require the approval of any Member other than as provided in Section 3.10, even if the issuance of such additional Units would have a dilutive effect on the economic, governance, voting or other rights of one or more classes, subclasses or series of Units. Each Member and each Unitholder shall be bound by any amendment, amendment and restatement, modification, waiver, or supplement to the terms and provisions of this Agreement effected in accordance with this Section 7.3, whether or not such Member or Unitholder has consented thereto.

SECTION 7.4. Notices. Whenever notice is required or permitted by this Agreement to be given, such notice shall be in writing and shall be given to any Member or Unitholder at its address or facsimile number shown in the Company’s books and records, or, if given to the Company, at the following address:

Valeritas Holdings, LLC

750 Route 202 South, Suite 100

Bridgewater, NJ 08807

Attention:

Facsimile Number:

Telephone Number:

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with a copy to (which shall not constitute notice):

Morgan, Lewis & Bockius LLP

502 Carnegie Center

Princeton, New Jersey 08540

Attention: Steven M. Cohen

Telephone No.:

Facsimile No.:

Each proper notice shall be effective upon any of the following: (i) personal delivery to the recipient, (ii) one Business Day after being sent by facsimile to the recipient (with hard copy sent to the recipient by reputable overnight courier service that same day or the next Business Day (charges prepaid)), (iii) one Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid) or (iv) five Business Days after being deposited in the mails (first class or airmail postage prepaid).

SECTION 7.5. Counterparts. This Agreement may be executed in any number of counterparts (including by means of signature pages sent by facsimile or other electronic means), all of which together shall constitute a single instrument.

SECTION 7.6. Entire Agreement. This Agreement and the other documents and agreements referred to herein or entered into concurrently herewith embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein and therein. This Agreement and such other documents and agreements supersede all prior (but not contemporaneous) agreements and understandings between the parties with respect to such subject matter.

SECTION 7.7. Jurisdiction. Any suit, action or proceeding under or with respect to this Agreement, or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Delaware and each of the Company, the Members and the Unitholders hereby submits to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding or judgment. To the fullest extent permitted by law, each of the Company, the Members and the Unitholders hereby irrevocably waives any objections which it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Delaware, and hereby further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in any inconvenient forum.

SECTION 7.8. Section Titles. Section titles and headings are for descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth in the text hereof.

SECTION 7.9. Intended Third Party Beneficiaries. Each Indemnitee that is not a direct party hereunder for purposes of Section 3.9 of this Agreement is and shall be considered an express third-party beneficiary for purposes of Section 3.9 of this Agreement and shall be entitled to enforce this Agreement to the same extent as a party hereunder.

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[remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties have executed this Amended and Restated Limited Liability Company Agreement as of the day and year first above written.

THE COMPANY:	VALERITAS HOLDINGS, LLC
	By:	/s/ Kristine Peterson
		Name:	Kristine Peterson
		Title:	CEO
TEMPORARY MEMBER:	VALERITAS, INC.
	By:	/s/ Kristine Peterson
		Name:	Kristine Peterson
		Title:	CEO

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among the Company and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

MEMBER NAME:

MEMBER SIGNATURE

DATE

Address:

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

Abingworth Bioventures V LP acting by its Manager Abingworth LLP

MEMBER NAME:

MEMBER SIGNATURE

June 23, 2014

DATE

Address:

38 Jermyn St.

London SW1Y 6DN

United Kingdom

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

Advanced Technology Ventures VIII, L.P.
By: ATV Associates VIII, L.L.C., its General Partner
By:	/s/ Jean George
	Jean George, Managing Director
Address:
500 Boylston Street, Suite 1380
Boston, MA 02116
Date:
June 19, 2014

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

AUDA CAPITAL IV CO-INVESTMENT FUND L.P.

MEMBER NAME:

MEMBER SIGNATURE

June 23, 2014

DATE

Address:

c/o Auda International L.P.

888 Seventh Ave., 41 Floor

New York, NY 10106

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

AUDA CAPITAL IV CO-INVESTMENT GMBH & CO. KG

MEMBER NAME:

MEMBER SIGNATURE

June 23, 2014

DATE

Address:

c/o Auda International L.P.

888 Seventh Ave., 41 Floor

New York, NY 10106

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

AUDA VALERITAS SEGREGATED PORTFOLIO

MEMBER NAME:

MEMBER SIGNATURE

June 23, 2014

DATE

Address:

c/o Auda International L.P.

888 Seventh Ave., 41 Floor

New York, NY 10106

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

BioVentures Investors Limited Partnership

MEMBER NAME:

MEMBER SIGNATURE

6/23/2014

DATE

Address:

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

CHL Medical Partners III Side Fund, LP

CHL Medical Partners III, LP

MEMBER NAME:

MEMBER SIGNATURE

6/19/14

DATE

Address:

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

JOHN E DAVIS III & BETTY F DAVIS JTWROS

MEMBER NAME:

/s/ JOHN E DAVIS III

/s/ BETTY F. DAVIS

MEMBER SIGNATURE

7/2/14

DATE

Address:

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

Elizabeth Gordon

MEMBER NAME:

/s/ Elizabeth Gordon

MEMBER SIGNATURE

6/24/14

DATE

Address:

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

Daniel J. Galles

MEMBER NAME:

/s/ Daniel J. Galles

MEMBER SIGNATURE

6/19/14

DATE

Address:

HLM Venture Partners

222 Berkeley St., 20th Floor

Boston, MA 02116

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

MPM BioVentures IV-QP, L.P.
By: MPM BioVentures IV GP LLC, its General Partner
By: MPM BioVentures IV LLC, its Managing Member
By:	/s/ Todd Foley
Name:	Todd Foley
Title:	Member
6/19/14
DATE
Address:
200 Clarendon Street, 54th Floor
Boston, MA 02116

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

MPM BioVentures IV GmbH & Co. Beteiligungs KG
By: MPM BioVentures IV GP LLC, in its capacity as the Managing Limited Partner
By: MPM BioVentures IV LLC, its Managing Member
By:	/s/ Todd Foley
Name:	Todd Foley
Title:	Member
6/19/14
DATE
Address:
200 Clarendon Street, 54th Floor
Boston, MA 02116

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

MPM Asset Management Investors BV4 LLC
By: MPM BioVentures IV LLC, its Manager
By:	/s/ Todd Foley
Name:	Todd Foley
Title:	Member
6/19/14
DATE
Address:
200 Clarendon Street, 54th Floor
Boston, MA 02116

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

EVAN NORTON

MEMBER NAME:

/s/ EVAN NORTON

MEMBER SIGNATURE

6/23/2014

DATE

Address:

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement. together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

Joseph Brown

MEMBER NAME:

/s/ Joseph Brown

MEMBER SIGNATURE

July 6, 2014

DATE

Address:

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

ONSET VI, L.P.

MEMBER NAME:

MEMBER SIGNATURE

6/23/2014

DATE

Address:

ONSET VENTURES

2490 Sand Hill Rd.

Menlo Park, CA 94025

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

PED-VLRTS, LLC

MEMBER NAME:

MEMBER SIGNATURE

June 20, 2014

DATE

Address:

4525 Harding Rd.

Suite 200

Nashville, TN 37205

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

MEMBER NAME:

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

Saint John’s University

MEMBER NAME:

MEMBER SIGNATURE

June 23, 2014

DATE

Address:

2850 Abbey Plaza

PO Box 2222

Collegeville, MN 56321

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

South Ferry #2, LP

MEMBER NAME:

MEMBER SIGNATURE

07/06/14

DATE

Address:

One State Street Plaza 29AF

New York N.Y. 10004

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

The Board of Trustees of the Leland Stanford Junior University (SBST)

MEMBER NAME:

/s/ Martina Poquet

MEMBER SIGNATURE

June 27, 2014

DATE

	Martina Poquet
Address:	Managing Director
	Stanford Management Company
	635 Knight Way
	Stanford, CA 94305-7297

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

The Board of Trustees of the Leland Stanford Junior University (DAPER 1)

MEMBER NAME:

/s/ Martina Poquet

MEMBER SIGNATURE

June 27, 2014

DATE

	Martina Poquet
Address:	Managing Director
	Stanford Management Company
	635 Knight Way
	Stanford, CA 94305-7297

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

THE PERMANENTE FEDERATION LLC-SERIES 1

MEMBER NAME:

MEMBER SIGNATURE

20 JUN 2014

DATE

Address:

ONE KAISER PLAZA, 22^ND FLOOR

OAKLAND, CA 94612

ATTN: CHRIS GRANT

510-271-5687

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

KAISER PERMANENTE VENTURES LLC-SERIES A

MEMBER NAME:

MEMBER SIGNATURE

20 JUN 2014

DATE

Address:

ONE KAISER PLAZA, 22^ND FLOOR

OAKLAND, CA 94612

ATTN: CHRIS GRANT

510-271-5687

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

KAISER PERMANENTE VENTURES LLC-SERIES B

MEMBER NAME:

MEMBER SIGNATURE

20 JUN 2014

DATE

Address:

ONE KAISER PLAZA, 22^ND FLOOR

OAKLAND, CA 94612

ATTN: CHRIS GRANT

510-271-5687

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

Tullis Opportunity Fund LP

MEMBER NAME:

Manager, Tullis Opportunity Fund LLC, The General Partner

MEMBER SIGNATURE

June 23, 2014

DATE

Address:

55 Old Field Point Rd.

Greenwich, CT 06830

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

Tullis Opportunity Fund II, L.P.

MEMBER NAME:

Manager Tullis Opportunity Fund II LLC

the general partner

MEMBER SIGNATURE

June 23, 2014

DATE

Address:

55 Old Field Point Rd.

Greenwich, CT 06830

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among the Company and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

MEMBER NAME:
U.S. Venture Partners IX, L.P.
MEMBER SIGNATURE:
U.S. Venture Partners IX, L.P.
By Presidio Management Group IX, L.L.C.
Its General Partner
By:	/s/ Jonathan D. Root
	Jonathan D. Root, Managing Member
07 / 02 / 2014
DATE
Address:
Attn: Chief Financial Officer
2735 Sand Hill Road
Menlo Park CA 94025
Fax: (650) 854-3018
Email: deals@usvp.com

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among the Company and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

MEMBER NAME:
U.S. Venture Partners X, L.P.
USVP X Affiliates, L.P.
MEMBER SIGNATURE:
U.S. Venture Partners IX, L.P. USVP X Affiliates, L.P.
By Presidio Management Group IX, L.L.C.
Its General Partner
By:	/s/ Jonathan D. Root
	Jonathan D. Root, Managing Member
07 / 02 / 2014
DATE
Address:
Attn: Chief Financial Officer
2735 Sand Hill Road
Menlo Park CA 94025
Fax: (650) 854-3018
Email: deals@usvp.com

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

MEMBER NAME:
WCAS Valeritas Holdings, LLC
MEMBER SIGNATURE:
WCAS VALERITAS HOLDINGS, LLC
By:	/s/ Jonathan M. Rather
Name:	Jonathan M. Rather
Title:	President
DATE

Address:	c/o Welsh, Carson, Anderson & Stowe
	320 Park Avenue, Suite 2500
	New York, New York 10022
	Attn: Paul B. Queally

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

MEMBER NAME:
WCAS XI Co-Investors LLC
MEMBER SIGNATURE:
WCAS XI CO-INVESTORS LLC
By:	/s/ Jonathan M. Rather
Name:	Jonathan M. Rather
Title:	Managing Member
DATE

Address:	c/o Welsh, Carson, Anderson & Stowe
	320 Park Avenue, Suite 2500
	New York, New York 10022
	Attn: Paul B. Queally

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together. constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

MEMBER NAME:
WCAS Management Corporation
MEMBER SIGNATURE:
WCAS MANAGEMENT CORPORATION
By:	/s/ Jonathan M. Rather
Name:	Jonathan M. Rather
Title:	Treasurer
DATE

Address:	c/o Welsh, Carson, Anderson & Stowe
	320 Park Avenue, Suite 2500
	New York, New York 10022
	Attn: Paul B. Queally

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

MEMBER NAME:
WCAS Capital Partners IV, L.P.
MEMBER SIGNATURE:
WCAS CAPITAL PARTNERS IV, L.P.
By:	WCAS CP IV ASSOCIATES LLC,
	its General Partner
By:	/s/ Jonathan M. Rather
Name:	Jonathan M. Rather
Title:	Managing Member
DATE

Address:	c/o Welsh, Carson, Anderson & Stowe
	320 Park Avenue, Suite 2500
	New York, New York 10022
	Attn: Paul B. Queally

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

Glenda Lewis

MEMBER NAME:

/s/ Glenda Lewis

MEMBER SIGNATURE

7/2/14

DATE

Address:

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

Massachusetts Development Finance Agency

MEMBER NAME:

/s/ Laura L Canter

MEMBER SIGNATURE

6-23-14

DATE

Address:

99 HIGH ST.

BOSTON, MA 02110

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

Lisa J. McGuinness

MEMBER NAME:

/s/ Lisa McGuinness

MEMBER SIGNATURE

06/28/2014

DATE

Address:

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

HEATHER MEROLLI

MEMBER NAME:

/s/ HEATHER MEROLLI

MEMBER SIGNATURE

6-27-14

DATE

Address:

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

Gregory Sellman

MEMBER NAME:

/s/ Gregory Sellman

MEMBER SIGNATURE

6-29-14

DATE

Address:

VALERITAS HOLDINGS, LLC

COUNTERPART SIGNATURE PAGE

TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

The undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Amended and Restated Limited Liability Company Agreement among Valeritas Holdings, LLC (the “Company”) and the members of the Company (the “Holdings Operating Agreement”), and further (i) authorizes the Company to attach this signature page to the Holdings Operating Agreement in order to make the undersigned a party to the Holdings Operating Agreement and (ii) acknowledges that to the extent undersigned has the right to receive units of limited liability company interest in the Company pursuant to the Merger (as defined in the Holdings Operating Agreement) but has not executed and delivered the Voting Agreement or the Investor Rights Agreement (each as defined in the Holdings Operating Agreement), the undersigned hereby adopts and agrees to be bound by all of the terms and provisions of the Voting Agreement and the Investor Rights Agreement. The Holdings Operating Agreement, Voting Agreement and the Investor Rights Agreement, together, constitute the limited liability company agreement of the Company for purposes of the Delaware Limited Liability Company Act.

POUL STRANGE

MEMBER NAME:

/s/ POUL STRANGE

MEMBER SIGNATURE

7/4/2014

DATE

Address:

Schedule A

UNITHOLDERS AND OUTSTANDING UNITS (AS OF JUNE 19, 2014)

Unitholder	Series A Preferred Units		Series B Preferred Units		Series C Preferred Units		Common Units
Abingworth Bioventures V LP				8,244,975		4,480,011
Advanced Technology Ventures VIII, L.P.				6,183,732		3,370,745
Agate Medical Investments Cayman L.P.				1,108,328		383,904
Agate Medical Investments L.P				3,109,937		1,045,610
Auda Capital IV Co-Investment Fund L.P.		1,052,131		265,060		608,109
Auda Capital IV Co-Investment GmbH & Co. KG		2,038,218		513,483		1,178,052
Auda Valeritas Segregated Portfolio		3,090,348		778,542		1,786,163
Bioventures Investors Limited Partnership		1,573,128
Brian Beutel				44,263
CHL Medical Partners III Side Fund, L.P.				186,423		100,319
CHL Medical Partners III, L.P,				2,039,721		1,113,147
John Curtin				22,131
Joe Fitzgerald				88,526
John E. Davis III and Betty F. Davis, JTWROS				22,131
Kenneth L. Franke and Grace L. Franke Living Trust				22,131
Elizabeth Gordon		225,000		1,030,588		124,029		450,000
Highbridge International LLC				182,213

Unitholder	Series A Preferred Units		Series B Preferred Units		Series C Preferred Units		Common Units
HLM Venture Partners II, L.P.				4,122,488		2,247,163
I. I. Y. Mordechay Ltd.						121,951
Kaiser Permanente Ventures, LLC - Series A				507,383		276,574
Kaiser Permanente Ventures, LLC - Series B				317,115		172,859
Meyers Family Revocable Trust				66,394
MPM Asset Management Investors BV4 LLC				329,608		179,670
MPM BioVentures IV GmbH & Co. Beteiligungs KG				446,566		243,423
MPM BioVentures IV-QP, L.P				11,591,370		6,318,443
Evan Norton				20,613
Onset VI, L.P.				4,946,985		2,696,596
PED-VLRTS, LLC		1,004,488		253,058		576,342
Pitango Venture Capital Fund V, L.P.				12,268,990		7,299,534
Pitango Venture Capital Principals Fund V, L.P.				268,731		159,886
Southferry #2, L.P.				182,213
The Board of Trustees of the Leland Stanford Junior University (DAPER I)				41,225
The Board of Trustees of the Leland Stanford Junior University (SBSTI)				41,225
The Permanente Federation LLC - Series I				824,498		449,433

Unitholder	Series A Preferred Units		Series B Preferred Units		Series C Preferred Units		Common Units
Tullis Opportunity Fund II, L.P.		283,344		71,382		165,885
Tullis Opportunity Fund, L.P.		283,345		71,382		165,885
Saint John’s University				24,735
U.S. Venture Partners IX, L.P.				4,122,487
U.S. Venture Partners X				3,994,690
USVP X Affiliates				127,797
WCAS Capital Partners IV, L.P.						439,200
WCAS Management Corporation						216,723
WCAS Valeritas Holdings, LLC						69,182,468
WCAS XI Co-Investors LLC						287,220
Kathy Aycok								3,750
Mandy Bentley								500
Joseph Brown								2,000
Michele Carter								2,500
Dan Connors								75,000
Yash Dave								1,050
Arleen DeCicco								22,250
Timothy E. Last								15,000
Steven F. Levesque								7,833
Glenda Lewis								4,063
Ronald Manning								16,016
Massachusetts Development Finance Agency								28,954
Devin V. McAllister								21,667
Lisa J. McGuinness								2,000
Heather Merolli								2,000
Deborah J. Nagy								2,000
Hung Nguyen								10,000

Unitholder	Series A Preferred Units		Series B Preferred Units		Series C Preferred Units		Common Units
Michael Price								2,000
William Rebello								25,625
Tam Pham								2,000
Greg Sellman								2,500
Mike Stout								16,042
Poul Strange								48,000
Christine Tanaka								500
Oscar Tamayo								1,814
Mark D. Taylor								2,000
The Estate of Frank Baldino, Jr.								120,938
The Helen L. Levesque 2012 Trust, Helen L. Levesque, Trustee								65,500
Total		9,550,002		68,483,119		105,267,393		953,502

Schedule B*

MEMBERS

Abingworth Bioventures V LP

Advanced Technology Ventures VIII, L.P.

Agate Medical Investments Cayman L.P.

Agate Medical Investments L.P

Auda Capital IV Co-Investment Fund L.P.

Auda Capital IV Co-Investment GmbH & Co. KG

Auda Valeritas Segregated Portfolio

Bioventures Investors Limited Partnership

Brian Beutel

CHL Medical Partners III Side Fund, L.P.

CHL Medical Partners III, L.P,

John Curtin

Joe Fitzgerald

John E. Davis III and Betty F. Davis, JTWROS

Kenneth L. Franke and Grace L. Franke Living Trust

Elizabeth Gordon

Highbridge International LLC

HLM Venture Partners II, L.P.

I. I. Y. Mordechay Ltd.

Kaiser Permanente Ventures, LLC - Series A

Kaiser Permanente Ventures, LLC - Series B

Meyers Family Revocable Trust

MPM Asset Management Investors BV4 LLC

MPM BioVentures IV GmbH & Co. Beteiligungs KG

MPM BioVentures IV-QP, L.P

Evan Norton

Onset VI, L.P.

PED-VLRTS, LLC

Pitango Venture Capital Fund V, L.P.

Pitango Venture Capital Principals Fund V, L.P.

Southferry #2, L.P.

The Board of Trustees of the Leland Stanford Junior University (DAPER I)

The Board of Trustees of the Leland Stanford Junior University (SBSTI)

The Permanente Federation LLC - Series I

Tullis Opportunity Fund II, L.P.

Tullis Opportunity Fund, L.P.

Saint John’s University

U.S. Venture Partners IX, L.P.

U.S. Venture Partners X

USVP X Affiliates

WCAS Capital Partners IV, L.P.

WCAS Management Corporation

WCAS Valeritas Holdings, LLC

WCAS XI Co-Investors LLC

Kathy Aycok

Mandy Bentley

Joseph Brown

Michele Carter

Dan Connors

Yash Dave

Arleen DeCicco

Timothy E. Last

Steven F. Levesque

Glenda Lewis

Ronald Manning

Massachusetts Development Finance Agency

Devin V. McAllister

Lisa J. McGuinness

Heather Merolli

Deborah J. Nagy

Hung Nguyen

Michael Price

William Rebello

Tam Pham

Greg Sellman

Mike Stout

Poul Strange

Christine Tanaka

Oscar Tamayo

Mark D. Taylor

The Estate of Frank Baldino, Jr.

The Helen L. Levesque 2012 Trust, Helen L. Levesque, Trustee

* Subject to such person’s acceptance of such units of limited liability company interest

Schedule C

CAPITAL CONTRIBUTIONS (AS OF JUNE 19, 2014)

Unitholder	Capital Contribution
	Shares of Series A Preferred Stock of Valeritas, Inc.		Shares of Series B Preferred Stock of Valeritas, Inc.		PIK Shares of Series B Preferred Stock of Valeritas, Inc.		Shares of Series C Preferred Stock of Valeritas, Inc.		Shares of Series C-2 Preferred Stock of Valeritas, Inc.		PIK Shares of Series C Preferred Stock of Valeritas, Inc.		Shares of Common Stock of Valeritas, Inc.
Abingworth Bioventures V LP				8,244,975		941,646		4,480,011				821,166
Advanced Technology Ventures VIII, L.P.				6,183,732		706,235		3,370,745				617,506
Agate Medical Investments Cayman L.P.				1,108,328		126,581		383,904				70,433
Agate Medical Investments L.P				3,109,937		355,181		1,045,610				191,034
Auda Capital IV Co-Investment Fund L.P.		1,052,131		265,060		30,272		608,109				111,462
Auda Capital IV Co-Investment GmbH & Co. KG		2,038,218		513,483		58,644		1,178,052				215,929
Auda Valeritas Segregated Portfolio		3,090,348		778,542		88,916		1,786,163				327,391
Bioventures Investors Limited Partnership		1,573,128
Brian Beutel				44,263		5,055
CHL Medical Partners III Side Fund, L.P.				186,423		21,291		100,319				18,378
CHL Medical Partners III, L.P,				2,039,721		232,954		1,113,147				203,924
John Curtin				22,131		2,528
Joe Fitzgerald				88,526		10,110
John E. Davis III and Betty F. Davis, JTWROS				22,131		2,528
Kenneth L. Franke and Grace L. Franke Living Trust				22,131		2,528
Elizabeth Gordon		225,000		1,030,588		117,702		124,029				22,483		450,000
Highbridge International LLC				182,213		20,810
HLM Venture Partners II, L.P.				4,122,488		470,824		2,247,163				411,671
I. I. Y. Mordechay Ltd.										121,951		29,129

Unitholder	Capital Contribution
	Shares of Series A Preferred Stock of Valeritas, Inc.		Shares of Series B Preferred Stock of Valeritas, Inc.		PIK Shares of Series B Preferred Stock of Valeritas, Inc.		Shares of Series C Preferred Stock of Valeritas, Inc.		Shares of Series C-2 Preferred Stock of Valeritas, Inc.	PIK Shares of Series C Preferred Stock of Valeritas, Inc.		Shares of Common Stock of Valeritas, Inc.
Kaiser Permanente Ventures, LLC - Series A				507,383		57,947		276,574			50,667
Kaiser Permanente Ventures, LLC - Series B				317,115		36,217		172,859			31,667
The Permanente Federation LLC - Series I				824,498		94,164		449,433			82,334
Meyers Family Revocable Trust				66,394		7,583
MPM Asset Management Investors BV4 LLC				329,608		37,644		179,670			32,915
MPM BioVentures IV GmbH & Co. Beteiligungs KG				446,566		51,002		243,423			44,594
MPM BioVentures IV-QP, L.P				11,591,370		1,323,834		6,318,443			1,157,511
Evan Norton				20,613		2,354
Onset VI, L.P.				4,946,985		564,988		2,696,596			494,004
PED-VLRTS, LLC		1,004,488		253,058		28,901		576,342			105,875
Pitango Venture Capital Fund V, L.P.				12,268,990		1,401,224		7,299,534			1,337,552
Pitango Venture Capital Principals Fund V, L.P.				268,731		30,691		159,886			29,297
Southferry #2, L.P.				182,213		20,810
The Board of Trustees of the Leland Stanford Junior University (DAPER I)				41,225		4,708
The Board of Trustees of the Leland Stanford Junior University (SBSTI)				41,225		4,708
Tullis Opportunity Fund II, L.P.		283,344		71,382		8,152		165,885			30,287
Tullis Opportunity Fund, L.P.		283,345		71,382		8,152		165,885			30,287
Saint John’s University				24,735		2,825
U.S. Venture Partners IX, L.P.				4,122,487		470,823
U.S. Venture Partners X				3,994,690		456,228
USVP X Affiliates				127,797		14,596
WCAS Capital Partners IV, L.P.								439,200			104,906
WCAS Management Corporation								216,723			39,812

Unitholder	Capital Contribution
	Shares of Series A Preferred Stock of Valeritas, Inc.		Shares of Series B Preferred Stock of Valeritas, Inc.		PIK Shares of Series B Preferred Stock of Valeritas, Inc.		Shares of Series C Preferred Stock of Valeritas, Inc.		Shares of Series C-2 Preferred Stock of Valeritas, Inc.		PIK Shares of Series C Preferred Stock of Valeritas, Inc.		Shares of Common Stock of Valeritas, Inc.
WCAS Valeritas Holdings, LLC								69,182,468				12,708,548
WCAS XI Co-Investors LLC								287,220				53,133
Kathy Aycok														3,750
Mandy Bentley														500
Joseph Brown														2,000
Michele Carter														2,500
Dan Connors														75,000
Yash Dave														1,050
Arleen DeCicco														22,250
Timothy E. Last														15,000
Steven F. Levesque														7,833
Glenda Lewis														4,063
Ronald Manning														16,016
Massachusetts Development Finance Agency														28,954
Devin V. McAllister														21,667
Lisa J. McGuinness														2,000
Heather Merolli														2,000
Deborah J. Nagy														2,000
Hung Nguyen														10,000
Michael Price														2,000
William Rebello														25,625
Tam Pham														2,000
Greg Sellman														2,500
Mike Stout														16,042
Poul Strange														48,000
Christine Tanaka														500
Oscar Tamayo														1,814
Mark D. Taylor														2,000
The Estate of Frank Baldino, Jr.														120,938
The Helen L. Levesque 2012 Trust, Helen L. Levesque, Trustee														65,500
Total		9,550,002		68,483,119		7,821,356		105,267,393		121,951		19,373,895		953,502

EX-10

Exhibit 10.19

VALERITAS HOLDINGS, LLC

VOTING AGREEMENT

This Voting Agreement (the “Agreement”) is made and entered into as of June 19, 2014, by and among Valeritas Holdings, LLC, a Delaware limited liability company (the “Company”), the holders of the Company’s issued and outstanding Series A Preferred Units, Series B Preferred Units and Series C Preferred Units (collectively, the “Preferred Units”) listed on Schedule A attached hereto (collectively, the “Investors”), and the holders of the Company’s issued and outstanding Common Units listed on Schedule B attached hereto (collectively, the “Common Unitholders”). The Company, the Investors and the Common Unitholders are individually referred to herein as a “Party” and are collectively referred to herein as the “Parties.” The Company’s Board of Managers is referred to herein as the “Board.” Certain other capitalized terms used in this Agreement but not defined where first used in this Agreement are defined in Section 25 of this Agreement.

WITNESSETH:

WHEREAS, the parties hereto desire to provide for certain matters relating to the Company and the equity securities of the Company that are from time to time held by the Investors and the Common Unitholders.

NOW, THEREFORE, in consideration of the foregoing premises and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. Agreement to Vote. Each Investor, as a holder of Preferred Units, hereby agrees on behalf of itself and any transferee or assignee of any such Preferred Units, to hold all of the Preferred Units registered in its name (and any securities of the Company issued with respect to, upon conversion of, or in exchange or substitution of such Preferred Units, and any other voting securities of the Company subsequently acquired by such Investor) (hereinafter collectively referred to as the “Investor Units”) subject to, and to vote the Investor Units at a regular or special meeting of members (or by written consent) in accordance with, the provisions of this Agreement. Each Common Unitholder hereby agrees on behalf of itself and any transferee or assignee to hold all of the Common Units and any other securities of the Company acquired by such Common Unitholder in the future (and any securities of the Company issued with respect to, upon conversion of, or in exchange or substitution for such securities) (the “Common Units”) subject to, and to vote the Common Units at a regular or special meeting of members (or by written consent) in accordance with, the provisions of this Agreement.

2. Board Size. The holders of Investor Units and Common Units shall vote at a regular or special meeting of members (or by written consent) such securities that they own (or as to which they have voting power) to ensure that the size of the Board shall be set and remain at seven (7) managers; provided, however, that such Board size may be subsequently increased or decreased pursuant to an amendment of this Agreement in accordance with Section 17 hereof.

3. Election of Managers; Chairman of the Board.

(a) In any election of managers of the Company to elect the Series C Managers, the Investors holding Series C Preferred Units shall each vote at any regular or special meeting of members (or by written consent) such number of Series C Preferred Units then owned by them (or as to which they then have voting power) as may be necessary to elect four (4) managers designated by the

holders of a majority of the Series C Preferred Units, which shall initially be Daniel Pelak, Paul Queally, Sean Traynor and John Barr.

(b) In any election of managers of the Company to elect the Series B Managers, the Investors holding Series B Preferred Units shall each vote at any regular or special meeting of members (or by written consent) such number of Series B Preferred Units then owned by them (or as to which they then have voting power) as may be necessary to elect three (3) managers in accordance with the following: (i) one (1) manager nominated by MPM BioVentures IV GP, LLC or its Affiliates, who shall initially be Vaughn Kailian; (ii) one (1) manager nominated by Pitango Venture Capital Fund V, L.P. or its Affiliates, who shall initially be Ittai Harel; and (iii) one (1) manager nominated by ONSET VI, L.P. or its Affiliates, who shall initially be John Ryan.

(c) In any election of the Chairman of the Board, the Investors that have nominated a manager to the Board pursuant to subsections 3(a) and 3(b) above shall use their best efforts to cause any manager who has been designated by such Investor in accordance with the terms of this Section 3, at any annual or special meeting of the Board, however called, and in any action by written consent of the Board, to vote in favor of the election of a Chairman of the Board nominated by the holders of a majority of the Series C Preferred Units, who shall initially be Daniel Pelak (the “Chairman”).

4. Removal. Any manager of the Company may only be removed from the Board in the manner allowed by Section 3.2(c) of the LLC Agreement.

5. Transfers; Drag-Along Right; Tag-Along Right.

(a) Transfers. Each Party agrees that it shall not transfer any equity securities of the Company owned by it except as expressly provided in Sections S(b), (e) and (f). Any transfer or attempted transfer of any such equity securities in violation of any provision of this Agreement shall, to the fullest extent permitted by law, be void ab initio, and the Company shall not record any such transfer on its books or treat any purported transferee of such equity securities as the owner of such equity securities for any purpose.

(b) Drag-Along Right. In the event that (i) the Board, including the Board Majority of the Minority and (ii) the Required Series C Holders approve a Sale of the Company (as defined below), then each holder of Investor Units and Common Units hereby agrees with respect to all securities of the Company which it own(s) or otherwise exercises voting or dispositive authority:

(i) in the event such transaction is to be brought to a vote at a member meeting, after receiving proper notice of any meeting of members of the Company to vote on the approval of such Sale of the Company, to be present, in person or by proxy, as a holder of voting securities, at all such meetings and be counted for the purposes of determining the presence of a quorum at such meetings;

(ii) to vote (in person, by proxy or by action by written consent, as applicable) all equity securities of the Company as to which it has beneficial ownership in favor of such Sale of the Company and in opposition of any and all other proposals that could reasonably be expected to delay or impair the ability of the Company to consummate such Sale of the Company;

(iii) to refrain from exercising any dissenters’ rights or rights of appraisal under applicable law at any time with respect to such Sale of the Company;

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(iv) to execute and deliver all related documentation and take such other action in support of or to consummate such Sale of the Company as shall reasonably be requested by the Company; and

(v) except for this Agreement, no holder of Investor Units or Common Units, or any Affiliate thereof, shall deposit any equity securities of the Company beneficially owned by such holder of Investor Units or Common Units, or an Affiliate thereof, in a voting trust or subject any such equity securities to any arrangement or agreement with respect to the voting of such equity securities.

Notwithstanding the foregoing, no Investor or Common Unitholder shall be required to vote in the manner described by this Section 5(b) unless (i) the net proceeds of such Sale of the Company are to be distributed to members of the Company in accordance with Section 4.4(b) of the LLC Agreement, (ii) any representation or warranty required to be made by any Investor in connection with such Sale of the Company shall be limited to customary representations and warranties relating to such Investor and equity securities of the Company owned by such Investor, (iii) the liability for indemnification, if any, of each Investor or Common Unitholder in the Sale of the Company for the inaccuracy of any representation or warranty made by the Company or applicable Investors and/or Common Unitholders in connection with such Sale of the Company, is several and not joint with any other person or entity (although nothing set forth herein shall be deemed to mean that an escrow fund established from the proceeds of a Sale of the Company for indemnification of such inaccuracy shall be a violation of the foregoing), is pro rata in proportion to the amount of consideration paid to such Investor or Common Unitholder in connection with such Sale of the Company and does not exceed the maximum amount of consideration to be received by such Investor or Common Unitholder from the Sale of the Company and (iv) if a choice with regards to the form of consideration is given to any Investor then all Investors shall be given the same choice.

(c) Provisions Applicable to Transfer of Control. Each Investor agrees that, except as otherwise approved in writing by the holders of a majority of each class of Preferred Units of the Company, such Investor shall not effect or close any transfer, whether in one transaction or a series of related transactions, to a Person or any Affiliates thereof (other than an underwriter of the Company’s securities or a transferee pursuant to an exempt transfer under Section 5(f)) of the Company’s securities if, after such effectuation or closing, such Person would hold 50% or more of the outstanding voting securities of the Company (or the surviving or acquiring entity) (any such transaction, a “Control Transfer”) unless (i) the same percentage of units of each class of Preferred Units of the Company as the percentage of Series C Preferred Units being transferred in such Control Transfer are also transferred in connection with such Control Transfer and (ii) the net aggregate proceeds of such Control Transfer are distributed to the members of the Company as a Liquidation Event in accordance with Section 4.4(b) of the LLC Agreement.

(d) Additional Drag-Along Right. Each of the Investors holding Series A Preferred Units hereby agrees (a) to vote in person, by proxy or by action by written consent, as applicable, in favor of any amendment to or restatement of the LLC Agreement, and also in favor of the taking of any other action by the Company or any other resolution of the Company’s members, if such amendment, restatement, action or resolution is approved and/or adopted, as applicable, by the Board Majority of the Minority and the Required Series C Holders (each such amendment, restatement, action or resolution so approved or adopted, an “Approved Action”) and (b) to take such other actions as are reasonably requested by the Company to effect and implement any Approved Action; provided that, in each case, such Approved Action would not contravene the voting, approval or waiver rights of the holders of Series A Preferred Units expressly set forth in Sections 3.10(c) of the LLC Agreement.

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Notwithstanding the foregoing, neither the provisions of this Section 5(d), nor any vote or action taken pursuant to this Section 5(d) by any person, shall be construed as, or shall otherwise result in, any waiver, estoppel or other limitation of any right or remedy, in law or in equity, of a holder of Series A Preferred Units.

(e) Tag-Along Rights. Except as provided in Section 5(f), each Investor may transfer equity securities of the Company owned by it, provided that as a condition of such Proposed Transfer such Investor grants to each other Party a Tag-Along Right with respect to such Proposed Transfer, in which case, the following terms and conditions shall apply:

(i) Notice. The Investor proposing to make a Proposed Transfer (the “Transferring Holder”) must deliver a Proposed Transfer Notice to each other Party not later than thirty (30) days prior to the consummation of such Proposed Transfer.

(ii) Exercise of Right. Each respective Party (except for the Transferring Holder) may elect to exercise its Tag-Along Right and participate on a pro rata basis (as described in subsection 5(e)(iii)) in such Proposed Transfer on the same terms and conditions specified in the Proposed Transfer Notice. Each Party who desires to exercise its Tag-Along Right (each, a “Participating Investor”) must give the Transferring Holder written notice to that effect within fifteen (15) days after delivery of the Proposed Transfer Notice, and upon giving such notice such Participating Investor shall be deemed to have effectively exercised its Tag-Along Right.

(iii) Units Includable. Each Participating Investor may include in the Proposed Transfer all or any part of such Participating Investor’s Investor Units or Common Units equal to the product obtained by multiplying (i) the aggregate number of Transfer Securities subject to the Proposed Transfer by (ii) a fraction, the numerator of which is the number of Investor Units (on an as converted basis) and Common Units owned by such Participating Investor immediately before consummation of the Proposed Transfer and the denominator of which is the total number of Investor Units (on an as converted basis) and Common Units outstanding immediately prior to the consummation of the Proposed Transfer.

(iv) Purchase and Sale Agreement. The Participating Investors and the Transferring Holder agree that the terms and conditions of any Proposed Transfer will be memorialized in, and governed by, a written purchase and sale agreement with the Prospective Transferee (the “Purchase and Sale Agreement”) with customary terms and provisions for such a transaction, and the Participating Investors and the Transferring Holder further covenant and agree to enter into such Purchase and Sale Agreement as a condition precedent to any sale or other transfer in accordance with this Section 5(e). The Purchase and Sale Agreement shall provide that the liability for indemnification by any Prospective Transferee shall not exceed the consideration received by such Prospective Transferee pursuant to the Purchase and Sale Agreement.

(v) Allocation of Consideration. The aggregate consideration payable to the Participating Investors and the Transferring Holder shall be allocated based on the number of Transfer Securities sold to the Prospective Transferee by each Participating Investor and the Transferring Holder as provided in paragraph (iii) and shall be allocated to the Participating Investors and the Transferring Holder in accordance with Section 4.4(b) of the LLC Agreement as if such transfer were a Liquidation Event (as defined in the LLC Agreement).

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(vi) Purchase by Selling Member; Deliveries. Notwithstanding paragraph (iv) above, if any Prospective Transferee or Transferees refuse(s) to purchase securities subject to the Tag-Along Right from any Participating Investor or upon the failure to negotiate in good faith a Purchase and Sale Agreement reasonably satisfactory to the Participating Investors, the Transferring Holder and any Party may not sell any Transfer Securities to such Prospective Transferee or Transferees unless and until, simultaneously with such sale, the Transferring Holder purchases all securities subject to the Tag-Along Right from such Participating Investor or Investors on the same terms and conditions (including the proposed purchase price) as set forth in the Proposed Transfer Notice and such other terms as such Participating Investor or Investors and the Transferring Holder shall agree. In connection with such purchase by the Transferring Holder, such Participating Investor or Investors shall deliver to the Transferring Holder a certificate or certificates, properly endorsed for transfer, representing the securities being purchased by the Transferring Holder. Each such certificate delivered to the Transferring Holder will be transferred to the Prospective Transferee against payment therefor in consummation of the sale of the Transfer Securities pursuant to the terms and conditions specified in the Proposed Transfer Notice, and the Transferring Holder shall concurrently therewith remit or direct payment to each such Participating Investor the portion of the aggregate consideration to which each such Participating Investor is entitled by reason of its participation in such sale as provided in this paragraph (vi).

(vii) Additional Compliance. If any Proposed Transfer is not consummated within one hundred eighty (180) days after receipt of the Proposed Transfer Notice, the Transferring Holder may not sell any Transfer Securities unless they first comply in full with each provision of this Section 5(e). The exercise or election not to exercise any right by any Party hereunder shall not adversely affect its right to participate in any other sales of Transfer Securities.

(viii) Violation of Tag-Along If any Transferring Holder purports to sell any Transfer Securities in contravention of the Tag-Along Right (a “Prohibited Transfer”), each Party who desires to exercise its Tag-Along Right may, in addition to such remedies as may be available by law, in equity or hereunder, require the Transferring Holder to purchase from such Party the type and number of Investor Units or Common Units that such Investor would have been entitled to sell to the Prospective Transferee had the Prohibited Transfer been effected in compliance with the terms of this Section 5(e). The sale will be made on the same terms and subject to the same conditions as would have applied had the Investor not made the Prohibited Transfer, except that the sale (including, without limitation, the delivery of the purchase price) must be made within ninety (90) days after the Party learns of the Prohibited Transfer, as opposed to the timeframe proscribed in paragraph (ii) above. Such Transferring Holder shall also reimburse each Party for any and all reasonable and documented out-of-pocket fees and expenses, including reasonable legal fees and expenses, incurred pursuant to the exercise or the attempted exercise of the Investor’s Tag-Along Right.

(f) Exempt Transfers. Notwithstanding the foregoing or anything to the contrary herein, the provisions of Sections 5(a), (c) and (e) shall not apply: (i) in the case of a holder of Investor Units and Common Units that is an entity, upon a transfer by such holder to Affiliates, (ii) to a repurchase of Common Units from a Common Unitholder by the Company at a price no greater than that originally paid by such Common Unitholder for such Common Units and pursuant to an agreement containing vesting and/or repurchase provisions approved by the Board, (iii) in the case of a Common Unitholder that is a natural person, upon a transfer of Transfer Securities by such Common Unitholder made for bona fide estate planning purposes, either during his or her lifetime or on death by will or intestacy, to his or her spouse, child (natural or adopted), or any other direct lineal descendant of such Common Unitholder (or his or her spouse) (all of the foregoing collectively referred to as “Family Members”), or any other relative approved by the Board, or any custodian or trustee of any trust,

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partnership or limited liability company for the benefit of, or the ownership interests of which are owned wholly by, such Common Unitholder or any such Family Members, (iv) a transfer of equity securities of the Company owned by BioValve Technologies, Inc. secured by a promissory note held by Elizabeth Gordon to Elizabeth Gordon or an entity controlled by Elizabeth Gordon, (v) a transfer by Auda Capital IV Co-Investment GMBH & Co. KG to any entity managed by Auda Capital or Tullis Health, (vi) in the case of a holder of Investor Units, upon a transfer by such holder to another Investor or an Affiliate of such other Investor or (vii) upon a Proposed Transfer approved by the Board; provided that in the case of clauses (i), (iii), (iv), (v), (vi) and (vii), such Transfer Securities shall at all times remain subject to the terms and restrictions set forth in this Agreement and such transferee shall, as a condition to such issuance, comply with Section 5.4 of the LLC Agreement and deliver a counterpart signature page to this Agreement as confirmation that such transferee shall be bound by all the terms and conditions of this Agreement as an Investor or Common Unitholder, as applicable, including the obligations with respect to Proposed Transfers of such Transfer Securities; and provided, further, in the case of any transfer pursuant to clause (iii) above, that such transfer is made pursuant to a transaction in which there is no consideration actually paid for such transfer.

(g) Certain Legal Requirements. In the event that the consideration to be paid in exchange for Investor Units or Common Units in a Sale of the Company or a Proposed Transfer pursuant to Section 5(b) or Section 5(e) includes any securities, and the receipt thereof by an Investor or Common Unitholder would require under applicable law (a) the registration or qualification of such securities or of any Person as a broker or dealer or agent with respect to such securities where such registration or qualification is not otherwise required for the Sale of the Company or the Proposed Transfer or (b) the provision to any Investor or Common Unitholder of any information regarding the Company, such securities or the issuer thereof, including by reason of the failure of one or more of such holders to be an “accredited investor” as such term is defined in Rule 501 of Regulation D of the Securities Act, such holder(s) shall not have the right to sell its Investor Units or Common Units in such proposed transaction. In such event, the Company or the Transferring Holder, as applicable, shall have the right, but not the obligation, to cause to be paid to such Investor or Common Unitholder in lieu thereof, against surrender of its Investor Units or Common Units which would have otherwise been sold in the proposed Sale of the Company or Proposed Transfer, an amount in cash equal to the fair market value of such securities as of the date such securities would have been issued in exchange for such securities.

6. Legend on Unit Certificates. Each certificate, if any, representing any Investor Units or Common Units shall be endorsed by the Company with a legend reading substantially as follows:

“THE UNITS EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT (A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST FROM THE ISSUER), AND BY ACCEPTING ANY INTEREST IN SUCH UNITS THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID VOTING AGREEMENT.”

7. Future Financing. Each Investor and Common Unitholder agrees to vote their Investor Units and Common Units, as applicable, against any amendment to, or restatement of, the LLC Agreement (and otherwise agrees not to approve, adopt, cause to be executed or cooperate in respect of the execution of any contract) or any equityholder agreement containing any “pay-to-play” provision or other provision whereby the failure of any Investor to (A) participate in any equity financing or (B) otherwise purchase Company securities would in either case cause (either alone or in combination with

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any other event or condition or set of events and/or conditions) (i) the loss of any rights or preferences associated with the Preferred Units held by such Investor (whether contained in the LLC Agreement or in any other agreement) or (ii) the automatic conversion to Common Units of any Preferred Units held by such Investor.

8. Covenant of the Company. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be performed hereunder by the Company.

9. No Liability for Election of Recommended Managers. Neither the Company, the Investors, the Common Unitholders, nor any officer, director, stockholder, partner, employee or agent of any such Party, makes any representation or warranty as to the fitness or competence of the nominee of any Party hereunder to serve on the Board by virtue of such Party’s execution of this Agreement or by the act of such Party in voting for such nominee pursuant to this Agreement.

10. Grant of Proxy. Upon the failure of any Investor or Common Unitholder to vote their Investor Units or Common Units, as applicable, in accordance with the terms of this Agreement, such Party hereby grants to the Chairman of the Board a proxy coupled with an interest in all Investor Units and Common Units owned by such Party, which proxy shall be irrevocable until this Agreement terminates pursuant to its terms or this Section 10 is amended to remove such grant of proxy in accordance with Section 17 hereof, to vote all such Investor Units and Common Units in the manner provided in this Agreement.

11. Specific Enforcement. It is agreed and understood that monetary damages would not adequately compensate an injured Party for the breach of this Agreement by any other Party, that this Agreement shall be specifically enforceable, and that any breach or threatened breach of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order. Further, to the fullest extent permitted by law, each Party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach.

12. Execution by the Company. The Company, by its execution in the space provided below, agrees that it will cause the certificates, if any, issued after the date hereof evidencing the Investor Units and Common Units to bear the legend required by Section 6 hereof, and it shall supply, free of charge, a copy of this Agreement to any holder of a certificate evidencing equity securities of the Company upon written request from such holder to the Company at its principal office. The parties hereto do hereby agree that the failure to cause the certificates, if any, evidencing the Investor Units and Common Units to bear the legend required by Section 6 hereof and/or failure of the Company to supply, free of charge, a copy of this Agreement, as provided under this Section 12, shall not affect the validity or enforcement of this Agreement.

13. Captions. The captions, headings and arrangements used in this Agreement are for convenience only and do not in any way limit or amplify the terms and provisions hereof.

14. Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively given or delivered: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All

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communications shall be sent to the respective parties at the addresses set forth on the signature pages attached hereto (or at such other addresses as shall be specified by notice given in accordance with this Section 14).

15. Term. This Agreement shall terminate and be of no further force or effect upon a Holdco Liquidation.

16. Manner of Voting. The voting of securities pursuant to this Agreement may be effected in person, by proxy, by written consent or in any other manner permitted by applicable law.

17. Amendments and Waivers. Any term hereof may be amended and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of (i) the Company, (ii) the Required Series C Holders and (iii) the Required Series B Holders; provided, however, that in the event that such amendment or waiver adversely affects the rights of (a) the Common Unitholders, in their capacity as such, in a different manner than Investors holding outstanding Preferred Units, if any, in their capacities as such, such amendment or waiver shall also require the written consent of the holders of a majority of the then outstanding Common Units or (b) the Investors holding Series A Preferred Units, in their capacity as such, in a different manner than the Investors holding outstanding Series B Preferred Units or Series C Preferred Units, if any, in their capacities as such, such amendment or waiver shall also require the written consent of the Required Series A Holders; provided, further that a new member of the Company shall become a party to this Agreement without the necessity of an amendment if the acquisition of securities of the Company is made in accordance with the terms and conditions of this Agreement (including the execution of a counterpart to this Agreement by such new member to be bound hereby). Any amendment or waiver so effected shall be binding upon all the Parties hereto. Notwithstanding the foregoing (other than with respect to the last sentence of this Section 17), this Agreement may be amended without the consent of the Required Series B Holders in connection with the issuance of equity securities of the Company in a third party led financing, the issuance of which does not require the approval of any holder of Series B Preferred Units pursuant to Section 3.1O(b) of the LLC Agreement; provided that such amendment does not adversely affect the rights of the holders of Series B Preferred Units, in their capacity as such, in a different manner than the holders of Series C Preferred Units, in their capacities as such. Notwithstanding the foregoing, Section 5 may not be amended without the consent of the WCAS Investors and Section 7 may not be amended without the written consent of holders of a majority of each series of Preferred Units impacted by the proposed pay to play provision.

18. Unit Splits, Unit Dividends, etc. In the event of any issuance of the Company’s voting securities hereafter to any of the Parties hereto (including, without limitation, in connection with any unit split, unit dividend, recapitalization, reorganization or the like), such securities shall become subject to this Agreement and, to the extent such securities are certificated, shall be endorsed with the legend set forth in Section 6.

19. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

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20. Additional Parties.

(a) In the event that after the date of this Agreement, the Company enters into an agreement with any person to issue equity securities to such person to someone that is not a party hereto, then the Company shall cause such person, as a condition to entering into such agreement, to become a party to this Agreement as a Common Unitholder, in the case of the issuance of Common Units, and an Investor, in the case of Preferred Units, by executing and delivering the Adoption Agreement attached to this Agreement as Exhibit A.

(b) Schedule A and B hereto may be amended by the Company from time to time without the consent of the other parties hereto to add information regarding Investors and Common Unitholders that become a party to this Agreement pursuant Section 20(a) above.

21. Binding Effect. In addition to any restriction on transfer that may be imposed by any other agreement by which any Party hereto may be bound, this Agreement shall be binding upon the Parties, their respective heirs, successors, transferees and assigns and to such additional individuals or entities that may become members of the Company and that desire to become Parties hereto; provided that for any such transfer to be deemed effective, the transferee shall have executed and delivered an Adoption Agreement substantially in the form attached hereto as Exhibit A. Upon the execution and delivery of an Adoption Agreement by a transferee reasonably acceptable to the Company, such transferee shall be deemed to be a Party hereto as if such transferee’s signature appeared on the signature pages hereto. By its execution hereof or any Adoption Agreement, each of the Parties hereto appoints the Company as its attorney-in-fact for the purpose of executing any Adoption Agreement which may be required to be delivered hereunder.

22. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles thereof.

23. Entire Agreement. This Agreement is intended to be the sole agreement of the Parties as it relates to the subject matter hereof and supersede all other agreements of the Parties relating to the subject matter hereof.

24. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

25. Certain Other Definitions. In addition the terms defined elsewhere in this Agreement, the following terms shall have the definitions set forth below for the purposes of this Agreement:

(a) “Affiliate” means any Person who, directly or indirectly, controls, is controlled by or is under common control with another Person, including, without limitation, any general partner, managing member, officer or director of such Person or any venture capital or private equity fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person. For all purposes hereunder, (i) Kaiser Permanente Ventures LLC—Series A, Kaiser Permanente Ventures LLC—Series B and The Permanente Federation LLC shall be deemed to be Affiliates of each other and (ii) any entity managed by Auda Capital or Tullis Health shall be deemed to be an Affiliate of Auda Capital IV Co-Investment GMBH & Co. KG.

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(b) “Board Majority of the Minority” means the affirmative vote of a majority of the managers consisting of the Series B Managers.

(c) “Holdco Liquidation” means such time as the Company distributes all of its equity securities of Valeritas, Inc. to its members pursuant to Section 4.4(b) of the LLC Agreement.

(d) “LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of the Company, dated on or about the date hereof, as the same may be amended, restated, modified or supplemented from time to time in accordance with its terms. For the avoidance of doubt, this Agreement constitutes part of the limited liability agreement (as such term is defined in the Delaware Limited Liability Company Act) of the Company.

(e) “Person” means an individual, firm, corporation, partnership, association, limited liability company, trust or any other entity.

(f) “Proposed Transfer” means any assignment, sale, offer to sell, pledge, mortgage, hypothecation, encumbrance, disposition of or any other like transfer or encumbering of any Transfer Securities (or any interest therein) proposed by any Investor or Common Unitholder.

(g) “Proposed Transfer Notice” means written notice from the applicable Investor setting forth the terms and conditions of a Proposed Transfer.

(h) “Prospective Transferee” means any person to whom the applicable Investor proposes to make a Proposed Transfer.

(i) “Required Series A Holders” means the members of the Company who are holders of at least sixty percent (60%) of the outstanding Series A Preferred Units held by members, voting together as a separate class on an as converted basis.

(j) “Required Series B Holders” means the members of the Company who are holders of a majority of the outstanding Series B Preferred Units held by members, voting together as a separate class on an as converted basis.

(k) “Required Series C Holders” means the members of the Company who are holders of a majority of the then outstanding Series C Preferred Units held by members, voting together as a separate class on an as converted basis.

(1) “Sale of the Company” means a transaction that qualifies as a “Liquidation Event” as defined in the LLC Agreement.

(m) “Series B Managers” has the meaning ascribed to such term in the LLC Agreement.

(n) “Series C Managers” has the meaning ascribed to such term in the LLC Agreement.

(o) “Tag-Along Right” means the right, but not an obligation, of a Party to participate in a Proposed Transfer to a Proposed Transferee on the terms and conditions specified in the Proposed Transfer Notice.

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(p) “Transfer Securities” means the Investor Units and/or Common Units held by an Investor or Common Unitholder, as applicable.

(q) “WCAS Investors” means Welsh, Carson, Anderson & Stowe XI, L.P. and any person or entity that is a shareholder, member, manager, general partner, limited partner, employee or Affiliate of Welsh, Carson, Anderson & Stowe XI, L.P.

[Signature Page Follows]

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

COMPANY: VALERITAS HOLDINGS, LLC
By:	/s/ Kristine Peterson
Name: Title: Address:	Kristine Peterson CEO 75 Route 202 South, Suite 600 Bridgewater, NJ 08807

SCHEDULE A

INVESTORS

WCAS Capital Partners IV, L.P.

WCAS Management Corporation

WCAS Valeritas Holdings, LLC

WCAS XI Co-Investors, LLC

MPM BioVentures IV-QP, L.P.

MPM BioVentures IV GmbH & Co. Beteiligungs KG

MPM Asset Management Investors BV4 LLC

ONSET VI, L.P.

Pitango Venture Capital Fund V, L.P.

Pitango Venture Capital Principals Fund V, L.P.

U.S. Venture Partners IX, L.P.

U.S. Venture Partners X, L.P.

USVP X Affiliates, L.P.

Auda Capital IV Co-Investment GMBH & Co. KG

Auda Capital IV Co-Investment Fund, L.P.

Auda Valeritas Segregated Portfolio

PED-VLRTS, LLC

Abingworth BioVentures V LP

Advanced Technology Ventures VIII, L.P.

HLM Venture Partners II, L.P.

Tullis Opportunity Fund, L.P.

Tullis Opportunity Fund II, L.P.

S-1

Agate Medical Investments LP

Agate Medical Investments (Cayman) LP

I.I.Y Mordechay Ltd.

Saint John’s University

The Permanente Federation LLC - Series I

Kaiser Permanente Ventures, LLC – Series A

Kaiser Permanente Ventures, LLC – Series B

CHL Medical Partners III, LP

CHL Medical Partners III Side Fund, LP

The Board of Trustees of the Leland Stanford Junior University (DAPER I)

The Board of Trustees of the Leland Stanford Junior University (SBST)

Evan Norton

Highbridge International LLC

South Ferry #2, LP

Meyers Family Revocable Trust

Brian W. Beutel

John Curtin

Joe Fitzgerald

John E. and Betty Davis

Kenneth L. and Grace L. Franke Living Trust

Elizabeth Gordon

S-2

SCHEDULE B

COMMON UNITHOLDERS

Elizabeth Gordon

Kathy Aycok

Mandy Bentley

Joseph Brown

Michele Carter

Dan Connors

Yash Dave

Arleen DeCicco

Timothy E. Last

Steven F. Levesque

Glenda Lewis

Ronald Manning

Massachusetts Development Finance Agency

Devin V. McAllister

Lisa J. McGuinness

Heather Merolli

Deborah J. Nagy

Hung Nguyen

Michael Price

William Rebello

Tam Pham

Greg Sellman

Mike Stout

Poul Strange

Christine Tanaka

Oscar Tamayo

Mark D. Taylor

The Estate of Frank Baldino, Jr.

The Helen L. Levesque 2012 Trust, Helen L. Levesque, Trustee

S-3

EXHIBIT A

ADOPTION AGREEMENT

This Adoption Agreement (“Adoption Agreement”) is executed by the undersigned (“Transferee”) pursuant to the terms of that certain Voting Agreement dated as of June 19, 2014 (as the same may be amended, restated, modified or supplemented from time to time in accordance with its terms, the “Agreement”) by and among the Company and certain of its members. Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Agreement. By the execution of this Adoption Agreement, the Transferee agrees as follows:

(a) Acknowledgment. Transferee acknowledges that Transferee is acquiring certain equity securities of the Company (the “Securities”), subject to the terms and conditions of the Agreement.

(b) Agreement. Transferee (i) agrees that the Securities acquired by Transferee shall be bound by and subject to the terms of the Agreement, (ii) shall be deemed an [Investor] [Common Unitholder] for all purposes under the Agreement and (iii) hereby adopts the Agreement with the same force and effect as if Transferee were originally a Party thereto.

(c) Notice. Any notice required or permitted by the Agreement shall be given to Transferee at the address listed beside Transferee’s signature below.

EXECUTED AND DATED this      day of             , 201    .

TRANSFEREE:
By:
	Name and Title

Address:

Fax:

Accepted and Agreed:

VALERITAS HOLDINGS, LLC

By:

Title: