Exhibit 10.11

 

 

 

AMENDED AND RESTATED TERM LOAN AGREEMENT

dated as of

August 5, 2014

between

VALERITAS, INC.

as Borrower,

VALERITAS HOLDINGS, LLC

as Guarantor

The GUARANTORS from Time to Time Party Hereto,

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.

as Lenders

U.S. $50,000,000

 

 

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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

     22     

1.05

 

Amendment and Restatement and Continuing Security

     22   

SECTION 2 THE COMMITMENT

     23     

2.01

 

Commitments

     23     

2.02

 

Borrowing Procedures

     23     

2.03

 

Fees

     24     

2.04

 

Notes

     24     

2.05

 

Use of Proceeds

     24     

2.06

 

Defaulting Lenders

     24     

2.07

 

Substitution of Lenders

     25   

SECTION 3 PAYMENTS OF PRINCIPAL AND INTEREST

     26     

3.01

 

Repayment

     26     

3.02

 

Interest

     26     

3.03

 

Prepayments

     27   

SECTION 4 PAYMENTS, ETC.

     30     

4.01

 

Payments

     30     

4.02

 

Computations

     30     

4.03

 

Notices

     30     

4.04

 

Set-Off

     30   

SECTION 5 YIELD PROTECTION, ETC.

     31     

5.01

 

Additional Costs

     31     

5.02

 

Reserved

     32     

5.03

 

Illegality

     32     

5.04

 

Reserved

     32     

5.05

 

Taxes

     32   

 

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TABLE OF CONTENTS

(continued)

 

             Page  

SECTION 6 CONDITIONS PRECEDENT

     35     

6.01

 

Conditions to Initial Borrowing

     35     

6.02

 

Acknowledgements

     38     

6.03

 

Conditions to Each Borrowing

     38   

SECTION 7 REPRESENTATIONS AND WARRANTIES

     39     

7.01

 

Power and Authority

     39     

7.02

 

Authorization; Enforceability

     39     

7.03

 

Governmental and Other Approvals; No Conflicts

     40     

7.04

 

Financial Statements; Material Adverse Change

     40     

7.05

 

Properties

     40     

7.06

 

No Actions or Proceedings

     44     

7.07

 

Compliance with Laws and Agreements

     44     

7.08

 

Taxes

     44     

7.09

 

Full Disclosure

     44     

7.10

 

Regulation

     45     

7.11

 

Solvency

     45     

7.12

 

Subsidiaries

     45     

7.13

 

Indebtedness and Liens

     45     

7.14

 

Material Agreements

     45     

7.15

 

Restrictive Agreements

     45     

7.16

 

Real Property

     45     

7.17

 

Pension Matters

     46     

7.18

 

Collateral; Security Interest

     46     

7.19

 

Regulatory Approvals

     46     

7.20

 

Small Business Concern

     47     

7.21

 

Update of Schedules

     47   

SECTION 8 AFFIRMATIVE COVENANTS

     47     

8.01

 

Financial Statements and Other Information

     47     

8.02

 

Notices of Material Events

     48     

8.03

 

Existence; Conduct of Business

     50     

8.04

 

Payment of Obligations

     50   

 

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TABLE OF CONTENTS

(continued)

 

             Page    

8.05

 

Insurance

     51     

8.06

 

Books and Records; Inspection Rights

     51     

8.07

 

Compliance with Laws and Other Obligations

     51     

8.08

 

Maintenance of Properties, Etc.

     52     

8.09

 

Licenses

     53     

8.10

 

Action under Environmental Laws

     53     

8.11

 

Use of Proceeds

     53     

8.12

 

Certain Obligations Respecting Subsidiaries and Parent; Further Assurances

     54     

8.13

 

Termination of Non-Permitted Liens

     56     

8.14

 

Intellectual Property

     56     

8.15

 

Post-Closing Items

     57     

8.16

 

Real Property Security Documents

     57   

SECTION 9 NEGATIVE COVENANTS

     57     

9.01

 

Indebtedness

     57     

9.02

 

Liens

     58     

9.03

 

Fundamental Changes and Acquisitions

     60     

9.04

 

Lines of Business

     61     

9.05

 

Investments

     61     

9.06

 

Restricted Payments

     61     

9.07

 

Payments of Indebtedness

     62     

9.08

 

Change in Fiscal Year

     62     

9.09

 

Sales of Assets, Issuances of Equity, Etc.

     62     

9.10

 

Transactions with Affiliates

     63     

9.11

 

Restrictive Agreements

     64     

9.12

 

Amendments to Material Agreements

     64     

9.13

 

Preservation of Borrower Lease; Operating Leases

     65     

9.14

 

Sales and Leasebacks

     66     

9.15

 

Hazardous Material

     66     

9.16

 

Accounting Changes

     66     

9.17

 

Compliance with ERISA

     66     

9.18

 

Investment Company Act

     66   

 

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TABLE OF CONTENTS

(continued)

 

             Page  

SECTION 10 FINANCIAL COVENANTS

     66     

10.01

 

Minimum Revenue

     66     

10.02

 

Minimum Cash

     68   

SECTION 11 EVENTS OF DEFAULT

     68     

11.01

 

Events of Default

     68     

11.02

 

Remedies

     71   

SECTION 12 MISCELLANEOUS

     71     

12.01

 

No Waiver

     71     

12.02

 

Notices

     71     

12.03

 

Expenses, Indemnification, Etc.

     72     

12.04

 

Amendments, Etc.

     73     

12.05

 

Successors and Assigns

     73     

12.06

 

Survival

     75     

12.07

 

Captions

     76     

12.08

 

Counterparts

     76     

12.09

 

Governing Law

     76     

12.10

 

Jurisdiction, Service of Process and Venue

     76     

12.11

 

Waiver of Jury Trial

     76     

12.12

 

Waiver of Immunity

     77     

12.13

 

Entire Agreement

     77     

12.14

 

Severability

     77     

12.15

 

No Fiduciary Relationship

     77     

12.16

 

Confidentiality

     77     

12.17

 

USA PATRIOT Act

     77     

12.18

 

Maximum Rate of Interest

     77     

12.19

 

Certain Waivers

     78   

SECTION 13 GUARANTEE

     79     

13.01

 

The Guarantee

     79     

13.02

 

Obligations Unconditional

     79     

13.03

 

Reinstatement

     80     

13.04

 

Subrogation

     80   

 

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TABLE OF CONTENTS

(continued)

 

             Page    

13.05

 

Remedies

     81     

13.06

 

Instrument for the Payment of Money

     81     

13.07

 

Continuing Guarantee

     81     

13.08

 

Rights of Contribution

     81     

13.09

 

General Limitation on Guarantee Obligations

     82     

13.10

 

Collateral and Guaranty Matters

     82   

 

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 Parent, 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 Parent, 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

 

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AMENDED AND RESTATED TERM LOAN AGREEMENT, dated as of August 5, 2014 (this
“Agreement”), among VALERITAS, INC., a Delaware corporation (“Borrower”),
VALERITAS, HOLDINGS, LLC, a Delaware limited liability company (“Parent”), the
GUARANTORS from time to time party hereto and the Lenders from time to time
party hereto.

WITNESSETH:

WHEREAS, the Borrower and the Lenders are parties to a Term Loan Agreement dated
as of May 24, 2013 (the “Existing Term Loan Agreement”).

WHEREAS, the Borrower has entered into a reorganization transaction and Series D
Preferred Stock financing of the Borrower (the “Transaction”), pursuant to
which, among other things, two new subsidiary entities of the Borrower
(Valeritas Holdings, LLC and “Merger Sub”, respectively) were created, with
Merger Sub then merging into the Borrower and Valeritas Holdings, LLC becoming
the parent of the Borrower.

WHEREAS, the Transaction was not permitted under the terms of the Existing Term
Loan Agreement.

WHEREAS, Lenders consented to such Transaction pursuant to a Consent, Waiver and
Amendment Agreement dated as of June 19, 2014 among Borrower and the Lenders
(the “Consent, Waiver and Amendment Agreement”), that, among other things,
required the Borrower and Lenders to amend and restate the Existing Term Loan
Agreement, to, among other things, require Valeritas Holdings, LLC to become an
Obligor, guarantee the Obligations and pledge its assets to secure the
Obligations.

NOW THEREFORE, accordingly, the parties hereto 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.

 

1

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“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.”

“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.

 

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“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 Parent or the Borrower or (b) the acquisition of direct or
indirect Control of the Parent or 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.

“Closing Date” means August 5, 2014, the effective date of this Amended and
Restated Term Loan Agreement.

“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 $50,000,000. 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 May 24, 2013 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.

 

3

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“Common Stock Outstanding” means, collectively, (1) outstanding Common Stock of
Borrower, (2) Common Stock issuable upon conversion of outstanding Preferred
Stock, including the Series D 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).

“Consent, Waiver, and Amendment Agreement” has the meaning set forth in the
recitals hereto.

“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.

“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

 

4

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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 “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.

 

5

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“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 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

 

6

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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.

“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).

 

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“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.

“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.

 

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“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 “Guarantor” hereunder in favor of the Lenders.

“Guarantors” means, collectively, the Subsidiary Guarantors and the Parent and
their respective successors and permitted assigns.

“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, 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.

 

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“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 (12th) 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 (16th) 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 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

 

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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 of May
24,2013, Kristine Peterson), the President and Chief Commercial Officer (as of
May 24,2013, John Timberlake), the Chief Financial Officer (as of May 24,2013,
Jim Dentzer), the Controller (as of May 24,2013, William Duke), the Executive
Vice President (Manufacturing, Operations and R&D) (as of May 24,2013, Geoffrey
Jenkins), and the Vice President (Human Resources) (as of May 24,2013, 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
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.

 

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“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.

“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).

 

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“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 Parent, Borrower and their 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
Parent, Borrower and their Subsidiaries, taken as a whole, relative to other
companies in the industry in which Parent, Borrower and their 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 May
24. 2013, 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”.

“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
May 24, 2013 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 (24th)
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.

 

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“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 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).

“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)).

“Parent” has the meaning set forth in the introduction hereto.

“Parent Security Agreement Joinder Agreement” means the Security Agreement
Joinder Agreement, dated as of the date hereof, among the Parent and the
Lenders, joining the Parent as a Grantor under the Security Agreement.

“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.

 

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“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.

“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.

 

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“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 Parent, Borrower and their 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 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

 

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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 (12th) Payment Date after the first Borrowing Date, and (B) if more
than one Borrowing (other than PIK Borrowings) shall be made, the sixteenth
(16th) 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 (12th) Payment Date after the first Borrowing Date), or (y) if
more than one Borrowing (other than PIK Borrowings) shall be made, the sixteenth
(16th) 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).

“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.

 

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“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.

“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 Parent, Borrower or any of their Subsidiaries, or any payment
(whether in cash, securities or other

 

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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 Parent, Borrower or any of their
Subsidiaries or any option, warrant or other right to acquire any such shares of
capital stock of the Parent, Borrower or any of their 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 May 24, 2013,
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, the Parent
Security Agreement Joinder 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).

“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 as of May 24, 2013.

 

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“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.

“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.

 

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“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 May 24, 2013
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) pursuant to the Consent,
Waiver, and Amendment Agreement (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.

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,

 

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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;

(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.

1.05 Amendment and Restatement and Continuing Security.

(a) As stated in the recitals hereof, this Agreement amends, restates and
supersedes the Existing Term Loan Agreement, without novation. Upon the Closing
Date, all references in any Loan Document and all other agreements, documents
and instruments delivered by the Parent, Borrower, any Subsidiary Guarantor, any
of the Lenders or any other Person to (i) the Existing Term Loan Agreement shall
be deemed to refer to this Agreement (except where the context otherwise
requires) and (ii) a “Lender” or the “Control Agent” shall mean such terms as
defined in this Agreement. As to all periods occurring on or after the Closing
Date, all of the

 

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terms and conditions set forth in the Existing Term Loan Agreement shall be of
no further force and effect; it being understood that all obligations of each
Obligor under the Existing Term Loan Agreement shall be governed by this Amended
and Restated Term Loan Agreement from and after the Closing Date.

(b) The parties hereto acknowledge and agree that all principal, interest, fees,
costs, reimbursable expenses and indemnification obligations accruing or arising
under or in connection with the Existing Term Loan Agreement which remain unpaid
and outstanding as of the Closing Date shall be and remain outstanding and
payable as an obligation under this Agreement and the other Loan Documents.

(c) Borrower hereby ratifies, affirms and acknowledges all of its obligations in
respect of the Existing Term Loan Agreement, as amended and restated hereby, and
the related documents and agreements delivered by it thereunder.

(d) It is the intention of each of the parties hereto that the Existing Term
Loan Agreement be amended and restated by the provisions hereof so as to
preserve the perfection and priority of all security interests securing
indebtedness and obligations under the Existing Term Loan Agreement and that all
indebtedness and obligations of the Obligors hereunder shall be secured by the
Security Documents and that this Agreement does not constitute a novation of the
obligations and liabilities existing under the Existing Term Loan Agreement
except to the extent superseded by this Agreement after the Closing
Date. Borrower hereby confirms that the validity, effect and enforceability of
all Collateral and the guarantee of the Obligations by any Subsidiary Guarantors
shall remain unaffected by this amendment and restatement. The parties agree
that the Obligations secured by the Collateral and the guarantee of any
Subsidiary Guarantors shall include the obligations under or in connection with
this amendment and restatement (including any term loans).

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”).

 

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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 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

 

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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 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.

 

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(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.

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

 

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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.

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;

 

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(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 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

 

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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), 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).

 

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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).

(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.

 

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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 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

 

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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.

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.

 

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(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.

(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

 

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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);

(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.

 

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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 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.

 

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(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.

(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.

 

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(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.

(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).

 

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(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.

(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 Acknowledgements

(a) The parties hereto acknowledge and agree that the initial Borrowing occurred
prior to the Closing Date and the conditions precedent under Section 6.01 were
satisfied as of such date; provided that, in accordance with the terms of the
Consent, Waiver and Amendment Agreement, the Warrants previously issued in
connection with the first Borrowing were terminated in their entirety and of no
further force or effect and that Schedule 1 sets forth the newly issued warrants
in substitution therefor.

(b) The parties hereto acknowledge and agree that the conditions precedent to
the second Borrowing, and consequently the third Borrowing contained in Section
6.02 of the Existing Tem Loan Agreement were not satisfied, and therefore, no
Lender has any commitment to fund the second and third term Borrowings
hereunder.

(c) The parties hereto acknowledge and agree that, with the execution and
delivery of this Agreement as of the date hereof, the Borrower is in compliance
with Section 6(b) of the Consent, Waiver and Amendment Agreement.

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 Parent, Borrower and their 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

 

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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).

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 Parent, Borrower and their 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 Parent, Borrower and their 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 Parent, Borrower and their 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 Parent, Borrower and their
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 Parent, Borrower nor any of their 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
Guarantor 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 Parent, Borrower or
their 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 Parent, Borrower and
their 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 Parent, Borrower nor any of their
Subsidiaries is an “investment company” as defined in, or subject to regulation
under, the Investment Company Act of 1940.

(b) Margin Stock. Neither Parent, Borrower nor any of their 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 Parent and 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 Parent, Borrower nor any of their 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 Guarantors’ assets, which security interests
are first-priority except for Permitted Senior Liens.

7.19 Regulatory Approvals. Except as listed on Schedule 7.19, Parent, Borrower
and their 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 Parent, Borrower and their 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 Parent, Borrower and their 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 Parent, Borrower and their Subsidiaries as at such date and the
results of operations of Parent, Borrower and their 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;

(b) as soon as available and in any event within 120 days after the end of each
fiscal year, the consolidated balance sheets of Parent, Borrower and their
Subsidiaries as of the end of

 

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such fiscal year, and the related consolidated statements of income,
shareholders’ equity and cash flows of Parent, Borrower and their 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 Parent, Borrower and
their Subsidiaries for the following five fiscal years, including forecasted
consolidated balance sheets, consolidated statements of income, shareholders’
equity and cash flows of Parent, Borrower and their 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 Parent, Borrower and their
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 Parent, Borrower or any of their
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, Parent, Borrower or any of their 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 Parent, Borrower
or any of their 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 Parent, Borrower or any of their 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 Parent,
Borrower or any of their 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 Parent, 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
Parent, 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. Parent and Borrower will, and will cause
each of their 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. Parent and Borrower will, and will cause each of
their 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 Parent, Borrower or any Subsidiary not constituting
a Permitted Lien, except to the extent such material

 

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taxes, fees, assessments or governmental charges or levies, or such claims are
being contested in good faith 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. Parent and Borrower will, and will cause each of their
Subsidiaries to discharge all Indebtedness other than Permitted Indebtedness.

8.05 Insurance. Parent and Borrower will, and will cause each of their
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. Parent and Borrower will, and will
cause each of their 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. Parent and Borrower will, and will
cause each of their 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. Parent and Borrower will, and
will cause each of their 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.

 

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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, Parent and Borrower shall, and shall cause each of
their 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.

(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

 

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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.

(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. Parent and Borrower shall, and shall cause each of their
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, Parent and Borrower
shall, and shall cause each of their 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 and Parent; 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

 

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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.

(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.

(d) Parent. Subject to the relevant limitations and terms contained in the
Security Documents, Parent shall take such action from time to time as shall be
necessary to ensure that Parent is a “Guarantor” hereunder, and will:

(i) become a “Grantor” under the Security Agreement, pursuant to the Parent
Security Agreement Joinder Agreement;

(ii) 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 Parent as collateral security for the obligations of Parent
hereunder; and

(iii) 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.

 

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8.13 Termination of Non-Permitted Liens. In the event that Parent, Borrower or
any of their Subsidiaries shall become aware or be notified by the Lenders of
the existence of any outstanding Lien against any Property of Parent, Borrower
or any of their Subsidiaries, which Lien is not a Permitted Lien, the Parent and
the Borrower shall use their 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 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 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 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 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 Guarantors or their 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 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 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.

 

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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. Parent and 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 Parent, Borrower and other
Guarantors in the United States.

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. Parent and Borrower will not, and will not permit any of
their 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 Guarantor in the
ordinary course of business;

(f) Indebtedness (i) of Borrower to any Guarantor, (ii) of any Guarantor to
Borrower or any other Guarantor, and (iii) of any Subsidiary that is not an
Obligor to any other Subsidiary that is not an Obligor;

 

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(g) Guarantees by Borrower of Indebtedness of any Guarantor and by any Guarantor
of Indebtedness of Borrower or any other 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;

(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. Parent and Borrower will not, and will not permit any of their
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 Parent, Borrower or any of their
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);

 

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(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;

(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;

 

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(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.

9.03 Fundamental Changes and Acquisitions. Parent and Borrower will not, and
will not permit any of their 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.

 

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9.04 Lines of Business. Parent and Borrower will not, and will not permit any of
their Subsidiaries to, engage to any material extent in any business other than
the business engaged in on the date hereof by Parent, Borrower or any Subsidiary
or a business reasonably related thereto.

9.05 Investments. Parent and Borrower will not, and will not permit any of their
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);

(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. Parent and Borrower will not, and will not permit any
of their 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;

 

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(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 of an Obligor to any Obligor;

(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

(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. Parent and Borrower will not, and will not permit
any of their 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 Parent and Borrower
will not, and will not permit any of their 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. Parent and Borrower will not, and will not permit
any of their 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
Parent and 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;

 

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(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;

(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. Parent and Borrower will not, and will not
permit any of their 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;

 

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(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, Parent and Borrower will not, and
will not permit any of their 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 Parent,
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 Parent, Borrower or any other Subsidiary or
to Guarantee Indebtedness of Parent, Borrower or any other Subsidiary; provided
that:

(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. Parent and Borrower will not, and will
not permit any of their 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 Parent, 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).

 

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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.    

(b) Parent and Borrower will not, and will not permit any of their 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.

 

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9.14 Sales and Leasebacks. Except as disclosed on Schedule 9.14, Parent and
Borrower will not, and will not permit any of their 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 Parent, Borrower or
such Subsidiary has sold or transferred or is to sell or transfer to any other
Person and (ii) which Parent, 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. Parent and Borrower will not, and will not permit any
of their 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. Parent and Borrower will not, and will not permit any
of their 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. Parent and Borrower will, and will cause each of
their Subsidiaries, not to engage in any activities that will result in Parent,
Borrower or such Subsidiary becoming an “investment company” as defined in, or
subject to regulation under, the Investment Company Act of 1940.

9.19 Parent. Parent shall not acquire, own, form, or have any interest
whatsoever in any direct Subsidiary other than Borrower.

SECTION 10

FINANCIAL COVENANTS

10.01 Minimum Revenue. (a) Parent, Borrower and their 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 (subject to the terms set forth in the Consent, Waiver and Amendment
Agreement);

(iii) during the twelve month period beginning on January 1, 2015, of at least
$20,000,000 (subject to the terms set forth in the Consent, Waiver and Amendment
Agreement);

(iv) during the twelve month period beginning on January 1, 2016, of at least
$75,000,000;

 

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(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) (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 calendar year during the
term of this Agreement:

(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.

(ii) Notwithstanding anything herein to the contrary, (A) 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”), (B)
Borrower shall deliver a compliance certificate, evidencing compliance with the
Specified Financial Covenants after giving effect to receipt of the Cure Amount
and (C) 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).

 

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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
Parent, Borrower or any of their 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;

(d) any Obligor shall fail to observe or perform any covenant, condition or
agreement contained in Section 8.02, 8.03 (with respect to Parent or 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) Parent, Borrower or any of their 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;

 

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(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 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;

 

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(i) any petition is filed, application made or other proceeding instituted
against or in respect of Parent, 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 Parent,
Borrower or such Subsidiary thereunder in the interim, such grace period will
cease to apply; provided further that if Parent, 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 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.

 

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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.

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

 

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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 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

 

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Documents or any of the transactions contemplated hereby or thereby or the
actual or proposed use of the proceeds of the Loans. Parent, 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.

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

 

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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 Parent or the 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.

(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.

 

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(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.

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.

 

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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 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.

 

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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.

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
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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.

(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

 

78

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(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 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 herein collectively
called the “Guaranteed Obligations”). The 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 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 Guarantors under Section
13.01 are absolute and unconditional, joint and several, irrespective of the
value, genuineness, validity,

 

79

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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 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 Guarantors hereunder, which shall remain absolute
and unconditional as described above:

(a) at any time or from time to time, without notice to the 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 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 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 bankruptcy or
reorganization or otherwise, and the 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 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

 

80

--------------------------------------------------------------------------------

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 Guarantors jointly and severally agree that, as between the
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 Guarantors for purposes of Section 13.01.

13.06 Instrument for the Payment of Money. Each 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 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 Guarantors hereby agree, as between
themselves, that if any Guarantor shall become an Excess Funding Guarantor (as
defined below) by reason of the payment by such Guarantor of any Guaranteed
Obligations, each other 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 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
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 Guarantor under the other provisions of this Section 13 and
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 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 Guarantor, the
ratio (expressed as a percentage) of (x) the amount by which the aggregate
present fair saleable value of all properties of such Guarantor (excluding any
shares of stock of any other Guarantor) exceeds the amount of all the debts and
liabilities of such Guarantor (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder and any obligations of any other Guarantor that have been Guaranteed
by

 

81

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such Guarantor) to (y) the amount by which the aggregate fair saleable value of
all properties of all of the 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 Guarantors
hereunder and under the other Loan Documents) of all of the Guarantors,
determined (A) with respect to any Guarantor that is a party hereto on the date
hereof, as of the date hereof, and (B) with respect to any other Guarantor, as
of the date such Guarantor becomes a 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 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 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

(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]

 

82

--------------------------------------------------------------------------------

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  

LOGO [g150397stamp335.jpg]

 

 

  Name:   Kristine Peterson   Title:   Chief Executive Officer Address for
Notices: 750 Route 202 South, Suite 600 Bridgewater, NJ 08807 Attn: Tel.: Fax:
Email:

 

[Signature Page to Term Loan Agreement]

 

S-1

--------------------------------------------------------------------------------

GUARANTORS: VALERITAS HOLDINGS, LLC By  

LOGO [g150397stamp336.jpg]

 

 

  Name:   Kristine Peterson   Title:   Chief Executive Officer Address for
Notices: Attn: Tel.: Fax: Email:

 

[Signature Page to Term Loan Agreement]

 

S-2

--------------------------------------------------------------------------------

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    LOGO [g150397stamp337anew.jpg]          

 

          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
INVESMENT OPPORTUNITIES PARTNERS II GP LLC, its General Partner        By   
LOGO [g150397stamp337b.jpg]          

 

          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    LOGO [g150397stamp337c.jpg]          

 

          Name:    Charles Tate           Title:    Sole Member   

 

[Signature Page to Term Loan Agreement]

 

S-4

--------------------------------------------------------------------------------

CAPITAL ROYALTY PARTNERS II (CAYMAN) L.P.       By CAPITAL ROYALTY PARTNERS II
(CAYMAN) GP L.P., its General Partner         By CAPITAL ROYALTY PARTNERS II
(CAYMAN) GP LLC, its General Partner          By   LOGO [g150397stamp338a.jpg]
         

 

          Name:   Charles Tate           Title:   Sole Member   

       WITNESS:   LOGO [g150397stamp338b.jpg]           Name:   Andrei Dorenbaum
  

CAPITAL ROYALTY PARTNERS II-PARALLEL FUND “B” (CAYMAN) L.P.       By CAPITAL
ROYALTY PARTNERS II (CAYMAN) GP L.P., its General Partner        

By CAPITAL ROYALTY PARTNERS II (CAYMAN) GP LLC, its General Partner

         By   LOGO [g150397stamp338c.jpg]          

 

          Name:   Charles Tate           Title:   Sole Member   

     WITNESS:   LOGO [g150397stamp338d.jpg]         Name:   Andrei Dorenbaum   
Address for Notices:    1000 Main Street, Suite 2500    Houston, TX 77002   
Attn:      General Counsel    Tel.:      713.209.7350    Fax:      713.209.7351
   Email:   adorenbaum@capitolroyalty.com   

 

[Signature Page to Term Loan Agreement]

 

S-5

--------------------------------------------------------------------------------

Schedule 1

to Term Loan Agreement

COMMITMENTS

 

Lender

   Commitment1      Proportionate
Share  

Capital Royalty Partners II L.P.

   $ 5,450,000         10.9 % 

Capital Royalty Partners II – Parallel Fund “A” L.P.

   $ 6,150,000         12.3 % 

Parallel Investment Opportunities Partners II L.P.

   $ 10,000,000         20 % 

Capital Royalty Partners II (Cayman) L.P.

   $ 1,950,000         3.9 % 

Capital Royalty Partners II – Parallel Fund “B” (Cayman) L.P.

   $ 26,450,000         52.9 %    

 

 

    

 

 

 

TOTAL

   $ 50,000,000         100 %    

 

 

    

 

 

 

WARRANT SHARES

 

Lender

   Number of
Warrant Shares
of Common
Stock  

Capital Royalty Partners II L.P.

     21,655   

Capital Royalty Partners II – Parallel Fund “A” L.P.

     24,436   

Parallel Investment Opportunities Partners II L.P.

     39,733   

Capital Royalty Partners II (Cayman) L.P.

     7,748   

Capital Royalty Partners II – Parallel Fund “B” (Cayman) L.P.

     105,095      

 

 

 

TOTAL

     198,667      

 

 

 

 

1  Subject to Section 6.02

--------------------------------------------------------------------------------

Schedule 7.05(b)

to Term Loan Agreement

CERTAIN INTELLECTUAL PROPERTY

PATENTS AND PATENT APPLICATIONS

Valeritas Holdings, LLC Patents and Patent Applications: None

Valeritas, Inc. 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    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-002-DE1    DE   
Injection Devices    60/112,805 & PCT/US99/30172   

18-Dec-98

18-Dec-99

   69928012.5    17-Dec-99    granted    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 Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

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    abandoned    144948    29-May-11 VALT-003-HK1    WO   
Electroactive Pore    60/120,879 PCT/US00/04273 00914640.8   

18-Feb-99

18-Feb-00

18-Feb-00

   02102212.6    18-Feb-00    abandoned       VALT-003-EP1    EP   
Electroactive Pore    60/120,879 PCT/US00/04273   

18-Feb-99

18-Feb-00

   00914640.8    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

   00914640.8    18-Feb-00    validated    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    validated    1161277    11-Oct-06

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

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   
Needless Injection Syringe          60/174,876    7-Jan-00    expired      
VALT-004-101    US    Needless Injection Syringe    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    Needleless injection Syringe    60/174,876    7-Jan-00    10/658,116   
8-Sep-03    granted    US 7,806,867    5-Oct-10 VALT-004-WO1    WO    Needleless
injection Syringe    60/174,876    7-Jan-00    PCT/US01/00346    4-Jan-01   
expired       VALT-004-EP1    EP    Needleless injection Syringe    60/174,876
PCT/USO1/00346   

7-Jan-00

4-Jan-01

   1908589.3    4-Jan-01    validated/granted    1296730    16-Mar-11
VALT-004-DE1    DE    Needleless injection Syringe    60/174,876 PCT/USO1/00346
  

7-Jan-00

4-Jan-01

   1908589.3    4-Jan-01    granted    60144229.6-08    16-Mar-11 VALT-004-FR1
   FR    Needleless injection Syringe    60/174,876 PCT/USO1/00346   

7-Jan-00

4-Jan-01

   1908589.3    4-Jan-01    granted    1296730    16-Mar-11 VALT-004-GB1    GB
   Needleless injection Syringe    60/174,876 PCT/USO1/00346   

7-Jan-00

4-Jan-01

   1908589.3    4-Jan-01    granted    1296730    16-Mar-11

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-004-IE1    IE    Needleless injection Syringe    60/174,876 PCT/USO1/00346
  

7-Jan-00

4-Jan-01

   1908589.3    4-Jan-01    granted    1296730    16-Mar-11 VALT-004-CA1    CA
   Needleless injection Syringe    60/174,876 PCT/USO1/00346   

7-Jan-00

4-Jan-01

   2,396,569    4-Jan-01    granted    2,396,569    23-Mar-10 VALT-004-AU1    AU
   Needleless injection Syringe    60/174,876 PCT/USO1/00346   

7-Jan-00

4-Jan-01

   3644101    4-Jan-01    granted    783680    9-Mar-06 VALT-004-AU2    AU   
Needleless injection Syringe    60/174,876 PCT/USO1/00346   

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-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    granted    US
8,500,681    06-Aug-2013 VALT-007-WO1    WO    Injection Systems    same as
above    same as above    PCT/US01/46029    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-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-01    granted    5525020   
18-Apr-2014 VALT-007-EP1    EP    Injection Systems    same as above    same as
above    01994145.9    30-Nov-01    published       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    WO    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 Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-021    US    Fluid Delivery Systems and Methods          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-011-001    US    Fluid
Delivery and Measurement Systems and Methods          60/250,538    30-Nov-00   
expired       VALT-017    US    Fluid Delivery Device          60/250,403   
30-Nov-00    expired       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-011-101    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 Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

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    published   
   VALT-011-104    US    Fluid Delivery and Measurement Systems and Methods   
same as above    30-Nov-00    13/743,892    17-Jan-2013    published      
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-011-EP1    EP    Fluid Delivery and Measurement Systems and Methods    same
as above & PCT/US01/46028    same as above & 30-Nov-01    01988242.2   
30-Nov-01    published       VALT-011-EP2    EP    Fluid Delivery and
Measurement Systems and Methods    same as above & PCT/US01/46028    same as
above & 30-Nov-01    12190927.9    30-Nov-01    published       VALT-011-EP3   
EP    Fluid Delivery and Measurement Systems and Methods    same as above &
PCT/US01/46028    same as above & 30-Nov-01    12190928.7    30-Nov-01   
published      

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

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-2012 VALT-011-CA2    CA    Fluid Delivery and Measurement Systems and
Methods    same as above    same as above    2,782,501    30-Nov-01    allowed
      VALT-011-CA3    CA    Fluid Delivery and Measurement Systems and Methods
   same as above    same as above    2,850,729    30-Nov-01    pending      
VALT-011-CA4    CA    Fluid Delivery and Measurement Systems and Methods    same
as above    same as above    2,850,798    30-Nov-01    pending      
VALT-023-001    US    Microneedle          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    published      
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    US    Microneedle systems and methods relating to same
         60/323,852    21-Sep-01    expired      

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

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
   published       VALT-025-WO1    WO    Gas Pressure Actuated Microneedle
Arrays, and Systems and methods relating to same    60/323,417    19-Sep-01   
PCT/US02/30117    23-Sep-02    expired       VALT-025-EP1    EP    Gas Pressure
Actuated Microneedle Arrays, and Systems and methods relating to same   
60/323,417 & PCT/US02/30117   

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    60/323,417 & PCT/US02/30117   

19-Sep-01

23-Sep-02

   2,499,838    23-Sep-02    Granted    2,499,838    18-Dec-12 VALT-025-FR1   
FR    Gas Pressure Actuated Microneedle Arrays, and Systems and methods relating
to same    60/323,417 & PCT/US02/30117   

19-Sep-01

23-Sep-02

   02766341.8    23-Sep-02    Granted    1471953    16-Feb-11

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-025-DE1    DE    Gas Pressure Actuated Microneedle Arrays, and Systems and
methods relating to same    60/323,417 & PCT/US02/30117   

19-Sep-01

23-Sep-02

   02766341.8    23-Sep-02    Granted    1471953    16-Feb-11 VALT-025-IE1    IE
   Gas Pressure Actuated Microneedle Arrays, and Systems and methods relating to
same    60/323,417 & PCT/US02/30117   

19-Sep-01

23-Sep-02

   02766341.8    23-Sep-02    Granted    1471953    16-Feb-11 VALT-025-GB1    GB
   Gas Pressure Actuated Microneedle Arrays, and Systems and methods relating to
same    60/323,417 & PCT/US02/30117   

19-Sep-01

23-Sep-02

   02766341.8    23-Sep-02    Granted    1471953    16-Feb-11 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/TBA       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 Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

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    published       VALT-029-001    US   
Microneedle Array System          60/257,757    21-Dec-00    expired      
VALT-029-101    US    Microneedle Array System    60/257,757    21-Dec-00   
10/027,115    20-Dec-01    granted    US 7,027,478 B2    11-Apr-06 VALT-029-0WO1
   WO    Microneedle Array System    60/257,757    21-Dec-00    PCT/US01/49797
   20-Dec-01    expired       VALT-030-001    US    Microneedle Array with
Switch          60/325,522    28-Sep-01    expired      

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

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-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 Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

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    pending       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    granted    1590034    14-May-14 VALT-034-DE1    DE
   Microneedle Array Patch    60/416,740 & PCT/US03/31847   

7-Oct-02

7-Oct-03

   03808167.5    7-Oct-03    granted    1590034    14-May-14 VALT-034-FR1    FR
   Microneedle Array Patch    60/416,740 & PCT/US03/31847   

7-Oct-02

7-Oct-03

   03808167.5    7-Oct-03    granted    1590034    14-May-14

--------------------------------------------------------------------------------

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    8,070,726   
06-Dec-2011 VALT-035-103    US    Hydraulically Actuated Pump for Long Duration
Medicament Administration    60/465,070    23-Apr-03    12/336,395    16-Dec-08
   published       VALT-035-104    US    Hydraulically Actuated Pump for Long
Duration Medicament Administration    60/465,070    23-Apr-03    12/762,307   
17-Apr-10    published       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    published       VALT-035-JP1    JP   
Hydraulically Actuated Pump for Long Duration Medicament Administration   
60/465,070 & PCT/US04/12797   

23-Apr-03

23-Apr-04

   2006-513327    23-Apr-04    granted    4565193    13-Aug-10 VALT-035-JP2   
JP    Hydraulically Actuated Pump for Long Duration Medicament Administration   
60/465,070 & PCT/US04/12797   

23-Apr-03

23-Apr-04

   2009-44928    23-Apr-04    abandoned       VALT-035-JP3    JP   
Hydraulically Actuated Pump for Long Duration Medicament Administration   
60/465,070 & PCT/US04/12797   

23-Apr-03

23-Apr-04

   2012-249271    23-Apr-04    granted    5550155    30-May-14 VALT-035-JP2   
JP    Hydraulically Actuated Pump for Long Duration Medicament Administration   
60/465,070 & PCT/US04/12797   

23-Apr-03

23-Apr-04

   2012-249272    23-Apr-04    published       VALT-035-CA1    CA   
Hydraulically Actuated Pump for Long Duration Medicament Administration   
60/465,070 & PCT/US04/12797   

23-Apr-03

23-Apr-04

   2,523,267    23-Apr-04    granted    2,523,267    03-Sep-13

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-035-CA2    CA    Hydraulically Actuated Pump for Long Duration Medicament
Administration    60/465,070 & PCT/US04/12797   

23-Apr-03

23-Apr-04

   2,820,537    23-Apr-04    pending       VALT-035-AU1    AU    Hydraulically
Actuated Pump for Long Duration Medicament Administration    60/465,070 &
PCT/US04/12797   

23-Apr-03

23-Apr-04

   2004232858    23-Apr-04    granted    2004232858    22-Oct-09 VALT-035-AU2   
AU    Hydraulically Actuated Pump for Long Duration Medicament Administration   
60/465,070 & PCT/US04/12797   

23-Apr-03

23-Apr-04

   2009202856    23-Apr-04    granted    2009202856    21-Jun-12 VALT-035-AU3   
AU    Hydraulically Actuated Pump for Long Duration Medicament Administration   
60/465,070 & PCT/US04/12797   

23-Apr-03

23-Apr-04

   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    published      

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

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   
published       VALT-037-AU1    AU    Methods and Devices for Delivering Agents
Across Biological Barriers    11/198,024 & PCT/US06/030981    5-Aug-05 &
07-Aug-06    2006278258    7-Aug-06    Granted    2006278258    28-Jun-12
VALT-037-CA1    CA    Methods and Devices for Delivering Agents Across
Biological Barriers    11/198,024 & PCT/US06/030981    5-Aug-05 & 07-Aug-06   
2,659,785    7-Aug-06    Granted    2,659,785    30-Jul-2013 VALT-037-JP1    JP
   Methods and Devices for Delivering Agents Across Biological Barriers   
11/198,024 & PCT/US06/030981    5-Aug-05 & 07-Aug-06    2008-525284    7-Aug-06
   published       VALT-037-EP1    EP    Methods and Devices for Delivering
Agents Across Biological Barriers    11/198,024 & PCT/US06/030981    5-Aug-05 &
07-Aug-06    6801016.4    7-Aug-06    published       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 Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-037-AU2    AU    Methods and Devices for Delivering Agents Across
Biological Barriers    11/198,024 & PCT/US06/030981    5-Aug-05 & 07-Aug-06   
2012203204    7-Aug-06    Granted    2012203204    15-May-2014 VALT-037-CA2   
CA    Methods and Devices for Delivering Agents Across Biological Barriers   
11/198,024 & PCT/US06/030981    5-Aug-05 & 07-Aug-06    2,817,035    7-Aug-06   
Pending       VALT-037-EP2    EP    Methods and Devices for Delivering Agents
Across Biological Barriers    11/198,024 & PCT/US06/030981    5-Aug-05 &
07-Aug-06    12177394.9    7-Aug-06    published       VALT-037-JP2    JP   
Methods and Devices for Delivering Agents Across Biological Barriers   
11/198,024 & PCT/US06/030981    5-Aug-05 & 07-Aug-06    2013-000238    7-Aug-06
   published       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    published      

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

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    60/787,616 & PCT/US07/065363    30-Mar-06 28-Mar-07   
2011201473    28-Mar-07    granted    2011201473    22-Aug-2013 VALT-AU3-1000   
AU    Multi-Cartridge Fluid Delivery Device    60/787,616 & PCT/US07/065363   
30-Mar-06 28-Mar-07    2013231047    28-Mar-07    pending       VALT-CA1-1000   
CA    Multi-Cartridge Fluid Delivery Device    60/787,616 & PCT/US07/065363   
30-Mar-06 28-Mar-07    2,646,324    28-Mar-07    pending       VALT-CN1-1000   
CN    Multi-Cartridge Fluid Delivery Device    60/787,616 & PCT/US07/065363   
30-Mar-06 28-Mar-07    200780020245.9    28-Mar-07    granted   
ZL200780020245.9    19-Jun-2013 VALT-CN2-1000    CN    Multi-Cartridge Fluid
Delivery Device    60/787,616 & PCT/US07/065363    30-Mar-06 28-Mar-07   
201310119427.9    28-Mar-07    published      

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-EP1-1000    EP    Multi-Cartridge Fluid Delivery Device    60/787,616 &
PCT/US07/065363    30-Mar-06 28-Mar-07    07759578.3    28-Mar-07    published
      VALT-HK1-1000    HK    Multi-Cartridge Fluid Delivery Device    60/787,616
& PCT/US07/065363    30-Mar-06 28-Mar-07    09105477.2    28-Mar-07    published
      VALT-IL1-1000    IL    Multi-Cartridge Fluid Delivery Device    60/787,616
& PCT/US07/065363    30-Mar-06 28-Mar-07    194452    28-Mar-07    abandoned   
   VALT-IL2-1000    IL    Multi-Cartridge Fluid Delivery Device    60/787,616 &
PCT/US07/065363    30-Mar-06 28-Mar-07    232412    28-Mar-07    pending      
VALT-IN1-1000    IN    Multi-Cartridge Fluid Delivery Device    60/787,616 &
PCT/US07/065363    30-Mar-06 28-Mar-07    8997/DELNP/2008    28-Mar-07   
published       VALT-JP1-1000    JP    Multi-Cartridge Fluid Delivery Device   
60/787,616 & PCT/US07/065363    30-Mar-06 28-Mar-07    2009-503245    28-Mar-07
   abandoned       VALT-JP2-1000    JP    Multi-Cartridge Fluid Delivery Device
   60/787,616 & PCT/US07/065363    30-Mar-06 28-Mar-07    2012-255233   
28-Mar-2007    published       VALT-KR1-1000    KR    Multi-Cartridge Fluid
Delivery Device    60/787,616 & PCT/US07/065363    30-Mar-06 28-Mar-07   
10-2008-7026677    28-Mar-07    granted    10-1361376    04-Feb-2014
VALT-RU1-1000    RU    Multi-Cartridge Fluid Delivery Device    60/787,616 &
PCT/US07/065363    30-Mar-06 28-Mar-07    2008143015    28-Mar-07    granted   
2438719    10-Jan-2012

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-SG1-1000    SG    Multi-Cartridge Fluid Delivery Device    60/787,616 &
PCT/US07/065363    30-Mar-06 28-Mar-07    200807302-5    28-Mar-07    granted   
146773    31-Aug-2011 VALT-SG2-1000    SG    Multi-Cartridge Fluid Delivery
Device    60/787,616 & PCT/US07/065363    30-Mar-06 28-Mar-07    201104696-8   
28-Mar-2007    published       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
   US 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   
allowed       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-10    13/332,065    20-Dec-11    Granted   
8,540,672    24-Sep-2013 VALT-110-102    US    Microneedle Patch Applicator   
61/426,199 & 13/332,065    22-Dec-10 & 20-Dec-11    13/972,442    21-Aug-13   
Granted    8,734,395    27-May-2014 VALT-110-103    US    Microneedle Patch
Applicator    61/426,199 & 13/332,065    22-Dec-10 & 20-Dec-11    13/972,460   
21-Aug-13    Published       VALT-110-WO1    PCT    Microneedle Patch Applicator
   61/426,199    22-Dec-10    PCT/US2011/066248    20-Dec-11    Expired      
VALT-110-AU1    AU    Microneedle Patch Applicator    61/426,199 &
PCT/US2011/066248    22-Dec-10 & 20-Dec-11    2011349277    20-Dec-11    pending
     

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-110-CA1    CA    Microneedle Patch Applicator    61/426,199 &
PCT/US2011/066248    22-Dec-10 & 20-Dec-11    2,822,428    20-Dec-11    pending
      VALT-110-EP1    EP    Microneedle Patch Applicator    61/426,199 &
PCT/US2011/066248    22-Dec-10 & 20-Dec-11    11850496.8    20-Dec-11   
Published       VALT-110-JP1    JP    Microneedle Patch Applicator    61/426,199
& PCT/US2011/066248    22-Dec-10 & 20-Dec-11    2013-546336    20-Dec-11   
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    granted
   US 8,667,996    11-Mar-2014 VALT-1001-102    US    Fluid Transfer Device   
61/175,329    04-May-09    14/156,514    16-Jan-2014    published      
VALT-1001-201    US    Fluid Transfer Device-Design          29/361,753   
14-May-10    granted    D667946    25-Sep-2012 VALT-1001-202    US    Fluid
Transfer Device-Design    29/361,753    14-May-10    29/428,565    01-Aug-2012
   granted    D687948    13-Aug-2013 VALT-1001-203    US    Fluid Transfer
Device-Design    29/361,753    14-May-10    29/458,166    17-Jun-2013    granted
   D706415    03-Jun-2014 VALT-1001-CN1    CN    Fluid Transfer Device-Design   
29/361,753    14-May-10    201030616664.3    12-Nov-10    granted   
ZL201030616664.3    19-Oct-2011 VALT-1001-CA1    CA    Fluid Transfer Device   
61/175,329 PCT/US10/33590    04-May-09 04-May-10    2,760,641    4-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    61/175,329 PCT/US10/33590   
04-May-09 04-May-10    201080029611.9    4-May-10    granted    ZL201080029611.9
   25-Jun-14 VALT-1001-CN2    CN    Fluid Transfer Device    61/175,329
PCT/US10/33590    04-May-09 04-May-10    201410204112.9    4-May-10    pending
      VALT-1001-EP1    EP    Fluid Transfer Device    61/175,329 PCT/US10/33590
   04-May-09 04-May-10    10772721.6    4-May-10    published      
VALT-1001-HK1    HK    Fluid Transfer Device    61/175,329 PCT/US10/33590   
04-May-09 04-May-10    12108444.1    4-May-10    published       VALT-1001-IN1
   IN    Fluid Transfer Device    61/175,329 PCT/US10/33590    04-May-09
04-May-10    8394/DELNP/2011    4-May-10    published       VALT-1001-JP1    JP
   Fluid Transfer Device    61/175,329 PCT/US10/33590    04-May-09 04-May-10   
2012-508830    4-May-10    published       VALT-1001-JP2    JP    Fluid Transfer
Device    61/175,329 PCT/US10/33590    04-May-09 04-May-10    2014-87852   
4-May-10    pending       VALT-1001-KR1    KR    Fluid Transfer Device   
61/175,329 PCT/US10/33590    04-May-09 04-May-10    10-2011-7028818    4-May-10
   published       VALT-1001-WO1    WO    Fluid Transfer Device    61/175,329   
04-May-09    PCT/US10/33590    4-May-10    expired      

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

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-AU    AU    Fluid Delivery Device   
61/251,236 PCT/US10/52352    13-Oct-09 12-Oct-10    2010307002    12-Oct-2010   
allowed       VALT-107-AU2    AU    Fluid Delivery Device    61/251,236
PCT/US10/52352    13-Oct-09 12-Oct-10    2014202952    12-Oct-2010    pending   
   VALT-107-CA    CA    Fluid Delivery Device    61/251,236 PCT/US10/52352   
13-Oct-09 12-Oct-10    2,776,397    12-Oct-2010    pending       VALT-107-CN   
CN    Fluid Delivery Device    61/251,236 PCT/US10/52352    13-Oct-09 12-Oct-10
   201080046063.0    12-Oct-2010    published       VALT-107-EP    EP    Fluid
Delivery Device    61/251,236 PCT/US10/52352    13-Oct-09 12-Oct-10   
10823957.5    12-Oct-2010    published       VALT-107-HK    HK    Fluid Delivery
Device    61/251,236 PCT/US10/52352    13-Oct-09 12-Oct-10    13102796.7   
12-Oct-2010    published       VALT-107-IL    IL    Fluid Delivery Device   
61/251,236 PCT/US10/52352    13-Oct-09 12-Oct-10    218554    12-Oct-2010   
pending       VALT-107-IN    IN    Fluid Delivery Device    61/251,236
PCT/US10/52352    13-Oct-09 12-Oct- 10    2600/DELNP/2012    12-Oct- 2010   
pending      

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-107-JP    JP    Fluid Delivery Device    61/251,236 PCT/US10/52352   
13-Oct-09 12-Oct-10    2012-534285    12-Oct-2010    published       VALT-107-KR
   KR    Fluid Delivery Device    61/251,236 PCT/US10/52352    13-Oct-09
12-Oct-10    10-2012-7008581    12-Oct-2010    published       VALT-107-SG    SG
   Fluid Delivery Device    61/251,236 PCT/US10/52352    13-Oct-09 12-Oct-10   
201201782-8    12-Oct-2010    allowed       VALT-107-101    US    Fluid Delivery
Device    61/251,236 PCT/US10/52352    13-Oct-09 12-Oct-10    13/500,136   
04-Apr-2012    published       VALT-107-WO1    WO    Fluid Delivery Device   
61/251,236    13-Oct-09    PCT/US10/52352    12-Oct-10    expired      
VALT-025-CA1    CA    Gas Pressure Actuated Microneedle Arrays, and Systems and
Methods Relating to Same          2,499,838    23-Sep-02    abandoned      
VALT-1002-AU1    AU    Fluid Delivery Device Cartridges, Needle Retraction
Mechanisms and Expandable Hydraulic Fluid Seals    61/353,004    09-Jun-10   
2011264825    09-Jun-2011    pending      

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-1002CA1    CA    same as above    61/353,004    09-Jun-10    2,799,784   
09-Jun-2011    pending       VALT-1002CA1    CN    same as above    61/353,004
   09-Jun-10    201180028239.4    09-Jun-2011    published       VALT-1002EP1   
EP    same as above    61/353,004    09-Jun-10    11793149.3    09-Jun-2011   
published       VALT-1002IL1    IL    same as above    61/353,004    09-Jun-10
   222801    09-Jun-2011    pending       VALT-1002IN1    IN    same as above   
61/353,004    09-Jun-10    11298/DELNP/2012    09-Jun-2011    pending      
VALT-1002JP1    JP    same as above    61/353,004    09-Jun-10    2013-514364   
09-Jun-2011    published       VALT-1002KR1    KR    same as above    61/353,004
   09-Jun-10    10-2013-7000391    09-Jun-2011    pending       VALT-1002SG1   
SG    same as above    61/353,004    09-Jun-10    201208331-7    09-Jun-2011   
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    granted    8,740,847   
03-Jun- 2014

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-1002-102    US    Fluid Delivery Device Cartridges, Needle Retraction
Mechanisms and Expandable Hydraulic Fluid Seals    61/353,004    09-Jun-10   
14/259,897    23-Apr-2014    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-1003-001    US    Vented Needle          61/569,642    12-Dec-2011   
expired       VALT-1003-WO1    WO    Vented Needle    61/569,642    12-Dec-2011
   PCT/US12/69054    12-Dec-2012    expired       VALT-1003-AU1    AU    Vented
Needle    61/569,642 PCT/US12/69054    12-Dec-2011 12-Dec-2012    2012352470   
12-Dec-2012    pending       VALT-1003-CA1    CA    Vented Needle    61/569,642
PCT/US12/69054    12-Dec-2011 12-Dec-2012    not yet assigned    12-Dec-2012   
pending      

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-1003-CN1    CN    Vented Needle    61/569,642 PCT/US12/69054    12-Dec-2011
12-Dec-2012    201280060538.0    12-Dec-2012    pending       VALT-1003-EP1   
EP    Vented Needle    61/569,642 PCT/US12/69054    12-Dec-2011 12-Dec-2012   
12858115.4    12-Dec-2012    pending       VALT-1003-IN1    IN    Vented Needle
   61/569,642 PCT/US12/69054    12-Dec-2011 12-Dec-2012    4148/DELNP/2014   
12-Dec-2012    pending       VALT-1003-JP1    JP    Vented Needle    61/569,642
PCT/US12/69054    12-Dec-2011 12-Dec-2012    not yet assigned    12-Dec-2012   
pending       VALT-1003-US1    US    Vented Needle    61/569,642 PCT/US12/69054
   12-Dec-2011 12-Dec-2012    14/363,981    09-Jun-14    pending      
VALT-1004-001    US    Infusion Needle Mechanism For A Fluid Delivery Device   
      61/829,325    31-May-2013    expired/converted       VALT-1004-WO1    WO
   A Fluid Delivery Device Having An Insertable Prefilled Cartridge   
61/829,325    31-May-2013    PCT/US2014/040205    30-May-2014    pending      
VALT-1005-001    US    Cartridge Insertion Mechanism For A Fluid Delivery Device
         61/857,415    23-Jul-2013    expired/unconverted      

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-1005-002    US    Cartridge Insertion Mechanism For A Fluid Delivery Device
         61/918,746    20-Dec-2013    expired/unconverted       VALT-1006-001   
US    Infusion Needle For A Fluid Delivery Device          61/923,957   
06-Jan-2014    expired/unconverted       VALT-1007-001    US    Piston         
61/925,286    09-Jan-2014    pending       VALT-1008-001    US    Moving Basal
Engine For A Fluid Delivery Device          61/934,259    31-Jan-2014    pending
     

--------------------------------------------------------------------------------

TRADEMARKS

Valeritas Holdings, LLC Trademarks and Trademark Applications: None

Valeritas, Inc. Trademarks and Trademark Applications:

 

Mark

  

Type

  

Serial No.

  

Filing Date

  

Country

  

Status

  

Reg. Date

  

Reg. No.

  

Class

VALERITAS    Standard Character Mark    77/752,916    5-Jun-2009    United
States of America    Registered    21-Feb-2012    4,102,741    10 Int. V-GO
DISPOSABLE INSULIN DELIVERY    Design Plus Words, Letters, and/or Numbers   
77/752,697    4-Jun-2009    United States of America    Registered   
28-Feb-2012    4,105,936    10 Int. VALERITAS    Design Plus Words, Letters,
and/or Numbers    77/752,695    4-Jun-2009    United States of America   
Registered    6-Mar-2012    4,109,207    10 Int. V-GO    Standard Character Mark
   77/752,694    4-Jun-2009    United States of America    Registered   
10-Apr-2012    4,125,819    10 Int. V-GO    Standard Character Mark    1130842
   20-Jul-2012    Australia    Registered    20-Jul-2012    1130842    10 Int.
V-GO    Standard Character Mark    840260458    11-Sep-2012    Brazil    Pending
         10 Int. V-GO    Standard Character Mark    1,587,483    25-Jul-2012   
Canada    Pending          10 Int. V-GO    Standard Character Mark    1130842   
20-Jul-2012    China (People’s Republic)    Pending          10 Int. V-GO   
Standard Character Mark    1130842    20-Jul-2012    European Community   
Registered    20-Jul-2012    1130842    10 Int. V-GO    Standard Character Mark
   302324475    24-Jul-2012    Hong Kong    Registered    24-Jul-2012   
302324475    10 Int.

--------------------------------------------------------------------------------

V-GO    Standard Character Mark    2370294    26-Jul-2012    India    Pending   
      10 Int. V-GO    Standard Character Mark    1130842    20-Jul-2012   
Israel    Registered    20-Jul-2012    1130842    10 Int. V-GO    Standard
Character Mark    1130842    20-Jul-2012    Japan    Abandoned          10 Int.
V-GO    Standard Character Mark    1130842    20-Jul-2012    Korea, Republic of
   Registered    20-Jul-2012    1130842    10 Int. V-GO    Standard Character
Mark    1,294,519    25-Jul-2012    Mexico    Pending          10 Int. V-GO   
Standard Character Mark    1130842    20-Jul-2012    Russian Federation   
Registered    20-Jul-2012    1130842    10 Int. V-GO    Standard Character Mark
   1130842    20-Jul-2012    Singapore    Registered          10 Int. V-GO   
Standard Character Mark    2012/21399    08-Aug- 2012    South Africa    Pending
         10 Int. V-GO    Standard Character Mark    1130842    20-Jul-2012   
Switzerland    Registered    20-Jul-2012    1130842    10 Int. V-GO    Standard
Character Mark    101041558    24-Jul-2012    Taiwan    Registered   
16-Mar-2013    01570123    10 Int. V-GO    Standard Character Mark    1130842   
20-Jul-2012    Turkey    Registered    20-Jul-2012    1130842    10 Int. V-GO
(Stylized and/or design)    Design Plus Words, Letters, and/or Numbers   
53700/2013    10-Jul-2013    Japan    Registered    28-Feb-2012    4,105,936   
10 Int. V-GO LIFE    Standard Character Mark    85/666,487    02-Jul-2012   
United States of America    Registered    04-Mar-2014    4,491,871    44 Int.

--------------------------------------------------------------------------------

U.S. COMMON LAW USE

Name/Picture

 

LOGO [g150397stamp372new.jpg]

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 www.vgo-insulin.com    10/03/2014
www.vgo-insulin.net    10/03/2014

--------------------------------------------------------------------------------

Domain Name

  

Renewal Date

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

--------------------------------------------------------------------------------

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.

THIRD PARTY PATENTS

Borrower is aware of U.S. Patent No. 6,629,954, U.S. Patent No. 6,736,795, U.S.
Patent 7,938,801 and U.S. Patent No. 5,858,001 and have obtained written
non-infringement and/or invalidity opinions for each of these patents.

--------------------------------------------------------------------------------

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    published       VALT-011-104    US    Fluid Delivery and
Measurement Systems and Methods    same as above    30-Nov-00    13/743,892   
17-Jan-2013    published       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    published   
  

--------------------------------------------------------------------------------

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   
published       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
   allowed       VALT-011-CA3    CA    Fluid Delivery and Measurement Systems
and Methods    same as above    same as above    2,850,729    30-Nov-01   
pending       VALT-011-CA4    CA    Fluid Delivery and Measurement Systems and
Methods    same as above    same as above    2,850,798    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 Ref. No.

  

Territory

  

Invention

  

Priority Application

  

Priority
Appln.
Filing

Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue

Date

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-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    granted    5550155    30- May-14

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

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-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   
granted    8,667,996    11- Mar-2014

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-1001-102    US    Fluid Transfer Device    61/175,329    04-May-09   
14/156,514    16-Jan-2014    published       VALT-1001-201    US    Fluid
Transfer Device-Design          29/361,753    14-May-10    granted    D667946   
25-Sep-2012 VALT-1001-202    US    Fluid Transfer Device-Design    29/361,753   
01-Aug-12    29/428,565    01-Aug-12    granted    D687948    13-Aug-2013
VALT-1001-203    US    Fluid Transfer Device-Design    29/361,753    01-Aug-12
   29/458,166    17-Jun-2013    granted    D706415    03-Jun-2014 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    granted    ZL201080029611.9    25-Jun-14 VALT-1001-CN2    CN   
Fluid Transfer Device    same as above    same as above    201410204112.9   
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    published       VALT-1001-IN1    IN    Fluid
Transfer Device    same as above    same as above    8394/DELNP/2011   
04-May-10    published       VALT- 1001-JP1    JP    Fluid Transfer Device   
same as above    same as above    2012-508830    04- May-10    published      

--------------------------------------------------------------------------------

VALT Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

VALT-1001-JP2    JP    Fluid Transfer Device    same as above    same as above
   2014-87852    04-May-10    pending       VALT-1001-KR1    KR    Fluid
Transfer Device    same as above    same as above    10-2011-7028818   
04-May-10    published       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    allowed       VALT-107-AU2    AU    Fluid Delivery
Device    61/251,236 61/325,136 PCT/US10/52352    13-Oct-09 16-Apr-10 12-Oct-10
   2014202952    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    published       VALT-107-EP    EP    Fluid
Delivery Device    same as above    same as above    10823957.5    12-Oct-10   
published       VALT-107-HK    HK    Fluid Delivery Device    same as above   
same as above    13102796.7    12-Oct-10    published       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    published       VALT-107-KR    KR    Fluid Delivery Device    same
as above    same as above    10-2012-7008581    12-Oct-10    published      
VALT-107-SG    SG    Fluid Delivery Device    same as above    same as above   
201201782-8    12-Oct-10    allowed      

--------------------------------------------------------------------------------

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    published       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    granted   
8,740,847    03-Jun-2014 VALT-1002-102    US    Fluid Delivery Device
Cartridges, Needle Retraction Mechanisms and Expandable Hydraulic Fluid Seals   
61/353,004    09-Jun-10    14/259,897    23-Apr-2014    published      
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 Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

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    published       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   
published       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 Ref. No.

  

Territory

  

Invention

  

Priority
Application

  

Priority
Appln.
Filing Date

  

Application No.

  

Appln. Filing

Date

  

Status

  

Patent No.

  

Issue Date

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    published       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

None

--------------------------------------------------------------------------------

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, Inc.

   Delaware    Valeritas
Holdings, LLC      100 % 

Valeritas Security Corporation

   Delaware    Valeritas, Inc.      99.99000099990001 % 

--------------------------------------------------------------------------------

Schedule 7.13(a)

to Term Loan Agreement

EXISTING INDEBTEDNESS OF PARENT, BORROWER AND ITS SUBSIDIARIES

 

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.

--------------------------------------------------------------------------------

Schedule 7.13(b)

to Term Loan Agreement

LIENS GRANTED BY THE OBLIGORS

None.

--------------------------------------------------------------------------------

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. Packaging Agreement by and between Valeritas, Inc. and MedPlast Inc dated
February 26, 2014.

 

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.

--------------------------------------------------------------------------------

Schedule 7.16

to Term Loan Agreement

REAL PROPERTY OWNED OR LEASED BY PARENT, BORROWER AND SUBSIDIARIES

Leased Real Property

 

1. 800 Boston Turnpike, Shrewsbury, Massachusetts.

 

2. 750 Route 202 South, Suite 600, Bridgewater, NJ.

--------------------------------------------------------------------------------

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. 2014 Equity Compensation Plan.

 

(b) Multiemployer Plans

None.

 

(c) Material Benefit Plans

 

  i. Medical – PPO Plan through Blue Cross & Blue Shield of Massachusetts,
Policy No. 2305332

 

  ii. Medical – HMO Plan through Blue Cross & Blue Shield of Massachusetts,
Policy No. 4050078

 

  iii. Medical – PPO/HSA Plan through Blue Cross & Blue Shield of Massachusetts,
Policy No. 2350252

 

  iv. Dental – Met Life, Policy No. TM-05913564-G

 

  v. Short Term Disability – Sun Life Insurance Company, Policy No. 211641

 

  v. Long Term Disability – Sun Life Insurance Company, Policy No. 211641

 

  vii. Life (Basic Term and AD&D) - SunLife Insurance Company, Policy No. 211641

 

  viii. Disability Plan for employees based in New York state – Sun life
Insurance Company, Policy No. 820083

 

  ix. Vision – Vision Service Plan Insurance Company – Policy No. 30043929

 

  x. Ameriflex Flexible Spending Account Plan

--------------------------------------------------------------------------------

Schedule 7.19

to Term Loan Agreement

REGULATORY APPROVALS

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 [                    ] by [NAME OF
ADDITIONAL GUARANTOR], a                      [corporation][limited liability
company] (the “Additional Guarantor”), in favor of Capital Royalty Partners II
L.P., Capital Royalty Partners II – Parallel Fund “A” L.P., Paralleled
Investment Opportunities Partners II L.P., Capital Royalty Partners II (Cayman)
L.P., and Capital Royalty Partners II – Parallel Fund “B” (Cayman) L.P., as
Lenders (the “Lenders”) under that certain Amended and Restated Term Loan
Agreement, dated as of August 5, 2014 (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 Guarantors party thereto.

Pursuant to Section 8.12(a) of the Loan Agreement, the Additional Guarantor
hereby agrees to become a “Guarantor” for all purposes of the Loan Agreement,
and a “Grantor” for all purposes of the Security Agreement. Without limiting the
foregoing, the Additional Guarantor hereby, jointly and severally with the other
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 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 Guarantor has caused this Guarantee
Assumption Agreement to be duly executed and delivered as of the day and year
first above written.

 

[ADDITIONAL 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 Amended and Restated Term Loan Agreement

Ladies and Gentlemen:

The undersigned, Valeritas, Inc., a Delaware corporation (“Borrower”), refers to
the Amended and Restated Term Loan Agreement, dated as of August 5, 2014 (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., Paralleled Investment
Opportunities Partners II L.P., Capital Royalty Partners II (Cayman) L.P., and
Capital Royalty Partners II – Parallel Fund “B” (Cayman) L.P., and other parties
from time to time party thereto as lenders (“Lenders”), and the 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:    [                    ]

 

Exhibit B-1

--------------------------------------------------------------------------------

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 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./ Paralleled Investment
Opportunities Partners II L.P./ Capital Royalty Partners II (Cayman) L.P./
Capital Royalty Partners II – Parallel Fund “B” (Cayman) 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 Amended and Restated Term
Loan Agreement, dated as of August 5, 2014 (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
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.

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.

THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE LOAN
AGREEMENT.

 

Exhibit C-1

--------------------------------------------------------------------------------

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 Amended and Restated Term Loan Agreement, dated as of
August 5, 2014 (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., Paralleled Investment
Opportunities Partners II L.P., Capital Royalty Partners II (Cayman) L.P., and
Capital Royalty Partners II – Parallel Fund “B” (Cayman) L.P., and other parties
from time to time party thereto as lenders (“Lenders”), and the 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;

3. 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

4. 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 Amended and
Restated Term Loan Agreement, dated as of August 5, 2014 (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., Paralleled Investment Opportunities Partners II L.P., Capital Royalty
Partners II (Cayman) L.P., and Capital Royalty Partners II – Parallel Fund “B”
(Cayman) L.P., and other parties from time to time party thereto as lenders
(“Lenders”), and the 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 Parent, 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)]2 [without qualification as to the scope of the audit.]3

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.

 

2  Insert language in brackets only for quarterly certifications.

3  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.4    Revenue received during the twelve month period beginning on January
1, 2014:    $                         Compliance waived for such calendar year
   C.5    Revenue received during the twelve month period beginning on January
1, 2015:    $                   Is line I.C equal to or greater than
$20,000,000?   

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:    $            6       (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

 

4  Compliance subject to the terms set forth in the Consent, Waiver, and
Amendment Agreement

5  Compliance subject to the terms set forth in the Consent, Waiver, and
Amendment Agreement

6  Insert the greater of line II.B(i) and II.B(ii)

 

Exhibit E-4

--------------------------------------------------------------------------------

Exhibit F

to Term Loan Agreement

FORM OPINION FROM CORPORATE COUNSEL

--------------------------------------------------------------------------------

May 3, 2016

To:

Capital Royalty Partners II L.P., as a Lender

Capital Royalty Partners II – Parallel Fund “A” L.P., as a Lender

Parallel Investment Opportunities Partners II L.P., as a Lender

Capital Royalty Partners II (Cayman) L.P., as a Lender

Capital Royalty Partners II – Parallel Fund “B” (Cayman) 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 “Borrower” or the “Company”), Valeritas Holdings, Inc., a Delaware
corporation (the “Parent”), and Valeritas Security Corporation, a Delaware
corporation (“Valeritas Security” or “VSC”; together with the Parent, the
“Guarantors”; the Company and Guarantors together being referred to,
collectively, herein as the “Opinion Parties”) in connection with the Second
Amended and Restated Term Loan Agreement dated as of May 3, 2016 (the “Term Loan
Agreement”) among the Company, as Borrower, and Capital Royalty Partners II L.P.
(“CRP II”), Capital Royalty Partners II –Parallel Fund “A” L.P. (“CRP IIA”),
Parallel Investment Opportunities Partners II L.P., (“PIOP” and, together with
CRP II and CPR IIA, collectively, “Original Lenders”), Capital Royalty Partners
II (Cayman) L.P. (“CRP II Cayman”), and Capital Royalty Partners II – Parallel
Fund “B” (Cayman) L.P. (“CRP IIB”, and, together with CRP II Cayman,
collectively, the “Additional Lenders” and, together with the Original Lenders,
collectively, the “Lenders”) as 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(e)(viii) 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 “NY UCC” are to the Uniform Commercial Code as currently in effect
in the State of New York. The terms in paragraph 10 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 paragraphs 9 and 11 that are defined in the NY UCC and
that are not capitalized have the respective meanings given to them in the NY
UCC.

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May     , 2016

Page 2

 

In connection with this opinion letter, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of (i) Certificate of
Incorporation of each of the Opinion Parties, as amended (the “Charters”), (ii)
the Bylaws of each of the Opinion Parties, as amended (the “Bylaws”), and (iii)
such 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 (e) below
are referred to herein as the “Loan Documents”):

 

  (a) the Term Loan Agreement;

 

  (b) the Security Agreement dated as of May 24, 2013 among the Opinion Parties
and the Original Lenders (the “Initial Security Agreement”);

 

  (c) the Assignment and Assumption dated as of November 12, 2013 by and among
CRP II and CRP IIA as assignors, and the Additional Lenders as assignees (the
“Assignment and Assumption”);

 

  (d) the previous Joinder Agreement dated as of April 16, 2015, entered into by
VSC, relating to the Initial Security Agreement (the “VSC Joinder”); the Initial
Security Agreement as modified by the VSC Joinder being referred to as the
“Existing Security Agreement”);

 

  (e) the Joinder Agreement dated as of May 3, 2016, entered into by and among
the Opinion Parties and the Lenders, relating to the Initial Security Agreement
(the “Parent Joinder”; the Existing Security Agreement as modified by the Parent
Joinder being referred to as the “Security Agreement”);

 

  (f) Good standing certificates, dated as of a recent date, (i) with respect to
the valid existence and good standing of each of the Opinion Parties, in each
case, in the State of Delaware (the “DE Good Standing Certificates”), (ii) in
the case of the Company and VSC, foreign qualified certificates in the
Commonwealth of Massachusetts (“MA Foreign Qualified Certificates”), and (iii)
in the case of the Company, a foreign qualified certificate in the State of New
Jersey (the “NJ Foreign Qualified Certificate” and, together with the DE Good
Standing Certificates and MA Foreign Qualified Certificates, collectively, the
“Good Standing Certificates”);

 

  (g) a copy of a Uniform Commercial Code financing statement (the “Parent
Financing Statement”) naming the Parent as debtor and the Lenders as secured
parties, to be filed in the Office of the Secretary of State of the State of
Delaware (the “DE Filing Office”), a copy of which is attached hereto as part of
Schedule 1;

 

  (h) a copy of a Uniform Commercial Code financing statement (the “Company
Financing Statement”) naming the Company as debtor and the Original Lenders as
secured parties, filed in the DE Filing Office on May 24, 2013, a copy of which
is attached hereto as part of Schedule 1;

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May     , 2016

Page 3

 

  (i) a copy of a Uniform Commercial Code financing statement amendment (the
“Additional Lenders Financing Statement”) naming the Company as debtor and the
Additional Lenders as secured parties to be filed in the DE Filing Office, a
copy of which is attached hereto as part of Schedule 1;

 

  (j) a copy of a Uniform Commercial Code financing statement (the “VSC
Financing Statement”) naming VSC as debtor and the Lenders as secured parties,
filed in the DE Filing Office on April 20, 2015, a copy of which is attached
hereto as part of Schedule 1 (the Company Financing Statement, and the VSC
Financing Statement being referred to herein, collectively, as the “Existing
Financing Statements”; and, together with the Parent Financing Statement and
Additional Lenders Financing Statement, collectively, the “Financing
Statements”).

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. The Term Loan Agreement,
and the Parent Joinder are referred to herein, collectively, as the “New Loan
Documents”; the Term Loan Agreement and the Security Agreement are referred to
herein, collectively, as the “Operative Loan Documents”. We have assumed that,
immediately prior to giving effect to the New Loan Documents, the Existing
Security Agreement has not been amended, modified or supplemented (other than by
the VSC Joinder and Assignment and Assumption as applicable), has not been
terminated or discharged, and is in full force and effect as the enforceable
agreement of the parties thereto, and that no circumstances exist or events have
taken place which constitute a defense, waiver, or excuse with respect to the
obligations of any party under the Existing Security Agreement.

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.

We express no opinion as to the enforceability of any obligations purportedly
guarantied or secured by (or incorporated by reference into) the Operative Loan
Documents that are not evidenced by the Operative Loan Documents (such as, but
not limited to, obligations arising under other contracts or arrangements) and
we assume such obligations are valid, binding and enforceable obligations of the
applicable obligors.

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 Opinion Parties in the subject

--------------------------------------------------------------------------------

May     , 2016

Page 4

 

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
Opinion Parties.

We have relied upon a certificate of an officer of each of the Opinion Parties
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 “Other Material Agreements”) which affect or purport to affect any Opinion
Party’s right to borrow money or guarantee debt or enter into the Loan
Documents; and (ii) all of the judicial or administrative orders, writs,
judgments, awards, injunctions and decrees (the “Orders”), which affect or
purport to affect any Opinion Party’s right to borrow money or guarantee debt or
enter into the Loan Documents. We have relied upon a certificate of an officer
of each of the Opinion Parties as to certain matters relevant to our opinions in
paragraph 8 below relating to the 1940 Act (as defined below).

Based upon and subject to the foregoing, and to the limitations and
qualifications described below, we are of the opinion that:

1. The Company and VSC are each 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. Each Opinion
Party is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware.

2. Each Opinion Party has the corporate power and authority to enter into the
New Loan Documents and perform the Operative Loan Documents to which it is a
party, has taken all necessary corporate action to authorize the execution,
delivery and performance of such New Loan Documents and the performance of such
Operative Loan Documents, and has duly executed and delivered such New Loan
Documents to which it is a party.

3. Each Operative 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.

4. The execution and delivery by each Opinion Party of the New Loan Documents to
which it is a party do not, and the performance by such Opinion Party of its
obligations under the Operative Loan Documents to which it is a party will not,
result in a violation of the Charter or Bylaws of such Opinion Party.

5. The execution and delivery by each Opinion Party of the New Loan Documents to
which it is a party does not, and the performance of such Opinion Party of its
obligations under the Operative Loan Documents to which it is party will not,
require any approval from or filing with any governmental authority of the
United States under federal law, the State of New York under New York law or the
State of Delaware under any provision of the Delaware General Corporation Law.

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May     , 2016

Page 5

 

6. The execution and delivery by each Opinion Party of the New Loan Documents to
which it is a party does not, and the performance by such Opinion Party of its
obligations under the Operative Loan Documents to which it is a party will not,
result in any violation of any federal law of the United States or any law of
the State of New York or any provision of the Delaware General Corporation Law.

7. 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. For purposes of this paragraph, we have assumed that
none of the assets of any Opinion Party or its subsidiaries constitutes “margin
stock” as such term is used in such Regulations; that none of the Lenders falls
within the definition of “Creditor” as such term is used in Regulation T of such
Board of Governors; and that the proceeds of the loans made under the Term Loan
Agreement are used in accordance with the provisions thereof.

8. No Opinion Party is required to register as an “investment company” within
the meaning of the Investment Company Act of 1940, as amended (the “1940 Act”).

9. 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 of the
applicable Opinion Parties described in the Security Agreement in which a
security interest may be created under Article 9 of the NY UCC (the “Article 9
Collateral”).

10. As a result of the previous filing of the Existing Financing Statements with
the DE Filing Office, the Article 9 Security Interest in that portion of the
Article 9 Collateral of the Company and VSC in which a security interest may be
perfected by the filing of a financing statement under the DE UCC has been
perfected. Upon the filing of the Parent Financing Statement with the DE Filing
Office, the Article 9 Security Interest in that portion of the Article 9
Collateral of the Parent in which a security interest may be perfected by the
filing of a financing statement under the DE UCC will be perfected.

11. The Article 9 Security Interest in that portion of the Article 9 Collateral
consisting of the certificated securities constituting the capital stock of the
Company, the applicable security certificates for which are being delivered by
the Parent to the Control Agent pursuant to the Security Agreement in connection
with the Parent Joinder, will be perfected upon delivery of such security
certificates to the Control Agent, together with duly executed stock powers or
other signed transfer powers in blank, within the State of New York.

--------------------------------------------------------------------------------

May     , 2016

Page 6

 

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, and (as to collateral
security) the duty to act in a commercially reasonable manner. We express no
opinion as to the effect of suretyship defenses, or defenses in the nature
thereof, with respect to the obligations of any Guarantor.

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, (including the NY UCC), the General Corporation Law of the
State of Delaware, the DE 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, we have, with your permission,
confined our investigation thereof to an examination of the relevant provisions
of the Uniform Commercial Code as in effect in the State of Delaware as set
forth in the CCH Secured Transactions Guide (as updated through a recent date),
without regard to any case law decided thereunder or other laws or regulations
related thereto.

D. For purposes of our opinions herein as to the valid existence and good
standing of the Opinion Parties, we have relied solely upon the Good Standing
Certificates.

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 9-11, we have assumed
that each applicable Opinion Party has, or has the 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. We assume that the Control Agent (as defined in the Security
Agreement) is validly acting as agent for and “representative” (as defined in
the applicable Uniform Commercial Code (the “UCC”) of each relevant
jurisdiction) of each holder of Secured Obligations (as defined in the Security
Agreement) or holder of any applicable obligation purported to be secured or
benefitted by a security interest granted in favor of the Control Agent or in
favor of any Lender by any Opinion Party.

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May     , 2016

Page 7

 

I. We express no opinion as to the creation, attachment or perfection of any
security interest except as expressly stated herein. 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 or lien. We assume the
Collateral does not include any “commercial tort claims” (as defined in the NY
UCC or the DE UCC) or “cooperative interests” (as defined in the NY UCC). We
express no opinion as to the enforceability of any provision of the Loan
Documents to the extent such enforceability is limited by Sections 1-302, 9-602,
9-603, 9-406, 9-407, 9-408, or other applicable provisions of the NY UCC or the
DE UCC.

J. In connection with the opinions set forth in paragraphs 9-11, 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. We call to your attention the requirement to file appropriate periodic
Uniform Commercial Code continuation statements on a timely basis under the DE
UCC with respect to each Financing Statement. We also point out that certain
actions may be required if any applicable debtor changes its name or its
“location” for purposes of Article 9 of the applicable Uniform Commercial Code,
or if a “new debtor” (as defined in the applicable Uniform Commercial Code)
becomes bound by the applicable security agreement.

L. We assume that none of the Existing Financing Statements has been amended,
modified, assigned, released or terminated in any manner, and each Existing
Financing Statement is in full force and effect and on file as of record in the
DE Filing Office.

M. For purposes of Section 122 (13) of the Delaware General Corporation Law, we
assume that each of the Company and VSC is a direct or indirect wholly-owned
subsidiary of the Parent.

N. Except to the extent that any provision in the Loan Documents providing for
the choice of New York law to govern the Loan Documents 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 contractual choice of law
clause or otherwise as to any choice of law matters.

O. 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 any Lender or any 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.

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May     , 2016

Page 8

 

(iii) The enforceability of any provision of the Loan Documents purporting to
waive the right to trial by jury, or any provisions in the Loan Documents
relating to jurisdiction, venue, choice of forum, service of process, or choice
of law (except to the extent made enforceable by New York General Obligations
Law Sections 5-1401 and 5-1402).

(iv) The enforceability of any provision of the Loan Documents purporting to
grant the right to confess judgment against the Opinion Parties.

(v) The enforceability of the provisions contained in the last sentence of
Section 2.01 of the Term Loan Agreement.

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.

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May     , 2016

Page 9

 

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 law or legal process,
without our express written consent.

Very truly yours,

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May     , 2016

Page 10

 

Schedule 1

[Attach Financing Statements]

--------------------------------------------------------------------------------

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 24, 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”); 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

--------------------------------------------------------------------------------

EXECUTION VERSION

SECOND AMENDED AND RESTATED SUBORDINATION AGREEMENT

This Second Amended and Restated Subordination Agreement (this “Agreement”) is
made as of May 3, 2016, 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”), Capital Royalty Partners II (Cayman) L.P., a Cayman Islands
exempted limited partnership (“Cayman”) and Capital Royalty Partners II –
Parallel Fund “B” (Cayman) L.P., a Cayman Islands exempted limited partnership
(“Parallel B” and, collectively with CRII, CRII Parallel, Parallel Investment
and Cayman, 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, on May 24, 2013, WCAS and Lenders entered
into a Subordination Agreement (the “Subordination Agreement”) 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 set forth therein and (ii) prohibit WCAS from obtaining any security
interests in the Collateral to secure the Subordinated Debt.

 

D. Lenders and Borrower are entering into the second amendment and restatement
of the Senior Term Loan Agreement on the date hereof. To induce Lenders to enter
into such second amendment and restatement of the Senior Term Loan Agreement,
WCAS agrees to amend and restate the Subordination Agreement as set forth below.

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

1. Definitions. As used herein, the following terms have the following meanings:

“Bankruptcy Code” means title 11 of the United States Code, 11 U.S.C. §§ 101 et
seq.

“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 and/or any of its subsidiaries 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.

“Management Incentive Fee Payments” means cash payments approved by the
Borrower’s board of directors on April 23, 2015, which payments are to be paid
to Borrower’s management as part of an incentive fee program.

“Permitted Subordinated Debt Payment” means any payment or distribution in
respect of the Subordinated Debt which consists solely of (i) conversion into
the Borrower’s Series AB preferred stock of all interest and fees accrued on the
Subordinated Debt outstanding as of April 29, 2016, and (ii) non-cash PIK
Interest (as defined in the Subordinated Note on May 24, 2013).

“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 Debt” means the Obligations (as defined in the Senior Term Loan
Agreement).

“Senior Discharge Date” has the meaning set forth in Section 2.

“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.

 

2

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“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.

“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 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.

“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.

“Subsidiary Guarantor” means any subsidiary guarantor party to the Senior Term
Loan 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 indefeasibly 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”), (a) all payments and distributions of any kind or character,
whether in cash, property or securities, in respect of the Subordinated Debt are
(i) subordinated in right and time of payment to all payments in respect of the
Management Incentive Fee Payments and (ii) except with respect to Permitted
Subordinated Debt Payments, subordinated in right and time of payment to all
payments in respect of the Senior Debt, and (b)

 

3

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WCAS will not demand, sue for or receive from Borrower (and Borrower will not
pay) any part of the Subordinated Debt, whether by payment, prepayment,
distribution, setoff, 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
until the Senior Discharge Date, despite an Insolvency Event. In furtherance
thereof:

 

  a) All payments and distributions of any kind, whether in cash, property or
securities, in respect of the Subordinated Debt to which WCAS would be entitled
if the Subordinated Debt were not subordinated pursuant to this Agreement, shall
be paid to Lender and applied in payment of the Senior Debt, regardless of
whether such Senior Debt, or any portion thereof, is reduced, expunged,
disallowed, subordinated or recharacterized;

 

  b) Notwithstanding the foregoing, if any payment or distribution of any kind,
whether in cash, property or securities, shall be received by WCAS on account of
the Subordinated Debt before all of the Senior Debt has been paid, then such
payment or distribution shall be received by WCAS in trust for, and shall be
promptly paid over to, Lenders and applied in payment of the Senior Debt,
regardless of whether such Senior Debt, or any portion thereof, is reduced,
expunged, disallowed, subordinated or recharacterized;

 

  c) The immediately preceding subsections (a) and (b) shall be enforceable even
if Lenders’ liens on the Collateral are declared fraudulent, preferential or
otherwise avoided, set aside, recharacterized or equitably subordinated;

 

  d) WCAS will not, and hereby waives any right to bring, join in, or otherwise
support any action to (i) contest the validity, legality, enforceability,
perfection, priority or avoidability of any of the Senior Debt, any of the
Senior Term Loan Documents or any security interests and/or liens of Lenders on
or in any property or assets of Borrower or any Subsidiary Guarantor with
respect to the Senior Debt, including without limitation, the Collateral; (ii)
request or require the marshaling of any assets of Borrower or any Subsidiary
Guarantor with respect to the Senior Debt; (iii) provide a priming
debtor-in-possession facility to the Borrower or any Subsidiary Guarantor
without the consent, in their sole discretion, of the Required Lenders; or (iv)
exercise any rights against the Lenders or the Collateral under Section 506(c)
of the Bankruptcy Code;

 

  e)

WCAS will not, and hereby waives any right to object to, join in, or otherwise
support any objection with respect to, (i) any request or motion of the Required
Lenders seeking the modification, lifting or vacating of the automatic stay with
respect to the Collateral or seeking adequate protection of Lenders’ interests
in the Collateral or with respect to the Senior Debt; (ii) any
debtor-in-possession financing or use of cash collateral arrangement if the
Required Lenders, in their sole discretion, consent to such debtor-in-possession
financing or cash collateral arrangement; (iii) any sale of the Collateral or
substantially

 

4

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  all of the assets of the Borrower and/or any Subsidiary Guarantor under
Section 363 of the Bankruptcy Code if the Required Lenders, in their sole
discretion, consent to such sale; (vii) Lenders’ right to make an election under
Section 1111(b) of the Bankruptcy Code; (viii) Lenders’ right to credit bid any
or all of its debt claims against the Borrower or any Subsidiary Guarantor,
including, without limitation, the Senior Debt; or (ix) any plan of
reorganization or liquidation if the Required Lenders, in their sole discretion,
consent to such plan of reorganization or liquidation, and, in furtherance
thereof, WCAS hereby grants to the Lenders the right to vote WCAS’s claim on
account of the Subordinated Debt with respect to any plan of reorganization or
liquidation to which WCAS may be entitled in any bankruptcy or liquidation
proceeding of the Borrower and/or any Subsidiary Guarantor.

5. Distributions of Proceeds of Collateral. All realizations upon any Collateral
pursuant to an Enforcement Action, an Insolvency Event or otherwise shall be
paid or delivered to Lenders and applied first to the Senior Debt until the
Senior Debt is indefeasibly paid in full before any payment may be made to WCAS.

6. Attorney-In-Fact. Until the Senior Discharge Date, WCAS irrevocably appoints
the Control Agent 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:

 

  a) 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 and (b) vote WCAS’s claim on account of the
Subordinated Debt with respect to any plan of reorganization or liquidation to
which WCAS may be entitled in any bankruptcy or liquidation proceeding of the
Borrower and/or any Subsidiary Guarantor;

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

 

5

--------------------------------------------------------------------------------

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 other than (a) in a principal amount
not to exceed $20,000,000 (which, for the avoidance of doubt, may be provided
under a second lien term loan agreement) and (b) as such principal amount of
Senior Debt may be increased by the accrual of PIK interest; (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. For the further avoidance of doubt,
notwithstanding anything to the contrary set forth herein, Lenders shall not
require the consent of WCAS to impose default interest on the Senior Debt under
the terms of the Senior Term Loan Documents.

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.

 

6

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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 or disposition of Collateral shall not require any consent from
WCAS, and WCAS hereby waives any right it may have to object to such sale or
disposition.

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.

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.

 

7

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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.

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

 

8

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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.

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.]

 

9

--------------------------------------------------------------------------------

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:    

 

[Signature Page to Second Amended and Restated Subordination Agreement]

--------------------------------------------------------------------------------

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

 

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

 

      Name:   Nathan Hukill       Title:   Authorized Signatory

 

[Signature Page to Second Amended and Restated Subordination Agreement]

--------------------------------------------------------------------------------

CAPITAL ROYALTY PARTNERS II (CAYMAN) L.P.   By CAPITAL ROYALTY PARTNERS II
(CAYMAN) GP L.P., its General Partner     By CAPITAL ROYALTY PARTNERS II
(CAYMAN) GP LLC, its General Partner     By  

 

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

 

      Name:   Nathan Hukill       Title:   Authorized Signatory       WITNESS:  
    Name:

Address for Notices:

1000 Main Street, Suite 2500

Houston, TX 77002

Attn: General Counsel

Tel: 713.209.7350

Fax: 713.209.7351

 

[Signature Page to Second Amended and Restated Subordination Agreement]

--------------------------------------------------------------------------------

Acknowledged and Agreed to: BORROWER: VALERITAS, INC. By  

 

  Name:     Title:  

Address for Notices:

750 Route 202 South, Suite 100

Attn: Chief Financial Officer

Bridgewater, NJ 08807

Tel: 908.927.9920

Fax: 908.927.9927

 

[Signature Page to Second Amended and Restated Subordination Agreement]