Valeritas Holdings, Inc. (OTCBB:CYGM) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement

Purchase Agreement

As previously disclosed, on May3, 2016, Valeritas, Inc., a
Delaware corporation and a wholly-owned subsidiary of Valeritas
Holdings, Inc., a Delaware corporation (the Company)
entered into: (i)a Second Amended and Restated Term Loan
Agreement with Capital Royalty Partners II L.P., Capital Royalty
Partners IIParallel 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. (collectively referred to as CRG) and (ii)an
Amended and Restated Note with WCAS Capital Partners IV, L.P.
(WCAS and, together with CRG, the Lenders),
relating to borrowings by the Company in an aggregate amount of
$55 million (the Outstanding Debt Amount).

On February14, 2017, the Company and the Lenders entered into a
Series A Preferred Stock Purchase Agreement (the Purchase
Agreement) to which the Lenders agreed to convert
approximately half of the Outstanding Debt Amount held by each of
them, for a total of $27.5 million (the Conversion
Amount), into shares of the Companys to-be-created Series A
Convertible Preferred Stock, par value $0.001 per share (the
Series A Preferred Stock), at a conversion price equal to
the public offering price per share of the Companys common stock,
par value $0.001 per share (the Common Stock), sold to the
Companys Registration Statement on Form S-1, filed by the Company
with the Securities and Exchange Commission (the SEC) on
February6, 2017 (File No.: 333-215897). Such conversion is
referred to as the Conversion.

Registration Rights Agreement

Contemporaneously with the execution of the Purchase Agreement,
the Company also entered into a Registration Rights Agreement
with the Lenders (the Registration Rights Agreement) to
which the Company has agreed, at the election of the holders of a
majority of the Registrable Securities (as defined in the
Registration Right Agreement) then outstanding at any time at
least 90 days after the closing of the Conversion, to file a
registration statement (the Resale Registration Statement)
with the SEC within 90 days after the initial request to register
50% of the number of shares of Common Stock issuable upon
conversion of the Series A Preferred Stock. to the Registration
Rights Agreement, the Company is required to use commercially
reasonable efforts to have the Resale Registration Statement
declared effective by the SEC as soon as practicable after the
initial request and to use commercially reasonable efforts to
keep the Resale Registration Statement effective until the date
on which all securities under the Resale Registration Statement
cease to be Registrable Securities, as set forth in the
Registration Rights Agreement.

Certificate of Designation; Description of Series A
Preferred Stock

In connection with the execution and delivery of the Purchase
Agreement and Registration Rights Agreement, the Company intends
to file with the Secretary of State of Delaware prior to the
Conversion a certificate of designation (the Certificate of
Designation), setting forth the rights, preferences and
privileges of the Series A Preferred Stock.

The shares of Series A Preferred Stock will be convertible at the
option of the holder at any time into shares of Common Stock at a
conversion rate determined by dividing the Series A Original
Issue Price by the Series A Conversion Price (both as defined in
the Certificate of Designation) in effect at the time of
conversion. This formula initially results in a one-to-one
conversion ratio. The Series A Conversion Price is subject to
adjustment for stock splits and the like subsequent to the date
of issuance of the Series A Preferred Stock. On or after
January1, 2021, at the Companys option, if the Company has
achieved an average market capitalization of at least $300
million for its most recent fiscal quarter, the Company may elect
to automatically convert all of the outstanding shares of Series
A Preferred Stock into Common Stock.

The holders of shares of Series A Preferred Stock are entitled to
receive annual dividends at a rate of $8 per every $100 of Series
A Preferred Stock, payable either in cash or in shares of Common
Stock, at each holders election. The shares of Series A Preferred
Stock have no voting rights. The Company has the right to redeem
all or less than all of the Series A Preferred Stock, at any
time, at a price equal to the Series A Conversion Price, as
adjusted, plus any accrued but unpaid dividends.

In the event of a Deemed Liquidation Event (as defined in the
Certificate of Designation) the holders of Series A Preferred
Stock are eligible to receive the greater of (i)the Conversion
Amount plus accrued but unpaid dividends or (ii)what they would
have received as a holder of Common Stock had they converted
their shares of Series A Preferred Stock into shares of Common
Stock immediately prior to the Deemed Liquidation Event.

To the extent permitted under Delaware law, the holders of shares
of Series A Preferred Stock have the right to prevent the Company
from liquidating, dissolving, amending its governing documents in
a manner that affects the rights of the Series A Preferred Stock,
authorizing shares of capital stock on parity or senior to the
Series A Preferred Stock, or issuing any shares of Series A
Preferred Stock to any individual, entity or person other than
CRG or WCAS.

The foregoing summaries of the Purchase Agreement, Registration
Rights Agreement, and Certificate of Designation do not purport
to be complete and are qualified in their entirety by reference
to the Purchase Agreement, Registration Rights Agreement and
Certificate of Designation, which are filed as exhibits to this
current report on Form 8-K and incorporated herein by reference.

Item2.02. Results of Operations and Financial
Condition.

On February21, 2017, the Company issued a press release
announcing its financial results for the quarter and year ended
December31, 2016. The Company is furnishing a copy of the press
release, which is furnished as Exhibit99.2 to this Current Report
on Form8-K.

In accordance with General Instruction B.2 of Form8-K, the
information included in Item2.02 of this Current Report on
Form8-K (including Exhibit99.2 hereto), shall not be deemed filed
for the purposes of Section18 of the Securities Exchange Act of
1934, as amended (the Exchange Act), or otherwise subject
to the liabilities of that section, nor shall it be deemed
incorporated by reference into any filing made by the Company
under the Exchange Act or Securities Act of 1933, as amended,
except as shall be expressly set forth by specific reference

Item 3.02 Unregistered Sales of Equity
Securities

The proposed issuance of shares of Series A Preferred Stock to
the Purchase Agreement will be exempt from registration under
Section4(a)(2) of the Securities Act of 1933, as amended, as a
transaction not involving any public offering. The information
contained in Item1.01 above regarding the Series A Preferred
Stock is incorporated herein by reference into this Item3.02.

Item 3.03 Material Modification to the Rights of Security
Holders

The information contained in Item1.01 above regarding the
Certificate of Designation and Series A Preferred Stock is
incorporated herein by reference into this Item3.03.

Item 5.03 Amendment to Articles of Incorporation or
Bylaws; Change in Fiscal Year

The information contained in Item1.01 above regarding the
Certificate of Designation is incorporated herein by reference
into this Item5.03.

Item 8.01. Other Events

Debt Conversion Press Release

On February15, 2017, the Company issued a press release titled
Valeritas and its Secured Creditors Agree to Convert $27.5
Million of Debt into Preferred Stock. A copy of the press
release is filed as Exhibit 99.1 to this current report on Form
8-K and is incorporated by reference into this Item8.01.

Amendment to Term Loan

As previously disclosed by the Company in its Current Report on
Form 8-K, filed with the SEC on February9, 2017 (File
No.333-198807), the Company and CRG entered into an Amendment
No.1 to Second Amended and Restated Term Loan Agreement (the
Amendment). In clarification of its prior disclosure, the
disclosure of the terms of the Amendment is restated as follows:

The Amendment (i)extends the interest only-period of the Loan
Agreement by one year to March31, 2022 from March31, 2021;
(ii)extends the time required prior to the initial required cash
interest payments by one year to June30, 2019 from June30, 2018;
(iii)extends the deadline for full payment under the Loan
Agreement to March31, 2022 from March 2021, and (iii)reduces the
Companys minimum cash and cash equivalent requirements to
$2,000,000 from the previous requirement of $5,000,000 under the
Loan Agreement, except that if the Company does not consummate an
underwritten public offering of at least $40,000,000 in gross
proceeds by December31, 2017, then the minimum cash covenant
reverts back to $5,000,000. A copy of the Amendment is filed as
Exhibit 10.3 to this Current Report on Form 8-K, and is
incorporated by reference herein.

Item 9.01. Exhibits

About Valeritas Holdings, Inc. (OTCBB:CYGM)

Valeritas Holdings, Inc., formerly Cleaner Yoga Mat, Inc., is a commercial-stage medical technology company. The Company is focused on developing technologies for Type 2 diabetes. It has developed its commercialized product, the V-Go Disposable Insulin Delivery Device (V-Go) to help patients with Type 2 diabetes who require insulin to maintain their target blood glucose goals. V-Go is a disposable insulin delivery device that a patient adheres to his or her skin every 24 hours. V-Go enables patients to closely mimic the body’s normal physiologic pattern of insulin delivery throughout the day and to manage their diabetes with insulin without the need to plan a daily routine around multiple daily injections. It has developed V-Go utilizing its h-Patch platform as a patient-focused solution to address insulin therapies. Its h-Patch platform facilitates the subcutaneous delivery of injectable medicines to patients across a range of therapeutic areas.