exv10w3






Exhibit 10.3




SECURITY AGREEMENT




     Security Agreement (this “Agreement”), dated as of March 13, 2009, between Insulet Corporation
(“Obligor”) in favor of Deerfield Private Design Fund, L.P., Deerfield Private Design
International, L.P., Deerfield Partners, L.P. and Deerfield International Limited (together, the
“Secured Party”).



W I T N E S S E T H:




     WHEREAS, Obligor has entered into a Facility Agreement, dated as of the date hereof (the
“Facility Agreement”), with the Secured Party;



     NOW, THEREFORE, in consideration of the mutual agreements set forth herein, Obligor and the
Secured Party agree as follows:



1. Grant of Security Interest.




     (a) To secure payment and performance of the Obligations (as defined below), Obligor hereby
grants to Secured Party a security interest in all property and interests in property of Obligor,
whether now owned or hereafter acquired or existing, and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or acquired by Secured
Party, collectively, the “Collateral”), including, without limitation, the following:




	 	(i)	 	all Accounts;
	 
	 	(ii)	 	all Receivables;
	 
	 	(iii)	 	all Equipment;
	 
	 	(iv)	 	all General Intangibles;
	 
	 	(v)	 	all Inventory;
	 
	 	(vi)	 	all Investment Property ; and
	 
	 	(vii)	 	all proceeds and products of (i), (ii), (iii), (iv) (v) and (vi).





     Notwithstanding anything herein to the contrary, in no event shall the security interest
granted under Section 1 attach to any of the following property or assets: (1) any of the
outstanding capital stock of a foreign Subsidiary of the Obligor, except, with respect to
first-tier foreign Subsidiaries only, up to 65% of the voting power of all classes of capital stock
of such Foreign Subsidiary entitled to vote; (2) assets sold by Obligor in compliance with the
Facility Agreement; (3) assets subject to a Permitted Lien (as defined in the Facility Agreement),
in each case, only to the extent and for so long as the documents related to such Lien prohibit the
attachment of a security interest under this Agreement; and (4) any vehicles.



 









 





     (b) Perfection of Security Interests.



          (i) Obligor authorizes Secured Party (or its agent) to file at any time and from time to time
such financing statements with respect to the Collateral naming Secured Party or its designee as
the secured party and Obligor as debtor, as Secured Party may require, and including any other
information with respect to Obligor or otherwise required by part 5 of Article 9 of the UCC of such
jurisdictions as Secured Party may determine, together with any amendment and continuations with
respect thereto, which authorization shall apply to all financing statements filed on or after the
date hereof. In no event shall Obligor at any time file, or permit or cause to be filed, any
correction statement or termination statement with respect to any financing statement (or amendment
or continuation with respect thereto) naming Secured Party or its designee as secured party and
Obligor or any affiliate of Obligor as debtor without the prior written consent of Secured Party.




          (ii) Obligor shall take any other actions reasonably requested by Secured Party from time to
time to cause the attachment and perfection of, and the ability of Secured Party to enforce, the
security interest of Secured Party in the Collateral.




2. Covenants Relating to Collateral; Indebtedness; Dividends. Obligor covenants that:




     (a) it shall at all times: (i) be the sole owner of each and every item of Collateral and
(ii) defend the Collateral against the claims and demands of all persons except for Permitted Liens
as defined in the Facility Agreement;



     (b) it will comply with the requirements of all agreements relating to premises where any
Collateral is located except where the necessity of compliance therewith is contested in good faith
by appropriate proceedings or where the failure to so comply, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect;



     (c) it will give Secured Party twenty (20) days’ prior written notice of any change to its
legal name;



     (d) it will give Secured Party twenty (20) days’ prior written notice of any change to its
chief executive office or its mailing address; and



     (e) it will give Secured Party twenty (20) days’ prior written notice of any change to its
type of organization, jurisdiction of organization or other legal structure.



3. Remedies.




     (a) Upon the occurrence and during the continuance of an Event of Default (as defined in the
Facility Agreement), (i) Secured Party shall have the right to exercise any right and remedy
provided for herein, under the UCC and at law or equity generally, including, without limitation,
the right to foreclose the security interests granted herein and to realize upon any Collateral by
any available judicial procedure and/or to take possession of and sell any or all of the Collateral
with or without judicial process; and (ii) with or without having the Collateral at the time or
place of sale, Secured Party may sell the Collateral, or any part thereof, at public or



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private
sale, at any time or place, in one or more sales, at such price or prices, and upon such
terms, either for cash, credit or future delivery, as Secured Party may elect in compliance
with the UCC.




4. Representations and Warranties. Obligor hereby represents and warrants to Secured
Party that:




     (a) (i) Obligor is a corporation duly organized and validly existing under the laws of
Delaware.



          (ii) the exact legal name of Obligor is as set forth on the signature page of this Agreement.
Obligor has not, during the past five years, been known by or used any other composite or
fictitious name or been a party to any merger or consolidation, or acquired all or substantially
all of the assets of any Person, or acquired any of its properties or assets out of the ordinary
course of business.




          (iii) the chief executive office and mailing address of Obligor are located only at the address
identified as such on Schedule 4(a)(iii) and its only other places of business and the only other
locations of Collateral, (other than Collateral in transit or out for repair), if any, are at the
addresses set forth on Schedule 4(a)(iii).




5. Expenses of Obligor’s Duties; Secured Party’s Right to Perform on Obligor’s Behalf.




     (a) Obligor’s agreements hereunder shall be performed by it at its sole cost and expense.



     (b) If Obligor shall fail to do any act which it has covenanted to do hereunder, Secured Party
may (but shall not be obligated to) do the same or cause it to be done, either in its name or in
the name and on behalf of Obligor, and Obligor hereby irrevocably authorizes Secured Party so to
act.



6. No Waivers of Rights hereunder; Rights Cumulative.




     (a) No delay by Secured Party in exercising any right hereunder, or in enforcing any of the
Obligations, shall operate as a waiver thereof, nor shall any single or partial exercise of any
right preclude other or further exercises thereof or the exercise of any other right. No waiver of
any of the Obligations shall be enforceable against Secured Party unless in writing and signed by
an officer of Secured Party, and unless it expressly refers to the provision affected; any such
waiver shall be limited solely to the specific event waived.



     (b) All rights granted Secured Party hereunder shall be cumulative and shall be supplementary
of and in addition to those granted or available to Secured Party under any other agreement with
respect to the Obligations or under applicable law and nothing herein shall be construed as
limiting any such other right.



7. Termination and Release.




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     (a) This Agreement shall continue in full force and effect until all Obligations (other than
contingent indemnification obligations) shall have been paid and satisfied in full. Upon the
payment in full of all Obligations (other than contingent indemnification obligations) and the
termination or expiration of the Secured Party’s obligation to make Loans under the Facility
Agreement, the security interest granted hereby shall terminate automatically and all rights to the
Collateral shall automatically revert to the Obligor. Upon any such termination, the Secured Party
shall, at the Obligor’s expense, promptly execute and deliver to the Obligor all releases and other
documents as the Obligor shall reasonably request to evidence such termination and shall take such
other action reasonably necessary for the release of the Liens created hereby on the Collateral.



     (b) If any Collateral shall be sold, transferred or otherwise disposed of by the Obligor in a
transaction permitted by the Facility Agreement, then the Secured Party, at the request and sole
expense of the Obligor, shall promptly execute and deliver to the Obligor all releases and other
documents, and take such other action, reasonably necessary for the release of the Liens created
hereby on such Collateral.



8. Governing Law; Jurisdiction; Certain Waivers.




     (a) This Agreement shall be governed by and construed in accordance with the laws of the State
of New York applied to contracts to be performed wholly within such State. Any judicial proceeding
brought by or against Obligor with respect to any of the Obligations or this Agreement may be
brought in any court of competent jurisdiction in such State, and, by execution and delivery of
this Agreement, Obligor accepts for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction of such court and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Agreement. Obligor hereby waives personal
service of any and all process upon it and consents that all such service of process may be made by
certified or registered mail (return receipt requested) directed to Obligor at its address set
forth in Section 10, and service so made shall be deemed completed five (5) days after the
same shall have been so deposited in the mails of the United States of America. Nothing herein
shall affect the right to serve process in any manner permitted by law or shall limit the right of
Secured Party to bring proceedings against Obligor in the courts of any other jurisdiction. Obligor
waives any objection to jurisdiction and venue of any action instituted hereunder and shall not
assert any defense based on lack of jurisdiction or venue or based upon forum non
conveniens. Any judicial proceeding by Obligor against Secured Party involving, directly or
indirectly, any matter or claim in any way arising out of, related to or connected with this
Agreement or any related agreement, shall be brought only in a federal or state court located in
The City of New York, State of New York.



     (b) EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OTHER AGREEMENT DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE, AND EACH PARTY HEREBY
CONSENTS THAT ANY SUCH CAUSE OF ACTION SHALL BE DECIDED BY A COURT



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TRIAL WITHOUT A JURY, AND THAT
ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS
WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL
BY JURY.




9. Additional Definitions. As used herein:




     (a) All terms used herein which are defined in Article 1 or Article 9 of the UCC shall have
the meanings given therein unless otherwise defined in this Agreement. All references to the
plural herein shall also mean the singular and to the singular shall also mean the plural unless
the context otherwise requires. All references to Obligor and Secured Party pursuant to the
definitions set forth in the recitals hereto, or to any other person herein, shall include their
respective successors and assigns. The words “hereof”, “herein”, “hereunder”, “this Agreement” and
words of similar import when used in this Agreement shall refer to this Agreement as a whole and
not any particular provision of this Agreement and as this Agreement now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced. The word “including”
when used in this Agreement shall mean “including, without limitation”.



     “Obligations” means:




     (1) the full and prompt payment by Obligor when due of all obligations and liabilities
to Secured Party, whether now existing or hereafter arising, under the Financing Documents
and the due performance and compliance by Obligor with the terms thereof;




     (2) any and all sums advanced in accordance with the terms of the Financing Documents
or applicable law by Secured Party in order to preserve the Collateral or to preserve the
Secured Party’s security interest in the Collateral; and




     (3) in the event of any proceeding for the collection or enforcement of any obligations
or liabilities of Obligor referred to in the immediately preceding clauses (1) and (2) the
reasonable expenses of re-taking, holding, preparing for sale, selling or otherwise
disposing of or realizing on the Collateral, or of any other exercise by Secured Party of
its rights hereunder, together with reasonable and documented attorneys’ fees and court
costs.



     “Person” or “person” shall mean any individual, sole proprietorship, partnership, corporation
limited liability company, limited liability partnership, business trust, unincorporated
association, joint stock corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.



     “UCC” shall mean the Uniform Commercial Code as in effect in the State of New York and any
successor statute, as in effect from time to time (except that terms used herein which are defined
in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall
continue to have the same meaning notwithstanding any replacement or amendment



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of such statute
except as Secured Party may otherwise determine) or, when the context implies, the Uniform
Commercial Code as in effect from time to time in any other applicable jurisdiction.




     The words “it” or “its” as used herein shall be deemed to refer to individuals and to business
entities.



10. Notices. Any communication required or permitted pursuant to this Agreement shall be
deemed given (a) when personally delivered to any officer of the party to whom it is addressed, (b)
on the earlier of actual receipt thereof or five (5) days following posting thereof by certified or
registered mail, postage prepaid, return receipt requested, or (c) upon actual receipt thereof when
sent by a recognized overnight delivery service, or (d) upon actual receipt thereof when sent by
telecopier to the number set forth below with telephone communication confirming receipt and
subsequently confirmed by registered or certified mail, return receipt requested, or by recognized
overnight delivery service to the address set forth below, in each case addressed to the applicable
party at its address set forth below or at such other address as has been furnished in writing by
such party to the other by like notice:




	 	(A)	 	If to Obligor:
	 
	 	 	 	Insulet Corporation

9 Oak Parks Drive

Bedford, MA 01730

Attention: P. Anthony Diehl

Telecopier: (781) 457-5011
	 
	 	 	 	With a courtesy copy to:
	 
	 	 	 	Goodwin Procter LLP

Exchange Place

Boston, MA 02109

Facsimile: (617) 523-1231

Attention: Raymond C. Zemlin

                  Jocelyn M. Arel
	 
	 	(B)	 	If to Secured Party:
	 
	 	 	 	Deerfield Private Design Fund, L.P.

780 Third Avenue, 37th Floor

New York, New York 10017

Attention: James E. Flynn

Facsimile: (212) 573-8111
	 
	 	 	 	Deerfield Private Design International, L.P.

780 Third Avenue, 37th Floor




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	 	 	 	New York, New York 10017

Attention: James E. Flynn

Facsimile: (212) 573-8111
	 
	 	 	 	With a courtesy copy to:
	 
	 	 	 	Katten Muchin Rosenman LLP

575 Madison Avenue

New York, New York 10022-2585

Facsimile: (212) 894-5827

Attention: Robert I. Fisher





     Any requirement under applicable law of reasonable notice by Secured Party to Obligor of any
event shall be met if notice is given to Obligor in the manner prescribed above at least five (5)
days before (a) the date of such event or (b) the date after which such event will occur.



11. General.




     (a) This Agreement shall be binding upon the assigns or successors of Obligor and shall inure
to the benefit of and be enforceable by Secured Party and its successors, transferees and assigns.



     (b) Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that jurisdiction or
affecting the validity or enforceability of such provision in any other jurisdiction.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




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Dated in New York, New York as of the date first above written.




	 	 	 	 	 	 	 
	OBLIGOR:

INSULET CORPORATION	 	SECURED PARTY:

DEERFIELD PRIVATE DESIGN

FUND, L.P.
	 
	 	 	 	 	 	 
	By:

	 	/s/ Duane DeSisto
	 	By:
	 	/s/ James Flynn
	 

	 	 
	 	 	 	 
	 

	 	Name: Duane DeSisto
	 	 	 	Name James Flynn
	 

	 	Title: President
and Chief Executive
Officer
	 	 	 	Title General
Partner
	 
	 	 	 	 	 	 
	 	 	 	 	SECURED PARTY:

DEERFIELD PRIVATE DESIGN
INTERNATIONAL, L.P.
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ James Flynn
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name James Flynn
	 

	 	 	 	 	 	Title General
Partner
	 
	 	 	 	 	 	 
	 	 	 	 	SECURED PARTY:

DEERFIELD PARTNERS, L.P.
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ James Flynn
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name James Flynn
	 

	 	 	 	 	 	Title General
Partner
	 
	 	 	 	 	 	 
	 	 	 	 	SECURED PARTY:

DEERFIELD INTERNATIONAL LIMITED
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ James Flynn
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name James Flynn
	 

	 	 	 	 	 	Title General
Partner







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