Document:

exv10w1

Exhibit 10.1

 

DISTRIBUTION AGREEMENT

dated as of January 4, 2010

between

Insulet Corporation

and

Ypsomed Distribution AG

 

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I Appointment of Distributor
	 	 	1	 
	 
	Section 1.1 Appointment
	 	 	1	 
	Section 1.2 Exclusivity
	 	 	2	 
	Section 1.3 Limitations on Appointment
	 	 	2	 
	Section 1.4 No Compensation
	 	 	2	 
	Section 1.5 Relationship
	 	 	2	 
	 
	ARTICLE II Marketing and Promotion
	 	 	3	 
	 
	Section 2.1 Steering Committee
	 	 	3	 
	Section 2.2 Promotion, Advertising and Marketing
	 	 	3	 
	Section 2.3 Sub-Distributors
	 	 	4	 
	Section 2.4 Customer Information
	 	 	4	 
	Section 2.5 Rights and Obligations of Distributor
	 	 	5	 
	Section 2.6 Competing Products
	 	 	6	 
	 
	ARTICLE III Distribution of Products
	 	 	6	 
	 
	Section 3.1 Distributor Covenants
	 	 	6	 
	Section 3.2 Branding
	 	 	7	 
	Section 3.3 Insurance
	 	 	7	 
	 
	ARTICLE IV Purchase, Sale and Delivery of Products
	 	 	7	 
	 
	Section 4.1 Supply of Products
	 	 	7	 
	Section 4.2 Calendar Year Minimums
	 	 	8	 
	Section 4.3 Forecasts
	 	 	9	 
	Section 4.4 Transfer Pricing
	 	 	9	 
	Section 4.5 Orders
	 	 	9	 
	Section 4.6 Order of Precedence
	 	 	9	 
	Section 4.7 Taxes and Governmental Charges
	 	 	9	 
	Section 4.8 Shipment, Delivery and Title
	 	 	9	 
	Section 4.9 Rejection of Delivery
	 	 	10	 
	Section 4.10 Terms of Payment
	 	 	10	 
	Section 4.11 Late Charges
	 	 	10	 
	Section 4.12 Audits
	 	 	10	 
	Section 4.13 Trade Price
	 	 	11	 
	 
	ARTICLE V Compliance with Laws; Regulatory Matters; Recycling
	 	 	11	 
	 
	Section 5.1 Export and Trade Regulations
	 	 	11	 
	Section 5.2 Customer Complaints and Product Safety
	 	 	11	 
	Section 5.3 Recalls
	 	 	11	 
	Section 5.4 Regulatory Interface
	 	 	12	 
	Section 5.5 Failure to Maintain
	 	 	12	 
	Section 5.6 Regulatory Requirements
	 	 	12	 
	Section 5.7 Labeling
	 	 	12	 

 

 

	 	 	 	 	 
	 	 	Page	 
	Section 5.8 Local Laws
	 	 	13	 
	Section 5.9 Recycling
	 	 	13	 
	 
	ARTICLE VI Intellectual Property Rights
	 	 	13	 
	 
	Section 6.1 Grant of License; Ownership of Intellectual Property Rights
	 	 	13	 
	Section 6.2 Use of Intellectual Property Rights
	 	 	13	 
	Section 6.3 Assistance
	 	 	13	 
	Section 6.4 Notice of Claims of Infringement
	 	 	13	 
	Section 6.5 Notice of Infringement
	 	 	14	 
	Section 6.6 Reservation of Rights
	 	 	14	 
	 
	ARTICLE VII Confidentiality
	 	 	14	 
	 
	Section 7.1 Non-Disclosure Obligations
	 	 	14	 
	Section 7.2 Ownership of Material
	 	 	14	 
	Section 7.3 Exceptions
	 	 	14	 
	 
	ARTICLE VIII Representations, Warranties and Liabilities
	 	 	15	 
	 
	Section 8.1 By Insulet
	 	 	15	 
	Section 8.2 By Distributor
	 	 	15	 
	Section 8.3 Product Warranty and Remedies
	 	 	15	 
	Section 8.4 No Implied Warranties
	 	 	16	 
	Section 8.5 Limitation of Liability
	 	 	16	 
	 
	ARTICLE IX Indemnification
	 	 	17	 
	 
	Section 9.1 Insulet Indemnity
	 	 	17	 
	Section 9.2 Indemnification Procedure
	 	 	17	 
	 
	ARTICLE X Term and Termination
	 	 	18	 
	 
	Section 10.1 Term and Renewal
	 	 	18	 
	Section 10.2 Termination for Cause
	 	 	19	 
	Section 10.3 Termination for Calendar Year Minimum Default
	 	 	20	 
	Section 10.4 Termination for Patent Challenge
	 	 	20	 
	Section 10.5 Termination or Expiration Fee
	 	 	20	 
	 
	ARTICLE XI Rights and Obligations upon Termination
	 	 	21	 
	 
	Section 11.1 Cessation of Rights
	 	 	21	 
	Section 11.2 No Penalties; Survival
	 	 	21	 
	Section 11.3 Return of Products and Information
	 	 	21	 
	Section 11.4 Obligations of Distributor upon Termination
	 	 	21	 
	 
	ARTICLE XII General Provisions
	 	 	22	 
	 
	Section 12.1 Notices
	 	 	22	 
	Section 12.2 Definitions
	 	 	23	 
	Section 12.3 Descriptive Headings; Certain Interpretations
	 	 	25	 
	Section 12.4 Waivers
	 	 	25	 
	Section 12.5 Entire Agreement and Amendments
	 	 	25	 
	Section 12.6 Severability
	 	 	25	 

 

 

	 	 	 	 	 
	 	 	Page	 
	Section 12.7 Assignments
	 	 	26	 
	Section 12.8 Force Majeure
	 	 	26	 
	Section 12.9 No Third-Party Beneficiaries
	 	 	26	 
	Section 12.10 Counterparts
	 	 	26	 
	Section 12.11 Further Assurance
	 	 	27	 
	Section 12.12 Governing Law
	 	 	27	 
	Section 12.13 Governing Language
	 	 	27	 
	Section 12.14 Arbitration
	 	 	27	 
	Section 12.15 Press Releases
	 	 	27	 

	 	 	 

	EXHIBITS:
	 	 
	 
	 	 
	Exhibit I:
	 	Products
	Exhibit II:
	 	Territory
	Exhibit III:
	 	Calendar Year Minimums and Pricing
	Exhibit IV: 
	 	Variances
	Exhibit V:
	 	Business Plans

 

 

Distribution Agreement (this “Agreement”),
dated as of January 4, 2010 (the “Effective Date”), between
Insulet Corporation, a Delaware corporation (“Insulet”) and
Ypsomed Distribution AG, Brunnmattstrasse 6, CH-3401 Burgdorf,
Switzerland (“Distributor”). Each of Insulet and Distributor
are referred to herein as a “Party” or the “Parties.”

Introduction

     Insulet has rights to market, distribute and sell certain products set forth in Exhibit I (as
updated by Insulet from time to time in writing) (the “Products”). Insulet wishes to distribute
the Products by appointment of distributors to make sales in certain territories.

     Insulet wishes to appoint Distributor as its exclusive distributor to promote, advertise,
market, distribute and sell the Products in the territory referred to in Exhibit II (the
“Territory”) and Distributor wishes to act as distributor on the terms and conditions set forth in
this Agreement.

     Capitalized terms shall have the meanings ascribed to such terms in Section 12.2 or as
otherwise provided in this Agreement.

     For good and valuable consideration, and in reliance upon the covenants, promises, and
representations and warranties contained herein, the Parties, intending legally to be bound, hereby
agree as follows:

ARTICLE I

Appointment of Distributor

          Section 1.1 Appointment.

          (a) Subject to the terms and conditions of this Agreement, Insulet hereby appoints
Distributor to act as its exclusive distributor to promote, advertise, market, distribute and sell
the Products in the Territory during the Term. Distributor hereby accepts the appointment and
agrees to use commercially reasonable efforts to promote, advertise, market, distribute and sell
the Products in the Territory during the Term in accordance with the terms and conditions of this
Agreement.

          (b) Subject to Exhibit II, Sections III and IV, Insulet hereby retains all rights outside
the Territory with respect to the Products in all respects, including the right to appoint other
distributors.

          (c) Insulet shall forward to Distributor all inquiries, requests for information and
purchase orders from Persons in the Territory relating to the Products.

 

          Section 1.2 Exclusivity. The appointment in Section 1.1(a) shall be exclusive to
Distributor in the Territory during the Term until the Exclusivity Termination Date (if any).
Subject to Section 4.2, during the Term until the Exclusivity Termination Date, Insulet shall not
(directly or indirectly) appoint as its distributor any Person to, nor shall itself, promote,
advertise, market, distribute or sell the Products, or any versions thereof, or any competitive
products in the Territory, nor shall supply any Third Party for promotion, advertisement,
marketing, distribution or sale of the Products, or any versions thereof, or any competitive
products, in the Territory.

          Section 1.3 Limitations on Appointment. Distributor shall not, and, if permitted
under applicable Laws, shall cause each of its Sub-Distributors not to, (i) actively promote,
advertise, market, distribute or sell the Products outside the Territory; or (ii) support by its
own actions any Third Party in doing any of the foregoing (which support includes, for example and
without limitation, providing any written marketing materials, conducting or financing any clinical
trials or otherwise providing any consideration in support of same). In addition, once Distributor
learns of any conduct by a Sub-Distributor of these prohibited activities, Distributor shall, if
permitted under applicable Laws, use commercially reasonable efforts to end all such prohibited
activities by such Sub-Distributor within a commercially reasonable time period, which in all
events shall be within 6 months of first learning of any such prohibited activities by such
Sub-Distributor, and if unable to end all such prohibited activities by such efforts: if permitted
under applicable Laws, (a) terminate the appointment of such Sub-Distributor; and (b) stop selling
(directly or indirectly through other Sub-Distributors or otherwise) the Products to such
Sub-Distributor. If Insulet notifies Distributor in writing of any conduct by a non-Affiliated
Sub-Distributor of any such prohibited activities, Distributor shall thereafter confirm in writing
to Insulet that Distributor has complied with the immediately preceding sentence with respect to
such Sub-Distributor. The Parties agree that if Distributor breaches its obligations under this
Section 1.3, Insulet shall have the right, in Insulet’s sole discretion, to either (a) provide
written notice to convert Distributor’s appointment pursuant to Section 1.1 from exclusive
distributor to non-exclusive distributor and the date of receipt of such notice shall be treated as
an Exclusivity Termination Date; or (b) terminate this Agreement pursuant to Section 10.2.

          Section 1.4 No Compensation. Insulet is not obligated to pay compensation for
Distributor’s performance of its obligations hereunder, and Distributor’s sole compensation shall
arise from its resale of the Products. Insulet shall not provide Distributor with any other
compensation or benefits, and Insulet shall not be responsible for reimbursement of any
out-of-pocket expenses, except as expressly set forth herein.

          Section 1.5 Relationship. In the exercise of their respective rights and the
performance of their respective obligations hereunder, the Parties are and shall remain independent
contractors. Nothing in this Agreement shall be construed:

          (a) to give either Party the right or power to direct or control the daily activities of
the other Party;

2

 

          (b) to create the relationship between the Parties of principal and agent, franchiser and
franchisee, partners, joint ventures, co-owners or otherwise as participants in a joint
undertaking;

          (c) to authorize either Party to bind the other Party to, or assume or create any contract
and obligation of any kind, express or implied, on behalf of the other Party or to any other
Person; or

          (d) to waive any right, interest and claim that one of the Parties may have against any
other Person.

ARTICLE II

Marketing and Promotion

          Section 2.1 Steering Committee.

          (a) The Parties shall appoint a committee (the “Steering Committee”) comprised of one
member designated by Insulet and one member designated by Distributor. The initial members of the
Steering Committee shall be the Vice President International Operations, for Insulet and the Senior
Vice President Marketing and Sales, for Distributor. Each Party may replace its Steering Committee
member at any time upon written notice to the other Party.

          (b) The Steering Committee shall meet at least on a calendar quarterly basis, which
meeting can be a teleconference, and shall be responsible for reviewing and steering the promotion,
advertising and marketing activities relating to the Products and the performance of the Agreement
by the Parties.

          (c) Each Party may invite, with the approval of the other Party (which shall not be
unreasonably withheld), additional individuals to attend one or more meetings of the Steering
Committee as ad hoc guests.

          Section 2.2 Promotion, Advertising and Marketing.

          (a) During the Term, Distributor shall actively promote, advertise, market, distribute and
sell the Products only in the Territory.

          (b) Distributor shall commercialize the Products in accordance with the Business Plans
attached as Exhibit V and such additional Business Plans to be developed by Distributor during the
Term of this Agreement. Distributor shall update the Business Plans at least annually and present
them to Insulet for review no later than October 1 of each year preceding the implementation of
such plan. Such Business Plan shall include, at a minimum: (i) Distributor’s proposed promotion,
advertising and marketing efforts; and (ii) a list of planned promotional activities, such as
training sessions for the education and training of Customers.

          (c) Distributor shall produce promotion, advertising and marketing materials for the
Products in the Territory. In connection therewith, Distributor shall conduct such activities,
including development, translation, printing and communication of marketing, sales,

3

 

medical education or other related materials (e.g., sales literature, advertising materials
and promotional programs) as commercially necessary for the distribution and sale of the Products
in the Territory (along with all other documents and other materials intended for public
distribution created by or on behalf of Distributor or any Sub-Distributor regarding Insulet or any
Products, collectively, “Distributor Materials”). Insulet shall provide such support (e.g.,
regarding technical information relating to the Products or printed materials such as product
labels) as is reasonably necessary to permit Distributor to fulfill any relevant regulatory
requirements with regard to the Distributor Materials. Distributor shall bear its own costs
associated with Distributor Materials, and shall provide all Distributor Materials that would
entail public communication regarding the Products to Insulet (translated in English, if
applicable) for its prior review and prompt approval insofar as the material relates to the
Products, which approval shall not be unreasonably withheld, provided that any accurate translation
of any such materials previously approved by Insulet, or any materials provided by Insulet, shall
not require Insulet’s separate approval. Unless Insulet has notified Distributor of any objections
within [***] Business Days after receipt of such Distributor Materials], Insulet shall be deemed to
have approved the Distributor Materials.

          (d) To facilitate Distributor’s performance of its obligations under this Section 2.2,
Insulet shall, at [***] cost to Distributor, make available to Distributor the following materials
written in English: (i) commercial, informational and educational materials or publications created
by or on behalf of Insulet relating to the Products; and (ii) samples of artwork created by or on
behalf of Insulet, in each case which Insulet may have in its possession or control, sufficient to
allow Distributor to translate (where necessary) and print, at Distributor’s expense, sales
literature, advertising materials, promotional programs or other materials required to promote,
advertise, market, sell and distribute the Products.

          Section 2.3 Sub-Distributors. Distributor shall be entitled to appoint one or more
Sub-Distributors to promote, advertise, market, distribute or sell the Products in the Territory in
accordance with the terms and conditions of this Agreement; provided, however, that Distributor
shall not utilize or engage any Competitor of Insulet as a Sub-Distributor, without the prior
written consent of Insulet. Distributor shall remain jointly and severally liable under this
Agreement for the actions and omissions of each of its Sub-Distributors, and Distributor shall be
solely responsible for any commitments, obligations or liabilities made by any of its
Sub-Distributors.

          Section 2.4 Customer Information.

          (a) Within [***] days of the end of each Calendar Quarter during the Term, Distributor
shall provide Insulet with a quarterly report, which shall include the following information: (i)
the number of new Customers added in the Calendar Quarter by country; (ii) the number of unit sales
of each Product by country; (iii) the average price paid by each Customer for each Product by
country; (iv) any information required by Law, such as Customer complaint information; and (v) any
such other information that may be reasonably requested by Insulet. Notwithstanding anything to
the contrary in this Agreement, Distributor shall not be obliged to disclose Customer data to
Insulet.

4

 

          Section 2.5 Rights and Obligations of Distributor. Consistent with applicable Laws,
Distributor shall actively promote the sale and distribution of the Products in the Territory. In
particular, Distributor shall:

          (a) appoint and train appropriately qualified staff to carry out its duties under this
Agreement;

          (b) undertake debtor collection;

          (c) check product availability and confirm delivery dates to Customers;

          (d) take orders from Customers and place such orders with Insulet;

          (e) track Customers’ orders and respond to Customers’ inquiries on orders;

          (f) undertake key account management;

          (g) provide other customer service activities as requested by Insulet and agreed to by
Distributor;

          (h) assume no obligation or liability in Insulet’s name;

          (i) refrain from acting in such a manner as to be construed an employee or agent of
Insulet;

          (j) make no representations or claims with respect to the Products, except in accordance
with Section 3.1;

          (k) maintain sufficient inventory to fulfill its obligations under this Agreement and to
Customers;

          (l) keep Insulet informed on a reasonably regular basis on sales activity, and promptly
disclose to Insulet all material information relating to the Products obtained concerning
purchasing plans of existing and prospective Customers, provided, that Distributor shall not be
obliged to provide Insulet with Customer data;

          (m) within 30 days of expiration or termination of this Agreement, return to Insulet, at
Insulet’s expense, all samples, catalogs, literature, correspondence, sales records, market data or
information and other similar documents or materials on hand relating to the Products; and

          (n) submit marketing materials relating to the Products, if any, to local Governmental
Authorities only in those countries in the Territory where such submissions are required or
necessary, or as directed by Insulet or any Governmental Authority in the Territory, and provide
reasonable assistance to Insulet in connection with Insulet’s submission of marketing materials
relating to the Products in any country or jurisdiction in which Insulet is required by Laws to
make such submissions.

5

 

Distributor may agree to provide other incidental services and perform other administrative
functions in connection with or incidental to its duties hereunder, consistent with applicable
Laws.

          Section 2.6 Competing Products. During the Term (i) until the Exclusivity
Termination Date (if any) or, (ii) with respect to individual country(ies), until conversion of
Distributor’s exclusive appointment pursuant to Section 1.1 from exclusive distributor to
non-exclusive distributor in such country(ies), Distributor shall not, and, if permitted under
applicable Laws, shall cause its Sub-Distributors not to, directly or indirectly engage in the
manufacture, sale, offer for sale, marketing, promotion, distribution, solicitation of order or
service of any Competitive Insulin Infusion Device in the Territory or in the individual
country(ies) referred to in clause (ii) of this Section 2.6, other than the Products as provided in
this Agreement. In addition, once Distributor learns of any conduct by a Sub-Distributor of such
activities, Distributor shall, unless such activities have been approved by Insulet and unless
prohibited by applicable Laws, use commercially reasonable efforts to promptly end all such
activities by such Sub-Distributor within a commercially reasonable time period, which in all
events shall be within 6 months of first learning of any such prohibited activities by such
Sub-Distributor, and if unable to end all such prohibited activities by such efforts: if permitted
under applicable Laws (a) terminate the appointment of such Sub-Distributor; and (b) stop selling
(directly or indirectly through other Sub-Distributors or otherwise) the Products to such
Sub-Distributor. If Insulet notifies Distributor in writing of any conduct by a non-Affiliated
Sub-Distributor of any such prohibited activities, Distributor shall thereafter confirm in writing
to Insulet that Distributor has complied with the immediately preceding sentence with respect to
such Sub-Distributor. The Parties agree that if Distributor breaches its obligations under this
Section 2.6, Insulet shall have the right, in Insulet’s sole discretion, to either (a) provide
written notice to convert Distributor’s appointment pursuant to Section 1.1 from exclusive
distributor to non-exclusive distributor the date of receipt of such notice shall be treated as an
Exclusivity Termination Date; or (b) terminate this Agreement pursuant to Section 10.2.

ARTICLE III

Distribution of Products

          Section 3.1 Distributor Covenants. Distributor hereby covenants and agrees for the
benefit of Insulet that Distributor shall:

          (a) conduct any promotion, advertising, marketing, distribution or sale of the Products in
accordance with all applicable Laws and in material conformance with applicable industry codes,
guidelines and standards, including each as amended and in force from time to time, and shall
cultivate good relationships with Customers and potential customers in the Territory in accordance
with sound commercial principles;

          (b) observe and comply with such storage, stock control and operational practices and
procedures with respect to the Products as may be legally required and as Insulet may specify or
approve from time to time;

6

 

          (c) not make any representation to Customers nor give any warranties other than those
printed on the Products’ packaging or labeling or included within marketing or sales aid material
or other Product information provided or agreed to by Insulet;

          (d) during the Term of this Agreement and for 3 years following expiration or termination
of this Agreement, or such longer period as may be required by applicable Laws, maintain complete
and accurate books of account and records showing orders placed, sales and services stock with
respect to the Products;

          (e) promote the Products solely for the indications and other conditions of use approved
by the United States Food and Drug Administration (“FDA”) (or other Governmental Authority) as
described in the Products’ package inserts or FDA-approved labeling;

          (f) not use the services of any Person debarred or suspended under section 306 of the
Federal Food, Drug, and Cosmetic Act, as amended, in performing its obligations or exercising its
rights under this Agreement. Distributor shall promptly notify Insulet if any Person whose
services Distributor is using in the performance of its obligations or exercise of its rights under
this Agreement becomes debarred or suspended;

          (g) submit marketing materials relating to the Products, if any, to local Governmental
Authorities only in those countries in the Territory where such submissions are required or
necessary or as directed by Insulet or any Governmental Authority;

          (h) be responsible for all reimbursement activity relating to the Products;

          (i) promote, advertise, market, distribute and sell the Products in the Territory in
substantially the same manner as other of Distributor’s businesses; and

          (j) execute trade terms, quantity discount, settlement terms, etc. in substantially the
same manner as other of Distributor’s businesses.

          Section 3.2 Branding. Distributor shall have the right to choose the trademarks,
logos and/or trade dress (the “Product Branding”) pursuant to which the Products are marketed and
sold in the Territory, provided, however, that Insulet’s “OMNIPOD” trademark shall be included in
the Product Branding in a manner to be mutually agreed upon by the Steering Committee.

          Section 3.3 Insurance. The Parties shall maintain adequate insurance, in such
amounts and with such insurance companies as is customary in accordance with sound business
practices consistent with the nature of the Products. Each Party shall upon the request of the
other Party furnish certificates of such insurance.

ARTICLE IV

Purchase, Sale and Delivery of Products

          Section 4.1 Supply of Products.

7

 

          (a) Insulet shall use commercially reasonable efforts to manufacture and supply the
Products with the Product Branding for Distributor during the Term with such quantities of the
Products as Distributor shall order from Insulet on the terms and conditions set forth in this
Agreement.

          (b) Insulet shall have the right to satisfy its supply obligations under this Agreement
either in whole or in part through arrangements with Affiliates or Third Parties engaged by
Insulet, provided that Insulet remains solely liable for the performance of such obligations.

          (c) Insulet shall notify Distributor as soon as commercially reasonable, taking due
account of Distributor’s need to be informed, in the event Insulet anticipates any problems with
supplying the quantities of the Products set forth in any forecast provided pursuant to Section
4.3, and the Parties shall agree on appropriate measures to address any such problems, including if
Insulet is not able to supply Product to meet the Calendar Year Minimum once ordered by
Distributor, then the Parties shall meet to discuss in good faith and agree on appropriate and
reasonable downward reductions in the Calendar Year Minimum to reflect the amount of Product
Insulet reasonably believes Insulet will be able to supply Distributor hereunder on a going forward
basis. Should Insulet fail to deliver the Products in the amounts specified in an Order within 45
days of its acceptance of such Order, then the Calendar Year Minimum shall be reduced accordingly.

          Section 4.2 Calendar Year Minimums. The Parties agree to establish Calendar Year
Minimums for the Products in accordance with the following process:

          (a) Exhibit III sets forth the Calendar Year Minimums for the Products. All Calendar
Year Minimums [must be satisfied by Orders that have been initiated by Distributor and accepted by
Insulet pursuant to Section 4.5 by no later than December 15 of the applicable Calendar Year.

          (b) A “Calendar Year Minimum Default” shall be deemed to occur if Distributor fails to
purchase the Calendar Year Minimums for the Products in any Calendar Year. For clarification, a
Calendar Year Minimum Default shall not be considered a breach of this Agreement that gives right
to Insulet to terminate this Agreement under Section 10.2(b) or to claim damages; rather, any such
Calendar Year Minimum Default may be addressed by Insulet pursuant Sections 4.2(c) and 10.3;
Sections 4.2(c) and 10.3 being Insulet’s exclusive remedy in case of a Calendar Year Minimum
Default.

          (c) If a Calendar Year Minimum Default occurs, Insulet shall give written notice thereof
to Distributor, stating in reasonable detail the basis for determining that a Calendar Year Minimum
Default has occurred. Distributor shall have a period of [***] days from the date of receipt of
such notice to cure any Calendar Year Minimum Default. If the Calendar Year Minimum Default is not
cured within such [***]-day period, Insulet may (but is not obligated to) provide written notice to
convert Distributor’s appointment pursuant to Section 1.1 from exclusive distributor to
non-exclusive distributor, which conversion shall be effective upon receipt of such notice (the
“Exclusivity Termination Date”).

8

 

          Section 4.3 Forecasts. Upon execution of this Agreement, and for each Calendar
Quarter thereafter, Distributor shall provide to Insulet, [***] days before the start of each
Calendar Quarter a written forecast of its best estimate Order forecast for the 12-month period
beginning with the start of the next Calendar Quarter, such forecast to be broken down
Product-by-Product, month-by-month and country-by-country. Except as provided in Section 4.5(c),
the forecasted amounts for the first 4 quarters of the forecast shall be deemed a binding and firm
purchase order subject to the Variance Table in Exhibit IV.

          Section 4.4 Transfer Pricing. The transfer prices to be paid by Distributor for
purchases of Products from Insulet for each Calendar Year of the initial Term shall be fixed as set
forth in Exhibit III.

          Section 4.5 Orders.

          (a) All orders from Distributor to Insulet shall be initiated by a written purchase order
specifying the quantities of the Products and requested dates of shipment (each, an “Order”) and
shall be deemed accepted within [***] Calendar Days after receipt by Insulet, unless Insulet
notifies Distributor in writing within those [***] Calendar Days.

          (b) Insulet shall not refuse to accept an Order which falls within the committed forecasts
and the Variance Table in Exhibit IV. Insulet shall be entitled to reject or reschedule any Order
that does not fall within the Variance Table in Exhibit IV, provided, that Insulet shall not refuse
to accept an Order which exceeds the flexibility up variance set forth in the Variance Table in
Exhibit IV, if such excess is necessary for Distributor to meet the applicable Calendar Year
Minimums.

          (c) Contemporaneous with the execution of this Agreement, Distributor shall issue to
Insulet an Order for Products that is equal to at least the Calendar Year Minimums for the PODs for
Calendar Year 1, provided, that Distributor shall be free to request partial deliveries and to
define the delivery dates of each partial delivery within Calendar Year 1, and Insulet must accept
such partial deliveries and delivery dates.

          Section 4.6 Order of Precedence. Any inconsistency in any documents relating to the
purchase of the Products shall be resolved by giving precedence in the following order: (i) the
terms and conditions of this Agreement (including the Exhibits attached hereto); (ii) the
provisions and text appearing on the face of the applicable Order insofar as they refer to the
specific Order; and (iii) other documents, exhibits and attachments which accompany such Order.

          Section 4.7 Taxes and Governmental Charges. Prices do not include any taxes or
other governmental charges, including import or export duties, value-added, sales, use or
privileges taxes, property or excise, or similar taxes levied by any government. Distributor shall
pay all such taxes or charges on or before the due date.

          Section 4.8 Shipment, Delivery and Title. Insulet shall deliver the Products EXW
(Incoterms 2000) at a facility designated by Insulet in the free-trade zone in Shenzhen China or in
Massachusetts, U.S.A. on the date as specified in the Order, provided, that such

9

 

dates specified in the Orders shall allow for a delivery time of at least [***] days from date
of Order. Title to each of the Products shall pass to Distributor (or to the Customer, where
Insulet ships direct to a Customer) when delivery is made to the carrier at such point of shipment.
Insulet shall be entitled to change the point of shipment, provided, however, that Insulet shall
be responsible for any additional costs or expenses incurred by Ypsomed in connection with such
changed point of shipment.

          Section 4.9 Rejection of Delivery.

          (a) Within [***] days of delivery of the Products to Distributor, Distributor shall notify
Insulet in writing of any physical damage or issue which is apparent from an external review of the
packaged Products, and within [***] days of Distributor’s receipt of notice from a Customer that
any Product has a defect and/or does not conform to the Specifications for the Product, Distributor
shall notify Insulet in writing of such claims by the Customer. In each case, Distributor shall,
if possible, include with its notice sufficient samples to permit Insulet to evaluate Distributor’s
or the Customer’s claims.

          (b) Within [***] days of receipt of those samples, Insulet will inform Distributor in
writing whether it accepts or rejects Distributor’s or the Customer’s claims. If the claim is
accepted, then Insulet shall [***] Distributor shall return all non-conforming Products (less
reasonable samples) in its possession at Insulet’s expense within [***] days of the date of
Insulet’s written confirmation that it accepts the claim, provided that such shipment can be made
in accordance with applicable Laws, including export Laws.

          (c) If Insulet does not accept the claim, the Parties shall submit samples of the
non-conforming Products for testing to an independent expert agreed upon by both Parties acting
reasonably. If the Parties are unable to agree on the identity of the expert, the Parties shall
jointly apply to a mutually agreed Third Party for the appointment of an expert. The expert’s
determination will be final absent of manifest error. The costs associated with such expert
determination shall be [***].

          Section 4.10 Terms of Payment. Insulet shall issue invoices for each shipment upon
delivery in accordance with Section 4.8. Terms of payment shall be net [***] days from date of the
invoice. All payments shall be in United States Dollars and shall be fully net, without set-off,
deduction or counterclaim.

          Section 4.11 Late Charges. If Distributor fails to pay the price or any other
payment due to Insulet promptly and when due, Insulet may recover, in addition to the price or
payment, interest thereon at a rate of [***] per annum.

          Section 4.12 Audits. All records relating to regulatory issues in connection with
the Products will be available for audit by Insulet and Governmental Authorities biannually at all
reasonable times and upon reasonable notice, and for a period of three (3) years following the
expiration or termination of this Agreement; provided, however, that any such inspection by Insulet
or its designees shall be conducted in a manner that does not unreasonably interfere with the
operation of the day-to-day business affairs of the Party being inspected. Insulet shall pay all
costs and expenses with respect to any such inspection or audit. For clarification, Customer data

10

 

and other trade secrets will not be disclosed by Distributor, unless required by applicable
Law, in which case such Customer data will only be disclosed to Governmental Authorities.

          Section 4.13 Trade Price. Distributor shall be free to set its own trade prices.
Distributor shall keep Insulet informed as to the trade prices so determined.

ARTICLE V

Compliance with Laws; Regulatory Matters; Recycling

          Section 5.1 Export and Trade Regulations. Both Parties shall endeavor to at all
times carry out the transactions contemplated by this Agreement in conformity with all applicable
Laws (including the United States Export Administration Acts), and shall obtain all necessary
permits and licenses required in connection with the purchase, installation, sale, shipment,
service or use of the Products. Shipments by Insulet are or may be subject to restrictions and
limitations imposed by United States export controls and other trade sanctions. Each Party shall
at all times use commercially reasonable efforts to keep the other Party informed of, and both
Parties shall at all times use commercially reasonable efforts to comply with, such sanctions,
controls and regulations, as well as the United States Foreign Corrupt Practices Act, in its
respective use and disposition of the Products. If Insulet learns, or has reasonable cause to
believe, or if any branch or agency of the government of the United States claims that a violation
of any applicable export regulation or other trade sanction, export control or trade regulation by
Distributor has occurred or is likely to occur because of any shipment by Insulet to Distributor,
Insulet shall promptly notify Distributor and may, in addition to any other remedy it may have,
suspend all shipments to Distributor until Insulet is satisfied that such violation did not occur
or has ceased to occur, or such claim is withdrawn or otherwise resolved in favor of Insulet.

          Section 5.2 Customer Complaints and Product Safety. The Parties will cooperate in
and each Party is responsible for full compliance with its requirements regarding Vigilance,
Product complaint, Field Safety Notices, Product Recall requirements set forth in MEDDEV 2.12-1
rev. 5 and/ any future revisions as well as corresponding regulatory requirements in all countries
of the Territory listed in Section II of Exhibit II and internal corporate procedures and policies.
Distributor shall promptly notify Insulet of any customer complaints of which it may become aware
in relation to the Products or any component thereof. Distributor will provide such Products to
Insulet for evaluation. Insulet will perform evaluations of such customer complaints and supply
the results of such evaluations to Distributor, including, but not limited to, corrective action(s)
and investigations. Distributor will respond directly to the Customer regarding the results of
these evaluations. Insulet will be responsible for creating and implementing any corrective or
preventive action that concerns the Products, [***]. Insulet is responsible to file all necessary
filings with Governmental Authorities.

          Section 5.3 Recalls. In the event any component of the Products is subject to a
recall in the Territory, the Parties will cooperate, under overall Insulet oversight, to manage the
process in a commercially reasonable manner. In the event of a recall or potential recall of any
component of the Products, Insulet will notify and consult with Distributor with regard to the
measures to be taken consistent with good business practices. Insulet shall be responsible for

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implementing any recall that concerns the Products, and shall bear all cost relating to such
recall, [***], and Insulet will provide all replacement Products to Distributor or to Customers
free of charge DDP (Incoterms 2000) destination as indicated by Distributor in writing.

          Section 5.4 Regulatory Interface. Insulet shall exercise commercially reasonable
efforts to obtain and Maintain any Product Registrations in the countries of the Territory as set
forth in Section II of Exhibit II during the Term. As used in this Section 5.4, the term
“Maintain” means that: (a) Insulet shall exercise commercially reasonable efforts to maintain the
Product Registrations as valid and in force with the appropriate Governmental Authorities, (b)
Insulet shall use commercially reasonable efforts to the extent possible to minimize the number and
extent of any changes to the Product Registrations, and (c) Insulet shall notify Distributor of any
change to any of the Product Registrations during the Term and any such change requested or
required by appropriate Governmental Authorities in the Territory. As between the Parties hereto,
it is agreed that the Product Registrations shall be held in the name of Insulet, who shall be the
beneficial owner of all Product Registrations and Distributor may not use the Product
Registrations, or any of them, on or in respect of any product other than the Products or use any
authorization other than one or more of the Product Registrations on or in respect of the Products,
except as may be approved in writing by Insulet. Distributor agrees to use its commercially
reasonable efforts to assist Insulet, [***] in obtaining and Maintaining the Product Registrations.
[***] If any Governmental Authority gives notice to Insulet that its Product Registration may be
invalid or may be revoked, limited, or conditioned, Insulet shall promptly inform Distributor, but
in any case not more than [***] Business Days following Insulet’s receipt of such notice.

          Section 5.5 Failure to Maintain. At any time during the Term, if Insulet fails to
Maintain an existing Product Registration or any of the Product Registrations becomes invalid or
not in full force and effect with the appropriate authorities in any country in the Territory, then
Distributor may either assume Insulet’s responsibilities under this Article V at Insulet’s costs or
terminate this Agreement with regard to such Product in such affected country(ies) with immediate
effect, provided that Distributor shall not be entitled to exercise such rights under this Section
5.5 if such failure to Maintain a Product Registration in any country(ies) is as a result of or in
connection with either (a) a breach of this Agreement by Distributor or (b) any negligence or
willful misconduct by Distributor or any Sub-Distributor.

          Section 5.6 Regulatory Requirements. Distributor shall at all times promote,
advertise, market distribute and sell the Products in accordance with all applicable Laws.
Distributor shall also follow (a) all relevant current written regulatory, quality assurance
instructions and guidelines agreed by the Parties.

          Section 5.7 Labeling. Subject to Section 3.2 hereof, all labeling and package
inserts used in any way in connection with the Products shall comply with the Product labeling
supplied or approved in writing by Insulet and with all applicable Laws. Distributor shall
promptly inform Insulet of any local requirements affecting the labeling and package inserts of the
Products; provided, however, that Insulet remains independently obligated to be aware of regulatory
requirements in all jurisdictions where it has obtained and Maintains a Product Registration.

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          Section 5.8 Local Laws. Distributor shall keep Insulet informed of any Laws of the
Territory which might be applicable to, or affect the use or sale of, the Products in the
Territory. Distributor shall inform Insulet of any instructions or requests inconsistent with
these Laws, provided, however, that Insulet remains independently obligated to be aware of
regulatory requirements in all jurisdictions where it has obtained and Maintains a Product
Registration.

          Section 5.9 Recycling. The Parties shall collaborate and agree upon an acceptable
recycling program for the Products. The costs associated with such program shall be borne by
Distributor.

ARTICLE VI

Intellectual Property Rights

          Section 6.1 Grant of License; Ownership of Intellectual Property Rights. Insulet
hereby grants Distributor a non-exclusive, royalty-free, limited license during the Term and under
the Intellectual Property Rights of Insulet relating to the Products solely to purchase Products
from Insulet and to promote, advertise, market, distribute and sell Products to Customers in the
Territory in accordance with the terms and conditions of this Agreement. Distributor hereby grants
Insulet a non-exclusive, royalty-free, limited license during the Term and under the Intellectual
Property Rights of Distributor to use the Product Branding solely for labeling of the Products
pursuant to this Agreement and for no other purpose whatsoever.

          Section 6.2 Use of Intellectual Property Rights. Distributor shall not alter,
deface, remove, cover, mutilate, or add to, in any manner whatsoever, any patent notice, copyright
notice, trademark, trade name, serial number, model number or legend that Insulet may attach or
affix to the Products. Distributor also agrees that during the Term, it will not otherwise
register or use any of Insulet’s Intellectual Property Rights or any word, symbol or design
confusingly similar thereto, unless agreed by Insulet.

          Section 6.3 Assistance. Distributor shall, at the expense of Insulet, take such
steps as Insulet may reasonably require to assist Insulet in maintaining the validity and
enforceability of the Intellectual Property Rights of Insulet, and Distributor will not do, or
allow or authorize any Person to do, any act which could invalidate or be inconsistent with the
Intellectual Property Rights of Insulet and shall not omit, or allow or authorize any Person to
omit, to do any act which, by its omission, could invalidate or be inconsistent with the
Intellectual Property Rights.

          Section 6.4 Notice of Claims of Infringement. Distributor shall promptly notify
Insulet of (a) any claims or objections that its use of the Intellectual Property Rights in
connection with the promotion, advertising, marketing, distribution or sale of the Products may or
will infringe the copyrights, patents, trademarks or other proprietary rights of another Person,
and (b) any and all infringements, imitations, illegal use, or misuse, by any Person, of the
Intellectual Property Rights of Insulet which come to its attention; provided, however, that
Distributor will not take any legal action relating to the protection of any Intellectual Property
Rights of Insulet without the prior written approval of Insulet; and provided further, that
Distributor shall render Insulet, [***], all reasonable assistance in connection with any matter

13

 

pertaining to the protection of the Intellectual Property Rights, whether in courts,
administrative agencies, or otherwise.

          Section 6.5 Notice of Infringement. Distributor shall promptly notify Insulet of
any infringement, violation, claim or objection in the Territory of or relating to the Intellectual
Property Rights, Confidential Information or Product Registrations (including trademarks, patents,
know-how, government licenses and health registrations) of Insulet which come to Distributor’s
attention, and shall, [***], cooperate in taking such action as Insulet may reasonably deem
necessary in connection with any such infringement, violation, claim or objection.

          Section 6.6 Reservation of Rights. Except as otherwise expressly set forth herein,
either Party reserves all right, title and interest in the Intellectual Property Rights of it or
any of its Affiliates, and the other Party shall not acquire, or be deemed to have acquired, any
right, title or interest whatsoever as a result of this Agreement in the Intellectual Property
Rights of either Party or any of its Affiliates. Subject to Section 11.3, upon expiration or
termination of this Agreement for any reason, the Parties agree to immediately discontinue any
further use of the Intellectual Property Rights of the other Party granted under this Agreement.

ARTICLE VII

Confidentiality

          Section 7.1 Non-Disclosure Obligations. During the Term, a Party may, at its sole
discretion, disclose certain Confidential Information to the other Party. This information will be
used solely to permit the receiving Party to exercise its rights and perform its obligations under
this Agreement. The receiving Party shall not disclose any Confidential Information to a Third
Party and shall refrain from using or exploiting any and all Confidential Information for any
purpose or activities other than those specifically authorized in this Agreement. The receiving
Party shall keep such Confidential Information secret during the Term of this Agreement and for 10
years after the expiration or termination hereof.

          Section 7.2 Ownership of Material. Except as otherwise expressly provided for
herein, all files, lists, records, documents, drawings and specifications which incorporate or
refer to all or a portion of the Confidential Information shall remain the sole property of the
disclosing Party. Such materials shall be promptly returned upon the earlier of (a) the disclosing
Party’s reasonable request, or (b) expiration or termination of this Agreement.

          Section 7.3 Exceptions. The provisions of this Article VII shall not apply, or
shall cease to apply, to data and information supplied by a Party if such data or information (a)
was already known to the receiving Party, (b) becomes part of the public domain without a breach of
confidence by the receiving Party or any other Person, (c) was received by the receiving Party from
a Third Party without restrictions on such Third Party’s use in favor of the disclosing Party, or
(d) was required to be disclosed pursuant to any statutory or regulatory provision or court order
(in which case only such portion of Confidential Information shall be disclosed as is required, and
the provisions of this Article VII shall not apply for disclosure in

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accordance with the respective statutory or regulatory provision or court order only),
provided that the receiving Party shall have the burden of establishing any of the foregoing
exceptions.

ARTICLE VIII

Representations, Warranties and Liabilities 

          Section 8.1 By Insulet. Insulet represents and warrants to Distributor that (i)
Insulet has the full right and authority to enter into this Agreement and grant the rights granted
herein; (ii) Insulet has not previously granted and will not grant any right in conflict with any
of the rights granted herein; and (iii) to Insulet’s knowledge on the Effective Date, there is no
existing or threatened action, suit or claim pending against it with respect to its right to enter
into and perform any of its obligations under this Agreement.

          (a) Insulet represents and warrants to Distributor that all applicable Laws and the
scientific and technical state of the art are observed and fulfilled.

          (b) Insulet represents and warrants to Distributor that no Products delivered are
encumbered in any form by Third Party rights (pledge, ownership, co-ownership, joint ownership and
the like).

          (c) Insulet represents and warrants to Distributor that the Products, the manufacture of
Products and all documentation related to the manufacture and the Products will conform to any
regulatory requirements in the countries of the Territory listed in Section II of Exhibit II.

          (d) Insulet represents and warrants to Distributor that to the best of Insulet’s knowledge
no intellectual property rights of Third Parties bar the use of the Products in the Territory as
contemplated by this Agreement.

          Section 8.2 By Distributor. Distributor represents and warrants to Insulet that (i)
Distributor has the full right and authority to enter into this Agreement and grant the rights
granted herein; (ii) Distributor has not previously granted and will not grant any right in
conflict with any of the rights granted herein; and (iii) to Distributor’s knowledge on the
Effective Date, there is no existing or threatened action, suit or claim pending against it with
respect to its right to enter into and perform its obligations under this Agreement.

          Section 8.3 Product Warranty and Remedies.

          (a) Subject to Section 8.3(b), Insulet hereby (i) warrants that the PDM shall be free from
material defects in material and workmanship under normal use and maintenance as provided in the
applicable instructions and fulfills the Specifications, for a period of [***] months from the date
of shipment of the PDM; (ii) warrants that the POD shall have an expiration date at least [***]
months from the date of shipment of the POD; and (iii) undertakes to use commercially reasonable
efforts to deliver PODs with an expiration date at least [***] months from the date of shipment of
the POD by June 1, [***].

15

 

          (b) Distributor shall maintain inventory of Products on a first in, first out (FIFO)
basis. For Products with expiration date, Distributor shall distribute such Products by lowest
expiration date first.

          (c) Subject to Section 4.9, the obligation of Insulet under the warranties set forth in
this Section 8.3 is limited to replacement or credit of parts and materials that prove defective.
The foregoing notwithstanding, Insulet shall not be responsible for damage to any Product resulting
from misuse, negligence or accident, or resulting from repairs or alterations made by any Person
not duly authorized by Insulet in writing.

          Section 8.4 No Implied Warranties. THE EXPRESS REPRESENTATIONS AND WARRANTIES GIVEN
IN THIS AGREEMENT ARE THE ONLY REPRESENTATIONS OR WARRANTIES GIVEN BY INSULET WITH RESPECT TO THE
PRODUCTS AND ARE GIVEN IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING THOSE OF NONINFRINGEMENT, TITLE, MERCHANTABILITY, COURSE OF DEALING, USAGE OF TRADE, AND
FITNESS FOR A PARTICULAR PURPOSE. DISTRIBUTOR’S EXCLUSIVE REMEDIES AND INSULET’S SOLE LIABILITY
FOR ANY NONCONFORMITY OR DEFECT IN ANY PRODUCT SHALL BE THOSE EXPRESSED IN THIS AGREEMENT.

          Section 8.5 Limitation of Liability. An essential purpose of the limited exclusive
liabilities and remedies in this Agreement is allocation of risk between Insulet and Distributor,
which allocation of risks is reflected in the purchase price for the Products. EXCEPT FOR
INSULET’S INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 9 AND/OR INSULET’S LIABILITY ARISING OUT
OF TERMINATION OF THIS AGREEMENT BY DISTRIBUTOR PURSUANT TO SECTION 10.2, OR AS A RESULT OF A
BREACH OF SECTION 7, UNDER NO CIRCUMSTANCES SHALL INSULET’S LIABILITY ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR INSULET’S PERFORMANCE OR ASSERTED FAILURE TO PERFORM HEREUNDER,
IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EXCEED [***] THE PURCHASE PRICE OF THE
PRODUCT OR PART THEREOF TO WHICH SUCH LIABILITY RELATES. EXCEPT FOR LIABILITY ARISING AS A RESULT
OF A PARTY’S INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 9 OR AS A RESULT OF A BREACH OF
SECTIONS 6.1 AND/OR 7, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR SPECIAL, INCIDENTAL, PUNITIVE,
CONSEQUENTIAL, TORT OR ANALOGOUS DAMAGES, INCLUDING DAMAGES RESULTING FROM LOSS OF USE, PROFITS,
REVENUES, BUSINESS OR GOODWILL, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY
THEREOF.

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ARTICLE IX

Indemnification

          Section 9.1 Insulet Indemnity.

          (a) Insulet will indemnify, defend, and hold harmless Distributor, and each of its
officers, directors, agents, employees, representatives, successors, and assigns (collectively,
“Distributor Indemnitees”), from and against any and all liabilities, losses, damages, and expenses
        , including without limitation reasonable attorney’s fees and expenses (the “Losses”) relating to
any demand, claim, suit or proceeding brought by a Third Party to the extent arising from or
occurring as a result of: (i) Insulet’s material breach of this Agreement, (ii) any negligent or
willful act or omission by or on behalf of Insulet, (iii) violation of any applicable Law by
Insulet, (iv) the actual or alleged infringement of a claim of a patent or the actual or alleged
infringement or misappropriation of a Third Party Intellectual Property Right by the Products, (v)
physical injury (including death) and/or property damage actually or allegedly caused by the
Products, or (vi) any other representation, act or omission by or on behalf of Insulet, including
Insulet’s performance of or failure to perform any term or condition of this Agreement. Insulet
shall not be liable for any Losses resulting from the negligent or willful misconduct of any
Distributor Indemnitee.

          (b) Distributor Indemnity. Insulet shall not be liable for any Losses to the
extent incurred by Distributor or any other person or entity, and Distributor shall indemnify,
defend, and hold harmless Insulet and its Affiliates and their officers, directors, agents,
employees, representatives, successors, and assigns (collectively, “Insulet Indemnitees”) from and
against any and all Losses relating to any demand, claim, suit or proceeding brought by a Third
Party to the extent arising from or occurring as a result of (i) Distributor’s material breach of
this Agreement, (ii) any negligent or willful act or omission by or on behalf of Distributor; (iii)
violation of any applicable Law by Distributor, (iv) the use of any Product or part thereof
furnished in combination with products, software or data not supplied by Insulet, (v) any
modification made to the Products without Insulet’s prior written consent, (vi) any termination or
expiration of any Sub-Distributor (to the extent not attributable to any direct relationship,
including any relationship preceding this Agreement, entered into between Insulet and such
Sub-Distributor independently from this Agreement), or (vii) any other representation, act or
omission by or on behalf of Distributor, including Distributor’s performance of or failure to
perform any term or condition of this Agreement. Distributor shall not be liable for any Losses
resulting from the negligent or willful misconduct of any Insulet Indemnitee.

          Section 9.2 Indemnification Procedure.

          (a) A Party that intends to claim indemnification under this Section 9 shall promptly
notify the indemnifying Party of any such claims in respect of which such Party intends to claim
such indemnification, and if applicable such indemnifying Party shall assume the defense thereof
with counsel mutually satisfactory to the Parties; provided that such Party shall have the right to
retain its own counsel and, in case compensation for fees and expenses are not otherwise awarded,
compensation for such reasonable costs shall be paid by such indemnifying Party provided such
indemnifying Party is responsible for the defense thereof, if

17

 

representation of such Party by the counsel retained by such indemnifying Party would be
inappropriate due to actual or potential conflicting interests between such Party and any other
Party represented by such counsel. The indemnification provided for by this Section 9 shall not
apply to amounts paid in settlement of any such claim if such settlement is effected without the
consent of the indemnifying Party, which consent shall not be unreasonably withheld. The failure
to deliver notice to the indemnifying Party within a reasonable time after the commencement of any
such action, if materially prejudicial to its ability to defend such action, shall relieve the
indemnifying Party of any liability to the other Party under this Section 9.3 to the extent so
prejudiced, but the omission so to deliver notice to such indemnifying Party shall not otherwise
relieve it of any liability that it may have to such other Party. The indemnified Party shall
cooperate fully with the other Party in the investigation of any such claim covered by this
indemnification.

          (b) If Distributor receives a demand, claim, suit or proceeding subject to Insulet
indemnification under Section 9.1(a)(iv), Distributor shall notify Insulet promptly in writing and
give Insulet information, assistance and exclusive authority to evaluate, defend and settle such
claim. Insulet shall then at its own expense and option, (i) settle the claim (which settlement
shall include for Distributor the right to sell and use the Products pursuant to this Agreement);
(ii) procure for Distributor the right to sell and use the Product pursuant to this Agreement;
(iii) replace or modify the Product to avoid infringement; (iv) defend against such claim; or (v)
remove the Product and indemnify and hold harmless Distributor. Should any court of competent
jurisdiction hold in a final decision that the sale, manufacture, or use of such Product
constitutes infringement, Insulet shall pay any costs and damages finally awarded against
Distributor on the account of such infringement, and if the use of such Product is enjoined,
Insulet shall take one more of the actions under clauses (ii), (iii) or (v) above. Insulet
reserves the right, at its sole option, to notify Distributor in writing that as a result of a
claim, suit or proceeding or threat of same in any given country, Distributor may not market or
sell the Products in such country, effective as of such written notice, subject to full
indemnification of Distributor. The foregoing states the entire and complete liability of Insulet
for any patent infringement or claimed infringement by reason of the sale, manufacture or use of
the Products or any part thereof. This Section 9.3(b) shall also apply in the event Insulet
receives a claim, suit or proceeding relating to an actual or alleged infringement of a claim of a
patent or an actual or alleged infringement or misappropriation of a Third Party Intellectual
Property Right by the Products.

ARTICLE X

Term and Termination

          Section 10.1 Term and Renewal.

          (a) The initial term of this Agreement shall be for a period of 5 years from the date of
the first commercial delivery of Products, unless earlier terminated under the provisions of this
Agreement (the “Term”).

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          (b) Fifteen months prior to the end of the Term, the Parties shall negotiate in good faith
to enter into an amendment of this Agreement to include a renewal term for this Agreement.

          Section 10.2 Termination for Cause. This Agreement may be terminated by Insulet or
Distributor in the event of any of the following:

          (a) immediately upon written notice to the other, if the other Party becomes insolvent or
seeks protection under any bankruptcy, receivership, trust deed, creditors arrangement, composition
or comparable proceeding, or if any such proceeding is instituted against the other Party which
proceeding remains undismissed for a period of 30 days; or

          (b) in the event that the other Party fails to perform or otherwise materially breaches
any of its obligations hereunder, and does not cure such failure or breach within 60 days of
receipt of written notice from the non-breaching Party of such failure or breach. In no event,
however, shall such notice of intention to terminate be deemed to waive any rights to damages or
any other remedy which the Party giving notice of breach may have as a consequence of such failure
or breach.

     For clarity, the date of any notice of termination for cause under this Section 10.2 shall
also be an Exclusivity Termination Date notwithstanding any wind-down period provided herein.

     Notwithstanding the foregoing, Insulet shall have the right, in its sole discretion to in lieu
of terminating the Agreement in full pursuant to Section 10.2, to either (a) convert Distributor’s
appointment pursuant to Section 1.1 from exclusive to non-exclusive in any countries in the
Territory upon written notice to Distributor and the date of receipt of such notice shall be
treated as an Exclusivity Termination Date, in which case the Calendar Year Minimums shall be
adjusted as set forth in Exhibit III; or (b) in lieu of terminating the Agreement in full pursuant
to Section 10.2, selectively terminate Distributor’s appointment as distributor in the country(ies)
in the Territory to which Distributor’s material breach relates, in which case the Calendar Year
Minimums shall be adjusted as set forth in Exhibit III.

     If Insulet terminates this Agreement pursuant to this Section 10.2 due to Distributor’s breach
of Section 2.6 hereof, Insulet shall have, the right to collect damages equal to the quantity of
Products as set forth in the most recent Forecast multiplied by [***] of the Transfer Price;
further claims are excluded. In the event the Parties have not entered into an amendment of this
Agreement to include a renewal term for this Agreement as set forth in Section 10.1(b) hereof and
Distributor breaches Section 2.6 hereof in the last 12 months of the Term, and if Insulet
terminates this Agreement pursuant to this Section 10.2 due to Distributor’s breach of Section 2.6
hereof, Insulet shall have the right to collect damages equal to the quantity of Products as set
forth in the most recent Forecast multiplied by [***] of the Transfer Price; further claims are
excluded. For clarification, the damages defined in the first sentence of this clause and the
damages defined in the second sentence of this clause shall not apply cumulatively.

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          Section 10.3 Termination for Calendar Year Minimum Default.

          (a) Insulet may terminate this Agreement upon 12 months written notice if a Calendar Year
Minimum Default occurs in two (2) consecutive Calendar Years, provided, that Insulet did not
convert Distributor’s appointment pursuant to Section 1.1 from exclusive distributor to
non-exclusive distributor in accordance with Section 4.2(c) after the first Calendar Year Minimum
Default, and provided further, that for purposes of this Section 10.3 the Calendar Year Minimum of
Calendar Year 1 shall not apply, i.e. a Calendar Year Minimum Default in Calendar Year 1 shall not
be taken into consideration for the purposes of Section 10.3.

          (b) Insulet may terminate this Agreement upon 12 months written notice if Distributor
submits a forecast pursuant to Section 4.3 that would result in Orders or purchases of Products
equal to less than [***] of the applicable Calendar Year Minimum for the applicable Calendar Year.

     For clarity, the date of any notice of termination under this Section 10.3 shall also be an
Exclusivity Termination Date notwithstanding any wind-down period provided herein.

     Notwithstanding the foregoing in this Section 10.3, Insulet shall have the right, in its sole
discretion to in lieu of terminating the Agreement in full pursuant to Section 10.3, to convert
Distributor’s appointment pursuant to Section 1.1 from exclusive to non-exclusive in any countries
in the Territory upon written notice to Distributor and the date of receipt of such notice shall be
treated as an Exclusivity Termination Date.

          Section 10.4 Termination for Patent Challenge. If Distributor directly or
indirectly initiates any challenges of Insulet’s patent rights, Insulet shall have the right to (i)
immediately terminate this Agreement; and (ii) collect, as damages, [***] of the amounts due under
the Calendar Year Minimums for the remainder of the Term.

          Section 10.5 Termination or Expiration Fee.

          (a) In the event of any termination of this Agreement by Insulet or Distributor or upon
the expiration of this Agreement, Insulet shall pay Distributor a Termination/Expiration Fee
calculated as follows:

Termination/Expiration Fee = [***]

     [***] twelve (12) month [***].

          (b) In the event of termination of this Agreement by Insulet or Distributor with regard to a
Product in any individual country(ies), Insulet shall pay Distributor a Termination/Expiration Fee
calculated as follows:

     Termination/Expiration Fee = [***] in the respective country(ies) during the twelve (12) month
period following such termination to Customers who purchased PODS or PDMs from Distributor during
the Term of this Agreement.

20

 

     The Termination/Expiration Fee shall be determined on a quarterly basis and paid to
Distributor within sixty (60) days after the close of each Calendar Quarter after the expiration or
termination of this Agreement.

     The Parties agree that the Termination/Expiration Fee set forth in this Section 10.5 is based
on the assumption that [***] the twelve (12) month period following termination or expiration of
this Agreement. In the event that [***] the twelve (12) month period following termination or
expiration of this Agreement due to reasons in Insulet’s responsibility, including, without
limitation, [***], the Parties shall negotiate in good faith and agree on a fair and equitable
adjustment of the Termination/Expiration Fee of [***].

ARTICLE XI

Rights and Obligations upon Termination

          Section 11.1 Cessation of Rights. Upon expiration, non-renewal or termination
(collectively, “Termination”) of this Agreement for any reason whatsoever, no Party and none of its
directors, officers, stockholders or Affiliates shall have any further liability or obligation to
the other Party under this Agreement, except with respect to Sections 2.5(m), 3.1(d), 4.6, 4.7,
4.9, 4.10, 4.11, 4.12, 5.2, 5.3, 6.2, 6.6, 8.3, 8.4, 8.5, 10.2, 10.4 and 10.5, Articles 7, 9, 11
and 12 and the definitions in Exhibit I (which shall survive Termination of this Agreement), except
that nothing in this Section 11.1 shall prejudice any rights, claims, or causes of action that may
have accrued hereunder or with respect hereto prior to the date of such Termination, including for
breach of this Agreement (whether based upon the Termination or otherwise).

          Section 11.2 No Penalties; Survival. Without prejudice to any rights or right of
action which may have accrued during the Term, and subject to Sections 10.2, 10.4 and 10.5, neither
Party shall be entitled to any compensation or other penalty arising out of Termination, provided
this Agreement has expired or been terminated in accordance with its terms. Any claim, the cause of
which has arisen during the Term of this Agreement, and which is not submitted and properly
substantiated within [***] years following Termination shall be deemed waived and shall be
conclusively barred from assertion by the claimant unless the delay in submission or substantiation
is due to circumstances beyond the claimant’s control.

          Section 11.3 Return of Products and Information. Upon Termination of this
Agreement, Distributor shall promptly and at the cost of Insulet return to Insulet or a Third Party
designated by Insulet, all Products samples, Confidential Information and all other information
supplied by Insulet; provided that in the event that this Agreement terminates as a result of a
material uncured breach by Distributor, Insulet shall not be responsible for such return costs; and
provided further, that Distributor may maintain a copy of Insulet’s Confidential Information for as
long as reasonably necessary to comply with applicable Laws. Upon Termination of this Agreement,
Insulet may, at its option, elect to purchase any remaining Products from Distributor at cost or
allow Distributor to sell its remaining supply of Products in the Territory within reasonable time.

          Section 11.4 Obligations of Distributor upon Termination. Upon Termination of this
Agreement and subject to Section 11.3, Distributor shall immediately cease any and all use of the
Product Registrations and transfer to Insulet or its designee any Product Registration

21

 

not already in the name of Insulet or an Affiliate of Insulet with any rights thereto that
Distributor may then hold. To the extent not already owned by Insulet, Distributor shall use
commercially reasonable efforts to transfer such Product Registration and rights without
interruption or disruption to the distribution, marketing or sales of the Products in the
Territory.

ARTICLE XII

General Provisions

          Section 12.1 Notices All notices, requests, claims, demands, waivers and other
communications under this Agreement shall be in writing and shall be by facsimile, courier services
or personal delivery to the following addresses, or to such other addresses as shall be designated
from time to time by a Party in accordance with this Section 12.1:

     if to Distributor:

Ypsomed Distribution AG

Brunnmattstrasse 6

CH-3401 Burgdorf

Switzerland

Attention: General Counsel

Facsimile: ++41/ 34 424 41 55

     with a copy (which shall not constitute notice) to:

Ypsomed Distribution AG

Brunnmattstrasse 6

CH-3401 Burgdorf

Switzerland

Attention: Product Manager Infusion Systems

Facsimile: ++41/ 34 424 32 92”

     if to Insulet:

Insulet Corporation

9 Oak Park Drive

Bedford, MA 01730

Attention: General Counsel

Facsimile: 781-357-4281

22

 

     with a copy (which shall not constitute notice) to:

Goodwin Procter LLP

Exchange Place

Boston, MA 02109

Attention: Ray Zemlin

Facsimile: 617-523-1231

All notices and communications under this Agreement shall be deemed to have been duly given (x)
when delivered by hand, if personally delivered, (y) 1 Business Day after when delivered to a
courier, if delivered by commercial one-day overnight courier service or (z) when sent, if sent by
facsimile, with an acknowledgment of sending being produced by the sending facsimile machine.

          Section 12.2 Definitions. For the purposes of this Agreement, the following terms
have the following meanings:

          “Affiliate” means, with respect to any Person, any other Person controlling, controlled by or
under direct or indirect common control with such first Person. For purposes of this definition, a
Person shall be deemed to control another Person if it owns or controls 50% or more of the voting
equity of the other Person (or other comparable ownership if the Person is not a corporation), or
otherwise possesses the power to direct the management or policies of the other Person, whether
through ownership of voting securities or by contract or otherwise; provided that solely for
purposes of this Agreement, no Party shall be deemed to be an “Affiliate” of any other Party (or
any of its Affiliates).

          “Business Day” means any day other than a Saturday or Sunday or a day on which banking
institutions at the domicile of Insulet or Distributor are permitted or required by Law, executive
order or decree of a Governmental Authority to remain closed.

          “Business Plan” means a description of the plan for marketing the Products in one or more
countries of the Territory (or proposed Territory) during the Term, including at least: (1) the
projected minimum sales quantities per quarter during the Term; (2) the distribution route (direct
or indirect), (3) the projected reimbursement for the Products, (4) and any other information
reasonably necessary for the Parties to assess the commercialization of the Products in the
specified portions of the Territory or proposed Territory.

          “Calendar Year” means the period of 12 consecutive months starting on January 1, 2010, and
each twelve (12) months period thereafter.

          “Calendar Quarter” means the respective periods of 3 consecutive calendar months commencing on
the first day of the first Calendar Year.

          “Calendar Year Minimums” means the minimum quantities as set forth in Section 4.2 and Exhibit
III.

23

 

          “Competitor” means any Third Party which, by itself or through any of its Affiliates, is
engaged or otherwise participating in any business or other activity involving the manufacture for
commercial sale or distribution of products that compete with Products.

          “Confidential Information” means all data and information of a confidential or proprietary
nature, including know-how and trade secrets relating to the business, the affairs and the products
of a Party. Confidential Information may be communicated orally, in writing or in any other
recorded or tangible form. Data and information shall be considered to be Confidential
Information, (a) if a Party has advised the receiving Party of such confidential nature, or (b) if,
due to such character or nature, a reasonable person in a like position and under like
circumstances as the receiving Party would treat such as secret and confidential.

          “Competitive Insulin Infusion Device” means an insulin infusion device comprising [***].

          “Customer” means a Person an individual who (a) is resident in the Territory; and (b) has
entered into an agreement (oral or written, including purchase orders) for the purchase of Products
with Distributor.

          “Force Majeure” has the meaning as set forth in Section 12.8.

          “Governmental Authority” means any nation, state, province, county, city or political
subdivision and any official, agency, arbitrator, authority, court, department, commission, board,
bureau, instrumentality or other governmental entity of any thereof, whether domestic or foreign.

          “Intellectual Property Rights” means, collectively, all rights in, to and under patents, trade
secret rights, copyrights, mask works, trademarks, service marks, trade dress and similar rights of
any type under the laws of any Governmental Authority, including, without limitation, all
applications and registrations relating to the foregoing, which either Party may at any time own,
control, license, adopt, use or register with respect to the Products.

          “Laws” shall mean any law, statute, rule, regulation, guideline, ordinance or other
pronouncement of any Governmental Authority having the effect of law or guidances of any
Governmental Authority in the United States and in the countries of the Territory, or any province,
county, city or other political sub-division thereof.

          “Person” means and includes any individual, corporation, trust, estate, partnership, limited
liability company, joint venture company, association, league, governmental bureau or agency, or
any other entity regardless of the type or nature thereof.

          “Product Registrations” means existing and future marketing and regulatory authorizations
relating to the Products in the Territory including such authorizations relating to any and all
existing and future uses for the Products, necessary for import, advertisement, marketing,
distribution and sale of the Products.

          “Products” means certain products as set forth in Exhibit I.

24

 

          “Specifications” shall mean the specifications for the Products that are included in the User
Manual for such Products.

          “Sub-Distributor” means any Third Party or any Affiliate of Distributor that has entered into
a written agreement with Distributor for the distribution of Products anywhere in the Territory.

          “Third Party” means any Person other than Insulet, Distributor or their respective Affiliates.

          Section 12.3 Descriptive Headings; Certain Interpretations. The table of contents
and headings contained in this Agreement are for reference purposes only and shall not control or
affect the meaning or construction of this Agreement. Except where expressly stated otherwise in
this Agreement, the following rules of interpretation apply to this Agreement: (a) “or” is not
exclusive and “include,” “includes” and “including” are not limiting; (b) “hereof,” “hereto,”
“hereby,” “herein” and “hereunder” and words of similar import when used in this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement; (c) “date hereof”
refers to the date of this Agreement; (d) “extent” in the phrase “to the extent” means the degree
to which a subject or other thing extends, and such phrase does not mean simply “if”; (e)
definitions contained in this Agreement are applicable to the singular as well as the plural forms
of such terms; (f) references to an agreement or instrument mean such agreement or instrument as
from time to time amended, modified or supplemented, and all exhibits, appendices, schedules or
other attachments thereto; (g) references to a Person are also to its permitted successors and
assigns; (h) references to an “Article,” “Section,” “Clause,” “Exhibit” or “Schedule” refer to an
Article, Section or Clause of, or an Exhibit or Schedule to, this Agreement; (i) words importing
the masculine gender include the feminine or neuter and, in each case, vice versa; (j) references
to a Law include any amendment or modification to such Law and any rules or regulations issued
thereunder, whether such amendment or modification is made, or issuance of such rules or
regulations occurs, before or after the date of this Agreement; and (k) references to monetary
amounts shall be denominated in United States Dollars.

          Section 12.4 Waivers. The waiver by either Party of a breach or default in any of
the provisions of this Agreement by the other Party shall not be construed as a waiver of any
succeeding breach of the same of either Party to exercise or avail itself of any right, power or
privilege that it has or may have hereunder nor operates as a waiver of any breach or default by
the other Party.

          Section 12.5 Entire Agreement and Amendments. This Agreement constitutes the entire
agreement between the Parties with respect to the subject matter hereof and supersedes all prior
agreements between the Parties, whether written or oral, relating to the same subject matter. No
modification, amendment or supplements to this Agreement shall be effective for any purpose unless
in writing, signed by each Party. Approvals or consents hereunder of a Party shall also be in
writing.

          Section 12.6 Severability. In the event that any provision herein shall be
determined to be void or unenforceable in whole or in part for any reason whatsoever, such
unenforceability or invalidity shall not affect the enforceability or validity of the remaining

25

 

provisions or part thereof contained in this Agreement and such void or unenforceable
provisions shall be deemed to be severable from any other provisions or part thereof herein
contained. In the event that any of the provisions herein contained are held to be unreasonable by
reason of the duration or type or scope of services covered by the said provision then the said
provision shall be given effect only to the extent as may be enforceable or deemed enforceable by
any court of competent jurisdiction.

          Section 12.7 Assignments. Neither Party shall transfer or assign the Agreement or
delegate the performance of its obligations hereunder without the express written consent of the
other Party. Notwithstanding the foregoing, either Party may assign this Agreement (a) to any of
its Affiliates; or (b) to any Third Party in connection with the sale or transfer, by merger,
reorganization, consolidation or otherwise, of all or substantially all of the Party’s business or
assets to which this Agreement relates. This Agreement and the provisions hereof shall be binding
upon and inure to the benefit of the Parties hereto and their respective successors and permitted
assigns.

          Section 12.8 Force Majeure.

          (a) Neither Party shall be liable to the other Party for any delay or omission in the
performance of any obligation hereunder, where the delay or omission is due to any cause or
conditions beyond the reasonable control of the Party obligated to perform, including strike or
other labor difficulties, acts of God, acts of government, war (declared or undeclared), acts of
terrorism, fire, epidemic of disease, riots, civil commotion, embargoes, government requisition or
impoundment or other acts of any Governmental Authority or inability to obtain supplies (“Force
Majeure”). For clarification, failure to obtain or Maintain a Product Registration shall not be
considered a Force Majeure event. If Force Majeure prevents or delays the performance by a Party of
any obligation under this Agreement, then the Party claiming Force Majeure shall notify the other
Party thereof in writing within 15 days of the occurrence of such Force Majeure.

          (b) If the performance of this Agreement shall be prevented for a period exceeding six
months from the date of notice given pursuant to Section 12.8(a) due to an event of Force Majeure,
the Party receiving notice of an event of Force Majeure shall be entitled to immediately terminate
all obligations regarding the supply, purchase or distribution of Products for the affected period
by giving written notice to the other. Distributor, if it is the Party receiving notice of an
event of Force Majeure, (instead of exercising its rights in the preceding sentence) may elect to
extend the Term of this Agreement for one additional year. As regards the supply of Product for
the remainder of the Term, absent termination by the Party receiving notice of an event of Force
Majeure, this Agreement shall continue in full force and effect in accordance with its terms.

          Section 12.9 No Third-Party Beneficiaries. This Agreement is for the sole benefit
of the Parties hereto and their permitted successors and assigns and nothing herein express or
implied shall give or be construed to give to any Person, other than the Parties hereto and such
successors and assigns, any legal or equitable rights or remedies.

          Section 12.10 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall constitute one and the same

26

 

instrument. Delivery of an executed counterpart of this Agreement by facsimile or other
electronic transmission shall be as effective as delivery of a manually executed counterpart of
this Agreement.

          Section 12.11 Further Assurance. Each Party undertakes, at the request and cost and
expense of the other Party, to sign all documents and to do all other acts, which may be necessary
to give full effect to this Agreement.

          Section 12.12 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the substantive Laws of Switzerland, excluding its conflicts of laws principles.
The UN Convention on Contracts for the International Sale of Goods is not applicable to this
Agreement nor to purchase orders and deliveries based hereon. General terms of sale of Insulet and
general order terms or purchase terms of Distributor are not applicable to this Agreement nor to
Orders based hereon

          Section 12.13 Governing Language. The official text of this Agreement shall be the
English language, and any interpretation or construction of this Agreement shall be based thereon.
If this Agreement or any documents or notices relating to it are translated into another language
the English version shall be controlling in the event of discrepancy between the two.

          Section 12.14 Arbitration.

          (a) In the event of a dispute between the Parties, the Parties shall first attempt in good
faith to resolve such dispute by negotiation and consultation between themselves. In the event
that such dispute is not resolved on an informal basis within 30 days for attempted resolution by
good faith negotiations within 30 days after such notice is received.

          (b) All disputes arising out of or in connection with this Agreement shall be finally
settled under the Rules of Arbitration of the International Chamber of Commerce by one or more
arbitrators appointed in accordance with the said Rules. Such arbitration shall take place in
Zurich, Switzerland. The language of the arbitration shall be English. The arbitration award so
given shall be a final and binding determination of the dispute and shall not include any damages
expressly prohibited by Section 8.5. Except in a proceeding to enforce the results of the
arbitration or as otherwise required by Law, neither Party nor any arbitrator may disclose the
existence, content or results of any arbitration hereunder without the prior written consent of
both Parties.

          (c) Notwithstanding the foregoing dispute resolution procedure, in the event of an actual
or threatened breach hereunder, the aggrieved Party may seek equitable relief (including
restraining orders, specific performance or other injunctive relief) without submitting to such
dispute resolution procedure if there is a reasonable likelihood of the occurrence of irreparable
harm during the period of the dispute resolution procedure.

          Section 12.15 Press Releases.

          (a) Subject to Section 12.15(b), press releases or other similar public communications by
a Party relating to this Agreement shall be subject to a right of reasonable

27

 

prior review and approval by the other Party, which approval shall not be unreasonably
withheld or delayed, provided that such right of approval shall not apply to communications
required by applicable Law, disclosures of information for which consent has previously been
obtained, or information that has been previously disclosed publicly, and provided, further, that
any draft press release or other public communication submitted to a Party for its approval shall
be deemed approved if such Party fails to notify the submitting Party within 5 Business Days of
receipt thereof as to whether or not it has been approved.

          (b) Distributor understands and agrees that Insulet may submit a copy of this Agreement to
the United States Securities and Exchange Commission.

[Signature Page Follows]

28

 

The Parties have caused this Agreement to be executed by their respective duly authorized officers
as of the date first above written.

	 	 	 	 	 
	 	Insulet Corporation

 	 
	 	By:  	/s/ Duane DeSisto
 	 
	 	 	Name:  	Duane DeSisto 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	Ypsomed Distribution AG

 	 
	 	By:  	/s/ Richard Fritschi
 	 
	 	 	Name:  	Richard Fritschi 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	 	 
	 	By:  	   /s/ Simon Michel
 	 
	 	 	Name:  	Simon Michel 	 
	 	 	Title:  	Senior Vice President Marketing & Sales 	 
	 

[Signature Page to Distribution Agreement]

 

 

Exhibit I

Products

	1.	 	Insulet’s OmniPod System, an insulin delivery system designed and manufactured by Insulet
and, pursuant to this Agreement, supplied to and distributed by Distributor, each OmniPod
System comprising a PDM (as defined hereafter) and PODs (as defined hereafter). The term
“Product(s)” includes improvements, enhancements, new versions of and accessories to the
Products. Insulet shall use reasonable commercial efforts to make any improved, enhanced or
new versions of Products available to Distributor for distribution in the Territory. The
OmniPod System includes:

	 	a.	 	Personal Diabetes Manager or PDM, the handheld portion of the OmniPod
System, containing the user interface for controlling the POD portion of the OmniPod
System, optionally including an integrated blood glucose meter.

	 	b.	 	POD, the wearable, disposable insulin pump portion of the OmniPod System
(including filling system), controlled by the PDM.

	2.	 	“YM OmniPod System” means a version of the OmniPod System, designed and manufactured by
Insulet and, pursuant to this Agreement, supplied to and distributed by Distributor, each YM
OmniPod System comprising a YM PDM (as defined hereafter) and YM PODs (as defined hereafter).
Insulet shall use reasonable commercial efforts to make the YM OmniPod System ready for supply
to Distributor and ready for distribution in the Territory by the dates set forth in Exhibit
II.
	 
	 	 	“YM PDM” means versions of Insulet’s PDM adapted and labeled for sale in the countries of
the Territory listed in Section II of Exhibit II.
	 
	 	 	“YM POD” ” means versions of Insulet’s POD adapted and labeled for sale in the countries of
the Territory listed in Section I of Exhibit II.
	 
	 	 	“YM Integrated BGM” means a blood glucose meter that uses blood glucose strips manufactured
by [***] and is integrated into the YM PDM.

The terms “PDM” and “POD” include the terms “YM PDM” and “YM POD” where appropriate.

 

 

Exhibit II

Territory

I. TERRITORY

Those countries listed below in Section II of this Exhibit II.

II. LIST OF COUNTRIES

The following countries shall be ready for distribution of Products by Distributor on the dates
specified below, i.e. Insulet shall have obtained and maintain Product Registrations in these
countries and shall have the country specific version of Products ready for supply and ready for
distribution by Distributor as of the date specified below.

     -   Germany: [***] 2010

     -   Netherlands: [***] 2010

     -   France: [***] 2010

     -   Australia: [***] 2010

     -   Belgium: [***] 2010

     -   China: [***] 2011

     -   UK: [***] 2010

     -   Norway: [***] 2010

     -   Sweden: [***] 2010

     -   Finland: [***] 2010

     -   Switzerland: [***] 2010

	III.	 	INCLUSION OF ADDITIONAL COUNTRIES FOR DISTRIBUTION
	 
	1.	 	At any time during the term, Distributor may request
Insulet in writing to add further countries to the list of
countries in the Territory in Section II of Exhibit II.
Distributor shall present a Business Plan for the distribution of
the Products in each such additional country(ies). Insulet and
Distributor shall negotiate in good faith to enter into an
amendment of this Exhibit II relating to the addition of each
such country(ies) to the Territory and an adjustment of the
Calendar Year Minimums as set forth in Exhibit III. If the
Parties agree to add any such country(ies) to the list of
countries in the Territory in Section II of Exhibit II, the
Parties shall share development costs equally, provided that

 

 

	 	 	Distributor’s share of such develop costs shall not exceed [***]
for any country added to the list of countries in Territory in
Section II of Exhibit II.

	 
	IV.	 	RIGHT OF FIRST REFUSAL
	 
	1.	 	During the Term, in the event that (i) Insulet desires to
enter into a distribution agreement with respect to the Products
in a country outside the Territory, (ii) Insulet desires to
itself promote, advertise, market, distribute and sell Products
in a country outside the Territory, or (iii) Insulet desires to
supply any Third Party for promotion, advertisement, marketing,
distribution and sale of Products in a country outside the
Territory, before itself promoting, advertising, marketing,
distributing or selling the Product in such country outside the
Territory or before entering into negotiations with any Third
Party with respect to such agreement, Insulet will notify
Distributor (a “Notice”). If Distributor would like to amend the
Territory to include such country, Distributor shall notify
Insulet in writing of such request and provide a Business Plan
for such country within sixty (60) days after Distributor’s
receipt of such Notice. Insulet shall enter into good faith
negotiations with Distributor with respect to such amendment of
the Territory and an equitable adjustment of the Calendar Year
Minimums for a period of sixty (60) days (the “Negotiation
Period”) following receipt of such request and Business Plan from
Distributor. If Distributor does not request to pursue an
amendment within the sixty (60) day period set forth above, or if
Distributor does not provide Insulet with a Business Plan for
such country during such sixty (60) day period, Insulet will then
be free to itself promote, advertise, market, distribute and sell
Products in such country outside the Territory or to enter into
negotiations with any Third Party regarding an agreement for
Products for such country, and free to enter into any such
agreement. If Distributor does request an amendment to the
Territory and provide a Business Plan to Insulet within the sixty
(60) day period set forth above, but the Parties do not conclude
an amendment within the Negotiation Period, Insulet will then be
free to enter into negotiations with any Third Party regarding an
agreement for Products for such country, and free to enter into
any such agreement, subject to the provisions set forth below.
For clarification, if Distributor does request an amendment to
the Territory and provide a Business Plan to Insulet within the
sixty (60) day period set forth above, but the Parties do not
conclude an amendment within the Negotiation Period, then Insulet
shall refrain from itself promoting, advertising, marketing,
distributing or selling the Product in such country without prior
written approval of Distributor, but shall have the right to
proceed in accordance with Section 2 below.
	 
	2.	 	Insulet shall not enter into an agreement with any Third
Party with respect to such country under terms and conditions
financially less favorable taken as a whole (including transfer
prices, Calendar Year Minimums and volume requirements for the
Products) to Insulet than the last counteroffer from Insulet to
Distributor (a “Financially Less Favorable Offer”). If Insulet
intends to enter into a Financially Less Favorable Offer with a
Third Party, then Insulet shall not enter into an agreement with
such Third Party without first offering such terms and conditions
in the Financially Less Favorable Offer to Distributor. In the
event that Insulet makes such offer to Distributor, Distributor
will have an additional fifteen (15) days to provide Insulet with
notice that Distributor desires

 

 

	 	 	to enter into an amendment with Insulet on substantially the same
terms and conditions as set out in the Financially Less Favorable
Offer. If such notice is provided by Distributor, the Parties
will work diligently to expeditiously complete such an amendment.
If such notice is not provided by Distributor within such
fifteen (15) day period, Insulet will be free to enter into an
agreement with such Third Party having the terms and conditions
set forth in the Financially Less Favorable Offer.

	 
	V.	 	COUNTRIES EXCLUDED FROM THE TERRITORY
	 
	1.	 	The Parties agree the countries listed below shall not be
part of the Territory and Distributor waives its right to (a) add
such countries to the Territory under Section III of this Exhibit
II, and (b) negotiate and have a right of first refusal with
respect to such countries under Section IV of this Exhibit II.

     -   USA

     -   Israel

     -   Canada

 

 

Exhibit III

Calendar Year Minimums And Pricing

I. CALENDAR YEAR MINIMUMS AND PRICING

	 	 	 	 	 	 	 	 	 
	[Calendar	 	Minimum	 	PDM Transfer	 	Minimum	 	POD Transfer
	Year	 	Quantity: PDMS	 	Price($US)	 	Quantity: PODS	 	Price ($US)]
	2010
	 	[***]	 	[***]	 	[***]	 	[***]
	2011
	 	[***]	 	[***]	 	[***]	 	[***]
	2012
	 	[***]	 	[***]	 	[***]	 	[***]
	2012
	 	 	 	 	 	[***]	 	[***]
	2013
	 	[***]	 	[***]	 	[***]	 	[***]
	2013
	 	 	 	 	 	[***]	 	[***]
	2014
	 	[***]	 	[***]	 	[***]	 	[***]
	2014
	 	 	 	 	 	[***]	 	[***]
	2015
	 	 	 	 	 	[***]	 	[***]

For the avoidance of doubt the Minimum Quantity for a Calendar Year is the sum of the values
expressed in the table above for each Calendar Year. For example, the Minimum Quantity of PODS for
2012 is [***], where [***] are purchased by Distributor at a Transfer Price of [***] and [***] are
purchased by Distributor at a Transfer Price of [***]. Distributor must purchase the Minimum
Quantity of PODS at the higher Transfer Price in each Calendar Year before purchasing PODS at the
lower Transfer Price.

SAMPLE PRICING

	 	 	 

	Demonstration POD

	 	[***]

II. PRICING OF PRODUCTS WITHOUT YM INTEGRATED BGM AFTER [***]

In the event Insulet is not able to supply Distributor with YM PDM with YM Integrated BGM for
distribution in the Territory by [***], the transfer price to be paid by Distributor for purchases
of PDMs after [***] shall be reduced to [***]. As soon as Insulet is able to supply an YM PDM with
[***] for distribution in the Territory, the transfer price to be paid by Distributor for purchase
of PDMs shall be as set forth in Section I of this Exhibit III. Alternatively, if Insulet is able
to supply a YM PDM with an alternative integrated BGM, the transfer price to be paid by Distributor
for purchase of PDFS shall be [***] and Insulet shall share [***] of any [***] that Insulet
actually receives from a Third Party provider of the [***].

III. EQUITABLE ADJUSTMENT TO CALENDAR YEAR MINIMUMS

 

 

The Parties shall negotiate and implement a fair and equitable adjustment to the Calendar Year
Minimums, which adjustment shall be agreed to by the Parties and referenced in an amendment to this
Exhibit III, if (a) the Parties amend the list of countries in the Territory in Section II of
Exhibit II as permitted in this Agreements; (b) if Insulet exercises its rights under Section 10.2
or 10.3; (c) if Insulet, pursuant to this Agreement, converts Distributor’s appointment as
exclusive distributor to non-exclusive in any country(ies); (d) if Insulet, pursuant to this
Agreement, selectively terminates Distributor’s appointment as distributor in any country(ies); (e)
if Insulet fails to obtain and maintain Product Registrations in the countries listed in Section II
of Exhibit II or fails to have country specific versions of Products ready for supply and
distribution by Distributor by the dates set forth in Section II of Exhibit II; or (f) if any of
the following events occurs during the Term of this Agreement:

(i) an injunction based on Third Party patent infringement by the Products is issued
and pending;

(ii) Insulet does not hold a Product Registration in a country of the Territory, or
such Product Registration, has been revoked, or an injunction or warning letter (or the
like) based on regulatory problems with a Product is issued and pending;

(iii) a corrective or preventive action or a recall is requested or voluntarily
performed;

(iv) Insulet materially breaches its obligations under Section 1.2;

(v) Distributor, having used commercially reasonable efforts, does not obtain listing
of the Products with reimbursement authorities in a country of the Territory;

(vi) Insulet is in material breach of this Agreement;

(vii) deliveries of Products are delayed by Insulet by more than thirty (30) days after
the delivery date specified in the Order;

(vii) Insulet suspends shipments of Products in accordance with Section 5.1;

(viii) the number of PODs delivered per Customer decreases during the Term due to
reasons in Insulet’s responsibility including, without limitation, new version of PODs
containing more insulin; or

(viii) a Force Majeure event prevents the supply, purchase, distribution, import,
marketing or sale of Products under this Agreement.

Upon occurrence of an event listed in this Section III of Exhibit III and until the amendment to
this Exhibit III containing the adjusted Calendar Year Minimums is in effect, the Calendar Year
Minimums shall not apply.

Any equitable adjustment to the Calendar Year Minimum agreed to by the Parties shall be
proportional to the share of the market in the Territory affected by the reason for the equitable
adjustment. The share of the market in the Territory affected by the reason for the

 

 

equitable adjustment shall be the greater of: (a) the projected market share set forth in the table
below; (b) the actual market share during the most recent twelve months; and (c) the market share
set forth in the most recent forecast pursuant to Section 4.3.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	[# of Pods	 	Year 1	 	 	Year 2	 	 	Year 3	 	 	Year 4	 	 	Year 5]	 
	Germany
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	France
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Netherlands
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Australia
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	UK
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Nordics
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Switzerland
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	China
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Total
	 	 	100	%	 	 	100	%	 	 	100	%	 	 	100	%	 	 	100	%

 

 

EXHIBIT IV

Variances

As set forth in Sections 4.3 of this Agreement, the forecasted amounts for the 4 quarters of the
forecast shall constitute a binding and firm purchase order, provided, however, that the Orders
actually issued to Insulet pursuant to Section 4.5 vary in accordance with the following table.

	 	 	 	 	 
	 	 	Order Flexibility Up	 	Order Flexibility
	 	 	(expressed as a	 	Down (expressed as a
	Period of Forecast in	 	percentage of the	 	percentage of the
	any Calendar Year	 	forecasted amount)	 	forecasted amount)
	Calendar Quarter 1
	 	[***]	 	[***]
	Calendar Quarter 2
	 	[***]	 	[***]
	Calendar Quarter 3
	 	[***]	 	[***]
	Calendar Quarter 4
	 	[***]	 	[***]

 

 

EXHIBIT V

Business PlansExhibit 10.24(a)

Exhibit 10.24(a)

SYNAPTICS INCORPORATED

2010 INCENTIVE COMPENSATION PLAN

1. Purpose. The purpose of this PLAN (the “Plan”) is to assist SYNAPTICS INCORPORATED, a
Delaware corporation (the “Company”) and its Related Entities in attracting, motivating, retaining
and rewarding high-quality executives and other Employees, officers, Directors and Consultants by
enabling such persons to acquire or increase a proprietary interest in the Company in order to
strengthen the mutuality of interests between such persons and the Company’s stockholders, and
providing such persons with annual and long term performance incentives to expend their maximum
efforts in the creation of stockholder value. The Plan is intended to qualify certain
compensation awarded under the Plan for tax deductibility under Section 162(m) of the Code (as
hereafter defined) to the extent deemed appropriate by the Committee.

2. Definitions. For purposes of the Plan, the following terms shall be defined as set forth
below, in addition to such terms defined in Section 1 hereof.

(a) “Annual Incentive Award” means a conditional right granted to a Participant under Section
7(c) hereof to receive a cash payment, Stock or other Award, unless otherwise determined by the
Committee, after the end of a specified fiscal year.

(b) “Award” means any Option, Stock Appreciation Right, Restricted Stock, Deferred Stock Unit,
Stock granted as a bonus or in lieu of another award, Dividend Equivalent, Other Stock-Based Award,
Performance Award or Annual Incentive Award, together with any other right or interest, granted to
a Participant under the Plan.

(c) “Beneficiary” means the person, persons, trust or trusts which have been designated by a
Participant in his or her most recent written beneficiary designation filed with the Committee to
receive the benefits specified under the Plan upon such Participant’s death or to which Awards or
other rights are transferred if and to the extent permitted under Section 10(b) hereof. If, upon a
Participant’s death, there is no designated Beneficiary or surviving designated Beneficiary, then
the term Beneficiary means the person, persons, trust or trusts entitled by will or the laws of
descent and distribution to receive such benefits.

(d) “Beneficial Owner”, “Beneficially Owning” and “Beneficial Ownership” shall have the
meanings ascribed to such terms in Rule 13d-3 under the Exchange Act and any successor to such
Rule.

(e) “Board” means the Company’s Board of Directors.

(f) “Cause” shall, with respect to any Participant, have the equivalent meaning (or the same
meaning as “cause” or “for cause”) set forth in any employment, consulting, change in control or
other agreement for the performance of services between the Participant and the Company or a
Related Entity or, in the absence of any such agreement or any such definition in such agreement,
such term shall mean (i) the failure by the Participant to perform his or her duties as assigned by
the Company (or a Related Entity) in a reasonable manner, (ii) any violation or breach by the
Participant of his or her employment, consulting or other similar agreement with the Company (or a
Related Entity), if any, (iii) any violation or breach by the Participant of his or her
non-competition and/or non-disclosure agreement with the Company (or a Related Entity), if any,
(iv) any act by the Participant of dishonesty or bad faith with respect to the Company (or a
Related Entity), (v) chronic addiction to alcohol, drugs or other similar substances affecting the
Participant’s work performance, or (vi) the commission by the Participant of any act, misdemeanor,
or crime reflecting unfavorably upon the Participant or the Company or any Related Entity. The
good faith determination by the Committee of whether the Participant’s Continuous Service was
terminated by the Company for “Cause” shall be final and binding for all purposes hereunder.

(g) “Change in Control” means a Change in Control as defined with related terms in Section 9
of the Plan.

(h) “Code” means the Internal Revenue Code of 1986, as amended from time to time, including
regulations thereunder and successor provisions and regulations thereto.

 

1

 

(i) “Committee” means a committee designated by the Board to administer the Plan; provided,
however, that the Committee shall consist of at least two directors, and each member of which shall
be (i) a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, unless
administration of the Plan by “non-employee directors” is not then required in order for exemptions
under Rule 16b-3 to apply to transactions under the Plan, and (ii) an “outside director” within the
meaning of Section 162(m) of the Code, unless administration of the Plan by “outside directors” is
not then required in order to qualify for tax deductibility under Section 162(m) of the Code.

(j) “Consultant” means any person (other than an Employee or a Director, solely with respect
to rendering services in such person’s capacity as a director) who is engaged by the Company or any
Related Entity to render consulting or advisory services to the Company or such Related Entity.

(k) “Continuous Service” means uninterrupted provision of services to the Company in any
capacity of Employee, Director, or Consultant. Continuous Service shall not be considered to be
interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any
Related Entities, or any successor entities, in any capacity of Employee Director, or Consultant,
or (iii) any change in status as long as the individual remains in the service of the Company or a
Related Entity in any capacity of Employee, Director, or Consultant (except as otherwise provided
in the Option Agreement). An approved leave of absence shall include sick leave, military leave,
or any other authorized personal leave.

(l) “Corporate Transaction” means a Corporate Transaction as defined in Section 9(b)(i) of the
Plan.

(m) “Covered Employee” means an Eligible Person who is a Covered Employee as specified in
Section 7(e) of the Plan.

(n) “Deferred Stock Unit” means a right, granted to a Participant under Section 6(e) hereof,
to receive Stock, cash or a combination thereof at the end of a specified deferral period.

(o) “Director” means a member of the Board or the board of directors of any Related Entity.

(p) “Disability” means a permanent and total disability (within the meaning of Section 22(e)
of the Code), as determined by a medical doctor satisfactory to the Committee.

(q) “Dividend Equivalent” means a right, granted to a Participant under Section 6(g) hereof,
to receive cash, Stock, other Awards or other property equal in value to dividends paid with
respect to a specified number of shares of Stock, or other periodic payments.

(r) “Effective Date” means the effective date of the Plan, which shall be the date of
stockholder approval of this Plan.

(s) “Eligible Person” means each Executive Officer of the Company (as defined under the
Exchange Act) and other officers, Directors and Employees of the Company or of any Related Entity,
and Consultants with the Company or any Related Entity. The foregoing notwithstanding, only
employees of the Company, the Parent, or any Subsidiary shall be Eligible Persons for purposes of
receiving any Incentive Stock Options. An Employee on leave of absence may be considered as still
in the employ of the Company or a Related Entity for purposes of eligibility for participation in
the Plan.

(t) “Employee” means any person, including an officer or Director, who is an employee of the
Company or any Related Entity. The Payment of a director’s fee by the Company or a Related Entity
shall not be sufficient to constitute “employment” by the Company.

(u) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time,
including rules thereunder and successor provisions and rules thereto.

 

2

 

(v) “Executive Officer” means an executive officer of the Company as defined under the
Exchange Act.

(w) “Fair Market Value” means the fair market value of Stock, Awards or other property as
determined by the Committee, or under procedures established by the Committee. Unless otherwise
determined by the Committee, the Fair Market Value of Stock as of any given date shall be the
closing sale price per share reported on a consolidated basis for stock listed on the principal
stock exchange or market on which Stock is traded on the date as of which such value is being
determined or, if there is no sale on that date, then on the last previous day on which a sale was
reported.

(x) “Good Reason” shall, with respect to any Participant, have the equivalent meaning (or the
same meaning as “good reason” or “for good reason”) set forth in any employment, consulting, change
in control or other agreement for the performance of services between the Participant and the
Company or a Related Entity or, in the absence of any such agreement, such term shall mean (i) the
assignment to the Participant of any duties inconsistent in any respect with the Participant’s
position (including status, offices, titles and reporting requirements), authority, duties or
responsibilities as assigned by the Company (or a Related Entity), or any other action by the
Company (or a Related Entity) which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company (or a Related Entity) promptly after
receipt of notice thereof given by the Participant; (ii) any failure by the Company (or a Related
Entity) to comply with its obligations to the Participant as agreed upon, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the
Company (or a Related Entity) promptly after receipt of notice thereof given by the Participant;
(iii) the Company’s (or Related Entity’s) requiring the Participant to be based at any office or
location outside of fifty miles from the location of employment as of the date of Award, except for
travel reasonably required in the performance of the Participant’s responsibilities; (iv) any
purported termination by the Company (or a Related Entity) of the Participant’s Continuous Service
otherwise than for Cause as defined in Section 2(f), or by reason of the Participant’s Disability
as defined in Section 2(q). For purposes of this Section 2(y), any good faith determination of
“Good Reason” made by the Committee shall be conclusive.

(y) “Incentive Stock Option” means any Option intended to be designated as an incentive stock
option within the meaning of Section 422 of the Code or any successor provision thereto.

(z) “Incumbent Board” means the Incumbent Board as defined in Section 9(b)(ii) of the Plan.

(aa) “Option” means a right granted to a Participant under Section 6(b) hereof, to purchase
Stock or other Awards at a specified price during specified time periods.

(bb) “Optionee” means a person to whom an Option is granted under this Plan or any person who
succeeds to the rights of such person under this Plan.

(cc) “Other Stock-Based Awards” means Awards granted to a Participant under Section 6(h)
hereof.

(dd) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in
Section 424(e) of the Code.

(ee) “Participant” means a person who has been granted an Award under the Plan which remains
outstanding, including a person who is no longer an Eligible Person.

(ff) “Performance Award” means a right, granted to an Eligible Person under Section 7 hereof,
to receive Awards based upon performance criteria specified by the Committee.

 

3

 

(gg) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange
Act and used in Sections 13(d) and 14(d) thereof, and shall include a “group” as defined in Section
13(d) thereof.

(hh) “Related Entity” means any Parent, Subsidiary, and any business, corporation,
partnership, limited liability company, or other entity designated by the Committee in which the
Company, a Parent, or a Subsidiary, directly or indirectly, holds a substantial ownership interest.

(ii) “Restricted Stock” means Stock granted to a Participant under Section 6(d) hereof, that
is subject to certain restrictions and to a risk of forfeiture.

(jj) “Rule 16b-3” and “Rule 16a-1(c)(3)” means Rule 16b-3 and Rule 16a-1(c)(3), as from time
to time in effect and applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.

(kk) “Stock” means the Company’s Common Stock, and such other securities as may be substituted
(or resubstituted) for Stock pursuant to Section 10(c) hereof.

(ll) “Stock Appreciation Right” means a right granted to a Participant under Section 6(c)
hereof.

(mm) “Subsidiary” means a “subsidiary corporation” whether now or hereafter existing, as
defined in Section 424(f) of the Code.

3. Administration.

(a) Authority of the Committee. The Plan shall be administered by the Committee. The
Committee shall have full and final authority, in each case subject to and consistent with the
provisions of the Plan, to select Eligible Persons to become Participants, grant Awards, determine
the type, number and other terms and conditions of, and all other matters relating to, Awards,
prescribe Award agreements (which need not be identical for each Participant) and rules and
regulations for the administration of the Plan, construe and interpret the Plan and Award
agreements and correct defects, supply omissions or reconcile inconsistencies therein, and to make
all other decisions and determinations as the Committee may deem necessary or advisable for the
administration of the Plan. In exercising any discretion granted to the Committee under the Plan
or pursuant to any Award, the Committee shall not be required to follow past practices, act in a
manner consistent with past practices, or treat any Eligible Person in a manner consistent with the
treatment of other Eligible Persons.

(b) Manner of Exercise of Committee Authority. Any action of the Committee shall be final,
conclusive and binding on all persons, including the Company, its Related Entities, Participants,
Beneficiaries, transferees under Section 10(b) hereof or other persons claiming rights from or
through a Participant, and stockholders. The express grant of any specific power to the Committee,
and the taking of any action by the Committee, shall not be construed as limiting any power or
authority of the Committee. The Committee may delegate to officers or managers of the Company or
any Related Entity, or committees thereof, the authority, subject to such terms as the Committee
shall determine, (i) to perform administrative functions, (ii) with respect to Participants not
subject to Section 16 of the Exchange Act, to perform such other functions as the Committee may
determine, and (iii) with respect to Participants subject to Section 16, to perform such other
functions of the Committee as the Committee may determine to the extent performance of such
functions will not result in the loss of an exemption under Rule 16b-3 otherwise available for
transactions by such persons, in each case to the extent permitted under applicable law and subject
to the requirements set forth in Section 7(d). The Committee may appoint agents to assist it in
administering the Plan.

(c) Limitation of Liability. The Committee, and each member thereof, shall be entitled to, in
good faith, rely or act upon any report or other information furnished to him or her by any
Executive Officer, other officer or Employee, the Company’s independent auditors, Consultants or
any other agents assisting in the administration of the Plan. Members of the Committee, and any
officer or Employee acting at the direction or on
behalf of the Committee, shall not be personally liable for any action or determination taken
or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action or determination.

 

4

 

4. Stock Subject to Plan.

(a) Limitation on Overall Number of Shares Subject to Awards. Subject to adjustment as
provided in Section 10(c) hereof, the total number of shares of Stock reserved and available for
delivery in connection with Awards under the Plan shall be the number of shares of Stock available
for issuance under the Company’s Amended and Restated 2001 Incentive Compensation Plan (the “2001
Plan”) that are not subject to an outstanding award under the 2001 Plan as of the date of
stockholder approval of this Plan (and such shares shall no longer be available for issuance under
the 2001 Plan). Any shares of Stock delivered under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares.

(b) Availability of Shares Not Issued pursuant to Awards. In the event that any Option or
other Award granted hereunder is exercised through the withholding of shares of Stock from the
Award by the Company or withholding tax liabilities arising from such Option or other Award are
satisfied by the withholding of shares of Stock from the Award by the Company, then only the number
of shares of Stock issued net of the shares of Stock withheld shall be counted as issued for
purposes of determining the maximum number of shares of Stock available for grant under the Plan,
subject to Section 4(c) below.

(c) Limitation on Number of Incentive Stock Option Shares. Subject to adjustment as provided
in Section 10(c) hereof, the number of shares of Stock which may be issued pursuant to Incentive
Stock Options shall be the lesser of (i) the number of shares of Stock that may be subject to
Awards under Section 4(a), or (ii) 15,000,000.

(d) Application of Limitations. The limitation contained in this Section 4 shall apply not
only to Awards that are settled by the delivery of shares of Stock but also to Awards relating to
shares of Stock but settled only in cash (such as cash-only Stock Appreciation Rights). The
Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the
number of shares of Stock actually delivered differs from the number of shares previously counted
in connection with an Award.

5. Eligibility; Per-Person Award Limitations. Awards may be granted under the Plan only to
Eligible Persons. In each fiscal year during any part of which the Plan is in effect, an Eligible
Person may not be granted Awards relating to more than 1,000,000 shares of Stock, subject to
adjustment as provided in Section 10(c), under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g),
6(h), 7(b) and 7(c). In addition, the maximum amount that may be earned as an Annual Incentive
Award or other cash Award in any fiscal year by any one Participant shall be $2,000,000, and the
maximum amount that may be earned as a Performance Award or other cash Award in respect of a
performance period by any one Participant shall be $5,000,000.

6. Specific Terms of Awards.

(a) General. Awards may be granted on the terms and conditions set forth in this Section 6.
In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or
thereafter (subject to Section 10(e)), such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture
of Awards in the event of termination of Continuous Service by the Participant and terms permitting
a Participant to make elections relating to his or her Award. The Committee shall retain full
power and discretion to accelerate, waive or modify, at any time, any term or condition of an Award
that is not mandatory under the Plan. Except in cases in which the Committee is authorized to
require other forms of consideration under the Plan, or to the extent other forms of consideration
must be paid to satisfy the requirements of Delaware law, no consideration other than services may
be required for the grant (but not the exercise) of any Award.

 

5

 

(b) Options. The Committee is authorized to grant Options to Participants on the following
terms and conditions:

(i) Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a
Stock Option Agreement. Such Stock Option Agreement shall be subject to all applicable terms and
conditions of the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered into under the
Plan need not be identical.

(ii) Number of Shares. Each Stock Option Agreement shall specify the number of shares of
Stock that are subject to the Option and shall provide for the adjustment of such number in
accordance with Section 10(c) hereof. The Stock Option Agreement shall also specify whether the
Option is an Incentive Stock Option or a Non-Qualified Stock Option.

(iii) Exercise Price.

(A) In General. Each Stock Option Agreement shall state the price at which shares of Stock
subject to the Option may be purchased (the “Exercise Price”), which shall be not less than 100% of
the Fair Market Value of the Stock on the date of grant.

(B) Ten Percent Stockholder. If an individual owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined voting
power of all classes of stock of the Company or any Related Entity, the Exercise Price of an
Incentive Stock Option must be at least 110% of the Fair Market Value of a share of Stock on the
date of grant and such Incentive Stock Option by its terms is not exercisable after the expiration
of five years from the date of grant.

(iv) Time and Method of Exercise. The Committee shall determine the time or times at which or
the circumstances under which an Option may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), provided that in the case of
an Optionee who is not an officer, Director, or Consultant of the Company or a Related Entity, his
or her Options shall become exercisable at least as rapidly as 20% per year, over a 5 year period
commencing on the date of the grant, unless a determination is made by counsel for the Company that
such vesting requirements are not required in the circumstances under applicable federal or state
securities laws. The Committee may also determine the time or times at which Options shall cease
to be or become exercisable following termination of Continuous Service or upon other conditions;
provided, however, if the Optionee’s Continuous Service is terminated for any reason other than
Cause, that portion of the Option that is exercisable as of the date of termination shall remain
exercisable for at least 6 months from the date of termination if by reason of death or Disability,
and for at least 30 days from the date of termination if by reason other than the Optionee’s death
or Disability. The Committee may determine the methods by which such exercise price may be paid or
deemed to be paid (including in the discretion of the Committee a cashless exercise procedure), the
form of such payment, including, without limitation, cash, Stock, other Awards or awards granted
under other plans of the Company or a Related Entity, or other property (including notes or other
contractual obligations of Participants to make payment on a deferred basis), and the methods by or
forms in which Stock will be delivered or deemed to be delivered to Participants.

(v) Incentive Stock Options. The terms of any Incentive Stock Option granted under the Plan
shall comply in all respects with the provisions of Section 422 of the Code. Anything in the Plan
to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options (including
any Stock Appreciation Rights in tandem therewith) shall be interpreted, amended or altered, nor
shall any discretion or authority granted under the Plan be exercised, so as to disqualify either
the Plan or any Incentive Stock Option under Section 422 of the Code, unless the Participant has
first requested the change that will result in such disqualification. Thus, if and to the extent
required to comply with Section 422 of the Code, Options granted as Incentive Stock Options shall
be subject to the following special terms and conditions:

(A) the Option shall not be exercisable more than seven years after the date such Incentive
Stock Option is granted; provided, however, that if a Participant owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting
power of all
classes of stock of the Company or any Parent Corporation and the Incentive Stock Option is
granted to such Participant, the term of the Incentive Stock Option shall be (to the extent
required by the Code at the time of the grant) for no more than five years from the date of grant;
and

 

6

 

(B) The aggregate Fair Market Value (determined as of the date the Incentive Stock Option is
granted) of the shares of stock with respect to which Incentive Stock Options granted under the
Plan and all other option plans of the Company or its Parent Corporation during any calendar year
are exercisable for the first time by the Participant during any calendar year shall not (to the
extent required by the Code at the time of the grant) exceed $100,000.

(vi) Repurchase Rights. The Committee shall have the discretion to grant Options which are
exercisable for unvested shares of Common Stock. Should the Optionee’s Continuous Service cease
while holding such unvested shares, the Company shall have the right to repurchase, at the exercise
price paid per share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and the appropriate
vesting schedule for the purchased shares) shall be established by the Committee and set forth in
the document evidencing such repurchase right.

(c) Stock Appreciation Rights. The Committee is authorized to grant Stock Appreciation Rights
to Participants on the following terms and conditions:

(i) Right to Payment. A Stock Appreciation Right shall confer on the Participant to whom it
is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of
one share of stock on the date of exercise, over (B) the grant price of the Stock Appreciation
Right as determined by the Committee. The grant price of a Stock Appreciation Right shall not be
less than the Fair Market Value of a share of Stock on the date of grant.

(ii) Other Terms. The Committee shall determine at the date of grant or thereafter, the time
or times at which and the circumstances under which a Stock Appreciation Right may be exercised in
whole or in part (including based on achievement of performance goals and/or future service
requirements), the time or times at which Stock Appreciation Rights shall cease to be or become
exercisable following termination of Continuous Service or upon other conditions, the method of
exercise, method of settlement, form of consideration payable in settlement, method by or forms in
which Stock will be delivered or deemed to be delivered to Participants, whether or not a Stock
Appreciation Right shall be in tandem or in combination with any other Award, and any other terms
and conditions of any Stock Appreciation Right. Stock Appreciation Rights may be either
freestanding or in tandem with other Awards.

(d) Restricted Stock. The Committee is authorized to grant Restricted Stock to Participants
on the following terms and conditions:

(i) Grant and Restrictions. Restricted Stock shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, or
as otherwise provided in this Plan. The restrictions may lapse separately or in combination at
such times, under such circumstances (including based on achievement of performance goals and/or
future service requirements), in such installments or otherwise, as the Committee may determine at
the date of grant or thereafter provided that the restrictions shall not lapse in less than three
years or less than one year in the case of performance-based Restricted Stock except that a total
of not more than 400,000 shares of Common Stock may be subject of restricted stock and deferred
stock units without regard to such restriction period. Except to the extent restricted under the
terms of the Plan and any Award agreement relating to the Restricted Stock, a Participant granted
Restricted Stock shall have all of the rights of a stockholder, including the right to vote the
Restricted Stock and the right to receive dividends thereon (subject to any mandatory reinvestment
or other requirement imposed by the Committee). During the restricted period applicable to the
Restricted Stock, subject to Section 10(b) below, the Restricted Stock may not be sold,
transferred, pledged, hypothecated, margined or otherwise encumbered by the Participant.

(ii) Forfeiture. Except as otherwise determined by the Committee at the time of the Award,
upon termination of a Participant’s Continuous Service during the applicable restriction period,
the Participant’s Restricted Stock that is at that time subject to restrictions shall be forfeited
(or, in accordance with
Section 6(b)(vi), reacquired by the Company); provided that the Committee may provide, by rule
or regulation or in any Award agreement, or may determine in any individual case, that restrictions
or forfeiture conditions relating to Restricted Stock shall be waived in whole or in part in the
event of terminations resulting from specified causes, and the Committee may in other cases waive
in whole or in part the forfeiture of Restricted Stock.

 

7

 

(iii) Certificates for Stock. Restricted Stock granted under the Plan may be evidenced in
such manner as the Committee shall determine. If certificates representing Restricted Stock are
registered in the name of the Participant, the Committee may require that such certificates bear an
appropriate legend referring to the terms, conditions and restrictions applicable to such
Restricted Stock, that the Company retain physical possession of the certificates, and that the
Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted
Stock.

(iv) Dividends and Splits. As a condition to the grant of an Award of Restricted Stock, the
Committee may require that any cash dividends paid on a share of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock or applied to the purchase of additional Awards
under the Plan. Unless otherwise determined by the Committee, Stock distributed in connection with
a Stock split or Stock dividend, and other property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to
which such Stock or other property has been distributed.

(e) Deferred Stock Units. The Committee is authorized to grant Deferred Stock Units to
Participants, which are rights to receive Stock, cash, or a combination thereof at the end of a
specified time period, subject to the following terms and conditions:

(i) Award and Restrictions. Satisfaction of an Award of Deferred Stock Units shall occur upon
expiration of the time specified for such Deferred Stock Units by the Committee (or, if permitted
by the Committee, as elected by the Participant). In addition, Deferred Stock Units shall be
subject to such restrictions (which may include a risk of forfeiture) as the Committee may impose,
if any, which restrictions may lapse at the expiration of the time period or at earlier specified
times (including based on achievement of performance goals and/or future service requirements),
separately or in combination, in installments or otherwise, as the Committee may determine provided
that the restrictions shall not lapse in less than three years or less than one year in the case of
performance-based Deferred Stock Units except that a total of not more than 400,000 shares of
Common Stock may be the subject of restricted stock and deferred stock units without regard to such
restriction period. The terms of an Award of Deferred Stock Units shall be set forth in a written
Award Agreement that shall contain provisions determined by the Committee and not inconsistent with
the Plan. Deferred Stock Units may be satisfied by delivery of Stock, cash equal to the Fair
Market Value of the specified number of shares of Stock covered by the Deferred Stock Units, or a
combination thereof, as determined by the Committee at the date of grant or thereafter. Prior to
satisfaction of an Award of Deferred Stock Units, an Award of Deferred Stock Units carries no
voting or dividend or other rights associated with share ownership. Notwithstanding the foregoing
or any other provision of the Plan, (A) all grants of Deferred Stock Units shall comply with the
vesting terms of Section 6(b)(iv), and (B) unless otherwise exempt from Section 409A of the Code or
otherwise specifically determined by the Committee, each Award of Deferred Stock Units shall be
structured to avoid the imposition of any excise tax under Section 409A of the Code.

(ii) Forfeiture. Except as otherwise determined by the Committee, upon termination of a
Participant’s Continuous Service during the applicable time period thereof to which forfeiture
conditions apply (as provided in the Award agreement evidencing the Deferred Stock Units), the
Participant’s Deferred Stock Units (other than those Deferred Stock Units subject to deferral at
the election of the Participant) shall be forfeited; provided that the Committee may provide, by
rule or regulation or in any Award agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Deferred Stock Units shall be waived in whole or
in part in the event of terminations resulting from specified causes, and the Committee may in
other cases waive in whole or in part the forfeiture of Deferred Stock Units.

(iii) Dividend Equivalents. Unless otherwise determined by the Committee at date of grant,
any Dividend Equivalents that are granted with respect to any Award of Deferred Stock Units shall
be either (A) paid with respect to such Deferred Stock Units at the dividend payment date in cash
or in shares of unrestricted Stock having a Fair Market Value equal to the amount of such
dividends, or (B) deferred with respect to
such Deferred Stock Units and the amount or value thereof automatically deemed reinvested in
additional Deferred Stock Units, other Awards or other investment vehicles, as the Committee shall
determine or permit the Participant to elect.

 

8

 

(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized to grant Stock
as a bonus, or to grant Stock or other Awards in lieu of Company obligations to pay cash or deliver
other property under the Plan or under other plans provided each such Award shall have a restricted
period of not less than three years or not less than one year in the case of performance-based
Awards or compensatory arrangements, provided that, in the case of Participants subject to Section
16 of the Exchange Act, the amount of such grants remains within the discretion of the Committee to
the extent necessary to ensure that acquisitions of Stock or other Awards are exempt from liability
under Section 16(b) of the Exchange Act. Stock or Awards granted hereunder shall be subject to
such other terms as shall be determined by the Committee.

(g) Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents to a
Participant entitling the Participant to receive cash, Stock, other Awards, or other property equal
in value to dividends paid with respect to a specified number of shares of Stock, or other periodic
payments. Dividend Equivalents may be awarded on a free-standing basis or in connection with
another Award. The Committee may provide that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been reinvested in additional Stock, Awards, or other
investment vehicles, and subject to such restrictions on transferability and risks of forfeiture,
as the Committee may specify. Notwithstanding any other provision of the Plan, unless otherwise
exempt from Section 409A of the Code or otherwise specifically determined by the Committee, each
Dividend Equivalent shall be structured to avoid the imposition of any excise tax under Section
409A of the Code.

(h) Other Stock-Based Awards. The Committee is authorized, subject to limitations under
applicable law, to grant to Participants such other Awards that may be denominated or payable in,
valued in whole or in part by reference to, or otherwise based on, or related to, Stock, as deemed
by the Committee to be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or exchangeable into Stock,
purchase rights for Stock, Awards with value and payment contingent upon performance of the Company
or any other factors designated by the Committee, and Awards valued by reference to the book value
of Stock or the value of securities of or the performance of specified Related Entities or business
units. The Committee shall determine the terms and conditions of such Awards provided each such
Award shall have a restricted period of not less than three years or not less than one year in the
case of performance-based Awards. Stock delivered pursuant to an Award in the nature of a purchase
right granted under this Section 6(h) shall be purchased for such consideration (including without
limitation loans from the Company or a Related Entity), paid for at such times, by such methods,
and in such forms, including, without limitation, cash, Stock, other Awards or other property, as
the Committee shall determine. The Committee shall have the discretion to grant such other Awards
which are exercisable for unvested shares of Common Stock. Should the Optionee’s Continuous
Service cease while holding such unvested shares, the Company shall have the right to repurchase,
at the exercise price paid per share, any or all of those unvested shares. The terms upon which
such repurchase right shall be exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be established by the Committee and
set forth in the document evidencing such repurchase right. Cash awards, as an element of or
supplement to any other Award under the Plan, may also be granted pursuant to this Section 6(h).
Notwithstanding any other provision of the Plan, unless otherwise exempt from Section 409A of the
Code or otherwise specifically determined by the Committee, each such Award shall be structured to
avoid the imposition of any excise tax under Section 409A of the Code.

7. Performance and Annual Incentive Awards.

(a) Performance Conditions. The right of a Participant to exercise or receive a grant or
settlement of any Award, and the timing thereof, may be subject to such performance conditions as
may be specified by the Committee. The Committee may use such business criteria and other measures
of performance as it may deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce the amounts payable under any Award subject to performance
conditions, except as limited under Sections 7(b) and 7(c) hereof in the case of a Performance
Award or Annual Incentive Award intended to qualify under Code Section 162(m).

 

9

 

(b) Performance Awards Granted to Designated Covered Employees. If and to the extent that the
Committee determines that a Performance Award to be granted to an Eligible Person who is designated
by the Committee as likely to be a Covered Employee should qualify as “performance-based
compensation” for purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Performance Award shall be contingent upon achievement of pre-established performance goals and
other terms set forth in this Section 7(b).

(i) Performance Goals Generally. The performance goals for such Performance Awards shall
consist of one or more business criteria and a targeted level or levels of performance with respect
to each of such criteria, as specified by the Committee consistent with this Section 7(b).
Performance goals shall be objective and shall otherwise meet the requirements of Code Section
162(m) and regulations thereunder including the requirement that the level or levels of performance
targeted by the Committee result in the achievement of performance goals being “substantially
uncertain.” The Committee may determine that such Performance Awards shall be granted, exercised
and/or settled upon achievement of any one performance goal or that two or more of the performance
goals must be achieved as a condition to grant, exercise and/or settlement of such Performance
Awards. Performance goals may differ for Performance Awards granted to any one Participant or to
different Participants.

(ii) Business Criteria. One or more of the following business criteria for the Company, on a
consolidated basis, and/or specified Related Entities or business units of the Company (except with
respect to the total stockholder return and earnings per share criteria), shall be used exclusively
by the Committee in establishing performance goals for such Performance Awards: (1) total
stockholder return; (2) such total stockholder return as compared to total return (on a comparable
basis) of a publicly available index such as, but not limited to, the Standard & Poor’s 500 Stock
Index or the S&P Specialty Retailer Index; (3) net income; (4) pretax earnings; (5) earnings before
interest expense, taxes, depreciation and amortization; (6) pretax operating earnings after
interest expense and before bonuses, service fees, and extraordinary or special items; (7)
operating margin; (8) earnings per share; (9) return on equity; (10) return on capital; (11) return
on investment; (12) operating earnings; (13) working capital or inventory; (14) operating earnings
before the expense for share based awards; and (15) ratio of debt to stockholders’ equity. One or
more of the foregoing business criteria shall also be exclusively used in establishing performance
goals for Annual Incentive Awards granted to a Covered Employee under Section 7(c) hereof that are
intended to qualify as “performance-based compensation under Code Section 162(m).

(iii) Performance Period; Timing For Establishing Performance Goals. Achievement of
performance goals in respect of such Performance Awards shall be measured over a performance period
of up to seven years, as specified by the Committee. Performance goals shall be established not
later than 90 days after the beginning of any performance period applicable to such Performance
Awards, or at such other date as may be required or permitted for “performance-based compensation”
under Code Section 162(m).

(iv) Performance Award Pool. The Committee may establish a Performance Award pool, which
shall be an unfunded pool, for purposes of measuring Company performance in connection with
Performance Awards. The amount of such Performance Award pool shall be based upon the achievement
of a performance goal or goals based on one or more of the business criteria set forth in Section
7(b)(ii) hereof during the given performance period, as specified by the Committee in accordance
with Section 7(b)(iii) hereof. The Committee may specify the amount of the Performance Award pool
as a percentage of any of such business criteria, a percentage thereof in excess of a threshold
amount, or as another amount which need not bear a strictly mathematical relationship to such
business criteria.

(v) Settlement of Performance Awards; Other Terms. Settlement of such Performance Awards
shall be in cash, Stock, other Awards or other property, in the discretion of the Committee. The
Committee may, in its discretion, reduce the amount of a settlement otherwise to be made in
connection with such Performance Awards. The Committee shall specify the circumstances in which
such Performance Awards shall be paid or forfeited in the event of termination of Continuous
Service by the Participant prior to the end of a performance period or settlement of Performance
Awards.

 

10

 

(c) Annual Incentive Awards Granted to Designated Covered Employees. The Committee may,
within its discretion, grant one or more Annual Incentive Awards to any Eligible Person, subject to
the terms and conditions set forth in this Section 7(c).

(i) Annual Incentive Award Pool. The Committee may establish an Annual Incentive Award pool,
which shall be an unfunded pool, for purposes of measuring Company performance in connection with
Annual Incentive Awards. In the case of Annual Incentive Awards intended to qualify as
“performance-based compensation” for purposes of Code Section 162(m), the amount of such Annual
Incentive Award pool shall be based upon the achievement of a performance goal or goals based on
one or more of the business criteria set forth in Section 7(b)(ii) hereof during the given
performance period, as specified by the Committee in accordance with Section 7(b)(iii) hereof. The
Committee may specify the amount of the Annual Incentive Award pool as a percentage of any such
business criteria, a percentage thereof in excess of a threshold amount, or as another amount which
need not bear a strictly mathematical relationship to such business criteria.

(ii) Potential Annual Incentive Awards. Not later than the end of the 90th day of each fiscal
year, or at such other date as may be required or permitted in the case of Awards intended to be
“performance-based compensation” under Code Section 162(m), the Committee shall determine the
Eligible Persons who will potentially receive Annual Incentive Awards, and the amounts potentially
payable thereunder, for that fiscal year, either out of an Annual Incentive Award pool established
by such date under Section 7(c)(i) hereof or as individual Annual Incentive Awards. In the case of
individual Annual Incentive Awards intended to qualify under Code Section 162(m), the amount
potentially payable shall be based upon the achievement of a performance goal or goals based on one
or more of the business criteria set forth in Section 7(b)(ii) hereof in the given performance
year, as specified by the Committee; in other cases, such amount shall be based on such criteria as
shall be established by the Committee. In all cases, the maximum Annual Incentive Award of any
Participant shall be subject to the limitation set forth in Section 5 hereof.

(iii) Payout of Annual Incentive Awards. After the end of each fiscal year, the Committee
shall determine the amount, if any, of (A) the Annual Incentive Award pool, and the maximum amount
of potential Annual Incentive Award payable to each Participant in the Annual Incentive Award pool,
or (B) the amount of potential Annual Incentive Award otherwise payable to each Participant. The
Committee may, in its discretion, determine that the amount payable to any Participant as an Annual
Incentive Award shall be reduced from the amount of his or her potential Annual Incentive Award,
including a determination to make no Award whatsoever. The Committee shall specify the
circumstances in which an Annual Incentive Award shall be paid or forfeited in the event of
termination of Continuous Service by the Participant prior to the end of a fiscal year or
settlement of such Annual Incentive Award.

(d) Written Determinations. All determinations by the Committee as to the establishment of
performance goals, the amount of any Performance Award pool or potential individual Performance
Awards and as to the achievement of performance goals relating to Performance Awards under Section
7(b), and the amount of any Annual Incentive Award pool or potential individual Annual Incentive
Awards and the amount of final Annual Incentive Awards under Section 7(c), shall be made in writing
in the case of any Award intended to qualify under Code Section 162(m). The Committee may not
delegate any responsibility relating to such Performance Awards or Annual Incentive Awards if and
to the extent required to comply with Code Section 162(m).

(e) Status of Section 7(b) and Section 7(c) Awards Under Code Section 162(m). It is the
intent of the Company that Performance Awards and Annual Incentive Awards under Section 7(b) and
7(c) hereof granted to persons who are designated by the Committee as likely to be Covered
Employees within the meaning of Code Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute “qualified performance-based compensation” within the
meaning of Code Section 162(m) and regulations thereunder. Accordingly, the terms of Sections
7(b), (c), (d) and (e), including the definitions of Covered Employee and other terms used therein,
shall be interpreted in a manner consistent with Code Section 162(m) and regulations thereunder.
The foregoing notwithstanding, because the Committee cannot determine with certainty whether a
given Participant will be a Covered Employee with respect to a fiscal year that has not yet been
completed, the term Covered Employee as used herein shall mean only a person designated by the
Committee, at the time of grant of Performance Awards or an Annual Incentive Award, as likely to be
a Covered Employee with respect to that fiscal year. If any provision of the Plan or any agreement
relating to such Performance Awards or Annual Incentive Awards does not
comply or is inconsistent with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent necessary to conform
to such requirements.

 

11

 

8. Certain Provisions Applicable to Awards or Sales.

(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under the Plan
may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with,
or in substitution or exchange for, any other Award or any award granted under another plan of the
Company, any Related Entity, or any business entity to be acquired by the Company or a Related
Entity, or any other right of a Participant to receive payment from the Company or any Related
Entity. Such additional, tandem, and substitute or exchange Awards may be granted at any time. If
an Award is granted in substitution or exchange for another Award or award, the Committee shall
require the surrender of such other Award or award in consideration for the grant of the new Award.
In addition, Awards may be granted in lieu of cash compensation, including in lieu of cash amounts
payable under other plans of the Company or any Related Entity in which the value of Stock subject
to the Award is equivalent in value to the cash compensation.

(b) Term of Awards. The term of each Award shall be for such period as may be determined by
the Committee or the Board; provided that in no event shall the term of any Option or Stock
Appreciation Right exceed a period of seven years (or such shorter term as may be required in
respect of an Incentive Stock Option under Section 422 of the Code).

(c) Form and Timing of Payment Under Awards; Deferrals. Subject to the terms of the Plan and
any applicable Award agreement, payments to be made by the Company or a Related Entity upon the
exercise of an Option or other Award or settlement of an Award may be made in such forms as the
Committee shall determine, including, without limitation, cash, other Awards or other property, and
may be made in a single payment or transfer, in installments, or on a deferred basis. The
settlement of any Award may be accelerated, and cash paid in lieu of Stock in connection with such
settlement, in the discretion of the Committee or upon occurrence of one or more specified events
(in addition to a Change in Control). Installment or deferred payments may be required by the
Committee (subject to Section 10(e) of the Plan) or permitted at the election of the Participant on
terms and conditions established by the Committee. Payments may include, without limitation,
provisions for the payment or crediting of a reasonable interest rate on installment or deferred
payments or the grant or crediting of Dividend Equivalents or other amounts in respect of
installment or deferred payments denominated in Stock.

(d) Exemptions from Section 16(b) Liability. It is the intent of the Company that this Plan
comply in all respects with applicable provisions of Rule 16b-3 or Rule 16a-1(c)(3) to the extent
necessary to ensure that neither the grant of any Awards to nor other transaction by a Participant
who is subject to Section 16 of the Exchange Act is subject to liability under Section 16(b)
thereof (except for transactions acknowledged in writing to be non-exempt by such Participant).
Accordingly, if any provision of this Plan or any Award agreement does not comply with the
requirements of Rule 16b-3 or Rule 16a-1(c)(3) as then applicable to any such transaction, such
provision will be construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule 16a- I (c)(3) so that such Participant shall avoid liability
under Section 16(b).

(e) Code Section 409A. If and to the extent that the Committee believes that any Awards may
constitute a “nonqualified deferred compensation plan” under Section 409A of the Code, the terms
and conditions set forth in the Award Agreement for that Award shall be drafted in a manner that is
intended to comply with, and shall be interpreted in a manner consistent with, the applicable
requirements of Section 409A of the Code, unless otherwise agreed to in writing by the Participant
and the Company.

(f) No Option Repricing. Other than pursuant to Section 10(c), without approval of the
Company’s stockholders, the Committee shall not be permitted to (A) lower the exercise price per
share of Stock of an Option after it is granted, (B) cancel an Option when the exercise price per
share of Stock exceeds the Fair Market Value of the underlying share of Stock in exchange for
another Award or cash, or (C) take any other action with respect to an Option that may be treated
as a repricing.

 

12

 

9. Change in Control.

(a) Effect of “Change in Control.” If and to the extent provided in the Award, in the event
of a “Change in Control,” as defined in Section 9(b):

(i) The Committee may, within its discretion, accelerate the vesting and exercisability of any
Award carrying a right to exercise that was not previously vested and exercisable as of the time of
the Change in Control, subject to applicable restrictions set forth in Section 10(a) hereof;

(ii) The Committee may, within its discretion, accelerate the exercisability of any Stock
Appreciation Rights and provide for the settlement of such Stock Appreciation Rights for amounts,
in cash;

(iii) The Committee may, within its discretion, lapse the restrictions, deferral of
settlement, and forfeiture conditions applicable to any other Award granted under the Plan and such
Awards may be deemed fully vested as of the time of the Change in Control, except to the extent of
any waiver by the Participant and subject to applicable restrictions set forth in Section 10(a)
hereof; and

(iv) With respect to any such outstanding Award subject to achievement of performance goals
and conditions under the Plan, the Committee may, within its discretion, deem such performance
goals and other conditions as having been met as of the date of the Change in Control.

(b) Definition of “Change in Control.” A “Change in Control” shall be deemed to have occurred
upon:

(i) Approval by the stockholders of the Company of a reorganization, merger, consolidation or
other form of corporate transaction or series of transactions, in each case, with respect to which
persons who were the stockholders of the Company immediately prior to such reorganization, merger
or consolidation or other transaction do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of directors of the reorganized,
merged or consolidated company’s then outstanding voting securities, or a liquidation or
dissolution of the Company or the sale of all or substantially all of the assets of the Company
(unless such reorganization, merger, consolidation or other corporate transaction, liquidation,
dissolution or sale (any such event being referred to as a “Corporate Transaction”) is subsequently
abandoned);

(ii) Individuals who, as of the date on which the Award is granted, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to the date on which the Award was granted whose
election, or nomination for election by the Company’s stockholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the Company) shall be, for
purposes of this Agreement, considered as though such person were a member of the Incumbent Board;
or

(iii) the acquisition (other than from the Company) by any person, entity or “group”, within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act, of more than 50% of
either the then outstanding shares of the Company’s Common Stock or the combined voting power of
the Company’s then outstanding voting securities entitled to vote generally in the election of
directors (hereinafter referred to as the ownership of a “Controlling Interest”) excluding, for
this purpose, any acquisitions by (1) the Company or a Related Entity, (2) any person, entity or
“group” that as of the date on which the Award is granted owns beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a Controlling Interest or
(3) any employee benefit plan of the Company or a Related Entity.

 

13

 

10. General Provisions.

(a) Compliance With Legal and Other Requirements. The Company may, to the extent deemed
necessary or advisable by the Committee, postpone the issuance or delivery of Stock or payment of
other benefits under any Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule or regulation, listing or other
required action with respect to any stock exchange or automated quotation system upon which the
Stock or other Company securities are listed or quoted, or compliance with any other obligation of
the Company, as the Committee, may consider appropriate, and may require any Participant to make
such representations, furnish such information and comply with or be subject to such other
conditions as it may consider appropriate in connection with the issuance or delivery of Stock or
payment of other benefits in compliance with applicable laws, rules, and regulations, listing
requirements, or other obligations. The foregoing notwithstanding, in connection with a Change in
Control, the Company shall take or cause to be taken no action, and shall undertake or permit to
arise no legal or contractual obligation, that results or would result in any postponement of the
issuance or delivery of Stock or payment of benefits under any Award or the imposition of any other
conditions on such issuance, delivery or payment, to the extent that such postponement or other
condition would represent a greater burden on a Participant than existed on the 90th day preceding
the Change in Control.

(b) Limits on Transferability; Beneficiaries.

(i) General. Except as provided herein, a Participant may not assign, sell, transfer, or
otherwise encumber or subject to any lien any Award or other right or interest granted under this
Plan, in whole or in part, including any Award or right which constitutes a derivative security as
generally defined in Rule 16a1(c) under the Exchange Act, other than by will or by operation of the
laws of descent and distribution, and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the Participant or his or her guardian or
legal representative.

(ii) Permitted Transfer of Option. The Committee, in its sole discretion, may permit the
transfer of an Option (but not an Incentive Stock Option, or any other right to purchase Stock
other than an Option) as follows: (A) by gift to a member of the Participant’s Immediate Family or
(B) by transfer by instrument to a trust providing that the Option is to be passed to beneficiaries
upon death of the Optionee. For purposes of this Section 10(b)(ii), “Immediate Family” shall mean
the Optionee’s spouse (including a former spouse subject to terms of a domestic relations order);
child, stepchild, grandchild, child-in-law; parent, stepparent, grandparent, parent-in-law; sibling
and sibling-in-law, and shall include adoptive relationships. If a determination is made by
counsel for the Company that the restrictions contained in this Section 10(b)(ii) are not required
by applicable federal or state securities laws under the circumstances, then the Committee, in its
sole discretion, may permit the transfer of Awards (other than Incentive Stock Options and Stock
Appreciation Rights in tandem therewith) to one or more Beneficiaries or other transferees during
the lifetime of the Participant, which may be exercised by such transferees in accordance with the
terms of such Award, but only if and to the extent permitted by the Committee pursuant to the
express terms of an Award agreement (subject to any terms and conditions which the Committee may
impose thereon, and further subject to any prohibitions and restrictions on such transfers pursuant
to Rule 16b-3). A Beneficiary, transferee, or other person claiming any rights under the Plan from
or through any Participant shall be subject to all terms and conditions of the Plan and any Award
agreement applicable to such Participant, except as otherwise determined by the Committee, and to
any additional terms and conditions deemed necessary or appropriate by the Committee.

(c) Adjustments.

(i) Adjustments to Awards. In the event that any dividend or other distribution (whether in
the form of cash, Stock, or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange,
liquidation, dissolution or other similar corporate transaction or event affects the Stock and/or
such other securities of the Company or any other issuer such that a substitution, exchange, or
adjustment is determined by the Committee to be appropriate, then the Committee shall, in such
manner as it deems equitable, substitute, exchange, or adjust any or all of (A) the number and kind
of shares of Stock which may be delivered in connection with Awards granted thereafter, (B) the
number and kind of shares of Stock by which annual per-person Award limitations are measured under
Section 5 hereof, (C) the number and kind of shares of Stock subject to or deliverable in respect
of outstanding Awards, (E) the exercise price, grant
price or purchase price relating to any Award and/or make provision for payment of cash or
other property in respect of any outstanding Award, and (F) any other aspect of any Award that the
Committee determines to be appropriate.

 

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(ii) Adjustments in Case of Certain Corporate Transactions. In the event of a proposed sale
of all or substantially all of the Company’s assets or any reorganization, merger, consolidation,
or other form of corporate transaction in which the Company does not survive, or in which the
shares of Stock are exchanged for or converted into securities issued by another entity, then the
successor or acquiring entity or an affiliate thereof may, with the consent of the Committee,
assume each outstanding Option or substitute an equivalent option or right. If the successor or
acquiring entity or an affiliate thereof, does not cause such an assumption or substitution, then
each Option shall terminate upon the consummation of sale, merger, consolidation, or other
corporate transaction. The Committee shall give written notice of any proposed transaction
referred to in this Section I 0(c)(ii) a reasonable period of time prior to the closing date for
such transaction (which notice may be given either before or after the approval of such
transaction), in order that Optionees may have a reasonable period of time prior to the closing
date of such transaction within which to exercise any Options that are then exercisable (including
any Options that may become exercisable upon the closing date of such transaction). An Optionee
may condition his exercise of any Option upon the consummation of the transaction.

(iii) Other Adjustments. In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards (including Performance Awards and
performance goals, and Annual Incentive Awards and any Annual Incentive Award pool or performance
goals relating thereto) in recognition of unusual or nonrecurring events (including, without
limitation, acquisitions and dispositions of businesses and assets) affecting the Company, any
Related Entity or any business unit, or the financial statements of the Company or any Related
Entity, or in response to changes in applicable laws, regulations, accounting principles, tax rates
and regulations or business conditions or in view of the Committee’s assessment of the business
strategy of the Company, any Related Entity or business unit thereof, performance of comparable
organizations, economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be authorized or made
if and to the extent that such authority or the making of such adjustment would cause Options,
Stock Appreciation Rights, Performance Awards granted under Section 8(b) hereof or Annual Incentive
Awards granted under Section 8(c) hereof to Participants designated by the Committee as Covered
Employees and intended to qualify as “performance-based compensation” under Code Section 162(m) and
the regulations thereunder to otherwise fail to qualify as “performance-based compensation” under
Code Section 162(m) and regulations thereunder.

(d) Taxes. The Company and any Related Entity are authorized to withhold from any Award
granted, any payment relating to an Award under the Plan, including from a distribution of Stock,
or any payroll or other payment to a Participant, amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and Participants to satisfy
obligations for the payment of withholding taxes and other tax obligations relating to any Award.
This authority shall include authority to withhold or receive Stock or other property and to make
cash payments in respect thereof in satisfaction of a Participant’s tax obligations; either on a
mandatory or elective basis in the discretion of the Committee.

(e) Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue or
terminate the Plan, or the Committee’s authority to grant Awards under the Plan, without the
consent of stockholders or Participants, except that any amendment or alteration to the Plan shall
be subject to the approval of the Company’s stockholders not later than the annual meeting next
following such Board action if (i) such stockholder approval is required by any federal or state
law or regulation (including, without limitation, Rule 16b-3 or Code Section 162(m)) or the rules
of any stock exchange or automated quotation system on which the Stock may then be listed or
quoted, or (ii) the amendment or alternation to the Plan materially increases the benefits accruing
to the participants under the Plan, materially increases the number of securities that may be
issued under the Plan, or materially modifies the requirements for participant in the Plan, and the
Board may otherwise, in its discretion, determine to submit other such changes to the Plan to
stockholders for approval; provided that, without the consent of an affected Participant, no such
Board action may materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. The Committee may waive any conditions or rights under,
or amend, alter, suspend, discontinue or terminate any Award theretofore granted and any Award
agreement relating
thereto, except as otherwise provided in the Plan; provided that, without the consent of an
affected Participant, no such Committee action may materially and adversely affect the rights of
such Participant under such Award.

 

15

 

(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any action taken
hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue
as an Eligible Person or Participant or in the employ of the Company or a Related Entity; (ii)
interfering in any way with the right of the Company or a Related Entity to terminate any Eligible
Person’s or Participant’s Continuous Service at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated uniformly with other
Participants and Employees, or (iv) conferring on a Participant any of the rights of a stockholder
of the Company unless and until the Participant is duly issued or transferred shares of Stock in
accordance with the terms of an Award.

(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute an
“unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made
to a Participant or obligation to deliver Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than those of a general
creditor of the Company; provided that the Committee may authorize the creation of trusts and
deposit therein cash, Stock, other Awards or other property, or make other arrangements to meet the
Company’s obligations under the Plan. Such trusts or other arrangements shall be consistent with
the “unfunded” status of the Plan unless the Committee otherwise determines with the consent of
each affected Participant. The trustee of such trusts may be authorized to dispose of trust assets
and reinvest the proceeds in alternative investments, subject to such terms and conditions as the
Committee may specify and in accordance with applicable law.

(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its
submission to the stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board or a committee thereof to adopt such other incentive
arrangements as it may deem desirable including incentive arrangements and awards which do not
qualify under Code Section 162(m).

(i) Payments in the Event of Forfeitures; Fractional Shares. Unless otherwise determined by
the Committee, in the event of a forfeiture of an Award with respect to which a Participant paid
cash or other consideration, the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered pursuant to the Plan or
any Award. The Committee shall determine whether cash, other Awards or other property shall be
issued or paid in lieu of such fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.

(j) Governing Law. The validity, construction and effect of the Plan, any rules and
regulations under the Plan, and any Award agreement shall be determined in accordance with the laws
of the State of Delaware without giving effect to principles of conflicts of laws, and applicable
federal law.

(k) Plan Effective Date and Stockholder Approval; Termination of Plan. The Plan shall become
effective on the Effective Date, provided the Plan is approved within 12 months of its adoption by
the Board by stockholders of the Company eligible to vote in the election of directors, by a vote
sufficient to meet the requirements of Code Sections 162(m) (if applicable) and 422, Rule 16b-3
under the Exchange Act (if applicable), applicable NASDAQ requirements, and other laws,
regulations, and obligations of the Company applicable to the Plan. The Plan shall terminate no
later than 10 years from the date the Plan is adopted by the Board or 10 years from the date the
Plan is approved by the stockholders, whichever is earlier.

 

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