Document:

exv4w1

Exhibit 4.1

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW, AND MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS
PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, OR (II) AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS.

AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. HOLDERS MUST RELY ON THEIR OWN
ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED.

			
	 	 	 
	Warrant to Purchase

[                    ] shares
	 	Warrant Number [___]

Warrant to Purchase Common Stock

of

INSULET CORPORATION

THIS CERTIFIES that [                    ] or any subsequent holder hereof (“Holder”) has the right to
purchase from INSULET CORPORATION, a Delaware corporation, (the “Company”), [______(___)]
fully paid and nonassessable shares of the Company’s common stock, $0.001 par value per share
(“Common Stock”), subject to adjustment as provided herein, at a price equal to the Exercise Price
as defined in Section 3 below, at any time during the Term (as defined below).

Holder agrees with the Company that this Warrant to Purchase Common Stock of the Company (this
“Warrant” or this “Agreement”) is issued and all rights hereunder shall be held subject to all of
the conditions, limitations and provisions set forth herein.

1. Date of Issuance and Term.

This Warrant shall be deemed to be issued on March 13, 2009 (“Date of Issuance”). The term of this
Warrant begins on the Date of Issuance and ends at 5:00 p.m., New York City time, on the date that
is six (6) years after the Date of Issuance (the “Term”). This Warrant was issued in conjunction
with that certain Facility Agreement (the “Facility Agreement”) and the Registration Rights
Agreement (“Registration Rights Agreement”) by and between the Company and [                    ], each
dated March 13, 2009, entered into in conjunction herewith.

(a) 9.98% Cap. Notwithstanding anything herein to the contrary, the Company shall not issue to
the Holder, and the Holder may not acquire, a number of shares of Common Stock upon exercise of
this Warrant to the extent that, upon such exercise, the number of shares of Common Stock then
beneficially owned by the Holder and its Affiliates and any other persons or entities whose
beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (including
shares held by any “group” of which the Holder is a member, but excluding shares beneficially owned
by virtue of the ownership of securities or rights to acquire securities that have limitations on
the right to convert, exercise or purchase similar to the limitation set forth herein) would exceed
9.98% of the total number of shares of Common Stock then issued and outstanding (the “9.98% Cap”);
provided, however, that the 9.98% Cap shall not apply with respect to the issuance of shares of
Common Stock pursuant to a Cashless Major Exercise (as defined below) in connection with a
Qualified Change of Control Transaction (as defined below) to the extent that the number of shares
beneficially owned by the Holder and its affiliates in the successor entity immediately following
consummation of such Qualified Change of Control Transaction does not exceed 9.98% of the
outstanding common stock of such successor entity and provided, further, that the 9.98% Cap shall
only apply to the extent that the

1

 

Common Stock is deemed to constitute an “equity security” pursuant to Rule 13d-1(i) promulgated
under the Exchange Act. For purposes hereof, “group” has the meaning set forth in Section 13(d) of
the Exchange Act and applicable regulations of the Securities and Exchange Commission (the “SEC”),
and the percentage held by the Holder shall be determined in a manner consistent with the
provisions of Section 13(d) of the Exchange Act. Upon the written request of the Holder, the
Company shall, within two (2) Trading Days, confirm orally and in writing to the Holder the number
of shares of Common Stock then outstanding.

“Affiliate” means any person or entity that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a person or entity, as
such terms are used in and construed under Rule 144 under the Securities Act of 1933, as amended
(the “Securities Act”). With respect to a Holder of Warrants, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager as such Holder will
be deemed to be an Affiliate of such Holder.

“Holder” means [                    ] and any transferee or assignee pursuant to the terms of this Warrant.

(b) Exchange Cap. Notwithstanding anything herein to the contrary, the number of shares of Common
Stock issuable by the Company and acquirable by the Holder pursuant to the terms of this Warrant
and all other Warrants issued pursuant to the Facility Agreement between the Company and lenders
named therein dated as of March 13, 2009 shall not exceed 5,565,009 shares of the Company’s Common
Stock (subject to appropriate adjustment for stock splits, stock dividends, or other similar
recapitalizations affecting the Common Stock) (the “Exchange Cap”). The Company shall not be
obligated to issue such shares of Common Stock in excess of the Exchange Cap.

2. Exercise.

(a) Manner of Exercise. During the Term, this Warrant may be Exercised as to all or any lesser
number of whole shares of Common Stock covered hereby (the “Warrant Shares” or the “Shares”) upon
surrender of this Warrant, with the Exercise Form attached hereto as Exhibit A (the
“Exercise Form”) duly completed and executed, together with the full Exercise Price (as defined
below, which may be satisfied by a Cash Exercise or a Cashless Exercise, as each is defined below)
for each share of Common Stock as to which this Warrant is Exercised, at the office of the Company,
Insulet Corporation, 9 Oak Park Drive, Bedford, MA 01730; Phone: (781) 457-5000, Fax:
(781) 457-5011, or at such other office or agency as the Company may designate in writing, by
overnight mail, with an advance copy of the Exercise Form sent to the Company and its transfer
agent (“Transfer Agent”) by facsimile (such surrender and payment of the Exercise Price hereinafter
called the “Exercise” of this Warrant).

(b) Date of Exercise. The “Date of Exercise” of the Warrant shall be defined as the date that the
Exercise Form attached hereto as Exhibit A, completed and executed, is sent by facsimile to
the Company, provided that the original Warrant and Exercise Form are received by the Company and
the Exercise Price is satisfied, each as soon as practicable thereafter. Alternatively, the Date of
Exercise shall be defined as the date the original Exercise Form is received by the Company, if
Holder has not sent advance notice by facsimile. Upon delivery of the Exercise Form to the Company
by facsimile or otherwise, the Holder shall be deemed for all corporate purposes to have become the
holder of record of the Warrant Shares with respect to which this Warrant has been Exercised,
irrespective of the date such Warrant Shares are credited to the Holder’s Depository Trust Company
(“DTC”) account or the date of delivery of the certificates evidencing such Warrant Shares, as the
case may be; provided, however, that in the event of a Cashless Major Exercise in respect of a
Qualified Change of Control Transaction, the Holder shall be deemed to have become the holder of
record of the shares issuable upon such exercise immediately prior to the consummation of such
Qualified Change of Control Transaction and provided, further, that in the event of a Cashless
Major Exercise triggered by an event set forth in Section 5(c)(i)(G), the Holder shall be deemed to
have become the holder of record of the shares issuable upon such exercise immediately following
the occurrence of the Major Transaction.

(c) Delivery of Common Stock Upon Exercise. Within three (3) business days after any Date of
Exercise, or in the case of a Cashless Major Exercise or a Cashless Default Exercise (each as
defined in Section 5(c) below), within the period provided in Section 5(c)(iv) or Section 3(c), as
applicable (the “Delivery Period”), the Company shall issue and deliver (or cause its Transfer
Agent to issue and deliver) in accordance with the terms hereof to or upon the order of the Holder
that number of shares of Common Stock (“Exercise Shares”) for the portion of this Warrant converted
as shall be determined in accordance herewith. Upon the Exercise of this Warrant or any part
hereof, the Company shall, at its own cost and expense, take all necessary action, including
obtaining and delivering an opinion

 

 

of counsel, to assure that the Transfer Agent shall issue stock certificates in the name of Holder
(or its nominee) or such other persons as designated by Holder and in such denominations to be
specified at Exercise representing the number of shares of Common Stock issuable upon such
Exercise. The Company warrants that no instructions other than these instructions have been or will
be given to the Transfer Agent and that, unless waived by the Holder, this Warrant and the Exercise
Shares will be free-trading, and freely transferable, and will not contain a legend restricting the
resale or transferability of the Exercise Shares if the Unrestricted Conditions (as defined below)
are met.

(d) Delivery Failure. In addition to any other remedies which may be available to the Holder, in
the event that the Company fails for any reason to effect delivery of the Exercise Shares by the
end of the Delivery Period (a “Delivery Failure”), the Holder will be entitled to revoke all or
part of the relevant Exercise Form by delivery of a notice to such effect to the Company whereupon
the Company and the Holder shall each be restored to their respective positions immediately prior
to the delivery of such notice, except that the liquidated damages described herein shall be
payable through the date notice of revocation or rescission is given to the Company.

(e) Legends.

(i) Restrictive Legend. The Holder understands that until such time as this Warrant, the
Exercise Shares and the Failure Payment Shares have been registered under the Securities Act as
contemplated by the Registration Rights Agreement or otherwise may be sold pursuant to Rule 144
under the Securities Act or an exemption from registration under the Securities Act without any
restriction as to the number of securities as of a particular date that can then be immediately
sold (including following a sale or transfer pursuant to a “4(1) and half” transaction referred to
in Section 8(b) , this Warrant, the Exercise Shares and the Failure Payment Shares, as applicable,
may bear a restrictive legend in substantially the following form (and a stop-transfer order may be
placed against transfer of the certificates for such securities):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER SAID ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SAID
ACT INCLUDING, WITHOUT LIMITATION, PURSUANT TO RULES 144 OR 144A UNDER SAID ACT OR PURSUANT
TO A PRIVATE SALE EFFECTED UNDER APPLICABLE FORMAL OR INFORMAL SEC INTERPRETATION OR
GUIDANCE, SUCH AS A SO-CALLED “4(1) AND A HALF” SALE.”

“THE SALE, TRANSFER, PLEDGE, ASSIGNMENT, HYPOTHECATION OR OTHER DISPOSITION OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS OF MARCH 13, 2009, AS AMENDED FROM TIME TO
TIME, AMONG THE COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING SECURITIES. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE COMPANY.”

(ii) Removal of Restrictive Legends. This Warrant and the certificates evidencing the
Exercise Shares and the Failure Payment Shares, as applicable, shall not contain any legend
restricting the transfer thereof (including the legend set forth above in subsection 2(e)(i)):
(A) while a registration statement (including a Registration Statement, as defined in the
Registration Rights Agreement) covering the sale or resale of such security is effective under the
Securities Act, or (B) following any sale of such Warrant, Exercise Shares and/or Failure Payment
Shares pursuant to Rule 144, or (C) if such Warrant, Exercise Shares and/or Failure Payment Shares
are eligible for sale under Rule 144(b)(1), or (D) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and pronouncements issued by
the staff of the SEC) (collectively, the “Unrestricted Conditions”). If the Unrestricted
Conditions are met at the time of issuance of this Warrant, the Exercise Shares or the Failure
Payment Shares, then such Warrant, Exercise Shares or Failure Payment Shares, as applicable, shall
be issued free of all legends. The Company agrees that following the Effective Date at such time
as the Unrestricted Conditions are met or such legend is otherwise no longer required under this
Section 2(e), it will, no later than three

 

 

(3) Trading Days following the delivery (the “Unlegended Shares Delivery Deadline”) by the Holder
to the Company or the Transfer Agent of this Warrant and a certificate representing Exercise Shares
and/or Failure Payment Shares, as applicable, issued with a restrictive legend (such third Trading
Day, the “Legend Removal Date”), deliver or cause to be delivered to such Holder this Warrant
and/or a certificate (or electronic transfer) representing such shares that is free from all
restrictive and other legends. For purposes hereof, “Effective Date” shall mean the date that the
Registration Statement that the Company is required to file pursuant to the Registration Rights
Agreement has been declared effective by the SEC.

(iii) Sale of Unlegended Shares. Holder agrees that the removal of the restrictive legend
from this Warrant and any certificates representing securities as set forth in Section 2(e) above
is predicated upon the Company’s reliance that the Holder will sell this Warrant or any Exercise
Shares and/or any Failure Payment Shares, as applicable, pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery requirements, or
an exemption therefrom, and that if such securities are sold pursuant to a Registration Statement,
they will be sold in compliance with the plan of distribution set forth therein.

(f) Cancellation of Warrant. This Warrant shall be canceled upon the full Exercise, of this
Warrant, and, as soon as practical after the Date of Exercise, Holder shall be entitled to receive
Common Stock for the number of shares purchased upon such Exercise of this Warrant, and if this
Warrant is not Exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant) representing any unexercised portion of this Warrant in addition
to such Common Stock.

(g) Holder of Record. Each person in whose name any Warrant for shares of Common Stock is issued
shall, for all purposes, be deemed to be the Holder of record of such shares on the Date of
Exercise of this Warrant, irrespective of the date of delivery of the Common Stock purchased upon
the Exercise of this Warrant.

(h) Delivery of Electronic Shares. In lieu of delivering physical certificates representing the
Common Stock issuable upon Exercise or legend removal, or representing Failure Payment Shares,
provided the Transfer Agent is participating in the DTC Fast Automated Securities Transfer (“FAST”)
program, upon written request of the Holder, the Company shall use its best efforts to cause its
Transfer Agent to electronically transmit the Common Stock issuable upon Exercise to the Holder by
crediting the account of the Holder’s prime broker with DTC through its Deposit Withdrawal Agent
Commission (DWAC) system. The time periods for delivery and penalties described herein shall apply
to the electronic transmittals described herein. Any delivery not effected by electronic
transmission shall be effected by delivery of physical certificates.

(i) Buy-In. If the Company fails to cause its Transfer Agent to transmit to the Holder a
certificate or certificates, or electronic shares through DWAC, representing the Exercise Shares
pursuant to an Exercise on or before the Delivery Period, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases shares of Common Stock to deliver in satisfaction of a sale by
the Holder of the Exercise Shares which the Holder anticipated receiving upon such Exercise (a
“Buy-In”), then the Company shall pay in cash to the Holder the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A) the number of Exercise Shares that the
Company was required to deliver to the Holder in connection with the Exercise at issue times and
(B) the price at which the sell order giving rise to such purchase obligation was executed. For
example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted Exercise to cover the sale of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000, the Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In, together with applicable confirmations and other
evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue
any other remedies available to it hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing shares of Common Stock upon Exercise of the Warrant as
required pursuant to the terms hereof.

 

 

3. Payment of Warrant Exercise Price for Cash Exercise or Cashless Exercise; Cashless Major
Exercise and Cashless Default Exercise.

(a) Exercise Price. The Exercise Price (“Exercise Price”) shall initially equal $3.13 per share,
subject to adjustment pursuant to the terms hereof, including but not limited to Section 5 below.

Payment of the Exercise Price may be made by either of the following, or a combination thereof, at
the election of Holder:

(i) Cash Exercise: The Holder may exercise this Warrant in cash, bank or cashier’s check
or wire transfer (a “Cash Exercise”); or

(ii) Cashless Exercise: The Holder, at its option, may exercise this Warrant in a cashless
exercise transaction. In order to effect a Cashless Exercise, the Holder shall surrender this
Warrant at the principal office of the Company together with notice of cashless election, in which
event the Company shall issue Holder a number of shares of Common Stock computed using the
following formula (a “Cashless Exercise”):

X = Y (A-B)/A

			
	where:	 	X = the number of shares of Common Stock to be issued to Holder.

Y = the number of shares of Common Stock for which this Warrant is being Exercised.

A = the Market Price of one (1) share of Common Stock (for purposes of this
Section 3(a)(ii), where “Market Price,” as of any date, means the Volume Weighted Average
Price (as defined herein) of the Company’s Common Stock during the ten (10) consecutive
Trading Day period immediately preceding the date in question.

B = the Exercise Price.

As used herein, the “Volume Weighted Average Price” for the Common Stock as of any date
means the volume weighted average sale price (based on trades occurring during regular hours
trading during a Trading Day) of the Common Stock on the NASDAQ Global Select Market
(“NASDAQ”) as reported by Bloomberg Financial L.P. using the AQR function or an equivalent,
reliable reporting service mutually acceptable to and hereafter designated by Holders of a
majority in interest of the Warrants and the Company (“Bloomberg”) or, if NASDAQ is not the
principal trading market for the Common Stock, the volume weighted average sale price of the
Common Stock on the principal securities exchange or trading market where such security is
listed or traded as reported by Bloomberg, or, if no volume weighted average sale price is
reported for the Common Stock, then the last closing trade price of such security as
reported by Bloomberg, or, if no last closing trade price is reported for the Common Stock
by Bloomberg, the average of the bid prices of any market makers for such security that are
listed in the over the counter market by the Financial Industry Regulatory Authority, Inc.
or in the “pink sheets” maintained by the Pink OTC Market, Inc. If the Volume Weighted
Average Price cannot be calculated for the Common Stock on such date in the manner provided
above, the volume weighted average price shall be the fair market value as mutually
determined by the Company and the Holders of a majority in interest of the Warrants being
Exercised for which the calculation of the volume weighted average price is required in
order to determine the Exercise Price of such Warrants. “Trading Day” shall mean any day
on which the Common Sock is traded for any period on NASDAQ, or on the principal securities
exchange or other securities market on which the Common Stock is then being traded.

For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended, understood and
acknowledged that the Common Stock issuable upon Exercise of this Warrant in a Cashless Exercise
transaction shall be deemed to have been acquired at the time this Warrant was issued. Moreover, it
is intended, understood and acknowledged that the holding period for the Common Stock issuable upon
Exercise of this Warrant in a Cashless Exercise transaction shall be deemed to have commenced on
the date this Warrant was issued.

 

 

(b) Cashless Major Exercise: To the extent the Holder shall exercise this Warrant or any portion
thereof as a Cashless Major Exercise pursuant to Section 5(c)(i) below, the Holder shall surrender
this Warrant at the principal office of the Company together with the Exercise Form indicating that
the Holder is exercising this Warrant (or such portion thereof) pursuant to a Cashless Major
Exercise, in which event the Company shall issue a number of shares of Common Stock equal to the
Black-Scholes Value (as defined in Section 5(c)(iii) below) of the Warrant (or such applicable
portion being exercised) divided by 95% of the closing price of the Common Stock on the principal
securities exchange or other securities market on which the Common Stock is then traded on the
Trading Day immediately preceding the date on which the applicable Major Transaction is
consummated.

(c) Cashless Default Exercise. To the extent the Holder exercises this Warrant as a Cashless
Default Exercise pursuant to Section 11(b)(i) below, the Holder shall surrender this Warrant to the
principal office of the Company together with the Exercise Form indicating that the Holder is
exercising this Warrant pursuant to a Cashless Default Exercise, in which event the Company shall
issue to the Holder, within five (5) Trading Days of the applicable Default Notice, a number of
shares of Common Stock (which shares shall be valued at 95% of the Volume Weighted Average Price
for the five (5) Trading Days prior to the applicable Default Notice) equal to the greater of (A)
the Black-Scholes value (determined by use of the Black-Scholes Option Pricing Model using the
criteria set forth on Schedule I hereto) of the remaining unexercised portion of this Warrant on
the date of such Default Notice and (B) the Black-Scholes value (determined by use of the
Black-Scholes Option Pricing Model using the criteria set forth on Schedule I hereto) of the
remaining unexercised portion of this Warrant on the Trading Day immediately preceding the date
that the Exercise Shares in respect of such Cashless Default Exercise are issued to the Holder.

(d) Dispute Resolution. In the case of a dispute as to the determination of the closing price or
the Volume Weighted Average Price of the Company’s Common Stock or the arithmetic calculation of
the Exercise Price, Market Price or any Major Transaction Warrant Early Termination Price, the
Company shall submit the disputed determinations or arithmetic calculations via facsimile within
two (2) business days of receipt, or deemed receipt, of the Exercise Notice or Major Transaction
Early Termination Notice, or other event giving rise to such dispute, as the case may be, to the
Holder. If the Holder and the Company are unable to agree upon such determination or calculation
within two (2) business days of such disputed determination or arithmetic calculation being
submitted to the Holder, then the Company shall, within two (2) business days submit via facsimile
(i) the disputed determination of the closing price or the Volume Weighted Average Price of the
Company’s Common Stock to an independent, reputable investment bank selected by the Company and
approved by the Holder, which approval shall not be unreasonably withheld or (ii) the disputed
arithmetic calculation of the Exercise Price, Market Price or any Major Transaction Warrant Early
Termination Price to the Company’s independent, outside accountant. The Company shall cause the
investment bank or the accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the Holder of the results no later than five (5) business
days from the time it receives the disputed determinations or calculations. Such investment bank’s
or accountant’s determination or calculation, as the case may be, shall be binding upon all parties
absent demonstrable error.

4. Transfer and Registration.

(a) Transfer Rights. Subject to the provisions of Section 8 of this Warrant, this Warrant may be
transferred on the books of the Company, in whole or in part, in person or by attorney, upon
surrender of this Warrant properly completed and endorsed. This Warrant shall be canceled upon such
surrender and, as soon as practicable thereafter, the person to whom such transfer is made shall be
entitled to receive a new Warrant or Warrants as to the portion of this Warrant transferred, and
Holder shall be entitled to receive a new Warrant as to the portion hereof retained.

(b) Registrable Securities. The Common Stock issuable upon the Exercise of this Warrant has
registration rights pursuant to the Registration Rights Agreement.

5. Adjustments Upon Certain Events.

(a) Participation. The Holder, as the holder of this Warrant, shall be entitled to receive such
dividends paid and distributions of any kind made to the holders of Common Stock of the Company to
the same extent as if the Holder had Exercised this Warrant into Common Stock (without regard to
any limitations on exercise herein or elsewhere and without regard to whether or not a sufficient
number of shares are authorized and reserved to effect any such exercise and issuance) and had held
such shares of Common Stock on the record date for such dividends and

 

 

distributions. Payments under the preceding sentence shall be made concurrently with the dividend
or distribution to the holders of Common Stock.

(b) Recapitalization or Reclassification. If the Company shall at any time effect a stock split,
payment of stock dividend, recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become exchangeable for a larger
or smaller number of shares, then upon the effective date thereof, the number of shares of Common
Stock which Holder shall be entitled to purchase upon Exercise of this Warrant shall be increased
or decreased, as the case may be, in direct proportion to the increase or decrease in the number of
shares of Common Stock by reason of such stock split, payment of stock dividend, recapitalization,
reclassification or similar transaction, and the Exercise Price shall be, in the case of an
increase in the number of shares, proportionally decreased and, in the case of decrease in the
number of shares, proportionally increased. The Company shall give Holder the same notice it
provides to holders of Common Stock of any transaction described in this Section 5(b).

(c) Rights Upon Major Transaction.

(i) Major Transaction. In the event that a Major Transaction (as defined below) occurs,
then (1) in the case of a Cash-Out Major Transaction (as defined below) and in the case of a Mixed
Major Transaction to the extent of the percentage of the cash consideration in the Mixed Major
Transaction (determined in accordance with the definition of a Mixed Major Transaction below), the
Holder, at its option, may require the Company to redeem that portion the Holder’s outstanding
Warrants described in Section 5(c)(iii) below and (2) in the case of all other Major Transactions
and in the case of a Mixed Major Transaction to the extent of the percentage of the consideration
represented by securities of a Successor Entity in the Mixed Major Transaction, the Holder shall
have the right to exercise this Warrant as a Cashless Major Exercise. Any Major Transaction
covered by the provisions of Section 5(c)(i)(A)(1) below in which the Company is not the surviving
entity (a “Qualified Change of Control Transaction”) shall be treated as an Assumption (as defined
below) in accordance with Section 5(c)(ii) if the Company and the Holder agree in writing to such
treatment and the Holder shall not have exercised any of its rights under clause (1) or (2) above.
Notwithstanding anything herein to the contrary, the Holder may waive its rights under this Section
5(c)(i) with respect to any Major Transaction. Each of the following events shall constitute a
“Major Transaction”:

(A) a consolidation, merger, exchange of shares, recapitalization, reorganization, business
combination or other similar event, (1) following which the holders of Common Stock immediately
preceding such consolidation, merger, exchange, recapitalization, reorganization, combination or
event either (a) no longer hold a majority of the shares of Common Stock or (b) no longer have the
ability to elect a majority of the board of directors of the Company or (2) as a result of which
shares of Common Stock shall be changed into (or the shares of Common Stock become entitled to
receive) the same or a different number of shares of the same or another class or classes of stock
or securities of the Company or another entity (collectively, a “Change of Control Transaction”);

(B) the sale or transfer of significant assets of the Company which shall mean a sale or transfer
of assets in one transaction or a series of related transactions for a purchase price of more than
$50, 000,000 or a sale or transfer of more than 50% of the Company’s assets;

(C) a purchase, tender or exchange offer made to the holders of outstanding shares of Common
Stock, such that following such purchase, tender or exchange offer a Change of Control Transaction
shall have occurred;

(D) any issuance of shares of Common Stock or securities convertible or exercisable for Common
Stock; other than an issuance (1) pursuant to a registered public offering or shelf takedown, (2)
in a transaction that does not require shareholder approval, (3) to partners in connection with a
joint venture, distribution or other partnering arrangement in a transaction that does not require
shareholder approval, (4) upon the exercise of options granted to the Company’s employees,
officers, directors and consultants, (5) of restricted stock to, or purchases, of Common Stock
under the Company’s employee stock purchase plan by, employees, officers, directors or consultants
or (6) upon the exercise of this Warrant.

(E) the liquidation, bankruptcy, insolvency, dissolution or winding-up (or the occurrence of any
analogous proceeding) affecting the Company;

 

 

(F) the shares of Common Stock cease to be listed, traded or publicly quoted on NASDAQ and are not
promptly re-listed or requoted on either the New York Stock Exchange, the NYSE Alternext U.S., the
NASDAQ Global Select Market or the NASDAQ Capital Market; or

(G) the Common Stock ceases to be registered under Section 12 of the Exchange Act.

(ii) Termination; Assumption. The Company shall not enter into or be party to a Qualified
Change of Control Transaction that is to be treated as an Assumption pursuant to Section 5(c)(i)
unless any Successor Entity (1) assumes in writing all of the obligations of the Company under this
Warrant, the Facility Agreement and the Registration Rights Agreement  in accordance with the
provisions of this Section (ii) pursuant to written agreements in form and substance satisfactory
to the Holder and approved by the Holder prior to such Qualified Change of Control Transaction,
including agreements to deliver to each holder of Warrants in exchange for such Warrants a security
of the Successor Entity evidenced by a written instrument substantially similar in form and
substance to the Warrants, including, without limitation, representing the appropriate number of
shares of the Successor Entity, having similar exercise rights as the Warrants (including but not
limited to a similar Exercise Price and similar Exercise Price adjustment provisions based on the
price per share or conversion ratio to be received by the holders of Common Stock in the Major
Transaction) and similar registration rights as provided by the Registration Rights Agreement ,
satisfactory to the Holder and (2) is a publicly traded corporation whose common stock is quoted on
or listed for trading on an Eligible Market. Upon the occurrence of any assumption of the Warrant,
any Successor Entity shall succeed to, and be substituted for (so that from and after the date of
such Major Transaction, the provisions of this Warrant and the Registration Rights Agreement
referring to the “Company” shall refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the obligations of the Company under this
Warrant with the same effect as if such Successor Entity had been named as the Company herein. Upon
the assumption of this Warrant, the Successor Entity shall deliver to the Holder confirmation that
there shall be issued upon exercise or redemption of this Warrant at any time after the
consummation of the Qualified Change of Control Transaction, in lieu of the shares of Common Stock
(or other securities, cash, assets or other property) issuable upon the exercise of the Warrants
prior to such Qualified Change of Control Transaction, such shares of publicly traded common stock
(or their equivalent) of the Successor Entity, as adjusted in accordance with the provisions of
this Warrant. The provisions of this Section shall apply similarly and equally to successive
Qualified Change of Control Transactions and shall be applied without regard to any limitations on
the exercise of this Warrant other than any applicable beneficial ownership limitations.
Immediately prior to the consummation of any Qualified Change of Control Transaction that is not to
be treated as an Assumption hereunder, any unexercised or unredeemed portion of this Warrant shall
be deemed to be exercised as a Cashless Major Exercise; provided, however, that in the case of a
Qualified Change of Control Transaction that constitutes a Cash-Out Major Transaction and in the
case of a Mixed Major Transaction that is a Qualified Change of Control Transaction, to the extent
of the percentage of the cash consideration in the Mixed Major Transaction (determined in
accordance with the definition of a Mixed Major Transaction below), the applicable unexercised or
unredeemed portion of this Warrant shall be treated as an Early Termination Upon Major Transaction
in exchange for the cash payment to the Holder, concurrently with the consummation of the Qualified
Change of Control Transaction, of the Major Transaction Warrant Early Termination Price. Any
assumption of Company obligations under this paragraph shall be referred to herein as an
“Assumption”

(iii) Notice; Major Transaction Early Termination Right; Notice of Cashless Major
Exercise. At least thirty (30) days prior to the consummation of any Major Transaction, but,
in any event, on the first to occur of (x) the date of the public announcement of such Major
Transaction if such announcement is made before 4:00 p.m., New York City time, or (y) the day
following the public announcement of such Major Transaction if such announcement is made on and
after 4:00 p.m., New York City time, the Company shall deliver written notice thereof via facsimile
and overnight courier to the Holder (a “Major Transaction Notice”). At any time during the period
beginning after the Holder’s receipt of a Major Transaction Notice and ending five (5) Trading Days
prior to the consummation of such Major Transaction (the “Early Termination Period”), the Holder
may require an early termination (an “Early Termination Upon Major Transaction”) of all or any
portion of this Warrant not eligible to be treated as a Cashless Major Exercise (without taking
into consideration the 9.98% Cap) by delivering written notice thereof (“Major Transaction Early
Termination Notice”) to the Company, which Major Transaction Early Termination Notice shall
indicate the portion of the Warrant that the Holder is electing to be subject to an Early
Termination Upon Major Transaction. The portion of this Warrant subject to early termination
pursuant to this Section 5(c)(iii) (the “Terminated Portion”), shall be terminated by the Company
at a price (the “Major Transaction Warrant Early

 

 

Termination Price”) payable to the Holder in cash equal to the “Black Scholes Value” of the
Terminated Portion determined by use of the Black Scholes Option Pricing Model using the criteria
set forth in Schedule 1 hereto (the “Black Scholes Value”). For the avoidance of doubt, in no
event shall the Holder be entitled to payment of the Major Transaction Warrant Early Termination
Price in cash in respect of a Major Transaction, other than with respect to a Cash-Out Major
Transaction and, in the case of a Mixed Major Transaction, to the extent of the percentage of cash
consideration in the Mixed Major Transaction (determined in accordance with the definition of a
Mixed Major Transaction).

To the extent the Holder shall elect to effect a Cashless Major Exercise in respect of a Major
Transaction, the Holder shall deliver its exercise notice in accordance with Section 3(b), within
the Early Termination Period.

(iv) Escrow; Payment of Major Transaction Warrant Early Termination Price. Following the
receipt of a Cashless Major Exercise from the Holder, the Company shall not effect a Major
Transaction that is being treated as a Cashless Major Exercise unless it shall first place into an
escrow account with an independent escrow agent, at least three (3) business days prior to the
closing date of the Major Transaction (the “Major Transaction Escrow Deadline”), an amount in
shares of Common Stock equal to the applicable Exercise Shares. The Company shall not consummate a
Major Transaction unless concurrently with the consummation of such Major Transaction, the Company
shall pay the Major Transaction Warrant Early Termination Price and shall instruct the escrow agent
to deliver the applicable Exercise Shares to the Holder. For purposes of determining the amount
required to be placed in escrow pursuant to the provisions of this subsection (iv) and without
affecting the amount of the actual applicable Exercise Shares, the calculation of the price
referred to in clause (1) of the first column of Schedule 1 hereto with respect to Stock Price
shall be determined (i) in the case of a Qualified Change of Control Transaction, based on the
closing market price for shares of the publicly traded Successor Entity on its principal securities
exchange on the Trading Day preceding the first public announcement of the Qualified Change of
Control Transaction and, (ii) in the case of all other Major Transactions, based on the Closing
Market Price (as defined on Schedule I) of the Common Stock on the Trading Day immediately
preceding the date that applicable Exercise Shares, as applicable, are deposited with the escrow
agent.

(v) Injunction. Following the receipt of a notice of a Cashless Major Exercise from the
Holder, in the event that the Company attempts to consummate a Major Transaction without placing
the applicable Exercise Shares in escrow in accordance with subsection (iv) above, the Holder shall
have the right to apply for an injunction in any state or federal courts sitting in the City of New
York, borough of Manhattan to prevent the closing of such Major Transaction until the applicable
Exercise Shares are delivered into escrow in accordance with subsection (iv) above.

An early termination required by this Section 5(c) shall be made in accordance with the provisions
of Section 12 and shall have priority to payments to holders of Common Stock in connection with a
Major Transaction except to the extent that a court of competent jurisdiction determines that the
Holder would be deemed to be a creditor of the Company, in which case the Holder shall be treated
on a pari passu basis with the holders of the Common Stock. Further, for the avoidance of doubt,
the Holder shall not have the rights senior to the Company’s common shareholders in any U.S.
bankruptcy proceedings of the Company, provided that nothing herein shall limit or shall be deemed
to limit Holder’s right to pursue remedies in the event of breach by the Company of its obligations
and agreements with respect to the Warrant; provided, further, that nothing herein shall limit or
be deemed to limit Holder’s rights in respect of any transactions other than the Warrant. To the
extent an early termination required of this Section 5(c) are deemed or determined by a court of
competent jurisdiction to be prepayments of the Warrant by the Company, such early termination
shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this
Section 5, until the Major Transaction Warrant Early Termination Price is paid in full, this
Warrant may be exercised, in whole or in part, by the Holder into shares of Common Stock. The
parties hereto agree that in the event of the Company’s early termination of any portion of the
Warrant under this Section 5(c), the Holder’s damages would be uncertain and difficult to estimate
because of the parties’ inability to predict future interest rates and the uncertainty of the
availability of a suitable substitute investment opportunity for the Holder. Accordingly, any
premium due under this Section 5(c) is intended by the parties to be, and shall be deemed, a
reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty.

 

 

For purposes hereof:

“Cash-Out Major Transaction” means a Major Transaction in which the consideration payable to the
Company and/or to holders of Common Stock in connection with the Major Transaction consists solely
of cash.

“Cashless Default Exercise” shall mean an exercise of this Warrant as a “Cashless Default Exercise”
in accordance with Section 3(c) and 11(b) hereof.

“Cashless Major Exercise” shall mean an exercise of this Warrant or portion thereof as a “Cashless
Major Exercise” in accordance with Section 3(b) , 5(c)(i) and (5 (c)(ii) hereof.

“Eligible Market” means the over the counter Bulletin Board, the New York Stock Exchange, Inc., the
NYSE Arca, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market or
the NYSE Alternext U.S.

“Mixed Major Transaction” means a Major Transaction in which the consideration payable to the
shareholders of the Company consists partially of cash and partially of securities of a Successor
Entity. If the Successor Entity is a Publicly Traded Successor Entity, the percentage of
consideration represented by securities of such Successor Entity shall be equal to the percentage
that the value of the aggregate anticipated number of shares of the Publicly Traded Successor
Entity to be issued to holders of Common Stock of the Company represents in comparison to the
aggregate value of all consideration, including cash consideration, in such Mixed Major
Transaction, as such values are set forth in any definitive agreement for the Mixed Major
Transaction that has been executed at the time of the first public announcement of the Major
Transaction or, if no such value is determinable from such definitive agreement, based on the
closing market price for shares of the Publicly Traded Successor Entity on its principal securities
exchange on the Trading Day preceding the first public announcement of the Mixed Major Transaction.
If the Successor Entity is a Private Successor Entity, the percentage of consideration represented
by securities of such Successor Entity shall be determined in good-faith by the Company’s Board of
Directors

“Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable
Person and whose common stock or equivalent equity security is quoted or listed on an Eligible
Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity
with the largest public market capitalization as of the date of consummation of a Major
Transaction.

“Person” means an individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other entity and a government or any
department or agency thereof.

“Private Successor Entity” means a Successor Entity that is not a Publicly Traded Successor Entity.

“Publicly Traded Successor Entity” means a Successor Entity that is a publicly traded corporation
whose common stock is quoted on or listed for trading on an Eligible Market (as defined above).

“Successor Entity” means any Person purchasing the Company’s assets or Common Stock, or any
successor entity resulting from such Major Transaction, or if the Warrant is to be exercisable for
shares of capital stock of its Parent Entity (as defined above), its Parent Entity.

(d) Exercise Price Adjusted. As used in this Warrant, the term “Exercise Price” shall mean the
purchase price per share specified in Section 3(a) of this Warrant, until the occurrence of an
event stated in this Section 5 or otherwise set forth in this Warrant, and thereafter shall mean
said price as adjusted from time to time in accordance with the provisions of said subsection. No
adjustment made pursuant to any provision of this Section 5 shall have the net effect of increasing
the Exercise Price in relation to the split adjusted and distribution adjusted price of the Common
Stock.

(e) Adjustments: Additional Shares, Securities or Assets. In the event that at any time, as a
result of an adjustment made pursuant to this Section 5 or otherwise, Holder shall, upon Exercise
of this Warrant, become entitled to receive shares and/or other securities or assets (other than
Common Stock) then, wherever appropriate, all references herein

 

 

to shares of Common Stock shall be deemed to refer to and include such shares and/or other
securities or assets; and thereafter the number of such shares and/or other securities or assets
shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as
practicable to the provisions of this Section 5.

(f) Notice of Adjustments. Whenever the Exercise Price is adjusted pursuant to the terms of this
Warrant, the Company shall promptly mail to the Holder a notice (an “Exercise Price Adjustment
Notice”) setting forth the Exercise Price after such adjustment and setting forth a statement of
the facts requiring such adjustment. The Company shall, upon the written request at any time of the
Holder, furnish to such Holder a like Warrant setting forth (i) such adjustment or readjustment,
(ii) the Exercise Price at the time in effect and (iii) the number of shares of Common Stock and
the amount, if any, of other securities or property which at the time would be received upon
Exercise of the Warrant. For purposes of clarification, whether or not the Company provides an
Exercise Price Adjustment Notice pursuant to this Section 5(f), upon the occurrence of any event
that leads to an adjustment of the Exercise Price, the Holder would be entitled to receive a number
of Exercise Shares based upon the new Exercise Price, as adjusted, for exercises occurring on or
after the date of such adjustment, regardless of whether the Holder accurately refers to the
adjusted Exercise Price in the Exercise Form.

6. Fractional Interests.

No fractional shares or scrip representing fractional shares shall be issuable upon the Exercise of
this Warrant, but on Exercise of this Warrant, Holder may purchase only a whole number of shares of
Common Stock. If, on Exercise of this Warrant, Holder would be entitled to a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such fractional share shall
be disregarded and the number of shares of Common Stock issuable upon Exercise shall be the rounded
up or down to the next closest whole number of shares.

7. Reservation of Shares.

From and after the date hereof, the Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted therefor as herein
above provided) as shall be sufficient for the Exercise of this Warrant and payment of the Exercise
Price. If at any time the number of shares of Common Stock authorized and reserved for issuance is
below the number of shares sufficient for the Exercise of this Warrant (a “Share Authorization
Failure”) (based on the Exercise Price in effect from time to time), the Company will promptly take
all corporate action necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of stockholders to authorize additional shares to
meet the Company’s obligations under this Section 7, in the case of an insufficient number of
authorized shares, and using its best efforts to obtain stockholder approval of an increase in such
authorized number of shares. The Company covenants and agrees that upon the Exercise of this
Warrant, all shares of Common Stock issuable upon such Exercise shall be duly and validly issued,
fully paid and nonassessable and not subject to preemptive rights, rights of first refusal or
similar rights of any Person.

8. Restrictions on Transfer.

(a) Registration or Exemption Required. This Warrant has been issued in a transaction exempt from
the registration requirements of the Securities Act by virtue of Regulation D and exempt from state
registration or qualification under applicable state laws. None of the Warrant, the Exercise Shares
or Failure Payment Shares may be sold, transferred, assigned, pledged, hypothecated or otherwise
disposed of except pursuant to an effective registration statement under the Securities Act and
applicable state laws or an exemption to the registration requirements of the Securities Act and
applicable state laws including, without limitation, a so-called “4(1) and a half” transaction.

(b) Assignment. Subject to Section 8(a), the Holder may sell, transfer, assign, pledge, or
otherwise dispose of this Warrant, in whole or in part. Holder shall deliver a written notice to
Company, substantially in the form of the Assignment attached hereto as Exhibit B,
indicating the Person or Persons to whom the Warrant shall be assigned and the respective number of
warrants to be assigned to each assignee. The Company shall effect the assignment within three (3)
business days (the “Transfer Delivery Period”), and shall deliver to the assignee(s) designated by
Holder a Warrant or Warrants of like tenor and terms for the appropriate number of shares. This
Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the
successors and assigns of the Holder. The provisions of this Warrant are intended to be for the
benefit of all Holders from time to time of this Warrant,

 

 

and shall be enforceable by any such Holder. For avoidance of doubt, in the event Holder notifies
the Company that such sale or transfer is a so called “4(1) and half” transaction, the parties
hereto agree that a legal opinion from outside counsel for the Holder delivered to counsel for the
Company substantially in the form attached hereto as Exhibit C shall be the only
requirement to satisfy an exemption from registration under the Securities Act to effectuate such
“4(1) and half” transaction.

9. Noncircumvention.

The Company hereby covenants and agrees that the Company will not, by amendment of its certificate
of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger,
scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will
at all times in good faith carry out all the provisions of this Warrant and take all action as may
be required to protect the rights of the Holder. Without limiting the generality of the foregoing,
the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the Exercise Price then in effect, and (ii) shall take all such
actions as may be necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

10. Events of Failure; Definition of Black Scholes Value.

(a) Definition.

The occurrence of each of the following shall be considered to be an “Event of Failure.”

(i) A Delivery Failure occurs, where a “Delivery Failure” shall be deemed to have
occurred if the Company fails to use its reasonable best efforts to deliver
Exercise Shares to the Holder within any applicable Delivery Period;

(ii) A Legend Removal Failure occurs, where a “Legend Removal Failure” shall be
deemed to have occurred if the Company fails to use its reasonable best efforts to
issue this Warrant and/or Exercise Shares without a restrictive legend, or fails to
use it reasonable best efforts to remove a restrictive legend, when and as required
under Section 2(e) hereof;

(iii) a Transfer Delivery Failure occurs, where a “Transfer Delivery Failure” shall
be deemed to have occurred if the Company fails to use its reasonable best efforts
to deliver a Warrant within any applicable Transfer Delivery Period; and

(iv) a Registration Failure (as defined below).

For purpose hereof, “Registration Failure” means that (A) the Company fails to file with the SEC on
or before the Filing Deadline (as defined in the Registration Rights Agreement) any Registration
Statement required to be filed pursuant to Section 2(a) of the Registration Rights Agreement,
(B) the Company fails to use its reasonable best efforts to obtain effectiveness with the SEC,
prior to the Registration Deadline (as defined in the Registration Rights Agreement), and if such
Registration Statement is not so filed prior to the Registration Deadline, as soon as possible
thereafter, of any Registration Statement (as defined in the Registration Rights Agreement) that
are required to be filed pursuant to Section 2(a) of the Registration Rights Agreement, or fails to
use its reasonable best efforts to keep such Registration Statement current and effective as
required in Section 3 of the Registration Rights Agreement, or (C) the Company fails to file any
additional Registration Statements required to be filed pursuant to Section 2(a)(ii) of the
Registration Rights Agreement on or before the Additional Filing Deadline or fails to use its
reasonable best efforts to cause such new Registration Statement to become effective on or before
the Additional Registration Deadline, and if such effectiveness does not occur within such period,
as soon as possible thereafter, and (D) the Company fails to file any amendment to any Registration
Statement required to be filed pursuant to Section 3(b) of the Registration Rights Agreement by the
Additional Filing Deadline or fails to use its best efforts to cause such amendment to become
effective within sixty (60) days of the applicable Registration Trigger Date, and, if such
effectiveness does not occur within such period, as soon as possible thereafter.

(b) Failure Payments; Black-Scholes Determination. The Company understands that any Event of
Failure (as defined above) could result in economic loss to the Holder. In the event that any Event
of Failure occurs, as

 

 

compensation to the Holder for such loss, the Company agrees to pay (as liquidated damages and not
as a penalty) to the Holder an amount payable, at the Company’s option, either (i) in cash or (ii)
in shares of Common Stock that are valued for these purposes at 95% of the Volume Weighted Average
Price on the date of such calculation (“Failure Payments”), in each case equal to 14% per annum (or
the maximum rate permitted by applicable law, whichever is less) of the Black-Scholes value (as
determined below) of the remaining unexercised portion of this Warrant on the date of such Event of
Failure (as recalculated on the first business day of each month thereafter for as long as Failure
Payments shall continue to accrue), which shall accrue daily from the date of such Event of Failure
until the Event of Failure is cured, accruing daily and compounded monthly, provided, however, the
Holder shall only receive up to such amount of shares of Common Stock in respect of Failure
Payments such that Holder and any other persons or entities whose beneficial ownership of Common
Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act
(including shares held by any “group” of which the Holder is a member, but excluding shares
beneficially owned by virtue of the ownership of securities or rights to acquire securities that
have limitations on the right to convert, exercise or purchase similar to the limitation set forth
herein) shall not collectively beneficially own greater than 9.98% of the total number of shares of
Common Stock of the Company then issued and outstanding and provided, further, that the foregoing
proviso shall not be construed to require any cash payment of the remaining Failure Payments. For
purposes of clarification, it is agreed and understood that Failure Payments shall continue to
accrue following any Event of Default until the applicable Default Amount is paid in full.

Notwithstanding the above, in the event that the Company (i) has, by the Filing Deadline (as
defined the Registration Rights Agreement) filed a Registration Statement (as defined in the
Registration Rights Agreement) covering the number of shares required by the Registration Rights
Agreement, and (ii) has responded in writing to any comments to the Registration Statement that the
Company has received from the SEC, within twenty (20) days of such receipt, and nevertheless the
SEC has not declared effective a Registration Statement covering the full number of Warrant Shares
issuable upon exercise of the Warrants by the Registration Deadline (as defined in the Registration
Rights Agreement) then, the Failure Payments attributable to such late Registration Effectiveness
shall be reduced from 14% to 11% (calculated as set forth above). The Company shall satisfy any
Failure Payments under this Section pursuant to Section 10(c) below. Failure Payments are in
addition to any Shares that the Holder is entitled to receive upon Exercise of this Warrant.

For purposes hereof, the “Black-Scholes” value of a Warrant shall be determined by use of the Black
Scholes Option Pricing Model using the criteria set forth on Schedule 1 hereto.

(c) Payment of Accrued Failure Payments. The Failure Payment Shares representing accrued Failure
Payments for each Event of Failure shall be issued and delivered on or before the fifth
(5th) business day of each month following a month in which Failure Payments accrued. Nothing
herein shall limit the Holder’s right to pursue actual damages (to the extent in excess of the
Failure Payments) for the Company’s Event of Failure, and the Holder shall have the right to pursue
all remedies available at law or in equity (including a decree of specific performance and/or
injunctive relief). Notwithstanding the above, if a particular Event of Failure results in an Event
of Default pursuant to Section 11 hereof, then the Failure Payment, for that Event of Failure only,
shall be considered to have been satisfied upon payment to the Holder of an amount equal to the
greater of (i) the Failure Payment, or (ii) the Default Amount, payable in accordance with
Section 11.

(d) Maximum Interest Rate. Nothing contained herein or in any document referred to herein or
delivered in connection herewith shall be deemed to establish or require the payment of a rate of
interest or other charges in excess of the maximum permitted by applicable law. In the event that
the rate of interest or dividends required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited against amounts
owed by the Company to the Holder and thus refunded to the Company.

11. Default.

(a) Events Of Default. Each of the following events shall be considered to be an “Event of
Default,” unless waived by the Holder:

(i) Failure To Effect Registration. With respect to all Registration Failures, a Registration
Failure occurs and remains uncured for a period of more than forty-five (45) days (or sixty (60)
days in the case where the Company (i) has, by the Filing Deadline (as defined the Registration
Rights Agreement) filed a Registration Statement (as

 

 

defined in the Registration Rights Agreement) covering this Warrant and the number of shares
required by the Registration Rights Agreement, and (ii) has responded in writing to any comments to
the Registration Statement that the Company has received from the SEC, within twenty (20) days of
such receipt, and nevertheless the SEC has not declared effective a Registration Statement covering
the this Warrant and the Shares by the Registration Deadline (as defined in the Registration Rights
Agreement)), and such Registration Failure relates solely to the Company’s failure to have
the Registration Statement declared effective by the Registration Deadline (as defined in the
Registration Rights Agreement) and with respect to a Registration Failure provided in clause (E) of
the definition of “Registration Failure”, such Registration Failure occurs and remains uncured for
a period of more than thirty (30) days.

(ii) Failure To Deliver Common Stock. A Delivery Failure (as defined above) occurs and
remains uncured for a period of more than twenty (20) days; or at any time, the Company announces
or states in writing that it will not honor its obligations to issue shares of Common Stock to the
Holder upon Exercise by the Holder of the Exercise rights of the Holder in accordance with the
terms of this Warrant.

(iii) Legend Removal Failure. A Legend Removal Failure (as defined above) occurs and
remains uncured for a period of twenty (20) days; and

(iv) Corporate Existence; Major Transaction. In the event that (A) the Company has failed
to place the Exercise Shares issuable upon exercise of a Cashless Major Exercise into escrow or to
instruct the escrow agent to release such shares to the Holder pursuant to Section 5(c)(iv), (B)
the Company has failed to pay the Major Transaction Warrant Early Termination Price to the Holder
pursuant to Section 5(c)(iv), or (C) with respect to a Major Transaction that is to be treated as
an Assumption under the terms hereof, the Company has failed to meet the Assumption requirements of
Section 5(c)(ii).

(b) Mandatory Early Termination.

(i) Mandatory Early Termination Amount; Cashless Default Exercise. If any Events of
Default shall occur then, unless waived by the Holder, upon the occurrence and during the
continuation of any Event of Default, at the option of the Holder, such option exercisable through
the delivery of written notice to the Company by such Holder (the “Default Notice”), the Company
shall have the right, but not the obligation, to terminate the outstanding amount of this Warrant
and pay to the Holder (a “Mandatory Early Termination”), in full satisfaction of its obligations
hereunder by delivery of a notice to such effect to the Holder within two (2) Business Days
following receipt of the Default Notice, an amount payable in cash (the “Mandatory Early
Termination Amount” or the “Default Amount”) equal to the greater of (i) the Black-Scholes value
(as determined in accordance with Section 10(b)) of the remaining unexercised portion of this
Warrant on the date of such Default Notice and (2) the Black-Scholes value (also as determined in
accordance with Section 10(b)) of the remaining unexercised portion of this Warrant on the Trading
Day immediately preceding the date that the Mandatory Early Termination Amount is paid to the
Holder. In the event the Company does not exercise its right to consummate a Mandatory Early
Termination, then the Holder shall have the right to exercise this Warrant pursuant to a Cashless
Default Exercise in accordance with Section 3(c) above.

The Mandatory Early Termination Amount shall be payable within five (5) Business Days following the
date of the applicable Default Notice.

(ii) Liquidated Damages. The parties hereto acknowledge and agree that the sums payable as
Failure Payments or pursuant to a Mandatory Early Termination shall give rise to liquidated damages
and not penalties. The parties further acknowledge that (i) the amount of loss or damages likely to
be incurred by the Holder is incapable or is difficult to precisely estimate, (ii) the amounts
specified bear a reasonable proportion and are not plainly or grossly disproportionate to the
probable loss likely to be incurred by the Holder, and (iii) the parties are sophisticated business
parties and have been represented by sophisticated and able legal and financial counsel and
negotiated this Agreement at arm’s length.

The Default Amount, together with all other amounts payable hereunder, shall immediately become due
and payable, all without demand, presentment or notice, all of which hereby are expressly waived,
together with all

 

 

costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall
be entitled to exercise all other rights and remedies available at law or in equity.

(c) Posting Of Bond. In the event that any Event of Default occurs hereunder, the Company may not
raise as a legal defense (in any Lawsuit, as defined below, or otherwise) or justification to such
Event of Default any claim that such Holder or any one associated or affiliated with such Holder
has been engaged in any violation of law, unless the Company has posted a surety bond (a “Surety
Bond”) for the benefit of such Holder in the amount of 100% of the aggregate Surety Bond Value (as
defined below) of all of the Holder’s Warrants (the “Bond Amount”), which Surety Bond shall remain
in effect until the completion of litigation of the dispute and the proceeds of which shall be
payable to such Holder to the extent Holder obtains judgment.

For purposes hereof, a “Lawsuit” shall mean any lawsuit, arbitration or other dispute resolution
filed by either party herein pertaining to any of this Warrant, the Facility Agreement and the
Registration Rights Agreement.

“Surety Bond Value,” for the Warrants shall mean 130% of the of the Black-Scholes value of the
remaining unexercised portion of this Warrant on the Trading Day immediately preceding the date
that such bond goes into effect).

(d) Injunction And Posting Of Bond. In the event that the Event of Default referred to in
subsection (c) above pertains to the Company’s failure to deliver unlegended shares of Common Stock
to the Holder pursuant to a Warrant Exercise, legend removal request, or otherwise, the Company may
not refuse such unlegended share delivery based on any claim that such Holder or any one associated
or affiliated with such Holder has been engaged in any violation of law, unless an injunction from
a court, on prior notice to Holder, restraining and or enjoining Exercise of all or part of said
Warrant shall have been sought and obtained by the Company and the Company has posted a Surety Bond
for the benefit of such Holder in the amount of the Bond Amount, which Surety Bond shall remain in
effect until the completion of litigation of the dispute and the proceeds of which shall be payable
to such Holder to the extent Holder obtains judgment.

(e) Remedies, Other Obligations, Breaches And Injunctive Relief. The remedies provided in this
Warrant shall be cumulative and in addition to all other remedies available under this Warrant, the
Facility Agreement and the Registration Rights Agreement, at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein shall limit the right
of the Holder to pursue actual damages for any failure by the Company to comply with the terms of
this Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach or threatened breach, the holder
of this Warrant shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and without any bond or
other security being required.

12. Holder’s Early Terminations.

(a) Mechanics of Holder’s Early Terminations. In the event that the Company does not deliver the
applicable Major Transaction Warrant Early Termination Price or Default Amount or the Exercise
Shares in respect of a Cashless Major Exercise or a Cashless Default Exercise, as the case may be,
to the Holder within the time period or as otherwise required pursuant to the terms hereof, at any
time thereafter the Holder shall have the option, upon notice to the Company, in lieu of early
termination, Cashless Major Exercise or Cashless Default Exercise, as the case may be, to require
the Company to promptly return to the Holder all or any portion of this Warrant that was submitted
for early termination or exercise. Upon the Company’s receipt of such notice, (x) the applicable
early termination or exercise, as the case may be, shall be null and void with respect to such
applicable portion of this Warrant, (y) the Company shall immediately return this Warrant, or issue
a new Warrant to the Holder representing the portion of this Warrant that was submitted for early
termination or exercise and (z) the Exercise Price of this Warrant or such new Warrant shall be
adjusted to the lesser of (A) the Exercise Price as in effect on the date on which the applicable
early termination, default or exercise notice, as the case may be, is voided and (B) the lowest
closing price for the Common Stock on NASDAQ, or, if NASDAQ is not the principal trading market for
the Common Stock, the principal securities exchange or other securities market on which the Common
Stock is then being traded, during the period beginning on and including the date on which the
applicable early termination, default or exercise notice, as the case may be, is delivered to the
Company and ending on and including the date on

 

 

which the applicable early termination or exercise is voided. The Holder’s delivery of a notice
voiding an early termination or exercise and exercise of its rights following such notice shall not
affect the Company’s obligations to make any payments of Failure Payments which have accrued prior
to the date of such notice with respect to the Warrant subject to such notice.

13. Benefits of this Warrant.

Nothing in this Warrant shall be construed to confer upon any person other than the Company and
Holder any legal or equitable right, remedy or claim under this Warrant and this Warrant shall be
for the sole and exclusive benefit of the Company and Holder.

14. Governing Law.

All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by law. The parties hereby waive all rights to a trial by
jury. If either party shall commence an action or proceeding to enforce any provisions of this
Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other
party for its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

15. Loss of Warrant.

Upon receipt by the Company of evidence of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of indemnity or security reasonably
satisfactory to the Company, and upon surrender and cancellation of this Warrant, if mutilated, the
Company shall execute and deliver a new Warrant of like tenor and date.

16. Notice or Demands.

Notices or demands pursuant to this Warrant to be given or made by Holder to or on the Company
shall be sufficiently given or made if sent by certified or registered mail, return receipt
requested, postage prepaid, and addressed, until another address is designated in writing by the
Company, to the address set forth in Section 2(a) above. Notices or demands pursuant to this
Warrant to be given or made by the Company to or on Holder shall be sufficiently given or made if
sent by certified or registered mail, return receipt requested, postage prepaid, and addressed, to
the address of Holder set forth in the Company’s records, until another address is designated in
writing by Holder.

17. Warrant Holder Not Deemed a Stockholder.

Except as otherwise specifically provided herein, no Holder, as such, of this Warrant shall be
entitled to vote or be deemed the holder of shares of capital stock of the Company for any purpose,
nor shall anything contained in this Warrant be construed to confer upon the Holder hereof, as
such, any of the rights of a stockholder of the Company

 

 

or any right to vote, give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive
notice of meetings, or otherwise, prior to the issuance to the Holder of this Warrant of the Common
Stock which it is then entitled to receive upon the due exercise of this Warrant. In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities on such Holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the
Company, whether such liabilities are asserted by the Company or by creditors of the Company.

18. Representations of Holder.

The Holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant
and the Warrant Shares for its own account for investment only and not with a view towards, or for
resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares,
except pursuant to sales registered or exempted under the Securities Act. The Holder of this
Warrant further represents, by acceptance hereof, that, as of this date, such Holder is an
“accredited investor” as such term is defined in Rule 501(a)(1) of Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act (an “Accredited Investor”). Upon
exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing, in a
form reasonably satisfactory to the Company, that any Common Stock acquired upon the exercise of
this Warrant so purchased are being acquired solely for the Holder’s own account and not as a
nominee for any other party, for investment and not with a view toward distribution or resale and
that such Holder is an Accredited Investor. If such Holder cannot make such representations
because it would be factually incorrect, it shall be a condition to such Holder’s exercise of this
Warrant that the Company receive such other representations as the Company considers reasonably
necessary to assure the Company that the issuance of its securities upon exercise of this Warrant
shall not violate any United Sates or state securities laws.

19. Hedging Limitations.

The Company shall notify the Holder of the scheduled date of the consummation of any Major
Transaction immediately following the close of regular hours of trading on the fourth Trading Day
preceding the scheduled consummation of a Major Transaction. During the next three Trading Days
following such notice Holder agrees that it will not enter into or engage in any short-selling
transaction or participate in any hedging activity with respect to the Common Stock. Holder agrees
that it will not enter into any transaction involving the Company’s Common Stock or any derivative
thereof while in possession of material nonpublic information.

 

 

IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the 13th day of
March, 2009.

	 	 	 	 	 
	 	INSULET CORPORATION

 	 
	 	By:  	 	 
	 	 	Print Name:  	  	 
	 	 	Title:  	 	 

The following Exhibits and Schedules
to the Warrant have been omitted in accordance with Item 601(b)(2) of Regulation S-K.

EXHIBITS

Exhibit A    Exercise Form for Warrant

Exhibit B    Assignment

Exhibit C    Form of Opinion

SCHEDULES

Schedule 1    Black-Scholes Value		

Insulet Corporation will furnish
supplementally a copy of any omitted or partially omitted schedule or exhibit to the Securities
and Exchange Commission upon request; provided, however, that Insulet Corporation may
request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended, for any schedule or exhibit so furnished.exv10w1

	 	 	 	 	 

Exhibit 10.1

This  Facility Agreement
(the “Facility Agreement”) contains representations and warranties that the Lenders
(“Lenders”) and Insulet Corporation (“Insulet”) made to each other. These
representations and warranties were made only for the purposes of the signing of the Facility
Agreement and solely for the benefit of the Lenders and Insulet as of specific dates, may be
subject to important limitations and qualifications agreed to by the Lenders and Insulet in
connection with the signing of the Facility Agreement, and may not be complete. Furthermore,
these representations and warranties may have been made for the purposes
of allocating contractual risk between the Lenders and Insulet instead of establishing these
matters as facts, and may or may not have been accurate as of any specific date and do not
purport to be accurate as of the date of the filing of the Facility Agreement by Insulet with the
Securities and Exchange Commission. Accordingly, you should not rely upon the representations
and warranties contained in the Facility Agreement as characterizations of the actual state
of facts, since they were intended to be for the benefit of, and to be limited to, the Lenders
and Insulet.

FACILITY AGREEMENT

     FACILITY AGREEMENT (this “Agreement”), dated as of March 13, 2009 (the “Agreement
Date”), between Insulet Corporation, a Delaware corporation (the “Borrower”), and those
lenders set forth on Schedule 1 attached hereto (individually, a “Lender” and together,
the “Lenders” and, together with the Borrower, the “Parties”).

W I T N E S S E T H:

     WHEREAS, the Borrower wishes to borrow from the Lenders up to Sixty Million Dollars
($60,000,000) for the purpose described in Section 2.1; and

     WHEREAS, the Lenders desire to make loans to the Borrower from time to time for such purpose.

     NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the Lenders and
the Borrower agree as follows:

ARTICLE 1

DEFINITIONS

     Section 1.1 General Definitions. Wherever used in this Agreement, the Exhibits or the
Schedules attached hereto, unless the context otherwise requires, the following terms have the
following meanings:

     “Additional Amounts” has the meaning given to it in Section 2.6(b).

     “Affiliate” means, with respect to any Person, any other Person:

     (a) that owns, directly or indirectly, in the aggregate of more than fifty percent
(50%) of the beneficial ownership interest of such Person; or

     (b) that directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such Person; or

     (c) that directly or indirectly is a general partner, controlling shareholder, or
managing member of such Person.

     “Approved Fund” means, with respect to any Lender, any Person (other than a natural
Person) that (a) is or will be engaged in making, purchasing, holding or otherwise investing in
notes, commercial loans and similar extensions of credit in the ordinary course of its business or
(b) is advised or managed by (i) such Lender, (ii) any Affiliate of such Lender or (iii) any Person
(other than an individual) or any Affiliate of any Person (other than an individual) that
administers or manages such Lender.

     “Business Day” means a day on which banks are open for business in The City of New
York.

 

 

     “Cash and Cash Equivalents” means with respect to any date of determination, the
amount shown as such on the consolidated balance sheet of the Borrower and its Subsidiaries at the
time such balance sheet is filed with the SEC on Form 10-Q or Form 10-K under the Exchange Act or
otherwise made available to the Borrower’s stockholders.

     “Code” means the Internal Revenue Code of 1986, as amended, and any Treasury
Regulations promulgated thereunder.

     “Common Stock” means the common stock, par value $0.001 per share, of the Borrower.

     “Default” means any event which, at the giving of notice, lapse of time or fulfillment
of any other applicable condition (or any combination of the foregoing), would constitute an Event
of Default.

     “Disbursement” has the meaning given to it in Section 2.2.

     “Disbursement Date” means the date on which a Disbursement occurs.

     “Disbursement Request” has the meaning given to it in Section 2.2.

     “Dollars” and the “$” sign mean the lawful currency of the United States of
America.

     “Event of Default” has the meaning given to it in Section 5.5.

     “Evidence of Disbursement” has the meaning given to it in Section 2.2.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, including the
rules and regulations promulgated thereunder.

     “Excluded Taxes” means all income taxes, minimum or alternative minimum income taxes,
any tax determined based upon income, capital gains, gross income, sales, net profits, windfall
profits or similar items, franchise taxes (or any other tax measured by capital, capital stock or
net worth), gross receipts taxes, branch profits taxes, margin taxes (or any other taxes imposed on
or measured by net income, or imposed in lieu of net income) payable by the Lenders in any
jurisdiction to any Government Authority (or political subdivision or taxing authority thereof) in
connection with any payments received under this Agreement by the Lenders, or any similar tax
imposed in connection with the execution and delivery of, and the performance of its obligations
under, this Agreement.

     “Final Payment” means such amount as may be necessary to repay the Loan in full and
any other amounts owing by the Borrower to the Lenders pursuant to the Financing Documents.

     “Final Payment Date” means the earlier of (i) the date on which the Borrower repays
the outstanding principal of the Loan (together with any other amounts accrued and unpaid under
this Agreement) to the Lenders pursuant to this Agreement and (ii) September 16, 2012.

     “Financing Documents” means this Agreement, the Notes, the Registration Rights
Agreement, the Security Agreement, the Warrants and any other document or instrument delivered by
the Borrower in connection with any of the foregoing whether or not specifically mentioned herein
or therein.

 

 

     “Finished Goods Inventory” means with respect to any date of determination, the amount
shown as such in the footnotes to the consolidated financial statements of the Borrower and its
Subsidiaries at the time such financial statement are filed with the SEC on Form 10-Q or Form 10-K
under the Exchange Act or otherwise made available to the Borrower’s stockholders.

     “GAAP” means generally accepted accounting principles consistently applied as set
forth in the opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable stature and authority
within the accounting profession).

     “Government Authority” means any government, governmental department, ministry,
cabinet, commission, board, bureau, agency, tribunal, regulatory authority, instrumentality,
judicial, legislative, fiscal, or administrative body or entity, whether domestic or foreign,
federal, state or local, having jurisdiction over the matter or matters and Person or Persons in
question, including, without limitation, the SEC.

     “Gross Profit” means, for any fiscal quarter of the Borrower, the gross profit
(loss) for such quarter as reported in the Borrower’s filings with the SEC, provided that (i) any
gross profit recorded in any single fiscal quarter from the sale of the OmniPod System Starter Kits
solely for investigational use shall be capped at $1 million and (ii) any gross profit recorded in
any fiscal quarter related to the favorable settlement of a legal dispute or proceeding between the
Borrower and a third party shall be excluded in its entirety.

     “Indebtedness” means the following, whether direct or contingent:

     (a) all indebtedness for borrowed money;

     (b) the deferred purchase price of assets or services which in accordance with GAAP
would be shown to be a liability (or on the liability side of a balance sheet);

     (c) all guaranty obligations;

     (d) the maximum amount of all letters of credit issued or acceptance facilities
established for the account of the Borrower and, without duplication, all drafts drawn
thereunder (other than letters of credit supporting other indebtedness of Borrower and which
are otherwise permitted hereunder);

     (e) all capitalized lease obligations;

     (f) all indebtedness of another Person secured by any Lien on any property of the
Borrower, whether or not such indebtedness has been assumed or is recourse;

     (g) all obligations under take-or-pay or similar arrangements or under any interest
rate swaps, caps, floors, collars and other interest hedge or protection agreements,
treasury locks, equity forward contracts, currency agreements or commodity purchase or
option agreements or other interest or exchange rate or commodity price hedging agreements
and any other derivative instruments, in each case, whether the Borrower is liable
contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations the Borrower otherwise assures a creditor against loss;

 

 

     (h) indebtedness created or arising under any conditional sale or title retention
agreement; and

     (i) obligations of the Borrower with respect to withdrawal liability to or on behalf of
any “multi employer plan” as defined in Section 4001(a) of ERISA.

     “Indemnified Person” has the meaning given to it in Section 6.11.

     “Indemnity” has the meaning given to it in Section 6.11.

     “Interest Rate” means 9.75% simple interest per annum, payable on the outstanding
principal amount of each of the Notes.

     “Lien” means any lien, pledge, preferential arrangement, mortgage, security interest,
deed of trust, charge, assignment, hypothecation, title retention, privilege or other encumbrance
on or with respect to property or interest in property having the practical effect of constituting
a security interest, in each case with respect to the payment of any obligation with, or from the
proceeds of, any asset or revenue of any kind.

     “Loan” means the loan to be made available by the Lenders to the Borrower pursuant to
Section 2.2 in the maximum aggregate amount of sixty million Dollars ($60,000,000) or, as the
context may require, the principal amount thereof from time to time outstanding.

     “Loss” has the meaning given to it in Section 6.11.

     “Major Transaction” has the meaning set forth in the Warrants.

     “Material Adverse Effect” means a material adverse effect on (a) the business,
operations, condition (financial or otherwise) or property of the Borrower, (b) the validity or
enforceability of any provision of any Financing Document, (c) the ability of the Borrower to
timely perform its Obligations or (d) the rights and remedies of the Lenders under any Financing
Document.

     “Notes” means the notes issued to the Lenders evidencing the Loan in the form attached
hereto as Exhibit A.

     “Obligations” means all obligations (monetary or otherwise) of the Borrower arising
under or in connection with the Financing Documents.

     “Organizational Documents” means the Certificate of Incorporation and Bylaws, each as
in effect from time to time, of the Borrower.

     “Permitted Indebtedness” means the principal of (and premium, if any), interest on,
and all fees and other amounts (including, without limitation, any reasonable out-of-pocket costs,
enforcement expenses (including reasonable out-of-pocket legal fees and disbursements), collateral
protection expenses and other reimbursement or indemnity obligations relating thereto) payable by
Borrower and/or its Subsidiaries under or in connection with: (i) Indebtedness of Borrower in favor
of the Lenders arising under this Agreement or any other Financing Document, (ii) Indebtedness
existing as of the date hereof and set forth in a schedule to this Agreement (which the Borrower
represents to not be in excess of $105,734,375 and any Permitted Refinancing Indebtedness used to
refinance such Indebtedness, (iii) future Indebtedness in respect of purchase money financing,
capital

 

 

lease obligations and equipment financing and letters of credit, in each case in the ordinary
course of business, (iv) Indebtedness to trade creditors incurred in the ordinary course of
business, (v) intercompany Indebtedness, (vi) Indebtedness in respect of workers’ compensation
claims, self-insurance obligations, indemnities, bankers’ acceptances, performance and surety
bonds, appeal or other similar bonds, in each case in the ordinary course of business, in any such
case, any reimbursement obligations in connection therewith (vii) Indebtedness arising from the
honoring by a bank or other financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within 15
Business Days and (viii) Indebtedness arising from agreements providing for indemnifications,
provided that the amount of such Indebtedness does not exceed $1,000,000.

     “Permitted Liens” means: (i) [Intentionally omitted]; (ii) Liens in favor of the
Lenders; (iii) statutory Liens created by operation of applicable law; (iv) Liens arising in the
ordinary course of business and securing obligations that are not overdue or are being contested in
good faith by appropriate proceedings; (v) Liens for Taxes not yet due and payable or that are
being contested in good faith by appropriate proceedings; (vi) licenses and sub-licenses granted in
the ordinary course of Borrower’s business and, with respect to any licenses where Borrower is the
licensee or sublicensee, any interest or title of a licensor or sublicensor under any such license
or sublicense; (vii) any option or other agreement to purchase any asset of the Borrower or any
Subsidiary the disposition of which is not otherwise prohibited hereby; (viii) Liens in favor of
the Borrower and/or any of its Subsidiaries; (ix) survey exceptions, easements or reservations of,
or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone
lines and other similar purposes, or zoning or other restrictions as to the use of real property
that were not incurred in connection with Indebtedness; (x) Liens incurred in the ordinary course
of business in connection with workers’ compensation, unemployment insurance and other types of
social security, (xi) Liens resulting from operation of law with respect to any judgments, awards
or orders to the extent such judgments, awards or orders do not cause of constitute an Event of
Default; (xii) Liens upon specific items of inventory or other goods and proceeds of any Person
securing such Person’s obligations in respect of bankers’ acceptances issued or created for the
account of such Person to facilitate the purchase, shipment or storage of such inventory or other
goods; (xiii) Liens securing reimbursement obligations with respect to commercial letters of credit
which encumber documents and other property relating to such letters of credit and products and
proceeds thereof; (xiv) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Borrower or any of its
Subsidiaries, including rights of offset and set-off; (xv) Liens securing Indebtedness represented
by the accrual of interest, the payment of interest on any Permitted Indebtedness in the form of
additional Permitted Indebtedness with the same terms; (xvi) Liens on raw materials or on
manufactured products or other goods as security for any drafts or bills of exchange drawn in
connection with the importation of such raw materials or manufactured products; (xvii) Liens
arising from precautionary UCC financing statements regarding operating leases or consignments;
(xviii) Liens occurring solely by filing of a UCC statement which filing has not been consented to
by the Borrower or any Subsidiary; (xix) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business, as well as obligations under bids, trade contracts and leases
(exclusive of obligations for the payment of borrowed money) and cash deposits in connection with
acquisitions otherwise permitted hereby; (xx) Liens in favor of financial institutions arising in
connection with Borrower’s accounts maintained in the ordinary course of Borrower’s business held
at such institutions to secure standard fees for services charged by, but not financing made
available by, such institutions.

 

 

     “Permitted Refinancing Indebtedness” means any Indebtedness of the Borrower or any of
its Subsidiaries issued in exchange for, or the net proceeds of which are used to renew, refund,
refinance, replace, defease or discharge Permitted Indebtedness of the Borrower or any of its
Subsidiaries; provided that:

     (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing
Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the
Indebtedness renewed, refunded, refinanced, replaced, defeased or discharged (plus all accrued
interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred
in connection therewith);

     (2) such Permitted Refinancing Indebtedness is unsecured or has a final maturity date later
than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater
than the Weighted Average Life to Maturity of, the Indebtedness being renewed, refunded,
refinanced, replaced, defeased or discharged; and

     (3) if the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged
is subordinated in right of payment to the Loan, such Permitted Refinancing Indebtedness is
subordinated in right of payment to the Loan on terms at least as favorable to the Lenders as those
contained in the documentation governing the Indebtedness being renewed, refinanced, replaced,
defeased or discharged.

     “Person” means and includes any natural person, individual, partnership, joint
venture, corporation, trust, limited liability company, limited company, joint stock company,
unincorporated organization, government entity or any political subdivision or agency thereof, or
any other entity.

     “Receivables” means with respect to any date of determination, the amount shown as
such on the consolidated balance sheet of the Borrower and its Subsidiaries at the time such
balance sheet is filed with the SEC on Form 10-Q or Form 10-K under the Exchange Act or otherwise
made available to the Borrower’s stockholders.

     “Registration Rights Agreement” means the Registration Rights Agreement, dated as of
the date hereof, among the Borrower and the Lenders.

     “Requisite Lenders” shall mean at any time Lenders then holding more than 50% of the
sum of the aggregate unpaid principal amount of the Loan then outstanding.

     “SEC” means the United States Securities and Exchange Commission.

     “Securities Act” means the Securities Act of 1933, as amended, including the rules and
regulations promulgated thereunder.

     “Security Agreement” means the Security Agreement, dated as of the date hereof, among
the Borrower and the Lenders granting to the Lenders a first priority security interest in the
collateral identified therein.

     “Subsidiary” means with respect to any Person, any corporation, partnership, trust,
limited liability company, association or other business entity of which more than 50% of the total
voting power of shares of stock or other ownership interests entitled (without regard to the
occurrence of any contingency) to vote in the election of the members of the board of directors or
equivalent

 

 

governing body is at the time owned or controlled, directly or indirectly by that Person or
one or more of the other Subsidiaries or Affiliates of that Person or a combination thereof.

     “Taxes” means all deductions or withholdings for any and all present and future taxes,
levies, imposts, stamp or other duties, fees, assessments, deductions, withholdings, all other
similar governmental charges, and all liabilities with respect thereto.

     “Warrants” means the warrants attached hereto as part of Exhibit C issued pursuant to
Section 2.9.

     Section 1.2 Interpretation. In this Agreement, unless the context otherwise requires, all
words and personal pronouns relating thereto shall be read and construed as the number and gender
of the party or parties requires and the verb shall be read and construed as agreeing with the
required word and pronoun; the division of this Agreement into Articles and Sections and the use of
headings and captions is for convenience of reference only and shall not modify or affect the
interpretation or construction of this Agreement or any of its provisions; the words “herein,”
“hereof,” “hereunder,” “hereinafter” and “hereto” and words of similar import refer to this
Agreement as a whole and not to any particular Article or Section hereof; the words “include,”
“including,” and derivations thereof shall be deemed to have the phrase “without limitation”
attached thereto unless otherwise expressly stated; references to a specified Article, Exhibit,
Section or Schedule shall be construed as a reference to that specified Article, Exhibit, Section
or Schedule of this Agreement; and any reference to any of the Financing Documents means such
document as the same shall be amended, supplemented or modified and from time to time in effect.

     Section 1.3 Business Day Adjustment. If the day by which a payment is due to be made is not a
Business Day, that payment shall be made by the next succeeding Business Day unless that next
succeeding Business Day falls in a different calendar month, in which case that payment shall be
made by the Business Day immediately preceding the day by which such payment is due to be made.

ARTICLE 2

AGREEMENT FOR THE LOAN

     Section 2.1 Use of Proceeds. The Borrower shall use the proceeds from the Loan for operating
expenses and general corporate purposes.

     Section 2.2 Disbursements. The Lenders agree to advance to Borrower Loans (a
“Disbursement”) in the amount for the first Disbursement of $27,500,000 and subsequent
Disbursements (without duplication) as set forth in Exhibit B, upon the Borrower’s request (a
“Disbursement Request”) in the form of Schedule 2, delivered to the Lenders not less than
15 Business Days prior to the date designated by the Borrower in the Disbursement Request for such
Disbursement. Against each Disbursement, the Borrower shall deliver to the Lenders a completed
receipt (the “Evidence of Disbursement”) in the form of Schedule 3, which receipt shall not
be effective until the Disbursement is actually advanced to the Borrower. The Borrower’s ability
to issue Disbursement Requests shall terminate on November 15, 2010. The Lenders shall fulfill
each Disbursement Request in accordance with their respective allocations set forth on Schedule 1
attached hereto.

 

 

     Section 2.3 Payment. (a) The Borrower shall remit the Final Payment to the Lenders on the
earlier to occur of (i) the Final Payment Date and (ii) except as contemplated by Section 5.6, upon
the written request of the Requisite Lenders, an Event of Default. The Borrower may prepay the
Loan at any time without premium or penalty.

     Section 2.4 Transaction Fee. On the date hereof, the Borrower has paid to Deerfield
Management Company, L.P. a transaction fee of $1,200,000.

     Section 2.5 Payments. Payments of any amounts due to the Lenders under this Agreement shall
be made in Dollars in immediately available funds prior to 11:00 a.m New York City time on such
date that any such payment is due, at such bank or places, as the Lenders shall from time to time
designate in writing at least 5 Business Days prior to the date such payment is due. The Borrower
shall pay all and any costs (administrative or otherwise) imposed by banks, clearing houses, or any
other financial institution, in connection with making any payments under any of the Financing
Documents, except for any costs imposed by the Lenders’ banking institutions.

     Section 2.6 Taxes, Duties and Fees.

     (a) The Borrower shall pay or cause to be paid all present and future Taxes (other than
Excluded Taxes, if any), if any, now or at any time hereafter levied or /imposed by any
Government Authority, by any department, agency, political subdivision or taxing or other
authority thereof or therein, by any organization of which the applicable Government
Authority is a member, or by any jurisdiction through which the Borrower makes payments
hereunder, on all amounts due under this Agreement, and all payments of principal and other
amounts due under this Agreement shall be made without deduction for or on account of any
such Taxes, except for Excluded Taxes, which may be deducted or withheld from payments made
by the Borrower only if such deduction or withholding is required by applicable law.

     (b) If the Borrower is required to withhold any such non-excluded Taxes or is prevented
by operation of law or otherwise from paying or causing to be paid such non-excluded Taxes
except for Excluded Taxes, the principal or other amounts due under this Agreement (as
applicable) shall be increased to such amount as shall be necessary to remit to the Lenders
the full amount they would have received (taking into account any such non-excluded Taxes
except for Excluded Taxes imposed on amounts payable by the Borrower under this
Section 2.6(b)) had such payment been made without deduction of such non-excluded Taxes (all
and any of such additional amounts, herein referred to as the “Additional Amounts”).

     (c) Notwithstanding anything to the contrary herein, Additional Amounts shall not be
payable to the extent the obligation to withhold or deduct (i) exists on the day a Lender
becomes a party to this Agreement or the date a new lending office is designated except to
the extent that such Lender was entitled at the time of such assignment or designation to
receive Additional Amounts, or (ii) would not have arisen but for the failure of a Lender or
assignee to deliver a properly completed and duly executed form establishing an exemption
from or reduction in Tax required under applicable law as a condition to the exemption or
reduction absent a change in applicable law (including treaties), which such Lender is
eligible to provide.

 

 

     (d) If Section 2.6(b) above applies and the Lenders so require the Borrower shall
deliver to the Lenders official tax receipts evidencing payment (or certified copies of
them) of the Additional Amounts within thirty (30) days of the date of payment.

     (e) If the Lenders receive a refund from a Government Authority to which the Borrower
has paid withholding Taxes pursuant to this Section 2.6, the Lenders shall pay such refund
to the Borrower.

     Section 2.7 Costs, Expenses and Losses.

     (a) If, as a result of any failure by the Borrower to pay any sums due under this
Agreement on the due date therefor (after the expiration of any applicable grace periods),
or to borrow in accordance with a Disbursement Request made pursuant to Section 2.2, the
Lenders shall incur costs, expenses and/or losses, by reason of the liquidation or
redeployment of deposits from third parties or in connection with obtaining funds to make or
maintain any Disbursement, the Borrower shall pay to the Lenders upon request by the
Lenders, the amount of such costs, expenses and/or losses within fifteen (15) days after
receipt by it of a certificate from the Lenders setting forth in reasonable detail such
costs, expenses and/or losses, along with supporting documentation. For the purposes of the
preceding sentence, “costs, expenses and/or losses” shall include, without limitation, any
interest paid or payable to carry any unpaid amount and any loss, premium, penalty or
expense which may be incurred in obtaining, liquidating or employing deposits of or
borrowings from third parties in order to make, maintain or fund the Loan or any portion
thereof.

     (b) If any Lender fails to disburse any additional portion of the Loan in accordance
with a Disbursement Request made pursuant to Section 2.2, the Loan amount then outstanding
shall be reduced by Disbursement Amount specified in the Disbursement Request.

     Section 2.8 Interest Rate. The principal amount outstanding under the Loan shall bear
interest at the Interest Rate (calculated on the basis of the actual number of days elapsed in each
month). Interest shall be paid quarterly in arrears commencing on June 1, 2009 and on the first
Business Day of each September, December, March and June thereafter.

     Section 2.9 Delivery of Warrants

     (a) On the date hereof, the Borrower shall issue to the Lenders Warrants to purchase an
aggregate of 3,750,000 shares of Common Stock at an initial Exercise Price (as defined in
the Warrants) of $3.13.

     (b) Concurrently with each Disbursement, the Borrower shall issue to Lenders Warrants
to purchase three hundred thousand (300,000) shares of Common Stock in the form annexed
hereto as Exhibit C containing an initial Exercise Price equal to 120% of the average of the
Volume Weighted Average Price (as defined in subsection (c) below) of the Common Stock for
each of the fifteen (15) consecutive Trading Days beginning with the first full Trading Day
following receipt by the Lenders of a Disbursement Request.

 

 

     (c) As used herein, the “Volume Weighted Average Price” for the Common Stock as
of any date means the volume weighted average price (based on regular hours trading) of the
Common Stock on the NASDAQ Global Select Market (“NASDAQ”) as reported by Bloomberg
Financial L.P. using the AQR function or an equivalent, reliable reporting service mutually
acceptable to and hereafter designated by the Lenders and the Borrower (“Bloomberg”)
or, if NASDAQ is not the principal trading market for the Common Stock, the volume weighted
average sale price of the Common Stock on the principal trading market for the Common Stock
on the principal securities exchange or trading market where the Common Stock is listed or
traded as reported by Bloomberg, or, if no volume weighted average sale price is reported
for the Common Stock, then the last closing trade price of the Common Stock as reported by
Bloomberg, or, if no last closing trading price is reported for the Common Stock by
Bloomberg, the average of the bid prices of any market makers for the Common Stock in the
over the counter market maintained by the Financial Industry Regulatory Authority, Inc. or
in the “pink sheets” maintained by the Pink OTC Market, Inc. If the Volume Weighted Average
Price cannot be calculated for the Common Stock on such date in the manner provided above,
the Volume Weighted Average Price shall be the fair market value as mutually determined by
the Lenders and the Borrower.

     (d) All Warrants issued pursuant to this Section 2.9 shall be allocated among the
Lenders as set forth on Schedule 1.

     (e) Notwithstanding anything herein to the contrary, the number of shares of Common
Stock into which a Warrant is exercisable and the Exercise Price of any such Warrant on any
relevant issue date pursuant to subsection (b) above shall be adjusted to reflect any
adjustments in the number of shares of Common Stock into which such Warrant is exercisable
that would have taken effect pursuant to the terms of the Warrant had such Warrant been
issued on the date hereof and remained outstanding through the date of such issuance.

     Section 2.9(A) Interest on Late Payments. Without limiting the remedies available to the
Lenders under the Financing Documents or otherwise, to the maximum extent permitted by applicable
law, if the Borrower fails to make any payment of principal or interest with respect to the Loan
when due (after the expiration of any applicable grace periods), the Borrower shall pay, in respect
of the outstanding principal amount and overdue interest of the Loan, interest at the rate per
annum equal to the Interest Rate plus eight percent (8%) for so long as such payment remains
outstanding. Such interest shall be payable on demand.

     Section 2.9 (B) Commitment to Provide Funding Fee. On each date interest is required to be
paid to the Lenders under this Agreement, the Borrower shall pay to the Lenders a fee (calculated
on the basis of the actual days elapsed in each month) of the product of (i) 2.75% per annum and
(ii) the difference between $60,000,000 and the aggregate principal amount of the Notes outstanding
on each day of the month, in accordance with their respective allocations set forth on Schedule 1
hereto.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

 

 

     Section 3.1 Representations and Warranties of the Borrower. The Borrower represents and
warrants as of the date hereof and as of each Disbursement Date as follows:

     (a) The Borrower is a corporation duly incorporated and validly existing under the laws
of the State of Delaware.

     (b) The Borrower is conducting its business in compliance with its Organizational
Documents. The Organizational Documents of the Borrower (including all amendments thereto)
as currently in effect have been made available to the Lenders and remain in full force and
effect with no defaults outstanding thereunder.

     (c) The Borrower has full power and authority to enter into each of the Financing
Documents and to make the borrowings and the other transactions contemplated thereby.

     (d) All authorizations, consents, approvals, registrations, exemptions and licenses
with or from Government Authorities or other Persons that are necessary for the conduct of
its business as currently conducted, for the borrowing hereunder, the execution and delivery
of the Financing Documents and the performance by the Borrower of the Obligations, have been
obtained and are in full force and effect, except (i) for such registrations and filings in
connection with the issuance of the Warrants and shares of Common Stock pursuant the
Financing Documents that are necessary to comply with federal and state securities laws,
rules and regulations, and (ii) filings contemplated by the Security Agreement.

     (e) Each Financing Document has been duly authorized, executed and delivered by the
Borrower and constitutes the valid and legally binding obligation of the Borrower,
enforceable in accordance with its terms, except as such enforceability may be limited by
(i) applicable insolvency, bankruptcy, reorganization, moratorium or other similar laws
affecting creditors’ rights generally, and (ii) applicable equitable principles (whether
considered in a proceeding at law or in equity).

     (f) No Default or Event of Default (or any other default or event of default, however
described) has occurred under any of the Financing Documents.

     (g) Neither the entering into any of the Financing Documents nor the compliance with
any of its terms conflicts with, violates or results in a breach of any of the terms of, or
constitutes a default or event of default (however described) or requires any consent under,
any agreement to which the Borrower is a party or by which it is bound, or violates any of
the terms of the Organizational Documents or any judgment, decree, resolution, award or
order or any statute, rule or regulation applicable to the Borrower or its assets.

     (h) The Borrower is not engaged in or the subject of any litigation, arbitration,
administrative regulatory compliance proceeding, or investigation, nor are there any
litigation, arbitration, administrative regulatory compliance proceedings or investigations
pending or, to the knowledge of the Borrower, threatened before any court or arbitrator or
before or by any Government Authority against the Borrower, except for those that have been
publicly disclosed in reports filed with the SEC and the Borrower is not aware of any facts
reasonably likely to give rise to any such proceedings other than as may have been publicly
disclosed in such reports.

 

 

     (i) The Borrower (i) is capable of paying its debts as they fall due, is not unable and
has not admitted its inability to pay debts as they fall due, (ii) is not bankrupt or
insolvent and (iii) has not taken action, and no such action has been taken by a third
party, for the Borrower’s winding up, dissolution, or liquidation or similar executory or
judicial proceeding or for the appointment of a liquidator, custodian, receiver, trustee,
administrator or other similar officer for the Borrower or any or all of its assets or
revenues.

     (j) No Lien exists on Borrower’s property, except for Permitted Liens.

     (k) The obligation of the Borrower to make any payment under this Agreement (together
with all charges in connection therewith) is absolute and unconditional, and there exists no
right of setoff or recoupment, counterclaim, cross-claim or defense of any nature whatsoever
to any such payment.

     Section 3.2 Borrower Acknowledgment. The Borrower acknowledges that it has made the
representations and warranties referred to in Section 3.1 with the intention of persuading the
Lenders to enter into the Financing Documents and that the Lenders have entered into the Financing
Documents on the basis of, and in full reliance on, each of such representations and warranties.
The Borrower represents and warrants to the Lenders that none of such representations and
warranties omits any matter the omission of which makes any of such representations and warranties
misleading.

     Section 3.3 Representations and Warranties of the Lenders. Each of the Lenders represents and
warrants to the Borrower as of the date hereof and as of each date Warrants are granted pursuant to
this Agreement that:

     (a) It is acquiring the Warrants and the shares of Common Stock issued upon exercise of
the Warrants (the “Exercise Shares”) solely for its account for investment and not
with a view to or for sale or distribution of the Warrants or Exercise Shares or any part
thereof. The entire legal and beneficial interests of the Warrants and Exercise Shares such
Lender is acquiring is being acquired for, and will be held for, its account only.

     (b) The Warrants and the Exercise Shares have not been registered under the Securities
Act on the basis that no distribution or public offering of the stock of the Borrower is to
be effected. It realizes that the basis for the exemptions may not be present if,
notwithstanding its representations, such Lender has a present intention of acquiring the
securities for a fixed or determinable period in the future, selling (in connection with a
distribution or otherwise), granting any participation in, or otherwise distributing the
securities. None of the Lenders has such present intention.

     (c) The Warrants and the Exercise Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption for such registration is
available.

     (d) Neither the Warrants nor the Exercise Shares may be sold pursuant to Rule 144
adopted under the Securities Act unless certain conditions are met, including, among other
things, the existence of a public market for the shares, the availability of certain current
public information about the Borrower, the resale following the required holding period

 

 

under Rule 144 and the number of shares being sold during any three month period not
exceeding specified limitation.

     (e) It will not make any disposition of all or any part of the Warrants or Exercise
Shares until:

     (i) The Borrower shall have received a letter secured by such Lender from the
SEC stating that no action will be recommended to the SEC with respect to the
proposed disposition;

     (ii) There is then in effect a registration statement under the Securities Act
covering such proposed disposition and such disposition is made in accordance with
said registration statement; or

     (iii) Such Lender shall have notified the Borrower of the proposed disposition
and, in the case of a sale or transfer in a so-called “4(1) and a half” transaction,
shall have furnished counsel for the Borrower with an opinion of counsel,
substantially in the form annexed as Exhibit C to the Warrant. The Borrower agrees
that it will not require an opinion of counsel with respect to transactions under
Rule 144 of the Securities Act.

     (f) It understands and agrees that all certificates evidencing the shares to be issued
to the Lenders upon exercise of the Warrants may bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER SAID ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SAID ACT
INCLUDING, WITHOUT LIMITATION, PURSUANT TO RULES 144 OR 144A UNDER SAID ACT OR PURSUANT TO A
PRIVATE SALE EFFECTED UNDER APPLICABLE FORMAL OR INFORMAL SEC INTERPRETATION OR GUIDANCE,
SUCH AS A SO-CALLED “4(1) AND A HALF” SALE.”

“THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS OF A CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS OF MARCH 13, 2009,
AS AMENDED FROM TIME TO TIME, AMONG THE COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING
SECURITIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.”

     (g) Such Lender is an “accredited investor” as defined in Regulation D promulgated the
Securities Act.

     (h) Such Lender is a limited partnership duly organized and validly existing under the
laws of the jurisdiction of its formation.

 

 

     (i) Each Financing Document to which it is a party has been duly authorized, executed
and delivered by such Lender and constitutes the valid and legally binding obligation of
such Lender, enforceable in accordance with its terms, except as such enforceability may be
limited by (i) applicable insolvency, bankruptcy, reorganization, moratorium or other
similar laws affecting creditors’ rights generally, and (ii) applicable equitable principles
(whether considered in a proceeding at law or in equity).

     (j) Such Lender agrees that (i) it does not hold a short position in the Common Stock
on the date hereof, (ii) it shall not enter into a short selling transaction with respect to
the Common Stock during the period commencing on receipt of a Disbursement Request and
ending on the date of the specific Disbursement that is the subject of the Disbursement
Request.

ARTICLE 4

[Intentionally omitted]

ARTICLE 5

BORROWER COVENANTS AND EVENTS OF DEFAULT

     Section 5.1 Affirmative Covenants. Unless the Lenders shall otherwise agree:

     (a) The Borrower shall (i) maintain its corporate existence and qualify and remain
qualified to do its business as currently conducted, except where the failure to so maintain
such qualification would not reasonably be expected to have a Material Adverse Effect and
(ii) maintain all approvals necessary for the Financing Documents to be in effect.

     (b) The Borrower shall comply in all material respects with all applicable laws,
rules, regulations and orders of any Government Authority, except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings or where the
failure to so comply, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.

     (c) The Borrower shall obtain, make and keep in full force and effect all licenses,
contracts, consents, approvals and authorizations from and registrations with Government
Authorities that may be required to conduct its business, except to the extent that the
failure to do so would not reasonably be expected to have a Material Adverse Effect.

     (d) The Borrower shall promptly notify the Lenders of the occurrence of (i) any Default
or Event of Default; or (ii) any claims, litigation, arbitration, mediation or
administrative or regulatory proceedings that are instituted or threatened against the
Borrower; or (iii) each event which, at the giving of notice, lapse of time, determination
of materiality or fulfillment of any other applicable condition (or any combination of the
foregoing), would constitute an event of default (however described) under any of the
Financing Documents.

 

 

     (e) The Borrower shall comply with the terms of each of the Financing Documents.

     (f) (i) If the Borrower is not required to file reports pursuant to Sections 13 or
15(d) of the Exchange Act, the Borrower will provide quarterly financial statements for
itself and its Subsidiaries within 45 days after the end of each quarter, and annual
financial statements within 120 days after the end of each year; (ii) the Borrower will
timely file with the SEC (subject to appropriate extensions made under Rule 12b-25 of the
Exchange Act) any annual reports, quarterly reports and other periodic reports pursuant to
Section 13 or 15(d) of the Exchange Act; and (iii) the Borrower and its Subsidiaries will
provide to the Lenders copies of all documents, reports, financial data and other
information as the Lenders may reasonably request, and permit the Lenders to visit and
inspect any of the properties of the Borrower and its Subsidiaries, and to discuss its and
their affairs, finances and accounts with its and their officers, all at such times as the
Lenders may reasonably request; and (iv) the Lenders shall have the right to consult with
and advise the management of the Borrower and its Subsidiaries on matters relating to the
operation of the Borrower and it Subsidiaries.

     (g) The Borrower shall not issue any shares of Common Stock or securities convertible
or exercisable for Common Stock (an “Equity Financing”); except (i) in a registered public
offering or shelf takedown, (ii) in a transaction that does not require shareholder
approval, (iii) to partners in connection with a joint venture, distribution or other
partnering arrangement in a transaction that does not require shareholder approval,
(iv) upon the exercise of options granted to the Borrower’s employees, officers, directors
and consultants, (v) issuances of restricted stock to, or purchase of common stock under the
Borrower’s employee stock purchase plan by, employees, officers, directors or consultants or
(vi) upon the exercise of the Warrants. Borrower agrees to notify the Lenders as soon as
reasonably practicable prior to the consummation of an Equity Financing and in any event
simultaneously with the public announcement of any Equity Financing.

     Section 5.2 Negative Covenants. Unless the Requisite Lenders shall otherwise agree:

     (a) The Borrower shall not (i) liquidate or dissolve; (ii) enter into any merger,
consolidation or reorganization or transaction that has the same effect or (iii) sell or
transfer the Company’s assets in one transaction or a series of transactions for a purchase
price of more than $50,000,000, or (iv) sell or transfer more than 50% of the Company’s
assets.

     (b) The Borrower shall not (i) enter into any partnership, joint venture, syndicate,
pool, profit-sharing or royalty agreement or other combination, or engage in any transaction
with an Affiliate, whereby its income or profits are, or might be, shared with another
Person or enter into any management contract or similar arrangement whereby a substantial
part of its business is managed by another Person, (ii) distribute, or permit the
distribution of, any assets of the Borrower or its Subsidiaries, including its intangibles,
to any shareholders of the Borrower or the holder of any equity interest in any Subsidiary
of the Borrower or any of its Affiliates (other than the Borrower or a Subsidiary of the
Borrower); provided, however, that (A) with respect to the restrictions in clause (i), the
Borrower may enter into any collaborative arrangement, licensing agreement, joint venture or
partnership providing for the research, development or commercial exploitation of compounds,
products or services whereby payments received therefrom or its income or profits are, or
might be, shared in the ordinary course of business with another Person; and (B) with
respect to the restrictions in

 

 

clause (ii), royalties and other payments made by any partnership, joint venture,
syndicate, pool, profit-sharing or royalty agreement or other combination, to the parties
thereto in the ordinary course of business shall not be deemed to be a distribution of
assets. For purposes of clarity, the foregoing restrictions shall not limit the Borrower’s
ability to enter into international partnering arrangements, U.S. or international
distribution arrangements.

     (c) The Borrower shall not: (i) create, incur or suffer any Lien upon any of its
assets, now owned or hereafter acquired, except Permitted Liens; or (ii) assign, sell,
transfer or otherwise dispose of, any of the Financing Documents, or the rights and
obligations thereunder.

     (d) The Borrower shall not create, incur assume, guarantee or be remain liable with
respect to any Indebtedness, other than Permitted Indebtedness, or prepay any Indebtedness
(other than Permitted Indebtedness) or take any actions which impose on the Borrower an
obligation to prepay any Indebtedness, except Permitted Indebtedness.

     Section 5.3 Reimbursement of Taxes. The Borrower shall pay all Taxes, duties, fees or other
charges payable on or in connection with the execution, issue, delivery, registration, notarization
or enforcement of the Financing Documents and shall, upon notice from the Lenders, reimburse the
Lenders for any such Taxes, duties, fees or other charges paid by the Lenders thereon; provided,
however, that notwithstanding the foregoing, under no circumstances shall the Borrower have any
obligation to reimburse the Lenders for Excluded Taxes.

     Section 5.4 Major Transaction. If a Major Transaction occurs, the Lenders, in the exercise of
their sole discretion, may deliver a written notice to the Borrower (the “Put Notice”)
within 10 Business Days after the date of the announcement of such Major Transaction, that (a) 106%
of the outstanding principal of the Notes and (b) accrued and unpaid interest on the Notes, and (c)
any other amounts accrued or payable under the Financing Documents ((a), (b) and (c) together, the
“Put Price”) is immediately due and payable upon consummation of the Major Transaction. If
the Lenders deliver a Put Notice, then upon such consummation, the Borrower shall pay the Put Price
to the Lenders and the Obligations shall terminate.

     Section 5.5 General Acceleration Provision upon Events of Default. If one or more of the
events specified in this Section 5.5 shall have happened and be continuing beyond the applicable
cure period (each, an “Event of Default”), the Requisite Lenders, by written notice to the
Borrower, may cancel the Borrower’s right to request Disbursements and declare the principal of,
accrued and unpaid interest on, the Notes or any part of any of them (together with any other
amounts accrued or payable under this Agreement) to be, and the same shall thereupon become,
immediately due and payable, without any further notice and without any presentment, demand, or
protest of any kind, all of which are hereby expressly waived by the Borrower, and take any further
action available at law or in equity, including, without limitation, the sale of the Loan and all
other rights acquired in connection with the Loan:

     (a) A Lender shall have failed to receive payment of (i) principal when due, or (ii)
interest and any other amounts due under the Loan or the Notes within five (5) Business Days
of their due date.

     (b) The Borrower shall have failed to comply with the due observance or performance of
any other covenant contained in this Agreement or any Note and such failure

 

 

could reasonable be expected to result in a Material Adverse Effect and shall not have
been cured by Borrower within 30 days after receiving written notice of such failure from
the Lenders.

     (c) Any representation or warranty made by the Borrower in any Financing Document shall
be have been incorrect, false or misleading as of the date it was made, deemed made,
reaffirmed or confirmed and as a result thereof, the Borrower could reasonably be expected
to incur a Material Adverse Effect.

     (d) (i) The Borrower shall generally be unable to pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts as they come due or shall make
a general assignment for the benefit of creditors; (ii) the Borrower shall declare a
moratorium on the payment of its debts; (iii) the commencement by the Borrower of
proceedings to be adjudicated bankrupt or insolvent, or the consent by it to the
commencement of bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization, intervention or other similar relief
under any applicable law, or the consent by it to the filing of any such petition or to the
appointment of an intervenor, receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of all or substantially all of its assets; (iv) the commencement
against the Borrower of a proceeding in any court of competent jurisdiction under any
bankruptcy or other applicable law (as now or hereafter in effect) seeking its liquidation,
winding up, dissolution, reorganization, arrangement, adjustment, or the appointment of an
intervenor, receiver, liquidator, assignee, trustee, sequestrator (or other similar
official), and any such proceeding shall continue undismissed, or any order, judgment or
decree approving or ordering any of the foregoing shall continue unstayed or otherwise in
effect, for a period of ninety (90) days; (v) the making by the Borrower of an assignment
for the benefit of creditors, or the admission by it in writing of its inability to pay its
debt generally as they become due; or (vi) any other event shall have occurred which under
any applicable law would have an effect analogous to any of those events listed above in
this subsection.

     (e) One or more judgments against the Borrower taken as a whole or attachments against
any of its property, which in the aggregate exceed $250,000, or which could have a Material
Adverse Effect remain(s) unpaid, unstayed on appeal, undischarged, unbonded or undismissed
for a period of thirty (30) days from the date of entry of such judgment.

     (f) Any license, permit or approval held by the Borrower from any Government Authority
shall have been suspended, canceled or revoked and such suspension, cancellation or
revocation could reasonably be expected to have a Material Adverse Effect, and such
suspension, cancellation or revocation shall not have been cured within 30 days.

     (g) Any authorization necessary for the execution, delivery or performance of any
Financing Document or for the validity or enforceability of any of the Obligations under any
Financing Document is not given or is withdrawn or ceases to remain in full force or effect.

     (h) The validity of or any Financing Document shall be contested by any legislative,
executive or judicial body of any jurisdiction, or any treaty, law, regulation, communiqué,
decree, ordinance or policy of any jurisdiction shall purport to render any material
provision of any Financing Document invalid or unenforceable or shall purport to

 

 

prevent or materially delay the performance or observance by the Borrower of the
Obligations, and the parties are unable to negotiate a replacement provision pursuant to
Section 6.7 below.

     (i) The Borrower has failed to comply in any material respect with the reporting
requirements of the Exchange Act, unless corrected by the Borrower promptly (if capable of
such correction) through the filing of an amendment to an existing report or making an
appropriate subsequent filing with the SEC.

     (j) There is a failure to perform in any agreement to which the Borrower is a party
with a third party or parties resulting in a right by such third party or parties to
accelerate the maturity of any Indebtedness for borrowed money in an amount in excess of
$250,000.

     (j) If an Event of Default pursuant to the Warrants (as such term is defined in the
Warrants) shall have occurred.

     (k) The sum of Cash, Cash Equivalents, Receivables and Finished Goods Inventory on the
last day of each calendar quarter is less than the greater of $15,000,000 or fifty percent
(50%) of the Loan then outstanding.

     (l) The shares of Common Stock cease to be listed, traded or publicly quoted on the
NASDAQ Global Market and are not promptly re-listed or requoted on either the New York Stock
Exchange, the NYSE Arca or the NASDAQ Stock Market LLC (or their respective successors).

     Section 5.6 Automatic Acceleration on Dissolution or Bankruptcy. Notwithstanding any other
provisions of this Agreement, if an Event of Default under Section 5.5(d) shall occur, the
principal of the Loan (together with any other amounts accrued or payable under this Agreement)
shall thereupon become immediately due and payable without any presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived by the Borrower.

     Section 5.7 Recovery of Amounts Due. If any amount payable hereunder is not paid as and when
due, the Borrower hereby authorizes each Lender to proceed, to the fullest extent permitted by
applicable law, without prior notice, by right of set-off, banker’s lien or counterclaim, against
any moneys or other assets of the Borrower to the full extent of all amounts payable to the
Lenders.

ARTICLE 6

MISCELLANEOUS

     Section 6.1 Notices. Any notice, request or other communication to be given or made under
this Agreement shall be in writing. Such notice, request or other communication shall be deemed to
have been duly given or made when it shall be delivered by hand, overnight mail, international
courier (confirmed by facsimile), or facsimile (with a hard copy delivered within two (2) Business
Days) to the Party to which it is required or permitted to be given or made at such Party’s address
specified below or at such other address as such Party shall have designated by notice to the other
Parties.

 

 

For the Borrower:

Insulet Corporation

9 Oak Parks Drive

Bedford, MA 01730

Facsimile: (781) 457-5011

Attention: R. Anthony Diehl

with a courtesy copy to:

Goodwin Procter LLP

Exchange Place

Boston, MA 02109

Facsimile: (617) 523-1231

Attention: Raymond C. Zemlin

                  Jocelyn M. Arel

For the Lenders c/o:

Deerfield Private Design Fund, L.P.

780 Third Avenue, 37th Floor

New York, New York 10017

Facsimile: (212) 573-8111

Attention: James E. Flynn

with a courtesy copy to:

Katten Muchin Rosenman LLP

575 Madison Avenue

New York, New York 10022-2585

Facsimile: (212) 894-5827

Attention: Robert I. Fisher

     Section 6.2 Waiver of Notice. Whenever any notice is required to be given to the Lenders or
the Borrower under the any of the Financing Documents, a waiver thereof in writing signed by the
person or persons entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.

     Section 6.3 Reimbursement of Legal and Other Expenses. If any amount owing to the Lenders
under any Financing Document shall be collected through enforcement of this Agreement, any
refinancing or restructuring of the Loan in the nature of a work-out, settlement, negotiation, or
any process of law, or shall be placed in the hands of third Persons for collection, the Borrower
shall pay (in addition to all monies then due in respect of the Loan or otherwise payable under any
Financing Document) reasonable, documented attorneys’ and other fees and expenses reasonably
incurred by the Lenders in respect of such collection.

     Section 6.4 Applicable Law and Consent to Non-Exclusive New York Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of New

 

 

York, without giving effect to the conflicts of laws principles thereof other than Sections
5-1401 and 5-1402 of the General Obligations Law of such State.

     (a) Any rights of the Lenders arising out of or relating to any Financing Document,
may, at the option of the Lenders, be enforced by the Lenders in the courts of the United
States of America located in the Southern District of the State of New York or in any other
courts having jurisdiction. For the benefit of the Lenders, the Borrower hereby
irrevocably agrees that any legal action, suit or other proceeding arising out of any
Financing Document may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York. The Borrower irrevocably consents
to the service of any and all process in any such legal action, suit or other proceeding by
the mailing of copies of such process to the Borrower at its address specified in Section
6.1 by registered mail, return receipt requested. By the execution and delivery of this
Agreement, the Borrower hereby irrevocably consents and submits to the jurisdiction of any
such court in any such action, suit or other proceeding. Final judgment against the
Borrower in any such action, suit or other proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment. Nothing contained in any
Financing Document shall affect the right of the Lenders to commence legal proceedings in
any court having jurisdiction, or concurrently in more than one jurisdiction, or to serve
process, pleadings and other legal papers upon the Borrower in any manner authorized by the
laws of any such jurisdiction.

     (b) The Borrower irrevocably waives, to the fullest extent permitted by applicable
law, any objection which it may now or hereafter have to the laying of venue of any action,
suit or other proceeding arising out of or relating to any Financing Document, brought in
the courts of the State of New York or in the United States District Court for the Southern
District of New York, and any claim that any such action, suit or other proceeding brought
in any such court has been brought in an inconvenient forum.

     (c) The Borrower hereby waives any and all rights to demand a trial by jury in any
action, suit or other proceeding arising out of any Financing Document or the transactions
contemplated by any Financing Document.

     (d) To the extent that the Parties may, in any suit, action or other proceeding
brought in any court arising out of or in connection with any Financing Document, be
entitled to the benefit of any provision of law requiring the Borrower or the Lenders, as
applicable, in such suit, action or other proceeding to post security for the costs of the
Borrower or the Lenders, as applicable, or to post a bond or to take similar action, the
Parties hereby irrevocably waive such benefit, in each case to the fullest extent now or
hereafter permitted under any applicable laws.

     Section 6.5 Successor and Assigns. This Agreement shall bind and inure to the respective
successors and assigns of the Parties, except that the Borrower may not assign or otherwise
transfer all or any part of its rights under this Agreement or the Obligations without the prior
written consent of each Lender. Notwithstanding anything to the contrary contained herein, if any
assignment or participation is to any Person that is not a “United States person” within the
meaning of Section 7701(a)(30) of the Code, then such Person shall submit to the Borrower, on or
before the date of such assignment or participation an IRS Form W-8BEN (or any successor form)
certifying as to such Person’s status for purposes of determining exemption from United States

 

 

withholding tax, information reporting and backup withholding with respect to all payments to
be made to such Person. Any attempted assignment or participation in violation of this Section 6.5
shall be void and of no force and effect.

     Section 6.6 Entire Agreement. The Financing Documents contain the entire understanding of the
Parties with respect to the matters covered thereby and supersede any and all other written and
oral communications, negotiations, commitments and writings with respect thereto. The provisions
of this Agreement may be waived, modified, supplemented or amended only by an instrument in writing
signed by the authorized officer of each Party.

     Section 6.7 Severability. If any provision contained in this Agreement shall be invalid,
illegal or unenforceable in any respect under any law, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby. The Parties shall
endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provision.

     Section 6.8 Counterparts. This Agreement may be executed in several counterparts, and by each
Party on separate counterparts, each of which and any photocopies and facsimile copies thereof
shall be deemed an original, but all of which together shall constitute one and the same agreement.

     Section 6.9 Survival.

     (a) This Agreement and all agreements, representations and warranties made in the
Financing Documents, and in any document, certificate or statement delivered pursuant
thereto or in connection therewith shall be considered to have been relied upon by the
other Parties and shall survive the execution and delivery of this Agreement and the making
of the Loan hereunder regardless of any investigation made by any such other Party or on
its behalf, and shall continue in force until all amounts payable under the Financing
Documents shall have been fully paid in accordance with the provisions hereof and thereof,
and the Lenders shall not be deemed to have waived, by reason of making the Loan, any
Default that may arise by reason of such representation or warranty proving to have been
false or misleading, notwithstanding that the Lenders may have had notice or knowledge of
any such Default or may have had notice or knowledge that such representation or warranty
was false or misleading at the time any Disbursement was made hereunder.

     (b) The obligations of the Borrower under Section 2.6 and the obligations of the
Borrower and the Lenders under this Article VI hereof shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loan, or the termination of this Agreement or any provision hereof.

     Section 6.10 Waiver. Neither the failure of, nor any delay on the part of, any Party in
exercising any right, power or privilege hereunder, or under any agreement, document or instrument
mentioned herein, shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder, or under any agreement, document or instrument mentioned
herein, preclude other or further exercise thereof or the exercise of any other right, power or
privilege; nor shall any waiver of any right, power, privilege or default hereunder, or under any
agreement, document or instrument mentioned herein, constitute a waiver of any other right, power,

 

 

privilege or default or constitute a waiver of any default of the same or of any other term or
provision. No course of dealing and no delay in exercising, or omission to exercise, any right,
power or remedy accruing to the Lenders upon any default under this Agreement, or any other
agreement shall impair any such right, power or remedy or be construed to be a waiver thereof or an
acquiescence therein; nor shall the action of the Lenders in respect of any such default, or any
acquiescence by it therein, affect or impair any right, power or remedy of the Lenders in respect
of any other default. All rights and remedies herein provided are cumulative and not exclusive of
any rights or remedies otherwise provided by law.

     Section 6.11 Indemnity.

     (a) The Parties shall, at all times, indemnify and hold each other harmless (the
“Indemnity”) and each of their respective directors, partners, officers, employees,
agents, counsel and advisors (each, an “Indemnified Person”) in connection with any
losses, claims (including the cost of defending against such claims), damages, liabilities,
penalties, or other expenses arising out of, or relating to, the Financing Documents, the
extension of credit hereunder or the Loan or the use or intended use of the Loan, which an
Indemnified Person may incur or to which an Indemnified Person may become subject (each, a
“Loss”). The Indemnity shall not apply to the extent that a court or arbitral
tribunal with jurisdiction over the subject matter of the Loss, and over the Lenders or the
Borrower, as applicable, and such other Indemnified Person that had an adequate opportunity
to defend its interests, determines that such Loss resulted from the gross negligence or
willful misconduct of the Indemnified Person, which determination results in a final,
non-appealable judgment or decision of a court or tribunal of competent jurisdiction. The
Indemnity is independent of and in addition to any other agreement of any Party under any
Financing Document to pay any amount to the Lenders or the Borrower, as applicable, and any
exclusion of any obligation to pay any amount under this subsection shall not affect the
requirement to pay such amount under any other section hereof or under any other agreement.

     (b) Without prejudice to the survival of any other agreement of any of the Parties
hereunder, the agreements and the obligations of the Parties contained in this Section 6.11
shall survive the termination of each other provision hereof and the payment of all amounts
payable to the Lenders hereunder.

     Section 6.12 No Usury. The Financing Documents are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of acceleration or otherwise, shall the amount
paid or agreed to be paid to the Lenders for the Loan exceed the maximum amount permissible under
applicable law. If from any circumstance whatsoever fulfillment of any provision hereof, at the
time performance of such provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity, and if from any such circumstance the Lenders shall ever receive anything which
might be deemed interest under applicable law, that would exceed the highest lawful rate, such
amount that would be deemed excessive interest shall be applied to the reduction of the principal
amount owing on account of the Loan, or if such deemed excessive interest exceeds the unpaid
balance of principal of the Loan, such deemed excess shall be refunded to the Borrower. All sums
paid or agreed to be paid to the Lenders for the Loan shall, to the extent permitted by applicable
law, be deemed to be amortized, prorated, allocated and spread throughout the full term of the Loan
until payment in full so that the deemed rate of interest on account of the Loan is uniform
throughout the

 

 

term thereof. The terms and provisions of this paragraph shall control and supersede every
other provision of this Agreement and the Notes.

     Section 6.13 Further Assurances. From time to time, the Borrower shall perform any and all
acts and execute and deliver to the Lenders such additional documents as may be necessary or as
requested by the Lenders to carry out the purposes of any Financing Document or any or to preserve
and protect the Lenders’ rights as contemplated therein.

     Section 6.14 Amendments and Waivers. This Agreement may be amended and any provision waived
only in writing signed by the Borrower and the Requisite Lenders.

     Section 6.15 Right to Assign. No Lender may at any time, sell, transfer, or assign all or a
portion of its rights and obligations hereunder (including all or a portion of its rights and
obligations with respect to the Notes), except to (i) any existing Lender, (ii) any Affiliate or
Approved Fund of any existing Lender or (iii) any other Person acceptable (which acceptance shall
not be reasonably withheld or delayed) to the Borrower; provided, however, that prior to the
disbursement of the full amount of the Loan the aggregate outstanding principal amount (determined
as of the effective date of the applicable Assignment) of the Notes subject to any such sale,
transfer or assignment shall be in a minimum amount of $7,000,000, unless such transfer is made to
an existing Lender or an Affiliate or Approved Fund of any existing Lender, is of the assignor’s
(together with its Affiliates and Approved Funds) entire interest hereunder or is made with the
prior consent of the Borrower.

[SIGNATURE PAGE FOLLOWS]

 

 

     IN WITNESS WHEREOF, the undersigned Lender and the Borrower have caused this Agreement to be
duly executed as of the 13th day of March, 2009.

	 	 	 	 	 	 	 	 	 
	BORROWER	 	 	 	LENDER
	INSULET CORPORATION.	 	 	 	DEERFIELD PRIVATE DESIGN FUND, L.P.
	 
	 	 	 	 	 	 	 	 
	By:

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

	 	 
	 	 	 	 	 	 
	 

	 	Name: Duane DeSisto
	 	 	 	 	 	Name James Flynn
	 

	 	Title: President and Chief
Executive Officer
	 	 	 	 	 	Title General Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	DEERFIELD PRIVATE DESIGN
INTERNATIONAL, L.P.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ James Flynn
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name James Flynn
	 

	 	 	 	 	 	 	 	Title General Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	DEERFIELD PARTNERS, L.P.
	 

	 	 	 	 	 	By:
	 	/s/ James Flynn
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name James Flynn
	 

	 	 	 	 	 	 	 	Title General Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	DEERFIELD INTERNATIONAL LIMITED
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ James Flynn
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name James Flynn
	 

	 	 	 	 	 	 	 	Title General Partner

The following Exhibits and Schedules
to the Facility Agreement have been omitted in accordance
with Item 601(b)(2) of Regulation S-K.

EXHIBITS

Exhibit A   Form of Note

Exhibit B   Disbursements

SCHEDULE

Schedule 1   Schedule of Lenders  	 	

Schedule 2   Form of Disbursement Request

Schedule 3   Form of Evidence of Disbursement		

Insulet Corporation will furnish supplementally
a copy of any omitted or partially omitted schedule or exhibit to the Securities and Exchange
Commission upon request; provided, however, that Insulet Corporation may request confidential
treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any
schedule or exhibit so furnished.

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