SECURITY AGREEMENT

Exhibit 10.3

SECURITY AGREEMENT

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

W I T N E S S E T H:

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

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

1. Grant of Security Interest .

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

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

     (b)  Perfection of Security Interests .

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

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

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

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

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

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

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

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

3. Remedies .

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

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

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

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

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

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

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

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

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

6. No Waivers of Rights hereunder; Rights Cumulative .

     (a) No delay by Secured Party in exercising any right hereunder, or in enforcing any of the Obligations, shall operate as a waiver thereof, nor shall any single or partial exercise of any right preclude other or further exercises thereo