Dexcom
Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549FORM 10-KýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2018 ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission file number 000-51222DEXCOM, INC.(Exact name of Registrant as specified in its charter)Delaware 33-0857544(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)6340 Sequence DriveSan Diego, California 92121(Address of Principal Executive Offices) (Zip Code)Registrant’s Telephone Number, including area code: (858) 200-0200Securities registered pursuant to Section 12(b) of the Exchange Act:Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, $0.001 Par Value Per Share The Nasdaq Stock Market LLC(Nasdaq Global Select Market)Securities registered pursuant to Section 12(g) of the Exchange Act: NoneIndicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes ý No ¨Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.Yes ¨ No ýIndicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ý No ¨Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). Yes ý No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Rule 405 of Regulation S-K is not contained herein, and will not be contained, tothe best of Registrant’s knowledge, in definite proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment tothis Form 10-K. ýIndicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer ý Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨ Emerging growth company ¨If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with anynew or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ýAs of June 29, 2018, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of theregistrant’s common stock held by non-affiliates of the registrant was approximately $8.276 billion based on the closing sales price of $94.98 per share asreported on the Nasdaq Global Select Market.Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.Class Outstanding at February 15, 2019Common stock, $0.001 par value per share 90,001,767DOCUMENTS INCORPORATED BY REFERENCEPortions of the Registrant’s definitive proxy statement relating to its 2019 Annual Meeting of Stockholders (the Proxy Statement) are incorporated byreference in Part III, Items 10 through 14 of this Annual Report on Form 10-K, as specified in the responses to those item numbers. Except with respect toinformation specifically incorporated by reference in the Form 10-K, the Proxy Statement is not deemed to be filed as part hereof. DexCom, Inc.Table of Contents PageNumberPART I ITEM 1.Business3 ITEM 1A.Risk Factors26 ITEM 1B.Unresolved Staff Comments57 ITEM 2.Properties58 ITEM 3.Legal Proceedings58 ITEM 4.Mine Safety Disclosures59 PART II ITEM 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities60 ITEM 6.Selected Financial Data62 ITEM 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations63 ITEM 7A.Quantitative and Qualitative Disclosures about Market Risk73 ITEM 8.Consolidated Financial Statements and Supplementary Data74 ITEM 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure74 ITEM 9A.Controls and Procedures74 ITEM 9B.Other Information76 PART III ITEM 10.Directors, Executive Officers and Corporate Governance76 ITEM 11.Executive Compensation76 ITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters76 ITEM 13.Certain Relationships and Related Transactions, and Director Independence76 ITEM 14.Principal Accountant Fees and Services76 PART IV ITEM 15.Exhibits, Financial Statement Schedules77 ITEM 16.Form 10-K Summary82CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSExcept for historical financial information contained herein, the matters discussed in this Form 10-K may be considered forward-looking statementswithin the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, andsubject to the safe harbor created by the Securities Litigation Reform Act of 1995. Such statements include declarations regarding our intent, belief, orcurrent expectations and those of our management. Prospective investors are cautioned that any such forward-looking statements are not guarantees offuture performance and involve a number of risks, uncertainties and other factors, some of which are beyond our control; actual results could differmaterially from those indicated by such forward-looking statements. Important factors that could cause actual results to differ materially from thoseindicated by such forward-looking statements include, but are not limited to: (i) that the information is of a preliminary nature and may be subject to furtheradjustment; (ii) those risks and uncertainties identified under “Risk Factors”; and (iii) the other risks detailed from time-to-time in our reports andregistration statements filed with the Securities and Exchange Commission, or SEC. Except as required by law, we undertake no obligation to revise orupdate publicly any forward-looking statements, whether as a result of new information, future events or otherwise.PART IITEM 1.BUSINESSOverviewWe are a medical device company primarily focused on the design, development and commercialization of continuous glucose monitoring, or CGM,systems for use by people with diabetes and by healthcare providers. We received approval from the United States (U.S.) Food and Drug Administration, orFDA, and commercialized our first product in 2006. We launched our latest generation system, the DexCom G6® integrated Continuous Glucose MonitoringSystem, or G6, in 2018. Unless the context requires otherwise, the terms “we,” “us,” “our,” the “company,” or “DexCom” refer to DexCom, Inc. and itssubsidiaries.ProductsDexCom G6® In March 2018, we obtained marketing authorization from the FDA for the G6 via the de novo process. The G6 is the first type of continuous glucosemonitoring system permitted by the FDA to be used as part of an integrated system with other compatible medical devices and electronic interfaces, whichmay include automated insulin dosing systems, insulin pumps, blood glucose meters or other electronic devices used for diabetes management. G6 andsubstantially equivalent devices of this generic type that may later receive marketing authorization are referred to as integrated continuous glucosemonitoring systems or iCGMs, and have been classified as Class II devices. Along with this classification, the FDA established criteria, called specialcontrols, which outline requirements for assuring CGM accuracy, reliability and clinical relevance, and which also describe the type of studies and datarequired to demonstrate acceptable CGM performance.The G6 is designed to allow our transmitter to run an algorithm to generate a glucose value and to communicate directly to a patient’s compatiblemobile device, including iPhone®, iPod touch®, iPad®, and certain Android® mobile devices. A patient’s glucose data can also be displayed on wearabledevices, like the Apple Watch® and Wear OS by Google devices. The G6 transmitter has a labeled useful life of three months. Data from the G6 can beintegrated with DexCom CLARITY®, our cloud-based reporting software, for personalized, easy-to-understand analysis of trends that may improve diabetesmanagement. In June 2018, we received Conformité Européenne Marking, or CE Mark, approval for the G6, which allows us to market the system in theEuropean Union and the countries in Asia and Latin America that recognize the CE Mark, as well as New Zealand (subject to compliance with certain localadministrative requirements) though certain countries may require additional marketing authorizations (for example, the inclusion of medical devices on theAustralian Register of Therapeutic Goods in Australia).The sensor is inserted by the user and is intended to be used continuously for up to ten days, after which it may be replaced with a new disposablesensor. Our transmitter is reusable until it reaches the end of its use life. Our receiver is also reusable. As we establish an installed base of customers using ourproducts, we expect to generate an increasing portion of our revenues through recurring sales of our disposable sensors.3The G6 carries forward important features of prior generation DexCom CGM systems:•Continuous glucose readings. Automatically sends glucose readings to a DexCom receiver or compatible mobile device every five minutes.•Mobile app and sharing. Compatibility with mobile device applications allows for sharing glucose information with up to five people for addedsupport.•Customizable alarms and alerts. Personalized alert schedule immediately warns the user of pending dangerous high and low blood sugars.•Third-party reimbursement. In the United States, the G6 is covered by those commercial insurers that reimburse for the G5 Mobile, as well asMedicare.The G6 also has a number of new or improved features compared to our prior generation devices:•Finger stick elimination. No finger sticks are needed for calibration or diabetes treatment decisions, consistent with the instructions for use.•Easy sensor application. Complete redesign of the sensor applicator allows for one-touch, simple insertion.•Discreet and low profile. A redesigned transmitter with a 28% lower profile than the previous generation DexCom CGM makes the devicecomfortable and easy to wear under clothing.•Medication blocking. New feature allows for more accurate glucose readings without interference from medications taken at typical indication doses,such as acetaminophen.•Predictive low alert. New alert feature intended to predict hypoglycemia before it hits to help avoid dangerous low blood sugar events.•Extended 10-day sensor. 10-day sensor allows for 43% longer wear than previous generation DexCom CGMs.Except with respect to the foregoing, the G6 is equivalent to our prior generation CGM systems in its technical capabilities and its indications, exceptthat since the G6 is classified by the FDA as a Class II device, it is subject to special controls and modifications of or revisions to the device may be madeunder the 510(k) process.DexCom G5® MobileIn August 2015, we received approval from the FDA for the DexCom G5 Mobile Continuous Glucose Monitoring System, also referred to as the G5Mobile. The G5 Mobile is designed to allow our transmitter to run the Software 505 algorithm, and to communicate directly to a patient’s compatible mobiledevice, including iPhone, iPod touch, iPad, and certain Android mobile devices. The G5 Mobile transmitter has a labeled useful life of three months. Datafrom the G5 Mobile can be integrated with DexCom CLARITY. In September 2015, we launched the G5 Mobile in certain countries in Europe.Similar to the G6, the disposable sensor is inserted by the user and is intended to be used continuously for up to seven days, after which it may bereplaced with a new sensor. The related transmitter is reusable until it reaches the end of its use life, and the related receiver is also reusable. In December2016, the FDA approved the G5 Mobile as the first CGM system in the United States to have a non-adjunctive indication. The non-adjunctive indicationexpands the lawfully permitted use of the G5 Mobile as a replacement to finger stick glucose testing for diabetes treatment decisions. With the new labelindication, the G5 Mobile only requires two finger sticks per day for calibration. In the countries and regions outside of the United States that recognize theCE Mark, as well as the United States and Canada, the G5 Mobile also does not require confirmatory finger sticks when making treatment decisions, althougha minimum of two finger sticks a day remain necessary for calibration. Approval of the non-adjunctive indication also was an important and necessary step inenabling people with Medicare to access CGM.Except with respect to the foregoing, the G5 Mobile is functionally equivalent to our earlier generation CGM systems in its technical capabilities andits regulatory requirements and indications.DexCom G4® PLATINUMThe DexCom G4 PLATINUM CGM system, or G4 PLATINUM, replaced our DexCom SEVEN PLUS system beginning in 2012, when it was approvedfor up to seven days of continuous use by adults with diabetes. Since 2012, we have marketed the G4 PLATINUM under a CE Mark in the European Union,the countries in Asia and Latin America that recognize the CE Mark, New Zealand and Australia, and in the United States with approval from the FDA. Wereceived approvals for a pediatric indication under the CE Mark in February 2013 and from the FDA in February 2014, enabling us to market and sell thissystem to persons two years old and older who have diabetes. In June 2014, we received approval4from the FDA for an expanded indication for the G4 PLATINUM for professional use, which allows healthcare professionals to purchase the G4 PLATINUMsystem for use with multiple patients. Healthcare professionals can use the insights gained from a G4 PLATINUM professional session to adjust therapy andto educate and motivate patients to modify their behavior after viewing the effects that specific foods, exercise, stress and medications have on their glucoselevels. In October 2014, we launched our Software 505 algorithm for the G4 PLATINUM, an algorithm which enabled our systems to achieve a single digitMARD – a measure of the accuracy of continuous glucose monitoring.DexCom Share® In 2015, we received approval from the FDA for the G4 PLATINUM with DexCom Share, or Share, and began commercializing this product in theUnited States in the first quarter of 2015 using a secure wireless connection between a patient’s G4 PLATINUM receiver and an app. We now offer this featurethrough the G6 and the G5 Mobile apps as well as the Share2 app, which works with the G4 PLATINUM receiver with Share. The Share remote monitoringsystem uses an app on the patient’s iPhone, iPod touch, iPad or Android mobile device to transmit glucose information to the cloud and then to apps on themobile devices of up to five designated recipients, or “followers,” who can remotely monitor a patient’s glucose information and receive alert notificationsanywhere they have an Internet or cellular connection. A patient’s glucose data can also be displayed on a patient’s or follower’s wearable device, such as theApple Watch and Wear OS by Google devices, when used in conjunction with the patient’s or follower’s iPhone or Android mobile device.Data and Insulin Delivery CollaborationsWe have entered into multiple collaboration agreements that leverage our technology platform to integrate our continuous glucose monitoring productswith insulin delivery systems. The general purpose of these development and commercial relationships is to integrate our technology into the insulin pumpor pen product offerings of the respective partner, enabling the partner’s insulin delivery device to receive and display glucose readings from our transmitterand, in some cases, use the glucose readings for semi-automated insulin delivery. Currently, we have announced significant insulin delivery partnerships withEli Lilly, Insulet, Novo Nordisk and Tandem Diabetes. In addition to these major partners, we are working with other companies that are pursuing varyingstrategies surrounding semi-automated insulin delivery and data analytics to improve outcomes and ease-of-use in diabetes management.Verily CollaborationOn November 20, 2018, we entered into an Amended and Restated Collaboration and License Agreement with Verily Life Sciences LLC (an AlphabetCompany) and Verily Ireland Limited (collectively, Verily), which we refer to as the Restated Collaboration Agreement. This replaced our originalCollaboration and License Agreement with Verily from August 2015, as amended in October 2016, and eliminated any future royalty obligations under theoriginal agreement. Pursuant to the Restated Collaboration Agreement, we and Verily have agreed to continue to jointly develop a certain next-generationCGM product, and potentially one or more additional CGM products, for which we will have exclusive commercialization rights.The Restated Collaboration Agreement also provides us with an exclusive license to use intellectual property of Verily resulting from the collaboration,and certain Verily patents, in the development, manufacture and commercialization of blood-based or interstitial glucose monitoring products more generally(subject to certain exclusions, which are outside the CGM field as it is commonly understood). It also provides us with non-exclusive license rights underVerily’s other intellectual property rights to develop, manufacture, and commercialize those kinds of glucose monitoring products and certain CGM-productcompanion software functionalities. The Restated Collaboration Agreement requires us to use commercially reasonable efforts to develop, launch, andcommercialize the CGM product(s) that are the subject of the collaboration according to certain timing and other objectives, and provides for one executivesponsor from each of us and Verily to meet periodically and make decisions related to the collaboration (within a limited scope of authority) by consensus.In consideration of Verily’s performance of its obligations under the joint development plan of the Restated Collaboration Agreement, the licensesgranted to us and the amendment of the original agreement, we made an upfront payment, and will make potential future milestone and incentive paymentsupon the achievement of certain goals, as follows:•On December 28, 2018, we made an initial payment of $250 million in shares of our common stock, calculated under the Restated CollaborationAgreement to be 1,840,943 shares of our common stock, allocated between Verily and Onduo, LLC, subject to certain transfer restrictions.•Additional milestone payments of up to $275 million may become due and payable by us upon the achievement of future product regulatoryapproval and revenue milestones. At our election, we may make these milestone5payments in shares of our common stock, also allocated between Verily and Onduo, LLC, with the number of shares being calculated based on thesame share value that was used for purposes of the initial payment, adjusted for stock splits, dividends, and the like, subject to customary closingconditions, including any required antitrust approvals applicable to the issuance of such shares. Alternatively, at our election, we may make any ofthese milestone payments in cash. Any such cash payment would be equal to the number of shares that would otherwise be issued for the givenmilestone payment (calculated as described above) multiplied by the value of our stock on the date the relevant milestone is achieved, adjusted forstock splits, dividends, and the like.•An additional payment of up to $5 million will become due and payable by us as an incentive payment if Verily completes its developmentobligations at least thirty days before an agreed-upon deadline.Future ProductsWe plan to develop future generations of technologies focused on improved performance and convenience and that will enable intelligent insulinadministration. We also are aggressively exploring how to extend our offerings to other opportunities, including for people with Type 2 diabetes that arenon-insulin using, people with pre-diabetes, people who are obese, people with gestational diabetes and in the hospital setting. We will continue to developa networked platform with open architecture, connectivity and transmitters capable of communicating with other devices and software systems. We alsointend to expand our efforts to accumulate CGM patient data and metrics and apply predictive modeling and machine learning to generate interactive CGMinsights that can inform patient behavior.Our product development timelines depend on our ability to achieve clinical endpoints, regulatory and legal requirements and to overcome technologychallenges. Product development timelines may be delayed due to extended regulatory approval timelines, scheduling issues with patients and investigators,requests from institutional review boards, sensor performance and manufacturing supply constraints, among other factors. In addition, support of theseclinical trials requires significant resources from employees involved in the production of our products, including research and development, manufacturing,quality assurance, and clinical and regulatory personnel. Even if our development and clinical trial efforts are successful, the FDA may not approve, clear orotherwise authorize our products, and even if authorized, we may not achieve acceptance in the marketplace by physicians and people with diabetes.BackgroundDiabetes is a disease with significant adverse consequences for human health throughout the world. The International Diabetes Federation, or IDF,estimates that in 2017, 425 million people around the world had diabetes, and the Centers for Disease Control, or CDC, estimates that in 2017, diabetesaffected 30.3 million people in the United States, of which 7.2 million were undiagnosed. IDF estimates that by 2045, the worldwide incidence of peoplesuffering from diabetes will reach 629 million. According to the CDC‘s National Vital Statistics Reports for 2015, diabetes was the seventh leading cause ofdeath by disease in the United States. According to the Congressional Diabetes Caucus website, diabetes is the leading cause of kidney failure, adult-onsetblindness, lower-limb amputations, and significant cause of heart disease and stroke, high blood pressure and nerve damage. According to the IDF, there werean estimated 4 million deaths attributable to diabetes globally in 2017 between the ages of 20 and 79 years. The American Diabetes Association, or ADA,Fast Facts, revised in August 2017, states that diabetes is the primary cause of death for more than 80,000 Americans each year, and contributes to the deathof more than 250,000 Americans annually. According to an article published in The New England Journal of Medicine in November 2014, excess mortalityfor people with diabetes with ages of less than 30 years is largely explained by acute complications of diabetes.Among people of all ages, 2017 data indicated the following: An estimated 24.7 million people or 7.6% of the U.S. population had been diagnosedwith diabetes. In addition to those newly diagnosed, the Congressional Diabetes Caucus website reports that every 24 hours there are: 238 amputations inpeople with diabetes, 120 people who enter end-stage kidney disease programs, and 48 people who go blind.According to the ADA, one in every four healthcare dollars was spent on treating people with diabetes in 2017, and the direct medical costs and indirectexpenditures attributable to diabetes in the United States were an estimated $327 billion, an inflation-adjusted increase of approximately 26% since 2012. Ofthe $327 billion in overall expenses, the ADA estimated that approximately $237 billion were direct costs associated with diabetes care, chroniccomplications and excess general medical costs, and $90 billion were indirect costs. The ADA also found that average medical expenditures among peoplewith diagnosed diabetes were 2.3 times higher than for people without diabetes in 2017. According to the IDF, 2017 expenditures attributable to diabeteswere estimated to be $727 billion globally. The IDF estimates that expenditures attributable to diabetes will grow to $776 billion globally by 2045.6Continuous Glucose MonitoringWe believe continuous glucose monitoring has the potential to enable more people with diabetes to achieve and sustain tight glycemic control. Thelandmark 1993 Diabetes Control and Complications Trial, or DCCT, demonstrated that improving blood glucose control lowers the risk of developingdiabetes-related complications by up to 50%. The study also demonstrated that people with Type 1 diabetes achieved sustained benefits with intensivemanagement. Yet, according to an article published in the Journal of the American Medical Association in 2004, less than 50% of diabetes patients weremeeting ADA standards for glucose control (A1c), and only 37% of people with diabetes were achieving their glycemic targets. According to an articlepublished in The New England Journal of Medicine in November 2014, in two national registries, only 13% to 15% of people with diabetes met treatmentguidelines for good glycemic control, and more than 20% had very poor glycemic control. The CDC estimated that as of 2010, 63.6% of all adults withdiabetes were monitoring their blood glucose levels on a daily basis, with a substantially higher percentage for insulin-requiring patients.Various clinical studies also demonstrate the benefits of continuous glucose monitoring and that continuous glucose monitoring is equally effective inpatients who administer insulin through multiple daily injections or through use of continuous subcutaneous insulin infusion pumps. Results of a JuvenileDiabetes Research Foundation, or JDRF, study published in the New England Journal of Medicine in 2008, and the extension phase of the study, publishedin Diabetes Care in 2009, demonstrated that continuous glucose monitoring improved A1c levels and reduced incidence of hypoglycemia for patients overthe age of 25 and for all patients of all ages who utilized continuous glucose monitoring regularly. In 2016, the first and only randomized, controlled studyfocusing solely on the benefit of continuous glucose monitoring for diabetes patients using multiple daily injections, or MDI, insulin therapy showedDexCom CGM System users on MDI achieved a one percent average A1c reduction after 24 weeks of regular use, compared to their baseline. Studyparticipants also increased time spent in their target A1c range and spent less time in hypoglycemia and hyperglycemia when they used a DexCom CGMSystem compared to those who used only a standard blood glucose meter to monitor their glucose. This DIaMonD (Multiple Daily Injections and ContinuousGlucose Monitoring in Diabetes) study is the first-of-its-kind in demonstrating the impact of CGM only, without insulin pumps or other therapeuticinterventions, on A1c and hypoglycemia in participants using a multiple daily injection insulin regimen.Our current target market consists primarily of people with Type 1 and Type 2 diabetes who utilize insulin pump therapy or who utilize multiple dailyinsulin injections. We have recently begun to target people with Type 2 diabetes on multiple daily injection therapy and expect to expand our target marketto include all people with diabetes, people with pre-diabetes and people who are obese. Although the majority of our revenue has been generated in theUnited States, we have expanded our operations to include Canada, Australia, New Zealand, and certain countries in Europe, Asia, the Middle East, LatinAmerica and Africa.Commercial OperationsWe have built a direct sales organization in the United States, Canada and certain countries in Europe to call on endocrinologists, physicians anddiabetes educators who can educate and influence patient adoption of continuous glucose monitoring. We believe that focusing efforts on these participantsis important given the instrumental role they each play in the decision-making process for diabetes therapy. To complement our direct sales efforts, we haveentered into distribution arrangements in the United States and internationally that allow distributors to sell our products. We believe our direct, highlyspecialized and focused sales organization and our domestic and international distribution agreements are sufficient for us to support our sales efforts for atleast the next twelve months.Product revenues are generated from the sale of durable continuous glucose monitoring systems (receivers and transmitters) and disposable sensorsthrough a direct sales force in the United States, the United Kingdom, Germany, Switzerland, Austria and Canada as well as through distribution arrangementsin the United States, Canada, Australia, New Zealand, and certain countries in Europe, Asia, Latin America, the Middle East and Africa.Market OpportunityDiabetesDiabetes is a chronic, life-threatening disease for which there is no known cure. The disease is caused by the body’s inability to produce or effectivelyutilize the hormone insulin. This inability prevents the body from adequately regulating blood glucose levels. Glucose, the primary source of energy forcells, must be maintained at certain concentrations in the blood in order to permit optimal cell function and health. Normally, the pancreas provides controlof blood glucose levels by secreting the hormone insulin to decrease blood glucose levels when concentrations are too high. In people with diabetes, thebody does not produce sufficient levels of insulin, or fails to utilize insulin effectively, causing blood glucose levels to rise above normal. This condition iscalled hyperglycemia and often results in acute complications as well as7chronic long-term complications such as heart disease, limb amputations, loss of kidney function and blindness. When blood glucose levels are high, peoplewith diabetes often administer insulin in an effort to decrease blood glucose levels. Unfortunately, insulin administration can drive blood glucose levelsbelow the normal range, resulting in hypoglycemia. In cases of severe hypoglycemia, people with diabetes risk acute complications, such as loss ofconsciousness or death. Due to the drastic nature of acute complications associated with hypoglycemia, many people with diabetes are reluctant to reduceblood glucose levels. Consequently, these individuals often remain in a hyperglycemic state, increasing their odds of developing long-term chroniccomplications. Diabetes is typically classified into two major groups: Type 1 and Type 2.Type 1 DiabetesAccording to the ADA and JDRF, as of 2012 there were an estimated 1.3 million people with Type 1 diabetes in the United States. Type 1 diabetes is anautoimmune disorder that usually develops during childhood and is characterized by an absence of insulin, resulting from destruction of the insulinproducing cells of the pancreas. Individuals with Type 1 diabetes must rely on frequent insulin injections in order to regulate and maintain blood glucoselevels.According to JDRF, 40,000 people are diagnosed with Type 1 diabetes each year in the United States and between the years 2001 and 2009 there was a21% increase in the prevalence of Type 1 diabetes in people under the age of 20. In addition, according to the National Diabetes Statistics Report in 2009,there were an estimated 18,436 people younger than the age of 20 years old were diagnosed with Type 1 diabetes in the United States.Type 2 DiabetesAccording to the ADA, in 2012 there were approximately 27.8 million people in the United States with Type 2 diabetes. Type 2 diabetes is a metabolicdisorder which results when the body is unable to produce sufficient amounts of insulin or becomes insulin resistant. Depending on the severity of Type 2diabetes, individuals may require diet and nutrition management, exercise, oral medications or insulin injections to regulate blood glucose levels. Weestimate that approximately 6.0 million Type 2 patients must use insulin to manage their diabetes.Type 2 diabetes is occurring with increasing frequency in young people, with the increase in prevalence related to an increase in obesity amongstchildren. According to the CDC, as of 2016, approximately 18.5% of children and adolescents aged 2-19 years, or 13.7 million children, in the United Stateswere obese. Childhood obesity has more than doubled in children and quadrupled in adolescents in the past 30 years.Diabetes and Glucose Management in the Hospital SettingThere are various subgroups of people with diabetes, including in-hospital patients, who present significant management challenges. According to theADA, diabetes-related inpatient hospitalizations totaled 40.3 million days and 22.2 million outpatient visits in 2017, with outpatient visits increasing 48%since 2012. Additionally, market research shows that over 1.6 million patients are admitted with hyperglycemia prior to elective surgery, which results indelays and increased length of stay. Once admitted, studies conducted by Hospital Health Network in 2013 and AACE in 2011 suggest that approximately28% of patients experience hyperglycemia and 5% of patients experience hypoglycemia, both of which are preventable. After discharge, patients whoexperienced hyperglycemia or hypoglycemia in the hospital have a higher rate of readmission within 30 days. Approximately 30% of all health careexpenditures incurred by people with diabetes come from higher rates of hospital admission and longer average lengths of stay per admission, constitutingthe single largest contributor to the medical cost of diabetes. Of the projected $486 billion in national expenditures for hospital inpatient care in 2017,approximately $123 billion is incurred by people who have diabetes, of which $70 billion is directly attributed to their diabetes.Importance of Glucose MonitoringBlood glucose levels can be affected by many factors, including the carbohydrate and fat content of meals, exercise, stress, illness or impending illness,hormonal releases, variability in insulin absorption and changes in the effects of insulin in the body. Given the many factors that affect blood glucose levels,maintaining glucose within a normal range is difficult, resulting in frequent and unpredictable excursions above or below normal blood glucose levels.People with diabetes administer insulin or ingest carbohydrates throughout the day in order to maintain blood glucose levels within normal ranges. Peoplewith diabetes frequently overcorrect and fluctuate between hyperglycemic and hypoglycemic states, often multiple times during the same day. As a result,many people with diabetes are routinely outside the normal blood glucose range. People with diabetes are often unaware that their glucose levels are eithertoo high or too low, and their inability to completely control blood glucose levels and the associated serious complications can be frustrating and, at times,overwhelming.8In an attempt to maintain blood glucose levels within the normal range, people with diabetes must first measure their blood glucose levels. Often aftermeasuring their blood glucose levels, people with diabetes make therapeutic adjustments. As adjustments are made, additional blood glucose measurementsmay be necessary to gauge the individual’s response to the adjustments. More frequent testing of blood glucose levels provides people with diabetes withinformation that can be used to better understand and manage their diabetes. The ADA recommends that most people with Type 1 diabetes test their bloodglucose levels at least three or more times per day, and that significantly more frequent testing may be required to reach A1c targets safely withouthypoglycemia.Clinical outcomes data support the notion that an important component of effective diabetes management is frequent monitoring of blood glucoselevels. The landmark 1993 DCCT consisting of patients with Type 1 diabetes, and the 1998 UK Prospective Diabetes Study, consisting of patients with Type2 diabetes, demonstrated that people with diabetes who intensely managed blood glucose levels delayed the onset and slowed the progression of diabetes-related complications. The DCCT demonstrated that intensive management reduced the risk of complications by 76% for eye disease, 60% for nerve diseaseand 50% for kidney disease, but also found that it led to a three-fold increase in the frequency of hypoglycemic events. In the December 2005 edition of theNew England Journal of Medicine, the authors of a peer-reviewed study concluded that intensive diabetes therapy has long-term beneficial effects on the riskof cardiovascular disease in patients with Type 1 diabetes. The study showed that intensive diabetes therapy reduced the risk of cardiovascular disease by42% and the risk of non-fatal heart attack, stroke or death from cardiovascular disease by 57%.Limitations of Existing Glucose Monitoring ProductsSingle-point finger stick devices are the most prevalent devices for glucose monitoring. These devices require taking a blood sample with a finger stick,placing a drop of blood on a test strip and inserting the strip into a glucose meter that yields a single point in time blood glucose measurement. We believethat these devices suffer from several limitations, including:•Limited Information. Even if people with diabetes test several times each day, each measurement represents a single blood glucose value at a singlepoint in time. Given the many factors that can affect blood glucose levels, excursions above and below the normal range often occur between thesediscrete measurement points in time. Without the ability to determine whether their blood glucose level is rising, falling or holding constant, and therate at which their blood glucose level is changing, the individual’s ability to effectively manage and maintain blood glucose levels within normalranges is severely limited. Further, people with diabetes cannot test themselves during sleep, when the risk of hypoglycemia is significantly increased.The following graph shows the limited information provided by four single-point measurements during a single day using a traditional single-pointfinger stick device, compared to the data provided by our continuous sensor. The data presented in the graph is from a clinical trial we completed in2003 with a continuous glucose monitoring system, where the patient was blinded to the continuous glucose data. The continuous data indicates that,even with four finger sticks in one day, the patient’s blood glucose levels were above the target range of 80-140 milligrams per deciliter (“mg/dl”) fora period of 13.5 hours.9Single Day Continuous Data•Inconvenience. The process of measuring blood glucose levels with single-point finger stick devices can cause significant disruption in the dailyactivities of people with diabetes and their families. People with diabetes using single-point finger stick devices must stop whatever they are doingseveral times per day, self-inflict a painful prick and draw blood to measure blood glucose levels. To do so, people with diabetes must always carry afully supplied kit that may include a spring-loaded needle, or lancet, disposable test strips, cleansing wipes and the meter, and then safely dispose ofthe used supplies. This process is inconvenient and may cause uneasiness in social situations.•Difficulty of Use. To obtain a sample with single-point finger stick devices, people with diabetes generally prick one of their fingertips or,occasionally, a forearm with a lancet. They then squeeze the area to produce the blood sample and another prick may be required if a sufficientvolume of blood is not obtained the first time. The blood sample is then placed on a disposable test strip that is inserted into a blood glucose meter.This task can be difficult for individuals with decreased tactile sensation and visual acuity, which are common complications of diabetes.•Pain. Although the fingertips are rich in blood flow and provide a good site to obtain a blood sample, they are also densely populated with highlysensitive nerve endings. This makes the lancing and subsequent manipulation of the finger to draw blood painful. The pain and discomfort arecompounded by the fact that fingers offer limited surface area, so tests are often performed on areas that are sore from prior tests. People with diabetesmay also suffer pain when the finger prick site is disturbed during regular activities.The DexCom SolutionOur G4 PLATINUM, G5 Mobile and G6 systems offer the following advantages to people with diabetes:•Improved Outcomes. Results of a major multicenter clinical trial funded by the JDRF demonstrated that patients with Type 1 diabetes who usedcontinuous glucose monitoring devices to help manage their disease experienced significant improvements in glucose control. Data published in apeer-reviewed article based on the pivotal trial for our first-generation system demonstrated that patients using the system showed statisticallysignificant improvements in glucose levels within the target range when compared to patients relying solely on single-point finger stickmeasurements. Additional peer-reviewed published data has demonstrated that patients with access to seven days of continuous glucose datastatistically improved glucose control by further increasing their time spent10with glucose levels in the target range, thereby reducing time spent in both hyperglycemic and hypoglycemic ranges. Finally, peer reviewed datapublished from the DIaMonD study demonstrated that DexCom CGM System users on MDI (multiple daily injections) achieved a one percent averagereduction in hemoglobin A1c levels, a measure of the average amount of glucose in the blood over the prior three months, after 24 weeks of regularuse, compared to their baseline. Study participants also increased time spent in their target A1c range and spent less time in hypoglycemia andhyperglycemia when they used a DexCom CGM system compared to those who used only a standard blood glucose meter to monitor their glucose.•Access to Real-Time Values, Trend Information and Alerts. At their fingertips, people with diabetes can view their current glucose value, alongwith a graphical display of the historical trend information on our receiver or alternate display device. Without continuous monitoring, the individualis often unaware if his or her glucose is rising, declining or remaining constant. Access to continuous real-time glucose measurements provides peoplewith diabetes information that may aid in attaining better glucose control. Additionally, our G4 PLATINUM, G5 Mobile and G6 systems alert peoplewith diabetes when their glucose levels approach inappropriately high or low levels so that they may intervene.•Intuitive User Interface. We have developed a user interface that we believe is intuitive and easy to use. The G5 Mobile and G6 receiver are compactwith an easy-to-read color display, simple navigation tools, audible alerts and graphical display of trend information. Similar benefits are availablevia the interfaces we have made available on compatible mobile devices. These devices can serve as substitutes for our receivers or alternate displayunits in certain geographies.•Convenience and Comfort. Our G4 PLATINUM, G5 Mobile and G6 systems provide people with diabetes with the benefits of continuousmonitoring, without having to perform finger stick tests for every measurement. Additionally, the disposable sensor that is inserted under the skin is avery thin wire, minimizing potential discomfort associated with inserting or wearing the disposable sensor. The external portion of the sensor,attached to the transmitter, is small, has a low profile and is designed to be easily worn under clothing. The wireless receiver is the size of a small smartphone and can be carried discreetly in a pocket or purse. We believe that convenience is an important factor in achieving widespread adoption of acontinuous glucose monitoring system.•Connectivity to Wearables and Others. Patients can monitor their glucose levels and trends on compatible wearable devices, such as Apple Watchand Wear OS by Google devices, when used with a compatible mobile device. Also, our Share remote monitoring systems enable users of our G4PLATINUM with Share, G5 Mobile and G6 systems to have their sensor glucose information remotely monitored by their family, friends or designatedrecipient, or follower, by wirelessly transmitting data from the user’s smart phone to the cloud and then to the follower’s mobile device. Up to fivefollowers can remotely monitor a patient’s glucose information and receive secondary alert notifications from almost anywhere with an Internetconnection via each follower’s mobile device.While we believe the G4 PLATINUM, G5 Mobile and G6 systems offer these advantages, people with diabetes may not perceive the benefits ofcontinuous glucose monitoring and may be unwilling to change their current treatment regimens. Furthermore, our G4 PLATINUM, G5 Mobile and G6systems are only available by prescription in the United States and may not appeal to all types of people with diabetes. Many international jurisdictions donot require a prescription for the dispensing of a specific device to a patient, however, the device must have received necessary regulatory approvals (e.g.,Australia, Singapore and Germany). In the United Kingdom, CGMs and most related supplies are issued pursuant to a prescription; however, prescriptions arefree for residents of England, Scotland, Wales and Northern Ireland under the National Health System. The G4 PLATINUM and G5 Mobile systems promptthe user to replace the sensor no later than the seventh day, and the G6 prompts the user to replace the sensor no later than the tenth day; although we areaware of reports from the field that some individuals have been able to use sensors for longer periods. People with diabetes could find this process to beuncomfortable or inconvenient, and may be unwilling to insert a disposable sensor in their body, especially if their current diabetes management involves nomore than two finger sticks per day.The G4 PLATINUM is not indicated as a replacement device for single-point finger stick devices in the United States, must be calibrated initially usingmeasurements from two single-point finger stick tests and thereafter at least every 12 hours using single-point finger stick tests, and may be more costly to usethan other glucose measurement devices. In the United States, Canada and the countries and regions outside of the United States that recognize the CE Mark,our G5 Mobile system no longer requires confirmatory finger sticks when making treatment decisions although it does require two single-point finger sticktests each day for calibration. In the United States, Canada and the countries and regions outside of the United States that recognize the CE Mark, our G6does not require confirmatory finger sticks when making treatment decisions or finger stick tests each day for calibration, although it does require finger sticktests when symptoms do not match readings and when readings are unavailable.11Our StrategyOur objective is to become the leading provider of continuous glucose monitoring systems and related products to enable people with diabetes to moreeffectively and conveniently manage their disease. We are also developing and commercializing products that integrate our continuous glucose monitoringtechnologies into the insulin delivery systems or data platforms of our respective partners. In addition, we continue to pursue development partnerships withother insulin delivery companies, including automated insulin delivery systems. To achieve these objectives, we are focusing on the following businessstrategies:•Establish and maintain our technology platform as the leading approach to continuous glucose monitoring and leverage our development expertise torapidly bring products to market, including for expanded indications.•Drive the adoption of our ambulatory products through a direct sales and marketing effort, as well as key distribution arrangements.•Drive additional adoption through technology integration partnerships such as our current partnerships with Eli Lilly, Insulet, Novo Nordisk, TandemDiabetes and others.•Seek broad coverage policies and reimbursement for our products from private third-party payors and national health systems.•Drive increased utilization and adoption of our products through a cloud-based data repository platform that enables people with diabetes toaggregate and analyze data from numerous diabetes devices and share the data with their healthcare providers.•Expand the use of our products to other patient care settings and patient demographics, including the hospital, people with Type 2 diabetes andpeople with gestational diabetes.•Provide a high level of customer support, service and education.•Pursue the highest safety and quality levels for our products.Our Technology PlatformWe believe we have a broad technology platform that will support the development of multiple products for continuous glucose monitoring.Sensor TechnologyThe key enabling technologies for our sensors include biomaterials, membrane systems, electrochemistry and low power microelectronics. Ourmembrane technology consists of multiple polymer layers configured to selectively allow the appropriate mix of glucose and oxygen to travel through themembrane and react with a glucose specific enzyme to create an extremely low electrical signal, measured in pico-amperes. This electrical signal is thentranslated into glucose values. We believe that the capability to measure very low levels of an electrical signal and to accurately translate thosemeasurements into glucose values is also a unique and distinguishing feature of our technology. We have also developed technology to allow sensitiveelectronics to be packaged in a small, fully contained, lightweight sealed unit that minimizes inconvenience and discomfort for the user.Receiver and Transmitter TechnologyG4 PLATINUM uses proprietary radiofrequency, and G5 Mobile and G6 use Bluetooth, to wirelessly transmit information from the transmitter, whichsits in a pod atop the sensor, to our receiver or to a compatible mobile device. We have developed technology for reliable transmission and reception andhave consistently demonstrated a high rate of successful transmissions from transmitter to receiver or compatible mobile device in our clinical trials. Ourreceiver or the mobile device, via our G5 Mobile and G6 apps, then displays both real-time and trended glucose values, and provides alerts and alarms. Wehave used our extensive database of continuous glucose data to create and refine software, algorithms and other technology for the display of data tocustomers.Products in DevelopmentWe have gained our technology expertise by learning to design implants that can withstand the rigors of functioning within the human body forextended periods of time, as well as other issues such as device sealing, miniaturization, durability and sensor geometry.We are leveraging this technology platform to enhance the capabilities of our current products (including obtaining expanded indications of use) andto develop additional continuous glucose monitoring products. We plan to develop12future generations of technologies focused on improved performance and convenience and that will enable intelligent insulin administration. Over the longerterm, we plan to continue to develop and improve networked platforms with open architecture, connectivity and transmitters capable of communicating withother devices.We also continue to pursue and support development partnerships with insulin pump companies and companies or institutions developing insulindelivery systems, including automated insulin delivery systems.In the future, we intend to seek additional indications for our continuous glucose monitoring technology, including gestational diabetes and hospitalmonitoring. Eventually, we may apply our technological expertise to products beyond glucose monitoring.Disposable Sensor and Reusable TransmitterOur sensor includes a tiny wire-like electrode coated with our sensing membrane system. This disposable sensor comes packaged with an integratedinsertion device and is contained in a small plastic housing platform, or pod. The base of the pod has adhesive that attaches it to the skin. The sensor isintended to be easily and reliably inserted by the user by exposing the adhesive, placing the pod against the surface of the skin of the abdomen or upperbuttocks for people ages 2-17, and pushing down on the insertion device. The insertion device first extends a narrow gauge needle containing the sensor intothe subcutaneous tissue and then retracts the needle, leaving behind the sensor in the tissue and the pod adhered to the skin. The user then disposes of theinsertion device and snaps the transmitter to the pod.After a stabilization period with the G6, the user will begin receiving CGM data on his or her mobile device or dedicated receiver through the ten-dayusage period. After a stabilization period with the G5 Mobile, the user is required to calibrate the sensor with two measurements from a single-point fingerstick device and the disposable sensor begins wirelessly transmitting the continuous glucose data at specific intervals to the handheld receiver or compatiblemobile device. Users are prompted by the receiver or mobile app, if using the G5 Mobile, to calibrate the system twice per day with finger stick measurementsthroughout the use period to ensure reliable operation. Calibration may be accomplished by using any FDA cleared blood glucose meter. Currently, the G4PLATINUM system is indicated for use as an adjunctive device to complement, not replace, information obtained from standard home blood glucosemonitoring devices. Our G6 and G5 Mobile systems both have labeling from the FDA and CE Mark permitting their use as a replacement for finger sticks formaking therapeutic adjustments, although the G5 Mobile still requires twice daily finger stick calibrations.The disposable sensor contained in the G6 system is intended to function for up to ten days and the G5 Mobile and G4 PLATINUM systems areintended to function for up to seven days, after which the sensor should be replaced. To replace a sensor, the user simply removes the pod and attached sensorfrom the skin and discards them while retaining the reusable transmitter. A new sensor and pod can then be inserted and used with the same receiver andtransmitter for a subsequent use period. We are aware of reports from the field, however, that customers have been able to use the G6 and the G5 Mobile andG4 PLATINUM sensors for periods longer than ten or seven days, respectively.Handheld ReceiverOur small handheld receiver is carried by the user and wirelessly receives continuous glucose values from the transmitter. Proprietary algorithms andsoftware, developed from our extensive database of continuous glucose data from clinical trials, are programmed into the G4 PLATINUM receiver to processthe glucose data from the sensor and display it on a user-friendly graphical user interface. For G5 Mobile and G6, the algorithm resides on the transmitter,which then sends the processed glucose data to the receiver. With a push of a button, the user can access their current glucose value and one-, three-, six-,twelve- and twenty-four-hour trended data. Additionally, when glucose values are inappropriately high or low, the receiver provides an audible alert orvibrates. The receiver is a self-contained, durable unit with a rechargeable battery.Compatible Mobile DevicesWith our G5 Mobile and G6 systems, the functionalities of our proprietary receiver can be obtained through the use of a compatible mobile device, suchas an iOS or Android device, and our mobile applications, depending on the patient’s geographic location. A receiver may be required as the primary displaydevice or a backup to the mobile device in some jurisdictions, including the United States.Sales and MarketingWe have built a direct sales organization to call on endocrinologists, physicians and diabetes educators who can educate and influence patientadoption of continuous glucose monitoring. We believe that focusing efforts on these participants is important given the instrumental role they each play inthe decision-making process for diabetes therapy.13We believe that referrals by endocrinologists, physicians and diabetes educators, together with self-referrals by customers, have driven and will continue todrive adoption of our G4 PLATINUM, G5 Mobile and G6 systems. We directly market our products in the United States, the United Kingdom, Germany,Ireland, Austria, Switzerland and Canada primarily to endocrinologists, physicians and diabetes educators. Although the number of diabetes patients issignificant, the number of physicians and educators influencing these patients is relatively small. As of 2018, we estimate there were approximately 6,500clinical endocrinologists who treat diabetes in the United States. As a result, we believe our direct, highly specialized and focused sales organization issufficient for us to support our sales efforts for the foreseeable future.We also are increasing our direct to consumer marketing efforts to increase awareness of our CGM systems and drive new patient leads to our website.We target people with Type 1 and insulin intensive Type 2 diabetes. We advertise on television, in print, digital and video media, CRM, offer sponsorships,host or participate in diabetes related events, conduct public relations and maintain a brand ambassador program. Our campaigns target people with diabetes.We use a variety of marketing tools to drive adoption, ensure continued usage and establish brand loyalty for our continuous glucose monitoringsystems by:•creating awareness of the benefits of continuous glucose monitoring and the advantages of our technology with endocrinologists, physicians,diabetes educators and people with diabetes;•providing strong and simple educational and training programs to healthcare providers and people with diabetes to ensure easy, safe and effective useof our systems; and•maintaining a readily accessible telephone and web-based technical and customer support infrastructure, which includes clinicians, diabeteseducators and reimbursement specialists, to help referring physicians, diabetes educators and people with diabetes as necessary.Our sales organization competes with the experienced and well-funded marketing and sales operations of our competitors. We have relatively limitedexperience developing and managing a direct sales organization and we may be unsuccessful in our attempt to manage and expand the sales force.Developing a direct sales organization is a difficult, expensive and time-consuming process. To be successful we must:•recruit and retain adequate numbers of effective sales personnel;•effectively train our sales personnel in the benefits of our products;•establish and maintain successful sales, marketing, training and education programs to educate endocrinologists, physicians, diabetes educators andpatients about our products;•manage geographically disbursed operations; and•effectively train our sales personnel on the applicable fraud and abuse laws that govern interactions with healthcare practitioners as well as currentand prospective patients and maintain active oversight and auditing measures to ensure continued compliance.CompetitionThe market for blood glucose monitoring devices is intensely competitive, subject to rapid change and significantly affected by new productintroductions and other market activities of industry participants. In selling the G4 PLATINUM, G5 Mobile and G6 systems, we compete directly withMedtronic plc’s Diabetes Group; Roche Diabetes Care, a division of Roche Diagnostics; privately-held LifeScan, Inc.; the Diabetes Care division of AbbottLaboratories; and Ascensia Diabetes Care, each of which manufactures and markets products for the single-point finger stick device market. Collectively,these companies currently account for the majority of the worldwide sales of self-monitored glucose testing systems.Several companies are developing or commercializing products for continuous or periodic monitoring of glucose levels in the interstitial fluid underthe skin that compete directly with our products. Medtronic plc’s Diabetes Group markets and sells a standalone glucose monitoring product called GuardianConnect, which has launched both internationally and in the United States after receiving FDA approval in 2018. In 2015, Abbott Diabetes Care, Inc.launched a consumer flash glucose monitoring system, FreeStyle Libre outside the United States. Abbott first received FDA approval for a professional-useversion of this system in September 2016 for use in the United States, referred to as the Pro Flash, for which readings are only made available to the patientthrough consultation with their healthcare provider. Abbott first received FDA approval for the consumer version of this system, referred to as Flash, inSeptember 2017 for use in the United States.Medtronic and other third parties have developed or are developing, insulin pumps integrated with continuous glucose monitoring systems thatprovide, among other things, the ability to suspend insulin administration while the14user’s glucose levels are low and to automate basal or bolus insulin dosing. Medtronic launched its 670G insulin delivery system in 2017.Many of our competitors are either publicly traded or are divisions of publicly traded companies, and they enjoy several competitive advantages overus. See Risk Factors, “We operate in a highly competitive market and face competition from large, well-established medical device manufacturers withsignificant resources, and, as a result, we may not be able to compete effectively.”As a result, we may be unable to compete effectively against these companies or their products. We believe that the principal competitive factors in ourmarket include:•safe, reliable and high-quality performance of products;•cost of products and eligibility for reimbursement;•comfort and ease of use of products;•effective sales, marketing and distribution networks;•brand awareness and strong acceptance by healthcare professionals and people with diabetes;•customer service and support and comprehensive education for people with diabetes and diabetes care providers;•speed of product innovation and time to market;•regulatory expertise; and•technological leadership and superiority.ManufacturingWe currently manufacture our products at our headquarters in San Diego, California and at our manufacturing facility in Mesa, Arizona. As ofDecember 31, 2018, our headquarters facilities had approximately 31,000 square feet of laboratory space and approximately 28,000 square feet of controlledenvironment rooms. Our Mesa, Arizona facility has approximately 14,000 square feet of laboratory space and approximately 19,000 square feet of controlledenvironment rooms. There are technical challenges to increasing manufacturing capacity, including FDA qualification of new manufacturing facilities,equipment design and automation, material procurement, problems with production yields, and quality control and assurance. We have focused significanteffort on continual improvement programs in our manufacturing operations intended to improve quality, yields and throughput. We have made progress inmanufacturing to enable us to supply adequate amounts of product to support our commercialization efforts, however we cannot guarantee that supply willnot be constrained going forward. Additionally, the production of our continuous glucose monitoring systems must occur in a highly controlled and cleanenvironment to minimize particles and other yield- and quality-limiting contaminants. Developing and maintaining commercial-scale manufacturingfacilities has and will continue to require the investment of substantial additional funds and the hiring and retaining of additional management, qualityassurance, quality control and technical personnel who have the necessary manufacturing experience.We manufacture our G4 PLATINUM, G5 Mobile and G6 systems with certain components supplied by outside vendors and other components that wemanufacture internally. Key components that we manufacture internally include our wire-based sensors. The remaining components and assemblies arepurchased from outside vendors. We then assemble, test, package and ship the finished systems, which may include a reusable transmitter, a receiver anddisposable sensors.We purchase certain components and materials used in manufacturing from single sources due to quality considerations, costs or constraints resultingfrom regulatory or other requirements. As of December 31, 2018, those single sources include suppliers of application-specific integrated circuits used in ourtransmitters, seals used for the applicator and certain polymers used to synthesize polymeric membranes for our sensors. In some cases, agreements with theseand other suppliers can be terminated by either party upon short notice. We may not be able to quickly establish additional or replacement suppliers for oursingle-source components, especially after our products are commercialized, in part because of the FDA review process and because of the custom nature ofthe parts we designed. Any supply interruption from our vendors or failure to obtain alternate vendors for any of the components would limit our ability tomanufacture our systems, and could have a material adverse effect on our business.The advantages of the manufacturing facility in Mesa, Arizona include increasing our capacity to:•avoid the constraints we anticipated in our headquarters facilities commencing in 2019-2020;•geographically diversify our manufacturing base to mitigate the risks of having all of our manufacturing located in earthquake and fire-proneCalifornia; and15•help manage certain of our operating expenses by taking advantage of Arizona’s lower costs and taxes relative to California.Third-Party ReimbursementAs a medical device company, reimbursement from Medicare, Medicaid or other governmental healthcare programs or systems, and private third-partyhealthcare payors is an important element of our success. In January 2017, the Centers for Medicare and Medicaid, or CMS, established a classification of“Therapeutic Continuous Glucose Monitors” as durable medical equipment under Medicare Part B, subject to payment by Medicare under certain coverageconditions to be determined by CMS, by local Medicare Administrative Contractors or on a patient claim by claim basis. This is a decision we had pursuedfor many years and which was made possible by the FDA’s decision in December 2016 to approve a non-adjunctive indication, or use, for our G5 Mobilesystem, as described further in the “Regulatory” section below. Similarly, in September 2016, Germany’s Federal Joint Committee agreed to providereimbursement for continuous glucose monitoring systems under certain conditions which we believe we meet. Our G4 PLATINUM system is not classified as a Therapeutic CGM by CMS and thus remains ineligible for reimbursement within the Medicare-eligiblepopulation. Reimbursement of our G4 PLATINUM system, or any future system that does not meet the requirements for Therapeutic CGMs under MedicarePart B or the requirements of another governmental healthcare system, will be limited to those customers covered by third-party payors that have adoptedcoverage policies for continuous glucose monitoring devices that include our products.As of December 31, 2018, the seven largest private third-party payors, in terms of the number of covered lives, have issued coverage policies for thecategory of continuous glucose monitoring devices. In addition, we have negotiated contracted rates with all seven of those third-party payors for thepurchase of our G4 PLATINUM, G5 Mobile and G6 systems by their members. Many of these coverage policies reimburse for our products under durablemedical equipment benefits, are restrictive in nature and require the patient to comply with extensive documentation and other requirements to demonstratemedical necessity under the policy. Customers who are insured by payors that do not offer coverage for our devices will have to bear the financial cost of theproducts. We currently employ in-house reimbursement expertise to assist customers in obtaining reimbursement from private third-party payors. We alsomaintain a field-based reimbursement team charged with calling on third-party private payors to obtain coverage decisions and contracts. We have hadformal meetings and have increased our efforts to create and liberalize coverage policies with third-party payors, including obtaining reimbursement for ourproducts under pharmacy benefits and for more people with diabetes.Medicare, Medicaid, other governmental health programs, health maintenance organizations and other third-party payors are increasingly attemptingto contain healthcare costs by limiting both coverage and the level of reimbursement of new medical devices, and, as a result, their coverage policies may berestrictive, or they may not cover or provide adequate payment for our products. In order to obtain reimbursement arrangements, we may have to agree to anet sales price lower than the net sales price we might charge in other sales channels. Our revenue may be limited by the continuing efforts of government andthird-party payors to contain or reduce the costs of healthcare through various increasingly sophisticated means, such as requiring prospective reimbursementand second opinions, purchasing in a bundle, or redesigning benefits. Furthermore, we are unable to predict what effect the current or any future healthcarereform will have on our business, or the effect these matters will have on our customers. Our dependence on the commercial success of the G4 PLATINUM, G5Mobile and G6 systems makes us particularly susceptible to any cost containment or reduction efforts. Accordingly, unless government and other third-partypayors provide adequate coverage and reimbursement for the G4 PLATINUM, G5 Mobile and G6 systems, people without coverage who have diabetes maynot use our products.Medicare does not cover any items or services that are not “reasonable and necessary.” Medicare covers the CGM system, which includes suppliesnecessary for the use of the device, under the Durable Medical Equipment, or DME, benefit category. In order to be covered under this benefit, onecomponent of the CGM system must meet the criteria for a durable medical device. To date, the receiver satisfied this criteria.In some foreign markets, pricing and profitability of medical devices are subject to government control. In the United States, we expect that there willcontinue to be federal and state proposals for similar controls. Also, the trends toward managed healthcare in the United States and proposed legislationintended to reduce the cost of government insurance programs could significantly influence the purchase of healthcare services and products and may resultin lower prices for our products or the exclusion of our products from reimbursement programs.16Intellectual PropertyProtection of our intellectual property is a strategic priority for our business. We rely on a combination of patents, copyrights, trademarks, tradenames,trade secrets, nondisclosure agreements and other measures to establish and protect our proprietary rights.As of December 31, 2018, we had 449 issued U.S. patents in force, and numerous U.S. published patent applications pending. We believe it will take upto five years, and possibly longer, for our pending U.S. patent applications to result in issued patents. As of December 31, 2018, we had 47 granted Europeanpatents, and numerous European patent applications and published international applications pending under the Patent Cooperation Treaty. Our patentsbegan expiring in 2017. We also have 31 registered U.S. trademarks, 46 registered European Community trademarks, and a number of registered trademarksand numerous pending trademark applications in the United States and outside the United States. In addition, we have entered into exclusive and non-exclusive licenses in the ordinary course of business relating to a wide array of technologies or other intellectual property rights or assets. Our RestatedCollaboration Agreement with Verily provides us with an exclusive license to use intellectual property of Verily resulting from the collaboration, and certainVerily patents in the development, manufacture and commercialization of blood-based or interstitial glucose monitoring products more generally (subject tocertain exclusions, which are outside the CGM field as it is commonly understood). It also provides us with non-exclusive license rights under Verily’s otherintellectual property rights to develop, manufacture and commercialize those kinds of glucose monitoring products and certain CGM-product companionsoftware functionalities.Our patents and patent applications seek to protect aspects of our core membrane and sensor technologies, and our product concepts for continuousglucose monitoring. We believe that our patent position provides us with sufficient rights to protect our current and proposed commercial products. However,our patent applications may not result in issued patents, and any patents that have been issued or might be issued may not protect our intellectual propertyrights. Furthermore, we operate in an industry characterized by extensive patent litigation, and our patents may not be upheld if challenged. Any patentsissued to us may be challenged by third parties as being invalid or unenforceable, and patent litigation may result in significant damage awards andinjunctions that could prevent the manufacture and sale of affected products or result in significant royalty payments in order to continue selling theproducts. Third parties may also independently develop similar or competing technology that avoids our patents. The steps we have taken may not preventthe misappropriation of our intellectual property, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in theUnited States. We also face risks associated with intellectual property infringement. See Risk Factors, “We are subject to claims of infringement ormisappropriation of the intellectual property rights of others, which could prohibit us from shipping affected products, require us to obtain licenses fromthird parties or to develop non-infringing alternatives, and subject us to substantial monetary damages and injunctive relief. We may also be subject toother claims or suits.” and “Our inability to adequately protect our intellectual property could allow our competitors and others to produce products basedon our technology, which could substantially impair our ability to compete.”We also rely on trade secrets, technical know-how and continuing innovation to develop and maintain our competitive position. We seek to protect ourproprietary information and other intellectual property by generally requiring our employees, consultants, contractors, outside scientific collaborators andother advisors to execute non-disclosure and assignment of invention agreements on commencement of their employment or engagement. Agreements withour employees also forbid them from bringing the proprietary rights of third parties to us. We also generally require confidentiality or material transferagreements from third parties that receive our confidential data or materials. We cannot guarantee that employees and third parties will abide by theconfidentiality or assignment terms of these agreements. Despite measures taken to protect our intellectual property, unauthorized parties might copy aspectsof our products or obtain and use information that we regard as proprietary.Government RegulationThe medical devices that we manufacture are subject to regulation by numerous regulatory bodies, including the U.S. FDA and comparableinternational regulatory agencies. These agencies require manufacturers of medical devices to comply with applicable laws and regulations governing thedevelopment, testing, manufacturing, labeling, marketing and distribution of medical devices. Devices are generally subject to varying levels of regulatorycontrol, the most comprehensive of which requires that a clinical evaluation program be conducted before a device receives approval for commercialdistribution. In addition, healthcare regulatory bodies in the United States and around the world impose a range of requirements related to the payment formedical devices and the procedures in which they are used, including laws intended to prevent fraud, waste, and abuse of healthcare dollars.17U.S. Laws and RegulationsAt the U.S. federal level, our products are medical devices subject to extensive and ongoing regulation by the FDA. The U.S. Federal Food, Drug andCosmetic Act, referred to as the FDCA, and the FDA’s implementing regulations govern product design and development, pre-clinical and clinical testing,pre-market clearance, authorization or approval, establishment registration and product listing, product manufacturing, product labeling, product storage,advertising and promotion, product sales, distribution, recalls and field actions, servicing and post-market clinical surveillance. A number of U.S. states alsoimpose licensing and compliance regimes on companies that manufacture or distribute prescription devices in the state.In addition, the delivery of our devices in the U.S market is subject to regulation by the U.S. Department of Health and Human Services and comparablestate agencies responsible for reimbursement and regulation of payment for health care items and services. U.S. laws and regulations are imposed primarily inconnection with the Medicare and Medicaid programs, as well as the government’s interest in regulating the quality and cost of health care.FDA RegulationUnless an exemption applies, each medical device we wish to commercially distribute in the United States will require either prior 510(k) clearance,prior de novo down-classification and a related grant of marketing authorization, or prior approval from the FDA through the premarket approval, or PMAprocess. The FDA classifies medical devices into one of three classes. Devices requiring fewer controls because they are deemed to pose lower risk are placedin Class I or II. Class I devices are subject to general controls such as labeling, pre-market notification, and adherence to the FDA’s manufacturingrequirements, which are contained in the Quality System Regulation, or QSR. Class II devices are subject to special controls such as performance standards,post-market surveillance, FDA guidelines, or particularized labeling, as well as general controls. Some Class I and Class II devices are exempted by regulationfrom the pre-market notification (i.e., 510(k) clearance) requirement, and/or the requirement of compliance with substantially all of the QSR. As an example,the mobile applications that comprise the Share System were classified by the FDA as Class II exempt. With the mobile applications classified as Class IIexempt, we must comply with certain general and special controls required by the FDA but we do not need prior FDA review to commercialize changes to themobile applications. Some devices are placed in Class III, which requires approval of a PMA application, if they are deemed by the FDA to pose the greatestrisk, such as life-sustaining, life-supporting or certain implantable devices, or to be “not substantially equivalent” either to a previously 510(k) cleareddevice or to a “preamendment” Class III device in commercial distribution before May 28, 1976 for which PMA applications have not been required.If a previously unclassified new medical device does not qualify for the 510(k) pre-market notification process because no predicate device to which itis substantially equivalent can be identified, the device is automatically classified into Class III. The Food and Drug Administration Modernization Act of1997 established a new route to market for low to moderate risk medical devices that are automatically placed into Class III due to the absence of a predicatedevice, called the “Request for Evaluation of Automatic Class III Designation,” or the de novo classification procedure. This procedure allows a manufacturerwhose novel device is automatically classified into Class III to request down-classification of its medical device into Class I or Class II on the basis that thedevice presents low or moderate risk, rather than requiring the submission and approval of a PMA. Prior to the enactment of the Food and DrugAdministration Safety and Innovation Act, or FDASIA, in July 2012, a medical device could only be eligible for de novo classification if the manufacturerfirst submitted a 510(k) pre-market notification and received a determination from the FDA that the device was not substantially equivalent. FDASIAstreamlined the de novo classification pathway by permitting (under Section 513(f)(2) of the FDCA) manufacturers to request de novo classification directlywithout first submitting a 510(k) pre-market notification to the FDA and receiving a not substantially equivalent determination. FDASIA sets a review timefor FDA of 120 days following receipt of the de novo application, but FDA does not always meet this timeline and has publicly only committed to a reviewgoal of 150 days for 50% of applications. If the manufacturer seeks reclassification into Class II, the manufacturer must include a draft proposal for specialcontrols that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. The FDA may reject the reclassificationpetition if it identifies a legally marketed predicate device that would be appropriate for a 510(k) or determines that the device is not low to moderate risk orthat general controls would be inadequate to control the risks and special controls cannot be developed. If the FDA agrees with the down-classification, thede novo applicant will then receive authorization to market the device, and a classification regulation will be established for the device type. The device canthen be used as a predicate device for future 510(k) submissions by the manufacturer or a competitor. In December 2018, the FDA issued proposed regulationsto govern the de novo classification process, which if finalized would further impact this path to market.As an alternative to the de novo process, a company could also file a reclassification petition, or the FDA could initiate such a process, seeking tochange the automatic Class III designation of a novel postamendment device under Section 513(f)(3) of the FDCA. The FDA issued a final rule (to take effectMarch 17, 2019) to clarify the process where18the FDA initiates such reclassification (issuance of a proposed reclassification order; optional panel consultation; and final reclassification order published inthe Federal Register).Our G4 PLATINUM and G5 Mobile systems (excluding associated Share System functionalities and mobile applications) have been classified asdevices requiring PMA approval. A PMA application must be supported by valid scientific evidence, which typically requires extensive data, includingtechnical, pre-clinical, clinical, manufacturing and labeling data, to demonstrate to the FDA’s satisfaction the safety and efficacy of the device. A PMAapplication also must include a complete description of the device and its components, a detailed description of the methods, facilities and controls used tomanufacture the device, and proposed labeling. After a PMA application is submitted and found to be sufficiently complete, the FDA begins an in-depthreview of the submitted information. During this review period, the FDA may request additional information or clarification of information already provided.Also during the review period, an advisory panel of experts from outside the FDA may be convened to review and evaluate the application and providerecommendations to the FDA. In addition, the FDA generally will conduct a pre-approval inspection of the manufacturing facility to evaluate compliancewith QSR, which requires manufacturers to implement and follow design, testing, control, documentation and other quality assurance procedures.FDA review of a PMA application generally takes between one and three years, but may take significantly longer. The FDA can delay, limit or denyapproval of a PMA application for many reasons, including:•our systems may not be safe or effective to the FDA’s satisfaction;•the data from our pre-clinical studies and clinical trials may be insufficient to support approval;•the manufacturing process or facilities we use may not meet applicable requirements; and•changes in FDA approval policies or adoption of new regulations may require additional data.If an FDA evaluation of a PMA application or manufacturing facilities is favorable, the FDA will either issue an approval letter, or approvable letter,which usually contains a number of conditions which must be met in order to secure final approval of the PMA. When and if those conditions have beenfulfilled to the satisfaction of the FDA, the agency will issue a PMA approval letter authorizing commercial marketing of a device, subject to the conditionsof approval and the limitations established in the approval letter. If the FDA’s evaluation of a PMA application or manufacturing facilities is not favorable,the FDA will deny approval of the PMA or issue a not approvable letter. The FDA may also determine that additional trials are necessary, in which case thePMA approval may be delayed for several months or years while the trials are conducted and data is submitted in an amendment to the PMA. The PMAprocess can be expensive, uncertain and lengthy and a number of devices for which FDA approval has been sought by other companies have never beenapproved by the FDA for marketing.New PMA applications or PMA supplements may be required for modifications to the manufacturing process, labeling, device specifications, materialsor design of a device that is approved through the PMA process. PMA supplements often require submission of the same type of information as an initialPMA application, except that the supplement is limited to information needed to support any changes from the device covered by the approved PMAapplication and may or may not require as extensive clinical data or the convening of an advisory panel.Clinical trials are almost always required to support a PMA application and are sometimes required for a 510(k) clearance. These trials generally requiresubmission of an application for an investigational device exemption, or IDE to the FDA. The IDE application must be supported by appropriate data, such asanimal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. The IDEapplication must be approved in advance by the FDA for a specified number of patients, unless the product is deemed a non-significant risk device andeligible for abbreviated IDE requirements. Generally, clinical trials for a significant risk device may begin once the IDE application is approved by the FDAand the study protocol and informed consent are approved by appropriate institutional review boards at the clinical trial sites. The FDA’s approval of an IDEallows clinical testing to go forward, but does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and efficacy, even ifthe trial meets its intended success criteria. All clinical trials must be conducted in accordance with the FDA’s IDE regulations, which govern investigationaldevice labeling, prohibit promotion, and specify an array of Good Clinical Practice requirements, which include among other things, recordkeeping,reporting and monitoring responsibilities of study sponsors and study investigators. Clinical trials must further comply with the FDA’s regulations forinstitutional review board approval and for informed consent and other human subject protections. Required records and reports are subject to inspection bythe FDA. The results of clinical testing may be unfavorable or, even if the intended safety and efficacy success criteria are achieved, may not be consideredsufficient for the FDA to grant approval or clearance of a product. The commencement or completion of any of our clinical trials may be delayed or halted, orbe inadequate to support approval of a PMA application, for numerous reasons, including, but not limited to, the following:19•the FDA or other regulatory authorities do not approve a clinical trial protocol or a clinical trial, or place a clinical trial on hold;•patients do not enroll in clinical trials at the rate we expect;•patients do not comply with trial protocols;•patient follow-up is not at the rate we expect;•patients experience adverse side effects;•patients die during a clinical trial, even though their death may not be related to our products;•institutional review boards and third-party clinical investigators may delay or reject our trial protocol;•third-party clinical investigators decline to participate in a trial or do not perform a trial on our anticipated schedule or consistent with the clinicaltrial protocol, good clinical practices or other FDA requirements;•DexCom or third-party organizations do not perform data collection, monitoring and analysis in a timely or accurate manner or consistent with theclinical trial protocol or investigational or statistical plans;•third-party clinical investigators have significant financial interests related to DexCom or the study that the FDA deems to make the study resultsunreliable, or DexCom or investigators fail to disclose such interests;•regulatory inspections of our clinical trials or manufacturing facilities, which may, among other things, require us to undertake corrective action orsuspend or terminate our clinical trials;•changes in governmental regulations or administrative actions applicable to our trial protocols;•the interim or final results of the clinical trial are inconclusive or unfavorable as to safety or effectiveness; and•the FDA concludes that the results from our trial and/or trial design are inadequate to demonstrate safety and effectiveness of the product.In November 2011, we received 510(k) clearance from the FDA to market to clinics a data management service, which helps healthcare providers andpatients see, understand and use blood glucose meter data to diagnose and manage diabetes. In 2014, we submitted a request to the FDA via the de novoprocess and the FDA agreed that our data management services with CGM data is classified as Class I.Our data transfer service allows researchers to control the transfer of data from certain diabetes devices to research tools and databases according to theirown research workflows.The infrastructure of the data management service is considered “medical device data systems,” or MDDS, and does not require 510(k) clearance.MDDS are hardware or software products that transfer, store, convert formats, and display medical device data. An MDDS does not modify the data or modifythe display of the data, and it does not by itself control the functions or parameters of any other medical device. MDDS are not intended to be used for activepatient monitoring. On February 15, 2011, the FDA issued a regulation down-classifying MDDS from Class III (high-risk) to Class I (low-risk). Since down-classifying MDDS, the FDA gained additional experience with these types of technologies, and determined that these devices pose a low risk to the public.Therefore, the FDA stated in 2014 guidance that it did not intend to enforce compliance with the regulatory controls that apply to MDDS devices, includingregistration and listing, premarket review, postmarket reporting, and QSR for manufacturers of these types of devices. In 2016, the 21st Century Cures Actamended the Food, Drug, and Cosmetic Act’s definition of “device” to exclude certain software functions, thus products meeting the definition of MDDS areno longer considered devices and thus are not subject to FDA regulatory requirements.Additional functions of, or intended uses for, our software platform may require us to obtain either 510(k) clearance or PMA approval from the FDA. Toobtain 510(k) clearance, we must submit a pre-market notification demonstrating that the software system is substantially equivalent to a previously cleared510(k) device or a pre-amendment device that was in commercial distribution before May 28, 1976 for which the FDA has not yet called for the submission ofa PMA application. The FDA’s 510(k) clearance pathway generally takes from three to twelve months from the date the application is completed, but can takesignificantly longer. After a medical device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or thatwould constitute a significant change in its intended use, requires a new 510(k) clearance.In March 2018 we obtained marketing authorization for the Dexcom G6 integrated continuous glucose monitoring (iCGM) system for determiningglucose (sugar) levels in children aged two and older and adults with diabetes, via the de novo process.20After a device is authorized for marketing and placed in commercial distribution, numerous regulatory requirements apply. These include:•establishment registration and device listing;•QSR, which requires manufacturers to follow design, testing, control, storage, supplier/contractor selection, complaint handling, documentation andother quality assurance procedures;•labeling regulations, which prohibit the promotion of products for unapproved or off-label uses or indications and impose other restrictions onlabeling, advertising and promotion;•medical device reporting regulations, which require that manufacturers report to the FDA if a device may have caused or contributed to a death orserious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur;•voluntary and mandatory device recalls to address problems when a device is defective and/or could be a risk to health; and•corrections and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals ifundertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health.Also, the FDA may require us to conduct post-market surveillance studies or order us to establish and maintain a system for tracking our productsthrough the chain of distribution to the patient level. The FDA and the Food and Drug Branch of the California Department of Health Services enforceregulatory requirements by conducting periodic, unannounced inspections and market surveillance. Inspections may include the manufacturing facilities ofour subcontractors.Failure to comply with applicable regulatory requirements, including those applicable to the conduct of our clinical trials, can result in enforcementaction by the FDA, which may lead to any of the following sanctions:•warning letters or untitled letters that require corrective action;•fines and civil penalties;•unanticipated expenditures;•delays in approving or refusal to approve our future continuous glucose monitoring systems or other products;•FDA refusal to issue certificates to foreign governments needed to export our products for sale in other countries;•suspension or withdrawal of FDA approval;•product recall or seizure;•interruption of production;•operating restrictions;•injunctions; and•criminal prosecution.We and our contract manufacturers, specification developers, and some suppliers of components or device accessories, are also required to manufactureour products in compliance with current Good Manufacturing Practice requirements set forth in the QSR. The QSR requires a quality system for the design,manufacture, packaging, labeling, storage, installation and servicing of marketed devices, and includes extensive requirements with respect to qualitymanagement and organization, device design, buildings, equipment, purchase and handling of components or services, production and process controls,packaging and labeling controls, device evaluation, distribution, installation, complaint handling, servicing, and record keeping. The FDA evaluatescompliance with the QSR through periodic unannounced inspections that may include the manufacturing facilities of our subcontractors. If the FDA believeswe or any of our contract manufacturers or regulated suppliers are not in compliance with these requirements, it can shut down our manufacturing operations,require recall of our products, refuse to approve new marketing applications, institute legal proceedings to detain or seize products, enjoin future violations,or assess civil and criminal penalties against us or our officers or other employees. Any such action by the FDA would have a material adverse effect on ourbusiness. We may be unable to comply with all applicable FDA regulations.21U.S. Fraud and Abuse Laws and Other Compliance RequirementsThe healthcare industry is subject to various U.S. federal and state laws pertaining to healthcare fraud and abuse. Violations of these laws arepunishable by criminal and civil sanctions, including, in some instances, exclusion from participation in U.S. federal and state healthcare programs,including Medicare and Medicaid.Anti-kickback Laws. The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, receiving, offering or providingremuneration directly or indirectly to induce either the referral of an individual, or the furnishing, recommending, or arranging of a good or service, for whichpayment may be made under a federal healthcare program such as Medicare and Medicaid. The definition of “remuneration” has been broadly interpreted toinclude anything of value, including such items as gifts, discounts, the furnishing of supplies or equipment, credit arrangements, waiver of payments, andproviding anything at less than its fair market value. The Department of Health and Human Services, or HHS has issued regulations, commonly known as safeharbors, that set forth certain provisions which, if fully met, will assure healthcare providers and other parties that they will not be prosecuted under thefederal Anti-Kickback Statute. The failure of a transaction or arrangement to fit precisely within one or more safe harbors does not necessarily mean that it isillegal or that prosecution will be pursued. However, conduct and business arrangements that do not fully satisfy each applicable safe harbor may result inincreased scrutiny by government enforcement authorities such as the HHS Office of Inspector General.The penalties for violating the federal Anti-Kickback Statute include imprisonment for up to ten years, fines of up to $100,000 per violation andpossible exclusion from federal healthcare programs such as Medicare and Medicaid. Many states have adopted prohibitions similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare services reimbursed by any source, not only by the Medicare and Medicaidprograms.Federal False Claims Act. The federal False Claims Act prohibits knowingly presenting, or causing to be presented a false claim or the knowing use offalse statements or records to obtain payment from the federal government. When an entity is determined to have violated the False Claims Act, it must paythree times the actual damages sustained by the government, plus mandatory civil penalties of between $11,181 and $22,363 for each separate false claim.Suits filed under the False Claims Act, known as “qui tam” actions, can be brought by any individual on behalf of the government and such individuals(known as “relators” or, more commonly, as “whistleblowers”) may share in any amounts paid by the entity to the government in fines or settlement. Inaddition, certain states have enacted laws modeled after the federal False Claims Act. Qui tam actions have increased significantly in recent years, causinggreater numbers of healthcare companies to have to defend a false claim action, pay fines or be excluded from Medicare, Medicaid or other federal or statehealthcare programs as a result of an investigation arising out of such action. Federal enforcement agencies also have showed increased interest inpharmaceutical companies’ product and patient assistance programs, including reimbursement and co-pay support services, and a number of investigationsinto these programs have resulted in significant civil and criminal settlements. In addition, the Affordable Care Act amended federal law to provide that thegovernment may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulentclaim for purposes of the federal civil False Claims Act. Criminal prosecution is possible for knowingly making or presenting a false or fictitious or fraudulentclaim to the federal government.Federal Physician Self-Referral Law (Stark Law). The Stark Law prohibits a physician (or an immediate family member of a physician) who has afinancial relationship with an entity from referring patients to that entity for certain designated health services (“DHS”), including durable medicalequipment such as the CGM receiver and supplies, payable by Medicare, unless an exception applies. The Stark Law also prohibits such an entity frompresenting or causing to be presented a claim to the Medicare program for DHS provided pursuant to a prohibited referral, and provides that certaincollections related to any such claims must be refunded in a timely manner. Because we bill Medicare for DME and related supplies, the company’s financialrelationships with referring physicians are governed by the Stark Law. Exceptions to the Stark Law include, among other things, exceptions for certainfinancial relationships, including both ownership and compensation arrangements. The Stark Law is a strict liability statute, therefore, to the extent that thestatute is implicated and an exception does not apply, the statute is violated. In addition to the Stark Law, many states have implemented similar physicianself-referral prohibitions that may extend to Medicaid, third party payors, and self-pay.HIPAA and Other Privacy Laws and Regulations. The Health Insurance Portability and Accountability Act of 1996, as amended by the AmericanRecovery and Reinvestment Act of 2009, and implementing regulations, or HIPAA, created two new federal crimes: healthcare fraud and false statementsrelating to healthcare matters. The healthcare fraud statute prohibits knowingly and willfully executing a scheme to defraud any healthcare benefit program,including private payors. A violation of this statute is a felony and may result in fines, imprisonment or exclusion from government sponsored programs. Thefalse statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious orfraudulent statement in connection with the delivery of or22payment for healthcare benefits, items or services. A violation of this statute is a felony and may result in fines or imprisonment.HIPAA, as well as a number of other federal and state privacy-related laws, also extensively regulate the use and disclosure of individually identifiablehealth information, known as “protected health information,” and require covered entities, including health plans and most health care providers, toimplement administrative, physical and technical safeguards to protect the security of such information. Certain provisions of the security and privacyregulations apply to business associates (entities that handle protected health information on behalf of covered entities), and business associates are subjectto direct liability for violation of these provisions. In addition, a covered entity may be subject to criminal and civil penalties as a result of a businessassociate violating HIPAA, if the business associate is found to be an agent of the covered entity. The HIPAA privacy regulations and security regulationsimpose and will continue to impose significant costs on us in order to comply with these standards.In addition, certain states have proposed or enacted legislation that will create new data privacy and security obligations for certain entities, such as theCalifornia Consumer Privacy Act that was recently enacted and goes into effect January 1, 2020.FCPA and Other Anti-Bribery and Anti-Corruption Laws. Additionally, the U.S. Foreign Corrupt Practices Act, or FCPA, prohibits U.S. corporationsand their representatives from offering, promising, authorizing or making payments to any foreign government official, government staff member, politicalparty or political candidate in an attempt to obtain or retain business abroad. The scope of the FCPA would include interactions with certain healthcareprofessionals in many countries. Our present and future business has been and will continue to be subject to various other U.S. and foreign laws, rules and/orregulations.Sunshine Act. Pursuant to the Patient Protection and Affordable Care Act that was signed into law in March 2010, the federal government enacted thePhysician Payment Sunshine Act. As a manufacturer of U.S. FDA‑regulated devices reimbursable by federal healthcare programs, we are subject to this law,which requires us to track and annually report certain payments and other transfers of value we make to U.S.-licensed physicians or U.S. teaching hospitals.We are also required to report certain ownership interests held by physicians and their immediate family members. In 2018 the law was extended to requiretracking and reporting of transfers of value to physician assistants, nurse practitioners, and other mid-level practitioners. Reporting requirements will go intoeffect in 2022 for payments and transfers of value made to these additional practitioner-types in 2021. CMS has the potential to impose penalties of up to$1.15 million per year for violations of the Physician Payment Sunshine Act, depending on the circumstances, and payments reported also have the potentialto draw scrutiny on payments to and relationships with physicians, which may have implications under the Anti-Kickback Statute and other healthcare laws.International RegulationInternational sales of medical devices are subject to foreign government regulations, which may vary substantially from country to country. The timerequired to obtain approval in a foreign country may be longer or shorter than that required for FDA approval, and the requirements may differ. There is atrend towards harmonization of quality system standards among the European Union, United States, Canada and various other industrialized countries.The primary regulatory body in Europe is that of the European Union, which includes most of the major countries in Europe. Other countries, such asSwitzerland, have voluntarily adopted laws and regulations that mirror those of the European Union with respect to medical devices. The European Unionhas adopted numerous directives and standards regulating the design, manufacture, clinical trials, labeling and adverse event reporting for medical devices.Devices that comply with the requirements of a relevant directive will be entitled to bear the CE conformity marking, indicating that the device conforms tothe essential requirements of the applicable directives and, accordingly, can be commercially distributed throughout Europe. The method of assessingconformity varies depending on the class of the product, but normally involves a combination of self-assessment by the manufacturer and a third-partyassessment by a “Notified Body.” This third-party assessment may consist of an audit of the manufacturer’s quality system and specific testing of themanufacturer’s product. An assessment by a Notified Body of one country within the European Union is required in order for a manufacturer to commerciallydistribute the product throughout the European Union. Outside of the European Union, regulatory approval needs to be sought on a country-by-country basisin order for us to market our products. The European Union regulatory bodies finalized a new Medical Device Regulation (MDR) in 2017, which replaced theexisting Directives and provided three years for transition and compliance. The MDR will change several aspects of the existing regulatory framework. Othercountries have adopted medical device regulatory regimes, such as the Classification Rules for Medical Devices published by the Hong Kong Department ofHealth, the Health Sciences Authority of Singapore regulation of medical devices under the Health Products Act, and Health Canada’s risk classificationsystem for invasive devices, among others. Each country may have its own processes and requirements for23medical device licensing, approval, and regulation, therefore requiring us to seek regulatory approvals on a country-by-country basis.Outside the United States a range of anti-bribery and anti-corruption laws, as well and some industry-specific laws and codes of conduct, apply to themedical device industry and interactions with government officials and entities and healthcare professionals. Laws include the UK Bribery Act of 2010.Further, the EU member countries have emphasized a greater focus on healthcare fraud and abuse and have indicated greater attention to the industry by theEuropean Anti-Fraud Office. MedTech Europe, the medical device industry association, also introduced the Code of Ethical Business Practices, which cameinto effect on January 1, 2017. Countries in Asia have also become more active in their enforcement of anti-bribery laws and with respect to procurement andsupply chain fraud.In the European Union, increasingly stringent data protection and privacy rules that have and will continue to have substantial impact on the use ofpatient data across the healthcare industry became effective in May 2018. The EU General Data Protection Regulation, or GDPR, applies across the EuropeanUnion and includes, among other things, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certaincircumstances and significant fines for non-compliance. The GDPR fine framework can be up to 20 million euros, or up to 4 % of the company’s total globalturnover of the preceding fiscal year, whichever is higher. The GDPR also requires companies processing personal data of individuals residing in theEuropean Union to comply with EU privacy and data protection rules, even if the company itself does not have a physical presence in the European Union.Noncompliance could result in the imposition of fines, penalties, or orders to stop noncompliant activities. Due to the strong consumer protection aspects ofthe GDPR, companies subject to its purview are allocating substantial legal costs to the development of necessary policies and procedures and overallcompliance efforts. We expect continued costs associated with maintaining compliance with GDPR into the future.Environmental RegulationOur research and development and clinical processes involve the handling of potentially harmful biological materials as well as hazardous materials.We are subject to federal, state and local laws and regulations governing the use, handling, storage and disposal of hazardous and biological materials and weincur expenses relating to compliance with these laws and regulations. If violations of environmental, health and safety laws occur, we could be held liablefor damages, penalties and costs of remedial actions. These expenses or this liability could have a significant negative impact on our financial condition. Wemay violate environmental, health and safety laws in the future as a result of human error, equipment failure or other causes. Environmental laws couldbecome more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with violations. We are subject topotentially conflicting and changing regulatory agendas of political, business and environmental groups. Changes to or restrictions on permittingrequirements or processes, hazardous or biological material storage or handling might require an unplanned capital investment or relocation. Failure tocomply with new or existing laws or regulations could harm our business, financial condition and results of operations.Advisory Boards and ConsultantsWe have relied upon the advice of experts in the development and commercialization of our products. Since 2005, we have used experts in variousdisciplines on a consulting basis as needed to solve problems or accelerate development pathways. We may continue to engage advisors from the academic,consultancy, governmental or other areas to assist us as necessary.EmployeesAs of December 31, 2018, we had approximately 2,800 full-time employees and approximately 1,100 contract and temporary employees globally.None of our employees are represented by a labor union or covered by a collective bargaining agreement. We have never experienced any employment-related work stoppages and we consider our employee relations to be good.Available InformationOur Internet website address is www.dexcom.com. We provide free access to various reports that we file with or furnish to the SEC through our website,as soon as reasonably practicable after they have been filed or furnished. These reports include, but are not limited to, our annual reports on Form 10-K,quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports. Our SEC reports can be accessed through the investorrelations section of our website, or through www.sec.gov. Also available on our website are printable versions of our Audit Committee charter, CompensationCommittee charter, Nominating and Corporate Governance Committee charter, and24Business Code of Conduct and Ethics. Information on our website does not constitute part of this Annual Report on Form 10-K or other report we file orfurnish with the SEC. Stockholders may request copies of these documents from:DexCom, Inc.6340 Sequence DriveSan Diego, CA 92121(858) 200-020025ITEM 1A.RISK FACTORSOur short and long-term success is subject to numerous risks and uncertainties, many of which involve factors that are difficult to predict or beyondour control. Before making a decision to invest in, hold or sell our common stock, stockholders and potential stockholders should carefully consider therisks and uncertainties described below, in addition to the other information contained in or incorporated by reference into this Annual Report on Form 10-K, as well as the other information we file with the Securities and Exchange Commission. If any of the following risks are realized, our business, financialcondition, results of operations and prospects could be materially and adversely affected. In that case, the value of our common stock could decline andstockholders may lose all or part of their investment. Furthermore, additional risks and uncertainties of which we are currently unaware, or which wecurrently consider to be immaterial, could have a material adverse effect on our business, financial condition or results of operations. Refer to ourdisclaimer regarding forward-looking statements at the beginning of our Management’s Discussion and Analysis of Financial Condition and Results ofOperations.Risks Related to Our BusinessWe have incurred losses since inception and anticipate that we will incur continued losses in the future.We have incurred operating losses in each year since our inception in May 1999, including an operating loss of $186.3 million for the twelve monthsended December 31, 2018. As of December 31, 2018, we had an accumulated deficit of $798.9 million. We have financed our operations primarily throughprivate and public offerings of equity securities and debt and the sales of our products. We have devoted substantial resources to:•research and development relating to our continuous glucose monitoring systems;•sales and marketing and manufacturing expenses associated with the commercialization of our G4 PLATINUM, G5 Mobile and G6 systems; and•expansion of our workforce.We expect our research and development expenses to increase in connection with our clinical trials and other development activities related to ourproducts, including our next-generation sensors, transmitters and sensor-augmented insulin pumps, as well as other collaborations. We also expect that ourgeneral and administrative expenses will continue to increase due to the additional operational and regulatory burdens applicable to public healthcare andmedical device companies. As a result, it is likely we will continue to incur operating losses in the future. These losses, among other things, have had and willcontinue to have an adverse effect on our stockholders’ equity.If, in the future, we are unable to continue the development of an adequate sales and marketing organization, or if our direct sales organization is notsuccessful, we may have difficulty achieving market awareness and selling our products.To achieve commercial success for the G4 PLATINUM, G5 Mobile and G6 systems and any of our future products, we must either continue to developand grow our sales and marketing organization and enter into partnerships or other arrangements to market and sell our products or collaborate with thirdparties to market and sell our products. Developing and managing a direct sales organization is a difficult, expensive and time-consuming process.To be successful we must:•recruit and retain adequate numbers of effective and experienced sales personnel;•effectively train our sales personnel in the benefits and risks of our products;•establish and maintain successful sales, marketing, training and education programs that educate endocrinologists, physicians and diabeteseducators so they can appropriately inform their patients about our products;•manage geographically dispersed sales and marketing operations; and•effectively train our sales personnel on the applicable fraud and abuse laws that govern interactions with healthcare practitioners as well ascurrent and prospective patients and maintain active oversight and auditing measures to ensure continued compliance.We currently employ a direct sales force to sell and market our products in the United States, Canada and certain countries in Europe. Our direct salesforce calls directly on healthcare providers and people with diabetes throughout the applicable country to initiate sales of our products. Our salesorganization competes with the experienced, larger and well-funded marketing and sales operations of our competitors. We may not be able to successfullymanage our dispersed sales force or increase our product sales at acceptable rates.26We have also entered into distribution arrangements to leverage existing distributors already engaged in the diabetes marketplace. Our United Statesdistribution partnerships are focused on accessing underrepresented regions and, in some instances, third-party payors that contract exclusively withdistributors. Our European and other international distribution partners call directly on healthcare providers and patients to market and sell our products inAustralia, New Zealand, and portions of Europe, Asia, Latin America, the Middle East and Africa. Because of the competition for their services, we may beunable to partner with or retain additional qualified distributors. Further, we may not be able to enter into agreements with distributors on commerciallyreasonable terms, if at all. Our distributors might not have the resources to continue to support our recent rapid growth.If we are unable to establish adequate sales, marketing and distribution capabilities or enter into and maintain arrangements with third parties to sell,market and distribute our products, our business may be harmed.We have entered into distribution arrangements to leverage established distributors already engaged in the diabetes marketplace. Our distributionagreements with Byram and affiliates and Cardinal Health and affiliates (including Edgepark Medical Supplies), our two most significant distributors,generated approximately 12% and 15%, respectively, of our total revenue during the twelve months ended December 31, 2018. We cannot guarantee thatthese relationships will continue or that we will be able to maintain this volume of sales from these relationships in the future. A substantial decrease or lossof these sales could have a material adverse effect on our operating performance. To the extent that we enter into additional arrangements with third parties toperform sales, marketing, distribution and billing services in the United States, Europe or other countries, our product margins could be lower than if wedirectly marketed and sold our products. To the extent that we enter into co-promotion or other marketing and sales arrangements with other companies, anyrevenue received will depend on the skills and efforts of others, and we cannot predict whether these efforts will be successful. In addition, market acceptanceof our products by physicians and people with diabetes in Europe or other countries will largely depend on our ability to demonstrate their relative safety,effectiveness, reliability, cost-effectiveness and ease of use. If we are unable to do so, we may not be able to generate product revenue from our sales efforts inEurope or other countries. Finally, if we are unable to establish and maintain adequate sales, marketing and distribution capabilities, independently or withothers, we may not be able to generate adequate product revenue and may not become profitable.Although many third-party payors have adopted some form of coverage policy on continuous glucose monitoring devices, our products do not yet havesimple broad-based contractual coverage with most third-party payors and we frequently experience administrative challenges in obtainingreimbursement for our customers. If we are unable to obtain adequately broad reimbursement at acceptable prices for our products or any future productsfrom third-party payors, we will be unable to generate significant revenue.As a medical device company, reimbursement from government and/or commercial third-party healthcare payors, including Medicare and Medicaid, isan important element of our success. In January 2017, the Centers for Medicare & Medicaid Services, or CMS, established a classification of “TherapeuticContinuous Glucose Monitors” as durable medical equipment under Medicare Part B, subject to payment by Medicare under certain coverage conditions tobe determined by CMS, by local Medicare Administrative Contractors or on a patient claim by claim basis. This is a decision we had pursued for many yearsand which was made possible by the FDA’s decision in December 2016 to approve a non-adjunctive indication, or use, for our G5 Mobile system. In March2017, CMS Medicare Administrative Contractors issued interim instructions for individual claim adjudication providing instructions and billing codes forthe reimbursement of individual claims for therapeutic CGM reimbursement that apply to our G6 and G5 Mobile systems, and in May 2017, CMS MedicareAdministrative Contractors issued a revision to an existing joint Local Coverage Determination, or LCD, which establishes the Medicare conditions ofcoverage for therapeutic CGM, including G5 Mobile and G6 systems.Similarly, in September 2016, Germany’s Federal Joint Committee agreed to provide reimbursement for continuous glucose monitoring systems undercertain conditions, which we believe are met by our G4 PLATINUM, G5 Mobile and G6 systems.A number of regulatory and commercial hurdles remain relating to wide-scale sales where a government or commercial third-party payors providereimbursement, including sales to Medicare beneficiaries. If we are unable to successfully address these hurdles, reimbursement of our products may belimited to a smaller subset of people with diabetes covered by Medicare or to those people with diabetes covered by other third-party payors that haveadopted policies for CGM devices allowing for coverage of these devices if certain conditions are met. Adverse coverage or reimbursement decisions relatingto our products by CMS, its Medicare Administrative Contractors, other state or federal payors, and/or third-party commercial payors could significantlyreduce reimbursement, which could have an impact on the acceptance of, and demand for, our products and the prices that our customers are willing to payfor them.As of December 31, 2018, the seven largest private third-party payors, in terms of the number of covered lives, have issued coverage policies for thecategory of CGM devices. In addition, we have negotiated contracted rates with all seven of those third-party payors for the purchase of our G4 PLATINUM,G5 Mobile and G6 systems by their members. However,27people with diabetes without insurance that covers our products will have to bear the financial cost of them. In the United States, people with diabetes usingexisting single-point finger stick devices are generally reimbursed all or part of the product cost by Medicare or other third-party payors. The commercialsuccess of our products in both domestic and international markets will substantially depend on whether timely and comprehensive third-partyreimbursement is widely available for individuals that use them. While many third-party payors have adopted some form of coverage policy on CGMdevices, typically, though not exclusively, under durable medical equipment benefits, those coverage policies frequently are restrictive and requiresignificant medical documentation and other requirements in order for policy holders to obtain reimbursement, and as a result, we have difficulty improvingthe efficiency of our customer service group. Moreover, it is not uncommon for governmental, including federal and/or state, agencies and their contractors toconduct periodic routine billing and compliance reviews that may entail extensive documentation requests, cooperation with which may require significanttime and resources.In addition, Medicare, Medicaid, other governmental health programs, health maintenance organizations and other third-party payors are increasinglyattempting to contain healthcare costs by limiting both coverage and the level of reimbursement of new and existing medical devices, and, as a result, theymay be restrictive, or they may not cover or provide adequate payment for our products. Many of these programs impose documentation and other eligibilityrequirements that make it more difficult to obtain reimbursement. In order to obtain additional reimbursement arrangements, including under pharmacybenefits, we may have to agree to a net sales price lower than the net sales price we might charge in other sales channels. Our revenue may be limited by thecontinuing efforts of government and third-party payors to contain or reduce the costs of healthcare through various increasingly sophisticated means, suchas leveraging increased competition, increasing eligibility requirements such as second opinions and other documentation, purchasing in a bundle, orredesigning benefits. We are unable to predict what effect the current or any future healthcare reform will have on our business, or the effect these matters willhave on our customers. Our dependence on the commercial success of the G4 PLATINUM, G5 Mobile and G6 systems makes us particularly susceptible toany cost containment or reduction efforts. Accordingly, unless government and other third-party payors provide adequate coverage and reimbursement forthe G4 PLATINUM, G5 Mobile and G6 systems, people without coverage who have diabetes may not use our products. Furthermore, payors are increasinglybasing reimbursement rates on factors such as the effectiveness of the product, clinical outcomes associated with the product, and any factors that negativelyimpact the effectiveness or clinical outcomes (or cause a perception of any such negative impact), such as the results of a clinical trial, a product defect, or aproduct recall, which could negatively impact the reimbursement rate.Medicare does not cover any items or services that are not “reasonable and necessary.” In terms of CGM, Medicare covers the CGM system, whichincludes supplies necessary for the use of the device, under the Durable Medical Equipment (DME) benefit category. In order to be covered under thisbenefit, one component of the CGM system must meet the criteria for a durable medical device. To date, the receiver satisfied this criteria. To the extent that areceiver is not used by a Medicare beneficiary or CMS otherwise determines that the items and supplies ordered are not medically necessary, Medicare maynot cover that CGM system or any associated supplies.In some foreign markets, pricing and profitability of medical devices are subject to government control. In the United States, we expect that there willcontinue to be federal and state proposals for similar controls. Also, the trends toward managed healthcare in the United States and legislative efforts intendedto reduce the cost of government insurance programs could significantly influence the purchase of healthcare services and products and may result in lowerprices for our products or the exclusion of our products from reimbursement programs.Uncollectible uninsured and patient due accounts could adversely affect our results of operations.The primary collection risks for our accounts receivable relate to the uninsured patient accounts and patient accounts for which the primary insurancecarrier has paid the amounts covered by the applicable agreement, but patient responsibility amounts (exclusions, deductibles and copayments) remainoutstanding. In the event that we are unsuccessful in collecting payments owed by patients, and/or experience increases in the amount, or deterioration in thecollectability, of uninsured and patient due accounts receivable, this could adversely affect our cash flows and results of operations. We may also beadversely affected by the growth in patient responsibility accounts as a result of increases in the adoption of plan structures, due to evolving health carepolicy and insurance landscapes that shift greater responsibility for care to individuals through greater exclusions and copayment and deductible amounts.We may never receive approval, marketing authorization or clearance from the U.S. FDA and other governmental agencies to market additional CGMsystems, expanded indications for use of current and future generation CGM systems, future software platforms, or any other products under development.In March 2018, via the de novo process, the FDA classified the G6 and substantially equivalent devices of this generic type (“integrated continuousglucose monitoring systems” or “iCGMs”) into Class II, meaning that going forward products of this generic type may utilize the 510(k) pathway.28Any subsequent modification of our G6 that could significantly affect its safety or effectiveness (for example, a significant change in design ormanufacture), or that would constitute a major change in its intended use, will require us to obtain a new 510(k) clearance or could require a new de novosubmission or a PMA. The FDA requires each manufacturer to make this determination initially, but the FDA may review any such decision and may disagreewith a manufacturer’s determination. If the FDA disagrees with a manufacturer’s determination, the FDA may require the manufacturer to cease marketingand/or recall the modified device until appropriate clearance or approval is obtained. Under these circumstances, the FDA may also subject a manufacturer tosignificant regulatory fines or other penalties.If future product candidates are not deemed by the FDA to meet the criteria for submission under the 510(k) pathway, or for down-classification underthe de novo process or otherwise, we would need to pursue a PMA. The PMA process requires us to prove the safety and effectiveness of our systems to theFDA‘s satisfaction. This process can be expensive, prolonged and uncertain, requires detailed and comprehensive scientific and human clinical data, and maynever result in the FDA granting a PMA. In March 2018, our G6 system received de novo classification from the FDA to be a Class II medical device. The denovo classification under the generic name “integrated continuous glucose monitoring system,” makes the G6 a predicate device for future 510(k)submissions. Complying with this classification requires ongoing compliance with the general controls required by the federal Food Drug and Cosmetic Actand the special controls specified by the FDA’s G6 order. Any future system or expanded indications for use of current generation systems will requireapproval of the applicable regulatory authorities. In addition, we intend to seek either 510(k) clearances or PMA approvals for certain changes andmodifications to our existing software platform, but cannot predict when, if ever, those changes and modifications will be approved.The FDA can refuse to grant a 510(k) clearance or a de novo request for marketing authorization, or delay, limit or deny approval of a PMA applicationor supplement for many reasons, including:•the system may not be deemed by the FDA to be substantially equivalent to appropriate predicate devices under the 510(k) pathway;•the system may not satisfy the FDA‘s safety or effectiveness requirements;•the data from pre-clinical studies and clinical trials may be insufficient to support approval, clearance and/or marketing authorization;•the manufacturing process or facilities used may not meet applicable requirements; and•changes in FDA approval policies or adoption of new regulations may require additional data.Even if approved or cleared by the FDA or foreign regulatory agencies, future generations of our CGM systems, expanded indications for use of currentand future generation CGM systems, our software platforms or any other continuous glucose monitoring system under development, may not be approved orcleared for the indications that are necessary or desirable for successful commercialization. We may not obtain the necessary regulatory approvals orclearances to market these continuous glucose monitoring systems in the United States or outside of the United States. Any delay in, or failure to receive ormaintain, approval or clearance for our products could prevent us from generating revenue from these products or achieving profitability. The uncertaintiming of regulatory approvals for future generations of our products could subject our current inventory to excess or obsolescence charges, which could havean adverse effect on our business, financial condition and operating results.If we are unable to successfully complete the pre-clinical studies or clinical trials necessary to support additional PMA, de novo, or 510(k) applications orsupplements, we may be unable to commercialize our continuous glucose monitoring systems under development, which could impair our business,financial condition and operating results.To support current and any future additional PMA, 510(k), de novo applications or supplements, we together with our partners, must successfullycomplete pre-clinical studies, bench-testing, and in some cases clinical trials that will demonstrate that the product is safe and effective. Productdevelopment, including pre-clinical studies and clinical trials, is a long, expensive and uncertain process and is subject to delays and failure at any stage.Furthermore, the data obtained from the studies and trials may be inadequate to support approval of an application and the FDA may request additionalclinical data in support of those applications, which may result in significant additional clinical expenses and may delay product approvals. While we havein the past obtained, and may in the future obtain, an investigational device exemption, or IDE, prior to commencing clinical trials for our products, FDAapproval of an IDE application permitting us to conduct testing does not mean that the FDA will consider the data gathered in the trial to be sufficient tosupport approval of a PMA, de novo or 510(k) application or supplement, even if the trial’s intended safety and effectiveness endpoints are achieved.Additionally, since 2009, the FDA has significantly increased the scrutiny applied to its oversight of companies subject to its regulations, including devicemarketing submissions, by hiring new investigators and increasing the frequency and scope of its inspections of manufacturing facilities. The ongoingoversight by the FDA‘s Center for Devices and Radiological Health could complicate the product approval process for certain of our and our partners’products, and we cannot predict the effect of such procedural changes and cannot ascertain if such changes will have a substantive impact on the approval ofour products or our partners’ products. If we fail to29adequately respond to any changes to the 510(k) submission process and associated matters, our business may be adversely impacted.Unexpected changes to the FDA or foreign regulatory approval processes could also delay or prevent the approval of our products submitted for review.For example, as part of the 21st Century Cures Act passed in 2016, Congress enacted several reforms that further affect medical device regulation both pre-and post-approval. In addition, the FDA is in the process of reviewing the 510(k) approval process and criteria and has announced initiatives to improve thecurrent pre- and post-market regulatory processes and requirements associated with infusion pumps and other home use medical devices. As part of this effort,the FDA is reviewing the adverse event reporting and recall processes for insulin pumps. Any change in the laws or regulations that govern the clearance andapproval processes relating to our current and future products could make it more difficult and costly to obtain clearance or approval for new products, or toproduce, market and distribute existing products. The data contained in our submissions, including data drawn from our clinical trials, may not be sufficientto support approval of our products or additional or expanded indications. Medical device company stock prices have declined significantly in certaincircumstances where companies have failed to meet expectations in regards to the timing of regulatory approval. If the FDA‘s response causes productapproval delays, or is not favorable for any of our products, our stock price (and the market price of our convertible notes) could decline substantially. InNovember 2018, the FDA announced that it plans to make further changes aimed at modernizing the 510(k) clearance pathway, creating further uncertainty.The commencement or completion of any of our clinical trials may be delayed or halted, or be inadequate to support approval of FDA marketingapplications or supplements, for numerous reasons, including, but not limited to, the following:•the FDA or other regulatory authorities do not approve a clinical trial protocol or a clinical trial, or place a clinical trial on hold;•patients do not enroll in clinical trials at the rate we expect;•patients do not comply with trial protocols;•patient follow-up does not occur at the rate we expect;•patients experience adverse side effects;•patients die during a clinical trial, even though their death may not be related to our products;•institutional review boards, or IRBs, and third-party clinical investigators may delay or reject our trial protocol;•third-party clinical investigators decline to participate in a trial or do not perform a trial on our anticipated schedule or consistent with theinvestigator agreements, clinical trial protocol, good clinical practices or other FDA or IRB requirements;•DexCom or third-party organizations do not perform data collection, monitoring and/or analysis in a timely or accurate manner or consistent withthe clinical trial protocol or investigational or statistical plans;•third-party clinical investigators have significant financial interests related to DexCom or the study that the FDA deems to make the study resultsunreliable, or DexCom or investigators fail to disclose such interests;•regulatory inspections of our clinical trials or manufacturing facilities may, among other things, require us to undertake corrective action orsuspend or terminate our clinical trials;•changes in governmental regulations, policies or administrative actions applicable to our trial protocols;•the interim or final results of the clinical trial are inconclusive or unfavorable as to safety or efficacy; and•the FDA concludes that the results from our trial and/or trial design are inadequate to demonstrate safety and effectiveness of the product.The results of pre-clinical studies do not necessarily predict future clinical trial results, and prior clinical trial results might not be repeated insubsequent clinical trials. Additionally, the FDA may disagree with our interpretation of the data from our pre-clinical studies and clinical trials, or may findthe clinical trial design, conduct or results inadequate to prove safety or effectiveness, and may require us to pursue additional pre-clinical studies or clinicaltrials, which could further delay the approval of our products. If we are unable to demonstrate the safety and effectiveness of our products in our clinical trialsto the FDA‘s satisfaction, we will be unable to obtain regulatory approval to market our products in the United States. In addition, the data we collect fromour current clinical trials, our pre-clinical studies and other clinical trials may not be sufficient to support FDA approval, even if our endpoints are met.We may also conduct clinical studies to demonstrate the relative or comparative effectiveness of continuous glucose monitoring devices for thetreatment of diabetes. These types of studies, which often require substantial investment and effort, may not show adequate, or any, clinical benefit for the useof continuous glucose monitoring devices.30Health care policy changes, including U.S. health care reform legislation, may have a material adverse effect on our business.In response to perceived increases in health care costs in recent years, there have been and continue to be proposals by the federal government, stategovernments, regulators, and third-party payors to control these costs and, more generally, to reform the U.S. health care system. Certain of these proposalscould limit the prices we are able to charge for our products or the amounts of reimbursement available for our products and could limit the acceptance andavailability of our products. The adoption of some or all of these proposals could have a material adverse effect on our business, financial condition andresults of operations.Comprehensive healthcare legislation, signed into law in the United States in March 2010, titled the Patient Protection and Affordable Care Act, asamended by the Health Care and Education Affordability Reconciliation Act of 2010, collectively, the ACA, imposes certain stringent compliance,recordkeeping, and reporting requirements on companies in various sectors of the life sciences industry, with which we may need to comply, and enhancedpenalties for non-compliance with the new healthcare regulations. However, there are many programs and requirements under the ACA for which theconsequences are not fully understood, and it is unclear what the full impact will ultimately be from the ACA. Costs of compliance with this legislation, orany future amendments thereto, may have a material adverse effect on our business, financial condition and results of operations.The ACA also focuses on a number of Medicare provisions aimed at improving quality and decreasing costs. It is uncertain at this point what negativeunintended consequences these provisions will have on patient access to new technologies. The Medicare provisions include value-based payment programs,increased funding of comparative effectiveness research, reduced hospital payments for avoidable readmissions and hospital acquired conditions, and pilotprograms to evaluate alternative payment methodologies that promote care coordination, such as bundled physician and hospital payments.Other legal, regulatory and commercial policy influences are subjecting our industry to significant changes, and we cannot predict whether newregulations or policies will emerge from U.S. federal or state governments, foreign governments, or third-party payors. Government and commercial payorsmay, in the future, consider healthcare policies and proposals intended to curb rising healthcare costs, including those that could significantly affectreimbursement for healthcare products such as our systems. These policies have included, and may in the future include: basing reimbursement policies andrates on clinical outcomes, the comparative effectiveness, and costs, of different treatment technologies and modalities; imposing price controls and taxes onmedical device providers; and other measures. Future significant changes in the healthcare systems in the United States or elsewhere could also have anegative impact on the demand for our current and future products. These include changes that may reduce reimbursement rates for our products and changesthat may be proposed or implemented by the current or future laws or regulations.The ACA included an excise tax on the sale of medical devices equal to 2.3% of the selling price of the device in the U.S. beginning in 2013. Theexcise tax is applicable to sales of our professional use devices. The excise tax was suspended from 2016 through 2020.As of December 31, 2018, we believe that our current CGM products were exempt from the excise tax, except for our G4 PLATINUM system forprofessional use, which is subject to the excise tax. The current tax liability related to our G4 PLATINUM system for professional use is immaterial but maybecome material in the future. Notwithstanding our belief, if the IRS were to determine that this tax applies to any of our current or future products, our futureoperating results could be harmed, which in turn could cause the price of our stock to decline. In addition, because of the uncertainty surrounding theseissues, the impact of this tax has not been reflected in our forward guidance.We cannot predict whether the ACA will be repealed, replaced, or modified or how such repeal, replacement or modification may be timed orstructured. As a result, we cannot quantify or predict what the effect of such repeal, replacement, or modification might have on our business and results ofoperations. However, any changes that lower reimbursement for our products or reduce medical procedure volumes could materially and adversely affect ourbusiness, financial condition and results of operations.Consolidation in the health care industry could have an adverse effect on our revenues and results of operations.Many health care industry companies, including health care systems, distributors, manufacturers, providers, and insurers, are consolidating or haveformed strategic alliances. As the health care industry consolidates, competition to provide goods and services to industry participants may become moreintense. In addition, this consolidation creates larger enterprises with greater negotiating power, which they can try to use to negotiate price concessions orreductions for medical devices and components produced by us. If we are forced to reduce our prices because of industry consolidation, or if we losecustomers as a result of consolidation, our revenues may decrease and our business, financial condition, results of operations and cash flows may suffer.31We conduct business in a heavily regulated industry and if we fail to comply with applicable laws and government regulations, we could become subject topenalties and/or be required to make significant changes to our operations.The healthcare industry generally, and our business specifically, is subject to extensive foreign, federal, state and local laws and regulations, includingthose relating to:•the pricing of our products and services;•the distribution of our products and services;•billing for services;•the obligation to report and return identified overpayments;•financial relationships with physicians and other referral sources;•inducements and courtesies given to physicians and other health care providers and patients;•labeling products;•the characteristics and quality of our products and services;•confidentiality, maintenance and security issues associated with medical records and individually identifiable health and other personalinformation;•medical device reporting;•prohibitions on kickbacks, also referred to as anti-kickback laws or regulations;•any scheme to defraud any healthcare benefit program;•physician and other healthcare professional payment disclosure requirements;•personal health information;•privacy;•data protection;•mobile communications;•false claims; and•professional licensure.These laws and regulations are extremely complex and, in some cases, still evolving. If our operations are found to violate any of the foreign, federal,state or local laws and regulations which govern our activities, we may be subject to litigation, government enforcement actions, and applicable penaltiesassociated with the violation, potentially including civil and criminal penalties, damages, fines, exclusion from participation in certain payor programs orcurtailment of our operations. Compliance obligations under these various laws are oftentimes detailed and onerous, further contributing to the risk that wecould be found to be out of compliance with particular requirements. The risk of being found in violation of these laws and regulations is further increased bythe fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety ofinterpretations.The FDA, CMS, the Office of Inspector General for the Department of Health and Human Services, Department of Justice, states’ attorneys general andother governmental authorities actively enforce the laws and regulations discussed above. In the United States, medical device manufacturers have been thetarget of numerous government prosecutions and investigations alleging violations of law, including claims asserting impermissible off-label promotion ofmedical devices, payments intended to influence the referral of federal or state healthcare business, and submission of false claims for governmentreimbursement. While we make every effort to comply with applicable laws, we cannot rule out the possibility that the government or other third partiescould interpret these laws differently and challenge our practices under one or more of these laws. This likelihood of allegations of non-compliance isincreased by the fact that under certain federal and state laws applicable to our business, individuals, known as relators, may bring an action allegingviolations of such laws, and potentially be awarded a share of any damages or penalties ultimately awarded to the applicable government body.Under the United States Federal Food, Drug, and Cosmetic Act, medical devices are classified into one of three classes – Class I, Class II or Class III –depending on the degree of risk associated with each medical device and the extent of control needed to ensure safety and effectiveness. Our G6 has beenclassified as a Class II device. Class II devices are subject to various general and special controls, including the Quality System Regulations and 510(k) pre-market notification requirements.From time to time, the FDA may disagree with the classification of a new Class II medical device and require the manufacturer of that device to applyfor approval as a Class III medical device. In the event that the FDA determines that our32Class II medical products should be classified as Class III medical devices, we could be precluded from marketing the devices for clinical use within theUnited States for months, years or longer, depending on the specific change in the classification. Reclassification of our Class II medical products as Class IIImedical devices could significantly increase our regulatory costs, including the timing and expense associated with required clinical trials and other costs.Any action against us alleging a violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significantlegal expenses and divert our management’s time and attention from the operation of our business, and have a material effect on our business.In addition, the laws and regulations impacting or affecting our business may change significantly in the future. Any new laws or regulations mayadversely affect our business. A review of our business by courts or regulatory authorities may result in a determination that could adversely affect ouroperations. Also, the regulatory environment applicable to our business may change in a way that restricts or adversely impacts our operations.Our failure to comply with laws, regulations and contract requirements relating to reimbursement of health care goods and services may subject us topenalties and adversely impact our reputation, business, financial condition and cash flows.Our products are purchased principally by individual patients, who may be eligible for insurance coverage of their devices from various third-partypayors, such as governmental programs (e.g., Medicare, Medicaid and comparable non-U.S. programs), private insurance plans, and managed care plans. Theability of our customers to obtain appropriate reimbursement for products and services from third-party payors is critical because it affects which productscustomers purchase and the prices they are willing to pay. As a result, our products are subject to regulation regarding quality and cost by the U.S.Department for Health & Human Services, including CMS, as well as comparable state and non-U.S. agencies responsible for reimbursement and regulation ofhealth care goods and services. The principal U.S. federal laws that implicate reimbursement issues include those that prohibit (i) the filing of false orimproper claims for federal payment, known as the federal civil False Claims Act, (ii) unlawful inducements for the referral of business reimbursable underfederally-funded health care programs, known as the federal health care program Anti-Kickback Statute, and (iii) health care service providers from seekingreimbursement for providing certain services to a patient who was referred by a physician who has certain types of direct or indirect financial relationshipswith the service provider, known as the physician self-referral law, or the “Stark Law.” Many states have similar laws that apply to reimbursement by stateMedicaid and other government-funded programs, as well as, in some cases, to all payors. In addition, the federal overpayment statute, as interpreted by CMS,requires the report and return of identified overpayments received from federal health care programs within 60 days of identification and quantification, andrequires the exercise of reasonable diligence to investigate credible information regarding potential overpayments. Insurance companies can also bring aprivate cause of action claiming treble damages against a manufacturer for causing a false claim to be filed under the federal Racketeer Influenced andCorrupt Organizations Act, or RICO. Additionally, as a manufacturer of U.S. FDA‑approved devices reimbursable by federal healthcare programs, we aresubject to the federal Physician Payments Sunshine Act, which requires us to annually report certain payments and other transfers of value we make to U.S.-licensed physicians or U.S. teaching hospitals. On October 25, 2018, President Trump signed into law the “Substance Use-Disorder Prevention that PromotesOpioid Recovery and Treatment for Patients and Communities Act.” This law, in part (under a provision entitled “Fighting the Opioid Epidemic withSunshine”), extends the reporting and transparency requirements for physicians in the Physician Payments Sunshine Act, to physician assistants, nursepractitioners, and other mid-level practitioners. Reporting requirements will go into effect in 2022 for payments and transfers of value made to theseadditional practitioner-types in 2021.We may be subject to these (and other) laws regulating the provision of, and reimbursement for, health care goods and services, both in our capacity asa medical device manufacturer and/or as a supplier of covered items and services to federal health care program beneficiaries, with respect to which items andservices we submit claims for reimbursement from such programs. The laws and regulations of health care goods and services that apply to us, including thosedescribed above, are subject to evolving interpretations and enforcement discretion. As part of our compliance program, we have reviewed our sales contracts,marketing materials, and billing practices (among others) to reduce the risk of non-compliance with these and other foreign, federal and state laws. If agovernmental authority was to conclude that we are not in compliance with applicable laws and regulations, we and our officers, directors and employeescould be subject to criminal and civil penalties, including, for example, exclusion from participation as a supplier of product to beneficiaries covered byfederal healthcare programs, including but not limited to Medicare and Medicaid. Any failure to comply with laws, regulations or contractual requirementsrelating to reimbursement and health care goods and services could adversely affect our reputation, business, financial condition and cash flows.With respect to the federal Anti-Kickback Statute, Congress and the U.S. Department of Health & Human Services Office of Inspector General, or OIG,have established a large number of statutory exceptions and regulatory safe harbors. An arrangement that fits squarely into an exception or safe harbor isimmune from prosecution under the Anti-Kickback Statute.33We train and educate employees and marketing representatives on the Anti-Kickback Statute and their obligations thereunder, and we endeavor tocomply with the applicable safe harbors. However, some of our arrangements, like many other common and non-abusive arrangements, may implicate theAnti-Kickback Statute and are not covered by a safe harbor, but nevertheless do not implicate any of the statute’s principal policy objectives and, as such,likely do not pose a material risk of program abuse or warrant the imposition of sanctions. However, we cannot offer assurance that arrangements that do notsquarely meet an exception or safe harbor will not be found to violate the Anti-Kickback Statute. Allegations of violations of the Anti-Kickback Statute maybe brought under the federal Civil Monetary Penalty Law, which requires a lower burden of proof than other fraud and abuse laws, including the Anti-Kickback Statute.Our financial relationships with referring physicians and their immediate family members must comply with the Stark Law by meeting an applicableexception. We attempt to structure our relationships to meet an exception to the Stark Law, but the regulations implementing the exceptions are detailed andcomplex, and we cannot assure you that every relationship complies fully with the Stark Law. Unlike the Anti-Kickback Statute, failure to meet an exceptionunder the Stark Law results in a violation of the Stark Law, even if such violation is technical in nature.Additionally, if we violate the Anti-Kickback Statute or Stark Law, or if we improperly bill for our services, or retain overpayments longer than 60 daysafter identification, or fail to act with reasonable diligence to investigate credible information regarding potential overpayments, we may be found to violatethe federal civil False Claims Act, either under a suit brought by the government or by a private person under a qui tam relator, or “whistleblower,” suit.We could become the subject of governmental investigations, claims and litigation.Health care companies are subject to numerous investigations by various governmental agencies. Further, under the False Claims Act, private partieshave the right to bring qui tam, or “whistleblower,” suits against companies that submit false claims for payments to, or improperly retain overpayments from,the government. Some states have adopted similar state whistleblower and false claims provisions. Depending upon whether the underlying conduct allegedin such inquiries or investigations could be considered systemic, the resolution could have a material, adverse effect on our financial position and results ofoperations.Governmental agencies and their agents, such as CMS Medicare Administrative Contractors and other CMS contractors, as well as the OIG, stateMedicaid programs, and other state and federal agencies may conduct audits of our operations, relating to covered items and services including thosefurnished to beneficiaries, health care providers and distributors. Commercial and government-funded managed care payors may conduct similar post-payment audits, and we also perform internal audits and monitoring. Depending on the nature of the conduct found in such audits and whether theunderlying conduct could be considered systemic, the resolution of these audits could have a material adverse effect on our financial position and results ofoperations.CMS contracts with Recovery Audit Contractors, or RACs, on a contingency fee basis to conduct post-payment reviews to detect and correct improperpayments in the fee-for-service Medicare program. The ACA expanded the RAC program’s scope to include managed Medicare plans and Medicaid claims.RAC denials are appealable; however, there currently are significant delays in the assignment of new Medicare appeals to Administrative Law Judges, whichnegatively impacts our ability to appeal RAC payment denials. In addition, CMS employs various other program integrity contractors – including zoneprogram integrity contractors, or ZPICs, Medicaid integrity contractors, or MICs, and unified program integrity contractors, or UPICs – to perform post-payment audits of claims and identify overpayments, and state Medicaid agencies and other contractors have increased their review activities.We are not presently aware of any governmental investigations involving our executives or us. However, any future investigations of our executives,our managers or us could result in significant liabilities or penalties to us, as well as adverse publicity. Should we be found out of compliance with any ofthese laws, regulations or programs, depending on the nature of the findings, our business, our financial position and our results of operations could benegatively impacted.Laws and regulations governing the export of our products could adversely impact our business.The U.S. Department of the Treasury’s Office of Foreign Assets Control, and the Bureau of Industry and Security at the U.S. Department of Commerce,administer certain laws and regulations that restrict U.S. persons and, in some instances, non-U.S. persons, in conducting activities, and transacting businesswith or making investments in certain countries, governments, entities and individuals subject to U.S. economic sanctions. Due to our internationaloperations, we are subject to such laws and regulations, which are complex, restrict our business dealings with certain countries and individuals, and areconstantly changing. Further restrictions may be enacted, amended, enforced or interpreted in a manner that materially impacts our operations.Violations of these regulations are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarmentfrom government contracts and revocations or restrictions of licenses, as well as criminal fines and imprisonment. We have established procedures designedto assist with our compliance with such laws and regulations.34However, we have only limited experience dealing with these laws and regulations and we cannot guarantee that our procedures will effectively prevent usfrom violating these regulations in every transaction in which we may engage. Any such violation could adversely affect our reputation, business, financialcondition and results of operations.If our manufacturing capabilities are insufficient to produce an adequate supply of product at appropriate quality levels, our growth could be limited andour business could be harmed.We currently have limited resources and facilities for commercially manufacturing sufficient quantities of product to meet expected demand. In thepast, we have had difficulty scaling our manufacturing operations to provide a sufficient supply of product to support our commercialization efforts. Fromtime to time, we have also experienced brief periods of backorder and, at times, have had to limit the efforts of our sales force to introduce our products to newcustomers. We have focused significant effort on continual improvement programs in our manufacturing operations intended to improve quality, yields andthroughput. We have made progress in manufacturing to enable us to supply adequate amounts of product to support our commercialization efforts; however,we cannot guarantee that supply will not be constrained in the future. In order to produce our products in the quantities we anticipate will be necessary tomeet market demand, we will need to increase our manufacturing capacity by a significant factor over the current level. In addition, we will have to modifyour manufacturing design, reliability and process if and when our next-generation sensor technologies are approved and commercialized. There are technicalchallenges to increasing manufacturing capacity, including equipment design and automation, materials procurement, manufacturing site expansion,problems with production yields and quality control and assurance. Continuing to develop commercial-scale manufacturing facilities will require theinvestment of substantial additional funds and the hiring and retention of additional management, quality assurance, quality control and technical personnelwho have the necessary manufacturing experience. The scaling of manufacturing capacity is subject to numerous risks and uncertainties, and may lead tovariability in product quality or reliability, increased construction timelines, as well as resources required to design, install and maintain manufacturingequipment, among others, all of which can lead to unexpected delays in manufacturing output. In addition, any changes to our manufacturing processes maytrigger the need for submissions or notifications to, and in some cases advance approval from, the FDA because of the potential impact of changes on ourpreviously cleared or approved devices. Our facilities are subject to inspections by the FDA and corresponding state agencies on an ongoing basis, and wemust comply with Good Manufacturing Practices and FDA Quality Systems Regulations. We may be unable to adequately maintain, develop and expand ourmanufacturing process and operations or maintain compliance with FDA and state agency requirements, and manufacturing issues could impact our clearedand approved products. If we are unable to manufacture a sufficient supply of our current products or any future products for which we may receive approval,maintain control over expenses or otherwise adapt to anticipated growth, or if we underestimate growth, we may not have the capability to satisfy marketdemand, contractual obligations, and our business will suffer.Additionally, the production of our products must occur in a highly controlled and clean environment to minimize particles and other yield- andquality-limiting contaminants. Weaknesses in process control or minute impurities in materials may cause a substantial percentage of defective products. Ifwe are not able to maintain stringent quality controls, or if contamination problems arise, our clinical development and commercialization efforts could bedelayed, which would harm our business and our results of operations.We also require the suppliers and business partners of components or services for our products to comply with law and certain of our policies regardingsourcing practices, but we do not control them or their practices. If any supplier or business partner violates laws or implements unethical practices, therecould be disruptions to our supply chain, cancellation of our orders, terminations of the relationship with the partner or damage to our reputation, and theFDA or other regulators could seek to hold us responsible for such violations.In the future, if our products have material defects or errors, this could result in loss or delay of revenues, delayed market acceptance, damagedreputation, diversion of development resources, legal claims, increased insurance costs or increased service and warranty costs, any of which could harm ourbusiness. Such defects or errors could also prompt us to amend certain warning labels or narrow the scope of the use of our products, either of which couldhinder our success in the market.Since the first commercial launch of our products in 2006, we have had periodic field failures related to our products, including reports of sensor errors,sensor failures, broken sensors, receiver malfunctions, audible alarms and alert failures, and transmitter failures. To comply with the FDA‘s medical devicereporting requirements, we have filed reports of applicable product field failures. Although we believe we have taken and are taking appropriate actionsaimed at reducing or eliminating field failures, we cannot guarantee that we will not have additional failures going forward.We depend upon third-party suppliers, making us vulnerable to supply problems and price fluctuations, which could harm our business.We rely on single sources for certain components and materials used in manufacturing, such as for the application-specific integrated circuit that isincorporated into the transmitter, seals used for the applicator and certain polymers used to35synthesize our polymeric biointerface membranes for our products. In some cases, our agreements with these and our other suppliers can be terminated byeither party upon short notice. Our contract manufacturers also rely on single-source suppliers to manufacture some of the components used in our products.Our manufacturers and suppliers may encounter problems during manufacturing for a variety of reasons, including failure to follow specific protocols andprocedures, failure to comply with applicable regulations, failed FDA audit or inspection (for example, failures leading to Form 483 Observations andWarning Letters, or other enforcement actions), equipment malfunction and environmental factors, any of which could delay or impede their ability to meetour demand. If our single-source suppliers shift their manufacturing and assembly sites to other locations, these new sites may require additional FDAapproval and inspection. Should any such FDA approval be delayed, or such inspection require corrective action, our supply of critical components may beconstrained or eliminated. Our reliance on these outside manufacturers and suppliers also subjects us to other risks that could harm our business, including:•we may not be able to obtain adequate supply in a timely manner or on commercially reasonable terms;•our products are technologically complex and it is difficult to develop alternative supply sources;•we are not a major customer of many of our suppliers, and these suppliers may therefore give other customers’ needs higher priority than ours;•our suppliers may make errors in manufacturing components that could negatively affect the quality, effectiveness or safety of our products orcause delays in shipment of our products;•we may have difficulty locating and qualifying alternative suppliers for our single-source supplies;•switching components may require product redesign and submission to the FDA of new applications – such as a PMA or 510(k) supplement orpossibly a separate PMA or 510(k), either of which could significantly delay production;•our suppliers manufacture products for a range of customers, and fluctuations in demand for the products these suppliers manufacture for othersmay affect their ability to deliver components to us in a timely manner;•our suppliers may make obsolete components that are critical to our products; and•our suppliers may encounter financial hardships unrelated to our demand for components, including those related to changes in global economicconditions, which could inhibit their ability to fulfill our orders and meet our requirements.We may not be able to quickly establish additional or replacement suppliers, particularly for our single-source components, in part because of the FDAinspection and approval process and because of the custom nature of various parts we design. Any interruption or delay in the supply of components ormaterials, or our inability to obtain components or materials from alternate sources at acceptable prices in a timely manner, could impair our ability to meetthe demand of our customers and cause them to cancel orders or switch to competitive products.Potential long-term complications from our current or future products or other continuous glucose monitoring systems under development may not berevealed by our clinical experience to date.Based on our experience, complications from use of our products may include sensor errors, sensor failures, broken sensors, lodged sensors or skinirritation under the adhesive dressing of the sensor. Inflammation or redness, swelling, minor infection, and minor bleeding at the sensor insertion site are alsopossible risks with an individual’s use of our products. However, if unanticipated long-term side-effects result from the use of our products or other glucosemonitoring systems we have under development, we could be subject to liability and the adoption of our systems may become more limited. With respect toour G4 PLATINUM and G5 Mobile systems, our clinical trials have been limited to seven days of continuous use, and with respect to our G6, our clinicaltrials have been limited to ten days of continuous use. It is possible that the results from our clinical studies and trials may not be indicative of the clinicalresults obtained when we examine the patients at later dates. We cannot assure you that repeated, long-term use would not result in unanticipated adverseeffects, potentially even after the sensor is removed.If we or our suppliers or distributors fail to comply with ongoing regulatory requirements, or if we have unanticipated problems with our products, theproducts could be subject to restrictions or withdrawal from the market.Any product for which we obtain marketing approval, clearance or authorization will be subject to continual review and periodic inspections by theFDA and other regulatory bodies, which may include inspection of our manufacturing processes, post-approval clinical data and promotional activities forsuch product. The FDA‘s Medical Device Reporting, or MDR, regulations require that we report to the FDA any incident in which our product may havecaused or contributed to a death or serious injury, or in which our product malfunctioned and, if the malfunction were to recur, it would likely cause orcontribute to a death or serious injury.36If FDA determines that there is a reasonable probability that a device intended for human use would cause serious, adverse health consequences ordeath, the agency may issue a cease distribution and notification order and a mandatory recall order. We may also decide to recall a product voluntarily if wefind a material deficiency, including unacceptable risks to health, manufacturing defects, design errors, component failures, labeling defects, or other issues.Recalls of our products could divert the attention of our management and have an adverse effect on our reputation, financial condition, and operating results.We and our suppliers are also required to comply with the FDA‘s Quality System Regulation, or QSR, and other regulations which cover the methodsand documentation of the design, testing, production, control, selection and oversight of suppliers or contractors, quality assurance, labeling, packaging,storage, complaint handling, shipping and servicing of our products. The FDA enforces the QSR through unannounced inspections.Compliance with ongoing regulatory requirements can be complex, expensive and time-consuming. Failure by us or one of our suppliers or distributorsto comply with statutes and regulations administered by the FDA, competent authorities and other regulatory bodies, or failure to take adequate response toany observations, could result in, among other things, any of the following actions:•warning letters or untitled letters that require corrective action;•delays in approving, or refusal to approve, our continuous glucose monitoring systems;•fines and civil or criminal penalties;•unanticipated expenditures;•FDA refusal to issue certificates to foreign governments needed to export our products for sale in other countries;•suspension or withdrawal of clearance or approval by the FDA or other regulatory bodies;•product recall or seizure;•administrative detention;•interruption of production, partial suspension, or complete shutdown of production;•interruption of the supply of components from our key component suppliers;•operating restrictions;•court consent decrees;•FDA orders to repair, replace, or refund the cost of devices;•injunctions; and•criminal prosecution.The effect of these events can be difficult to quantify. If any of these actions were to occur, it would harm our reputation and cause our product salesand profitability to suffer. In addition, we believe events that could be classified as reportable events pursuant to MDR regulations are generallyunderreported by physicians and users, and any underlying problems could be of a larger magnitude than suggested by the number or types of MDRs filed byus. Furthermore, our key component suppliers may not currently be or may not continue to be in compliance with applicable regulatory requirements.Even if regulatory approval or clearance of a product is granted, the approval or clearance may be subject to limitations on the indicated uses for whichthe product may be marketed or contain requirements for costly post-marketing testing or surveillance to monitor the safety or effectiveness of the product.Later discovery of previously unknown problems with our products, including software bugs, unanticipated adverse events or adverse events ofunanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements such as the QSR, MDR reporting, or otherpost-market requirements may result in restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary ormandatory recalls, fines, suspension of regulatory approvals, product seizures, injunctions, the imposition of civil or criminal penalties, or criminalprosecution. In addition, our distributors have rights to create marketing materials for their sales of our products, and may not adhere to contractual, legal orregulatory limitations that are imposed on their marketing efforts.We are subject to claims of infringement or misappropriation of the intellectual property rights of others, which could prohibit us from shipping affectedproducts, require us to obtain licenses from third parties or to develop non-infringing alternatives, and subject us to substantial monetary damages andinjunctive relief. We may also be subject to other claims or suits.Third parties have asserted, and may assert, infringement or misappropriation claims against us with respect to our current or future products. We areaware of numerous patents issued to third parties that may relate to aspects of our business, including the design and manufacture of continuous glucosemonitoring sensors and membranes, as well as methods for37continuous glucose monitoring. Whether a product infringes a patent involves complex legal and factual issues, the determination of which is oftenuncertain. Therefore, we cannot be certain that we have not infringed the intellectual property rights of such third parties or others. Our competitors mayassert that our continuous glucose monitoring systems or the methods we employ in the use of our systems are covered by U.S. or foreign patents held bythem. This risk is exacerbated by the fact that there are numerous issued patents and pending patent applications relating to self-monitored glucose testingsystems in the medical technology field. Because patent applications may take years to issue, there may be applications now pending of which we areunaware that may later result in issued patents that our products infringe. There could also be existing patents of which we are unaware that one or morecomponents of our system may inadvertently infringe. As the number of competitors in the market for continuous glucose monitoring systems grows, thepossibility of inadvertent patent infringement by us or a patent infringement claim against us increases. We have been and continue to be involved in variouspatent infringement actions, including:On March 28, 2016, AgaMatrix, Inc., or AgaMatrix, filed a patent infringement lawsuit against us in the United States District Court for the Districtof Oregon, asserting that certain of our products infringe certain patents held by AgaMatrix. On June 6, 2016, AgaMatrix filed a First Amended Complaintasserting the same three patents. On February 24, 2017, the Court granted AgaMatrix’s motion to substitute WaveForm Technologies, Inc., or WaveForm, asthe new plaintiff following AgaMatrix’s transfer of the three patents to its newly formed entity. On August 25, 2016, we filed petitions for inter partes reviewwith the Patent Trial and Appeal Board, or PTAB, of the U.S. Patent and Trademark Office seeking a determination that two of the three asserted patents areinvalid under U.S. patent law and those petitions were granted on March 6, 2017. On March 8, 2017, we filed a petition for inter partes review with the PTABseeking a determination that the third of the three asserted patents is invalid under U.S. patent law. This petition was granted on September 15, 2017. ThePTAB issued a Final Written Decision for each of the first two patents on February 28, 2018, where the PTAB found the majority of asserted claims from thefirst patent unpatentable and the remaining claims under review not unpatentable. The PTAB found all claims under review from the second patent notunpatentable. We believe the PTAB erred in finding any claims of the first two patents not unpatentable, and appealed the PTAB’s decision to the UnitedStates Court of Appeals for the Federal Circuit, or Federal Circuit, on March 30, 2018. Briefing of the appeal is complete and we are currently awaiting thedates for oral argument from the Court of Appeals. The PTAB issued a Final Written Decision for the third patent on September 12, 2018, where the PTABfound all claims of the third patent asserted against us in the District of Oregon litigation unpatentable. WaveForm did not appeal this decision. On January 4,2019, the parties stipulated to the dismissal of all claims and counterclaims regarding the third asserted patent. Most activity in the patent infringementlawsuit against us in the District of Oregon was stayed until the PTAB completed the inter partes review proceedings. That stay was lifted on October 10,2018. The remaining claims and counterclaims will continue with an estimated date of trial in February 2020. It is our position that Waveform’s assertions ofinfringement have no merit.We have also filed several lawsuits against AgaMatrix. We filed a patent infringement lawsuit against AgaMatrix in the United States District Court forthe Central District of California, or C.D. Cal., which is currently on appeal to the Federal Circuit based on a Final Judgment of non-infringement entered bythe C.D. Cal. judge on February 23, 2018. AgaMatrix sought attorneys’ fees for this lawsuit and as of December 31, 2018 we have accrued an immaterialamount for those fees. On September 15, 2017, we filed a patent infringement lawsuit against AgaMatrix in the United States District Court for the District ofDelaware, asserting certain single-point blood glucose monitoring products of AgaMatrix infringe two patents held by us. In addition, on September 18,2017, we filed a Complaint against AgaMatrix in the International Trade Commission, referred to as the ITC, requesting that the ITC institute aninvestigation and issue an order excluding certain products of AgaMatrix from importation into or sale in the United States based on AgaMatrix’sinfringement of the same two patents asserted in the Delaware litigation. On September 14, 2018, AgaMatrix filed two petitions for inter partes review foreach of the same two patents we asserted in the District of Delaware and the ITC. We filed a response to all four petitions on December 17, 2018. AgaMatrixhad requested additional briefing on the matter and the PTAB has authorized both sides to do so. Briefing was completed in January 2019.Neither the outcome of these lawsuits nor the amount and range of potential loss associated with the lawsuits can be assessed at this time. Other than theattorneys’ fees described above, as of December 31, 2018 we have accrued no amounts for contingent losses associated with these suits.Any infringement or misappropriation claim could cause us to incur significant costs, place significant strain on our financial resources, divertmanagement’s attention from our business and harm our reputation. If the relevant patents are upheld as valid and enforceable and we are found to infringesuch patents, we could be prohibited from selling any of our products that is found to infringe unless we could obtain licenses to use the technology coveredby the patent or are able to design around the patent. We may be unable to obtain a license on terms acceptable to us, if at all, and we may not be able toredesign our products to avoid infringement. Even if we are able to redesign our products to avoid an infringement claim, we may not receive FDA approvalfor such changes in a timely manner or at all. A court could also order us to pay compensatory damages for such infringement, plus prejudgment interest andcould, in addition, treble the compensatory damages and award attorney fees. These damages could be substantial and could harm our reputation, business,financial condition and operating results. A38court also could enter orders that temporarily, preliminarily or permanently enjoin us and our customers from making, using, selling or offering to sell one ormore of our products, or could enter an order mandating that we undertake certain remedial activities. Depending on the nature of the relief ordered by thecourt, we could become liable for additional damages to third parties.Any adverse determination in litigation or interference proceedings to which we are or may become a party relating to patents or other intellectualproperty rights could subject us to significant liabilities to third parties or require us to seek licenses from other third parties. Furthermore, if we are found towillfully infringe third-party patents, we could, in addition to other penalties, be required to pay treble damages and/or attorneys’ fees for the prevailingparty. Although patent and intellectual property disputes in the medical device area have often been settled through licensing or similar arrangements, costsassociated with such arrangements may be substantial and would likely include ongoing royalties. We may be unable to obtain necessary intellectualproperty licenses on satisfactory terms. If we do not obtain any such necessary licenses, we may not be able to redesign our products to avoid infringementand any redesign may not receive FDA approval in a timely manner or at all. Adverse determinations in a judicial or administrative proceeding or failure toobtain necessary intellectual property licenses could prevent us from manufacturing and selling our products, which would have a significant adverse impacton our business.In addition, from time to time, we are subject to various claims and suits arising out of the ordinary course of business, including commercial oremployment related matters. Although individually we do not expect these claims or suits to have a material adverse effect on DexCom, in the aggregate theymay divert significant time and resources from our staff.Our inability to adequately protect our intellectual property could allow our competitors and others to produce products based on our technology, whichcould substantially impair our ability to compete.Our success and our ability to compete depend, in part, upon our ability to maintain the proprietary nature of our technologies. We rely on acombination of patent, copyright and trademark law, and trade secrets and nondisclosure agreements to protect our intellectual property. However, suchmethods may not be adequate to protect us or permit us to gain or maintain a competitive advantage. Our patent applications may not issue as patents in aform that will be advantageous to us, or at all. Our issued patents, and those that may issue in the future, may be challenged, invalidated or circumvented,which could limit our ability to stop competitors from marketing related products. In addition, there are numerous recent changes to the patent laws andproposed changes to the rules of the U.S. Patent and Trademark Office, which may have a significant impact on our ability to protect our technology andenforce our intellectual property rights. For example, in September 2011, the United States enacted sweeping changes to its patent system under the Leahy-Smith America Invents Act, including changes that would transition the United States from a “first-to-invent” system to a “first-to-file” system and alter theprocesses for challenging issued patents. These changes could increase the uncertainties and costs surrounding the prosecution of our patent applications andthe enforcement or defense of our issued patents.To protect our proprietary rights, we may in the future need to assert claims of infringement against third parties. The outcome of litigation to enforceour intellectual property rights in patents, copyrights, trade secrets or trademarks is highly unpredictable, could result in substantial costs and diversion ofresources, and could have a material adverse effect on our business, financial condition and results of operations regardless of the final outcome of suchlitigation. In the event of an adverse judgment, a court could hold that some or all of our asserted intellectual property rights are not infringed, or are invalidor unenforceable, and could award attorney fees.Despite our efforts to safeguard our unpatented and unregistered intellectual property rights, we may not succeed in doing so or the steps taken by us inthis regard may not be adequate to detect or deter misappropriation of our technology or to prevent an unauthorized third party from copying or otherwiseobtaining and using our products, technology or other information that we regard as proprietary. In addition, third parties may be able to design around ourpatents. Furthermore, the laws of foreign countries may not protect our proprietary rights to the same extent as the laws of the United States.We operate in a highly competitive market and face competition from large, well-established medical device manufacturers with significant resources,and, as a result, we may not be able to compete effectively.The market for glucose monitoring devices is intensely competitive, subject to rapid change and significantly affected by new product introductionsand other market activities of industry participants. In selling the G4 PLATINUM, G5 Mobile and G6 systems, we compete directly with Medtronic plc’sDiabetes Group; Roche Diabetes Care, a division of Roche Diagnostics; privately-held LifeScan, Inc.; the Diabetes Care division of Abbott Laboratories; andAscensia Diabetes Care, each of which manufactures and markets products for the single-point finger stick device market. Collectively, these companiescurrently account for the majority of the worldwide sales of self-monitored glucose testing systems.Several companies are developing or commercializing products for continuous or periodic monitoring of glucose levels in the interstitial fluid underthe skin that compete directly with our products. Medtronic plc’s Diabetes Group markets and sells a standalone glucose monitoring product called GuardianConnect, which has launched both internationally and in the United States after receiving FDA approval in 2018. In 2015, Abbott Diabetes Care, Inc.launched a consumer flash glucose39monitoring system, FreeStyle Libre outside the United States. Abbott first received FDA approval for a professional-use version of this system in September2016 for use in the United States, referred to as the Pro Flash, for which readings are only made available to the patient through consultation with theirhealthcare provider. Abbott first received FDA approval for the consumer version of this system, referred to a Flash, in September 2017 for use in the UnitedStates.Medtronic and other third parties have developed or are developing insulin pumps integrated with continuous glucose monitoring systems thatprovide, among other things, the ability to suspend insulin administration while the user’s glucose levels are low and to automate basal and bolus insulindosing. Medtronic launched its 670G insulin delivery system in 2017.Some of the companies developing or marketing competing devices are publicly traded or divisions of publicly traded companies, and these companiespossess several competitive advantages over us, including:•significantly greater name recognition;•established relations with healthcare professionals, customers and third-party payors;•established distribution networks;•additional lines of products, and the ability to bundle products to offer higher discounts or incentives to gain a competitive advantage;•greater experience in conducting research and development, manufacturing, clinical trials, obtaining regulatory approval for products and marketingapproved products;•the ability to integrate multiple products to provide additional features beyond continuous glucose monitoring; and•greater financial and human resources for product development, manufacturing, sales and marketing, and patent litigation.As a result, we may not be able to compete effectively against these companies or their products, which may adversely impact our business.We enter into collaborations with third parties that may not result in the development of commercially viable products or the generation of significantfuture revenues.In the ordinary course of our business, we enter into collaborative arrangements to develop new products and to pursue new markets, such as ouragreements with Eli Lilly, Insulet, Novo Nordisk and Tandem Diabetes, to integrate our continuous glucose monitoring technology into their insulindelivery systems, and our recently amended agreement with Verily to develop one or more next-generation CGM products. Our Eli Lilly, Insulet, NovoNordisk and Verily collaborations have not yet resulted in a commercial product. In June 2018, Tandem received FDA approval for its latest sensor-augmented insulin delivery system, the t:slim X2™ Insulin Pump Basal-IQTM technology, which integrates with our G6 system.As a result of these development relationships, our operating results depend, to some extent, on the ability of our development partners to successfullycommercialize their insulin delivery systems or monitoring products. Any factors that may limit our partners’ ability to achieve widespread adoption of theirsystems, including competitive pressures, technological breakthroughs for the treatment or prevention of diabetes, adverse regulatory or legal actions relatingto insulin pump products, or changes in reimbursement rates or policies of third-party payors relating to insulin pumps or similar products, could have anadverse impact on our operating results. For example, Animas announced in September 2017 that it has discontinued the manufacturing and sale of Animas®Vibe® and OneTouch Ping® insulin pumps, then exited the insulin pump business. Animas selected Medtronic as its partner to facilitate a seamless transitionfor patients, caregivers and healthcare providers. Patients using an Animas insulin pump are offered the option to transfer to a Medtronic pump. As AnimasVibe is compatible with DexCom’s products, and Animas has served as a distributor for our products in certain geographies, the transition of Animascustomers to Medtronic pumps, which are not integrated with our sensors, may adversely impact our revenues. As another example, UnitedHealthcareannounced, effective July 1, 2016, that UnitedHealthcare Community Plan and Commercial members will no longer have an in-network choice amongproviders of insulin pumps, and designated Medtronic as its preferred, in-network provider. We do not have a relationship to integrate our CGM technologywith Medtronic, which has developed an insulin pump augmented with its proprietary continuous glucose monitoring system. The decision byUnitedHealthcare to establish Medtronic as its preferred provider of insulin pumps could result in a material reduction in the number of insulin pumps soldby other insulin pump manufacturers, including Tandem and Insulet. In addition, it is possible that other large third-party payors will establish preferredproviders of insulin pumps, which may or may not include the pumps produced by our development partners.Many of the companies that we collaborate with are also competitors or potential competitors who may decide to terminate our collaborativearrangement. In the event of such a termination, we may be required to devote additional resources to product development and commercialization, we mayneed to cancel some development programs and we may face increased competition. Additionally, collaborations may not result in the development ofproducts that achieve commercial success and could be terminated prior to developing any products. Former collaborators may use the experience andinsights40they develop in the course of their collaborations with us to initiate or accelerate their development of products that compete with our products, which maycreate competitive disadvantages for us. Accordingly, we cannot provide assurance that any of our collaborations will result in the successful development ofa commercially viable product or result in significant additional future revenues.In addition, our development timelines are highly dependent on our ability to achieve clinical endpoints and regulatory requirements and to overcometechnology challenges, and may be delayed due to scheduling issues with patients and investigators, requests from institutional review boards, productperformance and manufacturing supply constraints, among other factors. In addition, support of these clinical trials requires significant resources fromemployees involved in the production of our products, including research and development, manufacturing, quality assurance, and clinical and regulatorypersonnel. Even if our development and clinical trial efforts succeed, the FDA may not approve the combined products or may require additional producttesting and clinical trials before approving the combined products, which would result in product launch delays and additional expense. If approved by theFDA, the combined products may not be accepted in the marketplace by physicians and people with diabetes.Technological breakthroughs by us or our competitors could materially impact sales of current or future generations of our products.The glucose monitoring market is subject to rapid technological change and product innovation. Our products are based on our proprietary technology,but a number of companies and medical researchers are pursuing new technologies for the monitoring of glucose levels. FDA or other regulatory approval of acommercially viable continuous glucose monitor or sensor produced by one of our competitors could significantly reduce market acceptance of our systems.As discussed above in the risk factor entitled “We operate in a highly competitive market and face competition from large, well-established medical devicemanufacturers with significant resources, and, as a result, we may not be able to compete effectively,” several of our competitors are in various stages ofdeveloping continuous or intermittent glucose monitors or sensors, including non-invasive and invasive devices, and the FDA has approved a number ofthese competing products. In addition, certain development efforts throughout the diabetes industry, including that of the National Institutes of Health andother supporters of diabetes research are continually seeking ways to prevent, cure or improve treatment of diabetes. Therefore, our products may be renderedobsolete by technological breakthroughs in diabetes monitoring, treatment, prevention or cure.In addition, in the periods leading up to the launch of new or upgraded versions of our continuous glucose monitoring products, our customers’anticipation of the release of those products may cause them to cancel, change or delay current period purchases of our current products, which could have amaterial adverse effect on our business, financial condition and results of operations.We face the risk of product liability claims and may not be able to maintain or obtain insurance.Our business exposes us to the risk of product liability claims that is inherent in the testing, manufacturing and marketing of medical devices, includingthose which may arise from the misuse (including system hacking or other unauthorized access by third parties to our systems) or malfunction of, or designflaws in, our products. This liability may vary based on the FDA classification associated with our devices. Notably, the classification of our G6 system as aClass II medical device is likely to weaken our ability to rely on federal preemption of state law claims that assert liability against us for harms arising fromuse of the G6. We may be subject to product liability claims if our products cause, or merely appear to have caused, an injury. Claims may be made bycustomers, healthcare providers or others selling our products. The risk of product liability claims may increase now that our G5 Mobile system has obtainedindications and approved labeling in the United States, in Canada, and in the countries utilizing the CE Mark that allow for our patients to make diabetestreatment decisions with our CGM technology in conjunction with only two finger sticks required for calibration of the system and our G6 does not requireconfirmatory finger sticks when making treatment decisions or finger stick tests each day for calibration, although it does require finger stick tests whensymptoms do not match readings and when readings are unavailable. The risk of claims may also increase if our products are subject to a product recall orseizure. An example of the difficulty of complying with the regulatory requirements associated with the manufacture of our products, we issued notificationsto our customers regarding the audible alarms and alerts associated with our receivers, as discussed earlier in the risk factor entitled “If we or our suppliers ordistributors fail to comply with ongoing regulatory requirements, or if we experience unanticipated problems with our products, the products could besubject to restrictions or withdrawal from the market.”Although we have product liability and clinical trial liability insurance that we believe is appropriate, this insurance is subject to deductibles andcoverage limitations. Our current product liability insurance may not continue to be available to us on acceptable terms, if at all, and, if available, thecoverage may not be adequate to protect us against any future product liability claims. Further, if additional products are approved for marketing, we mayseek additional insurance coverage. If we are unable to obtain insurance at an acceptable cost or on acceptable terms with adequate coverage or otherwiseprotect against potential product liability claims, we will be exposed to significant liabilities, which may harm our business. A product liability41claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could result in significant costs and significantharm to our business.We may be subject to claims against us even if the apparent injury is due to the actions of others or misuse of the device. Our customers, either on theirown or following the advice of their physicians, may use our products in a manner not described in the products’ labeling and that differs from the manner inwhich it was used in clinical studies and approved by the FDA. For example, our current systems are designed to be used by an individual continuously forup to seven days for our G4 PLATINUM and G5 Mobile system and up to 10 days for our G6 system, but the individual might be able to circumvent thesafeguards designed into the systems and use the products for longer than seven or 10 days. Off-label use of products by customers is common, and any suchoff-label use of our products could subject us to additional liability, or require design changes to limit this potential off-label use once discovered. The CEMark and the recent HealthCanada and FDA approvals for our G5 Mobile system include indications that allow patients to make diabetes treatment decisionsbased on the information generated by such system, although both regulators still require finger stick calibrations twice per day. In addition, other regulatoryagencies may in the future approve similar diabetes treatment indications. We expect that such diabetes treatment indications could expose us to additionalliability. These liabilities could prevent or interfere with our product commercialization efforts. Defending a suit, regardless of merit, could be costly, coulddivert management attention and might result in adverse publicity, which could result in the withdrawal of, or inability to recruit, clinical trial volunteers orresult in reduced acceptance of our products in the market.We may be subject to fines, penalties and injunctions if we are determined to be promoting the use of our products for unapproved or improper off-labeluses.Although we believe our promotional materials and practices comply with FDCA and other applicable laws and regulations, as may be amended fromtime to time, if the FDA or other regulatory body with competent jurisdiction over us, our activities or products takes the position that our marketing,promotional or other materials or activities constitute improper promotion or marketing of an unapproved or improper use, the FDA or other regulatory bodycould request that we modify our materials or practices, or subject us to regulatory enforcement actions, including the issuance of a warning letter, injunction,seizure, civil fine and criminal penalties. It is also possible that other federal, state or foreign enforcement authorities might take action if they considerpromotional, marketing or other materials or activities to constitute improper promotion of an unapproved use, which could result in significant fines orpenalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. Recent court decisions have impacted the FDA’senforcement activity regarding off-label promotion in light of First Amendment considerations; however, there are still significant risks in this area in partdue to the potential False Claims Act exposure.We are subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, and other matters. Many of these lawsand regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties,increased cost of operations, or declines in user growth or engagement, or otherwise harm our business.We are subject to a number of foreign, federal and state laws and regulations protecting the use and confidentiality of certain patient health andpersonal information, including patient records, and restricting the use and disclosure of that protected information. These laws include foreign, federal andstate medical privacy laws, breach notification laws and foreign, federal and state consumer protection laws.In addition, foreign data protection, privacy, and other laws and regulations can be more restrictive than those in the United States. For example, datalocalization laws in some countries generally mandate that certain types of data collected in a particular country be stored and/or processed within thatcountry. We could be subject to audits in Europe and around the world, particularly in the areas of consumer and data protection, as we continue to grow andexpand our operations. Legislators and regulators may make legal and regulatory changes, or interpret and apply existing laws, in ways that make ourproducts less useful to our customers, require us to incur substantial costs, expose us to unanticipated civil or criminal liability, or cause us to change ourbusiness practices. These changes or increased costs could negatively impact our business and results of operations in material ways.In the ordinary course of our business, we collect and store sensitive data, such as our proprietary business information and that of our clients as well aspersonally identifiable information of our customers, including full names, social security numbers, addresses, and birth dates, in our data centers and on ournetworks. Our employees may also have access to and may use personal health information in the ordinary course of our business. The secure processing,maintenance and transmission of this information is critical to our operations. Despite our security measures and business controls, our informationtechnology and infrastructure may be vulnerable to attacks by hackers, breaches due to employee, contractor or vendor error, or malfeasance or otherdisruptions or subject to the inadvertent or intentional unauthorized release of information. Any such occurrence could compromise our networks and theinformation stored thereon could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could (i) result inlegal claims or proceedings, and liability42under laws that protect the privacy of personal information and regulatory penalties, (ii) disrupt our operations and the services we provide to our clients and(iii) damage our reputation, any of which could adversely affect our profitability, revenue and competitive position.As we grow and expand our administrative, customer support or IT support services, we may also utilize the services of personnel and contractorslocated outside of the United States to perform certain functions. While we make every effort to review our applicable contracts and other payor requirements,a local, state, or federal government agency or one of our customers may find the use of offshore resources to be a violation of a legal or contractualrequirement, which could result in termination of the contractual relationship, penalties, or changes in our business operations that could adversely affect ourbusiness, financial condition, and results of operations. Additionally, while we have implemented industry standard security measures for offshore access toprotected health information and other personal information, unauthorized access or disclosure of such information by offshore personnel may result in (i)legal claims or proceedings, and liability under laws that protect the privacy of personal information and regulatory penalties, (ii) a disruption of ouroperations and the services we provide to our clients or (iii) damage to our reputation, any of which could adversely affect our profitability, revenue andcompetitive position.Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation tosuffer and could subject us to substantial liabilities.The Administrative Simplification Provisions of the Health Insurance Portability and Accountability Act, or HIPAA, as amended, and implementingregulations, extensively regulate the use and disclosure of individually identifiable health information, known as “protected health information,” and requirecovered entities, including health plans and most health care providers, to implement administrative, physical and technical safeguards to protect the securityof such information. Certain provisions of the security and privacy regulations apply to business associates (entities that handle protected health informationon behalf of covered entities), and business associates are subject to direct liability for violation of these provisions. In addition, a covered entity may besubject to penalties as a result of a business associate violating HIPAA, if the business associate is found to be an agent of the covered entity.Covered entities must report breaches of unsecured protected health information to affected individuals without unreasonable delay and notificationmust also be made to the U.S. Department of Health & Human Services, Office for Civil Rights, or OCR and, in certain situations involving large breaches, tothe media. Various U.S. state laws and regulations may also require us to notify affected individuals and state agencies in the event of a data breach involvingindividually identifiable information.Violations of the HIPAA privacy and security regulations may result in criminal and civil penalties. The OCR enforces the regulations and performscompliance audits. In addition to enforcement by OCR, state attorneys general are authorized to bring civil actions seeking either injunction or damages inresponse to violations that threaten the privacy of state residents. OCR may resolve HIPAA violations through informal means, such as allowing a coveredentity to implement a corrective action plan, but OCR has the discretion to move directly to impose monetary penalties and is required to impose penaltiesfor violations resulting from willful neglect. We follow and maintain a HIPAA compliance plan, which we believe complies with the HIPAA privacy andsecurity regulations, but there can be no assurance that OCR or other regulators will agree. The HIPAA privacy regulations and security regulations have andwill continue to impose significant costs on us in order to comply with these standards.There are numerous other laws and legislative and regulatory initiatives at the federal and state levels addressing privacy and security concerns. We alsoremain subject to federal or state privacy-related laws that are more restrictive than the privacy regulations issued under HIPAA. These laws vary and couldimpose additional penalties. For example, the Federal Trade Commission uses its consumer protection authority to initiate enforcement actions in response toalleged privacy violations and data breaches. California recently enacted the California Consumer Privacy Act, or CCPA, which goes into effect January 1,2020. The CCPA, among other things, creates new data privacy obligations for covered companies and provides new privacy rights to California residents,including the right to opt out of certain disclosures of their information. The CCPA also creates a private right of action with statutory damages for certaindata breaches, thereby potentially increasing risks associated with a data breach. Legislators have stated that they intend to propose amendments to theCCPA before it goes into effect, and the California Attorney General will issue clarifying regulations. It remains unclear what, if any, modifications will bemade to this legislation or how it will be interpreted. The effects of the CCPA potentially are significant, however, and may require us to modify our dataprocessing practices, and may cause us to incur substantial costs and expenses to comply.We are also subject to laws and regulations in foreign countries covering data privacy and other protection of health and employee information thatmay be more onerous than corresponding U.S. laws, including in particular the laws of Europe.For instance, in the European Union, increasingly stringent data protection and privacy rules that have and will continue to have substantial impact onthe use of patient data across the healthcare industry became effective in May 2018. The EU General Data Protection Regulation, or GDPR, applies across theEuropean Union and includes, among other things, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certaincircumstances and43significant fines for non-compliance. The GDPR fine framework can be up to 20 million euros, or up to 4 % of the company’s total global turnover of thepreceding fiscal year, whichever is higher. The GDPR also requires companies processing personal data of individuals residing in the European Union tocomply with EU privacy and data protection rules, even if the company itself does not have a physical presence in the European Union. Noncompliancecould result in the imposition of fines, penalties, or orders to stop noncompliant activities. Due to the strong consumer protection aspects of the GDPR,companies subject to its purview are allocating substantial legal costs to the development of necessary policies and procedures and overall complianceefforts. We expect continued costs associated with maintaining compliance with GDPR into the future, and these provisions as interpreted by EU agencies,could negatively impact our business, financial condition and results of operations.Cybersecurity risks and cyber incidents could result in the compromise of confidential data or critical data systems and give rise to potential harm tocustomers, remediation and other expenses, expose us to liability under HIPAA, consumer protection laws, or other common law theories, subject us tolitigation and federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business and operations.Cyber incidents can result from deliberate attacks or unintentional events. We collect and store on our networks sensitive information, includingintellectual property, proprietary business information and personally identifiable information of our customers. The secure maintenance of this informationand technology is critical to our business operations. We have implemented multiple layers of security measures to protect the confidentiality, integrity andavailability of this data and the systems and devices that store and transmit such data. We utilize current security technologies, and our defenses aremonitored and routinely tested internally and by external parties. Despite these efforts, threats from malicious persons and groups, new vulnerabilities andadvanced new attacks against information systems create risk of cybersecurity incidents. These incidents can include, but are not limited to, gainingunauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption.Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediatelyproduce signs of intrusion, we may be unable to anticipate these incidents or techniques, timely discover them, or implement adequate preventativemeasures.These threats can come from a variety of sources, ranging in sophistication from an individual hacker to malfeasance by employees, consultants or otherservice providers to state-sponsored attacks. Cyber threats may be generic, or they may be custom-crafted against our information systems. Over the pastseveral years, cyber-attacks have become more prevalent and much harder to detect and defend against. Our network and storage applications, as well as thoseof our contractors, may be vulnerable to cyber-attack, malicious intrusion, malfeasance, loss of data privacy or other significant disruption and may besubject to unauthorized access by hackers, employees, consultants or other service providers. In addition, hardware, software or applications we develop orprocure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security.Unauthorized parties may also attempt to gain access to our systems or facilities through fraud, trickery or other forms of deceiving our employees,contractors and temporary staff.There can be no assurance that we will not be subject to cybersecurity incidents that bypass our security measures, impact the integrity, availability orprivacy of personal health information or other data subject to privacy laws or disrupt our information systems, devices or business, including our ability todeliver services to our customers. As a result, cybersecurity, physical security and the continued development and enhancement of our controls, processes andpractices designed to protect our enterprise, information systems and data from attack, damage or unauthorized access remain a priority for us. As cyberthreats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or toinvestigate and remediate any cybersecurity vulnerabilities. The occurrence of any of these events could result in:•harm to customers;•business interruptions and delays;•the loss, misappropriation, corruption or unauthorized access of data;•litigation, including potential class action litigation, and potential liability under privacy, security and consumer protection laws or otherapplicable laws;•reputational damage;•increase to insurance premiums; and•foreign, federal and state governmental inquiries, any of which could have a material, adverse effect on our financial position and results ofoperations and harm our business reputation.44Failure to protect our information technology infrastructure against cyber-based attacks, network security breaches, service interruptions, or datacorruption could significantly disrupt our operations and adversely affect our business and operating results.We rely on information technology and telephone networks and systems, including the Internet, to process and transmit sensitive electronicinformation and to manage or support a variety of business processes and activities, including sales, billing, customer service, procurement and supply chain,manufacturing, and distribution. We use enterprise information technology systems to record, process, and summarize financial information and results ofoperations for internal reporting purposes and to comply with regulatory financial reporting, legal, and tax requirements. Our information technologysystems, some of which are managed by third-parties, may be susceptible to damage, disruptions or shutdowns due to computer viruses, ransomware or othermalware, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components thereof, power outages,hardware failures, telecommunication failures, user errors or catastrophic events. Although we have developed systems and processes that are designed toprotect customer information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a securitybreach at a third-party vendor, such measures cannot provide absolute security. If our systems are breached or suffer severe damage, disruption or shutdownand we are unable to effectively resolve the issues in a timely manner, our business and operating results may significantly suffer and we may be subject tolitigation, government enforcement actions and other actions for which we could face financial liability and other adverse consequences which may include:•additional government oversight of our operations;•loss of existing customers;•difficulty in attracting new customers;•problems in determining product cost estimates and establishing appropriate pricing;•difficulty in preventing, detecting, and controlling fraud;•disputes with customers, physicians, and other health care professionals;•increases in operating expenses, incurrence of expenses, including remediation costs;•loss of revenues (including through loss of coverage or reimbursement);•product development delays;•disruption of key business operations; and•diversion of attention of management and key information technology resources.The failure to comply with U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws in non-U.S. jurisdictions could materially adverselyaffect our business and result in civil and/or criminal sanctions.The U.S. Foreign Corrupt Practices Act, the UK Bribery Act and similar worldwide anti-bribery laws in non-U.S. jurisdictions generally prohibitcompanies and their intermediaries from making improper payments to non-U.S. government officials and, in some instances, other persons for the purpose ofobtaining or retaining business. Because of the predominance of government-sponsored healthcare systems around the world, most of our customerrelationships outside of the United States are with governmental entities and are therefore potentially subject to such anti-bribery laws. Global enforcement ofanti-corruption laws has increased substantially in recent years, with more frequent voluntary self-disclosures by companies, aggressive investigations andenforcement proceedings by U.S. and foreign governmental agencies, and assessment of significant fines and penalties against companies and individuals.Our international operations create the risk of unauthorized payments or offers of payments by one of our employees, consultants, sales agents, or distributors,because these parties are not always subject to our direct oversight and control. It is our policy to implement safeguards to educate our employees and agentson these legal requirements and discourage improper practices. However, our existing safeguards and any future improvements may prove to be less thaneffective, and our employees, consultants, sales agents, or distributors may engage in conduct for which we might be held responsible. In addition, thegovernment agencies may seek to hold us liable for successor liability for anti-corruption law violations committed by any companies in which we invest orthat we acquire. Any alleged or actual violations of these regulations may subject us to government scrutiny, severe criminal or civil sanctions and otherliabilities, including exclusion from government contracting, and could disrupt our business, and result in a material adverse effect on our business, financialcondition, and results of operations.The majority of our operations are conducted at facilities in San Diego, California and Mesa, Arizona. Any disruption at these facilities could increase ourexpenses.We take precautions to safeguard our facilities, which include manufacturing protocols, insurance, health and safety protocols, and off-site storage ofdata. However, a natural or man-made disaster, such as fire, flood, earthquake, act of45terrorism, cyber-attack or other disruptive event could cause substantial delays in our operations, damage or destroy our manufacturing equipment, inventory,or records and cause us to incur additional expenses. Earthquakes are of particular significance since our primary manufacturing facilities in California arelocated in an earthquake-prone area. In the event our existing manufacturing facilities or equipment are affected by man-made or natural disasters, we may beunable to manufacture products for sale or meet customer demands or sales projections. If our manufacturing operations were curtailed or ceased, it wouldseriously harm our business. The insurance we maintain against fires, floods, earthquakes and other natural disasters and similar events may not be adequateto cover our losses in any particular case.Continued expansion of our operations in our facility in Mesa may not be scaled at a pace sufficient to ensure that we can manufacture one or more of ourcontinuous glucose monitoring products in quantities sufficient to meet market demand.Our facility in Mesa, Arizona is designed to manufacture current and next-generation sensors and transmitters, but may not be scaled quickly enough topermit us to manufacture one or more of our CGM products in quantities sufficient to meet market demand. There are risks associated with continuedexpansion of our manufacturing capacity in Mesa that include but are not limited to contractor issues and delays, licensing and permitting delays orrejections, limitations and delays on the installation of new or custom-ordered equipment, issues associated with validating such equipment, and processes orother aspects of ensuring we manufacture our products in compliance with current Good Manufacturing Practice requirements.Our products may not continue to achieve market acceptance.We expect that sales of our G4 PLATINUM system, which consists of a handheld receiver, reusable transmitter and disposable sensor, and our G5Mobile and G6 systems, which consist of a handheld receiver, reusable transmitter, disposable sensors and a smartphone application that securely identifies,receives, deciphers and displays information transmitted by the transmitter, will account for substantially all of our product revenue for the foreseeable future.If and when we receive FDA or other regulators’ approval for and begin commercialization of our next-generation continuous glucose monitoring systemsand sensors, we expect most patients will migrate onto those systems. Notwithstanding our prior experience in selling our products, we might be unable tosuccessfully expand the commercialization of our products on a wide scale for a number of reasons, including:•the FDA authorization to market our G6 system in the United States in March 2018 means that we have limited experience selling our G6 system;•our G6 system prompts the user to replace the sensor no later than the tenth day, which might make it more expensive for users;•widespread market acceptance of our products by physicians and people with diabetes will largely depend on our ability to demonstrate theirrelative safety, effectiveness, reliability, cost-effectiveness and ease of use;•the limited size of our sales force;•we may not have sufficient financial or other resources to adequately expand the commercialization efforts for our products;•our FDA and other regulatory reviews and/or submissions may be delayed, or approved with limited product labeling;•we may not be able to manufacture our products in commercial quantities or at an acceptable cost;•people with diabetes do not generally receive broad reimbursement from third-party payors for their purchase of CGM products since many payorsrequire that a policy holder meet specific medical criteria to qualify for reimbursement, which may reduce widespread access to or use of ourproducts;•the uncertainties associated with establishing and qualifying new manufacturing facilities;•people with diabetes will need to incur the costs of our systems in addition to single-point finger stick devices;•the relative immaturity of the continuous glucose monitoring market internationally, and the general absence of international reimbursement ofcontinuous glucose monitoring devices by third-party payors and government healthcare providers outside the United States;•the introduction and market acceptance of competing products and technologies;•our inability to obtain sufficient quantities of supplies at appropriate quality levels from our single-source and other key suppliers;•our inability to manufacture products that perform in accordance with expectations of consumers; and•rapid technological change may make our technology and our products obsolete.46In addition to the risks outlined above, the G6 has improved performance and is being adopted more quickly than anticipated. There is the risk thatconsumers will stop purchasing our G4 PLATINUM or G5 Mobile systems in preference for the G6, or that regulatory authorities will determine that the G4PLATINUM or G5 Mobile systems are not as effective as the G6 and may change marketing approval, reimbursement or the extent of coverage for theseproducts. Our G4 PLATINUM, G5 Mobile and G6 systems are more invasive than many other self-monitored glucose testing systems, including single-pointfinger stick devices, and people with diabetes may be unwilling to insert a sensor in their body, especially if their current diabetes management involves nomore than two finger sticks per day. Moreover, people with diabetes may not perceive the benefits of continuous glucose monitoring and may be unwilling tochange their current treatment regimens. In addition, physicians tend to be slow to change their medical treatment practices because of perceived liabilityrisks arising from the use of new products. Physicians may not recommend or prescribe our products unless and until (i) there is more long-term clinicalevidence to convince them to alter their existing treatment methods, (ii) there are additional recommendations from prominent physicians that our productsare effective in monitoring glucose levels and (iii) reimbursement or insurance coverage is more widely available. We cannot predict when, if ever, physiciansand people with diabetes may adopt more widespread use of continuous glucose monitoring systems, including our systems. If our systems do not achieveand maintain an adequate level of acceptance by people with diabetes, physicians and healthcare payors, we may not generate significant product revenueand we may not become profitable.Current uncertainty in global economic and political conditions makes it particularly difficult to predict product demand and other related matters andmakes it more likely that our actual results could differ materially from expectations.Our operations and performance depend on worldwide economic and political conditions. These conditions have been adversely impacted bycontinued global economic uncertainty, political instability and military hostilities in multiple geographies, concerns over the potential downgrade of U.S.sovereign debt and continued sovereign debt, monetary and financial uncertainties in Europe and other foreign countries. These include potential reductionsin the overall stability and suitability of the Euro as a single currency, given the economic and political challenges facing individual Eurozone countries.These conditions have made and may continue to make it difficult for our customers and potential customers to afford our products, and could cause ourcustomers to stop using our products or to use them less frequently. If that were to occur, our revenue may decrease and our performance may be negativelyimpacted. In addition, the pressure on consumers to absorb more of their own health care costs has resulted in some cases in higher deductibles and limits ondurable medical equipment, which may cause seasonality in purchasing patterns. Furthermore, during economic uncertainty, our customers have had joblosses and may continue to have issues gaining timely access to sufficient health insurance or credit, which could result in their unwillingness to purchaseproducts or impair their ability to make timely payments to us. We cannot predict the reoccurrence of any economic slowdown or the strength orsustainability of the economic recovery, worldwide, in the United States, or in our industry. These and other economic factors could have a material adverseeffect on our business, financial condition and results of operations.We depend on clinical investigators and clinical sites to enroll patients in our clinical trials and other third parties to manage the trials and to performrelated data collection and analysis, and, as a result, we may face costs and delays that are outside of our control.We rely on clinical investigators and clinical sites to enroll patients in our clinical trials, and other third parties to manage the trial and to performrelated data collection and analysis. However, we may not be able to control the amount and timing of resources that clinical sites may devote to our clinicaltrials. If these clinical investigators and clinical sites fail to enroll a sufficient number of patients in our clinical trials or fail to ensure compliance by patientswith clinical protocols or fail to comply with regulatory requirements, we will be unable to complete these trials, which could prevent us from obtainingregulatory approvals for our products. Our agreements with clinical investigators and clinical sites for clinical testing place substantial responsibilities onthese parties and, if these parties fail to perform as expected, our trials could be delayed or terminated. If these clinical investigators, clinical sites or otherthird parties do not carry out their contractual duties or obligations or fail to meet expected deadlines, or if the quality or accuracy of the clinical data theyobtain is compromised due to their failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended,delayed or terminated, or the clinical data may be rejected by the FDA, and we may be unable to obtain regulatory approval for, or successfullycommercialize, our products.We may be liable for contamination or other harm caused by materials that we handle, and changes in environmental regulations could cause us to incuradditional expense.Our research and development and clinical processes involve the handling of potentially harmful biological materials as well as hazardous materials.We are subject to international and domestic (including federal, state and local) laws, rules and regulations governing the use, handling, storage and disposalof hazardous and biological materials and we incur expenses relating to compliance with these laws and regulations. If violations of environmental, healthand safety laws occur, we could47be held liable for damages, penalties and costs of remedial actions. These expenses or this liability could have a significant negative impact on our financialcondition. We may violate environmental, health and safety laws in the future as a result of human error, equipment failure or other causes. Environmentallaws could become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with violations. We are subjectto potentially conflicting and changing regulatory agendas of political, business and environmental groups. Changes to or restrictions on permittingrequirements or processes, hazardous or biological material storage or handling might require an unplanned capital investment or relocation. Failure tocomply with new or existing laws or regulations could harm our business, financial condition and results of operations.We are subject to a variety of risks due to our international operations that could adversely affect our business, our operations or profitability andoperating results.Our operations in countries outside the United States, which accounted for approximately 21% of our revenues for the twelve months endedDecember 31, 2018, are accompanied by certain financial and other risks. In addition to opening offices in the United Kingdom, Germany, Canada, and thePhilippines, in connection with distributor acquisitions and otherwise, we intend to continue to pursue growth opportunities in sales outside the UnitedStates, especially in Europe and Asia (including Japan and Korea), and we may increase our use of administrative and support functions from locationsoutside the United States, which could expose us to greater risks associated with our sales and operations. As we pursue opportunities outside the UnitedStates, we may become more exposed to these risks and our ability to scale our operations effectively may be affected. Additionally, we may experiencedifficulties in scaling these functions from locations outside the United States and may not experience the expected cost efficiencies.Our profitability and international operations are, and will continue to be, subject to a number of risks and potential costs, including:•local product preferences and product requirements;•longer-term receivables than are typical in the United States;•fluctuations in foreign currency exchange rates;•less intellectual property protection in some countries outside the United States than exists in the United States;•trade protection measures and import and export licensing requirements;•workforce instability;•fluctuations in trade policy and tariff regulations;•political and economic instability; and•the potential payment of U.S. income taxes on certain earnings of our subsidiaries outside the United States upon repatriation.While it is impossible for us to predict whether these and other proposals will be implemented, or how they will ultimately impact us, they maymaterially impact our results of operations if, for example, our profits earned abroad are subject to U.S. income tax, or we are otherwise disallowed deductionsas a result of these profits.As another example, changes in foreign currency exchange rates may reduce the reported value of our foreign currency denominated revenues,expenses, and cash flows. We cannot predict changes in currency exchange rates, the impact of exchange rate changes, nor the degree to which we will beable to manage the impact of currency exchange rate changes.As a final example, on June 23, 2016, the United Kingdom, or U.K., held a referendum in which voters approved an exit from the European Union,commonly referred to as “Brexit.” As a result of the referendum, the U.K. government is negotiating the terms of the U.K.’s future relationship with theEuropean Union. Although it is unknown what those terms will be, it is possible that there will be greater restrictions on imports and exports and on themovement of people between the U.K. and European Union countries, and increased regulatory complexities.Failure to obtain any required regulatory authorization in foreign jurisdictions will prevent us from marketing our products abroad.We conduct limited commercial and marketing efforts in Canada, Europe, Australia, New Zealand, Asia, Latin America, the Middle East and Africa withrespect to our continuous glucose monitoring systems and may seek to market our products in other regions in the future. Outside the United States, we canmarket a product only if we receive a marketing authorization and, in some cases, pricing approval, from the appropriate regulatory authorities. Theauthorization and/or approval procedure varies among countries and can involve additional testing, and the time required to obtain any requiredauthorization or approval may differ from that required to obtain FDA marketing authorization(s). The foreign regulatory authorization or48approval process may include all of the risks associated with obtaining FDA marketing authorization(s) in addition to other risks. We may not obtain foreignregulatory authorizations or approvals on a timely basis, if at all. Obtaining a marketing authorization from the FDA does not ensure authorization orapproval by regulatory authorities in other countries, and authorization or approval by one foreign regulatory authority does not ensure authorization orapproval by regulatory authorities in other foreign countries or by the FDA. In addition, in order to obtain the authorization to market our products in certainforeign jurisdictions, we may need to obtain a Certificate to Foreign Government from the FDA. The FDA may refuse to issue a Certificate to ForeignGovernment in certain instances, including without limitation, during the pendency of any outstanding warning letter. As a result, we may not be able to filefor regulatory approvals or marketing authorizations and may not receive necessary approvals or authorizations to commercialize our products in any marketoutside the United States on a timely basis, or at all.Our success will depend on our ability to attract and retain our personnel, while controlling labor costs.We depend to a significant degree on our senior management, especially Kevin Sayer, our President and Chief Executive Officer. Our success willdepend on our ability to retain our senior management and to attract and retain qualified personnel in the future, including sales persons, scientists,clinicians, engineers and other highly skilled personnel. Competition for senior management personnel, as well as sales persons, scientists, clinicians andengineers, is intense and we may not be able to retain our personnel. The loss of the services of members of our senior management, scientists, clinicians orengineers could prevent the implementation and completion of our objectives, including the commercialization of our current products and the developmentand introduction of additional products. The loss of a member of our senior management or our professional staff would require the remaining executiveofficers to divert immediate and substantial attention to seeking a replacement. Each of our officers may terminate their employment at any time withoutnotice and without cause or good reason. Additionally, volatility or a lack of positive performance in our stock price may adversely affect our ability to retainkey employees.We expect to continue to expand our operations and grow our research and development, manufacturing, sales and marketing, product developmentand administrative operations. We expect this expansion to place a significant strain on our management and it will require hiring a significant number ofqualified personnel. Accordingly, recruiting and retaining such personnel will be critical to our success. There is intense competition from other companiesand research and academic institutions for qualified personnel in the areas of our activities. If we fail to identify, attract, retain and motivate these skilledpersonnel, we may be unable to continue our development and commercialization activities.We may undertake a reorganization of our workforce, which may result in a temporary reduction in the number of employees in certain locations. Wewould undertake a reorganization to reduce operating expenses, though we cannot guarantee any specific amount of long-term cost savings. Further, theturnover in our employee base could result in operational and administrative inefficiencies, which could adversely impact the results of our operations, stockprice and customer relationships, and could make recruiting for future management and other positions more difficult.We may require additional funding to continue the commercialization of our G4 PLATINUM, G5 Mobile and G6 systems, or the development andcommercialization of our future generation and other continuous glucose monitoring systems, including our sensor augmented insulin pump systemsdeveloped in collaboration with our pump partners and other partners.Our operations have consumed substantial amounts of cash since inception. We expect to continue to spend substantial amounts on commercializationof our products, including growth of our manufacturing capacity, and on research and development, including conducting clinical trials for our next-generation ambulatory continuous glucose monitoring sensors and systems. Although we raised $389.0 million in net proceeds through the private sale ofour convertible notes in June 2017, $75.0 million of which was used to repay our credit facility, $836.6 million in net proceeds through the private sale ofour convertible notes in November 2018, $100.0 million of which we used to purchase shares of our common stock, and now have $195.6 million availableto us under our credit facility (as reduced by our outstanding letters of credit), we may need funds to continue the commercialization of our current productsand to develop and commercialize our next-generation sensors and systems. Additional financing may not be available on a timely basis on terms acceptableto us, or at all. Any additional financing may be dilutive to stockholders or may require us to grant a lender a security interest in our assets. The amount offunding we may need will depend on many factors, including:•the revenue generated by sales of our products and other future products;•the costs, timing and risks of delay of additional regulatory approvals;•the expenses we incur in manufacturing, developing, selling and marketing our products;•our ability to scale our manufacturing operations to meet demand for our current and any future products;•the costs to produce our continuous glucose monitoring systems;49•the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;•the rate of progress and cost of our clinical trials and other development activities;•the success of our research and development efforts;•the emergence of competing or complementary technologies;•the terms and timing of any collaborative, licensing and other arrangements that we may establish;•the cost of ongoing compliance with legal and regulatory requirements, and third-party payors’ policies;•the cost of obtaining and maintaining regulatory or payor clearance or approval for our current or future products including those integratedwith other companies’ products; and•the acquisition of business, products and technologies, although we currently have no commitments or agreements relating to any of these typesof transactions.If adequate funds are not available, we may not be able to commercialize our products at the rate we desire and we may have to delay development orcommercialization of our products or license to third parties the rights to commercialize products or technologies that we would otherwise seek tocommercialize. We also may have to reduce sales, marketing, customer support or other resources devoted to our products. Any of these factors could harmour business and financial condition.We may face risks associated with acquisitions of companies, products and technologies and our business could be harmed if we are unable to addressthese risks.If we are presented with appropriate opportunities, we could acquire or make other investments in complementary companies, products or technologies.We may not realize the anticipated benefit of our acquisitions, or the realization of the anticipated benefits may require greater expenditures than anticipatedby us. We will likely face risks, uncertainties and disruptions associated with the integration process, including difficulties in the integration of theoperations and services of any acquired company, integration of acquired technology with our products, diversion of our management’s attention from otherbusiness concerns, the potential loss of key employees or customers of the acquired businesses and impairment charges if future acquisitions are not assuccessful as we originally anticipate. If we fail to successfully integrate other companies, products or technologies that we acquire, our business could beharmed. Furthermore, we may have to incur debt or issue equity or equity-linked securities to pay for any future acquisitions or investments, the issuance ofwhich could be dilutive to our existing stockholders. In addition, our operating results may suffer because of acquisition-related costs or amortizationexpenses or charges relating to acquired intangible assets.Compliance with regulations relating to public company corporate governance matters and reporting is time consuming and expensive.Many laws and regulations, notably those adopted in connection with the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform andConsumer Protection Act, new SEC regulations and The Nasdaq Stock Market listing rules, impose obligations on public companies, such as ours, whichhave increased the scope, complexity and cost of corporate governance, reporting and disclosure practices. Compliance with these laws and regulations,including enhanced new disclosures, has required and will continue to require substantial management time and oversight and the incurrence of significantaccounting and legal costs. The effects of new laws and regulations remain unclear and will likely require substantial management time and oversight andrequire us to incur significant additional accounting and legal costs. Additionally, changes to existing accounting rules or standards, such as the potentialrequirement that U.S. registrants prepare financial statements in accordance with International Financial Reporting Standards, may adversely impact ourreported financial results and business, and may require us to incur greater accounting fees.If we are unable to successfully maintain effective internal control over financial reporting, investors may lose confidence in our reported financialinformation and our stock price and our business may be adversely impacted.As a public company, we are required to maintain internal control over financial reporting and our management is required to evaluate the effectivenessof our internal control over financial reporting as of the end of each fiscal year. If we are not successful in maintaining effective internal control over financialreporting, there could be inaccuracies or omissions in the consolidated financial information we are required to file with the SEC. Additionally, even if thereare no inaccuracies or omissions, we will be required to publicly disclose the conclusion of our management that our internal control over financial reportingor disclosure controls and procedures are not effective. These events could cause investors to lose confidence in our reported financial information, adverselyimpact our stock price, result in increased costs to remediate any deficiencies, attract regulatory scrutiny or lawsuits that could be costly to resolve anddistract management’s attention, limit our ability to access the capital markets or cause our stock to be delisted from The Nasdaq Stock Market or any othersecurities exchange on which it is then listed.50We could be subject to changes in our tax rates, new U.S. or international tax legislation or additional tax liabilities.We are subject to taxes in the United States and numerous foreign jurisdictions, where a number of our subsidiaries are organized. Due to economic andpolitical conditions, tax rates in various jurisdictions may be subject to change. Our effective tax rates could be affected by numerous factors, includingchanges in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, and changes in taxlaws or their interpretation, both in and outside the United States.The U.S. government has recently enacted comprehensive tax legislation that includes significant changes to the taxation of business entities. Thesechanges include, among others, (i) a permanent reduction to the corporate income tax rate, (ii) a partial limitation on the deductibility of business interestexpense, (iii) a shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a territorial system (along with certain rulesdesigned to prevent erosion of the U.S. income tax base) and (iv) a one-time tax on accumulated offshore earnings held in cash and illiquid assets, with thelatter taxed at a lower rate. The overall impact of this tax reform is uncertain, and our business and financial condition could be adversely affected. Inaddition, it is uncertain if and to what extent various states will conform to the newly enacted federal tax law.Our tax returns and other tax matters also are subject to examination by the U.S. Internal Revenue Service and other tax authorities and governmentalbodies. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes. Wecannot guarantee the outcome of these examinations. If our effective tax rates were to increase, particularly in the United States, or if the ultimatedetermination of our taxes owed is for an amount in excess of amounts previously accrued, our financial condition, operating results and cash flows could beadversely affected.Valuation of share-based payments, which we are required to perform for purposes of recording compensation expense under authoritative guidance forshare-based payment, involves assumptions that are subject to change and difficult to predict.We record compensation expense in the consolidated statement of operations for share-based payments, such as employee stock options, restrictedstock units and employee stock purchase plan shares, using the fair value method. The requirements of the authoritative guidance for share-based paymenthave and will continue to have a material effect on our future financial results reported under U.S. GAAP and make it difficult for us to accurately predict theimpact on our future financial results.For instance, estimating the fair value of share-based payments is highly dependent on assumptions regarding the future exercise behavior of ouremployees and changes in our stock price. If there are errors in our input assumptions for our valuations models, we may inaccurately calculate actual orestimated compensation expense for share-based payments.The authoritative guidance for share-based payment could also adversely impact our ability to provide accurate guidance on our future financial resultsas assumptions that are used to estimate the fair value of share-based payments are based on estimates and judgments that may differ from period to period.We may also be unable to accurately predict the amount and timing of the recognition of tax benefits associated with share-based payments as they arehighly dependent on the exercise behavior of our employees and the price of our stock relative to the exercise price of each outstanding stock option.For those reasons, among others, the authoritative guidance for share-based payment may create variability and uncertainty in the share-basedcompensation expense we will record in future periods, which could adversely impact our stock price and increase our expected stock price volatility ascompared to prior periods.Changes in financial accounting standards or practices or existing taxation rules or practices may cause adverse unexpected revenue and/or expensefluctuations and affect our reported results of operations.A change in accounting standards or practices or a change in existing taxation rules or practices can have a significant effect on our reported results andmay even affect our reporting of transactions completed before the change is effective. New accounting pronouncements and taxation rules and varyinginterpretations of accounting pronouncements and taxation practice have occurred and may occur in the future. The method in which we market and sell ourproducts may have an impact on the manner in which we recognize revenue. In addition, changes to existing rules or the questioning of current practices mayadversely affect our reported financial results or the way we conduct our business. Additionally, changes to existing accounting rules or standards, such as thepotential requirement that U.S. registrants prepare financial statements in accordance with International Financial Reporting Standards, may adversely impactour reported financial results and business, and may further require us to incur greater accounting fees.The SEC “conflict minerals” rule has caused us to incur additional expenses, could limit the supply and increase the cost of certain metals used inmanufacturing our products, and could make us less competitive in our target markets.We are required to disclose information related to the origin, source and chain of custody of specified minerals, known as conflict minerals, that arenecessary to the functionality or production of products manufactured or contracted to be51manufactured. The requirement mandates companies to obtain sourcing data from suppliers, engage in supply chain due diligence, and file annually with theSEC a specialized disclosure report on Form SD covering the prior calendar year. The rule could limit our ability to source at competitive prices and to securesufficient quantities of certain minerals (or derivatives thereof) used in the manufacture of our products, specifically tantalum, tin, gold and tungsten, as thenumber of suppliers that provide conflict-free minerals may be limited. In addition, we have incurred, and may continue to incur, material costs associatedwith complying with the rule, such as costs related to the determination of the origin, source and chain of custody of the minerals used in our products, theadoption of conflict minerals-related governance policies, processes and controls, and possible changes to products or sources of supply as a result of suchactivities. Within our supply chain, we may not be able to sufficiently verify the origins of the relevant minerals used in our products through the datacollection and due diligence procedures that we implement, which may harm our reputation. Furthermore, we may encounter challenges in satisfying thosecustomers that require that all of the components of our products be certified as conflict free, and if we cannot satisfy these customers, they may choose acompetitor’s products.Risks Related to Our Common StockOur stock price is highly volatile and investing in our stock involves a high degree of risk, which could result in substantial losses for investors.Historically, the market price of our common stock, like the securities of many other medical products companies, fluctuates and could continue to bevolatile in the future. From January 1, 2018 through February 15, 2019, the closing price of our common stock on the Nasdaq Global Select Market was ashigh as $152.73 per share and as low as $52.25 per share.The market price of our common stock is influenced by many factors that are beyond our control, including the following:•securities analyst coverage or lack of coverage of our common stock or changes in their estimates of our financial performance;•variations in quarterly operating results;•future sales of our common stock by our stockholders;•investor perception of us and our industry;•announcements by us or our competitors of significant agreements, acquisitions, or capital commitments or product launches or discontinuations;•changes in market valuation or earnings of our competitors;•negative business or financial announcements regarding our partners;•general economic conditions;•regulatory actions;•legislation and political conditions; and•terrorist acts.Please also refer to the factors described elsewhere in this “Risk Factors” section. In addition, the stock market in general has experienced extreme priceand volume fluctuations that have often been unrelated and disproportionate to the operating performance of companies in our industry. These broad marketand industry factors may materially reduce the market price of our common stock, regardless of our operating performance.Securities class action litigation has often been brought against public companies that experience periods of volatility in the market prices of theirsecurities. Securities class action litigation could result in substantial costs and a diversion of our management’s attention and resources.If our financial performance fails to meet the expectations of investors and public market analysts, the market price of our common stock could decline.Our revenues and operating results may fluctuate significantly from quarter to quarter. We believe that period-to-period comparisons of our operatingresults may not be meaningful and should not be relied on as an indication of our future performance. If quarterly revenues or operating results fall below theexpectations of investors or public market analysts, the trading price of our common stock could decline substantially. Factors that might cause quarterlyfluctuations in our operating results include:•our inability to manufacture an adequate supply of product at appropriate quality levels and acceptable costs;•possible delays in our research and development programs or in the completion of any clinical trials;•a lack of acceptance of our products in the marketplace by physicians and people with diabetes;52•the inability of customers to receive reimbursements from third-party payors;•failures to comply with regulatory requirements, which could lead to withdrawal of products from the market;•our failure to continue the commercialization of any of our continuous glucose monitoring systems;•competition;•inadequate financial and other resources; and•global and political economic conditions, political instability and military hostilities.Failure to comply with covenants in our revolving credit agreement with JPMorgan Chase Bank and other syndicate lenders could result in our inabilityto borrow additional funds and adversely impact our business.We have entered into a revolving credit agreement and a pledge and security agreement with JPMorgan Chase Bank and four other lenders to fund ourbusiness operations. These agreements impose numerous financial and other restrictive covenants on our operations, including covenants relating to ourgeneral profitability and our liquidity. As of December 31, 2018, we were in compliance with the covenants imposed by the loan and security agreement. Ifwe violate these or any other covenants, any outstanding amounts under these agreements could become due and payable prior to their stated maturity dates,each lender could proceed against any collateral in our operating accounts and our ability to borrow funds in the future may be restricted or eliminated. Theserestrictions may also limit our ability to borrow additional funds and pursue other business opportunities or strategies that we would otherwise consider to bein our best interests.Increasing our financial leverage could affect our operations and profitability.The current maximum available credit under our multi-currency revolving credit facility is $200.0 million. Our leverage ratio may affect theavailability to us of additional capital resources as well as our operations in several ways, including:•the terms on which credit may be available to us could be less attractive, both in the economic terms of the credit and the legal covenants;•the possible lack of availability of additional credit;•the potential for higher levels of interest expense to service or maintain our outstanding debt;•the possibility of additional borrowings in the future to repay our indebtedness when it comes due; and•the possible diversion of capital resources from other uses.While we believe we will have the ability to service our debt and obtain additional resources in the future if and when needed, that will depend uponour results of operations and financial position at the time, the then-current state of the credit and financial markets, and other factors that may be beyond ourcontrol. Therefore, we cannot give assurances that sufficient credit will be available on terms that we consider attractive, or at all, if and when necessary orbeneficial to us.The issuance of shares by us in the future or sales of shares by our stockholders may cause the market price of our common stock to drop significantly, evenif our business is performing well.This issuance of shares by us in the future, including by conversion of our convertible notes in certain circumstances, the issuance of shares of ourcommon stock to partners, including up to 2,025,036 shares of our common stock that we may issue to Verily and Onduo LLC pursuant to the RestatedCollaboration Agreement, or sales of shares by our stockholders may cause the market price of our common stock to decline, perhaps significantly, even ifour business is performing well. The market price of our common stock could also decline if there is a perception that sales of our shares are likely to occur inthe future. This might also make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. Also, we mayissue securities in connection with future financings and acquisitions, and those shares could dilute the holdings of other stockholders.We do not intend to pay dividends for the foreseeable future.We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation andexpansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future and the terms of our credit agreement restrict ourability to declare or pay dividends. As a result, stockholders (including holders of our convertible notes who receive shares of our common stock, if any, uponconversion of their notes) may only receive a return on their investment in our common stock if the market price of our common stock increases.53Anti-takeover effects of our charter documents and Delaware law could make a merger, tender offer or proxy contest difficult, thereby depressing thetrading price of our common stock.In addition, there are provisions in our certificate of incorporation and bylaws, as well as provisions in the Delaware General Corporation Law, that maydiscourage, delay or prevent a change of control that might otherwise be beneficial to stockholders. For example:•our Board of Directors may, without stockholder approval, issue shares of preferred stock with special voting or economic rights;•our stockholders do not have cumulative voting rights and, therefore, each of our directors can only be elected by holders of a majority of ouroutstanding common stock;•a special meeting of stockholders may only be called by a majority of our Board of Directors, the Chairman of our Board of Directors, our ChiefExecutive Officer, our President or our Lead Independent Director;•our stockholders may not take action by written consent;•our Board of Directors is divided into three classes, only one of which is elected each year; and•we require advance notice for nominations for election to the Board of Directors or for proposing matters that can be acted upon by stockholdersat stockholder meetings.Risks Related to Our DebtWe have indebtedness in the form of convertible senior notes, which could adversely affect our financial health and our ability to respond to changes inour business.In June 2017, we completed an offering of $400.0 million aggregate principal amount of 0.75% convertible senior notes due 2022, or 2022 Notes,which offering we refer to as the 2017 Notes Offering. In November 2018, we completed an offering of $850.0 million aggregate principal amount of 0.75%convertible senior notes due 2023, or 2023 Notes, which offering we refer to as the 2018 Notes Offering. We refer to the 2017 Notes Offering and the 2018Notes Offering together as the Notes Offerings, and we refer to the 2022 Notes and the 2023 Notes together as the Notes. As a result of the Notes Offerings, weincurred $1.250 billion principal amount of indebtedness, the principal amount of which we may be required to pay at maturity.Holders of the Notes will have the right to require us to repurchase their notes upon the occurrence of a fundamental change (as defined in the indenturefor each of the 2022 Notes and the 2023 Notes) at a purchase price equal to 100% of the principal amount of the notes to be purchased, plus accrued andunpaid interest, if any. In addition, each indenture for the Notes provides that we are required to repay amounts due under each indenture in the event thatthere is an event of default for the Notes that results in the principal, premium, if any, and interest, if any, becoming due prior to maturity date for the Notes.There can be no assurance that we will be able to repay this indebtedness when due, or that we will be able to refinance this indebtedness on acceptable termsor at all.As a result of our level of increased debt after the completion of the Notes Offerings:•our vulnerability to adverse general economic conditions and competitive pressures will be heightened;•we will be required to dedicate a larger portion of our cash flow from operations to interest payments, limiting the availability of cash for otherpurposes;•our flexibility in planning for, or reacting to, changes in our business and industry may be more limited; and•our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes orother purposes may be impaired.We cannot be sure that our leverage resulting from the level of increased debt after the completion of the Notes Offerings will not materially andadversely affect our ability to finance our operations or capital needs or to engage in other business activities. In addition, we cannot be sure that additionalfinancing will be available when required or, if available, will be on terms satisfactory to us. Further, even if we are able to obtain additional financing, wemay be required to use such proceeds to repay a portion of our debt.54We may be unable to repurchase the Notes upon a fundamental change when required by the holders or repay prior to maturity any accelerated amountsdue under the notes upon an event of default or redeem the Notes unless specified conditions are met under our credit facility, and our future debt maycontain limitations on our ability to pay cash upon conversion, repurchase or repayment of the Notes.Holders of the Notes will have the right to require us to repurchase their Notes upon the occurrence of a fundamental change at a purchase price equal to100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest, if any, to, but not including, the fundamental change purchasedate. In addition, each indenture for the Notes provides that we are required to repay amounts due under each indenture in the event that there is an event ofdefault for the Notes that results in the principal, premium, if any, and interest, if any, becoming due prior to maturity date for the Notes. In addition, uponconversion of the Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than cash in lieu of any fractionalshare), we will be required to make cash payments in respect of the Notes being converted. However, we may not have enough available cash or be able toobtain financing at the time we are required to repurchase Notes surrendered upon a fundamental change or repay prior to maturity any accelerated amountsor pay cash for Notes being converted.In addition, our ability to purchase the Notes or repay prior to maturity any accelerated amounts under the Notes upon an event of default or pay cashupon conversions of the Notes may be limited by law, by regulatory authority or by agreements governing our indebtedness outstanding at the time,including our credit facility. Under our current credit facility we are only permitted to use cash to purchase the Notes or repay prior to maturity anyaccelerated amounts under the Notes if we meet certain conditions that are defined under the Credit Agreement. We may not meet these conditions in thefuture. Our failure to repurchase Notes at a time when the repurchase is required by the respective indenture (whether upon a fundamental change or otherwiseunder each indenture) or pay cash payable on future conversions of the Notes as required by the indenture would constitute a default under each indenture. Adefault under each indenture or the fundamental change itself could also lead to a default under agreements governing our existing or future indebtedness,including our credit facility. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not havesufficient funds to repay the indebtedness, repurchase the Notes or make cash payments upon conversions thereof.We may still incur substantially more debt or take other actions which would intensify the risks discussed above.We may incur substantial additional debt in the future, subject to the restrictions contained in our debt instruments, some of which may be secured debt.We are not restricted under the terms of the indentures governing the Notes from incurring additional debt, securing existing or future debt, recapitalizing ourdebt, or taking a number of other actions that are not limited by the terms of the indenture governing the convertible senior notes that could have the effect ofdiminishing our ability to make payments on the Notes when due.The convertible note hedge and warrant transactions may affect the value of the 2023 Notes and our common stock.In connection with the sale of the 2023 Notes, we entered into convertible note hedge, or the 2023 Note Hedge, transactions with certain financialinstitutions, or option counterparties. We also entered into warrant transactions with the option counterparties pursuant to which we sold warrants for thepurchase of our common stock, or the 2023 Warrants. The 2023 Note Hedge transactions are expected generally to reduce the potential dilution upon anyconversion of the 2023 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2023 Notes. The 2023Warrant transactions could separately have a dilutive effect to the extent that the market price per share of our common stock exceeds the exercise price of the2023 Warrants, which is $198.38.The option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives withrespect to our common stock and/or purchasing or selling our common stock in secondary market transactions prior to the maturity of 2023 Notes (and arelikely to do so during any observation period related to a conversion of 2023 Notes, or following any repurchase of Notes by us on any fundamental changerepurchase date (as defined in the indenture for the 2023 Notes) or otherwise). This activity could also cause or avoid an increase or a decrease in the marketprice of our common stock or the 2023 Notes, which could affect note holders’ ability to convert the 2023 Notes and, to the extent the activity occurs duringany observation period related to a conversion of the 2023 Notes, it could affect the amount and value of the consideration that note holders will receiveupon conversion of the 2023 Notes.The potential effect, if any, of these transactions and activities on the market price of our common stock or the 2023 Notes will depend in part on marketconditions and cannot be ascertained at this time. Any of these activities could adversely affect the value of our common stock and the value of the 2023Notes (and as a result, the value of the consideration, the amount of cash and/or the number of shares, if any, that note holders would receive upon theconversion of the 2023 Notes) and, under certain circumstances, the ability of the note holders to convert the 2023 Notes.We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may haveon the price of the 2023 Notes or our common stock. In addition, we do not make any55representation that the option counterparties will engage in these transactions or that these transactions, once commenced, will not be discontinued withoutnotice.We are subject to counterparty risk with respect to the 2023 Note Hedge transactions.The option counterparties are financial institutions, and we will be subject to the risk that any or all of them may default under the 2023 Note Hedgetransactions. Our exposure to the credit risk of the option counterparties will not be secured by any collateral. Recent global economic conditions haveresulted in the actual or perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvencyproceedings, we will become an unsecured creditor in those proceedings, with a claim equal to our exposure at that time under our transactions with thatoption counterparty. Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the marketprice and in the volatility of our common stock. In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and moredilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of the optioncounterparties.Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the Notes, depends on ourfuture financial condition and operating performance, which is subject to economic, financial, competitive and other factors beyond our control. Our businessmay not continue to generate cash flow from operations in the future sufficient to satisfy our obligations under the Notes, our existing indebtedness and anyfuture indebtedness we may incur and to make necessary capital expenditures. We may not maintain a level of cash flows from operating activities sufficientto permit us to pay the principal, premium, if any, and interest on (as well as any cash due upon conversion of) our debt, including the Notes.If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing or delaying investments or capitalexpenditures, selling assets, refinancing or obtaining additional equity capital on terms that may be onerous or highly dilutive. These alternative measuresmay not be successful and may not permit us to meet our scheduled debt servicing obligations. Further, we may need to refinance all or a portion of our debton or before maturity, and our ability to refinance the Notes, existing indebtedness or future indebtedness will depend on the capital markets and ourfinancial condition at such time. We may not be able to engage in any of these activities on commercially reasonable terms or at all, which could result in adefault on the Notes or our current and future indebtedness.Our credit facility imposes restrictions on us that may adversely affect our ability to operate our business.Our credit facility contains restrictive covenants relating to our capital raising activities and other financial and operational matters which may make itmore difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. In addition, our credit facility and theagreements governing the notes each contain cross-default provisions whereby a default under one agreement would likely result in cross defaults underagreements covering other borrowings. For example, the occurrence of a default with respect to any indebtedness or any failure to repay debt when due in anamount in excess of $25.0 million that causes such indebtedness to become due prior to its scheduled maturity date would cause a cross default under theindenture governing the Notes. In addition, the occurrence of a default with respect to any indebtedness or any failure to repay debt when due in an amountin excess of $15.0 million that causes such indebtedness to become due prior to its scheduled maturity date would cause a default under our credit facility.The occurrence of a default under any of these borrowing arrangements would permit the holders of the Notes or the lenders under our credit facility todeclare all amounts outstanding under those borrowing arrangements to be immediately due and payable. If the Note holders or the trustee under theindenture governing the Notes or the lenders under our credit facility accelerate the repayment of borrowings, we cannot assure you that we will havesufficient assets to repay those borrowings.Conversion of the Notes will, to the extent we deliver shares upon conversion of such Notes, dilute the ownership interest of existing stockholders,including holders who had previously converted their Notes, or may otherwise depress our stock price.The conversion of some or all of the Notes will dilute the ownership interests of existing stockholders to the extent we deliver shares upon conversionof any of the Notes. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of ourcommon stock. In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could be usedto satisfy short positions, or anticipated conversion of the Notes into shares of our common stock could depress our stock price.56The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.In the event the conditional conversion feature of the Notes is triggered, holders of the Notes will be entitled to convert the Notes at any time duringspecified periods at their option. If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solelyshares of our common stock (other than cash in lieu of any fractional share), we would be required to settle a portion or all of our conversion obligationthrough the payment of cash, which could adversely affect our liquidity. In addition, even if holders of the Notes do not elect to convert their Notes, we couldbe required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-termliability, which would result in a material reduction of our net working capital.The accounting method for convertible debt securities that may be settled in cash, such as the Notes, may have a material effect on our reported financialresults.Under GAAP, an entity must separately account for the debt component and the embedded conversion option of convertible debt instruments that maybe settled entirely or partially in cash upon conversion, such as the Notes, in a manner that reflects the issuer’s economic interest cost. The effect of theaccounting treatment for such instruments is that the value of such embedded conversion option would be treated as original issue discount for purposes ofaccounting for the debt component of the Notes, and that original issue discount is amortized into interest expense over the term of the Notes using aneffective yield method. As a result, we will be required to record a greater amount of non-cash interest expense because of the amortization of the originalissue discount to the Notes’ face amount over the term of the Notes and because of the amortization of the debt issuance costs. Accordingly, we will reportgreater interest expense and lower net income in our financial results because of the recognition of both the current period’s amortization of the debt discountand the Notes’ coupon interest, which could adversely affect our reported or future financial results, the trading price of our common stock and the tradingprice of the Notes.In addition, if the conditional conversion feature of the Notes is triggered, even if holders do not elect to convert their Notes, we could be requiredunder applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, whichwould result in a material reduction of our net working capital.The fundamental change repurchase feature of the Notes may delay or prevent an otherwise beneficial attempt to take over DexCom.The terms of the Notes require us to repurchase the Notes in the event of a fundamental change. A takeover of DexCom would trigger an option of theholders of the Notes to require us to repurchase the Notes. In addition, if a make-whole fundamental change occurs prior to the maturity date of the Notes, wewill in some cases be required to increase the conversion rate for a holder that elects to convert its Notes in connection with such make-whole fundamentalchange. Furthermore, each indenture for the Notes prohibits us from engaging in certain mergers or acquisitions unless, among other things, the survivingentity assumes our obligations under the notes. These and other provisions of each indenture may have the effect of delaying or preventing a takeover ofDexCom.ITEM 1B.UNRESOLVED STAFF COMMENTSNone.57ITEM 2.PROPERTIESOur principal locations, their sizes and purposes, and the expiration dates for the leases on the facilities at those locations as of December 31, 2018 areshown in the table below.Location ApproximateSquare Feet Purpose LeaseExpiration DatesSan Diego, CA 470,900 Laboratory, Manufacturing, Research and Development, Warehouse, Generaland Administrative, Sales and Marketing 2022 (1)Mesa, AZ 148,800 General and Administrative, Laboratory, Manufacturing, Warehouse 2028 (2)All international locations (3) 122,800 EMEA Headquarters, Clinical, Regulatory, Marketing, General andAdministrative 2026(1) Excludes renewals that would be at our option to extend the term of leases for approximately 219,000 square feet of space for two additional five-year terms.(2) Excludes renewals that would be at our option to extend the term of this lease for four additional five-year terms.(3) International locations include Canada, the United Kingdom, Germany, Switzerland and the Philippines.We also lease facilities in a number of smaller domestic locations. We believe our facilities are suitable and adequate for our current and near-termneeds, and that we will be able to locate additional facilities as needed.ITEM 3.LEGAL PROCEEDINGSOn March 28, 2016, AgaMatrix, Inc., or AgaMatrix, filed a patent infringement lawsuit against us in the United States District Court for the District ofOregon, asserting that certain of our products infringe certain patents held by AgaMatrix. On June 6, 2016, AgaMatrix filed a First Amended Complaintasserting the same three patents. On February 24, 2017, the Court granted AgaMatrix’s motion to substitute WaveForm Technologies, Inc., or WaveForm, asthe new plaintiff following AgaMatrix’s transfer of the three patents to its newly formed entity. On August 25, 2016, we filed petitions for inter partes reviewwith the Patent Trial and Appeal Board, or PTAB, of the U.S. Patent and Trademark Office seeking a determination that two of the three asserted patents areinvalid under U.S. patent law and those petitions were granted on March 6, 2017. On March 8, 2017, we filed a petition for inter partes review with the PTABseeking a determination that the third of the three asserted patents is invalid under U.S. patent law. This petition was granted on September 15, 2017. ThePTAB issued a Final Written Decision for each of the first two patents on February 28, 2018, where the PTAB found the majority of asserted claims from thefirst patent unpatentable and the remaining claims under review not unpatentable. The PTAB found all claims under review from the second patent notunpatentable. We believe the PTAB erred in finding any claims of the first two patents not unpatentable, and appealed the PTAB’s decision to the UnitedStates Court of Appeals for the Federal Circuit, or Federal Circuit, on March 30, 2018. Briefing of the appeal is complete and we are currently awaiting thedates for oral argument from the Court of Appeals. The PTAB issued a Final Written Decision for the third patent on September 12, 2018, where the PTABfound all claims of the third patent asserted against us in the District of Oregon litigation unpatentable. WaveForm did not appeal this decision. On January 4,2019, the parties stipulated to the dismissal of all claims and counterclaims regarding the third asserted patent. Most activity in the patent infringementlawsuit against us in the District of Oregon was stayed until the PTAB completed the inter partes review proceedings. That stay was lifted on October 10,2018. The remaining claims and counterclaims will continue with an estimated date of trial in February 2020. It is our position that Waveform’s assertions ofinfringement have no merit.We have also filed several lawsuits against AgaMatrix. We filed a patent infringement lawsuit against AgaMatrix in the United States District Court forthe Central District of California, or C.D. Cal., which is currently on appeal to the Federal Circuit based on a Final Judgment of non-infringement entered bythe C.D. Cal. judge on February 23, 2018. AgaMatrix sought attorneys’ fees for this lawsuit and as of December 31, 2018 we have accrued an immaterialamount for those fees. On September 15, 2017, we filed a patent infringement lawsuit against AgaMatrix in the United States District Court for the District ofDelaware, asserting certain single-point blood glucose monitoring products of AgaMatrix infringe two patents held by us. In addition, on September 18,2017, we filed a Complaint against AgaMatrix in the International Trade Commission, referred to as the ITC, requesting that the ITC institute aninvestigation and issue an order excluding certain products of AgaMatrix from importation into or sale in the United States based on AgaMatrix’sinfringement of the same two patents asserted in the Delaware litigation. On September 14, 2018, AgaMatrix filed two petitions for inter partes review foreach of the same two patents we asserted in the District of Delaware and the ITC. We filed a response to all four petitions on December5817, 2018. AgaMatrix had requested additional briefing on the matter and the PTAB has authorized both sides to do so. Briefing was completed in January2019.Neither the outcome of these lawsuits nor the amount and range of potential loss associated with the lawsuits can be assessed at this time. Other than theattorneys’ fees described above, as of December 31, 2018 we have accrued no amounts for contingent losses associated with these suits.We are subject to various claims, complaints and legal actions that arise from time to time in the normal course of business, including commercialinsurance, product liability and employment related matters. In addition, from time to time we may bring claims or initiate lawsuits against various thirdparties with respect to matters arising out of the ordinary course of our business, including commercial and employment related matters. We do not believe weare party to any currently pending legal proceedings, the outcome of which could have a material adverse effect on our business, financial condition orresults of operations. There can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not havea material adverse effect on our business, financial condition or results of operations.ITEM 4.MINE SAFETY DISCLOSURESNot applicable. 59PART IIITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESMarket Information for Common StockDexCom’s common stock is traded on the Nasdaq Global Select Market under the symbol “DXCM.” The following table sets forth the high and lowintraday per share sales prices reported on Nasdaq for DexCom’s common stock for the periods indicated. High LowYear Ended December 31, 2018 First Quarter $75.30 $51.04Second Quarter $102.10 $69.51Third Quarter $148.56 $92.33Fourth Quarter $152.14 $105.05 High LowYear Ended December 31, 2017 First Quarter $88.80 $57.68Second Quarter $85.32 $66.16Third Quarter $78.92 $42.62Fourth Quarter $62.35 $43.74StockholdersWe had approximately 30 stockholders of record as of February 19, 2019. The number of beneficial owners of our common stock at that date wassubstantially greater than the number of record holders because a large portion of our common stock is held of record through brokerage firms in “streetname.”Dividend PolicyWe have never declared or paid any cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation andexpansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future.Recent Sales of Unregistered SecuritiesThere were no unregistered sales of equity securities which have not been previously disclosed in a quarterly report on Form 10-Q or a current report onForm 8-K during the year ended December 31, 2018.Purchases of Equity Securities by the Issuer and Affiliated PurchasersIn November 2018 we repurchased 0.8 million shares of our common stock for $100.0 million, or an average per share price of $123.99. None of theseshares were repurchased as part of a publicly announced share repurchase plan.Company Stock Price PerformanceThe graph below compares the cumulative total stockholder return on our common stock with the cumulative total returns on the Nasdaq CompositeIndex and the Nasdaq Medical Equipment Index over the five-year period ending December 31, 2018. The graph assumes that $100 was invested in DexComcommon stock and in each of the other indices on December 31, 2013 and that all dividends were reinvested. The comparisons in the graph below are basedon historical data and are not intended to forecast the possible future performance of DexCom’s common stock.The graph below and related information shall not be deemed “soliciting material” or be deemed to be “filed” with the SEC, nor shall such informationbe incorporated by reference into any future filing, except to the extent that we specifically incorporate it by reference into such filing.60COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*AMONG DEXCOM, INC.THE NASDAQ COMPOSITE INDEXAND THE NASDAQ MEDICAL EQUIPMENT INDEX* $100 invested on December 31, 2013 in stock or index, including reinvestment of any dividends. December 31,2013 December 31,2014 December 31,2015 December 31,2016 December 31,2017 December 31,2018DexCom, Inc.$100.00 $155.46 $231.29 $168.60 $162.07 $338.32Nasdaq Composite$100.00 $114.62 $122.81 $133.19 $172.11 $165.84Nasdaq Medical Equipment$100.00 $117.22 $131.48 $138.45 $195.37 $221.4561ITEM 6.SELECTED FINANCIAL DATAThe consolidated statements of operations data for the years ended December 31, 2018, 2017, and 2016 and the consolidated balance sheet data as ofDecember 31, 2018 and 2017 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report. Thestatements of operations data for the years ended December 31, 2015 and 2014 and the consolidated balance sheet data as of December 31, 2016, 2015 and2014 have been derived from our audited financial statements not included in this Annual Report. The following selected financial data should be read inconjunction with our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and our financialstatements and related notes in Part II, Item 8 of this Annual Report. Years Ended December 31,(In millions, except per share data) 2018 2017 2016 2015 2014Consolidated Statements of Operations Data: Product revenue $1,031.6 $718.5 $573.3 $400.7 $257.1Development grant and other revenue — — — 1.3 2.1Total revenue 1,031.6 718.5 573.3 402.0 259.2Product cost of sales 367.7 226.4 194.9 123.6 82.3Development and other cost of sales — — — — 0.6Total cost of sales 367.7 226.4 194.9 123.6 82.9Gross profit 663.9 492.1 378.4 278.4 176.3Operating expenses: Research and development 199.7 185.4 156.1 101.0 69.4Collaborative research and development fees(1) 217.7 — — 36.5 —Selling, general and administrative 432.8 349.2 286.2 198.0 128.4Total operating expenses 850.2 534.6 442.3 335.5 197.8Operating loss (186.3) (42.5) (63.9) (57.1) (21.5)Interest expense (22.7) (12.8) (0.7) (0.4) (0.8)Income from equity investments 80.1 — — — —Interest and other income (expense), net 2.4 6.7 (0.3) — —Loss before income taxes (126.5) (48.6) (64.9) (57.5) (22.3)Income tax expense 0.6 1.6 0.7 0.1 0.1Net loss $(127.1) $(50.2) $(65.6) $(57.6) $(22.4)Basic and diluted net loss per share attributable to common stockholders(2) $(1.44) $(0.58) $(0.78) $(0.72) $(0.30)Shares used to compute basic and diluted net loss per share attributable tocommon stockholders(2) 88.2 86.3 83.6 79.8 75.2 As of December 31,(In millions) 2018 2017 2016 2015 2014Consolidated Balance Sheet Data: Cash, cash equivalents, and short-term marketable securities $1,385.6 $548.6 $123.7 $115.2 $83.6Working capital 1,477.1 605.8 177.6 164.4 105.3Total assets 1,916.0 904.1 402.8 292.0 184.6Long-term obligations 1,030.3 345.8 16.6 3.9 3.8Total stockholders’ equity $663.3 $419.4 $283.8 $221.2 $140.2(1) See Note 2 to the financial statements in Part II, Item 8 of this Annual Report for a description of our Restated Collaboration Agreement with VerilyLife Sciences LLC and Verily Ireland Limited.(2) See Note 1 to the financial statements in Part II, Item 8 of this Annual Report for a description of the method used to compute basic and diluted net lossper share attributable to common stockholders.62 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThis document, including the following Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements that are not purely historical regarding DexCom’s or its management’s intentions, beliefs, expectations and strategies for the future.These forward-looking statements fall within the meaning of the federal securities laws that relate to future events or our future financial performance. Insome cases, you can identify forward-looking statements by terminology such as “may,” “will,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”“intend,” “potential” or “continue” or the negative of these terms or other comparable terminology. Forward-looking statements are made as of the date ofthis report, deal with future events, are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in thoseforward looking statements. The risks and uncertainties that could cause actual results to differ materially are more fully described under “Risk Factors”and elsewhere in this report and in our other reports filed with the SEC. We assume no obligation to update any of the forward-looking statements after thedate of this report or to conform these forward-looking statements to actual results. You should read the following discussion and analysis together with“Selected Financial Data” in Part II, Item 6 and our financial statements and related notes in Part II, Item 8 of this Annual Report.OverviewWe are a medical device company primarily focused on the design, development and commercialization of continuous glucose monitoring, or CGM,systems for use by people with diabetes and by healthcare providers. We received approval from the Food and Drug Administration, or FDA, andcommercialized our first product in 2006. We launched our latest generation system, the DexCom G6® integrated Continuous Glucose Monitoring System, orG6, in 2018. Unless the context requires otherwise, the terms “we,” “us,” “our,” the “company,” or “DexCom” refer to DexCom, Inc. and its subsidiaries.We sell our durable CGM systems and disposable sensors through a direct sales force in the United States, Canada and some countries in Europe, andthrough distribution arrangements in the United States, Canada, Australia, New Zealand and some countries in Europe, Asia, Latin America, the Middle Eastand Africa.We plan to develop future generations of technologies that are focused on improved performance and convenience and that will enable intelligentinsulin administration. We also are aggressively exploring how to extend our offerings to other opportunities, including for people with Type 2 diabetes thatare non-insulin using, people with pre-diabetes, people who are obese, people with gestational diabetes, and in the hospital setting. We will continue todevelop a networked platform with open architecture, connectivity and transmitters capable of communicating with other devices and software systems. Wealso intend to expand our efforts to accumulate CGM patient data and metrics and apply predictive modeling and machine learning to generate interactiveCGM insights that can inform patient behavior.Critical Accounting Policies and EstimatesThe discussion and analysis of our financial condition and results of operations are based on our financial statements, which we have prepared inaccordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts ofassets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported revenue and expensesduring the reporting periods. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience and on variousother factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value ofassets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.While our significant accounting policies are more fully described in Note 1 to the financial statements in Part II, Item 8 of this Annual Report, webelieve that the following accounting policies and estimates are most critical to a full understanding and evaluation of our reported financial results.Members of our senior management have discussed the development and selection of these critical accounting policies and their disclosure in this AnnualReport with the Audit Committee of our Board of Directors.Revenue RecognitionASC Topic 606. We adopted ASC Topic 606 effective January 1, 2018 using the modified retrospective method. Results for reporting periods afterJanuary 1, 2018 are presented under ASC Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with legacyaccounting guidance under ASC Topic 605. The discussion which follows describes the judgments and estimates we use in recognizing revenue under ASCTopic 606. Our adoption of ASC Topic 606 did not have a material impact on the measurement nor on the recognition of revenue from contracts, for whichall revenue had63not been recognized as of January 1, 2018. Therefore, no cumulative adjustment has been made to the opening balance of retained earnings at the beginningof 2018. For more information, see “Revenue Recognition” in Note 1 to the financial statements in Part II, Item 8 of this Annual Report.Revenue Recognition. We generate our revenue from the sale of our durable CGM systems and disposable sensors. Our durable systems include areusable transmitter and receiver. Disposable sensors are sold separately. We also provide free-of-charge software and mobile applications for use with ourdurable systems and disposable sensors. The initial durable system price is generally not dependent upon the subsequent purchase of any amount ofdisposable sensors.We generally recognize revenue when control is transferred to our customers in an amount that reflects the net consideration to which we expect to beentitled. Transaction price is typically based on contracted rates less any estimates of claim denials and historical reimbursement experience, which wouldinclude current and future expectations regarding reimbursement contracts, guidelines and payor mix, and less estimated variable consideration adjustmentsincluding rebates. The amount of variable consideration that is included in the transaction price is included in revenue only to the extent that it is probablethat a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. We estimate reductions to our revenues forrebates paid to payors and healthcare providers in the United States. Rebates are based on contractual arrangements or statutory requirements, which mayvary by product, payor and individual payor plans. Our estimates are based on products sold, historical payor mix and, as available, known market events ortrends and channel inventory data. For more information, see “Revenue Recognition” in Note 1 to the financial statements in Part II, Item 8 of this AnnualReport.Recognizing revenue requires us to exercise judgment and use estimates that can have a significant impact on the amount and timing of revenue wereport. We exercise significant judgment when we determine the transaction price, including variable consideration adjustments. If the actual amounts ofconsideration that we receive differ from our estimates, we would adjust our estimates and that would affect reported revenue in the period that such variancesbecome known.Disaggregation of Revenue. We disaggregate revenue by geographic region and by major sales channel. We have determined that disaggregatingrevenue into these categories achieves the ASC Topic 606 disclosure objectives of depicting how the nature, amount, timing and uncertainty of revenue andcash flows are affected by economic factors. Reconciliations of revenue disaggregated by geographic location and by major sales channel to total revenue areprovided in Note 10 to the financial statements in Part II, Item 8 of this Annual Report.Share-Based CompensationShare-based compensation expense is measured at the grant date based on the estimated fair value of the award and is recognized straight-line over therequisite service period of the individual grants, which typically equals the vesting period. Shared-based compensation arrangements include time-based andperformance/market-based Restricted Stock Units (“RSUs”) and purchases of common stock at a discount under our Employee Stock Purchase Plan, or ESPP.We estimate the fair value of time-based RSUs based on the market price of our common stock on the date of grant (the intrinsic value method). Weestimate the fair value of performance/market-based RSUs using a Monte Carlo simulation model. We adjust share-based compensation expense quarterly forperformance/market-based RSUs based on the expected achievement of the related performance conditions, which requires significant judgment.We estimate the fair value of ESPP purchase rights using the Black-Scholes option pricing model. The model requires us to make assumptions thatinclude expected volatility, expected term, dividends, and the risk-free interest rate. We account for forfeitures as they occur by reversing any share-basedcompensation expense related to awards that will not vest.We recorded $101.9 million, $106.2 million and $110.8 million in share-based compensation expense during the twelve months ended December 31,2018, 2017 and 2016, respectively. At December 31, 2018, unrecognized estimated compensation costs related to unvested restricted stock units totaled$126.5 million and are expected to be recognized through 2021.Fair Value of Financial InstrumentsThe authoritative guidance establishes a fair value hierarchy that is based on the extent and level of judgment used to estimate the fair value of assetsand liabilities. In general, the authoritative guidance requires us to maximize the use of observable inputs and minimize the use of unobservable inputs whenmeasuring fair value. An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to themeasurement of its fair value. The three levels of input defined by the authoritative guidance are as follows:Level 1—Unadjusted quoted prices that are available in active markets for identical assets or liabilities.Level 2—Inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly, through correlation with market data.These include quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are notactive; and inputs to valuation models or other pricing64methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated byreadily observable market data for substantially the full term of the assets or liabilities.Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the determination of fair value. Level 3 assetsand liabilities include those whose fair values are determined using pricing models, discounted cash flow methodologies, or similar valuation techniques andsignificant judgment or estimation.We estimate the fair value of most of our cash equivalents using Level 1 inputs. We estimate the fair value of our marketable equity securities usingLevel 1 inputs and we estimate the fair value of our marketable debt securities using Level 2 inputs. We carry our other financial instruments, such as cash,accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities, at cost, which approximates the related fair valuesdue to the short-term maturities of these instruments. See Note 1 and Note 3 to the financial statements in Part II, Item 8 of this Annual Report for moreinformation about fair value measurements.Accounts Receivable and Related Valuation AccountsWe maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Weevaluate the collectability of our accounts receivable based on a combination of factors. We regularly analyze customer accounts, review the length of timereceivables are outstanding, review historical loss rates and assess current economic trends that may impact the level of credit losses in the future. Ourallowance for doubtful accounts has generally been adequate to cover our actual credit losses. However, since we cannot reliably predict future changes inthe financial stability of our customers, we may need to increase our reserves if the financial conditions of our customers deteriorate.Excess and Obsolete InventoryInventory is valued at the lower of cost or net realizable value. We record adjustments to inventory for potentially excess, obsolete, or scrapped goodsin order to state inventory at net realizable value. Factors influencing these adjustments include inventories on hand and on order compared to estimatedfuture usage and sales for existing and new products, as well as judgments regarding quality control testing data and assumptions about the likelihood ofscrap and obsolescence. Historically, our inventory reserves have been adequate to cover our actual losses. However, if actual product life cycles, productquality or market conditions differ from our assumptions, additional inventory adjustments that would increase cost of goods sold could be required.Income TaxesWe estimate our income taxes based on the various jurisdictions where we conduct business. Significant judgment is required in determining ourworldwide income tax provision. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws andregulations and the potential for future adjustment of our uncertain tax positions by the Internal Revenue Service or other taxing jurisdictions. While webelieve we have appropriate support for the positions taken on our tax returns, we regularly assess the potential outcomes of examinations by tax authoritiesin determining the adequacy of our provision for income taxes. We continually assess the likelihood and amount of potential adjustments and adjust theincome tax provision, income taxes payable, and deferred taxes in the period in which the facts that give rise to a revision become known.We use the asset and liability approach to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differencesbetween the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets and liabilities are determined using the enacted tax rates in effectfor the years in which those tax assets are expected to be realized. Significant judgement is required to evaluate the need for a valuation allowance againstdeferred tax assets. We review all available positive and negative evidence, including projections of pre-tax book income, earnings history, and reliability offorecasting. A valuation allowance is established when it is more likely than not that some or all of the deferred tax assets will not be realized. As ofDecember 31, 2018, we have maintained a full valuation allowance on our deferred tax assets since inception based on our historical losses and theuncertainty of generating future taxable income to utilize our loss and credit carryforwards. A future release of our valuation allowance will result in amaterial tax benefit recognized in the quarter of the release.We recognize and measure benefits for uncertain tax positions using a two-step approach. The first step is to evaluate the tax position taken or expectedto be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that the tax position will be sustainedupon audit, including resolution of any related appeals or litigation processes. For tax positions that are more likely than not of being sustained upon audit,the second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. Significant judgment isrequired to evaluate uncertain tax positions and is based upon a number of factors, including changes in facts or circumstances, changes in65tax law, correspondence with tax authorities during the course of audits and effective settlement of audit issues. Changes in the recognition or measurementof uncertain tax positions could result in material increases or decreases in our income tax expense in the period in which we make the change, which couldhave a material impact on our effective tax rate and operating results.Loss ContingenciesWe are subject to certain legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. Wereview the status of each significant matter quarterly and assess our potential financial exposure. If the potential loss from a claim or legal proceeding isconsidered probable and the amount can be reasonably estimated, we record a liability and an expense for the estimated loss and disclose it in our financialstatements if it is significant. If we determine that a loss is possible and the range of the loss can be reasonably determined, we do not record a liability or anexpense but we disclose the range of the possible loss. Significant judgment is required in the determination of whether a potential loss is probable,reasonably possible, or remote as well as in the determination of whether a potential exposure is reasonably estimable. We base our judgments on the bestinformation available at the time. As additional information becomes available, we reassess the potential liability related to our pending claims and litigationand may revise our estimates. Any revision of our estimates of potential liability could have a material impact on our financial position and operating results.Results of OperationsFinancial Overview Twelve Months Ended December 31, 2018 - 2017 2017 - 2016(Dollars in millions)2018 2017 2016 $ Change % Change $ Change % ChangeTotal revenue$1,031.6 $718.5 $573.3 $313.1 44% $145.2 25 %Gross profit663.9 492.1 378.4 $171.8 35% $113.7 30 %Gross profit as a percent of total revenue64% 68% 66% Operating loss(186.3) (42.5) (63.9) $(143.8) 338% $21.4 (33)%Net loss$(127.1) $(50.2) $(65.6) $(76.9) 153% $15.4 (23)%Basic and diluted net loss per share$(1.44) $(0.58) $(0.78) $(0.86) 148% $0.20 (26)%Revenue, Cost of Sales and Gross Profit Twelve Months Ended December 31, 2018 - 2017 2017 - 2016(Dollars in millions)2018 2017 2016 $ Change % Change $ Change % ChangeTotal revenue$1,031.6 $718.5 $573.3 $313.1 44% $145.2 25%Cost of sales367.7 226.4 194.9 141.3 62% 31.5 16%Gross profit$663.9 $492.1 $378.4 $171.8 35% $113.7 30%Gross profit as a percent of total revenue64% 68% 66% We sell our G4 PLATINUM, G5 Mobile and G6 durable CGM systems and disposable sensors through a direct sales force in the United States, Canadaand some countries in Europe, and through distribution arrangements in the United States, Canada, Australia, New Zealand and some countries in Europe,Asia, Latin America, the Middle East and Africa. Most of our distributors stock our products and fulfill orders for our products from their inventory.We expect that revenues we generate from the sales of our products will fluctuate from quarter to quarter. We typically experience seasonality, withlower sales in the first quarter of each year compared to the immediately preceding fourth quarter. This seasonal sales pattern relates to U.S. annual insurancedeductible resets and unfunded flexible spending accounts.Cost of sales includes direct labor and materials costs related to each product sold or produced, including assembly, test labor and scrap, as well asfactory overhead supporting our manufacturing operations. Factory overhead includes facilities, material procurement and control, manufacturingengineering, quality assurance, supervision and management. These costs are primarily salary, fringe benefits, share-based compensation, facility expense,supplies and purchased services. A portion of our costs are currently fixed due to our moderate level of production volumes compared to our potentialcapacity. All of our manufacturing costs are included in cost of sales.662018 Compared to 2017Total revenue increased $313.1 million or 44% for the twelve months ended December 31, 2018 compared to the twelve months ended December 31,2017. The 2018 revenue increase was primarily driven by increased sales volume of our disposable sensors and durable systems due to the continued growthof our installed base of customers, both in the United States and outside the United States. Disposable sensor and other revenue comprised approximately75% of total revenue and durable systems revenue comprised approximately 25% of total revenue for the twelve months ended December 31, 2018.Disposable sensor and other revenue comprised approximately 70% of total revenue and durable systems revenue comprised approximately 30% of totalrevenue for the twelve months ended December 31, 2017. Total distributor revenue for the twelve months ended December 31, 2018 was approximately$652.9 million or 63% of our total revenue, compared to $538.0 million or 75% of our total revenue for the same period in 2017.Cost of sales increased $141.3 million or 62% for the twelve months ended December 31, 2018 compared to the twelve months ended December 31,2017 primarily due to increased sales volume. The gross profit of $663.9 million or 64% of total revenue for the twelve months ended December 31, 2018increased $171.8 million compared to $492.1 million or 68% of total revenue for the same period in 2017. The 2018 increase in gross profit dollars wasdriven primarily by increased revenue and decreased warranty costs, partially offset by a $7.3 million excess and obsolete inventory charge that was relatedto the approval and launch of our G6 system and the continuous improvement and innovation of our products, as well as royalty-related cost of sales charges.The 2018 decrease in gross margin percentage is a function of channel strategy and product mix through our new product launches and internationalexpansion.2017 Compared to 2016Total revenue increased $145.2 million or 25% for the twelve months ended December 31, 2017 compared to the twelve months ended December 31,2016. The 2017 revenue increase was primarily driven by increased sales volume of our disposable sensors due to the continued growth of our installed baseof customers using our durable systems and also by increased sales volume of our durable systems to both new and existing customers. Revenue attributableto our disposable sensors and durable systems was approximately 70% and 30%, respectively, of total revenue for each of the twelve months endedDecember 31, 2017 and 2016. Revenue from products shipped to our distributors for the twelve months ended December 31, 2017 was approximately $538.0million or 75% of our total revenue compared to $411.8 million or 72% of our total revenue for the same period in 2016.Cost of sales increased $31.5 million or 16% for the twelve months ended December 31, 2017 compared to the twelve months ended December 31, 2016primarily due to increased sales volume. The gross profit of $492.1 million or 68% of total revenue for the twelve months ended December 31, 2017increased $113.7 million compared to $378.4 million or 66% of total revenue for the same period in 2016. The increases in gross profit dollars and grossmargin percentage were driven primarily by increased revenue and decreased warranty costs. Warranty costs were lower in 2017 than in 2016 primarily due tothe February 2016 customer notification regarding the audible alarms and alerts associated with our receivers, which was classified as a voluntary Class 1recall by the FDA and was closed by the FDA in August 2017.Operating Expenses Twelve Months Ended December 31, 2018 - 2017 2017 - 2016(Dollars in millions)2018 2017 2016 $ Change % Change $ Change % ChangeResearch and development$199.7 $185.4 $156.1 $14.3 8% $29.3 19%as a % of total revenue19% 26% 27% Collaborative research and development fee217.7 — — 217.7 NM — —%as a % of total revenue21% —% —% Selling, general and administrative432.8 349.2 286.2 83.6 24% 63.0 22%as a % of total revenue42% 48% 50% Total operating expenses$850.2 $534.6 $442.3 $315.6 59% $92.3 21%as a % of total revenue82% 74% 77% NM = Not MeaningfulOur research and development expenses primarily consist of engineering and research expenses related to our continuous glucose monitoringtechnology, clinical trials, regulatory expenses, quality assurance programs, materials and products for67clinical trials. Research and development expenses are primarily related to employee compensation, including salary, fringe benefits, share-basedcompensation, and temporary employee expenses. We also incur significant expenses to operate our clinical trials including clinical site reimbursement,clinical trial product and associated travel expenses. Our research and development expenses also include fees for design services, contractors anddevelopment materials.Our selling, general and administrative expenses primarily consist of salary, fringe benefits and share-based compensation for our executive, financial,sales, marketing, information technology and administrative functions. Other significant expenses include commissions, marketing and advertising, ITsoftware license costs, insurance, professional fees for our outside legal counsel and independent auditors, litigation expenses, patent application expensesand consulting expenses.2018 Compared to 2017Research and Development Expense. Research and development expense increased $14.3 million or 8% for the twelve months ended December 31,2018 compared to the same period of 2017. The increase was primarily due to $15.4 million in additional salaries, bonus and payroll-related costs, $4.6million in additional facilities costs, and $2.9 million in additional software license costs, partially offset by $4.6 million in lower stock compensation costs,$4.0 million in lower expensed equipment costs, and a $2.5 million reduction in supplies costs.Collaborative Research and Development Fee. We and Verily Life Sciences LLC (an Alphabet Company) (“Verily”) have been jointly developingcertain next-generation CGM products since August 2015. In November 2018, we entered into an amended and restated collaboration and license agreementwith Verily. Under the terms of that agreement, we made an initial payment of $250.0 million through the issuance of 1,840,943 shares of our common stock.We recorded a $217.7 million collaborative research and development charge in our statement of operations during 2018 relating to the issuance of thiscommon stock. See Note 2 to the financial statements in Part II, Item 8 of this Annual Report for more information about this collaboration agreement.Selling, General and Administrative Expense. Selling, general and administrative expense increased $83.6 million or 24% for the twelve months endedDecember 31, 2018 compared to the same period of 2017. The increase was primarily due to higher sales-related costs that were driven by increasedheadcount and marketing costs to support revenue growth and the continued commercialization of our products in both the United States and Europe.Significant elements of the increase in selling, general, and administrative expenses included $19.9 million in additional salaries, bonus and payroll-relatedcosts, $12.3 million in additional consulting fees, $9.2 million in additional incentive compensation paid to our sales personnel, $8.6 million in additionaltemporary labor costs, $8.2 million in additional marketing costs, $5.4 million in additional legal fees, and $4.4 million in additional software license costs.2017 Compared to 2016Research and Development Expense. Research and development expense increased $29.3 million or 19% for the twelve months ended December 31,2017 compared to the same period of 2016. The increase was primarily due to $18.3 million in additional salaries, bonus and payroll-related costs, $8.4million in additional expensed equipment, and $2.4 million of additional clinical trial costs related to development of our future products.Selling, General and Administrative Expense. Selling, general and administrative expense increased $63.0 million or 22% for the twelve months endedDecember 31, 2017 compared to the same period of 2016. The increase was primarily due to higher headcount-related selling, marketing and customersupport costs to support revenue growth and the continued commercialization of our products. Significant elements of the increase in selling, general, andadministrative expenses included $37.8 million in additional salaries, bonus, and payroll-related costs, $10.6 million in additional marketing costs, and $4.4million in additional software license costs.Non-Operating Income and ExpensesInterest ExpenseInterest expense is $22.7 million for the twelve months ended December 31, 2018 compared to $12.8 million for the same period of 2017 and is relatedto our 2022 Notes, 2023 Notes and Revolving Credit Agreement. The 2018 increase is primarily due to an additional $6.9 million of interest expense for the2022 Notes, which were issued in May and June 2017, and $3.3 million of interest expense for the 2023 Notes, which were issued in November 2018.Interest expense is $12.8 million for the twelve months ended December 31, 2017 compared to $0.7 million for the same period of 2016 and is related toour 2022 Notes and Revolving Credit Agreement. The 2017 increase is primarily due to an additional $11.1 million of interest expense for the 2022 Notes.68Income from Equity InvestmentsIncome from equity investments of $80.1 million for the twelve months ended December 31, 2018 consists solely of realized gains of $44.1 million andunrealized gains of $36.0 million on our equity investment in Tandem Diabetes Care, Inc.Interest and Other Income (Expense), NetInterest income is $10.5 million, $3.3 million and $0.4 million for the twelve months ended December 31, 2018, 2017 and 2016, respectively, and isrelated to our marketable debt securities portfolio. Average interest rates and average invested balances both increased during 2018 compared to 2017 andduring 2017 compared to 2016.Other income (expense) for the twelve months ended December 31, 2018, 2017 and 2016 consists primarily of foreign currency transaction gains andlosses due to the effects of foreign currency fluctuations.Income Tax ExpenseWe recorded pre-tax losses in the each of the twelve months ended December 31, 2018, 2017 and 2016. The nominal income tax expense we recordedfor 2018 is primarily attributable to state and foreign income tax expense, partially offset by the release of a valuation allowance related to acquiredintangible assets for which we have no tax basis. The nominal income tax expense we recorded for 2017 and 2016 is primarily due to withholding and otherincome tax expenses in profitable jurisdictions.Liquidity and Capital ResourcesOverview, Capital Resources, and Capital RequirementsOur principal sources of liquidity are our existing cash, cash equivalents and marketable securities, cash generated from operations, proceeds from ourconvertible notes issuances, and access to our revolving line of credit. Our primary uses of cash have been for research and development programs, sellingand marketing activities, capital expenditures, acquisitions of businesses, and debt service costs.We expect that cash provided by our operations may fluctuate in future periods as a result of a number of factors, including fluctuations in our operatingresults, working capital requirements and capital deployment decisions. We have historically invested our cash primarily in U.S. dollar-denominated,investment grade, highly liquid obligations of U.S. government-sponsored enterprises, commercial paper, corporate debt, and money market funds. Certain ofthese investments are subject to general credit, liquidity and other market risks. The general condition of the financial markets and the economy may increasethose risks and may affect the value and liquidity of investments and restrict our ability to access the capital markets.Our future capital requirements will depend on many factors, including but not limited to:•the revenue generated by sales of our approved products and other future products;•the expenses we incur in manufacturing, developing, selling and marketing our products;•the quality levels of our products and services;•the third-party reimbursement of our products for our customers;•our ability to efficiently scale our operations to meet demand for our current and any future products;•the costs, timing and risks of delays of additional regulatory approvals;•the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;•the rate of progress and cost of our clinical trials and other development activities;•the success of our research and development efforts;•the emergence of competing or complementary technological developments;•the terms and timing of any collaborative, licensing and other arrangements that we may establish;•the acquisition of businesses, products and technologies and our ability to integrate and manage any acquired businesses, products andtechnologies; and•the evolution of the international expansion of our business.We expect that existing cash and cash flows from our future operations will generally be sufficient to fund our ongoing core business. As currentborrowing sources become due, we may be required to access the capital markets for additional funding. As we assess inorganic growth strategies, we mayneed to supplement our internally generated cash flow with outside69sources. In the event that we are required to access the debt market, we believe that we will be able to secure reasonable borrowing rates. As part of ourliquidity strategy, we will continue to monitor our current level of earnings and cash flow generation as well as our ability to access the market in light ofthose earning levels.A substantial portion of our operations are located in the United States, and the majority of our sales since inception have been made in U.S. dollars.Accordingly, our assessment is that we have no material net exposure to foreign currency exchange rate fluctuations at this time. However, as our business inmarkets outside of the United States continues to increase, we will be exposed to foreign currency exchange risk related to our foreign operations.Fluctuations in the rate of exchange between the U.S. dollar and foreign currencies, primarily the British Pound, the Euro, and the Canadian Dollar, couldadversely affect our financial results, including our revenues, revenue growth rates, gross margins, income and losses as well as assets and liabilities. Wecurrently engage in limited hedging transactions to reduce foreign currency risks on certain intercompany balances. We will continue to monitor and manageour financial exposures due to exchange rate fluctuations as an integral part of our overall risk management program. As of December 31, 2018, the cashbalance held by our foreign subsidiaries with currencies other than the U.S. dollar was approximately $18.0 million. We intend to reinvest a substantialportion of our foreign earnings in those businesses, and we currently do not anticipate that we will need funds generated by foreign operations to fund ourdomestic operations.As of December 31, 2018, our cash, cash equivalents and marketable securities totaled $1.386 billion, an increase of $837.0 million from December 31,2017 due to the factors described in “Cash Flows” below. We believe that our cash, cash equivalents, and marketable securities balances, projected cashcontributions from our commercial operations, and our $200.0 million revolving line of credit, of which $195.6 million remains available, will be sufficientto meet our anticipated seasonal working capital needs, capital expenditure requirements, contractual obligations, commitments, debt service requirements,and other liquidity requirements associated with our operations for at least the next 12 months.Revolving Credit AgreementIn December 2018, we entered into an amended and restated five-year $200.0 million revolving Credit Agreement, including a sub-facility of up to$10.0 million for letters of credit. Subject to customary conditions and the approval of any lender whose commitment would be increased, we have the optionto increase the maximum principal amount available under the Credit Agreement by up to an additional $300.0 million, resulting in a maximum availableprincipal amount of $500.0 million. However, at this time none of the lenders have committed to provide any such increase in their commitments. Revolvingloans under the Credit Agreement will be available for general corporate purposes, including working capital and capital expenditures. In March 2017, wedrew $75.0 million on the Credit Agreement under a six-month term and we repaid the entire principal balance in May 2017. As of December 31, 2018, wehad no outstanding borrowings, $4.4 million in outstanding letters of credit, and a total available balance of $195.6 million under the Credit Agreement. Wemonitor counterparty risk associated with the institutional lenders that are providing the credit facility. We currently believe that the credit facility will beavailable to us should we choose to borrow under it.See Note 5 to the financial statements in Part II, Item 8 of this Annual Report for more information about the terms of the Credit Agreement.Senior Convertible NotesIn June 2017, we completed an offering of $400.0 million aggregate principal amount of unsecured senior convertible notes with a stated interest rate of0.75% and a maturity date of May 15, 2022 (the 2022 Notes). Holders may elect to convert the 2022 Notes any time after February 15, 2022 for shares of ourcommon stock. The 2022 Notes may be settled in cash, stock, or a combination thereof, solely at our discretion. Interest on the 2022 Notes began accruingupon issuance and payable semi-annually on May 15 and November 15 of each year.In November 2018, we completed an offering of $850.0 million aggregate principal amount of unsecured senior convertible notes with a stated interestrate of 0.75% and a maturity date of December 1, 2023 (the 2023 Notes). Holders may elect to convert the 2023 Notes any time after September 1, 2023 forshares of our common stock. The 2023 Notes may be settled in cash, stock, or a combination thereof, solely at out discretion. Interest on the 2023 Notesbegan accruing upon issuance and payable semi-annually on June 1 and December 1 of each year.We used a portion of the net proceeds from the offering of the 2022 Notes to repay $75.0 million of borrowings under our existing credit facility in2017. We used a portion of the net proceeds from the offering of the 2023 Notes to repurchase 0.8 million shares of our common stock for $100.0 million in2018. The remainder of the net proceeds from the 2022 Notes and the 2023 Notes offerings are available for general corporate purposes and capitalexpenditures, including working capital needs. We may also use the net proceeds to expand our current business through in-licensing or acquisitions of, orinvestments in, other businesses, products or technologies; however, we do not have any significant commitments with respect to any such acquisitions orinvestments at this time.702023 Note HedgeIn connection with the offering of the 2023 Notes, in November 2018 we entered into convertible note hedge transactions (the 2023 Note Hedge) withtwo of the initial purchasers of the 2023 Notes (the 2023 Counterparties) entitling us to purchase up to 5.2 million shares of our common stock at an initialprice of $164.29 per share, each of which is subject to adjustment. The cost of the 2023 Note Hedge was $218.9 million and it will expire on December 1,2023. The 2023 Note Hedge is expected to reduce the potential equity dilution upon any conversion of the 2023 Notes and/or offset any cash payments weare required to make in excess of the principal amount of converted 2023 Notes if the daily volume-weighted average price per share of our common stockexceeds the strike price of the 2023 Note Hedge. The strike price of the 2023 Note Hedge initially corresponds to the conversion price of the 2023 Notes andis subject to certain adjustments under the terms of the 2023 Note Hedge.2023 WarrantsIn November 2018, we also sold warrants (the 2023 Warrants) to the 2023 Counterparties to acquire up to 5.2 million shares of our common stock forcash proceeds of $183.8 million. The 2023 Warrants require net share settlement and a pro-rated number of warrants will expire on each of the 60 scheduledtrading days starting on March 1, 2024.See Note 5 to the financial statements in Part II, Item 8 of this Annual Report for more information about the 2022 Notes and the 2023 Notes, the 2023Note Hedge, and the 2023 Warrants.Cash FlowsThe following table sets forth a summary of our cash flows for the periods indicated. See the financial statements in Part II, Item 8 of this Annual Reportfor complete statements of cash flows for these periods. Twelve Months Ended December 31, Change(In millions)2018 2017 2016 2018-2017 2017-2016Net cash provided by operating activities$123.2 $92.0 $56.2 $31.2 $35.8Net cash used in investing activities(139.8) (144.4) (55.9) 4.6 (88.5)Net cash provided by financing activities710.4 399.1 8.1 311.3 391.0Effect of exchange rates on cash, cash equivalents, andrestricted cash1.8 0.3 — 1.5 0.3Net increase in cash, cash equivalents, and restricted cash$695.6 $347.0 $8.4 $348.6 $338.6As of December 31, 2018, we had $1.386 billion in cash, cash equivalents and short-term marketable securities, which is an increase of $837.0 millioncompared to $548.6 million as of December 31, 2017. The primary cash flows during the twelve months ended December 31, 2018, 2017 and 2016 aredescribed below.Operating Cash FlowsNet cash provided by operating activities during 2018 was comprised of a net loss of $127.1 million and changes in working capital balances of $40.9million, offset by $291.2 million of net non-cash expenses. Net non-cash expenses were primarily related to a $217.7 million non-cash collaborative researchand development fee, share-based compensation, depreciation and amortization, non-cash interest expense for our senior convertible notes, and realized andunrealized gains on our equity investment in Tandem Diabetes Care, Inc.Net cash provided by operating activities during 2017 was comprised of a net loss of $50.2 million, offset by $139.6 million of net non-cash expensesand $2.6 million of changes in working capital balances. Net non-cash expenses were primarily related to share-based compensation, depreciation andamortization, and non-cash interest expense for our senior convertible notes.Net cash provided by operating activities during 2016 was comprised of a net loss of $65.6 million and changes in working capital balances of $6.3million, offset by $128.1 million of net non-cash expenses. Net non-cash expenses were primarily related to share-based compensation and depreciation andamortization.Investing Cash FlowsNet cash used in investing activities during 2018 was primarily comprised of $61.4 million for net purchases of marketable securities and $67.1 millionfor capital expenditures.71Net cash used in investing activities during 2017 was primarily comprised of $78.4 million for net purchases of marketable securities and $66.0 millionfor capital expenditures.Net cash used in investing activities during 2016 was primarily comprised of $55.7 million for capital expenditures.Financing Cash FlowsNet cash provided by financing activities during 2018 was primarily comprised of $836.6 million in net proceeds from the issuance of our 2023 Notesand $183.8 million in proceeds from the sale of the 2023 Warrants, partially offset by $218.9 million for the purchase of the 2023 Note Hedge and $100.0million for the purchase of treasury shares.Net cash provided by financing activities during 2017 was primarily comprised of $389.0 million in net proceeds from the issuance of our 2022 Notes.Net cash provided by financing activities during 2016 was primarily comprised of $10.4 million from the issuance of common stock under ouremployee stock plans.Contractual ObligationsWe are party to various leasing arrangements, primarily for office, manufacturing and warehouse space that expire at various times through March 2028.The following table summarizes our outstanding contractual obligations as of December 31, 2018 and the effect those obligations are expected to haveon our liquidity and cash flows in future periods: (In millions) Total(3) Lessthan1 Year(3) 1-3Years 3-5Years(1) Morethan5 YearsSenior convertible notes (1) $1,292.4 $9.4 $18.8 $1,264.2 $—Lease obligations (2) 68.8 14.4 34.2 11.3 8.9Total $1,361.2 $23.8 $53.0 $1,275.5 $8.9(1)We issued senior convertible notes in May and June 2017 that are due in May 2022 and we issued senior convertible notes in November 2018 that are due in December 2023.The obligations presented above include both principal and interest for these notes. Although these notes mature in 2022 and 2023, they may be converted into cash and sharesof our common stock prior to maturity if certain conditions are met. Any conversion prior to maturity can result in repayment of the principal amounts sooner than thescheduled repayment as indicated in the table. See Note 5 to the financial statements in Part II, Item 8 of this Annual Report for further discussion of the terms of our seniorconvertible notes.(2)Includes a financing lease obligation related to our Mesa, Arizona facility. See Note 6 to the financial statements in Part II, Item 8 of this Annual Report for more information.(3)We are also party to various purchase arrangements related to components used in manufacturing and research and development activities. As of December 31, 2018, we hadfirm purchase commitments with vendors totaling approximately $204.0 million, most of which are due within one year. Firm purchase commitments represent agreements topurchase products and services that are enforceable, legally binding and specify terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variableprice provisions; and the approximate timing of the payments.Off-Balance Sheet ArrangementsAs of December 31, 2018, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.Recent Accounting GuidanceFor a description of recently issued accounting guidance that is applicable to our financial statements, see Note 1 to the financial statements in Part II, Item 8of this Annual Report.72ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKInterest Rate RiskThe primary objective of our investment activities is to preserve our capital for the purpose of funding operations while at the same time maximizingthe income we receive from our investments without significantly increasing risk. To achieve these objectives, our investment policy allows us to maintain aportfolio of cash equivalents and short-term investments in a variety of securities, including money market funds, U.S. Treasury debt and corporate debtsecurities. Due to the short-term nature of our investments, we believe that we have no material exposure to interest rate risk.Market Price Sensitive InstrumentsIn order to reduce potential equity dilution, in connection with the issuance of the 2023 Notes we entered into the 2023 Hedge which entitles us topurchase shares of our common stock. Upon conversion of the 2023 Notes, the 2023 Hedge is expected to reduce the equity dilution if the daily volume-weighted average price per share of our common stock exceeds the strike price of the hedge. We also entered into warrant transactions with the counterpartiesof the 2023 Hedge entitling them to acquire shares of our common stock. The warrant transactions could have a dilutive effect on our earnings per share tothe extent that the price of our common stock during a given quarterly or annual measurement period exceeds the strike price of the warrants. See Note 5 tothe financial statements in Part II, Item 8 of this Annual Report for more information.Foreign Currency Exchange RiskA substantial portion of our operations are located in the United States, and the majority of our sales since inception have been made in U.S. dollars.Accordingly, our assessment is that we have no material net exposure to foreign currency exchange rate fluctuations at this time. However, as our business inmarkets outside of the United States continues to increase, we will be exposed to foreign currency exchange risk related to our foreign operations.Fluctuations in the rate of exchange between the U.S. dollar and foreign currencies, primarily the British Pound, the Euro, and the Canadian Dollar, couldadversely affect our financial results, including our revenues, revenue growth rates, gross margins, income and losses as well as assets and liabilities.We translate the financial statements of our foreign subsidiaries with functional currencies other than the U.S. dollar into the U.S. dollar forconsolidation using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations.We record net gains or losses resulting from the translation of foreign financial statements and the effect of exchange rate changes on intercompanyreceivables and payables of a long-term nature as a separate component of stockholders’ equity. These adjustments will affect net income only upon sale orliquidation of the underlying investment in foreign subsidiaries.We record exchange rate fluctuations resulting from the translation of the short-term intercompany balances between domestic entities and our foreignsubsidiaries as foreign currency transaction gains or losses and include them in interest and other income (expense), net in our statement of operations. Weenter into foreign currency forward contracts for certain intercompany balances in order to partially offset the impact from fluctuation of the foreign currencyrates.As of December 31, 2018, a notional amount of $60.0 million was outstanding to hedge currency risk relating to certain intercompany balances.Derivative instrument gains on forward exchange contracts were $0.4 million for the twelve months ended December 31, 2018 and are included in interestand other income (expense), net in our statement of operations. The fair value of the forward contract exchange derivative instrument liability was $0.2million as of December 31, 2018. We record derivative instruments in other current assets or other current liabilities in our balance sheets consistent with thenature of the instrument at period end. We entered into no foreign currency forward contracts during 2017 or 2016.Notional principal amounts provide one measure of the transaction volume outstanding as of period end, but they do not represent the amount of ourexposure to market loss. Estimates of fair value are based on applicable and commonly used pricing models using prevailing financial market information.The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will dependon actual market conditions during the remaining life of the instruments. We monitor and manage our financial exposures due to exchange rate fluctuationsas an integral part of our overall risk management program, which recognizes the unpredictability of financial markets and seeks to reduce potentiallyadverse effects on our financial results.73ITEM 8.CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAThe information required is set forth under “Report of Independent Registered Public Accounting Firm,” “Consolidated Balance Sheets,”“Consolidated Statements of Operations,” “Consolidated Statements of Comprehensive Loss,” “Consolidated Statements of Stockholders’ Equity,”“Consolidated Statements of Cash Flows” and “Notes to Consolidated Financial Statements” on pages F-2 to F-37 of this Annual Report.ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENot applicable.ITEM 9A.CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresRegulations under the Securities Exchange Act of 1934 require public companies to maintain “disclosure controls and procedures,” which are definedto mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submitsunder the Securities Exchange Act of 1934 is accumulated and timely communicated to management, including our Chief Executive Officer and ChiefFinancial Officer, recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules andforms. Our management, including our Chief Executive Officer and our Chief Financial Officer, conducted an evaluation as of the end of the period coveredby this report of the effectiveness of our disclosure controls and procedures. Based on their evaluation as of December 31, 2018, our Chief Executive Officerand our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date for this purpose.Changes in Internal Control over Financial ReportingThere were no changes in our internal control over financial reporting during our last fiscal quarter that have materially affected, or are reasonablylikely to materially affect our internal control over financial reporting.Management’s Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) underthe Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance to our management and Boardof Directors regarding the preparation and fair presentation of published financial statements.Our management, with the participation of the Chief Executive and Chief Financial Officers, assessed the effectiveness of our internal control overfinancial reporting as of December 31, 2018. In making this assessment, our management used the criteria set forth by the 2013 Committee of SponsoringOrganizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on this assessment, our management, with theparticipation of the Chief Executive and Chief Financial Officers, believes that, as of December 31, 2018, our internal control over financial reporting iseffective based on those criteria. The effectiveness of our internal control over financial reporting as of December 31, 2018 has been audited by Ernst &Young LLP an Independent Public Registered Accounting Firm, as stated in their report which is included herein.The certifications of our Chief Executive Officer and Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act have been filed asExhibits 31.01 and 31.02 to this report.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systemsdetermined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.Limitation on Effectiveness of ControlsIt should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that theobjectives of the system are met. The design of any control system is based, in part, upon the benefits of the control system relative to its costs. Controlsystems can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Inaddition, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures maydeteriorate. Because of these and other inherent limitations of control systems, we cannot guaranty that any design will succeed in achieving its stated goalsunder all potential future conditions, regardless of how remote.74REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and Stockholders of DexCom, Inc.Opinion on Internal Control over Financial ReportingWe have audited DexCom, Inc.’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria). In ouropinion, DexCom, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, basedon the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedbalance sheets of DexCom, Inc. as of December 31, 2018 and 2017, the related consolidated statements of operations, comprehensive loss, stockholders’equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedule listed in theIndex at Item 15(a) and our report dated February 21, 2019 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing andevaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ Ernst & Young LLPSan Diego, CaliforniaFebruary 21, 201975ITEM 9B.OTHER INFORMATIONNone.PART IIIITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information concerning our directors required by this Item is incorporated by reference to the section in our Proxy Statement entitled “ProposalNo. 1 – Election of Directors.”The information concerning our executive officers required by this Item is incorporated by reference to the section in our Proxy Statement entitled“Executive Officers.”The information concerning compliance with Section 16(a) of the Securities Exchange Act of 1934 required by this Item is incorporated by reference tothe section in our Proxy Statement entitled “Section 16(a) Beneficial Ownership Reporting Compliance.”We have adopted a written code of ethics for financial employees that applies to our principal executive officer, principal financial officer, principalaccounting officer, controller and other employees of the finance department designated by our Chief Financial Officer. This code of ethics, titled the “Codeof Conduct and Ethics for Chief Executive Officer and Senior Finance Personnel,” is publicly available on our Internet website at https://dexcom.gcs-web.com/corporate-governance. The information contained on our Internet website is not incorporated by reference into this Annual Report on Form 10-K.The information concerning the audit committee of the Board of Directors required by this Item is incorporated by reference to information set forth inthe Proxy Statement.The information concerning material changes to the procedures by which stockholders may recommend nominees to the Board of Directors required bythis Item is incorporated by reference to information set forth in the Proxy Statement.ITEM 11.EXECUTIVE COMPENSATIONThe information required by this Item concerning executive compensation and our Compensation Committee is incorporated by reference toinformation set forth in the Proxy Statement under the heading “Executive Compensation.”ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERSThe information required by this Item is incorporated by reference to information set forth in the Proxy Statement under the headings “PrincipalStockholders and Stock Ownership by Management” and “Equity Compensation Plan Information.”ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information required by this Item with respect to director independence is incorporated by reference to information set forth in the ProxyStatement.The information concerning certain relationships and related transactions required by the Item is incorporated by reference to the section in our ProxyStatement entitled “Certain Transactions.”ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICESThe information concerning principal accountant fees and services required by this Item is incorporated by reference to the section in our ProxyStatement entitled “Ratification of Selection of Independent Registered Public Accounting Firm.”76PART IVITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES(a)The following documents are filed as part of this Annual Report:1. Financial Statements.The financial statements listed in Part II, Item 8 of this Annual Report.2. Financial Statement Schedules.For the three fiscal years ended December 31, 2018, Schedule II – Valuation and Qualifying Accounts.Financial statement schedules not listed above have been omitted because information required to be set forth therein is not applicable, not required,or the information required by such schedules is shown in the financial statements or the notes thereto.3. Exhibits.ExhibitNumber Exhibit Description Incorporated by Reference ProvidedHerewith Form File No. Date ofFirst Filing ExhibitNumber 3.01 Registrant’s Restated Certificate of Incorporation. S-1/A 333-122454 March 3, 2005 3.03 3.02 Registrant’s Amended and Restated Bylaws. 8-K 000-51222 November 25, 2014 3.01 4.01 Form of Specimen Certificate for Registrant’scommon stock. S-1/A 333-122454 March 24, 2005 4.01 4.02 Indenture, dated as of May 12, 2017, betweenDexCom, Inc. and U.S. Bank National Association(including the form of 0.75% Convertible SeniorNotes due 2022) 8-K 000-51222 May 12, 2017 4.1 4.03 Indenture, dated as of November 30, 2019, betweenDexCom, Inc. and U.S. Bank National Association(including the form of 0.75% Convertible SeniorNotes due 2023) 8-K 000-51222 December 3, 2018 4.1 10.01 Form of Indemnity Agreement between Registrantand each of its directors and executive officers. S-1 333-122454 February 1, 2005 10.01 10.03 2005 Equity Incentive Plan and forms of stock optionagreement and stock option exercise agreements.* S-1/A 000-51222 March 24, 2005 10.03 10.04 2005 Employee Stock Purchase Plan and form ofsubscription agreement.* S-1/A 000-51222 March 24, 2005 10.04 10.05 Offer letter between DexCom, Inc. and Jorge Valdesdated October 16, 2005.* 10-K 000-51222 February 27, 2006 10.14 10.06 Office Lease Agreement, dated March 31, 2006,between DexCom, Inc. and Kilroy Realty, L.P. 8-K 000-51222 April 7, 2006 99.01 77ExhibitNumber Exhibit Description Incorporated by Reference ProvidedHerewith Form File No. Date ofFirst Filing ExhibitNumber 10.07 Offer letter between DexCom, Inc. and Steven R.Pacelli dated April 10, 2006.* 8-K 000-51222 April 13, 2006 99.01 10.09 Amended and Restated Joint DevelopmentAgreement, dated January 12, 2009, betweenDexCom, Inc. and Animas Corporation.** 8-K/A 000-51222 January 28, 2009 10.1 10.10 OUS Commercialization Agreement, dated January12, 2009, between DexCom, Inc. and AnimasCorporation.** 8-K/A 000-51222 January 28, 2009 10.2 10.11 Form of Amended and Restated Executive Change ofControl & Severance Agreement.* 10-K 000-51222 March 5, 2009 10.20 10.12 Amended and Restated Offer Letter Agreement datedDecember 19, 2008 between DexCom, Inc. andTerrance H. Gregg.* 10-K 000-51222 March 5, 2009 10.21 10.14 Non-Exclusive Distribution Agreement, betweenRGH Enterprises, Inc. and DexCom, Inc., dated April30, 2008.** 10-Q 000-51222 August 3, 2009 10.23 10.15 Letter of Amendment of the Amended and RestatedJoint Development Agreement, between AnimasCorporation and DexCom, Inc., dated July 30,2009.** 10-Q 000-51222 November 4, 2009 10.24 10.16 Amendment No. 1 to the CommercializationAgreements, between Animas Corporation andDexCom, Inc., dated July 30, 2009.** 10-Q 000-51222 November 4, 2009 10.25 10.17 Amended and Restated Development, Manufacturing,Licensing and Supply Agreement, between DSMPTG, Inc. and DexCom, Inc., dated February 19,2010.** 10-K 000-51222 March 9, 2010 10.25 10.18 Form of Restricted Stock Unit Award Agreement. 10-Q 000-51222 May 5, 2010 10.26 10.19 First Amendment to Office Lease between DexCom,Inc. and Kilroy Realty, L.P., dated August 18, 2010. 10-Q 000-51222 November 4, 2010 10.27 10.20 2005 Equity Incentive Plan, as amended.* 10-Q 000-51222 May 3, 2011 10.25 10.21 Amendment Number One to Non-ExclusiveDistribution Agreement, between RGH Enterprises,Inc. and DexCom, Inc., dated March 29, 2011.** 10-Q/A 000-51222 July 1, 2011 10.26 10.22 Amendment No. 2 to the OUS CommercializationAgreement, between Animas Corporation andDexCom, Inc., dated June 7, 2011.** 10-Q 000-51222 August 3, 2011 10.27 78ExhibitNumber Exhibit Description Incorporated by Reference ProvidedHerewith Form File No. Date ofFirst Filing ExhibitNumber 10.23 Offer letter between DexCom, Inc. and Kevin Sayerdated May 3, 2011.* 10-Q 000-51222 August 3, 2011 10.28 10.24 Research and Development Agreement, betweenRoche Diagnostics Operations, Inc. and DexCom, Inc.dated November 1, 2011.** 10-K 000-51222 February 23, 2012 10.26 10.25 Loan and Security Agreement by and among SiliconValley Bank, Oxford Finance LLC, DexCom, Inc. andSweetSpot Diabetes Care, Inc. dated November 1,2012. 10-K 000-51222 February 21, 2013 10.26 10.26 Amendment Number Two to Non-ExclusiveDistribution Agreement between RGH Enterprises,Inc. and DexCom, Inc., dated March 28, 2013.** 10-Q 000-51222 May 1, 2013 10.27 10.27 Amendment Number Three to Non-ExclusiveDistribution Agreement between RGH Enterprises,Inc. and DexCom, Inc., dated December 4, 2013.** 10-K 000-51222 February 20, 2014 10.28 10.28 Non-Exclusive Distribution Agreement betweenDexcom, Inc. and Diabetes Specialty Center, LLCdated October 12, 2009, as amended on September30, 2010, October 11, 2011, November 14, 2012 andNovember 1, 2013.** 10-K 000-51222 February 20, 2014 10.29 10.29 First Amendment to Loan and Security Agreement byand among Silicon Valley Bank, Oxford FinanceLLC, DexCom, Inc. and SweetSpot Diabetes Care,Inc. dated August 6, 2013. 10-Q 000-51222 May 1, 2014 10.30 10.30 Settlement and License Agreement by and amongAbbott Diabetes Care, Inc. and DexCom, Inc., datedJuly 2, 2014. 10-Q 000-51222 August 6, 2014 10.31 10.31 Amendment No. 5 to Non-Exclusive DistributionAgreement between DexCom, Inc. and DiabetesSpecialty Center, LLC, dated March 14, 2014. 10-Q 000-51222 August 6, 2014 10.32 10.32 Second Amendment to Office Lease betweenDexCom, Inc. and Kilroy Realty, L.P., dated October1, 2014. 10-K 000-51222 February 25, 2015 10.32 10.33 2015 Employee Stock Purchase Plan DEF 14A 000-51222 April 13, 2015 AppendixA 10.34 Form of Subscription Agreement under 2015Employee Stock Purchase Plan 8-K 000-51222 June 2, 2015 10.2 10.35 Collaboration and License Agreement betweenDexCom Inc., and Google Life Sciences, LLC datedAugust 10, 2015** 10-Q 000-51222 November 4, 2015 10.32 79ExhibitNumber Exhibit Description Incorporated by Reference ProvidedHerewith Form File No. Date ofFirst Filing ExhibitNumber 10.36 Sublease between DexCom, Inc. and EntropicCommunications, LLC dated February 1, 2016. 10-Q 000-51222 April 27, 2016 10.36 10.37 Amended and Restated Non-Exclusive DistributionAgreement with Byram Healthcare dated February 1,2016.** 10-Q 000-51222 April 27, 2016 10.37 10.38 Credit Agreement dated June 17, 2016 by and amongDexCom, Inc., the Lenders, and JPMorgan ChaseBank, as Administrative Agent.** 10-Q 000-51222 August 2, 2016 10.38 10.39 Industrial Net Lease, Broadway dated April 28, 2016,by and between PRA/LB, L.L.C. and DexCom, Inc. 10-Q 000-51222 August 2, 2016 10.39 10.40 Standard Form of Agreement dated May 2, 2016, byand between DexCom, Inc. and Skanska USABuilding Inc 10-Q 000-51222 August 2, 2016 10.40 10.41 Amendment to Non-Exclusive DistributionAgreement dated April 30, 2016 by and betweenRGH Enterprises, Inc. d/b/a Cardinal Health at Homeand DexCom, Inc. ** 10-Q 000-51222 August 2, 2016 10.41 10.42 Amendment No. 1 to Collaboration and LicenseAgreement dated October 25, 2016 by and betweenDexCom, Inc. and Verily Life Sciences LLC (formerlyGoogle Life Sciences LLC) 10-K 000-51222 February 28, 2017 10.42 10.44 Severance and Change in Control Plan 8-K 000-51222 June 6, 2017 10.20 10.45 Form of Participation Agreement to the Severanceand Change in Control Plan 8-K 000-51222 June 6, 2017 10.30 10.46 Amended and Restated 2015 Equity Incentive Plan,as amended 10-Q 000-51222 August 1, 2017 10.42 10.47 First Amendment to Credit Agreement dated June 17,2016 by and among DexCom, Inc., the Lenders, andJPMorgan Chase Bank, as Administrative Agent. 10-Q 000-51222 August 1, 2017 10.46 10.48 Standard Form of Agreement dated May 1, 2017, byand between DexCom, Inc. and Skanska USABuilding Inc. 10-Q 000-51222 August 1, 2017 10.47 10.49 Offer Letter for Quentin S. Blackford dated July 28,2017. * 8-K 000-51222 August 1, 2017 10.10 10.50 Form of Indemnity Agreement 10-Q 000-51222 August 1, 2017 10.43 10.51 Form of RSU Grant Agreement 2015 Plan GlobalDouble Trigger 10-K 000-51222 February 27, 2018 10.51 80ExhibitNumber Exhibit Description Incorporated by Reference ProvidedHerewith Form File No. Date ofFirst Filing ExhibitNumber 10.52 Form of RSU Grant Agreement 2015 Plan GlobalGeneral 10-K 000-51222 February 27, 2018 10.52 10.53 Form of RSU Grant Agreement 2015 Plan GlobalSingle Trigger 10-K 000-51222 February 27, 2018 10.53 10.54 Form of RSU Grant Agreement 2015 Plan Global 10-K 000-51222 February 27, 2018 10.54 10.55 Form of RSU Grant Agreement 2015 Plan (Associates,Engineers, Managers, & Sr. Managers) 10-K 000-51222 February 27, 2018 10.55 10.56 Form of RSU Grant Agreement 2015 Plan (BoardMembers - Annual Grant) 10-K 000-51222 February 27, 2018 10.56 10.57 Form of RSU Grant Agreement 2015 Plan (BoardMembers - Incoming Grant) 10-K 000-51222 February 27, 2018 10.57 10.58 Form of RSU Grant Agreement 2015 Plan (DirectorLevel Employees) 10-K 000-51222 February 27, 2018 10.58 10.59 Form of RSU Grant Agreement 2015 Plan (VP’s andabove) 10-K 000-51222 February 27, 2018 10.59 10.60 Amended and Restated Collaboration and LicenseAgreement dated November 20, 2018 by and betweenDexCom, Inc., Verily Life Sciences LLC (an AlphabetCompany) and Verily Ireland Limited** X 10.61 Amended and Restated Credit Agreement datedDecember 19, 2018 by and among DexCom, Inc.,Bank of America, Silicon Valley Bank and UnionBank, and JPMorgan Chase Bank, as AdministrativeAgent X 21.01 List of Subsidiaries X 23.01 Consent of Independent Registered PublicAccounting Firm X 24.01 Power of Attorney (see signature page of this Form10-K) X 31.01 Certification of Chief Executive Officer Pursuant toSecurities Exchange Act Rule 13a-14(a) X 31.02 Certification of Chief Financial Officer Pursuant toSecurities Exchange Act Rule 13a-14(a) X 32.01 Certification of Chief Executive Officer Pursuant to18 U.S.C. Section 1350 and Securities Exchange ActRule 13a-14(b).*** X 81ExhibitNumber Exhibit Description Incorporated by Reference ProvidedHerewith Form File No. Date ofFirst Filing ExhibitNumber 32.02 Certification of Chief Financial Officer Pursuant to18 U.S.C. Section 1350 and Securities ExchangeAct Rule 13a-14(b)*** X 101.INS XBRL Instance Document X 101.SCH XBRL Taxonomy Extension Schema Document X 101.CAL XBRL Taxonomy Extension Calculation LinkbaseDocument X 101.DEF XBRL Taxonomy Extension Definition LinkbaseDocument X 101.LAB XBRL Taxonomy Extension Label LinkbaseDocument X 101.PRE XBRL Taxonomy Extension Presentation LinkbaseDocument X *Represents a management contract or compensatory plan.**Confidential treatment has been requested for certain portions of this document pursuant to an application for confidential treatment sent to theSecurities and Exchange Commission. Such portions are omitted from this filing and were filed separately with the Securities and ExchangeCommission.***This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act, or otherwise subject to the liability of thatsection. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the SecuritiesExchange Act of 1934, except to the extent that DexCom specifically incorporates it by reference.ITEM 16. FORM 10-K SUMMARYNone82SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned thereunto duly authorized. DEXCOM, INC.(Registrant) Dated: February 21, 2019 By: /S/ QUENTIN S. BLACKFORD Quentin S. Blackford,Executive Vice President and Chief Financial Officer (PrincipalFinancial and Accounting Officer)POWER OF ATTORNEYKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kevin Sayer and QuentinBlackford, jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to thisReport on Form 10-K and to file same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission,hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitutes, may do or cause to be done by virtue hereof.Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of theRegistrant and in the capacities and on the dates indicated. Signature Title Date /S/ KEVIN R. SAYER Chairman of the Board of Directors, President andChief Executive Officer (Principal ExecutiveOfficer) February 21, 2019Kevin R. Sayer /S/ QUENTIN S. BLACKFORD Executive Vice President and Chief FinancialOfficer (Principal Financial and AccountingOfficer) February 21, 2019Quentin S. Blackford /S/ MARK FOLETTA Lead Independent Director February 21, 2019Mark Foletta /S/ STEVE ALTMAN Director February 21, 2019Steve Altman /S/ NICHOLAS AUGUSTINOS Director February 21, 2019Nicholas Augustinos /S/ RICHARD COLLINS Director February 21, 2019Richard Collins /S/ BARBARA KAHN Director February 21, 2019Barbara Kahn /S/ JAY SKYLER Director February 21, 2019Jay Skyler, M.D. /S/ ERIC TOPOL Director February 21, 2019Eric Topol, M.D. 83DEXCOM, INC.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting FirmF-2 Consolidated Balance SheetsF-3 Consolidated Statements of OperationsF-4 Consolidated Statements of Comprehensive LossF-5 Consolidated Statements of Stockholders’ EquityF-6 Consolidated Statements of Cash FlowsF-7 Notes to Consolidated Financial StatementsF-9 F-1REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and Stockholders of DexCom, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of DexCom, Inc. (the Company) as of December 31, 2018 and 2017, the related consolidatedstatements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2018, and therelated notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In ouropinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017,and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generallyaccepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’sinternal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated February 21, 2019 expressed an unqualifiedopinion thereon.Basis for OpinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Companyin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion./s/ Ernst & Young LLPWe have served as the Company’s auditor since 2000San Diego, CaliforniaFebruary 21, 2019F-2DexCom, Inc.Consolidated Balance Sheets(In millions—except share and par value data) December 31, 2018 2017Assets Current assets: Cash and cash equivalents$1,137.0 $441.5Short-term marketable securities248.6 107.1Accounts receivable, net226.7 134.3Inventory70.7 45.2Prepaid and other current assets16.5 16.6Total current assets1,699.5 744.7Property and equipment, net183.1 145.6Goodwill18.7 12.1Other assets14.7 1.7Total assets$1,916.0 $904.1Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and accrued liabilities$147.1 $87.2Accrued payroll and related expenses72.4 48.5Deferred revenue2.9 3.2Total current liabilities222.4 138.9Other liabilities20.0 18.2Long-term senior convertible notes1,010.3 327.6Total liabilities1,252.7 484.7Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value, 5.0 million shares authorized; no shares issued and outstanding at December31, 2018 and December 31, 2017, respectively— —Common stock, $0.001 par value, 200.0 million shares authorized; 91.1 million and 90.0 million sharesissued and outstanding, respectively, at December 31, 2018; 87.3 million and 87.0 million shares issued andoutstanding, respectively, at December 31, 20170.1 0.1Additional paid-in capital1,560.6 1,093.7Accumulated other comprehensive income (loss)1.5 (2.6)Accumulated deficit(798.9) (671.8)Treasury stock at cost; 0.8 million shares at December 31, 2018(100.0) —Total stockholders’ equity663.3 419.4Total liabilities and stockholders’ equity$1,916.0 $904.1See accompanying notesF-3DexCom, Inc.Consolidated Statements of Operations(In millions—except per share data) Years Ended December 31, 2018 2017 2016Revenue$1,031.6 $718.5 $573.3Cost of sales367.7 226.4 194.9Gross profit663.9 492.1 378.4Operating expenses Research and development199.7 185.4 156.1Collaborative research and development fee217.7 — —Selling, general and administrative432.8 349.2 286.2Total operating expenses850.2 534.6 442.3Operating loss(186.3) (42.5) (63.9)Interest expense(22.7) (12.8) (0.7)Income from equity investments80.1 — —Interest and other income (expense), net2.4 6.7 (0.3)Loss before income taxes(126.5) (48.6) (64.9)Income tax expense0.6 1.6 0.7Net loss$(127.1) $(50.2) $(65.6) Basic and diluted net loss per share$(1.44) $(0.58) $(0.78)Shares used to compute basic and diluted net loss per share88.2 86.3 83.6See accompanying notesF-4DexCom, Inc.Consolidated Statements of Comprehensive Loss(In millions) Years Ended December 31, 2018 2017 2016Net loss $(127.1) $(50.2) $(65.6)Other comprehensive income (loss), net of income taxes: Foreign currency translation gain (loss) 4.0 (1.4) (0.7)Unrealized gain (loss) on marketable debt securities 0.1 (0.2) —Total other comprehensive income (loss), net 4.1 (1.6) (0.7)Comprehensive loss $(123.0) $(51.8) $(66.3)See accompanying notesF-5DexCom, Inc.Consolidated Statements of Stockholders’ Equity(In millions) Common Stock AdditionalPaid-InCapital AccumulatedOtherComprehensiveIncome (Loss) AccumulatedDeficit TreasuryStock TotalStockholders’EquityShares Amount Balance at December 31, 2015 81.7 $0.1 $776.8 $(0.3) $(555.4) $— $221.2Issuance of common stock under equity incentiveplans 2.7 — 4.4 — — — 4.4Issuance of common stock for Employee StockPurchase Plan 0.1 — 6.0 — — — 6.0Issuance of common stock in connection withacquisition 0.1 — 7.2 — — — 7.2Share-based compensation expense — — 111.3 — — — 111.3Net loss — — — — (65.6) — (65.6)Other comprehensive loss — — — (0.7) — — (0.7)Balance at December 31, 2016 84.6 0.1 905.7 (1.0) (621.0) — 283.8Issuance of common stock under equity incentiveplans 2.3 — 2.7 — — — 2.7Issuance of common stock for Employee StockPurchase Plan 0.1 — 7.4 — — — 7.4Share-based compensation expense — — 106.7 — — — 106.7Equity component of convertible 2022 Noteissuance, net of issuance costs — — 70.6 — — — 70.6Adoption of ASU 2016-09 — — 0.6 — (0.6) — —Net loss — — — — (50.2) — (50.2)Other comprehensive loss — — — (1.6) — — (1.6)Balance at December 31, 2017 87.0 0.1 1,093.7 (2.6) (671.8) — 419.4Issuance of common stock under equity incentiveplans 1.8 — 1.9 — — — 1.9Issuance of common stock for Employee StockPurchase Plan 0.2 — 8.9 — — — 8.9Share-based compensation expense — — 101.9 — — — 101.9Issuance of common stock for collaborativeresearch and development fee 1.8 — 217.7 — — — 217.7Equity component of convertible 2023 Noteissuance, net of issuance costs — — 171.6 — — — 171.6Sale of warrants — — 183.8 — — — 183.8Convertible note hedge — — (218.9) — — — (218.9)Purchases of treasury stock (0.8) — — — — (100.0) (100.0)Net loss — — — — (127.1) — (127.1)Other comprehensive income — — — 4.1 — — 4.1Balance at December 31, 2018 90.0 $0.1 $1,560.6 $1.5 $(798.9) $(100.0) $663.3See accompanying notesF-6DexCom, Inc.Consolidated Statements of Cash Flows(In millions) Years Ended December 31, 2018 2017 2016Operating activities Net loss$(127.1) $(50.2) $(65.6)Adjustments to reconcile net loss to cash provided by operating activities: Depreciation and amortization29.1 16.1 15.0Share-based compensation101.9 106.2 110.8Non-cash interest expense17.9 9.4 0.1Non-cash collaborative research and development fee through issuance of common stock217.7 — —Unrealized income on equity investment(36.0) — —Realized income on equity investment(44.1) — —Other non-cash income and expenses4.7 7.9 2.2Changes in operating assets and liabilities: Accounts receivable, net(93.2) (31.8) (27.2)Inventory(25.5) 0.4 (9.8)Prepaid and other assets(3.0) (6.7) (3.9)Accounts payable and accrued liabilities56.2 21.1 21.1Accrued payroll and related expenses23.8 14.8 8.5Deferred revenue, deferred rent and other liabilities0.8 4.8 5.0Net cash provided by operating activities123.2 92.0 56.2Investing activities Purchase of marketable securities(452.5) (171.8) (39.2)Proceeds from sale and maturity of marketable securities392.1 93.4 38.7Purchase of other equity investments(1.0) — —Purchase of property and equipment(67.1) (66.0) (55.7)Acquisitions, net of cash acquired(11.3) — 0.3Net cash used in investing activities(139.8) (144.4) (55.9)Financing activities Net proceeds from issuance of common stock10.8 10.1 10.4Purchases of treasury stock(100.0) — —Proceeds from issuance of convertible debt, net of issuance costs836.6 389.0 —Proceeds from sale of warrants183.8 — —Purchase of convertible note hedge(218.9) — —Proceeds from short-term borrowings— 75.0 —Repayment of short-term borrowings— (75.0) —Other financing activities(1.9) — (2.3)Net cash provided by financing activities710.4 399.1 8.1Effect of exchange rate changes on cash, cash equivalents and restricted cash1.8 0.3 —Increase in cash, cash equivalents and restricted cash695.6 347.0 8.4Cash, cash equivalents and restricted cash, beginning of period441.5 94.5 86.1Cash, cash equivalents and restricted cash, end of period$1,137.1 $441.5 $94.5 Reconciliation of cash, cash equivalents and restricted cash, end of period: Cash and cash equivalents$1,137.0 $441.5 $94.5Restricted cash0.1 — —Total cash, cash equivalents and restricted cash$1,137.1 $441.5 $94.5 F-7Supplemental disclosure of non-cash investing and financing transactions: Issuance of common stock in connection with acquisition$— $— $7.2Assets acquired and financing obligation under build-to-suit leasing arrangement$— $— $6.0Acquisition of property and equipment included in accounts payable and accrued liabilities$10.8 $6.3 $10.5Supplemental cash flow information: Cash paid during the year for interest$3.6 $2.4 $0.1Cash paid during the year for income taxes$2.3 $1.4 $0.1See accompanying notesF-8DexCom, Inc.Notes to Consolidated Financial StatementsDecember 31, 20181. Organization and Significant Accounting PoliciesOrganization and BusinessDexCom, Inc. is a medical device company focused on the design, development and commercialization of continuous glucose monitoring, or CGM,systems for ambulatory use by people with diabetes and by healthcare providers. Unless the context requires otherwise, the terms “we,” “us,” “our,” the“company,” or “DexCom” refer to DexCom, Inc. and its subsidiaries.Basis of Presentation and Principles of ConsolidationThe consolidated financial statements include the accounts of DexCom, Inc. and our wholly owned subsidiaries. All significant intercompany balancesand transactions have been eliminated in consolidation. We have reclassified certain amounts previously reported in our financial statements to conform tothe current presentation.The functional currencies of our international subsidiaries are generally the local currencies. We translate the financial statements of our foreignsubsidiaries into U.S. dollars using period-end exchange rates for assets and liabilities and average exchange rates for each period for revenue, costs andexpenses. We include translation-related adjustments in comprehensive loss and in accumulated other comprehensive income (loss) in the equity section ofour balance sheet. Gains and losses resulting from certain intercompany transactions as well as transactions with customers and vendors that are denominatedin currencies other than the functional currency of each entity give rise to foreign exchange gains or losses that we record in interest and other income(expense), net in our statements of operations.Use of EstimatesThe preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to makecertain estimates and assumptions that affect the amounts reported in our financial statements and the disclosures made in the accompanying notes. Areasrequiring significant estimates include pharmacy rebates, transaction price, net accounts receivable, excess or obsolete inventories and the valuation ofinventory, and accruals for litigation contingencies. Despite our intention to establish accurate estimates and use reasonable assumptions, actual results maydiffer from our estimates.Fair Value MeasurementsThe authoritative guidance establishes a fair value hierarchy that is based on the extent and level of judgment used to estimate the fair value of assetsand liabilities. In general, the authoritative guidance requires us to maximize the use of observable inputs and minimize the use of unobservable inputs whenmeasuring fair value. An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to themeasurement of its fair value. The three levels of input defined by the authoritative guidance are as follows:Level 1—Unadjusted quoted prices that are available in active markets for identical assets or liabilities.Level 2—Inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly, through correlation with market data.These include quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are notactive; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such asinterest rates and volatility, can be corroborated by readily observable market data for substantially the full term of the assets or liabilities.Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the determination of fair value. Level 3 assetsand liabilities include those whose fair values are determined using pricing models, discounted cash flow methodologies, or similar valuation techniques andsignificant judgment or estimation.We carry our marketable securities at fair value. We carry our other financial instruments, such as cash and cash equivalents, accounts receivable,prepaid expenses and other current assets, accounts payable and accrued liabilities, at cost, which approximates the related fair values due to the short-termmaturities of these instruments. For more information see Note 3, “Fair Value Measurements.”F-9Cash and Cash EquivalentsWe consider highly liquid investments with a maturity of 90 days or less at the time of purchase to be cash equivalents.Marketable SecuritiesWe have classified our marketable securities with remaining maturity at purchase of more than three months and remaining maturities of one year or lessas short-term marketable securities. We have also classified marketable securities with remaining maturities of greater than one year as short-term marketablesecurities based upon our ability and intent to use any and all of those marketable securities to satisfy the liquidity needs of our current operations.We calculate realized gains or losses on our marketable securities using the specific identification method. We carry our marketable debt securities atfair value with unrealized gains and losses reported as a separate component of stockholders’ equity in our balance sheets and included in comprehensiveloss. Realized gains and losses on marketable debt securities are included in interest and other income (expense), net in our statements of operations. Wecarry our marketable equity securities at fair value with realized and unrealized gains and losses reported in income on equity investments in our statementsof operations.We invest in various types of debt securities, including debt securities in government-sponsored entities, corporate debt securities, U.S. Treasurysecurities and commercial paper. We do not generally intend to sell these investments and it is not more likely than not that we will be required to sell theinvestments before recovery of their amortized cost bases, which may be at maturity. See Note 3, “Fair Value Measurements” and Note 4, “Balance SheetDetails – Short-Term Marketable Securities” for more information on our marketable debt securities and our marketable equity securities.Accounts Receivable and Allowance for Doubtful AccountsAccounts receivable are generally recorded at the invoiced amount for Distributors and at net realizable value for Direct customers, which is determinedusing estimates of claim denials and historical reimbursement experience without regard to aging category. Accounts receivable are not interest bearing. Weevaluate the creditworthiness of significant customers and generally do not require collateral from our customers. We maintain an allowance for doubtfulaccounts for potential credit losses. Uncollectable accounts are written off against the allowance after appropriate collection efforts have been exhausted andwhen it is deemed that a customer account is uncollectable. Generally, receivable balances greater than one year past due are deemed uncollectable.Concentration of Credit Risk and Significant CustomersFinancial instruments which potentially subject us to concentrations of credit risk consist primarily of cash, cash equivalents, short-term investmentsecurities, and accounts receivable. We limit our exposure to credit loss by placing our cash and investments with high credit quality financial institutions.We have also established guidelines regarding diversification of our investments and their maturities that are designed to maintain principal and maximizeliquidity. We review these guidelines periodically and modify them to take advantage of trends in yields and interest rates and changes in our operations andfinancial position.Two of our distributors are significant customers. Each of them accounted for more than 10% of revenue in each of the past three fiscal years and eachof them accounted for more than 10% of accounts receivable as of the end of the past two fiscal years. Distributor A accounted for 15%, 16% and 14% of ourrevenues for the twelve months ended December 31, 2018, 2017 and 2016, respectively. Distributor B accounted for 12%, 14% and 17% of our revenues forthe twelve months ended December 31, 2018, 2017 and 2016, respectively. Distributor A and Distributor B accounted for 19% and 15%, respectively, ofaccounts receivable as of December 31, 2018 and 18% and 12%, respectively, of accounts receivable as of December 31, 2017.InventoryInventory is valued at the lower of cost or net realizable value on a part-by-part basis that approximates first in, first out. We record adjustments toinventory for potentially excess, obsolete or scrapped goods in order to state inventory at net realizable value. Factors influencing these adjustments includeinventories on hand and on order compared to estimated future usage and sales for existing and new products, as well as judgments regarding quality controltesting data and assumptions about the likelihood of scrap and obsolescence. Once written down the adjustments are considered permanent and are notreversed until the related inventory is sold or disposed of.Our products require customized products and components that currently are available from a limited number of sources. We purchase certaincomponents and materials from single sources due to quality considerations, costs or constraints resulting from regulatory requirements.F-10Property and EquipmentProperty and equipment is stated at cost less accumulated depreciation. We calculate depreciation using the straight-line method over the estimateduseful lives of the assets. Estimated useful lives are generally three years for computer software and hardware, four to 15 years for machinery and equipment,and five years for furniture and fixtures. Leasehold improvements and assets acquired through a build-to-suit arrangement are amortized over the shorter ofthe estimated useful lives of the assets or the remaining lease term. We include the amortization of assets that are recorded under capital leases in depreciationexpense.We review property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may notbe recoverable. We estimate the recoverability of the asset by comparing the carrying amount to the future undiscounted cash flows that we expect the assetto generate. We estimate the fair value of the asset based on the present value of future cash flows for those assets. If the carrying value of an asset exceeds itsestimated fair value, we would record an impairment loss equal to the difference.GoodwillWe record goodwill when the fair value of consideration transferred in a business combination exceeds the fair value of the identifiable assets acquiredand liabilities assumed. Goodwill and other intangible assets that have indefinite useful lives are not amortized, but we test them annually for impairment inthe fourth quarter of our fiscal year and whenever events or changes in circumstances indicate that it is more likely than not that the fair value is less than thecarrying value. Events that would indicate impairment and trigger an interim impairment assessment include, but are not limited to, current economic andmarket conditions, including a decline in market capitalization, a significant adverse change in legal factors, business climate or operational performance ofthe business, and an adverse action or assessment by a regulator.We perform our goodwill impairment analysis at the reporting unit level, which aligns with DexCom’s reporting structure and the availability ofdiscrete financial information. We perform the first step of our annual impairment analysis by either comparing a reporting unit’s estimated fair value to itscarrying amount or doing a qualitative assessment of a reporting unit’s fair value from the last quantitative assessment to determine if there is potentialimpairment. We may do a qualitative assessment when the results of the previous quantitative test indicated the reporting unit’s estimated fair value wassignificantly in excess of the carrying value of its net assets and we do not believe there have been significant changes in the reporting unit’s operations thatwould significantly decrease its estimated fair value or significantly increase its net assets. If a quantitative assessment is performed the evaluation includesmanagement estimates of cash flow projections based on internal future projections and/or use of a market approach by looking at market values ofcomparable companies. Key assumptions for these projections include revenue growth, future gross margin and operating margin growth, and weighted costof capital and terminal growth rates. The revenue and margin growth are based on increased sales of new and existing products as we maintain investments inresearch and development. Additional assumed value creators may include increased efficiencies from capital spending. The resulting cash flows arediscounted using a weighted average cost of capital. Operating mechanisms and requirements to ensure that growth and efficiency assumptions willultimately be realized are also considered in the evaluation, including the timing and probability of regulatory approvals for our products to becommercialized. We also consider DexCom’s market capitalization as a part of our analysis.If the estimated fair value of a reporting unit exceeds the carrying amount of the net assets assigned to that unit, goodwill is not impaired and no furtheranalysis is required. If the carrying value of the net assets assigned to a reporting unit exceeds the estimated fair value of the unit, we perform the second stepof the impairment test. In this step we allocate the fair value of the reporting unit calculated in step one to all of the assets and liabilities of that unit, as if wehad just acquired the reporting unit in a business combination. The excess of the fair value of the reporting unit over the total amount allocated to the assetsand liabilities represents the implied fair value of goodwill. If the carrying amount of a reporting unit’s goodwill exceeds its implied fair value, we wouldrecord an impairment loss equal to the difference. We recorded no goodwill impairment charges for the twelve months ended December 31, 2018, 2017 or2016.There were no accumulated impairment losses for goodwill at December 31, 2016. The change in goodwill for the twelve months ended December 31,2017 consisted of translation adjustments on our foreign currency denominated goodwill. The change in goodwill for the twelve months ended December 31,2018 consisted of goodwill we recorded for acquisitions that were not significant, individually or in the aggregate, and translation adjustments on our foreigncurrency denominated goodwill.Intangible Assets and Other Long-Lived AssetsWe amortize intangible assets with a finite life, such as acquired technology, customer relationships, trade names and trademarks, on a straight-linebasis over their estimated useful lives, which range from two to five years. We review intangible assets that have finite lives and other long-lived assets forimpairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We estimate the fair value ofthe asset based on the present valueF-11of future cash flows for those assets. If the carrying value of an asset exceeds its estimated fair value, we would record an impairment loss equal to thedifference.Income TaxesWe account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expectedfuture tax consequences of events that have been included in the financial statements. The effect of a change in tax rates on deferred tax assets and liabilitiesis recognized in income in the period that includes the enactment date.We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized, which requires significantjudgment. The realization of deferred tax assets is dependent, in part, upon future taxable income. In assessing whether our deferred tax assets will be realized,we consider all available evidence, both positive and negative. Such evidence includes historical earnings, future reversals of existing taxable temporarydifferences, estimates of future taxable income, and the feasibility of ongoing tax planning strategies. We have recorded a full valuation allowance on our netdeferred tax asset balances for all periods presented because of the uncertainty related to utilization of our deferred tax assets.We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likelythan not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement withthe related tax authority.We file federal and state income tax returns in the United States and income tax returns in various other foreign jurisdictions with varying statutes oflimitations. Due to net operating losses incurred, our income tax returns from inception to date are subject to examination by taxing authorities. Werecognize interest expense and penalties related to income tax matters, including unrecognized tax benefits, as a component of income tax expense.Warranty AccrualEstimated warranty costs associated with a product are recorded at the time revenue is recognized. We estimate future warranty costs by analyzinghistorical warranty experience for the timing and amount of returned product, and expectations for future warranty activity based on changes andimprovements to the product or process that are in place or will be in place in the future. We evaluate these estimates on at least a quarterly basis to determinethe continued appropriateness of our assumptions.Loss ContingenciesIf the potential loss from a claim or legal proceeding is considered probable and the amount can be reasonably estimated, we record a liability and anexpense for the estimated loss and disclose it in our financial statements if it is significant. If we determine that a loss is possible and the range of the loss canbe reasonably determined, then we disclose the range of the possible loss. Significant judgment is required in the determination of whether a potential loss isprobable, reasonably possible, or remote as well as in the determination of whether a potential exposure is reasonably estimable.Comprehensive LossComprehensive loss consists of two elements, net loss and other comprehensive income (loss). We report all components of comprehensive loss,including net loss, in our financial statements in the period in which they are recognized. Total comprehensive loss is defined as the change in equity duringa period from transactions and other events and circumstances from non-owner sources. We report net loss and the components of other comprehensiveincome (loss), including foreign currency translation adjustments and unrealized gains and losses on marketable securities, net of their related tax effect toarrive at total comprehensive loss.Revenue RecognitionWe generate our revenue from the sale of our durable CGM systems and disposable sensors (the Components). Our durable systems include a reusabletransmitter and receiver. Disposable sensors are sold separately. We also provide free-of-charge software and mobile applications for use with our durablesystems and disposable sensors. The initial durable system price is generally not dependent upon the subsequent purchase of any amount of disposablesensors.We sell our durable systems and disposable sensors through two main sales channels: 1) directly to customers who use our products or organizations(the Direct Channel) and 2) to distribution partners who resell our products (the Distributor Channel).F-12In the Direct Channel, we sell our durable systems and disposable sensors to customers who use our products and we receive payment directly fromcustomers who use our products, organizations and third-party payors. Third-party payors primarily include commercial insurance companies and federal andstate agencies (under Medicare and Medicaid programs).We adopted ASC Topic 606 effective January 1, 2018 using the modified retrospective method. We applied the practical expedient permitted underASC Topic 606 to those contracts that were not completed as of the date of initial adoption. Results for reporting periods after January 1, 2018 are presentedunder ASC Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with legacy accounting guidance under ASCTopic 605. Our revenue recognition policies under ASC Topic 606 are explained below.Policy elections and practical expedients taken•We report revenue net of taxes collected from customers, which are subsequently remitted to governmental authorities;•We account for shipping and handling activities that are performed after a customer has obtained control of a good as fulfillment costs rather than asseparate performance obligations;•We do not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with thecustomer; and•If we expect, at contract inception, that the period between the transfer of control and corresponding payment from the customer will be one year orless, we do not adjust the amount of consideration for the effects of a significant financing component.Contracts and performance obligationsWe consider customer purchase orders, which in most cases are governed by agreements with distributors or third-party payors, to be contracts with acustomer. For each contract, we consider the obligation to transfer Components to the customer, each of which are distinct, to be separate performanceobligations. Components are individually priced and can be purchased separately or bundled in a contract. We also provide free-of-charge software, mobileapplications and updates for our DexCom Share® remote monitoring system. The standalone selling prices of our free-of-charge software, mobile applicationsand updates are based on an expected cost plus a margin approach.Transaction priceTransaction price for the Components reflects the net consideration to which we expect to be entitled. Transaction price is typically based on contractedrates less any estimates of claim denials and historical reimbursement experience, which would include current and future expectations regardingreimbursement contracts, guidelines and payor mix, and less estimated variable consideration adjustments.Variable considerationRebates. We estimate reductions to our revenues for rebates paid to payors and healthcare providers in the United States. Rebates are based oncontractual arrangements or statutory requirements, which may vary by product, payor and individual payor plans. Our estimates are based on products sold,historical payor mix and, as available, known market events or trends and channel inventory data. We also take into consideration, as available, newinformation regarding changes in programs’ regulations and guidelines that would impact the amount of the actual rebates and/or our expectations regardingfuture payor mix for these programs.Product Returns. We generally provide a “30-day money back guarantee” program whereby first-time end-user customers may return the durablesystem. In accordance with the terms of their distribution agreements, most distributors do not have rights of return outside of our limited warranty. Thedistributors typically have a limited time frame to notify us of any missing, damaged, defective or non-conforming products. Our returns have historicallybeen immaterial.Revenue recognitionWe recognize revenue when control is transferred to our customers. The timing of revenue recognition is based on the satisfaction of performanceobligations. Substantially all of the performance obligations associated with our durable systems and disposable sensors are satisfied at a point in time, whichtypically occurs at shipment of our products. Terms of direct and distributor orders are generally Freight on Board (FOB) shipping point for U.S. orders or FreeCarrier (FCA) shipping point for international orders. For certain of our distributors, control transfers at delivery of the product to the customer.In cases where our free-of-charge software, mobile applications and updates are deemed to be separate performance obligations, revenue is recognizedover time on a ratable basis over the estimated life of the related hardware component.F-13Our sales of the receiver and transmitter components of our CGM systems include an assurance-type warranty which is accounted for based on the costaccrual method recognized as expense when the products are sold and is not considered a separate performance obligation.Contract balancesThe timing of revenue recognition, billing and cash collections results in trade receivables and deferred revenue on our balance sheets. We recognize areceivable in the period in which our right to the consideration is unconditional. We generally do not have any contracts or performance obligations with aterm of more than one year.Our contracts with customers do not typically include extended payment terms. Payment terms vary by contract type and type of customer andgenerally range from 30 to 90 days.Accounts receivable as of December 31, 2018 included unbilled accounts receivable of $5.1 million. Unbilled accounts receivable consists of revenuerecognized for Components we have delivered but not yet invoiced to customers. We expect to invoice and collect all unbilled accounts receivable withintwelve months.Substantially all of our deferred revenue as of December 31, 2018 is associated with certain of our free-of-charge software and mobile applications andwill be recognized during 2019. During the twelve months ended December 31, 2018, we recognized revenue of $1.9 million that was recorded as deferredrevenue as of December 31, 2017.Deferred cost of salesDeferred cost of sales are associated with sales for which revenue recognition criteria are not met but product has shipped and released from inventory.These costs are recognized in cost of sales when the associated revenue is recognized. Deferred cost of sales are included in prepaid and other current assets inour balance sheets.Incentive compensation costsWe generally expense incentive compensation associated with our internal sales force when incurred because the amortization period for such costs, ifcapitalized, would have been one year or less. We record these costs in selling, general and administrative expense in our statement of operations.Product Shipment CostsWe record the amounts we charge our customers for the shipping and handling of our products in revenue and we record the related costs as cost of salesin our statements of operations.Research and DevelopmentWe expense all costs of research and development as we incur them. Our research and development expenses primarily consist of engineering andresearch expenses related to our continuous glucose monitoring technology, clinical trials, regulatory expenses, quality assurance programs, materials andproducts for clinical trials. Research and development expenses primarily consist of employee compensation, including salary, fringe benefits, share-basedcompensation, and temporary employee expenses. We also incur significant expenses to operate our clinical trials that include clinical site reimbursement,clinical trial product, and associated travel expenses. Our research and development expenses also include fees for design services, contractors, anddevelopment materials.Our CGM systems include certain software that we develop. We expense software development costs as we incur them until technological feasibilityhas been established, at which time we capitalize development costs until the product is available for general release to customers. To date, our software hasbeen available for general release concurrent with the establishment of technological feasibility and, accordingly, we have not capitalized any developmentcosts.Advertising CostsWe expense all advertising costs as we incur them to selling, general and administrative expenses. Advertising expense was $25.4 million, $21.9million and $11.9 million for the twelve months ended December 31, 2018, 2017 and 2016, respectively.LeasesWe review all leases for capital or operating classification at their inception. We use our incremental borrowing rate in the assessment of leaseclassification and define the initial lease term to include the construction build-out period but to exclude lease extension periods when we are not reasonablycertain to exercise our extension option. We conduct our operations primarily under operating leases. For leases that contain rent escalations, we record thetotal rent payable during the lease term,F-14as defined above, to rent expense on a straight-line basis over the term of the lease. We record the difference between amounts paid under the leaseagreements and the straight-line rent expense as deferred rent in our balance sheets.Share-Based CompensationShare-based compensation expense is measured at the grant date based on the estimated fair value of the award and is recognized straight-line over therequisite service period of the individual grants, which typically equals the vesting period. Shared-based compensation arrangements include time-based andperformance/market-based Restricted Stock Units, or RSUs, and purchases of common stock at a discount under our Employee Stock Purchase Plan, or ESPP.We estimate the fair value of time-based RSUs using the closing market price of our common stock on the date of grant. We estimate the fair value ofperformance/market-based RSUs using a Monte Carlo simulation model and adjust share-based compensation expense based on the expected achievement ofthe related performance conditions at the end of each reporting period.We estimate the fair value of ESPP purchase rights using the Black-Scholes option pricing model. The model uses assumptions that include expectedvolatility, expected term, dividends, and the risk-free interest rate. The expected volatility is based on the historical volatility of our common stock over theexpected term of the awards. The expected term is based on the terms and conditions of the ESPP stock awards. The expected dividend yield is zero becausewe have never declared or paid cash dividends on our common stock and do not anticipate paying dividends in the foreseeable future. The risk-free interestrate is based on U.S. Treasury securities with remaining terms similar to the expected term of the stock awards.We account for forfeitures as they occur by reversing any share-based compensation expense related to awards that will not vest.Net Income (Loss) Per ShareBasic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss) attributable to commonstockholders by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using theweighted average number of common shares outstanding during the period and, when dilutive, potential common share equivalents.Common share equivalents that we calculate using the treasury stock method include outstanding stock options and unvested RSUs that are settleablein shares of common stock and potential common shares from convertible securities that we intend to settle using a combination of shares of our commonstock and cash. Common share equivalents that we calculate using the if-converted method include potential common shares from convertible securities thatwe intend to settle using only shares of our common stock.Because we reported net losses for the twelve months ended December 31, 2018, 2017 and 2016, all potentially dilutive common shares have beenexcluded from the computation of the diluted net loss per share for those periods as the effect would have been anti-dilutive.Outstanding anti-dilutive securities not included in the diluted net loss per share attributable to common stockholders calculations were as follows: Years Ended December 31,(In millions)2018 2017 2016Options outstanding to purchase common stock0.1 0.4 0.7Unvested restricted stock units2.7 2.7 3.7Senior convertible notes due 20224.0 4.0 —Senior convertible notes due 20235.2 — —Warrants5.2 — —Total17.2 7.1 4.4Recent Accounting GuidanceRecently Adopted Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance for Revenue from Contracts with Customers (Topic606) (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the guidance is to recognizerevenue when promised goods or services are transferred toF-15customers in an amount that reflects the consideration that is expected to be received for those goods or services. The guidance defines a five step process toachieve this core principle and it is possible when the five step process is applied, more judgment and estimates may be required within the revenuerecognition process than required under existing U.S. GAAP, including identifying performance obligations in the contract, estimating the amount ofvariable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. We have applied thisstandard electing the modified retrospective method. We have also applied the practical expedient permitted under Accounting Standards Codification(“ASC”) Topic 606 to those contracts that were not completed as of January 1, 2018. Our analysis of open contracts as of January 1, 2018 resulted in nomaterial cumulative effect from applying ASU 2014-09.In January 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-01 to amend the guidance on the classification and measurement offinancial instruments. This ASU was further amended in February 2018 by ASU No. 2018-03. The new guidance requires entities to measure equityinvestments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in netincome. The new guidance also amends certain disclosure requirements associated with the fair value of financial instruments. Our adoption of this guidancein the first quarter of 2018 did not have a significant impact on our financial statements.In October 2016, the FASB issued ASU No. 2016-16, Accounting for Income Taxes – Intra-Entity Asset Transfer other than Inventory (Topic 740) (ASU2016-16), which requires the recognition of the tax expense from the sale of an asset other than inventory when the transfer occurs, rather than when the assetis sold to a third party or otherwise recovered through use. Due to the full valuation allowance on our U.S. deferred tax assets, our adoption of the provisionsof ASU 2016-16 in 2018 did not have a significant impact on our financial statements.In December 2016, the FASB issued ASU No. 2016-18, Restricted Cash (ASU 2016-18). This update requires additional disclosure and that thestatement of cash flows explains the change during the period in the total cash, cash equivalents and amounts generally described as restricted cash.Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period andend-of-period total amounts shown on the statement of cash flows. Our adoption of this ASU in 2018 impacted the presentation of cash flows with theinclusion of restricted cash flows for each of the presented periods.In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-BasedPayment Accounting (ASU 2018-07), which simplifies the accounting for share-based payments made to nonemployees so the accounting for such paymentsis substantially the same as those made to employees. Under ASU 2018-07, share based awards to nonemployees will be measured at fair value on the grantdate of the awards, entities will need to assess the probability of satisfying performance conditions if any are present, and awards will continue to be classifiedaccording to ASC 718 upon vesting. This eliminates the need to reassess classification upon vesting, consistent with awards granted to employees. ASU2018-07 is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, andearly adoption is permitted. We elected to early adopt ASU 2018-07 in the third quarter of 2018 and our adoption of this guidance did not have a significantimpact on our financial statements.Recently Issued Accounting Pronouncements Not Yet AdoptedIn February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02), which requires a lessee to recognize a lease payment liabilityand a corresponding right of use asset on their balance sheet for all lease terms longer than 12 months. ASU 2016-02 is effective for public business entitiesfor fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We will adopt ASU 2016-02 utilizing the modifiedretrospective transition method through an immaterial cumulative-effect adjustment to retained earnings at the beginning of the first quarter of 2019. We willcontinue to report financial information for fiscal years prior to 2019 under the current lease accounting standards. Based on our lease portfolio as ofDecember 31, 2018, we expect to record additional lease assets and liabilities of less than five percent of total assets on our balance sheet, with no materialimpact to our statement of operations.In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (ASU 2016-13), which changes the accounting for recognizingimpairments of financial assets. Under the new guidance, credit losses for certain types of financial instruments will be estimated based on expected losses.The new guidance also modifies the impairment models for available-for-sale debt securities and for purchased financial assets with credit deterioration sincetheir origination. ASU 2016-13 is effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods withinthose fiscal years, and early adoption is permitted. We are currently evaluating the impact that this guidance will have on our financial statements.In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment(ASU 2017-14). This new guidance eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge.Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. ASU 2017-14 is effective forpublic business entities for fiscal yearsF-16beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted. We are currently evaluating theimpact that this guidance will have on our financial statements.In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (ASU 2017-12), which is intended to more closely align hedgeaccounting with companies’ risk management strategies, simplify the application of hedge accounting and increase transparency regarding the scope andresults of hedging programs. The guidance in this update will be applied using a cumulative-effect adjustment to retained earnings at the beginning of thefiscal year of adoption. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periodswithin those fiscal years. We are currently evaluating the impact that this guidance will have on our financial statements.In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement: Disclosure Framework – Changes to the Disclosure Requirements forFair Value Measurement (ASU 2018-13), which adds and modifies certain disclosure requirements for fair value measurements. Under the newguidance, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, orvaluation processes for Level 3 fair value measurements. However, public business entities will be required to disclose the range and weighted average ofsignificant unobservable inputs used to develop Level 3 fair value measurements, and related changes in unrealized gains and losses included in othercomprehensive income. ASU 2018-13 is effective for public business entities for fiscal years beginning after December 15, 2019, including interim periodswithin those fiscal years, and early adoption is permitted. We are currently evaluating the impact that this guidance will have on our financial statements.In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting forImplementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (ASU 2018-05). This new guidance requires a customer in acloud computing arrangement to determine which implementation costs to capitalize as assets or expense as incurred. Capitalized implementation costsrelated to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module orcomponent of the hosting arrangement is ready for its intended use. ASU 2018-05 is effective for public business entities for fiscal years beginning afterDecember 15, 2019, including interim periods within those fiscal years, and early adoption is permitted. Application of this guidance can be applied eitherprospectively or retrospectively. We are currently evaluating the impact that this guidance will have on our financial statements. 2. Development and Other AgreementsCollaboration with Verily Life SciencesOn November 20, 2018, we entered into an Amended and Restated Collaboration and License Agreement with Verily Life Sciences LLC (an AlphabetCompany) and Verily Ireland Limited (collectively, Verily), which we refer to as the Restated Collaboration Agreement. This replaced our originalCollaboration and License Agreement with Verily dated August 10, 2015, as amended in October 2016, including the royalty obligations provisions underthat original agreement. Pursuant to the Restated Collaboration Agreement, we and Verily have agreed to continue to jointly develop a certain next-generation CGM product, and potentially one or more additional CGM products, for which we will have exclusive commercialization rights.The Restated Collaboration Agreement also provides us with an exclusive license to use intellectual property of Verily resulting from thecollaboration, and certain Verily patents, in the development, manufacture and commercialization of blood-based or interstitial glucose monitoring productsmore generally (subject to certain exclusions, which are outside of the CGM field as it is commonly understood). It also provides us with non-exclusivelicense rights under Verily’s other intellectual property rights to develop, manufacture and commercialize those kinds of glucose monitoring products andcertain CGM-product companion software functionalities. The Restated Collaboration Agreement requires us to use commercially reasonable efforts todevelop, launch and commercialize the CGM product(s) that are the subject of the collaboration according to certain timing and other objectives, andprovides for one executive sponsor from each of DexCom and Verily to meet periodically and make decisions related to the collaboration (within a limitedscope of authority) by consensus.In consideration of Verily’s performance of its obligations under the joint development plan of the Restated Collaboration Agreement, the licensesgranted to us and the amendment of the original agreement, we made an upfront payment and we will make potential future milestone and incentivepayments upon the achievement of certain goals. In the fourth quarter of 2018, we made an initial payment of $250.0 million through the issuance of1,840,943 shares of our common stock. We recorded a $217.7 million charge in our statement of operations during 2018 relating to the issuance of thiscommon stock because this milestone payment did not meet the capitalization criteria. The amount of the charge was based on our closing stock price of$118.28 per share on December 28, 2018, the date on which we obtained the necessary regulatory approvals and the transaction closed. Additional milestoneand incentive payments of up to a total of $280.0 million may become due and payable by us upon the achievement of future development, productregulatory approval and revenue milestones. $275.0 million of these payments may be paid in cash or shares of our common stock, at our election. If we electto make all $275.0 million of these payments inF-17shares, we will issue a total of 2,025,036 shares of our common stock, based on the volume weighted average trading price during the 15 consecutive daysending on the date of the Restated Collaboration Agreement.The Restated Collaboration Agreement will continue until December 31, 2028, unless terminated by either party upon uncured material breach of theRestated Collaboration Agreement by the other party. Upon achievement of the first revenue milestone event and payment of the corresponding milestonefee by us, the term of the Restated Collaboration Agreement will be extended until December 31, 2033.3. Fair Value MeasurementsAssets and Liabilities Measured at Fair Value on a Recurring BasisWe estimate the fair value of our Level 1 financial instruments, which are in active markets, using unadjusted quoted market prices for identicalinstruments.We obtain the fair values for our Level 2 financial instruments, which are not in active markets, from a primary professional pricing source that usesquoted market prices for identical or comparable instruments, rather than direct observations of quoted prices in active markets. Fair values obtained from thisprofessional pricing source can also be based on pricing models whereby all significant observable inputs, including maturity dates, issue dates, settlementdate, benchmark yields, reported trades, broker-dealer quotes, issue spreads, benchmark securities, bids, offers or other market related data, are observable orcan be derived from, or corroborated by, observable market data for substantially the full term of the asset. We validate the quoted market prices provided byour primary pricing service by comparing the fair values of our Level 2 marketable securities portfolio balance provided by our primary pricing serviceagainst the fair values of our Level 2 marketable securities portfolio balance provided by our investment managers.The following table summarizes financial assets that we measured at fair value on a recurring basis as of December 31, 2018, classified in accordancewith the fair value hierarchy: Fair Value Measurements Using(In millions)Level 1 Level 2 Level 3 TotalCash equivalents$199.3 $66.7 $— $266.0 Equity investment in Tandem Diabetes Care, Inc.38.0 — — 38.0 Debt securities, available for sale: U.S. government agencies— 173.1 — 173.1Commercial paper— 36.2 — 36.2Corporate debt— 1.3 — 1.3Total debt securities, available for sale— 210.6 — 210.6 Total assets measured at fair value on a recurring basis$237.3 $277.3 $— $514.6F-18The following table summarizes financial assets that we measured at fair value on a recurring basis as of December 31, 2017, classified in accordancewith the fair value hierarchy: Fair Value Measurements Using(In millions)Level 1 Level 2 Level 3 TotalCash equivalents$306.6 $38.0 $— $344.6 Debt securities, available for sale: U.S. government agencies— 87.3 — 87.3Commercial paper— 14.7 — 14.7Corporate debt— 5.1 — 5.1Total debt securities, available for sale— 107.1 — 107.1 Total assets measured at fair value on a recurring basis$306.6 $145.1 $— $451.7There were no transfers between Level 1 and Level 2 securities during the years ended December 31, 2018 and December 31, 2017. There were notransfers into or out of Level 3 securities during the years ended December 31, 2018 and 2017.We hold certain other investments that we do not measure at fair value on a recurring basis. The carrying values of these investments are not significantand we include them in other assets in our balance sheets. It is impracticable for us to estimate the fair value of these investments on a recurring basis due tothe fact that these entities are often privately held and limited information is available. We monitor the information that becomes available from time to timeand adjust the carrying values of these investments if there are identified events or changes in circumstances that have a significant adverse effect on the fairvalues.Financial liabilities whose fair values we measure on a recurring basis using Level 1 inputs consist of our outstanding 2022 Notes and 2023 Notes. Wemeasure the fair value of the 2022 Notes and 2023 Notes based on their trading prices. The fair value of the 2022 Notes was $540.2 million at December 31,2018 and $381.3 million at December 31, 2017. The fair value of the 2023 Notes was $859.6 million at December 31, 2018. For more information on thecarrying values of our 2022 Notes and 2023 Notes see Note 5, “Debt.”Foreign Currency and Derivative Financial InstrumentsWe currently engage in limited hedging transactions to reduce foreign currency risks on certain intercompany balances. The fair values of thesederivatives are based on quoted market prices, which are Level 1 inputs.As of December 31, 2018, a notional amount of $60.0 million was outstanding to hedge currency risk relating to certain intercompany balances.Derivative instrument gains on forward exchange contracts were $0.4 million for the twelve months ended December 31, 2018 and are included in interestand other income (expense), net in our statement of operations. The fair value of the forward contract exchange derivative instrument liability was $0.2million as of December 31, 2018. We record derivative instruments in other current assets or other current liabilities in our balance sheets consistent with thenature of the instrument at period end. We entered into no foreign currency forward contracts during 2017 or 2016.Our foreign currency exposures vary but are primarily concentrated in the British Pound, the Euro, and the Canadian Dollar. We monitor the costs andthe impact of foreign currency risks upon our financial results as part of our risk management program. We do not use derivative financial instruments forspeculation or trading purposes or for activities other than risk management. We do not require and are not required to pledge collateral for these financialinstruments and we do not carry any master netting arrangements to mitigate the credit risk.Assets and Liabilities Measured at Fair Value on a Non-Recurring BasisIn accordance with authoritative guidance, we measure certain non-financial assets and liabilities at fair value on a non-recurring basis. Thesemeasurements are usually performed using the discounted cash flow method and Level 3 inputs. These include items such as non-financial assets andliabilities initially measured at fair value in a business combination and non-financial long-lived assets measured at fair value for an impairment assessment.In general, non-financial assets, including goodwill, intangible assets, and property and equipment, are measured at fair value when there are indicators ofimpairment and are recorded at fair value only when any impairment is recognized.F-19See “Property and Equipment” in Note 4 for information about property and equipment impairment losses that we recorded during the twelve monthsended December 31, 2018 and 2017. There were no indicators of impairment and we recorded no significant impairment losses on goodwill or intangibleassets during the twelve months ended December 31, 2018, 2017 and 2016.4. Balance Sheet DetailsShort-Term Marketable SecuritiesShort-term marketable securities, consisting of equity securities and debt securities, were as follows as of the dates indicated: December 31, 2018(In millions)Cost or AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses EstimatedMarketValueEquity investment in Tandem Diabetes Care, Inc$2.0 $36.0 $— $38.0 Debt securities, available for sale: U.S. government agencies173.2 — (0.1) 173.1Commercial paper36.2 — — 36.2Corporate debt1.3 — — 1.3Total debt securities, available for sale210.7 — (0.1) 210.6 Total marketable securities$212.7 $36.0 $(0.1) $248.6 December 31, 2017(In millions)AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses EstimatedMarketValueDebt securities, available for sale: U.S. government agencies$87.5 $— $(0.2) $87.3Commercial paper14.7 — — 14.7Corporate debt5.1 — — 5.1Total debt securities, available for sale$107.3 $— $(0.2) $107.1As of December 31, 2018, all of our debt securities had contractual maturities of less than 12 months. As of December 31, 2017, the estimated marketvalue of debt securities with contractual maturities of less than 12 months was $92.7 million; the remaining debt securities that we held at that date had anestimated market value of $14.4 million and contractual maturities of up to 16 months.Gross realized gains and losses on our debt securities for the twelve months ended December 31, 2018, 2017 and 2016 were not significant.We periodically review our portfolio of debt securities to determine if any investment is other-than-temporarily impaired due to changes in credit risk orother potential valuation concerns. We believe that the investments we held at December 31, 2018 were not other-than-temporarily impaired. Unrealizedlosses on available-for-sale debt securities at that date were not significant and were due to changes in interest rates, including market credit spreads, and notdue to increased credit risks associated with specific securities. We do not intend to sell these investments and it is not more likely than not that we will berequired to sell the investments before recovery of their amortized cost bases, which may be at maturity.F-20The following table reconciles the net gain recognized on equity securities during the twelve months ended December 31, 2018, 2017 and 2016 to theunrealized gain recognized during those periods on equity securities still held at the reporting dates. Twelve Months Ended December 31,(In millions)2018 2017 2016Net gains recognized during the period on equity securities$80.1 $— $—Less: Net gains recognized during the period on equity securities sold during the period(44.1) — —Unrealized gains recognized during the reporting period on equity securities still held at thereporting date$36.0 $— $—Accounts Receivable December 31,(In millions)2018 2017Accounts receivable$233.9 $145.8Less allowance for doubtful accounts(7.2) (11.5)Total accounts receivable, net$226.7 $134.3Inventory December 31,(In millions)2018 2017Raw materials$30.8 $20.0Work-in-process11.2 8.2Finished goods28.7 17.0Total inventory$70.7 $45.2During the twelve months ended December 31, 2018, we recorded excess and obsolete inventory charges of $7.3 million in cost of goods sold that wereprimarily related to the approval and launch of our G6 System and the continuous improvement and innovation of our products.During the twelve months ended December 31, 2016, we recorded excess and obsolete inventory charges of $3.5 million in cost of goods sold that wererelated to the February 2016 customer notification regarding the audible alarms and alerts associated with our receivers. This notification was classified as avoluntary Class 1 recall by the Food and Drug Administration, or FDA, and was closed by the FDA in August 2017.F-21Property and Equipment December 31,(In millions)2018 2017Building (1)$6.0 $6.0Furniture and fixtures9.0 5.7Computer software and hardware29.2 25.6Machinery and equipment80.7 33.8Leasehold improvements80.7 41.7Construction in progress (2)57.3 87.6Total cost262.9 200.4Less accumulated depreciation and amortization(79.8) (54.8)Total property and equipment, net$183.1 $145.6(1) As described in Note 6, “Commitments,” although we do not legally own these premises, we were deemed the owner of the construction project during the construction period ofour manufacturing facility in Mesa, Arizona under a build-to suit lease arrangement. We placed the facility into service in 2018 and as of December 31, 2018 had recordedaccumulated amortization of $0.7 million.(2) Construction in progress as of December 31, 2018 and December 31, 2017 included approximately $6.2 million and $33.6 million, respectively, related to our manufacturingfacility in Mesa, Arizona with the remaining balances as of those dates primarily related to machinery and equipment.Depreciation expense related to property and equipment for the twelve months ended December 31, 2018, 2017 and 2016 was $28.6 million, $16.1million, and $14.4 million, respectively.During the twelve months ended December 31, 2018, we recorded a $5.4 million loss on disposal of property and equipment. The loss on disposal wasprimarily associated with changes in our product portfolio and was recorded in operating expenses, primarily in research and development expense in ourstatement of operations.During the twelve months ended December 31, 2017, we recorded a $11.0 million loss on disposal of property and equipment, the majority of whichwas previously contained within the construction in progress balance. The loss on disposal was primarily associated with changes in our product portfolioand was recorded in operating expenses, primarily in research and development expense in our statement of operations.Accounts Payable and Accrued Liabilities December 31,(In millions)2018 2017Accounts payable trade$75.5 $46.7Accrued tax, audit, and legal fees11.7 7.1Accrued rebates36.1 13.9Accrued warranty6.8 8.8Accrued other17.0 10.7Total accounts payable and accrued liabilities$147.1 $87.2Accrued WarrantyWarranty costs are reflected in our statements of operations as cost of product sales. Reconciliations of our accrued warranty costs for the twelve monthsended December 31, 2018 and 2017 were as follows: Twelve Months EndedDecember 31,(In millions)2018 2017Beginning balance$8.8 $9.8Charges to costs and expenses17.4 18.4Costs incurred(19.4) (19.4)Ending balance$6.8 $8.8F-22Other Liabilities December 31,(In millions)2018 2017Financing lease obligations$7.3 $6.7Deferred rent9.4 8.7Other3.3 2.8Total other liabilities$20.0 $18.25. DebtSenior Convertible NotesThe carrying amounts of our senior convertible notes were as follows as of the dates indicated: December 31,(In millions)2018 20170.75% Senior Convertible Notes due 2022: Principal amount$400.0 $400.0Unamortized debt discount(51.1) (64.4)Unamortized debt issuance costs(6.3) (8.0)Net carrying amount of Senior Convertible Notes due 2022342.6 327.6 0.75% Senior Convertible Notes due 2023: Principal amount850.0 —Unamortized debt discount(171.8) —Unamortized debt issuance costs(10.5) —Net carrying amount of Senior Convertible Notes due 2023667.7 — Total net carrying amount of senior convertible notes$1,010.3 $327.6 Fair value of outstanding notes: Senior Convertible Notes due 2022$540.2 $381.3Senior Convertible Notes due 2023859.6 —Total fair value of outstanding senior convertible notes$1,399.8 $381.3 Amount by which the notes’ if-converted value exceeds their principal amount: Senior Convertible Notes due 2022$125.4 $—Senior Convertible Notes due 2023— —Total by which the notes’ if-converted value exceeds their principal amount$125.4 $—0.75% Senior Convertible Notes due 2022In May 2017, we completed an offering of $350.0 million aggregate principal amount of unsecured senior convertible notes with a stated interest rate of0.75% and a maturity date of May 15, 2022 (the 2022 Notes). In June 2017, the initial purchasers exercised their option to purchase an additional $50.0million aggregate principal amount of 2022 Notes. The net proceeds from the offering, after deducting initial purchasers’ discounts and costs directly relatedto the offering, were approximately $389.0 million. The 2022 Notes may be settled in cash, stock, or a combination thereof, solely at our discretion. It is ourcurrent intent and policy to settle all 2022 Notes conversions in shares of our common stock. The initial conversion rate of the 2022 Notes is 10.0918 sharesof common stock per $1,000 principal amount of notes, which is equivalent to aF-23conversion price of approximately $99.09 per share, subject to adjustments. We use the if-converted method for assumed conversion of the 2022 Notes tocompute the weighted average shares of common stock outstanding for diluted earnings per share.Since upon conversion by the holders we may elect to settle such conversion in shares of our common stock, cash, or a combination thereof, weaccounted for the cash conversion option as an equity instrument classified to stockholders’ equity. As a result, we recognized $72.6 million in additionalpaid-in capital during 2017.The interest expense recognized on the 2022 Notes during the twelve months ended December 31, 2018 includes $3.0 million, $13.4 million and $1.6million for the contractual coupon interest, the accretion of the debt discount and the amortization of the debt issuance costs, respectively. The interestexpense recognized on the 2022 Notes during the twelve months ended December 31, 2017 includes $1.9 million, $8.2 million and $1.0 million for thecontractual coupon interest, the accretion of the debt discount and the amortization of the debt issuance costs, respectively.The effective interest rate on the 2022 Notes is 5.1%, which includes the interest on the notes, amortization of the debt discount and debt issuance costs.The discount on the 2022 Notes is being amortized through May 15, 2022. Interest on the 2022 Notes began accruing upon issuance and is payable semi-annually on May 15 and November 15 of each year.In the event of a fundamental change (as defined in the indenture relating to the notes), holders of the 2022 Notes have the right to require us torepurchase for cash all or a portion of their notes at a price equal to 100% of the principal amount of the 2022 Notes, plus any accrued and unpaid interest.Holders of the 2022 Notes who convert their notes in connection with a make-whole fundamental change (as defined in the indenture) or following thedelivery by DexCom of a notice of redemption are, under certain circumstances, entitled to an increase in the conversion rate.Prior to 5:00 p.m., New York City time, on the business day immediately preceding February 15, 2022, holders of the 2022 Notes may convert all or aportion of their notes, in multiples of $1,000 principal amount, only under the following circumstances:(1)during any calendar quarter commencing after September 30, 2017 (and only during such calendar quarter), if the last reported sale price of commonstock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of theimmediately preceding calendar quarter is greater than or equal to 130% of the applicable conversion price of the 2022 Notes on each such tradingday;(2)during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the 2022Notes for each day of that five day consecutive trading day period was less than 98% of the product of the last reported sale price of common stockand the applicable conversion rate of the 2022 Notes on such trading day;(3)if we call any or all of the 2022 Notes for redemption, at any time prior to the close on business on the scheduled trading day immediately precedingthe redemption date; or(4)upon the occurrence of specified corporate transactions. On or after February 15, 2022, until 5:00 p.m., New York City time, on the business day immediately preceding the maturity date, holders of the 2022Notes may convert all or a portion of their notes regardless of the foregoing circumstances.DexCom may not redeem the 2022 Notes prior to May 15, 2020. On or after May 15, 2020, DexCom may redeem for cash all or part of the notes, at itsoption, if the last reported sale price of our common stock has been at least 140% of the conversion price then in effect for at least 20 trading days (whether ornot consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which DexComprovides notice of redemption. The redemption price will be equal to 100% of the principal amount of the 2022 Notes to be redeemed plus accrued andunpaid interest to, but excluding, the redemption date.No principal payments are due on the 2022 Notes prior to maturity. Other than restrictions relating to certain fundamental changes and consolidations,mergers or asset sales and customary anti-dilution adjustments, the indenture relating to the 2022 Notes includes customary terms and covenants, includingcertain events of default after which the 2022 Notes may be due and payable immediately.Circumstance (1) listed above occurred during the last 30 trading days of the quarter ended September 30, 2018. As a result, the 2022 Notes becameconvertible at the option of the holders from October 1, 2018 and remained convertible until December 31, 2018. Holders of 2022 Notes with an insignificantprincipal amount exercised their option to convert their 2022 Notes which we settled with shares of our common stock during the fourth quarter of 2018.F-240.75% Senior Convertible Notes due 2023In November 2018, we completed an offering of $750.0 million aggregate principal amount of unsecured senior convertible notes with a stated interestrate of 0.75% and a maturity date of December 1, 2023 (the 2023 Notes). In November 2018, the initial purchasers exercised their option to purchase anadditional $100.0 million aggregate principal amount of 2023 Notes. The net proceeds from the offering, after deducting initial purchasers’ discounts andcosts directly related to the offering, were approximately $836.6 million. The 2023 Notes may be settled in cash, stock, or a combination thereof, solely at ourdiscretion. It is our current intent and policy to settle all 2023 Notes conversions through combination settlement, satisfying the principal amountoutstanding with cash and any note conversion value in excess of the principal amount in shares of our common stock. The initial conversion rate of the2023 Notes is 6.0869 shares of common stock per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $164.29 pershare, subject to adjustments. We use the treasury stock method for assumed conversion of the 2023 Notes to compute the weighted average shares ofcommon stock outstanding for diluted earnings per share. We entered into transactions for a convertible note hedge (the 2023 Note Hedge) and warrants (the2023 Warrants) concurrently with the issuance of the 2023 Notes.Since upon conversion by the holders we may elect to settle such conversion in shares of our common stock, cash, or a combination thereof, weaccounted for the cash conversion option as an equity instrument classified to stockholders’ equity. As a result, we recognized $174.4 million in additionalpaid-in capital during 2018.The interest expense recognized on the 2023 Notes during the twelve months ended December 31, 2018 includes $0.5 million, $2.6 million and $0.2million for the contractual coupon interest, the accretion of the debt discount and the amortization of the debt issuance costs, respectively. The effectiveinterest rate on the 2023 Notes is 5.6%, which includes the interest on the notes, amortization of the debt discount and debt issuance costs. The discount onthe 2023 Notes is being amortized through December 1, 2023. Interest on the 2023 Notes began accruing upon issuance and is payable semi-annually onJune 1 and December 1 of each year.Holders of the 2023 Notes have the right to require us to repurchase for cash all or a portion of their notes at 100% of their principal amount, plus anyaccrued and unpaid interest, upon the occurrence of a fundamental change (as defined in the indenture relating to the notes). We will also be required toincrease the conversion rate for holders who convert their 2023 Notes in connection with certain fundamental changes occurring prior to the maturity date orfollowing the delivery by DexCom of a notice of redemption.Holders of the 2023 Notes may convert all or a portion of their notes at their option prior to 5:00 p.m., New York City time, on the business dayimmediately preceding September 1, 2023, in multiples of $1,000 principal amount, only under the following circumstances:(1)during any calendar quarter commencing after March 31, 2019 (and only during such calendar quarter), if the last reported sale price of commonstock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of theimmediately preceding calendar quarter is greater than or equal to 130% of the applicable conversion price of the 2023 Notes on each such tradingday;(2)during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the 2023Notes for each day of that five-day consecutive trading day period was less than 98% of the product of the last reported sale price of common stockand the applicable conversion rate of the 2023 Notes on such trading day;(3)if we call any or all of the 2023 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately precedingthe redemption date; or(4)upon the occurrence of specified corporate transactions.On or after September 1, 2023, until 5:00 p.m., New York City time, on the second scheduled trading day immediately preceding the maturity date,holders of the 2023 Notes may convert all or a portion of their notes regardless of the foregoing circumstances.DexCom may not redeem the 2023 Notes prior to December 1, 2021. On or after December 1, 2021 and prior to September 1, 2023, DexCom mayredeem for cash all or part of the 2023 Notes, at its option, if the last reported sale price of our common stock has been at least 130% of the conversion pricethen in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the tradingday immediately preceding the date on which DexCom provides notice of redemption. The redemption price will be equal to 100% of the principal amountof the 2023 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date.No principal payments are due on the 2023 Notes prior to maturity. Other than restrictions relating to certain fundamental changes and consolidations,mergers or asset sales and customary anti-dilution adjustments, the indenture relating to the 2023F-25Notes includes customary terms and covenants, including certain events of default after which the 2023 Notes may be due and payable immediately. As ofthe date of these financial statements, we are unaware of any current events or market conditions that would allow holders to convert the 2023 Notes.2023 Note HedgeIn connection with the offering of the 2023 Notes, in November 2018 we entered into convertible note hedge transactions with two of the initialpurchasers of the 2023 Notes (the 2023 Counterparties) entitling us to purchase up to 5.2 million shares of our common stock at an initial priceof $164.29 per share, each of which is subject to adjustment. The cost of the 2023 Note Hedge was $218.9 million and we accounted for it as an equityinstrument by recognizing $218.9 million in additional paid-in capital during 2018. The 2023 Note Hedge will expire on December 1, 2023. The 2023 NoteHedge is expected to reduce the potential equity dilution upon any conversion of the 2023 Notes and/or offset any cash payments we are required to make inexcess of the principal amount of converted 2023 Notes if the daily volume-weighted average price per share of our common stock exceeds the strike price ofthe 2023 Note Hedge. The strike price of the 2023 Note Hedge initially corresponds to the conversion price of the 2023 Notes and is subject to certainadjustments under the terms of the 2023 Note Hedge. An assumed exercise of the 2023 Note Hedge by us is considered anti-dilutive since the effect of theinclusion would always be anti-dilutive with respect to the calculation of diluted earnings per share.2023 WarrantsIn November 2018, we also sold warrants to the 2023 Counterparties to acquire up to 5.2 million shares of our common stock. The 2023 Warrantsrequire net share settlement and a pro rated number of warrants will expire on each of the 60 scheduled trading days starting on March 1, 2024. Wereceived $183.8 million in cash proceeds from the sale of the 2023 Warrants, which we recorded in additional paid-in capital during 2018. The 2023Warrants could have a dilutive effect on our earnings per share to the extent that the price of our common stock during a given measurement period exceedsthe strike price of the 2023 Warrants. The strike price of the 2023 Warrants is initially $198.38 per share and is subject to certain adjustments under the termsof the warrant agreements. We use the treasury share method for assumed conversion of the 2023 Warrants when computing the weighted average commonshares outstanding for diluted earnings per share.Revolving Credit AgreementTerms of the Revolving Credit AgreementOn December 19, 2018, we entered into an amended and restated $200.0 million revolving credit agreement (the Credit Agreement) with JPMorganChase Bank, NA, as administrative agent, Bank of America, Silicon Valley Bank, Union Bank and Bank of the West, amending and restating our June 2016agreement with those counterparties. In addition to allowing borrowings in U.S. dollars, the Credit Agreement provides a $50.0 million sublimit forborrowings in Canadian Dollars, Euros, British Pounds, Swedish Kroner, Japanese Yen and any other currency that is subsequently approved by JPMorganChase and each lender. The Credit Agreement also provides a sub-facility of up to $10.0 million for letters of credit. Subject to customary conditions and theapproval of any lender whose commitment would be increased, we have the option to increase the maximum principal amount available under the CreditAgreement by up to an additional $300.0 million, resulting in a maximum available principal amount of $500.0 million. However, at this time none of thelenders have committed to provide any such increase in their commitments. Borrowings under the Credit Agreement will be available for general corporatepurposes, including working capital and capital expenditures.Revolving loans under the Credit Agreement bear interest at our choice of one of two base rates plus a range of applicable margin rates that are based onour leverage ratio. The first base rate is the highest of (a) the publicly announced JPMorgan Chase prime rate, (b) the federal funds rate, or (c) the overnightbank funding rate, and the applicable margin rate ranges from 0.375% to 1.000%. The second base rate is a LIBOR-based rate, and the applicable margin rateranges from 1.375% to 2.000%. We will also pay a commitment fee of between 0.2% and 0.3%, payable quarterly in arrears, on the average daily unusedamount of the revolving facility based on our leverage ratio. The aggregate debt issuance costs and fees incurred with respect to entering into the CreditAgreement were $1.5 million, which have been capitalized in other assets in our balance sheets and will be amortized through the maturity date of December2023 on a straight line basis.The Credit Agreement will mature on the earlier to occur of (i) December 19, 2023 or (ii) 91 days prior to the maturity date of the 2022 Notes or (iii) 91days prior to the maturity date of the 2023 Notes if both (a) the aggregate outstanding principal amount of the 2022 Notes or the 2023 Notes, as applicable, isgreater than EBITDA for the period of four consecutive fiscal quarters ending prior to such date and (b) unrestricted domestic cash on hand is less than theaggregate outstanding principal amount of the 2022 Notes or the 2023 Notes, as applicable, plus $100.0 million. The full balance of the revolving loans andall other obligations under the Credit Agreement must be paid on the maturity date.Our obligations under the Credit Agreement are guaranteed by our existing and future wholly-owned domestic subsidiaries, and are secured by a first-priority security interest in substantially all of the assets of DexCom and the guarantors,F-26including all or a portion of the equity interests of our domestic subsidiaries and first-tier foreign subsidiaries but excluding real property and intellectualproperty (which is subject to a negative pledge). The Credit Agreement contains covenants that limit certain indebtedness, liens, investments, transactionswith affiliates, dividends and other restricted payments, subordinated indebtedness and amendments to subordinated indebtedness documents, and sale andleaseback transactions of DexCom or any of its domestic subsidiaries. The Credit Agreement also requires us to maintain a maximum leverage ratio and aminimum fixed charge coverage ratio. We were in compliance with these covenants as of December 31, 2018.Short-Term BorrowingsIn March 2017, we drew $75.0 million on the Credit Agreement under a six month term. We repaid the entire principal balance in May 2017. As ofDecember 31, 2018, we had no outstanding borrowings, letters of credit totaling $4.4 million, and a total available balance of $195.6 million under theCredit Agreement.6. CommitmentsLeasesOur corporate headquarters and primary manufacturing facilities are located in San Diego, California. We lease approximately 219,000 square feet ofspace in San Diego under leases that expire in February and March 2022. We have the option to renew each of these leases for two additional five-year terms.We lease approximately 87,000 square feet of space in San Diego under a lease that expires in February 2022 with no renewal options. We also leaseapproximately 132,600 square feet of space in San Diego under a sublease that expires in January 2022.We lease approximately 148,800 square feet of space in Mesa, Arizona under a lease that expires in March 2028. We have the option to renew this leasefor four additional five-year terms. The Mesa lease is a build-to-suit arrangement for a manufacturing facility where we were involved in the design andconstruction of the leased space, including non-standard tenant improvements that we paid for. For accounting purposes, we were considered the owner of theconstruction project during the construction period; as a result, during 2016 we capitalized the $6.0 million fair value of the Mesa building in property andequipment and recorded a corresponding financing lease obligation liability of $6.0 million in other liabilities in our balance sheet. We concluded that theMesa lease does not qualify for “sale-leaseback” treatment due to prohibited continuing involvement, so we have treated the Mesa lease as a financingarrangement.We have also entered into other operating lease agreements, primarily for office and warehouse space, that expire at various times through July 2026.Future minimum rental obligations under all lease agreements as of December 31, 2018 were as shown in the table below. These obligations excludereal estate taxes, operating costs and tenant improvement allowances and include the financing lease obligation for our Mesa facility.Fiscal Year Ending(In millions)2019$14.4202016.9202117.320226.620234.7Thereafter8.9Total$68.8Total rent expense for the twelve months ended December 31, 2018, 2017 and 2016 was $12.5 million, $11.1 million and $9.0 million, respectively.Purchase CommitmentsWe are party to various purchase arrangements related to our manufacturing and research and development activities, including for materials used in ourCGM systems. As of December 31, 2018, we had firm purchase commitments with vendors totaling $204.0 million, most of which are due within one year.F-277. ContingenciesLitigationOn March 28, 2016, AgaMatrix, Inc., or AgaMatrix, filed a patent infringement lawsuit against us in the United States District Court for the District ofOregon, asserting that certain of our products infringe certain patents held by AgaMatrix. On June 6, 2016, AgaMatrix filed a First Amended Complaintasserting the same three patents. On February 24, 2017, the Court granted AgaMatrix’s motion to substitute WaveForm Technologies, Inc., or WaveForm, asthe new plaintiff following AgaMatrix’s transfer of the three patents to its newly formed entity. On August 25, 2016, we filed petitions for inter partes reviewwith the Patent Trial and Appeal Board, or PTAB, of the U.S. Patent and Trademark Office seeking a determination that two of the three asserted patents areinvalid under U.S. patent law and those petitions were granted on March 6, 2017. On March 8, 2017, we filed a petition for inter partes review with the PTABseeking a determination that the third of the three asserted patents is invalid under U.S. patent law. This petition was granted on September 15, 2017. ThePTAB issued a Final Written Decision for each of the first two patents on February 28, 2018, where the PTAB found the majority of asserted claims from thefirst patent unpatentable and the remaining claims under review not unpatentable. The PTAB found all claims under review from the second patent notunpatentable. We believe the PTAB erred in finding any claims of the first two patents not unpatentable, and appealed the PTAB’s decision to the UnitedStates Court of Appeals for the Federal Circuit, or Federal Circuit, on March 30, 2018. Briefing of the appeal is complete and we are currently awaiting thedates for oral argument from the Court of Appeals. The PTAB issued a Final Written Decision for the third patent on September 12, 2018, where the PTABfound all claims of the third patent asserted against us in the District of Oregon litigation unpatentable. WaveForm did not appeal this decision. On January 4,2019, the parties stipulated to the dismissal of all claims and counterclaims regarding the third asserted patent. Most activity in the patent infringementlawsuit against us in the District of Oregon was stayed until the PTAB completed the inter partes review proceedings. That stay was lifted on October 10,2018. The remaining claims and counterclaims will continue with an estimated date of trial in February 2020. It is our position that Waveform’s assertions ofinfringement have no merit.We have also filed several lawsuits against AgaMatrix. We filed a patent infringement lawsuit against AgaMatrix in the United States District Court forthe Central District of California, or C.D. Cal., which is currently on appeal to the Federal Circuit based on a Final Judgment of non-infringement entered bythe C.D. Cal. judge on February 23, 2018. AgaMatrix sought attorneys’ fees for this lawsuit and as of December 31, 2018 we have accrued an immaterialamount for those fees. On September 15, 2017, we filed a patent infringement lawsuit against AgaMatrix in the United States District Court for the District ofDelaware, asserting certain single-point blood glucose monitoring products of AgaMatrix infringe two patents held by us. In addition, on September 18,2017, we filed a Complaint against AgaMatrix in the International Trade Commission, referred to as the ITC, requesting that the ITC institute aninvestigation and issue an order excluding certain products of AgaMatrix from importation into or sale in the United States based on AgaMatrix’sinfringement of the same two patents asserted in the Delaware litigation. On September 14, 2018, AgaMatrix filed two petitions for inter partes review foreach of the same two patents we asserted in the District of Delaware and the ITC. We filed a response to all four petitions on December 17, 2018. AgaMatrixhad requested additional briefing on the matter and the PTAB has authorized both sides to do so. Briefing was completed in January 2019.Neither the outcome of these lawsuits nor the amount and range of potential loss associated with the lawsuits can be assessed at this time. Other than theattorneys’ fees described above, as of December 31, 2018 we have accrued no amounts for contingent losses associated with these suits.We are subject to various claims, complaints and legal actions that arise from time to time in the normal course of business, including commercialinsurance, product liability and employment related matters. In addition, from time to time we may bring claims or initiate lawsuits against various thirdparties with respect to matters arising out of the ordinary course of our business, including commercial and employment related matters. We do not expectthat the resolution of these matters would, or will, have a material adverse effect or material impact on our financial position or results of operations.F-288. Income TaxesIncome (loss) before income taxes subject to taxes in the following jurisdictions is as follows: Twelve Months Ended December 31, 2018(In millions)2018 2017 2016United States$(28.3) $12.4 $(44.4)Outside of the United States(98.2) (61.0) (20.5)Total$(126.5) $(48.6) $(64.9)Significant components of the provision for income taxes are as follows: Twelve Months Ended December 31, 2018(In millions)2018 2017 2016Current: Federal$— $— $—State2.7 0.1 0.1Foreign0.1 1.5 0.8Total current income taxes2.8 1.6 0.9Deferred: Federal(1.7) — (0.1)State(0.5) — —Foreign— — (0.1)Total deferred income taxes(2.2) — (0.2)Total$0.6 $1.6 $0.7On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the Act) was signed into law making significant changes to the Internal Revenue Code.Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, thetransition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemedrepatriation of cumulative foreign earnings as of December 31, 2017. We made provisional estimates of the impact of the Act in our 2017 year end income taxprovision in accordance with our understanding of the Act and guidance available as of the date of our 2017 financial statements. As a result, we reduced ournet U.S. deferred tax assets by a provisional amount of $105.7 million offset by a decrease in the valuation allowance, resulting in no tax expense. Theprovisional amount related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings was nil based on cumulative foreigndeficits in earnings of $41.2 million.On December 22, 2017, Staff Accounting Bulletin No. 118 (SAB 118) was issued to address the application of US GAAP in situations when a registrantdoes not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting forcertain income tax effects of the Act. In accordance with SAB 118, the Company has determined that $105.7 million of deferred tax expense offset by anincrease in valuation allowance in connection with the remeasurement of our U.S. deferred tax assets and liabilities, and the analysis of our foreign deficits inearnings in connection with the transition tax on the mandatory deemed repatriation of foreign earnings, were provisional amounts and reasonable estimatesat December 31, 2017.During 2018 we finalized the impact of remeasuring our net U.S. deferred tax assets resulting from the decrease in the federal tax rate. Our provisionalestimate of the reduction in our U.S. deferred tax assets of $105.7 million decreased to $105.3 million, resulting in a $0.4 million increase to our openingbalance of net U.S. deferred tax assets that was offset by an increase in the valuation allowance. The final amount related to the one-time mandatory deemedrepatriation of foreign earnings is nil based on final cumulative foreign deficits of $24.6 million. The Act repealed U.S. taxation on the subsequentrepatriation of foreign earnings. We intend to reinvest all of our foreign earnings and capital to support and expand existing operations outside the U.S. inthose jurisdictions in which we would incur significant withholding taxes and other taxes upon repatriation of such amounts.F-29At December 31, 2018, we had federal, state and foreign tax net operating loss carryforwards of approximately $578.7 million, $417.2 million, and$129.3 million, respectively. The federal and state tax loss carryforwards will begin to expire in 2027 and 2025, respectively, unless previously utilized. Theforeign net operating losses carry forward indefinitely.At December 31, 2018, we also had federal and state research and development tax credit carryforwards of approximately $41.1 million and $41.4million, respectively. $0.03 million of the federal research and development tax credit will begin to expire in 2020, unless previously utilized. The stateresearch and development tax credit will carryforward indefinitely until utilized.Utilization of net operating losses and credit carryforwards is subject to an annual limitation due to ownership change limitations provided bySection 382 and 383 of the Internal Revenue Code of 1986, as amended, and similar state provisions. An ownership change limitation occurred as a result ofthe stock offering completed in February 2009. The limitation will likely result in approximately $2.1 million of U.S. income tax credits that will expireunused. The related deferred tax assets have been removed from the components of our deferred tax assets as summarized in the table below. We performed aSection 382 study on the remaining federal and state net operating losses and tax credit carryforwards and have determined that there is no annual limitationon them as of December 31, 2018.Significant components of our deferred tax assets as of December 31, 2018 and 2017 are shown below. A valuation allowance of approximately $330.1million has been established as of December 31, 2018 to offset the deferred tax assets, as realization of such assets is uncertain. We maintain a deferred taxliability related to indefinite-lived intangible assets that is not netted against the deferred tax assets. Reversal of the taxable temporary difference for theseintangible assets cannot serve as a source of income for realization of the deferred tax assets because the deferred tax liability will not reverse until theintangible assets are sold or written down due to impairment. December 31,(In millions)2018 2017Deferred tax assets: Net operating loss carryforwards$162.0 $188.7Capitalized research and development expenses62.1 8.4Tax credits59.0 47.8Share-based compensation12.5 13.8Fixed and intangible assets16.0 0.4Accrued liabilities and reserves22.5 20.5Total gross deferred tax assets334.1 279.6Less: valuation allowance(330.1) (263.5)Total net deferred tax assets4.0 16.1Deferred tax liabilities: Fixed assets and acquired intangibles assets(3.8) (0.1)Convertible debt discount(0.1) (15.9)Total deferred tax liabilities(3.9) (16.0)Net deferred tax assets (liabilities)$0.1 $0.1Of the $66.6 million increase in valuation allowance during the twelve months ended December 31, 2018, $56.9 million relates to income fromcontinuing operations and $11.9 million relates to temporary differences established through additional paid-in capital, partially offset by $2.2 million thatrelates to temporary differences established through goodwill.As of December 31, 2018, deferred tax assets for which any subsequently recognized tax benefits will be credited to additional paid-in capital ratherthan to income tax benefit totaled $56.2 million. In 2017 we adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718) (ASU 2016-09), whichwas intended to simplify several areas of accounting for share-based payment arrangements, including the recognition for excess tax benefits anddeficiencies. As a result of our adoption of ASU 2016-09, we recorded $161.8 million of excess tax benefits as an increase in deferred tax assets, with anoffsetting increase in valuation allowance through retained earnings.F-30The reconciliation between our effective tax rate on income (loss) from continuing operations and the statutory rate is as follows: Twelve Months Ended December 31, 2018(In millions)2018 2017 2016Income taxes at statutory rates$(26.6) $(17.0) $(22.7)State income tax, net of federal benefit(5.5) (0.7) 1.2Permanent items1.3 0.7 0.8Research and development credits(11.7) (13.3) (11.7)Foreign rate differential3.7 5.4 4.5Stock and officers compensation(5.1) (10.4) 4.0Rate change— (0.1) (0.1)Unrecognized tax benefits— (15.4) 27.7Impact of adoption of ASU 2016-16(13.3) — —Impact of Tax Cuts and Jobs Act of 2017(0.4) 105.7 —Other1.3 (2.2) —Change in valuation allowance56.9 (51.1) (3.0)Income taxes at effective rates$0.6 $1.6 $0.7The following table summarizes the activity related to our gross unrecognized tax benefits:(In millions) Balance at January 1, 2016$15.6Decreases related to prior year tax positions(8.4)Increases related to current year tax positions32.6Balance at December 31, 201639.8Decreases related to prior year tax positions(14.9)Increases related to current year tax positions3.3Decrease related to Tax Cuts and Jobs Act of 2017(5.4)Balance at December 31, 201722.8Decreases related to prior year tax positions(0.3)Increases related to current year tax positions3.4Balance at December 31, 2018$25.9Due to the valuation allowance recorded against our deferred tax assets, none of the total unrecognized tax benefits as of December 31, 2018 wouldreduce our annual effective tax rate if recognized. Interest and penalties are classified as a component of income tax expense and were not material for anyperiod presented. Due to net operating losses incurred, tax years from 1999 and forward for federal and state purposes and from 2016 and forward for foreignjurisdictions remain open to examination by the major taxing jurisdictions to which we are subject. The IRS commenced an audit of our 2015 and 2016federal income tax returns in February 2018. We expect that the audit will be completed in 2019. We do not expect any significant changes to ourunrecognized tax benefits over the next twelve months.9. Employee Benefit Plans and Stockholders’ Equity401(k) PlanWe have a defined contribution 401(k) retirement plan (the 401(k) Plan) covering substantially all employees in the United States that meet certain agerequirements. Employees who participate in the 401(k) Plan may contribute up to 75% of their compensation each year, subject to Internal Revenue Servicelimitations and the terms and conditions of the plan. Under the terms of the 401(k) Plan, we may elect to match a discretionary percentage of contributions. InApril 2018, we beganF-31matching 50% of contributions up to 4% of annual compensation. Total matching contributions were $2.6 million for the twelve months ended December 31,2018.Employee Stock Purchase Plan, or ESPPOn May 28, 2015, our stockholders approved the 2015 Employee Stock Purchase Plan (the 2015 ESPP), which replaced our 2005 Employee StockPurchase Plan. The 2015 ESPP permits our eligible employees to purchase discounted shares of our common stock at semi-annual intervals through periodicpayroll deductions. A total of up to 1.5 million shares may be issued under the 2015 ESPP and it expires upon the earliest to occur of (a) termination of the2015 ESPP by our board of directors, (b) issuance of all of the shares of common stock reserved for issuance under the plan, or (c) May 28, 2025.Payroll deductions may not exceed 10% of the participant’s cash compensation subject to certain limitations, and the purchase price will not be lessthan 85% of the lower of the fair market value of the common stock at either the beginning of the applicable Offering Period or the Purchase Date. Under our2015 ESPP, each Offering Period is twelve months, with new Offering Periods commencing every six months on March 1 and September 1 of each year. EachOffering Period consists of two six-month purchase periods (each a Purchase Period) during which payroll deductions of the participants are accumulatedunder the ESPP. The last business day of each Purchase Period is referred to as the Purchase Date. Purchase Dates are every six months on February 28 orFebruary 29 and August 31.We issued 189,904 and 122,857 and 99,192 shares of common stock under the 2015 ESPP during the twelve months ended December 31, 2018, 2017and 2016, respectively. We issued 8,539 shares of common stock under the 2005 ESPP during the twelve months ended December 31, 2016. As ofDecember 31, 2018, there were 1.1 million shares available for issuance under the 2015 ESPP.Treasury StockWe repurchased 0.8 million shares of our common stock for $100.0 million during 2018. We repurchased all of these shares at the market prices on thetrade dates; accordingly, all amounts paid to reacquire these shares have been recorded as treasury stock in our balance sheet as of December 31, 2018.Repurchased shares of our common stock are held as treasury shares until they are reissued or retired. When we reissue treasury stock, if the proceedsfrom the sale are more than the average price we paid to acquire the shares we record an increase in additional paid-in capital. Conversely, if the proceedsfrom the sale are less than the average price we paid to acquire the shares, we record a decrease in additional paid-in capital to the extent of increasespreviously recorded for similar transactions and a decrease in retained earnings for any remaining amount.We issue new shares of common stock to satisfy option exercises and RSU vesting under our employee equity incentive plans. We have not yetdetermined the ultimate disposition of the shares that we repurchased in 2018, and consequently we continue to hold them as treasury shares rather thanretiring them.Description of Equity Incentive PlansIn May 2015, we adopted the Amended and Restated 2015 Equity Incentive Plan (the 2015 Plan), which replaced our 2005 Equity Incentive Plan andprovides for the grant of incentive and nonstatutory stock options, restricted stock, stock bonuses, stock appreciation rights, and restricted stock units toemployees, directors or consultants of the Company. As of the date of adoption, a total of 4.0 million shares were reserved for issuance pursuant to the 2015Plan. Shares forfeited under the 2005 Equity Incentive Plan subsequent to May 28, 2015 are returned to the share reserve under the 2015 Plan and will beavailable for future awards. Stockholder approval is required to increase the maximum number of shares that may be issued under the 2015 Plan.F-32Stock OptionsWe have not granted any stock options since 2010. A summary of our stock option activity and related information for the twelve months endedDecember 31, 2018 is as follows: Number ofShares(in millions) Weighted-AverageExercisePriceper Share Weighted-AverageRemainingContractualTerm(in years) Aggregate IntrinsicValue(in millions)Outstanding at December 31, 20170.4 $6.71 Exercised(0.3) 6.34 Forfeited— — Outstanding at December 31, 20180.1 8.02 0.95 $9.6Exercisable at December 31, 20180.1 $8.02 0.95 $9.6The total intrinsic value of stock options exercised as of the date of exercise was as follows: Years Ended December 31, (In millions)2018 2017 2016Intrinsic value of options exercised$30.0 $21.6 $39.9We define in-the-money options at December 31, 2018 as options that had exercise prices that were lower than the $119.80 closing market price of ourcommon stock at that date. There were 0.1 million in-the-money options exercisable at December 31, 2018. The aggregate intrinsic value of optionsoutstanding at December 31, 2018 is calculated as the difference between the exercise price of the underlying options and the market price of our commonstock for the 0.1 million options that were in-the-money at that date.Expense and Valuation InformationThe following table summarizes share-based compensation expense related to restricted stock units, stock options, and employee stock purchases underthe ESPP for the twelve months ended December 31, 2018, 2017 and 2016: Years Ended December 31, (In millions)2018 2017 2016Cost of sales$9.2 $9.6 $12.0Research and development33.0 37.5 39.8Selling, general and administrative59.7 59.1 59.0Total share-based compensation expense included in net loss$101.9 $106.2 $110.8At December 31, 2018, unrecognized estimated compensation costs related to unvested restricted stock units totaled $126.5 million and are expectedto be recognized through 2021.We estimate the fair value of stock options granted and ESPP purchase rights on the date of grant using the Black-Scholes option pricing model and theassumptions below. We did not have any stock option grants during the twelve months ended December 31, 2018, 2017 and 2016. Years Ended December 31, ESPP2018 2017 2016Risk free interest rate1.55 – 2.25 0.75 – 1.12 0.46 – 0.57Dividend yield—% —% —%Expected volatility of DexCom common stock0.50 – 0.67 0.33 – 0.56 0.33 – 0.57Expected life (in years)1 1 1F-33Restricted Stock Units (RSUs)RSU awards typically vest annually over three or four years and vesting is subject to continued services. A summary of our RSU activity for the twelvemonths ended December 31, 2018, 2017 and 2016 is as follows:(In millions except weighted average grant date fair value)Shares Weighted AverageGrant DateFair Value AggregateIntrinsic ValueNonvested at December 31, 20154.1 $50.60 Granted1.9 68.16 Vested(2.1) 44.95 Forfeited(0.2) 56.37 Nonvested at December 31, 20163.7 62.51 $218.6Granted1.3 75.78 Vested(1.9) 58.92 Forfeited(0.4) 67.97 Nonvested at December 31, 20172.7 70.68 154.5Granted1.7 66.07 Vested(1.4) 68.44 Forfeited(0.3) 68.56 Nonvested at December 31, 20182.7 $69.19 $319.0The total vest-date fair value of RSUs vested was $120.9 million, $144.5 million and $150.0 million for the twelve months ended December 31, 2018,2017 and 2016, respectively.Reserved SharesShares of common stock reserved for future issuance were as follows as of the dated indicated: December 31,(In millions)2018 2017Stock options and awards under our plans: Stock options granted and outstanding0.1 0.4Unvested restricted stock units2.7 2.7Reserved for future grant3.2 4.7Employee Stock Purchase Plan1.1 1.3Total7.1 9.110. Business Segment and Geographic InformationReportable SegmentsAn operating segment is identified as a component of a business that has discrete financial information available and for which the chief operatingdecision maker must decide the level of resource allocation. In addition, the guidance for segment reporting indicates certain quantitative materialitythresholds. None of the components of our business meet the definition of an operating segment.We currently consider our operations to be, and manage our business globally within, one reportable segment, which is consistent with how ourPresident and Chief Executive Officer, who is our chief operating decision maker, reviews our business, makes investment and resource allocation decisions,and assesses operating performance.F-34Disaggregation of RevenueDexCom is domiciled in the United States. We sell our durable systems and disposable sensors through a direct sales force in the United States, Canadaand some countries in Europe, and through distribution arrangements in the United States, Canada, Australia, New Zealand, and some countries in Europe,Asia, Latin America, the Middle East and Africa. We disaggregate our revenue from contracts by geography and by major sales channel as we believe theybest depict how the nature, amount and timing of revenues and cash flows are affected by economic factors.Revenues by geographic regionDuring the twelve months ended December 31, 2018, 2017 and 2016, no individual country outside the United States generated revenue thatrepresented more than 10% of our total revenue. The following table sets forth revenues by our two primary geographical markets, the United States andoutside of the United States, based on the geographic location to which we deliver the product: Twelve Months Ended December 31, 2018 2017 2016(Dollars in millions)Amount %of Total Amount %of Total Amount %of TotalRevenues: United States$818.4 79% $596.2 83% $497.5 87%Outside of the United States213.2 21% 122.3 17% 75.8 13%Total$1,031.6 100% $718.5 100% $573.3 100%Substantially all of our long-lived assets are located in the United States.Revenues by customer sales channelThe following table sets forth revenues by major sales channel for the twelve months ended December 31, 2018, 2017 and 2016: Twelve Months Ended December 31, 2018 2017 2016(Dollars in millions)Amount %of Total Amount %of Total Amount %of TotalRevenues: Distributor$652.9 63% $538.0 75% $411.8 72%Direct378.7 37% 180.5 25% 161.5 28%Total$1,031.6 100% $718.5 100% $573.3 100%F-3511. Quarterly Financial Information (Unaudited)The following is a summary of our quarterly results of operations for the years ended December 31, 2018 and 2017: For the Three Months Ended(In millions except per share data) December 31 September 30 June 30 March 31Year ended December 31, 2018 Revenues $338.0 $266.7 $242.5 $184.4Gross profit 222.8 168.6 153.6 118.9Total operating expenses 387.4 154.7 158.5 149.6Net income (loss) (179.7) 46.6 30.2 (24.2)Basic net income (loss) per share (a) $(2.03) $0.53 $0.34 $(0.28)Diluted net income (loss) per share (a) $(2.03) $0.52 $0.34 $(0.28) Year ended December 31, 2017 Revenues $221.0 $184.6 $170.6 $142.3Gross profit 153.5 127.0 117.5 94.1Total operating expenses 141.5 127.5 131.1 134.5Net income (loss) (9.4) (2.0) 2.9 (41.7)Basic net income (loss) per share (a) $(0.11) $(0.02) $0.03 $(0.49)Diluted net income (loss) per share (a) $(0.11) $(0.02) $0.03 $(0.49)(a) Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per share information may notequal annual basic and diluted earnings per share.F-36DEXCOM, INC.SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTSFor the Years Ended December 31, 2018, 2017 and 2016(in millions) Allowance for doubtful accounts Balance December 31, 2015$7.8Provision for doubtful accounts9.5Write-offs and adjustments(5.6)Recoveries0.7Balance December 31, 2016$12.4 Allowance for doubtful accounts Balance December 31, 2016$12.4Provision for doubtful accounts5.3Write-offs and adjustments(7.0)Recoveries0.7Balance December 31, 2017$11.4 Allowance for doubtful accounts Balance December 31, 2017$11.4Provision for doubtful accounts3.6Write-offs and adjustments(8.3)Recoveries0.5Balance December 31, 2018$7.2F-37[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIALAMENDED AND RESTATED COLLABORATION AND LICENSE AGREEMENTThis AMENDED AND RESTATED COLLABORATION AND LICENSE AGREEMENT (the “Agreement”) is executed onNovember 20, 2018 (the “Effective Date”) (as defined below) by and between DexCom, Inc., (“DexCom”) having its principal placeof business at 6340 Sequence Drive, San Diego, California 92121, Verily Ireland Limited (“VIL”) having its principal place ofbusiness at 70 Sir John Rogerson’s Quay, Dublin 2, Ireland and Verily Life Sciences LLC (formerly Google Life Sciences LLC)(“VLS” and together with VIL, “Verily”), having its principal place of business at 1600 Amphitheatre Parkway, Mountain View,California 94043, and amends and restates in its entirety that certain Collaboration and License Agreement dated as of August 10,2015 (“Original Effective Date”) by and between DexCom and Verily (as amended by Amendment No. 1 thereto effective as ofOctober 25, 2016, the “Original Agreement”). DexCom and Verily are each referred to herein by name or, individually, as a “Party”or, collectively, as “Parties.”BACKGROUNDA. Verily has rights to certain proprietary technologies related to electronic devices and assemblies for glucose monitoring,including receiving and transmitting electronic signals in connection therewith.B. DexCom develops, manufactures and distributes continuous glucose monitoring systems and components of such systems,and has rights to certain proprietary technologies relating to such systems.C. Verily and DexCom wish to collaboratively develop Future Products (as defined below) and for DexCom tocommercialize such Future Products, all on the terms and conditions set forth herein.D. In order to better align the goals and interests of the parties, Verily and DexCom wish to amend certain terms of theOriginal Agreement, and to restate the Original Agreement, as so amended, in its entirety in this Agreement, all on the terms andconditions set forth below. [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL NOW, THEREFORE, in consideration of the mutual covenants and agreements provided herein below and otherconsideration, the receipt and sufficiency of which is hereby acknowledged, DexCom and Verily hereby agree as follows:Article 1. DEFINITIONSThe following capitalized terms shall have the meanings given in this Article 1 when used in this Agreement:1.1 “510(k)” means a pre-market notification submitted to the FDA for clearance under Section 510(k) of the FD&C Act, 21U.S.C. § 360(k), and 21 C.F.R. Part 807, Subpart E.1.2 “Acceptance Submission Notice” has the meaning set forth in Section 3.9.1.1.3 “Acquirer” means a Third Party with whom DexCom enters into a definitive agreement pursuant to which a Change ofControl is effected.1.4 “Additional Product” means any [***] that the Parties agree to [***] hereunder in accordance with Section 4.3, as such[***] may be updated or upgraded pursuant to the Final Additional Product Supplement.1.5 “Adverse Event” means, with respect to a Product, any reportable event, as defined in the United States under 21 C.F.R.§ 803.3 (or other applicable Law in the Territory) or pursuant to Good Clinical Practice.1.6 “Affiliate” means (a) with respect to Verily, the subsidiaries of Verily, and (b) with respect to DexCom, any Persondirectly or indirectly controlling, controlled by or under common control with DexCom. For purposes of this Section 1.5 only,“control” means (a) direct or indirect ownership of more than fifty percent (50%) (or, if less than fifty percent (50%), the maximumownership interest permitted by applicable Law) of the stock or shares having the right to vote for2 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL the election of directors of such corporate entity or (b) the possession, directly or indirectly, of the power to direct, or cause thedirection of, the management or policies of such entity, whether through the ownership of voting securities, by contract or otherwise.For the avoidance of doubt, the following shall not be Affiliates of Verily for purposes of this Agreement: (i) Alphabet Inc. or anysubsidiaries of Alphabet Inc. other than Verily and its subsidiaries; (ii) Google LLC or any subsidiaries of Google LLC; (iii) CalicoLLC, (iv) all portfolio companies of GV Management Company, L.L.C., CapitalG Management Company LLC or any otherinvestment arm of Verily or Google Inc.; (v) all portfolio companies of Verily or Google Inc. or its subsidiaries in which such entity orentities hold securities primarily for investment purposes, and (vi) any joint venture entity formed by Verily or its subsidiaries togetherwith one or more Third Parties unless Verily possesses the power to wholly-control such joint venture entity, whether through theownership of voting securities, by contract, or otherwise.1.7 “Agreement” has the meaning set forth in the Preamble.1.8 “Alliance Manager” means the individual appointed by a Party to act as alliance manager for that Party.1.9 “Alphabet” means Alphabet Inc. having its principal place of business at 1600 Amphitheatre Parkway, Mountain View,CA 94043.1.10 “Alternative Product” means (a) any [***], or (b) if [***] elects not to submit [***] with respect to the applicable[***], then any [***], provided, however, that if [***], it being understood that in no event shall [***]. [***] shall be deemed to haveoccurred if either of the following occurs: [***]; or (ii) [***]. Notwithstanding the foregoing, with respect to any [***]. A [***] shallbe subject to this Section 1.9 only if [***]. For purposes of this definition:(i) “[***]” means a [***] that (in each case as compared to the [***] (1) comprises or utilizes (a) [***],(b) [***], (c) [***], (d) [***], (e) [***], (f) [***], and/or (g) [***], and (2) [***];(ii) “Sublicensee” means a Third Party that has [***]; and(iii) “[***]” means that [***].3 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 1.11 “Antitrust Clearance Date” has the meaning set forth in the Stock Purchase Agreement.1.12 “Antitrust Law” has the meaning set forth in the Stock Purchase Agreement.1.13 “Assigned Software” means any [***] which (a) is [***] and/or (b) [***].1.14 “Bankruptcy Code” has the meaning set forth in Section 14.12.1.15 “[***]” has the meaning set forth in Section 7.1.2(b).1.16 “Business Day” means any day other than a Saturday, Sunday or any other day on which commercial banks in the Stateof California, U.S.A. are authorized or required by Law to remain closed.1.17 “[***]” means any of the following [***]: (a) [***]; and/or (b) [***].1.18 “[***]” means any and all [***], (i) whether on a standalone basis or as integrated into, or connected with, otherproducts, systems ([***]), or components (including but not limited to the Products), whether or not such products, systems, orcomponents [***], and (ii) whether or not such [***]. [***] may include the following to the extent used or incorporated in such [***]:(a) [***]. [***] exclude [***]. If there is another method for [***] and the Parties agree in writing [***], then this definition will beexpanded to include that method.1.19 “Change of Control” means any merger, consolidation, sale of substantially all of the assets to which this Agreementrelates, or similar transaction or series of transactions in which DexCom is the entity being acquired or selling such assets.1.20 “Chief Executive” means the Chief Executive Officer of DexCom and/or the Chief Executive Officer of Verily, asapplicable.1.21 “Collaboration” means any and all activities performed by or on behalf of each Party under this Agreement.1.22 “Collaboration IP” means any and all IP in subject matter conceived, developed or (in the case of IP in Software)authored by or on behalf of a Party and/or its Affiliates, and/or any4 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL Third Party acting on such Party’s behalf (or employees of the foregoing), in each case in the course of performing activities under the[***], and/or activities that have been or will be conducted under this Agreement, [***], at any time during the period from theOriginal Effective Date through the end of the Term of this Agreement (including, for the sake of clarity, the period beginning as of theOriginal Effective Date and ended on the Effective Date).1.23 “Collaboration Patent” means any Patent that claims Collaboration IP.1.24 “Commercialization” means, with respect to a [***] in connection with or support of any of the foregoing.Commercialization also includes activities with respect to [***]. “Commercialize” and “Commercializing” have their correlativemeanings.1.25 “Commercialization Plan” means a [***].1.26 “Commercially Reasonable Efforts” means, with respect to a Party, the efforts and resources normally applied by suchParty to its other programs and products of similar commercial potential at a similar stage in its product life, but no less than a sustained,continued and active commitment of efforts and resources (financial and otherwise) consistent with those normally applied in themedical device industry for novel, high-priority programs and products of similar commercial potential, provided that the determinationof efforts and resources applied (or to be applied) by DexCom shall not take into consideration any of the payments made or to bemade (including the possibility thereof) by DexCom to Verily under this Agreement. Without limiting the foregoing, CommerciallyReasonable Efforts shall require the applicable Party to: (a) promptly assign responsibilities for activities for which it is responsible tospecific employee(s) who are held accountable for the progress, monitoring and completion of such activities, (b) set and consistentlyseek to achieve meaningful objectives for carrying out such activities, and (c) consistently make and implement decisions and allocatethe full complement of resources necessary or appropriate to advance progress with respect to and complete such objectives in anexpeditious manner.1.27 “Communication IP” means Collaboration IP in subject matter consisting of [***].1.28 “Competing Program” means a [***].1.29 “Completed Deliverables” has the meaning set forth in Section 3.9.1.5 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 1.30 “Confidential Information” has the meaning set forth in Section 10.1.1.31 “Controlled” means, with respect to any item of IP, the possession (whether by ownership or license, other than alicense granted by one Party to the other pursuant to this Agreement), by a Party (or its Affiliates) of the ability to grant to the otherParty an assignment, exclusivity, access, a license or a sublicense (as applicable), or a covenant, or to extend other rights as provided inthis Agreement, to such IP, without violating the terms of any agreement or other arrangements with any Affiliate or Third Partyexisting at the time such Party (or its Affiliates) would be first required to grant any such assignment, exclusivity, access, license,sublicense, covenant, or any other right under this Agreement. For clarity, in the event an item of IP is “Controlled” by a Party as of theOriginal Effective Date or thereafter during the term of the Original Agreement and/or the Term, and is subsequently transferred to anAffiliate of such Party or a Third Party, such item shall continue to be covered by the licenses granted under this Agreement followingsuch transfer (to the same extent, if any, that it was covered prior to such transfer).1.32 “[***]” means, [***].1.33 “Defending Party” has the meaning set forth in Section 9.4.1.34 “DexCom Indemnitees” has the meaning set forth in Section 11.4.1.1.35 “Development” means, with respect to a product, any and all development activities, including, to the extent applicable,use, electrical and mechanical design, chemistry and materials development, software and firmware development, [***] developmentand scale-up, design and process verification and validation, test method development, biocompatibility and toxicology, qualityassurance/quality control development, statistical analysis, primary packaging development, [***] in support of Regulatory Approvals,[***] for the purposes of obtaining Regulatory Approvals, and development and implementation of (a) [***], (b) [***] and (c) [***].“Develop” and “Developed” have their correlative meaning.1.36 “Development Completion” means, with respect to a [***] completion of its obligations [***].1.37 “DexCom [***]” has the meaning set forth in Section 7.1.5.6 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 1.38 “DexCom Deliverable” has the meaning set forth in Section 11.4.3.1.39 “Development Plan” means (a) [***] and (b) [***], the terms of which are incorporated by reference herein, as suchplans may be amended or updated as provided in this Agreement (including any amendments [***]). The Parties acknowledge andagree that the [***], in effect as of the Effective Date, have been exchanged between the Parties in (or as one or more attachments to) asigned letter on the date hereof; provided, however, that the [***] is, as of the Effective Date, tentative and will be effective only uponmutual agreement of the Parties within ninety (90) days after the Effective Date.1.40 “[***]” has the meaning set forth in Section 3.1.1.41 “DexCom” has the meaning set forth in the Preamble.1.42 “DexCom Background IP” means any and all IP (other than Collaboration IP) Controlled by DexCom and itsAffiliates as of the Effective Date and/or at any time between the Effective Date and the end of the Term.1.43 “DexCom [***]” means any present or future (a) [***], or (b) [***].1.44 “DexCom Collaboration IP” has the meaning set forth in Section 9.1.1.1.45 “DexCom Collaboration Patents” means any Collaboration Patents solely owned by DexCom and/or its Affiliates.1.46 “DexCom Common Stock” means shares of common stock of DexCom.1.47 “DexCom Delay” has the meaning set forth in Section 3.8.1.1.48 “DexCom IP” means DexCom Collaboration IP and DexCom Background IP.1.49 “DexCom Other Collaboration IP” means Collaboration IP in subject matter consisting of (i) [***] and/or (ii) [***], ineach case (i) and (ii) where such Collaboration IP is conceived, developed, and/or authored solely by or on behalf of DexCom, and/orits Affiliates, and/or a Third Party acting on DexCom’s behalf (or employees of the foregoing).7 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 1.50 “DexCom Programs” means DexCom’s programs [***].1.51 “Dispute” has the meaning set forth in Section 13.1.1.52 “Enforcement Action” has the meaning set forth in Section 9.5.2.1.53 “Enforcing Party” has the meaning set forth in Section 9.5.4.1.54 “Effective Date” has the meaning set forth in the preamble.1.55 “[***]” means [***].1.56 “[***]” means [***].1.57 “Executive Sponsor” has the meaning set forth in Section 2.1.1.58 “Existing Distribution Agreement” means that certain [***].1.59 “FDA” means the United States Food and Drug Administration, or any successor agency thereto.1.60 “Final Additional Product Supplement” has the meaning set forth in Section 4.3.1.61 “First Product” means the [***].1.62 “Force Majeure Event” has the meaning set forth in Section 14.9.1.63 “Future Products” means the Products other than the First Product.1.64 “Good Clinical Practice” means generally accepted standards for design, conduct, performance, monitoring, auditing,analysis and reporting of clinical trials.1.65 “[***].1.66 “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules andregulations promulgated thereunder.8 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 1.67 “Incentive Milestone Event” has the meaning set forth in Section 8.2.3.1.68 “Indemnify” has the meaning set forth in Section 11.4.1.1.69 “Initial VWAP” means (i) if the Agreement is announced by press release prior to the open of trading on the NasdaqStock Market on the Effective Date, the VWAP of DexCom Common Stock on the day prior to the Effective Date, or (ii) if theAgreement is announced by press release after the close of trading on the Nasdaq Stock Market on the Effective Date, the VWAP ofDexCom Common Stock on the Effective Date.1.70 “[***]” has the meaning set forth in Section 7.6.1(a).1.71 “[***]” has the meaning set forth in Section 7.6.3(e).1.72 “Infringing Product” has the meaning set forth in Section 9.5.1.1.73 “IP” means any and all intellectual property rights of every kind throughout the world, including any and all: (a) Patents,(b) rights in Software, (c) rights in Know-How, (d) copyrights, and registrations and applications for copyrights, and (e) rights andremedies against past, present and future infringement, misappropriation, or other violation thereof with respect to any of the foregoing.1.74 “Joint Collaboration IP” means any and all Collaboration IP (other than the DexCom Collaboration IP and the VerilyCollaboration IP). For clarity, Joint Collaboration IP shall include any and all Communication IP.1.75 “Joint Collaboration Know-How” has the meaning set forth in Section 10.2.1.76 “Joint Collaboration Patent” any Collaboration Patent jointly owned by Verily and DexCom.1.77 “Know-How” means any proprietary data, results, material(s), technology, and nonpublic information of any typewhatsoever, in any tangible or intangible form, including information, techniques, technology, prototypes, practices, commercialmodels (including product pricing and/or reimbursement models or strategies), trade secrets, software, algorithms, discoveries,9 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL developments, inventions (whether patentable or not), methods, knowledge, know-how, skill, experience, chemical, pharmacological,toxicological and clinical test data and results, protocols and process for the conduct of pre-clinical and clinical studies, analytical andquality control results or descriptions, software and algorithms, reports and study reports.1.78 “Launch” means the first bona fide, arm’s length commercial sale of a Product that makes such Product generallycommercially available in any country following receipt of Marketing Approval for such Product in such country. “Launched” has itscorrelative meaning.1.79 “Law” means, individually and collectively, any and all laws, ordinances, orders, rules, rulings, directives andregulations of any kind whatsoever of any governmental authority or Regulatory Authority within the applicable jurisdiction.1.80 “Losses” has the meaning set forth in Section 11.4.1.1.81 “Manufacture” means all activities involved in manufacturing, preparing, quality control, testing, packaging and storingany of the products. “Manufacturing” has its correlative meaning.1.82 “Marketing Approval” means, with respect to a Product in a particular jurisdiction, all clearances, approvals, licenses,registrations or authorizations necessary for the Commercialization of such Product in such jurisdiction in the indication(s) specified inthe Specifications, including, only where mandatory for Commercialization of such Product, approval of labeling, price orreimbursement.1.83 “Milestone Date VWAP” means, with respect to a Milestone Event, the VWAP of DexCom Common Stock asdetermined on the date that such Milestone Event is first achieved, as equitably adjusted to reflect any stock split, stock dividend,combination, reclassification, recapitalization or other similar event involving DexCom Common Stock.1.84 “Milestone Event” has the meaning set forth in Section 8.2.1.1.85 “Milestone Payment” has the meaning set forth in Section 8.2.1.10 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 1.86 “Onduo” means Onduo, LLC, having its principal place of business at 55 Chapel Street Suite 10, Newton,Massachusetts 02458.1.87 “Original Agreement” has the meaning set forth in the Preamble.1.88 “Original [***]” means the [***] as defined under the Original Agreement as in effect at any relevant time during theterm of the Original Agreement.1.89 “Outside Software” has the meaning set forth in Section 2.3.2.1.90 “Party” has the meaning set forth in the Preamble.1.91 “Patent” means any of the following, whether existing now or in the future anywhere in the world: (a) any issued patent,including inventor's certificates, substitutions, extensions, confirmations, reissues, reexamination, renewal or any like governmentalgrant for protection of inventions; and (b) any pending application for any of the foregoing, including any continuation, divisional,substitution, continuations-in-part, provisional and converted provisional applications.1.92 “Permitted Encumbrances” means the agreements between Verily and/or its Affiliates, Alphabet, or AlphabetAffiliates and a Third Party with respect to the Verily IP in the [***], as set out at Exhibit 1.92.1.93 “Person” means any individual, corporation, partnership, association, joint-stock company, trust, unincorporatedorganization or government or political subdivision thereof.1.94 “Phase Gate IV” means the date of completion of the design validation, clinical pivotal trial (if applicable), and processvalidation for the applicable Product, in accordance with DexCom’s standard operating procedures [***].1.95 “PMA” means a pre-market approval application submitted to the FDA for approval in accordance with 21 U.S.C. §360(e) and 21 C.F.R. Part 814.1.96 “Pricing Assumptions” means that (a) [***]; (b) [***]; (c) [***]; (d) [***], (e) [***], and (f) [***].11 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 1.97 “Pricing Expectations” has the meaning set forth in Section 7.6.5(a).1.98 “[***]” means a [***]. For clarity, [***].1.99 “Prior Agreements” has the meaning set forth in Section 10.5.1.100 “Product” means the First Product, Second Product, the Third Product (if agreed by DexCom pursuant to Section3.1.1), and/or any Additional Product (if agreed by the Parties pursuant to Section 4.3).1.101 “Product Deadlines” means the deadlines for the completion of Development, Regulatory Filing in the U.S. and EUand Launch in the U.S. and EU for the [***]. The Product Deadlines for such Development, Regulatory Filing(s) [***] are alsoreferred to as “Product Development Deadlines.” The Product Deadlines for such Launch in the U.S. and EU are also referred to as“Product Launch Deadlines.”1.102 “Product Development Obligations” means the development, clinical and regulatory obligations of [***].1.103 “Proposed Additional Product Supplement” has the meaning set forth in Section 4.3.1.104 “Proposed Third Product Supplement” has the meaning set forth in Section 3.1.1.1.105 “Prosecution and Maintenance” means, with respect to a Patent, the preparing, filing, prosecuting and maintenance ofsuch Patent, as well as reexaminations, reissues, requests for Patent term extensions and the like with respect to such Patent, togetherwith the conduct of interferences, the defense of post-grant reviews, inter partes reviews, oppositions and other similar proceedingswith respect to the particular Patent; and “Prosecute and Maintain” shall have the correlative meaning.1.106 “Regulatory Approval” means, with respect to a Product in a particular jurisdiction, any Marketing Approval and allclearances, approvals, licenses, registrations or authorizations necessary for the Development or Manufacture of such Product in suchjurisdiction.12 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 1.107 “Regulatory Authority” means any federal, national, multinational, state, provincial or local regulatory agency,department, bureau or other governmental entity, agency or other organization (e.g., notified bodies) with authority over theDevelopment, Manufacture, Commercialization or other use or exploitation (including the granting of Marketing Approvals) of anyProduct in any jurisdiction, including the FDA.1.108 “Regulatory Filing” means any filing, application or submission for Regulatory Approval, and any notification andother correspondence made to or with a Regulatory Authority in connection with a Regulatory Approval, in each case that arenecessary or reasonably desirable in Development, Manufacture or Commercialization in a particular country, whether submittedbefore or after a Marketing Approval in the country, including a PMA, a 510(k), or any other pre-market notification of intent,including any Regulatory Approvals, in each case with respect to a Product.1.109 “Required Party” has the meaning set forth in Section 10.4.1.110 “Second Product” means the [***].1.111 “[***]” means [***] in subject matter consisting of: (a) [***], (b) [***], (c) [***], (d) [***], (e) [***], or (f) anycombination thereof.1.112 “Software” means software source code, object code, and any associated technical documentation, including, ifapplicable, the associated graphical interface, images, design materials, and schema design.1.113 “Specifications” means, with respect to a Product or component, written functional, performance, form andconfiguration specifications, cost objectives and technical designs, and proposed indications for use, of or for such Product orcomponent that are consistent with the technological capabilities of such Product or component and are intended to support the marketrequirements for such Product, together with the acceptance criteria for such Product or component, [***].1.114 “Standalone Product Limitation” has the meaning set forth in Section 7.1.2(b).13 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 1.115 “Statement of Work” means a writing executed by the Parties that sets forth the services to be rendered by Verily andany terms and conditions related to such services.1.116 “Stock Purchase Agreement” has the meaning set forth in Section 8.6.1.117 “Suppliers” has the meaning set forth in Section 7.6.1(a).1.118 “Supply Agreements” has the meaning set forth in Section 7.6.1(a).1.119 “Technical Lead” has the meaning set forth in Section 2.1.4.1.120 “Term” has the meaning set forth in Section 12.1.1.121 “Territory” means [***].1.122 “Third Party” means any Person other than DexCom, Verily or their respective Affiliates.1.123 “Third Party Claim” has the meaning set forth in Section 11.4.1.1.124 “Third Product” means the [***], if any, developed pursuant to Section 3.1.1, as such [***] may be updated orupgraded. For the avoidance of doubt, all references to Third Product in this Agreement, except for the restrictive covenant set forth inSection 3.1.1, shall apply if and only if DexCom elects to proceed with Third Product development as set forth in Section 3.1.1 andshall otherwise have no effect in this Agreement.1.125 “Third Product Negotiation Period” has the meaning set forth in Section 3.1.1.1.126 “Third Product Supplement” has the meaning set forth in Section 3.1.1.1.127 “Total Product Revenue” means total net revenue attributable to the sale by DexCom and/or its Affiliates of the FirstProduct, Second Product, Third Product, and/or any Alternative Product, as calculated in accordance with GAAP, consistent withDexCom’s revenue disclosed in DexCom’s financial statements filed with the SEC in its periodic (quarterly and annual) reports. If aProduct (or Alternative Product) is Commercialized, directly or indirectly, in a manner that is combined or integrated with any productor service that is not a Product (“Combination14 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL Product”), the portion of the total net revenue attributable to the Product (or Alternative Product) shall be calculated by [***].1.128 “Trademark” means any trademark, trade name, service mark, service name, brand, domain name, trade dress, logo,slogan or other indicia of origin or ownership, including registrations and applications therefor and the goodwill and activitiesassociated with each of the foregoing.1.129 “Upfront Payment Amount” has the meaning set forth in Section 8.1.1.130 “Upfront Shares” has the meaning set forth in Section 8.1.1.131 “Verily” has the meaning set forth in the Preamble.1.132 “Verily Background IP” means any and all IP (other than Collaboration IP) Controlled by Verily and/or its Affiliatesas of the Effective Date and/or at any time during the Term.1.133 “Verily [***]” has the meaning set forth in Section 4.3.1.134 “Verily Collaboration IP” means Verily Software IP and Verily Retained Know-How.1.135 “Verily Delay” has the meaning set forth in Section 3.1.2.1.136 “Verily Deliverable” has the meaning set forth in Section 11.4.1.1.137 “Verily Development Services” means [***] to support the [***].1.138 “Verily Indemnitees” has the meaning set forth in Section 11.4.3.1.139 “Verily Infrastructure Services” means [***].1.140 “Verily IP” means, collectively, (i) Verily Collaboration IP, (ii) Verily Licensed Patents, and (iii) Verily Know-How.15 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 1.141 “Verily Know-How” means any and all Know-How (a) incorporated by Verily into the First Product, Second Product,Third Product and/or any Additional Product or (b) otherwise used by Verily for its performance of [***].1.142 “Verily Licensed Patents” means (a) (i) the [***], (ii) any Patents that are entitled to claim priority to the foregoingPatents, and (iii) any Patents hereafter issuing on any of the Patents described in clause (i) or (ii) above, (b) [***], and/or (c) any otherPatents that are Controlled by Verily (and/or its Affiliates) as of the Effective Date and/or at any time between the Effective Date andthe end of the Term (excluding any Patents that are Verily Software IP), which Patents under (c) claim or cover the First Product,Second Product, Third Product and/or any Additional Product.1.143 “[***]” means the Patents listed in Exhibit 1.143.1.144 “[***]” means the Patents listed in Exhibit 1.144.1.145 “Verily Milestone Shares” has the meaning set forth in Section 8.2.1.1.146 “Verily Platform” means the [***] platform developed by or on behalf of [***], which platform (a) [***] and (b)[***].1.147 “Verily Programs” means Verily’s programs for [***].1.148 “Verily Program Notice” has the meaning set forth in Section 4.2.1.149 “Verily Program [***]” has the meaning set forth in Section 4.2.1.150 “Verily Retained Know-How” has the meaning set forth in Section 9.1.4.1.151 “Verily Services” means, collectively, the [***].1.152 “Verily Software IP” means [***].1.153 “Verily Trademarks” means the Trademarks set forth on Exhibit 1.153 or such replacements therefor as may bedesignated by Verily from time to time.1.154 “Verily Upfront Shares” has the meaning set forth in Section 8.1.16 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 1.155 “VWAP” means, with respect to a publicly traded stock and a specified end date, the volume weighted average tradingprice of such stock during a period of fifteen (15) consecutive trading days ending on the specified end date, calculated utilizing“VWAP” in the Bloomberg function VAP.1.156 Interpretation. The captions and headings to this Agreement are for convenience only, and are to be of no force or effectin construing or interpreting any of the provisions of this Agreement. Unless specified to the contrary, references to Articles, Sectionsor Exhibits mean the particular Articles, Sections or Exhibits to this Agreement and references to this Agreement include all Exhibitshereto. Unless context otherwise clearly requires, whenever used in this Agreement: (a) the words “include” or “including” shall beconstrued as incorporating, also, “but not limited to” or “without limitation;” (b) the word “day” or “year” means a calendar day or yearunless otherwise specified; (c) the word “notice” means notice in writing (whether or not specifically stated) and shall include notices,consents, approvals and other communications contemplated under this Agreement; (d) the words “hereof,” “herein,” “hereby” andderivative or similar words refer to this Agreement (including any Exhibits); (e) the word “or” shall be construed as the inclusivemeaning identified with the phrase “and/or;” (f) provisions that require that a Party, the Parties or the Executive Sponsors “agree,”“consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by writtenagreement, letter, approved minutes or otherwise; (g) words of any gender include the other gender; (h) words using the singular orplural number also include the plural or singular number, respectively; (i) references to any specific law, rule or regulation, or article,section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement law, rule orregulation thereof; and (j) neither Party nor its Affiliates shall be deemed to be acting “on behalf of” or “under authority of” the otherParty hereunder. This Agreement has been prepared jointly and shall not be strictly construed against either Party. Ambiguities, if any,in this Agreement shall not be construed against any Party, irrespective of which Party may be deemed to have authored the ambiguousprovision.Article 2.GOVERNANCE2.1 Executive Sponsors. The Parties will each appoint an individual to act as executive sponsor for that Party (each, an“Executive Sponsor”). The Executive Sponsors shall provide17 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL oversight with respect to the Development of the Products and the Parties’ respective activities to be conducted under this Agreement.The initial Executive Sponsor for DexCom shall be [***] and for Verily shall be [***]. The name and contact information for anyreplacement Executive Sponsor(s) chosen by a Party in its sole discretion from time to time, shall be promptly provided to the otherParty in writing.2.1.1 Meetings. The Executive Sponsors will meet [***], and more or less frequently as the Parties mutually deemappropriate, on such dates, and at such places and times, as provided herein or as the Parties shall agree. Meetings of the ExecutiveSponsors may occur [***]; provided, that at least [***] of the Executive Sponsor meetings per calendar year shall be held in person.[***]. As appropriate, other employee representatives of the Parties may attend meetings of the Executive Sponsors as nonvotingobservers, but no personnel of a Party’s Affiliates or of a Third Party may attend unless otherwise mutually agreed to by the Parties.Each Party may also call for special meetings to resolve particular matters requested by such Party.2.1.2 Decision Making. Decisions of the Executive Sponsors shall be made [***]. Each Party shall work in good faithto [***] and act in the general spirit of cooperation (taking into consideration the scope of the Executive Sponsors’ authority and theprinciples set forth in Sections 2.2.1 and 2.2.2) and in no event shall either Party unreasonably withhold, condition or delay anyapproval or other decision of the Executive Sponsors. Except as set forth in Section 3.3, in the event that the Executive Sponsors fail[***] with respect to a particular matter within its authority, then either Party may, by notice to the other Party, have such matterreferred to [***] for resolution by good faith discussions for a period of at least fifteen (15) Business Days. In the event that [***] areunable to reach agreement with respect to such matter within such fifteen (15) Business Days, then the dispute shall be resolvedpursuant to Article 13, provided that each Party shall retain final decision-making authority with respect to [***] (so long as incompliance with this Agreement).2.1.3 Alliance Managers. Each Party shall appoint an Alliance Manager, who will serve as a primary point of contactbetween the Parties, and who shall be responsible for communicating the status of activities under this Agreement to its ExecutiveSponsor and to the other Party’s Alliance Manager. The initial Alliance Manager for DexCom shall be [***] and for Verily shall be[***]. The Alliance Managers shall be the primary point of contact for the Parties with respect to the activities to be conducted underthis Agreement. The name and contact18 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL information for the Alliance Managers, as well as any replacement(s) chosen by either Party in their sole discretion from time to time,shall be promptly provided to the other Party in writing.2.1.4 Technical Leads. The Parties will each appoint an individual to act as a technical lead for that Party (each, a“Technical Lead”). The initial Technical Lead for DexCom shall be [***], and for Verily shall be [***] and [***]. The name andcontact information for the Technical Leads, as well as any replacement(s) chosen by either Party in their sole discretion from time totime, shall be promptly provided to the other Party in writing. The Technical Leads shall be responsible for (i) communicating on day-to-day implementation [***] with the other Technical Lead, and (ii) proposing updates or amendments [***] to the Executive Sponsorsin accordance with Section 3.3.2.2 Authority.2.2.1 General. Notwithstanding the appointment of the Executive Sponsors, each Party shall retain the rights, powersand discretion granted to it hereunder, and the Executive Sponsors shall not be delegated or vested with rights, powers or discretionunless such delegation or vesting is expressly provided herein, or the Parties expressly so agree in writing. The Executive Sponsorsshall not have the power to (i) amend, modify or waive compliance with this Agreement, (ii) to determine whether or not a Party hasmet its diligence or other obligations under the Agreement, or (iii) to determine whether or not a breach of this Agreement hasoccurred, and no decision of the Executive Sponsors shall be in contravention of any terms and conditions of this Agreement.2.2.2 Guiding Principles. The Executive Sponsors shall perform their responsibilities under this Agreement based onthe principles of prompt and diligent Development and Commercialization of Future Products in [***] throughout the Territory,consistent with Commercially Reasonable Efforts.2.3 Day-to-Day Responsibilities.2.3.1 Each Party shall: (a) be responsible for its day-to-day activities hereunder, provided that such activities areconsistent with the express terms of this Agreement or the decisions of the Executive Sponsors within the scope of their authorityspecified herein; and (b) keep the other Party informed as to the progress of such activities as reasonably requested by the other Party19 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL and as otherwise determined by the Executive Sponsors. Without limiting the foregoing, (i) the Executive Sponsor of each Party shallpromptly notify the Executive Sponsor of the other Party after becoming aware of circumstances that are reasonably likely to result in adelay in achieving a Product Deadline, achieving Phase Gate IV, or providing a Verily Service (as the case may be); [***].2.3.2 The Parties’ Technical Leads shall discuss use of Third Party Software or Software developed [***] (“OutsideSoftware”) as proposed to be incorporated into or relied on by any Assigned Software, in advance of delivery of such AssignedSoftware. If such use of Outside Software adversely impacts DexCom’s IP rights in such Assigned Software or the licensing terms forsuch Outside Software would impose restrictions or obligations on DexCom as a result of such use, then Verily will not use suchOutside Software in or with the Assigned Software without first obtaining approval from DexCom, such approval not to beunreasonably withheld. For clarity, DexCom’s approval of a whitelisted open source license constitutes an approval of the use of anyOutside Software under such whitelisted open source license for purposes of the foregoing.Article 3. DEVELOPMENT; DILIGENCE3.1 General. Subject to oversight and review of the Executive Sponsors, Verily and DexCom shall conduct a program toDevelop the Second Product and, at DexCom’s option in accordance with Section 3.1.1, the Third Product, in each case, on acollaborative basis and in accordance with the [***] (the “[***]”). Each Party shall use [***]. In addition, Verily shall, at its own cost,use [***], until Verily’s Development Completion of such Verily Services or the end date specified for such Verily Services [***],whichever is earlier. In accordance with Section 8.11, each Party will bear its own costs in performing its obligations [***] except asotherwise expressly provided herein or otherwise agreed by the Parties. Notwithstanding anything to the contrary in this Agreement, asof the Effective Date, neither Party shall have any Development, Commercialization, support, manufacturing, or other performanceobligations with respect to the First Product or otherwise [***].20 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 3.1.1 Third Product. Commencing on the Effective Date, DexCom shall cooperate with Verily in good faith, and shallmake its personnel available for discussion with Verily upon Verily’s reasonable request, for purposes of evaluating and drafting ThirdProduct requirements. [***]. The Parties shall [***]. Product deadlines in the Third Product Supplement shall be deemed ProductDeadlines under this Agreement. Notwithstanding the foregoing, the Parties acknowledge and agree that (i) [***], (ii) [***]. In theevent the Parties [***].3.2 [***]. The Development of the Future Products shall be carried out in accordance [***], which may be updated oramended as set forth in Section 3.3.3.2.1 Content [***]. The [***] will set forth the Development activities to be undertaken by each Party with respect tothe Future Products, including: (1) up to date Specifications for the Second Product and, if applicable, Third Product or any AdditionalProduct, (2) each Party’s Product Development Obligations, (3) the Verily Services, (4) the acceptance criteria for the deliverablescontemplated in the [***] and the Verily Services, and (5) the party responsible for performing each obligation and the deadline forsuch performance, consistent with the Product Development Deadlines. [***] will include the [***]. [***] will at all times containterms that reflect the use of Commercially Reasonable Efforts to Develop the Second Product and, if applicable, Third Product or anyAdditional Product, provide the Verily Services and obtain Marketing Approval for the Second Product and, if applicable, ThirdProduct or any Additional Product, in a timely manner; provided that no action shall be required to be taken with respect to the ThirdProduct or any Additional Product unless the Parties agree on a final Third Product Supplement in accordance with Section 3.1.1, orsuch Additional Product in accordance with Section 4.4, as applicable.3.3 Updates or Amendments [***] shall be reviewed by the Executive Sponsors on a quarterly basis (or more frequently ifappropriate). The Technical Leads shall be responsible for proposing updates and/or amendments [***] for approval. The ExecutiveSponsors shall propose that their respective Party approve [***], which will become effective and supersede [***] as of the date ofsuch written approval signed by authorized signatories of the Parties. In the event of a disagreement regarding a proposed update oramendment [***] that (a) cannot be resolved by the Executive Sponsors, and (b) will result in a delay (or is reasonably likely to resultin a delay) of [***] or more in any material aspect [***], the matter will be escalated to the Chief Executives. If21 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL the Chief Executives are unable to reach an agreement to amend or update [***] within thirty (30) days, [***]3.4 Verily Services. Verily will provide to DexCom the [***], in each case [***], in accordance with this Agreement [***].As part of the Verily Services, Verily will provide to DexCom [***], provided however, that, except for [***], Verily shall not beobligated to provide such assistance with respect to [***] Competing Programs. For the avoidance of doubt, [***] Verily Services donot include services in connection with [***]; if the Parties wish to contract for such services, the Parties will do so, subject to mutualagreement, in a separate agreement or Statement of Work.3.5 Verily Additional Services. Upon DexCom’s request in each case, the Parties will discuss in good faith entering into oneor more Statement(s) of Work for the provision by Verily of services (other than the Verily Services) [***]. Each such Statement ofWork shall describe, among other things, Verily’s responsibilities, deliverables, and timelines, rights and obligations with respect to theservices, as well as commercially reasonable fees payable by DexCom. Neither Party shall have any obligation to enter into suchStatement of Work, and the terms discussed by the Parties shall not be binding unless set forth in a writing signed by both Parties.3.6 DexCom Cooperation. At Verily’s request, DexCom will promptly provide Verily with access and any licenses to anyDexCom Software as reasonably necessary (a) to provide the Verily Services, (b) to facilitate interoperation of the Products with theVerily Platform, and (c) to fulfill Verily obligations [***], provided that Verily agrees not to use, copy or distribute DexCom Software,or disclose DexCom Software or related DexCom IP to Third Parties except as approved by DexCom in writing.3.7 Resource Commitments. In conducting the activities assigned to it under the [***], each Party agrees to use scientific,technical and other personnel who are sufficiently qualified and have the requisite skills to perform such activities.22 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 3.8 Product Deadlines.3.8.1 DexCom Diligence Obligations. Without limiting DexCom’s obligations under this Agreement, DexCom shalluse Commercially Reasonable Efforts to achieve the Product Deadlines and perform its obligations [***] and [***]; provided that ifDexCom fails to achieve a Product Deadline within the timeframe specified due to any causes such as unforeseen technical delays,regulatory or clinical process or delays, or delays caused by Verily’s failure to perform the Verily Services or Verily’s failure toperform its obligations [***] or the Commercialization Plan, in each case to the extent beyond the reasonable control of DexCom, anddespite DexCom’s Commercially Reasonable Efforts to achieve such Product Deadline, then DexCom shall not be deemed in defaultor breach of this Section 3.8.1 on account of such failure to achieve the Product Deadline, and the timeframe for achieving suchProduct Deadline will be extended by the time of the delay reasonably attributable to the causes that were beyond the reasonablecontrol of DexCom. Subject to this Section 3.8.1, if there is a delay in achieving a Product Deadline for which DexCom is responsibleunder this Section 3.8.1 and such delay exceeds [***] beyond the later of (a) the applicable Product Deadline and (b) the deadlinemutually agreed upon by the Executive Sponsors in a modification to [***] as set forth in Section 3.3 (a “DexCom Delay”), DexComwill pay to Verily [***], which payment shall be made on a quarterly basis, within thirty (30) days of the end of the applicable calendarquarter. The Parties acknowledge and agree that the remedy set out in this Section 3.8.1 shall be Verily’s sole and exclusive remedy fora DexCom Delay and is a reasonable estimate of the damages suffered by Verily in the event of DexCom’s failure to meet a ProductDeadline, and is not intended to be, nor will be construed as, a penalty.3.8.2 Verily Diligence Obligations. Without limiting Verily’s obligations under this Agreement, Verily shall useCommercially Reasonable Efforts to achieve the Product Deadlines and perform its obligations under the [***], including the VerilyServices, and Commercialization Plan; provided that if Verily fails to achieve a Product Deadline within the timeframe specified due toany causes such as unforeseen technical delays, regulatory or clinical process or delays, or delays caused by DexCom’s failure toperform its obligations under the [***] or the Commercialization Plan, in each case to the extent beyond the reasonable control ofVerily, and despite Verily’s Commercially Reasonable Efforts to achieve such Product Deadline, then Verily shall not be deemed indefault or breach of this Section 3.8.2 on account of such failure to achieve the Product Deadline and the timeframe for achieving suchProduct Deadline will be extended by the time of the delay23 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL reasonably attributable to the causes that were beyond the reasonable control of Verily. Subject to this Section 3.8.2, if there is a delayin achieving a Product Deadline for which Verily is responsible under this Section 3.8.2 and such delay exceeds [***] (a “VerilyDelay”), Verily will pay to DexCom [***], which payment shall be made on a quarterly basis, within thirty (30) days of the end of theapplicable calendar quarter. The Parties acknowledge and agree that the remedies set out in this Section 3.8.2 (in addition to theadjustments to the [***] in Section 1.9) are DexCom’s sole and exclusive remedies for a Verily Delay, are a reasonable estimate of thedamages suffered by DexCom in the event of Verily’s failure to meet a Product Deadline, and are not intended to be, nor will beconstrued as, a penalty. In addition, with respect to the Second Product, in the event Verily fails to meet a Product Deadline by [***]or more but less than [***], the Parties agree that if a Milestone Payment for the First Marketing Approval becomes due, suchMilestone Payment for the first Marketing Approval of the Second Product shall be reduced by one divided by three hundred sixty five(1/365th) of the total of such Milestone Payment for each day after the [***] period following the expiration of such timeframespecified in the [***] for such Verily Service. In the event Verily fails to meet a Product Deadline by [***] or more, the Parties agreethat DexCom shall not be obligated to (i) pay Verily any Milestone Payment for the first Marketing Approval of the Second Product,or (ii) Launch the Second Product.3.8.3 Excused Delays. In order for a Party to be excused from its payment obligations under Section 3.8.1 or 3.8.2 (asapplicable) for a delay in achieving a Product Deadline, such Party (after becoming aware of circumstances likely to result in a delay inthe performance of its obligations) must notify the other Party’s Executive Sponsor and (i) propose, timely implement, and adhere to amitigation plan approved by the other Party in the exercise of its reasonable discretion or (ii) provide reasonable substantiating evidencethat such delay was caused by the other Party or by a Force Majeure Event.3.9 Acceptance Process.3.9.1 Verily may, at any time, request DexCom’s acceptance that it has achieved Development Completion withrespect to any deliverable, Product, or Verily Service, or any component thereof that is subject to a Product Development Deadline (the“Completed Deliverables”) by providing written or email notification to DexCom’s Technical Lead of such request (“AcceptanceSubmission Notice”). Verily shall provide DexCom’s Technical Lead with24 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL access to review and evaluate the Completed Deliverables. The Technical Leads shall promptly review the Completed Deliverablesand confer on whether the Completed Deliverables meet the applicable Specifications [***], and shall, no later than ten (10) calendardays after the date of the Acceptance Submission Notice, make a single (unanimous) or separate (split) recommendation(s) to theExecutive Sponsors as to whether the Completed Deliverables should be accepted and be deemed to have achieved DevelopmentCompletion.3.9.2 If the Technical Leads unanimously agree to reject the Completed Deliverables, then the Presenting Party mayrescind such Acceptance Submission Notice and resubmit such Completed Deliverable using the process set forth in Section 3.9.1.3.9.3 If the Technical Leads make a single (unanimous) recommendation that a Party has achieved such DevelopmentCompletion with respect to such Completed Deliverable, then, no later than twenty (20) calendar days after the date of the AcceptanceSubmission Notice, the Executive Sponsors shall review the recommendation(s) of the Technical Leads and determine whether toaccept the Completed Deliverables as meeting the Specifications or reject the Completed Deliverables as not meeting theSpecifications, which acceptance or rejection shall be made by a unanimous decision of the Executive Sponsors. If the ExecutiveSponsors unanimously agree to accept a Completed Deliverable, then Verily will be deemed to have achieved DevelopmentCompletion with respect to such Completed Deliverable. If the Executive Sponsors unanimously agree to reject a CompletedDeliverable, then the Completed Deliverable shall be referred back to the Technical Leads for review and remediation, and Verily mayresubmit such Completed Deliverable using the process set forth in Section 3.9.1.3.9.4 If the Technical Leads make a separate (split) recommendation regarding whether Verily has achievedDevelopment Completion with respect to such Completed Deliverable, then, no later than twenty (20) calendar days after the date ofthe Acceptance Submission Notice, the Executive Sponsors shall review the recommendation(s) of the Technical Leads and attempt toresolve the differences in the recommendations. If the Executive Sponsors are unable to reach a unanimous decision in such time, thenthe matter shall be referred to the Chief Executives of DexCom and Verily for resolution by good faith discussions for a period of atleast fifteen (15) Business Days. In the event that the Chief Executives are unable to reach agreement with respect to such matterwithin such fifteen (15) Business Days, then the dispute shall be resolved pursuant to Article25 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 13, provided that each Party shall retain final decision-making authority with respect to the implementation of its own responsibilitiesunder the [***] (so long as in compliance with this Agreement).3.10 Reporting. Without limiting any other provisions of this Agreement, each Party shall keep the other reasonably informedthrough the Executive Sponsors as to the progress of its activities [***] or otherwise under this Article 3 and provide such reports andinformation with respect thereto as designated by the Executive Sponsors or as may be reasonably requested by the other Party. Also,each Party shall promptly notify the other Party if it anticipates, or there are, material deviations from the [***] and shall discuss ingood faith, and keep such other Party reasonably informed, as to any corrective actions that it intends to take, or is taking, to addresssuch deviations.Article 4. SUPPLY; ADDITIONAL PRODUCTS; PROGRAMS4.1 Amended and Restated Supply Agreement. In order to enable DexCom to become the preferred provider of [***] toOnduo, the Existing Distribution Agreement will be amended and restated in its entirety by DexCom and Onduo concurrently with theexecution of this Agreement.4.2 Supply ROFN. The Parties acknowledge and agree that Verily, whether by itself or in collaboration with others, is, ormay be, working to develop one or more Verily Programs. During the Term, if Verily, whether by itself or in collaboration with others,Develops a Verily Program [***], Verily shall provide notice to DexCom of such Verily Program (“Verily Program Notice”), andDexCom shall have a first right of negotiation, as set forth in this Section 4.2, to be the preferred supplier [***]. Such right of firstnegotiation shall be exercisable by DexCom by notice given to Verily within [***] of the date of the Verily Program Notice. In theevent that DexCom exercises its right of first negotiation pursuant to this Section 4.2, the Parties shall promptly begin to negotiate ingood faith on an exclusive basis with respect to the foregoing. If the Parties are unable to reach such agreement within [***] followingDexCom’s receipt of the Verily Program Notice, Verily shall not be prevented by this Section 4.2 or Section 7.5 from purchasing theapplicable [***] from a Third Party, provided that in no event shall Verily, for [***] from the earlier of DexCom’s decision to pass onthe preferred supplier opportunity and the expiration of such [***], enter into any26 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL agreement with such Third Party on terms that are more favorable to the Third Party than those last offered to DexCom.4.3 Additional Products ROFN. During the Term, if Verily desires to Develop any [***] other than the First Product, SecondProduct, and Third Product), then, before commencing [***], Verily shall notify DexCom in writing and shall include with such notice[***] which shall set forth the Parties’ respective roles and responsibilities with respect to the Development of such [***] (“ProposedAdditional Product Supplement”). Thereafter, the Parties shall have [***] following the receipt of the Proposed Additional ProductSupplement to negotiate, in good faith, a final Additional Product Supplement for the development of such [***] (the “FinalAdditional Product Supplement”) and, upon the Parties’ mutual written agreement on the Final Additional Product Supplement, the[***] subject to the Final Additional Product Supplement shall become an Additional Product [***]. Notwithstanding the foregoing,the Parties acknowledge and agree that (i) neither Party shall be obligated to assume any of the costs and expenses of the Developmentand Commercialization of any Additional Product, and (ii) the Development and Commercialization of the Second Product and, ifapplicable, Third Product, shall be the initial priority of the Collaboration, and the Development and Commercialization of anyAdditional Product shall not materially impact the Product Deadlines for the Second Product and, if applicable, Third Product, unlessrevised Product Deadlines for such Products are mutually agreed upon by the Parties. If the Parties are unable to reach writtenagreement on the Final Additional Product Supplement within [***] following DexCom’s receipt of the Proposed Additional ProductSupplement, Verily shall not be prevented by this Section 4.3 or Section 7.5 from independently developing the [***] that was thesubject of the Final Additional Product Supplement (“[***]”), provided, however, that (a) as between the Products and [***], theDevelopment and Commercialization of the Products shall continue to be Verily’s priority, and the development andcommercialization, if any, of the [***] shall in no event impact the Product Deadlines for the Products, and (b) in no event shall Verilybe granted or otherwise have any right to exploit any IP owned or Controlled by DexCom or its Affiliates or exclusively licensed toDexCom hereunder (other than the Verily Licensed Patents), or use any of DexCom’s Confidential Information, whether to develop,manufacture and/or commercialize the [***] or otherwise.4.4 Preferred Provider [***]. Verily will use [***] to facilitate discussions with Alphabet to enable DexCom to become thepreferred provider of [***].27 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL Article 5. COMMERCIALIZATION5.1 General. Subject to the terms and conditions of this Agreement and the oversight of the Executive Sponsors, as betweenthe Parties, DexCom shall have the exclusive right to Commercialize the Products in [***] in the Territory. DexCom shall, [***] beresponsible for all Commercialization efforts for the Products in the Exclusive CGM Field in the Territory, including the [***] tosupport such Commercialization, in accordance with the Commercialization Plan. Verily shall, [***] use Commercially ReasonableEfforts to assist with DexCom’s [***]; provided that Verily shall have the right to approve or reject in writing any such assistance thatexceeds a de minimis effort or contribution.5.2 Commercialization Plans. The Commercialization of each Future Product will be carried out in accordance with aCommercialization Plan. Each such Commercialization Plan will set forth: (1) the timing for Launch of the applicable Productsconsistent with the Product Launch Deadlines, (2) the obligations required for the Commercialization of the applicable Products, and(3) the Party responsible for performing each obligation.5.2.1 Second Product. DexCom shall propose and submit to the Executive Sponsors an initial Commercialization Planfor the Second Product at least nine (9) months prior to the Product Deadline for Launch of such Product in the United States.5.2.2 Third Product and Additional Products. At least nine (9) months in advance of the Launch of the Third Productand each Additional Product, DexCom shall propose and submit to the Executive Sponsors an initial Commercialization Plan for suchProduct in the Territory.5.2.3 Updates. Until such time as DexCom has paid to Verily all of the Milestone Payments set forth in Section 8.2.1,each Commercialization Plan will be updated at least annually. DexCom shall provide each Commercialization Plan and any materialmodification or addition thereto to the Executive Sponsors for its review and comment. The Parties acknowledge that the comments ofthe Executive Sponsors with respect to any Commercialization Plan and any material modification or addition thereto are [***] withrespect thereto. For the avoidance of doubt, the Commercialization Plan and any updates thereto shall not amend or modify the termsof this Agreement.28 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 5.3 Diligence Obligations. DexCom shall use Commercially Reasonable Efforts to: (a) Launch each Product by the applicableProduct Launch Deadlines and (b) Commercialize Products so as to achieve each of the Milestone Events set forth in Section 8.2.1.5.4 Trademarks.5.4.1 Ownership of Marks. DexCom will be responsible for the selection, registration, maintenance and defense of,and will solely own all right, title and interest in, all Trademarks (except the Verily Trademarks) for use in connection with theCommercialization of the Products, as well as all expenses associated therewith.5.4.2 Branding of Products. DexCom will have the right to implement a branding strategy for the Products, as outlinedin the Commercialization Plan; provided, however, that if requested by Verily, and to the extent allowed by the applicable RegulatoryAuthority, DexCom will include on all labels, packaging, inserts and promotional materials for each Product a designation that eachProduct incorporates Verily technology, provided that such designation may be subordinate to any Trademark selected by DexCom fora Product and any Trademark used by DexCom; provided that size and placement of the designation shall be consistent withDexCom’s practices with respect to other Third Party Trademarks. Such designation will include at least one of the Verily Trademarksas agreed by the Parties.5.4.3 Use of Verily Trademarks. In advance of each separate use of a Verily Trademark for a Product, DexCom shallnotify Verily in writing and obtain Verily’ prior written approval on the final selection, placement, look and feel of the VerilyTrademark. DexCom recognizes the reputation of Verily as a provider of high quality products and services and agrees to continue tomaintain, and to require its sublicensees to continue to maintain, the same high standard of quality for the Commercialization of theProducts. DexCom will not, without Verily’s prior written consent, use any other Trademarks of Verily, or Trademarks confusinglysimilar thereto, in connection with its marketing or promotion of the Products. DexCom acknowledges that it obtains no ownershipinterest in, or to, the Verily Trademarks under this Agreement. DexCom will at any time, whether during or after the Term, executeany documents that are reasonably required by Verily to confirm Verily’s ownership of the Verily Trademarks. DexCom agrees that itwill do nothing inconsistent with Verily’s ownership of the Verily Trademarks.29 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 5.5 Reporting. Without limiting any other provisions of this Agreement, until such time as DexCom has paid to Verily all ofthe Milestone Payments set forth in Section 8.2.1, DexCom shall keep Verily reasonably informed through the Executive Sponsors asto the progress of its activities with respect to the Commercialization of Products or otherwise under this Article 5 and provide Productsales forecasts, Total Product Revenue estimates, and such other reports and information with respect to Commercialization of Productsas designated by the Executive Sponsors or as may be reasonably requested by Verily, except as prohibited by Law.Article 6. REGULATORY MATTERS6.1 General. As between the Parties, [***] shall, [***], be the manufacturer of record with respect thereto and take the leadand be responsible for (in each case with respect to Products): (a) conducting any clinical trials or clinical studies required for anyRegulatory Filings and/or Regulatory Approvals; (b) filing, obtaining and maintaining Regulatory Filings and Regulatory Approvalsfor Development, Manufacture and Commercialization of the Products in the Territory; (c) communicating with RegulatoryAuthorities; (d) preparing and submitting supplements, communications, annual reports, Adverse Event reports, manufacturingchanges, supplier designations and all other Regulatory Filings; and (e) all costs and expenses associated with the foregoing, except tothe extent otherwise provided herein, and provided that [***] shall, at its own cost, provide to [***] any documentation or otherassistance reasonably required to support the foregoing activities [***]. [***] will keep [***] or its designee reasonably informedregarding the status and progress of such activity, including (i) providing [***] or its designee with advance notice of all meetingsscheduled with a Regulatory Authority involving a Regulatory Filing; and (ii) providing [***] a copy of each Regulatory Approval foreach Product.6.2 Safety Reporting. With respect to any Adverse Event, any safety monitoring and any obligation to report to anyRegulatory Authority relating to any safety issue with respect to Products or any component thereof, [***] shall be responsible for, andshall establish (subject to the oversight and comment of the Executive Sponsors as described below) operating procedures to report tothe appropriate Regulatory Authority(ies), all such matters in accordance with applicable Law. Such activities and operatingprocedures by [***] shall include any measures necessary for [***] to fully comply with such Laws and, if necessary, allow [***] tocomply with its requirements for Adverse30 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL Event reporting under applicable Laws. Such activities and operating procedures, and any material revisions to them, shall be providedto the Executive Sponsors for review and comment. To the extent requested by [***], [***] shall provide [***] any information orregular updates on Adverse Events, safety monitoring and/or any interaction with Regulatory Authorities relating to safety issues withrespect to the Products or any component thereof.6.3 Quality Agreement. The Parties will enter into a mutually agreed-upon Quality Agreement in connection with theCommercialization Plan.Article 7. LICENSES AND EXCLUSIVITY7.1 Licenses to DexCom.7.1.1 License to Verily Collaboration IP.(a) As of the Original Effective Date, Verily hereby grants to DexCom, [***] under any Verily CollaborationIP and Verily’s interest in any Joint Collaboration IP (in each case other than Verily Software IP) to (either by itself or in collaborationwith a Third Party) Develop, Manufacture and Commercialize [***]. The Parties acknowledge and agree that the [***] nature of thelicense granted under this Section 7.1.1(a) shall not be construed to limit Verily’s or its Affiliates’ ability to develop, manufacture orcommercialize Software that [***].(b) As of the Original Effective Date, Verily hereby grants to DexCom, a [***] license under any VerilySoftware IP to (either by itself or in collaboration with a Third Party) Develop, Manufacture and Commercialize [***]; provided thatDexCom may not use any Software covered by Verily Software IP, which Software was delivered to DexCom by Verily [***] (orwhich constitutes a derivative work of the foregoing Software), to co-develop, co-brand or white-label with a Third Party a CompetingProgram.(c) Verily hereby grants to DexCom, a [***] license under any Verily Software IP covering or claiming theAssigned Software to use, reproduce, modify, distribute, publicly display and publicly perform and otherwise exploit such AssignedSoftware for any purpose.31 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 7.1.2 Licenses to Verily Background IP and for [***].(a) As of the Original Effective Date, Verily hereby grants to DexCom, a [***] license, under any VerilyBackground IP (other than the Verily Licensed Patents) [***]. For the avoidance of doubt, any Verily Background IP that covers,claims, is used in, or is used to make a [***] shall be deemed to be “necessary” for purposes of the foregoing license.(b) As of the Original Effective Date, Verily hereby grants to DexCom, a [***] license, under any VerilyLicensed Patents and other Verily Background IP and Verily Collaboration IP (including Verily Software IP) as necessary to Develop,Manufacture, or Commercialize [***] for purposes of Developing, Manufacturing and Commercializing [***], to the extent that such[***] is commercialized (or, if not yet commercialized, designed) as part of a standalone [***], regardless of whether (i) reimbursementis for the standalone [***] or for a bundle of products or services offered by a Third Party that includes the [***], or (ii) DexCom re-sells [***] (the “Standalone Product Limitation”). For the avoidance of doubt, any Verily Background IP that covers, claims, is usedin, or is used to make [***] that is commercialized by DexCom as part of a standalone [***] shall be deemed to be “necessary” forpurposes of the foregoing license. A “[***]” means a medical device, [***].(c) As of the Original Effective Date, Verily hereby grants to DexCom, a [***] license, under any VerilyLicensed Patents and other Verily Background IP covering or claiming the Assigned Software, in each case to use, reproduce, modify,distribute, publicly display and publicly perform and otherwise exploit the Assigned Software for any purpose.7.1.3 Sublicensing. The licenses contained in Sections 7.1.1(b) and (c) and 7.1.2(a), (b) and (c) shall be sublicensable(through multiple tiers) in connection with the Development, Manufacturing and/or Commercialization of any [***] (subject to theStandalone Product Limitation), and Assigned Software, as applicable, provided that (i) material DexCom Background IP and/or [***]is included in such sublicense, and (ii) DexCom retains a material involvement in the Development, Manufacturing and/orCommercialization of such [***], as applicable, which sublicense shall not be effective until DexCom delivers to Verily an executedcopy of any such sublicense agreement, provided that DexCom may reasonably redact from any such sublicense agreement anyconfidential information of DexCom or the applicable sublicensee,32 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL and further provided that upon such delivery to Verily, the sublicense will be deemed effective as of the date specified in the applicablesublicense agreement. Delivery to Verily of a standard sublicense template used by DexCom with multiple customers, resellers, ordistributors in the ordinary course of its business will be sufficient for purposes of the delivery condition set forth in the precedingsentence. Without limiting the foregoing, the Parties will use good faith efforts to implement shared procedures to limit theadministrative burdens associated with complying with the foregoing delivery obligation.7.1.4 License to Verily Licensed Patents. As of the Original Effective Date, Verily hereby grants to DexCom, an[***] license under the Verily Licensed Patents to (either by itself or in collaboration with a Third Party) Develop, Manufacture andCommercialize [***]. The Parties acknowledge and agree that the [***] nature of the license granted under this Section 7.1.4 shall notbe construed to limit Verily’s or its Affiliates’ ability to develop, manufacture or commercialize Software [***].7.1.5 Covenant Not to Sue for DexCom [***]. For a period of [***] from the Effective Date, Verily on behalf of itselfand its Affiliates, covenants that Verily and its Affiliates will not initiate or continue any judicial or administrative proceeding (e.g.,before the U.S. International Trade Commission) anywhere in the world against DexCom, its Affiliates, or any of its or their customersor direct distributors, based upon any claim that the manufacture, use, sale, license, distribution, offer for sale, offer for license, import,export, or other exploitation of a DexCom [***]constitutes infringement or misappropriation (including direct, contributory orinducement of infringement) of any [***] Controlled by Verily as necessary to manufacture, use, distribute, sell, license, offer for sale,offer for license, import, export, or otherwise exploit such DexCom [***]. For the avoidance of doubt, any such Patent rights or VerilyKnow-How that covers, claims, or is used in or to make a DexCom [***] shall be deemed to be “necessary” for purposes of theforegoing covenant. “DexCom [***]” means [***] Commercialized by DexCom or (subject to Section 7.1.7) any of its Affiliates[***]. This covenant is personal to DexCom, not transferable or assignable to a Third Party. If DexCom or its Affiliates, customers, ordirect distributors commences or participates in a legal proceeding in the same or similar technical subject matter covered under thiscovenant not to sue against Verily, its Affiliates, or Onduo LLC or its Affiliates, then Verily may, at its sole discretion, suspend or33 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL terminate the covenant not to sue provided under this Agreement upon providing written notice to DexCom.7.1.6 License to Verily Trademarks. Subject to Section 5.4.3, Verily hereby grants to DexCom a [***] license to usethe Verily Trademarks solely as provided for under Section 5.4 in connection with the Commercialization of Products. The ownershipand all goodwill accruing to the Verily Trademarks arising directly from use of the Verily Trademarks will vest in and inure to thebenefit of Verily.7.1.7 DexCom Affiliates. DexCom shall have the right to exercise the licenses granted under Sections 7.1.1, 7.1.2,and 7.1.4 through its Affiliates as of the Effective Date, solely for as long as such entity remains an Affiliate of DexCom, and DexComshall remain responsible for the compliance of such Affiliate with all terms of this Agreement. Furthermore, DexCom shall have theright to exercise the licenses granted under Sections 7.1.1, 7.1.2 and 7.1.4 through its future Affiliates in connection with restructuringor tax matters, subject to Verily’s prior written consent, not to be unreasonably withheld, conditioned or delayed. For clarity,DexCom’s ability to grant sublicenses to future Affiliates under the licenses granted under Sections 7.1.1, 7.1.2 and 7.1.4 shall besubject to the terms set forth therein and in Section 7.1.3 with respect to Third Parties, excluding the condition set forth thereinregarding delivery of an executed copy of the sublicense agreement to Verily. Notwithstanding anything to the contrary in thisAgreement, the non-transferable licenses in Section 7.1.2 and Section 7.1.4 may not be transferred to a Third Party or Affiliate inconnection with a permitted assignment of this Agreement under Section 14.2 (unless such transfer is otherwise expressly authorizedunder the preceding provisions of this Section 7.1.7).7.2 Licenses to Verily.7.2.1 License to Perform Obligations. Subject to the terms and conditions of this Agreement, DexCom hereby grantsto Verily a [***] license under any DexCom IP, during the Term, solely to perform Verily’s service and development andcommercialization obligations to DexCom under the [***], Commercialization Plan, and/or otherwise under this Agreement.7.2.2 License to [***]. DexCom hereby grants to Verily a [***] license under (i) any [***] jointly developed by theParties or solely developed by Verily, solely for use outside of34 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL the [***] and (ii) any [***] solely developed by DexCom in subject matter consisting of [***], in each case under (i) and (ii) solely foruse [***].7.3 No Other Rights. Each Party acknowledges that the rights and licenses granted under this Article 7 and elsewhere in thisAgreement are limited to the scope expressly granted. Accordingly, except for the rights expressly granted under this Agreement, noright, title, or interest of any nature whatsoever is granted whether by implication, estoppel, reliance, or otherwise, by either Party to theother Party. All rights with respect to Know-How, Patent, Trademarks or other IP rights that are not specifically granted herein arereserved to the owner thereof.7.4 Other Licenses. No license to Collaboration IP owned by Verily shall be granted by Verily or its Affiliates to [***] of theforegoing unless Verily (a) [***], and (b) [***]. Notwithstanding the foregoing, any license granted by [***], or any subsidiary of theforegoing under the Collaboration IP shall be subject to the exclusive and non-exclusive rights granted by Verily to DexCom pursuantto this Agreement and the foregoing shall not be construed to allow or authorize any grant of a license under the Collaboration IP thatis in conflict with any such exclusive or non-exclusive license granted to DexCom.7.5 [***]. During the Term, Verily and DexCom will collaborate on [***] on the Development of the Products, and DexComwill have the [***], in each case subject to Section 4.3 of this Agreement, and in accordance with the terms and conditions of thisAgreement. Subject to Section 4.3 of this Agreement, Verily and its Affiliates shall not, during the Term, Develop, Manufacture orCommercialize [***], except as necessary to fulfill its obligations under this Agreement or to allow any [***]. Subject to Section 4.3,during the Term, Verily and its Affiliates shall not [***] except (i) solely to the extent necessary to [***], and/or (ii) in an open sourcelicense accompanying distributable source code (for each case (i) and (ii), solely with respect to communication software and/or othersimilar software) hosted by or on behalf of Verily. For clarity, [***] granted under this Section 7.5 shall not be construed [***],provided that in no event shall [***].7.6 [***] Supply.7.6.1 Support for [***] Supply.35 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL (a) Verily will use Commercially Reasonable Efforts to enter into an agreement with [***] (the “Suppliers”)(the two principal suppliers for [***]) on terms that would (a) allow DexCom, or a vendor identified by DexCom and reasonablyacceptable to Verily, to have [***] and (b) specify [***]. For clarity, [***].(b) To facilitate manufacturing of [***], Verily will provide to DexCom [***].7.6.2 [***] Application Engineer Support Services. During development of the [***], Verily will use CommerciallyReasonable Efforts to provide reasonable and customary application engineer support services relating to use of [***] in a FutureProduct. This support will include providing updates to [***] as necessary and in response inquiries from the DexCom technical team.This support obligation does not include design changes, new features, or integrations [***].7.6.3 Support for [***].(a) If DexCom reasonably believes that a Future Product unit has failed or has been returned due to a defect in[***], then, upon DexCom’s reasonable request and delivery of the defective [***] to Verily, Verily will use CommerciallyReasonable Efforts to [***].(b) Verily’s Technical Lead will notify DexCom’s Technical Lead of the determination of any design ormanufacturing defect in [***] pursuant to the foregoing section (which notice may be provided by email). DexCom’s technical leadshall notify Verily if DexCom wishes for Verily to present a Defect Notification Plan (the date of such notice, the “Defect NotificationDate”).(c) If such failure is determined to be due to a design defect, and DexCom demonstrates with reasonablydetailed, objective evidence that such design defect is caused primarily by [***], then, notwithstanding DexCom’s prior acceptance ofsuch Deliverable pursuant to Section 3.9 of the Agreement, [***]. All other services, and any services [***], and any related capitalexpenditures, will be subject to a separate Statement of Work negotiated between the Parties.36 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL (d) If, (a) by [***] Business Days after the Defect Notification Date, Verily does not deliver to DexCom a planfor addressing a design defect, or (b) by [***] days after the Defect Notification Date, the Parties are unable to reach terms on whichVerily will provide design modifications to address a design defect in [***], then such matter shall be referred to the ExecutiveSponsors for resolution. If the Executive Sponsors are unable to reach resolution on commercially reasonable terms within [***]Business Days of such referral, then Verily will, at DexCom’s request, provide the [***] to DexCom for purposes of addressing designdefects in [***]; provided, however, that the foregoing obligation shall not apply if Verily offers commercially reasonable terms ingood faith and DexCom does not accept such terms.(e) On and after the third anniversary of Launch, Verily may, in lieu of providing any support for designdefects in [***] for a Future Product, provide to DexCom (i) the [***].7.6.4 Services After Completion of Verily’s Deliverables. After completion of Verily’s Deliverables, any additionaldesign or test changes requested by DexCom will be negotiated under a Statement of Work on terms to be mutually agreed upon bythe Parties.7.6.5 [***] Pricing.(a) Verily anticipates that if the Pricing Assumptions set forth below are satisfied, then the [***] for the SecondProduct will be available under the Supply Agreements at the following purchase prices (which prices reflect the cost per unitexcluding taxes, duties, shipping, and other fees) (the “Pricing Expectations”):(i) For volume commitments greater than [***] units per year, the purchase price under the SupplyAgreements is expected to be [***] per unit;37 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL (ii) For volume commitments greater than [***] units per year and less than [***] units per year, thepurchase price under the Supply Agreements is expected to be [***] per unit;(iii) No pricing commitment is provided for volume commitments below [***] units per year.(b) If, notwithstanding satisfaction of the Pricing Assumptions, the actual [***] cost upon completion of PhaseGate IV is higher than the Pricing Expectations (based on [***] through the Phase Gate IV completion date and a complete set ofquoted supplier costs for a volume of [***]), then Verily shall pay to DexCom a fee of [***], such fee not to exceed [***] in total.(c) If the actual [***] cost upon completion of Phase Gate IV is lower than the Pricing Expectations (based on[***] through the Phase Gate IV completion date and a complete set of quoted supplier costs for a volume of [***] units purchased peryear), then DexCom shall pay to Verily a fee of [***], such fee not to exceed [***] in total.(d) The fees set forth in this Section 7.6.5 are the Parties sole and exclusive remedies for any deviations fromthe Pricing Expectations.Article 8. PAYMENTS8.1 Second Upfront Fee. The Parties acknowledge and agree that DexCom has paid to Verily the upfront fee set forth inSection 8.1 of the Original Agreement. Within ten (10) Business Days following the Antitrust Clearance Date, in consideration of (a)Verily’s performance of its obligations under the Development Plan, (b) the licenses granted to DexCom under Section 7.1, and (c) theParties’ agreement to amend and restate the Original Agreement, DexCom shall pay a second upfront payment of $250 million (the“Upfront Payment Amount”), or, at DexCom’s election, an equivalent number of shares of DexCom Common Stock as determinedby dividing the Upfront Payment Amount by the Initial VWAP (the “Upfront Shares”). The Upfront Payment38 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL Amount shall be paid as follows, at the direction of Verily: (1) $15 million (or six percent (6%) of Upfront Shares, which shall be“Verily Upfront Shares”), to Verily and (2) $235 million (or ninety four percent (94%) of Upfront Shares) to Onduo and shall beissued pursuant to the Stock Purchase Agreement (as defined below). The Upfront Payment Amount (or the Upfront Shares in lieu ofthe Upfront Payment Amount, if applicable) shall be non-refundable and shall not be creditable. The Parties acknowledge and agreethat the $15 million paid to Verily or Verily Upfront Shares issued directly to Verily under this Section 8.1 are attributable to a buyoutof the First Product milestone described in Section 8.2.1 of the Original Agreement.8.2 Milestone Payments.8.2.1 Milestones. Subject to DexCom’s right to pay in cash pursuant to and subject to the calculation methodology setforth in Section 8.2.2, DexCom shall pay the DexCom Common Stock as set forth in the following table (each such payment, a“Milestone Payment”) upon the first achievement of the corresponding milestone event for the applicable Product (each such event, a“Milestone Event”), it being understood that, at Verily’s direction, part of such Milestone Payment shall be paid to Onduo, as set forthbelow:39 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL Milestone Event Milestone PaymentThe earlier of (i) [***] or (ii) [***] DexCom Common Stockequal to $100 milliondivided by the InitialVWAP (half issued toVerily (the “VerilyMilestone Shares”) halfissued to Onduo) First time Total Product Revenue exceeds [***] DexCom Common Stockequal to $125 milliondivided by the InitialVWAP, issued to Onduo First time Total Product Revenue exceeds [***] DexCom Common Stockequal to $50 milliondivided by the InitialVWAP, issued to OnduoThe Parties acknowledge and agree that the Verily Milestone Shares issued directly to Verily, or the equivalent amount in cash uponDexCom’s election to pay in cash subject to the calculation methodology set forth in Section 8.2.2, under this Section 8.2.1 areattributable to a milestone buyout of the Second Product milestone described in Section 8.2.1 of the Original Agreement.8.2.2 For clarity, it is understood that each Milestone Payment shall be payable only once upon the first achievementof the applicable Milestone Event and, if paid in DexCom Common Stock, shall be issued pursuant to the Stock Purchase Agreement.At DexCom’s option, DexCom may pay cash to Verily and Onduo in lieu of delivering any DexCom Common Stock required to bepaid pursuant to Section 8.2.1, which cash payment amount shall be the applicable number of shares of DexCom Common Stock setforth in Section 8.2.1 multiplied by Milestone Date VWAP for such Milestone Event.40 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 8.2.3 Incentive Payment. With respect to the Second Product, if Verily completes its Product DevelopmentObligations, as determined by the Parties in accordance with Section 3.9 at least [***] prior to Verily’s Product Development Deadline(the “Incentive Milestone Event”), then Verily shall be entitled to receive an incentive payment of [***]. The date on which Verilywill be deemed to have completed its Product Development Obligations will be the date on which Verily last submitted for acceptanceor approval (pursuant to Section 3.9) the Product Development Obligations that were ultimately approved or accepted pursuant toSection 3.9 without an intervening notice of rejection from DexCom.8.2.4 Payment Terms. The Milestone Payments set forth in this Section 8.2 shall each be payable in, at DexCom’s soleelection, cash or in shares of DexCom Common Stock, and due to Verily or Onduo, as applicable, within thirty (30) days of theachievement of the corresponding Milestone Event or completion of the Product Development Obligations, as applicable, except to theextent set forth in the Stock Purchase Agreement (as defined below).8.2.5 Notice. DexCom agrees to promptly notify Verily of its achievement of each Milestone Event.8.3 No Royalties, Milestones or Other Amounts. Except for the amounts payable to Verily by DexCom under Sections 8.1and 8.2 above, no other amounts shall be payable to Verily in connection with the First Product, Second Product, Third Product, anyAdditional Product, or the Verily Services. For clarity, the foregoing payments replace in their entirety any and all payment obligationsof DexCom under the Original Agreement, including any and all royalty and/or milestone payments.8.4 First Product Purchase. Verily agrees to purchase [***] units of First Product [***], and prepay for that Product within 14days after [***], where the prices shall be no higher than [***].8.5 Payment Terms. All cash payments due under this Agreement shall be made by bank wire transfer in immediatelyavailable funds to an account designated by the receiving Party. All payments hereunder shall be made in the legal currency of theUnited States of America, and all references to “$” or “Dollars” shall refer to United States dollars. Except as otherwise providedherein, all payments due to a Party hereunder shall be due and payable within thirty (30) days of41 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL achievement of the applicable milestone event as set forth herein, subject to receipt of a proper invoice from the other Party. If anywithholding taxes, levies or similar taxes is due with respect to such a payment, such amounts shall be payable by the paying Party tothe applicable taxing authority, including any tax or withholding levied by a foreign taxing authority in respect of the payment oraccrual of any product fee. Each Party agrees to assist the other Party as reasonably requested by the other Party in claiming exemptionfrom or otherwise reducing such deductions or withholdings under any taxation or similar agreement or treaty from time to time inforce.8.6 Stock Purchase Agreement. DexCom shall issue any DexCom Common Stock to be issued to Verily or Onduo asdescribed in this Agreement pursuant to the stock purchase agreement attached hereto as Exhibit 8.6 (the “Stock PurchaseAgreement”); provided that if DexCom is unable to deliver the shares under the Stock Purchase Agreement in accordance with theterms of the Stock Purchase Agreement, DexCom shall make the applicable payment in cash at the scheduled time for such Closing (asdefined in the Stock Purchase Agreement).8.7 Reports. Until such time as DexCom has paid all of the Milestone Payments set forth in Section 8.2.1, DexCom shallprovide to Verily, within forty-five (45) days of the end of each calendar quarter, a reasonably detailed report setting forth worldwideTotal Product Revenue broken down by Product and territory, together with such substantiating information reasonably requested byVerily for purposes of confirming the accuracy of the Total Product Revenue calculation (which information may be redacted withrespect to information unrelated to the calculation of Total Product Revenue).8.8 Inspection of Records. This Section 8.8 shall be in effect until such time as DexCom has paid to Verily all of theMilestone Payments set forth in Section 8.2.1. DexCom shall, and shall cause its Affiliates and Third Parties acting on their behalf orunder their authority, to keep full and accurate books and records regarding the sales of the First Product, Second Product, ThirdProduct and any Additional Products and/or Alternative Product. DexCom shall permit Verily, by independent qualified publicaccountants engaged by Verily and reasonably acceptable to DexCom, to examine such books and records for the sole purposes ofverifying the accuracy of the reports provided pursuant to Section 8.7. Such examination may be conducted at any reasonable time, butnot later than three (3) years following the rendering of any corresponding reports, accountings and payments pursuant to Section 8.7.Such inspections may be made no more than once each calendar42 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL year, at reasonable times and on reasonable prior written notice. The records for any particular calendar quarter shall be subject to nomore than one inspection. The accountant shall be obligated to execute a reasonable confidentiality agreement prior to commencingany such inspection. Any inspection conducted under this Section 8.8 shall be at the expense of Verily, unless such inspection revealsthat a Milestone Event had been achieved and DexCom did not provide the applicable notice to Verily pursuant to Section 8.2.5 inwhich case such inspection shall be at the expense of DexCom. Any underpayment shall be paid within fifteen (15) Business Dayswith interest on the underpayment at the rate specified in Section 8.9 from the date such payment was originally due; and anyoverpayment may be credited against future payments hereunder without interest or if there will be no future payments by DexCom,then reimbursed within fifteen (15) Business Days. Any disputes arising under this Section 8.8 regarding any discrepancy identified bythe accountant shall be subject to resolution under Article 13.8.9 Late Payment. Any payments or portions thereof due hereunder which are not paid when due shall bear interest at the rateof one and a half percent (1.5%) per month from the payment due date until paid in full. This Section 8.9 shall in no way limit anyother remedies available to either Party.8.10 Currency Conversion. With respect to sales invoiced and received in a currency other than U.S. Dollars, such sales shallbe converted into the U.S. Dollar equivalent in accordance with DexCom’s standard practices used in preparing its audited financialstatements for the applicable calendar quarter and DexCom shall provide Verily the basis for such conversion.8.11 Collaboration Costs. Except as otherwise expressly provided herein or otherwise agreed by the Parties, each Party shallbear all of its own costs and costs of any Third Party acting on its behalf in carrying out those activities assigned to it under theCollaboration.8.12 Stock Splits. The number of shares of DexCom Common Stock issuable hereunder shall be adjusted for any stockdividend, stock split, combination of shares, reorganization, recapitalization, reclassification or other similar event with respect toDexCom Common Stock after the date of this Agreement.43 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL Article 9. INTELLECTUAL PROPERTY9.1 Ownership.9.1.1 DexCom Collaboration IP. As between the Parties, DexCom shall solely own all right, title and interest to anyand all:(a) Collaboration IP that is [***], whether developed solely by a Party or jointly by the Parties. For purposes ofclarity, DexCom shall own any [***] in the First Product, Second Product, Third Product and/or any Additional Product (in each case,whether such Products are Launched or not);(b) Collaboration IP that is copyright in or that is Assigned Software.(c) Collaboration IP that is DexCom Other Collaboration IP.The foregoing under (a), (b) and (c), collectively, the “DexCom Collaboration IP”.Subject to Section 9.1.4, to the extent Verily and/or its Affiliates has or acquires any right, title or interest (including any IP) in or toany DexCom Collaboration IP, Verily shall assign, and does hereby assign to DexCom (and shall cause its Affiliates to assign), anysuch right, title and/or interest (including any IP).9.1.2 Verily Collaboration IP. As between the Parties, Verily shall solely own all right, title and interest to any and allVerily Collaboration IP.9.1.3 Joint Collaboration IP. All right, title and interest to any and all Joint Collaboration IP shall be jointly owned byDexCom and Verily. Each Party shall assign, and does hereby assign to the other Party an undivided joint interest in the JointCollaboration IP. Subject to the licenses and other rights or exclusivities granted to the other Party herein (including in Article 7), (i)each Party reserves the right to use, practice or otherwise exploit its solely owned Collaboration IP (DexCom Collaboration IP withrespect to DexCom and Verily Collaboration IP with respect to Verily) and the Joint Collaboration IP; and (ii) neither Party shall haveany obligation to account44 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL to the other Party for profits, or to obtain any approval of the other Party to license, assign, enforce (subject to Section 9.5) or otherwiseexploit any Joint Collaboration IP or intellectual property with respect thereto, by reason of joint ownership thereof, and each Partyhereby waives any right it may have under the applicable Law of any jurisdiction to require any such approval or accounting.9.1.4 Retained Know-How. Notwithstanding Section 9.1.1, Verily shall have no obligation to assign to DexCom anyKnow-How developed by Verily and included in DexCom Collaboration IP, except to the extent such Know-How (i) consists ofsubject matter that is patentable, copyrightable or otherwise registrable, or is otherwise claimed or included in a Patent, copyrightregistration or other statutory registration owned by DexCom under Section 9.1.1 (it being understood that the IP assigned to DexComunder Section 9.1.1 includes the right to seek patent, copyright or any other available statutory protection) or (ii) is expressly identifiedas DexCom-owned Know-How in [***]. Any Know-How developed by Verily and included in DexCom Collaboration IP, whichKnow-How is not assigned to DexCom under this Section 9.1.4 (“Verily Retained Know-How”) shall be deemed part of VerilyCollaboration IP and, without limiting the foregoing, shall be licensed to DexCom under Section 7.1.1(a) and 7.1.2(b) and subject touse and disclosure restrictions in Section 11.2.9.1.5 Each Party shall disclose under the coordination of the Executive Sponsors to the other Party all Collaboration IPfirst conceived in the course of its performance of the [***] (or in the course of the Parties’ activities [***], to the extent not disclosedpreviously) or required for the other Party to perform the activities assigned to it [***], and the Parties shall work in good faith,together with their respective counsel, to jointly identify respective lists of [***], Verily Software IP, or other Collaboration IP.Notwithstanding anything to the contrary, DexCom will have no obligation to share information with Verily regarding [***] andVerily will have no obligation to share information with DexCom regarding patenting Verily Software IP. The Parties will form aPatent Review Committee with equal representation. The composition, rules, and roles of the Patent Review Committee shall bedefined under the Patent Committee Rules, which have been exchanged between the Parties in as of the Effective Date can beamended by consensus of the Patent Review Committee from time to time without amending this Agreement. If there is a conflictbetween the Patent Committee Rules and the Agreement, the Agreement shall govern. The representative(s) of each Party in the PatentReview Committee will consult with each other on patent claiming strategy for the Collaboration Patents in furtherance of [***].45 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 9.1.6 The Parties acknowledge and agree that (i) DexCom has developed and will continue to develop [***] otherthan the Products outside the scope of the Collaboration, and (ii) to the extent DexCom uses in the Collaboration components or othertechnology from such [***], in no event shall such components or technology be deemed part of Joint Collaboration IP or licensed toVerily other than as expressly set forth in Section 7.2.1.9.2 Joint Research Agreement. The Parties hereby acknowledge that this Agreement qualifies as a “joint research agreement”as defined in 35 U.S.C. § 100(h) and agree that the Parties will cooperate to take advantage of the “joint research agreement”provisions of 35 U.S.C. § 102(c), including by the filing of a terminal disclaimer as provided for in Manual of Patent ExaminingProcedure Section 717.02(c), if reasonably prudent or necessary during the filing and/or prosecution of a patent application that issubject to a license grant or assignment under this Agreement.9.3 Patent Prosecution.9.3.1 Verily Patents. As between the Parties, Verily shall have the right to control the Prosecution and Maintenance ofthe Verily Licensed Patents and Joint Collaboration Patents with at least one Verily inventor using counsel of its choice. Verily agreesto: (a) keep DexCom reasonably informed with respect to such activities; and (b) consult in good faith with DexCom regarding suchmatters, including notice prior to the abandonment of any claims thereof covering the Products and in the [***]. If Verily does notwant to Prosecute and Maintain any of the Joint Collaboration Patents, then Verily shall give DexCom sufficient notice (i.e. in order toavoid any adverse events such as missing a filing deadline) and DexCom shall have the right to control the Prosecution andMaintenance of such Joint Collaboration Patents.9.3.2 DexCom Patents. As between the Parties, DexCom shall have the right to control the Prosecution andMaintenance of the DexCom Collaboration Patents and Joint Collaboration Patents without any Verily inventors using counsel of itschoice. DexCom agrees to: (i) keep Verily reasonably informed with respect to such activities; and (ii) consult in good faith with Verilyregarding such matters, including notice prior the abandonment of any claims thereof covering the Products.9.3.3 Filing Notice. Each Party agrees to give notice to the other Party at least four weeks prior to filing of any newpatent application that constitutes Collaboration IP and highlight46 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL any proposed inclusion of the other Party’s Confidential Information in such new patent application. Such Party will consult with theother Party in good faith to resolve any objections to inventorship (under applicable law) and/or content of the patent application.9.4 Defense of Third Party Infringement Claims. During the Term, if any Product that is Commercialized by DexCom or itsAffiliates becomes the subject of a Third Party’s claim or assertion of infringement of a Patent relating to the manufacture, use, sale,offer for sale or importation of such Product, the Party first having notice of the claim or assertion shall promptly notify the other Party,and the Parties shall promptly confer to consider the claim or assertion and the appropriate course of action. Except as provided inSection 11.4, or by separate written agreement of the Parties, each Party shall have the right to defend itself against a suit that names itas a defendant (the “Defending Party”). Except as provided in Section 11.4, neither Party shall enter into any settlement of any claimdescribed in this Section 9.4 that adversely affects the other Party’s rights or interests without such other Party’s written consent, whichconsent shall not be unreasonably conditioned, withheld or delayed. In any event, the other Party shall reasonably assist the DefendingParty and cooperate in any such litigation at the Defending Party’s request and expense.9.5 Enforcement.9.5.1 Notice. Subject to the provisions of this Section 9.5 and during the Term, in the event that either Partyreasonably believes that any Verily Licensed Patent (a) is being infringed by a Third Party or (b) is or will become subject to adeclaratory judgment action arising from such infringement, in each case, (a) and (b), which infringement arises from the manufacture,sale, use or import of a [***] in the Territory (an “Infringing Product”) such Party shall promptly notify the other Party.9.5.2 Enforcement in the [***]. During the Term, DexCom shall have the initial right (but not the obligation), at itsexpense, to enforce the Verily Licensed Patents in the [***] or to defend any declaratory judgment action with respect thereto in theTerritory (each, an “Enforcement Action”). Prior to the commencement of any activity by DexCom with respect to an EnforcementAction, (a) DexCom shall provide thirty (30) days advance written notice to Verily and (b) if requested by Verily, DexCom shallconsult in good faith with respect to such Enforcement Action and consider in good faith Verily’s input, including to prevent anyVerily Licensed Patent47 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL to be subject to undue risk of invalidation. DexCom agrees not to settle any Enforcement Action, or intentionally make any admissionsor assert any position in such Enforcement Action, in a manner that would materially adversely affect the validity, enforceability orscope of any Verily Licensed Patent in or outside the Territory, without the prior written consent of Verily, which shall not beunreasonably withheld, conditioned or delayed. In the event that DexCom or its designee fails to commence or defend an EnforcementAction with respect to Infringing Products in the Territory within [***] of a request by Verily to do so (or such shorter period as isnecessary to bring and maintain such action), Verily or its designee may commence an Enforcement Action with respect to suchInfringing Products at its own expense. In such case, Verily agrees not to settle any Enforcement Action, or intentionally make anyadmissions or assert any position in such Enforcement Action, in a manner that would materially adversely affect DexCom’s rights orinterests in [***] in the Territory, without the prior written consent of DexCom, which shall not be unreasonably withheld, conditionedor delayed.9.5.3 Enforcement Outside of the [***]. As between the Parties, Verily shall have the sole right (but not theobligation), at its expense, to enforce the Verily Licensed Patents outside of the [***].9.5.4 Cooperation. The Party commencing, controlling or defending any action under Section 9.5.2 (such Party, the“Enforcing Party”) shall keep the other Party reasonably informed of the progress of any such Enforcement Action, and such otherParty shall have the right to participate with counsel of its own choice at its own expense. The non-Enforcing Party hereby gives theEnforcing Party the right to name the non- Enforcing Party in any Enforcement Action if required for standing. In any event, the otherParty shall reasonably cooperate with the Enforcing Party, including providing information and materials, at the Enforcing Party’srequest and expense. The Enforcing Party shall also have the right to control settlement of such Enforcement Action; provided,however, no settlement shall be entered into without the consent of the other Party, which consent not to be unreasonably withheld,conditioned or delayed, if such settlement would materially and adversely affect the interests of the other Party.9.5.5 Recoveries. Any recovery received as a result of any Enforcement Action to enforce a Patent pursuant to Section9.5.2 shall be used first to reimburse the Parties for the costs and expenses (including attorneys’ and professional fees) incurred inconnection with such48 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL Enforcement Action (and not previously reimbursed), and the remainder of the recovery shall be shared (a) for any EnforcementAction in the [***] and (b) for any Enforcement Action [***].Article 10. CONFIDENTIALITY10.1 Confidentiality; Exceptions. Except to the extent expressly authorized by this Agreement or otherwise agreed by theParties in writing, the Parties agree that the receiving Party shall keep confidential and shall not publish or otherwise disclose or use forany purpose other than as provided for in this Agreement any confidential or proprietary information or materials or Know-Howfurnished to it by the other Party pursuant to this Agreement and the terms and conditions of this Agreement (collectively,“Confidential Information”). Notwithstanding the foregoing, Confidential Information shall not be deemed to include information ormaterials to the extent that it can be established by the receiving Party that such information or material:10.1.1 was already known to or possessed by the receiving Party, other than under an obligation of confidentiality(except to the extent such obligation has expired or an exception is applicable under the relevant agreement pursuant to which suchobligation established), at the time of disclosure;10.1.2 was generally available to the public or otherwise part of the public domain at the time of its disclosure to thereceiving Party;10.1.3 became generally available to the public or otherwise part of the public domain after its disclosure and otherthan through any act or omission of the receiving Party in breach of this Agreement;10.1.4 was independently developed by the receiving Party without use of or reference to the disclosing Party’sConfidential Information as demonstrated by documented evidence prepared contemporaneously with such independent development;or10.1.5 was disclosed to the receiving Party on a non-confidential basis by a Third Party having the right to make suchnon-confidential disclosure.49 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 10.2 Authorized Use and Disclosure. Each Party may use and disclose Confidential Information of the other Party as follows:(a) under appropriate confidentiality provisions substantially equivalent to those in this Agreement in connection with the performanceof its obligations or exercise of rights granted to such Party in this Agreement; (b) to the extent such disclosure is reasonably necessaryfor the Prosecution and Maintenance of Patents (including applications therefor) in accordance with Section 9.3, prosecuting ordefending litigation, filing for and conducting preclinical or clinical trials, obtaining and maintaining Regulatory Approvals forProducts; (c) in communication with existing and potential acquirers, investors, strategic partners, licensees, distributors, consultants,advisors (including financial advisors, lawyers and accountants) and others on a need to know basis, in each case, under appropriateconfidentiality provisions substantially equivalent to those of this Agreement; (d) for the purposes of the performance of thisAgreement and exercising any rights of a Party pursuant to this Agreement and in connection with the grant of any license pursuant toArticle 7 of this Agreement; or (e) to the extent mutually agreed to by the Parties. Notwithstanding the foregoing, and without limitingSection 9.1.4, to the extent any Verily Retained Know-How is Confidential Information, (i) such Verily Retained Know-How shallnot be used by Verily or its Affiliates in the [***] except to perform the activities contemplated in the Agreement, (ii) Verily and itsAffiliates shall not disclose to any Third Party in the [***] any such Verily Retained Know-How without DexCom’s prior writtenconsent except where such disclosure is for purposes of performing activities under this Agreement, and (iii) without limiting theforegoing, any disclosure of Verily Retained Know-How to any Third Party shall be under a use restriction limiting such use of suchVerily Retained Know-How to be outside of [***]. In addition, to the extent any Know-How is assigned to DexCom under thisAgreement, such Know-How shall be protected as DexCom’s Confidential Information under this Article 7. Furthermore, during theTerm, to the extent any proprietary, non-public Know-How is included in Joint Collaboration IP (“Joint Collaboration Know-How”), then (i) such Joint Collaboration Know-How shall not be used by Verily or its Affiliates in [***] except to perform theactivities contemplated in the Agreement, (ii) Verily and its Affiliates shall not disclose to any Third Party for use in [***] any suchJoint Collaboration Know-How without DexCom’s prior written consent, and (iii) without limiting the foregoing, any disclosure ofJoint Collaboration Know-How to any Third Party shall be under a use restriction limiting such use of such Joint Collaboration Know-How to be outside of [***].50 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 10.3 Methods Marking Requirement. Any non-public algorithm or other method shared by a Party under this Agreement thatis outside of the scope of [***] and is not marked or identified by such Party as confidential or proprietary will not be consideredConfidential Information.10.4 Required Disclosures. Notwithstanding anything to the contrary in this Agreement, each Party may make any disclosuresrequired of it by applicable Law or the rules of a stock exchange upon which a Party’s capital stock is listed, provided that (a) the Partyrequired to make such disclosure (the “Required Party”) shall notify the other Party in writing of the proposed content of the requireddisclosures at least five (5) Business Days prior to the date on which the disclosure is to be made, except with respect to the currentreport on Form 8-K to be filed by DexCom immediately following the execution of this Agreement regarding its entry into thisAgreement, and the non-Required Party shall be entitled to reasonably comment with respect to the form and content of such requireddisclosure, which the Required Party shall consider in good faith; (b) if so requested by the non-Required Party in the case ofdisclosures required by applicable Law, the Required Party shall use reasonable efforts to obtain an order protecting to the maximumextent possible the confidentiality of the provisions of this Agreement and the non-Required Party’s Confidential Information asreasonably requested by the non-Required Party; and (c) if the Parties are unable to agree on the form or content of any requireddisclosure, such disclosure shall be limited to the minimum required as determined by the Required Party in consultation with its legalcounsel. Without limiting the foregoing, the Required Party shall provide the non-Required Party with a draft of the proposedredactions to the provisions of this Agreement, together with exhibits or other attachments hereto, to be filed by Verily or DexComwith the Securities and Exchange Commission (or other applicable regulatory body) or as otherwise required by Law, and the non-Required Party shall be entitled to reasonably comment with respect to the content of the redactions, which the Required Party shallconsider in good faith.10.5 Prior Agreements. This Agreement supersedes (a) the Non-binding Term Sheet between DexCom and Verily exchangedby the Parties in August and September, 2018, (b) the Collaboration and License Agreement between DexCom and Google LifeSciences LLC, dated August 10, 2015, as amended, (c) the and Non-binding Term Sheet for Collaboration and License Agreementbetween DexCom and Google Inc. dated June 29, 2015, and, (d) solely with regard to the subject matter of this Agreement and theinformation disclosed pursuant hereto, the Non-Disclosure Agreement dated April 6, 2015 between DexCom and Google Inc., actingon its behalf51 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL and on behalf of its affiliates (collectively, the “Prior Agreements”). All Confidential Information disclosed by a Party under the PriorAgreements shall be deemed Confidential Information of such disclosing Party under this Agreement and shall be subject to the termsof this Article 10.10.6 Publications. Each Party shall submit to the other Party any proposed publication or public disclosure containing clinicalor scientific results for the Products at least thirty (30) days in advance to allow that Party to review such proposed publication ordisclosure. The reviewing Party will promptly review such proposed publication or disclosure and make any objections or commentsthat it may have thereto, and the Parties shall discuss the advantages and disadvantages of publishing or disclosing such results. If theParties are unable to agree on whether to publish or disclose the same, the matter shall be referred to the Executive Sponsors for reviewand comment. In resolving whether to publish or disclose the same, DexCom shall consider the good faith comments of Verily withrespect thereto. This Section 10.6 shall not be deemed to limit the Parties’ obligations under Section 10.1 above.10.7 Press Release. Neither Party shall issue any press release or other public statement, whether oral or written, disclosing theexistence of this Agreement, the terms hereof or any information relating to this Agreement without the prior written consent of theother Party.Article 11. REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION11.1 General Representations and Warranties. Each Party represents and warrants to the other that:11.1.1 it is duly organized and validly existing under the Laws of the jurisdiction of its incorporation, and has fullcorporate power and authority to enter into this Agreement and to carry out the provisions hereof;11.1.2 it is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and theperson executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate action;52 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 11.1.3 this Agreement is legally binding upon it and enforceable in accordance with its terms. The execution, deliveryand performance of this Agreement by it does not conflict with any agreement, instrument or understanding, oral or written, to which itis a party or by which it may be bound, nor violate any material applicable Law;11.1.4 except for the Permitted Encumbrances, it has not granted, and shall not grant during the Term, any right to anyThird Party which would conflict with the IP rights granted to the other Party hereunder;11.1.5 it is not aware of any action, suit or inquiry or investigation instituted by any Person which questions orthreatens the validity of this Agreement;11.1.6 with respect to Verily only,(a) Verily, together with its Affiliates, is the sole owner of the [***] and the [***] and has the exclusive rightto such Patents to grant the licenses granted to DexCom hereunder;(b) Verily will not assign or transfer any rights in the Verily Licensed Patents in a manner that would cause alicense to be granted to a Third Party pursuant to [***];(c) none of the agreements identified in Exhibit 1.63 grant any Third Party (i) any exclusive rights with respectto any of the Verily Licensed Patents in [***], (ii) any right to Verily Know-How in [***], (iii) any right to file applications for,prosecute, maintain, enforce or defend any of the Verily Licensed Patents in [***], or (iv) rights necessary to Develop, Manufactureand Commercialize [***];(d) without limiting the foregoing, Verily has not, prior to the Effective Date, and will not have, as of theEffective Date, (i) assigned to any Third Party any Verily IP for which Verily granted any license or other rights to DexCom under theOriginal Agreement, or (ii) otherwise granted to any Third Party any rights to such Verily IP that, in each case (i) and (ii), adverselyaffect Verily’s ability to grant rights to or in such Verily IP to the same extent that Verily granted such rights in the OriginalAgreement; and53 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL (e) it will conduct its obligations under [***] and Commercialization Plan, including the Development ofProducts thereunder, using its employees or contractors that are obligated to assign to Verily and/or its Affiliates all rights in and to anyCollaboration IP and associated intellectual property rights and to maintain in confidence all of the other Party’s ConfidentialInformation, and will not use any employee of an Affiliate in the conduct of such [***] and Commercialization Plan unless suchemployee is under such obligations of assignment and confidentiality.11.1.7 DexCom Antitrust Representation. DexCom represents and warrants to Verily that DexCom, or if different itsultimate parent entity under the HSR Act, has determined that the value of the non-exempt assets it will acquire from Verily under thisAgreement (including U.S. patent rights), as determined under the HSR Act (including 16 C.F.R. Section 801.10), is less than $84.4million and has therefore concluded, taking into account the aggregation rules under the HSR Act, that the HSR Act’s size oftransaction test will not be satisfied, with respect to the non-exempt assets DexCom will acquire under this Agreement.11.1.8 Verily Service Covenants. Verily covenants that the Verily Services provided by it hereunder will be providedby qualified professionals conforming to Verily’s standard practices (in no event less than industry standard practices) governing thedesign and development of application software of the same general nature and complexity.11.2 Disclaimer of Warranties. EXCEPT AS SET FORTH IN THIS ARTICLE 11, VERILY AND DEXCOMEXPRESSLY DISCLAIM ANY WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE,WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT (INCLUDING THE VERILY IP, VERILYBACKGROUND IP, JOINT COLLABORATION IP, OR COLLABORATION IP ASSIGNED TO DEXCOM FROMVERILY), INCLUDING ANY WARRANTY OF MERCHANTABILITY, NONINFRINGEMENT, OR FITNESS FOR APARTICULAR PURPOSE, AND NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRDPARTIES.11.3 Limitation of Liability. WITHOUT LIMITING EITHER PARTY’S INDEMNIFICATION OBLIGATIONS UNDERSECTION 11.4 BELOW, NEITHER PARTY SHALL BE LIABLE TO THE OTHER UNDER THIS AGREEMENT FOR ANYLOSS OF54 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL PROFITS, LOSS OF BUSINESS, INTERRUPTION OF BUSINESS, INDIRECT, SPECIAL OR CONSEQUENTIALDAMAGES OF ANY KIND SUFFERED BY SUCH OTHER PARTY FOR BREACH HEREOF, WHETHER BASED ONCONTRACT OR TORT CLAIMS OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THEPOSSIBILITY OF SUCH LOSS; PROVIDED, HOWEVER, THAT THE FOREGOING SHALL NOT APPLY TO ANYMATERIAL WILLFUL BREACH OF THIS AGREEMENT BY A PARTY OR A BREACH OF A PARTY’SCONFIDENTIALITY OBLIGATIONS UNDER ARTICLE 10.55 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL 11.4 Indemnification.11.4.1 Indemnification by Verily. Verily hereby agrees to defend, hold harmless and indemnify (collectively,“Indemnify”) DexCom and its Affiliates, and its and their agents, directors, officers and employees (the “DexCom Indemnitees”)from and against any liability or expense (including reasonable legal expenses and attorneys’ fees) (collectively, “Losses”), resultingfrom suits, claims, actions and demands, in each case brought by a Third Party (each, a “Third-Party Claim”) arising out of (a) abreach of any of Verily’s covenants, representations or warranties hereunder, (b) the gross negligence or willful misconduct oromission of Verily or its Affiliates under this Agreement, (c) actual or alleged infringement of the intellectual property rights of a ThirdParty by a Verily Service or deliverable of Verily under the Development Plan (“Verily Deliverable”), except to the extent that suchinfringement results from a modification, enhancement or improvement made or implemented by DexCom to the Verily Deliverable, orcombination of the Verily Deliverable with materials not furnished by Verily. Verily’s obligation to Indemnify the DexComIndemnitees pursuant to this Section 11.4.1 shall not apply to the extent that any such Losses arise from the gross negligence orintentional misconduct of any DexCom Indemnitee, arise from any material breach by DexCom of this Agreement; or are Losses forwhich DexCom is obligated to Indemnify the Verily Indemnitees pursuant to Section 11.4.3. Verily may, at Verily’s option, (i) obtain,at its expense, a license from such Third Party for the benefit of DexCom and its customers, and/or (ii) replace or modify thedeliverable in question so that it is no longer infringing but provides comparable functionality. Verily’s obligation to indemnify underthis Section 11.4.1 shall not extend to use of its deliverable or Verily Service after Verily has offered or implemented a technicallyreasonable non-infringing alternative design with comparable functionality.11.4.2 Indemnification by Verily for [***]. Verily hereby agrees to Indemnify the DexCom Indemnitees from andagainst any and all Losses resulting from a claim by [***].11.4.3 Indemnification by DexCom. DexCom hereby agrees to Indemnify Verily and its Affiliates, and its and theiragents, directors, officers and employees (the “Verily Indemnitees”) from and against any and all Losses resulting from Third-PartyClaims arising out of: (a) a breach of any of DexCom’s covenants, representations or warranties hereunder, (b) the gross negligence orwillful misconduct or omission of DexCom or its Affiliates under this Agreement, (c) actual or alleged infringement of the intellectualproperty rights of a Third Party by56 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL a deliverable of DexCom under the Development Plan (“DexCom Deliverable”), except to the extent that such infringement resultsfrom a modification, enhancement or improvement made or implemented by Verily to the DexCom Deliverable, or combination of theDexCom Deliverable with materials not furnished by DexCom. DexCom’s obligation to Indemnify the Verily Indemnitees pursuant tothis Section 11.4.3 shall not apply to the extent that any such Losses arise from the gross negligence or intentional misconduct of anyVerily Indemnitee, arise from any material breach by Verily of this Agreement or are Losses for which Verily is obligated to Indemnifythe DexCom Indemnitees pursuant to Section 11.4.1.11.4.4 Procedure. The indemnified Party shall provide the indemnifying Party with prompt notice of the Third-PartyClaim or [***] giving rise to the indemnification obligation pursuant to this Section 11.4 and, to be eligible to be Indemnifiedhereunder, the exclusive ability to defend (with the reasonable cooperation of the indemnified Party) or settle any such claim; provided,however, that the indemnifying Party shall not enter into any settlement that admits fault, wrongdoing or damages without theindemnified Party’s written consent, such consent not to be unreasonably withheld or delayed. The indemnified Party shall have theright to participate, at its own expense and with counsel of its choice, in the defense of any claim or suit that has been assumed by theindemnifying Party.11.5 Insurance. Each Party shall obtain and maintain, during the term of this Agreement and for six (6) years thereafter,comprehensive general liability insurance, including products liability insurance and coverage for clinical trials. Such insurance shall bewith reputable and financially secure insurance carriers, or self-insurance in a form and at levels consistent with industry standardsbased upon such Party’s activities hereunder and indemnification obligations hereunder, and shall name the other Party as an additionalinsured. Such liability insurance or self-insurance shall be maintained on an occurrence basis to provide such protection after expirationor termination of the policy itself or this Agreement.Article 12. TERM AND TERMINATION12.1 Term. This Agreement shall become effective as of the Effective Date and continue in full force and effect, unless earlierterminated pursuant to the other provisions of this Article 12,57 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL until December 31, 2028, provided that upon achievement of the first revenue-related Milestone Event and the payment of theMilestone Payment related thereto (or corresponding cash amount calculated pursuant to Section 8.2.2) the term shall be extended untilDecember 31, 2033 (the “Term”).12.2 Termination for Breach. Either Party may terminate this Agreement in the event the other Party materially breaches thisAgreement, and such material breach shall have continued for [***] days after written notice thereof was provided to the breachingParty by the other Party. Any such termination shall become effective at the end of such [***] day period unless the breaching Partyhas cured any such material breach prior to the expiration of the [***] day period, provided, however, in the event that, following theLaunch of the first Product, a good faith dispute arises with respect to the existence of any material breach of a Party’s obligations touse Commercially Reasonable Efforts to Develop, Manufacture, Launch, or Commercialize (which material breach, if existing, wouldgive the other Party the right to terminate this Agreement as set forth herein), such termination right shall be tolled commencing on thedate of receipt of written notice of such good faith dispute until such time as the dispute is resolved pursuant to Article 13. If thisAgreement is terminated following a tolling period as described in this Section 12.2, then, for purposes of determining what constitutesVerily Background IP, the “Term” shall be deemed to end on the date on which such termination would otherwise have been effectivein the absence of such tolling.12.3 General Effects of Expiration or Termination.12.3.1 Accrued Obligations. Expiration or termination of this Agreement for any reason shall not release either Partyof any obligation or liability which, at the time of such expiration or termination, has already accrued to the other Party or which isattributable to a period prior to such expiration or termination.12.3.2 Non-Exclusive Remedy. Notwithstanding anything herein to the contrary, termination of this Agreement by aParty shall be without prejudice to other remedies such Party may have at Law or equity.12.3.3 Licenses. Section 7.1 (Licenses to DexCom) (except for Section 7.1.6 (License to Verily Trademarks)) andSection 7.2.2 (License to [***]) shall survive any expiration or termination of Agreement, provided however, that: (i) each of thelicenses granted to DexCom58 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL pursuant to Section 7.1.1(a) and Section 7.1.4 shall (upon such expiration or termination) become non-exclusive (but shall otherwise besubject to the terms set forth therein); and (ii) for clarity, Section 7.1.5 (Covenant Not to Sue for DexCom [***]) will not apply beyondthe limited period specified therein.12.3.4 General Survival. In addition to the surviving provisions identified in Section 12.3.3. above, Article 1(Definitions), Section 5.5 (Reporting), Section 7.3 (No Other Rights), Section 7.4 (Other Licenses), Article 8 (Payments) (except forSection 8.1 (Second Upfront Fee) unless such payment is due prior such termination or expiration and Section 8.2.3 (IncentivePayment) unless such payment is due before such termination or expiration, and provided that Section 8.7 (Reports) and Section 8.8(Inspection of Records) survive only as long as DexCom or its Affiliates are Commercializing any Products), Section 9.1 (Ownership)(except for Section 9.1.5), Section 9.3 (Patent Prosecution), Section 9.5.3 (Enforcement Outside of [***]), Article 10 (Confidentiality)(except for the last sentence of 10.2 with respect to Joint Collaboration Know-How), Section 11.2 (Disclaimer of Warranties), Section11.3 (Limitation of Liability), Section 11.4 (Indemnification), Section 11.5 (Insurance), Section 12.3 (General Effects of Expiration orTermination), Article 13 (Dispute Resolution), and Article 14 (Miscellaneous) shall survive expiration or termination of this Agreementfor any reason, provided however, that: (i) if this Agreement terminates for Verily’s breach or bankruptcy, then in addition to theforegoing, Section 7.6 ([***] Supply) shall survive for 2 years after such termination; and (ii) for clarity, Section 11.5 (Insurance) willnot apply beyond the limited period specified therein. Except as otherwise provided in this Section 12.3.4, all rights and obligations ofthe Parties under this Agreement shall terminate upon expiration or termination of this Agreement for any reason.Article 13. DISPUTE RESOLUTION13.1 Dispute Resolution. The Parties agree that any dispute, controversy or claim arising from or in connection with (a) theinterpretation, enforcement, termination or invalidity of this Agreement, (b) the failure of the Executive Sponsors to reach unanimousagreement on any issue within their authority under this Agreement, (c) any alleged failure to perform, or breach of, this Agreement,(d) or claim relating to the ownership, scope, validity, enforceability or infringement of any Patent rights covering the manufacture, useor sale of any Product or of any Trademark rights59 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL relating to any Product, or (e) any issue relating to the interpretation or application of this Agreement (each, a “Dispute”), shall be firstreferred to the Chief Executives of DexCom and Verily for resolution in accordance with Section 2.1.2. In the event that the ChiefExecutives are unable to reach agreement with respect to such Dispute in accordance with Section 2.1.2, such Dispute shall beresolved through the procedures set forth in this Article 13.13.2 Jurisdiction; Venue. Other than those Disputes resolved as described in Section 13.3 all Disputes shall be subject to theexclusive jurisdiction and venue of the federal courts within the State of California. Each Party hereto waives and covenants not toassert or plead any objection that such Party might otherwise have to such jurisdiction and venue. Except as set forth herein, each Partyhereto hereby agrees not to commence any legal proceedings relating to or arising out of this Agreement or the transactionscontemplated hereby in any jurisdiction or courts.13.3 Executive Sponsor Disputes. Disputes as to matters within the authority of the Executive Sponsors will be resolved as setforth in Section 2.1.2 and shall not otherwise be subject to the provisions of this Article 13; provided that any Dispute as to theapplication of such Section 2.1.2 shall be subject to the provisions of this Article 13.Article 14. MISCELLANEOUS14.1 Governing Law. This Agreement and any dispute arising from the performance or breach hereof shall be governed byand construed and enforced in accordance with the Law of the State of California, without reference to conflicts of laws principles.14.2 Assignment. This Agreement shall not be assignable by either Party to any Third Party without the written consent of theother Party and any such attempted assignment shall be void. Notwithstanding the foregoing, either Party may assign this Agreement,without the written consent of the other Party, to an Affiliate or to an entity that acquires all or substantially all of the business or assetsof such Party to which this Agreement pertains (whether by merger, reorganization, acquisition, sale or otherwise), and agrees inwriting to be bound by the terms and conditions of this Agreement. No assignment or transfer of this Agreement shall be valid andeffective unless and until the assignee/transferee agrees in writing to be bound by the provisions of this Agreement. The terms andconditions of this Agreement shall be binding on and inure to the benefit of the60 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL permitted successors and assigns of the Parties. Notwithstanding Section 8.5, in the event any withholding or similar tax is levied by ordue to an assignment of this Agreement or any obligation by a Party to an Affiliate or any Third Party, then such Party (itself or itssuccessor) shall bear the full cost of such tax. Except as expressly provided in this Section 14.2, any attempted assignment or transferof this Agreement shall be null and void.14.3 Notices. Any notice, request, delivery, approval or consent required or permitted to be given under this Agreement shallbe in writing and shall be deemed to have been sufficiently given if delivered in person, transmitted via electronic mail or by expresscourier service (signature required) or five (5) days after it was sent by registered letter, return receipt requested (or its equivalent),provided that no postal strike or other disruption is then in effect or comes into effect within two (2) days after such mailing, to theParty to which it is directed at its physical or email address shown below or such other address. Notices sent by electronic means shallbe effective upon confirmation of receipt, notices sent by mail or overnight delivery service shall be effective upon receipt, and noticesgiven personally shall be effective when delivered.If to Verily, addressed to: Verily Life Sciences LLC269 East Grand AvenueSouth San Francisco, CA 94080Attention: Andy ConradEmail: [***]With a copy to (which shallnot constitute notice): Verily Life Sciences LLC269 East Grand AvenueSouth San Francisco, CA 94080Attention: General CounselEmail: [***]with a copy to verily-counsel@google.comIf to DexCom, addressed to: DexCom, Inc.6340 Sequence DriveSan Diego, CA 92121Attention: Kevin Sayer, President and Chief Executive Officer61 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL Email: [***]With a copy (which shallnot constitute notice) to: Fenwick & West LLP801 California StreetMountain View, CA 94041Attention: Stefano Quintini and Michael BrownEmail: [***]14.4 Waiver. Neither Party may waive or release any of its rights or interests in this Agreement except in writing. The failureof either Party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitutea waiver of that right or excuse a similar subsequent failure to perform any such term or condition. No waiver by either Party of anycondition or term in any one or more instances shall be construed as a continuing waiver of such condition or term or of anothercondition or term.14.5 Severability. If any provision hereof should be held invalid, illegal or unenforceable in any jurisdiction, the Parties shallnegotiate in good faith a valid, legal and enforceable substitute provision that most nearly reflects the original intent of the Parties andall other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry outthe intentions of the Parties as nearly as may be possible. Such invalidity, illegality or unenforceability shall not affect the validity,legality or enforceability of such provision in any other jurisdiction. If a Party seeks to avoid a provision of this Agreement by assertingthat such provision is invalid, illegal or otherwise unenforceable, such action shall be deemed to be a material breach of thisAgreement.14.6 No Third Party Beneficiaries. Except for the rights to indemnification provided for certain Third Parties as specified inSection 11.4 and as otherwise specified in this Section 14.6, all rights, benefits and remedies under this Agreement are solely intendedfor the benefit of DexCom and its Affiliates and Verily and its Affiliates, and except for such rights to indemnification expresslyprovided pursuant to Section 11.4, no Third Party shall have any rights whatsoever to (a) enforce any obligation contained in thisAgreement (b) seek a benefit or remedy for any breach of this Agreement, or (c) take any other action relating to this Agreement underany legal theory, including, actions in contract, tort (including but not limited to, negligence, gross negligence and strict liability),62 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL or as a defense, setoff or counterclaim to any action or claim brought or made by either Party. Notwithstanding the foregoing, Onduoshall be a Third Party beneficiary with respect to the obligations to make payments or transfer shares to Onduo under this Agreement,which payments shall be “Product Fee Payments” as referenced in the Contribution Agreement between Verily Life Sciences LLC andOnduo LLC.14.7 Entire Agreement/Modification. This Agreement, including its Exhibits, sets forth all the covenants, promises,agreements, warranties, representations, conditions and understandings between the Parties and supersedes and terminates all prioragreements and understandings between the Parties including the Original Agreement and the Prior Agreements. No subsequentalteration, amendment, change or addition to this Agreement shall be binding upon the Parties unless reduced to writing and signed bythe respective authorized officers of the Parties. All references to the Original Agreement in any other agreement or other documentbetween the Parties that pre-dates the Effective Date shall, on and after the Effective Date, be deemed to refer to this Agreement(except to the extent, if any, that such interpretation would conflict with the terms of this Agreement as they refer or pertain to theOriginal Agreement).14.8 Relationship of the Parties. The Parties agree that the relationship of Verily and DexCom established by this Agreementis that of independent contractors. Furthermore, the Parties agree that this Agreement does not, is not intended to, and shall not beconstrued to, establish an employment, agency or any other relationship. Except as may be specifically provided herein, neither Partyshall have any right, power or authority, nor shall they represent themselves as having any authority to assume, create or incur anyexpense, liability or obligation, express or implied, on behalf of the other Party, or otherwise act as an agent for the other Party forany purpose.14.9 Force Majeure. Except with respect to payment of money, neither Party shall be liable to the other for failure or delay inthe performance of any of its obligations under this Agreement for the time and to the extent such failure or delay is caused byearthquake, riot, civil commotion, war, terrorist acts, strike, flood, or governmental acts or restriction or other cause, in each case to theextent beyond the reasonable control of the respective Party (any of the foregoing, “Force Majeure Event”). The Party affected bysuch force majeure will provide the other Party with full particulars thereof as soon as it becomes aware of the same (including its bestestimate of the likely extent and duration of the interference with its activities), and will use Commercially Reasonable63 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL Efforts to overcome the difficulties created thereby and to resume performance of its obligations as soon as practicable. If theperformance of any such obligation under this Agreement is delayed owing to such a force majeure for any continuous period of morethan [***] days, the Parties will consult with respect to an equitable solution.14.10 Compliance with Laws/Other. Notwithstanding anything to the contrary contained herein, all rights and obligations ofVerily and DexCom are subject to prior compliance with, and each Party shall comply with, all applicable Laws, including obtainingall necessary approvals required by the applicable agencies of the governments of the United States and foreign jurisdictions. Inaddition, each Party shall conduct its activities under the Collaboration in accordance with good scientific and business practices.14.11 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all ofwhich together, shall constitute one and the same instrument.14.12 Bankruptcy Matters. All licenses granted under this Agreement are deemed to be, for purposes of Section 365(n) of theUnited States Bankruptcy Code (the “Bankruptcy Code”), licenses of rights to “intellectual property” as defined in Section 101 of theBankruptcy Code. The Parties agree that each Party may fully exercise all of its rights and elections under the Bankruptcy Code.[The remainder of this page intentionally left blank; the signature page follows.]64 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate originals by their duly authorizedrepresentatives as of the Effective Date, with effect as of Effective Date.VERILY LIFE SCIENCES LLC VERILY IRELANDBy: /s/ Andrew Conrad By: /s/ Kristian Marthinsen Name: Andrew Conrad Name: Kristian Marthinsen Title: Chief Operating Officer Title: Director Date: Date: 11/19/2018 DEXCOM, INC. By: /s/ Quentin Blackford Name: Quentin Blackford Title: Chief Financial Officer Date: 11/20/18 List of ExhibitsExhibit 1.92 – Permitted EncumbrancesExhibit 1.143 – [***]Exhibit 1.144 – [***]Exhibit 1.153 – [***]65 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL EXHIBIT 1.92 PERMITTED ENCUMBRANCES[***]66 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL EXHIBIT 1.143[***][***][***][***][***][***][***] [***][***][***] [***][***][***] [***][***][***][***][***][***][***] [***][***][***] [***][***][***][***][***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***][***][***]67 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL [***][***] [***][***][***][***][***][***][***] [***][***][***][***][***]68 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL [***][***][***][***][***][***] [***][***][***] [***][***][***][***][***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***][***][***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***]69 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL [***][***] [***][***][***] [***][***][***] [***][***][***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***]70 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL EXHIBIT 1.144[***][***][***][***][***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***]71 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL [***][***] [***][***][***] [***][***][***] [***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***][***][***] [***]72 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL EXHIBIT 1.153[***]•[***][***][***][***]•[***][***][***][***]73 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDINFORMATION.EXECUTION COPYCONFIDENTIAL EXHIBIT 8.6STOCK PURCHASE AGREEMENT[Previously Filed] 74 J.P. MorganAMENDED AND RESTATED CREDIT AGREEMENTdated as ofDecember 19, 2018by and amongDEXCOM, INC., as Borrower,the Lenders party hereto,andJPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Administrative Agent___________________________JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,and MERRILL LYNCH, PIERCE, FENNER & SMITH INC.,as Joint Bookrunners and Joint Lead ArrangersBANK OF AMERICA, N.A., and SILICON VALLEY BANK, as Co-Syndication Agents730594648.9 16508322ARTICLE I DEFINITIONSSECTION 1.01.Defined Terms1SECTION 1.02.Classification of Loans and Borrowings26SECTION 1.03.Terms Generally26SECTION 1.04.Accounting Terms; GAAP.26SECTION 1.05.Interests Rates; LIBOR Notification27SECTION 1.06.Pro Forma Adjustments for Acquisitions and Dispositions27SECTION 1.07.Status of Obligations28ARTICLE II THE CREDITSSECTION 2.01.Commitments28SECTION 2.02.Loans and Borrowings28SECTION 2.03.Requests for Revolving Borrowings29SECTION 2.04.Determination of Dollar Equivalent29SECTION 2.05.[Intentionally Omitted]30SECTION 2.06.Letters of Credit30SECTION 2.07.Funding of Borrowings34SECTION 2.08.Interest Elections35SECTION 2.09.Termination and Reduction of Commitments36SECTION 2.10.Repayment of Loans; Evidence of Debt37SECTION 2.11.Prepayment of Loans38SECTION 2.12.Fees38SECTION 2.13.Interest39SECTION 2.14.Alternate Rate of Interest40SECTION 2.15.Increased Costs41SECTION 2.16.Break Funding Payments42SECTION 2.17.Payments Free of Taxes42SECTION 2.18.Payments Generally; Pro Rata Treatment; Sharing of Set-offs46SECTION 2.19.Mitigation Obligations; Replacement of Lenders48SECTION 2.20.Defaulting Lenders48SECTION 2.21.Increase in Commitments49SECTION 2.22.Returned Payments50SECTION 2.23.Banking Services and Swap Agreements51i730594648.9 16508322ARTICLE III REPRESENTATIONS AND WARRANTIESSECTION 3.01.Organization; Powers51SECTION 3.02.Authorization; Enforceability51SECTION 3.03.Governmental Approvals; No Conflicts51SECTION 3.04.Financial Condition; No Material Adverse Change51SECTION 3.05.Properties52SECTION 3.06.Litigation and Environmental Matters52SECTION 3.07.Compliance with Laws and Agreements52SECTION 3.08.Investment Company Status52SECTION 3.09.Taxes53SECTION 3.10.ERISA53SECTION 3.11.Disclosure53SECTION 3.12.Anti-Corruption Laws and Sanctions53SECTION 3.13.EEA Financial Institutions53SECTION 3.14.Capitalization and Subsidiaries53SECTION 3.15.Employment Matters54SECTION 3.16.Federal Reserve Regulations54SECTION 3.17.Use of Proceeds54SECTION 3.18.Security Interest in Collateral54SECTION 3.19.Plan Assets; Prohibited Transactions54ARTICLE IV CONDITIONSSECTION 4.01.Restatement Effective Date54SECTION 4.02.Each Credit Event56ii730594648.9 16508322ARTICLE V AFFIRMATIVE COVENANTSSECTION 5.01.Financial Statements; Ratings Change and Other Information57SECTION 5.02.Notices of Material Events58SECTION 5.03.Existence; Conduct of Business58SECTION 5.04.Payment of Obligations58SECTION 5.05.Maintenance of Properties; Insurance59SECTION 5.06.Books and Records; Inspection Rights59SECTION 5.07.Compliance with Laws59SECTION 5.08.Use of Proceeds and Letters of Credit59SECTION 5.09.Accuracy of Information59SECTION 5.10.Additional Collateral; Further Assurances60SECTION 5.11.Intellectual Property61SECTION 5.12.Post-Closing Matters61ARTICLE VI NEGATIVE COVENANTSSECTION 6.01.Indebtedness61SECTION 6.02.Liens62SECTION 6.03.Fundamental Changes63SECTION 6.04.Investments, Loans, Advances, Guarantees and Acquisitions64SECTION 6.05.Swap Agreements65SECTION 6.06.Restricted Payments; Certain Payments of Indebtedness65SECTION 6.07.Transactions with Affiliates66SECTION 6.08.Restrictive Agreements66SECTION 6.09.Sale and Leaseback Transactions67SECTION 6.10.Amendment of Material Documents67SECTION 6.11.Fiscal Year67SECTION 6.12.Anti-Corruption Laws and Sanctions67SECTION 6.13.Financial Covenants67iii730594648.9 16508322ARTICLE VII EVENTS OF DEFAULTARTICLE VIII THE ADMINISTRATIVE AGENT; CREDIT BIDDINGSECTION 8.01.The Administrative Agent70SECTION 8.02.Administrative Agent’s Reliance, Indemnification, Etc.73SECTION 8.03.Posting of Communications.74SECTION 8.04.The Administrative Agent Individually75SECTION 8.05.Successor Administrative Agent75SECTION 8.06.Acknowledgements of Lenders and Issuing Banks76SECTION 8.07.Collateral Matters77SECTION 8.08.Credit Bidding78SECTION 8.09.Certain ERISA Matters79SECTION 8.10.Flood Laws80ARTICLE IX MISCELLANEOUSSECTION 9.01.Notices80SECTION 9.02.Waivers; Amendments82SECTION 9.03.Expenses; Indemnity; Damage Waiver84SECTION 9.04.Successors and Assigns86SECTION 9.05.Survival89SECTION 9.06.Counterparts; Integration; Effectiveness; Electronic Execution89SECTION 9.07.Severability90SECTION 9.08.Right of Setoff90SECTION 9.09.Governing Law; Jurisdiction; Consent to Service of Process90SECTION 9.10.WAIVER OF JURY TRIAL91SECTION 9.11.Headings91SECTION 9.12.Confidentiality91SECTION 9.13.Material Non-Public Information92SECTION 9.14.Interest Rate Limitation92SECTION 9.15.USA PATRIOT Act92SECTION 9.16.Acknowledgement and Consent to Bail-In of EEA Financial Institutions92SECTION 9.17.No Fiduciary Duty, etc.93SECTION 9.18.Amendment and Restatement; Reaffirmation94iv730594648.9 16508322SCHEDULES:Schedule 2.01 – Commitment ScheduleSchedule 3.05 – Intellectual PropertySchedule 3.06 – Disclosed MattersSchedule 3.14 – Capitalization and SubsidiariesSchedule 6.01 – Existing IndebtednessSchedule 6.02 – Existing LiensSchedule 6.04 – Existing InvestmentsSchedule 6.08 – Existing RestrictionsEXHIBITS:Exhibit A– Form of Assignment and AssumptionExhibit B– [RESERVED]Exhibit C-1– U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships for U.S. Federal IncomeTax Purposes)Exhibit C-2– U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships for U.S. Federal Income Tax Purposes)Exhibit C-3– U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships for U.S. Federal Income TaxPurposes)Exhibit C-4– U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships for U.S. Federal IncomeTax Purposes)v730594648.9 16508322AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 19, 2018 (as it may be amended, restated,supplemented or otherwise modified from time to time, this “Agreement”), by and among DEXCOM, INC., a Delaware corporation (the“Borrower”), the Lenders party hereto, and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Administrative Agent.R E C I T A L S:WHEREAS, the Borrower is a party to that certain Credit Agreement dated as of June 17, 2016 by and among the Borrower, thelenders party thereto (collectively, the “Existing Lenders”) and JPMorgan, as administrative agent, (as amended, restated, supplementedor otherwise modified prior to the date hereof, the “Existing Credit Agreement”), pursuant to which the Existing Lenders providedcertain loans and other financial accommodations to the Borrower;WHEREAS, the parties hereto desire to amend and restate the Existing Credit Agreement to, among other things, extend thematurity of the Loans; andWHEREAS, in connection with the foregoing, the parties hereto agree that upon satisfaction of the conditions set forth inSections 4.01 and 4.02, the Existing Credit Agreement shall be amended and restated in its entirety and superseded by this Agreement;provided, however, the obligation to repay the Obligations under the Existing Credit Agreement shall continue in full force and effectand shall be governed by the terms of this Agreement and corresponding Loan Documents.AGREEMENT:NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual covenants set forth below, and intending to belegally bound, the parties hereto agree as follows:ARTICLE 1DefinitionsSECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:“2017 Convertible Notes” means the Borrower’s unsecured convertible notes outstanding as of the Second AmendmentEffective Date in aggregate principal amount equal to $400,000,000.“2018 Call Spread” means call or capped call options (or a substantively equivalent derivative transaction) on Borrower’scommon stock purchased by, and warrants (if any) on the Borrower’s common stock issued by, the Borrower, in each case, on or afterthe Second Amendment Effective Date and prior to December 31, 2018, with respect to its Equity Interests, such that (i) in the case of apurchase of a call option, the initial strike price per share is approximately equal to the initial conversion price of the 2018 ConvertibleNotes, (ii) the purpose of which is to hedge certain of the Borrower’s obligations in respect of the 2018 Convertible Notes and (iii) thenet premium payable (based on the aggregate premium paid by the Borrower for such purchased call options less the aggregatepremium received by the Borrower for any such warrants) shall not exceed $75,000,000. As used herein, references to the “2018 CallSpread” include any component thereof.730594648.9 16508322“2018 Convertible Notes” means unsecured convertible notes issued by the Borrower on or after the Second AmendmentEffective Date and prior to December 31, 2018 in an aggregate principal amount of not more than $1,000,000,000.“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising suchBorrowing, bear interest at a rate determined by reference to the Alternate Base Rate.“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum(rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the Eurocurrency Rate for such Interest Period multiplied by (b) theStatutory Reserve Rate.“Administrative Agent” means JPMorgan Chase Bank, N.A. (including its branches and affiliates) in its capacity asadministrative agent for the Lenders hereunder.“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or moreintermediaries, Controls or is Controlled by or is under common Control with the Person specified.“Agent Party” has the meaning assigned to it in Section 9.01(d).“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day,(b) the NYFRB Rate in effect on such day plus ½ of 1% and (c) the Adjusted LIBO Rate for a one month Interest Period on such day(or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that, the Adjusted LIBO Rate for anyday shall be based on the LIBO Screen Rate (or if the LIBO Screen Rate is not available for such one month Interest Period, theInterpolated Rate) at approximately 11:00 a.m. London time on such day. Any change in the Alternate Base Rate due to a change in thePrime Rate, the NYFRB Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in thePrime Rate, the NYFRB Rate or the Adjusted LIBO Rate, respectively. If the Alternate Base Rate is being used as an alternate rate ofinterest pursuant to Section 2.14, then the Alternate Base Rate shall be the greater of clause (a) and (b) above and shall be determinedwithout reference to clause (c) above. For the avoidance of doubt, if the Alternate Base Rate as determined pursuant to the foregoingwould be less than 1.00%, such rate shall be deemed to be 1.00% for purposes of this Agreement.“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of itsSubsidiaries from time to time concerning or relating to bribery or corruption.“Applicable Currency” means dollars, Canadian Dollars, Euros, British Pounds, Swedish Kroner, Japanese Yen and any othercurrency determined after the Restatement Effective Date by mutual agreement of the Borrower, the Administrative Agent and each ofthe Revolving Lenders; provided that at all times each of the foregoing currencies (other than dollars) is a lawful currency that is readilyavailable, freely transferable and not restricted, able to be converted into dollars and available in the London interbank deposit market.“Applicable Payment Office” means, in the case of a Eurodollar Borrowing, the applicable Eurodollar Payment Office.2730594648.9 16508322“Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments represented by suchLender’s Commitment; provided that in the case of Section 2.20 when a Defaulting Lender shall exist, “Applicable Percentage” shallmean the percentage of the total Commitments (disregarding any Defaulting Lender’s Commitment) represented by such Lender’sCommitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon theCommitments most recently in effect, giving effect to any assignments and to any Lender’s status as a Defaulting Lender at the time ofdetermination.“Applicable Rate” means, for any day, with respect to any ABR Loan or Eurodollar Revolving Loan, or with respect to thecommitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption“ABR Spread”, “Eurodollar Spread” or “Unused Commitment Fee Rate”, as the case may be, based upon Total Leverage Ratio as of themost recent determination date, provided that until the delivery to the Administrative Agent, pursuant to Section 5.01, of the Borrower’sconsolidated financial information for the fiscal quarter ending December 31, 2018, the “Applicable Rate” shall be the applicable ratesper annum set forth below in Level I:Level:Total Leverage RatioABR SpreadEurodollar SpreadUnused CommitmentFee RateLevel ILess than 1.00 to 1.000.375%1.375%0.200%Level IIGreater than or equal to 1.00 to 1.00 but lessthan 2.00 to 1.000.500%1.500%0.225%Level IIIGreater than or equal to 2.00 to 1.00 but lessthan 3.00 to 1.000.750%1.750%0.250%Level IVGreater than or equal to 3.00 to 1.001.000%2.000%0.300%For purposes of the foregoing, (a) the Applicable Rate shall be determined as of the end of each fiscal quarter of the Borrower,based upon the Borrower’s annual or quarterly consolidated financial statements delivered pursuant to Section 5.01 and (b) eachchange in the Applicable Rate resulting from a change in the Total Leverage Ratio shall be effective during the period commencing onand including the date of delivery to the Administrative Agent of such consolidated financial statements indicating such change andending on the date immediately preceding the effective date of the next such change, provided that (A) at any time that an Event ofDefault has occurred and is continuing or (B) at the option of the Administrative Agent or at the request of the Required Lenders, if theBorrower fails to deliver the annual or quarterly consolidated financial statements required to be delivered by it pursuant to Section5.01, the Total Leverage Ratio shall be deemed to be in Level IV during the period from the expiration of the time for delivery thereofuntil such consolidated financial statements are delivered.If at any time the Administrative Agent determines that the financial statements upon which the Applicable Rate was determinedwere incorrect (whether based on a restatement, fraud or otherwise), the Borrower shall be required to retroactively pay any additionalamount that the Borrower would have been required to pay if such financial statements had been accurate at the time they weredelivered.“Approved Electronic Platform” has the meaning assigned to it in Section 8.03(a).“Approved Fund” has the meaning assigned to it in Section 9.04(b).3730594648.9 16508322“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with theconsent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A orany other form approved by the Administrative Agent.“Availability Period” means the period from and including the Restatement Effective Date to but excluding the earlier of theMaturity Date and the date of termination of the Commitments.“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority inrespect of any liability of an EEA Financial Institution.“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of theEuropean Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time totime which is described in the EU Bail-In Legislation Schedule.“Banking Services” means each and any of the following bank services provided to any Loan Party or any of their Subsidiariesby any Lender or any of its Affiliates: (a) credit cards for commercial customers (including, without limitation, “commercial creditcards” and purchasing cards), (b) stored value cards, (c) merchant processing services, and (d) treasury management services(including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, any direct debit scheme orarrangement, overdrafts and interstate depository network services).“Banking Services Obligations” means any and all obligations of the Loan Parties or their Subsidiaries, whether absolute orcontingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions andmodifications thereof and substitutions therefor) in connection with Banking Services.“Bankruptcy Code” means the provisions of Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. or other applicablebankruptcy, insolvency or similar laws.“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvencyproceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Personcharged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the AdministrativeAgent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding orappointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of anyownership interest, in such Person by a Governmental Authority or instrumentality thereof, unless such ownership interest results in orprovides such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments orwrits of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavowor disaffirm any contracts or agreements made by such Person.“Beneficial Ownership Certification” means a certification regarding beneficial ownership or control as required by theBeneficial Ownership Regulation.“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subje4ct to Title I ofERISA, (b) a “plan” as defined in Section 4975 of the Code to which Section 4975 of the Code applies, and (c) any Person whose assetsinclude (for purposes of the Plan Asset Regulations4730594648.9 16508322or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.“Board” means the Board of Governors of the Federal Reserve System of the United States of America.“Borrower” has the meaning assigned to it in the preamble hereto.“Borrowing” means Revolving Loans of the same Type, made, converted or continued on the same date and, in the case ofEurodollar Loans, as to which a single Interest Period is in effect.“Borrowing Availability” means, as of any date of determination, the total Commitments minus the sum of the Total RevolvingCredit Exposures (including, without duplication, the outstanding balance of Letter of Credit Obligations then outstanding).“Borrowing Request” means a request by the Borrower for a Revolving Borrowing in accordance with Section 2.03.“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City areauthorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “BusinessDay” shall also exclude (a) any day on which banks are not open for general business in London and (b) any day on which banks arenot open in the principal financial center of the Applicable Currency.“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any leaseof (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are requiredto be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligationsshall be the capitalized amount thereof determined in accordance with GAAP.“CDOR Screen Rate” means on any day for the relevant Interest Period, the annual rate of interest equal to the average rateapplicable to Canadian dollar Canadian bankers’ acceptances for the applicable period that appears on the “Reuters Screen CDORPage” as defined in the International Swap Dealer Association, Inc. definitions, as modified and amended from time to time (or, in theevent such rate does not appear on such page or screen, on any successor or substitute page or screen that displays such rate, or on theappropriate page of such other information service that publishes such rate from time to time, as selected by the Administrative Agent inits reasonable discretion), rounded to the nearest 1/100th of 1% (with .005% being rounded up), as of 10:15 a.m. Toronto local time onthe first day of such Interest Period and, if such day is not a business day, then on the immediately preceding business day (as adjustedby Administrative Agent after 10:15 a.m. Toronto local time to reflect any error in the posted rate of interest or in the posted averageannual rate of interest). If the CDOR Screen Rate shall be less than zero, the CDOR Screen Rate shall be deemed to be zero for purposesof this Agreement.“CFC” has the meaning assigned to it in the definition of “Excluded Subsidiary.”“CFC Holdco” has the meaning assigned to it in the definition of “Excluded Subsidiary.”“Change in Control” means the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person orgroup (within the meaning of the Securities Exchange Act of 1934 and the rules of5730594648.9 16508322the SEC thereunder as in effect on the date hereof), of Equity Interests representing more than 40% of the aggregate ordinary votingpower represented by the issued and outstanding Equity Interests of the Borrower.“Change in Law” means the occurrence after the date of this Agreement or, with respect to any Lender, such later date on whichsuch Lender becomes a party to this Agreement, of (a) the adoption of or taking effect of any law, rule, regulation or treaty, (b) anychange in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by anyGovernmental Authority or (c) compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.15(b), by any lendingoffice of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with any request, guideline, requirement ordirective (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement;provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Actand all requests, rules, guidelines, requirements or directives thereunder or issued in connection therewith or in the implementationthereof and (y) all requests, rules, guidelines, requirements or directives promulgated by the Bank for International Settlements, theBasel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities,in each case pursuant to Basel III, shall be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued orimplemented.“Class” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising suchBorrowing, are Revolving Loans or other Loans.“Code” means the Internal Revenue Code of 1986, as amended.“Collateral” means any and all property owned, leased or operated by a Person covered by the Collateral Documents and anyand all other property of any Loan Party, now existing or hereafter acquired, that may at any time be, become or be intended to be,subject to a security interest or Lien in favor of the Administrative Agent, on behalf of itself and the Lenders and other Secured Parties,to secure the Secured Obligations, which, for the avoidance of doubt, shall not include any copyrights, patents, trademarks or otherIntellectual Property or any other Excluded Assets (as defined in the Security Agreement).“Collateral Documents” means, collectively, the Security Agreement and any other agreements, instruments and documentsexecuted in connection with this Agreement that are intended to create, perfect or evidence Liens to secure the Secured Obligations,including, without limitation, all other security agreements, pledge agreements, mortgages, deeds of trust, loan agreements, pledges,powers of attorney, financing statements and all other written matter whether theretofore, now or hereafter executed by any Loan Partyand delivered to the Administrative Agent.“Commitment” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquireparticipations in Letters of Credit hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’sRevolving Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09, (b)increased pursuant to Section 2.21 and (c) reduced or increased from time to time pursuant to assignments by or to such Lenderpursuant to Section 9.04. The initial amount of each Lender’s Commitment is set forth on Schedule 2.01, or in the Assignment andAssumption pursuant to which such Lender shall have assumed its Commitment, as applicable. The initial aggregate principal amountof the Lenders’ Commitments is $200,000,000.“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, andany successor statute.“Communications” has the meaning assigned to it in Section 8.03(c).6730594648.9 16508322“Computation Date” has the meaning assigned to it in Section 2.04.“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (howeverdenominated) or that are franchise Taxes or branch profits Taxes.“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management orpolicies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled”have meanings correlative thereto.“Convertible Notes” means the 2017 Convertible Notes and the 2018 Convertible Notes.“Copyrights” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following: (a) allcopyrights, rights and interests in copyrights, works protectable by copyright, copyright registrations, and copyright applications; (b) allrenewals of any of the foregoing; (c) all income, royalties, damages, and payments now or hereafter due and/or payable under any ofthe foregoing, including, without limitation, damages or payments for past or future infringements for any of the foregoing; (d) the rightto sue for past, present, and future infringements of any of the foregoing; and (e) all rights corresponding to any of the foregoingthroughout the world.“Credit Event” means a Borrowing, the issuance, amendment, renewal or extension of a Letter of Credit, an LC Disbursement orany of the foregoing.“Credit Party” means the Administrative Agent, each Issuing Bank or any other Lender.“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or bothwould, unless cured or waived, become an Event of Default.“Defaulting Lender” means any Lender that (a) has failed, within two (2) Business Days of the date required to be funded orpaid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or (iii) pay over to any CreditParty any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies theAdministrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent tofunding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or anyCredit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its fundingobligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s goodfaith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a Loanunder this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed,within three (3) Business Days after request by the Borrower or a Credit Party, acting in good faith, to provide a certification in writingfrom an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations as ofthe date of certification) to fund prospective Loans and participations in then outstanding Letters of Credit under this Agreement,provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of suchcertification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of (i) a BankruptcyEvent or (ii) a Bail-In Action.“Disclosed Matters” means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06.“Dividing Person” has the meaning assigned to it in the definition of “Division”.7730594648.9 16508322“Division” means the division of the assets, liabilities and/or obligations of a Person (the “Dividing Person”) among two or morePersons (whether pursuant to a “plan of division” or similar arrangement), which may or may not include the Dividing Person andpursuant to which the Dividing Person may or may not survive.“Division Successor” means any Person that, upon the consummation of a Division of a Dividing Person, holds all or anyportion of the assets, liabilities and/or obligations previously held by such Dividing Person immediately prior to the consummation ofsuch Division. A Dividing Person which retains any of its assets, liabilities and/or obligations after a Division shall be deemed aDivision Successor upon the occurrence of such Division.“Dollar Equivalent” means, for any amount, at the time of determination thereof, (a) if such amount is expressed in dollars,such amount, (b) if such amount is expressed in a Foreign Currency, the equivalent of such amount in dollars determined by using therate of exchange for the purchase of dollars with the Foreign Currency last provided (either by publication or otherwise provided to theAdministrative Agent) by the applicable Thompson Reuters Corp. (“Reuters”) source on the Business Day (New York City time)immediately preceding the date of determination or if such service ceases to be available or ceases to provide a rate of exchange for thepurchase of dollars with the Foreign Currency, as provided by such other publicly available information service which provides thatrate of exchange at such time in place of Reuters chosen by the Administrative Agent in its sole discretion (or if such service ceases tobe available or ceases to provide such rate of exchange, the equivalent of such amount in dollars as determined by the AdministrativeAgent using any method of determination it deems appropriate in its sole discretion) and (c) if such amount is denominated in any othercurrency, the equivalent of such amount in dollars as determined by the Administrative Agent using any method of determination itdeems appropriate in its sole discretion.“dollars” or “$” refers to lawful money of the United States of America.“EBITDA” means, for any period, Net Income for such period plus (a) without duplication and to the extent deducted indetermining Net Income for such period, the sum of (i) Interest Expense for such period, (ii) income tax expense for such period, (iii)all amounts attributable to depreciation and amortization expense for such period, (iv) expenses relating to share-based compensationand (v) any other non-cash charges, non-cash losses or non-cash expenses for such period (but excluding any non-cash charge, loss orexpense in respect of an item that was included in Net Income in a prior period), (vi) costs arising from or related to mergers,acquisitions, divestitures, or similar transactions permitted hereunder (including transition, retention and integration), in each caseregardless of whether such transactions have been consummated, (vii) expenses with respect to earn-outs payable as a purchase price(or a portion thereof) in acquisitions, (viii) extraordinary, unusual and/or non-recurring charges, costs, credits or items or loss,determined on a consolidated basis in accordance with GAAP, (ix) any expenses or charges related to any equity financing or offering,investment, indebtedness or restricted payment permitted hereunder, or any modification to any instrument of indebtedness permittedhereunder, in each case regardless of whether such transaction has been consummated and including the Transaction Costs, (x) allexpenses or charges (including deferred financing costs written off and premiums paid) in connection with any early extinguishment ofdebt, including hedging obligations or other derivative instruments, (xi) restructuring costs, reorganization costs, integration costs andother related one-time charges, provided that, for any trailing twelve month period, the aggregate amount added pursuant to this clause(xi) and clause (xii) shall not exceed the greater of (x) 15% of EBITDA for the applicable Reference Period (calculated before givingeffect to such addbacks) and (y) $3,000,000, (xii) pro forma cost savings and synergies that are reasonably identifiable and factuallysupportable and realizable within 12 months of the closing of the applicable acquisition to which such add backs relate, provided that,for any trailing twelve month period, the aggregate amount added pursuant to8730594648.9 16508322this clause (xii) and clause (xi) shall not exceed the greater of (x) 15% of EBITDA for the applicable Reference Period (calculatedbefore giving effect to such addbacks) and (y) $3,000,000, and (xiii) cash expenses or charges to the extent fully indemnified by a thirdparty or covered by insurance, but only to the extent (1) the applicable indemnification obligation or insurance policy remains in fullforce and effect, and (2) the counterparty to such indemnification obligation or applicable insurance provider has not refused orchallenged a claim in writing for such indemnification or insurance payment, without duplication of any gains from suchindemnification payment or insurance proceeds received in any subsequent period, minus (b) without duplication and to the extentincluded in Net Income, (i) any cash payments made during such period in respect of non-cash charges described in clause (a)(v) takenin a prior period and (ii) any non-cash items of income for such period, all calculated for the Borrower and its Subsidiaries on aconsolidated basis in accordance with GAAP.“ECP” means an “eligible contract participant” as defined in Section 1(a)(18) of the Commodity Exchange Act or anyregulations promulgated thereunder and the applicable rules issued by the Commodity Futures Trading Commission and/or the SEC.“EEA Financial Institution” means (a) any institution established in any EEA Member Country which is subject to thesupervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institutiondescribed in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of aninstitution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent;“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrativeauthority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA FinancialInstitution.“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other recordand adopted by a Person with the intent to sign, authenticate or accept such contract or record.“Electronic System” means any electronic system, including e-mail, e-fax, web portal access for the Borrower and any otherInternet or extranet-based site, whether such electronic system is owned, operated or hosted by the Administrative Agent or any IssuingBank and any of its respective Related Parties or any other Person, providing for access to data protected by passcodes or other securitysystem.“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices orbinding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment,preservation or reclamation of natural resources, the management, Release or threatened Release of any Hazardous Material or to healthand safety matters.“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs ofenvironmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from orbased upon (a) any violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposalof any Hazardous Materials, (c) any exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous9730594648.9 16508322Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed orimposed with respect to any of the foregoing.“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company,beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holderthereof to purchase or acquire any such equity interest.“Equivalent Amount” of any currency with respect to any amount of dollars at any date shall mean the equivalent in suchcurrency of such amount of dollars, calculated on the basis of the Exchange Rate for such other currency at 11:00 a.m., London time,on the date on or as of which such amount is to be determined.“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules andregulations promulgated thereunder.“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as asingle employer under Section 414(b) or (c) of the Code or Section 4001(14) of ERISA or, solely for purposes of Section 302 of ERISAand Section 412 of the Code, is treated as a single employer under Section 414 of the Code.“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunderwith respect to a Plan (other than an event for which the 30 day notice period is waived); (b) the failure to satisfy the “minimum fundingstandard” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant toSection 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect toany Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to thetermination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any noticerelating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borroweror any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal of the Borrower or any ERISAAffiliate from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt byany Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition upon the Borrower or anyERISA Affiliate of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent, in critical statusor in reorganization, within the meaning of Title IV of ERISA.“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (orany successor Person), as in effect from time to time.“EURIBOR Screen Rate” means the euro interbank offered rate administered by the European Money Markets Institute (or anyother person which takes over the administration of that rate) for the relevant period displayed (before any correction, recalculation orrepublication by the administrator) on page EURIBOR01 of the Thomson Reuters screen (or any replacement Thomson Reuters pagewhich displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time inplace of Thomson Reuters as of 11:00 a.m. Brussels time two TARGET days prior to the commencement of such Interest Period. If suchpage or service ceases to be available, the Administrative Agent may specify another page or service displaying the relevant rate afterconsultation with the Company. If the EURIBOR Screen Rate shall be less than zero, the EURIBOR Screen Rate shall be deemed to bezero for purposes of this Agreement.10730594648.9 16508322“Eurocurrency Rate” means,(a) with respect to any Eurodollar Borrowing for any Applicable Currency (other than Euros, Canadian Dollars orSwedish Kroner), and for any Interest Period, the London interbank offered rate as administered by ICE BenchmarkAdministration (or any other Person that takes over the administration of such rate for the Applicable Currency for a periodequal in length to such Interest Period) as displayed on pages LIBOR01 or LIBOR02 of the Reuters screen that displays suchrate, and in the case of any Foreign Currency, the appropriate page of such service which displays the London interbank offeredrate as administered by ICE Benchmark Administration for deposits in such Foreign Currency (or any other Person that takesover the administration of such rate for such Foreign Currency) for a period equal in length to such Interest Period (or, in theevent such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displayssuch rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected bythe Administrative Agent in its reasonable discretion; in each case the “LIBO Screen Rate”) at approximately 11:00 a.m.,London time, two (2) Business Days prior to the commencement of such Interest Period; provided that if the LIBO Screen Rateshall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement;(b) with respect to any Eurodollar Borrowing denominated in Euros and for any Interest Period, the EURIBOR ScreenRate; and(c) with respect to any Eurodollar Borrowing denominated in Canadian Dollars and for any Interest Period, the CDORScreen Rate; and(c) with respect to any Eurodollar Borrowing denominated in Swedish Kroner and for any Interest Period, theSTIBOR Screen Rate;provided that if the LIBO Screen Rate, the EURIBOR Screen Rate, the CDOR Screen Rate or the STIBOR Screen Rate shall not beavailable at such time for such Interest Period (an “Impacted Interest Period”) with respect to the Applicable Currency, then the LIBOScreen Rate, the EURIOBOR Screen Rate, the CDOR Screen Rate or the STIBOR Screen Rate, as applicable, shall be the InterpolatedRate; provided that if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.“Eurodollar” when used in reference to a currency means an Applicable Currency and when used in reference to any Loan orBorrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by referenceto the Adjusted LIBO Rate.“Eurodollar Payment Office” of the Administrative Agent shall mean, for each Foreign Currency, the office, branch, affiliate orcorrespondent bank of the Administrative Agent for such currency as specified from time to time by the Administrative Agent to theBorrower and each Lender.“Event of Default” has the meaning assigned to such term in Article VII.“Exchange Rate” means, on any day, with respect to any Foreign Currency, the rate at which such Foreign Currency may beexchanged into dollars, as set forth at approximately 11:00 a.m., Local Time, on such date on the Reuters World Currency Page forsuch Foreign Currency. In the event that such rate does not appear on any Reuters World Currency Page, the Exchange Rate withrespect to such Foreign Currency shall be determined by reference to such other publicly available service for displaying exchangerates as may be reasonably selected by the Administrative Agent or, in the event no such service is selected, such11730594648.9 16508322Exchange Rate shall instead be calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of theAdministrative Agent for such Foreign Currency on the London market at 11:00 a.m., Local Time, on such date for the purchase ofDollars with such Foreign Currency, for delivery two (2) Business Days later; provided, that if at the time of any such determination, forany reason, no such spot rate is being quoted, the Administrative Agent, after consultation with the Borrower, may use any reasonablemethod it deems appropriate to determine such rate, and such determination shall be conclusive absent manifest error.“Excluded Subsidiary” means (i) any Subsidiary that is a “controlled foreign corporation” within the meaning of the Code (a“CFC”), (ii) any Subsidiary substantially all the assets of which consist of Equity Interests of one or more CFCs (a “CFC Holdco”), and(iii) any Subsidiary of a CFC.“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or aportion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (orany Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the CommodityFutures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for anyreason to constitute an ECP at the time the Guarantee of such Guarantor or the grant of such security interest becomes or would becomeeffective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap,such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee orsecurity interest is or becomes illegal.“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld ordeducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes,and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having itsprincipal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or anypolitical subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxesimposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan, Letter of Credit orCommitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan, Letter of Credit orCommitment (other than pursuant to an assignment request by the Borrower under Section 2.19(b)) or (ii) such Lender changes itslending office, except in each case to the extent that, pursuant to Section 2.17, amounts with respect to such Taxes were payable eitherto such Lender’s assignor immediately before such Lender acquired the applicable interest in a Loan, Letter of Credit or Commitment orto such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply withSection 2.17(f) and (d) any U.S. federal withholding Taxes imposed under FATCA.“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successorversion that is substantively comparable and not materially more onerous to comply with), any current or future regulations or officialinterpretations thereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatorylegislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among GovernmentalAuthorities and implementing such Sections of the Code.“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal fundstransactions by depositary institutions (as determined in such manner as the NYFRB shall set forth on its public website from time totime) and published on the next succeeding Business Day12730594648.9 16508322by the NYFRB as the federal funds effective rate, provided that, if the Federal Funds Effective Rate as so determined would be less thanzero, such rate shall be deemed to be zero for the purposes of this Agreement.“Financial Officer” means the chief financial officer, vice president of finance, principal accounting officer, treasurer orcontroller of the Borrower.“Financial Statements” means the financial statements to be furnished pursuant to Sections 5.01(a) and (b).“Flood Laws” has the meaning assigned to such term in Section 8.10.“Foreign Currency” means each Applicable Currency, other than dollars.“Foreign Currency LC Exposure” means, at any time, the sum of (a) the Dollar Equivalent of the aggregate undrawn andunexpired amount of all outstanding Foreign Currency Letters of Credit at such time plus (b) the aggregate principal Dollar Equivalentof all LC Disbursements in respect of Foreign Currency Letters of Credit that have not yet been reimbursed at such time.“Foreign Currency Letter of Credit” means a Letter of Credit denominated in a Foreign Currency.“Foreign Currency Sublimit” means $50,000,000.“Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not aU.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident fortax purposes.“GAAP” means generally accepted accounting principles in the United States of America.“Governmental Authority” means the government of the United States of America, any other nation or any political subdivisionthereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercisingexecutive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.“Governmental Authorizations” means any and all permits, licenses, authorizations, certificates, registrations, accreditations andgovernmental or other approvals applied for, pending by, issued or given to any Loan Party or any of their Subsidiaries with or by anygovernmental or quasi-governmental authorities (federal, state, local or foreign) and all agreements with any governmental or quasi-governmental authorities (federal, state, local or foreign) entered into by any Loan Party or any of their Subsidiaries, that are in effect orapplied for.“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantorguaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “primary obligor”) in anymanner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (oradvance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for thepurchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuringthe owner of such Indebtedness of the payment thereof, (c) to maintain working capital, equity capital or any other financial statementcondition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (d) as an account party inrespect of any letter of credit or letter of guaranty13730594648.9 16508322issued to support such Indebtedness; provided, that the term Guarantee shall not include endorsements for collection or deposit in theordinary course of business.“Guarantors” means all Loan Guarantors and all non-Loan Parties who have delivered an Obligation Guaranty, and the term“Guarantor” means each or any one of them individually.“Hazardous Materials” means: (a) any substance, material, or waste that is included within the definitions of “hazardoussubstances,” “hazardous materials,” “hazardous waste,” “toxic substances,” “toxic materials,” “toxic waste,” or words of similar importin any Environmental Law, (b) those substances listed as hazardous substances by the United States Department of Transportation (orany successor agency) (49 C.F.R. Part 302 and amendments thereto) or by the Environmental Protection Agency (or any successoragency) (40 C.F.R. Part 302 and amendments thereto); and (c) any substance, material, or waste that is petroleum, petroleum related, ora petroleum by-product, asbestos or asbestos-containing material, polychlorinated biphenyls, flammable, explosive, radioactive, freongas, radon, or a pesticide, herbicide, or any other agricultural chemical.“Impacted Interest Period” has the meaning assigned to it in the definition of “Eurocurrency Rate.”“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respectto deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments,(c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditionalsale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of thedeferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) allIndebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to besecured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has beenassumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) any earn-outobligation to the extent such obligation is a liability on the balance sheet of such Person in accordance with GAAP, (j) all obligations,contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (k) all obligations,contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include theIndebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liabletherefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of suchIndebtedness provide that such Person is not liable therefor.“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or onaccount of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a) hereof,Other Taxes.“Ineligible Institution” has the meaning assigned to it in Section 9.04(b).“Intellectual Property” means, with respect to any Person, any and all of such Person’s (a) Patents, Trademarks and Copyrights,including any amendments, renewals and extensions thereof, (b) trade secrets and trade secret rights, including, without limitation, anyrights to unpatented inventions, know-how, operating manuals, (c) source code, (d) design rights which may be available to suchPerson and (e) claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not theobligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above.14730594648.9 16508322“Interest Coverage Ratio” means, for any period, the ratio of (a) EBITDA to (b) cash Interest Expense in the four consecutivefiscal quarters ended on the last day of such period, all calculated for the Borrower and its Subsidiaries on a consolidated basis inaccordance with GAAP.“Interest Election Request” means a request by the Borrower to convert or continue a Revolving Borrowing in accordance withSection 2.08.“Interest Expense” means, with reference to any period, total interest expense (including that attributable to Capital LeaseObligations) of the Borrower and its Subsidiaries for such period with respect to all outstanding Indebtedness of the Borrower and itsSubsidiaries (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’acceptances and net costs under Swap Agreements in respect of interest rates, to the extent such net costs are allocable to such period inaccordance with GAAP), calculated for the Borrower and its Subsidiaries on a consolidated basis for such period in accordance withGAAP.“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each March, June, September and Decemberand (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a partand, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day ofsuch Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period.“Interest Period” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing andending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrowermay elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extendedto the next succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such next succeeding Business Day would fallin the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Periodpertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is nonumerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendarmonth of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is madeand, in the case of a Revolving Borrowing, thereafter shall be the effective date of the most recent conversion or continuation of suchBorrowing.“Interpolated Rate” means with respect to the LIBO Screen Rate, the EURIBOR Screen Rate, the CDOR Screen Rate or theSTIBOR Screen Rate, as applicable, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimalplaces as the LIBO Screen Rate, the EURIBOR Screen Rate, the CDOR Screen Rate or the STIBOR Screen Rate, as applicable)determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to therate that results from interpolating on a linear basis between: (a) the LIBO Screen Rate, the EURIBOR Screen Rate, the CDOR ScreenRate or the STIBOR Screen Rate, as applicable, for the longest period (for which such rate is available for the Applicable Currency) thatis shorter than the Impacted Interest Period; and (b) the LIBO Screen Rate, the EURIBOR Screen Rate, the CDOR Screen Rate or theSTIBOR Screen Rate, as applicable, for the shortest period (for which such rate is available for the Applicable Currency) that exceedsthe Impacted Interest Period, in each case, at such time.“IRS” means the United States Internal Revenue Service.“Issuing Bank” means JPMorgan in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacityas provided in Section 2.06(i). Any Issuing Bank may, in its discretion, arrange15730594648.9 16508322for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall includeany such Affiliate with respect to Letters of Credit issued by such Affiliate. Each reference herein to the “Issuing Bank” shall be deemedto be a reference to the relevant Issuing Bank.“JPMorgan” means JPMorgan Chase Bank, National Association.“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of Credit.“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn Dollar Equivalent of all outstanding Letters of Creditat such time plus (b) the aggregate Dollar Equivalent of all LC Disbursements that have not yet been reimbursed by or on behalf of theBorrower at such time. The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at suchtime.“Lender Parent” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.“Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to anAssignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.Unless the context otherwise requires, the term “Lenders” includes the Issuing Bank.“Letter of Credit” means any letter of credit issued pursuant to this Agreement.“Letter of Credit Commitment” means, with respect to each Issuing Bank, the commitment of such Issuing Bank to issue Lettersof Credit hereunder. The initial amount of each Issuing Bank’s Letter of Credit Commitment is set forth on Schedule 2.01, or if anIssuing Bank has entered into an Assignment and Assumption, the amount set forth for such Issuing Bank as its Letter of CreditCommitment in the Register maintained by the Administrative Agent.“LIBO Screen Rate” has the meaning assigned to it in the definition of “Eurocurrency Rate.”“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge orsecurity interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or titleretention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to suchasset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.“Liquidity” means, with respect to the Borrower at any date, the sum of unrestricted domestic cash, cash equivalents and othershort-term domestic investments of the Borrower and its Subsidiaries on such date, determined in accordance with GAAP.“Loan Documents” means this Agreement, including schedules and exhibits hereto, each Collateral Document, the LoanGuaranty and any promissory notes and any other agreement, instrument, document or certificate entered into in connection herewithby the Borrower or any Loan Party with or in favor of the Administrative Agent and/or the Lenders, including any amendments,modifications or supplements thereto or waivers thereof, legal opinions issued in connection with the other Loan Documents, UCCfilings, flood determinations, letter of credit applications and any agreements between the Borrower and the Issuing Bank regarding theIssuing Bank’s Letter of Credit Commitment or the respective rights and obligations between the Borrower and the Issuing Bank inconnection with the issuance of Letters of Credit and any other documents prepared in connection with the other Loan Documents, ifany, and each other written matter16730594648.9 16508322whether heretofore, now or hereafter executed by or on behalf of any Loan Party, or any employee of any Loan Party, and delivered tothe Administrative Agent or any Lender in connection with this Agreement or the transactions contemplated hereby. Any reference inthis Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and allamendments, restatements, supplements or other modifications thereto, and shall refer to this Agreement or such Loan Document as thesame may be in effect at any and all times such reference becomes operative.“Loan Guarantor” means each Loan Party, other than Excluded Subsidiaries.“Loan Guaranty” means that certain Guaranty (including any and all supplements thereto), dated as of the Original EffectiveDate, among the Loan Guarantors and the Administrative Agent, for the benefit of the Administrative Agent and the other SecuredParties, and any other guarantee entered into, after the date of this Agreement by any other Loan Party (as required by this Agreementor any other Loan Document) or any other Person for the benefit of the Administrative Agent and the other Secured Parties, as the samemay be amended, restated, supplemented or otherwise modified from time to time.“Loan Parties” means the Borrower and each Guarantor.“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.“Local Time” means (i) New York City time in the case of a Loan, Borrowing or LC Disbursement denominated in dollars and(ii) local time in the case of a Loan, Borrowing or LC Disbursement denominated in a Foreign Currency (it being understood that suchlocal time shall mean London, England time unless otherwise notified by the Administrative Agent).“Long-Term Debt” means any Indebtedness that, in accordance with GAAP, constitutes (or, when incurred, constituted) a long-term liability.“Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations, property or financial conditionof the Borrower and its Subsidiaries taken as a whole or (b) the validity or enforceability of any of the Loan Documents or the rightsand remedies of the Administrative Agent or Lenders thereunder.“Material Indebtedness” means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one ormore Swap Agreements, of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding$15,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or anySubsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any nettingagreements) that the Borrower or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.“Maturity Date” means the earliest to occur of (i) December 19, 2023; (ii) ninety-one (91) days prior to the maturity date of the2017 Convertible Notes if both (x) the aggregate outstanding principal amount of the 2017 Convertible Notes is greater at such timethan EBITDA for the period of four consecutive fiscal quarters ended on or most recently prior to such date and (y) unrestricteddomestic cash on hand is less than the aggregate outstanding principal amount of the 2017 Convertible Notes plus $100,000,000; and(iii) ninety-one (91) days prior to the maturity date of the 2018 Convertible Notes if both (x) the aggregate outstanding principal amountof the 2018 Convertible Notes is greater at such time than EBITDA for the period of four consecutive fiscal quarters ended on or mostrecently prior to such date and (y) unrestricted17730594648.9 16508322domestic cash on hand is less than the aggregate outstanding principal amount of the 2018 Convertible Notes plus $100,000,000.“Moody’s” means Moody’s Investors Service, Inc.“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.“Net Income” means, for any period, the consolidated net income (or loss) determined for the Borrower and its Subsidiaries, ona consolidated basis, in accordance with GAAP; provided that there shall be excluded (a) subject to Section 1.06 hereof, the income (ordeficit) of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the Borrower or anySubsidiary, (b) the income (or deficit) of any Person (other than a Subsidiary) in which the Borrower or any Subsidiary has anownership interest, except to the extent that any such income is actually received by the Borrower or such Subsidiary in the form ofdividends or similar distributions and (c) the undistributed earnings of any Subsidiary, to the extent that the declaration or payment ofdividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation (other thanunder any Loan Document) or requirement of law applicable to such Subsidiary.“Non-Consenting Lender” has the meaning assigned to such term in Section 9.02(d).“NYFRB” means the Federal Reserve Bank of New York.“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) theOvernight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding BusinessDay); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for afederal funds transaction quoted at 11:00 a.m. on such day received to the Administrative Agent from a Federal funds broker ofrecognized standing selected by it; provided, further, that if any of the aforesaid rates shall be less than zero, such rate shall be deemedto be zero for purposes of this Agreement.“Obligation Guaranty” means any Guarantee of all or any portion of the Secured Obligations executed and delivered to theAdministrative Agent for the benefit of the Secured Parties by a guarantor who is not a Loan Party.“Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans, all LC Exposure, all accrued andunpaid fees and all expenses, reimbursements, indemnities and other obligations and indebtedness (including interest and fees accruingduring the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed orallowable in such proceeding), obligations and liabilities of any of the Loan Parties to any of the Lenders, the Administrative Agent, theIssuing Bank or any indemnified party, individually or collectively, existing on the Restatement Effective Date or arising thereafter,direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, ineach case arising by contract, operation of law or otherwise, arising or incurred under this Agreement or any of the other LoanDocuments or in respect of any of the Loans made or reimbursement or other obligations incurred or any of the Letters of Credit orother instruments at any time evidencing any thereof.“Original Effective Date” means June 17, 2016.“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connectionbetween such Recipient and the jurisdiction imposing such Tax (other than18730594648.9 16508322connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, receivedpayments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any LoanDocument, or sold or assigned an interest in any Loan, Letter of Credit or Loan Document).“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arisefrom any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfectionof a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxesimposed with respect to an assignment (other than an assignment made pursuant to Section 2.19).“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnightEurodollar borrowings by U.S.-managed banking offices of depository institutions (as such composite rate shall be determined by theNYFRB as set forth on its public website from time to time) and published on the next succeeding Business Day by the NYFRB as anovernight bank funding rate (from and after such date as the NYFRB shall commence to publish such composite rate).“Overnight Foreign Currency Rate” means, for any amount payable in a Foreign Currency, the rate of interest per annum asdetermined by the Administrative Agent at which overnight or weekend deposits in the relevant currency (or if such amount dueremains unpaid for more than three (3) Business Days, then for such other period of time as the Administrative Agent may elect) fordelivery in immediately available and freely transferable funds would be offered by the Administrative Agent to major banks in theinterbank market upon request of such major banks for the relevant currency as determined above and in an amount comparable to theunpaid principal amount of the related Credit Event, plus any taxes, levies, imposts, duties, deductions, charges or withholdingsimposed upon, or charged to, the Administrative Agent by any relevant correspondent bank in respect of such amount in such relevantcurrency.“Participant” has the meaning assigned to such term in Section 9.04(c).“Participant Register” has the meaning assigned to such term in Section 9.04(c).“Patents” means, with respect to any Person, all of such Person’s right, title, and interest in and to: (a) any and all patents andpatent applications; (b) all inventions and improvements described and claimed therein; (c) all reissues, divisions, continuations,renewals, extensions, and continuations-in-part thereof; (d) all income, royalties, damages, claims, and payments now or hereafter dueor payable under and with respect thereto, including, without limitation, damages and payments for past and future infringementsthereof; (e) all rights to sue for past, present, and future infringements thereof; and (f) all rights corresponding to any of the foregoingthroughout the world.“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entityperforming similar functions.“Permitted Encumbrances” means:(a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance with Section 5.04;(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising inthe ordinary course of business and securing obligations that are not overdue by more than thirty (30) days or are beingcontested in compliance with Section 5.04;19730594648.9 16508322(c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation,unemployment insurance and other social security laws or regulations;(d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds,performance bonds and other obligations of a like nature, in each case in the ordinary course of business, and deposits to securethe performance of appeal bonds (or letters of credit securing such performance) in respect of judgments that do not constitutean Event of Default under clause (k) of Article VII;(e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII;(f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arisingin the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value ofthe affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary;(g) Liens in favor of a banking or other financial institution arising as a matter of law or in the ordinary course ofbusiness under customary general terms and conditions encumbering deposits or other funds maintained with a financialinstitution (including the right of set-off) and that are within the general parameters customary in the banking industry or arisingpursuant to such banking institution’s general terms and conditions;(h) Liens on specific items of inventory or other goods and proceeds thereof of any Person securing such Person’sobligations in respect of bankers’ acceptances or letters of credit issued or created for the account of such Person to facilitate thepurchase, shipment or storage of such inventory or other goods in the ordinary course of business; and(i) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching tocommodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculativepurposes.“Permitted Investments” means:(a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, theUnited States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of theUnited States of America), in each case maturing within eighteen months from the date of acquisition thereof;(b) investments in commercial paper maturing within 365 days from the date of acquisition thereof and investments incorporate obligations maturing within eighteen months, having, at such date of acquisition, a minimum S&P rating of A1 or A2or Moody’s rating of P1 or P2;(c) investments in certificates of deposit, in individual increments of $250,000 or less from any individual commercialbank, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued orguaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercialbank organized under the laws of the United States of America or any State thereof;20730594648.9 16508322(d) fully collateralized repurchase agreements with a term of not more than thirty (30) days for securities described inclause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above;(e) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Actof 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $100,000,000;(f) investments in investment grade corporate bonds existing on the Restatement Effective Date;(g) local currencies held by any foreign Subsidiary;(h) investments that are permitted by the Borrower’s investment policy as in effect on the date hereof; and (i) investments of the type described in clauses (a) through (d) and (h) above of foreign Subsidiaries.“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company,partnership, Governmental Authority or other entity.“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV ofERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if suchplan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.“Plan Asset Regulations” means 29 CFR § 2510.3-101 et seq., as modified by Section 3(42) of ERISA, as amended from timeto time.“Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The WallStreet Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal ReserveStatistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, anysimilar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (asdetermined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the date such change ispublicly announced or quoted as being effective.“Projections” has the meaning assigned to such term in Section 5.01(d).“Recipient” means (a) the Administrative Agent, (b) any Lender and (c) any Issuing Bank, as applicable.“Reference Period” means any period of four consecutive fiscal quarters of the Borrower for which financial statements havebeen or are required to have been delivered.“Register” has the meaning assigned to such term in Section 9.04(b).“Regulation D” means Regulation D of the Federal Reserve Board, as in effect from time to time and all official rulings andinterpretations thereunder or thereof.21730594648.9 16508322“Regulation T” means Regulation T of the Federal Reserve Board, as in effect from time to time and all official rulings andinterpretations thereunder or thereof.“Regulation U” means Regulation U of the Federal Reserve Board, as in effect from time to time and all official rulings andinterpretations thereunder or thereof.“Regulation X” means Regulation X of the Federal Reserve Board, as in effect from time to time and all official rulings andinterpretations thereunder or thereof.“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers,employees, agents and advisors of such Person and such Person’s Affiliates.“Release” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,leaching, migrating, disposing, or dumping of any substance into the environment.“Required Lenders” means, at any time, Lenders having Revolving Credit Exposures and unused Commitments representinggreater than 50% of the sum of the total Revolving Credit Exposures and unused Commitments at such time.“Requirement of Law” means, with respect to any Person, (a) the charter, articles or certificate of organization or incorporationand bylaws or operating, management or partnership agreement, or other organizational or governing documents of such Person and(b) any statute, law (including common law), treaty, rule, regulation, code, ordinance, order, decree, writ, judgment, injunction ordetermination of any arbitrator or court or other Governmental Authority (including Environmental Laws), in each case applicable to orbinding upon such Person or any of its property or to which such Person or any of its property is subject.“Restatement Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived inaccordance with Section 9.02).“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect toany Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including anysinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any suchEquity Interests in the Borrower or any option, warrant or other right to acquire any such Equity Interests in the Borrower, butexcluding any payment of principal of any of the Convertible Notes, any payment on account of the purchase, redemption, retirement,repayment, acquisition, cancellation or termination of Convertible Notes, and any settlement of the Convertible Notes on the conversionthereof, whether in cash, securities, other property or a combination thereof.“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount ofsuch Lender’s Revolving Loans, its LC Exposure at such time.“Revolving Loan” means a Loan made pursuant to Section 2.03.“S&P” means Standard & Poor’s.“Sale and Leaseback Transaction” has the meaning assigned to it in Section 6.09.22730594648.9 16508322“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (atthe time of this Agreement, Crimea, Cuba, Iran, North Korea, and Syria).“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained bythe Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by the United NationsSecurity Council, the European Union, any European Union member state, Her Majesty’s Treasury of the United Kingdom, or otherrelevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned orcontrolled by any such Person or Persons described in the foregoing clauses (a) or (b), or (d) any Person otherwise the subject of anySanctions.“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to timeby (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of theTreasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Unionmember state, Her Majesty’s Treasury of the United Kingdom, or other relevant sanctions authority.“SEC” means the Securities and Exchange Commission of the United State of America.“Second Amendment Effective Date” means November 26, 2018.“Secured Obligations” means all Obligations, together with all (i) Banking Services Obligations and (ii) Swap AgreementObligations owing to one or more Lenders or their respective Affiliates; provided, however, that the definition of “Secured Obligations”shall not create any guarantee by any Guarantor of (or grant of security interest by any Guarantor to support, as applicable) anyExcluded Swap Obligations of such Guarantor for purposes of determining any obligations of any Guarantor.“Secured Parties” means (a) the Lenders, (b) the Administrative Agent, (c) each Issuing Bank, (d) each provider of BankingServices, to the extent the Banking Services Obligations in respect thereof constitute Secured Obligations, (e) each counterparty to anySwap Agreement, to the extent the obligations thereunder constitute Secured Obligations, (f) the beneficiaries of each indemnificationobligation undertaken by any Loan Party under any Loan Document and (g) the successors and assigns of each of the foregoing.“Security Agreement” means that certain Pledge and Security Agreement (including any and all supplements thereto), dated asof the Original Effective Date among the Loan Parties and the Administrative Agent, for the benefit of the Administrative Agent and theother Secured Parties, and any other pledge or security agreement entered into, after the date of this Agreement by any other Loan Party(as required by this Agreement or any other Loan Document) or any other Person for the benefit of the Administrative Agent and theother Secured Parties, as the same may be amended, restated, supplemented or otherwise modified from time to time.“Senior Secured Leverage Covenant Holiday” has the meaning assigned to such term in Section 6.13(b).“Senior Secured Leverage Ratio” means, on any date, the ratio of (a) Total Indebtedness which is secured by a Lien of theBorrower and its Subsidiaries on such date minus Liquidity in excess of $50,000,000 to (b) EBITDA for the period of four consecutivefiscal quarters ended on or most recently prior to such date.23730594648.9 16508322“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and thedenominator of which is the number one minus the aggregate of the maximum reserve percentage (including any marginal, special,emergency or supplemental reserves) established by the Federal Reserve Board to which the Administrative Agent is subject withrespect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation D). Suchreserve percentages shall include those imposed pursuant to Regulation D of the Federal Reserve Board. Eurodollar Loans shall bedeemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration,exemptions or offsets that may be available from time to time to any Lender under Regulation D of the Federal Reserve Board or anycomparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in anyreserve percentage.“STIBOR Screen Rate” means, with respect to any Interest Period, the Stockholm interbank offered rate administered by theSwedish Bankers’ Association ( or any other person that takes over the administration of that rate) for deposits in Swedish Kroner with aterm equivalent to such Interest Period as displayed on the Reuters screen page that displays such rate (or, in the event such rate doesnot appear on such Reuters page, on any successor or substitute page on such screen that displays such rate, or on the appropriate pageof such other information service that publishes such rate as shall be selected by the Administrative Agent from time to time in itsreasonable discretion) as of 11:00 a.m. London time two business days prior to the commencement of such Interest Period. If theSTIBOR Screen Rate shall be less than zero, the STIBOR Screen Rate shall be deemed to be zero for purposes of this Agreement.“Subordinated Indebtedness” of a Person means any Indebtedness of such Person, the payment of which is subordinated topayment of the Secured Obligations to the written satisfaction of the Administrative Agent.“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company,partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’sconsolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as anyother corporation, limited liability company, partnership, association or other entity of which securities or other ownership interestsrepresenting more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than50% of the general partnership interests are, as of such date, owned, controlled or held (excluding in all cases any “qualifying shares”).“Subsidiary” means any direct or indirect subsidiary of the Borrower or of any other Loan Party, as applicable.“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similaragreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, oreconomic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or anycombination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of servicesprovided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a SwapAgreement.“Swap Agreement Obligations” means any and all obligations of the Loan Parties and their Subsidiaries, whether absolute orcontingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions andmodifications thereof and substitutions therefor), under (a)24730594648.9 16508322any Swap Agreement permitted hereunder with a Lender or an Affiliate of a Lender, and (b) any cancellations, buy backs, reversals,terminations or assignments of any Swap Agreement transaction permitted hereunder with a Lender or an Affiliate of a Lender.“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding),value added taxes, or any other goods and services, use or sales taxes, assessments, fees or other charges imposed by anyGovernmental Authority, including any interest, additions to tax or penalties applicable thereto.“Total Indebtedness” means, at any date, the aggregate principal amount of all Indebtedness of the type specified in clauses (a)through (j) in the definition thereof determined for the Borrower and its Subsidiaries on a consolidated basis at such date, in accordancewith GAAP.“Total Leverage Ratio” means, on any date, the ratio of (a) Total Indebtedness, other than earn-out obligations which are notyet due and payable or are being contested in good faith and adequate reserves are maintained with respect thereto to the extentrequired by GAAP, on such date minus Liquidity in excess of $50,000,000 to (b) EBITDA for the period of four consecutive fiscalquarters ended on or most recently prior to such date.“Total Revolving Credit Exposure” means, the sum of the outstanding principal amount of all Lenders’ Revolving Loans andtheir LC Exposure at such time.“Trademarks” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following: (a) alltrademarks (including service marks), trade names, trade dress, and trade styles and the registrations and applications for registrationthereof and the goodwill of the business symbolized by the foregoing; (b) all licenses of the foregoing, whether as licensee or licensor;(c) all renewals of the foregoing; (d) all income, royalties, damages, and payments now or hereafter due or payable with respect thereto,including, without limitation, damages, claims, and payments for past and future infringements thereof; (e) all rights to sue for past,present, and future infringements of the foregoing, including the right to settle suits involving claims and demands for royalties owing;and (f) all rights corresponding to any of the foregoing throughout the world.“Transaction Costs” means all fees, costs and expenses incurred or paid by the Borrower or any Subsidiary in connection withthe Transactions, this Agreement and the other Loan Documents and the transactions contemplated hereby and thereby.“Transactions” means the execution, delivery and performance by the Borrower of this Agreement and the other LoanDocuments, the borrowing of Loans and other credit extensions, the use of the proceeds thereof and the issuance of Letters of Credithereunder.“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loanscomprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.“U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.“U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.17(f)(ii)(B)(3).25730594648.9 16508322“USA Patriot Act” means the United and Strengthening America by Providing Appropriate Tools Required to Intercept andObstruct Terrorism Act of 2001.“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from suchMultiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversionpowers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country,which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.SECTION 1.02. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified andreferred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “EurodollarRevolving Loan”). Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a“Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).SECTION 1.03. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of theterms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “law”shall be construed as referring to all statutes, rules, regulations, codes and other laws (including official rulings and interpretationsthereunder having the force of law or with which affected Persons customarily comply) and all judgments, orders and decrees of allGovernmental Authorities. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless thecontext requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construedas referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwisemodified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein), (b) anyreference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions onassignments set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall havesucceeded to any or all functions thereof, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall beconstrued to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles,Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement,(e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible andintangible assets and properties, including cash, securities, accounts and contract rights, (f) any reference in any definition to the phrase“at any time” or “for any period” shall refer to the same time or period for all calculations or determinations within such definition, and(g) any reference to any law, rule or regulations shall mean such law, rule or regulation as amended or restated from time to time.SECTION 1.04. Accounting Terms; GAAP.(a) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed inaccordance with GAAP, as in effect from time to time; provided that, if after the date hereof there occurs any change in GAAP or in theapplication thereof on the operation of any provision hereof and the Borrower notifies the Administrative Agent that the Borrowerrequests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the26730594648.9 16508322application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lendersrequest an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after suchchange in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and appliedimmediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended inaccordance herewith. Notwithstanding any other provision contained herein, the effectiveness of any change in GAAP after theRestatement Effective Date will not cause any lease that was not or would not have been a capital lease prior to such change to bedeemed a capital lease. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used hereinshall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any electionunder Financial Accounting Standards Board Accounting Standards Codification 825 (or any other Financial Accounting Standardhaving a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, asdefined therein and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under FinancialAccounting Standards Board Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or FinancialAccounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as describedtherein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.(b) Notwithstanding anything to the contrary contained in Section 1.04(a) or in the definition of “Capital Lease Obligations,”in the event of an accounting change requiring leases that were not required to be capitalized on the date hereof to be capitalized, onlythose leases (assuming for purposes hereof that such leases were in existence on the date hereof) that would constitute capital leases inconformity with GAAP on the date hereof shall be considered capital leases, and all calculations and deliverables under this Agreementor any other Loan Document shall be made or delivered, as applicable, in accordance therewith.SECTION 1.05. Interests Rates; LIBOR Notification. The interest rate on Eurodollar Loans is determined by reference to theLIBO Rate, which is derived from the London interbank offered rate. The London interbank offered rate is intended to represent the rateat which contributing banks may obtain short-term borrowings from each other in the London interbank market. In July 2017, the U.K.Financial Conduct Authority announced that, after the end of 2021, it would no longer persuade or compel contributing banks to makerate submissions to the ICE Benchmark Administration (together with any successor to the ICE Benchmark Administrator, the “IBA”)for purposes of the IBA setting the London interbank offered rate. As a result, it is possible that commencing in 2022, the Londoninterbank offered rate may no longer be available or may no longer be deemed an appropriate reference rate upon which to determinethe interest rate on Eurodollar Loans. In light of this eventuality, public and private sector industry initiatives are currently underway toidentify new or alternative reference rates to be used in place of the London interbank offered rate. In the event that the Londoninterbank offered rate is no longer available or in certain other circumstances as set forth in Section 2.14 of this Agreement, suchSection 2.14 provides a mechanism for determining an alternative rate of interest. The Administrative Agent will notify the Borrower,pursuant to Section 2.14, in advance of any change to the reference rate upon which the interest rate on Eurodollar Loans is based.However, the Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, theadministration, submission or any other matter related to the London interbank offered rate or other rates in the definition of “LIBORate” or with respect to any alternative or successor rate thereto, or replacement rate thereof, including without limitation, whether thecomposition or characteristics of any such alternative, successor or replacement reference rate, as it may or may not be adjustedpursuant to Section 2.14(c), will be similar to, or produce the same value or economic equivalence of, the LIBO Rate or have the samevolume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability.27730594648.9 16508322SECTION 1.06. Pro Forma Adjustments for Acquisitions and Dispositions. To the extent the Borrower or any of itsSubsidiaries makes any acquisition permitted pursuant to Section 6.04 or disposition of assets outside the ordinary course of businessduring the period of four fiscal quarters of the Borrower most recently ended for which financial statements have been delivered, theSenior Secured Leverage Ratio and Total Leverage Ratio shall be calculated after giving pro forma effect thereto (including pro formaadjustments arising out of events which are directly attributable to the acquisition or the disposition of assets, are factually supportableand are expected to have a continuing impact, in each case as determined on a basis consistent with Article 11 of Regulation S-X of theSecurities Act of 1933, as amended, as interpreted by the SEC, and as certified by a Financial Officer), as if such acquisition or suchdisposition (and any related incurrence, repayment or assumption of Indebtedness) had occurred in the first day of such four-quarterperiod.SECTION 1.07. Status of Obligations. In the event that the Borrower or any other Loan Party shall at any time issue or haveoutstanding any Subordinated Indebtedness, the Borrower shall take or cause such other Loan Party to take all such actions as shall benecessary to cause the Secured Obligations to constitute senior indebtedness (however denominated) in respect of such SubordinatedIndebtedness and to enable the Administrative Agent and the Lenders to have and exercise any payment blockage or other remediesavailable or potentially available to holders of senior indebtedness under the terms of such Subordinated Indebtedness. Without limitingthe foregoing, the Secured Obligations are hereby designated as “senior indebtedness” and as “designated senior indebtedness” andwords of similar import under and in respect of any indenture or other agreement or instrument under which such SubordinatedIndebtedness is outstanding and are further given all such other designations as shall be required under the terms of any suchSubordinated Indebtedness in order that the Lenders may have and exercise any payment blockage or other remedies available orpotentially available to holders of senior indebtedness under the terms of such Subordinated Indebtedness.ARTICLE II The CreditsSECTION 2.01. Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make RevolvingLoans to the Borrower in the Applicable Currency from time to time during the Availability Period in an aggregate principal amountthat will not result (after giving effect to any application of proceeds of such Borrowing pursuant to Section 2.10) in (a) the DollarEquivalent of any Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment, (b) the sum of the Dollar Equivalent ofthe Total Revolving Credit Exposures exceeding the total Commitments or (c) the Dollar Equivalent of the total outstanding RevolvingLoans denominated in Foreign Currencies to exceed the Foreign Currency Sublimit. Within the foregoing limits and subject to the termsand conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.SECTION 2.02. Loans and Borrowings. (23) Each Revolving Loan shall be made as part of a Borrowing consisting ofRevolving Loans made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make anyLoan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of theLenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.(a) Subject to Section 2.14, each Revolving Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as theBorrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic orforeign branch or Affiliate of such Lender28730594648.9 16508322to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan inaccordance with the terms of this Agreement.(b) At the commencement of each Interest Period for any Eurodollar Revolving Borrowing, such Borrowing shall be in anaggregate Dollar Equivalent that is an integral multiple of $1,000,000 and not less than $5,000,000. At the time that eachABR Revolving Borrowing is made, such Borrowing shall be in an aggregate Dollar Equivalent that is an integral multiple of $100,000and not less than $500,000; provided that an ABR Revolving Borrowing may be in an aggregate Dollar Equivalent that is equal to theentire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement ascontemplated by Section 2.06(e). Borrowings of more than one Type and Class may be outstanding at the same time; provided thatthere shall not at any time be more than a total of 10 Eurodollar Revolving Borrowings outstanding.(c) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convertor continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving Borrowing, the Borrower shall notify theAdministrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing denominated in dollars, not later than 1:00p.m., New York City time, three (3) Business Days before the date of the proposed Borrowing, (b) in the case of a EurodollarBorrowing denominated in a Foreign Currency, not later than 12:00 p.m., Local Time, three (3) Business Days before the date of theproposed Borrowing or (c) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of theproposed Borrowing; provided that any such notice of an ABR Revolving Borrowing to finance the reimbursement of an LCDisbursement as contemplated by Section 2.06(e) may be given not later than 1:00 p.m., New York City time, on the date of theproposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand deliveryor telecopy (or transmit by electronic communication in accordance with Section 9.01 hereof) to the Administrative Agent of a writtenBorrowing Request in a form approved by the Administrative Agent and signed by the Borrower. Each such telephonic and writtenBorrowing Request shall specify the following information in compliance with Section 2.02:(i) the aggregate amount of the requested Borrowing;(ii) the date of such Borrowing, which shall be a Business Day;(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;(iv) in the case of a Eurodollar Borrowing, the Applicable Currency and initial Interest Period to be applicable thereto,which shall be a period contemplated by the definition of the term “Interest Period”; and(v) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with therequirements of Section 2.07.If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be an ABR Borrowing.If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall be deemed tohave selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with thisSection, the29730594648.9 16508322Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of therequested Borrowing.SECTION 2.04. Determination of Dollar Equivalent. The Administrative Agent will determine the Dollar Equivalent of:(a) each Eurodollar Borrowing as of the date two (2) Business Days prior to the date of such Borrowing or, if applicable, thedate of conversion/continuation of any Borrowing as a Eurodollar Borrowing;(b) the LC Exposure as of the date of each request for the issuance, amendment, renewal or extension of any Letter of Credit;and(c) the aggregate amount of all Loans and LC Exposure on and as of the last Business Day of each calendar quarter and,during the continuation of an Event of Default, on any other Business Day elected by the Administrative Agent in its discretion or uponinstruction by the Required Lenders.Each day upon or as of which the Administrative Agent determines the Dollar Equivalent as described in the preceding clauses (a), (b)and (c) is herein described as a “Computation Date” with respect to each Credit Event for which a Dollar Equivalent is determined onor as of such day.SECTION 2.05. [Intentionally Omitted].SECTION 2.06. Letters of Credit. (23) General. Subject to the terms and conditions set forth herein, the Borrower may requestthe issuance of Letters of Credit denominated in Applicable Currencies as the applicant thereof for the support of its or its Subsidiaries’obligations, in a form reasonably acceptable to the Issuing Bank, at any time and from time to time during the Availability Period andthe Issuing Bank shall, subject to the conditions precedent set forth in Section 4.02, issue such requested Letters of Credit pursuant tothis Agreement. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions ofany form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, theIssuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. Notwithstanding anything hereinto the contrary, the Issuing Bank shall have no obligation hereunder to issue, and shall not issue, any Letter of Credit (i) the proceeds ofwhich would be made available to any Person (A) to fund any activity or business of or with any Sanctioned Person, or in any countryor territory that, at the time of such funding, is the subject of any Sanctions or (B) in any manner that would result in a violation of anySanctions by any party to this Agreement, (ii) if any order, judgment or decree of any Governmental Authority or arbitrator shall by itsterms purport to enjoin or restrain the Issuing Bank from issuing such Letter of Credit, or any Requirement of Law relating to theIssuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdictionover the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from, the issuance of letters of credit generally or suchLetter of Credit in particular or shall impose upon the Issuing Bank with respect to such Letter of Credit any restriction, reserve orcapital requirement (for which the Issuing Bank is not otherwise compensated hereunder) not in effect on the Restatement EffectiveDate, or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the RestatementEffective Date and which the Issuing Bank in good faith deems material to it, or (iii) if the issuance of such Letter of Credit wouldviolate one or more policies of the Issuing Bank applicable to letters of credit generally; provided that, notwithstanding anything hereinto the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements ordirectives thereunder or issued in connection therewith or in the implementation thereof, and (y) all requests, rules, guidelines,requirements or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or anysuccessor or similar authority) or the30730594648.9 16508322United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed not to be in effect on theRestatement Effective Date for purposes of clause (ii) above, regardless of the date enacted, adopted, issued or implemented.(a) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (orthe amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmitthrough Electronic System, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and theAdministrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension, but in any event noless than three (3) Business Days, or with respect to Letters of Credit to be issued in Swedish Kroner, such longer period as required bythe Issuing Bank from time to time) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to beamended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day),the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter ofCredit, the Applicable Currency, the name and address of the beneficiary thereof and such other information as shall be necessary toprepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of creditapplication on the Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued,amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrowershall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) (x) theaggregate undrawn Dollar Equivalent of all outstanding Letters of Credit issued by the Issuing Bank at such time plus (y) the aggregateDollar Equivalent of all LC Disbursements made the Issuing Bank that have not yet been reimbursed by or on behalf of the Borrower atsuch time shall not exceed its Letter of Credit Commitment, (ii) the Dollar Equivalent of any Lender’s Revolving Credit Exposure shallnot exceed its Commitment and (iii) the sum of the Dollar Equivalent of the Total Revolving Credit Exposure shall not exceed the totalCommitments. The Borrower may, at any time and from time to time, reduce the Letter of Credit Commitment of any Issuing Bank;provided that the Borrower shall not reduce the Letter of Credit Commitment of any Issuing Bank if, after giving effect of suchreduction, the conditions set forth in clauses (i) through (iii) above shall not be satisfied.(b) Expiration Date. Each Letter of Credit shall expire (or be subject to termination by notice from the Issuing Bank to thebeneficiary thereof) at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letterof Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five (5)Business Days prior to the Maturity Date. Notwithstanding the foregoing, any Letter of Credit may, at the discretion of the IssuingBank, expire no later than one year after the Maturity Date so long as the Borrower cash collateralizes an amount equal to 105% of theface amount of such Letter of Credit at least ten (10) Business Days prior to the Maturity Date in the manner described in Section 2.06(j)and otherwise on terms and conditions reasonably acceptable to the Issuing Bank and the Administrative Agent.(c) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof)and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and eachLender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage ofthe aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, eachLender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, suchLender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the datedue as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for anyreason. Each Lender acknowledges31730594648.9 16508322and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute andunconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letterof Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such paymentshall be made without any offset, abatement, withholding or reduction whatsoever.(d) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shallreimburse such LC Disbursement by paying to the Administrative Agent in dollars the Dollar Equivalent equal to such LCDisbursement, calculated as of the date the Issuing Bank made such LC Disbursement (or if the Issuing Bank shall so elect in its solediscretion by notice to the Borrower (given at the time such LC Disbursement is made), in such other Applicable Currency which waspaid by the Issuing Bank pursuant to such LC Disbursement in an amount equal to such LC Disbursement) not later than 12:00 noon,New York City time, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LCDisbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the Borrower prior tosuch time on such date, then not later than 12:00 noon, New York City time, on the Business Day immediately following the day thatthe Borrower receives such notice; provided that the Borrower may, subject to the conditions to borrowing set forth herein, request inaccordance with Section 2.03 that such payment be financed with (i) to the extent such LC Disbursement was made in dollars, an ABRRevolving Borrowing in an amount equal to such LC Disbursement or (ii) to the extent that such LC Disbursement was made in aForeign Currency, a Eurodollar Revolving Borrowing in such Foreign Currency in an amount equal to such LC Disbursement and, ineach case, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resultingABR Revolving Borrowing or Eurodollar Revolving Borrowing, as applicable. If the Borrower fails to make such payment when due,the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower inrespect thereof and such Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay tothe Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided inSection 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment obligations ofthe Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Lenders.Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, theAdministrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments pursuant tothis paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear. Any paymentmade by a Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding ofABR Revolving Loans as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation toreimburse such LC Disbursement. If the Borrower’s reimbursement of, or obligation to reimburse, any amounts in any ForeignCurrency would subject the Administrative Agent, the Issuing Bank or any Lender to any stamp duty, ad valorem charge or similar taxthat would not be payable if such reimbursement were made or required to be made in dollars, the Borrower shall, at its option, either(x) pay the amount of any such tax requested by the Administrative Agent, the Issuing Bank or the relevant Lender or (y) reimburseeach LC Disbursement made in such Foreign Currency in dollars, in an amount equal to the Equivalent Amount, calculated using theapplicable Exchange Rates, on the date such LC Disbursement is made, of such LC Disbursement.(e) Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of thisSection shall be absolute, unconditional and irrevocable, and shall, subject to the limitations set forth in the immediately followingsentence, be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever andirrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein,(ii) any32730594648.9 16508322draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statementtherein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of adraft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstancewhatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal orequitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. Neither the Administrative Agent, theLenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connectionwith the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any ofthe circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery ofany draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawingthereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the IssuingBank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of anydirect damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which are hereby waived by theBorrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercisecare when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. Theparties hereto expressly agree that, in the absence of gross negligence or wilful misconduct on the part of the Issuing Bank (as finallydetermined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination.In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presentedwhich appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its solediscretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of anynotice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strictcompliance with the terms of such Letter of Credit.(f) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documentspurporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the AdministrativeAgent and the Borrower by telephone (confirmed by telecopy or through Electronic Systems) of such demand for payment and whetherthe Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving suchnotice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to any such LCDisbursement.(g) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LCDisbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from andincluding the date such LC Disbursement is made to but excluding the date that the reimbursement is due and payable at the rate perannum then applicable to ABR Revolving Loans (or in the case such LC Disbursement is denominated in a Foreign Currency, at theOvernight Foreign Currency Rate for such Applicable Currency plus the then effective Applicable Rate with respect to EurodollarRevolving Loans) and such interest shall be due and payable on the date when such reimbursement is payable; provided that, if theBorrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(d) shall apply.Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after thedate of payment by any Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of suchLender to the extent of such payment.33730594648.9 16508322(h) Replacement of the Issuing Bank. (23) The Issuing Bank may be replaced at any time by written agreement among theBorrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notifythe Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shallpay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b). From and after the effective dateof any such replacement, (x) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under thisAgreement with respect to Letters of Credit to be issued thereafter and (y) references herein to the term “Issuing Bank” shall be deemedto refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shallrequire. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue tohave all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to suchreplacement, but shall not be required to issue additional Letters of Credit.(i) Subject to the appointment and acceptance of a successor Issuing Bank, any Issuing Bank may resign as an IssuingBank at any time upon thirty (30) days’ prior written notice to the Administrative Agent, the Borrower and the Lenders, inwhich case, such Issuing Bank shall be replaced in accordance with Section 2.06(i) above.(i) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Borrowerreceives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Lenderswith LC Exposure representing not less than 51% of the total LC Exposure) demanding the deposit of cash collateral pursuant to thisparagraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for thebenefit of the Lenders, an amount in cash equal to 105% of the Dollar Equivalent of the LC Exposure as of such date plus any accruedand unpaid interest thereon; provided that (i) the portions of such amount attributable to undrawn Foreign Currency Letters of Credit orLC Disbursements in a Foreign Currency that the Borrower is not late in reimbursing shall be deposited in the applicable ForeignCurrencies in the actual amounts of such undrawn Letters of Credit and LC Disbursements and (ii) the obligation to deposit such cashcollateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or othernotice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (h) or (i) ofArticle VII. For the purposes of this paragraph, the Foreign Currency LC Exposure shall be calculated using the applicable ExchangeRate on the date notice demanding cash collateralization is delivered to the Borrower. The Borrower also shall deposit cash collateralpursuant to this paragraph as and to the extent required by Section 2.11(c). Such deposit shall be held by the Administrative Agent ascollateral for the payment of the LC Exposure under this Agreement. The Administrative Agent shall have exclusive dominion andcontrol, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of suchdeposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk andexpense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneysin such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has notbeen reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower forthe LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with LCExposure representing not less than 51% of the total LC Exposure), be applied to satisfy other obligations of the Borrower under thisAgreement. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event ofDefault, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three (3) Business Days after allEvents of Default have been cured or waived.34730594648.9 16508322SECTION 2.07. Funding of Borrowings. (23) Each Lender shall make each Loan to be made by it hereunder on the proposeddate thereof solely by wire transfer of immediately available funds (i) in the case of Loans denominated in dollars, by 12:00 noon,New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to theLenders and (ii) in the case of each Loan denominated in a Foreign Currency, by 12:00 noon, Local Time, in the city of theAdministrative Agent’s Applicable Payment Office for such currency and at such Applicable Payment Office for such currency. Exceptin respect of the provisions of this Agreement covering the reimbursement of Letters of Credit, the Administrative Agent will make suchLoans available to the Borrower by promptly crediting the funds so received, in like funds, to (x) an account of the Borrowerdesignated by the Borrower in the applicable Borrowing Request, in the case of Loans denominated in dollars made to the Borrowerand (y) an account of the Borrower in the relevant jurisdiction and designated by the Borrower in the applicable Borrowing Request, inthe case of Loans denominated in a Foreign Currency; provided that ABR Revolving Loans made to finance the reimbursement of anLC Disbursement as provided in Section 2.06(e) shall be remitted by the Administrative Agent to the Issuing Bank.(a) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing thatsuch Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent mayassume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, inreliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in factmade its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrowerseverally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each dayfrom and including the date such amount is made available to the Borrower to but excluding the date of payment to the AdministrativeAgent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the AdministrativeAgent in accordance with banking industry rules on interbank compensation (including without limitation the Overnight ForeignCurrency Rate in the case of Loans denominated in a Foreign Currency) or (ii) in the case of the Borrower, the interest rate applicable toABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loanincluded in such Borrowing.SECTION 2.08. Interest Elections. (23) Each Revolving Borrowing initially shall be of the Type specified in the applicableBorrowing Request and, in the case of a Eurodollar Revolving Borrowing, shall have an initial Interest Period as specified in suchBorrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowingand, in the case of a Eurodollar Revolving Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrowermay elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall beallocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shallbe considered a separate Borrowing. Notwithstanding anything in this Agreement to the contrary, the Borrower may not request thatany Eurodollar Revolving Borrowing denominated in a Foreign Currency be converted into a different Type of Borrowing or Loan.(a) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election bytelephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a RevolvingBorrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic InterestElection Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy (or transmit by electroniccommunication in accordance with Section 9.01 hereof) to the Administrative Agent of a written Interest Election Request in a formapproved by the Administrative Agent and signed by the Borrower; provided, that any interest received from the Borrower by theAdministrative Agent during the period beginning when35730594648.9 16508322the Administrative Agent funded the Borrowing until such Lender pays such amount shall be solely for the account of theAdministrative Agent.(b) Each telephonic and written Interest Election Request shall specify the following information in compliance withSection 2.02:(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respectto different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information tobe specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period and Applicable Currency to be applicablethereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shallbe deemed to have selected an Interest Period of one month’s duration.(c) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the detailsthereof and of such Lender’s portion of each resulting Borrowing.(d) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Revolving Borrowing prior tothe end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such InterestPeriod (i) in the case of a Eurodollar Borrowing denominated in dollars, such Borrowing shall be converted to an ABR Borrowing and(ii) in the case of a Eurodollar Borrowing denominated in a Foreign Currency, in respect of which the applicable Borrower shall havefailed to deliver an Interest Election Request prior to the third (3rd) Business Day preceding the end of such Interest Period, suchBorrowing shall automatically continue as a Eurodollar Revolving Borrowing in the same Applicable Currency with an Interest Periodof one month unless such Eurodollar Revolving Borrowing is or was repaid in accordance with Section 2.11. Notwithstanding anycontrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of theRequired Lenders, so notifies the Borrower, then, so long as such Event of Default is continuing (x) no outstanding RevolvingBorrowing may be converted to or continued as a Eurodollar Borrowing, (y) unless repaid, each Eurodollar Revolving Borrowingdenominated in dollars shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto and (z) unlessrepaid, each Eurodollar Revolving Borrowing denominated in a Foreign Currency shall automatically be continued as a EurodollarRevolving Borrowing in the same Applicable Currency with an Interest Period of one month.SECTION 2.09. Termination and Reduction of Commitments. (23) Unless previously terminated, the Commitments shallterminate on the Maturity Date.(a) The Borrower may at any time terminate the Commitments upon (i) the payment in full of all outstanding Revolving Loansand LC Disbursements, together with accrued and unpaid interest thereon, (ii) the cancellation and return of all outstanding Letters ofCredit (or alternatively, with respect to each such36730594648.9 16508322Letter of Credit, the furnishing to the Administrative Agent of a cash deposit (or at the discretion of the Administrative Agent a backupstandby letter of credit satisfactory to the Administrative Agent and the Issuing Bank) in a Dollar Equivalent equal to 105% of the LCExposure as of such date), (iii) the payment in full of the accrued and unpaid fees, including applicable prepayment fee (if any), and(iv) the payment in full of all reimbursable expenses and other Obligations together with accrued and unpaid interest thereon.(b) The Borrower may from time to time reduce the Commitments; provided that (i) each reduction of the Commitments shallbe in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not terminate orreduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.11, the DollarEquivalent of the sum of the Total Revolving Credit Exposures would exceed the total Commitments.(c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments underparagraph (b) of this Section at least three (3) Business Days prior to the effective date of such termination or reduction, specifying suchelection and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders ofthe contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice oftermination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of othercredit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to thespecified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent. Eachreduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.SECTION 2.10. Repayment of Loans; Evidence of Debt. (23) The Borrower hereby unconditionally promises to pay to theAdministrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan on the Maturity Date.(a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness ofthe Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payableand paid to such Lender from time to time hereunder.(b) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder,the Class, Applicable Currency and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interestdue and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum receivedby the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.(c) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidenceof the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent tomaintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans inaccordance with the terms of this Agreement.(d) Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrower shallprepare, execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by such Lender, to such Lenderand its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by such promissorynote and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or morepromissory notes in such form.37730594648.9 16508322SECTION 2.11. Prepayment of Loans. (23) The Borrower shall have the right at any time and from time to time to prepay anyBorrowing in whole or in part, subject to prior notice in accordance with paragraph (b) of this Section.(a) The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder(i) in the case of prepayment of a Eurodollar Revolving Borrowing denominated in dollars, not later than 1:00 p.m., New York Citytime, three (3) Business Days before the date of prepayment, (ii) in the case of prepayment of a Eurodollar Revolving Borrowingdenominated in a Foreign Currency, not later than 11:00 a.m., Local Time, three (3) Business Days before the date of prepayment or(iii) in the case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New York City time on the date ofprepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowingor portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of terminationof the Commitments as contemplated by Section 2.09, then such notice of prepayment may be revoked if such notice of termination isrevoked in accordance with Section 2.09. Promptly following receipt of any such notice relating to a Revolving Borrowing, theAdministrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Revolving Borrowing shall be inan amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02.Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shallbe accompanied by accrued interest to the extent required by Section 2.13.(b) If at any time the sum of the aggregate principal Dollar Equivalent of all of the Revolving Credit Exposures (calculated,with respect to those Credit Events denominated in Foreign Currencies, as of the most recent Computation Date with respect to eachsuch Credit Event) exceeds (A) the aggregate Commitments or (B) the sum of the aggregate principal Dollar Equivalent of all of theoutstanding Revolving Credit Exposures denominated in a Foreign Currency, as of the most recent Computation Date with respect toeach such Credit Event, exceeds the Foreign Currency Sublimit, the Borrower shall immediately repay Borrowings or cash collateralizeLC Exposure in an account with the Administrative Agent pursuant to Section 2.06(j), as applicable, in an aggregate principal amountsufficient to cause (x) the aggregate Dollar Equivalent of all Revolving Credit Exposures (so calculated) to be less than or equal to theaggregate Commitments and (y) the Revolving Credit Exposures denominated in a Foreign Currency to be less than or equal to theForeign Currency Sublimit, as applicable.SECTION 2.12. Fees. (23) The Borrower agrees to pay to the Administrative Agent for the account of each Lender acommitment fee, which shall accrue at the Applicable Rate on the daily unused amount of the Commitment of such Lender during theperiod from and including the Restatement Effective Date to but excluding the date on which such Commitment terminates. Accruedcommitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date onwhich the Commitments terminate, commencing on the first such date to occur after the date hereof. All commitment fees shall becomputed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day butexcluding the last day).(a) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respectto its participations in Letters of Credit, which shall accrue at the same Applicable Rate used to determine the interest rate applicable toEurodollar Revolving Loans on the average daily Dollar Equivalent of such Lender’s LC Exposure (excluding any portion thereofattributable to unreimbursed LC Disbursements) during the period from and including the Restatement Effective Date to but excludingthe later of the date on which such Lender’s Commitment terminates and the date on which such Lender ceases to have any LCExposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue38730594648.9 16508322at the rate or rates per annum separately agreed upon between the Borrower and the Issuing Bank on the average daily DollarEquivalent of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period fromand including the Restatement Effective Date to but excluding the later of the date of termination of the Commitments and the date onwhich there ceases to be any LC Exposure, as well as the Issuing Bank’s standard fees with respect to the issuance, amendment,renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued throughand including the last day of March, June, September and December of each year shall be payable on the third (3rd) Business Dayfollowing such last day, commencing on the first such date to occur after the Restatement Effective Date; provided that all such feesshall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitmentsterminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable withinten (10) days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall bepayable for the actual number of days elapsed (including the first day but excluding the last day).(b) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the timesseparately agreed upon between the Borrower and the Administrative Agent.(c) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (orto the Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees and participation fees, to theLenders. Fees paid shall not be refundable under any circumstances.SECTION 2.13. Interest. (23) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plusthe Applicable Rate.(a) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period ineffect for such Borrowing plus the Applicable Rate.(b) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by theBorrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bearinterest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rateotherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2%plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.(c) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case ofRevolving Loans, upon termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (c) of thisSection shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of anABR Revolving Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall bepayable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Revolving Loan priorto the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of suchconversion.(d) All interest hereunder shall be computed on the basis of a year of 360 days, except that (i) interest computed by referenceto the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of365 days (or 366 days in a leap year), and (ii) interest on Eurodollar Borrowings denominated in a Foreign Currency (other thanCanadian Dollars) shall be computed on the basis of a year of 365 days, and in each case shall be payable for the actual number of39730594648.9 16508322days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate orEurocurrency Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.SECTION 2.14. Alternate Rate of Interest.(a) If prior to the commencement of any Interest Period for a Eurodollar Borrowing:(i) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequateand reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the Eurocurrency Rate, as applicable (includingbecause the LIBO Screen Rate or the EURIBOR Rate, as applicable, is not available or published on a current basis), for suchInterest Period; or(ii) the Administrative Agent is advised in writing by the Required Lenders that the Adjusted LIBO Rate or theEurocurrency Rate, as applicable, for the applicable currency and such Interest Period will not adequately and fairly reflect thecost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for theapplicable currency and such Interest Period;then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly aspracticable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise tosuch notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of anyBorrowing as, a Eurodollar Borrowing shall be ineffective and, unless repaid, (A) in the case of a Eurodollar Borrowing denominated indollars, such Borrowing shall be made as an ABR Borrowing and (B) in the case of a Eurodollar Borrowing denominated in a ForeignCurrency, such Eurodollar Borrowing shall be repaid on the last day of the then current Interest Period applicable thereto, and (ii) if anyBorrowing Request requests (x) a Eurodollar Borrowing in dollars, such Borrowing shall be made as an ABR Borrowing and (y) aEurodollar Borrowing in a Foreign Currency, such Borrowing Request shall be ineffective; provided that if the circumstances givingrise to such notice affect only one Type of Borrowings, then the other Type of Borrowings shall be permitted.(b) If at any time the Administrative Agent determines (which determination shall be conclusive absent manifest error) that,solely with respect to the LIBO Screen Rate for dollars, (i) the circumstances set forth in clause (a)(i) have arisen and suchcircumstances are unlikely to be temporary or (ii) the circumstances set forth in clause (a)(i) have not arisen but either (w) thesupervisor for the administrator of the LIBO Screen Rate for dollars has made a public statement that the administrator of such LIBOScreen Rate is insolvent (and there is no successor administrator that will continue publication of such LIBO Screen Rate), (x) theadministrator of the LIBO Screen Rate for dollars has made a public statement identifying a specific date after which such LIBO ScreenRate will permanently or indefinitely cease to be published by it (and there is no successor administrator that will continue publicationof the LIBO Screen Rate for dollars), (y) the supervisor for the administrator of the LIBO Screen Rate for dollars has made a publicstatement identifying a specific date after which such LIBO Screen Rate will permanently or indefinitely cease to be published or (z) thesupervisor for the administrator of the LIBO Screen Rate for dollars or a Governmental Authority having jurisdiction over theAdministrative Agent has made a public statement identifying a specific date after which the LIBO Screen Rate for dollars may nolonger be used for determining interest rates for loans, then the Administrative Agent and the Borrower shall endeavor to establish analternate rate of interest to the Eurocurrency Rate for dollars that gives due consideration to the then prevailing market convention fordetermining a rate of interest for syndicated loans denominated in dollars in the United States at such time,40730594648.9 16508322and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to thisAgreement as may be applicable (but for the avoidance of doubt, such related changes shall not include a reduction of the ApplicableRate); provided that, if such alternate rate of interest as so determined would be less than zero, such rate shall be deemed to be zero forthe purposes of this Agreement. Notwithstanding anything to the contrary in Section 9.02, such amendment, as agreed to between theBorrower and the Administrative Agent, shall become effective without any further action or consent of any other party to thisAgreement so long as the Administrative Agent shall not have received, within five Business Days of the date notice of such alternaterate of interest is provided to the Lenders, a written notice from the Required Lenders stating that such Required Lenders object to suchamendment. Until an alternate rate of interest shall be determined in accordance with this clause (b) (but, in the case of thecircumstances described in clause (ii)(w), (ii)(x) or (ii)(y) of the first sentence of this Section 2.14(b), only to the extent the LIBO ScreenRate for the applicable currency and such Interest Period is not available or published at such time on a current basis), (x) any InterestElection Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shallbe ineffective and (y) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.SECTION 2.15. Increased Costs. (23) If any Change in Law shall:(i) impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including anycompulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, orcredit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank;(ii) impose on any Lender or the Issuing Bank or the London interbank market any other condition, cost or expense(other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein; or(iii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through(d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit,commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing,converting or maintaining any Loan, or of maintaining its obligation to make any such Loan (including, without limitation, pursuant toany conversion of any Borrowing denominated in an Applicable Currency into a Borrowing denominated in any other ApplicableCurrency), or to increase the cost to such Lender, the Issuing Bank or such other Recipient of participating in, issuing or maintainingany Letter of Credit (including, without limitation, pursuant to any conversion of any Borrowing denominated in an ApplicableCurrency into a Borrowing denominated in any other Applicable Currency) or to reduce the amount of any sum received or receivableby such Lender, the Issuing Bank or such other Recipient hereunder, whether of principal, interest or otherwise (including, withoutlimitation, pursuant to any conversion of any Borrowing denominated in an Applicable Currency into a Borrowing denominated in anyother Applicable Currency), then the Borrower will pay to such Lender, the Issuing Bank or such other Recipient, as the case may be,such additional amount or amounts as will compensate such Lender, the Issuing Bank or such other Recipient, as the case may be, forsuch additional costs incurred or reduction suffered.(b) If any Lender or the Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has orwould have the effect of reducing the rate of return on such Lender’s or the41730594648.9 16508322Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of thisAgreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by theIssuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding companycould have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and thepolicies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy and liquidity and so long as it isgenerally the policy of such Lender to seek reimbursement for such amounts from similarly situated borrower), then from time to timethe Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensatesuch Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered.(c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender orthe Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to theBorrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the case may be,the amount shown as due on any such certificate within ten (10) days after receipt thereof.(d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall notconstitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the Borrower shall not berequired to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than180 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law givingrise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor; providedfurther that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred toabove shall be extended to include the period of retroactive effect thereof.SECTION 2.16. Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other thanon the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of anyEurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue orprepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may berevoked under Section 2.11(b) and is revoked in accordance therewith), or (d) the assignment of any Eurodollar Loan other than on thelast day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19 or 9.02(d), then, inany such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of aEurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be theexcess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event notoccurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to thelast day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that wouldhave been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for suchperiod at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of acomparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount oramounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absentmanifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receiptthereof.42730594648.9 16508322SECTION 2.17. Payments Free of Taxes. (23) Any and all payments by or on account of any obligation of the Borrowerunder any Loan Document shall be made without deduction or withholding for any Taxes, except as required by current and futureapplicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires thededuction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall beentitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant GovernmentalAuthority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Partyshall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdingsapplicable to additional sums payable under this Section 2.17) the applicable Recipient receives an amount equal to the sum it wouldhave received had no such deduction or withholding been made.(a) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority inaccordance with applicable law, or at the option of the Administrative Agent timely reimburse it for, Other Taxes.(b) Evidence of Payments. As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authoritypursuant to this Section 2.17, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issuedby such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of suchpayment reasonably satisfactory to the Administrative Agent.(c) Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within ten (10) days after demandtherefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amountspayable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipientand any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legallyimposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to theBorrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of aLender, shall be conclusive absent manifest error.(d) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten (10) daysafter demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has notalready indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so),(ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(c) relating to the maintenance of aParticipant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by theAdministrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto,whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to theamount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lenderunder any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amountdue to the Administrative Agent under this paragraph (e).(e) Status of Lenders. (23) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect topayments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonablyrequested by the Borrower or the Administrative43730594648.9 16508322Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as willpermit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonablyrequested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law orreasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent todetermine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstandinganything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other thansuch documentation set forth in Section 2.17(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonablejudgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or wouldmaterially prejudice the legal or commercial position of such Lender.(i) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to thedate on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonablerequest of the Borrower or the Administrative Agent), an executed IRS Form W-9 certifying that such Lender is exemptfrom U.S. federal backup withholding tax;(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and theAdministrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which suchForeign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request ofthe Borrower or the Administrative Agent), whichever of the following is applicable:(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is aparty (x) with respect to payments of interest under any Loan Document, an executed IRS Form W-8BEN-E or IRS FormW-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” articleof such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the“business profits” or “other income” article of such tax treaty;(2) in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectively connectedincome, an executed IRS Form W-8ECI;(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section881(c) of the Code, (x) a certificate substantially in the form of Exhibit C-1 to the effect that such Foreign Lender is nota “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within themeaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) ofthe Code (a “U.S. Tax Compliance Certificate”) and (y) executed IRS Form W-8BEN-E or IRS Form W-8BEN; or(4) to the extent a Foreign Lender is not the beneficial owner, an executed IRS Form W-8IMY, accompanied byIRS Form W-8ECI, IRS Form W-8BEN-E, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in theform of Exhibit C-2 or44730594648.9 16508322Exhibit C-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; providedthat if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender areclaiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificatesubstantially in the form of Exhibit C-4 on behalf of each such direct and indirect partner;(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and theAdministrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which suchForeign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request ofthe Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis forclaiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementarydocumentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine thewithholding or deduction required to be made; and(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Taximposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (includingthose contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and theAdministrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borroweror the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agentas may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and todetermine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount todeduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendmentsmade to FATCA after the date of this Agreement.Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in anyrespect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legalinability to do so.(f) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received arefund of any Taxes as to which it has been indemnified pursuant to this Section 2.17 (including by the payment of additional amountspursuant to this Section 2.17), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnitypayments made under this Section 2.17 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses(including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authoritywith respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnifiedparty the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevantGovernmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority.Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount toan indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a less favorable netafter-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refundhad not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts giving rise to such45730594648.9 16508322refund had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (orany other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.(g) Survival. Each party’s obligations under this Section 2.17 shall survive the resignation or replacement of theAdministrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and therepayment, satisfaction or discharge of all obligations under any Loan Document.(h) Defined Terms. For purposes of this Section 2.17, the term “Lender” includes any Issuing Bank and the term “applicablelaw” includes FATCA.SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs. (23) The Borrower shall make each paymentrequired to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payableunder Section 2.15, 2.16 or 2.17, or otherwise) prior to (i) in the case of payments denominated in dollars, 12:00 noon, New York Citytime and (ii) in the case of payments denominated in a Foreign Currency, 12:00 noon, Local Time, in the city of the AdministrativeAgent’s Applicable Payment Office for such currency, in each case on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemedto have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall bemade (i) subject to Section 2.06(e), in the same currency in which the applicable Credit Event was made (or where such currency hasbeen converted to another Applicable Currency, in such Applicable Currency) and (ii) to the Administrative Agent at its offices at 270Park Avenue, New York, New York, or, in the case of a Credit Event denominated in a Foreign Currency, the Administrative Agent’sApplicable Payment Office for such currency, except payments to be made directly to the Issuing Bank as expressly provided hereinand except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto. TheAdministrative Agent shall distribute any such payments denominated in the same currency received by it for the account of any otherPerson to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not aBusiness Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruinginterest, interest thereon shall be payable for the period of such extension. Notwithstanding the foregoing provisions of this Section, if,after the making of any Credit Event in any Foreign Currency, currency control or exchange regulations are imposed in the countrywhich issues such currency with the result that the type of currency in which the Credit Event was made (the “Original Currency”) nolonger exists or the Borrower is not able to make payment to the Administrative Agent for the account of the Lenders in such OriginalCurrency, then all payments to be made by the Borrower hereunder in such currency shall instead be made when due in dollars in anamount equal to the Dollar Equivalent (as of the date of repayment) of such payment due, it being the intention of the parties hereto thatthe Borrower take all risks of the imposition of any such currency control or exchange regulations.(a) Any funds or proceeds of Collateral received by the Administrative Agent (i) not constituting either (A) a specific paymentof principal, interest, fees or other sum payable under the Loan Documents (which shall be applied as specified by the Borrower), or (B)a mandatory prepayment (which shall be applied in accordance with Section 2.11) or (ii) after an Event of Default has occurred and iscontinuing and the Administrative Agent so elects or the Required Lenders so direct, shall be applied ratably first, to pay any fees,indemnities, or expense reimbursements including amounts then due to the Administrative Agent and the Issuing Bank from theBorrower (other than in connection with Banking Services Obligations or Swap Agreement Obligations), second, to pay any fees orexpense reimbursements then due to the Lenders from46730594648.9 16508322the Borrower (other than in connection with Banking Services Obligations or Swap Agreement Obligations), third, to pay interest thendue and payable on the Loans ratably, fourth, to prepay principal on the Loans and unreimbursed LC Disbursements and to pay anyamounts owing with respect to Swap Agreement Obligations up to and including the amount most recently provided to theAdministrative Agent pursuant to Section 2.22, ratably, fifth, to pay an amount to the Administrative Agent equal to one hundred fivepercent (105%) of the aggregate LC Exposure, to be held as cash collateral for such Obligations, and sixth, to the payment of anyamounts owing in respect of Banking Services Obligations up to and including the amount most recently provided to the AdministrativeAgent pursuant to Section 2.22, and seventh, to the payment of any other Secured Obligation due to the Administrative Agent or anyLender from the Borrower or any other Loan Party.Notwithstanding the foregoing, Secured Obligations arising under Banking Services Obligations or Swap AgreementObligations shall be excluded from the application described above and paid in clause seventh if the Administrative Agent has notreceived written notice thereof, together with such supporting documentation as the Administrative Agent may have reasonablyrequested from the applicable provider of such Banking Services or Swap Agreements.(b) If any Lender shall, by exercising any right of set off or counterclaim or otherwise, obtain payment in respect of anyprincipal of or interest on any of its Revolving Loans or participations in LC Disbursements resulting in such Lender receiving paymentof a greater proportion of the aggregate amount of its Revolving Loans and participations in LC Disbursements and accrued interestthereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash atface value) participations in the Revolving Loans and participations in LC Disbursements of other Lenders to the extent necessary sothat the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of andaccrued interest on their respective Revolving Loans and participations in LC Disbursements; provided that (i) if any such participationsare purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and thepurchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construedto apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any paymentobtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LCDisbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which theprovisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do sounder applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against theBorrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of theBorrower in the amount of such participation.(c) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment isdue to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make suchpayment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith andmay, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In suchevent, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severallyagrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interestthereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to theAdministrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent inaccordance with banking47730594648.9 16508322industry rules on interbank compensation (including without limitation the Overnight Foreign Currency Rate in the case of Loansdenominated in a Foreign Currency).(d) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.06(d) or 2.06(e), 2.07(b),2.18(d) or 9.03(c), then the Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) applyany amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations undersuch Sections until all such unsatisfied obligations are fully paid, and/or (ii) hold such amounts in a segregated account over which theAdministrative Agent shall have exclusive control as cash collateral for, and application to, any future funding obligations of suchLender under any such Section, in the case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agentin its discretion.SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (23) If any Lender requests compensation underSection 2.15, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any GovernmentalAuthority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a differentlending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices,branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payablepursuant to Sections 2.15 or 2.17, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost orexpense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs andexpenses incurred by any Lender in connection with any such designation or assignment.(a) If any Lender (i) requests compensation under Section 2.15, (ii) if the Borrower is required to pay any Indemnified Taxesor additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, (iii) if anyLender becomes Defaulting Lender or (iv) if any Lender has failed to consent to any amendment, consent or waiver that has beenapproved by the Required Lenders but requires the approval of all the Lenders, then the Borrower may, at its sole expense and effort,upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordancewith and subject to the restrictions contained in Section 9.04), all its interests, rights (other than its existing rights to payments pursuantto Sections 2.15 or 2.17) and obligations under this Agreement to an assignee that shall assume such obligations (which assignee maybe another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent ofthe Administrative Agent (and if a Commitment is being assigned, the Issuing Bank), which consent shall not unreasonably bewithheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participationsin LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to theextent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the caseof any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant toSection 2.17, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make anysuch assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling theBorrower to require such assignment and delegation cease to apply.SECTION 2.20. Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomesa Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:48730594648.9 16508322(a) fees shall cease to accrue on the Commitment of such Defaulting Lender pursuant to Section 2.12(a);(b) such Defaulting Lender shall not have the right to vote on any issue on which voting is required (other than to the extentexpressly provided in Section 9.02(b)) and the Commitment and Revolving Credit Exposure of such Defaulting Lender shall not beincluded in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to anyamendment, waiver or other modification pursuant to Section 9.02); provided that, except as otherwise provided in Section 9.02, thisclause (b) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring theconsent of such Lender or each Lender affected thereby; and(c) if any LC Exposure exists at the time such Lender becomes a Defaulting Lender then:(i) all or any part of the LC Exposure of such Defaulting Lender shall be reallocated among the non-Defaulting Lendersin accordance with their respective Applicable Percentages but only (x) to the extent that such reallocation does not, as to anynon-Defaulting Lender, cause such non-Defaulting Lender’s Revolving Credit Exposure to exceed its Commitment and (y) ifthe conditions set forth in Section 4.02 are satisfied at such time;(ii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall withinone (1) Business Day following notice by the Administrative Agent cash collateralize for the benefit of the Issuing Bank onlythe Borrower’s obligations corresponding to such Defaulting Lender’s LC Exposure (after giving effect to any partialreallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.06(j) for so long as such LCExposure is outstanding;(iii) if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to clause (ii)above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b) with respect tosuch Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized;(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the fees payableto the Lenders pursuant to Section 2.12(a) and Section 2.12(b) shall be adjusted in accordance with such non-DefaultingLenders’ Applicable Percentages; and(v) if all or any portion of such Defaulting Lender’s LC Exposure is neither reallocated nor cash collateralized pursuantto clause (i) or (ii) above, then, without prejudice to any rights or remedies of the Issuing Bank or any other Lender hereunder,all commitment fees that otherwise would have been payable to such Defaulting Lender (solely with respect to the portion ofsuch Defaulting Lender’s Commitment that was utilized by such LC Exposure) and letter of credit fees payable under Section2.12(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Bank until and to the extent thatsuch LC Exposure is reallocated and/or cash collateralized.If (i) a Bankruptcy Event or a Bail-In Action with respect to a Lender Parent shall occur following the date hereof and for solong as such event shall continue or (ii) the Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling itsobligations under one or more other agreements in which such Lender commits to extend credit, the Issuing Bank shall not be requiredto issue, amend or increase any Letter of Credit, unless the Issuing Bank shall have entered into arrangements with the Borrower orsuch Lender, satisfactory to the Issuing Bank to defease any risk to it in respect of such Lender hereunder.49730594648.9 16508322In the event that the Administrative Agent, the Borrower, and the Issuing Bank each agrees that a Defaulting Lender hasadequately remedied all matters that caused such Lender to be a Defaulting Lender, then the LC Exposure of the Lenders shall bereadjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loansof the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans inaccordance with its Applicable Percentage.SECTION 2.21. Increase in Commitments.(a) Request for Increase. Provided there exists no Default, upon notice to the Administrative Agent (which shall promptlynotify the Lenders), the Borrower may from time to time request an increase in the Commitments by an amount (for all such increases)not exceeding $300,000,000; provided that (i) any such increase shall be in a minimum amount of $25,000,000 and (ii) the Borrowermay make a maximum of three such increases.(b) Increasing and Additional Lenders. The Borrower may, in consultation with the Administrative Agent, designate anyLender party to this Agreement (with the consent of such Lender, which may be given or withheld in its sole discretion) or anotherPerson (which may be, but need not be, an existing Lender) which is not an Ineligible Institution and which such Person shall be subjectto the consent of the Administrative Agent and the Issuing Bank (such consents not to be unreasonably withheld) if such Person is not aLender, an Affiliate of a Lender or an Approved Fund and which at the time agrees in its sole discretion to (i) in the case of any suchdesignated Lender that is an existing Lender, increase its Commitment, and (ii) in the case of any other such Person (an “AdditionalLender”), become a party to this Agreement pursuant to a customary joinder agreement in form and substance reasonably satisfactoryto the Administrative Agent and its counsel.(c) Effective Date and Allocations. If the Commitments are increased in accordance with this Section, the Borrower shalldetermine the effective date (the “Increase Effective Date”) and the final allocation of such increase in consultation with theAdministrative Agent. The Administrative Agent shall promptly notify the Lenders of the final allocation of such increase and theIncrease Effective Date.(d) Conditions to Effectiveness of Increase. As a condition precedent to such increase, the Borrower shall deliver to theAdministrative Agent a certificate of each Loan Party dated as of the Increase Effective Date (in sufficient copies for each Lender)signed by a Responsible Officer of such Loan Party (x) certifying and attaching the resolutions adopted by such Loan Party approvingor consenting to such increase, and (y) in the case of the Borrower, certifying that, before and after giving effect to such increase, therepresentations and warranties contained in Article V and the other Loan Documents are true and correct in all material respects on andas of the Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, inwhich case they are true and correct in all material respects as of such earlier date. The Borrower shall prepay any Revolving Loansoutstanding on the Increase Effective Date (and pay any additional amounts required pursuant to Section 2.16) to the extent necessaryto keep the outstanding Revolving Loans ratable with any revised Applicable Percentages arising from any nonratable increase in theCommitments under this Section.(e) Conflicting Provisions. This Section shall supersede any provisions in Section 2.18 or 9.02 to the contrary.SECTION 2.22. Returned Payments. If, after receipt of any payment which is applied to the payment of all or any part of theObligations (including a payment effected through exercise of a right of setoff), the Administrative Agent or any Lender is for anyreason compelled to surrender such payment or proceeds to50730594648.9 16508322any Person because such payment or application of proceeds is invalidated, declared fraudulent, set aside, determined to be void orvoidable as a preference, impermissible setoff, or a diversion of trust funds, or for any other reason (including pursuant to anysettlement entered into by the Administrative Agent or such Lender in its discretion), then the Obligations or part thereof intended to besatisfied shall be revived and continued and this Agreement shall continue in full force as if such payment or proceeds had not beenreceived by the Administrative Agent or such Lender. The provisions of this Section 2.22 shall be and remain effective notwithstandingany contrary action which may have been taken by the Administrative Agent or any Lender in reliance upon such payment orapplication of proceeds. The provisions of this Section 2.22 shall survive the termination of this Agreement.SECTION 2.23. Banking Services and Swap Agreements. Each Lender or Affiliate thereof providing Banking Services for, orhaving Swap Agreements with, any Loan Party or any Subsidiary thereof shall deliver to the Administrative Agent, promptly afterentering into such Banking Services or Swap Agreements, written notice setting forth the aggregate amount of all Banking ServicesObligations and Swap Agreement Obligations of such Loan Party or Subsidiary thereof to such Lender or Affiliate (whether matured orunmatured, absolute or contingent). In furtherance of that requirement, each such Lender or Affiliate thereof shall furnish theAdministrative Agent, from time to time after a significant change therein or upon a request therefor, a summary of the amounts due orto become due in respect of such Banking Services Obligations and Swap Agreement Obligations. The most recent informationprovided to the Administrative Agent shall be used in determining which tier of the waterfall, contained in Section 2.18(b), suchBanking Services Obligations and/or Swap Agreement Obligations will be placed.ARTICLE III Representations and WarrantiesThe Borrower represents and warrants to the Administrative Agent and the Lenders that:SECTION 3.01. Organization; Powers. Each of the Loan Parties and their Subsidiaries is duly organized, validly existing andin good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business asnow conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in aMaterial Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification isrequired.SECTION 3.02. Authorization; Enforceability. The Transactions are within the Borrower’s and each other Loan Party’scorporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action. This Agreement hasbeen duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable inaccordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of,registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are infull force and effect, and except for filings necessary to perfect Liens created pursuant to the Loan Documents, (b) will not violate anyRequirement of Law applicable to any Loan Party or any Subsidiary, (c) will not violate or result in a default under any indenture,material agreement or other material instrument binding upon any Loan Party or any of their Subsidiaries or their assets, or give rise to aright thereunder to require any payment to be made by any Loan Party or any of their51730594648.9 16508322Subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset of any Loan Party or any of their Subsidiaries,except Liens created pursuant to the Loan Documents.SECTION 3.04. Financial Condition; No Material Adverse Change. (23) The Borrower has heretofore furnished to the Lendersits consolidated balance sheet and statements of income, stockholders equity and cash flows (i) as of and for the fiscal year endedDecember 31, 2017, audited by Ernst & Young LLP, independent public accountants, and (ii) as of and for the fiscal quarter and theportion of the fiscal year ended September 30, 2018, certified by its chief financial officer. Such financial statements present fairly, inall material respects, the financial position and results of operations and cash flows of the Borrower and its consolidated Subsidiaries asof such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in thecase of the statements referred to in clause (ii) above.(a) Since December 31, 2017, there has been no event, development or circumstance that has had or would reasonably beexpected to have a Material Adverse Effect.SECTION 3.05. Properties. (23) Each of the Loan Parties and its Subsidiaries has good title to, or valid leasehold interests in,all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conductits business as currently conducted or to utilize such properties for their intended purposes or except where the failure to do so wouldnot reasonably be expected to have a Material Adverse Effect.(a) As of the Restatement Effective Date, the Loan Parties do not have any interest in, or title to, any United States federallyregistered Intellectual Property except as set forth in Schedule 3.05. Each of the Loan Parties and its Subsidiaries owns, or is licensed touse, all Trademarks, Copyrights, Patents and other Intellectual Property free and clear of all Liens (other than Liens permitted underSection 6.02), and the use thereof by the Loan Parties and their Subsidiaries does not infringe upon the rights of any other Person,except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a MaterialAdverse Effect.SECTION 3.06. Litigation and Environmental Matters. (23) There are no actions, suits or proceedings by or before anyarbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting any LoanParty or any of their Subsidiaries that would reasonably be expected, individually or in the aggregate, to result in a Material AdverseEffect (other than the Disclosed Matters) or (ii) that involve any Loan Document or the Transactions.(a) Except for the Disclosed Matters, (i) as of the Restatement Effective Date, no Loan Party or any Subsidiary has receivednotice of any claim with respect to any Environmental Liability or knows of any basis for any Environmental Liability and (ii) exceptwith respect to any other matters that, individually or in the aggregate, would not reasonably be expected to result in a Material AdverseEffect, no Loan Party nor any of their Subsidiaries (A) has failed to comply with any Environmental Law or to obtain, maintain orcomply with any permit, license or other approval required under any Environmental Law, (B) has become subject to anyEnvironmental Liability, (C) has received notice of any claim with respect to any Environmental Liability or (D) knows of any basis forany Environmental Liability.(b) Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or inthe aggregate, has resulted in, or would reasonably be expected to result in Material Adverse Effect.52730594648.9 16508322SECTION 3.07. Compliance with Laws and Agreements. Each Loan Party and its Subsidiaries is in compliance with (i) allRequirements of Law applicable to it or its property and (ii) all indentures, agreements and other instruments binding upon it or itsproperty, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a MaterialAdverse Effect. No Default has occurred and is continuing.SECTION 3.08. Investment Company Status. No Loan Party nor any of their Subsidiaries is an “investment company” asdefined in, or subject to regulation under, the Investment Company Act of 1940.SECTION 3.09. Taxes. Each Loan Party and its Subsidiaries has timely filed or caused to be filed all Tax returns and reportsrequired to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are beingcontested in good faith by appropriate proceedings and for which such Loan Party or such Subsidiary, as applicable, has set aside on itsbooks adequate reserves or (b) to the extent that the failure to do so would not reasonably be expected to result in a Material AdverseEffect.SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with allother such ERISA Events for which liability is reasonably expected to occur, would reasonably be expected to result in a MaterialAdverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposesof Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting suchamounts, exceed the fair market value of the assets of such Plan by an amount that would reasonably be expected to result in a MaterialAdverse Effect, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions usedfor purposes of Statement of Financial Accounting Standards No. 87 or subsequent recodification thereof, as applicable) did not, as ofthe date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of all suchunderfunded Plans by an amount that would reasonably be expected to result in a Material Adverse Effect.SECTION 3.11. Disclosure. (23) None of the reports, financial statements, certificates or other written information furnishedby or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation of this Agreement ordelivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact oromits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made,not misleading in any material respect; provided that, with respect to projected financial information, the Borrower represents only thatsuch information was prepared in good faith based upon assumptions believed by it to be reasonable at the time (it being recognizedthat such projections are not to be viewed as facts and are subject to significant uncertainties and contingencies, which are beyond theBorrower’s control, that no assurance can be given that any particular financial projections will be realized, that actual results may differfrom projected results and that such differences may be material).(a) As of the Restatement Effective Date, to the best knowledge of the Borrower, the information included in the BeneficialOwnership Certification provided on or prior to the Restatement Effective Date to any Lender in connection with this Agreement is trueand correct in all respects.SECTION 3.12. Anti-Corruption Laws and Sanctions. The Loan Parties have implemented and maintain in effect policies andprocedures designed to ensure compliance by the Loan Parties, their Subsidiaries and their respective directors, officers, employees andagents with Anti-Corruption Laws and applicable Sanctions, and the Loan Parties, their Subsidiaries and their respective officers anddirectors and to the knowledge of any Loan Party its employees and agents, are in compliance with Anti-Corruption Laws53730594648.9 16508322and applicable Sanctions in all material respects. None of (a) any Loan Party, any Subsidiary or any of their respective directors,officers or employees, or (b) to the knowledge of any Loan Party, any agent of any Loan Party or any of their Subsidiaries that will actin any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Transaction willviolate any Anti-Corruption Law or applicable Sanctions.SECTION 3.13. EEA Financial Institutions. No Loan Party is an EEA Financial Institution.SECTION 3.14. Capitalization and Subsidiaries. Schedule 3.14 sets forth as of the Restatement Effective Date (a) a correct andcomplete list of the name and relationship to the Borrower of each Subsidiary, (b) a true and complete listing of each class of each LoanParties’ (other than the Borrower) authorized Equity Interests, of which all of such issued Equity Interests are validly issued,outstanding, fully paid and non-assessable, and owned beneficially and of record by the Persons identified on Schedule 3.14, and (c)the type of entity of each Loan Party and each of their Subsidiaries. All of the issued and outstanding Equity Interests owned by anyLoan Party have been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued andare fully paid and non-assessable.SECTION 3.15. Employment Matters. As of the Restatement Effective Date, there are no strikes, lockouts or slowdownsagainst any Loan Party or any Subsidiary pending or, to the knowledge of any Loan Party, threatened. The hours worked by andpayments made to employees of the Loan Parties and their Subsidiaries have not been in violation in any material respect of the FairLabor Standards Act or any other applicable federal, state, local or foreign law dealing with such matters.SECTION 3.16. Federal Reserve Regulations. No part of the proceeds of any Loan or Letter of Credit has been used or will beused, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, includingRegulations T, U and X.SECTION 3.17. Use of Proceeds. The proceeds of the Loans and the Letters of Credit will be used as set forth in Section 5.08.SECTION 3.18. Security Interest in Collateral. The provisions of this Agreement and the other Loan Documents create legaland valid Liens on all the Collateral in favor of the Administrative Agent, for the benefit of the Secured Parties, and such Liensconstitute perfected and continuing Liens on the Collateral, securing the Secured Obligations, enforceable against the applicable LoanParty and all third parties, and having priority over all other Liens on the Collateral except in the case of (a) Permitted Encumbrances, tothe extent any such Permitted Encumbrances would have priority over the Liens in favor of the Administrative Agent pursuant to anyapplicable law or agreement and (b) Liens perfected only by possession (including possession of any certificate of title), to the extentthe Administrative Agent has not obtained or does not maintain possession of such Collateral.SECTION 3.19. Plan Assets; Prohibited Transactions. None of the Loan Parties or any of their Subsidiaries is an entity deemedto hold “plan assets” (within the meaning of the Plan Asset Regulations), and neither the execution, delivery nor performance of thetransactions contemplated under this Agreement, including the making of any Loan and the issuance of any Letter of Credit hereunder,will give rise to a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.54730594648.9 16508322ARTICLE IV ConditionsSECTION 4.01. Restatement Effective Date. The obligations of the Lenders to make Loans and of the Issuing Bank to issueLetters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived inaccordance with Section 9.02):(a) Credit Agreement and Loan Documents. The Administrative Agent (or its counsel) shall have received (i) from each partyhereto either (A) a counterpart of this Agreement signed on behalf of such party or (B) written evidence satisfactory to theAdministrative Agent (which may include fax or other electronic transmission of a signed signature page of this Agreement) that suchparty has signed a counterpart of this Agreement and (ii) duly executed copies of the Loan Documents to be executed on theRestatement Effective Date, including any promissory notes requested by a Lender pursuant to Section 2.10 payable to the order ofeach such requesting Lender.(b) Lien Searches. The Administrative Agent shall have received the results of a recent Lien search in the jurisdiction oforganization of each Loan Party and each jurisdiction where assets of the Loan Parties are located, and such search shall reveal no Lienson any of the assets of the Loan Parties except for Liens permitted by Section 6.02 or discharged on or prior to the RestatementEffective Date pursuant to a pay-off letter or other documentation satisfactory to the Administrative Agent.(c) Filings, Registrations and Recordings. Each document (including any Uniform Commercial Code financing statement)required by the Collateral Documents or under law or reasonably requested by the Administrative Agent to be filed, registered orrecorded in order to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a perfected Lien on the Collateraldescribed therein, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 6.02),shall be in proper form for filing, registration or recordation.(d) Pledged Equity Interests; Stock Powers; Pledged Notes. The Administrative Agent shall have received (i) the certificatesrepresenting the Equity Interests required to be pledged pursuant to the Security Agreement on the Restatement Effective Date, togetherwith an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (ii) eachpromissory note (if any) pledged to the Administrative Agent pursuant to the Security Agreement endorsed (without recourse) in blank(or accompanied by an executed transfer form in blank) by the pledgor thereof.(e) Closing Certificates; Certified Certificate of Incorporation; Good Standing Certificates. The Administrative Agent shallhave received (i) a certificate of each Loan Party, dated the Restatement Effective Date and executed by its secretary or assistantsecretary, which shall (A) certify the resolutions of its Board of Directors, members or other body authorizing the execution, deliveryand performance of the Loan Documents to which it is a party, (B) identify by name and title and bear specimen signatures of theofficers of such Loan Party authorized to sign the Loan Documents to which it is a party and, in the case of the Borrower, its FinancialOfficers, and (C) contain appropriate attachments, including the charter, articles or certificate of organization or incorporation of eachLoan Party certified by the relevant authority of the jurisdiction of organization of such Loan Party and a true and correct copy of itsbylaws or operating, management or partnership agreement, or other organizational or governing documents, and (ii) a good standingcertificate for each Loan Party from its jurisdiction of organization.55730594648.9 16508322(f) No Default Certificate. The Administrative Agent shall have received a certificate confirming compliance with theconditions set forth in paragraphs (a) and (b) of Section 4.02 dated the Restatement Effective Date and signed by the president, a vicepresident or a Financial Officer of the Borrower.(g) Legal Opinion. The Administrative Agent shall have received a favorable written opinion (addressed to the AdministrativeAgent and the Lenders and dated the Restatement Effective Date) of Fenwick & West LLP, counsel for the Loan Parties, and coveringsuch other matters relating to the Loan Parties, this Agreement or the Transactions as the Required Lenders shall reasonably request.Each Loan Party hereby requests such counsel to deliver such opinion.(h) Insurance. The Administrative Agent shall have received insurance certificates and endorsements for all insurance of theBorrower and the other Loan Parties as the Administrative Agent shall request naming the Administrative Agent, on behalf of theLenders, as additional insured or lenders loss payee (or similar designation), as applicable, in form, scope and substance satisfactory tothe Administrative Agent, and otherwise in compliance with the terms of Section 5.05 of this Agreement and Section 4.12 of theSecurity Agreement.(i) Fees. The Administrative Agent and Lead Arrangers shall have received all fees and other amounts due and payable on orprior to the Restatement Effective Date, including, to the extent invoiced on or prior to the Restatement Effective Date, reimbursementor payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder.(j) USA PATRIOT Act, Etc. (i) The Administrative Agent shall have received, (x) at least five (5) days prior to the RestatementEffective Date, all documentation and other information regarding the Borrower requested in connection with applicable “know yourcustomer” and anti-money laundering rules and regulations, including the USA PATRIOT Act, to the extent requested in writing of theBorrower at least ten (10) days prior to the Restatement Effective Date, and (y) a properly completed and signed IRS Form W-8 or W-9,as applicable, for each Loan Party, and (ii) to the extent the Borrower qualifies as a “legal entity customer” under the BeneficialOwnership Regulation, at least five (5) days prior to the Restatement Effective Date, any Lender that has requested, in a written noticeto the Borrower at least (10) days prior to the Restatement Effective Date, a Beneficial Ownership Certification in relation to theBorrower shall have received such Beneficial Ownership Certification (provided that, upon the execution and delivery by such Lenderof its signature page to this Agreement, the condition set forth in this clause (ii) shall be deemed to be satisfied).The Administrative Agent shall notify the Borrower and the Lenders of the Restatement Effective Date, and such notice shall beconclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans and of the Issuing Bank to issueLetters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant toSection 9.02) at or prior to 3:00 p.m., New York City time, on December 31, 2018 (and, in the event such conditions are not so satisfiedor waived, the Commitments shall terminate at such time).SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing (otherthan a Borrowing consisting solely of a conversion of Loans of one Type to another Type or a continuation of a Eurodollar Loanfollowing the expiration of the applicable Interest Period), and of the Issuing Bank to issue, amend, renew or extend any Letter ofCredit, is subject to the satisfaction of the following conditions:(a) The representations and warranties of the Loan Parties set forth in the Loan Documents shall be true and correct in allmaterial respects (without duplication of any materiality qualifiers set forth56730594648.9 16508322therein) on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, asapplicable (unless such representation and warranty relates to an earlier date, then such representation and warranty shall be true andcorrect in all material respects (without duplication of any materiality qualifiers set forth therein) as of such earlier date).(b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension ofsuch Letter of Credit, as applicable, no Default shall have occurred and be continuing.Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute arepresentation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.Notwithstanding the failure to satisfy the conditions precedent set forth in paragraphs (a) or (b) of this Section, unless otherwise directedby the Required Lenders, the Administrative Agent may, but shall have no obligation to, continue to make Loans and an Issuing Bankmay, but shall have no obligation to, issue, amend, renew or extend, or cause to be issued, amended, renewed or extended, any Letterof Credit for the ratable account and risk of Lenders from time to time if the Administrative Agent believes that making such Loans orissuing, amending, renewing or extending, or causing the issuance, amendment, renewal or extension of, any such Letter of Credit is inthe best interests of the Lenders.ARTICLE VAffirmative CovenantsUntil the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payablehereunder shall have been paid in full and all Letters of Credit shall have expired or terminated , in each case, without any pendingdraw, and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:SECTION 5.01. Financial Statements; Ratings Change and Other Information. The Borrower will furnish to the AdministrativeAgent and each Lender:(a) within ninety (90) days after the end of each fiscal year of the Borrower, its audited consolidated balance sheet and relatedstatements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case incomparative form the figures for the previous fiscal year, all audited by Ernst & Young LLP or other independent public accountants ofrecognized national standing (without a “going concern” or like qualification commentary or exception and without any qualification orexception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects thefinancial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordancewith GAAP consistently applied, accompanied by any management letter prepared by said accountants;(b) within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, itsconsolidated balance sheet and related statements of operations and cash flows as of the end of and for such fiscal quarter and the thenelapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of(or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presentingfairly in all material respects the financial condition and results of operations of the Borrower57730594648.9 16508322and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-endaudit adjustments and the absence of footnotes;(c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer ofthe Borrower (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and anyaction taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliancewith Section 6.13 and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the auditedfinancial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on thefinancial statements accompanying such certificate;(d) as soon as available, but in any event no later than 100 days following the end of, each fiscal year of the Borrower, a copyof the Borrower’s plan and forecast, in a form consistent with the Borrower’s past practice (the “Projections”);(e) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and othermaterials filed by the Borrower or any Subsidiary with the SEC, or any Governmental Authority succeeding to any or all of thefunctions of said Commission, or with any national securities exchange, or distributed by the Borrower to its shareholders generally, asthe case may be;(f) promptly following any request therefor, such other information regarding the operations, business affairs and financialcondition of the Borrower or any of its Subsidiaries, or compliance with the terms of this Agreement, as the Administrative Agent orany Lender may reasonably request; and(g) promptly following any request therefor, such information and documentation reasonably requested by the AdministrativeAgent or any Lender, and reasonably available to the Borrower, for purposes of compliance with applicable “know your customer” andanti-money laundering rules and regulations, including the USA PATRIOT Act and the Beneficial Ownership Regulation.Information required to be delivered pursuant to Section 5.01(a), 5.01(b) or 5.01(e) shall be deemed to have been delivered if suchinformation, or one or more annual, quarterly or current reports containing such information, shall have been posted by theAdministrative Agent on the Platform, on the website of the SEC at http://www.sec.gov or on the website of the Borrower. Informationrequired to be delivered pursuant to this Section 5.01 may also be delivered by electronic communications pursuant to proceduresapproved by the Administrative Agent. Each Lender shall be solely responsible for timely accessing posted documents and maintainingits copies of such documents.SECTION 5.02. Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender promptwritten notice of a Financial Officer of the Borrower becoming aware of the following:(a) the occurrence of any Default;(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authorityagainst or affecting any Loan Party or any Affiliate thereof that, if adversely determined, could reasonably be expected to result in aMaterial Adverse Effect;(c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, couldreasonably be expected to result in liability of the Loan Parties and their Subsidiaries in an aggregate amount that could reasonably beexpected to result in a Material Adverse Effect; and58730594648.9 16508322(d) any other development that results in, or would reasonably be expected to result in, a Material Adverse Effect.Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of theBorrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken withrespect thereto.SECTION 5.03. Existence; Conduct of Business. The Borrower will, and will cause each of its Subsidiaries to, do or cause tobe done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, GovernmentalAuthorizations, privileges and franchises material to the conduct of its business except where the failure to do so would not reasonablybe expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, Division,liquidation or dissolution permitted under Section 6.03.SECTION 5.04. Payment of Obligations. The Borrower will, and will cause each of its Subsidiaries to, pay its obligations,including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or indefault, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower orsuch Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to makepayment pending such contest would not reasonably be expected to result in a Material Adverse Effect.SECTION 5.05. Maintenance of Properties; Insurance. The Borrower will, and will cause each of its Subsidiaries to, (a) exceptas otherwise permitted pursuant to this Agreement keep and maintain all property material to the conduct of its business in goodworking order and condition, ordinary wear and tear excepted, and (b) maintain, with financially sound and reputable insurancecompanies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same orsimilar businesses operating in the same or similar locations. The Borrower will furnish to the Lenders, upon request of theAdministrative Agent, but no less frequently than annually, information in reasonable detail as to the insurance so maintained.SECTION 5.06. Books and Records; Inspection Rights. The Borrower will, and will cause each of its Subsidiaries to, keepproper books of record and account in which full, true and correct entries in all material respects are made of all dealings andtransactions in relation to its business and activities. The Borrower will, and will cause each of its Subsidiaries to, permit anyrepresentatives designated by the Administrative Agent, upon reasonable prior notice, to visit and inspect its properties, to examine andmake extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants(at which the Borrower shall have the right to be present), all at such reasonable times and as often as reasonably requested (and, ifrequested, any Lender may accompany the Agent on such inspection, which shall be at such Lender’s sole expense unless an Event ofDefault has occurred and is continuing); provided, however, that unless an Event of Default has occurred and is continuing, any suchinspection shall be limited to once in any calendar year.SECTION 5.07. Compliance with Laws. The Borrower will, and will cause each of its Subsidiaries to, comply with all laws,rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so,individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. The Borrower will maintain ineffect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respectivedirectors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.59730594648.9 16508322SECTION 5.08. Use of Proceeds and Letters of Credit. The proceeds of the Loans and the Letters of Credit will be used onlyfor general corporate purposes of the Borrower and its Subsidiaries including working capital, capital expenditures, acquisitions,dividends and share repurchases permitted hereunder. No part of the proceeds of any Loan will be used, whether directly or indirectly,for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X. The Borrower will notrequest any Borrowing or Letter of Credit, and the Borrower shall not use, and shall procure that its Subsidiaries and its or theirrespective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter of Credit (A) in furtheranceof an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person inviolation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction ofor with any Sanctioned Person, or in any Sanctioned Country, to the extent such activities, business or transaction would be prohibitedby Sanctions if conducted by a corporation incorporated in the United States or in a European Union member state, or (C) in anymanner that would result in the violation of any Sanctions applicable to any party hereto.SECTION 5.09. Accuracy of Information. The Borrower will ensure that any written information, including financialstatements or other documents, furnished to the Administrative Agent or the Lenders in connection with this Agreement or anyamendment or modification hereof or waiver hereunder contains no material misstatement of fact or omits to state any material factnecessary to make the statements therein, in the light of the circumstances under which they were made, not materially misleading, andthe furnishing of such information shall be deemed to be a representation and warranty by the Borrower on the date thereof as to thematters specified in this Section 5.09; provided that, with respect to projected financial information, the Borrower will cause suchprojections to be prepared in good faith based upon assumptions believed to be reasonable at the time (it being recognized that suchprojections are not to be viewed as facts and are subject to significant uncertainties and contingencies, which are beyond the Borrower’scontrol, that no assurance can be given that any particular financial projections will be realized, that actual results may differ fromprojected results and that such differences may be material).SECTION 5.10. Additional Collateral; Further Assurances. (23) Subject to applicable law and the Collateral Documents, theBorrower shall cause (x) each Division Successor and (y) each wholly-owned domestic Subsidiary (other than any ExcludedSubsidiary), in each case, formed or acquired after the date of this Agreement in accordance with the terms of this Agreement tobecome a Loan Party by executing one or more joinder agreements (or similar documents) as requested by Administrative Agent. Uponexecution and delivery thereof, each such Person (i) shall become a Loan Guarantor and thereupon shall have all of the rights, benefits,duties, and obligations in such capacity under the Loan Documents and (ii) will grant Liens to the Administrative Agent, for the benefitof the Administrative Agent and the Secured Parties, in any property of such Loan Party which constitutes Collateral.(a) Without limiting the foregoing, the Borrower will, and will cause each Loan Party to, execute and deliver, or cause to beexecuted and delivered, to the Administrative Agent such documents, agreements and instruments, and will take or cause to be takensuch further actions (including the filing and recording of financing statements and other documents and such other actions ordeliveries of the type required by Section 4.01, as applicable, including, without limitation, issuance of legal opinions), which may berequired by law or which the Administrative Agent may, from time to time, reasonably request to carry out the terms and conditions ofthis Agreement and the other Loan Documents and to ensure perfection and priority of the Liens created or intended to be created bythe Collateral Documents, all at the expense of the Borrower. The Borrower will cause (i) 100% of the issued and outstanding EquityInterests of each of its domestic Subsidiaries (other than Excluded Subsidiaries) and (ii) 65% of all issued and outstanding voting EquityInterests and 100% of the issued and outstanding nonvoting Equity Interests (which, for the60730594648.9 16508322avoidance of doubt, is not convertible into voting Equity Interests) of each of its directly-owned foreign Subsidiaries and CFC Holdcos,in each case of clauses (i) and (ii) above, to be subject at all times to a first priority, perfected Lien in favor of the Administrative Agentpursuant to terms in the Loan Documents or as Administrative Agent may reasonably request (provided that this shall not be construedto constitute consent by the Administrative Agent or any of the Lenders to the establishment of any foreign Subsidiaries or theconsummation of any other transaction not expressly permitted by the terms of this Agreement).(b) If any assets which constitute or are required to constitute Collateral are acquired by any Loan Party after the RestatementEffective Date (other than assets constituting Collateral under the Security Agreement that become subject to the Lien in favor of theAdministrative Agent upon acquisition thereof), the Borrower, on behalf of the Loan Parties, will notify the Administrative Agentthereof and cause such assets to be subjected to a Lien securing the Secured Obligations in connection with and at the time ofacquisition thereof and will take, and cause each Loan Party to take, such actions as shall be necessary or reasonably requested by theAdministrative Agent to grant and perfect such Liens, including actions described in Section 5.10(b), all at the expense of the LoanParties. Administrative Agent may determine in its sole discretion whether or not to take any steps with respect to obtaining a securityinterest in or pledge or perfection of any Collateral if it determines that the cost thereof exceeds the practical benefit to the SecuredParties of the security afforded thereby.(c) Each Loan Party agrees that each action required by Section 5.10(a) shall be completed not less than thirty (30) days afterthe formation or acquisition of a Subsidiary (or such longer period of time as designated by the Administrative Agent in its reasonablediscretion).(d) The parties hereto agree that if a Borrower who caused any Equity Interests in its domestic or foreign Subsidiaries to besubject to a first priority, perfected Lien in favor of the Administrative Agent per clauses (b) or (c) above and that Subsidiarysubsequently is transferred in a manner permitted hereunder such that it is no longer a direct subsidiary of the Borrower, the Partiesagree that the Lien on the Equity Interests of such Subsidiary shall be released upon consummation of the transfer.SECTION 5.11. Intellectual Property. (23) The Borrower will, and will cause each of its Subsidiaries to, take all actionsnecessary to maintain and pursue each application, to obtain the relevant registration and to maintain the registration of each of itsPatents, Trademarks and Copyrights (now or hereafter existing), including the filing of applications for renewal, affidavits of use,affidavits of noncontestability and opposition and interference and cancellation proceedings, unless the Borrower shall determine thatsuch Patent, Trademark or Copyright is not material to the conduct of its business or operations or such failures to take such actionscould not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.(a) The Borrower will, and will cause each of its Subsidiaries to promptly sue for infringement, misappropriation or dilutionand to recover any and all damages for such infringement, misappropriation or dilution to protect such Patent, Trademark or Copyright,unless the Borrower shall determine that such Patent, Trademark or Copyright is in no way material to the conduct of its business oroperations or such infringement, misappropriation or dilution could not, individually or in the aggregate, reasonably be expected toresult in a Material Adverse Effect. In the event that the Borrower or such Subsidiary institutes suit because any of its Patents,Trademarks or Copyrights is infringed upon, or misappropriated or diluted by a third party, such Person shall comply with Section 4.7of the Security Agreement.SECTION 5.12. Post-Closing Matters. On or prior to sixty (60) days following the Restatement Effective Date (or such laterdate as the Administrative Agent may agree in its sole discretion), the Borrower61730594648.9 16508322shall cause its wholly-owned Subsidiaries, TypeZero Technologies, Inc., a Delaware corporation (“TypeZero”), and Dex Capital, LLC,a Delaware limited liability company (“Dex Capital”), to become Loan Parties by executing a joinder agreement as requested byAdministrative Agent. Upon execution and delivery thereof, TypeZero and Dex Capital shall each (a) become a Loan Guarantor andthereupon shall have all of the rights, benefits, duties, and obligations in such capacity under the Loan Documents and (b) grant Liensto the Administrative Agent, for the benefit of the Administrative Agent and the Secured Parties, in any property of such Loan Partywhich constitutes Collateral.ARTICLE VI Negative CovenantsUntil the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payablehereunder have been paid in full and all Letters of Credit have expired or terminated, in each case, without any pending draw, and allLC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:SECTION 6.01. Indebtedness. The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume orpermit to exist any Indebtedness, except:(a) (i) Indebtedness created hereunder or (ii) any other Secured Obligations;(b) Indebtedness existing on the date hereof and set forth in Schedule 6.01 and extensions, amendments, refinancings,renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or shorten the finalmaturity or weighted average life to maturity thereof;(c) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the Borrower or any other Subsidiary, providedthat (i) Indebtedness of any Subsidiary that is not a Loan Party to the Borrower or any other Loan Party shall be subject to Section 6.04and (ii) Indebtedness of any Loan Party to any Subsidiary that is not a Loan Party shall be subordinated to the Secured Obligations onterms reasonably satisfactory to the Administrative Agent;(d) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of the Borrower orany other Subsidiary, provided that (i) the Indebtedness so Guaranteed is permitted by this Section 6.01, (ii) Guarantees by theBorrower or any other Loan Party of Indebtedness of any Subsidiary that is not a Loan Party shall be subject to Section 6.04 and (iii)Guarantees permitted under this clause (d) shall be subordinated to the Secured Obligations on the same terms as the Indebtedness soGuaranteed is subordinated to the Secured Obligations;(e) Indebtedness of the Borrower or any Subsidiary incurred to finance the acquisition, construction or improvement of anyfixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of anysuch assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of anysuch Indebtedness that do not increase the outstanding principal amount thereof; provided that (i) such Indebtedness is incurred prior toor within one hundred eighty (180) days after such acquisition or the completion of such construction or improvement and (ii) theaggregate principal amount of Indebtedness permitted by this clause (e) shall not exceed the greater of $180,000,000 and 10% of thetotal consolidated assets of the Borrower and its Subsidiaries at any time outstanding;(f) Indebtedness of the Borrower or any Subsidiary as an account party in respect of trade letters of credit; and62730594648.9 16508322(g) other unsecured Indebtedness of the Borrower or any of its Subsidiaries (including, without limitation, any Indebtednessassumed in connection with an acquisition permitted hereunder), so long as, after giving effect thereto the Borrower is in pro formacompliance with each of the covenants contained in Section 6.13 and no Default or Event of Default shall have occurred and becontinuing.SECTION 6.02. Liens. The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit toexist any Lien on any property or asset (including trademarks, trade names, copyrights, patents and other Intellectual Property) nowowned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of anythereof, except:(a) Permitted Encumbrances;(b) any Lien on any property or asset of the Borrower or any Subsidiary existing on the date hereof and set forth in Schedule6.02; provided that (i) such Lien shall not apply to any other property or asset of the Borrower or any Subsidiary and (ii) such Lien shallsecure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increasethe outstanding principal amount thereof;(c) any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary or existing onany property or asset of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary;provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming aSubsidiary, as the case may be, (ii) such Lien shall not apply to any other property or assets of the Borrower or any Subsidiary and(iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes aSubsidiary, as the case may be and extensions, renewals and replacements thereof that do not increase the outstanding principal amountthereof; and(d) Liens on fixed or capital assets acquired, constructed or improved by the Borrower or any Subsidiary; provided that(i) such security interests secure Indebtedness permitted by clause (e) of Section 6.01, (ii) such security interests and the Indebtednesssecured thereby are incurred prior to or within one hundred eighty (180) days after such acquisition or the completion of suchconstruction or improvement, (iii) the Indebtedness secured thereby does not exceed 80% of the cost of acquiring, constructing orimproving such fixed or capital assets and (iv) such security interests shall not apply to any other property or assets of the Borrower orany Subsidiary.(e) Liens of a collecting bank arising in the ordinary course of business under Section 4-208 of the UCC in effect in therelevant jurisdiction covering only the items being collected upon;(f) Liens granted by a Subsidiary that is not a Loan Party in favor of the Borrower or another Loan Party in respect ofIndebtedness owed by such Subsidiary;(g) Liens, if any, in favor of the Issuing Bank to cash collateralize LC Exposure or otherwise secure the obligations of aDefaulting Lender to fund risk participations hereunder; and(h) financing statements filed under the UCC of any jurisdiction for notice purposes in connection with any operating lease inrespect of the amounts covered by such lease.SECTION 6.03. Fundamental Changes. (23) The Borrower will not, and will not permit any of its Subsidiaries to, merge intoor consolidate with any other Person, or permit any other Person to merge into or consolidate with it, consummate a Division as theDividing Person or sell, transfer, lease or otherwise63730594648.9 16508322dispose of (in one transaction or in a series of transactions) all or any substantial part of its assets, or all or substantially all of the stockof any of its Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the timethereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Subsidiary may merge intothe Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Subsidiary may merge into any Loan Party ina transaction in which the surviving entity is a Loan Party or any Subsidiary that is not a Loan Party may merge into any otherSubsidiary that is not a Loan Party, (iii) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the Borrower or toanother Loan Party and any Subsidiary that is not a Loan Party may sell, transfer, lease or otherwise dispose of its assets to any otherSubsidiary that is not a Loan Party, (iv) any Subsidiary may liquidate or dissolve if the Borrower determines in good faith that suchliquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders; provided that anysuch merger involving a Person that is not a wholly-owned Subsidiary immediately prior to such merger shall not be permitted unlessalso permitted by Section 6.04 and (v) any Subsidiary that is a limited liability company may consummate a Division as the DividingPerson if, immediately upon the consummation of the Division, the assets of the applicable Dividing Person are held by one or moreSubsidiaries at such time so long as, in the case of a Division pursuant to which the Dividing Person is a Guarantor, any suchSubsidiaries which hold such assets upon the consummation of such Division are Guarantors or become Guarantors concurrently withsuch Division.(a) The Borrower will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business otherthan businesses of the type conducted by the Borrower and its Subsidiaries on the Restatement Effective Date and any other businessesreasonably related or otherwise complimentary or similar thereto.SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. The Borrower will not, and will not permit anyof its Subsidiaries to, purchase, hold or acquire (including pursuant to any merger, or as a Division Successor pursuant to the Divisionof, with any Person that was not a wholly owned Subsidiary prior to such merger or Division) any capital stock, evidences ofindebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to existany loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any otherPerson, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting abusiness unit, except:(a) cash or Permitted Investments;(b) investments (other than investments permitted under clauses (a) and (c) of this Section) existing on the RestatementEffective Date and set forth on Schedule 6.04 and any investment that replaces, refinances or refunds any investment made pursuant tothis Section 6.04(b); provided that the amount of any such investment may be increased (x) as required by the terms of such investmentas in existence on the date hereof or (y) as otherwise permitted hereunder;(c) investments by the Borrower existing on the date hereof in the capital stock of its Subsidiaries;(d) (i) loans or advances made by the Borrower to any Loan Party and made by any Loan Party to the Borrower or any otherLoan Party, (ii) loans or advances made by any Subsidiary that is not a Loan Party to the Borrower or any Loan Party or to any non-Loan Party, (iii) loans or advances made by the Borrower or any Loan Party to any foreign Subsidiary, provided that the aggregateamount of such loans or64730594648.9 16508322advances under this clause (iii) shall not exceed $50,000,000 for the fiscal year ending December 31, 2019 and each fiscal year endingthereafter;(e) Guarantees constituting Indebtedness permitted by Section 6.01;(f) other acquisitions, investments, loans or advancements made by the Loan Parties, so long as, after giving effect thereto (i)pro forma Senior Secured Leverage Ratio is less than or equal to (x) 2.00 to 1.00 or (y) if a Senior Secured Leverage Covenant Holidayis then in effect, 2.50 to 1.00, (ii) the Borrower is in pro forma compliance with each of the other covenants contained in Section 6.13,(iii) the Borrower shall have not less than $25,000,000 in the aggregate of (x) Borrowing Availability and (y) unrestricted domesticcash; and (iv) no Default or Event of Default shall have occurred and be continuing;(g) other acquisitions, investments, loans or advancements made by the Loan Parties, so long as, after giving effect thereto (i)the Borrower shall have not less than $350,000,000 in the aggregate of (x) Borrowing Availability and (y) unrestricted domestic cashand (ii) no Default or Event of Default shall have occurred and be continuing;(h) acquisitions or investments made by foreign Subsidiaries that are not Loan Parties in an aggregate amount not to exceed inany fiscal year the greater of (x) $90,000,000 in the aggregate, net of any returns on such investment to such foreign Subsidiary and (y)5% of the total consolidated assets of the Borrower and its Subsidiaries at any time outstanding;(i) notes payable, or stock or other securities issued by an account debtor to the Borrower or any Subsidiary pursuant tonegotiated agreements with respect to settlement of such account debtor’s accounts in the ordinary course of business, consistent withpast practices;(j) investments in the form of Swap Agreements permitted by Section 6.05;(k) investments of any Person existing at the time such Person becomes a Subsidiary of the Borrower or consolidates ormerges with the Borrower or any of the Subsidiaries so long as such investments were not made in contemplation of such Personbecoming a Subsidiary or of such merger;(l) investments constituting deposits described in clauses (c) and (d) of the definition of the term “Permitted Encumbrances”;(m) advances or extensions of credit to officers, directors and employees of the Borrower or any Subsidiaries made in theordinary course of business and consistent with past practices for travel, entertainment, relocation and similar purposes up to amaximum of $10,000,000 in the aggregate at any one time outstanding;(n) investments consisting of extensions of credit in the nature of accounts or notes receivable arising from the grant of tradecredit in the ordinary course of business, and investments received in satisfaction or partial satisfaction thereof from financially troubledaccount debtors to the extent reasonably necessary in order to prevent or limit loss; and(o) investments in the form of Indebtedness of, or equity interests in, foreign Subsidiaries that are not Loan Partiesrepresenting consideration for licenses to any rights to Intellectual Property outside of the United States so long as the Loan Partylicensing such Intellectual Property retains ownership of such Intellectual Property, provided that the Borrower determine in good faiththat any such license has been effected for fair value.65730594648.9 16508322SECTION 6.05. Swap Agreements. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any SwapAgreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which the Borrower or any Subsidiary has actualexposure (other than those in respect of Equity Interests of the Borrower or any of its Subsidiaries), (b) Swap Agreements entered intoin order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate orotherwise) with respect to any interest-bearing liability or investment of the Borrower or any Subsidiary and (c) the 2018 Call Spread.SECTION 6.06. Restricted Payments; Certain Payments of Indebtedness.(a) The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly orindirectly, any Restricted Payment, except (i) the Borrower may declare and pay dividends with respect to its Equity Interests payablesolely in additional shares of its common stock, (ii) Subsidiaries of the Borrower may declare and pay dividends ratably with respect totheir Equity Interests, (iii) the Borrower may make Restricted Payments pursuant to and in accordance with stock option plans or otherbenefit plans for management, directors or employees of the Borrower and its Subsidiaries, (iv) other Restricted Payments not to exceed$50,000,000 in the aggregate during any four consecutive fiscal quarters so long as after giving effect thereto (x) the Borrower shallhave not less than $25,000,000 of Liquidity and (y) no Default or Event of Default shall have occurred and be continuing, (v) any otherRestricted Payments so long as after giving effect thereto (w) the pro forma Total Leverage Ratio is less than or equal to 1.75 to 1.00,(x) the Borrower is in pro forma compliance with each of the covenants contained in Section 6.13, (y) the Borrower shall have not lessthan $25,000,000 of Liquidity and (z) no Default or Event of Default shall have occurred and be continuing, and (vi) any otherRestricted Payments so long as after giving effect thereto (x) the Borrower shall have not less than $350,000,000 of Liquidity, (y) theBorrower is in pro forma compliance with each of the covenants contained in Section 6.13, and (z) no Default or Event of Default shallhave occurred and be continuing; provided, however, that this Section 6.06 shall not prohibit the repurchase of Equity Interestspursuant to any accelerated stock repurchase or similar agreement so long as any payment made by the Borrower with respect to suchrepurchase is permitted under this Section 6.06(a) (without regard to this proviso) at the time of such payment.(b) The Borrower will not, nor will it permit any Subsidiary to, pay or make, directly or indirectly, any cash payment ofprincipal of any of the Convertible Notes, or any cash payment on account of the purchase, redemption, settlement on conversion,retirement, acquisition, cancellation or termination of any such Indebtedness, unless (i) the Borrower is in pro forma compliance witheach of the covenants contained in Section 6.13, (ii) the Borrower shall have not less than $100,000,000 of Liquidity on a pro formabasis, (iii) no Default or Event of Default shall have occurred and be continuing, in each case of clauses (i), (ii) and (iii), on the date ofsuch payment and giving effect thereto and (iv) in the case of redemption, the Borrower shall deliver to the Administrative Agent acertificate of a Financial Officer to effect that the Borrower is in compliance with the conditions set forth in clauses (i), (ii) and (iii) ofthis Section 6.06(b); provided that for the avoidance of doubt, this Section 6.06(b) shall not restrict (x) the payment of interest(including any additional interest payable upon specified events) on the Convertible Notes or (y) the settlement of conversion ofConvertible Notes for securities, other property (excluding cash) or a combination thereof); provided further that clause (ii) of thisSection 6.06(b) shall not apply in the case of any settlement on conversion for cash.SECTION 6.07. Transactions with Affiliates. The Borrower will not, and will not permit any of its Subsidiaries to, sell, lease orotherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage inany other transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions notless favorable to the66730594648.9 16508322Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between oramong the Borrower and its wholly-owned Subsidiaries not involving any other Affiliate, excluding any transfer or other disposition ofIntellectual Property rights of any Loan Party or any of their United States Subsidiaries which are material to the ongoing business of theLoan Parties and their Subsidiaries, taken as a whole, provided that licenses of such Intellectual Property shall be permitted so long asthe Loan Party or United States Subsidiary licensing such Intellectual Property retains ownership thereof, and (c) any RestrictedPayment permitted by Section 6.06.SECTION 6.08. Restrictive Agreements. The Borrower will not, and will not permit any of its Subsidiaries to, directly orindirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon(a) the ability of any Loan Party or any of their Subsidiaries to create, incur or permit to exist any Lien of the Administrative Agent orany Secured Party upon any of its property or assets, or (b) the ability of any Subsidiary of a Loan Party to pay dividends or otherdistributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other LoanParty or to Guarantee Indebtedness of the Borrower or any other Loan Party; provided that (i) the foregoing shall not apply torestrictions and conditions imposed by any Requirement of Law or by any Loan Document, (ii) the foregoing shall not apply torestrictions and conditions existing on the date hereof identified on Schedule 6.08 (but shall apply to any extension or renewal of, orany amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply tocustomary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided that suchrestrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause (a) of theforegoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by thisAgreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness and (v) clause (a) of theforegoing shall not apply to customary provisions in leases restricting the assignment thereof.SECTION 6.09. Sale and Leaseback Transactions. The Borrower will not, and will not permit any of its Subsidiaries to, enterinto any arrangement, directly or indirectly, whereby it shall sell or transfer any property, real or personal, used or useful in its business,whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use forsubstantially the same purpose or purposes as the property sold or transferred (a “Sale and Leaseback Transaction”). For the avoidanceof doubt, customary “build to suit” transactions do not constitute a Sale and Leaseback Transaction hereunder.SECTION 6.10. Amendment of Material Documents. The Borrower will not, and will not permit any of its Subsidiaries to,amend, modify or waive any of its rights under (a) any agreement relating to any Subordinated Indebtedness, or (b) its charter, articlesor certificate of organization or incorporation and bylaws or operating, management or partnership agreement, or other organizationalor governing documents, to the extent any such amendment, modification or waiver would be adverse to the Administrative Agent orthe Lenders.SECTION 6.11. Fiscal Year. The Borrower will not, and will not permit any of its Subsidiaries to, change its fiscal year to endon any date other than December 31 of each year.SECTION 6.12. Anti-Corruption Laws and Sanctions. The Borrower will not, and will not permit any of its Subsidiaries to, failto maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and theirrespective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.67730594648.9 16508322SECTION 6.13. Financial Covenants.(a) Minimum Interest Coverage Ratio. The Borrower will not permit the Interest Coverage Ratio, for any period of fourconsecutive fiscal quarters ending on the last day of any fiscal quarter (commencing with the fiscal quarter ending December 31, 2018)to be less than 4.00 to 1.00.(b) Maximum Senior Secured Leverage Ratio. The Borrower will not permit the Senior Secured Leverage Ratio, on the lastday of any fiscal quarter (commencing with the fiscal quarter ending December 31, 2018) to be greater than 2.00 to 1.00.Notwithstanding the foregoing, in the event that the Borrower and/or one or more of its Subsidiaries makes an acquisition which ispermitted hereunder with a total purchase price greater than $150,000,000 during the fiscal quarter then most recently ended, themaximum Senior Secured Leverage Ratio may be increased at the election of the Borrower to 2.50 to 1.00 for such fiscal quarter andfor each of the three (3) subsequent fiscal quarters (a “Senior Secured Leverage Covenant Holiday”); provided however, the Borrowershall not be permitted to elect an additional Senior Secured Leverage Covenant Holiday until the Senior Secured Leverage Ratio hasreturned, after the Senior Secured Leverage Covenant Holiday, to a ratio of less than or equal to 2.00 to 1.00 for a period of four (4) fullfiscal quarters.ARTICLE VIIEvents of DefaultIf any of the following events (“Events of Default”) shall occur:(a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LCDisbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepaymentthereof or otherwise;(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to inclause (a) of this Article) payable under this Agreement or any other Loan Document, when and as the same shall become due andpayable, and such failure shall continue unremedied for a period of three (3) Business Days;(c) any representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or inconnection with this Agreement, any other Loan Document, or any amendment or modification hereof or thereof or waiver hereunderor thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with thisAgreement, any other Loan Document, or any amendment or modification hereof or thereof or waiver hereunder or thereunder, shallprove to have been incorrect in any material respect when made or deemed made;(d) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02, 5.03 (withrespect to the Borrower’s existence), 5.08, 5.12 or in Article VI;(e) the Borrower or any other Loan Party shall fail to observe or perform any covenant, condition or agreement contained inthis Agreement (other than those specified in clause (a), (b) or (d) of this Article) or any other Loan Document, and such failure shallcontinue unremedied for a period of thirty (30) days after notice thereof from the Administrative Agent to the Borrower (which noticewill be given at the request of any Lender);68730594648.9 16508322(f) any Loan Party or any of their Subsidiaries shall fail to make a principal payment in respect of any Material Indebtedness,when and as the same shall become due and payable (other than earn-out obligations to the extent such obligations are being contestedin good faith and adequate reserves are maintained with respect thereto to the extent required by GAAP), after giving effect to anyapplicable grace or cure period;(g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity orthat enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any MaterialIndebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require theprepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not applyto (i) secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing suchIndebtedness, (ii) any event or condition that gives a holder the right to convert any Convertible Note (other than an event of defaultunder the Convertible Notes), (iii) any conversion of the Convertible Notes (and the settlement thereof, whether in securities, otherproperty (excluding cash) or a combination thereof) or (iv) any purchase, redemption, retirement, settlement on conversion for cash,acquisition, cancellation or termination of any Convertible Notes that is permitted by Section 6.06(b);(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation,reorganization or other relief in respect of any Loan Party or any of their Subsidiaries or their debts, or of a substantial part of its assets,under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointmentof a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or any of their Subsidiaries or for asubstantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or anorder or decree approving or ordering any of the foregoing shall be entered;(i) any Loan Party or any of their Subsidiaries shall (i) voluntarily commence any proceeding or file any petition seekingliquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now orhereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petitiondescribed in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator,conservator or similar official for any Loan Party or any of their Subsidiaries or for a substantial part of their assets, (iv) file an answeradmitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit ofcreditors or (vi) take any action for the purpose of effecting any of the foregoing;(j) any Loan Party or any of their Subsidiaries shall become unable, admit in writing its inability or fail generally to pay itsdebts as they become due;(k) one or more judgments for the payment of money in an aggregate amount in excess of $25,000,000 (except to the extentcovered by insurance) shall be rendered against any Loan Party, any of their Subsidiaries or any combination thereof and the same shallremain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any actionshall be legally taken by a judgment creditor to attach or levy upon any assets of any Loan Party or any of their Subsidiaries to enforceany such judgment;(l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all otherERISA Events that have occurred, could reasonably be expected to result in69730594648.9 16508322liability of any Loan Party or any of their Subsidiaries in an aggregate amount that could reasonably be expected to result in a MaterialAdverse Effect;(m) a Change in Control shall occur;(n) except for expiration, termination or release in accordance with its terms, (i) the Loan Guaranty or any ObligationGuaranty shall fail to remain in full force or effect or (ii) any action shall be taken to discontinue or to assert the invalidity orunenforceability of the Loan Guaranty or any Obligation Guaranty, or any Guarantor shall deny in writing to the Administrative Agentthat it has any further liability under the Loan Guaranty or any Obligation Guaranty to which it is a party;(o) except as permitted by the terms of any Loan Document, (i) any Collateral Document shall for any reason fail to create avalid security interest in any Collateral purported to be covered thereby, or (ii) any Lien securing any Secured Obligation shall cease tobe a perfected, first priority Lien;(p) except for expiration, termination or release in accordance with its terms, any Collateral Document shall fail to remain infull force or effect or any action shall be taken by any Loan Party or any of their Subsidiaries to discontinue or to assert the invalidity orunenforceability of any Collateral Document; or(q) any material provision of any Loan Document for any reason ceases to be valid, binding and enforceable (except solely asa result of applicable law) in accordance with its terms (or any Loan Party shall challenge the enforceability of any Loan Document orshall assert in writing that any material provision of any of the Loan Documents has ceased to be or otherwise is not valid, binding andenforceable in accordance with its terms);then, and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of this Article), and at anytime thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall,by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments(including the Letter of Credit Commitments), and thereupon the Commitments shall terminate immediately, (ii) declare the Loans thenoutstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable maythereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, togetherwith accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payableimmediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower, and(iii) require cash collateral for the LC Exposure in accordance with Section 2.06(j); and in case of any event with respect to theBorrower described in clause (h) or (i) of this Article, the Commitments shall automatically terminate and the principal of the Loansthen outstanding and cash collateral for the LC Exposure, together with accrued interest thereon and all fees and other obligations of theBorrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of anykind, all of which are hereby waived by the Borrower.In addition to any other rights and remedies granted to the Administrative Agent and the Lenders in the Loan Documents, theAdministrative Agent on behalf of the Lenders may exercise all rights and remedies of a secured party under the New York UniformCommercial Code or any other applicable law.70730594648.9 16508322ARTICLE VIII The Administrative Agent; Credit BiddingSECTION 8.01. The Administrative Agent.(a) Each Lender, on behalf of itself and any of its Affiliates that are Secured Parties and each Issuing Bank hereby irrevocablyappoints the entity named as Administrative Agent in the heading of this Agreement and its successors and assigns to serve as theadministrative agent and collateral agent under the Loan Documents and each Lender and each Issuing Bank authorizes theAdministrative Agent to take such actions as agent on its behalf and to exercise such powers under this Agreement and the other LoanDocuments as are delegated to the Administrative Agent under such agreements and to exercise such powers as are reasonablyincidental thereto. In addition, to the extent required under the laws of any jurisdiction other than within the United States, each Lenderand each Issuing Bank hereby grants to the Administrative Agent any required powers of attorney to execute and enforce any CollateralDocument governed by the laws of such jurisdiction on such Lender’s or such Issuing Bank’s behalf. Without limiting the foregoing,each Lender and each Issuing Bank hereby authorizes the Administrative Agent to execute and deliver, and to perform its obligationsunder, each of the Loan Documents to which the Administrative Agent is a party, and to exercise all rights, powers and remedies thatthe Administrative Agent may have under such Loan Documents(b) As to any matters not expressly provided for herein and in the other Loan Documents (including enforcement orcollection), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or torefrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written instructions of the RequiredLenders (or such other number or percentage of the Lenders as shall be necessary, pursuant to the terms in the Loan Documents), and,unless and until revoked in writing, such instructions shall be binding upon each Lender and each Issuing Bank; provided, however,that the Administrative Agent shall not be required to take any action that (i) the Administrative Agent in good faith believes exposes itto liability unless the Administrative Agent receives an indemnification and is exculpated in a manner satisfactory to it from the Lendersand the Issuing Banks with respect to such action or (ii) is contrary to this Agreement or any other Loan Document or applicable law,including any action that may be in violation of the automatic stay under any requirement of law relating to bankruptcy, insolvency orreorganization or relief of debtors or that may effect a forfeiture, modification or termination of property of a Defaulting Lender inviolation of any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors; provided, further, that theAdministrative Agent may seek clarification or direction from the Required Lenders prior to the exercise of any such instructed actionand may refrain from acting until such clarification or direction has been provided. Except as expressly set forth in the LoanDocuments, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, anyinformation relating to the Borrower, any other Loan Party, any Subsidiary or any Affiliate of any of the foregoing that iscommunicated to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity. Nothing in thisAgreement shall require the Administrative Agent to expend or risk its own funds or otherwise incur any financial liability in theperformance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds forbelieving that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.(c) In performing its functions and duties hereunder and under the other Loan Documents, the Administrative Agent is actingsolely on behalf of the Lenders and the Issuing Banks (except in limited circumstances expressly provided for herein relating to themaintenance of the Register), and its duties are entirely mechanical and administrative in nature. Without limiting the generality of theforegoing:71730594648.9 16508322(i) the Administrative Agent does not assume and shall not be deemed to have assumed any obligation or duty or anyother relationship as the agent, fiduciary or trustee of or for any Lender, Issuing Bank, any other Secured Party or holder of anyother obligation other than as expressly set forth herein and in the other Loan Documents, regardless of whether a Default or anEvent of Default has occurred and is continuing (and it is understood and agreed that the use of the term “agent” (or any similarterm) herein or in any other Loan Document with reference to the Administrative Agent is not intended to connote any fiduciaryduty or other implied (or express) obligations arising under agency doctrine of any applicable law, and that such term is used asa matter of market custom and is intended to create or reflect only an administrative relationship between contracting parties);additionally, each Lender agrees that it will not assert any claim against the Administrative Agent based on an alleged breach offiduciary duty by the Administrative Agent in connection with this Agreement and/or the transactions contemplated hereby;(ii) where the Administrative Agent is required or deemed to act as a trustee in respect of any Collateral over which asecurity interest has been created pursuant to a Loan Document expressed to be governed by the laws of the United States ofAmerica , or is required or deemed to hold any Collateral “on trust” pursuant to the foregoing, the obligations and liabilities ofthe Administrative Agent to the Secured Parties in its capacity as trustee shall be excluded to the fullest extent permitted byapplicable law;(iii) to the extent that English law is applicable to the duties of the Administrative Agent under any of the LoanDocuments, Section 1 of the Trustee Act 2000 of the United Kingdom shall not apply to the duties of the Administrative Agentin relation to the trusts constituted by that Loan Document; where there are inconsistencies between the Trustee Act 1925 or theTrustee Act 2000 of the United Kingdom and the provisions of this Agreement or such Loan Document, the provisions of thisAgreement shall, to the extent permitted by applicable law, prevail and, in the case of any inconsistency with the Trustee Act2000 of the United Kingdom, the provisions of this Agreement shall constitute a restriction or exclusion for the purposes of thatAct; and(iv) nothing in this Agreement or any Loan Document shall require the Administrative Agent to account to any Lenderfor any sum or the profit element of any sum received by the Administrative Agent for its own account;(d) The Administrative Agent may perform any of its duties and exercise its rights and powers hereunder or under any otherLoan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and anysuch sub-agent may perform any of their respective duties and exercise their respective rights and powers through their respectiveRelated Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of theAdministrative Agent and any such sub-agent, and shall apply to their respective activities pursuant to this Agreement. TheAdministrative Agent shall not be responsible for the negligence or misconduct of any sub-agent except to the extent that a court ofcompetent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent acted with gross negligence orwillful misconduct in the selection of such sub-agent.(e) None of any Syndication Agent, or any Arranger shall have obligations or duties whatsoever in such capacity under thisAgreement or any other Loan Document and shall incur no liability hereunder or thereunder in such capacity, but all such persons shallhave the benefit of the indemnities provided for hereunder.72730594648.9 16508322(f) In case of the pendency of any proceeding with respect to any Loan Party under any federal, state or foreign bankruptcy,insolvency, receivership or similar law now or hereafter in effect, the Administrative Agent (irrespective of whether the principal of anyLoan or any reimbursement obligation in respect of any LC Disbursement shall then be due and payable as herein expressed or bydeclaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall beentitled and empowered (but not obligated) by intervention in such proceeding or otherwise:(i) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of theLoans, LC Disbursements and all other Obligations that are owing and unpaid and to file such other documents as may benecessary or advisable in order to have the claims of the Lenders, the Issuing Banks and the Administrative Agent (includingany claim under Sections 2.12, 2.13, 2.15, 2.17 and 9.03) allowed in such judicial proceeding; and(ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute thesame;and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is herebyauthorized by each Lender, each Issuing Bank and each other Secured Party to make such payments to the Administrative Agent and,in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, the Issuing Banks orthe other Secured Parties, to pay to the Administrative Agent any amount due to it, in its capacity as the Administrative Agent, under theLoan Documents (including under Section 9.03). Nothing contained herein shall be deemed to authorize the Administrative Agent toauthorize or consent to or accept or adopt on behalf of any Lender or Issuing Bank any plan of reorganization, arrangement, adjustmentor composition affecting the Obligations or the rights of any Lender or Issuing Bank or to authorize the Administrative Agent to vote inrespect of the claim of any Lender or Issuing Bank in any such proceeding.(g) The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Banks,and, except solely to the extent of the Borrower’s rights to consent pursuant to and subject to the conditions set forth in this Article,none of the Borrower or any Subsidiary, or any of their respective Affiliates, shall have any rights as a third party beneficiary under anysuch provisions. Each Secured Party, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateraland of the Guarantees of the Secured Obligations provided under the Loan Documents, to have agreed to the provisions of this Article.SECTION 8.02. Administrative Agent’s Reliance, Indemnification, Etc.(a) Neither the Administrative Agent nor any of its Related Parties shall be (i) liable for any action taken or omitted to be takenby such party, the Administrative Agent or any of its Related Parties under or in connection with this Agreement or the other LoanDocuments (x) with the consent of or at the request of the Required Lenders (or such other number or percentage of the Lenders asshall be necessary, or as the Administrative Agent shall believe in good faith to be necessary, under the circumstances as provided inthe Loan Documents) or (y) in the absence of its own gross negligence or willful misconduct (such absence to be presumed unlessotherwise determined by a court of competent jurisdiction by a final and non-appealable judgment) or (ii) responsible in any manner toany of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained inthis Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, orreceived by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or73730594648.9 16508322for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or forany failure of any Loan Party to perform its obligations hereunder or thereunder.(b) The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof(stating that it is a “notice of default”) is given to the Administrative Agent by the Borrower, a Lender or an Issuing Bank, and theAdministrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty orrepresentation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other documentdelivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other termsor conditions set forth in any Loan Document or the occurrence of any Default, (iv) the sufficiency, validity, enforceability,effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, (v) the satisfaction of anycondition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items (which on their face purportto be such items) expressly required to be delivered to the Administrative Agent or satisfaction of any condition that expressly refers tothe matters described therein being acceptable or satisfactory to the Administrative Agent, or (vi) the creation, perfection or priority ofLiens on the Collateral. Notwithstanding anything herein to the contrary, the Administrative Agent shall not be liable for, or beresponsible for any claim, liability, loss, cost or expense suffered by the Borrower, any other Loan Party, any Subsidiary, any Lender orany Issuing Bank as a result of, any determination of the Revolving Exposure, any of the component amounts thereof or any portionthereof attributable to each Lender or Issuing Bank, or any Exchange Rate or Dollar Equivalent, except to the extent that a court ofcompetent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent acted with gross negligence orwillful misconduct in making such determination.(c) Without limiting the foregoing, the Administrative Agent (i) may treat the payee of any promissory note as its holder untilsuch promissory note has been assigned in accordance with Section 9.04, (ii) may rely on the Register to the extent set forth in Section9.04(b), (iii) may consult with legal counsel (including counsel to the Borrower), independent public accountants and other expertsselected by it, and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice ofsuch counsel, accountants or experts, (iv) makes no warranty or representation to any Lender or Issuing Bank and shall not beresponsible to any Lender or Issuing Bank for any statements, warranties or representations made by or on behalf of any Loan Party inconnection with this Agreement or any other Loan Document, (v) in determining compliance with any condition hereunder to themaking of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an IssuingBank, may presume that such condition is satisfactory to such Lender or Issuing Bank unless the Administrative Agent shall havereceived notice to the contrary from such Lender or Issuing Bank sufficiently in advance of the making of such Loan or the issuance ofsuch Letter of Credit and (vi) shall be entitled to rely on, and shall incur no liability under or in respect of this Agreement or any otherLoan Document by acting upon, any notice, consent, certificate or other instrument or writing (which writing may be a fax, anyelectronic message, Internet or intranet website posting or other distribution) or any statement made to it orally or by telephone andbelieved by it to be genuine and signed or sent or otherwise authenticated by the proper party or parties (whether or not such Person infact meets the requirements set forth in the Loan Documents for being the maker thereof).SECTION 8.03. Posting of Communications.(a) The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make any Communicationsavailable to the Lenders and the Issuing Banks by posting the Communications on IntraLinks™, DebtDomain, SyndTrak, ClearPar orany other electronic system chosen by the Administrative Agent to be its electronic transmission system (the “Approved ElectronicPlatform”).74730594648.9 16508322(b) Although the Approved Electronic Platform and its primary web portal are secured with generally-applicable securityprocedures and policies implemented or modified by the Administrative Agent from time to time (including, as of the RestatementEffective Date, a user ID/password authorization system) and the Approved Electronic Platform is secured through a per-dealauthorization method whereby each user may access the Approved Electronic Platform only on a deal-by-deal basis, each of theLenders, each of the Issuing Banks and the Borrower acknowledges and agrees that the distribution of material through an electronicmedium is not necessarily secure, that the Administrative Agent is not responsible for approving or vetting the representatives orcontacts of any Lender that are added to the Approved Electronic Platform, and that there may be confidentiality and other risksassociated with such distribution. Each of the Lenders, each of the Issuing Banks and the Borrower hereby approves distribution of theCommunications through the Approved Electronic Platform and understands and assumes the risks of such distribution.(c) THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS ARE PROVIDED “AS IS” AND “ASAVAILABLE”. THE APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY ORCOMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE APPROVED ELECTRONIC PLATFORM ANDEXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC PLATFORM AND THECOMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTYOF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS ORFREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE APPLICABLE PARTIES IN CONNECTION WITHTHE COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVEAGENT, ANY ARRANGER, ANY SYNDICATION AGENT OR ANY OF THEIR RESPECTIVE RELATED PARTIES(COLLECTIVELY, “APPLICABLE PARTIES”) HAVE ANY LIABILITY TO ANY LOAN PARTY, ANY LENDER, ANY ISSUINGBANK OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL,INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE)ARISING OUT OF ANY LOAN PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONSTHROUGH THE INTERNET OR THE APPROVED ELECTRONIC PLATFORM.“Communications” means, collectively, any notice, demand, communication, information, document or other material provided by oron behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein which is distributed by theAdministrative Agent, any Lender or any Issuing Bank by means of electronic communications pursuant to this Section, includingthrough an Approved Electronic Platform.(d) Each Lender and each Issuing Bank agrees that notice to it (as provided in the next sentence) specifying thatCommunications have been posted to the Approved Electronic Platform shall constitute effective delivery of the Communications tosuch Lender for purposes of the Loan Documents. Each Lender and Issuing Bank agrees (i) to notify the Administrative Agent inwriting (which could be in the form of electronic communication) from time to time of such Lender’s or Issuing Bank’s (as applicable)email address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent tosuch email address.(e) Each of the Lenders, each of the Issuing Banks and the Borrower agrees that the Administrative Agent may, but (except asmay be required by applicable law) shall not be obligated to, store the Communications on the Approved Electronic Platform inaccordance with the Administrative Agent’s generally applicable document retention procedures and policies.75730594648.9 16508322(f) Nothing herein shall prejudice the right of the Administrative Agent, any Lender or any Issuing Bank to give any notice orother communication pursuant to any Loan Document in any other manner specified in such Loan Document.SECTION 8.04. The Administrative Agent Individually. With respect to its Commitment, Loans and Letters of Credit, thePerson serving as the Administrative Agent shall have and may exercise the same rights and powers hereunder and is subject to thesame obligations and liabilities as and to the extent set forth herein for any other Lender or Issuing Bank, as the case may be. The terms“Issuing Banks”, “Lenders”, “Required Lenders” and any similar terms shall, unless the context clearly otherwise indicates, include theAdministrative Agent in its individual capacity as a Lender, Issuing Bank or as one of the Required Lenders, as applicable. The Personserving as the Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, act as the financialadvisor or in any other advisory capacity for and generally engage in any kind of banking, trust or other business with, any Loan Party,any Subsidiary or any Affiliate of any of the foregoing as if such Person was not acting as the Administrative Agent and without anyduty to account therefor to the Lenders or the Issuing Banks.SECTION 8.05. Successor Administrative Agent.(a) The Administrative Agent may resign at any time by giving 30 days’ prior written notice thereof to the Lenders, theIssuing Banks and the Borrower, whether or not a successor Administrative Agent has been appointed. Upon any such resignation, theRequired Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall havebeen so appointed by the Required Lenders, and shall have accepted such appointment, within thirty (30) days after the retiringAdministrative Agent’s giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders and theIssuing Banks, appoint a successor Administrative Agent, which shall be a bank with an office in New York, New York or an Affiliateof any such bank. In either case, such appointment shall be subject to the prior written approval of the Borrower (which approval maynot be unreasonably withheld and shall not be required while an Event of Default has occurred and is continuing). Upon the acceptanceof any appointment as Administrative Agent by a successor Administrative Agent, such successor Administrative Agent shall succeedto, and become vested with, all the rights, powers, privileges and duties of the retiring Administrative Agent. Upon the acceptance ofappointment as Administrative Agent by a successor Administrative Agent, the retiring Administrative Agent shall be discharged fromits duties and obligations under this Agreement and the other Loan Documents. Prior to any retiring Administrative Agent’s resignationhereunder as Administrative Agent, the retiring Administrative Agent shall take such action as may be reasonably necessary to assign tothe successor Administrative Agent its rights as Administrative Agent under the Loan Documents.(b) Notwithstanding paragraph (a) of this Section, in the event no successor Administrative Agent shall have been soappointed and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of itsintent to resign, the retiring Administrative Agent may give notice of the effectiveness of its resignation to the Lenders, the IssuingBanks and the Borrower, whereupon, on the date of effectiveness of such resignation stated in such notice, (i) the retiringAdministrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents; provided that,solely for purposes of maintaining any security interest granted to the Administrative Agent under any Collateral Document for thebenefit of the Secured Parties, the retiring Administrative Agent shall continue to be vested with such security interest as collateral agentfor the benefit of the Secured Parties, and continue to be entitled to the rights set forth in such Collateral Document and LoanDocument, and, in the case of any Collateral in the possession of the Administrative Agent, shall continue to hold such Collateral, ineach case until such time as a successor Administrative Agent is appointed and accepts such appointment76730594648.9 16508322in accordance with this Section (it being understood and agreed that the retiring Administrative Agent shall have no duty or obligationto take any further action under any Security Document, including any action required to maintain the perfection of any such securityinterest), and (ii) the Required Lenders shall succeed to and become vested with all the rights, powers, privileges and duties of theretiring Administrative Agent; provided that (A) all payments required to be made hereunder or under any other Loan Document to theAdministrative Agent for the account of any Person other than the Administrative Agent shall be made directly to such Person and (B)all notices and other communications required or contemplated to be given or made to the Administrative Agent shall directly be givenor made to each Lender and each Issuing Bank. Following the effectiveness of the Administrative Agent’s resignation from its capacityas such, the provisions of this Article, Section 2.17(d) and Section 9.03, as well as any exculpatory, reimbursement and indemnificationprovisions set forth in any other Loan Document, shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiringAdministrative Agent was acting as Administrative Agent and in respect of the matters referred to in the proviso under clause (a) above.SECTION 8.06. Acknowledgements of Lenders and Issuing Banks.(a) Each Lender represents that it is engaged in making, acquiring or holding commercial loans in the ordinary course of itsbusiness and that it has, independently and without reliance upon the Administrative Agent, any Arranger, any Syndication Agent, orany other Lender, or any of the Related Parties of any of the foregoing, and based on such documents and information as it has deemedappropriate, made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loanshereunder. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, anyArranger, any Syndication Agent, or any other Lender, or any of the Related Parties of any of the foregoing, and based on suchdocuments and information (which may contain material, non-public information within the meaning of the United States securitieslaws concerning the Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions intaking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any documentfurnished hereunder or thereunder.(b) Each Lender, by delivering its signature page to this Agreement on the Restatement Effective Date, or delivering itssignature page to an Assignment and Assumption or any other Loan Document pursuant to which it shall become a Lender hereunder,shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other documentrequired to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Lenders on the Restatement EffectiveDate or the effective date of any such Assignment and Assumption or any other Loan document pursuant to which it shall have becomea Lender hereunder.(c) Each Lender hereby agrees that (i) it has requested a copy of each Report prepared by or on behalf of the AdministrativeAgent; (ii) the Administrative Agent (A) makes no representation or warranty, express or implied, as to the completeness or accuracy ofany Report or any of the information contained therein or any inaccuracy or omission contained in or relating to a Report and (B) shallnot be liable for any information contained in any Report; (iii) the Reports are not comprehensive audits or examinations, and that anyPerson performing any field examination will inspect only specific information regarding the Loan Parties and will rely significantlyupon the Loan Parties’ books and records, as well as on representations of the Loan Parties’ personnel and that the AdministrativeAgent undertakes no obligation to update, correct or supplement the Reports; (iv) it will keep all Reports confidential and strictly for itsinternal use, not share the Report with any Loan Party or any other Person except as otherwise permitted pursuant to this Agreement;and (v) without limiting the generality of any other indemnification provision contained in this Agreement,77730594648.9 16508322(A) it will hold the Administrative Agent and any such other Person preparing a Report harmless from any action the indemnifyingLender may take or conclusion the indemnifying Lender may reach or draw from any Report in connection with any extension of creditthat the indemnifying Lender has made or may make to the Borrower, or the indemnifying Lender’s participation in, or theindemnifying Lender’s purchase of, a Loan or Loans; and (B) it will pay and protect, and indemnify, defend, and hold theAdministrative Agent and any such other Person preparing a Report harmless from and against, the claims, actions, proceedings,damages, costs, expenses, and other amounts (including reasonable attorneys’ fees) incurred by the Administrative Agent or any suchother Person as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifyingLender.SECTION 8.07. Collateral Matters.(a) Except with respect to the exercise of setoff rights in accordance with Section 9.08 or with respect to a Secured Party’sright to file a proof of claim in an insolvency proceeding, no Secured Party shall have any right individually to realize upon any of theCollateral or to enforce any Guarantee of the Secured Obligations, it being understood and agreed that all powers, rights and remediesunder the Loan Documents may be exercised solely by the Administrative Agent on behalf of the Secured Parties in accordance withthe terms thereof. In its capacity, the Administrative Agent is a “representative” of the Secured Parties within the meaning of the term“secured party” as defined in the UCC. In the event that any Collateral is hereafter pledged by any Person as collateral security for theSecured Obligations, the Administrative Agent is hereby authorized, and hereby granted a power of attorney, to execute and deliver onbehalf of the Secured Parties any Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral in favor ofthe Administrative Agent on behalf of the Secured Parties.(b) In furtherance of the foregoing and not in limitation thereof, no arrangements in respect of Banking Services, theobligations under which constitute Secured Obligations, and no Swap Agreement, the obligations under which constitute SecuredObligations, will create (or be deemed to create) in favor of any Secured Party that is a party thereto any rights in connection with themanagement or release of any Collateral or of the obligations of any Loan Party under any Loan Document. By accepting the benefitsof the Collateral, each Secured Party that is a party to any such arrangement in respect of Banking Services or Swap Agreement, asapplicable, shall be deemed to have appointed the Administrative Agent to serve as administrative agent and collateral agent under theLoan Documents and agreed to be bound by the Loan Documents as a Secured Party thereunder, subject to the limitations set forth inthis paragraph.(c) The Secured Parties irrevocably authorize the Administrative Agent, at its option and in its discretion, to subordinate anyLien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on suchproperty that is permitted by Section 6.02(b). The Administrative Agent shall not be responsible for or have a duty to ascertain orinquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority orperfection of the Administrative Agent’s Lien thereon or any certificate prepared by any Loan Party in connection therewith, nor shallthe Administrative Agent be responsible or liable to the Lenders or any other Secured Party for any failure to monitor or maintain anyportion of the Collateral.SECTION 8.08. Credit Bidding. The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction ofthe Required Lenders, to credit bid all or any portion of the Obligations (including by accepting some or all of the Collateral insatisfaction of some or all of the Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (eitherdirectly or through one or more acquisition vehicles) all or any portion of the Collateral (a) at any sale thereof conducted under theprovisions of the Bankruptcy Code, including under Sections 363, 1123 or 1129 of the78730594648.9 16508322Bankruptcy Code, or any similar laws in any other jurisdictions to which a Loan Party is subject, or (b) at any other sale, foreclosure oracceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether byjudicial action or otherwise) in accordance with any applicable law. In connection with any such credit bid and purchase, theObligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid by the Administrative Agent at the direction ofthe Required Lenders on a ratable basis (with Obligations with respect to contingent or unliquidated claims receiving contingentinterests in the acquired assets on a ratable basis that shall vest upon the liquidation of such claims in an amount proportional to theliquidated portion of the contingent claim amount used in allocating the contingent interests) for the asset or assets so purchased (or forthe equity interests or debt instruments of the acquisition vehicle or vehicles that are issued in connection with such purchase). Inconnection with any such bid (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles and to assignany successful credit bid to such acquisition vehicle or vehicles (ii) each of the Secured Parties’ ratable interests in the Obligationswhich were credit bid shall be deemed without any further action under this Agreement to be assigned to such vehicle or vehicles forthe purpose of closing such sale, (iii) the Administrative shall be authorized to adopt documents providing for the governance of theacquisition vehicle or vehicles (provided that any actions by the Administrative Agent with respect to such acquisition vehicle orvehicles, including any disposition of the assets or equity interests thereof, shall be governed, directly or indirectly, by, and thegoverning documents shall provide for, control by the vote of the Required Lenders or their permitted assignees under the terms of thisAgreement or the governing documents of the applicable acquisition vehicle or vehicles, as the case may be, irrespective of thetermination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in Section 9.02of this Agreement), (iv) the Administrative Agent on behalf of such acquisition vehicle or vehicles shall be authorized to issue to eachof the Secured Parties, ratably on account of the relevant Obligations which were credit bid, interests, whether as equity, partnershipinterests, limited partnership interests or membership interests, in any such acquisition vehicle and/or debt instruments issued by suchacquisition vehicle, all without the need for any Secured Party or acquisition vehicle to take any further action, and (v) to the extent thatObligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason, such Obligations shallautomatically be reassigned to the Secured Parties pro rata with their original interest in such Obligations and the equity interests and/ordebt instruments issued by any acquisition vehicle on account of such Obligations shall automatically be cancelled, without the need forany Secured Party or any acquisition vehicle to take any further action. Notwithstanding that the ratable portion of the Obligations ofeach Secured Party are deemed assigned to the acquisition vehicle or vehicles as set forth in clause (ii) above, each Secured Party shallexecute such documents and provide such information regarding the Secured Party (and/or any designee of the Secured Party whichwill receive interests in or debt instruments issued by such acquisition vehicle) as the Administrative Agent may reasonably request inconnection with the formation of any acquisition vehicle, the formulation or submission of any credit bid or the consummation of thetransactions contemplated by such credit bid.SECTION 8.09. Certain ERISA Matters.(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants,from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of,the Administrative Agent and each Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit ofthe Borrower or any other Loan Party, that at least one of the following is and will be true:(i) such Lender is not using “plan assets” (within the meaning of the Plan Asset Regulations) of one or more BenefitPlans in connection with the Loans, the Letters of Credit or the Commitments,79730594648.9 16508322(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certaintransactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certaintransactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involvinginsurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collectiveinvestment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), isapplicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, theLetters of Credit, the Commitments and this Agreement,(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaningof Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of suchLender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and thisAgreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, theCommitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to thebest knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to suchLender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitmentsand this Agreement, or(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent,in its sole discretion, and such Lender.(b) In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lenderhas not provided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a),such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, fromthe date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, theAdministrative Agent, and each Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of theBorrower or any other Loan Party, that none of the Administrative Agent, or any Arranger, any Syndication Agent, or any of theirrespective Affiliates is a fiduciary with respect to the Collateral or the assets of such Lender (including in connection with thereservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents relatedto hereto or thereto).(c) The Administrative Agent, each Arranger and each Syndication Agent hereby informs the Lenders that each such Person isnot undertaking to provide investment advice or to give advice in a fiduciary capacity, in connection with the transactions contemplatedhereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof(i) may receive interest or other payments with respect to the Loans, the Letters of Credit, the Commitments, this Agreement and anyother Loan Documents (ii) may recognize a gain if it extended the Loans, the Letters of Credit or the Commitments for an amount lessthan the amount being paid for an interest in the Loans, the Letters of Credit or the Commitments by such Lender or (iii) may receivefees or other payments in connection with the transactions contemplated hereby, the Loan Documents or otherwise, includingstructuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees,administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away oralternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other earlytermination fees or fees similar to the foregoing.80730594648.9 16508322SECTION 8.10. Flood Laws. JPMorgan Chase has adopted internal policies and procedures that address requirements placedon federally regulated lenders under the National Flood Insurance Reform Act of 1994 and related legislation (the “Flood Laws”).JPMorgan Chase, as administrative agent or collateral agent on a syndicated facility, will post on the applicable electronic platform (orotherwise distribute to each Lender in the syndicate) documents that it receives in connection with the Flood Laws. However, JPMorganChase reminds each Lender and Participant in the facility that, pursuant to the Flood Laws, each federally regulated Lender (whetheracting as a Lender or Participant in the facility) is responsible for assuring its own compliance with the flood insurance requirements.ARTICLE IX MiscellaneousSECTION 9.01. Notices. (23) Except in the case of notices and other communications expressly permitted to be given bytelephone or Electronic System (and subject to paragraph (b) below), all notices and other communications provided for herein shall bein writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, asfollows:(i) if to the Borrower or any other Loan Party, to:DexCom, Inc. 6340 Sequence Drive San Diego, CA 92121 Attention: Jereme Sylvain Telephone No.: (858) 203-6538 Email: jereme.sylvain@dexcom.com(ii)if to the Administrative Agent or Issuing Bank, in the case of Borrowings denominated in dollars to:JPMorgan Chase Bank, N.A. 10 S. Dearborn St Floor L2S Chicago, IL 60603 Attention: April Yebd Telephone No: (312) 732-2628 Fax No.: (888) 303-9732 Email: jpm.agency.cri@jpmorgan.comin the case of Borrowings denominated in a Foreign Currency to:JPMorgan Chase Bank, London Branch 25 Bank Street, Canary Wharf, 6th Floor London E145JP, United Kingdom Attention: Loans Agency, Fax No.: +44 20 7777 2360 Email: Loan_and_agency_London@jpmorgan.comIn each case, with a copy to:81730594648.9 16508322JPMorgan Chase Bank, N.A. 3 Park Plaza, Suite 900 Irvine CA 92614, Attention: Ling Li Fax No.: (714) 917-4866 Email: ling.f.li@jpmorgan.comand:Mayer Brown LLP 1221 Avenue of the Americas New York, New York 10020 Attention: Adam Wolk Telephone No.: (212) 506-2257 Fax No.: (212) 849-5957 Email: awolk@mayerbrown.com(iii) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given whenreceived; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal businesshours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient).Notices delivered through Electronic Systems, to the extent provided in paragraph (b) below, shall be effective as provided in saidparagraph (b).(a) Notices and other communications to the Lenders and the Issuing Bank hereunder may be delivered or furnished by usingElectronic Systems or Approved Electronic Platforms, as applicable, or pursuant to procedures approved by the Administrative Agent;provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and theapplicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communicationsto it hereunder by using Electronic Systems or Approved Electronic Platforms, as applicable, pursuant to procedures approved by it;provided that approval of such procedures may be limited to particular notices or communications.Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall bedeemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receiptrequested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to anInternet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address asdescribed in the foregoing clause (i), of notification that such notice or communication is available and identifying the website addresstherefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normalbusiness hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the nextBusiness Day for the recipient.(b) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice tothe other parties hereto.SECTION 9.02. Waivers; Amendments. (23) No failure or delay by the Administrative Agent, the Issuing Bank or any Lenderin exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single orpartial exercise of any such right or power, or any82730594648.9 16508322abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exerciseof any other right or power. The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder andunder any other Loan Document are cumulative and are not exclusive of any rights or remedies that they would otherwise have. Nowaiver of any provision of any Loan Document or consent to any departure by the Borrower therefrom shall in any event be effectiveunless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in thespecific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan orissuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, anyLender or the Issuing Bank may have had notice or knowledge of such Default at the time.(a) Subject to Section 9.02(c) below, neither this Agreement nor any other Loan Document nor any provision hereof orthereof may be waived, amended or modified except (i) in the case of this Agreement, pursuant to an agreement or agreements inwriting entered into by the Borrower and the Required Lenders or (ii) in the case of any other Loan Document, pursuant to anagreement or agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties that are parties thereto,with the consent of the Required Lenders; provided that no such agreement shall (A) increase the Commitment of any Lender withoutthe written consent of such Lender, (B) reduce or forgive the principal amount of any Loan or LC Disbursement or reduce or the rate ofinterest thereon (other than to reduce the default rate accruing under and in accordance with Section 2.13(c)), or reduce or forgive anyinterest or fees or other amount payable hereunder, without the written consent of each Lender (including any such Lender that is aDefaulting Lender) affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LCDisbursement, or any interest thereon, or any fees or other amount payable hereunder, or reduce the amount of, waive or excuse anysuch payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affectedthereby, (iv) change Section 2.18(b) or (c) in any manner or Section 8.08 in a manner that would alter the pro rata sharing by theLenders required thereby, in each case, without the written consent of each Lender, (v) change any of the provisions of this Section orthe definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive,amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of eachLender, (vi) waive or amend clause (d) of the definition of “Ineligible Institution”, without the written consent of each Lender, (vii)except as provided in any Collateral Document, release all or substantially all of the Collateral without the written consent of eachLender, (viii) release any Guarantor from its obligation under its Loan Guaranty or Obligation Guaranty (except as otherwise permittedherein or in the other Loan Documents), without the written consent of each Lender or (ix) subordinate any of the Obligations to anyother Indebtedness of the Loan Parties (except as otherwise permitted herein or in the other Loan Documents), without the writtenconsent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of theAdministrative Agent or the Issuing Bank hereunder without the prior written consent of the Administrative Agent or the Issuing Bank,as the case may be; provided further that no such agreement shall amend or modify the provisions of Section 2.07 or any letter of creditapplication and any bilateral agreement between the Borrower and the Issuing Bank regarding the Issuing Bank’s Letter of CreditCommitment or the respective rights and obligations between the Borrower and the Issuing Bank in connection with the issuance ofLetters of Credit without the prior written consent of the Administrative Agent and the Issuing Bank, respectively. Any amendment,waiver or other modification of this Agreement or any other Loan Document that by its terms affects the rights or duties under thisAgreement of the Lenders of one or more Classes (but not the Lenders of any other Class), may be effected by an agreement oragreements in writing entered into by the Borrower and the requisite number or percentage in interest of each affected Class of Lendersthat would be required to consent thereto under this Section if such Class of Lenders were the only Class of Lenders hereunder at thetime.83730594648.9 16508322(b) The Lenders and the Issuing Bank hereby irrevocably authorize the Administrative Agent, at its option and in its solediscretion, to release any Liens granted to the Administrative Agent by the Loan Parties on any Collateral (i) upon the Payment in Fullof all Secured Obligations, and the cash collateralization of all Unliquidated Obligations in a manner satisfactory to each affectedLender, (ii) constituting property being sold or disposed of if the Loan Party disposing of such property certifies to the AdministrativeAgent that the sale or disposition is made in compliance with the terms of this Agreement (and the Administrative Agent may relyconclusively on any such certificate, without further inquiry), and to the extent that the property being sold or disposed of constitutes100% of the Equity Interests of a Subsidiary, the Administrative Agent is authorized to release any Loan Guaranty or ObligationGuaranty provided by such Subsidiary, (iii) constituting property leased to a Loan Party under a lease which has expired or beenterminated in a transaction permitted under this Agreement, (iv) as required to effect any sale or other disposition of such Collateral inconnection with any exercise of remedies of the Administrative Agent and the Lenders pursuant to Article VII or (v) as requiredpursuant to the terms of the Security Agreement or any other Loan Document. Any such release shall not in any manner discharge,affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of the Loan Parties inrespect of) all interests retained by the Loan Parties, including the proceeds of any sale, all of which shall continue to constitute part ofthe Collateral. Any execution and delivery by the Administrative Agent of documents in connection with any such release shall bewithout recourse to or warranty by the Administrative Agent.(c) If, in connection with any proposed amendment, waiver or consent requiring the consent of “each Lender” or “eachLender affected thereby,” the consent of the Required Lenders is obtained, but the consent of other necessary Lenders is not obtained(any such Lender whose consent is necessary but has not been obtained being referred to herein as a “Non-Consenting Lender”), thenthe Borrower may elect to replace a Non-Consenting Lender as a Lender party to this Agreement, provided that, concurrently with suchreplacement, (i) another bank or other entity which is reasonably satisfactory to the Borrower, the Administrative Agent and the IssuingBank shall agree, as of such date, to purchase for cash the Loans and other Obligations due to the Non-Consenting Lender pursuant toan Assignment and Assumption and to become a Lender for all purposes under this Agreement and to assume all obligations of theNon-Consenting Lender to be terminated as of such date and to comply with the requirements of clause (b) of Section 9.04, and (ii) theBorrower shall pay to such Non-Consenting Lender in same day funds on the day of such replacement (1) all interest, fees and otheramounts then accrued but unpaid to such Non-Consenting Lender by the Borrower hereunder to and including the date of termination,including without limitation payments due to such Non-Consenting Lender under Sections 2.15 and 2.17, and (2) an amount, if any,equal to the payment which would have been due to such Lender on the day of such replacement under Section 2.16 had the Loans ofsuch Non-Consenting Lender been prepaid on such date rather than sold to the replacement Lender. Each party hereto agrees that anassignment required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Borrower,the Administrative Agent and the assignee (or, to the extent applicable, an agreement incorporating an Assignment and Assumption byreference pursuant to an Approved Electronic Platform as to which the Administrative Agent and such parties are participants), and (b)the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall bedeemed to have consented to an be bound by the terms thereof; provided that, following the effectiveness of any such assignment, theother parties to such assignment agree to execute and deliver such documents necessary to evidence such assignment as reasonablyrequested by the applicable Lender, provided that any such documents shall be without recourse to or warranty by the parties thereto.SECTION 9.03. Expenses; Indemnity; Damage Waiver. (23) The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (which shall be limited, in the case of legal fees andexpenses, to the reasonable and documented fees,84730594648.9 16508322disbursements and other charges of one primary counsel and one local counsel in each applicable jurisdiction) and the Lead Arrangersin connection with the syndication and distribution (including, without limitation, via the internet or through an Electronic System orApproved Electronic Platform) of the credit facilities provided for herein, the preparation and administration of this Agreement and theother Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not thetransactions contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expensesincurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demandfor payment thereunder and (iii) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, theIssuing Bank or any Lender (which shall be limited, in the case of legal fees and expenses, to the reasonable and documented fees,disbursements and other charges of one primary counsel and one local counsel in each applicable jurisdiction for the AdministrativeAgent and not more than one outside counsel and one local counsel in each applicable jurisdiction for all of the other Lenders and,solely in the case of an actual or reasonably perceived conflict of interest, one additional counsel for each affected Lender) inconnection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents, includingits rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonableand documented out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Lettersof Credit.(a) The Borrower shall indemnify the Administrative Agent, the Lead Arrangers, the Syndication Agents, the Issuing Bankand each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, andhold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (which shall be limited, in thecase of legal fees and expenses, to the reasonable and documented fees, disbursements and other charges of one primary counsel andone local counsel in each applicable jurisdiction for the Administrative Agent, and not more than one outside counsel, and one localcounsel in each applicable jurisdiction for all of the other Indemnitees and, solely in the case of an actual or reasonably perceivedconflict of interest, one additional counsel for each affected Indemnitee) incurred by or asserted against any Indemnitee arising out of,in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document, or any agreement orinstrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder orthereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit orthe use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit ifthe documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actualor alleged presence or Release of Hazardous Materials on or from any property owned or operated by the Borrower or any of itsSubsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual orprospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not such claim, litigation,investigation or proceeding is brought by the Borrower or any other Loan Party or any of their Subsidiaries or its or their respectiveequity holders, Affiliates, creditors or any other third Person and whether based on contract, tort or any other theory and regardless ofwhether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent thatsuch losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. This Section 9.03(b) shallnot apply with respect to Taxes other than any Taxes that represent losses, claims or damages arising from any non-Tax claim.(b) Each Lender severally agrees to pay any amount required to be paid by any Loan Party under paragraph (a) or (b) of thisSection 9.03 to the Administrative Agent, the Lead Arrangers and each85730594648.9 16508322Issuing Bank, and each Related Party of any of the foregoing Persons (each, an “Agent Indemnitee”) (to the extent not reimbursed bythe Loan Parties and without limiting the obligation of any Loan Party to do so), ratably according to their respective ApplicablePercentage in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the dateupon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with suchApplicable Percentage immediately prior to such date), from and against any and all losses, claims, damages, liabilities and relatedexpenses, including the fees, charges and disbursements of any kind whatsoever that may at any time (whether before or after thepayment of the Loans) be imposed on, incurred by or asserted against such Agent Indemnitee in any way relating to or arising out ofthe Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or thereinor the transactions contemplated hereby or thereby or any action taken or omitted by such Agent Indemnitee under or in connectionwith any of the foregoing; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, asthe case may be, was incurred by or asserted against such Agent Indemnitee in its capacity as such; provided further that no Lendershall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,expenses or disbursements that are found by a final and non-appealable decision of a court of competent jurisdiction to have resultedfrom such Agent Indemnitee’s gross negligence or willful misconduct. The agreements in this Section shall survive the termination ofthis Agreement and the Payment in Full of the Secured Obligations.(c) To the extent permitted by applicable law, no party hereto shall assert, and each such party hereby waives, any claimagainst any other party hereto, (i) for any damages arising from the use by others of information or other materials obtained throughtelecommunications, electronic or other information transmission systems (including the Internet), or (ii) on any theory of liability, forspecial, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as aresult of, this Agreement, any other Loan Document, or any agreement or instrument contemplated hereby or thereby, the Transactions,any Loan or Letter of Credit or the use of the proceeds thereof; provided that, nothing in this clause (d) shall relieve the Borrower ofany obligation it may have to indemnify an Indemnitee against special, indirect, consequential or punitive damages asserted againstsuch Indemnitee by a third party.(d) All amounts due under this Section shall be payable promptly after written demand therefor.SECTION 9.04. Successors and Assigns. (23) The provisions of this Agreement shall be binding upon and inure to the benefitof the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issuesany Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder withoutthe prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be nulland void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, theirrespective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit),Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the RelatedParties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or byreason of this Agreement.(a) (23) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Persons (otherthan an Ineligible Institution) all or a portion of its rights and obligations under this Agreement (including all or a portion of itsCommitment, participations in Letters of Credit and the86730594648.9 16508322Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of:(A) the Borrower, provided that, the Borrower shall be deemed to have consented to an assignment unless it shallhave objected thereto by written notice to the Administrative Agent within five (5) Business Days after having receivednotice thereof; provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of aLender, an Approved Fund or, if an Event of Default has occurred and is continuing, any other assignee;(B) the Administrative Agent, provided that no consent of the Administrative Agent shall be required for anassignment of any Commitment to an assignee that is a Lender (other than a Defaulting Lender) with a Commitmentimmediately prior to giving effect to such assignment; and(C) the Issuing Bank.(ii) Assignments shall be subject to the following additional conditions:(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entireremaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loansof the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption withrespect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of theBorrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be requiredif an Event of Default has occurred and is continuing;(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’srights and obligations under this Agreement, provided that this clause shall not be construed to prohibit the assignment of aproportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans;(C) the parties to each assignment shall execute and deliver to the Administrative Agent (x) an Assignment andAssumption or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption by referencepursuant to an Approved Electronic Platform as to which the Administrative Agent and the parties to the Assignment andAssumption are participants, together with a processing and recordation fee of $3,500; and(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an AdministrativeQuestionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information (whichmay contain material non-public information about the Borrower, the Loan Parties and their Related Parties or theirrespective securities) will be made available and who may receive such information in accordance with the assignee’scompliance procedures and applicable laws, including federal and state securities laws.For the purposes of this Section 9.04(b), the term “Approved Fund” and “Ineligible Institution” have the following meanings:“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investingin bank loans and similar extensions of credit in the ordinary course of its87730594648.9 16508322business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity thatadministers or manages a Lender.“Ineligible Institution” means (a) a natural person, (b) a Defaulting Lender or its Lender Parent, (c) a company, investmentvehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof; provided that, suchcompany, investment vehicle or trust shall not constitute an Ineligible Institution if it (x) has not been established for the primarypurpose of acquiring any Loans or Commitments, (y) is managed by a professional advisor, who is not such natural person or a relativethereof, having significant experience in the business of making or purchasing commercial loans, and (z) has assets greater than$25,000,000 and a significant part of its activities consist of making or purchasing commercial loans and similar extensions of credit inthe ordinary course of its business, or (d) the Borrower or any of its Affiliates.(i) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after theeffective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent ofthe interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement,and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, bereleased from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of theassigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continueto be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights orobligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement asa sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.(ii) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one ofits offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names andaddresses of the Lenders, and the Commitment of, and principal amount (and stated interest) of the Loans and LCDisbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Registershall be conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders shall treat each Personwhose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement,notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Bank and anyLender, at any reasonable time and from time to time upon reasonable prior notice.(iii) Upon its receipt of (x) a duly completed Assignment and Assumption executed by an assigning Lender and anassignee or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to anApproved Electronic Platform as to which the Administrative Agent and the parties to the Assignment and Assumption areparticipants, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder),the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignmentrequired by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and recordthe information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed tomake any payment required to be made by it pursuant to Section 2.06(d) or (e), 2.07(b), 2.18(d) or 9.03(c), the AdministrativeAgent shall have no obligation to accept such Assignment and Assumption and record the information therein in the Registerunless and until such payment shall have been made88730594648.9 16508322in full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it hasbeen recorded in the Register as provided in this paragraph.(b) Any Lender may, without the consent of, or notice to, the Borrower, the Administrative Agent or the Issuing Bank, sellparticipations to one or more banks or other entities (a “Participant”), other than an Ineligible Institution, in all or a portion of suchLender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); providedthat (A) such Lender’s obligations under this Agreement shall remain unchanged; (B) such Lender shall remain solely responsible to theother parties hereto for the performance of such obligations; and (C) the Borrower, the Administrative Agent, the Issuing Bank and theother Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations underthis Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shallretain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of thisAgreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant,agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. TheBorrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 (subject to the requirements andlimitations therein, including the requirements under Sections 2.17(f) and (g) (it being understood that the documentation requiredunder Section 2.17(f) shall be delivered to the participating Lender and the information and documentation required under 2.17(g) willbe delivered to the Borrower and the Administrative Agent)) to the same extent as if it were a Lender and had acquired its interest byassignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section2.19 as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment underSection 2.15 or 2.17, with respect to any participation, than its participating Lender would have been entitled to receive, except to theextent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired theapplicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable effortsto cooperate with the Borrower to effectuate the provisions of Section 2.19(b) with respect to any Participant. To the extent permitted bylaw, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender; provided that such Participantagrees to be subject to Section 2.18(c) as though it were a Lender. Each Lender that sells a participation shall, acting solely for thispurpose as an agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principalamounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ParticipantRegister”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including theidentity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its otherobligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that suchCommitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States TreasuryRegulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Personwhose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreementnotwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as AdministrativeAgent) shall have no responsibility for maintaining a Participant Register.(c) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement tosecure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and thisSection shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a securityinterest shall release a Lender89730594648.9 16508322from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.SECTION 9.05. Survival. All covenants, agreements, representations and warranties made by the Borrower herein and in thecertificates or other instruments delivered in connection with or pursuant to this Agreement and the other Loan Documents shall beconsidered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and themaking of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on itsbehalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of anyDefault or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect aslong as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement isoutstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. Theprovisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of theconsummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters ofCredit and the Commitments or the termination of this Agreement or any provision hereof.SECTION 9.06. Counterparts; Integration; Effectiveness; Electronic Execution. (23) This Agreement may be executed incounterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which whentaken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements withrespect to (i) fees payable to the Administrative Agent and (ii) the reductions of the Letter of Credit Commitment of any Issuing Bankconstitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements andunderstandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall becomeeffective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have receivedcounterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be bindingupon and inure to the benefit of the parties hereto and their respective successors and assigns.(a) Delivery of an executed counterpart of a signature page of this Agreement by telecopy, emailed pdf. or any otherelectronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executedcounterpart of this Agreement. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to anydocument to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to includeElectronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity orenforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the casemay be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and NationalCommerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the UniformElectronic Transactions Act; provided that nothing herein shall require the Administrative Agent or Silicon Valley Bank to acceptelectronic signatures in any form or format without its prior written consent.SECTION 9.07. Severability. Any provision of any Loan Document held to be invalid, illegal or unenforceable in anyjurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affectingthe validity, legality and enforceability of the remaining provisions thereof; and the invalidity of a particular provision in a particularjurisdiction shall not invalidate such provision in any other jurisdiction.90730594648.9 16508322SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of itsAffiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and alldeposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by suchLender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now orhereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demandunder this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition toother rights and remedies (including other rights of setoff) which such Lender may have.SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process. (23) (a) The Loan Documents (other than thosecontaining a contrary express choice of law provision) shall be governed by and construed in accordance with the internal laws of theState of New York, but giving effect to federal laws applicable to national banks.(a) Each party hereto irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of theSupreme Court of the State of New York sitting in the Borough of Manhattan, and of the United States District Court for the SouthernDistrict of New York sitting in the Borough of Manhattan, and any appellate court from any thereof, in any action or proceeding arisingout of or relating to any Loan Documents, the transactions relating hereto or thereto, or for recognition or enforcement of any judgment,and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceedingmay (and any such claims, cross-claims or third party claims brought against the Administrative Agent or any of its Related Parties mayonly) be heard and determined in such New York State or, to the extent permitted by law, in such federal court. Each of the partieshereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions bysuit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect anyright that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating tothis Agreement against the Borrower or its properties in the courts of any jurisdiction.(b) Each party hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, anyobjection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to thisAgreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties hereto herebyirrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action orproceeding in any such court.(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01.Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in anyother manner permitted by law.SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENTPERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDINGDIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT ORTHE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHERTHEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHERPARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OFLITIGATION, SEEK TO ENFORCE THE91730594648.9 16508322FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TOENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THISSECTION.SECTION 9.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience ofreference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, thisAgreement.SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain theconfidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors,officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whomsuch disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Informationconfidential), (b) to the extent requested by any Governmental Authority (including any self-regulatory authority, such as the NationalAssociation of Insurance Commissioners), (c) to the extent required by any Requirement of Law or by any subpoena or similar legalprocess, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or under any otherLoan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rightshereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) anyassignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or(ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and itsobligations, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as aresult of a breach of this Section or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a non-confidential basis from a source other than the Borrower. For the purposes of this Section, “Information” means all informationreceived from the Borrower relating to the Borrower or its business, other than any such information that is available to theAdministrative Agent, the Issuing Bank or any Lender on a non-confidential basis prior to disclosure by the Borrower and other thaninformation pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers,that serve the lending industry; provided that, in the case of information received from the Borrower after the date hereof, suchinformation is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality ofInformation as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercisedthe same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidentialinformation.SECTION 9.13. Material Non-Public Information.(a) EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 9.12(a) FURNISHED TO ITPURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THEBORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPEDCOMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILLHANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLELAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.(b) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THEBORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THISAGREEMENT WILL BE92730594648.9 16508322SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THEBORROWER, THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY,EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITSADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAINMATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLELAW.SECTION 9.14. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rateapplicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicablelaw (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged,taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respectof such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extentlawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operationof this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall beincreased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal FundsEffective Rate to the date of repayment, shall have been received by such Lender.SECTION 9.15. USA PATRIOT Act. Each Lender that is subject to the requirements of the USA Patriot Act hereby notifies theBorrower that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies the Borrower,which information includes the name and address of the Borrower and other information that will allow such Lender to identify theBorrower in accordance with the Act.SECTION 9.16. Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to thecontrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party heretoacknowledges that any liability of any EEA Financial Institution arising under any Loan Document may be subject to the Write-Downand Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arisinghereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and(b) the effects of any Bail-In Action on any such liability, including, if applicable:(i) a reduction in full or in part or cancellation of any such liability;(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEAFinancial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that suchshares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under thisAgreement or any other Loan Document; or(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and ConversionPowers of any EEA Resolution Authority.SECTION 9.17. No Fiduciary Duty, etc.93730594648.9 16508322(a) The Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that no Credit Party will haveany obligations except those obligations expressly set forth herein and in the other Loan Documents and each Credit Party is actingsolely in the capacity of an arm’s length contractual counterparty to the Borrower with respect to the Loan Documents and thetransactions contemplated herein and therein and not as a financial advisor or a fiduciary to, or an agent of, the Borrower or any otherperson. The Borrower agrees that it will not assert any claim against any Credit Party based on an alleged breach of fiduciary duty bysuch Credit Party in connection with this Agreement and the transactions contemplated hereby. Additionally, the Borroweracknowledges and agrees that no Credit Party is advising the Borrower as to any legal, tax, investment, accounting, regulatory or anyother matters in any jurisdiction. The Borrower shall consult with its own advisors concerning such matters and shall be responsible formaking its own independent investigation and appraisal of the transactions contemplated herein or in the other Loan Documents, andthe Credit Parties shall have no responsibility or liability to the Borrower with respect thereto.(b) The Borrower further acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party,together with its Affiliates, is a full service securities or banking firm engaged in securities trading and brokerage activities as well asproviding investment banking and other financial services. In the ordinary course of business, any Credit Party may provide investmentbanking and other financial services to, and/or acquire, hold or sell, for its own accounts and the accounts of customers, equity, debtand other securities and financial instruments (including bank loans and other obligations) of, the Borrower and other companies withwhich the Borrower may have commercial or other relationships. With respect to any securities and/or financial instruments so held byany Credit Party or any of its customers, all rights in respect of such securities and financial instruments, including any voting rights,will be exercised by the holder of the rights, in its sole discretion.(c) In addition, the Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each CreditParty and its affiliates may be providing debt financing, equity capital or other services (including financial advisory services) to othercompanies in respect of which the Borrower may have conflicting interests regarding the transactions described herein and otherwise.No Credit Party will use confidential information obtained from the Borrower by virtue of the transactions contemplated by the LoanDocuments or its other relationships with the Borrower in connection with the performance by such Credit Party of services for othercompanies, and no Credit Party will furnish any such information to other companies. The Borrower also acknowledges that no CreditParty has any obligation to use in connection with the transactions contemplated by the Loan Documents, or to furnish to the Borrower,confidential information obtained from other companies.SECTION 9.18. Amendment and Restatement; Reaffirmation. The parties hereto agree that, on the Restatement Effective Date,the following transactions shall be deemed to occur automatically, without further action by any party hereto:(a) The Existing Credit Agreement shall be deemed to be amended and restated in its entirety in the form of andpursuant to this Agreement and the terms of this Agreement shall replace and supersede the Existing Credit Agreement (which shallhereafter have no further effect upon the parties thereto other than with respect to any action, event, representation, warranty orcovenant occurring, made or applying prior to the Restatement Effective Date).(b) All “Revolving Loans” outstanding under the Existing Credit Agreement shall be deemed to be Revolving Loansunder this Agreement. All other “Obligations” existing under the Existing Credit Agreement shall be deemed to be outstanding underthis Agreement and, in each case (i) are in all94730594648.9 16508322respects enforceable with only the terms thereof being modified as provided by this Agreement and (ii) shall in all respects becontinuing after the Restatement Effective Date and shall be deemed to be Obligations governed by this Agreement.(c) All references to the Existing Credit Agreement or the “Credit Agreement” in the existing Loan Documentsexecuted in connection with the Original Credit Agreement (the “Existing Loan Documents”), whether on the Existing CreditAgreement’s “Restatement Effective Date” or at any time thereafter but prior to the Restatement Effective Date, shall be deemed toinclude references to this Agreement, as amended, restated, supplemented or otherwise modified from time to time.(d) The Borrower hereby acknowledges and agrees that each of the Existing Loan Documents that are not supersededby corresponding Loan Documents executed and delivered in connection with this Agreement to which the Borrower is a party remainsin full force and effect. The Borrower hereby (i) ratifies and reaffirms all of its repayment and performance obligations, includingobligations to indemnify, contingent or otherwise, under each of such Existing Loan Documents to which it is a party, (ii) ratifies andreaffirms its grant of liens on, or security interests in, its properties pursuant to such Existing Loan Documents to which it is a party assecurity for the Secured Obligations under or with respect to this Agreement, (iii) confirms and agrees that such liens and securityinterests secure all of the Secured Obligations, in each case as if each reference in such Existing Loan Documents to the obligationssecured thereby are construed to mean and refer to such Secured Obligations under this Agreement. To the extent the Borrowerguaranteed any of the Secured Obligations as defined in the Existing Credit Agreement pursuant to any of such Existing LoanDocuments as security for such Secured Obligations, the Borrower, hereby ratifies and reaffirms such guaranty and agrees that suchguaranty secures all of the Secured Obligations under this Agreement and remain in full force and effect after giving effect to thisAgreement. The execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power or remedy ofthe Administrative Agent or the Lenders under the Existing Credit Agreement or any Existing Loan Document, nor constitute a waiverof any provision of the Existing Credit Agreement or any other Existing Loan Document, except as specifically set forth therein or in acorresponding Loan Document.(e) Each party to this Agreement acknowledges and agrees that this Agreement and the documents executed anddelivered in connection herewith do not constitute a novation, payment and reborrowing or termination of any of the Obligations underthe Existing Credit Agreement as in effect prior to the Restatement Effective Date or a novation or payment and reborrowing of anyamount owing under the Existing Credit Agreement as in effect prior to the Restatement Effective Date.[Signatures Immediately Follow]95730594648.9 16508322IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respectiveauthorized officers as of the day and year first above written.DEXCOM, INC. By:/s/ Quentin S. Blackford Name: Quentin S. BlackfordTitle: Executive Vice President and Chief Financial OfficerSignature Page to Amended and Restated Credit Agreement730594648.9 16508322JPMORGAN CHASE BANK, N.A.,individually and as Administrative Agent andIssuing Bank By:/s/ Ling Li Name: Ling LiTitle: Executive DirectorSignature Page to Amended and Restated Credit Agreement730594648.9 16508322BANK OF AMERICA N.A. By:/s/ Sebastian Lurie Name: Sebastian LurieTitle: SVPSignature Page to Amended and Restated Credit Agreement730594648.9 16508322SILICON VALLEY BANK By:/s/ Joseph C. Hammer Name: Joseph C. HammerTitle: Managing DirectorSignature Page to Amended and Restated Credit Agreement730594648.9 16508322BANK OF THE WEST By:/s/ Jason Antrim Name: Jason AntrimTitle: Vice PresidentSignature Page to Amended and Restated Credit Agreement730594648.9 16508322UNION BANK By:/s/ Edmund Ozorio Name: Edmund OzorioTitle: Vice PresidentSignature Page to Amended and Restated Credit Agreement730594648.9 16508322SCHEDULE 2.01Commitment ScheduleLenderCommitmentLetter of Credit CommitmentJPMorgan Chase Bank, National Association$60,000,000.00$10,000,000Bank of America N.A.$55,000,000.00--Silicon Valley Bank$35,000,000.00--Bank of the West$25,000,000.00--Union Bank$25,000,000.00-- Total$200,000,000.00$10,000,000Sched. 2.01730594648.9 16508322EXHIBIT A ASSIGNMENT AND ASSUMPTIONThis Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and isentered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalizedterms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended,supplemented or otherwise modified from time to time, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged bythe Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein byreference and made a part of this Assignment and Assumption as if set forth herein in full.For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee herebyirrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and theCredit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rightsand obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuantthereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations ofthe Assignor under the respective facilities identified below (including any letters of credit and guarantees included in such facilities)and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor(in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement,any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on orrelated to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law orin equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold andassigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”). Such sale andassignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, withoutrepresentation or warranty by the Assignor.1. Assignor: ______________________________2. Assignee: ______________________________ [and is an Affiliate/Approved Fund of [identify Lender]1 ]3. Borrower: DexCom, Inc.4.Administrative Agent: JPMorgan Chase Bank, N.A., as the administrative agent under the Credit Agreement5.Credit Agreement: The $200,000,000 Amended and Restated Credit Agreement dated as of December 19, 2018 amongDexCom, Inc., the Lenders parties thereto, JPMorgan Chase Bank, National Association, asAdministrative Agent6. Assigned Interest:1 Select as applicable.Exh. A - 1730594648.9 16508322Facility Assigned2Aggregate Amount ofCommitment/Loans for allLendersAmount of Commitment/LoansAssignedPercentage Assigned ofCommitment/Loans3 $$% $$% $$%Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THEEFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]The Assignee agrees to deliver to the Administrative Agent a completed Administrative Questionnaire in which the Assignee designatesone or more credit contacts to whom all syndicate-level information (which may contain material non-public information about theBorrower[, the Loan Parties] and [its] [their] Related Parties or their respective securities) will be made available and who may receivesuch information in accordance with the Assignee’s compliance procedures and applicable laws, including federal and state securitieslaws.The terms set forth in this Assignment and Assumption are hereby agreed to:ASSIGNOR[NAME OF ASSIGNOR] By: Title:ASSIGNEE[NAME OF ASSIGNEE] By: Title:2 Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g.,“Revolving Commitment”).3 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.Exh. A - 2730594648.9 16508322[Consented to and]4 Accepted:JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Administrative AgentBy_________________________________Title:[Consented to:]5 [NAME OF RELEVANT PARTY]By________________________________Title:4 To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.5 To be added only if the consent of the Borrower and/or other parties (e.g. Issuing Bank) is required by the terms of the Credit Agreement.Exh. A - 3730594648.9 16508322ANNEX 1 TO EXHIBIT ADEXCOM, INC. STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION1. Representations and Warranties.1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii)the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and hastaken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplatedhereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection withthe Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency orvalue of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries orAffiliates or any other Person obligated in respect of the Credit Agreement, (iv) any requirements under applicable law for the Assigneeto become a lender under the Credit Agreement or any other Loan Document or to charge interest at the rate set forth therein from timeto time or (v) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of theirrespective obligations under the any Loan Document.1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all actionnecessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and tobecome a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement and underapplicable law that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and afterthe Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of theAssigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together withcopies of the most recent financial statements delivered pursuant to Section 5.01 thereof, as applicable, and such other documents andinformation as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption andto purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance onthe Administrative Agent or any other Lender, and (v) attached to the Assignment and Assumption is any documentation required to bedelivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) itwill, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documentsand information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action underthe Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the LoanDocuments are required to be performed by it as a Lender.2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the AssignedInterest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to butexcluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties heretoand their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, whichtogether shall constitute one instrument. Acceptance and adoption of the terms of this Assignment and Assumption by the Assignee andthe Assignor by Electronic Signature (as defined in the Credit Agreement) or delivery of an executed counterpart of a signature page ofthis Assignment and Assumption by any Approved Electronic Platform (as defined in the CreditAnnex 1 – 1730594648.9 16508322Agreement) shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment andAssumption shall be governed by, and construed in accordance with, the law of the State of New York.Annex 1 – 2730594648.9 16508322EXHIBIT B [RESERVED] Ex. B - 1730594648.9 16508322EXHIBIT C-1 FORM OF U.S. TAX COMPLIANCE CERTIFICATE(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)Reference is hereby made to the Amended and Restated Credit Agreement dated as of December 19, 2018 (as amended,supplemented or otherwise modified from time to time, the “Credit Agreement”), among DexCom, Inc., each lender from time to timeparty thereto and JPMorgan Chase Bank, National Association, as Administrative Agent.Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole recordand beneficial owner of the Loan(s) (as well as any promissory note(s) evidencing such Loan(s)) in respect of which it is providing thiscertificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of theBorrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to theBorrower as described in Section 881(c)(3)(C) of the Code.The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRSForm W-8BEN-E or IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided onthis certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersignedshall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificateprior to the first payment to be made to the undersigned, or in either of the two calendar years preceding such payments.Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to themin the Credit Agreement.[NAME OF LENDER]By: Name: Title:Date: ________ __, 20[ ]Ex. C-1 – 1730594648.9 16508322EXHIBIT C-2 FORM OF U.S. TAX COMPLIANCE CERTIFICATE(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)Reference is hereby made to the Amended and Restated Credit Agreement dated as of December 19, 2018 (as amended,supplemented or otherwise modified from time to time, the “Credit Agreement”), among DexCom, Inc., each lender from time to timeparty thereto and JPMorgan Chase Bank, National Association, as Administrative Agent.Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole recordand beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning ofSection 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) ofthe Code, and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN-Eor IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificatechanges, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnishedsuch Lender with a properly completed and currently effective certificate prior to the first payment to be made to the undersigned, or ineither of the two calendar years preceding such payments.Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to themin the Credit Agreement.[NAME OF PARTICIPANT]By: Name: Title:Date: ________ __, 20[ ]Ex. C-2 – 1730594648.9 16508322EXHIBIT C-3 FORM OF U.S. TAX COMPLIANCE CERTIFICATE(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)Reference is hereby made to the Amended and Restated Credit Agreement dated as of December 19, 2018 (as amended,supplemented or otherwise modified from time to time, the “Credit Agreement”), among DexCom, Inc., each lender from time to timeparty thereto and JPMorgan Chase Bank, National Association, as Administrative Agent.Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole recordowner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the solebeneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirectpartners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or businesswithin the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholderof the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is acontrolled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following formsfrom each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN-E or IRS Form W-8BENor (ii) an IRS Form W-8IMY accompanied by a withholding statement together with an IRS Form W-8BEN-E or IRS Form W-8BENfrom each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate,the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform suchLender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effectivecertificate prior to the first payment to be made to the undersigned, or in either of the two calendar years preceding such payments.Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to themin the Credit Agreement.[NAME OF PARTICIPANT]By: Name: Title:Date: ________ __, 20[ ]Ex. C-3 – 1730594648.9 16508322EXHIBIT C-4 FORM OF U.S. TAX COMPLIANCE CERTIFICATE(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)Reference is hereby made to the Amended and Restated Credit Agreement dated as of December 19, 2018 (as amended,supplemented or otherwise modified from time to time, the “Credit Agreement”), among DexCom, Inc., each lender from time to timeparty thereto and JPMorgan Chase Bank, National Association, as Administrative Agent.Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole recordowner of the Loan(s) (as well as any promissory note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii)its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any promissory note(s) evidencing suchLoan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement or any other Loan Document, neither theundersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into inthe ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirectpartners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none ofits direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) ofthe Code.The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of thefollowing forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN-E or IRSForm W-8BEN or (ii) an IRS Form W-8IMY accompanied by a withholding statement together with an IRS Form W-8BEN-E or IRSForm W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executingthis certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly soinform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and theAdministrative Agent with a properly completed and currently effective certificate prior to the first payment to be made to theundersigned, or in either of the two calendar years preceding such payments.Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to themin the Credit Agreement.[NAME OF LENDER]By: Name: Title:Date: ________ __, 20[ ]Ex. C-4 – 1730594648.9 16508322Exhibit 21.01DEXCOM, INC. SUBSIDIARY(Name under which subsidiary does business)JURISDICTION OF INCORPORATION SweetSpot Diabetes Care, Inc.DelawareTypeZero Technologies, Inc.DelawareDexCapital, LLCDelawareThe Glucose Program, LLCDelawareDexCom (Canada) Inc.CanadaDexCom Philippines, Inc.PhilippinesDexCom (UK) Ltd.United KingdomDexCom (UK) Intermediate Holdings Ltd.United KingdomDexCom Operating Ltd.United KingdomDexCom International Ltd.United KingdomDexCom (UK) Distribution Ltd.United KingdomNintamed Handels GmbHAustriaDexCom Deutschland GmbHGermanyDexCom KommanditbolagSwedenDexCom Suisse GmbHSwitzerlandExhibit 23.01CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in the following Registration Statements:(1)Registration Statements (Form S-3 Nos. 333-206619, 333-211101 and 333-228495) of DexCom, Inc., and (2)Registration Statements (Form S-8 Nos. 333-124059, 333-138174, 333-145159, 333-149734, 333-158993, 333-166552, 333-172604, 333-180421,333-188305, 333-195660, 333-202375, 333-204699 and 333-218562 ) pertaining to the 2005 Equity Incentive Plan, 2005 Employee StockPurchase Plan, 1999 Stock Option Plan, 2015 Amended and Restated Equity Incentive Plan and 2015 Employee Stock Purchase Plan of DexCom,Inc.;of our reports dated February 21, 2019, with respect to the consolidated financial statements and schedule of DexCom, Inc., and the effectiveness of internalcontrol over financial reporting of DexCom, Inc., included in this Annual Report (Form 10-K) of DexCom, Inc. for the year ended December 31, 2018./s/ Ernst & Young LLPSan Diego, CaliforniaFebruary 21, 2019Exhibit 31.01CERTIFICATION OF CHIEF EXECUTIVE OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Kevin R. Sayer, certify that:1. I have reviewed this annual report on Form 10-K of DexCom, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have:a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including any consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles;c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant’s ability to record, process, summarize and report financial information; andb) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. February 21, 2019By: /s/ Kevin R. Sayer Kevin R. Sayer Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer)Exhibit 31.02CERTIFICATION OF CHIEF FINANCIAL OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Quentin S. Blackford, certify that:1. I have reviewed this annual report on Form 10-K of DexCom, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have:a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including any consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles;c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant’s ability to record, process, summarize and report financial information; andb) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. February 21, 2019By: /s/ Quentin S. Blackford Quentin S. Blackford Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)Exhibit 32.01CERTIFICATION OF CHIEF EXECUTIVE OFFICERPURSUANT TO18 U.S.C SECTION 1350The undersigned, Kevin R. Sayer, the President and Chief Executive Officer of DexCom, Inc. (the “Company”), pursuant to 18 U.S.C. §1350, hereby certifiesthat:(i) the annual Report on Form 10-K for the period ended December 31, 2018 of the Company (the “Report”) fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934.(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Dated: February 21, 2019 /s/ Kevin R. SayerKevin R. SayerChairman of the Board of Directors, President andChief Executive Officer(Principal Executive Officer)Exhibit 32.02CERTIFICATION OF CHIEF FINANCIAL OFFICERPURSUANT TO18 U.S.C. SECTION 1350The undersigned, Quentin S. Blackford, Chief Financial Officer of DexCom, Inc. (the “Company”), pursuant to 18 U.S.C. §1350, hereby certifies:(i) the annual Report on Form 10-K for the period ended December 31, 2018 of the Company (the “Report”) fully complies with the requirements ofSection 13(a) and 15(d) of the Securities Exchange Act of 1934; and(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Dated: February 21, 2019 /s/ Quentin S. BlackfordQuentin S. BlackfordExecutive Vice President and Chief Financial Officer(Principal Financial and Accounting Officer)

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