Exhibit 10.13

Execution Version

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT, dated as of February 26, 2008 (as amended,
restated, supplemented or otherwise modified from time to time (this
“Agreement”)) is among GENERAL ELECTRIC CAPITAL CORPORATION (“GECC”), in its
capacity as agent for Lenders (as defined below) (together with its successors
and assigns in such capacity, “Agent”), OXFORD FINANCE CORPORATION (“Oxford”),
the other financial institutions who are or hereafter become parties to this
Agreement as lenders (together with GECC and Oxford, collectively the “Lenders,”
and each individually, a “Lender”), ACHILLION PHARMACEUTICALS, INC., a Delaware
corporation (“Borrower”), and the other entities or persons, if any, who are or
hereafter become parties to this Agreement as guarantors (each a “Guarantor” and
collectively, the “Guarantors,” and together with Borrower, each a “Loan Party”
and collectively, “Loan Parties”).

RECITALS

Borrower wishes to borrow funds from time to time from Lenders, and Lenders
desire to make loans, advances and other extensions of credit, severally and not
jointly, to Borrower from time to time pursuant to the terms and conditions of
this Agreement.

AGREEMENT

Loan Parties, Agent and Lenders agree as follows:

 

1. DEFINITIONS.

As used in this Agreement, all capitalized terms shall have the definitions as
provided herein. Any accounting term used but not defined herein shall be
construed in accordance with generally accepted accounting principles in the
United States of America, as in effect from time to time (“GAAP”) and all
calculations shall be made in accordance with GAAP. The term “financial
statements” shall include the accompanying notes and schedules. All other terms
used but not defined herein shall have the meaning given to such terms in the
Uniform Commercial Code as adopted in the State of New York, as amended and
supplemented from time to time (the “UCC”).

 

2. LOANS AND TERMS OF PAYMENT.

2.1. Promise to Pay. Borrower promises to pay Agent, for the ratable accounts of
Lenders, when due pursuant to the terms hereof, the aggregate unpaid principal
amount of all loans, advances and other extensions of credit made severally by
the Lenders to Borrower, together with interest on the unpaid principal amount
of such loans, advances and other extensions of credit at the interest rates set
forth herein.

2.2. Term Loans.

 

  (a) Commitments.

(i) Term A Loan Commitments. Subject to the terms and conditions hereof, each
Lender (each a “Term A Lender”), severally, but not jointly, agrees to refinance
and convert on the Closing Date (as defined below) all obligations outstanding
under its existing term loan to Borrower evidenced by (1) those certain two
promissory notes, each in the original

 

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principal amount of $2,500,000 and dated as of December 30, 2005, made by
Borrower in favor of each of GECC and Oxford Finance Corporation (“Oxford”) and
(2) that certain Master Security Agreement, dated as of December 30, 2005, by
and among Borrower, GECC and Oxford (the “Existing Security Agreement,” and
collectively, with such promissory notes, the “Existing Term A Loan Documents”)
into a new term loan in an aggregate principal amount equal to $1,542,068.72
(the “Term A Loan”), in accordance with such Term A Lender’s commitments as
identified on Schedule A hereto (such commitment of each Term A Lender to
refinance its portion of the Term A Loan as it may be amended to reflect
assignments made in accordance with this Agreement or terminated or reduced in
accordance with this Agreement, its “Term A Loan Commitment”). Each Term A
Lender’s obligation with respect to the Term A Loan shall be limited to such
Term A Lender’s Pro Rata Share (as defined below) of such Term A Loan.

(ii) Term B Loan Commitments. Subject to the terms and conditions hereof, each
Lender (each a “Term B Lender”), severally, but not jointly, agrees to refinance
and convert on the Closing Date all obligations outstanding under its existing
term loan to Borrower evidenced by (1) those certain two promissory notes, each
in the original principal amount of $2,500,000 and dated as of May 12, 2006,
made by Borrower in favor of each of GECC and Oxford and (2) the Existing
Security Agreement (collectively, the “Existing Term B Loan Documents”) into a
new term loan in an aggregate principal amount equal to $2,272,659.12 (the “Term
B Loan”), in accordance with such Term B Lender’s commitments as identified on
Schedule A hereto (such commitment of each Term B Lender to refinance its
portion of the Term B Loan as it may be amended to reflect assignments made in
accordance with this Agreement or terminated or reduced in accordance with this
Agreement, its “Term B Loan Commitment”). Each Term B Lender’s obligation with
respect to the Term B Loan shall be limited to such Term B Lender’s Pro Rata
Share (as defined below) of such Term B Loan.

(iii) Term C Loan Commitments. Subject to the terms and conditions hereof, each
Lender (each a “Term C Lender”), severally, but not jointly, agrees to refinance
and convert on the Closing Date all obligations outstanding under its existing
term loan to Borrower evidenced by (1) those certain two promissory notes, each
in the original principal amount of $400,000 and dated as of June 28, 2007, made
by Borrower in favor of each of GECC and Oxford and (2) the Existing Security
Agreement (collectively, the “Existing Term C Loan Documents,” and together with
the Existing Term A Loan Documents and the Existing Term B Loan Documents, the
“Existing Term Loan Documents”) into a new term loan in an aggregate principal
amount equal to $665,311.94 (the “Term C Loan”), in accordance with such Term C
Lender’s commitments as identified on Schedule A hereto (such commitment of each
Term C Lender to refinance its portion of the Term C Loan as it may be amended
to reflect assignments made in accordance with this Agreement or terminated or
reduced in accordance with this Agreement, its “Term C Loan Commitment”). Each
Term C Lender’s obligation with respect to the Term C Loan shall be limited to
such Term C Lender’s Pro Rata Share (as defined below) of such Term C Loan.

(iv) Term D Loan Commitment. Subject to the terms and conditions hereof, each
Lender (each, a “Term D Lender”), severally, but not jointly, agrees to make
term loans (each a “Term D Loan” and collectively, the “Term D Loans,” and
together with the Term A Loans, the Term B Loans and the Term C Loans, the “Term
Loans”) to Borrower on the Closing Date (as defined below) in an aggregate
principal amount not to exceed such Term D Lender’s commitment as identified on
Schedule A hereto (such commitment of each Term D Lender as it may be amended to
reflect assignments made in accordance with this Agreement or terminated or
reduced in accordance with this Agreement, its “Term D Loan

 

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Commitment,” and the aggregate of all such commitments, including the Term A
Loan Commitment, the Term B Loan Commitment and the Term C Loan Commitment, the
“Commitments”). Notwithstanding the foregoing, the aggregate principal amount of
the Term D Loans made hereunder shall not exceed $5,000,000 (the “Total
Commitment”). Each Lender’s obligation to fund a Term D Loan shall be limited to
such Lender’s Pro Rata Share (as defined below) of such Term D Loan.

 

  (b) Funding of Term Loans.

(i) The Term A Loan, the Term B Loan and the Term C Loan shall be deemed to be
advanced on the Closing Date by the refinancing of the indebtedness outstanding
under the Existing Term Loan Documents in accordance with the terms and
conditions of Section 2.10.

(ii) With respect to the Term D Loan, each Lender, severally and not jointly,
shall make available to Agent on the Closing Date its Pro Rata Share of the Term
D Loan, in lawful money of the United States of America in immediately available
funds, to the Collection Account (as defined below). Agent shall, unless it
shall have determined that one of the conditions set forth in Section 4, has not
been satisfied, credit the amounts received by it in like funds to Borrower by
wire transfer to the following deposit account of Borrower (or such other
deposit account as specified in writing by an authorized officer of Borrower and
acceptable to Agent) (the “Designated Deposit Account”):

Bank Name: State Street Bank and Trust Company

Bank Address: 225 Franklin Street, Boston, MA 02110

ABA#: 011000028

Account #: 17039843

Credit: Custody Services

Ref: DE1725

 

  (c) Notes. Each Term Loan of each Lender shall be evidenced by a promissory
note substantially in the form of Exhibit A hereto (each a “Note” and,
collectively, the “Notes”), and Borrower shall execute and deliver such Notes to
each Lender. Each Note shall represent the obligation of Borrower to pay to such
Lender the lesser of (a) the aggregate unpaid principal amount of the applicable
Term Loan made by such Lender (or deemed to be made by such Lender) to or on
behalf of Borrower under this Agreement or (b) the amount of such Lender’s
Commitment, in each case together with interest thereon as prescribed in
Section 2.3(a).

2.3. Interest and Repayment.

 

  (a) Interest.

(i) Each Term A Loan shall accrue interest in arrears from the Closing Date
until such Term A Loan is fully repaid at a fixed per annum rate of interest
equal to 10.92%.

 

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(ii) Each Term B Loan shall accrue interest in arrears from the Closing Date
until such Term B Loan is fully repaid at a fixed per annum rate of interest
equal to 11.56%.

(iii) Each Term C Loan shall accrue interest in arrears from the Closing Date
until such Term C Loan is fully repaid at a fixed per annum rate of interest
equal to 11.58%.

(iv) Each Term D Loan shall accrue interest in arrears from the date made until
such Term Loan is fully repaid at a fixed per annum rate of interest equal to
9.97%.

(v) All computations of interest and fees calculated on a per annum basis shall
be made by Agent on the basis of a 360-day year, in each case for the actual
number of days occurring in the period for which such interest and fees are
payable. Each determination of an interest rate or the amount of a fee hereunder
shall be made by Agent and shall be conclusive, binding and final for all
purposes, absent manifest error.

 

  (b) Payments of Principal and Interest.

(i) For the Term A Loan, Borrower shall pay to the Agent, for the ratable
benefit of the Term A Lenders, ten (10) equal consecutive payments of principal
and interest (payable in arrears) at the rate of interest determined in
accordance with Section 2.3(a) (each such payment of principal and interest on
the Term A Loan, a “Term A Loan Scheduled Payment”) on the first day of each
calendar month (the first day of each calendar month during the term of this
Agreement, a “Scheduled Payment Date”) commencing on March 1, 2008.
Notwithstanding the foregoing, all unpaid principal and accrued interest with
respect to the Term A Loan is due and payable in full to Agent, for the ratable
benefit of Term A Lenders, on the earlier of (A) December 1, 2008 or (B) the
date that such Term A Loan otherwise becomes due and payable hereunder, whether
by acceleration of the Obligations pursuant to Section 8.2 or otherwise (the
earlier of (A) or (B), the “Term A Loan Maturity Date”).

 

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(ii) For the Term B Loan, Borrower shall pay to the Agent, for the ratable
benefit of the Term B Lenders, fifteen (15) equal consecutive payments of
principal and interest (payable in arrears) at the rate of interest determined
in accordance with Section 2.3(a) (each such payment of principal and interest
on the Term B Loan, a “Term B Loan Scheduled Payment”) on each Scheduled Payment
Date commencing on March 1, 2008. Notwithstanding the foregoing, all unpaid
principal and accrued interest with respect to the Term B Loan is due and
payable in full to Agent, for the ratable benefit of Term B Lenders, on the
earlier of (A) May 1, 2009 or (B) the date that such Term B Loan otherwise
becomes due and payable hereunder, whether by acceleration of the Obligations
pursuant to Section 8.2 or otherwise (the earlier of (A) or (B), the “Term B
Loan Maturity Date”).

(iii) For the Term C Loan, Borrower shall pay to the Agent, for the ratable
benefit of the Term C Lenders, twenty-nine (29) equal consecutive payments of
principal and interest (payable in arrears) at the rate of interest determined
in accordance with Section 2.3(a) (each such payment of principal and interest
on the Term C Loan, a “Term C Loan Scheduled Payment”) on each Scheduled Payment
Date commencing on March 1, 2008. Notwithstanding the foregoing, all unpaid
principal and accrued interest with respect to the Term C Loan is due and
payable in full to Agent, for the ratable benefit of Term C Lenders, on the
earlier of (A) July 1, 2010 or (B) the date that such Term C Loan otherwise
becomes due and payable hereunder, whether by acceleration of the Obligations
pursuant to Section 8.2 or otherwise (the earlier of (A) or (B), the “Term C
Loan Maturity Date”).

(iv) For each Term D Loan, Borrower shall pay to the Agent, for the ratable
benefit of the Lenders, thirty-six (36) equal consecutive payments of principal
and interest (payable in arrears) at the rate of interest determined in
accordance with Section 2.3(a) (each such payment of principal and interest on
the Term D Loan, a “Term D Loan Scheduled Payment” and, together with each Term
A Loan Scheduled Payment, each Term B Loan Scheduled Payment and each Term C
Loan Scheduled Payment, the “Scheduled Payments”) on each Scheduled Payment Date
commencing on April 1, 2008. The amount of each such payment of principal and
interest shall be calculated by the Agent and shall be sufficient to fully
amortize the principal and interest due with respect to the applicable Term D
Loan over such repayment period. Notwithstanding the foregoing, all unpaid
principal and accrued interest with respect to a Term D Loan is due and payable
in full to Agent, for the ratable benefit of Lenders, on the earlier of
(A) March 1, 2011 or (B) the date that such Term D Loan otherwise becomes due
and payable hereunder, whether by acceleration of the Obligations pursuant to
Section 8.2 or otherwise (the earlier of (A) or (B), the “Applicable Term D Loan
Maturity Date” and together with the Term A Loan Maturity Date, the Term B Loan
Maturity Date and the Term C Loan Maturity Date, the “Applicable Term Loan
Maturity Date”).

(v) Each Scheduled Payment, when paid, shall be applied first to the payment of
accrued and unpaid interest on the applicable Term Loan and then to unpaid
principal balance of such Term Loan. Without limiting the foregoing, all
Obligations shall be due and payable on the Applicable Term Loan Maturity Date
for the last Term Loan made.

 

  (c) No Reborrowing. Once a Term Loan is repaid or prepaid, it cannot be
reborrowed.

 

  (d)

Payments. All payments (including prepayments) to be made by any Loan Party
under any Debt Document shall be made in immediately available funds in U.S.
dollars, without setoff or counterclaim to the Collection Account (as defined
below) before 11:00 a.m. New York time on the date when due. All payments
received by Agent after 11:00 a.m. New York

 

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time on any Business Day or at any time on a day that is not a Business Day
shall be deemed to be received on the next Business Day. Whenever any payment
required under this Agreement would otherwise be due on a date that is not a
Business Day, such payment shall instead be due on the next Business Day, and
additional fees or interest, as the case may be, shall accrue and be payable for
the period of such extension. The payment of any Scheduled Payment prior to its
due date shall be deemed to have been received on such due date for purposes of
calculating interest hereunder. All Scheduled Payments due to Agent and Lenders
under Section 2.3(b) shall be effected by automatic debit of the appropriate
funds from Borrower’s operating account specified on the EPS Setup Form (as
defined below). As used herein, the term “Collection Account” means the
following account of Agent (or such other account as Agent shall identify to
Borrower in writing):

Bank Name: Deutsche Bank

Bank Address: New York, NY

ABA Number: 021 001 033

Account Number: 50271079

Account Name: GECC HH Cash Flow Collections

Ref: Achillion Pharmaceuticals, Inc. / HFS 2715

 

  (e) Withholdings and Increased Costs. All payments shall be made free and
clear of any taxes, withholdings, duties, impositions or other charges (other
than taxes on the overall net income of any Lender and comparable taxes), such
that Agent and Lenders will receive the entire amount of any Obligations (as
defined below), regardless of source of payment. If Agent or any Lender shall
have determined that the introduction of or any change in, after the date
hereof, any law, treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order reduces the rate of return on Agent or such Lender’s capital
as a consequence of its obligations hereunder or increases the cost to Agent or
such Lender of agreeing to make or making, funding or maintaining any Term Loan,
then Borrower shall have the right to either (i) upon demand by Agent or such
Lender (with a copy of such demand to Agent), promptly pay to Agent for its own
account or for the account of such Lender, as the case may be, additional
amounts sufficient to compensate Agent or such Lender for such reduction or for
such increased cost (such reduction or increased cost, as applicable and
collectively, the “Increased Costs”) or (ii) within 10 days of such demand,
prepay the Term Loans in full pursuant to Section 2.4 together with the
Increased Costs; provided, however, that only 50% of the prepayment premium that
would have been otherwise due pursuant to clause (ii) of Section 2.4 shall be
paid by Borrower in connection with such prepayment. A certificate as to the
amount of such reduction or such increased cost submitted by Agent or such
Lender (with a copy to Agent) to Borrower shall be conclusive and binding on
Borrower, absent manifest error, provided that, neither Agent nor any Lender
shall be entitled to payment of any amounts under this Section 2.3(e) unless it
has delivered such certificate to Borrower within 90 days after the occurrence
of the changes or events giving rise to the increased costs to, or reduction in
the amounts received by, Agent or such Lender. This provision shall survive the
termination of this Agreement.

 

  (f)

Loan Records. Each Lender shall maintain in accordance with its usual practice
accounts evidencing the Obligations of Borrower to such Lender resulting from
such Lender’s Pro Rata Share of each Term Loan, including the amounts of
principal and interest payable and paid to such Lender from time to time under
this Agreement. Agent shall maintain in accordance with its usual practice a
loan account on its books to record the Term Loans and any other extensions of
credit made by Lenders hereunder, and all payments thereon made by Borrower. The
entries made in the such accounts shall, to the extent permitted by

 

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applicable law, be prima facie evidence of the existence and amounts of the
Obligations recorded therein; provided, however, that no error in such account
and no failure of any Lender or Agent to maintain any such account shall affect
the obligations of Borrower to repay the Obligations in accordance with their
terms.

2.4. Prepayments. Borrower can voluntarily prepay, upon 5 Business Days’ prior
written notice to Agent, any Term Loan in full, but not in part. Upon the date
of (a) any voluntary prepayment of a Term Loan in accordance with the
immediately preceding sentence or (b) any mandatory prepayment of a Term Loan
required under this Agreement (whether by acceleration of the Obligations
pursuant to Section 8.2 or otherwise), Borrower shall pay to Agent, for the
ratable benefit of the Lenders, a sum equal to (i) all outstanding principal
plus any unpaid interest accrued through the date of such prepayment with
respect to the such Term Loan, and (ii) a prepayment premium (as yield
maintenance for loss of bargain and not as a penalty) equal to: (A) with respect
to the Term A Loan, 3% on such principal prepayment amount, if such prepayment
is made before the Term A Loan Maturity Date, (B) with respect to the Term B
Loan, (I) 4% on such principal prepayment amount, if such prepayment is made on
or before April 30, 2008 and (II) 3% on such principal prepayment amount, if
such prepayment is made after April 30, 2008 but before the Term B Loan Maturity
Date, (C) with respect to the Term C Loan, (I) 0% if such prepayment is made on
or before December 1, 2008, (II) 4% on such principal prepayment amount, if such
prepayment is made after December 1, 2008 but on or before May 31, 2009, (III)
3% on such principal prepayment amount, if such prepayment is made after May 31,
2009 but on or before May 31, 2010, (IV) 2% on such principal prepayment amount,
if such prepayment is made after May 31, 2010 but before the Term C Loan
Maturity Date, and (D) with respect to the Term D Loan, (I) 6% on such principal
prepayment amount, if such prepayment is made on or before the one year
anniversary of such Term D Loan, (II) 5% on such principal prepayment amount, if
such prepayment is made after the one year anniversary of such Term D Loan but
on or before the two year anniversary of such Term D Loan, and (III) 4% on such
principal prepayment amount, if such prepayment is made after the two year
anniversary of such Term D Loan but before the Applicable Term D Loan Maturity
Date for such Term D Loan.

2.5. Late Fees. If Agent does not receive any Scheduled Payment or other payment
under any Debt Document from any Loan Party within 5 days after its due date,
then, at Agent’s election, such Loan Party agrees to pay to Agent for the
ratable benefit of all Lenders, a late fee equal to (a) 5% of the amount of such
unpaid payment or (b) such lesser amount that, if paid, would not cause the
interest and fees paid by such Loan Party under this Agreement to exceed the
Maximum Lawful Rate (as defined below) (the “Late Fee”).

2.6. Default Rate. All Term Loans and other Obligations shall bear interest, at
the option of Agent or upon the request of the Requisite Lenders (as defined
below), from and after the occurrence and during the continuation of an Event of
Default (as defined below), at a rate equal to the lesser of (a) 5% above the
rate of interest applicable to such Obligations as set forth in Section 2.3(a)
immediately prior to the occurrence of the Event of Default and (b) the Maximum
Lawful Rate (the “Default Rate”). The application of the Default Rate shall not
be interpreted or deemed to extend any cure period or waive any Default or Event
of Default or otherwise limit the Agent’s or any Lender’s right or remedies
hereunder. All interest payable at the Default Rate shall be payable on demand.

2.7. Lender Fees. On the Closing Date, Borrower shall pay to Agent, for the
benefit of Lenders in accordance with their Pro Rata Shares, a non-refundable
closing fee in an amount equal to $25,000, which fee shall be fully earned when
paid.

2.8. Maximum Lawful Rate. Anything herein, any Note or any other Debt Document
(as defined below) to the contrary notwithstanding, the obligations of Loan
Parties hereunder and thereunder shall be subject to the limitation that
payments of interest shall not be required, for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by

 

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Agent and Lenders would be contrary to the provisions of any law applicable to
Agent and Lenders limiting the highest rate of interest which may be lawfully
contracted for, charged or received by Agent and Lenders, and in such event Loan
Parties shall pay Agent and Lenders interest at the highest rate permitted by
applicable law (“Maximum Lawful Rate”); provided, however, that if at any time
thereafter the rate of interest payable hereunder or thereunder is less than the
Maximum Lawful Rate, Loan Parties shall continue to pay interest hereunder at
the Maximum Lawful Rate until such time as the total interest received by Agent
and Lenders is equal to the total interest that would have been received had the
interest payable hereunder been (but for the operation of this paragraph) the
interest rate payable since the making of the Initial Term Loan as otherwise
provided in this Agreement, any Note or any other Debt Document.

2.9. Authorization and Issuance of the Warrants. Borrower has duly authorized
the issuance to Lenders (or their respective affiliates or designees) of stock
purchase warrants substantially in the form of the warrant attached hereto as
Exhibit F (collectively, the “Warrants”) evidencing Lenders’ (or their
respective affiliates or designees) right to acquire their respective Pro Rata
Share of up to 42,735 shares of common stock of Borrower at an exercise price of
$4.68 per share. The exercise period shall expire ten (10) years from the date
such Warrant is issued.

2.10. Amendment and Restatement; No Novation; Continuance of Security Interests.

 

  (a) This Agreement constitutes an amendment and restatement of the Existing
Term Loan Documents effective from and after the Closing Date. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby are not intended by the parties to constitute, and shall not constitute,
a novation or an accord and satisfaction of any of the indebtedness and other
obligations owing by the Borrower to any Lender under the Existing Term Loan
Documents (such indebtedness and other obligations, collectively, the “Existing
Term Loan Debt”). On the Closing Date, the Existing Term Loans shall be
refinanced and converted into the Term A Loan, Term B Loan and Term C Loan,
respectively, in accordance with the provisions of Section 2.2(a)(i), (ii) and
(iii). The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereunder are not intended by the parties to
constitute, and shall not constitute, a termination or release of any prior
security interests or liens granted by Borrower to any Lender under the Existing
Term Loan Documents, but are intended to constitute a restatement and
reconfirmation of all such prior security interests and liens granted under the
Existing Term Loan Documents in favor of Agent (for the benefit of the Lenders)
in and to the Collateral (as defined in Section 3.1).

 

  (b) Without limiting the generality of Section 2.10(a), the Borrower, Lenders
and Agent hereby further agree that the Intercreditor Agreement, dated as of
December 30, 2005, by and between GECC and Oxford and relating to the Existing
Term Loan Documents, is hereby terminated and shall be of no further force or
effect.

 

3. CREATION OF SECURITY INTEREST.

3.1. Grant of Security Interest. As security for the prompt payment and
performance, whether at the stated maturity, by acceleration or otherwise, of
all Term Loans and other debt, obligations and liabilities of any kind
whatsoever of Borrower to Agent and Lenders under the Debt Documents (whether
for principal, interest, fees, expenses, prepayment premiums, indemnities,
reimbursements or other sums, and whether or not such amounts accrue after the
filing of any petition in bankruptcy or after the commencement of any
insolvency, reorganization or similar proceeding, and whether or not allowed in
such case or proceeding), absolute or contingent, now existing or arising in the
future, including but not limited to the payment and performance of any
outstanding Notes, and any renewals, extensions and modifications of such

 

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Term Loans (such indebtedness under the Notes, Term Loans and other debt,
obligations and liabilities in connection with the Debt Documents (excluding the
Warrants) are collectively called the “Obligations”), and as security for the
prompt payment and performance by each Guarantor of the Guaranteed Obligations
as defined in the Guaranty (as defined below), each Loan Party does hereby grant
to Agent, on behalf of itself and Lenders, a security interest in the property
listed below (all hereinafter collectively called the “Collateral”):

All of such Loan Party’s personal property of every kind and nature (except for
Intellectual Property, as defined in, and to the extent excluded pursuant to,
Section 3.3) whether now owned or hereafter acquired by, or arising in favor of,
such Loan Party, and regardless of where located, including, without limitation,
all accounts, chattel paper (whether tangible or electronic), commercial tort
claims, deposit accounts, documents, equipment, financial assets, fixtures,
goods, instruments, investment property (including, without limitation, all
securities accounts), inventory, letter-of-credit rights, letters of credit,
securities, supporting obligations, cash, cash equivalents, any other contract
rights (including, without limitation, rights under any license agreements), or
rights to the payment of money, and general intangibles, and all books and
records of such Loan Party relating thereto, and in and against all additions,
attachments, accessories and accessions to such property, all substitutions,
replacements or exchanges therefor, all proceeds, insurance claims, products,
profits and other rights to payments not otherwise included in the foregoing
(with each of the foregoing terms that are defined in the UCC having the meaning
set forth in the UCC).

Each Loan Party hereby represents and covenants that such security interest
constitutes a valid, first priority security interest in the presently existing
Collateral, and will constitute a valid, first priority security interest in
Collateral acquired after the date hereof. Each Loan Party hereby covenants that
it shall give written notice to Agent promptly upon the acquisition by such Loan
Party or creation in favor of such Loan Party of any commercial tort claim after
the Closing Date.

Notwithstanding anything herein to the contrary, in no event shall the
Collateral include or the security interest granted under Section 3.1 hereof
attach to more than 65% of the outstanding capital stock of a Controlled Foreign
Corporation (as defined in the Internal Revenue Code)

3.2. Financing Statements. Each Loan Party hereby authorizes Agent to file UCC
financing statements with all appropriate jurisdictions to perfect Agent’s
security interest (for the benefit of itself and the Lenders) granted hereby.

3.3. Grant of Security Interest in Proceeds of Intellectual Property. The
Collateral shall not include any of the following: (a) all of any Loan Party’s
right, title and interest, whether now owned or existing or hereafter acquired
or arising, in and to all domestic and foreign copyrights, copyright
registrations and copyright applications, whether or not registered or filed
with any governmental authority, together with (i) all renewals thereof,
(ii) all present and future rights of such Loan Party under all present and
future license agreements relating thereto, whether such Loan Party is licensee
or licensor thereunder, (iii) all of such Loan Party’s present and future
claims, causes of action and rights to sue for past, present or future
infringements thereof, and (iv) all rights corresponding thereto throughout the
world (collectively “Copyright Rights”); (b) all of any Loan Party’s right,
title and interest, whether now owned or existing or hereafter acquired or
arising, in and to all United States and foreign patents, and pending and
abandoned United States and foreign patent applications, including, without
limitation, the inventions and improvements described or claimed therein,
together with (i) and reissues, divisions continuations, certificates of
re-examination, extensions and continuations-in-part thereof, (ii) all present
and future rights of such Loan Party under all present and future license
agreements relating thereto, whether such Loan Party is licensee or licensor
thereunder, and (iii) all of such Loan Party’s present and future claims,
throughout the

 

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world (collectively “Patent Rights”); (c) all of any Loan Party’s right title
and interest, whether now owned or existing or hereafter acquired or arising, in
and to all domestic and foreign trademarks, trademark registrations, trademark
applications and trade names, whether or not registered or filed with any
governmental authority, together with (i) all renewals thereof, (ii) all present
and future rights of such Loan Party under all present and future license
agreements relating thereto, whether such Loan Party is licensee or licensor
thereunder, (iii) all of such Loan Party’s present and future claims, causes of
action and rights to sue for past, present or future infringements thereof, and
(iv) all rights corresponding thereto throughout the world and all goodwill
related to the foregoing (collectively “Trademark Rights”); (d) all present and
future licenses and license agreements of any Loan Party, and all rights of such
Loan Party under or in connection therewith, whether such Loan Party is licensee
or licensor thereunder, including without limitation any present or future
franchise agreements under which such Loan Party is a franchisee or franchisor,
together with (i) all renewals thereof, (ii) all claims, causes of action and
rights to sue for past, present or future infringements thereof, and (iii) all
rights corresponding thereto throughout the world (collectively “License
Rights”); (e) all present and future trade secrets of any Loan Party; and
(f) all other present and future intellectual property of any Loan Party
(collectively, “Intellectual Property”) now owned or hereafter acquired, or any
claims for damages by way of any past, present or future infringement of any of
the foregoing; provided however, that the Collateral shall include all cash,
royalty fees, other proceeds, accounts and general intangibles that consist of
rights of payment to or on behalf of a Loan Party or proceeds from the sale,
licensing or other disposition of all or any part of, or rights in, the
Intellectual Property by or on behalf of a Loan Party (“Rights to Payment”).
Notwithstanding the foregoing, to the extent it is necessary under applicable
law in any bankruptcy or insolvency proceeding involving a Loan Party for Agent
(on behalf of itself and Lenders) to have a security interest in the underlying
Intellectual Property in order for Agent to have (i) a security interest in the
Rights to Payment and (ii) a security interest in any payments with respect to
Rights to Payment that are received after the commencement of such bankruptcy or
insolvency proceeding, then the Collateral shall automatically, and effective as
of the date hereof, include the Intellectual Property to the extent necessary to
permit attachment and perfection of Agent’s security interest (on behalf of
itself and Lenders) in the Rights to Payment and any payments in respect thereof
that are received after the commencement of any bankruptcy or insolvency
proceeding. Agent hereby agrees on behalf of itself and the Lenders that, if
Agent obtains a security interest in the Intellectual Property pursuant to the
immediately preceding sentence, Agent will not exercise any remedies (under the
UCC or otherwise) with respect to the Intellectual Property (other than remedies
with respect to Rights to Payment or any other proceeds of the Intellectual
Property).

3.4. Termination of Security Interest. Subject to Section 10.9, Agent’s lien on
the Collateral (on behalf of itself and Lenders) shall continue until all of the
Obligations are indefeasibly repaid in full in cash and all of the Commitments
hereunder are terminated (the “Termination Date”). Upon the Termination Date,
Agent shall, on behalf of itself and the Lenders, at Loan Parties’ sole cost and
expense and without any recourse, representation or warranty, release its liens
in the Collateral, and all rights remaining therein, if any, shall revert to
Loan Parties.

 

4. CONDITIONS PRECEDENT TO THE REFINANCING OF THE TERM A LOAN, THE TERM B LOAN
AND THE TERM C LOAN, AND THE ADVANCE OF THE TERM D LOAN.

No Lender shall be obligated to refinance the indebtedness under the Existing
Term Loan Documents into the Term A Loan, the Term B Loan and the Term C Loan as
described in Sections 2.2(a)(i), (ii) or (iii) or make the Term D Loan as
described in Section 2.2(a)(iv), or to take, fulfill, or perform any other
action hereunder, until the following have been delivered to the Agent (the date
on which the Lenders refinance the Term A Loan, the Term B Loan and the Term C
Loan and make the Term D Loan after all such conditions shall have been
satisfied in a manner satisfactory to Agent or waived in accordance with this
Agreement, the “Closing Date”):

 

  (a) a counterpart of this Agreement duly executed by each Loan Party;

 

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  (b) a certificate executed by the Secretary of each Loan Party, the form of
which is attached hereto as Exhibit B (the “Secretary’s Certificate”), providing
verification of incumbency and attaching (i) such Loan Party’s board resolutions
approving the transactions contemplated by this Agreement and the other Debt
Documents and (ii) such Loan Party’s governing documents;

 

  (c) Notes duly executed by Borrower in favor of each applicable Lender;

 

  (d) filed copies of UCC financing statements, collateral assignments, and
terminations statements, with respect to the Collateral, as Agent shall request;

 

  (e) certificates of insurance evidencing the insurance coverage, and
satisfactory additional insured and lender loss payable endorsements, in each
case as required pursuant to Section 6.4 herein;

 

  (f) current UCC lien, judgment, bankruptcy and tax lien search results
demonstrating that there are no other security interests or liens on the
Collateral, other than Permitted Liens (as defined below);

 

  (g) a Warrant in favor of each Lender (or its affiliate or designee);

 

  (h) a certificate of good standing of each Loan Party from the jurisdiction of
such Loan Party’s organization and a certificate of foreign qualification from
each jurisdiction where such Loan Party’s failure to be so qualified could
reasonably be expected to have a Material Adverse Effect (as defined below), in
each case as of a recent date acceptable to Agent;

 

  (i) a landlord consent and/or bailee letter in favor of Agent executed by the
landlord or bailee, as applicable, for any third party location where (a) any
Loan Party’s principal place of business, (b) any Loan Party’s books or records
or (c) Collateral with an aggregate value in excess of $25,000 is located, a
form of which is attached hereto as Exhibit C-1 and Exhibit C-2, as applicable
(“Access Agreement”);

 

  (j) a legal opinion of Loan Parties’ counsel, in form and substance
satisfactory to Agent;

 

  (k) a completed EPS set-up form, a form of which is attached hereto as Exhibit
E (the “EPS Setup Form”);

 

  (l) a completed perfection certificate, duly executed by each Loan Party (the
“Perfection Certificate”), a form of which Agent previously delivered to
Borrower;

 

  (m) one or more Account Control Agreements (as defined below), in form and
substance reasonably acceptable to Agent, duly executed by the applicable Loan
Parties and the applicable depository or financial institution, for each deposit
and securities account (other than accounts used exclusively for payroll and
withholding tax purposes) listed on the Perfection Certificate;

 

  (n) a disbursement instruction letter, in form and substance satisfactory to
Agent, executed by each Loan Party, Agent and each Lender (the “Disbursement
Letter”);

 

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  (o) all other documents and instruments as Agent may reasonably deem necessary
or appropriate to effectuate the intent and purpose of this Agreement (together
with the Agreement, Note, the Warrants, the Perfection Certificate, the
Guaranty, if any, the Secretary’s Certificate and the Disbursement Letter, and
all other agreements, instruments, documents and certificates executed and/or
delivered to or in favor of Agent from time to time in connection with this
Agreement or the transactions contemplated hereby, the “Debt Documents”);

 

  (p) Agent and Lenders shall have received the fees required to be paid by
Borrower, if any, in the respective amounts specified in Section 2.7, and
Borrower shall have reimbursed Agent and Lenders for all fees, costs and
expenses of closing presented as of the date of this Agreement; and

 

  (q) all representations and warranties in Section 5 below shall be true as of
the Closing Date; (ii) no Event of Default or any other event, which with the
giving of notice or the passage of time, or both, would constitute an Event of
Default (such event, a “Default”) has occurred and is continuing or will result
from the refinancing of the Term A Loan, the Term B Loan and the Term C Loan or
the making of the Term D Loan, and (iii) Agent shall have received a certificate
from an authorized officer of each Loan Party confirming each of the foregoing.

 

5. REPRESENTATIONS AND WARRANTIES OF LOAN PARTIES.

Each Loan Party, jointly and severally, represents, warrants and covenants to
Agent and each Lender that:

5.1. Due Organization and Authorization. Each Loan Party’s exact legal name is
as set forth in the Perfection Certificate and each Loan Party is duly
organized, existing and in good standing under the laws of the State of its
organization as specified in the Perfection Certificate, has its chief executive
office at the location specified in the Perfection Certificate, and is duly
qualified and licensed in every jurisdiction wherever necessary to carry on its
business and operations, except where the failure to be so qualified and
licensed could not reasonably be expected to have a Material Adverse Effect.
This Agreement and the other Debt Documents have been duly authorized, executed
and delivered by each Loan Party and constitute legal, valid and binding
agreements enforceable in accordance with their terms. The execution, delivery
and performance by each Loan Party of each Debt Document executed or to be
executed by it is in each case within such Loan Party’s powers.

5.2. Required Consents. No filing, registration, qualification with, or
approval, consent or withholding of objections from, any governmental authority
or instrumentality or any other entity or person is required with respect to the
entry into, or performance by any Loan Party of, any of the Debt Documents,
except any already obtained.

5.3. No Conflicts. The entry into, and performance by each Loan Party of, the
Debt Documents will not (a) violate any of the organizational documents of such
Loan Party, (b) violate any law, rule, regulation, order, award or judgment
applicable to such Loan Party, or (c) result in any breach of or constitute a
default under, or result in the creation of any lien, claim or encumbrance on
any of such Loan Party’s property (except for liens in favor of Agent, on behalf
of itself and Lenders) pursuant to, any indenture, mortgage, deed of trust, bank
loan, credit agreement, or other Material Agreement (as defined below) to which
such Loan Party is a party. As used herein, “Material Agreement” shall mean any
agreement required to be filed with the Securities and Exchange Commission
(“SEC”) pursuant to Item 601(b)(10) of Regulation S-K. A description of all
Material Agreements as of the Closing Date is set forth on Schedule B hereto.

 

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5.4. Litigation. There are no actions, suits, proceedings or investigations
pending against or affecting any Loan Party before any court, federal, state,
provincial, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, the outcome of which
could reasonably be expected to have a Material Adverse Effect, or which
questions the validity of the Debt Documents, or the other documents required
thereby or any action to be taken pursuant to any of the foregoing, nor does any
Loan Party have reason to believe that any such actions, suits, proceedings or
investigations are threatened. As used in this Agreement, the term “Material
Adverse Effect” shall mean a material adverse effect on any of (a) the
operations, business, assets, properties, or condition (financial or otherwise)
of Borrower, individually, or the Loan Parties, collectively, (b) the ability of
a Loan Party to perform any of its obligations under any Debt Document to which
it is a party, (c) the legality, validity or enforceability of any Debt
Document, (d) the rights and remedies of Agent or Lenders under any Debt
Document or (e) the validity, perfection or priority of any lien in favor of
Agent, on behalf of itself and Lenders, on any of the Collateral.

5.5. Financial Statements. All financial statements delivered to Agent and
Lenders pursuant to Section 6.3 have been prepared in accordance with GAAP
(subject, in the case of unaudited financial statements, to the absence of
footnotes and normal year end audit adjustments), and since the date of the most
recent audited financial statement, no event has occurred which has had or could
reasonably be expected to have a Material Adverse Effect. There has been no
material adverse deviation from the most recent annual operating plan of
Borrower delivered to Agent and Lenders in accordance with Section 6.3.

5.6. Use of Proceeds. The proceeds of the Term Loans shall be used for working
capital and general corporate purposes.

5.7. Collateral. Each Loan Party is the sole and lawful owner of, and in
possession of, the Collateral, and has the sole right and lawful authority to
grant the security interest described in this Agreement. The Collateral is free
and clear of all liens, claims and encumbrances of any kind whatsoever, except
for (a) liens in favor of Agent, on behalf of itself and Lenders, to secure the
Obligations, (b) liens (i) with respect to the payment of taxes, assessments or
other governmental charges or (ii) of suppliers, carriers, materialmen,
warehousemen, workmen or mechanics and other similar liens, in each case imposed
by law and arising in the ordinary course of business, and securing amounts that
are not yet due or that are being contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves or
other appropriate provisions are maintained on the books of the applicable Loan
Party in accordance with GAAP and which do not involve, in the judgment of
Agent, any risk of the sale, forfeiture or loss of any of the Collateral (a
“Permitted Contest”), (c) liens existing on the date hereof and set forth on
Schedule B hereto, (d) liens securing Indebtedness (as defined in Section 7.2
below) permitted under Section 7.2(c) below, provided that (i) such liens exist
prior to the acquisition of, or attach substantially simultaneous with, or
within 20 days after the, acquisition, repair, improvement or construction of,
such property financed by such Indebtedness and (ii) such liens do not extend to
any property of a Loan Party other than the property (and proceeds thereof)
acquired or built, or the improvements or repairs, financed by such
Indebtedness, and (e) licenses described in Section 7.3(c) and (d) below (all of
such liens described in the foregoing clauses (a) through (e) are called
“Permitted Liens”).

5.8. Compliance with Laws.

 

  (a)

Each Loan Party is in compliance with all laws, statutes, ordinances, rules and
regulations applicable to it, except to the extent that any such non-compliance,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. Without limiting the generality of the immediately
preceding sentence, each Loan Party further agrees that it is in compliance in
all material respects with all U.S. economic sanctions laws, Executive Orders
and implementing regulations as promulgated by the U.S. Treasury

 

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Department’s Office of Foreign Assets Control (“OFAC”), and all applicable
anti-money laundering and counter-terrorism financing provisions of the Bank
Secrecy Act and the USA Patriot Act and all regulations issued pursuant to it.
No Loan Party nor any of its subsidiaries, affiliates or joint ventures (A) is a
person or entity designated by the U.S. Government on the list of the Specially
Designated Nationals and Blocked Persons (the “SDN List”) with which a U.S.
person or entity cannot deal with or otherwise engage in business transactions,
(B) is a person or entity who is otherwise the target of U.S. economic sanctions
laws such that a U.S. person or entity cannot deal or otherwise engage in
business transactions with such person or entity; or (C) is controlled by
(including without limitation by virtue of such person being a director or
owning voting shares or interests), or acts, directly or indirectly, for or on
behalf of, any person or entity on the SDN List or a foreign government that is
the target of U.S. economic sanctions prohibitions such that the entry into, or
performance under, this Agreement or any other Debt Document would be prohibited
under U.S. law. The SDN List is maintained by OFAC and is available at:
http://www.ustreas.gov/offices/enforcement/ofac/sdn/.

 

  (b) Each Loan Party has met the minimum funding requirements of the United
States Employee Retirement Income Security Act of 1974 (as amended, “ERISA”)
with respect to any employee benefit plans subject to ERISA. No Loan Party is an
“investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940. No Loan Party is engaged
principally, or as one of the important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations T, U and X of the Board of Governors of the Federal
Reserve System (the “Federal Reserve Board”).

5.9. Intellectual Property. The Intellectual Property is free and clear of all
liens, claims and encumbrances of any kind whatsoever, except for Permitted
Liens described in clauses (b)(i) and (e) of Section 5.7. No Loan Party has
entered into any other agreement or financing arrangement in which a negative
pledge in such Loan Party’s Intellectual Property is granted to any other party.
As of the Closing Date and each date a Term Loan is advanced to Borrower, no
Loan Party has any interest in, or title to any Intellectual Property except as
disclosed in the Perfection Certificate. Each Loan Party owns or has rights to
use all Intellectual Property material to the conduct of its business as now or
heretofore conducted by it or proposed to be conducted by it, without any actual
or claimed infringement upon the rights of third parties that has had or could
reasonably be expected to have a Material Adverse Effect.

5.10. Solvency. Both before and after giving effect to each Term Loan, the
transactions contemplated herein, and the payment and accrual of all transaction
costs in connection with the foregoing, each Loan Party is and will be Solvent.
As used herein, “Solvent” means, with respect to a Loan Party on a particular
date, that on such date (a) the fair value of the property of such Loan Party is
greater than the total amount of liabilities, including contingent liabilities,
of such Loan Party; (b) the present fair salable value of the assets of such
Loan Party is not less than the amount that will be required to pay the probable
liability of such Loan Party on its debts as they become absolute and matured;
(c) such Loan Party does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Loan Party’s ability to pay as such debts and
liabilities mature; (d) such Loan Party is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which
such Loan Party’s property would constitute an unreasonably small capital; and
(e) is not “insolvent” within the meaning of Section 101(32) of the United
States Bankruptcy Code (11 U.S.C. § 101, et. seq), as amended from time to time.
The amount of contingent liabilities (such as litigation, guaranties and pension
plan liabilities) at any time shall be computed as the amount that, in light of
all the facts and circumstances existing at the time, represents the amount that
can be reasonably be expected to become an actual or matured liability.

 

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5.11. Taxes; Pension. All tax returns, reports and statements, including
information returns, required by any governmental authority to be filed by each
Loan Party and its Subsidiaries have been filed with the appropriate
governmental authority all taxes, levies, assessments and similar charges have
been paid prior to the date on which any fine, penalty, interest or late charge
may be added thereto for nonpayment thereof (or any such fine, penalty,
interest, late charge or loss has been paid), excluding taxes, levies,
assessments and similar charges or other amounts which are the subject of a
Permitted Contest. Proper and accurate amounts have been withheld by each Loan
Party from its respective employees for all periods in compliance with
applicable laws and such withholdings have been timely paid to the respective
governmental authorities. Each Loan Party has paid all amounts necessary to fund
all present pension, profit sharing and deferred compensation plans in
accordance with their terms, and no Loan Party has withdrawn from participation
in, or has permitted partial or complete termination of, or permitted the
occurrence of any other event with respect to, any such plan which could
reasonably be expected to result in any liability of a Loan Party, including any
liability to the Pension Benefit Guaranty Corporation or its successors or any
other governmental authority.

5.12. Full Disclosure. Loan Parties hereby confirm that all of the information
disclosed on the Perfection Certificate is true, correct and complete as of the
date of this Agreement and as of the date of each Term Loan. No representation,
warranty or other statement made by or on behalf of a Loan Party contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained therein not misleading, it being recognized by
Agent and Lenders that the projections and forecasts provided by Loan Parties in
good faith and based upon reasonable and stated assumptions are not to be viewed
as facts and that actual results during the period or periods covered by any
such projections and forecasts may differ from the projected or forecasted
results.

 

6. AFFIRMATIVE COVENANTS.

6.1. Good Standing. Until the Termination Date (but subject to reinstatement of
this Agreement pursuant to Section 10.9), each Loan Party shall maintain its and
each of its Subsidiaries’ existence and good standing in its jurisdiction of
organization and maintain qualification in each jurisdiction in which the
failure to so qualify could reasonably be expected to have a Material Adverse
Effect. Until the Termination Date (but subject to reinstatement of this
Agreement pursuant to Section 10.9), each Loan Party shall maintain, and shall
cause each of its Subsidiaries to maintain, in full force all licenses,
approvals and agreements, the loss of which could reasonably be expected to have
a Material Adverse Effect. “Subsidiary” means, with respect to a Loan Party, any
entity the management of which is, directly or indirectly controlled by, or of
which an aggregate of more than 50% of the outstanding voting capital stock (or
other voting equity interest) is, at the time, owned or controlled, directly or
indirectly by, such Loan Party or one or more Subsidiaries of such Loan Party,
and, unless the contest otherwise requires each reference to a Subsidiary herein
shall be a reference to a Subsidiary of Borrower.

6.2. Notice to Agent. Until the Termination Date (but subject to reinstatement
of this Agreement pursuant to Section 10.9), Loan Parties shall provide Agent
with (a) notice of any change in the accuracy of the Perfection Certificate or
any of the representations and warranties provided in Section 5 above,
immediately upon the occurrence of any such change, (b) notice of the occurrence
of any Default or Event of Default, promptly (but in any event within 3 days)
after the date on which any officer of a Loan Party obtains knowledge of the
occurrence of any such event, (c) upon written request by Agent, copies of all
statements, reports and notices made available generally by Borrower to its
securityholders and all documents filed with the SEC or any securities exchange
or governmental authority exercising a similar function, promptly, but in any
event within 3 days after Agent’s request, (d) a report of any legal actions
pending or threatened against Borrower or any Subsidiary that could result in
damages or costs to Borrower or any Subsidiary of $500,000 or more promptly, but
in any event within 3 days, upon receipt of notice thereof, (e) upon written
request of Agent, any new applications or registrations that Borrower has made
or

 

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filed in respect of any Intellectual Property or a change in status of any
outstanding application or registration within 5 days of such application,
filing or change in status, (f) redacted (and upon Agent’s written request and
agreement to be bound by the confidentiality provisions therein, unredacted)
copies of all statements, reports and notices delivered to or by a Loan Party in
connection with any Material Agreement within 3 Business Days after the date on
which Borrower makes a determination that such statement, report and/or notice,
as applicable, is material and adverse to Borrower, Agent or any Lender and
(g) in the event that any of the chief executive officer, the chief financial
officer or the chief scientific officer of Borrower ceases to be involved in the
day to day operations (including research development) or management of the
business of Borrower, Borrower shall deliver written notice thereof to Agent
promptly (but in any event within 3 days) after the date such officer ceases to
be involved in such operations.

6.3. Financial Statements. Until the Termination Date (but subject to
reinstatement of this Agreement pursuant to Section 10.9), if Borrower is a
private company, it shall deliver to Agent and Lenders (a) unaudited
consolidated and, if available, consolidating balance sheets, statements of
operations and cash flow statements within 45 days of each month end, in a form
acceptable to Agent and certified by Borrower’s president, chief executive
officer or chief financial officer, and (b) its complete annual audited
consolidated and, if available, consolidating financial statements prepared
under GAAP and certified by an independent certified public accountant selected
by Borrower and satisfactory to Agent within 120 days of the fiscal year end or,
if sooner, at such time as Borrower’s Board of Directors receives the certified
audit. If Borrower is a publicly held company and does not make its quarterly or
annual audited financial statements available on EDGAR on the date such
financial statements are required to be provided to the SEC (the “SEC Filing
Date”) (whether due to a failure by Borrower to file such financial statements,
an extension of the filing deadline by the SEC or otherwise), Borrower shall
deliver to Agent and Lenders, within 5 days after the SEC Filing Date and as
applicable, (i) quarterly unaudited consolidated and, if available,
consolidating balance sheets, statements of operations and cash flow statements
(“Quarterly Financials”) and (ii) annual audited consolidated and, if available,
consolidating balance sheets, statements of operations and cash flow statements,
certified by a recognized firm of certified public accountants (“Annual
Financials”). If Borrower is a publicly held company and Agent or a Lender is
unable to obtain Borrower’s quarterly or annual audited financial statements
through EDGAR on or after the 5th day after the SEC Filing Date, Borrower, upon
the request of Agent or such Lender, shall deliver the requested Quarterly
Financials or Annual Financials to the requesting party within 3 days after such
request. If Agent requests, Borrower shall deliver to Agent and Lenders monthly
unaudited consolidated and, if available, consolidating balance sheets,
statements of operations and cash flow statements within 30 days after the end
of each month. All such statements are to be prepared using GAAP (subject, in
the case of unaudited financial statements, to the absence of footnotes and
normal year end audit adjustments) and, if Borrower is a publicly held company,
are to be in compliance with applicable SEC requirements. All financial
statements delivered pursuant to this Section 6.3 shall be accompanied by a
compliance certificate, signed by the chief financial officer of Borrower, in
the form attached hereto as Exhibit D. Borrower shall deliver to Agent and
Lenders (i) as soon as available and in any event not later than 30 days after
the end of each fiscal year of Borrower, an annual operating plan for Borrower,
on a consolidated and, if available, consolidating basis, approved by the Board
of Directors of Borrower, for the current fiscal year, in form and substance
satisfactory to the Board of Directors of Borrower and (ii) such budgets, sales
projections, or other financial information as Agent or any Lender may
reasonably request from time to time generally prepared by Borrower in the
ordinary course of business.

6.4. Insurance. Until the Termination Date (but subject to reinstatement of this
Agreement pursuant to Section 10.9), Borrower, at its expense, shall maintain,
and shall cause each Subsidiary to maintain, insurance (including, without
limitation, comprehensive general liability, hazard, and business interruption
insurance) with respect to all of its properties and businesses (including, the
Collateral), in such amounts and covering such risks as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated and in any event with deductible amounts, insurers and
policies that shall be reasonably acceptable to Agent. Borrower shall deliver to
Agent annual certificates of

 

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insurance evidencing such coverage, together with endorsements to such policies
naming Agent as a lender loss payee or additional insured, as appropriate, in
form and substance satisfactory to Agent. Borrower appoints Agent as its
attorney-in-fact to make, settle and adjust all claims under and decisions with
respect to Borrower’s policies of insurance, and to receive payment of and
execute or endorse all documents, checks or drafts in connection with insurance
payments. Agent shall not act as Borrower’s attorney-in-fact unless an Event of
Default has occurred and is continuing. The appointment of Agent as Borrower’s
attorney in fact is a power coupled with an interest and is irrevocable until
all of the Obligations are indefeasibly paid in full. Proceeds of insurance
shall be applied, at the option of Agent, to repair or replace the Collateral or
to reduce any of the Obligations.

6.5. Taxes. Borrower shall, and shall cause each Subsidiary to, timely file all
tax reports and pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it, or its income or profits or upon its
properties or any part thereof, before the same shall be in default and before
the date on which penalties attach thereto, except to the extent such taxes,
assessments and governmental charges or levies are the subject of a Permitted
Contest.

6.6. Agreement with Landlord/Bailee. Until the Termination Date (but subject to
reinstatement of this Agreement pursuant to Section 10.9), each Loan Party shall
obtain and maintain such Access Agreement(s) with respect to any real property
on which (a) a Loan Party’s principal place of business, (b) a Loan Party’s
books or records or (c) Collateral with an aggregate value in excess of $25,000
is located (other than real property owned by such Loan Party) as Agent may
require.

6.7. Protection of Intellectual Property. Until the Termination Date (but
subject to reinstatement of this Agreement pursuant to Section 10.9), each Loan
Party shall take all necessary actions to: (a) protect, defend and maintain the
validity and enforceability of its Intellectual Property to the extent material
to the conduct of its business now or heretofore conducted by it or proposed to
be conducted by it, (b) promptly advise Agent in writing of material
infringements of its Intellectual Property, (c) not allow any Intellectual
Property to be abandoned, forfeited or dedicated to the public without Agent’s
written consent, unless such Loan Party has reasonably determined that such
Intellectual Property is not material to such Loan Party’s business, and
(d) notify Agent promptly, but in any event within 3 days, if it knows or has
reason to know (i) that any application or registration relating to any patent,
trademark or copyright (now or hereafter existing) may become abandoned or
dedicated, or (ii) of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court) regarding such Loan Party’s ownership of any Intellectual
Property, its right to register the same, or to keep and maintain the same,
unless in each case described in the preceding clauses (i) and (ii), such Loan
Party has reasonably determined that such Intellectual Property is not material
to such Loan Party’s business. Each Loan Party shall remain liable under each of
its Intellectual Property licenses pursuant to which it is a licensee
(“Licenses”) to observe and perform all of the conditions and obligations to be
observed and performed by it thereunder. None of Agent or any Lender shall have
any obligation or liability under any such License by reason of or arising out
of this Agreement, the granting of a lien, if any, in such License or the
receipt by Agent (on behalf of itself and Lenders) of any payment relating to
any such License. None of Agent or any Lender shall be required or obligated in
any manner to perform or fulfill any of the obligations of any Loan Party under
or pursuant to any License, or to make any payment, or to make any inquiry as to
the nature or the sufficiency of any payment received by it or the sufficiency
of any performance by any party under any License, or to present or file any
claims, or to take any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to it or which it may be
entitled at any time or times.

 

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6.8. Special Collateral Covenants.

 

  (a) Until the Termination Date (but subject to reinstatement of this Agreement
pursuant to Section 10.9), each Loan Party shall remain in possession of its
respective Collateral solely at the location(s) specified on the Perfection
Certificate; except that Agent, on behalf of itself and Lenders, shall have the
right to possess (i) any chattel paper or instrument that constitutes a part of
the Collateral, (ii) any other Collateral in which Agent’s security interest (on
behalf of itself and Lenders) may be perfected only by possession and (iii) any
Collateral after the occurrence of an Event of Default in connection with the
exercise of its remedies hereunder and in accordance with this Agreement and the
other Debt Documents. Agent may inspect (and representatives of any Lender may
accompany Agent on any such inspection) any of the Collateral during normal
business hours, and in the absence of a Default or an Event of Default, after
giving Borrower reasonable prior notice. If Agent asks, each Loan Party will
promptly notify Agent in writing of the location of any Collateral.

 

  (b) Until the Termination Date (but subject to reinstatement of this Agreement
pursuant to Section 10.9), each Loan Party shall (i) use the Collateral only in
its trade or business, (ii) maintain all of the Collateral in good operating
order and repair, normal wear and tear excepted, and (iii) use and maintain the
Collateral only in compliance with manufacturers’ recommendations and all
applicable laws.

 

  (c) Until the Termination Date (but subject to reinstatement of this Agreement
pursuant to Section 10.9), Agent and Lenders do not authorize and each Loan
Party agrees it shall not (i) part with possession of any of the Collateral
(except to Agent (on behalf of itself and Lenders), for maintenance and repair
or for a Permitted Disposition), or (ii) remove any of the Collateral from the
continental United States.

 

  (d) Until the Termination Date (but subject to reinstatement of this Agreement
pursuant to Section 10.9), each Loan Party shall pay promptly when due all
taxes, license fees, assessments and public and private charges levied or
assessed on any of the Collateral, on its use, or on this Agreement or any of
the other Debt Documents. At its option, Agent may discharge taxes, liens,
security interests or other encumbrances at any time levied or placed on the
Collateral and may pay for the maintenance, insurance and preservation of the
Collateral and effect compliance with the terms of this Agreement or any of the
other Debt Documents. Each Loan Party agrees to reimburse Agent, on demand, all
costs and expenses incurred by Agent in connection with such payment or
performance and agrees that such reimbursement obligation shall constitute
Obligations.

 

  (e) Each Loan Party shall, at all times, keep accurate and complete records of
the Collateral, and Agent shall have the right to inspect and make copies of all
of Loan Parties’ books and records relating to the Collateral during normal
business hours, and in the absence of a Default or an Event of Default, after
giving the applicable Loan Parties reasonable prior notice.

 

  (f) Each Loan Party agrees and acknowledges that any third person who may at
any time possess all or any portion of the Collateral shall be deemed to hold,
and shall hold, the Collateral as the agent of, and as pledge holder for, Agent
(on behalf of itself and Lenders). Agent may at any time give notice to any
third person described in the preceding sentence that such third person is
holding the Collateral as the agent of, and as pledge holder for, Agent (on
behalf of itself and Lenders).

 

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  (g) Until the Termination Date (but subject to reinstatement of this Agreement
pursuant to Section 10.9), the Collateral shall be free and clear of all liens,
claims and encumbrances of any kind whatsoever, except for Permitted Liens.

6.9. Further Assurances. Each Loan Party shall, upon request of Agent, furnish
to Agent such further information, execute and deliver to Agent such documents
and instruments (including, without limitation, UCC financing statements) and
shall do such other acts and things as Agent may at any time reasonably request
relating to the perfection or protection of the security interest created by
this Agreement or for the purpose of carrying out the intent of this Agreement
and the other Debt Documents.

 

7. NEGATIVE COVENANTS

7.1. Liens. Until the Termination Date (but subject to reinstatement of this
Agreement pursuant to Section 10.9), no Loan Party shall, and no Loan Party
shall permit any of its Subsidiaries to, create, incur, assume or permit to
exist any lien, security interest, claim or encumbrance or grant any negative
pledges on any Collateral or Intellectual Property, except Permitted Liens.

7.2. Indebtedness. Until the Termination Date (but subject to reinstatement of
this Agreement pursuant to Section 10.9), no Loan Party shall, and no Loan Party
shall permit any of its Subsidiaries to, directly or indirectly create, incur,
assume, permit to exist, guarantee or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness (as hereinafter defined),
except for (a) the Obligations, (b) Indebtedness existing on the date hereof and
set forth on Schedule B to this Agreement together with any and all
refinancings, refundings, renewals and extensions thereof provided that such
refinancings, refundings, renewals and extensions (i) are pursuant to
substantially the same terms as in effect on the Closing Date with respect to
such Indebtedness and (ii) do not increase the aggregate amount of such
Indebtedness outstanding immediately prior to such refinancing, refunding,
renewal or extension, (c) Indebtedness consisting of capitalized lease
obligations and purchase money Indebtedness, in each case incurred by Borrower
or any of its Subsidiaries to finance the acquisition, repair, improvement or
construction of fixed or capital assets of such person, provided that (i) the
aggregate outstanding principal amount of all such Indebtedness does not exceed
$500,000 at any time and (ii) the principal amount of such Indebtedness does not
exceed the lower of the cost or fair market value of the property so acquired or
built or of such repairs or improvements financed with such Indebtedness (each
measured at the time of such acquisition, repair, improvement or construction is
made), and (d) unsecured Indebtedness incurred in connection with licensing
transactions (“Licensing Indebtedness”) in an aggregate amount not to exceed
$1,000,000 at any time; provided, however, that the Loan Parties shall be
permitted to incur Licensing Indebtedness in excess of $1,000,000 in the
aggregate so long as such Licensing Indebtedness is subordinated to the
Obligations on terms and conditions acceptable to the Lenders and provided
further that this Section 7.2 shall not prohibit Licensing Indebtedness incurred
by the Loan Parties which by its express terms (i) is only payable by way of an
offset against such Loan Party’s future milestone payments under the applicable
license agreement and (ii) is forgiven by the payee in the event such milestone
payment is not made for any reason. The term “Indebtedness” shall mean, with
respect to any person, at any date, without duplication, (i) all obligations of
such person for borrowed money, (ii) all obligations of such person evidenced by
bonds, debentures, notes or other similar instruments, or upon which interest
payments are customarily made, (iii) all obligations of such person to pay the
deferred purchase price of property or services, but excluding obligations to
trade creditors incurred in the ordinary course of business and not past due by
more than 90 days, (iv) all capital lease obligations of such person, (v) the
principal balance outstanding under any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing product,
(vi) all obligations of such person to purchase securities (or other property)
which arise out of or in connection with the issuance or sale of the same or
substantially similar securities (or property), (vii) all contingent or
non-contingent obligations of such person to reimburse any bank or other person
in respect of amounts paid under a letter of credit or similar instrument,
(viii) all equity

 

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securities of such person subject to repurchase or redemption otherwise than at
the sole option of such person, (ix) all “earnouts” and similar payment
obligations of such person, (x) all indebtedness secured by a lien on any asset
of such person, whether or not such indebtedness is otherwise an obligation of
such person, (xi) all obligations of such person under any foreign exchange
contract, currency swap agreement, interest rate swap, cap or collar agreement
or other similar agreement or arrangement designed to alter the risks of that
person arising from fluctuations in currency values or interest rates, in each
case whether contingent or matured, and (xii) all obligations or liabilities of
others guaranteed by such person.

7.3. Dispositions. Until the Termination Date (but subject to reinstatement of
this Agreement pursuant to Section 10.9), no Loan Party shall, and no Loan Party
shall permit any of its Subsidiaries to, convey, sell, rent, lease, sublease,
mortgage, license, transfer or otherwise dispose of (collectively, “Transfer”)
any of the Collateral or any Intellectual Property, except for the following
(collectively, “Permitted Dispositions”): (a) sales of Inventory in the ordinary
course of business, (b) dispositions by a Loan Party or any of its Subsidiaries
of tangible assets for cash and fair value that are no longer used or useful in
the business of such Loan Party or such Subsidiary so long as (i) no Default or
Event of Default exists at the time of such disposition or would be caused after
giving effect thereto and (ii) the fair market value of all such assets disposed
of does not exceed $25,000 since the Closing Date, (c) non-exclusive licenses
for the use of Borrower’s Intellectual Property in the ordinary course of
business, and (d) exclusive licenses for the use of Borrower’s Intellectual
Property, so long as, with respect to each such exclusive license, (i) no
Default or Event of Default exists at the time of such Transfer, (ii) the
license constitutes an arms-length transaction made in connection with a bona
fide corporate collaboration and the terms of which, on their face, do not
provide for a sale or assignment of the Intellectual Property that is the
subject of such license, (iii) Borrower delivers 5 days prior written notice and
a brief summary of the terms of the license to Agent, (iv) Borrower delivers to
Agent redacted (and upon Agent’s written request and agreement to be bound by
the confidentiality provisions therein, unredacted) copies of the final executed
licensing documents in connection with the license promptly upon consummation of
the license, and (v) all royalties, milestone payments or other proceeds arising
from the licensing agreement are paid to a deposit account that is governed by
an Account Control Agreement.

7.4. Change in Name, Location or Executive Office; Change in Business; Change in
Fiscal Year. Until the Termination Date (but subject to reinstatement of this
Agreement pursuant to Section 10.9), no Loan Party shall, and no Loan Party
shall permit any of its Subsidiaries to, (a) change its name or its state of
organization without 30 days prior written notification to Agent and the receipt
by Borrower of written confirmation from Agent that all actions necessary to
maintain the liens of Agent (on behalf of itself and Lenders) in the Collateral
have been satisfied, (b) relocate its chief executive office without 30 days
prior written notification to Agent, (c) engage in any business other than or
reasonably related or incidental to the businesses currently engaged in by such
Loan Party or Subsidiary, (d) cease to conduct business substantially in the
manner conducted by such Loan Party or Subsidiary as of the date of this
Agreement or (e) change its fiscal year end without 30 days prior written
notification to Agent.

7.5. Mergers or Acquisitions. Until the Termination Date (but subject to
reinstatement of this Agreement pursuant to Section 10.9), no Loan Party shall
merge or consolidate, and no Loan Party shall permit any of its Subsidiaries to
merge or consolidate, with or into any other person or entity (other than
mergers of a Subsidiary into Borrower in which Borrower is the surviving entity)
or acquire, or permit any of its Subsidiaries to acquire, all or substantially
all of the capital stock or property of another person or entity.
Notwithstanding the foregoing, a Loan Party may acquire all or substantially all
of the assets or stock of another person or entity (such person or entity, the
“Target”) so long as (a) Agent and each Lender shall receive at least ten
(10) Business Days’ prior written notice of such proposed acquisition, which
notice shall include a reasonably detailed description of such proposed
acquisition; (b) such acquisition shall only comprise a business, or those
assets of a business, substantially of the type engaged in by the Loan Parties
as of the Closing Date; (c) such acquisition shall be consensual and shall have
been approved by Target’s board

 

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of directors or similar governing body (as applicable); (d) the purchase price
paid and/or payable (whether in cash, stock or other form of consideration) in
connection with all acquisitions (including all transaction costs and all
Indebtedness, liabilities and contingent obligations incurred or assumed in
connection therewith or otherwise reflected in a consolidated balance sheet of
Borrower and Target), shall not exceed, with respect to the portion of the
purchase price for such acquisitions payable in cash and together with any
Investments made pursuant to Section 7.7(iv)(A), $1,000,000 in the aggregate for
all such acquisitions during the term hereof; (e) Agent shall have received
evidence satisfactory to Agent that after giving pro forma effect to such
acquisition the Cash Burn Amount (as defined below) of Borrower and its
Subsidiaries, on a consolidated basis, will not exceed the Cash Burn Amount of
Borrower and its Subsidiaries on a consolidated basis prior to giving effect to
any such acquisition; (f) the business and assets acquired in such permitted
acquisition shall be free and clear of all liens (other than Permitted Liens);
(g) at or prior to the closing of any permitted acquisition, Agent will be
granted a first priority perfected lien (subject to Permitted Liens) in all
assets acquired pursuant thereto or in the assets and stock of Target, and the
Loan Parties and Target shall have executed such documents and taken such
actions as may be required by Agent in connection therewith; (h) on or prior to
the date of such acquisition, Agent shall have received, in form and substance
reasonably satisfactory to Agent, copies of the acquisition agreement and
related agreements and instruments, and all opinions, certificates, lien search
results and other documents reasonably requested by Agent; and (i) at the time
of such acquisition and after giving effect thereto, no Default or Event of
Default has occurred and is continuing.

As used herein, the term “Cash Burn Amount” means, with respect to Borrower and
its consolidated Subsidiaries, as of any date of determination and based on the
financial statements most recently delivered to Agent and the Lenders in
accordance with this Agreement, the difference between:

 

  (a) the quotient of (i) the sum of, without duplication, (A) net income
(loss), plus (B) depreciation and amortization, minus (C) non-financed capital
expenditures, in each case of clauses (A), (B) and (C), for the immediately
preceding twelve month period on a trailing basis, divided by (ii) twelve,

minus

 

  (b) the quotient of (i) the current portion of interest bearing liabilities
due and payable in the immediately succeeding twelve months divided by
(ii) twelve.

7.6. Restricted Payments. Until the Termination Date (but subject to
reinstatement of this Agreement pursuant to Section 10.9), no Loan Party shall,
and no Loan Party shall permit any of its Subsidiaries to, (a) declare or pay
any dividends or make any other distribution or payment on account of or redeem,
retire, defease or purchase any capital stock, (b) purchase, redeem, defease or
prepay any principal of, premium, if any, interest or other amount payable in
respect of any Indebtedness prior to its scheduled maturity, (c) make any
payment in respect of management fees or consulting fees (or similar fees) to
any equityholder or other affiliate of Borrower that owns more than 1% of the
stock of Borrower, or (d) be a party to or bound by an agreement that restricts
a Subsidiary from paying dividends or otherwise distributing property to
Borrower; provided, however, that notwithstanding the forgoing, (i) the payment
of dividends to Borrower shall not be prohibited, (ii) the purchase by Borrower
of its capital stock owned by former employees pursuant to stock repurchase
agreements shall not be prohibited so long as (x) no Default or Event of Default
exists at the time of such payment or after giving effect thereto and (y) the
aggregate amount of all such payments for the purchase of such former employee
stock shall not exceed in the aggregate $100,000 during any calendar year), and
(iii) Borrower shall be permitted to make payments to Borrower’s shareholders
and directors for honorarium or consulting fees consistent with past practices
in an aggregate amount not exceeding $150,000 in any calendar year.

 

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7.7. Investments. Until the Termination Date (but subject to reinstatement of
this Agreement pursuant to Section 10.9), no Loan Party shall, and no Loan Party
shall permit any of its Subsidiaries to, directly or indirectly (a) acquire or
own, or make any loan, advance or capital contribution (an “Investment”) in or
to any person or entity, (b) acquire or create any Subsidiary, or (c) engage in
any joint venture or partnership with any other person or entity, other than:
(i) Investments existing on the date hereof and set forth on Schedule B to this
Agreement, (ii) Investments permitted under Borrower’s Investment Policy
Guidelines attached hereto as Exhibit G which guidelines shall not be amended or
modified without the prior written consent of Agent, (iii) loans or advances to
employees of Borrower or any of its Subsidiaries to finance travel,
entertainment and relocation expenses and other ordinary business purposes in
the ordinary course of business as presently conducted, provided that the
aggregate outstanding principal amount of all loans and advances permitted
pursuant to this clause (iii) shall not exceed $100,000 at any time, and
(iv) Investments in the form of joint ventures, partnerships or equity
investments in other persons so long as such Investments (A) shall not exceed,
with respect to the portion of such Investment payable in cash and together with
any acquisitions permitted under Section 7.5(d), $1,000,000 in the aggregate for
all such Investments during the term hereof, (B) shall be businesses
substantially of the type engaged in by such Loan Parties as of the Closing Date
and (C) after giving pro forma effect to such Investment the Cash Burn Amount of
Borrower and its Subsidiaries, on a consolidated basis, will not exceed the Cash
Burn Amount of Borrower and its Subsidiaries on a consolidated basis prior to
giving effect to any such Investment.

7.8. Transactions with Affiliates. Until the Termination Date (but subject to
reinstatement of this Agreement pursuant to Section 10.9), no Loan Party shall,
and no Loan Party shall permit any of its Subsidiaries to, directly or
indirectly enter into or permit to exist any transaction with any Affiliate (as
defined below) of a Loan Party or any Subsidiary of a Loan Party except for
transactions that are in the ordinary course of such Loan Party’s or such
Subsidiary’s business, upon fair and reasonable terms that are no more favorable
to such Affiliate than would be obtained in an arm’s length transaction. As used
herein, “Affiliate” shall mean, with respect to a Loan Party or any Subsidiary
of a Loan Party, (a) each person that, directly or indirectly, owns or controls
10% or more of the stock or membership interests having ordinary voting power in
the election of directors or managers of such Loan Party or such Subsidiary, and
(b) each person that controls, is controlled by or is under common control with
such Loan Party or such Subsidiary.

7.9. Compliance. Until the Termination Date (but subject to reinstatement of
this Agreement pursuant to Section 10.9), no Loan Party shall, and no Loan Party
shall permit any of its Subsidiaries to, (a) fail to comply with the laws and
regulations described in clauses (a) and (b) of Section 5.8 herein, (b) use any
portion of the Term Loans to purchase or carry margin stock (within the meaning
of Regulation U of the Federal Reserve Board) or (c) fail to comply in any
material respect with, or violate in any material respect any other law or
regulation applicable to it.

7.10. Deposit Accounts and Securities Accounts. Until the Termination Date (but
subject to reinstatement of this Agreement pursuant to Section 10.9), no Loan
Party shall directly or indirectly maintain or establish any deposit account or
securities account, unless Agent, the applicable Loan Party or Loan Parties and
the depository institution or securities intermediary at which the account is or
will be maintained enter into a deposit account control agreement or securities
account control agreement, as the case may be, in form and substance
satisfactory to Agent (an “Account Control Agreement”) (which agreement shall
provide that such depository institution or securities intermediary shall comply
with all instructions of Agent without further consent of such Loan Party or
Loan Parties, as applicable, including, without limitation, an instruction by
Agent to follow a notice of exclusive control or similar notice (such notice, a
“Notice of Exclusive Control”)), prior to or concurrently with the establishment
of such deposit account or securities account (or in the case of any such
deposit account or securities account maintained as of the date hereof, prior to
or concurrently with the entering into this Agreement). Agent may give a Notice
of Exclusive Control with respect to any deposit account or securities account
at any time at which a Default or Event of Default has occurred and is
continuing.

 

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7.11. Amendments to Other Agreements. Until the Termination Date (but subject to
reinstatement of this Agreement pursuant to Section 10.9), no Loan Party shall
amend, modify or waive any provision of any Material Agreement without the prior
written consent of Agent and the Requisite Lenders unless Borrower makes a
reasonable determination that such statement, report and/or notice, as
applicable, is not material and adverse to Borrower, Agent or any Lender.

 

8. DEFAULT AND REMEDIES.

8.1. Events of Default. Loan Parties shall be in default under this Agreement
and each of the other Debt Documents if (each of the following, an “Event of
Default”):

 

  (a) Borrower shall fail to pay (i) any principal when due, or (ii) any
interest, fees or other Obligations (other than as specified in clause
(i) within a period of 3 days after the due date thereof (other than on the
Applicable Term Loan Maturity Date));

 

  (b) any Loan Party breaches any of its obligations under Section 6.1 (solely
as it relates to maintaining its existence), Section 6.2, Section 6.3,
Section 6.4 or Article 7;

 

  (c) any Loan Party breaches any of its other obligations under any of the Debt
Documents and fails to cure such breach within 30 days after the occurrence of
such breach;

 

  (d) any warranty, representation or statement made or deemed made by or on
behalf of any Loan Party in any of the Debt Documents or otherwise in connection
with any of the Obligations shall be false or misleading in any material
respect;

 

  (e) any of the Collateral is subjected to attachment, execution, levy, seizure
or confiscation in any legal proceeding or otherwise, or if any legal or
administrative proceeding is commenced against any Loan Party or any of the
Collateral, which in the good faith judgment of Agent subjects any of the
Collateral to a material risk of attachment, execution, levy, seizure or
confiscation and no bond is posted or protective order obtained to negate such
risk and such attachment, execution, levy, seizure or confiscation is not
removed, discharged or rescinded within 20 days;

 

  (f) one or more judgments, orders or decrees shall be rendered against any
Loan Party or any Subsidiary of a Loan Party that exceeds by more than $50,000
any insurance coverage applicable thereto (to the extent the relevant insurer
has been notified of such claim and has not denied coverage therefor) and either
(i) enforcement proceedings shall have been commenced by any creditor upon any
such judgment, order or decree or (ii) such judgment, order or decree shall not
have been vacated or discharged for a period of 10 consecutive days and there
shall not be in effect (by reason of a pending appeal or otherwise) any stay of
enforcement thereof;

 

  (g)

(i) any Loan Party or any Subsidiary of a Loan Party shall generally not pay its
debts as such debts become due, shall admit in writing its inability to pay its
debts generally, shall make a general assignment for the benefit of creditors,
or shall cease doing business as a going concern, (ii) any proceeding shall be
instituted by or against any Loan Party or any Subsidiary of a Loan Party
seeking to adjudicate it a bankrupt or insolvent or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, composition of
it or its debts or any similar order, in each case under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or seeking the
entry of an order for relief or the appointment of a custodian, receiver,
trustee, conservator, liquidating agent,

 

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liquidator, other similar official or other official with similar powers, in
each case for it or for any substantial part of its property and, in the case of
any such proceedings instituted against (but not by or with the consent of) such
Loan Party or such Subsidiary, either such proceedings shall remain undismissed
or unstayed for a period of 45 days or more or any action sought in such
proceedings shall occur or (iii) any Loan Party or any Subsidiary of a Loan
Party shall take any corporate or similar action or any other action to
authorize any action described in clause (i) or (ii) above;

 

  (h) an event or development occurs which has had a Material Adverse Effect;

 

  (i) (i) any provision of any Debt Document shall fail to be valid and binding
on, or enforceable against, a Loan Party party thereto, or (ii) any Debt
Document purporting to grant a security interest to secure any Obligation shall
fail to create a valid and enforceable security interest on any Collateral
purported to be covered thereby or such security interest shall fail or cease to
be a perfected lien with the priority required in the relevant Debt Document, or
any Loan Party shall state in writing that any of the events described in clause
(i), or (ii) above shall have occurred;

 

  (j) (i) any Loan Party or any Subsidiary of a Loan Party defaults under any
Material Agreement (after any applicable grace period contained therein),
(ii) (A) any Loan Party or any Subsidiary of a Loan Party fails to make (after
any applicable grace period) any payment when due (whether due because of
scheduled maturity, required prepayment provisions, acceleration, demand or
otherwise) on any Indebtedness (other than the Obligations) of such Loan Party
or such Subsidiary having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $100,000
(“Material Indebtedness”), (B) any other event shall occur or condition shall
exist under any contractual obligation relating to any such Material
Indebtedness, if the effect of such event or condition is to accelerate, or to
permit the acceleration of (without regard to any subordination terms with
respect thereto), the maturity of such Material Indebtedness or (C) any such
Material Indebtedness shall become or be declared to be due and payable, or be
required to be prepaid, redeemed, defeased or repurchased (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof,
or (iii) Borrower or any Subsidiary defaults under any obligation for payments
due under any lease agreement in excess of $100,000; or

 

  (k) (i) the acquisition, directly or indirectly, by any person or group (as
such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) of
more than forty percent (40%) of the voting power of the voting stock of
Borrower by way of merger or consolidation or otherwise, or (ii) Borrower ceases
to own and control, directly or indirectly, all of the economic and voting
rights associated with the outstanding voting capital stock (or other voting
equity interest) of each of its Subsidiaries.

8.2. Lender Remedies. Upon the occurrence and during the continuance of any
Event of Default, Agent may, and at the written request of the Requisite Lenders
shall, terminate the Commitments and declare any or all of the Obligations to be
immediately due and payable, without demand or notice to any Loan Party and the
accelerated Obligations shall bear interest at the Default Rate pursuant to
Section 2.6, provided that, upon the occurrence of any Event of Default
specified in Section 8.1(g) above, the Obligations shall be automatically
accelerated. After the occurrence of an Event of Default, Agent shall have (on
behalf of itself and Lenders) all of the rights and remedies of a secured party
under the UCC, and under any other applicable law. Without limiting the
foregoing, Agent shall have the right to, and at the

 

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written request of the Required Lenders shall, (a) notify any account debtor of
any Loan Party or any obligor on any instrument which constitutes part of the
Collateral to make payments to Agent (for the benefit of itself and Lenders),
(b) with or without legal process, enter any premises where the Collateral may
be and take possession of and remove the Collateral from the premises or store
it on the premises, (c) sell the Collateral at public or private sale, in whole
or in part, and have the right to bid and purchase at such sale, or (d) lease or
otherwise dispose of all or part of the Collateral, applying proceeds from such
disposition to the Obligations in accordance with Section 8.4. If requested by
Agent, Loan Parties shall promptly assemble the Collateral and make it available
to Agent at a place to be designated by Agent. Agent may also render any or all
of the Collateral unusable at a Loan Party’s premises and may dispose of such
Collateral on such premises without liability for rent or costs. Any notice that
Agent is required to give to a Loan Party under the UCC of the time and place of
any public sale or the time after which any private sale or other intended
disposition of the Collateral is to be made shall be deemed to constitute
reasonable notice if such notice is given in accordance with this Agreement at
least 5 days prior to such action. Effective only upon the occurrence and during
the continuance of an Event of Default, each Loan Party hereby irrevocably
appoints Agent (and any of Agent’s designated officers or employees) as such
Loan Party’s true and lawful attorney to: (i) take any of the actions specified
above in this paragraph; (ii) endorse such Loan Party’s name on any checks or
other forms of payment or security that may come into Agent’s possession;
(iii) settle and adjust disputes and claims respecting the accounts directly
with account debtors, for amounts and upon terms which Agent determines to be
reasonable; and (iv) do such other and further acts and deeds in the name of
such Loan Party that Agent may deem necessary or desirable to enforce its rights
in or to any of the Collateral or to perfect or better perfect Agent’s security
interest (on behalf of itself and Lenders) in any of the Collateral. The
appointment of Agent as each Loan Party’s attorney in fact is a power coupled
with an interest and is irrevocable until the Termination Date.

8.3. Additional Remedies. Solely for the purpose of enabling and solely to the
extent necessary for Agent to exercise rights and remedies under Section 8.2
hereof with respect to the Collateral (including, without limiting the terms of
Section 8.2 hereof, in order to take possession of, hold, preserve, process,
assemble, prepare for sale, market for sale, sell or otherwise dispose of any
Collateral) at such time as Agent shall be lawfully entitled to exercise such
rights and remedies, and solely to the extent such license is not prohibited by
applicable law or by the license agreement governing such Intellectual Property,
Borrower hereby grants to Agent, for the benefit of Agent and Lenders, a
nonexclusive license (which license shall be irrevocable until the Termination
Date and exercisable without payment of royalty or other compensation to
Borrower) to use any Intellectual Property now owned, licensed by or hereafter
acquired or licensed by such Grantor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof. Notwithstanding anything to the contrary in
this Section 8.3, in no event shall Agent or Lenders have the right to license,
sublicense or otherwise transfer any patents or trade secrets of Borrower
(unless and until the Borrower grants to Agent, for the benefit of Lenders, a
security interest in its patents or trade secrets, respectively, after the date
hereof pursuant to a separate security agreement or amendment to this
Agreement).

8.4. Application of Proceeds. Proceeds from any Transfer of the Collateral or
the Intellectual Property (other than Permitted Dispositions) and all payments
made to or proceeds of Collateral received by Agent during the continuance of an
Event of Default shall be applied as follows: (a) first, to pay all fees, costs,
indemnities, reimbursements and expenses then due to Agent under the Debt
Documents in its capacity as Agent under the Debt Documents, (b) second, to pay
all fees, costs, indemnities, reimbursements and expenses then due to Lenders
under the Debt Documents in accordance with their respective Pro Rata Shares,
until paid in full, (c) third, to pay all interest on the Term Loans then due to
Lenders in accordance with their respective Pro Rata Shares, until paid in full
(other than interest accrued after the commencement of any proceeding referred
to in Section 8.1(g) if a claim for such interest is not allowable in such
proceeding), (d) fourth, to pay all principal on the Term Loans then due to
Lenders in accordance with their

 

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respective Pro Rata Shares, until paid in full, (e) fifth, to pay all other
Obligations then due to Lenders in accordance with their respective Pro Rata
Shares, until paid in full (including, without limitation, all interest accrued
after the commencement of any proceeding referred to in Section 8.1(g) whether
or not a claim for such interest is allowable in such proceeding), and
(f) sixth, to Borrower or as otherwise required by law. Borrower shall remain
fully liable for any deficiency.

 

9. THE AGENT.

9.1. Appointment of Agent.

 

  (a) Each Lender hereby appoints GECC (together with any successor Agent
pursuant to Section 9.6) as Agent under the Debt Documents and authorizes the
Agent to (a) execute and deliver the Debt Documents and accept delivery thereof
on its behalf from Loan Parties, (b) take such action on its behalf and to
exercise all rights, powers and remedies and perform the duties as are expressly
delegated to the Agent under such Debt Documents and (c) exercise such powers as
are reasonably incidental thereto. The provisions of this Article 9 are solely
for the benefit of Agent and Lenders and none of Loan Parties nor any other
person shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement
and the other Debt Documents, Agent shall act solely as an agent of Lenders and
does not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Loan Party or any other person.
Agent shall have no duties or responsibilities except for those expressly set
forth in this Agreement and the other Debt Documents. The duties of Agent shall
be mechanical and administrative in nature and Agent shall not have, or be
deemed to have, by reason of this Agreement, any other Debt Document or
otherwise a fiduciary or trustee relationship in respect of any Lender. Except
as expressly set forth in this Agreement and the other Debt Documents, Agent
shall not have any duty to disclose, and shall not be liable for failure to
disclose, any information relating to Borrower or any of its Subsidiaries that
is communicated to or obtained by GECC or any of its affiliates in any capacity.

 

  (b)

Without limiting the generality of clause (a) above, Agent shall have the sole
and exclusive right and authority (to the exclusion of the Lenders), and is
hereby authorized, to (i) act as the disbursing and collecting agent for the
Lenders with respect to all payments and collections arising in connection with
the Debt Documents (including in any other bankruptcy, insolvency or similar
proceeding), and each person making any payment in connection with any Debt
Document to any Lender is hereby authorized to make such payment to Agent,
(ii) file and prove claims and file other documents necessary or desirable to
allow the claims of Agent and Lenders with respect to any Obligation in any
proceeding described in any bankruptcy, insolvency or similar proceeding (but
not to vote, consent or otherwise act on behalf of such Lender), (iii) act as
collateral agent for Agent and each Lender for purposes of the perfection of all
liens created by the Debt Documents and all other purposes stated therein,
(iv) manage, supervise and otherwise deal with the Collateral, (v) take such
other action as is necessary or desirable to maintain the perfection and
priority of the liens created or purported to be created by the Debt Documents,
(vi) except as may be otherwise specified in any Debt Document, exercise all
remedies given to Agent and the other Lenders with respect to the Collateral,
whether under the Debt Documents, applicable law or otherwise and (vii) execute
any amendment, consent or waiver under the Debt Documents on behalf of any
Lender that has consented in writing to such amendment, consent or waiver;
provided, however, that Agent hereby appoints, authorizes and directs each
Lender to act as collateral sub-agent for Agent and the Lenders for purposes of
the

 

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perfection of all liens with respect to the Collateral, including any deposit
account maintained by a Loan Party with, and cash and cash equivalents held by,
such Lender, and may further authorize and direct the Lenders to take further
actions as collateral sub-agents for purposes of enforcing such liens or
otherwise to transfer the Collateral subject thereto to Agent, and each Lender
hereby agrees to take such further actions to the extent, and only to the
extent, so authorized and directed. Agent may, upon any term or condition it
specifies, delegate or exercise any of its rights, powers and remedies under,
and delegate or perform any of its duties or any other action with respect to,
any Debt Document by or through any trustee, co-agent, employee,
attorney-in-fact and any other person (including any Lender). Any such person
shall benefit from this Article 9 to the extent provided by Agent.

 

  (c) If Agent shall request instructions from Requisite Lenders or all affected
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Debt Document, then Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from Requisite Lenders or all affected Lenders,
as the case may be, and Agent shall not incur liability to any person by reason
of so refraining. Agent shall be fully justified in failing or refusing to take
any action hereunder or under any other Debt Document (a) if such action would,
in the opinion of Agent, be contrary to law or any Debt Document, (b) if such
action would, in the opinion of Agent, expose Agent to any potential liability
under any law, statute or regulation or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Debt Document in accordance with the instructions
of Requisite Lenders or all affected Lenders, as applicable.

9.2. Agent’s Reliance, Etc. Neither Agent nor any of its affiliates nor any of
their respective directors, officers, agents, employees or representatives shall
be liable for any action taken or omitted to be taken by it or them hereunder or
under any other Debt Documents, or in connection herewith or therewith, except
for damages caused by its or their own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction. Without limiting the
generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until such Note has been assigned in accordance with
Section 10.1; (b) may consult with legal counsel, independent public accountants
and other experts, whether or not selected by it, and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts; (c) shall not be responsible
or otherwise incur liability for any action or omission taken in reliance upon
the instructions of the Requisite Lenders, (d) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Debt Documents; (e) shall not have any duty to inspect
the Collateral (including the books and records) or to ascertain or to inquire
as to the performance or observance of any provision of any Debt Document,
whether any condition set forth in any Debt Document is satisfied or waived, as
to the financial condition of any Loan Party or as to the existence or
continuation or possible occurrence or continuation of any Default or Event of
Default and shall not be deemed to have notice or knowledge of such occurrence
or continuation unless it has received a notice from Borrower or any Lender
describing such Default or Event of Default clearly labeled “notice of default”;
(f) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, effectiveness, genuineness, sufficiency or value of,
or the attachment, perfection or priority of any lien created or purported to be
created under or in connection with, any Debt Document or any other instrument
or document furnished pursuant hereto or thereto; and (g) shall incur no
liability under or in respect of this Agreement or the other Debt Documents by
acting upon any notice, consent, certificate or other instrument or writing
(which may be by telecopy, telegram, cable or telex) believed by it to be
genuine and signed or sent or otherwise authenticated by the proper party or
parties.

 

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9.3. GECC and Affiliates. GECC shall have the same rights and powers under this
Agreement and the other Debt Documents as any other Lender and may exercise the
same as though it were not Agent; and the term “Lender” or “Lenders” shall,
unless otherwise expressly indicated, include GECC in its individual capacity.
GECC and its affiliates may lend money to, invest in, and generally engage in
any kind of business with, Borrower, any of Borrower’s Subsidiaries, any of
their Affiliates and any person who may do business with or own securities of
Borrower, any of Borrower’s Subsidiaries or any such Affiliate, all as if GECC
were not Agent and without any duty to account therefor to Lenders. GECC and its
affiliates may accept fees and other consideration from Borrower for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders. Each Lender acknowledges the potential conflict of interest
between GECC as a Lender holding disproportionate interests in the Term Loans
and GECC as Agent, and expressly consents to, and waives, any claim based upon,
such conflict of interest.

9.4. Lender Credit Decision. Each Lender acknowledges that it has, independently
and without reliance upon Agent or any other Lender and based on the financial
statements referred to in Section 6.3 and such other documents and information
as it has deemed appropriate, made its own credit and financial analysis of each
Loan Party and its own decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement. Each Lender acknowledges the potential
conflict of interest of each other Lender as a result of Lenders holding
disproportionate interests in the Term Loans, and expressly consents to, and
waives, any claim based upon, such conflict of interest.

9.5. Indemnification. Lenders shall and do hereby indemnify Agent (to the extent
not reimbursed by Loan Parties and without limiting the obligations of Loan
Parties hereunder), ratably according to their respective Pro Rata Shares from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against Agent
in any way relating to or arising out of this Agreement or any other Debt
Document or any action taken or omitted to be taken by Agent in connection
therewith; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent’s gross negligence or
willful misconduct as finally determined by a court of competent jurisdiction.
Without limiting the foregoing, each Lender agrees to reimburse Agent promptly
upon demand for its Pro Rata Share of any out-of-pocket expenses (including
reasonable counsel fees) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement and each
other Debt Document, to the extent that Agent is not reimbursed for such
expenses by Loan Parties. The provisions of this Section 9.5 shall survive the
termination of this Agreement.

9.6. Successor Agent. Agent may resign at any time by giving not less than 30
days’ prior written notice thereof to Lenders and Borrower. Upon any such
resignation, the Requisite Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Requisite
Lenders and shall have accepted such appointment within 30 days after the
resigning Agent’s giving notice of resignation, then the resigning Agent may, on
behalf of Lenders, appoint a successor Agent, which shall be a Lender, if a
Lender is willing to accept such appointment, or otherwise shall be a commercial
bank or financial institution or a subsidiary of a commercial bank or financial
institution if such commercial bank or financial institution is organized under
the laws of the United States of America or of any State thereof and has a
combined capital and surplus of at least $300,000,000. If no successor Agent has
been appointed pursuant to the foregoing, within 30 days after the date such
notice of resignation was given by the resigning

 

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Agent, such resignation shall become effective and the Requisite Lenders shall
thereafter perform all the duties of Agent hereunder until such time, if any, as
the Requisite Lenders appoint a successor Agent as provided above. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Agent. Upon the earlier of the acceptance
of any appointment as Agent hereunder by a successor Agent or the effective date
of the resigning Agent’s resignation, the resigning Agent shall be discharged
from its duties and obligations under this Agreement and the other Debt
Documents, except that any indemnity rights or other rights in favor of such
resigning Agent shall continue. After any resigning Agent’s resignation
hereunder, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was acting as Agent under
this Agreement and the other Debt Documents.

9.7. Setoff and Sharing of Payments. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default and
subject to Section 9.8(e), each Lender is hereby authorized at any time or from
time to time upon the direction of Agent, without notice to Borrower or any
other person, any such notice being hereby expressly waived, to offset and to
appropriate and to apply any and all balances held by it at any of its offices
for the account of Borrower (regardless of whether such balances are then due to
Borrower) and any other properties or assets at any time held or owing by that
Lender or that holder to or for the credit or for the account of Borrower
against and on account of any of the Obligations that are not paid when due. Any
Lender exercising a right of setoff or otherwise receiving any payment on
account of the Obligations in excess of its Pro Rata Share thereof shall
purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender’s or holder’s Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance with
their respective Pro Rata Shares of the Obligations. Borrower agrees, to the
fullest extent permitted by law, that (a) any Lender may exercise its right to
offset with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amounts so offset to other
Lenders and holders and (b) any Lender so purchasing a participation in the Term
Loans made or other Obligations held by other Lenders or holders may exercise
all rights of offset, bankers’ lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender or holder were a direct holder
of the Term Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the offset amount or
payment otherwise received is thereafter recovered from the Lender that has
exercised the right of offset, the purchase of participations by that Lender
shall be rescinded and the purchase price restored without interest. The term
“Pro Rata Share” means, with respect to any Lender at any time, the percentage
obtained by dividing (x) the Commitment of such Lender then in effect (or, if
such Commitment is terminated, the aggregate outstanding principal amount of the
Term Loans owing to such Lender) by (y) the Total Commitment then in effect (or,
if the Total Commitment is terminated, the outstanding principal amount of the
Term Loans owing to all Lenders).

9.8. Advances; Payments; Non-Funding Lenders; Information; Actions in Concert.

 

  (a) Advances; Payments. If Agent receives any payment for the account of
Lenders on or prior to 11:00 a.m. (New York time) on any Business Day, Agent
shall pay to each applicable Lender such Lender’s Pro Rata Share of such payment
on such Business Day. If Agent receives any payment for the account of Lenders
after 11:00 a.m. (New York time) on any Business Day, Agent shall pay to each
applicable Lender such Lender’s Pro Rata Share of such payment on the next
Business Day. To the extent that any Lender has failed to fund any such payments
and Term Loans (a “Non-Funding Lender”), Agent shall be entitled to set off the
funding short-fall against that Non-Funding Lender’s Pro Rata Share of all
payments received from Borrower.

 

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  (b) Return of Payments.

(i) If Agent pays an amount to a Lender under this Agreement in the belief or
expectation that a related payment has been or will be received by Agent from a
Loan Party and such related payment is not received by Agent, then Agent will be
entitled to recover such amount (including interest accruing on such amount at
the Federal Funds Rate for the first Business Day and thereafter, at the rate
otherwise applicable to such Obligation) from such Lender on demand without
setoff, counterclaim or deduction of any kind.

(ii) If Agent determines at any time that any amount received by Agent under
this Agreement must be returned to a Loan Party or paid to any other person
pursuant to any insolvency law or otherwise, then, notwithstanding any other
term or condition of this Agreement or any other Debt Document, Agent will not
be required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to a Loan Party or such other person, without setoff,
counterclaim or deduction of any kind.

 

  (c) Non-Funding Lenders. The failure of any Non-Funding Lender to make any
Term Loan or any payment required by it hereunder shall not relieve any other
Lender (each such other Lender, an “Other Lender”) of its obligations to make
such Term Loan, but neither any Other Lender nor Agent shall be responsible for
the failure of any Non-Funding Lender to make a Term Loan or any other payment
required hereunder. Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have any voting or consent rights under or with
respect to any Debt Document or constitute a “Lender” (or be included in the
calculation of “Requisite Lender” hereunder) for any voting or consent rights
under or with respect to any Debt Document. At Borrower’s request, Agent or a
person reasonably acceptable to Agent shall have the right with Agent’s consent
and in Agent’s sole discretion (but shall have no obligation) to purchase from
any Non-Funding Lender, and each Non-Funding Lender agrees that it shall, at
Agent’s request, sell and assign to Agent or such person, all of the Commitments
and all of the outstanding Term Loans of that Non-Funding Lender for an amount
equal to the principal balance of all Term Loans held by such Non-Funding Lender
and all accrued interest and fees with respect thereto through the date of sale,
such purchase and sale to be consummated pursuant to an executed Assignment
Agreement (as defined below).

 

  (d) Dissemination of Information. Agent shall use reasonable efforts to
provide Lenders with any notice of Default or Event of Default received by Agent
from, or delivered by Agent to Borrower, with notice of any Event of Default of
which Agent has actually become aware and with notice of any action taken by
Agent following any Event of Default; provided that Agent shall not be liable to
any Lender for any failure to do so, except to the extent that such failure is
attributable to Agent’s gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. Lenders acknowledge that
Borrower is required to provide financial statements to Lenders in accordance
with Section 6.3 hereto and agree that Agent shall have no duty to provide the
same to Lenders.

 

  (e) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement, the Notes or any other Debt Documents (including exercising any
rights of setoff) without first obtaining the prior written consent of Agent and
Requisite Lenders, it being the intent of Lenders that any such action to
protect or enforce rights under this Agreement and the Notes shall be taken in
concert and at the direction or with the consent of Agent and Requisite Lenders.

 

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10. MISCELLANEOUS.

10.1. Assignment. Subject to the terms of this Section 10.1, any Lender may make
an assignment to an assignee of, or sell participations in, at any time or
times, the Debt Documents, its Commitment, Term Loans or any portion thereof or
interest therein, including any Lender’s rights, title, interests, remedies,
powers or duties thereunder. Any assignment by a Lender shall: (i) except in the
case of an assignment to a Qualified Assignee (as defined below), require the
consent of each Lender (which consent shall not be unreasonably withheld,
conditioned or delayed), (ii) require the execution of an assignment agreement
in form and substance reasonably satisfactory to, and acknowledged by, Agent (an
“Assignment Agreement”); (iii) be conditioned on such assignee Lender
representing to the assigning Lender and Agent that it is purchasing the
applicable Commitment and/or Term Loans to be assigned to it for its own
account, for investment purposes and not with a view to the distribution
thereof; (iv) be in an aggregate amount of not less than $1,000,000, unless such
assignment is made to an existing Lender or an affiliate of an existing Lender
or is of the assignor’s (together with its affiliates’) entire interest of the
Term Loans or is made with the prior written consent of Agent; and (v) include a
payment to Agent of an assignment fee of $3,500. In the case of an assignment by
a Lender under this Section 10.1, the assignee shall have, to the extent of such
assignment, the same rights, benefits and obligations as all other Lenders
hereunder. The assigning Lender shall be relieved of its obligations hereunder
with respect to its Commitment and Term Loans, as applicable, or assigned
portion thereof from and after the date of such assignment. Borrower hereby
acknowledges and agrees that any assignment shall give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be considered
to be a “Lender”. In the event any Lender assigns or otherwise transfers all or
any part of the Commitments and Obligations, Agent shall so notify Borrower and
Borrower shall, upon the request of Agent, execute new Notes in exchange for the
Notes, if any, being assigned. Agent may amend Schedule A to this Agreement to
reflect assignments made in accordance with this Section.

As used herein, “Qualified Assignee” means (a) any Lender and any affiliate of
any Lender and (b) any commercial bank, savings and loan association or savings
bank or any other entity which is an “accredited investor” (as defined in
Regulation D under the Securities Act) which extends credit or buys loans as one
of its businesses, including insurance companies, mutual funds, lease financing
companies and commercial finance companies, in each case, which has a rating of
BBB or higher from S&P and a rating of Baa2 or higher from Moody’s at the date
that it becomes a Lender and in each case of clauses (a) and (b), which, through
its applicable lending office, is capable of lending to Borrower without the
imposition of any withholding or similar taxes; provided that no person proposed
to become a Lender after the Closing Date and determined by Agent to be acting
in the capacity of a vulture fund or distressed debt purchaser shall be a
Qualified Assignee, and no person or Affiliate of such person proposed to become
a Lender after the Closing Date and that holds any subordinated debt or stock
issued by Borrower shall be a Qualified Assignee.

10.2. Notices. All notices, requests or other communications given in connection
with this Agreement shall be in writing, shall be addressed to the parties at
their respective addresses set forth on the signature pages hereto below such
parties’ name or in the most recent Assignment Agreement executed by any Lender
(unless and until a different address may be specified in a written notice to
the other party delivered in accordance with this Section), and shall be deemed
given (a) on the date of receipt if delivered by hand, (b) on the date of
sender’s receipt of confirmation of proper transmission if sent by facsimile
transmission, (c) on the next Business Day after being sent by a
nationally-recognized overnight courier, and (d) on the fourth Business Day
after being sent by registered or certified mail, postage prepaid. As used
herein, the term “Business Day” shall mean and include any day other than
Saturdays, Sundays, or other days on which commercial banks in New York, New
York are required or authorized to be closed.

 

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10.3. Correction of Debt Documents. Agent may correct patent errors and fill in
all blanks in this Agreement or the Debt Documents consistent with the agreement
of the parties.

10.4. Performance. Time is of the essence of this Agreement. This Agreement
shall be binding, jointly and severally, upon all parties described as the
“Borrower” and their respective successors and assigns, and shall inure to the
benefit of Agent, Lenders, and their respective successors and assigns.

10.5. Payment of Fees and Expenses. Loan Parties agree, jointly and severally,
to pay or reimburse upon demand for all (a) reasonable fees, costs and expenses
incurred by Agent and Lenders in connection with (i) the investigation,
preparation, negotiation, execution, administration of, or any amendment,
modification, waiver or termination of, this Agreement or any other Debt
Document and (ii) the enforcement, assertion, defense or preservation of Agent’s
and Lenders’ rights and remedies under this Agreement or any other Debt
Document, and (b) out-of-pocket costs and expenses incurred by Agent and Lenders
in connection with the administration of any transaction contemplated hereby or
thereby, in each case of clauses (a) and (b), including, without limitation,
reasonable attorney’s fees and expenses, and without duplication the allocated
cost of in-house legal counsel, reasonable fees and expenses of consultants,
auditors and appraisers and UCC and other corporate search and filing fees and
wire transfer fees. Borrower further agrees that such fees, costs and expenses
shall constitute Obligations. This provision shall survive the termination of
this Agreement.

10.6. Indemnity. Each Loan Party shall and does hereby jointly and severally
indemnify and defend Agent, Lenders, and their respective successors and
assigns, and their respective directors, officers, employees, consultants,
attorneys, agents and affiliates (each an “Indemnitee”) from and against all
liabilities, losses, damages, expenses, penalties, claims, actions and suits
(including, without limitation, related reasonable attorneys’ fees and the
allocated costs of in-house legal counsel) of any kind whatsoever arising,
directly or indirectly, which may be imposed on, incurred by or asserted against
such Indemnitee as a result of or in connection with this Agreement, the other
Debt Documents or any of the transactions contemplated hereby or thereby (the
“Indemnified Liabilities”); provided that, no Loan Party shall have any
obligation to any Indemnitiee with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities arise from the gross negligence or willful
misconduct of such Indemnitee as determined by a final non-appealable judgment
of a court of competent jurisdiction. This provision shall survive the
termination of this Agreement.

10.7. Rights Cumulative. Agent’s and Lenders’ rights and remedies under this
Agreement or otherwise arising are cumulative and may be exercised singularly or
concurrently. Neither the failure nor any delay on the part of Agent or any
Lender to exercise any right, power or privilege under this Agreement shall
operate as a waiver, nor shall any single or partial exercise of any right,
power or privilege preclude any other or further exercise of that or any other
right, power or privilege. NONE OF AGENT OR ANY LENDER SHALL BE DEEMED TO HAVE
WAIVED ANY OF ITS RESPECTIVE RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER
AGREEMENT, INSTRUMENT OR PAPER SIGNED BY BORROWER UNLESS SUCH WAIVER IS
EXPRESSED IN WRITING AND SIGNED BY AGENT, REQUISITE LENDERS OR ALL LENDERS, AS
APPLICABLE. A waiver on any one occasion shall not be construed as a bar to or
waiver of any right or remedy on any future occasion.

10.8. Entire Agreement; Amendments, Waivers.

 

  (a)

This Agreement and the other Debt Documents constitute the entire agreement
between the parties with respect to the subject matter hereof and thereof and
supersede all prior

 

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understandings (whether written, verbal or implied) with respect to such subject
matter. Section headings contained in this Agreement have been included for
convenience only, and shall not affect the construction or interpretation of
this Agreement.

 

  (b) Except for actions expressly permitted to be taken by Agent, no amendment,
modification, termination or waiver of any provision of this Agreement or any
other Debt Document, or any consent to any departure by Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by Agent, Borrower and Lenders having more than (x) 60% of the aggregate
Commitments of all Lenders or (y) if such Commitments have expired or been
terminated, 50% of the aggregate outstanding principal amount of the Term Loans
(the “Requisite Lenders”); provided, however, that so long as a party that is a
Lender hereunder on the Closing Date does not assign any portion of its
Commitment or any Term Loan, such Lender shall be deemed to be a Requisite
Lender. Except as set forth in clause (c) below, all such amendments,
modifications, terminations or waivers requiring the consent of any Lenders
shall require the written consent of Requisite Lenders.

 

  (c) No amendment, modification, termination or waiver of any provision of this
Agreement or any other Debt Document shall, unless in writing and signed by
Agent and each Lender directly affected thereby: (i) increase or decrease any
Commitment of any Lender or increase or decrease the Total Commitment (which
shall be deemed to affect all Lenders), (ii) reduce the principal of or rate of
interest on any Obligation or the amount of any fees payable hereunder,
(iii) postpone the date fixed for or waive any payment of principal of or
interest on any Term Loan, or any fees hereunder, (iv) release all or
substantially all of the Collateral, except as otherwise expressly permitted in
the Debt Documents, (v) subordinate the lien granted in favor of the Agent
securing the Obligations, (vi) release a Loan Party from, or consent to a Loan
Party’s assignment or delegation of, such Loan Party’s obligations hereunder and
under the other Debt Documents or any Guarantor from its guaranty of the
Obligations or (vi) amend, modify, terminate or waive Section 8.4 or 10.8(b) or
(c).

 

  (d) Notwithstanding any provision in this Section 10.8 to the contrary, no
amendment, modification, termination or waiver affecting or modifying the rights
or obligations of Agent hereunder shall be effective unless signed by Borrower,
Agent and Requisite Lenders.

10.9. Binding Effect. This Agreement shall continue in full force and effect
until the Termination Date; provided, however, that the provisions of Sections
2.3(e), 9.5, 10.5 and 10.6 and the other indemnities contained in the Debt
Documents shall survive the Termination Date. The surrender, upon payment or
otherwise, of any Note or any of the other Debt Documents evidencing any of the
Obligations shall not affect the right of Agent to retain the Collateral for
such other Obligations as may then exist or as it may be reasonably contemplated
will exist in the future. This Agreement and the grant of the security interest
in the Collateral pursuant to Section 3.1 shall automatically be reinstated if
Agent or any Lender is ever required to return or restore the payment of all or
any portion of the Obligations (all as though such payment had never been made).

10.10. Use of Logo. With each Loan Party’s prior written consent, Agent may use
such Loan Party’s name, logo and/or trademark in connection with certain
promotional materials that Agent may disseminate to the public. The promotional
materials may include, but are not limited to, brochures, video tape, internet
website, press releases, advertising in newspaper and/or other periodicals,
lucites, and any other materials relating the fact that Agent has a financing
relationship with Borrower and such materials may be developed, disseminated and
used without Loan Parties’ review. Nothing herein obligates Agent to use a Loan
Party’s name, logo and/or trademark, in any promotional materials of Agent. Loan
Parties shall

 

33

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not, and shall not permit any of its respective Affiliates to, issue any press
release or other public disclosure (other than any document filed with any
governmental authority to the extent required under applicable law) using the
name, logo or otherwise referring to General Electric Capital Corporation, GE
Healthcare Financial Services, Inc. or of any of their affiliates, the Debt
Documents or any transaction contemplated herein or therein without at least two
(2) Business Days prior written notice to and the prior written consent of Agent
unless, and only to the extent that, Loan Parties or such Affiliate is required
to do so under applicable law and then, only after consulting with Agent prior
thereto.

10.11. Waiver of Jury Trial. EACH OF LOAN PARTIES, AGENT AND LENDERS
UNCONDITIONALLY WAIVE ANY AND ALL RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER DEBT
DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED HEREBY, ANY DEALINGS AMONG LOAN
PARTIES, AGENT AND/OR LENDERS RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION
OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED
AMONG LOAN PARTIES, AGENT AND/OR LENDERS. THE SCOPE OF THIS WAIVER IS INTENDED
TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT.
THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING. THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER DEBT DOCUMENTS, OR TO
ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

10.12. Governing Law. THIS AGREEMENT, THE OTHER DEBT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE),
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF
THE LOCATION OF THE COLLATERAL. IF ANY ACTION ARISING OUT OF THIS AGREEMENT OR
ANY OTHER DEBT DOCUMENT IS COMMENCED BY AGENT IN THE STATE COURTS OF THE STATE
OF NEW YORK IN THE COUNTY OF NEW YORK OR IN THE U.S. DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, EACH LOAN PARTY HEREBY CONSENTS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH ACTION AND TO THE LAYING OF VENUE IN
THE STATE OF NEW YORK. ANY PROCESS IN ANY SUCH ACTION SHALL BE DULY SERVED IF
MAILED BY REGISTERED MAIL, POSTAGE PREPAID, TO LOAN PARTIES AT THEIR ADDRESS
DESCRIBED IN SECTION 10.2, OR IF SERVED BY ANY OTHER MEANS PERMITTED BY
APPLICABLE LAW.

10.13. Confidentiality. Agent and each Lender agrees, as to itself, to use
commercially reasonable efforts (equivalent to the efforts Agent or such Lender,
as the case may be, applies to maintaining the confidentiality of its own
confidential information) to maintain as confidential all confidential
information provided to it by Borrower and designated as confidential, except
that Agent and Lenders may disclose such information (a) to persons employed or
engaged by Agent or a Lender; (b) to any bona fide assignee or participant or
potential assignee or participant that has agreed to comply with the covenant
contained in this Section 10.13 (and any such bona fide assignee or participant
or potential assignee or participant may disclose such information to Persons
employed or engaged by them as described in clause (a) above); (c) as required
or requested by any governmental authority or reasonably believed by Agent or
any Lender to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of Agent’s or such
Lender’s counsel, required by law; (e) to the extent necessary to exercise of
any right or remedy under the Debt Documents or in connection with any
litigation to which Agent or such Lender is a

 

34

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party or bound; (f) that ceases to be confidential through no fault of Agent or
such Lender or (g) persons employed by Agent’s strategic marketing partners,
provided that such persons agree in writing to comply with the provisions
contained in this Section 10.13.

10.14. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement. Delivery of an executed
signature page of this Agreement by facsimile transmission or electronic
transmission shall be as effective as delivery of a manually executed
counterpart hereof.

[Signature Page Follows]

 

35

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IN WITNESS WHEREOF, each Loan Party, Agent and Lenders, intending to be legally
bound hereby, have duly executed this Agreement in one or more counterparts,
each of which shall be deemed to be an original, as of the day and year first
aforesaid.

 

BORROWER: ACHILLION PHARMACEUTICALS, INC. By:  

/s/ Mary Kay Fenton

Name:   Mary Kay Fenton Title:   Chief Financial Officer

Address For Notices:

 

Achillion Pharmaceuticals, Inc.

300 George Street

New Haven, CT 06511

Attn:   Mary Kay Fenton, Chief Financial Officer With a copy to: Wilmer Cutler
Pickering Hale and Dorr, LLP WilmerHale Venture Group

Bay Colony Corporate Center

1100 Winter Street

Waltham, MA 02451 Attn:   Susan Mazur, Esq.

 

36

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AGENT AND LENDER: GENERAL ELECTRIC CAPITAL CORPORATION By:  

/s/ Danijela Gjenero

Name:   Danijela Gjenero Title:   Duly Authorized Signatory

Address For Notices:

 

General Electric Capital Corporation

c/o GE Healthcare Financial Services, Inc., LSF

83 Wooster Heights Road, Fifth Floor

Danbury, Connecticut 06810

Attention:   Senior Vice President of Risk Phone:   (203) 205-5200 Facsimile:  
(203) 205-2192 With a copy to: General Electric Capital Corporation c/o GE
Healthcare Financial Services, Inc.

Two Bethesda Metro Center, Suite 600

Bethesda, Maryland 20814

Attention:   General Counsel Phone:   (301) 961-1640 Facsimile:   (301) 664-9866

 

37

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LENDER: OXFORD FINANCE CORPORATION By:  

/s/ Timothy A. Lex

Name:   Timothy A. Lex Title:   Executive Vice President and Chief Operating
Officer

Address For Notices:

 

Oxford Finance Corporation

133 North Fairfax Street

Alexandria, VA 22314

Attention:   Timothy A. Lex   Executive Vice President & Chief Operating Officer
Phone:   703-519-6017 Facsimile:   703-519-6010

 

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SCHEDULE A

COMMITMENTS

 

Name of Lender

 

Commitment of such Lender

 

Pro Rata Share

General Electric Capital Corporation  

Term A Loan: $771,034.36

Term B Loan: $1,136,329.56

Term C Loan: $332,655.97

Term D Loans: $2,500,000

 

Term A Loan: 50%

Term B Loan: 50%

Term C Loan: 50%

Term D Loan: 50%

Total Term Loans: 50%

Oxford Finance Corporation  

Term A Loan: $771,034.36

Term B Loan: $1,136,329.56

Term C Loan: $332,655.97

Term D Loans: $2,500,000

 

Term A Loan: 50%

Term B Loan: 50%

Term C Loan: 50%

Term D Loan: 50%

Total Term Loans: 50%

TOTAL  

Term A Loan: $1,542,068.72

Term B Loan: $2,272,659.12

Term C Loan: $665,311.94

Term D Loans: $5,000,000

Total Term Loans: $9,480,039.78

  100%

 

39

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SCHEDULE B

DISCLOSURES

[To be scheduled by Borrower]

Existing Liens

 

Debtor   Secured Party   Collateral   State and Jurisdiction   Filing Date and
Number
(include original file date and
continuations, amendments,
etc.)                                                                          
                                     

Existing Indebtedness

 

Debtor   Creditor   Amount of Indebtedness outstanding
as of              ,            Maturity Date                                  
                                                     

Existing Investments

 

Debtor   Type of Investment   Date   Amount Outstanding as of
                                                                                
                           

Material Agreements

1.

2.

3.

 

40

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EXHIBIT A

FORM OF [TERM A/B/C/D LOAN] PROMISSORY NOTE

[            ,         ]

FOR VALUE RECEIVED, ACHILLION PHARMACEUTICALS, INC., a Delaware corporation
located at the address stated below (“Borrower”), promises to pay to the order
of [Lender] or any subsequent holder hereof (each, a “Lender”), the principal
sum of                      and     /100 Dollars ($                    ) or, if
less, the aggregate unpaid principal amount of all Term Loans made by Lender to
or on behalf of Borrower pursuant to the Agreement (as hereinafter defined). All
capitalized terms, unless otherwise defined herein, shall have the respective
meanings assigned to such terms in the Agreement.

This Promissory Note is issued pursuant to that certain Loan and Security
Agreement, dated as of             , 20    , among Borrower, the guarantors from
time to time party thereto, General Electric Capital Corporation, as agent, the
other lenders signatory thereto, and Lender (as amended, restated, supplemented
or otherwise modified from time to time, the “Agreement”), is one of the Notes
referred to therein, and is entitled to the benefit and security of the Debt
Documents referred to therein, to which Agreement reference is hereby made for a
statement of all of the terms and conditions under which the loans evidenced
hereby were made.

The principal amount of the indebtedness evidenced hereby shall be payable in
the amounts and on the dates specified in the Agreement. Interest thereon shall
be paid until such principal amount is paid in full at such interest rates and
at such times as are specified in the Agreement. The terms of the Agreement are
hereby incorporated herein by reference.

All payments shall be applied in accordance with the Agreement. The acceptance
by Lender of any payment which is less than payment in full of all amounts due
and owing at such time shall not constitute a waiver of Lender’s right to
receive payment in full at such time or at any prior or subsequent time.

All amounts due hereunder and under the other Debt Documents are payable in the
lawful currency of the United States of America. Borrower hereby expressly
authorizes Lender to insert the date value as is actually given in the blank
space on the face hereof and on all related documents pertaining hereto.

This Note is secured as provided in the Agreement and the other Debt Documents.
Reference is hereby made to the Agreement and the other Debt Documents for a
description of the properties and assets in which a security interest has been
granted, the nature and extent of the security interest, the terms and
conditions upon which the security interest was granted and the rights of the
holder of the Note in respect thereof.

Time is of the essence hereof. If Lender does not receive from Borrower payment
in full of any Scheduled Payment or any other sum due under this Note or any
other Debt Document within 3 days after its due date, Borrower agrees to pay the
Late Fee in accordance with the Agreement. Such Late Fee will be immediately due
and payable, and is in addition to any other costs, fees and expenses that
Borrower may owe as a result of such late payment.

This Note may be voluntarily prepaid only as permitted under Section 2.4 of the
Agreement. After an Event of Default, this Note shall bear interest at a rate
per annum equal to the Default Rate pursuant to Section 2.6 of the Agreement.

 

41

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Borrower and all parties now or hereafter liable with respect to this Note,
hereby waive presentment, demand for payment, notice of nonpayment, protest,
notice of protest, notice of dishonor, and all other notices in connection
herewith, as well as filing of suit (if permitted by law) and diligence in
collecting this Note or enforcing any of the security hereof, and agree to pay
(if permitted by law) all expenses incurred in collection, including reasonable
attorneys’ fees and expenses, including without limitation, the allocated costs
of in-house counsel.

[For Term A/B/C Notes: The execution and delivery of this Note shall not in any
circumstances be deemed to have terminated, extinguished, released, constituted
a novation of, or discharged the indebtedness of the Borrower owing to Lender
under that certain Promissory Note, dated as of                  , 20    , made
by Borrower in favor of Lender, which indebtedness shall continue under and be
governed by this Note.]

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless such variation or modification
is made in accordance with Section 10.8 of the Agreement. Any such waiver,
consent, modification or change shall be effective only in the specific instance
and for the specific purpose given.

IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first
above written.

 

ACHILLION PHARMACEUTICALS, INC. By:  

 

Name:  

 

Title:  

 

Federal Tax ID #:  

 

Address:  

 

 

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EXHIBIT B

SECRETARY’S CERTIFICATE OF AUTHORITY

[DATE]

Reference is made to the Loan and Security Agreement, dated as of [            
    ,     ] (as amended, restated, supplemented or otherwise modified from time
to time, the “Agreement”), among ACHILLION PHARMACEUTICALS, INC., a Delaware
corporation (the “Borrower”), the guarantors from time to time party thereto,
General Electric Capital Corporation, a Delaware corporation (“GECC”), as a
lender and as agent (in such capacity, together with its successors and assigns
in such capacity, “Agent”), and the other lenders signatory thereto from time to
time (GECC and such other lenders, the “Lenders”). Capitalized terms used but
not defined herein are used with the meanings assigned to such terms in the
Agreement.

I, [                                         ], do hereby certify that:

(i) I am the duly elected, qualified and acting [Assistant] Secretary of
ACHILLION PHARMACEUTICALS, INC. (the “Company”);

(ii) attached hereto as Exhibit A is a true, complete and correct copies of the
Company’s [Certificate/Articles of Incorporation or Articles of
Organization/Certificate of Formation] and the [Bylaws/LLC Agreement/Partnership
Agreement], each of which is in full force and effect on and as of the date
hereof;

(iii) each of the following named individuals is a duly elected or appointed,
qualified and acting officer of the Company who holds the offices set opposite
such individual’s name, and such individual is authorized to sign the Debt
Documents to which the Company is a party and all other notices, documents,
instruments and certificates to be delivered pursuant thereto, and the signature
written opposite the name and title of such officer is such officer’s genuine
signature:

 

Name

 

Title

 

Signature

           

(iv) attached hereto as Exhibit B are true, complete and correct copies of
resolutions adopted by the Board of Directors/Members of the Company (the
“Board”) authorizing the execution, delivery and performance of the Debt
Documents to which the Company is a party, which resolutions were duly adopted
by the Board on [DATE] and all such resolutions are in full force and effect on
the date hereof in the form in which adopted without amendment, modification,
rescission or revocation;

(v) the foregoing authority shall remain in full force and effect, and Agent and
each Lender shall be entitled to rely upon same, until written notice of the
modification, rescission or revocation of same, in whole or in part, has been
delivered to Agent and each Lender, but no such modification, rescission or
revocation shall, in any event, be effective with respect to any documents
executed or actions taken in reliance upon the foregoing authority before said
written notice is delivered to Agent and each Lender; and

 

43

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(vi) no Default or Event of Default exists under the Agreement, and all
representations and warranties of the Company in the Debt Documents are true and
correct in all respects on and as of the date hereof, except to the extent such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties were true and correct in all respects
on and as of such earlier date.

[Signature Page Follows]

 

44

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IN WITNESS WHEREOF, I have hereunto set my hand as of the first date written
above

 

 

Name:  

 

Title:   [Assistant] Secretary

The undersigned does hereby certify on behalf of the Company that he/she is the
duly elected or appointed, qualified and acting [TITLE] of the Company and that
[NAME FROM ABOVE] is the duly elected or appointed, qualified and acting
[Assistant] Secretary of the Company, and that the signature set forth
immediately above is his/her genuine signature.

 

 

Name:  

 

Title:  

 

 

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EXHIBIT B TO SECRETARY’S CERTIFICATE OF AUTHORITY

FORM OF RESOLUTIONS

BOARD RESOLUTIONS

                 , 200    

WHEREAS, [            ], a                           (“Borrower”) has requested
that General Electric Capital Corporation, a Delaware corporation (“GECC”), as
agent (in such capacity, the “Agent”) and lender, and certain other lenders
(GECC and such other lenders, collectively, the “Lenders”) provide a credit
facility in an original principal amount not to exceed $[                    ]
(the “Credit Facility”); and

WHEREAS, the terms of the Credit Facility are set forth in a loan and security
agreement by and among Borrower, the guarantors from time to time party thereto,
Agent, and the Lenders and certain related agreements, documents and instruments
described in detail below; and

[WHEREAS, as a subsidiary of Borrower,                     , the “Company”) will
benefit from the making of the loan(s) to Borrower under the Credit Facility;
and]

WHEREAS, the Board of Directors of [Borrower] [Company] (the “Directors”) deems
it advisable and in the best interests of [Borrower] [Company] to execute,
deliver and perform its obligations under those transaction documents described
and referred to below.

NOW, THEREFORE, be it

RESOLVED, that the Credit Facility be, and it hereby is, approved; and further

RESOLVED, that the form of Loan and Security Agreement (the “Loan and Security
Agreement”), by and among [Borrower], [Company,] the [other] guarantors from
time to time party thereto, Agent and the Lenders, as presented to the
Directors, be and it hereby is, approved and the [President, the Chief Executive
Officer, Chief Financial Officer, the Vice President or Treasurer] of [Borrower]
[Company] (collectively, the “Proper Officers”) be, and each of them hereby is,
authorized and directed on behalf of [Borrower] [Company] to execute and deliver
to Agent the Loan and Security Agreement, in substantially the form as presented
to the Directors, with such changes as the Proper Officers may approve, such
approval to be conclusively evidenced by execution and delivery thereof; and
further

[RESOLVED, that the form of Promissory Note (the “Note”), as presented to the
Directors, be, and it hereby is, approved and the Proper Officers be, and each
of them hereby is, authorized and directed on behalf of Borrower to execute and
deliver to Lender one or more promissory Notes, in substantially the form as
presented to the Directors, with such changes as the Proper Officers may
approve, such approval to be conclusively evidenced by execution and delivery
thereof; and further]

[RESOLVED, that the form(s) of [Intellectual Property Security Agreement]
[Pledge Agreement] [and] [Account Control Agreement] [(collectively, the
“Security Documents”)] [and the form of the Preferred Stock Warrant,]
[Disbursement Letter,] [Guaranty,] [INCLUDE OTHER DOCUMENTS AS APPROPRIATE]
(together with the Security Documents, the “Ancillary Documents”), each as
presented to the Directors, be, and each of them hereby is, approved and the
Proper Officers be, and each of them hereby is, authorized and directed on
behalf of Borrower to execute and deliver to Agent each of the Ancillary
Documents, in substantially the form as presented to the Directors, with such
changes as the Proper Officers may approve, such approval to be conclusively
evidenced by execution and delivery thereof; and further]

 

46

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RESOLVED, that the Proper Officers be, and each of them hereby is, authorized
and directed to execute and deliver any and all other agreements, certificates,
security agreements, financing statements, indemnification agreements,
instruments and documents (together with the Loan and Security Agreement, [and]
the Notes [, and the Ancillary Documents], the “Debt Documents”) and take any
and all other further action, in each case, as may be required or which they may
deem appropriate, on behalf of [Borrower] [Company], in connection with the
Credit Facility and carrying into effect the foregoing resolutions, transactions
and matters contemplated thereby; and further

RESOLVED, that [Borrower] [Company] is hereby authorized to perform its
obligations under the Debt Documents, [including, without limitation, the
borrowing of any advances made under the Credit Facility and] the granting of
any security interest in [Borrower’s] [Company’s] assets contemplated thereby to
secure [Borrower’s] [Company’s] obligations in connection therewith; and further

RESOLVED, that in addition to executing any documents approved in the preceding
resolutions, the Secretary or any Assistant Secretary of [Borrower] [Company]
may attest to such Debt Documents, the signature thereon or the corporate seal
of [Borrower] [Company] thereon; and further

RESOLVED, that any actions taken by the Proper Officers prior to the date of
these resolutions in connection with the transactions contemplated by these
resolutions are hereby ratified and approved; and further

RESOLVED, that these resolutions shall be valid and binding upon [Borrower]
[Company].

 

47

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EXHIBIT C-1

FORM OF LANDLORD CONSENT

[Landlord]

[Address]

[                ,     ]

Ladies and Gentlemen:

General Electric Capital Corporation (together with its successors and assigns,
if any, “Agent”) and certain other lenders (the “Lenders”) have entered into, or
is about to enter into, a Loan and Security Agreement, dated as of [DATE] (as
amended, restated, supplemented or otherwise modified from time to time, the
“Agreement”) with [CUSTOMER NAME] (“Borrower”) [and                     
(“Company”)], pursuant to which [Borrower] [Company] has granted, or will grant,
to Agent, on behalf of itself and the Lenders, a security interest in certain
assets of [Borrower] [Company], including, without limitation, all of
[Borrower’s] [Company’s] cash, cash equivalents, accounts, books and records,
goods, inventory, machinery, equipment, furniture and trade fixtures (such as
equipment bolted to floors), together with all addition, substitutions,
replacements and improvements to, and proceeds, including, insurance proceeds,
of the foregoing, but excluding building fixtures (such as plumbing, lighting
and HVAC systems (collectively, the “Collateral”). Some or all of the Collateral
is, or will be, located at certain premises known as [                    ] in
the City or Town of [                    , County of
                                         and State of             ]
(“Premises”), and [Borrower] [Company] occupies the Premises pursuant to a
lease, dated as of [DATE], between [Borrower] [Company], as tenant, and you,
[NAME], as [owner/landlord/mortgagee/realty manager] (as amended, restated,
supplemented or otherwise modified from time to time, the “Lease”).

By your signature below, you hereby agree (and we shall rely on your agreement)
that: (i) the Lease is in full force and effect and you are not aware of any
existing defaults thereunder, (ii) the Collateral is, and shall remain, personal
property regardless of the method by which it may be, or become, affixed to the
Premises; (iii) you agree to use your best efforts to provide Agent with written
notice of any default by [Borrower] [Company] under the Lease resulting in a
termination of the Lease (“Default Notice”) and Agent shall have the right, but
not the obligation to cure such default within 15 days following Agent’s receipt
of such Default Notice, (iv) your interest in the Collateral and any proceeds
thereof (including, without limitation, proceeds of any insurance therefor)
shall be, and remain, subject and subordinate to the interests of Agent and you
agree not to levy upon any Collateral or to assert any landlord lien, right of
distraint or other claim against the Collateral for any reason; (v) Agent, and
its employees and agents, shall have the right, from time to time, to enter into
the Premises for the purpose of inspecting the Collateral; and (vi) Agent, and
its employees and agents, shall have the right, upon any default by [Borrower]
[Company] under the Agreement, to enter into the Premises and to remove or
otherwise deal with the Collateral, including, without limitation, by way of
public auction or private sale (provided that, if Agent conducts a public
auction or private sale of the Collateral at the Premises, Agent shall use
reasonable efforts to notify Landlord first and to hold such auction or sale in
a manner that would not unduly disrupt Landlord’s or any other tenant’s use of
the Premises). Agent agrees to repair or reimburse you for any physical damage
actually caused to the Premises by Agent, or its employees or agents, during any
such removal or inspection (other than ordinary wear and tear), provided that it
is understood by the parties hereto that Agent shall not be liable for any
diminution in value of the Premises caused by the removal or absence of the
Collateral therefrom. You hereby acknowledge that Agent shall have no obligation
to remove or dispose of the Collateral from the Premises and no action by Agent
pursuant to this Consent shall be deemed to be an assumption by Agent of any
obligation under the Lease and, except as provided in the immediately preceding
sentence, Agent shall not have any obligation to you.

 

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You hereby acknowledge and agree that [Borrower’s] [Company’s] granting of a
security interest in the Collateral in favor of Agent, on behalf of itself and
the Lenders, shall not constitute a default under the Lease nor permit you to
terminate the Lease or re-enter or repossess the Premises or otherwise be the
basis for the exercise of any remedy available to you.

This Consent and the agreements contained herein shall be binding upon, and
shall inure to the benefit of, any successors and assigns of the parties hereto
(including any transferees of the Premises). This Consent shall terminate upon
the indefeasible payment of Borrower’s indebtedness in full in immediately
available funds and the satisfaction in full of Borrower’s [and Company’s]
performance of its obligations under the Agreement and the related documents.

This Consent and any amendments, waivers, consents or supplements hereto or in
connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. Delivery of an executed signature page of this Consent or any delivery
contemplated hereby by facsimile or electronic transmission shall be as
effective as delivery of a manually executed counterpart thereof.

 

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We appreciate your cooperation in this matter of mutual interest.

 

GENERAL ELECTRIC CAPITAL CORPORATION, as Agent By:  

 

Name:  

 

Title:  

 

General Electric Capital Corporation

c/o GE Healthcare Financial Services, Inc., LSF

83 Wooster Heights Road, Fifth Floor

Danbury, Connecticut 06810

Attention:   Senior Vice President of Risk Phone:   (203) 205-5200 Facsimile:  
(203) 205-2192 With a copy to:

General Electric Capital Corporation

c/o GE Healthcare Financial Services, Inc.

Two Bethesda Metro Center, Suite 600

Bethesda, Maryland 20814

Attention:   General Counsel Phone:   (301) 961-1640 Facsimile:   (301) 664-9866

 

AGREED TO AND ACCEPTED BY: [NAME], as [owner/landlord/mortgagee/realty manager]
By:  

 

Name:  

 

Title:  

 

Address:   AGREED TO AND ACCEPTED BY: [NAME OF LOAN PARTY] By:  

 

Name:  

 

Title:  

 

Interest in the Premises (check applicable box)   q   Owner   q   Mortgagee   q
  Landlord   q   Realty Manager Address:    

 

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EXHIBIT C-2

FORM OF BAILEE CONSENT

[Letterhead of GE Capital]

                 , 200    

[NAME OF BAILEE]

 

 

 

 

Dear Sirs:

Re: [Name of the Loan Party] (the “Company”)

Please accept this letter as notice that we have entered into or may enter into
financing arrangements with the Company under which the Company has granted to
us continuing security interests in substantially all personal property and
assets of the Company and the proceeds thereof, including, without limitation,
certain equipment owned by the Company held by you at the manufacturing facility
(the “Premises”) owned by you and located at [                    ](the
“Personal Property”).

Please acknowledge that as a result of such arrangements, you are holding all of
the Personal Property solely for our benefit and subject only to the terms of
this letter and our instructions; provided, however, that until further written
notice from us, you are authorized to use and/or release any and all of the
Personal Property in your possession as directed by the Company in the ordinary
course of business. The foregoing instructions shall continue in effect until we
modify them in writing, which we may unilaterally do without any consent or
approval from the Company. Upon receipt of our instructions, you agree that
(a) you will release the Personal Property only to us or our designee; (b) you
will cooperate with us in our efforts to assemble, sell (whether by public or
private sale), take possession of, and remove all of the Personal Property
located at the Premises; (c) you will permit the Personal Property to remain on
the Premises for forty-five (45) days after your receipt of our instructions or
at our option, to have the Personal Property removed from the Premises within a
reasonable time, not to exceed forty-five (45) days after your receipt of our
instructions; (d) you will not hinder our actions in enforcing our liens on the
Personal Property; and (e) after receipt of our instructions, you will abide
solely by our instructions with respect to the Personal Property, and not those
of the Company.

You hereby waive and release in our favor: (a) any contractual lien, security
interest, charge or interest and any other lien which you may be entitled to
whether by contract, or arising at law or in equity against any Personal
Property; (b) any and all rights granted under any present or future laws to
levy or distrain for rent or any other charges which may be due to you against
the Personal Property; and (c) any and all other claims, liens, rights of
offset, deduction, counterclaim and demands of every kind which you have or may
hereafter have against the Personal Property.

You agree that (i) you have not and will not commingle the Personal Property
with any other property of a similar kind owned or held by you in any manner
such that the Personal Property is not readily identifiable, (ii) you have not
and will not issue any negotiable or non-negotiable documents or instruments
relating to the Personal Property, and (iii) the Personal Property is not and
will not be deemed to be fixtures.

 

51

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Notwithstanding the foregoing, all of your charges of any nature whatsoever
shall continue to be charged to and paid by the Company and we shall not be
liable for such charges.

You hereby authorize us to file at any time such financing statements naming you
as the debtor/bailee, Company as the secured party/bailor, and us as the
Company’s assignee, indicating as the collateral goods of the Company now or
hereafter in your custody, control or possession and proceeds thereof, and
including any other information with respect to the Company required under the
Uniform Commercial Code for the sufficiency of such financing statement or for
it to be accepted by the filing office of any applicable jurisdiction (and any
amendments or continuations with respect thereto).

The arrangement as outlined herein is to continue without modification, until we
have given you written notice to the contrary.

EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS LETTER.

Any notice(s) required or desired to be given hereunder shall be directed to the
party to be notified at the address stated herein.

The terms and conditions contained herein are to be construed and enforced in
accordance with the laws of the State of New York.

This terms and conditions contained herein shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns.

 

52

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The Company has signed below to indicate its consent to and agreement with the
foregoing arrangements, terms and conditions. By your signature below, you
hereby agree to be bound by the terms and conditions of this letter.

 

Very truly yours, GENERAL ELECTRIC CAPITAL CORPORATION By:  

 

Name:  

 

Title:   Duly Authorized Signatory

General Electric Capital Corporation

c/o GE Healthcare Financial Services, Inc., LSF

83 Wooster Heights Road, Fifth Floor

Danbury, Connecticut 06810

Attention:   Senior Vice President of Risk Phone:   (203) 205-5200 Facsimile:  
(203) 205-2192 With a copy to:

General Electric Capital Corporation

c/o GE Healthcare Financial Services, Inc.

Two Bethesda Metro Center, Suite 600

Bethesda, Maryland 20814

Attention:   General Counsel Phone:   (301) 961-1640 Facsimile:   (301) 664-9866

 

Agreed to: [NAME OF LOAN PARTY] By:  

 

Name:  

 

Title:  

 

Address:  

 

 

 

[NAME OF BAILEE] By:  

 

Name:  

 

Title:  

 

Address:  

 

 

 

 

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EXHIBIT D

COMPLIANCE CERTIFICATE

[DATE]

Reference is made to the Loan and Security Agreement, dated as of [            
    ,     ] (as amended, restated, supplemented or otherwise modified from time
to time, the “Agreement”), among ACHILLION PHARMACEUTICALS, INC., a Delaware
corporation (the “Borrower”), the guarantors from time to time party thereto,
General Electric Capital Corporation, a Delaware corporation (“GECC”), in its
capacity as agent (in such capacity, together with its successors and assigns,
in such capacity, the “Agent”) and lender, and the other lenders signatory
thereto (GECC and such other lenders, the “Lenders”). Capitalized terms used but
not defined herein are used with the meanings assigned to such terms in the
Agreement.

I, [                                         ], do hereby certify that:

 

(i) I am the duly elected, qualified and acting [TITLE] of Borrower;

(ii) attached hereto as Exhibit A are [the monthly financial statements]/[annual
audited financial statements]/[quarterly financial statements] as required under
Section 6.3 of the Agreement and that such financial statements are prepared in
accordance with GAAP and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes;

(iii) no Default or Event of Default has occurred under the Agreement which has
not been previously disclosed, in writing, to Lender; and

(iv) all representations and warranties of the Loan Parties stated in the Debt
Documents are true and correct in all respects on and as of the date hereof,
except to the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties were true and
correct in all respects on and as of such earlier date.

IN WITNESS WHEREOF, I have hereunto set my hand as of the first date written
above

 

 

 

Name:  

 

Title:  

 

 

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EXHIBIT E

 

EPS Setup Form   

Submit Via Fax:

ATTN: EPS Facilitator

(203) 205-2193

  

GE Healthcare Financial Services

Phone: (800) 426-6346

Fax: (203) 205-2193

1. Sender Information:   

Instructions To Enroll In EPS Plan:

Sender Name:

 

  

A.     Complete sections 1 - 7 (signature and all other information is required)

Sender Phone Number:

 

  

B.     Include a copy of a voided check, on which is noted your bank, branch and
account number

     

C.     Please submit via Fax to: (203) 205-2193

2. Authorization Agreement for Pre-Arranged Payment Plan:

 

  (a)                                           (“Borrower”) authorizes General
Electric Capital Corporation (“Agent”) to initiate debit entries for payment
becoming due pursuant to the terms and conditions set forth in the Loan and
Security Agreement, dated as of [DATE] (as amended, restated, supplemented or
otherwise modified from time to time, the “Agreement”), among Borrower, the
guarantors form time to time party thereto, Agent and the lenders signatory
thereto.

 

  (b) Borrower understands that the basic term loan payment and all applicable
taxes are solely its responsibility. If payment is not satisfied due to account
closure, insufficient funds, or cancellation of any required automated payment
services, Borrower agrees to remit payment plus any applicable late charges, as
set forth in the Agreement.

 

  (c) It is incumbent upon Borrower to give written notice to Agent of any
changes to this authorization or the below referenced bank account information
10 days prior to payment date; Borrower may revoke this authorization by giving
10 days written notice to Agent unless otherwise stipulated in the Agreement.

 

  (d) If a deduction is made in error, Borrower has the right to be paid within
five business days by Agent the amount of the erroneous deduction, provided
Agent is notified in writing of such error.

 

  (e) Cosigner must also sign if the account is a joint account.

 

55

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3. Agent Account Number(s): (Invoice Billing ID, 10-digit number formatted:
1234567-001)

 

Account:   Account:   Account:   Account: Account:   Account:   Account:  
Account:

 

4. First Payment Debit Date (mm/dd/yy)

 

 

First Payment:

 

5. Complete ALL Bank and Borrower Information:

 

BANK

 

INFO

  

Name of Bank or Financial

Institution:

 

  

Bank Account Number:

 

 

  

ABA Routing Number

(9-digit number)

 

  

Address of Bank or Financial

Institution:

 

  

City:

 

 

  

State:             Zip Code:

 

 

 

 

 

BORROWER

 

 

 

 

 

 

INFO

   Signatures    Company         Contact   
Signature of Authorized Signer: Date:    Company Name:    Contact Name:   

 

  

 

  

 

  

 

       

 

       

 

       

 

Name of Joint Account Holder: (Please Print)

  

 

Company Address:

  

 

Contact Phone Number:

  

 

  

 

  

 

  

 

       

 

       

 

       

 

Signature of Joint Account Holder: Date:

  

 

City:

  

 

Contact Fax Number:

  

 

  

 

  

 

  

 

                 

 

       

 

Name of Authorized Signer: (Please Print)

  

 

State:

  

 

Zip Code:

  

 

Contact email address:

  

 

  

 

  

 

  

 

  

 

                        

 

6. Would you like to have property taxes paid via EPS on above accounts?

Check (X):    YES:      NO:  

 

7. Would you like to receive a complementary invoice?

Check (X):    YES:      NO:  

 

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EXHIBIT F

FORM OF WARRANT

 

57

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EXHIBIT G

BORROWER’S INVESTMENT POLICY GUIDELINES

 

58

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TERM A LOAN PROMISSORY NOTE

February 26, 2008

FOR VALUE RECEIVED, ACHILLION PHARMACEUTICALS, INC., a Delaware corporation
located at the address stated below (“Borrower”), promises to pay to the order
of GENERAL ELECTRIC CAPITAL CORPORATION or any subsequent holder hereof (each, a
“Lender”), the principal sum of SEVEN HUNDRED SEVENTY-ONE THOUSAND THIRTY-FOUR
and 36/100 Dollars ($771,034.36) or, if less, the aggregate unpaid principal
amount of all Term Loans made by Lender to or on behalf of Borrower pursuant to
the Agreement (as hereinafter defined). All capitalized terms, unless otherwise
defined herein, shall have the respective meanings assigned to such terms in the
Agreement.

This Promissory Note is issued pursuant to that certain Loan and Security
Agreement, dated as of February 26, 2008, among Borrower, the guarantors from
time to time party thereto, General Electric Capital Corporation, as agent, the
other lenders signatory thereto, and Lender (as amended, restated, supplemented
or otherwise modified from time to time, the “Agreement”), is one of the Notes
referred to therein, and is entitled to the benefit and security of the Debt
Documents referred to therein, to which Agreement reference is hereby made for a
statement of all of the terms and conditions under which the loans evidenced
hereby were made.

The principal amount of the indebtedness evidenced hereby shall be payable in
the amounts and on the dates specified in the Agreement. Interest thereon shall
be paid until such principal amount is paid in full at such interest rates and
at such times as are specified in the Agreement. The terms of the Agreement are
hereby incorporated herein by reference.

All payments shall be applied in accordance with the Agreement. The acceptance
by Lender of any payment which is less than payment in full of all amounts due
and owing at such time shall not constitute a waiver of Lender’s right to
receive payment in full at such time or at any prior or subsequent time.

All amounts due hereunder and under the other Debt Documents are payable in the
lawful currency of the United States of America. Borrower hereby expressly
authorizes Lender to insert the date value as is actually given in the blank
space on the face hereof and on all related documents pertaining hereto.

This Note is secured as provided in the Agreement and the other Debt Documents.
Reference is hereby made to the Agreement and the other Debt Documents for a
description of the properties and assets in which a security interest has been
granted, the nature and extent of the security interest, the terms and
conditions upon which the security interest was granted and the rights of the
holder of the Note in respect thereof.

Time is of the essence hereof. If Lender does not receive from Borrower payment
in full of any Scheduled Payment or any other sum due under this Note or any
other Debt Document within 3 days after its due date, Borrower agrees to pay the
Late Fee in accordance with the Agreement. Such Late Fee will be immediately due
and payable, and is in addition to any other costs, fees and expenses that
Borrower may owe as a result of such late payment.

This Note may be voluntarily prepaid only as permitted under Section 2.4 of the
Agreement. After an Event of Default, this Note shall bear interest at a rate
per annum equal to the Default Rate pursuant to Section 2.6 of the Agreement.

Borrower and all parties now or hereafter liable with respect to this Note,
hereby waive presentment, demand for payment, notice of nonpayment, protest,
notice of protest, notice of dishonor, and all other

 

59

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notices in connection herewith, as well as filing of suit (if permitted by law)
and diligence in collecting this Note or enforcing any of the security hereof,
and agree to pay (if permitted by law) all expenses incurred in collection,
including reasonable attorneys’ fees and expenses, including without limitation,
the allocated costs of in-house counsel.

The execution and delivery of this Note shall not in any circumstances be deemed
to have terminated, extinguished, released, constituted a novation of, or
discharged the indebtedness of the Borrower owing to Lender under that certain
Promissory Note, dated as of December 30, 2005, made by Borrower in favor of
Lender, which indebtedness shall continue under and be governed by this Note.

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless such variation or modification
is made in accordance with Section 10.8 of the Agreement. Any such waiver,
consent, modification or change shall be effective only in the specific instance
and for the specific purpose given.

[Remainder of page left intentionally blank; Signature page follows]

 

60

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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first
above written.

 

ACHILLION PHARMACEUTICALS, INC. By:  

/s/ Mary Kay Fenton

Name:   Mary Kay Fenton Title:   Chief Financial Officer Federal Tax ID #:
52-2113479 Achillion Pharmaceuticals, Inc.

300 George Street

New Haven, CT 06511

Attn:   Mary Kay Fenton, Chief Financial Officer

 

61

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TERM A LOAN PROMISSORY NOTE

February 26, 2008

FOR VALUE RECEIVED, ACHILLION PHARMACEUTICALS, INC., a Delaware corporation
located at the address stated below (“Borrower”), promises to pay to the order
of OXFORD FINANCE CORPORATION or any subsequent holder hereof (each, a
“Lender”), the principal sum of SEVEN HUNDRED SEVENTY-ONE THOUSAND THIRTY-FOUR
and 36/100 Dollars ($771,034.36) or, if less, the aggregate unpaid principal
amount of all Term Loans made by Lender to or on behalf of Borrower pursuant to
the Agreement (as hereinafter defined). All capitalized terms, unless otherwise
defined herein, shall have the respective meanings assigned to such terms in the
Agreement.

This Promissory Note is issued pursuant to that certain Loan and Security
Agreement, dated as of February 26, 2008, among Borrower, the guarantors from
time to time party thereto, General Electric Capital Corporation, as agent, the
other lenders signatory thereto, and Lender (as amended, restated, supplemented
or otherwise modified from time to time, the “Agreement”), is one of the Notes
referred to therein, and is entitled to the benefit and security of the Debt
Documents referred to therein, to which Agreement reference is hereby made for a
statement of all of the terms and conditions under which the loans evidenced
hereby were made.

The principal amount of the indebtedness evidenced hereby shall be payable in
the amounts and on the dates specified in the Agreement. Interest thereon shall
be paid until such principal amount is paid in full at such interest rates and
at such times as are specified in the Agreement. The terms of the Agreement are
hereby incorporated herein by reference.

All payments shall be applied in accordance with the Agreement. The acceptance
by Lender of any payment which is less than payment in full of all amounts due
and owing at such time shall not constitute a waiver of Lender’s right to
receive payment in full at such time or at any prior or subsequent time.

All amounts due hereunder and under the other Debt Documents are payable in the
lawful currency of the United States of America. Borrower hereby expressly
authorizes Lender to insert the date value as is actually given in the blank
space on the face hereof and on all related documents pertaining hereto.

This Note is secured as provided in the Agreement and the other Debt Documents.
Reference is hereby made to the Agreement and the other Debt Documents for a
description of the properties and assets in which a security interest has been
granted, the nature and extent of the security interest, the terms and
conditions upon which the security interest was granted and the rights of the
holder of the Note in respect thereof.

Time is of the essence hereof. If Lender does not receive from Borrower payment
in full of any Scheduled Payment or any other sum due under this Note or any
other Debt Document within 3 days after its due date, Borrower agrees to pay the
Late Fee in accordance with the Agreement. Such Late Fee will be immediately due
and payable, and is in addition to any other costs, fees and expenses that
Borrower may owe as a result of such late payment.

This Note may be voluntarily prepaid only as permitted under Section 2.4 of the
Agreement. After an Event of Default, this Note shall bear interest at a rate
per annum equal to the Default Rate pursuant to Section 2.6 of the Agreement.

Borrower and all parties now or hereafter liable with respect to this Note,
hereby waive presentment, demand for payment, notice of nonpayment, protest,
notice of protest, notice of dishonor, and all other

 

62

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notices in connection herewith, as well as filing of suit (if permitted by law)
and diligence in collecting this Note or enforcing any of the security hereof,
and agree to pay (if permitted by law) all expenses incurred in collection,
including reasonable attorneys’ fees and expenses, including without limitation,
the allocated costs of in-house counsel.

The execution and delivery of this Note shall not in any circumstances be deemed
to have terminated, extinguished, released, constituted a novation of, or
discharged the indebtedness of the Borrower owing to Lender under that certain
Promissory Note, dated as of December 30, 2005, made by Borrower in favor of
Lender, which indebtedness shall continue under and be governed by this Note.

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless such variation or modification
is made in accordance with Section 10.8 of the Agreement. Any such waiver,
consent, modification or change shall be effective only in the specific instance
and for the specific purpose given.

[Remainder of page left intentionally blank; Signature page follows]

 

63

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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first
above written.

 

ACHILLION PHARMACEUTICALS, INC. By:  

/s/ Mary Kay Fenton

Name:   Mary Kay Fenton Title:   Chief Financial Officer Federal Tax ID #:
52-2113479 Achillion Pharmaceuticals, Inc.

300 George Street

New Haven, CT 06511

Attn:   Mary Kay Fenton, Chief Financial Officer

 

64

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TERM B LOAN PROMISSORY NOTE

February 26, 2008

FOR VALUE RECEIVED, ACHILLION PHARMACEUTICALS, INC., a Delaware corporation
located at the address stated below (“Borrower”), promises to pay to the order
of GENERAL ELECTRIC CAPITAL CORPORATION or any subsequent holder hereof (each, a
“Lender”), the principal sum of [ONE MILLION ONE HUNDRED THIRTY-SIX THOUSAND
THREE HUNDRED TWENTY-NINE and 56/100 Dollars ($1,136,329.56)] or, if less, the
aggregate unpaid principal amount of all Term Loans made by Lender to or on
behalf of Borrower pursuant to the Agreement (as hereinafter defined). All
capitalized terms, unless otherwise defined herein, shall have the respective
meanings assigned to such terms in the Agreement.

This Promissory Note is issued pursuant to that certain Loan and Security
Agreement, dated as of February 26, 2008, among Borrower, the guarantors from
time to time party thereto, General Electric Capital Corporation, as agent, the
other lenders signatory thereto, and Lender (as amended, restated, supplemented
or otherwise modified from time to time, the “Agreement”), is one of the Notes
referred to therein, and is entitled to the benefit and security of the Debt
Documents referred to therein, to which Agreement reference is hereby made for a
statement of all of the terms and conditions under which the loans evidenced
hereby were made.

The principal amount of the indebtedness evidenced hereby shall be payable in
the amounts and on the dates specified in the Agreement. Interest thereon shall
be paid until such principal amount is paid in full at such interest rates and
at such times as are specified in the Agreement. The terms of the Agreement are
hereby incorporated herein by reference.

All payments shall be applied in accordance with the Agreement. The acceptance
by Lender of any payment which is less than payment in full of all amounts due
and owing at such time shall not constitute a waiver of Lender’s right to
receive payment in full at such time or at any prior or subsequent time.

All amounts due hereunder and under the other Debt Documents are payable in the
lawful currency of the United States of America. Borrower hereby expressly
authorizes Lender to insert the date value as is actually given in the blank
space on the face hereof and on all related documents pertaining hereto.

This Note is secured as provided in the Agreement and the other Debt Documents.
Reference is hereby made to the Agreement and the other Debt Documents for a
description of the properties and assets in which a security interest has been
granted, the nature and extent of the security interest, the terms and
conditions upon which the security interest was granted and the rights of the
holder of the Note in respect thereof.

Time is of the essence hereof. If Lender does not receive from Borrower payment
in full of any Scheduled Payment or any other sum due under this Note or any
other Debt Document within 3 days after its due date, Borrower agrees to pay the
Late Fee in accordance with the Agreement. Such Late Fee will be immediately due
and payable, and is in addition to any other costs, fees and expenses that
Borrower may owe as a result of such late payment.

This Note may be voluntarily prepaid only as permitted under Section 2.4 of the
Agreement. After an Event of Default, this Note shall bear interest at a rate
per annum equal to the Default Rate pursuant to Section 2.6 of the Agreement.

 

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Borrower and all parties now or hereafter liable with respect to this Note,
hereby waive presentment, demand for payment, notice of nonpayment, protest,
notice of protest, notice of dishonor, and all other notices in connection
herewith, as well as filing of suit (if permitted by law) and diligence in
collecting this Note or enforcing any of the security hereof, and agree to pay
(if permitted by law) all expenses incurred in collection, including reasonable
attorneys’ fees and expenses, including without limitation, the allocated costs
of in-house counsel.

The execution and delivery of this Note shall not in any circumstances be deemed
to have terminated, extinguished, released, constituted a novation of, or
discharged the indebtedness of the Borrower owing to Lender under that certain
Promissory Note, dated as of May 12, 2006, made by Borrower in favor of Lender,
which indebtedness shall continue under and be governed by this Note.

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless such variation or modification
is made in accordance with Section 10.8 of the Agreement. Any such waiver,
consent, modification or change shall be effective only in the specific instance
and for the specific purpose given.

[Remainder of page left intentionally blank; Signature page follows]

 

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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first
above written.

 

ACHILLION PHARMACEUTICALS, INC. By:  

/s/ Mary Kay Fenton

Name:   Mary Kay Fenton Title:   Chief Financial Officer Federal Tax ID #:
52-2113479 Achillion Pharmaceuticals, Inc.

300 George Street

New Haven, CT 06511

Attn:   Mary Kay Fenton, Chief Financial Officer

 

67

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TERM B LOAN PROMISSORY NOTE

February 26, 2008

FOR VALUE RECEIVED, ACHILLION PHARMACEUTICALS, INC., a Delaware corporation
located at the address stated below (“Borrower”), promises to pay to the order
of OXFORD FINANCE CORPORATION or any subsequent holder hereof (each, a
“Lender”), the principal sum of ONE MILLION ONE HUNDRED THIRTY-SIX THOUSAND
THREE HUNDRED TWENTY-NINE and 56/100 Dollars ($1,136,329.56) or, if less, the
aggregate unpaid principal amount of all Term Loans made by Lender to or on
behalf of Borrower pursuant to the Agreement (as hereinafter defined). All
capitalized terms, unless otherwise defined herein, shall have the respective
meanings assigned to such terms in the Agreement.

This Promissory Note is issued pursuant to that certain Loan and Security
Agreement, dated as of February 26, 2008, among Borrower, the guarantors from
time to time party thereto, General Electric Capital Corporation, as agent, the
other lenders signatory thereto, and Lender (as amended, restated, supplemented
or otherwise modified from time to time, the “Agreement”), is one of the Notes
referred to therein, and is entitled to the benefit and security of the Debt
Documents referred to therein, to which Agreement reference is hereby made for a
statement of all of the terms and conditions under which the loans evidenced
hereby were made.

The principal amount of the indebtedness evidenced hereby shall be payable in
the amounts and on the dates specified in the Agreement. Interest thereon shall
be paid until such principal amount is paid in full at such interest rates and
at such times as are specified in the Agreement. The terms of the Agreement are
hereby incorporated herein by reference.

All payments shall be applied in accordance with the Agreement. The acceptance
by Lender of any payment which is less than payment in full of all amounts due
and owing at such time shall not constitute a waiver of Lender’s right to
receive payment in full at such time or at any prior or subsequent time.

All amounts due hereunder and under the other Debt Documents are payable in the
lawful currency of the United States of America. Borrower hereby expressly
authorizes Lender to insert the date value as is actually given in the blank
space on the face hereof and on all related documents pertaining hereto.

This Note is secured as provided in the Agreement and the other Debt Documents.
Reference is hereby made to the Agreement and the other Debt Documents for a
description of the properties and assets in which a security interest has been
granted, the nature and extent of the security interest, the terms and
conditions upon which the security interest was granted and the rights of the
holder of the Note in respect thereof.

Time is of the essence hereof. If Lender does not receive from Borrower payment
in full of any Scheduled Payment or any other sum due under this Note or any
other Debt Document within 3 days after its due date, Borrower agrees to pay the
Late Fee in accordance with the Agreement. Such Late Fee will be immediately due
and payable, and is in addition to any other costs, fees and expenses that
Borrower may owe as a result of such late payment.

This Note may be voluntarily prepaid only as permitted under Section 2.4 of the
Agreement. After an Event of Default, this Note shall bear interest at a rate
per annum equal to the Default Rate pursuant to Section 2.6 of the Agreement.

 

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Borrower and all parties now or hereafter liable with respect to this Note,
hereby waive presentment, demand for payment, notice of nonpayment, protest,
notice of protest, notice of dishonor, and all other notices in connection
herewith, as well as filing of suit (if permitted by law) and diligence in
collecting this Note or enforcing any of the security hereof, and agree to pay
(if permitted by law) all expenses incurred in collection, including reasonable
attorneys’ fees and expenses, including without limitation, the allocated costs
of in-house counsel.

The execution and delivery of this Note shall not in any circumstances be deemed
to have terminated, extinguished, released, constituted a novation of, or
discharged the indebtedness of the Borrower owing to Lender under that certain
Promissory Note, dated as of May 12, 2006, made by Borrower in favor of Lender,
which indebtedness shall continue under and be governed by this Note.

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless such variation or modification
is made in accordance with Section 10.8 of the Agreement. Any such waiver,
consent, modification or change shall be effective only in the specific instance
and for the specific purpose given.

[Remainder of page left intentionally blank; Signature page follows]

 

69

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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first
above written.

 

ACHILLION PHARMACEUTICALS, INC. By:  

/s/ Mary Kay Fenton

Name:   Mary Kay Fenton Title:   Chief Financial Officer Federal Tax ID #:
52-2113479 Achillion Pharmaceuticals, Inc.

300 George Street

New Haven, CT 06511

Attn:   Mary Kay Fenton, Chief Financial Officer

 

70

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TERM C LOAN PROMISSORY NOTE

February 26, 2008

FOR VALUE RECEIVED, ACHILLION PHARMACEUTICALS, INC., a Delaware corporation
located at the address stated below (“Borrower”), promises to pay to the order
of GENERAL ELECTRIC CAPITAL CORPORATION or any subsequent holder hereof (each, a
“Lender”), the principal sum of [THREE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED
FIFTY-FIVE and 97/100 Dollars ($332,655.97)] or, if less, the aggregate unpaid
principal amount of all Term Loans made by Lender to or on behalf of Borrower
pursuant to the Agreement (as hereinafter defined). All capitalized terms,
unless otherwise defined herein, shall have the respective meanings assigned to
such terms in the Agreement.

This Promissory Note is issued pursuant to that certain Loan and Security
Agreement, dated as of February 26, 2008 among Borrower, the guarantors from
time to time party thereto, General Electric Capital Corporation, as agent, the
other lenders signatory thereto, and Lender (as amended, restated, supplemented
or otherwise modified from time to time, the “Agreement”), is one of the Notes
referred to therein, and is entitled to the benefit and security of the Debt
Documents referred to therein, to which Agreement reference is hereby made for a
statement of all of the terms and conditions under which the loans evidenced
hereby were made.

The principal amount of the indebtedness evidenced hereby shall be payable in
the amounts and on the dates specified in the Agreement. Interest thereon shall
be paid until such principal amount is paid in full at such interest rates and
at such times as are specified in the Agreement. The terms of the Agreement are
hereby incorporated herein by reference.

All payments shall be applied in accordance with the Agreement. The acceptance
by Lender of any payment which is less than payment in full of all amounts due
and owing at such time shall not constitute a waiver of Lender’s right to
receive payment in full at such time or at any prior or subsequent time.

All amounts due hereunder and under the other Debt Documents are payable in the
lawful currency of the United States of America. Borrower hereby expressly
authorizes Lender to insert the date value as is actually given in the blank
space on the face hereof and on all related documents pertaining hereto.

This Note is secured as provided in the Agreement and the other Debt Documents.
Reference is hereby made to the Agreement and the other Debt Documents for a
description of the properties and assets in which a security interest has been
granted, the nature and extent of the security interest, the terms and
conditions upon which the security interest was granted and the rights of the
holder of the Note in respect thereof.

Time is of the essence hereof. If Lender does not receive from Borrower payment
in full of any Scheduled Payment or any other sum due under this Note or any
other Debt Document within 3 days after its due date, Borrower agrees to pay the
Late Fee in accordance with the Agreement. Such Late Fee will be immediately due
and payable, and is in addition to any other costs, fees and expenses that
Borrower may owe as a result of such late payment.

This Note may be voluntarily prepaid only as permitted under Section 2.4 of the
Agreement. After an Event of Default, this Note shall bear interest at a rate
per annum equal to the Default Rate pursuant to Section 2.6 of the Agreement.

 

71

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Borrower and all parties now or hereafter liable with respect to this Note,
hereby waive presentment, demand for payment, notice of nonpayment, protest,
notice of protest, notice of dishonor, and all other notices in connection
herewith, as well as filing of suit (if permitted by law) and diligence in
collecting this Note or enforcing any of the security hereof, and agree to pay
(if permitted by law) all expenses incurred in collection, including reasonable
attorneys’ fees and expenses, including without limitation, the allocated costs
of in-house counsel.

The execution and delivery of this Note shall not in any circumstances be deemed
to have terminated, extinguished, released, constituted a novation of, or
discharged the indebtedness of the Borrower owing to Lender under that certain
Promissory Note, dated as of June 28, 2007 made by Borrower in favor of Lender,
which indebtedness shall continue under and be governed by this Note.

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless such variation or modification
is made in accordance with Section 10.8 of the Agreement. Any such waiver,
consent, modification or change shall be effective only in the specific instance
and for the specific purpose given.

[Remainder of page left intentionally blank; Signature page follows]

 

72

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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first
above written.

 

ACHILLION PHARMACEUTICALS, INC. By:  

/s/ Mary Kay Fenton

Name:   Mary Kay Fenton Title:   Chief Financial Officer Federal Tax ID #:
52-2113479 Achillion Pharmaceuticals, Inc.

300 George Street

New Haven, CT 06511

Attn:   Mary Kay Fenton, Chief Financial Officer

 

73

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TERM C LOAN PROMISSORY NOTE

February 26, 2008

FOR VALUE RECEIVED, ACHILLION PHARMACEUTICALS, INC., a Delaware corporation
located at the address stated below (“Borrower”), promises to pay to the order
of OXFORD FINANCE CORPORATION or any subsequent holder hereof (each, a
“Lender”), the principal sum of THREE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED
FIFTY-FIVE and 97/100 Dollars ($332,655.97) or, if less, the aggregate unpaid
principal amount of all Term Loans made by Lender to or on behalf of Borrower
pursuant to the Agreement (as hereinafter defined). All capitalized terms,
unless otherwise defined herein, shall have the respective meanings assigned to
such terms in the Agreement.

This Promissory Note is issued pursuant to that certain Loan and Security
Agreement, dated as of February 26, 2008 among Borrower, the guarantors from
time to time party thereto, General Electric Capital Corporation, as agent, the
other lenders signatory thereto, and Lender (as amended, restated, supplemented
or otherwise modified from time to time, the “Agreement”), is one of the Notes
referred to therein, and is entitled to the benefit and security of the Debt
Documents referred to therein, to which Agreement reference is hereby made for a
statement of all of the terms and conditions under which the loans evidenced
hereby were made.

The principal amount of the indebtedness evidenced hereby shall be payable in
the amounts and on the dates specified in the Agreement. Interest thereon shall
be paid until such principal amount is paid in full at such interest rates and
at such times as are specified in the Agreement. The terms of the Agreement are
hereby incorporated herein by reference.

All payments shall be applied in accordance with the Agreement. The acceptance
by Lender of any payment which is less than payment in full of all amounts due
and owing at such time shall not constitute a waiver of Lender’s right to
receive payment in full at such time or at any prior or subsequent time.

All amounts due hereunder and under the other Debt Documents are payable in the
lawful currency of the United States of America. Borrower hereby expressly
authorizes Lender to insert the date value as is actually given in the blank
space on the face hereof and on all related documents pertaining hereto.

This Note is secured as provided in the Agreement and the other Debt Documents.
Reference is hereby made to the Agreement and the other Debt Documents for a
description of the properties and assets in which a security interest has been
granted, the nature and extent of the security interest, the terms and
conditions upon which the security interest was granted and the rights of the
holder of the Note in respect thereof.

Time is of the essence hereof. If Lender does not receive from Borrower payment
in full of any Scheduled Payment or any other sum due under this Note or any
other Debt Document within 3 days after its due date, Borrower agrees to pay the
Late Fee in accordance with the Agreement. Such Late Fee will be immediately due
and payable, and is in addition to any other costs, fees and expenses that
Borrower may owe as a result of such late payment.

This Note may be voluntarily prepaid only as permitted under Section 2.4 of the
Agreement. After an Event of Default, this Note shall bear interest at a rate
per annum equal to the Default Rate pursuant to Section 2.6 of the Agreement.

Borrower and all parties now or hereafter liable with respect to this Note,
hereby waive presentment, demand for payment, notice of nonpayment, protest,
notice of protest, notice of dishonor, and all other

 

74

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notices in connection herewith, as well as filing of suit (if permitted by law)
and diligence in collecting this Note or enforcing any of the security hereof,
and agree to pay (if permitted by law) all expenses incurred in collection,
including reasonable attorneys’ fees and expenses, including without limitation,
the allocated costs of in-house counsel.

The execution and delivery of this Note shall not in any circumstances be deemed
to have terminated, extinguished, released, constituted a novation of, or
discharged the indebtedness of the Borrower owing to Lender under that certain
Promissory Note, dated as of June 28, 2007, made by Borrower in favor of Lender,
which indebtedness shall continue under and be governed by this Note.

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless such variation or modification
is made in accordance with Section 10.8 of the Agreement. Any such waiver,
consent, modification or change shall be effective only in the specific instance
and for the specific purpose given.

[Remainder of page left intentionally blank; Signature page follows]

 

75

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first
above written.

 

ACHILLION PHARMACEUTICALS, INC. By:  

/s/ Mary Kay Fenton

Name:   Mary Kay Fenton Title:   Chief Financial Officer Federal Tax ID #:
52-2113479 Achillion Pharmaceuticals, Inc.

300 George Street

New Haven, CT 06511

Attn:   Mary Kay Fenton, Chief Financial Officer

 

76

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TERM D LOAN PROMISSORY NOTE

February 26, 2008

FOR VALUE RECEIVED, ACHILLION PHARMACEUTICALS, INC., a Delaware corporation
located at the address stated below (“Borrower”), promises to pay to the order
of GENERAL ELECTRIC CAPITAL CORPORATION or any subsequent holder hereof (each, a
“Lender”), the principal sum of TWO MILLION FIVE HUNDRED THOUSAND and 00/100
Dollars ($2,500,000.00) or, if less, the aggregate unpaid principal amount of
all Term Loans made by Lender to or on behalf of Borrower pursuant to the
Agreement (as hereinafter defined). All capitalized terms, unless otherwise
defined herein, shall have the respective meanings assigned to such terms in the
Agreement.

This Promissory Note is issued pursuant to that certain Loan and Security
Agreement, dated as of February 26, 2008 among Borrower, the guarantors from
time to time party thereto, General Electric Capital Corporation, as agent, the
other lenders signatory thereto, and Lender (as amended, restated, supplemented
or otherwise modified from time to time, the “Agreement”), is one of the Notes
referred to therein, and is entitled to the benefit and security of the Debt
Documents referred to therein, to which Agreement reference is hereby made for a
statement of all of the terms and conditions under which the loans evidenced
hereby were made.

The principal amount of the indebtedness evidenced hereby shall be payable in
the amounts and on the dates specified in the Agreement. Interest thereon shall
be paid until such principal amount is paid in full at such interest rates and
at such times as are specified in the Agreement. The terms of the Agreement are
hereby incorporated herein by reference.

All payments shall be applied in accordance with the Agreement. The acceptance
by Lender of any payment which is less than payment in full of all amounts due
and owing at such time shall not constitute a waiver of Lender’s right to
receive payment in full at such time or at any prior or subsequent time.

All amounts due hereunder and under the other Debt Documents are payable in the
lawful currency of the United States of America. Borrower hereby expressly
authorizes Lender to insert the date value as is actually given in the blank
space on the face hereof and on all related documents pertaining hereto.

This Note is secured as provided in the Agreement and the other Debt Documents.
Reference is hereby made to the Agreement and the other Debt Documents for a
description of the properties and assets in which a security interest has been
granted, the nature and extent of the security interest, the terms and
conditions upon which the security interest was granted and the rights of the
holder of the Note in respect thereof.

Time is of the essence hereof. If Lender does not receive from Borrower payment
in full of any Scheduled Payment or any other sum due under this Note or any
other Debt Document within 3 days after its due date, Borrower agrees to pay the
Late Fee in accordance with the Agreement. Such Late Fee will be immediately due
and payable, and is in addition to any other costs, fees and expenses that
Borrower may owe as a result of such late payment.

This Note may be voluntarily prepaid only as permitted under Section 2.4 of the
Agreement. After an Event of Default, this Note shall bear interest at a rate
per annum equal to the Default Rate pursuant to Section 2.6 of the Agreement.

Borrower and all parties now or hereafter liable with respect to this Note,
hereby waive presentment, demand for payment, notice of nonpayment, protest,
notice of protest, notice of dishonor, and all other

 

77

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notices in connection herewith, as well as filing of suit (if permitted by law)
and diligence in collecting this Note or enforcing any of the security hereof,
and agree to pay (if permitted by law) all expenses incurred in collection,
including reasonable attorneys’ fees and expenses, including without limitation,
the allocated costs of in-house counsel.

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless such variation or modification
is made in accordance with Section 10.8 of the Agreement. Any such waiver,
consent, modification or change shall be effective only in the specific instance
and for the specific purpose given.

[Remainder of page left intentionally blank; Signature page follows]

 

78

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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first
above written.

 

ACHILLION PHARMACEUTICALS, INC. By:  

/s/ Mary Kay Fenton

Name:   Mary Kay Fenton Title:   Chief Financial Officer Federal Tax ID #:
52-2113479 Achillion Pharmaceuticals, Inc.

300 George Street

New Haven, CT 06511

Attn:   Mary Kay Fenton, Chief Financial Officer

 

79

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TERM D LOAN PROMISSORY NOTE

February 26, 2008

FOR VALUE RECEIVED, ACHILLION PHARMACEUTICALS, INC., a Delaware corporation
located at the address stated below (“Borrower”), promises to pay to the order
of OXFORD FINANCE CORPORATION or any subsequent holder hereof (each, a
“Lender”), the principal sum of TWO MILLION FIVE HUNDRED THOUSAND and 00/100
Dollars ($2,500,000.00) or, if less, the aggregate unpaid principal amount of
all Term Loans made by Lender to or on behalf of Borrower pursuant to the
Agreement (as hereinafter defined). All capitalized terms, unless otherwise
defined herein, shall have the respective meanings assigned to such terms in the
Agreement.

This Promissory Note is issued pursuant to that certain Loan and Security
Agreement, dated as of February 26, 2008 among Borrower, the guarantors from
time to time party thereto, General Electric Capital Corporation, as agent, the
other lenders signatory thereto, and Lender (as amended, restated, supplemented
or otherwise modified from time to time, the “Agreement”), is one of the Notes
referred to therein, and is entitled to the benefit and security of the Debt
Documents referred to therein, to which Agreement reference is hereby made for a
statement of all of the terms and conditions under which the loans evidenced
hereby were made.

The principal amount of the indebtedness evidenced hereby shall be payable in
the amounts and on the dates specified in the Agreement. Interest thereon shall
be paid until such principal amount is paid in full at such interest rates and
at such times as are specified in the Agreement. The terms of the Agreement are
hereby incorporated herein by reference.

All payments shall be applied in accordance with the Agreement. The acceptance
by Lender of any payment which is less than payment in full of all amounts due
and owing at such time shall not constitute a waiver of Lender’s right to
receive payment in full at such time or at any prior or subsequent time.

All amounts due hereunder and under the other Debt Documents are payable in the
lawful currency of the United States of America. Borrower hereby expressly
authorizes Lender to insert the date value as is actually given in the blank
space on the face hereof and on all related documents pertaining hereto.

This Note is secured as provided in the Agreement and the other Debt Documents.
Reference is hereby made to the Agreement and the other Debt Documents for a
description of the properties and assets in which a security interest has been
granted, the nature and extent of the security interest, the terms and
conditions upon which the security interest was granted and the rights of the
holder of the Note in respect thereof.

Time is of the essence hereof. If Lender does not receive from Borrower payment
in full of any Scheduled Payment or any other sum due under this Note or any
other Debt Document within 3 days after its due date, Borrower agrees to pay the
Late Fee in accordance with the Agreement. Such Late Fee will be immediately due
and payable, and is in addition to any other costs, fees and expenses that
Borrower may owe as a result of such late payment.

This Note may be voluntarily prepaid only as permitted under Section 2.4 of the
Agreement. After an Event of Default, this Note shall bear interest at a rate
per annum equal to the Default Rate pursuant to Section 2.6 of the Agreement.

Borrower and all parties now or hereafter liable with respect to this Note,
hereby waive presentment, demand for payment, notice of nonpayment, protest,
notice of protest, notice of dishonor, and all other

 

80

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notices in connection herewith, as well as filing of suit (if permitted by law)
and diligence in collecting this Note or enforcing any of the security hereof,
and agree to pay (if permitted by law) all expenses incurred in collection,
including reasonable attorneys’ fees and expenses, including without limitation,
the allocated costs of in-house counsel.

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless such variation or modification
is made in accordance with Section 10.8 of the Agreement. Any such waiver,
consent, modification or change shall be effective only in the specific instance
and for the specific purpose given.

[Remainder of page left intentionally blank; Signature page follows]

 

81

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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first
above written.

 

ACHILLION PHARMACEUTICALS, INC. By:  

/s/ Mary Kay Fenton

Name:   Mary Kay Fenton Title:   Chief Financial Officer Federal Tax ID #:
52-2113479 Achillion Pharmaceuticals, Inc.

300 George Street

New Haven, CT 06511

Attn:   Mary Kay Fenton, Chief Financial Officer

 

82