Exhibit 10.2

PROMISSORY NOTE

June 28, 2007

(Date)

FOR VALUE RECEIVED, Achillion Pharmaceuticals, Inc. a corporation located at the
address stated below (“Maker”) promises, jointly and severally if more than one,
to pay to the order of General Electric Capital Corporation or any subsequent
bolder hereof (each, a “Payee”) at its office located at 83 Wooster Heights
Road, Danbury, CT 06810 or at such other place as Payee or the holder hereof may
designate, the principal sum of Four Hundred Thousand and 00/100 Dollars
($400,000.00), with interest on the unpaid principal balance, from the date
hereof through and including the dates of payment, at a fixed interest rate of
Eleven and Fifty Eight Hundredths percent (11.58%) per annum, to be paid in
lawful money of the United States, in Thirty-Six (36) consecutive monthly
installments of principal and interest as follows:

 

Periodic Installment

   Amount

Thirty-Five (35)

   $ 13,205.62

each (“Periodic Installment”) and a final installment which shall be in the
amount of the total outstanding principal and interest. The first Periodic
installment shall be due and payable on August 1, 2007 and the following
Periodic Installments and the final installment shall be due and payable on the
same day of each succeeding month (each, a “Payment Date”). Such installments
have been calculated on the basis of a 360 day year of twelve 30-day months.
Each payment may, at the option of the Payee, be calculated and applied on an
assumption that such payment would be made on its due date.

The acceptance by Payee 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 Payee’s
right to receive payment in full at such time or at any prior or subsequent
time.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a “Security
Agreement”).

Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful maximum.
If (i) Maker fails to make payment of any amount due hereunder within ten
(10) days after the same becomes due and payable; or (ii) Maker is in default
under, or fails to perform under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
accrued interest thereon and any other sum payable under this Note or any
Security Agreement, at the election of Payee, shall immediately become due and
payable, with interest thereon at the lesser of eighteen percent (18%) per annum
or the highest rate not prohibited by applicable law from the date of such
accelerated maturity until paid (both before and after any judgment).

Prior to the eighteenth month of this Note, Maker may prepay in full, but not in
part, its entire indebtedness hereunder upon payment of the then outstanding
gross amount due. Thereafter, Maker may prepay in full, but not in part, its
entire indebtedness hereunder upon payment of the entire indebtedness plus an
additional sum as a premium equal to the following percentages of the then
outstanding principal balance for the indicated period: Following the eighteenth
month but prior to the twenty-fourth monthly payment of this Note: four percent
(4%) Thereafter and prior to the thirty-sixth monthly payment of this Note:
three percent (3%) Thereafter and prior to the forty-eighth monthly payment of
this Note: two percent (2%) and zero percent (0%) thereafter, plus all other
sums due hereunder or under any Security Agreement.

It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is

 

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

contracted for, charged or received under this Note or any Security Agreement,
or if all of the principal balance shall be prepaid, so that under any of such
circumstances the amount of interest contracted for, charged or received under
this Note or any Security Agreement on the principal balance shall exceed the
maximum amount of interest permitted by applicable law, then in such event
(a) the provisions of this paragraph shall govern and control, (b) neither Maker
nor any other person or entity now or hereafter liable for the payment hereof
shall be obligated to pay the amount of such interest to the extent that it is
in excess of the maximum amount of interest permitted by applicable law, (c) any
such excess which may have been collected shall be either applied as a credit
against the then unpaid principal balance or refunded to Maker, at the option of
the Payee, and (d) the effective rate of interest shall be automatically reduced
to the maximum lawful contract rate allowed under applicable law as now or
hereafter construed by the courts having jurisdiction thereof. It is further
agreed that without limitation of the foregoing, all calculations of the rate of
interest contracted for, charged or received under this Note or any Security
Agreement which are made for the purpose of determining whether such rate
exceeds the maximum lawful contract rate, shall be made, to the extent permitted
by applicable law, by amortizing, prorating, allocating and spreading in equal
parts during the period of the full stated term of the indebtedness evidenced
hereby, all interest at any time contracted for, charged or received from Maker
or otherwise by Payee in connection with such indebtedness; provided, however,
that if any applicable state law is amended or the law of the United States of
America preempts any applicable state law, so that it becomes lawful for the
Payee to receive a greater interest per annum rate than is presently allowed,
the Maker agrees that, on the effective date of such amendment or preemption, as
the case may be, the lawful maximum hereunder shall be increased to the maximum
interest per annum rate allowed by the amended state law or the law of the
United States of America.

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an “Obligor”) who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
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 agrees to pay (if permitted by
law) all expenses incurred in collection, including Payee’s actual attorneys’
fees. Maker and each Obligor agrees that fees not in excess of twenty percent
(20%) of the amount then due shall be deemed reasonable.

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.

 

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

Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

 

  Achillion Pharmaceuticals, Inc.

/s/ Melissa Donnarummo

(Witness)

 

By: /s/ Mary Kay Fenton

Melissa Donnarummo

(Print name)

 

Name: Mary Kay Fenton

300 George St., New Haven, CT 06511

(Address)

 

Title: Chief Financial Officer   Federal Tax ID #: 522113479   Address: 300
George Street, New Haven, New Haven County, CT 06511

 

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

Date: June 28, 2007

General Electric Capital Corporation

83 Wooster Heights Road

Danbury, CT 06810

Gentlemen:

You are hereby irrevocably authorized and directed to deliver and apply the
proceeds of your loan to the undersigned evidenced by that Note dated May 11,
2006 and secured by that Security Agreement or Chattel Mortgage dated March 21,
2002, as follows:

 

Achillion Pharmaceuticals, Inc.

   $ 394,614.00

GE Capital (Good Faith Deposit)

   $ 5,000.00

GE Capital (Interim Interest)

   $ 386.00

This authorization and direction is given pursuant to the same authority
authorizing the above-mentioned borrowing.

Very truly yours,

Achillion Pharmaceuticals, Inc.

By: /s/ Mary Kay Fenton

Name: Mary Kay Fenton

Title: Chief Financial Officer

 

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

                AMORTIZATION SCHEDULE

    

LENDING COMPANY:

     GE Capital    

PRINCIPAL:

   $ 400,000.00    

INTEREST RATE:

     11.58 %  

TERM (MONTHS):

     36    

MONTHLY PAYMENT:

   $ 13,205.62     36

 

    MONTH   PAYMENT   PRINCIPAL   INTEREST   BALANCE

1

  7/1/2007       386.00   400,000.00

2

  8/1/2007   13,205.62   9,345.63   3,859.99   390,654.37

3

  9/1/2007   13,205.62   9,435.81   3,769.81   381,218.56

4

  10/1/2007   13,205.62   9,526.86   3,678.76   371,691.70

5

  11/1/2007   13,205.62   9,618.81   3,586.81   362,072.90

6

  12/1/2007   13,205.62   9,711.62   3,494.00   352,361.28

7

  1/1/2008   13,205.62   9,805.33   3,400.29   342,555.95

8

  2/1/2008   13,205.62   9,899.96   3,305.66   332,655.99

9

  3/1/2008   13,205.62   9,995.50   3,210.12   322,660.49

10

  4/1/2008   13,205.62   10,091.95   3,113.67   312,568.55

11

  5/1/2008   13,205.62   10,189.34   3,016.28   302,379.20

12

  6/1/2008   13,205.62   10,287.67   2,917.95   292,091.53

13

  7/1/2008   13,205.62   10,386.95   2,818.67   281,704.59

14

  8/1/2008   13,205.62   10,487.17   2,718.45   271,217.42

15

  9/1/2008   13,205.62   10,588.37   2,617.25   260,629.04

16

  10/1/2008   13,205.62   10,690.55   2,515.07   249,938.49

17

  11/1/2008   13,205.62   10,793.71   2,411.91   239,144.78

18

  12/1/2008   13,205.62   10,897.87   2,307.75   228,246.91

19

  1/1/2009   13,205.62   11,003.04   2,202.58   217,243.87

20

  2/1/2009   13,205.62   11,109.22   2,096.40   206,134.65

21

  3/1/2009   13,205.62   11,216.42   1,989.20   194,918.23

22

  4/1/2009   13,205.62   11,324.66   1,880.96   183,593.57

23

  5/1/2009   13,205.62   11,433.94   1,771.68   172,159.63

24

  6/1/2009   13,205.62   11,544.28   1,661.34   160,615.35

25

  7/1/2009   13,205.62   11,655.68   1,549.94   148,959.67

26

  8/1/2009   13,205.62   11,768.16   1,437.46   137,191.51

27

  9/1/2009   13,205.62   11,881.72   1,323.90   125,309.79

28

  10/1/2009   13,205.62   11,996.38   1,209.24   113,313.41

29

  11/1/2009   13,205.62   12,112.15   1,093.47   101,201.26

30

  12/1/2009   13,205.62   12,229.03   976.59   88,972.24

31

  1/1/2010   13,205.62   12,347.04   858.58   76,625.20

32

  2/1/2010   13,205.62   12,466.19   739.43   64,159.01

33

  3/1/2010   13,205.62   12,586.49   619.13   51,572.53

34

  4/1/2010   13,205.62   12,707.95   497.67   38,864.58

35

  5/1/2010   13,205.62   12,830.58   375.04   26,034.00

36

  6/1/2010   26,285.23   26,034.01   251.23   (0.00)     475,276.31   400,000.00
  75,662.31  

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

PROMISSORY NOTE

        3/22/02        

(Date)

FOR VALUE RECEIVED, Achillion Pharmaceuticals, Inc. a corporation located at the
address stated below (“Maker”) promises, jointly and severally if more than one,
to pay to the order of General Electric Capital Corporation or any subsequent
holder hereof (each, a “Payee”) at its office located at 401 Merritt 7 Suite 23,
Norwalk, CT 06851 or at such other place as Payee or the holder hereof may
designate, the principal sum of One Million One Hundred Forty-Four Thousand Five
Hundred Twenty-Three 46/100 Dollars ($1,144,523.16), with interest on the unpaid
principal balance, from the date hereof through and including the dates of
payment, at a fixed interest rate of Nine and Sixty-Six Hundredths percent
(9.66%) per annum, to be paid in lawful money of the United States, in
Thirty-Six (36) consecutive monthly installments of principal and interest as
follows:

 

Periodic Installment

   Amount

Thirty-Five (35)

   $ 36,748.11

each (“Periodic Installment”) and a final installment which shall be in the
amount of the total outstanding principal and interest. The first Periodic
Installment shall be due and payable on 5/1/02 and the following Periodic
Installments and the final installment shall be due and payable on the same day
of each succeeding month (each, a “Payment Date”). Such installments have been
calculated on the basis of a 360 day year of twelve 30-day months. Each payment
may, at the option of the Payee, be calculated and applied on an assumption that
such payment would be made on its due date.

The acceptance by Payee 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 Payee’s
right to receive payment in full at such time or at any prior or subsequent
time.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a “Security
Agreement”).

Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful maximum.
If (i) Maker fails to make payment of any amount due hereunder within ten
(10) days after the same becomes due and payable; or (ii) Maker is in default
under, or fails to perform under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
accrued interest thereon and any other sum payable under this Note or any
Security Agreement, at the election of Payee, shall immediately become due and
payable, with interest thereon at the lesser of eighteen percent (18%) per annum
or the highest rate not prohibited by applicable law from the date of such
accelerated maturity until paid (both before and after any judgment).

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

Prior to the eighteenth month of this Note, Maker may prepay in full, but not in
part, its entire indebtedness hereunder upon payment of the then outstanding
gross amount due. Thereafter, Maker may prepay in full, but not in part, its
entire indebtedness hereunder upon payment of the entire indebtedness plus an
additional sum as a premium equal to the following percentages of the then
outstanding principal balance for the indicated period:

Following the eighteenth month but prior to the twenty-fourth monthly payment of
this Note: four percent (4%)

Thereafter and prior to the thirty-sixth monthly payment of this Note: three
percent (3%)

Thereafter and prior to the forty-eighth monthly payment of this Note: two
percent (2%)

and zero percent (0%) thereafter, plus all other sums due hereunder or under any
Security Agreement.

It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control,
(b) neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or any Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective
date of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.

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

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an “Obligor”) who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
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 agrees to pay (if permitted by
law) all expenses incurred in collection, including Payee’s actual attorneys’
fees. Maker and each Obligor agrees that fees not in excess of twenty percent
(20%) of the amount then due shall be deemed reasonable.

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.

Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

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

    Achillion Pharmaceuticals, Inc.       By:   /s/ Mary Kay Fenton (Witness)  
          Name:   Mary Kay Fenton (Print name)             Title:   Sr.
Director, Finance (Address)             Federal Tax ID #: 522113479      
Address:  

300 George Street, New Haven, New

Haven County, CT 06511

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

COLLATERAL SCHEDULE NO. 002

THIS COLLATERAL SCHEDULE NO. 002 is annexed to and made a part of that certain
Master Security Agreement dated as of 3/21/02 between General Electric Capital
Corporation, together with its successors and assigns, if any, as Secured Party
and Achillion Pharmaceuticals, Inc. as Debtor and describes collateral in which
Debtor has granted Secured Party a security interest in connection with the
Indebtedness (as defined in the Security Agreement) including without limitation
that certain Promissory Note dated 3/22/02 in the original principal amount of
$1,144,523.16.

 

Quantity

  

Manufacturer

  

Serial Number

  

Year/Model and Type of Equipment

SEE EXHIBIT A ATTACHED HERETO AND MADE A PART HEREOF

 

SECURED PARTY:     DEBTOR: General Electric Capital Corporation     Achillion
Pharmaceuticals, Inc. By:   /s/ John Edel    

By:

  /s/ Mary Kay Fenton Name:   John Edel     Name:   Mary Kay Fenton Title:   SVP
    Title:   Sr. Director, Finance Date:         Date:   3/21/02

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

CERTIFICATE OF DELIVERY/INSTALLATION

Undersigned hereby certify that all equipment and property covered by a Security
Agreement or Chattel Mortgage dated 3/21/02 and Note dated 3/22/02, between
General Electric Capital Corporation (together with its successors and assigns,
if any, “Secured Party”) and undersigned has been delivered to undersigned and
found satisfactory, and that any and all installation has been satisfactorily
completed. In order to induce Secured Party to advance the loan evidenced by
such Note, undersigned hereby waive any defense, counterclaim or offset
thereunder as against Secured Party.

 

Achillion Pharmaceuticals, Inc. By:   /s/ Mary Kay Fenton Name:   Mary Kay
Fenton Title:   Sr. Director, Finance Date:   3/21/02

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

Date March 21, 2002

General Electric Capital Corporation

401 Merritt 7 Suite 23

Norwalk, CT 06851-1177

Gentlemen:

You are hereby irrevocably authorized and directed to deliver and apply the
proceeds of your loan to the undersigned evidenced by that Note dated 3/22/02
and secured by that Security Agreement or Chattel Mortgage dated 3/21/02, as
follows:

Achillion Pharmaceuticals, Inc.                      1,144,523.16

This authorization and direction is given pursuant to the same authority
authorizing the above-mentioned borrowing.

 

Very truly yours, Achillion Pharmaceuticals, Inc. By:   /s/ Mary Kay Fenton
Name:   Mary Kay Fenton Title:   Sr. Director, Finance

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

PROMISSORY NOTE

        3/22/02        

(Date)

FOR VALUE RECEIVED, Achillion Pharmaceuticals, Inc a corporation located at the
address stated below (“Maker”) promises, jointly and severally if more than one,
to pay to the order of General Electric Capital Corporation or any subsequent
holder hereof (each, a “Payee”) at its office located at 401 Merritt 7 Suite 23,
Norwalk, CT 06851 or at such other place as Payee or the holder hereof may
designate, the principal sum of One Hundred Forty-Four Thousand Three Hundred
Fifty-Seven 69/100 Dollars ($144,357.69), with interest on the unpaid principal
balance, from the date hereof through and including the dates of payment, at a
fixed interest rate of Ten and Seventeen Hundredths percent (10.17%) per annum,
to be paid in lawful money of the United States, in Forty-Eight (48) consecutive
monthly installments of principal and interest as follows:

 

Periodic Installment

   Amount

Forty-Seven (47)

   $ 3,673.08

each (“Periodic Installment”) and a final installment which shall be in the
amount of the total outstanding principal and interest. The first Periodic
Installment shall be due and payable on 5/1/02 and the following Periodic
Installments and the final installment shall be due and payable on the same day
of each succeeding month (each, a “Payment Date”). Such installments have been
calculated on the basis of a 360 day year of twelve 30-day months. Each payment
may, at the option of the Payee, be calculated and applied on an assumption that
such payment would be made on its due date.

The acceptance by Payee 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 Payee’s
right to receive payment in full at such time or at any prior or subsequent
time.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a “Security
Agreement”).

Time is of the essence hereof. If any installment or any other sum due under
this Note many Security Agreement is not received within ten (10) days after its
due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful maximum.
If (i) Maker fails to make payment of any amount due hereunder within ten
(10) days after the same becomes due and payable; or (ii) Maker is in default
under, or fails to perform under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
accrued interest thereon and any other sum payable under this Note or any
Security Agreement, at the election of Payee, shall immediately become due and
payable, with interest thereon at the lesser of eighteen percent (18%) per annum
or the highest rate not prohibited by applicable law from the date of such
accelerated maturity until paid (both before and after any judgment).

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

Prior to the eighteenth month of this Note, Maker may prepay in full, but not in
part, its entire indebtedness hereunder upon payment of the then outstanding
gross amount due. Thereafter, Maker may prepay in full, but not in pad, its
entire Indebtedness hereunder upon payment of the entire indebtedness plus an
additional sum as a premium equal to the following percentages of the then
outstanding principal balance for the indicated period:

Following the eighteenth month but prior to the twenty-fourth monthly payment of
this Note: four percent (4%)

Thereafter and prior to the thirty-sixth monthly payment of this Note: three
percent (3%)

Thereafter and prior to the forty-eighth monthly payment of this Note: two
percent (2%) and zero percent (0%) thereafter, plus all other sums due hereunder
or under any Security Agreement.

It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control,
(b) neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or any Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective
date of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.

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

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an “Obligor”) who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
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 agrees to pay (if permitted by
law) all expenses incurred in collection, including Payee’s actual attorneys’
fees. Maker and each Obligor agrees that fees not in excess of twenty percent
(20%) of the amount then due shall be deemed reasonable.

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.

Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

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

    Achillion Pharmaceuticals, Inc.       By:   /s/ Mary Kay Fenton (Witness)  
          Name:   Mary Kay Fenton (Print name)             Title:   Sr.
Director, Finance (Address)             Federal Tax ID #: 522113479      
Address:  

300 George Street, New Haven, New

Haven County, CT 06511

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

PROMISSORY NOTE

        6/11/02        

(Date)

FOR VALUE RECEIVED, Achillion Pharmaceuticals, Inc a corporation located at the
address stated below (“Maker”) promises, jointly and severally if more than one,
to pay to the order of General Electric Capital Corporation or any subsequent
holder hereof (each, a “Payee”) at its office located at 401 Merritt 7 Suite 23,
Norwalk, CT 06851 or at such other place as Payee or the holder hereof may
designate, the principal sum of Eight Hundred Thirteen Thousand Thirteen 50/100
Dollars ($813,013.50), with interest on the unpaid principal balance. from the
date hereof through and including the dates of payment, at a fixed interest rate
of Nine and Forty-One Hundredths percent (9.41%) per annum, to be paid in lawful
money of the United States, in Forty-Eight (48) consecutive monthly installments
of principal and interest as follows:

 

Periodic Installment

   Amount

Thirty-Six (36)

   $ 23,166.32

Eleven (11)

   $ 10,327.03

each (“Periodic installment”) and a final installment which shall be in the
amount of the total outstanding principal and interest. The first Periodic
Installment shall be due and payable on 8/1/02, and the following Periodic
Installments and the final installment shall be due and payable on the same day
of each succeeding month (each, a “Payment Date”). Such installments have been
calculated on the basis of a 360 day year of twelve 30-day months. Each payment
may, at the option of the Payee, be calculated and applied on an assumption that
such payment would be made on its due date.

The acceptance by Payee 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 Payee’s
right to receive payment in full at such time or at any prior or subsequent
time.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a “Security
Agreement”).

Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful maximum.
If (i) Maker fails to make payment of any amount due hereunder within ten (10)
days after the same becomes due and payable; or (ii) Maker is in default under,
or fails to perform under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
accrued interest thereon and any other sum payable under this Note or any
Security Agreement, at the election of Payee, shall immediately become due and
payable, with interest thereon at the lesser of eighteen percent (18%) per annum
or the highest rate not prohibited by applicable law from the date of such
accelerated maturity until paid (both before and after any judgment).

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

Prior to the eighteenth month of this Note, Maker may prepay in full, but not in
part, its entire indebtedness hereunder upon payment of the then outstanding
gross amount due. Thereafter, Maker may prepay in full, but not in part, its
entire indebtedness hereunder upon payment of the entire indebtedness plus an
additional sum as a premium equal to the following percentages of the then
outstanding principal balance for the indicated period:

Following the eighteenth month but prior to the twenty-fourth monthly payment of
this Note: four percent (4%)

Thereafter and prior to the thirty-sixth monthly payment of this Note: three
percent (3%)

Thereafter and prior to the forty-eighth monthly payment of this Note: two
percent (2%) and zero percent (0%) thereafter, plus all other sums due hereunder
or under any Security Agreement.

It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control,
(b) neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and {d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or any Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective
date of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.

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

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an “Obligor”) who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made. granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
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 agrees to pay (if permitted by
law) all expenses incurred in collection, including Payee’s actual attorneys’
fees. Maker and each Obligor agrees that fees not in excess of twenty percent
(20%) of the amount then due shall be deemed reasonable.

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.

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

Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

 

    Achillion Pharmaceuticals, Inc. /s/ Melissa Donnarummo     By:   /s/ Mary
Kay Fenton (Witness)       Melissa Donnarummo     Name:   Mary Kay Fenton (Print
name)       300 George St. New Haven CT 06511     Title:   Sr. Director, Finance
(Address)             Federal Tax ID #: 52-211-3479       Address:  

300 George Street, New Haven, New

Haven County, CT 06511

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

COLLATERAL SCHEDULE NO. 003

THIS COLLATERAL SCHEDULE NO. 003 is annexed to and made a part of that certain
Master Security Agreement dated as of January 24, 2002 between General Electric
Capital Corporation, together with its successors and assigns, if any, as
Secured Party and Achillion Pharmaceuticals, Inc. as Debtors and describes
collateral in which Debtor has granted Secured Party a security interest in
connection with the indebtedness (as defined in the Security Agreement)
including without limitation that certain Promissory Note dated
                     in the original principal amount of $813,013.50.

 

Quantity

  

Manufacturer

  

Serial Number

  

Year/Model and Type of Equipment

SEE EXHIBIT A ATTACHED HERETO AND MADE A PART HEREOF

 

SECURED PARTY:     DEBTOR: General Electric Capital Corporation     Achillion
Pharmaceuticals, Inc. By:   /s/ John Edel    

By:

  /s/ Mary Kay Fenton Name:   John Edel     Name:   Mary Kay Fenton Title:   SVP
    Title:   Sr. Director, Finance Date:   6/12/02     Date:   6/6/02

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

PROMISSORY NOTE

        Sept. 17, 2002        

(Date)

FOR VALUE RECEIVED, Achillion Pharmaceuticals, Inc. a corporation located at the
address stated below (“Maker”) promises, jointly and severally if more than one,
to pay to the order of General Electric Capital Corporation or any subsequent
holder hereof (each, a “Payee”) at its office located at 401 Merritt 7 Suite 23,
Norwalk, CT 06851 or at such other place as Payee or the holder hereof may
designate, the principal sum of FOUR HUNDRED TWO THOUSAND NINE HUNDRED SEVENTY
TWO- 89/00 Dollars ($402,972.89), with interest on the unpaid principal balance,
from the date hereof through and including the dates of payment, at a fixed
interest rate of Eight and Twenty Eight Hundredths percent (8.28%) per annum, to
be paid in lawful money of the United States, in Forty-Eight (48) consecutive
monthly installments of principal and interest as follows:

 

Periodic Installment

   Amount

Thirty-Six (36)

   $ 11,077.93

Eleven (11)

   $ 5,680.11

each (“Periodic Installment”) and a final installment which shall be in the
amount of the total outstanding principal and interest. The first Periodic
Installment shall be due and payable on Nov. 1, 2002 and the following Periodic
Installments and the final installment shall be due and payable on the same day
of each succeeding month (each, a “Payment Date”). Such installments have been
calculated on the basis of a 360 day year of twelve 30-day months. Each payment
may, at the option of the Payee, be calculated and applied on an assumption that
such payment would be made on its due date.

The acceptance by Payee 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 Payee’s
right to receive payment in full at such time or at any prior or subsequent
time.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related-
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a “Security
Agreement”).

Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful maximum.
If (i) Maker fails to make payment of any amount due hereunder within ten
(10) days after the same becomes due and payable: or (ii) Maker is in default
under, or fails to perform under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
accrued interest thereon and any other sum payable under

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

this Note or any Security Agreement. at the election of Payee, shall immediately
become due and payable, with interest thereon at the lesser of eighteen percent
(18%) per annum or the highest rate not prohibited by applicable law from the
date of such accelerated maturity until paid (both before and after any
judgment).

Prior to the eighteenth month of this Note, Maker may prepay in full, but not in
part, its entire indebtedness hereunder upon payment of the then outstanding
gross amount due. Thereafter, Maker may prepay in full, but not in part, its
entire indebtedness hereunder upon payment of the entire indebtedness plus an
additional sum as a premium equal to the following percentages of the then
outstanding principal balance for the indicated period:

Following the eighteenth month but prior to the twenty-fourth monthly payment of
this Note: four percent (4%)

Thereafter and prior to the thirty-sixth monthly payment of this Note: three
percent (3%)

Thereafter and prior to the forty-eighth monthly payment of this Note: two
percent (2%) and zero percent (0%) thereafter, plus all other sums due hereunder
or under any Security Agreement.

It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. of any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control,
(b) neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or any Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective
date of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.

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

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an “Obligor”) who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit maybe brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
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 agrees to pay (if permitted by
law) all expenses incurred in collection, including Payee’s actual attorneys’
fees. Maker and each Obligor agrees that fees not in excess of twenty percent
(20%) of the amount then due shall be deemed reasonable.

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS.
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.

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

Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

 

    Achillion Pharmaceuticals, Inc.       By:   /s/ Mary Kay Fenton (Witness)  
          Name:   Mary Kay Fenton (Print Name)             Title:   Sr.
Director, Finance (Address)           Federal Tax ID#: 522113479    

Address: 300 George Street, New Haven,

                 New Haven County, CT 06511

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

Date: September 13. 2002

General Electric Capital Corporation

401 Merritt 7 Suite 23

Norwalk CT 06851-1177

Gentlemen:

You are hereby irrevocably authorized and directed to deliver and apply the
proceeds of your loan to the undersigned evidenced by that Note dated Sept. 17,
2002 and secured by that Security Agreement or Chattel Mortgage dated
January 24, 2002, as follows:

 

General Electric

   $ 1,291.56

Achillion Pharmaceuticals, Inc.

   $ 401,681.31

This authorization and direction is given pursuant to the same authority
authorizing the above-mentioned borrowing.

 

Very truly yours, Achillion Pharmaceuticals, Inc. By:   /s/ Mary Kay Fenton
Name:   Mary Kay Fenton Title:   Sr. Director, Finance

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

COLLATERAL SCHEDULE NO. 004

THIS COLLATERAL SCHEDULE NO. 004 is annexed to and made a part of that certain
Master Security Agreement dated as of January 24, 2002 between General Electric
Capital Corporation, together with its successors and assigns, if any, as
Secured Party and Achillion Pharmaceuticals, Inc. as Debtor and describes
collateral in which Debtor has granted Secured Party a security interest in
connection with the Indebtedness (as defined in the Security Agreement)
including without limitation that certain Promissory Note dated Sept. 17, 2002
in the original principal amount of $402,972.89.

 

Quantity

  

Manufacturer

  

Serial Number

  

Year/Model and Type of Equipment

SEE EXHIBIT A ATTACHED HERETO AND MADE A PART HEREOF

and including all additions, attachments, accessories and accessions thereto,
and any and all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof.

 

SECURED PARTY:     DEBTOR: General Electric Capital Corporation     Achillion
Pharmaceuticals, Inc. By:   /s/ Diane Hernandez     By:   /s/ Mary Kay Fenton
Name:   Diane Hernandez     Name:   Mary Kay Fenton Title:   Vice President    
Title:   Sr. Director Date:         Date:   9/16/02

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

PROMISSORY NOTE

12/31/02

(Date)

FOR VALUE RECEIVED, Achillion Pharmaceuticals, Inc. a corporation located at the
address stated below (“Maker”) promises, jointly and severally if more than one,
to pay to the order of General Electric Capital Corporation or any subsequent
holder hereof (each, a “Payee”) at its office located at 401 Merritt 7 Suite 23,
Norwalk, CT 06851or at such other place as Payee or the holder hereof may
designate, the principal sum of FIVE HUNDRED THIRTEEN THOUSAND EIGHT HUNDRED
ELEVEN- 93/100 Dollars ($513,811.93), with interest on the unpaid principal
balance, from the date hereof through and including the dates of payment, at a
fixed interest rate of EIGHT AND ONE Hundredths percent (8.01%) per annum, to be
paid in lawful money of the United States, in Forty-Eight (48) consecutive
monthly installments of principal and interest as follows:

 

Periodic Installment

   Amount

Thirty-Six (36)

   $ 13,845.63

Eleven (11)

   $ 7,966.20

each (“periodic Installment”) and a final installment which shall be in the
amount of the total outstanding principal and interest. The first Periodic
Installment Shall be due and payable on Feb. 1, 2003 and the following Periodic
Installments sad the final installment shall be due and payable on the same day
of each succeeding month (each, a “Payment Date”). Such installments have been
calculated on the basis of a 360 day year of twelve 30-day months. Each payment
may, at the option of the Payee, be calculated and applied on an assumption that
such payment would be made on its due date.

The acceptance by Payee of any payment which is less than payment to full of all
amounts due and owing at such time shall not constitute a waiver of Payee’s
right to receive payment in full at such time or at any prior or subsequent
time.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a “Security
Agreement”).

Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful maximum.
If (i) Maker fails to make payment of my amount due hereunder within ten
(10) days after the same becomes due and payable; or (ii) Maker is in default
under, or fails to perform under any term or condition contained in any Security
Agreement, them the entire principal sum remaining unpaid, together with all
accrued interest thereon and any other sum payable under

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

this Note or any Security Agreement, at the election of Payee, shall immediately
become due and payable, with interest thereon at the lesser of eighteen percent
(18%) per annum or the highest rate not prohibited by applicable law from the
date of such accelerated maturity until paid (both before and after any
judgment).

Prior to the eighteenth month of this Note, Maker may prepay in full, but not in
part, its entire indebtedness hereunder upon payment of the then outstanding
gross amount due. Thereafter, Maker may prepay in full, but not in part, its
entire indebtedness hereunder upon payment of the entire indebtedness plus an
additional sum as a premium equal to the following percentages of the then
outstanding principal balance for the indicated period:

Following the eighteenth month but prior to the twenty-fourth monthly payment of
this Note: four percent (4%)

Thereafter and prior to the thirty-sixth monthly payment of this Note: three
percent (3%)

Thereafter and prior to the forty-eighth monthly payment of this Note: two
percent (2%)

and zero percent (0%) thereafter, plus all other sums due hereunder or under any
Security Agreement.

It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contacted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, ad that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
,ball exceed the maximums amount of interest permitted by applicable law, then
in such event (a) the provisions of this paragraph shall govern and control,
(b) neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of Interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate slimed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or any Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective
date of each amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.

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

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an “Obligor”) who may at any time become liable
for the payment hereof jointly and severally content hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
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 agrees to pay (if permuted by
law) all expenses incurred in collection, including Payee’s actual attorneys’
fees. Maker and each Obligor agrees that fees not in excess of twenty percent
(20%) of the amount then due shall be deemed reasonable.

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION. CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose gives.

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

Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

 

    Achillion Pharmaceuticals, Inc. /s/ Jennifer Stewart     By:   /s/ Mary Kay
Fenton (Witness)       Jennifer Stewart     Name:   Mary Kay Fenton (Print Name)
      300 George St. New Haven, CT 06591     Title:   Sr. Director, Finance
(Address)           Federal Tax ID#: 522113479    

Address: 300 George Street, New Haven,

                 New Haven County, CT 06511

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

PROMISSORY NOTE

3/19/03

(Date)

FOR VALUE RECEIVED, Achillion Pharmaceuticals, Inc. a corporation located at the
address stated below (“Maker”) promises, jointly and severally if more than one,
to pay to the order of General Electric Capital Corporation or any subsequent
holder hereof (each, a “Payee”) at its office located at 401 Merritt 7 Suite 23,
Norwalk, CT 06851 or at such other place as Payee or the holder hereof may
designate, the principal sum of Two Hundred Forty Five Thousand Five Hundred
Three and- 17/00 Dollars ($245,503.17), with interest on the unpaid principal
balance, from the date hereof through and including the dates of payment, at a
fixed interest rate of Seven and Ninety Six Hundredths percent (7.96%) per
annum, to be paid in lawful money of the United States, in Forty-Fight
(48) consecutive monthly installments of principal and interest as follows:

 

Periodic Installment

   Amount

Thirty-Six (36)

   $ 6,361.33

Eleven (11)

   $ 4,678.73

each (“Periodic Installment”) and a final installment which shall be in the
amount of the total outstanding principal and interest. The first Periodic
Installment shall be due and payable on 5/1/03 and the following Periodic
Installments and the final installment shall be due and payable on the same day
of each succeeding month (each, a “Payment Date”). Such installments have been
calculated on the basis of a 360 day year of twelve 30-day months. Each payment
may, at the option of the Payee, be calculated and applied on an assumption that
such payment would be made on its due date.

The acceptance by Payee 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 Payee’s
right to receive payment in full at such time or at any prior or subsequent
time.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a “Security
Agreement”).

Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other stun, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful maximum.
If (i) Maker fails to make payment of any amount due hereunder within ten
(10) days after the same becomes due and payable; or (ii) Maker is in default
under, or fails to perform under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
accrued interest thereon and any other sum payable under this Note or any
Security Agreement, at the election of Payee, shall immediately become due and
payable, with interest thereon at the lesser of eighteen percent (18%) per annum
or the highest rate not prohibited by applicable law from the date of such
accelerated maturity until paid (both before and after any judgment).

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

Prior to the eighteenth month of this Note, Maker may prepay in full, but not in
part, its entire indebtedness hereunder upon payment of the then outstanding
gross amount due. Thereafter, Maker may prepay in full, but not in part, its
entire indebtedness hereunder upon payment of the entire indebtedness plus an
additional sum as a premium equal to the following percentages of the then
outstanding principal balance for the indicated period:

Following the eighteenth month but prior to the twenty-fourth monthly payment of
this Note: four percent (4%)

Thereafter and prior to the thirty-sixth monthly payment of this Note: three
percent (3%) Thereafter and prior to the forty-eighth monthly payment of this
Note: two percent (2%)

and zero percent (0%) thereafter, plus all other sums due hereunder or under any
Security Agreement.

It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control,
(b) neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or any Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective
date of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.

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

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an “Obligor”) who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit maybe brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
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 agrees to pay (if permitted by
law) all expenses incurred in collection, including Payee’s actual attorneys’
fees. Maker and each Obligor agrees that fees not in excess of twenty percent
(20%) of the amount then due shall be deemed reasonable.

THEE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.

Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

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

    Achillion Pharmaceuticals, Inc. /s/ Beverly Starbala     By:   /s/ Mary Kay
Fenton (Witness)       Beverly Starbala     Name:   Mary Kay Fenton (Print Name)
      300 George St., New Haven     Title:   Sr. Director, Finance (Address)    
      Federal Tax ID#: 522113479    

Address: 300 George Street, New Haven,

                 New Haven County, CT 06511

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

PROMISSORY NOTE

        December 30, 2005        

(Date)

FOR VALUE RECEIVED, Achillion Pharmaceuticals, Inc. a corporation located at the
address stated below (“Maker”) promises, jointly and severally if more than one,
to pay to the order of General Electric Capital Corporation or any subsequent
holder hereof (each, a “Payee”) at its office located at 83 Wooster Heights
Road, Danbury, CT 06810 or at such other place as Payee or the holder hereof may
designate, the principal sum of Two Million Five Hundred Thousand and 00/100
Dollars ($2,500,000), with interest on the unpaid principal balance, from the
date hereof through and including the dates of payment, at a fixed interest rate
of Ten and Ninety Two Hundredths percent (10.92%) per annum, to be paid in
lawful money of the United States, in Thirty-Six (36) consecutive monthly
installments of principal and interest as follows:

 

Periodic
Installment

   Amount

Thirty-Five (35)

   $ 81,014.90

each (“Periodic Installment”) and a final installment which shall be in the
amount of the total outstanding principal and interest. The first Periodic
Installment shall be due and payable on                      and the following
Periodic Installments and the final installment shall be due and payable on the
same day of each succeeding month (each, a “Payment Date”). Such installments
have been calculated on the basis of a 360 day year of twelve 30-day months.
Each payment may, at the option of the Payee, be calculated and applied on an
assumption that such payment would be made on its due date.

The acceptance by Payee 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 Payee’s
right to receive payment in full at such time or at any prior or subsequent
time.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a “Security
Agreement”) dated December 30, 2005.

Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful maximum.
If (i) Maker fails to make payment of any amount due hereunder within ten (10)
days after the same becomes due and payable; or (ii) Maker is in default under,
or fails to perform under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
accrued interest thereon and any other sum payable under this Note or any
Security Agreement, at the election of Payee, shall immediately become due and
payable, with interest thereon at the lesser of eighteen percent (18%) per annum
or the highest rate not prohibited by applicable law from the date of such
accelerated maturity until paid (both before and after any judgment).

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

Prior to the eighteenth month of this Note, Maker may prepay in full, but not in
part, its entire indebtedness hereunder upon payment of the then outstanding
gross amount due. Thereafter, Maker may prepay in full, but not in part, its
entire indebtedness hereunder upon payment of the entire indebtedness plus an
additional sum as a premium equal to the following percentages of the then
outstanding principal balance for the indicated period:

Following the eighteenth month but prior to the twenty-fourth monthly payment of
this Note: four percent (4%)

Thereafter and prior to the thirty-sixth monthly payment of this Note: three
percent (3%)

Thereafter and prior to the forty-eighth monthly payment of this Note: two
percent (2%) and zero percent (0%) thereafter, plus all other sums due hereunder
or under any Security Agreement.

It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control,
(b) neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or any Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective
date of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.

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

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an “Obligor”) who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
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 agrees to pay (if permitted by
law) all expenses incurred in collection, including Payee’s actual attorneys’
fees. Maker and each Obligor agrees that fees not in excess of twenty
percent (20%) of the amount then due shall be deemed reasonable.

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.

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

Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

 

(Witness)     Achillion Pharmaceuticals, Inc.     /S/    THOMAS S.
MENNER             By:   /S/    MARY KAY FENTON           Thomas s. Menner    
Name:   Mary Kay Fenton (Print Name) Thomas S. Menner     Title:   Vice
President, Finance 1381 Farmington Ave., W. Hartford, CT       (Address)    
Federal Tax ID #: 522113479    

Address:  300 George Street, New Haven,

                   New Haven County, CT 06511

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

PROMISSORY NOTE

May 12, 2006

(Date)

FOR VALUE RECEIVED, Achillion Pharmaceuticals, Inc. a corporation located at the
address stated below (“Maker”) promises, jointly and severally if more than one,
to pay to the order of General Electric Capital Corporation or any subsequent
holder hereof (each, a “Payee”) at its office located at 83 Wooster Heights
Road, Danbury, CT 06810 or at such other place as Payee or the holder hereof may
designate, the principal sum of Two Million Five Hundred Thousand and 00/100
Dollars ($2,500,000.00), with interest on the unpaid principal balance, from the
date hereof through and including the dates of payment, at a fixed interest rate
of Eleven and Fifty Six Hundredths percent (11.56%) per annum, to be paid in
lawful money of the United States, in Thirty-Six (36) consecutive monthly
installments of principal and interest as follows:

 

Periodic Installment

   Amount

Thirty-Five (35)

   $ 81,724.05

each (“Periodic Installment”) and a final installment which shall be in the
amount of the total outstanding principal and interest. The first Periodic
Installment shall be due and payable on June 1, 2006 and the following Periodic
Installments and the final installment shall be due and payable on the same day
of each succeeding month (each, a “Payment Date”). Such installments have been
calculated on the basis of a 360 day year of twelve 30-day months. Each payment
may, at the option of the Payee, be calculated and applied on an assumption that
such payment would be made on its due date.

The acceptance by Payee 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 Payee’s
right to receive payment in full at such time or at any prior or subsequent
time.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a “Security
Agreement”).

Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful maximum.
If (i) Maker fails to make payment of any amount due hereunder within ten (10)
days after the same becomes due and payable; or (ii) Maker is in default under,
or fails to perform under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
accrued interest thereon and any other sum payable under this Note or any
Security Agreement, at the election of Payee, shall immediately become due and
payable, with interest thereon at the lesser of eighteen percent (18%) per annum
or the highest rate not prohibited by applicable law from the date of such
accelerated maturity until paid (both before and after any judgment).

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

Prior to the eighteenth month of this Note, Maker may prepay in full, but not in
part, its entire indebtedness hereunder upon payment of the then outstanding
gross amount due. Thereafter, Maker may prepay in full, but not in part, its
entire indebtedness hereunder upon payment of the entire indebtedness plus an
additional sum as a premium equal to the following percentages of the then
outstanding principal balance for the indicated period:

Following the eighteenth month but prior to the twenty-fourth monthly payment of
this Note: four percent (4%)

Thereafter and prior to the thirty-sixth monthly payment of this Note: three
percent (3%)

Thereafter and prior to the forty-eighth monthly payment of this Note: two
percent (2%) and zero percent (0%) thereafter, plus all other sums due hereunder
or under any Security Agreement.

It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control,
(b) neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or any Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective
date of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.

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

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an “Obligor”) who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
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 agrees to pay (if permitted by
law) all expenses incurred in collection, including Payee’s actual attorneys’
fees. Maker and each Obligor agrees that fees not in excess of twenty
percent (20%) of the amount then due shall be deemed reasonable.

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.

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

Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

 

    Achillion Pharmaceuticals, Inc. /s/ Marita Khein    

By:

  /s/ Mary Kay Fenton (Witness)       Marita Khein     Name:   Mary Kay Fenton  
    300 George St., New Haven, CT 06511     Title:   Vice President, Finance
(Address)             Federal Tax ID #: 522113479       Address:  

300 George Street, New Haven,

New Haven County, CT 06511

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

MASTER SECURITY AGREEMENT

dated as of January 24, 2002 (“Agreement”)

THIS AGREEMENT is between General Electric Capital Corporation (together with
its successors and assigns, if any, “Secured Party”) and Achillion
Pharmaceuticals, Inc. (“Debtor”). Secured Party has an office at 401 Merritt 7
Suite 23, Norwalk, CT 06851. Debtor is a corporation organized and existing
under the laws of the state of Delaware. Debtor’s mailing address and chief
place of business is 300 George Street, New Haven, CT 06511.

 

1. CREATION OF SECURITY INTEREST.

Debtor grants to Secured Party, its successors and assigns, a security interest
in and against all property listed on any collateral schedule now or in the
future annexed to or made a part of this Agreement (“Collateral Schedule”), and
in and against all additions, attachments, accessories and accessions to such
property, all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof (all such property is individually and
collectively called the “Collateral”). This security interest is given to secure
the payment and performance of all debts, obligations and liabilities of any
kind whatsoever of Debtor to Secured Party, now existing or arising in the
future, including but not limited to the payment and performance of certain
Promissory Notes from time to time identified on any Collateral Schedule
(collectively “Notes” and each a “Note”), and any renewals, extensions and
modifications of such debts, obligations and liabilities (such Notes, debts,
obligations and liabilities are called the “Indebtedness”). Unless otherwise
provided by applicable law, notwithstanding anything to the contrary contained
in this Agreement, to the extent that Secured Party asserts a purchase money
security interest in any items of Collateral (“PMSI Collateral”): (i) the PMSI
Collateral shall secure only that portion of the Indebtedness which has been
advanced by Secured Party to enable Debtor to purchase, or acquire rights in or
the use of such PMSI Collateral (the “PMSI Indebtedness”), and (ii) no other
Collateral shall secure the PMSI Indebtedness.

 

2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.

Debtor represents, warrants and covenants as of the date of this Agreement and
as of the date of each Collateral Schedule that:

(a) Debtor’s exact legal name is as set forth in the preamble of this Agreement
and Debtor is, and will remain, duly organized, existing and in good standing
under the laws of the State set forth in the preamble of this Agreement, has its
chief executive offices at the location specified in the preamble, and is, and
will remain, duly qualified and licensed in every jurisdiction wherever
necessary to carry on its business and operations;

(b) Debtor has adequate power and capacity to enter into, and to perform its
obligations under this Agreement, each Note and any other documents evidencing,
or given in connection with, any of the Indebtedness (all of the foregoing are
called the “Debt Documents”);

(c) This Agreement and the other Debt Documents have been duly authorized,
executed and delivered by Debtor and constitute legal, valid and binding
agreements enforceable in accordance with their terms, except to the extent that
the enforcement of remedies may be limited under applicable bankruptcy and
insolvency laws;

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

(d) No approval, consent or withholding of objections is required from any
governmental authority or instrumentality with respect to the entry into, or
performance by Debtor of any of the Debt Documents, except any already obtained;

(e) The entry into, and performance by, Debtor of the Debt Documents will not
(i) violate any of the organizational documents of Debtor or any judgment,
order, law or regulation applicable to Debtor, or (ii) result in any breach of
or constitute a default under any contract to which Debtor is a party, or result
in the creation of any lien, claim or encumbrance on any of Debtor’s property
(except for liens in favor of Secured Party) pursuant to any indenture,
mortgage, deed of trust, bank loan, credit agreement, or other agreement or
instrument to which Debtor is a party;

(f) There are no suits or proceedings pending in court or before any commission,
board or other administrative agency against or affecting Debtor which could, in
the aggregate, have a material adverse effect on Debtor, its business or
operations, or its ability to perform its obligations under the Debt Documents,
nor does Debtor have reason to believe that any such suits or proceedings are
threatened;

(g) All financial statements delivered to Secured Party in connection with the
Indebtedness have been prepared in accordance with generally accepted accounting
principles, and since the date of the most recent financial statement, there has
been no material adverse change in Debtors financial condition;

(h) The Collateral is not, and will not be, used by Debtor for personal, family
or household purposes;

(i) The Collateral is, and will remain, in good condition and repair and Debtor
will not be negligent in its care and use;

(j) Debtor is, and will remain, the sole and lawful owner, and in possession of,
the Collateral, and has the sole right and lawful authority to grant the
security interest described in this Agreement; and

(k) The Collateral is, and will remain, free and clear of all liens, claims and
encumbrances of any kind whatsoever, except for (i) liens in favor of Secured
Party, (ii) liens for taxes not yet due or for taxes being contested in good
faith and which do not involve, in the judgment of Secured Party, any risk of
the sale, forfeiture or loss of any of the Collateral, and (iii) inchoate
materialmen’s, mechanic’s, repairmen’s and similar liens arising by operation of
law in the normal course of business for amounts which are not delinquent (all
of such liens are called “Permitted Liens”).

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

3. COLLATERAL.

(a) Until the declaration of any default, Debtor shall remain in possession of
the Collateral; except that Secured Party shall have the right to possess
(i) any chattel paper or instrument that constitutes a part of the Collateral,
and (ii) any other Collateral in which Secured Party’s security interest may be
perfected only by possession. Secured Party may inspect any of the Collateral
during normal business hours after giving Debtor reasonable prior notice. If
Secured Party asks, Debtor will promptly notify Secured Party in writing of the
location of any Collateral.

(b) Debtor 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, (iii) use and maintain the Collateral only in compliance
with manufacturers recommendations and all applicable laws, and (iv) keep all of
the Collateral free and clear of all liens, claims and encumbrances (except for
Permitted Liens).

(c) Secured Party does not authorize and Debtor agrees it shall not (i) part
with possession of any of the Collateral (except to Secured Party or for
maintenance and repair), (ii) remove any of the Collateral from the continental
United States, or (iii) sell, rent, lease, mortgage, license, grant a security
interest in or otherwise transfer or encumber (except for Permitted Liens) any
of the Collateral.

(d) Debtor 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,
Secured Party 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. Debtor
agrees to reimburse Secured Party, on demand, all costs and expenses incurred by
Secured Party in connection with such payment or performance and agrees that
such reimbursement obligation shall constitute Indebtedness.

(e) Debtor shall, at all times, keep accurate and complete records of the
Collateral, and Secured Party shall have the right to inspect and make copies of
all of Debtor’s books and records relating to the Collateral during normal
business hours, after giving Debtor reasonable prior notice.

(f) Debtor 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, Secured Party.
Secured Party 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, the Secured Party.

 

4. INSURANCE.

(a) Debtor shall at all times bear the entire risk of any loss, theft, damage
to, or destruction of, any of the Collateral from any cause whatsoever.

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

(b) Debtor agrees to keep the Collateral insured against loss or damage by fire
and extended coverage perils, theft, burglary, and for any or all Collateral
which are vehicles, for risk of loss by collision, and if requested by Secured
Party, against such other risks as Secured Party may reasonably require. The
insurance coverage shall be in an amount no less than the full replacement value
of the Collateral, and deductible amounts, insurers and policies shall be
acceptable to Secured Party. Debtor shall deliver to Secured Party policies or
certificates of insurance evidencing such coverage. Each policy shall name
Secured Party as a loss payee, shall provide for coverage to Secured Party
regardless of the breach by Debtor of any warranty or representation made
therein, shall not be subject to co-insurance, and shall provide that coverage
may not be canceled or altered by the insurer except upon thirty (30) days prior
written notice to Secured Party. Debtor appoints Secured Party as its
attorney-in-fact to make proof of loss, claim for insurance and adjustments with
insurers, and to receive payment of and execute or endorse all documents, checks
or drafts in connection with insurance payments. Secured Party shall not act as
Debtor’s attorney-in-fact unless Debtor is in default. Proceeds of insurance
shall be applied, at the option of Secured Party, to repair or replace the
Collateral or to reduce any of the Indebtedness.

 

5. REPORTS.

(a) Debtor shall promptly notify Secured Party of (i) any change in the name of
Debtor, (ii) any change in the state of its incorporation or registration,
(iii) any relocation of its chief executive offices, (iv) any relocation of any
of the Collateral, (v) any of the Collateral being lost, stolen, missing,
destroyed, materially damaged or worn out, or (vi) any lien, claim or
encumbrance other than Permitted Liens attaching to or being made against any of
the Collateral.

(b) Debtor will deliver to Secured Party Debtor’s complete financial statements,
certified by a recognized firm of certified public accountants, within
ninety (90) days of the close of each fiscal year of Debtor. If Secured Party
requests, Debtor will deliver to Secured Party copies of Debtor’s quarterly
financial reports certified by Debtor’s chief financial officer, within
ninety (90) days after the close of each of Debtor’s fiscal quarter. Debtor will
deliver to Secured Party copies of all Forms 10-K and 10-Q, if any, within 30
days after the dates on which they are filed with the Securities and Exchange
Commission.

 

6. FURTHER ASSURANCES.

(a) Debtor shall, upon request of Secured Party, furnish to Secured Party such
further information, execute and deliver to Secured Party such documents and
instruments (including, without limitation, Uniform Commercial Code financing
statements) and shall do such other acts and things as Secured Party 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. Without limiting the foregoing, Debtor shall cooperate and do
all acts deemed necessary or advisable by Secured Party to continue in Secured
Party a perfected first security interest in the Collateral, and shall obtain
and furnish to Secured Party any subordinations, releases, landlord waivers,
lessor waivers, mortgagee waivers, or control agreements, and similar documents
as may be from time to time requested by, and in form and substance satisfactory
to, Secured Party.

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

(b) Debtor authorizes Secured Party to file a financing statement and amendments
thereto describing the Collateral and containing any other information required
by the applicable Uniform Commercial Code. Debtor irrevocably grants to Secured
Party the power to sign Debtor’s name and generally to act on behalf of Debtor
to execute and file applications for title, transfers of title, financing
statements, notices of lien and other documents pertaining to any or all of the
Collateral; this power is coupled with Secured Party’s interest in the
Collateral. Debtor shall, if any certificate of title be required or permitted
by law for any of the Collateral, obtain and promptly deliver to Secured Party
such certificate showing the lien of this Agreement with respect to the
Collateral. Debtor ratifies its prior authorization for Secured Party to file
financing statements and amendments thereto describing the Collateral and
containing any other information required by the Uniform Commercial Code if
filed prior to the date hereof.

(c) Debtor shall indemnify and defend the Secured Party, its successors and
assigns, and their respective directors, officers and employees, from and
against all claims, actions and suits (including, without limitation, related
attorneys’ fees) of any kind whatsoever arising, directly or indirectly, in
connection with any of the Collateral.

 

7. DEFAULT AND REMEDIES.

(a) Debtor shall be in default under this Agreement and each of the other Debt
Documents if:

(i) Debtor breaches its obligation to pay when due any installment or other
amount due or coming due under any of the Debt Documents;

(ii) Debtor, without the prior written consent of Secured Party, attempts to or
does sell, rent, lease, license, mortgage, grant a security interest in, or
otherwise transfer or encumber (except for Permitted Liens) any of the
Collateral;

(iii) Debtor breaches any of its insurance obligations under Section 4;

(iv) Debtor breaches any of its other obligations under any of the Debt
Documents and fails to cure that breach within thirty (30) days after written
notice from Secured Party;

(v) Any warranty, representation or statement made by Debtor in any of the Debt
Documents or otherwise in connection with any of the Indebtedness shall be false
or misleading in any material respect;

(vi) 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 Debtor or any of the Collateral,
which in the good faith judgment of Secured Party 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;

(vii) Debtor breaches or is in default under any other agreement between Debtor
and Secured Party;

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

(viii) Debtor or any guarantor or other obligor for any of the Indebtedness
(collectively “Guarantor”) dissolves, terminates its existence, becomes
insolvent or ceases to do business as a going concern;

(ix) If Debtor or any Guarantor is a natural person, Debtor or any such
Guarantor dies or becomes incompetent;

(x) A receiver is appointed for all or of any part of the property of Debtor or
any Guarantor, or Debtor or any Guarantor makes any assignment for the benefit
of creditors;

(xi) Debtor or any Guarantor files a petition under any bankruptcy, insolvency
or similar law, or any such petition is filed against Debtor or any Guarantor
and is not dismissed within forty-five (45) days; or

(xii) Debtor’s improper filing of an amendment or termination statement relating
to a filed financing statement describing the Collateral.

(b) If Debtor is in default, the Secured Party, at its option, may declare any
or all of the Indebtedness to be immediately due and payable, without demand or
notice to Debtor or any Guarantor. The accelerated obligations and liabilities
shall bear interest (both before and after any judgment) until paid in full at
the lower of eighteen percent (18%) per annum or the maximum rate not prohibited
by applicable law.

(c) After default, Secured Party shall have all of the rights and remedies of a
Secured Party under the Uniform Commercial Code, and under any other applicable
law. Without limiting the foregoing, Secured Party shall have the right to
(i) notify any account debtor of Debtor or any obligor on any instrument which
constitutes part of the Collateral to make payment to the Secured Party,
(ii) 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, (iii) sell the Collateral at public or private sale, in
whole or in part, and have the right to bid and purchase at said sale, or
(iv) lease or otherwise dispose of all or part of the Collateral, applying
proceeds from such disposition to the obligations then in default. If requested
by Secured Party, Debtor shall promptly assemble the Collateral and make it
available to Secured Party at a place to be designated by Secured Party which is
reasonably convenient to both parties. Secured Party may also render any or all
of the Collateral unusable at the Debtor’s premises and may dispose of such
Collateral on such premises without liability for rent or costs. Any notice that
Secured Party is required to give to Debtor under the Uniform Commercial Code 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 to the last known address
of Debtor at least five (5) days prior to such action.

(d) Proceeds from any sale or lease or other disposition shall be applied:
first, to all costs of repossession, storage, and disposition including without
limitation attorneys’, appraisers’, and auctioneers’ fees; second, to discharge
the obligations then in default; third, to discharge any other Indebtedness of
Debtor to Secured Party, whether as obligor, endorser, guarantor, surety or
indemnitor; fourth, to expenses incurred in paying or settling liens and claims
against the Collateral; and lastly, to Debtor, if there exists any surplus.
Debtor shall remain fully liable for any deficiency.

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

(e) Debtor agrees to pay all reasonable attorneys’ fees and other costs incurred
by Secured Party in connection with the enforcement, assertion, defense or
preservation of Secured Party’s rights and remedies under this Agreement, or if
prohibited by law, such lesser sum as may be permitted. Debtor further agrees
that such fees and costs shall constitute Indebtedness.

(f) Secured Party’s 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 the Secured Party 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.
SECURED PARTY SHALL NOT BE DEEMED TO HAVE WAIVED ANY OF ITS RIGHTS UNDER THIS
AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENT OR PAPER SIGNED BY DEBTOR
UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED BY SECURED PARTY. 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.

(g) DEBTOR AND SECURED PARTY UNCONDITIONALLY WAIVE THEIR RIGHTS 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 BETWEEN DEBTOR AND SECURED PARTY RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING
ESTABLISHED BETWEEN DEBTOR AND SECURED PARTY. 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.

 

8. MISCELLANEOUS.

(a) This Agreement, any Note and/or any of the other Debt Documents may be
assigned, in whole or in part, by Secured Party without notice to Debtor, and
Debtor agrees not to assert against any such assignee, or assignee’s assigns,
any defense, set-off, recoupment claim or counterclaim which Debtor has or may
at any time have against Secured Party for any reason whatsoever. Debtor agrees
that if Debtor receives written notice of an assignment from Secured Party,
Debtor will pay all amounts payable under any assigned Debt Documents to such
assignee or as instructed by Secured Party. Debtor also agrees to confirm in
writing receipt of the notice of assignment as may be reasonably requested by
Secured Party or assignee.

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

(b) All notices to be given in connection with this Agreement shall be in
writing, shall be addressed to the parties at their respective addresses set
forth in this Agreement (unless and until a different address may be specified
in a written notice to the other party), and shall be deemed given (i) on the
date of receipt if delivered in hand or by facsimile transmission, (ii) on the
next business day after being sent by express mail, and (iii) on the fourth
business day after being sent by regular, registered or certified mail. 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.

(c) Secured Party may correct patent errors and fill in all blanks in this
Agreement or in any Collateral Schedule consistent with the agreement of the
parties.

(d) Time is of the essence of this Agreement. This Agreement shall be binding,
jointly and severally, upon all parties described as the “Debtor” and their
respective heirs, executors, representatives, successors and assigns, and shall
inure to the benefit of Secured Party, its successors and assigns.

(e) This Agreement and its Collateral Schedules constitute the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersede all prior understandings (whether written, verbal or implied) with
respect to such subject matter. THIS AGREEMENT AND ITS COLLATERAL SCHEDULES
SHALL NOT BE CHANGED OR TERMINATED ORALLY OR BY COURSE OF CONDUCT, BUT ONLY BY A
WRITING SIGNED BY BOTH PARTIES. Section headings contained in this Agreement
have been included for convenience only, and shall not affect the construction
or interpretation of this Agreement.

(f) This Agreement shall continue in full force and effect until all of the
Indebtedness has been indefeasibly paid in full to Secured Party or its
assignee. The surrender, upon payment or otherwise, of any Note or any of the
other documents evidencing any of the Indebtedness shall not affect the right of
Secured Party to retain the Collateral for such other Indebtedness as may then
exist or as it may be reasonably contemplated will exist in the future. This
Agreement shall automatically be reinstated if Secured Party is ever required to
return or restore the payment of all or any portion of the Indebtedness (all as
though such payment had never been made).

(g) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF CONNECTICUT (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 EQUIPMENT.

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

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

 

SECURED PARTY:     DEBTOR: General Electric Capital Corporation     Achillio
Pharmaceuticals, Inc. By:   /S/    DIANE HERNANDEZ             By:   /S/    MARY
KAY FENTON         Name:   Diane Hernandez     Name:   Mary Kay Fenton Title:  
Vice President     Title:   Sr. Director, Finance

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

CONSENT AND WAIVER

WHEREAS, Achillion Pharmaceuticals, Inc. (the “Company”) entered into a Loan
Agreement (the “Loan Agreement”), dated as of March 30, 2001, with Connecticut
Innovations, Inc. (“CII”); and

WHEREAS, pursuant to Section 3 of the Loan Agreement, the Company’s Obligations
(as defined in the Loan Agreement) under the Loan Agreement are secured by,
among other things, furniture, fixtures and equipment located on the Leased
Premises (as defined in the Loan Agreement) not subject to a security interest
at the time of the Term Loan (as defined in the Loan Agreement); and

WHEREAS, pursuant to Section 8.1 of the Loan Agreement, the Company may not
create, assume, incur or permit to exist, any mortgage, lien, pledge, charge,
security interest or other encumbrance of any kind in respect of the Collateral
(as defined in the Loan Agreement); and

WHEREAS, the Company wishes to enter into a Master Security Agreement (the
“Security Agreement”) with General Electric Capital Corporation (“GE”), pursuant
to which the Company shall grant to GE a security interest in and against
certain property (the “GE Collateral”) which will be located on the Leased
Premises (as defined in the Loan Agreement); and

WHEREAS, CII wishes to facilitate the execution of the Security Agreement and
the granting of the security interest to GE contemplated therein.

NOW, THEREFORE,

Pursuant to Section 12.2.1, CII hereby (i) waives its right to a first priority
security interest in the GE Collateral, and (ii) consents to the granting to GE
of the security interest in the GE Collateral contemplated by the Security
agreement.

This Consent and Waiver may be executed in several counterparts, each of which
shall constitute an original and all of which, when taken together, shall
constitute one and the same instrument.

[Remainder of page is intentionally left blank]

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

IN WITNESS THEREOF, this Consent and Waiver is dated as of the 20th day of March
2002.

 

CONNECTICUT INNOVATIONS, INCORPORATED By:   /S/    RICHARD R. BARREDO        
Name:   Richard R. Barredo Title:   Managing Director/Project Finance Address: 
  99 West Street   Rocky Hill, CT 06067

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

AMENDMENT

THIS AMENDMENT is made as of the              day of                     , 2002,
between General Electric Capital Corporation (“Secured Party”) and Achillion
Pharmaceuticals, Inc. (“Debtor”) in connection with that certain Master Security
Agreement, dated as of January 24, 2002 (“Agreement”). The terms of this
Amendment are hereby incorporated into the Agreement as though fully set forth
therein. Section references below refer to the section numbers of the Agreement.
The Agreement is hereby amended as follows:

 

  1. CREATION OF SECURITY INTEREST.

The Section is hereby amended and replaced with the following:

“Debtor grants to Secured Party, its successors and assigns, a security interest
in and against all property listed on any collateral schedule now or in the
future annexed to or made a part of this Agreement (“Collateral Schedule”), and
in and against all additions, attachments, accessories and accessions to such
property, all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof (all such property is individually and
collectively called the “Collateral”). This security interest is given to secure
the payment and performance of all debts, obligations and liabilities of any
kind whatsoever of Debtor to Secured Party, other than any obligations of Debtor
to Secured Party in connection with any agreements executed between Secured
Party and Debtor in connection with Secured Party’s purchase of Debtor’s Series
C Convertible Preferred Stock, now existing or arising in the future, including
but not limited to the payment and performance of certain Promissory Notes from
time to time identified on any Collateral Schedule (collectively “Notes” and
each a “Note”), and any renewals, extensions and modifications of such debts,
obligations and liabilities (such Notes, debts, obligations and liabilities are
called the “Indebtedness”). Unless otherwise provided by applicable law,
notwithstanding anything to the contrary contained in this Agreement, to the
extent that Secured Party asserts a purchase money security interest in any
items of Collateral (“PMSI Collateral”): (i) the PMSI Collateral shall secure
only that portion of the Indebtedness which has been advanced by Secured Party
to enable Debtor to purchase, or acquire rights in or the use of such PMSI
Collateral (the “PMSI Indebtedness”), and (ii) no other Collateral shall secure
the PMSI Indebtedness.”

 

  2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.

The first sentence of this Section is hereby amended and replaced with the
following:

“Debtor represents, warrants and covenants as of the date of this Agreement and
as of the date of each Collateral Schedule, unless specifically otherwise
disclosed, that:”

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

Subsection (b) is hereby amended and replaced with the following:

“Debtor has adequate power and capacity to enter into, and to perform its
obligations under this Agreement, each Note and any other documents evidencing,
or given in connection with, any of the Indebtedness (all of the foregoing,
excluding the Warrant, are called the “Debt Documents”);”

Subsection (c) is hereby amended and replaced with the following:

“This Agreement and the other Debt Documents have been duly authorized, executed
and delivered by Debtor and constitute legal, valid and binding agreements
enforceable in accordance with their terms, except to the extent that the
enforcement of remedies may be limited under applicable bankruptcy and
insolvency laws and equitable remedies;”

 

  3. COLLATERAL.

Subsection (a) is hereby amended and replaced with the following:

“Until the occurrence and continuance of any default under Section 7, Debtor
shall remain in possession of the Collateral; except that Secured Party shall
have the right to possess (i) any chattel paper or instrument that constitutes a
part of the Collateral, and (ii) any other Collateral in which Secured Party’s
security interest may be perfected only by possession. Secured Party may inspect
any of the Collateral during normal business hours after giving Debtor
reasonable prior notice. If Secured Party asks, Debtor will promptly notify
Secured Party in writing of the location of any Collateral.”

Subsection (d) is hereby amended and replaced with the following:

“Debtor 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,
Secured Party 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. Debtor
agrees to reimburse Secured Party, on demand, all reasonable costs and expenses
incurred by Secured Party in connection with such payment or performance and
agrees that such reimbursement obligation shall constitute Indebtedness.”

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

  7. DEFAULT AND REMEDIES.

Section (a) is hereby amended and replaced with the following:

“Debtor shall be in default under this Agreement and each of the other Debt
Documents if (and so long as is continuing):”

Section (a)(i) is hereby amended and replaced with the following:

“Debtor breaches its obligation to pay when due any installment or other amount
due or coming due under any of the Debt Documents unless such failure to pay on
the required due date is as a result of the error or malfunction of any
electronic payment system or other system established for the electronic
transfer of funds. If the error or malfunction of any electronic payment system
or other system persists for more than three (3) days, Debtor agrees to
immediately send payment to Secured Party via wire transfer or overnight mail”

Subsection (a)(v) is hereby amended and replaced with the following:

“Any warranty, representation or statement made by Debtor in any of the Debt
Documents or otherwise in connection with any of the Indebtedness shall be false
or misleading in any material respect when made;”

Subsection (a)(xi) is hereby amended and replaced with the following:

“Debtor or any Guarantor files a petition under any bankruptcy, insolvency or
similar law, or any such petition is filed against Debtor or any Guarantor and
is not dismissed within sixty (60) days; or”

Subsection (c) is hereby amended and replaced with the following:

“After default, Secured Party shall have all of the rights and remedies of a
Secured Party under the Uniform Commercial Code, and under any other applicable
law. Without limiting the foregoing, Secured Party shall have the right to
(i) notify any account debtor of Debtor or any obligor on any instrument which
constitutes part of the Collateral to make payment to the Secured Party,
(ii) 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, (iii) sell

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

the Collateral at public or private sale, in whole or in part, and have the
right to bid and purchase at said sale, or (iv) lease or otherwise dispose of
all or part of the Collateral, applying proceeds from such disposition to the
obligations then in default. If requested by Secured Party, Debtor shall
promptly assemble the Collateral and make it available to Secured Party at a
place to be designated by Secured Party which is reasonably convenient to both
parties. Secured Party may also render any or all of the Collateral unusable at
the Debtor’s premises and may dispose of such Collateral on such premises
without liability for rent or costs. Any notice that Secured Party is required
to give to Debtor under the Uniform Commercial Code 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 to the last known address of Debtor at
least ten (10) days prior to such action.”

 

  8. MISCELLANEOUS.

Section (b) is hereby amended and replaced with the following:

“All notices to be given in connection with this Agreement shall be in writing,
shall be addressed to the parties at their respective addresses set forth in
this Agreement (unless and until a different address may be specified in a
written notice to the other party), and shall be deemed given (i) on the date of
receipt if delivered in hand or by facsimile transmission, (ii) on the next
business day after being sent by express mail, and (iii) on the fourth business
day after being sent by regular, registered or certified mail. 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 Haven, Connecticut are
required or authorized to be closed.”

TERMS USED, BUT NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN TO
THEM IN THE AGREEMENT. EXCEPT AS EXPRESSLY AMENDED HEREBY, THE AGREEMENT SHALL
REMAIN IN FULL FORCE AND EFFECT. IF THERE IS ANY CONFLICT BETWEEN THE PROVISIONS
OF THE AGREEMENT AND THIS AMENDMENT, THEN THIS AMENDMENT SHALL CONTROL.

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

IN WITNESS WHEREOF, the parties hereto have executed this Amendment
simultaneously with the Agreement by signature of their respective authorized
representative set forth below.

 

General Electric Capital Corporation     Achillio Pharmaceuticals, Inc. By:  
/S/    JOHN EDER             By:   /S/    MARY KAY FENTON         Name:   John
Eder     Name:   Mary Kay Fenton Title:   Senior Vice President     Title:   Sr.
Director, Finance

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

AMENDMENT NO. 3

THIS AMENDMENT NO. 3 is made as of the 30th day of December 2005, between
General Electric Capital Corporation (“Secured Party”) and Achillion
Pharmaceuticals, Inc. (“Debtor”) in connection with that certain Master Security
Agreement, dated as of March 21, 2002, as amended by Amendment dated as of
March 21, 2002 (“Agreement”). The terms of this Amendment No. 3 are hereby
incorporated into the Agreement as though fully set forth therein. Secured Party
and Debtor mutually desire to amend the Agreement as set forth below. Section
references below refer to the section numbers of the Agreement.

Subsections 1(b) is hereby added to the existing paragraph (now to be identified
as 1(a) and reads as follows:

“(b) With this Amendment, Debtor is, and Secured Party acknowledges, entering
into a similar financing with Oxford Finance Corporation, which will be referred
to as “Oxford,” or, together with Secured Party, will be referenced as “Secured
Parties.” Oxford and Secured Party are entering into an Intercreditor Agreement
of same date as used in this Amendment. The Intercreditor Agreement sets forth
the relative priority of Secured Parties with respect to the security interests
in the Collateral (as there defined) and allocates the distribution or any
proceeds from any sale or disposition of the Collateral.

Subsections 2(e)(k)(1) and (m) are hereby added and read as follows:

“(e) The entry into, and performance by, Debtor of the Debt Documents will not
(i) violate any of the organizational documents of Debtor or any judgment,
order, law or regulation applicable to Debtor, or (ii) result in any breach of
or constitute a default under any contract to which Debtor is a party, or result
in the creation of any lien, claim or encumbrance on any of Debtor’s property
(except for liens in favor of Secured Parties) pursuant to any indenture,
mortgage, deed of trust, bank loan, credit agreement, or other agreement or
instrument to which Debtor is a party;

(k) The Collateral is, and will remain, free and clear of all liens, claims and
encumbrances of any kind whatsoever, except for (i) liens in favor of Secured
Parties, (ii) liens for taxes not yet due or for taxes being contested in good
faith and which do not involve, in the judgment of Secured Parties, any risk of
the sale, forfeiture or loss of any of the Collateral, and (iii) inchoate
materialmen’s, mechanic’s, repairmen’s and similar liens arising by operation of
law in the normal course of business for amounts which are not delinquent, and
(iv) Debtor’s fulfillment of its obligations pursuant to its collaboration
agreement with Gilead Sciences, Inc. (all of such liens are called “Permitted
Liens”);

(l) Debtor’s Intellectual Property, as defined in Section 7 below, is and will
remain free and clear of all liens, claims and encumbrances of any kind
whatsoever, except for Permitted Liens as defined in subsection (k) of this
Section; and

(m) Debtor has not and will not enter into any other agreement or financing
arrangement, other than with Secured Parties, in which it granted a negative
pledge in Debtor’s Intellectual Property to any other party.”

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

(n) To the extent Secured Party has outstanding balances with Debtor, Secured
Party will have a right to first proceeds under any permitted sale or transfer
of Intellectual Property as set forth in the Intercreditor Agreement.

Subsections 7(a)(xiii) through (xvii) are hereby added and read as follows:

“(xiii) There is a material adverse change in the Debtor’s financial condition
as determined reasonably by Secured Party (Secured Party acknowledges that cash
bum alone by Debtor shall not be deemed a “material adverse change” if such cash
burn does not materially exceed the cash burn projections provided to Secured
Party as of December 30, 2005);

(xiv) Any Guarantor revokes or attempts to revoke its guaranty of any of the
Indebtedness or fails to observe or perform any covenant, condition or agreement
to be performed under any guaranty or other related document to which it is a
party;

(xv) Debtor defaults under any other material obligation for (A) borrowed money,
(B) the deferred purchase price of property or (C) payments due under any lease
agreement;

(xvi) At any time during the term of this Agreement Debtor experiences a change
of control such that any person or entity acquires either more than 50% or the
voting stock of Debtor or all or substantially all of Debtor’s assets, in either
case, without Secured Party’s prior written consent; or

(xvii) Debtor or any guarantor or other obligor for any of the Indebtedness
sells, transfers, assigns, mortgages, pledges, leases, grants a security
interest in or encumbers any or all of Debtor’s Intellectual Property now
existing or hereafter acquired. Intellectual Property shall consist of but not
be limited to any and all owned or licensed patents, trademarks and copyrights.
For purposes of this paragraph xvii, licenses or sublicenses by the Debtor of
its Intellectual Property as part of a research and development or similar
arrangement, or in fulfilling its existing obligations pursuant to its
collaboration agreement with Gilead Sciences, Inc., shall be excluded. Debtor
shall provide Secured Parties with a listing of licenses and sublicenses granted
to third parties within ten (10) days of receipt of written request.”

TERMS USED, BUT NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN TO
THEM IN THE AGREEMENT. EXCEPT AS EXPRESSLY AMENDED HEREBY, THE AGREEMENT SHALL
REMAIN IN FULL FORCE AND EFFECT. IF THERE IS ANY CONFLICT BETWEEN THE PROVISIONS
OF THE AGREEMENT AND THIS AMENDMENT NO. 3, THEN THIS AMENDMENT NO. 3 SHALL
CONTROL.

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

IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 3 by
signature of their respective authorized representative set forth below.

 

General Electric Capital Corporation     Achillio Pharmaceuticals, Inc. By:  
/S/ JOHN EDER     By:   /S/    MARY KAY FENTON         Name:   John Eder    
Name:   Mary Kay Fenton Title:   Senior Vice President     Title:   Sr.
Director, Finance

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

COLLATERAL SCHEDULE NO. 007

Part of Master Security Agreement dated as of March 21, 2002 (the “Contract”)
between General Electric Capital Corporation (the “Secured Party”) and Achillion
Pharmaceuticals, Inc. (the “Debtor”).

As security for the full and faithful performance by the Debtor of all of the
terms and conditions upon the Debtor’s part to be performed under the Contract
and any other obligation of the Debtor to the Secured Party now or hereafter in
existence, the Debtor does hereby grant to the Secured Party a security interest
in the property listed below (all hereinafter collectively called the
“Additional Collateral”):

All of Debtor’s Personal Property and Fixtures now owned or hereafter acquired
and wherever located including but not limited to the following:

1. All Machinery, Equipment, Furniture and Fixtures, now owned or hereafter
acquired and wherever located, complete with any and all attachments,
accessions, additions, replacements, improvements, modifications and
substitutions thereto and therefor and all proceeds including insurance proceeds
and products thereof and therefrom.

2. All Accounts, Accounts Receivable, Contract Rights, General Intangibles,
Investment Property, Instruments, and Chattel Paper, now owned or hereafter
acquired and wherever located, and all proceeds thereof and therefrom.

3. All Inventory and any other goods, merchandise or other personal property
held by Debtor for sale or lease and all, raw materials, work or goods in
process or materials or supplies of every nature used, consumed or to be
consumed in Debtor’s business, all of the foregoing now owned or hereafter
acquired and wherever located, and all proceeds, including insurance proceeds
and products of any of the foregoing.

4. Notwithstanding the foregoing, the Collateral does not include any of the
following, whether now owned or hereafter acquired any copyright rights,
copyright applications, copyright registrations and like projections in each
work of authorship and derivative work, whether published or unpublished, any
patents, patent applications and like projections, including improvements,
divisions, continuations, renewals, reissues, extensions, and
continuations-in-part of the same, trademarks, service marks and, to the extent
permitted under applicable law, any applications therefor, whether registered or
not, and the goodwill of the business of Debtor connected with and symbolized
thereby, know-how, operating manuals, trade secret rights, rights to unpatented
inventions, and any claims for damage by way of any past, present, or future
infringement of any of the foregoing; provided, however, the Collateral shall
include all Accounts, license and royalty fees and other revenues, proceeds, or
income arising out of or relating to any of the foregoing.

In the event of a default by the Debtor with respect to any of the conditions,
terms, covenants and provisions under the Contract or other agreement, Secured
Party shall have the rights and remedies of a secured party under the Uniform
Commercial Code with respect to the

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

Additional Collateral. The Debtor shall have the same obligations with respect
to the Additional Collateral as it has under the Contract with respect to the
Collateral financed.

This Agreement shall run to the benefit of the Secured Party’s successors and
assigns.

 

General Electric Capital Corporation     Achillion Pharmaceuticals, Inc. By:    
    By:   /S/    MARY KAY FENTON         Title:         Title:   Vice President,
Finance