Master Security Agreement, Webster Bank, dated as of May 15, 2003, as amended



 Exhibit 10.27 
  
 MASTER SECURITY AGREEMENT 
 dated as of May 15, 2003 (“Agreement”) 
  
 THIS AGREEMENT is between Webster Bank (together with its successors and assigns, if any, “Secured Party”) and Achillion Pharmaceuticals, Inc. (“Debtor”). Secured Party
has an office at 80 Elm Street, New Haven, CT 06510. 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 Patty 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 in 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:
		
	Webster Bank	 	Achillion Pharmaceuticals, Inc.
				
	By:	 	 /s/John E. Rossi

	 	By:	 	 /s/Mary Kay Fenton


	Name:	 	/s/John E. Rossi	 	Name:	 	Mary Kay Fenton
	Title:	 	Senior Vice President	 	Title:	 	Sr. Director, Finance








 AMENDMENT 
  

THIS AMENDMENT is made as of the 15th day of May, 2003, between Webster Bank (“Secured Party”) and Achillion Pharmaceuticals, Inc.
(“Debtor”) in connection with that certain Master Security Agreement of even date herewith (“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: 
  
 I. SECTION 1 
  

	 	A.	This Section is hereby amended and replaced with the following: 

  
 “1. EQUIPMENT LOAN ADVANCES; NOTES, CONDITIONS PRECEDENT; CONTINGENCY; CREATION OF SECURITY INTEREST. 
  
 (a) Equipment Loan Advances. Subject to the terms and
condition set forth in this Agreement, Secured Party agrees to make advances for the purchase of Eligible Equipment (defined below) (each an “Equipment Loan Advance” and collectively “Equipment Loan Advances”) to
Debtor from time to time on any business day during the period from the date of this Agreement up to, but not including, the first anniversary date of this Agreement (the “Drawdown Period”); provided, however, that at
no time shall the aggregate amount of all Equipment Loan Advances exceed One Million Dollars ($1,000,000) (the “Committed Amount”). “Eligible Equipment” for the purposes of this Agreement may include new lab and
test equipment provided, however, that computer, office automation equipment and furnishings may not exceed fifteen percent (15%) of the Committed Amount and software may not exceed five percent (5%) of the Committed Amount.
Notwithstanding anything to the contrary contained in this Agreement, (i) the initial Equipment Loan Advance will include purchases made within ninety (90) days of the closing date of the initial Equipment Loan Advance; (ii) future
Equipment Loan Advances, if any, will be made within sixty (60) days of Debtor’s purchase date provided, that such purchase amount is equal to or greater than Two Hundred Thousand Dollars ($200,000); (iii) Debtor is
limited to a total of five (5) Equipment Loan Advances during the Drawdown Period; and (iv) any amounts repaid with respect to any Equipment Loan Advance may not be reborrowed. 
  
 (b) Equipment Loan Notes. Equipment Loan Advances shall be evidenced by, and repaid with interest in
accordance with, promissory notes of Debtor in the form of Exhibit A hereto, duly completed, executed and delivered to Secured Party, the aggregate of which shall not exceed the Committed Amount, payable to Secured Party in accordance
with its terms (each such promissory note a “Note” and collectively, the “Notes”). Debtor hereby authorizes Secured Party to record on each Note or in its internal computerized records the amount of each Equipment
Loan Advance and of each payment of principal received by Secured 
  

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 Party on account of the advances evidenced by the Notes (individually, an “Equipment Loan”
and collectively, the “Equipment Loans”), which recordation shall, in the absence of manifest error, be conclusive as to the outstanding principal balance of the Equipment Loans and shall be considered correct and binding on
Debtor; provided, however, that the failure to make such recordation with respect to any Equipment Loan Advance or payment shall not limit or otherwise affect the obligations of Debtor under this Agreement or the Equipment Loan Notes.

  
 (c) Conditions Precedent. 
  
 (i) As a condition precedent to the execution and delivery
of this Agreement by Secured Party, as of the date hereof, Debtor’s cash and cash equivalents, including the Equipment Loan proceeds, shall be greater than or equal to Debtor’s projected cash burn during the Drawdown Period. 
  
 (ii) As a condition precedent to each closing of an
Equipment Loan Advance, Debtor shall have (A) delivered duly executed and completed copies of this Agreement (in the case of the initial Equipment Loan Advance), each Note and any other documents evidencing, or given in connection with, any of
the Indebtedness (defined below) (all of the foregoing are referred to herein as the “Debt Documents”); (B) certified that the all representations and warranties contained in the debt documents are true, complete and correct as
of the closing date of each Equipment Loan Advance; and (C) certified that each covenant required to be performed or competed as of each Equipment Loan Advance closing date has been duly performed or completed. 
  
 (d) 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 (other than with respect to any preferred stock of Debtor) of Debtor to Secured
Party now existing or arising in the future, including but not limited to the payment and performance of the Notes identified on any Collateral Schedule, 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. 
  

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 (e) Stipulated Loss Value. If a unit of equipment is lost, stolen, destroyed or
seized by a government authority, Debtor will pay to Secured Party the applicable Stipulated Loss Value (a percentage) times Secured Party’s advance on the unit. A table of Stipulated Loss Value, substantially in the form of Exhibit B,
will be included in each advance schedule.” . 
  
 II. SECTION 2

  
 A. 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 in writing, that:” . 
  
 B. 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 the Debt Documents;” . 
  
 C.
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;” . 
  
 D. Subsection (j) is hereby amended by deleting after the semi-colon the word “and” 
  
 E. Subsection (k) is hereby amended by deleting at the end of
this subsection the period “.” and replacing it with “; and” . 
  

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 F. This Section is hereby amended by adding subsection (l) as follows: 
  
 “(l) Debtor shall maintain all of its operating accounts (other than
Debtor’s payroll account with ADP or other similar payroll services provider) with Secured Party.” . 
  
 III. SECTION 3 
  
 A.
Subsection (a) is hereby amended and replaced with the following: 
  
 “Until the occurrence and during the 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.” . 
  
 B. Subsection 3(c)(ii) is hereby amended and replaced with the following: 
  
 “(ii) move any of the Collateral to a new location without the express,
prior written consent of Secured Party, or” . 
  
 C.
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.” . 
  
 IV. SECTION 5 
  
 A. Subsection
(b) is hereby amended and replaced with the following: 
  
 “(b) Debtor will deliver to Secured Party Debtor’s complete audited financial statements, certified by a recognized firm of certified public accountants, within one hundred twenty (120) days of the close of each fiscal year
of Debtor. In addition, Debtor will deliver to Secured Party (i) Debtor’s monthly management prepared financial statements within thirty (30) days after the end of each month and (ii) Debtor’s annual projected financial
statements, including statement of cash flows prepared on a monthly or quarterly basis as presented or provided to Borrower’s Board of Directors.”. 
  

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 V. SECTION 7. 
  
 A. This Section is hereby amended by deleting the title of this Section and replacing it with “1. DEFAULT AND REMEDIES; RIGHT TO SET
OFF.”. 
  
 B. 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):” . 
  
 C. 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” . 
  
 D. 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;” . 
  
 E. Subsection (a)(vii) is hereby amended and replaced with the following: 
  
 “Debtor shall (A) fail to pay any indebtedness for borrowed money, including interest or premium thereon, when due
(whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise), (B) fail to perform or observe any term, covenant, or condition on its part to be performed or observed under any agreement or instrument relating to any
such indebtedness, when required to be performed or observed (including any applicable grace periods) if the effect of such failure to perform or observe is to accelerate, or to permit the acceleration after the giving of notice or passage of time,
or both, of the maturity of such indebtedness, whether or not such failure to perform or observe shall be waived by the holder of such indebtedness; or any such indebtedness shall be declared to be due and payable, or required to be prepaid (other
than by a regularly scheduled required prepayment), prior to the stated maturity thereof, or (C) be in default under any other indebtedness of Debtor to Secured Party.” . 
  
 F. 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” . 
  

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 G. 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.” . 
  
 H. This Section is hereby amended by adding a new subsection (h) as follows: 
  
 “(h) Set Off. Debtor hereby grants to Secured Party a lien on, a security interest in, and during the existence
of an event of default, an option to set off against, any and all property, including deposits of Debtor, now or hereafter in the possession or control of Secured Party (inclusive of such property as may be in transit by mail or carrier to or from
Secured Party), or that of any third party acting on behalf of Debtor against any and all Indebtedness due under the Master Security Agreement, although otherwise unmatured, without prior demand or notice regardless of the adequacy of any collateral
securing all or part of the Indebtedness, and without resort to legal process or judicial proceeding or other authorization.” . 
  

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 VI. SECTION 8 
  
 A. Subsection (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. 
  

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

							
	Webster Bank	 	Achillion Pharmaceuticals, Inc.
				
	By:	 	 /s/John E. Rossi

	 	By:	 	 /s/ Mary Kay Fenton


	Name:	 	John E. Rossi	 	Name:	 	Mary Kay Fenton
	Title:	 	Senior Vice President	 	Title:	 	Sr. Director, Finance

  

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 SECOND AMENDMENT TO MASTER SECURITY AGREEMENT 
  
 This Second Amendment to Master Security Agreement (this “Second
Amendment”) is made as of the 29th day of October, 2004 between Webster Bank (“Secured Party”) and Achillion Pharmaceuticals, Inc. (“Debtor”). 
  
 WHEREAS, Secured Party and Debtor entered into a Master Security Agreement dated as of May 15, 2003 (the
“Original Agreement”) and an Amendment dated May 15, 2003 (the “Amendment” and together with the Original Agreement and this Second Amendment, the “Agreement”); and 
  
 WHEREAS, Secured Party and Debtor desire to amend the Agreement in
certain respects and to ratify and confirm the portions of the Agreement that are not being amended by this Second Amendment; and 
  
 WHEREAS, Secured Party desires to signify its consent to the extension of the Drawdown Period from the date of this Second Amendment through and
including December 31, 2004, for a Committed Amount of $250,000. 
  
 NOW THEREFORE, in consideration of the foregoing and the mutual covenants set forth below and intending to be legally bound, the parties hereby agree as follows: 
  
 (1) Amendment to Master Security Agreement. The following amendments to the Agreement shall be made: 
  
 (a) Section l(a) “Equipment Loan Advances” is hereby deleted in
its entirety and replaced with the following: 
  
 “(a)
Equipment Loan Advances. Subject to the terms and conditions set forth in this Agreement, Secured Party agrees to make advances for the purchase of Eligible Equipment (defined below) (each an “Equipment Loan Advance” and
collectively “Equipment Loan Advances”) to Debtor from time to time on any business day during the period from October 29, 2004 up to and including, December 31, 2004 (the “Drawdown Period”);
provided, however, that at no time shall the aggregate amount of all Equipment Loan Advances exceed Two Hundred Fifty Thousand Dollars ($250,000) (the “Committed Amount”). “Eligible Equipment” for the
purposes of this Agreement may include new lab and test equipment provided, however, that computer, office automation equipment and furnishings may not exceed fifteen percent (15%) of the Committed Amount. Notwithstanding anything
to the contrary contained in this Agreement, (i) the initial Equipment Loan Advance may include purchases made no later than April 1, 2004 provided, that, such initial advance shall not exceed $100,000, (ii) future
Equipment Loan Advances, if any, will be made within sixty (60) clays of Debtor’s purchase and (iii) any amounts repaid with respect to any Equipment Loan Advance may not be reborrowed. 







 (2) Ratification of Original Agreement. Except as expressly amended hereby, the Agreement shall remain in full
force and effect, and is hereby ratified and confirmed in all respects. 
  
 (3)
Miscellaneous 
  
 (a) Successors and Assigns. This
Second Amendment shall inure to the benefit of and shall be binding upon the parties hereto and their respective successors and assigns. 
  
 (b) Severability. If any provision of this Second Amendment shall be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof. 
  
 (c) Modifications in Writing. Amendments or modifications of any provision of this Second Amendment (including this paragraph) or any documents delivered in connection herewith shall in no event be effective
unless the same shall be in writing and signed by the party against whom enforcement is sought. 
  
 (d) Execution and Counterparts. This Second Amendment may be executed in several counterparts, each of which shall be an original and all of which
shall constitute one and the same document. 
  
 (e)
Captions. The captions and headings in this Second Amendment are for convenience only and do not define, limit or describe the intent of any provisions hereof. 
  
 (f) Definitions. Capitalized terms used herein, but not otherwise defined herein shall have the meanings given to
them in the Agreement. 
  
 [Signature Page to Follow]

  

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 IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Master Security
Agreement by signature of their respective authorized representative set forth below. 
  

							
	Webster Bank	 	Achillion Pharmaceuticals, Inc.
				
	By:	 	 /s/ John R. Strahley

	 	By:	 	 /s/ Mary Kay Fenton


	Name:	 	John R. Strahley	 	Name:	 	Mary Kay Fenton
	Title:	 	Vice President	 	Title:	 	Vice President, Finance

  

 3 








 Execution Copy 
  
 THIRD AMENDMENT TO MASTER SECURITY AGREEMENT 
  
 This Third Amendment to Master Security Agreement (this “Third Amendment”) is made as of the 24th day of March,
2005 between Webster Bank, National Association (“Secured Party”) and Achillion Pharmaceuticals, Inc. (“Debtor”). 
  
 WHEREAS, Secured Party and Debtor entered into that certain Master Security Agreement dated as of May 15, 2003 (the “Original
Agreement”), an Amendment dated May 15, 2003 (the “First Amendment”) and most recently, a Second Amendment dated October 29, 2004 (the “Second Amendment” and together with the Original Agreement, the First
Amendment and this Second Amendment, the “Agreement”); and 
  
 WHEREAS, Secured Party and Debtor desire to amend the Agreement in certain respects and to ratify and confirm the portions of the Agreement that are not being amended by this Third Amendment; and 
  
 WHEREAS, Secured Party desires to signify its consent to the extension
of the Drawdown Period from the date of this Third Amendment through and including December 31, 2005, for a Committed Amount of $500,000. 
  
 NOW THEREFORE, in consideration of the foregoing and the mutual covenants set forth below and intending to be legally bound, the parties hereby
agree as follows: 
  
 (1) Amendment to Master Security Agreement. The
following amendments to the Agreement shall be made: 
  
 (a)
Section l(a) “Equipment Loan Advances” is hereby deleted in its entirety and replaced with the following: 
  
 “(a) Equipment Loan Advances. Subject to the terms and conditions set forth in this Agreement, Secured Party agrees to make
advances for the purchase of Eligible Equipment (defined below) (each an “Equipment Loan Advance” and collectively “Equipment Loan Advances”) to Debtor from time to time on any business day during the period from March 24,
2005 up to and including, December 31, 2005 (the “Drawdown Period”); provided, however, that at no time shall the aggregate amount of all Equipment Loan Advances exceed Five Hundred Thousand Dollars ($500,000) (the
“Committed Amount”), exclusive of amounts currently outstanding under previous advances. “Eligible Equipment” for the purposes of this Agreement may include new lab and test equipment provided, however, that
computer, office automation equipment and furnishings may not exceed fifteen percent (15%) of the Committed Amount. Notwithstanding anything to the contrary contained in this Agreement, (i) the initial Equipment Loan Advance may include
purchases of Eligible Equipment 
  

 4 








 made within ninety (90) days prior to the date of such Equipment Loan Advance, (ii) future
Equipment Loan Advances, if any, will be made within sixty (60) days of Debtor’s purchase of Eligible Equipment, (iii) each Equipment Loan Advance must be equal to or greater than $50,000 and (iv) the Equipment Loan Advances are
limited to five (5) in total. Any amounts repaid with respect to any Equipment Loan Advance may not be reborrowed. 
  
 (b) Subsection l(c) “Conditions Precedent” is amended as follows: 
  

	 	(i)	Subsection l(c)(i) is hereby deleted and replaced with the following: 

  
 “(i) as a condition precedent to the execution and delivery of this Amendment by Secured Party, as of the date hereof, Debtor’s
cash and cash equivalents, including the Equipment Loan proceeds AND TAKING INTO ACCOUNT THE ASSUMPTIONS SET FORTH IN THE FORECAST AS PREVIOUSLY DELIVERED BY DEBTOR TO SECURED PARTY, shall be a minimum of twelve (12) months projected cash
burn.” 
  
 (2) Ratification of Original Agreement. Except as expressly
amended hereby, the Agreement shall remain in full force and effect, and is hereby ratified and confirmed in all respects. 
  
 (3) Miscellaneous 
  
 (a) Successors and Assigns. This Third Amendment shall inure to the benefit of and shall be binding upon the parties hereto and their respective
successors and assigns. 
  
 (b) Severability. If any
provision of this Third Amendment shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 
  
 (c) Modifications in Writing. Amendments or modifications of any
provision of this Third Amendment (including this paragraph) or any documents delivered in connection herewith shall in no event be effective unless the same shall be in writing and signed by the party against whom enforcement is sought. 

 
 (d) Execution and Counterparts. This Third Amendment may be
executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same document. 
  

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 (e) Captions. The captions and headings in this Third Amendment are for convenience only and do
not define, limit or describe the intent of any provisions hereof. 
  
 (f) Definitions. Capitalized terms used herein, but not otherwise defined herein shall have the meanings given to them in the Agreement. 
  
 [Signature Page to Follow] 
  

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 IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment to Master Security Agreement by
signature of their respective authorized representative set forth below. 
  

							
	Webster Bank, National Association	 	Achillion Pharmaceuticals, Inc.
				
	By:	 	 /s/ John E. Rossi

	 	By:	 	 /s/ Mary Kay Fenton


	Name:	 	John E. Rossi	 	Name:	 	Mary Kay Fenton
	Title:	 	Senior Vice President	 	Title:	 	Vice President, Finance

  

 7