Document:

License Agreement, dated March 1, 1999

 EXHIBIT 10.6 
 LICENSE AGREEMENT 
 BETWEEN 
 DR. MAHMOUD H. el KOUNI, 
 DR. FARDOS M. N. NAGUIB, 
 DR. RAYMOND SCHINAZI 
 AND

 PHARMASSET, LTD. 

 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions,
which are marked with brackets and asterisks [***], have been separately filed with the Commission. 
 TABLE OF CONTENTS 
  

					
	 ARTICLE 1. DEFINITIONS
	  	1
	 1.1
	  	 Affiliate
	  	1
	 1.2
	  	 “Agreement” or “License Agreement
	  	1
	 1.3
	  	 Effective Date
	  	1
	 1.4
	  	 Field of Use
	  	1
	 1.5
	  	 First Commercial Sale
	  	1
	 1.6
	  	 IND
	  	2
	 1.7
	  	 Indemnitees
	  	2
	 1.8
	  	 Licensed Patents
	  	2
	 1.9
	  	 Licensed Product
	  	2
	 1.10
	  	 Licensed Technology
	  	2
	 1.11
	  	 NDA
	  	2
	 1.12
	  	 Net Selling Price
	  	2
	 1.13
	  	 Party
	  	3
	 1.14
	  	 Phase II
	  	3
	 1.15
	  	 Sale or Sold
	  	3
	 1.16
	  	 Sublicensee
	  	3
	 1.17
	  	 Sublicense Payments
	  	3
	 1.18
	  	 Sublicense Royalties
	  	4
	 1.19
	  	 Valid Claim
	  	4
	 ARTICLE 2. GRANT OF LICENSE
	  	4
	 2.1
	  	 License Grant from Dr. el Kouni
	  	4
	 2.2
	  	 License Grant from Dr. Naguib
	  	4
	 2.3
	  	 License Grant from Dr. Schinazi
	  	4
	 2.4
	  	 Retained License
	  	4
	 2.5
	  	 Sublicense Rights
	  	4
	 2.6.
	  	 Diligence and Commercialization
	  	5
	 2.7.
	  	 Lack of Diligence
	  	5
	 ARTICLE 3. PAYMENT OBLIGATIONS
	  	5
	 3.1.
	  	 License Fee
	  	5
	 3.2.
	  	 Reimbursement of Patent Expenses
	  	5
	 3.3.
	  	 Milestone Payments
	  	6
	 3.4.
	  	 Royalties
	  	6
	 ARTICLE 4. REPORTS AND PAYMENTS
	  	7
	 4.1
	  	 Payments
	  	7
	 4.2
	  	 Progress Reports
	  	7
	 4.3
	  	 Royalty Reports
	  	7
	 4.4
	  	 Currency Conversion
	  	8
	 4.5
	  	 Interest
	  	8
	 ARTICLE 5. RECORDS
	  	8
	 5.1
	  	 Records of Sales
	  	8
	 5.2
	  	 Audit of Records
	  	8
	 ARTICLE 6. PATENT PROSECUTION
	  	9
	 6.1
	  	 Prosecution and Maintenance of Licensed Patents
	  	9
	 6.2.
	  	 Extension of Licensed Patents
	  	9
	 6.3
	  	 Further Obligations
	  	9

  

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	 ARTICLE 7. ABATEMENT OF INFRINGEMENT
	  	10
	 7.1
	  	 Infringement
	  	10
	 7.2
	  	 Abandonment of Infringement
	  	11
	 ARTICLE 8. CONFIDENTIALITY
	  	11
	 8.1
	  	 Confidential Information
	  	11
	 8.2
	  	 Disclosure of Confidential Information
	  	12
	 8.3
	  	 Prior Agreements
	  	12
	 ARTICLE 9. LIMITED WARRANTY, MERCHANTABILITY AND EXCLUSION OF WARRANTIES
	  	12
	 9.1
	  	 Limited Warranty
	  	12
	 ARTICLE 10. DAMAGES, INDEMNIFICATION, AND INSURANCE
	  	12
	 10.1
	  	 No Liability
	  	12
	 10.2
	  	 Indemnification
	  	13
	 10.3
	  	 No Patent Infringement Suit
	  	13
	 10.4
	  	 Insurance
	  	13
	 10.5
	  	 Notice of Claims
	  	13
	 ARTICLE 11. TERM AND TERMINATION
	  	13
	 11.1
	  	 Term
	  	13
	 11.2
	  	 Termination by Dr. el Kouni, Dr. Naguib and Dr. Schinazi
	  	14
	 11.3
	  	 Notice of Bankruptcy
	  	14
	 11.4
	  	 Exercise
	  	14
	 11.5
	  	 Failure to Enforce
	  	14
	 11.6
	  	 Termination by Pharmasset
	  	14
	 11.7
	  	 Effect
	  	15
	 11.8
	  	 Survival
	  	15
	 ARTICLE 12. ASSIGNMENT
	  	15
	 ARTICLE 13. ARBITRATION
	  	15
	 ARTICLE 14. MISCELLANEOUS
	  	16
	 14.1
	  	 Export Controls
	  	16
	 14.2
	  	 Legal Compliance
	  	16
	 14.3
	  	 Independent Contractor
	  	16
	 14.4
	  	 Patent Marking
	  	16
	 14.5
	  	 Use of Names
	  	16
	 14.6
	  	 Place of Execution
	  	16
	 14.7
	  	 Governing Law
	  	16
	 14.8
	  	 Entire Agreement
	  	16
	 14.9
	  	 Severability
	  	17
	 14.10
	  	 Force Majeure
	  	17
	 ARTICLE 15. NOTICES
	  	17

  

 ii 

 LICENSE AGREEMENT 
 THIS LICENSE AGREEMENT is made by and between Pharmasset Ltd., a corporation organized under the laws of Barbados (“Pharmasset”), Dr. el Kouni an individual residing in the State of Alabama, USA
(“Dr. el Kouni”), Dr. Naguib an individual residing in the State of Alabama, USA and (“Dr. Naguib”) and Dr. Raymond Schinazi, an individual residing in the State of Georgia, U.S.A. (“Dr. Schinazi”).

 WITNESSETH: 
 WHEREAS,
Dr. Mahmoud H. el Kouni, Dr. Fardos N. M. Naguib and Dr. Raymond F. Schinazi are the co-inventor and owner of certain intellectual property rights, including U.S. and European patents and application listed in Exhibit
A, entitled “Novel inhibitors, their synthesis, and methods for use” and have the right to grant licenses to this intellectual property. 
 WHEREAS, Pharmasset is a company dedicated to the development and production of antiviral compounds and desires to obtain a license to the patent application referenced above, and all U.S. and corresponding foreign patents issuing
therefrom. 
 NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pharmasset, Dr. el Kouni, Dr. Naguib, and Dr. Schinazi agree as follows: 
 ARTICLE 1. DEFINITIONS 
 The following terms, whether used in the singular or
plural, shall have the following meanings: 
 1.1 “Affiliate” shall mean any corporation, partnership, or other business entity
which is directly or indirectly controlled by Pharmasset or any entity which directly or indirectly controls Pharmasset. “Controls” as used herein means owns directly or indirectly at least thirty percent (30%) of the outstanding
voting securities. 
 1.2 “Agreement” or “License Agreement” shall mean this Agreement, including all Exhibits attached
to this Agreement. 
 1.3 “Effective Date” means the later of (i) the date on which Pharmasset executes this Agreement,
(ii) the date on which Dr. el Kouni executes this Agreement, (iii) the date on which Dr. Schinazi executes this Agreement, or (iv) the date on which Dr. Naguib executes this Agreement. 
 1.4 “Field of Use” shall mean all human antiviral (including HIV) and anticancer applications and uses. 
 1.5 “First Commercial Sale” means, with respect to each Licensed Product, the first commercial sale by Pharmasset, its Affiliates, sublicensees
and/or distributors of such Licensed Product, other than for clinical trial purposes or compassionate use. 

 1.6 “IND” means an Investigational New Drug Application filed with the United States Food and
Drug Administration (“FDA”) in respect of the Licensed Technology. 
 1.7 “Indemnitees” shall mean Dr. el Kouni,
Dr. Naguib, and Dr. Schinazi, and their heirs, executors, administrators, legal representatives. 
 1.8 “Licensed
Patents” means all patents and patent applications listed in attached Exhibit A (which shall be updated as additional patents or patent applications are added to this Agreement by mutual agreement of the Parties) throughout the world, including
any substitutions, extensions, reissues, reexaminations, renewals, divisions, continuations or continuations-in-part, which Dr. el Kouni, Dr. Naguib and Dr. Schinazi own, or otherwise has the right to grant licenses under. 

1.9 “Licensed Product” means a product which, or the manufacture, use or sale of which, is covered by a Valid Claim of any of the Licensed
Patents in the country where the product is manufactured, used or sold. 
 1.10 “Licensed Technology” shall mean all designs,
technical information, know-how, knowledge, data, specifications, test results and other information, whether or not patented, which is known to Dr. el Kouni, Dr. Naguib and Dr. Schinazi on the date of this Agreement and is useful for
the manufacture, use or sale of any Licensed Product. 
 1.11 “NDA” means a New Drug Application filed with the FDA relating to the
Licensed Technology. 
 1.12 “Net Selling Price” of Licensed Products shall mean the gross invoiced price paid to Pharmasset, its
Affiliates, or sublicensees by a purchaser of a Licensed Product less the following discounts: (a) customary trade, quantity and cash discounts actually allowed and taken; (b) credit actually given for rejected or returned Licensed
Products; (c) freight and insurance costs, if separately itemized on the invoice paid by the customer; and (d) custom and excise taxes included in the invoiced amount, and (e) to the extent separately stated on purchase orders,
invoices or other documents of Sale, all taxes including VAT and sales or similar taxes. Where a Sale is deemed consummated by a gift, use, or other disposition of Licensed Products for other than a selling price stated in cash, the term “Net
Selling Price” shall mean the average gross selling price paid to Pharmasset in consideration of Sales of the same quantity of Licensed Products during the six (6) month period immediately preceding such Sale, without reduction of any kind
(other than as provided for in (a) - (d) above). If no Sales of Licensed Products have occurred in the preceding six (6) months, then sales of comparable products shall be used in such determination. 
 “Net Selling Price” with respect to any Combination Product (a Licensed Product incorporating additional active ingredients) shall be
negotiated in good faith by the parties with the intention of agreeing upon a fair and equitable formula; provided, however, that if the parties are unable to agree upon such definition within a reasonable period of time, Net Selling Price with
respect to such Combination Product shall mean the gross sales of such Product paid by independent customers, less all the allowances, adjustments, reductions, discounts, taxes, duties, rebates or other charges referred to in the above definition of
Net Selling Price multiplied by a 

  

 2 

 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission. 
  

 
fraction, the numerator of which shall be the average invoice price per gram of compound contained in the most comparable stock keeping unit of Licensed
Product having the compound as the sole active ingredient during the applicable royalty period in a country of the Licensed Territory, when such comparable Licensed Product is Sold for the same indication as such Combination Product and the
denominator of which shall be the average invoice price per gram of the compound sold alone as described immediately above plus the average invoice price(s) per gram of the other active ingredient(s) contained in such Combination Product in such
country during the applicable royalty period when such active ingredients are Sold alone for the same indication as such Combination Product. If there is no average invoice price per gram in a given country for a compound or for one or more of the
active ingredients comprising a Combination Product, Net Selling Price with respect to such Combination Product shall be deemed to be [***] Percent ([***]%) of the gross Sales of such Combination Product paid by independent customers, less all the
allowances, adjustments, reductions, discounts, taxes, duties, rebates or other charges referred to in the above definition of Net Selling Price. 
 1.13 “Party” means Pharmasset or Dr. el Kouni or Dr. Naguib or Dr. Schinazi; “Parties” means Pharmasset and Dr. el Kouni, Dr. Naguib and Dr. Schinazi. 
 1.14 “Phase II” means the first controlled FDA approved first controlled clinical trials conducted with a limited number of human patients and
are designed to measure the effectiveness of a new pharmaceutical product, that is, the effective dose and regiment for further study in larger clinical trials. Completion of Phase II represents a milestone to then begin the Phase III clinical
trials that are pivotal to product approval. 
 1.15 “Sale or Sold” shall mean the sale, transfer, exchange, or other disposition
of Licensed Products whether by gift or otherwise, including but not limited to the use of Licensed Products by any person authorized by Pharmasset other than Pharmasset. Neither (a) the provision of Licensed Products, prior to the approval of
Licensed Products in a country and pursuant to a requirement issued by the appropriate governmental agency in that country, for consumption by or administration to persons for humanitarian purposes or compassionate use, (b) the provision of
Licensed Products for use in clinical trials, nor (c) the provision of samples in reasonable quantities without charge for promotional purposes shall be deemed a Sale for the purposes of this Agreement. Sales of Licensed Products shall be
deemed consummated upon the first to occur of: (a) receipt of payment from the purchaser; (b) delivery of Licensed Products to the purchaser or a common carrier; (c) release of Licensed Products from consignment; (d) if deemed
Sold by use, when first put to such use; or (e) if otherwise transferred, exchanged, or disposed of whether by gift or otherwise when such transfer, exchange, gift, or other disposition occurs. 
 1.16 “Sublicensee” means any third party other than an Affiliate granted the right, subject to the terms and conditions of Article 2, to make,
use and sell a Licensed Product, but not including a third party that is not granted the right to make such Product but merely purchases such Product in finished form for resale. 
 1.17 “Sublicense Payments” means sublicense fees, milestone payments and other cash consideration (excluding royalties) received by Pharmasset
from a Sublicensee, provided that in no event shall Sublicense Payments include any funds provided by a Sublicensee to fund research, development, and clinical trials, to reimburse Pharmasset for research, development, and clinical trial expenses or
to purchase equity securities of Pharmasset. 
  

 3 

 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission. 
  

 1.18 “Sublicense Royalties” means royalties on sales of Licensed Product received by
Pharmasset from a Sublicensee. 
 1.19. “Valid Claim” means a claim which (i) in the case of any unexpired United States or
foreign patent, shall not have been donated to the public, disclaimed, nor held invalid or unenforceable against the other Party by a court of competent jurisdiction in an unappealed or unappealable decision, or (ii) in the case of any United
States or foreign patent application, shall not have been cancelled, withdrawn, abandoned nor been pending for more than [***] ([***]) years. 
 ARTICLE 2. GRANT OF LICENSE 
 2.1 License Grant from Dr. el Kouni. Dr. el Kouni hereby grants to
Pharmasset, and Pharmasset hereby accepts, an exclusive sublicense, including the right to grant further sublicenses pursuant to Section 2.5, under the Licensed Patents in Exhibit A to make, have made, use, import, offer for sale, and sell
Licensed Products covered by such Licensed Patents only and to practice Licensed Technology with respect to such Licensed Patents only for the Field of Use during the term of the Agreement. 
 2.2 License Grant from Dr. Naguib. Dr. Naguib hereby grants to Pharmasset, and Pharmasset hereby accepts, an exclusive sublicense,
including the right to grant further sublicenses pursuant to Section 2.5, under the Licensed Patents in Exhibit A to make, have made, use, import, offer for sale, and sell Licensed Products covered by such Licensed Patents only and to practice
Licensed Technology with respect to such Licensed Patents only for the Field of Use during the term of the Agreement. 
 2.3 License Grant
from Dr. Schinazi. Dr. Schinazi hereby grants to Pharmasset, and Pharmasset hereby accepts, an exclusive license, including the right to grant sublicenses pursuant to Section 2.5, under the Licensed Patents in Exhibit A to make,
have made, use, import, offer for sale, and sell Licensed Products covered by such Licensed Patents only and to practice Licensed Technology with respect to such Licensed Patents only for the Field of Use during the term of the Agreement.

 2.4 Retained License. Left blank intentionally. 
 2.5. Sublicense Rights. Pharmasset shall have the right to grant sublicenses under the sublicense granted pursuant to Section 2.1 above, and under the license granted pursuant to Section 2.2 above and
under the license granted pursuant to Section 2.3 above to parties with whom Pharmasset has agreed to jointly develop and/or commercialize Licensed Products; provided that any sublicense granted by Pharmasset under this Agreement shall be
subject and subordinate to, and consistent with, the terms and conditions of this Agreement, and shall provide that any such sublicensee shall not further sublicense except on terms consistent with this Section 2.4. Pharmasset shall provide
Dr. el Kouni, Dr. Naguib and Dr. Schinazi with a copy of any sublicense granted pursuant to this Section 2.4 within one (1) month after the execution thereof. Such copy may be redacted to exclude confidential scientific
information and other information 

  

 4 

 
required by a sublicensee to be kept confidential, provided that all relevant financial terms and information shall be retained therein. In the event of a
material default by any sublicensee under a sublicense agreement, Pharmasset will inform Dr. el Kouni, Dr. Naguib and Dr. Schinazi and take such action, after consultation with Dr. el Kouni, Dr. Naguib and Dr. Schinazi,
which in Pharmasset’s reasonable business judgment will address such default. 
 2.6. Diligence and Commercialization. Pharmasset
shall use its reasonable best efforts, either directly or through Affiliates or sublicensees, throughout the term of this Agreement to bring Licensed Products to market through a thorough, vigorous, and diligent program for exploitation of the right
and license granted in this Agreement to Pharmasset and to create, supply, and service as extensive a market as possible. In no instance shall Pharmasset’s reasonable best efforts be less than efforts customary in Pharmasset’s industry.

 2.7. Lack of Diligence. If Dr. el Kouni, Dr. Naguib and Dr. Schinazi conclude that Pharmasset is not diligent in
development or Sales of Licensed Products pursuant to Article 2.5 for any reason other than (a) the withholding by a regulatory agency or marketing approval despite Pharmasset’s diligent effort to obtain such approval;
(b) unanticipated technical or scientific problems which have been promptly reported to Dr. el Kouni, Dr. Naguib and Dr. Schinazi in writing; or (c) other causes beyond the reasonable control of Pharmasset which have been
promptly reported to Dr. el Kouni, Dr. Naguib and Dr. Schinazi in writing; then Dr. el Kouni, Dr. Naguib and Dr. Schinazi may give notice to Pharmasset stating the basis for its conclusion and, upon the request of
Dr. el Kouni, Dr. Naguib and Dr. Schinazi, Pharmasset shall show cause why the license granted hereunder should not be terminated. If within ninety (90) days after Pharmasset’s receipt of said notice, the parties have not
resolved the matter through good faith negotiations in a mutually acceptable manner, the parties shall submit the dispute to arbitration under the provisions of Article 13 of this Agreement. 
 ARTICLE 3. PAYMENT OBLIGATIONS 
 3.1. License Fee. In consideration of
the rights granted to Pharmasset under this Agreement, Pharmasset shall pay to Dr. el Kouni, Dr. Naguib and Dr. Schinazi the following non-refundable, non-creditable license fee on the Effective Date: 
  

			
	 To Dr. Mahmoud H. el Kouni:
	  	 17,500 Common Stock Options at US$1.00 and,

		
	 To Dr. Fardos N. M. Naguib:
	  	 17,500 Common Stock Options at US$1.00 and,

		
	 To Dr. Raymond F. Schinazi:
	  	 35,000 Common Stock Options at US$1.00

 Options will be exercisable for a period of 10 years starting from March 1, 1999. 

3.2. Reimbursement of Patent Expenses. Pharmasset will issue 18,000 preferred shares Series A (price of $1.00 at time of signing) to
Dr. el Kouni and Pharmasset will forgive $20,000 of the obligation of Dr. Schinazi under that certain Promissory Note, dated January 29, 1999, made by Dr. Schinazi to Pharmasset in the original principal amount of $320,500 in
partial reimbursement of patents costs associated with the technology listed in Exhibit A. In addition, Dr. el Kouni will be permitted to purchase 7,000 shares of preferred shares series A at the price of $1.00 if a check is received prior to
April 30, 1999. 
  

 5 

 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission. 
  

 Within thirty (30) days after the end of each calendar quarter, Dr. el Kouni and
Dr. Schinazi shall provide Pharmasset with an invoiced accounting of all patent related expenses incurred by them, as described in Section 4.1, below, during such calendar quarter. Pharmasset shall reimburse all such invoiced patent
related expenses within one (1) month after receipt of such accounting. 
 3.3. Milestone Payments. Within thirty (30) days
after the occurrence of the milestones specified below, Pharmasset shall make the following non-refundable, non-creditable payments to Dr. el Kouni, Dr. Naguib and Dr. Schinazi: 
  

					
	To Dr. el Kouni:	  	Milestone	  	Payment
		  	Completion of Phase II	  	$[***]
		  	NDA Approval	  	$[***]
			
	To Dr. Naguib:	  	Milestone	  	Payment
		  	Completion of Phase II	  	$[***]
		  	NDA Approval	  	$[***]
			
	To Dr. Schinazi:	  	Milestone	  	Payment
		  	Completion of Phase II	  	$[***]
		  	NDA Approval	  	$[***]

 The milestone payments in this Section 3.3 shall be payable only once, for each significant
disease indication for which the milestones are applicable. 
 3.4. Royalties. Pharmasset shall pay to Dr. el Kouni,
Dr. Naguib and Dr. Schinazi, according to the payment schedule described in subsection (b), during the applicable term described in subsection (c), earned royalties at the rate of (i) [***] percent ([***] %) of Net Sales of a Licensed
Product covered by a Valid Claim in the country of sale included in the Licensed Patents and (ii) [***] percent ([***] %) of Net Sales of a Licensed Product not covered by such a Valid Claim in the country of sale, provided that in no event
shall more than one royalty be due Dr. el Kouni, Dr. Naguib and Dr. Schinazi for the sale of any Licensed Product. 
 The
earned royalties described in subsection (a) above shall be paid to Dr. el Kouni, Dr. Naguib and Dr. Schinazi according to the following schedule: 
  

			
	To Dr. el Kouni:	  	[***] percent ([***]%) of the earned royalties, and,
		
	To Dr. Naguib:	  	[***] percent ([***]%) of the earned royalties, and,
		
	To Dr. Schinazi:	  	[***] percent ([***]%) of the earned royalties.

 Pharmasset shall be obligated to pay royalties at the rate set forth in subsection (a) (i),
on a country by country basis, so long as there continues to be a Valid Claim included in the Licensed Patents that cover the applicable Licensed Product in such country. Pharmasset shall be obligated to pay royalties at the rate set forth in
subsection (a) (ii), on a country by country basis, on Net 

  

 6 

 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission. 
  

 
Sales of a Licensed Product not covered by a Valid Claim (including a Licensed Product which previously was covered by a Valid Claim) until the [***]
anniversary of the First Commercial Sale of such Licensed Product in such country. 
 Pharmasset shall pay to Dr. el Kouni,
Dr. Naguib and Dr. Schinazi [***] percent ([***]%) of Sublicense Payments. 
 Pharmasset shall pay to Dr. el Kouni,
Dr. Naguib and Dr. Schinazi [***] percent ([***]%) of Sublicense Royalties. 
 Notwithstanding the foregoing, Pharmasset may deduct
from royalties otherwise owed under subsections (a) and (d) [***] percent ([***]%) of any royalties or other payments required to be paid for licenses under intellectual property rights of third parties. 
 ARTICLE 4. REPORTS AND PAYMENTS 
 4.1
Payments. Unless otherwise specified, all payments required under this Agreement shall be payable within thirty (30) days of the due date for each payment. All payments due under this Agreement shall be made either by wire transfer or
immediately available funds or in person or via the mail or private courier to the following address: 
 Dr. Mahmoud H. el Kouni 
 4632 Round Forest Drive 
 Mountain Brook, AL 35213, USA 
 Dr. Raymond Schinazi 
 1524 Regency Walk Drive 
 Decatur, GA 30033, USA 
 4.2
Progress Reports. Pharmasset will provide Dr. el Kouni, Dr. Naguib and Dr. Schinazi with semi-annual progress reports detailing the activities of Pharmasset relevant to Pharmasset’s Development Plan. 
 4.3 Royalty Reports. Once royalties are due, within thirty (30) days of September 30, December 31, March 31 and
June 30 of each year and of the year following the termination or expiration of this Agreement, Pharmasset shall render a written report setting forth for the preceding calendar quarter, the following as may be applicable: 
 (a) all Sales (including Net Selling Price of each product sold) of Licensed Products by Pharmasset, its sublicensees, and its Affiliates
on a country-by-country basis throughout the Licensed Territory; 
 (b) the amount of royalty payable hereunder; 

(c) any other information reasonably necessary to show the basis on which such royalty has been computed; 
  

 7 

 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission. 
  

 (d) any payments due Dr. el Kouni, Dr. Naguib and Dr. Schinazi
pursuant to Section 3.4(c) and 3.4(d); 
 (e) other income received by Pharmasset from sublicensees and the amount
thereof due to Dr. el Kouni, Dr. Naguib and Dr. Schinazi accompanied by an explanation of the basis of said income and the amount of such income due Dr. el Kouni, Dr. Naguib and Dr. Schinazi; and 
 (f) in case no payment is due, Pharmasset shall so report. 
 Each royalty report shall be accompanied by the payment of all royalties due for the quarter calendar year in question. 
 4.4 Currency Conversion. If any Licensed Products are Sold for monies other than United States dollars, the Net Selling Price of such Licensed Products shall first be determined in the foreign currency of the
country in which such Licensed Products are Sold and then converted to United States dollars at the spot rate published by The Wall Street Journal (U.S. edition) for conversion of that foreign currency into United States dollars on the last day of
the quarter for which such payment is due. 
 4.5 Interest. Payments required under this Agreement shall, if overdue, bear interest
until payment at a per annum rate [***] percent ([***]%) above the prime rate in effect as published in The Wall Street Journal on the due date. The payment of such interest shall not foreclose Dr. el Kouni, Dr. Naguib or Dr. Schinazi
from exercising any other rights they may have because any payment is late. 
 ARTICLE 5. RECORDS 
 5.1 Records of Sales. During the term of this Agreement and for a period of three (3) years thereafter, Pharmasset shall keep at its
principal place of business true and accurate records of all Sales in accordance with generally accepted accounting principles in the respective country where such Sales occur and in such form and manner so that all royalties owed to Dr. el
Kouni, Dr. Naguib and Dr. Schinazi may be readily and accurately determined. Pharmasset shall furnish Dr. el Kouni, Dr. Naguib and Dr. Schinazi copies of such records upon Dr. el Kouni, Dr. Naguib and
Dr. Schinazi’s request, which shall not be made more often than once per License Agreement Year. 
 5.2 Audit of Records.
Dr. el Kouni, Dr. Naguib and Dr. Schinazi shall have the right, from time to time at reasonable times during normal business hours through an independent certified public accountant, to examine the records of Pharmasset in order to
verify the calculation of any royalties payable under this Agreement. Such examination and verification shall not occur more than once each License Agreement Year and the calendar year immediately following termination of this Agreement. Unless
otherwise agreed in writing by Pharmasset, the fees and expenses of performing such examination and verification shall be borne by Dr. el Kouni, Dr. Naguib and Dr. Schinazi. 
  

 8 

 If such examination reveals an underpayment by Pharmasset of more than five percent (5%) for any
quarter examined, Pharmasset shall pay Dr. el Kouni, Dr. Naguib and Dr. Schinazi the amount of such underpayment plus interest and shall reimburse Dr. el Kouni, Dr. Naguib and Dr. Schinazi for all expenses of the
accountant reasonably incurred in performing the examination. 
 ARTICLE 6. PATENT PROSECUTION 
 6.1 Prosecution and Maintenance of Licensed Patents. The prosecution and maintenance of the Licensed Patents shall be the primary responsibility
of Pharmasset, with assistance from Dr. el Kouni, Dr. Naguib and Dr. Schinazi. Dr. el Kouni and Dr. Naguib shall keep Pharmasset informed as to all developments with respect to Licensed Patents to the extent that Dr. el
Kouni and Dr. Naguib is so informed. Pharmasset shall be afforded reasonable opportunities to advise Dr. el Kouni and Dr. Naguib, and cooperate with Dr. el Kouni, Dr. Naguib and Dr. Schinazi in such prosecution and
maintenance. 
 Pharmasset, upon ninety (90) days advance written notice to Dr. el Kouni, Dr. Naguib and Dr. Schinazi,
may advise Dr. el Kouni, Dr; Naguib and Dr. Schinazi that it no longer wishes to pay expenses for filing, prosecuting or maintaining one or more Licensed Patents. Dr. el Kouni, Dr. Naguib and Dr. Schinazi may, at its option,
elect to pay such expenses or permit such Licensed Patents to become abandoned or lapsed in the event that the Licensors elect not to pay such expenses. If Dr. el Kouni, Dr. Naguib and Dr. Schinazi elects to pay such expenses, such
patents shall not be subject to any license granted to Pharmasset hereunder. 
 6.2. Extension of Licensed Patents. Left blank
intentionally 
 6.3 Further Obligations. 
 (a) Except as otherwise provided in Article 7, each party’s responsibilities for patent prosecution activities pursuant to this
Article 6 shall also include ex parte and inter partes activities relating to the relevant patent applications and patents, including all interference, opposition and observation proceedings before any patent offices and litigation to determine the
validity, enforceability, allowability or subsistence of such patent applications and patents. Each party agrees to give due consideration to the other party’s or its sublicensee’s position with respect to any such patent prosecution
activities, (which term as used herein, shall include without limitation, any inter partes activities of the type described in the first sentence of this subparagraph (a)). In the event a party fails to initiate or pursue any patent prosecution
activities for which it is responsible, or having commenced such patent prosecution activities, declines to pursue such patent prosecution activities, it shall give notice to the other party pursuant to the applicable provisions of subparagraph
(b) below and the other party or its sublicensees, as applicable, may initiate, pursue or assume such patent prosecution activities, at its sole expense. 
 (b) In conducting its patent prosecution activities under this License Agreement, each party hereto shall use the patent attorneys
selected by Pharmasset. In addition to the other obligations set forth in this Article 6, each party undertakes to keep the other party and, if applicable such other party’s sublicensee throughout the term of this License Agreement regularly
informed of the status and progress of the patent prosecution activities it undertakes under this, License Agreement including, but not limited to, supplying the other party or its sublicensee, as 

  

 9 

 
applicable, upon reasonable request and at reasonable intervals, with the correspondents with the United States, Japan and European patent office
counterparts with respect to the United States, Japan and European patents and patent applications. To the extent that a party has not previously done so, or promptly upon request by the other party or its sublicensee, in order to assist such other
party or its sublicensees in connection with any of its activities or the exercise of any of its rights pursuant to Article 6, such party shall provide the other party or its sublicensee with such additional relevant documentation which such other
party or its sublicensee may reasonably request relating to such patent applications and patents in the Licensed Patents, including but not limited to, copies thereof and access to laboratory notebooks, other supporting data and relevant employees.
If a party decides to abandon or allow to lapse any patent application or patent or not to initiate or any other patent prosecution activity for which it has patent prosecution responsibility pursuant to this Article 6, it shall give the other party
or its sublicense notice thereof in a sufficiently timely manner so as to enable such other party or its sublicensee to determine whether to assume patent prosecution activity in connection therewith. Each party shall use its best efforts to give
such notice at least sixty (60) days before any abandonment, lapse or any other relevant deadline. 
 (c) Pharmasset and
Dr. el Kouni, Dr. Naguib and Dr. Schinazi agree that, during the term of any sublicensee agreement, the rights of Pharmasset under this Article 6 shall be exercised, if at all, by its sublicense with respect to all patent prosecution
activities in any country in which a sublicense agreement is then in effect. With respect to such patent prosecution activities, Dr. el Kouni, Dr. Naguib and Dr. Schinazi shall communicate with such sublicensee directly. 

ARTICLE 7. ABATEMENT OF INFRINGEMENT 
 7.1 Infringement. Pharmasset shall promptly inform Dr. el Kouni, Dr. Naguib and Dr. Schinazi and Dr. el Kouni, Dr. Naguib and Dr. Schinazi will promptly notify Pharmasset of any suspected infringement of
any Licensed Patents. During the term of this Agreement, Dr. el Kouni, Dr. Naguib and Dr. Schinazi and Pharmasset shall have the right to institute an action for infringement of the Licensed Patents against such third party in
accordance with the following: 
 (a) If Dr. el Kouni, Dr. Naguib and Dr. Schinazi and Pharmasset, agree to
institute suit jointly, the suit shall be brought in all their names and the out-of-pocket costs thereof shall be borne equally. Any recovery or settlement received by Dr. el Kouni, Dr. Naguib and Dr. Schinazi and/or Pharmasset for
punitive or exemplary damages shall be shared 50% by Pharmasset and 50% by Dr. el Kouni, Dr. Naguib and Dr. Schinazi, collectively, and any other recovery or settlement received, including compensatory damages or damages based on a
loss of revenues, shall be paid to Pharmasset, and Pharmasset shall pay to Dr. el Kouni, Dr. Naguib and Dr. Schinazi an amount representing the royalty which would have been paid by Pharmasset on such amount in accordance with the
provisions of Article 3 had such amount been accrued by Pharmasset as Sales. The parties shall agree upon the manner in which they shall exercise control over such action and may, if they so desire, also be represented by separate counsel of their
own such action and may, if they so desire, also be represented by separate counsel of their own selection. The fees of which counsel shall be paid by the respective parties so represented; 
  

 10 

 (b) In the absence of agreement to institute a suit jointly, Dr. el Kouni,
Dr. Naguib and Dr. Schinazi may institute suit and, at its option, name Pharmasset as plaintiff. Dr. el Kouni, Dr. Naguib and Dr. Schinazi shall bear the entire cost of such litigation, including defending any counterclaims
brought against Pharmasset and paying any judgments rendered against Pharmasset, and Dr. el Kouni, Dr. Naguib and Dr. Schinazi shall be entitled to retain the entire amount of any recovery or settlement; and 
 (c) In the absence of agreement to institute suit jointly and if Dr. el Kouni, Dr. Naguib and Dr. Schinazi have decided not
to join in or institute a suit, as provided in (a) - (c) above, Pharmasset may institute suit and at its option name Dr. el Kouni, Dr. Naguib and Dr. Schinazi as plaintiffs. Pharmasset shall bear the enter cost of such litigation,
including defending any considerations brought against Dr. el Kouni, Dr. Naguib and Dr. Schinazi and paying any judgments rendered against Dr. el Kouni, Dr. Naguib and Dr. Schinazi, and Pharmasset shall be entitled to
retain the entire amount of any recovery or settlement. 
 7.2 Abandonment of Infringement. Should either Dr. el Kouni,
Dr. Naguib and Dr. Schinazi or Pharmasset commence a suit under the provisions of this Article and thereafter elect to abandon such suit, the abandoning party shall give timely notice to the other parties who may, if so desired, continue
prosecution of such suit, provided that the sharing of expenses and any recovery in such suit shall be as agreed upon between Dr. el Kouni, Dr. Naguib and Dr. Schinazi and Pharmasset. 
 ARTICLE 8. CONFIDENTIALITY 
 8.1
Confidential Information. Pharmasset shall not, without the express written consent of Dr. el Kouni, Dr. Naguib and Dr. Schinazi, for any reason or at any time for a period of five (5) years from the Effective Date of this
Agreement, disclose to third parties any information disclosed in the Licensed Patents or Licensed Technology or any other information pertaining to the Licensed Patents and Licensed Technology disclosed to Pharmasset by Dr. el Kouni,
Dr. Naguib and Dr. Schinazi, (such information shall be collectively referred to as “Proprietary Information”). This obligation of nondisclosure shall not extend to information: 
 (a) which Pharmasset can demonstrate through documentation to have been within Pharmasset’s legitimate possession prior to the time
of disclosure of such information to Pharmasset by Dr. el Kouni, Dr. Naguib and Dr. Schinazi; 
 (b) which was
in the public domain prior to disclosure by Dr. el Kouni, Dr. Naguib and Dr. Schinazi, as evidenced by documents published prior to such disclosure; 
 (c) which, after disclosure by Dr. el Kouni, Dr. Naguib and Dr. Schinazi, comes into the public domain through no fault of
Pharmasset; 
 (d) which is disclosed to Pharmasset by a third party having legitimate possession of the information and the
unrestricted right to make such disclosure. 
 (e) which is disclosed in the issued Licensed Patents. 
  

 11 

 8.2 Disclosure of Confidential Information. Notwithstanding the provisions of Section 8.1
above, and to the extent necessary: 
 (a) a party may disclose and use the other party’s information for purposes of
securing the registration of, and of governmental approval to market, pursuant to this Agreement, any Licensed Products; 
 (b) a party may disclose and use the other party’s information where the disclosure and use of such will be necessary to the procurement of patent protection, pursuant to this Agreement, for a Licensed Product; 
 (c) a party may disclose and use the other party’s information to the extent that it is necessary to aid in the development and
commercialization, pursuant to this Agreement, of any Licensed Product provided that any such disclosure of the disclosing party’s information shall be in confidence and subject to provisions the same, or substantially the same, as those in
Section 8.1 hereof. 
 8.3 Prior Agreements. The provisions of this Agreement supersede and shall be substituted for any terms of
any prior confidentiality agreement between Pharmasset and Dr. el Kouni, Dr. Naguib and Dr. Schinazi which are not consistent with this Agreement. 
 ARTICLE 9. LIMITED WARRANTY, MERCHANTABILITY 
 AND EXCLUSION OF WARRANTIES 
 9.1 Limited Warranty. Dr. el Kouni, Dr. Naguib and Dr. Schinazi represent and warrant that they have the right and authority to
enter into this Agreement and that neither the execution of this Agreement nor the performance of its obligations hereunder will constitute a breach of the terms and provisions of any other agreement to which Dr. el Kouni, Dr. Naguib and
Dr. Schinazi are parties. Dr. el Kouni, Dr. Naguib and Dr. Schinazi do not warrant the validity of the Licensed Patents licensed hereunder and make no representation whatsoever with regard to the scope of the Licensed Patents or
that such Licensed Patents may be exploited by Pharmasset or its Affiliates without infringing other patents. 
 Pharmasset possesses the
necessary expertise and skill in the technical areas in which the Licensed Products and Licensed Technology are involved to make, and has made, its own evaluation of the capabilities, safety, utility, and commercial application of the Licensed
Patents and Licensed Technology. ACCORDINGLY, DR. EL KOUNI, DR. NAGUIB AND DR. SCHINAZI MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE LICENSED PATENTS OR LICENSED TECHNOLOGY AND EXPRESSLY DISCLAIMS ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ANY OTHER IMPLIED WARRANTIES WITH RESPECT TO THE CAPABILITIES, SAFETY, UTILITY, OR COMMERCIAL APPLICATION OF LICENSED PATENTS OR LICENSED TECHNOLOGY. 
 ARTICLE 10. DAMAGES, INDEMNIFICATION, AND INSURANCE 
 10.1 No Liability. Dr. el Kouni, Dr. Naguib and Dr. Schinazi shall not be liable to Pharmasset and Pharmasset’s customers, sublicensees or Affiliates for special, incidental, indirect,

  

 12 

 
or consequential damages resulting from defects in the design, testing, labeling, manufacture, or other application of Licensed Products manufactured,
tested, designed, sublicensed, or Sold pursuant to this Agreement. 
 10.2 Indemnification. Pharmasset shall defend, indemnify, and
hold harmless the Indemnitees from and against any and all claims, demands, loss, liability, expense, or damage (including investigative costs, court costs and attorneys’ fees) Indemnitees may suffer, pay, or incur as a result of claims,
demands or actions against any of the Indemnitees arising or alleged to arise by reason of or in connection with any and all personal injury and property damage caused or contributed to in whole or in part by Pharmasset’s manufacture, testing,
design, use, sale, or labeling of any Licensed Products, or the practice of any Licensed Patents. Pharmasset’s obligations under this Article shall survive the expiration or termination of this Agreement for any reason. 
 10.3 No Patent Infringement Suit. To the extent that the rights have not already been licensed exclusively to another party, Dr. el Kouni,
Dr. Naguib and Dr. Schinazi agree not to sue Pharmasset or its Affiliates or sublicensees for patent infringement for practicing a claim of a patent assigned or licensed to Dr. el Kouni, Dr. Naguib and Dr. Schinazi if
practicing said claim is required to make, have made, use, import, offer for Sale, Sell or have Sold Licensed Products. 
 10.4
Insurance. Without limiting Pharmasset’s indemnity obligations under the preceding paragraph, Pharmasset, its Affiliates, and sublicensees shall maintain throughout the term of this Agreement and for ten (10) years thereafter a
liability insurance policy which: 
 (a) insures Indemnitees for all claims, damages, and actions mentioned in Article 11.1 of
this Agreement; 
 (b) includes a contractual endorsement providing coverage for all liability which may be incurred by
Indemnitees in connection with this Agreement; 
 (c) requires the insurance carrier to provide Dr. el Kouni,
Dr. Naguib and Dr. Schinazi with no less than thirty (30) days written notice of any change in the terms or coverage of the policy or its cancellation; and 
 (d) provides Indemnitees product liability coverage in an amount no less than One Million Dollars ($1,000,000) per occurrence for bodily
injury and One Million Dollars ($1,000,000) per occurrence for property damage, subject to a reasonable aggregate amount. 
 10.5 Notice
of Claims. Pharmasset shall promptly notify Dr. el Kouni, Dr. Naguib and Dr. Schinazi of all claims involving the Indemnitees and will advise Dr. el Kouni, Dr. Naguib and Dr. Schinazi of the policy amounts that
might be needed to defend and pay any such claims. 
 ARTICLE 11. TERM AND TERMINATION 
 11.1 Term. Unless sooner terminated as otherwise provided in this Agreement, the term of this Agreement shall commence on the date hereof and
shall continue until the date of expiration of the last to expire of the Licensed Patents, including any renewals or extensions thereof. 
  

 13 

 11.2 Termination by Dr. el Kouni, Dr. Naguib and Dr. Schinazi. Dr. el Kouni,
Dr. Naguib and Dr. Schinazi shall have the right to terminate this Agreement upon the occurrence of any one or more of the following events: 
 (a) failure of Pharmasset to make any payment required pursuant to this Agreement when due; or 
 (b) failure of Pharmasset to render reports to Dr. el Kouni, Dr. Naguib and Dr. Schinazi as required by this Agreement; or 
 (c) the insolvency of Pharmasset; or 
 (c) the institution of any proceeding by Pharmasset
under any bankruptcy, insolvency, or moratorium law; or 
 (d) any assignment by Pharmasset of substantially all of its assets
for the benefit of creditors; or 
 (e) placement of Pharmasset’s assets in the hands of a trustee or receiver unless the
receivership or trust is dissolved within thirty (30) days thereafter; or 
 (f) the breach of any other material term of
this Agreement. 
 11.3 Notice of Bankruptcy. Each party hereto shall inform the other party hereto of its intention to file a
voluntary petition in bankruptcy or its learning of another’s intention to file an involuntary petition in bankruptcy in respect of such party to be receive at least thirty (30) days prior to filing (or learning of) such a petition or
intention. A party’s filing without conforming to this requirement shall be deemed a material, pre-petition incurable breach. 
 11.4
Exercise. Dr. el Kouni, Dr. Naguib and Dr. Schinazi may exercise its right of termination by giving Pharmasset, its trustees or receivers or assigns, sixty (60) days prior written notice of Dr. el Kouni,
Dr. Naguib and Dr. Schinazi’s election to terminate. Upon the expiration of such period this Agreement shall automatically terminate unless the Pharmasset has cured the breach. Such notice and termination shall not prejudice
Dr. el Kouni, Dr. Naguib and Dr. Schinazi’s right to receive royalties or other sums due hereunder and shall not prejudice any cause of action or claim of Dr. el Kouni, Dr. Naguib and Dr. Schinazi’s accrued or
to accrue on account of any breach or default by Pharmasset. 
 11.5 Failure to Enforce. The failure of Dr. el Kouni,
Dr. Naguib and Dr. Schinazi at any time, or for any period of time, to enforce any of the provisions of this Agreement shall not be construed as a waiver of such provisions or as a waiver of the right of Dr. el Kouni, Dr. Naguib
and Dr. Schinazi thereafter to enforce each and every such provision. 
 11.6 Termination by Pharmasset. Pharmasset may terminate
this Agreement at its sole discretion upon four (4) months’ written notice to Dr. el Kouni, Dr. Naguib and Dr. Schinazi. In the event of such termination, Pharmasset agrees, upon the request of Dr. el Kouni,,
Dr. Naguib and Dr. Schinazi, to provide Dr. el Kouni, Dr. Naguib and Dr. Schinazi with all existing data in Pharmasset’s possession or control in support of registration of Licensed Products for the Field of 

  

 14 

 
Use with the relevant federal agencies. Dr. el Kouni, Dr. Naguib and Dr. Schinazi shall have the unrestricted right to provide such data to
third parties. 
 11.7 Effect. In the event this Agreement is terminated for any reason whatsoever, Pharmasset shall return, or at
Dr. el Kouni, Dr. Naguib and Dr. Schinazi’s direction destroy, all plans, drawings, papers, notes, writings and other documents, and models pertaining to the Licensed Patents or Technology, retaining only one copy in its
corporate counsel’s office for the sole purpose of compliance with surviving terms of this Agreement or defense against any legal actions related to this Agreement, shall refrain from using or publishing any portion of the Licensed Technology
as provided in Article 8 of this Agreement and shall sell to Dr. el Kouni, Dr. Naguib and Dr. Schinazi at cost all organisms and other biological and chemical materials. Upon termination of this Agreement, Pharmasset shall cease
manufacturing, processing, producing, using, or Selling Licensed Products; provided, however, that Pharmasset may continue to Sell in the ordinary course of business for a period of three (3) months reasonable quantities of Licensed Products
which are fully manufactured and in Pharmasset’s normal inventory at the date of termination if (a) all monetary obligations of Pharmasset to Dr. el Kouni, Dr. Naguib and Dr. Schinazi have been satisfied and
(b) royalties on such sales are paid to Dr. el Kouni, Dr. Naguib and Dr. Schinazi in the amounts and in the manner provided in this Agreement. However, nothing herein shall be construed to release either party of any obligation
which mature prior to the effective date of such termination. 
 11.8 Survival. The provisions of Articles 8, 9, and 10 of this
Agreement shall remain in full force and effect notwithstanding the termination of this Agreement. 
 ARTICLE 12. ASSIGNMENT

 Pharmasset may not assign this Agreement or any of the rights or obligations hereunder without the prior written consent of
Dr. el Kouni, Dr. Naguib and Dr. Schinazi, except to an Affiliate of Pharmasset or to any other party who acquires all or substantially all of the business of Pharmasset, or all of the business relating to the Licensed Product by
merger, sale of assets or otherwise, so long as such Affiliate or other party agrees in writing to be bound by the terms of this Agreement. 
 ARTICLE 13. ARBITRATION 
 Any dispute related to this Agreement shall be settled by arbitration. Arbitration shall be
conducted under the Commercial Arbitration Rules of the American Arbitration Association by three arbitrators, one to be appointed by Dr. el Kouni, Dr. Naguib and Dr. Schinazi, one to be appointed by Pharmasset, and one to be
appointed by the two arbitrators appointed by Dr. el Kouni, Dr. Naguib and Dr. Schinazi and Pharmasset. Arbitration shall take place in Atlanta, Georgia, and the decision of the arbitrators shall be enforceable, but not appealable, in
any court of competent jurisdiction. The fees and expenses incurred in connection with such arbitration shall be borne by the party initiating the arbitration proceeding (or equally by both parties if both parties jointly initiate such proceeding)
subject to reimbursement by the party which does not prevail in such proceeding promptly upon the termination thereof in the event that the party initiating such proceeding is the prevailing party. 
  

 15 

 ARTICLE 14. MISCELLANEOUS 
 14.1 Export Controls. Pharmasset acknowledges that Dr. el Kouni, Dr. Naguib and Dr. Schinazi is subject to United States laws and
regulations controlling the export of technical data, computer software, laboratory prototypes, and other commodities and that Dr. el Kouni, Dr. Naguib and Dr. Schinazi’s obligations under this Agreement are contingent upon
compliance with applicable United States export laws and regulations. The transfer of technical data and commodities may require a license from the cognizant agency of the United States government or written assurances by Pharmasset that Pharmasset
shall not export data or commodities to certain foreign countries without the prior approval of certain United States agencies. Dr. el Kouni, Dr. Naguib and Dr. Schinazi neither represents that an export license shall not be required
nor that, if required, such export license shall issue. 
 14.2 Legal Compliance. Pharmasset shall comply with all laws and
regulations relating to its manufacture, processing, producing, use, Selling, or distributing of Licensed Products. Pharmasset shall not take any action which would cause Dr. el Kouni, Dr. Naguib and Dr. Schinazi or Pharmasset to
violate any laws and regulations. 
 14.3 Independent Contractor. Pharmasset’s relationship to Dr. el Kouni, Dr. Naguib
and Dr. Schinazi shall be that of a licensee only. Pharmasset shall not be the agent of Dr. el Kouni, Dr. Naguib and Dr. Schinazi and shall have no authority to act for or on behalf of Dr. el Kouni, Dr. Naguib and
Dr. Schinazi in any matter. Persons retained by Pharmasset as employees or agents shall not by reason thereof be deemed to be employees or agents of Dr. el Kouni, Dr. Naguib and Dr. Schinazi. 
 14.4 Patent Marking. Pharmasset shall mark Licensed Products Sold in the United States with United States patent numbers. Licensed Products
manufactured or sold in other countries shall be marked in compliance with the intellectual property laws in force in such foreign countries. 
 14.5 Use of Names. Pharmasset shall obtain the prior written approval of Dr. el Kouni, Dr. Naguib and Dr. Schinazi prior to making use of its name for any commercial purpose, except as required by sublicensees and by
law. As an exception to the foregoing, both Pharmasset and Dr. el Kouni, Dr. Naguib and Dr. Schinazi shall have the right to publicize the existence of this Agreement; however, neither Pharmasset nor Dr. el Kouni, Dr. Naguib
and Dr. Schinazi shall disclose the terms and conditions of this Agreement without the other party’s consent, except as required by law. 
 14.6 Place of Execution. This Agreement and any subsequent modifications or amendments hereto shall be deemed to have been executed in Barbados. 
 14.7 Governing Law. This Agreement and all amendments, modifications, alterations, or supplements hereto, and the rights of the parties hereunder, shall be construed under and governed by the laws of the State
of Georgia, USA and the United States of America. 
 14.8 Entire Agreement. This Agreement constitutes the entire agreement between
Dr. el Kouni, Dr. Naguib and Dr. Schinazi and Pharmasset with respect to the subject matter hereof and shall not be modified, amended or terminated except as herein provided or except by another 

  

 16 

 
agreement in writing executed by the parties hereto. In the event of any conflict between the terms hereof and the terms of the Primary License, the terms of
the Primary License shall control. 
 14.9 Severability. All rights and restrictions contained herein may be exercised and shall be
applicable and binding only to the extent that they do not violate any applicable laws and are intended to be limited to the extent that they do not violate any applicable laws and are intended to be limited to the extent necessary so that they will
not render this Agreement illegal, invalid or unenforceable. 
 If any provision or portion of any provision of this Agreement not essential
to the commercial purpose of this Agreement shall be held to be illegal, invalid or unenforceable by a court of competent jurisdiction, it is the intention of the parties that the remaining provisions or portions thereof shall constitute their
agreement with respect to the subject matter hereof, and all such remaining provisions or portions thereof shall remain in full force and effect. To the extent legally permissible, any illegal, invalid or unenforceable provision of this Agreement
shall be replaced by a valid provision which will implement the commercial purpose of the illegal, invalid or unenforceable provision. In the event that any provision essential to the commercial purpose of this Agreement is held to be illegal,
invalid or unenforceable and cannot be replaced by a valid provision which will implement the commercial purpose of this Agreement, this Agreement and the rights granted herein shall terminate. 
 14.10 Force Majeure. Any delays in, or failure of, performance of any party to this Agreement shall not constitute default hereunder, or give rise
to any claim for damages, if and to the extent caused by occurrences beyond the control of the party affected, including, but not limited to, acts of God, strikes or other work stoppages; civil disturbances, fires, floods, explosions, riots, war,
rebellion, sabotage, acts of governmental authority or failure of governmental authority to issue licenses or approvals which may be required. 
 ARTICLE 15. NOTICES 
 All notices and other communications shall be hand delivered, sent by private overnight mail service,
or sent by registered or certified mail, postage prepaid, return receipt requested, and addressed to the party to receive such notice or other communication at the address given below, or such other address as may hereafter be designated by notice
in writing: 
  

			
	If to Dr. el Kouni:	  	Dr. Mahmoud H. el Kouni
		  	4632 Round Forest Drive
		  	Mountain Brook, AL 35213, USA
		
	If to Dr. Naguib:	  	Dr. Fardos N. M Naguib
		  	4632 Round Forest Drive
		  	Mountain Brook, AL 35213, USA
		
	If to Dr. Schinazi:	  	Dr. Raymond Schinazi
		  	1524 Regency Walk Drive
		  	Decatur, GA 30033, USA

  

 17 

			
	If to Pharmasset:	  	Pharmasset
		  	1860 Montreal Road
		  	Tucker, GA 30084, USA

 Any such notice, instruction or communication shall be deemed to have been delivered upon receipt
if delivered by hand, three business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, one business day after it is sent via a reputable nationwide overnight courier service, or when transmitted with
electronic confirmation of receipt, if transmitted by facsimile (if such transmission is on a business day; otherwise, on the next business day following such transmission). 
 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed in their names by their properly and duly authorized officers or
representatives as of the date first above written. 
  

			
	Pharmasset, Ltd.
		
	By:	 	 /s/ Martin J. K. Pritchard

	 Name:
	 	 Martin J. K. Pritchard

	 Title:
	 	 Director

	 Date:
	 	 __________________________

		
	By:	 	 /s/ Raymond F. Schinazi

	 Name:
	 	 Raymond F. Schinazi

	 Title:
	 	 Director

	 Date:
	 	 March 1, 1999

	
	Dr. Mahmoud H. el Kouni
		
	By:	 	 /s/ Mahmoud H. el Kouni

	 Date:
	 	 March 1, 1999

	
	Dr. Fardos N. M. Naguib
		
	By:	 	 /s/ Fardos N. M. Naguib

	 Date:
	 	 March 1, 1999

	
	Dr. Raymond F. Schinazi
		
	By:	 	 /s/ Raymond F. Schinazi

	 Date:
	 	 March 1, 1999

  

 18 

 EXHIBIT A 
 As of May 14, 1999 
  

											
	 Nutter, McClennen & Fish,
LLP Docket Number
	  	Country	  	Serial Number/
Patent Number	  	 Inventor(s)
	  	Filed/
Issued/
Granted	  	 Pending Action

	22728-001	  	USA	  	08/146,838
5,476,855	  	 Mahmoud H. el Kouni
 Fardos N. M. Naguib
 Raymond F. Schinazi
	  	11/2/93
12/10/05	  	*Reissue Application See 22728-008**
						
	22728-002	  	USA	  	5,721,241	  	 Mahmoud H. el Kouni
 Fardos N. M. Naguib
 Raymond F. Schinazi
	  	2/24/98	  	Issued Maintenance fees due 2/24/01.
						
	22728-003	  	Australia	  	6 99914	  	 Mahmoud H. el Kouni
 Fardos N. M. Naguib
 Raymond F. Schinazi
	  	4/1/99	  	Granted.
						
	22728-004	  	Canada	  	2,176,720	  	 Mahmoud H. el Kouni
 Fardos N. M. Naguib
 Raymond F. Schinazi
	  	9/30/94	  	Pending, Request Examination by 9/30/01.
						
	22728-005	  	European	  	94 92 9398.9	  	 Mahmoud H. el Kouni
 Fardos N. M. Naguib
 Raymond F. Schinazi
	  	9/30/94	  	Currently undergoing Examination, Instructions to associate due 6/15/99. 
						
	22728-006	  	Japan	  	07-513211	  	 Mahmoud H. el Kouni
 Fardos N. M. Naguib
 Raymond F. Schinazi
	  	9/30/94	  	Petition for Examination due 9/30/01.

											
	 Nutter, McClennen & Fish,
LLP Docket Number
	  	Country	  	Serial Number/
Patent Number	  	 Inventor(s)
	  	Filed/
Issued/
Granted	  	 Pending Action

	22728-007	  	PCT	  	PCT/
US94/l1173	  	 Mahmoud H. el Kouni
 Fardos N. M. Naguib
 Raymond F. Schinazi
	  	9/30/94	  	Completed Entered National Stage (see 003, 004, 005, 006).
						
	22728-008	  	USA	  	08/980,629	  	 Mahmoud H. el Kouni
 Fardos N. M. Naguib
 Raymond F. Schinazi
	  	12/1/97	  	Reissue Application, Response due 6/29/99.License and Consulting Agreement, dated March 1, 1999

 EXHIBIT 10.7 
 LICENSE AGREEMENT 
 BETWEEN 
 DR. CRAIG HILL, 
 DR. RAYMOND SCHINAZI 
 AND 
 PHARMASSET, LTD.

 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission. 
  

 TABLE OF CONTENTS 
  

					
	 LICENSE AGREEMENT
	  	1
			
	 ARTICLE 1.
	  	DEFINITIONS	  	1
	   1.1.  
	  	“Affiliate”	  	1
	   1.2.  
	  	“Agreement” or “License Agreement”	  	2
	   1.3.  
	  	“Effective Date”	  	2
	   1.4.  
	  	“Field of Use”	  	2
	   1.5.  
	  	“First Commercial Sale”	  	2
	   1.6.  
	  	“IND”	  	2
	   1.7.  
	  	“Indemnitees”	  	2
	   1.8.  
	  	“Licensed Patents”	  	2
	   1.9.  
	  	“Licensed Product”	  	3
	   1.10.
	  	“Licensed Technology”	  	3
	   1.11.
	  	“NDA”	  	3
	   1.12.
	  	“Net Selling Price”	  	3
	   1.13.
	  	“Party”	  	4
	   1.14.
	  	“Phase II”	  	4
	   1.15.
	  	“Sale or Sold”	  	4
	   1.16.
	  	“Sublicensee”	  	5
	   1.17.
	  	“Sublicense Payments”	  	5
	   1.18.
	  	“Sublicense Royalties”	  	5
	   1.19.
	  	“Valid Claim”	  	5
			
	 ARTICLE 2.
	  	GRANT OF LICENSE	  	6
	   2.1.  
	  	License Grant from Dr. Hill	  	6
	   2.2.  
	  	License Grant from Dr. Schinazi	  	6
	   2.3.  
	  	Retained License	  	6
	   2.4.  
	  	Sublicense Rights	  	6
	   2.5.  
	  	Diligence and Commercialization	  	7
	   2.6.  
	  	Lack of Diligence	  	7
			
	 ARTICLE 3.
	  	PAYMENT OBLIGATIONS	  	7
	   3.1.  
	  	License Fee	  	7
	   3.2.  
	  	Reimbursement of Patent Expenses	  	8
	   3.3.  
	  	Milestone Payments	  	8
	   3.4.  
	  	Royalties	  	9
			
	 ARTICLE 4.
	  	REPORTS AND PAYMENTS	  	10
	   4.1.  
	  	Payments	  	10
	   4.2.  
	  	Progress Reports	  	10
	   4.3.  
	  	Royalty Reports	  	10
	   4.4.  
	  	Currency Conversion	  	11
	   4.5.  
	  	Interest	  	12

  

 i 

					
	 ARTICLE 5.
	  	RECORDS	  	12
	   5.1.  
	  	Records of Sales	  	12
	   5.2.  
	  	Audit of Records	  	12
			
	 ARTICLE 6.
	  	PATENT PROSECUTION	  	13
	   6.1.  
	  	Prosecution and Maintenance of Licensed Patents	  	13
	   6.2.  
	  	Extension of Licensed Patents	  	13
	   6.3.  
	  	Further Obligations	  	13
			
	 ARTICLE 7.
	  	ABATEMENT OF INFRINGEMENT	  	15
	   7.1.  
	  	Infringement	  	15
	   7.2.  
	  	Abandonment of Infringement	  	16
			
	 ARTICLE 8.
	  	CONFIDENTIALITY	  	16
	   8.1.  
	  	Confidential Information	  	16
	   8.2.  
	  	Disclosure of Confidential Information	  	17
	   8.3.  
	  	Prior Agreements	  	17
			
	 ARTICLE 9.
	  	LIMITED WARRANTY, MERCHANTABILITY AND EXCLUSION OF WARRANTIES	  	18
	   9.1.  
	  	Limited Warranty	  	18
			
	 ARTICLE 10.
	  	DAMAGES, INDEMNIFICATION, AND INSURANCE	  	18
	 10.1.  
	  	No Liability	  	18
	 10.2.  
	  	Indemnification	  	19
	 10.3.  
	  	No Patent Infringement Suit	  	19
	 10.4.  
	  	Insurance	  	19
	 10.5.  
	  	Notice of Claims	  	20
			
	 ARTICLE 11.
	  	TERM AND TERMINATION	  	20
	 11.1.  
	  	Term	  	20
	 11.2.  
	  	Termination by Dr. Hill and Dr. Schinazi	  	20
	 11.3.  
	  	Notice of Bankruptcy	  	21
	 11.4.  
	  	Exercise	  	21
	 11.5.  
	  	Failure to Enforce	  	21
	 11.6.  
	  	Termination by Pharmasset	  	21
	 11.7.  
	  	Effect	  	22
	 11.8.  
	  	Survival	  	22
			
	 ARTICLE 12.
	  	ASSIGNMENT	  	22
			
	 ARTICLE 13.
	  	ARBITRATION	  	23
			
	 ARTICLE 14.
	  	MISCELLANEOUS	  	23
	 14.1.  
	  	Export Controls	  	23

  

 ii 

					
	14.2.	  	Legal Compliance	  	23
	14.3.	  	Independent Contractor	  	24
	14.4.	  	Patent Marking	  	24
	14.5.	  	Use of Names	  	24
	14.6.	  	Place of Execution	  	24
	14.7.	  	Governing Law	  	24
	14.8.	  	Entire Agreement	  	24
	14.9.	  	Severability	  	25
	 14.10	  	Force Majeure	  	25
			
	ARTICLE 15.	  	NOTICES	  	25
		
	EXHIBIT A	  	

  

 iii 

 LICENSE AGREEMENT 
 THIS LICENSE AGREEMENT is made by and between Pharmasset Ltd., a corporation organized under the laws of Barbados (“Pharmasset”),
Dr. Craig L. Hill an individual residing in the State of Georgia, USA (“Dr. Hill”) and Dr. Raymond Schinazi, an individual residing in the State of Georgia, U.S.A. (“Dr. Schinazi”). 
 WITNESSETH: 
 WHEREAS, Dr. Hill
and Dr. Schinazi are the co-inventor and owner of certain intellectual property rights, including U.S. and European patents and application listed in Exhibit A, on different proprietary and uses of polyoxometalates and have the right to grant
licenses to this intellectual property. 
 WHEREAS, Pharmasset is a company dedicated to the development and production of antiviral
compounds and desires to obtain a license to the patent application referenced above, and all U.S. and corresponding foreign patents issuing therefrom. 
 NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Pharmasset, Dr. Hill, and Dr. Schinazi agree as follows: 
 ARTICLE 1. DEFINITIONS 
 The following terms, whether used in the singular or plural, shall have the following meanings: 
 1.1 “Affiliate” shall mean any corporation, partnership, or other business entity which is directly or indirectly controlled by
Pharmasset or any entity which directly or indirectly 

 
controls Pharmasset. “Controls” as used herein means owns directly or indirectly at least thirty percent (30%) of the outstanding voting
securities. 
 1.2 “Agreement” or “License Agreement” shall mean this Agreement, including all Exhibits
attached to this Agreement. 
 1.3. “Effective Date” means the later of (i) the date on which Pharmasset executes this
Agreement, (ii) the date on which Dr. Hill executes this Agreement, or (iii) the date on which Dr. Schinazi executes this Agreement. 
 1.4. “Field of Use” shall mean all human antiviral (including HIV) applications and uses. 
 1.5. “First Commercial Sale” means, with respect to each Licensed Product, the first commercial sale by Pharmasset, its Affiliates, sublicensees and/or distributors of such Licensed Product, other than for clinical trial
purposes or compassionate use. 
 1.6. “IND” means an Investigational New Drug Application filed with the United States Food
and Drug Administration (“FDA”) in respect of the Licensed Technology. 
 1.7. “Indemnitees” shall mean
Dr. Hill and Dr. Schinazi, and their heirs, executors, administrators, legal representatives. 
 1.8. “Licensed
Patents” means all patents and patent applications listed in attached Exhibit A (which shall be updated as additional patents or patent applications are added to this Agreement by mutual agreement of the Parties) throughout the world,
including any substitutions, extensions, reissues, reexaminations, renewals, divisions, continuations or continuations-in-part, which Dr. Hill and Dr. Schinazi own, or otherwise has the right to grant licenses under. 
  

 2 

 1.9. “Licensed Product” means a product which, or the manufacture, use or sale of which
is covered by a Valid Claim of any of the Dr. Hill and Dr. Schinazi Patent Rights in the country where the product is manufactured, used or sold. 
 1.10. “Licensed Technology” shall mean all designs, technical information, know-how, knowledge, data, specifications, test results and other information, whether or not patented, which is known to
Dr. Hill and Dr. Schinazi on the date of this Agreement and is useful for the manufacture, use or sale of any Licensed Product. 
 1.11. “NDA” means a New Drug Application filed with the FDA relating to the Licensed Technology. 
 1.12.
“Net Selling Price” of Licensed Products shall mean the gross invoiced price paid to Pharmasset, its Affiliates, or sublicensees by a purchaser of a Licensed Product less the following discounts: (a) customary trade, quantity
and cash discounts actually allowed and taken; (b) credit actually given for rejected or returned Licensed Products; (c) freight and insurance costs, if separately itemized on the invoice paid by the customer; and (d) custom and
excise taxes included in the invoiced amount, and (e) to the extent separately stated on purchase orders, invoices or other documents of Sale, all taxes including VAT and sales or similar taxes. Where a Sale is deemed consummated by a gift,
use, or other disposition of Licensed Products for other than a selling price stated in cash, the term “Net Selling Price” shall mean the average gross selling price paid to Pharmasset in consideration of Sales of the same quantity of
Licensed Products during the six (6) month period immediately preceding such Sale, without reduction of any kind (other than as provided for in (a) - (d) above). If no Sales of Licensed Products have occurred in the preceding six
(6) months, then sales of comparable products shall be used in such determination. 
 “Net Selling Price” with
respect to any Combination Product (a Licensed Product incorporating additional active ingredients) shall be negotiated in good faith by the parties with the intention of agreeing upon a fair and equitable formula; provided, however, that if the
parties 

  

 3 

 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission. 
  

 
are unable to agree upon such definition within a reasonable period of time, Net Selling Price with respect to such Combination Product shall mean the gross
sales of such Product paid by independent customers, less all the allowances, adjustments, reductions, discounts, taxes, duties, rebates or other charges referred to in the above definition of Net Selling Price multiplied by a fraction, the
numerator of which shall be the average invoice price per gram of compound contained in the most comparable stock keeping unit of Licensed Product having the compound as the sole active ingredient during the applicable royalty period in a country of
the Licensed Territory, when such comparable Licensed Product is Sold for the same indication as such Combination Product and the denominator of which shall be the average invoice price per gram of the compound sold alone as described immediately
above plus the average invoice price(s) per gram of the other active ingredient(s) contained in such Combination Product in such country during the applicable royalty period when such active ingredients are Sold alone for the same indication as such
Combination Product. If there is no average invoice price per gram in a given country for a compound or for one or more of the active ingredients comprising a Combination Product, Net Selling Price with respect to such Combination Product shall be
deemed to be [***] Percent ([***]%) of the gross Sales of such Combination Product paid by independent customers, less all the allowances, adjustments, reductions, discounts, taxes, duties, rebates or other charges referred to in the above
definition of Net Selling Price. 
 1.13. “Party” means Pharmasset or Dr. Hill or Dr. Schinazi;
“Parties” means Pharmasset and Dr. Hill and Dr. Schinazi. 
 1.14. “Phase II” means the first
controlled FDA approved first controlled clinical trials conducted with a limited number of human patients and are designed to measure the effectiveness of a new pharmaceutical product, that is, the effective dose and regiment for further study in
larger clinical trials. Completion of Phase II represents a milestone to then begin the Phase III clinical trials that are pivotal to product approval. 
 1.15. “Sale or Sold” shall mean the sale, transfer, exchange, or other disposition of Licensed Products whether by gift or otherwise, including but not limited to the use of Licensed Products by any
person authorized by Pharmasset other than Pharmasset. Neither (a) the 

  

 4 

 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission. 
  

 
provision of Licensed Products, prior to the approval of Licensed Products in a country and pursuant to a requirement issued by the appropriate governmental
agency in that country, for consumption by or administration to persons for humanitarian purposes or compassionate use, (b) the provision of Licensed Products for use in clinical trials, nor (c) the provision of samples in reasonable
quantities without charge for promotional purposes shall be deemed a Sale for the purposes of this Agreement. Sales of Licensed Products shall be deemed consummated upon the first to occur of: (a) receipt of payment from the purchaser;
(b) delivery of Licensed Products to the purchaser or a common carrier; (c) release of Licensed Products from consignment; (d) if deemed Sold by use, when first put to such use; or (e) if otherwise transferred, exchanged, or
disposed of whether by gift or otherwise when such transfer, exchange, gift, or other disposition occurs. 
 1.16.
“Sublicensee” means any third party other than an Affiliate granted the right, subject to the terms and conditions of Article 2, to make, use and sell a Licensed Product, but not including a third party that is not granted the right
to make such Product but merely purchases such Product in finished form for resale. 
 1.17. “Sublicense Payments” means
sublicense fees, milestone payments and other cash consideration (excluding royalties) received by Pharmasset from a Sublicensee, provided that in no event shall Sublicense Payments include any funds provided by a Sublicensee to fund
research, development, and clinical trials, to reimburse Pharmasset for research, development, and clinical trial expenses or to purchase equity securities of Pharmasset. 
 1.18. “Sublicense Royalties” means royalties on sales of Licensed Product received by Pharmasset from a Sublicensee. 
 1.19. “Valid Claim” means a claim which (i) in the case of any unexpired United States or foreign patent, shall not have been donated to the public, disclaimed, nor held invalid or unenforceable
against the other Party by a court of competent jurisdiction in an unappealed or unappealable decision, or (ii) in the case of any United States or foreign patent application, shall not have been cancelled, withdrawn, abandoned nor been pending
for more than [***] ([***]) years. 
  

 5 

 ARTICLE 2. GRANT OF LICENSE 
 2.1. License Grant from Dr. Hill. Dr. Hill hereby grants to Pharmasset, and Pharmasset hereby accepts, an exclusive sublicense,
including the right to grant further sublicenses pursuant to Section 2.4, under the Licensed Patents in Exhibit A to make, have made, use, import, offer for sale, and sell Licensed Products covered by such Licensed Patents only and to practice
Licensed Technology with respect to such Licensed Patents only for the Field of Use during the term of the Agreement. 
 2.2. License
Grant from Dr. Schinazi. Dr. Schinazi hereby grants to Pharmasset, and Pharmasset hereby accepts, an exclusive license, including the right to grant sublicenses pursuant to Section 2.4, under the Licensed Patents in Exhibit A to
make, have made, use, import, offer for sale, and sell Licensed Products covered by such Licensed Patents only and to practice Licensed Technology with respect to such Licensed Patents only for the Field of Use during the term of the Agreement.

 2.3. Retained License. Left blank intentionally. 
 2.4. Sublicense Rights. Pharmasset shall have the right to grant sublicenses under the sublicense granted pursuant to Section 2.1 above and under the license granted pursuant to Section 2.2 above to
parties with whom Pharmasset has agreed to jointly develop and/or commercialize Licensed Products; provided that any sublicense granted by Pharmasset under this Agreement shall be subject and subordinate to, and consistent with, the terms and
conditions of this Agreement, and shall provide that any such sublicensee shall not further sublicense except on terms consistent with this Section 2.4. Pharmasset shall provide Dr. Hill and Dr. Schinazi with a copy of any sublicense
granted pursuant to this Section 2.4 within one (1) month after the execution thereof. Such copy may be redacted to exclude confidential scientific information and other information required by a sublicensee to be kept confidential,
provided that all relevant financial terms and information shall be retained therein. In the event of a material default by any sublicensee under a sublicense agreement, Pharmasset will inform Dr. Hill and Dr. Schinazi

  

 6 

 
and take such action, after consultation with Dr. Hill and Dr. Schinazi, which in Pharmasset’s reasonable business judgment will address such
default. 
 2.5. Diligence and Commercialization. Pharmasset shall use its reasonable best efforts, either directly or through
Affiliates or sublicensees, throughout the term of this Agreement to bring Licensed Products to market through a thorough, vigorous, and diligent program for exploitation of the right and license granted in this Agreement to Pharmasset and to
create, supply, and service as extensive a market as possible. In no instance shall Pharmasset’s reasonable best efforts be less than efforts customary in Pharmasset’s industry. 
 2.6. Lack of Diligence. If Dr. Hill and Dr. Schinazi conclude that Pharmasset is not diligent in development or Sales of Licensed
Products pursuant to Article 2.5 for any reason other than (a) the withholding by a regulatory agency or marketing approval despite Pharmasset’s diligent effort to obtain such approval; (b) unanticipated technical or scientific
problems which have been promptly reported to Dr. Hill and Dr. Schinazi in writing; or (c) other causes beyond the reasonable control of Pharmasset which have been promptly reported to Dr. Hill and Dr. Schinazi in writing;
then Dr. Hill and Dr. Schinazi may give notice to Pharmasset stating the basis for its conclusion and, upon the request of Dr. Hill and Dr. Schinazi, Pharmasset shall show cause why the license granted hereunder should not be
terminated. If within ninety (90) days after Pharmasset’s receipt of said notice, the parties have not resolved the matter through good faith negotiations in a mutually acceptable manner, the parties shall submit the dispute to arbitration
under the provisions of Article 13 of this Agreement. 
 ARTICLE 3. PAYMENT OBLIGATIONS 
 3.1. License Fee. In consideration of the rights granted to Pharmasset under this Agreement, Pharmasset shall pay to Dr. Hill and
Dr. Schinazi the following non-refundable, non-creditable license fee on the Effective Date: 
 (a) To Dr. Hill:
35,000 Common Stock Options at US$1.00 and, 
  

 7 

 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission. 
  

 (b) To Dr. Schinazi: 35,000 Common Stock Options at US$1.00 
 Options will be exercisable for a period of 10 years starting from March 1, 1999. 
 3.2. Reimbursement of Patent Expenses. Pharmasset will forgive $20,000 of the obligation of Dr. Schinazi under that certain Promissory Note, dated January 29, 1999, made by Dr. Schinazi to
Pharmasset in the original principal amount of $320,500 in partial reimbursement of patents costs associated with the technology listed in Exhibit A. Within thirty (30) days after the end of each calendar quarter, Dr. Hill and
Dr. Schinazi shall provide Pharmasset with an invoiced accounting of all patent related expenses incurred by them, as described in Section 4.1, below, during such calendar quarter. Pharmasset shall reimburse all such invoiced patent
related expenses within one (1) month after receipt of such accounting. 
 3.3. Milestone Payments. Within thirty (30) days after
the occurrence of the milestones specified below, Pharmasset shall make the following non-refundable, non-creditable payments to Dr. Hill and Dr. Schinazi: 
  

						
	To Dr. Hill:	  	 Milestone
	  	Payment
		  	Completion of Phase II	  	$	[***]
		  	NDA Approval	  	$	[***]
			
	To Dr. Schinazi:	  	 Milestone
	  	Payment
		  	Completion of Phase II	  	$	[***]
		  	NDA Approval	  	$	[***]

  

 8 

 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission. 
  

 The milestone payments in this Section 3.3 shall be payable only once, for each significant disease indication
for which the milestones are applicable. 
 3.4. Royalties. 
 (a) Pharmasset shall pay to Dr. Hill and Dr. Schinazi, according to the payment schedule described in subsection (b), during the
applicable term described in subsection (c), earned royalties at the rate of (i) [***] percent ([***] %) of Net Sales of a Licensed Product covered by a Valid Claim in the country of sale included in the Licensed Patents and (ii) [***]
percent ([***] %) of Net Sales of a Licensed Product not covered by such a Valid Claim in the country of sale, provided that in no event shall more than one royalty be due Dr. Hill and Dr. Schinazi for the sale of any Licensed
Product. 
 (b) The earned royalties described in subsection (a) above shall be paid to Dr. Hill and
Dr. Schinazi according to the following schedule: 
 (i) To Dr. Hill: [***] percent ([***]%) of the earned
royalties, and, 
 (ii) To Dr. Schinazi: [***] percent ([***]%) of the earned royalties. 
 (c) Pharmasset shall be obligated to pay royalties at the rate set forth in subsection (a) (i), on a country by country basis, so
long as there continues to be a Valid Claim included in the Licensed Patents that cover the applicable Licensed Product in such country. Pharmasset shall be obligated to pay royalties at the rate set forth in subsection (a) (ii), on a country
by country basis, on Net Sales of a Licensed Product not covered by a Valid Claim (including a Licensed Product which previously was covered by a Valid Claim) until the [***] anniversary of the First Commercial Sale of such Licensed Product in such
country. 
 (d) Pharmasset shall pay to Dr. Hill and Dr. Schinazi [***] percent ([***]%) of Sublicense Payments.

  

 9 

 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission. 
  

 (e) Pharmasset shall pay to Dr. Hill and Dr. Schinazi [***] percent
([***]%) of Sublicense Royalties. 
 (f) Notwithstanding the foregoing, Pharmasset may deduct from royalties otherwise owed
under subsections (a) and (d) [***] percent ([***]%) of any royalties or other payments required to be paid for licenses under intellectual property rights of third parties. 
 ARTICLE 4. REPORTS AND PAYMENTS 
 4.1. Payments. Unless otherwise
specified, all payments required under this Agreement shall be payable within thirty (30) days of the due date for each payment. All payments due under this Agreement shall be made either by wire transfer or immediately available funds or in
person or via the mail or private courier to the following address: 
 Dr. Craig Hill 
 2941 Cravey Drive, NE 
 Atlanta, GA 30345 
 Dr. Raymond Schinazi 
 1524 Regency Walk Drive 
 Decatur, GA 30033, USA 
 4.2. Progress Reports. Pharmasset will provide Dr. Hill and
Dr. Schinazi with semi-annual progress reports detailing the activities of Pharmasset relevant to Pharmasset’s Development Plan. 
 4.3. Royalty Reports. Once royalties are due, within thirty (30) days of September 30, December 31, March 31 and June 30 of each year and of the year following the termination or expiration of this
Agreement, Pharmasset shall render a written report setting forth for the preceding calendar quarter, the following as may be applicable: 
 (a) all Sales (including Net Selling Price of each product sold) of Licensed Products by Pharmasset, its sublicensees, and its Affiliates on a country-by-country basis throughout the Licensed Territory; 
  

 10 

 (b) the amount of royalty payable hereunder; 
 (c) any other information reasonably necessary to show the basis on which such royalty has been computed; 
 (d) any payments due Dr. Hill and Dr. Schinazi pursuant to Section 3.4(c) and 3.4(d); 
 (e) other income received by Pharmasset from sublicensees and the amount thereof due to Dr. Hill and Dr. Schinazi accompanied by
an explanation of the basis of said income and the amount of such income due Dr. Hill and Dr. Schinazi; and 
 (f)
in case no payment is due, Pharmasset shall so report. 
 Each royalty report shall be accompanied by the payment of all royalties due for
the quarter calendar year in question. 
 4.4. Currency Conversion. If any Licensed Products are Sold for monies other than United
States dollars, the Net Selling Price of such Licensed Products shall first be determined in the foreign currency of the country in which such Licensed Products are Sold and then converted to United States dollars at the spot rate published by
The Wall Street Journal (U.S. edition) for conversion of that foreign currency into United States dollars on the last day of the quarter for which such payment is due. 
  

 11 

 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission. 
  

 4.5. Interest. Payments required under this Agreement shall, if overdue, bear interest until
payment at a per annum rate [***] percent ([***]%) above the prime rate in effect as published in The Wall Street Journal on the due date. The payment of such interest shall not foreclose Dr. Hill or Dr. Schinazi from exercising any
other rights they may have because any payment is late. 
 ARTICLE 5. RECORDS 
 5.1. Records of Sales. During the term of this Agreement and for a period of three (3) years thereafter, Pharmasset shall keep at its
principal place of business true and accurate records of all Sales in accordance with generally accepted accounting principles in the respective country where such Sales occur and in such form and manner so that all royalties owed to Dr. Hill
and Dr. Schinazi may be readily and accurately determined. Pharmasset shall furnish Dr. Hill and Dr. Schinazi copies of such records upon Dr. Hill and Dr. Schinazi’s request, which shall not be made more often than once
per License Agreement Year. 
 5.2. Audit of Records. Dr. Hill and Dr. Schinazi shall have the right, from time to time at
reasonable times during normal business hours through an independent certified public accountant, to examine the records of Pharmasset in order to verify the calculation of any royalties payable under this Agreement. Such examination and
verification shall not occur more than once each License Agreement Year and the calendar year immediately following termination of this Agreement. Unless otherwise agreed in writing by Pharmasset, the fees and expenses of performing such examination
and verification shall be borne by Dr. Hill and Dr. Schinazi. If such examination reveals an underpayment by Pharmasset of more than five percent (5%) for any quarter examined, Pharmasset shall pay Dr. Hill and Dr. Schinazi
the amount of such underpayment plus interest and shall reimburse Dr. Hill and Dr. Schinazi for all expenses of the accountant reasonably incurred in performing the examination. 
  

 12 

 ARTICLE 6. PATENT PROSECUTION 
 6.1. Prosecution and Maintenance of Licensed Patents. The prosecution and maintenance of the Licensed Patents shall be the primary responsibility
of Pharmasset, with assistance from Dr. Hill and Dr. Schinazi. Dr. Hill shall keep Pharmasset informed as to all developments with respect to Licensed Patents to the extent that Dr. Hill is so informed. Pharmasset shall be
afforded reasonable opportunities to advise Dr. Hill and cooperate with Dr. Hill and Dr. Schinazi in such prosecution and maintenance. 
 Pharmasset, upon ninety (90) days advance written notice to Dr. Hill and Dr. Schinazi, may advise Dr. Hill and Dr. Schinazi that it no longer wishes to pay expenses for filing, prosecuting or
maintaining one or more Licensed Patents. Dr. Hill and Dr. Schinazi may, at its option, elect to pay such expenses or permit such Licensed Patents to become abandoned or lapsed in the event that the Licensors elect not to pay such
expenses. If Dr. Hill and Dr. Schinazi elects to pay such expenses, such patents shall not be subject to any license granted to Pharmasset hereunder. 
 6.2. Left blank intentionally. 
 6.3. Further Obligations. 
 (a) Except as otherwise provided in Article 7, each party’s responsibilities for patent prosecution activities pursuant to this
Article 6 shall also include ex parte and inter partes activities relating to the relevant patent applications and patents, including all interference, opposition and observation proceedings before any patent offices and litigation to
determine the validity, enforceability, allowability or subsistence of such patent applications and patents. Each party agrees to give due consideration to the other party’s or its sublicensee’s position with respect to any such patent
prosecution activities, (which term as used herein, shall include without limitation, any inter partes activities of the type described in the first sentence of this subparagraph (a)). In the event a party fails to initiate or pursue any
patent prosecution activities for which it is responsible, or having commenced such patent prosecution activities, declines to 

  

 13 

 
pursue such patent prosecution activities, it shall give notice to the other party pursuant to the applicable provisions of subparagraph (b) below and
the other party or its sublicensees, as applicable, may initiate, pursue or assume such patent prosecution activities, at its sole expense. 
 (b) In conducting its patent prosecution activities under this License Agreement, each party hereto shall use the patent attorneys selected by Pharmasset. In addition to the other obligations set forth in this Article
6, each party undertakes to keep the other party and, if applicable such other party’s sublicensee throughout the term of this License Agreement regularly informed of the status and progress of the patent prosecution activities it undertakes
under this, License Agreement including, but not limited to, supplying the other party or its sublicensee, as applicable, upon reasonable request and at reasonable intervals, with the correspondents with the United States, Japan and European patent
office counterparts with respect to the United States, Japan and European patents and patent applications. To the extent that a party has not previously done so, or promptly upon request by the other party or its sublicensee, in order to assist such
other party or its sublicensees in connection with any of its activities or the exercise of any of its rights pursuant to Article 6, such party shall provide the other party or its sublicensee with such additional relevant documentation which such
other party or its sublicensee may reasonably request relating to such patent applications and patents in the Licensed Patents, including but not limited to, copies thereof and access to laboratory notebooks, other supporting data and relevant
employees. If a party decides to abandon or allow to lapse any patent application or patent or not to initiate or any other patent prosecution activity for which it has patent prosecution responsibility pursuant to this Article 6, it shall give the
other party or its sublicense notice thereof in a sufficiently timely manner so as to enable such other party or its sublicensee to determine whether to assume patent prosecution activity in connection therewith. Each party shall use its best
efforts to give such notice at least sixty (60) days before any abandonment, lapse or any other relevant deadline. 
 (c)
Pharmasset and Dr. Hill and Dr. Schinazi agree that, during the term of any sublicensee agreement, the rights of Pharmasset under this Article 6 shall be exercised, if at all, by its sublicense with respect to all patent prosecution
activities in any country in which a 

  

 14 

 
sublicense agreement is then in effect. With respect to such patent prosecution activities, Dr. Hill and Dr. Schinazi shall communicate with such
sublicensee directly. 
 ARTICLE 7. ABATEMENT OF INFRINGEMENT 
 7.1. Infringement. Pharmasset shall promptly inform Dr. Hill and Dr. Schinazi and Dr. Hill and Dr. Schinazi will promptly
notify Pharmasset of any suspected infringement of any Licensed Patents. During the term of this Agreement, Dr. Hill and Dr. Schinazi and Pharmasset shall have the right to institute an action for infringement of the Licensed Patents
against such third party in accordance with the following: 
 (a) If Dr. Hill and Dr. Schinazi and Pharmasset, agree
to institute suit jointly, the suit shall be brought in all their names and the out-of-pocket costs thereof shall be borne equally. Any recovery or settlement received by Dr. Hill and Dr. Schinazi and/or Pharmasset for punitive or
exemplary damages shall be shared equally, and any other recovery or settlement received, including compensatory damages or damages based on a loss of revenues, shall be paid to Pharmasset, and Pharmasset shall pay to Dr. Hill and
Dr. Schinazi an amount representing the royalty which would have been paid by Pharmasset on such amount in accordance with the provisions of Article 3 had such amount been accrued by Pharmasset as Sales. The parties shall agree upon the manner
in which they shall exercise control over such action and may, if they so desire, also be represented by separate counsel of their own such action and may, if they so desire, also be represented by separate counsel of their own selection. The fees
of which counsel shall be paid by the respective parties so represented; 
 (b) In the absence of agreement to institute a
suit jointly, Dr. Hill and Dr. Schinazi may institute suit and, at its option, name Pharmasset as plaintiff. Dr. Hill and Dr. Schinazi shall bear the entire cost of such litigation, including defending any counterclaims brought
against Pharmasset and paying any judgments rendered against Pharmasset, and Dr. Hill and Dr. Schinazi shall be entitled to retain the entire amount of any recovery or settlement. 
  

 15 

 (c) In the absence of agreement to institute suit jointly and if Dr. Hill and
Dr. Schinazi have decided not to join in or institute a suit, as provided in (a) - (c) above, Pharmasset may institute suit and at its option name Dr. Hill and Dr. Schinazi as plaintiffs. Pharmasset shall bear the enter cost of such
litigation, including defending any considerations brought against Dr. Hill and Dr. Schinazi and paying any judgments rendered against Dr. Hill and Dr. Schinazi, and Pharmasset shall be entitled to retain the entire amount of any
recovery or settlement. 
 7.2. Abandonment of Infringement. Should either Dr. Hill and Dr. Schinazi or Pharmasset commence
a suit under the provisions of this Article and thereafter elect to abandon such suit, the abandoning party shall give timely notice to the other parties who may, if so desired, continue prosecution of such suit, provided that the sharing of
expenses and any recovery in such suit shall be as agreed upon between Dr. Hill and Dr. Schinazi and Pharmasset. 
 ARTICLE 8.
CONFIDENTIALITY 
 8.1. Confidential Information. Pharmasset shall not, without the express written consent of Dr. Hill
and Dr. Schinazi, for any reason or at any time for a period of five (5) years from the Effective Date of this Agreement, disclose to third parties any information disclosed in the Licensed Patents or Licensed Technology or any other
information pertaining to the Licensed Patents and Licensed Technology disclosed to Pharmasset by Dr. Hill and Dr. Schinazi, (such information shall be collectively referred to as “Proprietary Information”). This obligation of
nondisclosure shall not extend to information: 
 (a) which Pharmasset can demonstrate through documentation to have been
within Pharmasset’s legitimate possession prior to the time of disclosure of such information to Pharmasset by Dr. Hill and Dr. Schinazi; 
 (b) which was in the public domain prior to disclosure by Dr. Hill and Dr. Schinazi, as evidenced by documents published prior to such disclosure; 
  

 16 

 (c) which, after disclosure by Dr. Hill and Dr. Schinazi, comes into the public
domain through no fault of Pharmasset; 
 (d) which is disclosed to Pharmasset by a third party having legitimate possession
of the information and the unrestricted right to make such disclosure. 
 (e) which is disclosed in the issued Licensed
Patents. 
 8.2. Disclosure of Confidential Information. Notwithstanding the provisions of Section 8.1 above, and to the extent
necessary: 
 (a) a party may disclose and use the other party’s information for purposes of securing the registration
of, and of governmental approval to market, pursuant to this Agreement, any Licensed Products; 
 (b) a party may disclose and
use the other party’s information where the disclosure and use of such will be necessary to the procurement of patent protection, pursuant to this Agreement, for a Licensed Product; 
 (c) a party may disclose and use the other party’s information to the extent that it is necessary to aid in the development and
commercialization, pursuant to this Agreement, of any Licensed Product provided that any such disclosure of the disclosing party’s information shall be in confidence and subject to provisions the same, or substantially the same, as those in
Section 8.1 hereof. 
 8.3. Prior Agreements. The provisions of this Agreement supersede and shall be substituted for any terms
of any prior confidentiality agreement between Pharmasset and Dr. Hill and Dr. Schinazi which are not consistent with this Agreement. 
  

 17 

 ARTICLE 9. LIMITED WARRANTY, MERCHANTABILITY AND EXCLUSION OF WARRANTIES 
 9.1. Limited Warranty. Dr. Hill and Dr. Schinazi represent and warrant that they have the right and authority to enter into this
Agreement and that neither the execution of this Agreement nor the performance of its obligations hereunder will constitute a breach of the terms and provisions of any other agreement to which Dr. Hill and Dr. Schinazi are parties.
Dr. Hill and Dr. Schinazi do not warrant the validity of the Licensed Patents licensed hereunder and make no representation whatsoever with regard to the scope of the Licensed Patents or that such Licensed Patents may be exploited by
Pharmasset or its Affiliates without infringing other patents. 
 Pharmasset possesses the necessary expertise and skill in the technical
areas in which the Licensed Products and Licensed Technology are involved to make, and has made, its own evaluation of the capabilities, safety, utility, and commercial application of the Licensed Patents and Licensed Technology. ACCORDINGLY, DR.
HILL AND DR. SCHINAZI MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE LICENSED PATENTS OR LICENSED TECHNOLOGY AND EXPRESSLY DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ANY OTHER IMPLIED
WARRANTIES WITH RESPECT TO THE CAPABILITIES, SAFETY, UTILITY, OR COMMERCIAL APPLICATION OF LICENSED PATENTS OR LICENSED TECHNOLOGY. 
 ARTICLE 10. DAMAGES, INDEMNIFICATION, AND INSURANCE 
 10.1. No Liability. Dr. Hill and Dr. Schinazi
shall not be liable to Pharmasset and Pharmasset’s customers, sublicensees or Affiliates for special, incidental, indirect, or consequential damages resulting from defects in the design, testing, labeling, manufacture, or other application of
Licensed Products manufactured, tested, designed, sublicensed, or Sold pursuant to this Agreement. 
  

 18 

 10.2. Indemnification. Pharmasset shall defend, indemnify, and hold harmless the Indemnitees from
and against any and all claims, demands, loss, liability, expense, or damage (including investigative costs, court costs and attorneys’ fees) Indemnitees may suffer, pay, or incur as a result of claims, demands or actions against any of the
Indemnitees arising or alleged to arise by reason of or in connection with any and all personal injury and property damage caused or contributed to in whole or in part by Pharmasset’s manufacture, testing, design, use, sale, or labeling of any
Licensed Products, or the practice of any Licensed Patents. Pharmasset’s obligations under this Article shall survive the expiration or termination of this Agreement for any reason. 
 10.3. No Patent Infringement Suit. To the extent that the rights have not already been licensed exclusively to another party, Dr. Hill and
Dr. Schinazi agree not to sue Pharmasset or its Affiliates or sublicensees for patent infringement for practicing a claim of a patent assigned or licensed to Dr. Hill and Dr. Schinazi if practicing said claim is required to make, have
made, use, import, offer for Sale, Sell or have Sold Licensed Products. 
 10.4. Insurance. Without limiting Pharmasset’s
indemnity obligations under the preceding paragraph, Pharmasset, its Affiliates, and sublicensees shall maintain throughout the term of this Agreement and for ten (10) years thereafter a liability insurance policy which: 
 (a) insures Indemnitees for all claims, damages, and actions mentioned in Article 11.1 of this Agreement; 
 (b) includes a contractual endorsement providing coverage for all liability which may be incurred by Indemnitees in connection with this
Agreement; 
 (c) requires the insurance carrier to provide Dr. Hill and Dr. Schinazi with no less than thirty
(30) days written notice of any change in the terms or coverage of the policy or its cancellation; and 
  

 19 

 (d) provides Indemnitees product liability coverage in an amount no less than One Million
Dollars ($1,000,000) per occurrence for bodily injury and One Million Dollars ($1,000,000) per occurrence for property damage, subject to a reasonable aggregate amount. 
 10.5. Notice of Claims. Pharmasset shall promptly notify Dr. Hill and Dr. Schinazi of all claims involving the Indemnitees and will advise Dr. Hill and Dr. Schinazi of the policy amounts
that might be needed to defend and pay any such claims. 
 ARTICLE 11. TERM AND TERMINATION 
 11.1. Term. Unless sooner terminated as otherwise provided in this Agreement, the term of this Agreement shall commence on the date hereof and
shall continue until the date of expiration of the last to expire of the Licensed Patents, including any renewals or extensions thereof. 
 11.2. Termination by Dr. Hill and Dr. Schinazi. Dr. Hill and Dr. Schinazi shall have the right to terminate this Agreement upon the occurrence of any one or more of the following events: 
 (a) failure of Pharmasset to make any payment required pursuant to this Agreement when due; or 
 (b) failure of Pharmasset to render reports to Dr. Hill and Dr. Schinazi as required by this Agreement; or 
 (c) the insolvency of Pharmasset; or 
 (d) the institution of any proceeding by Pharmasset under any bankruptcy, insolvency, or moratorium law; or 
  

 20 

 (e) any assignment by Pharmasset of substantially all of its assets for the benefit of
creditors; or 
 (f) placement of Pharmasset’s assets in the hands of a trustee or receiver unless the receivership or
trust is dissolved within thirty (30) days thereafter; or 
 (g) the breach of any other material term of this Agreement.

 11.3. Notice of Bankruptcy. Each party hereto shall inform the other party hereto of its intention to file a voluntary petition in
bankruptcy or its learning of another’s intention to file an involuntary petition in bankruptcy in respect of such party to be receive at least thirty (30) days prior to filing (or learning of) such a petition or intention. A party’s
filing without conforming to this requirement shall be deemed a material, pre-petition incurable breach. 
 11.4. Exercise.
Dr. Hill and Dr. Schinazi may exercise its right of termination by giving Pharmasset, its trustees or receivers or assigns, sixty (60) days prior written notice of Dr. Hill and Dr. Schinazi’s election to terminate. Upon
the expiration of such period this Agreement shall automatically terminate unless the Pharmasset has cured the breach. Such notice and termination shall not prejudice Dr. Hill and Dr. Schinazi’s right to receive royalties or other
sums due hereunder and shall not prejudice any cause of action or claim of Dr. Hill and Dr. Schinazi’s accrued or to accrue on account of any breach or default by Pharmasset. 
 11.5 Failure to Enforce. The failure of Dr. Hill and Dr. Schinazi at any time, or for any period of time, to enforce any of the
provisions of this Agreement shall not be construed as a waiver of such provisions or as a waiver of the right of Dr. Hill and Dr. Schinazi thereafter to enforce each and every such provision. 
 11.6 Termination by Pharmasset. Pharmasset may terminate this Agreement at its sole discretion upon four (4) months’ written notice to
Dr. Hill and Dr. Schinazi. In the event of such termination, Pharmasset agrees, upon the request of Dr. Hill and Dr. Schinazi, to provide Dr. Hill and Dr. Schinazi with all existing data in Pharmasset’s possession
or control in support of 

  

 21 

 
registration of Licensed Products for the Field of Use with the relevant federal agencies. Dr. Hill and Dr. Schinazi shall have the unrestricted
right to provide such data to third parties. 
 11.7 Effect. In the event this Agreement is terminated for any reason whatsoever,
Pharmasset shall return, or at Dr. Hill and Dr. Schinazi’s direction destroy, all plans, drawings, papers, notes, writings and other documents, and models pertaining to the Licensed Patents or Technology, retaining only one copy in
its corporate counsel’s office for the sole purpose of compliance with surviving terms of this Agreement or defense against any legal actions related to this Agreement, shall refrain from using or publishing any portion of the Licensed
Technology as provided in Article 8 of this Agreement and shall sell to Dr. Hill and Dr. Schinazi at cost all organisms and other biological and chemical materials. Upon termination of this Agreement, Pharmasset shall cease
manufacturing, processing, producing, using, or Selling Licensed Products; provided, however, that Pharmasset may continue to Sell in the ordinary course of business for a period of three (3) months reasonable quantities of Licensed Products
which are fully manufactured and in Pharmasset’s normal inventory at the date of termination if (a) all monetary obligations of Pharmasset to Dr. Hill and Dr. Schinazi have been satisfied and (b) royalties on such sales are
paid to Dr. Hill and Dr. Schinazi in the amounts and in the manner provided in this Agreement. However, nothing herein shall be construed to release either party of any obligation which matured prior to the effective date of such
termination. 
 11.8 Survival. The provisions of Articles 8, 9, and 10 of this Agreement shall remain in full force and effect
notwithstanding the termination of this Agreement. 
 ARTICLE 12. ASSIGNMENT 
 Pharmasset may not assign this Agreement or any of the rights or obligations hereunder without the prior written consent of Dr. Hill and
Dr. Schinazi, except to an Affiliate of Pharmasset or to any other party who acquires all or substantially all of the business of Pharmasset, or all of the business relating to the Licensed Product by merger, sale of assets or otherwise, so
long as such Affiliate or other party agrees in writing to be bound by the terms of this Agreement. 
  

 22 

 ARTICLE 13. ARBITRATION 
 Any dispute related to this Agreement shall be settled by arbitration. Arbitration shall be conducted under the Commercial Arbitration Rules of the
American Arbitration Association by three arbitrators, one to be appointed by Dr. Hill and Dr. Schinazi, one to be appointed by Pharmasset, and one to be appointed by the two arbitrators appointed by Dr. Hill and Dr. Schinazi and
Pharmasset. Arbitration shall take place in Atlanta, Georgia, and the decision of the arbitrators shall be enforceable, but not appealable, in any court of competent jurisdiction. The fees and expenses incurred in connection with such arbitration
shall be borne by the party initiating the arbitration proceeding (or equally by both parties if both parties jointly initiate such proceeding) subject to reimbursement by the party which does not prevail in such proceeding promptly upon the
termination thereof in the event that the party initiating such proceeding is the prevailing party. 
 ARTICLE 14. MISCELLANEOUS

 14.1 Export Controls. Pharmasset acknowledges that Dr. Hill and Dr. Schinazi is subject to United States laws and
regulations controlling the export of technical data, computer software, laboratory prototypes, and other commodities and that Dr. Hill and Dr. Schinazi’s obligations under this Agreement are contingent upon compliance with applicable
United States export laws and regulations. The transfer of technical data and commodities may require a license from the cognizant agency of the United States government or written assurances by Pharmasset that Pharmasset shall not export data or
commodities to certain foreign countries without the prior approval of certain United States agencies. Dr. Hill and Dr. Schinazi neither represents that an export license shall not be required nor that, if required, such export license
shall issue. 
 14.2 Legal Compliance. Pharmasset shall comply with all laws and regulations relating to its manufacture, processing,
producing, use, Selling, or distributing of Licensed 

  

 23 

 
Products. Pharmasset shall not take any action which would cause Dr. Hill and Dr. Schinazi or Pharmasset to violate any laws and regulations.

 14.3 Independent Contractor. Pharmasset’s relationship to Dr. Hill and Dr. Schinazi shall be that of a licensee
only. Pharmasset shall not be the agent of Dr. Hill and Dr. Schinazi and shall have no authority to act for or on behalf of Dr. Hill and Dr. Schinazi in any matter. Persons retained by Pharmasset as employees or agents shall not
by reason thereof be deemed to be employees or agents of Dr. Hill and Dr. Schinazi. 
 14.4 Patent Marking. Pharmasset shall
mark Licensed Products Sold in the United States with United States patent numbers. Licensed Products manufactured or sold in other countries shall be marked in compliance with the intellectual property laws in force in such foreign countries.

 14.5 Use of Names. Pharmasset shall obtain the prior written approval of Dr. Hill and Dr. Schinazi prior to making use of
its name for any commercial purpose, except as required by sublicensees and by law. As an exception to the foregoing, both Pharmasset and Dr. Hill and Dr. Schinazi shall have the right to publicize the existence of this Agreement; however,
neither Pharmasset nor Dr. Hill and Dr. Schinazi shall disclose the terms and conditions of this Agreement without the other party’s consent, except as required by law. 
 14.6 Place of Execution. This Agreement and any subsequent modifications or amendments hereto shall be deemed to have been executed in Barbados.

 14.7 Governing Law. This Agreement and all amendments, modifications, alterations, or supplements hereto, and the rights of the
parties hereunder, shall be construed under and governed by the laws of the State of Georgia, USA and the United States of America. 
 14.8
Entire Agreement. This Agreement constitutes the entire agreement between Dr. Hill and Dr. Schinazi and Pharmasset with respect to the subject matter hereof and shall not be modified, amended or terminated except as herein provided
or except by another agreement in 

  

 24 

 
writing executed by the parties hereto. In the event of any conflict between the terms hereof and the terms of the Primary License, the terms of the Primary
License shall control. 
 14.9 Severability. All rights and restrictions contained herein may be exercised and shall be applicable and
binding only to the extent that they do not violate any applicable laws and are intended to be limited to the extent that they do not violate any applicable laws and are intended to be limited to the extent necessary so that they will not render
this Agreement illegal, invalid or unenforceable. If any provision or portion of any provision of this Agreement not essential to the commercial purpose of this Agreement shall be held to be illegal, invalid or unenforceable by a court of competent
jurisdiction, it is the intention of the parties that the remaining provisions or portions thereof shall constitute their agreement with respect to the subject matter hereof, and all such remaining provisions or portions thereof shall remain in full
force and effect. To the extent legally permissible, any illegal, invalid or unenforceable provision of this Agreement shall be replaced by a valid provision which will implement the commercial purpose of the illegal, invalid or unenforceable
provision. In the event that any provision essential to the commercial purpose of this Agreement is held to be illegal, invalid or unenforceable and cannot be replaced by a valid provision which will implement the commercial purpose of this
Agreement, this Agreement and the rights granted herein shall terminate. 
 14.10 Force Majeure. Any delays in, or failure of,
performance of any party to this Agreement shall not constitute default hereunder, or give rise to any claim for damages, if and to the extent caused by occurrences beyond the control of the party affected, including, but not limited to, acts of
God, strikes or other work stoppages; civil disturbances, fires, floods, explosions, riots, war, rebellion, sabotage, acts of governmental authority or failure of governmental authority to issue licenses or approvals which may be required.

 ARTICLE 15. NOTICES 
 All notices and other communications shall be hand delivered, sent by private overnight mail service, or sent by registered or certified mail, postage prepaid, return receipt requested, and 

  

 25 

 
addressed to the party to receive such notice or other communication at the address given below, or such other address as may hereafter be designated by
notice in writing: 
  

			
	If to Dr. Hill:	  	Dr. Craig Hill
		  	2941 Cravey Drive, NE
		  	Atlanta, GA 30345, USA
		
	If to Dr. Schinazi:	  	Dr. Raymond Schinazi
		  	1524 Regency Walk Drive
		  	Decatur, GA 30033, USA
		
	If to Pharmasset:	  	Pharmasset
		  	1860 Montreal Road
		  	Tucker, GA 30084, USA

 Any such notice, instruction or communication shall be deemed to have been delivered upon receipt if delivered by
hand, three business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, one business day after it is sent via a reputable nationwide overnight courier service, or when transmitted with electronic
confirmation of receipt, if transmitted by facsimile (if such transmission is on a business day; otherwise, on the next business day following such transmission). 
 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed in their names by their properly and duly authorized officers or representatives as of the date first above written. 
  

															
	 Pharmasset Ltd.
	 		 	 Dr. Craig Hill
	 		 	 Dr. Raymond F. Schinazi

								
	 By: 
	 	 /s/ Martin J.K. Pritchard
	 		 	 By: 
	 	 /s/ Craig Hill
	 		 	 By: 
	 	 /s/ Raymond F. Schinazi

	 Name: 
	 	 Martin J.K. Pritchard
	 		 		 		 		 	 Name: 
	 	  
	 Title: 
	 	 Director
	 		 		 		 		 	 Title: 
	 	  
	 Date: 
	 	 March 1, 1999
	 		 	 Date: 
	 	 March 26, 1999
	 		 	 Date: 
	 	 March 1, 1999

								
	 By: 
	 	 /s/ Raymond F. Schinazi
	 		 		 		 		 		 	
	 Name: 
	 	 Raymond F. Schinazi
	 		 		 		 		 		 	
	 Title: 
	 	 Director
	 		 		 		 		 		 	
	 Date: 
	 	 March 1, 1999
	 		 		 		 		 		 	

  

 26 

 EXHIBIT A 
 LICENSED PATENT RIGHTS 
 Patents 
  

									
	 Title
	  	Filed	    	Serial No.	    	 Patent No.
	  	 Date of issue

	Polyoxometallate compounds as antiviral agents	  	9.22.88	    	247,641	    	Pending	  	
	  	2.5.90	    	474,389	    	Pending	  	
	  	3.1.93	    	08/024,837	    	Pending	  	
	  	10.25.93	    	08/140,885	    	Pending	  	
					
	Organic-derivatised polyoxotungstates	  	10.2.91	    	9120907.2	    	UK Pending	  	
					
	Improvements in chemical compounds	  	8.26.93	    	08/066,007	    	Pending (National)	  	
					
	Methods, compositions, and apparatus for treating and preventing respiratory viral infections	  	9.26.94  
	    	08/312,561  
	    	 Pending
  
	  	
	  	7.7.98	    	09/111,275	    	Pending divisional

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