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STOCK PURCHASE AGREEMENT AND LETTER OF INTENT

Letter of Intent

STOCK PURCHASE AGREEMENT AND LETTER OF INTENT | Document Parties: PHARMASSET INC | SAMCHULLY PHARMACEUTICAL CO., LTD You are currently viewing:
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PHARMASSET INC | SAMCHULLY PHARMACEUTICAL CO., LTD

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Title: STOCK PURCHASE AGREEMENT AND LETTER OF INTENT
Governing Law: Georgia     Date: 5/8/2006

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EXHIBIT 4.10

STOCK PURCHASE AGREEMENT

AND

LETTER OF INTENT

BETWEEN

PHARMASSET, LTD.

AND

SAMCHULLY PHARMACEUTICAL CO., LTD.


STOCK PURCHASE AGREEMENT

AND LETTER OF INTENT

THIS STOCK PURCHASE AGREEMENT (the “Agreement”), effective as of December 11, 1999 (the “Effective Date”), is entered into by and between PHARMASSET, LTD ., a company organized and existing under the laws of Barbados having its principal office at 1795 Peachtree Road N.E., Suite 350, Atlanta, Georgia 30309-2339, U.S.A. and laboratories located at 1860 Montreal Road, Tucker, Georgia 30084, U.S.A.(“Pharmasset”), and SAMCHULLY PHARMACEUTICAL CO., LTD. , a company organized and existing under the laws of Korea having its principal office located at 947-7 Daechi-Dong, Kangnam-Ku, Seoul, 135-735, KOREA (“Samchully”).

BACKGROUND

Whereas, Pharmasset and Samchully recognize the business value and opportunity that can be created through a cooperative relationship; and

Whereas, Pharmasset and Samchully have agreed to explore the scope of a strategic alliance relationship as set forth in Exhibit A to this Agreement (the “Letter of Intent”);

Now, Therefore, in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound, do hereby agree as follows:

ARTICLE I

PURCHASE OF SHARES

1.1 Purchase and Closing . Subject to the terms and conditions hereof, Pharmasset agrees to issue and sell to Samchully, and Samchully hereby agrees to pay Pharmasset a purchase price in the amount of One Million Five Hundred Thousand U.S. Dollars (US$1,500,000)(the “Proceeds”) for the equivalent of Four Hundred Fifty-four Thousand Five Hundred Forty-Five (454,545) whole shares of PHARMASSET Series A Preferred Stock (at US$3.30 per share). Payment for the Shares shall be made within twenty (20) business days following the Effective Date by wire transfer of immediately available funds to:

Barclays Bank PLC, Barbados Offshore Banking Center for the account of Pharmasset LTD, account number 23-104-1532. The SWIFT code or Routing Number is BARCBBBBOBU or CHIPS UID 240280. The full name and address of the bank are: Barclays Bank PLC, Barbados Offshore Banking Center, First Floor, Barclays House, P.O. Box 180, Rendezvous, Christ Church, Barbados; Telephone: 246-431-5294; Fax: 246-429-4785/228-8534. A contact person is Monica Odle (Mrs.), Manager, Offshore Corporate.

Upon receipt of the Proceeds, Pharmasset shall within thirty (30) business days issue and deliver to Samchully a certificate evidencing the Shares.

 

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ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS

2.1 Representations and Warranties of Pharmasset . Pharmasset hereby represents and warrants to Samchully as follows:

(a) Organization and Good Standing . Pharmasset is a corporation duly organized, validly existing and in good standing under the laws of Barbados and has all requisite corporate power and corporate authority to carry on its business as now conducted and as proposed to be conducted.

(b) Capitalization . The capital stock Pharmasset is authorized to issue and the number of outstanding shares are as set forth on Exhibit B attached hereto. Before giving effect to the shares of Series A Preferred Shares of Pharmasset being issued to Samchully hereunder, an aggregate of 3,105,000 shares of Series A Preferred Shares of Pharmasset are issued and outstanding.

(c) Articles of Incorporation and Bylaws . A true and complete copy of Pharmasset’s current Articles of Incorporation and Bylaws (collectively, “Charter Documents”) are attached hereto as Exhibit C .

(d) Valid Issuance of the Shares . The Shares, when issued, sold and delivered in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable and, subject to the warranties and representations contained in Section 2.3, will be issued in compliance with all applicable U.S. and state securities laws.

(e) Litigation . There is no action, suit, proceeding or investigation pending or, to the best of Pharmasset’s knowledge, threatened against Pharmasset.

(f) No Conflict with Other Instruments . Except as set forth on Exhibit D , Pharmasset is not in violation or default of any provisions of Pharmasset’s Articles of Incorporation, Bylaws or other charter decree or contract to which Pharmasset is a party or by which Pharmasset is bound or of any provision of any statute, rule or regulation applicable to Pharmasset. The execution, delivery and performance of this Agreement will not result in any violation of, be in conflict with, or constitute a default under, with or without the passage of time or the giving of notice: (i) any provision of the Charter Documents; (ii) any provision of any judgment, decree or order to which Pharmasset is a party or by which Pharmasset is bound; (iii) any contract, agreement, obligation or commitment to which Pharmasset is a party or by which Pharmasset is bound; or (iv) any statute, rule or regulation applicable to Pharmasset.

(g) Absence of Claims . There are no actions, suits, claims, investigations or legal or administrative proceedings pending or, to the best of Pharmasset’s knowledge and belief, threatened, against Pharmasset, and there are no judgments, decrees or orders of any court, or government department, commission or agency entered or existing against Pharmasset or any of its assets or properties.

 

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(h) No Broker . No finder, broker, agent, financial advisor or other intermediary has acted on behalf of Pharmasset in connection with the offering or sale of the Shares or the negotiation or consummation of this Agreement or any of the transactions contemplated hereby.

(i) Disclosure . Attached hereto as Exhibit E is a copy of the unaudited balance sheet of Pharmasset dated the date set forth therein. Pharmasset has provided to Samchully all of the additional information that Samchully has requested for purposes of making an investment decision to acquire the Shares.

(j) Authorization . Within thirty (30) days after the Effective Date, all corporate action on the part of Pharmasset, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement will have been taken. Pharmasset has the requisite corporate power to enter into this Agreement and carry out and perform its obligations under the terms of this Agreement.

(k) Due Execution . This Agreement has been duly authorized, executed and delivered by Pharmasset and, upon due execution and delivery by Samchully, this Agreement will be a valid and binding agreement of Pharmasset, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles.

(l) Governmental Consents . No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state, local or provincial governmental authority on the part of Pharmasset is required in connection with the consummation of the transactions contemplated by this Agreement, except for notices required or permitted to be filed with certain state and U.S. federal securities commissions.

2.2 Covenants of Pharmasset: Rule 144 Compliance . Pharmasset covenants to Samchully as follows:

With a view to making available the benefits of certain rules and regulations of the U.S. Securities and Exchange Commission (the “Commission”) which may at any time permit the sale of the shares to the public without registration, at all times after ninety (90) days after any registration statement covering a public offering of securities of Pharmasset under the Securities Act of 1933, as amended (the “1933 Act”) shall have become effective (for which there can be no assurance), Pharmasset agrees to use commercially reasonable efforts to: (i) make and keep public information available, as those terms are understood and defined in Rule 144 under the 1933 Act (“Rule 144”); (ii) file with the Commission in a timely manner all reports and other documents required of Pharmasset under the 1933 Act and the Securities Exchange Act of 1934 (the “Exchange Act”); (iii) furnish to Samchully upon request a written statement by Pharmasset as to Pharmasset’s compliance with the reporting requirements of Rule 144 and the Exchange Act, a copy of the most recent annual or quarterly report of

 

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Pharmasset, and such other reports and documents so filed by Pharmasset as such holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such holder to sell any shares without registration; and (iv) satisfy the requirements of all such rules and regulations (including the requirements for current public information, registration under the Exchange Act and timely reporting to the Commission) at the earliest possible date after its first registered public offering.

2.3 Representations and Warranties of Samchully . Samchully hereby represents and warrants to Pharmasset as follows:

(a) Investment Intent . Samchully is purchasing the Shares for Samchully’s own account for investment and not with a view to, or for sale in connection with, any distribution of the Shares or any portion thereof and not with any present intention of selling, offering to sell or otherwise disposing of or distributing the Shares or any portion thereof in any transaction other than a transaction exempt from registration under the 1933 Act.

(b) Information Concerning the Company . Samchully has had an opportunity to discuss with officers and directors of Pharmasset the plans, operations and financial condition of Pharmasset and has received all such information as Samchully has deemed necessary and appropriate to enable Samchully to evaluate the financial risk inherent in making an investment in the Shares.

(c) No Broker . No finder, broker, agent, financial advisor or other intermediary has acted on behalf of Samchully in connection with the offering of the Shares or the negotiation or consummation of this Agreement or any of the transactions contemplated hereby.

(d) Economic Risk. Samchully is able, without impairing its financial condition, to hold the Shares for an indefinite period of time and to suffer a complete loss of Samchully’s investment.

2.4 Acknowledgment of Samchully . Samchully hereby acknowledges to Pharmasset that the Shares have not been registered under the 1933 Act and are characterized as “restricted securities” under the 1933 Act and applicable regulations. Samchully further acknowledges that the Shares have not been registered under the Georgia Securities Act of 1973, as amended, and are being offered and will be issued and sold in reliance upon an exemption afforded thereby.

ARTICLE III

TRANSFERS

3.1 Restrictions on Transfer .

(a) Samchully shall not sell, transfer, assign, pledge, hypothecate or otherwise dispose of any of the Shares unless and until the Shares are disposed of pursuant to and in conformity with an effective registration statement filed with the Commission pursuant to the 1933 Act or a valid exemption therefrom or pursuant to Rule 144.

 

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(b) Notwithstanding anything to the contrary in this Agreement, Samchully may transfer the Shares to an affiliate of Samchully and such transferee shall be deemed an assignee of Samchully under this Agreement; provided that such affiliate has delivered to Pharmasset a written agreement making the representations and acknowledgments set forth in Section 2.3 hereof and agreeing to be bound by the covenants set forth in this Agreement.

3.2 Legend . The certificates representing the Shares may bear the following or similar restrictive legend:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, NOR WILL AN ASSIGNEE OR ENDORSEE HEREOF BE RECOGNIZED AS AN OWNER OF THE SHARES BY THE ISSUER UNLESS (I) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO THE SHARES AND THE TRANSFER SHALL THEN BE IN EFFECT, OR (II) IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER, THE SHARES ARE TRANSFERRED IN A TRANSACTION WHICH IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS.

ARTICLE IV

REGISTRATION RIGHTS

4.1 Certain Definitions . When used in this Article IV of this Agreement, the following terms shall have the following respective meanings:

“Commission” shall mean the U.S. Securities and Exchange Commission or any other federal agency at the time administering the 1933 Act and the Exchange Act.

“Form S-4” and “Form S-8” shall mean Form S-4 and Form S-8, respectively, under the 1933 Act as in effect on the Effective Date, or any substantially similar, equivalent or successor form under the 1933 Act.

“Holder” shall mean Samchully or any transferee of registration rights under Section 4.8 hereof who then holds any outstanding Registrable Securities.

The terms “register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the 1933 Act, and the declaration or ordering of the effectiveness of such registration statement.

 

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“Registrable Securities” means Shares of Pharmasset Series A Preferred Shares issued to Samchully in accordance herewith and any such shares issued to Samchully by reason of any stock split, stock dividend, recapitalization or similar event which have not been sold to the public.

“Registration Expenses” shall mean all expenses incurred by Pharmasset in complying with Section 4.2 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel to Pharmasset, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of Pharmasset which shall be paid in any event by Pharmasset).

“Selling Expenses” shall mean all underwriting discounts and selling commissions applicable to the applicable sale.

4.2 Company Registration .

(a) If, at any time or from time to time, Pharmasset shall determine to register any of its securities, either for its own account or the account of a security holder or holders exercising their respective demand registration rights, other than a registration relating solely to employee benefit plans on Form S-8 or similar forms which may be promulgated in the future or a registration on Form S-4 or similar forms which may be promulgated in the future relating solely to a Commission Rule 145 or similar transaction, Pharmasset will (i) promptly give to each Holder written notice thereof and (ii) include in such registration (and any related qualification under Blue Sky laws or other compliance), and in any underwriting involved therein, all Registrable Securities of such Holders as specified in a written request or requests made within fifteen (15) days after receipt of such written notice from Pharmasset.

(b) If the registration of which Pharmasset gives notice is for a registered public offering involving an underwriting, Pharmasset shall so indicate in the notice given pursuant to Section 4.2(a). In such event the right of any Holder to registration pursuant to this Section 4.2 shall be conditioned upon such Holder’s agreeing to participate in such underwriting and in the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with Pharmasset and the other holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by Pharmasset or by other holders exercising any demand registration rights. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to Pharmasset and the underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration. Notwithstanding any other provision of this Section 4.2, if the underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may exclude some or all of the shares of Registrable Securities from such registration and underwriting; provided, however that there shall first be excluded shares proposed to be included by holders not possessing legal rights to include the same pursuant to this Section 4.2 or any similar provision and further provided the rights granted under this Section 4.2 shall be subject to any superior registration rights granted to third parties.

 

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4.3 (Intentionally left blank)

4.4 Expenses of Registration . All Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Sections 4.2 (exclusive of Selling Expenses and the fees and expenses of any special counsel to the selling Holders) shall be borne by Pharmasset. All Selling Expenses incurred in connection with any registrations hereunder shall be borne by the holders of the securities registered pro rata on the basis of the number of shares registered.

4.5 Registration Procedures . In the case of each registration, qualification or compliance effected by Pharmasset pursuant to this Article IV, Pharmasset will keep each Holder advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof. At its expense Pharmasset will:

(a) Keep such registration, qualification or compliance effective for a period of one hundred twenty (120) days or until the Holder or Holders have completed the distribution described in the registration statement relating thereto, whichever first occurs;

(b) Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the 1933 Act with respect to the disposition of all securities covered by such registration statement;

(c) Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the 1933 Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them;

(d) Use its reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that Pharmasset shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;

(e) In the event of any underwritten public offering, enter into and performs its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and performs its obligations under such an agreement; and

(f) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the 1933 Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

 

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4.6 Indemnification . In the event any Registrable Securities are included in a registration statement under Section 4.2:

(a) To the extent permitted by law, Pharmasset will indemnify each Holder, each of its officers, directors and partners, and each person controlling such Holder within the meaning of Section 15 of the 1933 Act, with respect to which registration, qualification or compliance has been effected pursuant to this Article IV, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the 1933 Act, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by Pharmasset of any rule or regulation promulgated under the 1933 Act applicable to Pharmasset and relating to action or inaction required of Pharmasset in connection with any such registration, qualification or compliance, and will reimburse each such Holder, each of its officers and directors and partners, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action; provided, however, that the indemnity agreement set forth in this Section 4.6(a) shall not apply to amounts paid in settlement of any such claim, loss damage, liability or action if such settlement is effected without the consent of Pharmasset, which consent shall not be unreasonably withheld; provided further that Pharmasset will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to Pharmasset by an instrument duly executed by such Holder or underwriter and stated to be specifically for use therein.

(b) To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify Pharmasset, each of its directors and officers, each underwriter, if any, of Pharmasset’s securities covered by such a registration statement, each person who controls Pharmasset or such underwriter within the meaning of Section 15 of the 1933 Act, and each other such Holder, each of its officers and directors and partners and each person controlling such Holder within the meaning of Section 15 of the 1933 Act, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof) including any of the foregoing incurred in settlement of any litigation commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading, or any violation by Pharmasset of any rule or regulation promulgated under the 1933 Act applicable to Pharmasset in connection with any such registration, qualification, or

 

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compliance, and will reimburse Pharmasset, such Holders, such directors, officers, partners, persons, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigation, preparing or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to Pharmasset by an instrument duly executed by such Holder and stated to be specifically for use therein; provided, however, that the indemnity agreement set forth in this Section 4.6(b) shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonable withheld; provided further, that the obligations of such Holders hereunder shall be limited to an amount equal to the proceeds to each such Holder of Registrable Securities sold as contemplated herein.

(c) Each party entitled to indemnification under this Section 4.6 (the “Indemnified Party” shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnify may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at its own expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 4.6 unless such failure resulted in actual detriment to the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party a release from all liability in respect of such claim or litigation.

(d) If the indemnification provided for in this Section 4.6 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage, or expense referred to therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

 

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(e) The obligations of Pharmasset and Holders under this Section 4.6 shall survive the completion of any offering of Registrable Securities in a registration statement under this Article IV.

4.7 Information by Holder . The Holder or Holders of Registrable Securities included in any registration shall furnish to Pharmasset such information as Pharmasset may request in writing regarding such Holder or Holders and the distribution proposed by such Holder or Holders and as shall be required in connection with any registration, qualification or compliance referred to in this Article IV.

4.8 Transfer of Registration Rights . The rights to cause Pharmasset to register securities granted under Section 4.2 may be assigned or otherwise conveyed to a transferee or assignee of Registrable Securities permitted in accordance with Section 3.1, who shall be considered a “Holder” for purposes of this Article IV, provided that (a) Pharmasset is given written notice by such Holder at the time of or within a reasonable time (but not more than thirty (30) days) after said transfer, stating the name and address of said transferee or assignee and identifying the securities with respect to which such registration rights are being assigned and (b) the transferee acquires at least 50,000 Shares in a private transaction.

4.9 Termination of Registration Rights . The registration rights granted pursuant to this Article IV shall terminate upon the earlier of (i) the third anniversary of the effective date of Pharmasset’s Initial Public Offering (ii) as to any particular Holder, at such time after Pharmasset’s Initial Public Offering as all Registrable Securities held by such Holder can be sold without compliance with the registration requirements of the 1933 Act pursuant to Rule 144 (including Rule 144(k)) promulgated thereunder.

4.10 Suspension of Sales.

(a) If any Registrable Securities are included in a registration statement pursuant to the terms of this Agreement, Holder will not (until further notice) effect sales thereof after receipt of written notice from Pharmasset pursuant to Section 4.10(b) of the occurrence of an event specified therein in order to permit Pharmasset to correct or update the registration statement or prospectus, provided that the obligations of Pharmasset with respect to maintaining any registration statement current and effective shall be extended by a period of days equal to the period said suspension is in effect.

(b) Pharmasset shall notify Holder promptly at any time when a prospectus relating thereto is required to be delivered under the 1933 Act of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and prepare and file promptly with the Commission (but in no event later than five (5) business days following notice of the occurrence of such event to each seller of Registrable Securities) and promptly notify Holders of the filing of, a supplement to such prospectus or an amendment to the registration statement so that, as thereafter

 

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delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made and in the case of an amendment to the registration statement, use reasonable best efforts to cause it to become effective as soon as possible.

ARTICLE V

ADDITIONAL PROVISIONS

5.1 Survival . All agreements, representations and warranties contained herein shall survive the execution and delivery of this Agreement, the sale and purchase of the Shares, and any disposition of the Shares. All statements contained in a certificate or other instrument executed and delivered by Pharmasset or Pharmasset’s duly authorized officers pursuant to this Agreement or in connection with the transactions contemplated hereby shall constitute additional representations and warranties by Pharmasset hereunder.

5.2 Notices . All notices and other communications shall be hand delivered, sent by overnight mail service, or sent by registered or certified mail, postage prepaid, return receipt requested, and addressed to the party at the address given below, or such other address as may hereafter be designated by notice in writing:

If to SAMCHULLY, to:

Samchully Pharmaceutical Co., Ltd.

Attention: Hee Moon Park, Ph.D.

8F Samtan Building

947-7 Daechi-dong

Kangnam-ku

Seoul 135-735, Korea

Facsimile: +82 (2) 561-6006

If to Pharmasset, to:

Executive Director

Pharmasset, Ltd.

1795 Peachtree Road N.E., Suite 350

Atlanta, GA 30309-2339, U.S.A.

Fax: 404-728-7726

with a copy to:

Director, Legal and Financial Affairs

Pharmasset, Inc.

1860 Montreal Road

Tucker, GA 30084, U.S.A.

Fax: 678-395-0030

 

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or to such other names or addresses as Pharmasset or Samchully, as the case may be, shall designate by notice to each other person entitled to receive notices in the manner specified in this Section 5.2. Any such notice, instruction or communication shall be deemed to have been delivered upon receipt if delivered by hand, seven business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, three business days after it is sent via a reputable 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).

5.3 No Waiver . No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.

5.4 Binding Nature of Agreement; Amendments . All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto. This Agreement may not be changed, modified, extended or terminated except by a written amendment executed by an authorized representative of each party.

5.5 Counterparts, Headings and Exhibits . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The headings used in this Agreement are for convenience only and are not to be considered in construing or interpreting any term or provision of this Agreement. All Exhibits hereto are hereby incorporated in this Agreement and made a part hereof.

5.6 Severability . If any provision of this Agreement shall be held to be illegal, invalid or unenforceable, then such illegality, invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render illegal, invalid or unenforceable any other provisions of this Agreement, and this Agreement shall be carried out as if any such illegal, invalid or unenforceable provision were not contained herein.

5.7 Governing Law . This Agreement shall be governed by the laws of the State of Georgia, U.S.A., as such laws are applied to contracts entered into and to be performed within such state and country.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate originals by their proper officers as of the date and year first above written.

 

 

 

 

 

 

 

 

 

 

Pharmasset:

 

 

 

Samchully:

PHARMASSET, LTD.

 

 

 

SAMCHULLY PHARMACEUTICAL CO., LTD.

 

 

 

 

 

By:

 

/s/ Raymond F. Schinazi, Ph.D.

 

 

 

By:

 

/s/ Tae Sung Kim

Name:

 

Raymond F. Schinazi, Ph.D.

 

 

 

Name:

 

Tae Sung Kim

Title:

 

Director

 

 

 

Title:

 

President

 

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By:

 

/s/ Bruno Lucidi

Name:

 

Bruno Lucidi

Title:

 

Director

 

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EXHIBIT A

LETTER OF INTENT

Subject to the execution of the Stock Purchase Agreement with Pharmasset, Ltd., Pharmasset, Ltd. (“Pharmasset”) and Samchully Pharmaceutical Co., Ltd. (“Samchully”) may, upon mutual consent, explore the scope of a strategic alliance relationship. Pharmasset will provide Samchully with information on research items and Samchully will develop the production technology of the corresponding items. Details of this relationship shall be set forth in a separate agreement.

In connection with Pharmasset’s other strategic partners, including Microbiológica Quimica e Farmacéutica Ltda of Brazil, Samchully is well aware of Pharmasset’s third party relationships with its strategic partners, and Samchully is willing to collaborate with Pharmasset’s strategic partners in sales and manufacturing activities.

As consideration for the new business opportunities generated for Samchully by Pharmasset, the parties will determine an appropriate sales commission rate on a case-by-case basis.

 

 

 

 

 

 

 

 

 

 

ACKNOWLEDGED AND AGREED

 

 

 

 

 

 

 

SAMCHULLY PHARM. CO., LTD.

 

 

 

PHARMASSET, LTD.

 

 

 

 

 

By:

 

/s/ Tae Sung Kim

 

 

 

By:

 

/s/ Raymond F. Schinazi

Name:

 

Tae Sung Kim

 

 

 

Name:

 

Raymond F. Schinazi, Ph.D.

Title:

 

President

 

 

 

Title:

 

Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

/s/ Bruno Lucidi

 

 

 

 

 

 

Name:

 

Bruno Lucidi

 

 

 

 

 

 

Title:

 

Director

 

15


EXHIBIT B

Capitalization

 

 

 

 

 

 

 

 

 

 

 

  

# of Shares
Authorized

  

# of Shares Issued
and Outstanding

  

# of Fully Diluted
Shares Outstanding*

  

Maximum Stock Plan
Grants**

Common Shares

  

Unlimited

  

5,842,500(53.2%)

  

5,842,500(50.4%)

  

5,842,500(46.8%)

Series A Preferred

  

Unlimited

  

2,830,000(25.8%)

  

2,830,000(24.4%)

  

2,830,000(22.7%)

Series B Preferred

  

2,300,000

  

2,300,000(21.0%)

  

2,300,000(19.8%)

  

2,300,000(18.4%)

1998 Stock Plan

  

1,500,000

  

 

  

626,000(5.4%)

  

1,500,000(12.1%)

 

  

 

  

 

  

 

  

 

 

  

 

  

10,972,500(100%)

  

11,589,500(100%)

  

12,472,500(100%)

 

*

This column sets forth the number of shares that will be issued and outstanding upon exercise of the stock options that have been granted.

 

**

This column sets forth the number of shares that will be issued and outstanding upon exercise of the maximum number of stock options that currently could be granted under the 1998 Stock Plan (1,500,000 shares).

 

16


EXHIBIT C

Articles of Incorporation and Bylaws


[LOGO]

 

 

 

 

 

 

 

 

 

 

FORM 14

 

 

 

 

 

 

 

COMPANY NO. 15461

COMPANIES ACT OF BARBADOS

CERTIFICATE OF INCORPORATION WITH

RESTATED ARTICLES

PHARMASSET, LTD.

Name of Company

I hereby certify that the Articles of Incorporation of the above-mentioned company were restated under section 205 of the Companies Act as set out in the attached Restated Articles of Incorporation.

 

 

 

/s/

Registrar of Companies

 

 

June 4th, 1999

Date of Restatement


COMPANIES ACT OF BARBADOS

(Section 205)

RESTATED ARTICLES OF INCORPORATION

 

 

 

 

1.      Name of Company:

  

2.      Company No

Pharmasset, Ltd.

  

    15461

 

3.

The classes and any maximum number of shares that the company is authorized to issue.

The annexed Schedule 1 is incorporated in this form.

 

4.

Restrictions if any on share transfers.

There shall be no restrictions on the transfer of Shares

 

5.

Number (or minimum and maximum number) of directors.

There shall be a minimum of 3 and a maximum of 10 directors.

 

6.

Restrictions if any on business the company may carry on.

The company shall not engage in any business other than international business as defined in the international Business Companies Act, 1991-24.

 

7.

Other provisions if any.

The annexed Schedule 2 is incorporated in this form.

The foregoing restated articles of incorporation correctly set out, without substantive change the corresponding provisions of the articles of incorporation as amended and supersede the original articles of incorporation.

 

 

 

 

 

 

8.      Date

 

Signature

  

Title

 

 

 

99-06-04

 

/s/ Sheridan A. Reece

For Corporate Services Limited

  

Secretary

For Ministry use only


Companies Act of Barbados

(Section 205)

RESTATED ARTICLES OF INCORPORATION

 

 

 

 

Name of Company

  

Company No.

 

 

Pharmasset, Ltd.

  

15461

Schedule 1

 

2.

The classes and any maximum number of Shares that the company is authorized to issue.

The company is authorised to issue the following:

 

 

(i)

An unlimited number of Shares designated as Common Shares

 

 

(ii)

An unlimited number of Shares designated as Preferred Shares Series A

 

 

(iii)

2,300,000 Shares designated as Series B Preferred Shares.

The rights, privileges, restrictions and conditions of the Common Shares, Preferred Shares Series A and Series B Preferred Shares are set out in Parts 2, 3 and 4 of this schedule. The Interpretation section with respect to Parts 2, 3 and 4 is contained in Part l of this schedule.

Part 1

Interpretation Section

 

1.1

Affiliate ” or “ Affiliates ” mean, as applied to the Company or any other specified Person, any Person directly or indirectly controlling, controlled by or under direct or indirect common control with the Company (or other specified Person) and shall also include (a) any Person who is a director or officer of the Company (or such other specified Person) or beneficial owner of at least 5% of any class of the then issued equity securities of the Company (or such other specified Person) and Family Members of any such Person, (b) any Person of which the Company (or such other specified Person) or an Affiliate (as defined in clause (a) above) of the Company (or such other specified Person) shall, directly or indirectly, either beneficially own at least 10% of any class of such Person’s then issued equity securities, and (c) in the case of a specified Person who is an individual, any Family Member of such Person.

 

1.2

Articles of Incorporation ” shall mean the Articles of Incorporation of the Company, as amended and/or restated from time to time.

 

1.3

Board ” shall mean the Board of Directors of the Company or any executive committee thereof to the extent such executive committee has the legal authority under Barbados law to act on behalf of the Board of Directors.

 

1.4

Common Shares ” shall mean the Company’s Common Stock.


Companies Act of Barbados

(Section 205)

RESTATED ARTICLES OF INCORPORATION

 

 

 

 

Name of Company

  

Company No.

 

 

Pharmasset, Ltd.

  

15461

Schedule 1 continued

 

1.5

Common Shares Deemed Outstanding ” shall mean, at any given time, the number of Common Shares actually then in issue at such time, plus the number of Common Shares issuable upon conversion of the Series B Preferred Shares, plus the number of Common Shares issuable upon the exercise in full of all Convertible Securities whether or not the Convertible Securities are convertible into Common Shares at such time.

 

1.6

Conversion Date ” shall have the meaning set forth in Paragraph 4.4(a)(ii) hereof.

 

1.7

Conversion Price ” shall have the meaning set forth in Paragraph 4.4(b) hereof.

 

1.8

Convertible Securities ” shall mean securities or obligations that are exercisable for, convertible into or exchangeable for Common Shares. The term includes options, warrants or other rights to subscribe for or purchase Common Shares or to subscribe for or purchase other securities that are convertible into or exchangeable for Common Shares.

 

1.9

Equity Incentive Plan ” means the 1998 Stock Plan, as adopted by the Board of Directors of the Company, pursuant to which 1,500,000 Common Shares are currently authorised to be issued to officers, directors, employees and consultants of the Company or a Subsidiary.

 

1.10

Excluded Securities ” shall mean (i) Common Shares offered to the public pursuant to a Qualified IPO; (ii) up to 1,500,000 Common Shares issuable to officers, directors, employees and consultants of the Company, pursuant to the exercise of options granted or Common Shares directly issued under the Equity Incentive Plan, subject to four (4) year vesting, and such options granted thereunder; (iii) Common Shares issued upon conversion of Preferred Shares; (iv) any Common Shares issued to Emory University pursuant to Section 1.3 of that certain Stock Purchase Agreement dated December 10, 1998 between Emory University and the Company; (v) Common Shares issued in a transaction contemplated by Paragraph 4.4(d) hereof; (vi) up to 1,000,000 Common Shares or Series A Preferred Shares issued in a transaction with a multi-national pharmaceutical company; or its affiliate pursuant to an agreement executed on or before December 31, 1999, provided that such issuance is approved in advance by the Board and the holders of Series B Preferred Shares have been provided sufficient input to ensure that such agreement and the securities to be issued thereunder contain terms and conditions reasonably acceptable to the holders of Series B Preferred Shares and (vii) 430,500 Preferred Shares Series A that have been issued but for which full payment will not be received until July 31, 1999.


Companies Act of Barbados

(Section 205)

RESTATED ARTICLES OF INCORPORATION

 

 

 

 

Name of Company

  

Company No.

 

 

Pharmasset, Ltd.

  

15461

Schedule 1 continued

 

1.11

Family Member ” shall mean, as applied to any individual, such individual’s spouse, child (including a stepchild or an adopted child), grandchild, parent, brother or sister thereof or any spouse of any of the foregoing, and each trust created for the exclusive benefit of one or more of them.

 

1.12

Person ” shall mean an individual, partnership, company, corporation, association, trust, joint venture, unincorporated organisation and any government, governmental department or agency or political subdivision thereof.

 

1.13

Preferred Shares ” shall mean the Series A Preferred Shares and the Series B Preferred Shares.

 

1.14

Preferred Stock ” shall mean the preferred share capital of the Company.

 

1.15

Purchase Price ” shall mean $1.70 per share.

 

1.16

Purchase Agreement ” shall mean that certain Stock Purchase Agreement dated as of June 4th, 1999 among the purchaser(s) named therein and the Company, as it may be amended from time to time.

 

1.17

Qualified IPO ” shall mean a fully underwritten, firm commitment public offering pursuant to an effective registration statement under the United States Securities Act covering the offer and sale by the Company of Common Shares that is consummated on or prior to June 1, 2004 in which the aggregate net proceeds to the Company (after deducting underwriters’ discounts and commissions) equals or exceeds US$20,000,000 and in which the price per Common Share offered to the public equals or exceeds US$8.50 (such price to be equitably adjusted in the event of any share dividend, share split, recapitalisation or other similar event) and the listing of such Common Shares on a nationally recognised U.S. exchange or the Nasdaq Stock Market.

 

1.18

Restricted Action ” shall have the meaning set forth in Paragraph 4.3(a).

 

1.19

Requisite Percentage ” shall mean in excess of 50%.


Companies Act of Barbados

(Section 205)

RESTATED ARTICLES OF INCORPORATION

 

 

 

 

Name of Company

  

Company No.

 

 

Pharmasset, Ltd.

  

15461

Schedule 1 continued

 

1.20

Sale of the Company ” shall mean a single transaction or a series of transactions pursuant to which a Person or Persons acquire (i) share capital of the Company possessing the voting power to elect a majority of the Company’s Board of directors (whether by merger, consolidation or sale or transfer of the Company’s share capital, provided, however, that a Qualified IPO that results in an acquisition of voting power shall not be a Sale of the Company); or (ii) all or substantially all of the Company’s assets determined on a consolidated basis.

 

1.21

Series A Preferred Shares ” shall mean the Company’s Series A Preferred Shares, as in effect on date hereof and shall have the same meaning as “Preferred Shares Series A”.

 

1.22

Series B Preference Amount ” of any Series B Preferred Share means an amount in cash equal to the Purchase Price plus all declared but unpaid dividends on such Series B Preferred Share.

 

1.23

Series B Preferred Shares ” shall mean the Company’s Series B Preferred Shares as in effect on the date hereof.

 

1.24

Stockholders’ Agreement ” shall mean the certain Stockholders’ Agreement dated as of June 4 th , 1999 among certain of the Company’s stockholders and the Company, as it may be amended from time to time.

 

1.25

Subsidiary ” shall mean, with respect to any Person, any company, corporation, partnership, association or other business entity of which (i) if a company or corporation, a majority of the total voting power of Shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons shall be allocated a majority of partnership, association or other business entity gains or losses or shall be or control the managing general partner of such partnership, association or other business entity.


Companies Act of Barbados

(Section 205)

RESTATED ARTICLES OF INCORPORATION

 

 

 

 

Name of Company

  

Company No.

 

 

Pharmasset, Ltd.

  

15461

Schedule 1 continued

 

1.26

Triggering Event ” shall mean any one or more of the following events:

 

 

(i)

the Company’s breach in any material respect of its obligations to the holders of the Series B Preferred Shares under the Articles of Incorporation; or

 

 

(ii)

any material breach by the Company of its obligations under the Purchase Agreement or under the Stockholders’ Agreement;

provided, that in either case the Company has failed to remedy the breach to the satisfaction of the holders of the Requisite Percentage of Series B Preferred Shares within thirty (30) days of its having received written notice of such breach.

Part 2

Common Shares

 

2.1

Dividends

 

 

(i)

Subject to the provisions of paragraph 4.1, the holders of the Common Shares shall in each financial year of the Company be entitled to receive if declared by the Board of Directors out of the monies or other property of the Company properly applicable to the payment of dividends non-cumulative dividends in an amount to be determined by and in the discretion of the Board of Directors of the Company. If in any year the Board of Directors of the Company in its discretion decides to declare a dividend the same amount of dividend must be declared on each outstanding Common Share without preference or distinction. If in any year the Board of Directors in its discretion does not declare any dividend then the rights of the holders of the Common Shares to any dividend for the year shall forever be extinguished.

 

 

(ii)

Subject to the provisions of paragraph 4.1, it shall be in the sole discretion of the Board of Directors of the Company whether in any financial year of the Company any dividend is declared on any class or classes of Shares of the Company and it shall be in the sole discretion of the Board of Directors on which class or classes of Shares if any dividend is declared in a particular financial year of the Company provided that there is compliance with the provisions of paragraph (i) of this Section. For purposes of greater certainty it is hereby stated that a dividend may be paid in money or property or by issuing fully paid Shares of the Company.


Companies Act of Barbados

(Section 205)

RESTATED ARTICLES OF INCORPORATION

 

 

 

 

Name of Company

  

Company No.

 

 

Pharmasset, Ltd.

  

15461

Schedule 1 continued

 

2.2

Voting

 

 

(i)

The holders of Common Shares shall be entitled to 1 vote for each Common Share held by them at all meetings o


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