EXHIBIT 10.79


 


WARBURG, PINCUS EQUITY PARTNERS, L.P.


466 Lexington Avenue


New York, NY 10017


 


October 29, 2004


 


InterMune,
Inc.


3280
Bayshore Boulevard


Brisbane,
CA  94005


Attention: Chief Executive Officer


 


Re:  Amended and Restated Standstill Agreement


 


Gentlemen:


 


In connection with the acquisition of Common Stock, par value $0.001
per share (the “Common Stock”), of InterMune, Inc., a Delaware
corporation (the “Company”), by Warburg, Pincus Equity Partners, L.P., a
Delaware limited partnership (“WPEP”), Warburg, Pincus Netherlands
Equity Partners I, C.V., a Netherlands limited partnership (“WPEP I”),
Warburg, Pincus Netherlands Equity Partners II, C.V., a Netherlands limited
partnership (“WPEP II”), Warburg, Pincus Netherlands Equity Partners
III, C.V., a Netherlands limited partnership (“WPEP III” and, together
with WPEP, WPEP I and WPEP II, the “Purchasers”), Warburg Pincus &
Co., a New York general partnership and the sole general partner of each of the
Purchasers (“WP”), and Warburg Pincus LLC, a New York limited liability
company and the sole manager of each of the Purchasers (“WP LLC” and,
collectively, WP LLC, WP and the Purchasers are referred to herein as, the “Purchaser
Group”), the Company and the Purchaser Group entered into a Standstill
Agreement, dated April 28, 2004 (the “Original Standstill Agreement”).  In connection with the Purchaser Group’s
desire to purchase additional shares of Common Stock and the Company’s desire
to influence any disposition of Common Stock held by the Purchaser Group, the
Company and the Purchaser Group hereby amend and restate the Original
Standstill Agreement in its entirety and agree as follows:


 


1.             Standstill.  For a period of three years from the date
hereof (the “Standstill Period”), no member of the Purchaser Group or
any of their respective Affiliates (as defined below) shall, without the prior
written consent of a majority of the independent members of the Board of
Directors of the Company (the “Board”) who are not affiliated with the
Purchaser Group:


 


(a)           in any manner
acquire, agree or seek to acquire, or make any proposal or offer (other than to
a member of the Board or senior management of the Company by means that would
not cause public dissemination thereof) to acquire, whether directly or
indirectly,


 





















 


 


(i)            any material assets of the Company
or


 


(ii)           any Common Stock, voting equity
securities of the Company or any securities convertible or exchangeable into or
exercisable for any such securities (including derivatives), other than
acquisitions that would not, in the aggregate, result in the Purchaser Group
together with their respective Affiliates Beneficially Owning (as defined
herein) more than 25.0% of the Company’s issued and outstanding Common Stock,
as of the date of such acquisition;


 


(b)           propose to any
person (other than to a member of the Board or senior management of the Company
by means that would not cause public dissemination thereof) or effect, seek to
effect or enter into, whether alone or in concert with others, any merger,
consolidation, acquisition, scheme, business combination or other extraordinary
transaction in which the Company or any of its subsidiaries is a constituent
corporation or party (a “Business Combination”);


 


(c)           solicit proxies or
shareholder consents or participate in any such solicitation for any purpose
relating to the election or removal of directors of the Company or a Business
Combination;


 


(d)           form, join,
encourage, influence, advise or participate in a “group” (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) with respect to the voting, ownership or control of
any Common Stock (other than the group consisting of the current members
of the Purchaser Group);


 


(e)           seek to have the
Company waive, amend or modify its Certificate of Incorporation, Bylaws or the
Rights Agreement, dated as of July 17, 2001, between the Company and Mellon
Investor Services LLC (the “Rights Agreement”);


 


(f)            assist, advise or
encourage (including by knowingly providing or arranging financing for that
purpose) any other person in connection with any of the foregoing; or


 


(g)           make, or take any
action (including a request to waive or amend any provision of this agreement)
that would cause the Company to make, a public announcement regarding any
intention of the Purchaser Group or any of their respective Affiliates to take
an action which would be prohibited by any of the foregoing.


 


For purposes of this letter agreement, 
(i) “Affiliates” shall mean (1) any person, corporation,
partnership, trust, limited liability company or other entity, whether existing
now or in the future, that, directly or indirectly, controls, is controlled by
or is under common control with, the Purchaser Group; provided, however,
that no corporation, partnership, trust, limited liability company or other
entity in which a Controlled Fund (as defined below) has made or in the future


 


2





















 


makes an investment shall be considered an Affiliate for purposes of
this letter agreement and/or (2) any fund, whether existing now or in the
future, of which WP is a general partner or WP LLC is a manager (a “Controlled
Fund”) and (ii) “Beneficially Owns” (including the terms “Beneficial
Ownership”, “Beneficially Owned” or “Beneficially Owning”)
shall mean beneficial ownership within the meaning of Rule 13d-3 under the
Exchange Act.


 


2.             No Effect on Directors.  Notwithstanding any of the foregoing, the
provisions set forth in Section 1 shall in no way limit the ability of any
individual who is serving as a director of the Company to take any actions (or
to refrain from taking any actions) in their capacity as directors of the
Company.


 


3.             Waiver of Section 203.  The Company represents and warrants to the
Purchaser Group that the Board has taken all action necessary to render
inapplicable the provisions of Section 203 of the General Corporation Law of
the State of Delaware (“Section 203”) solely as it relates to the
acquisition by the Purchaser Group of Beneficial Ownership of up to 25.0% of the
Company’s issued and outstanding Common Stock (the “Waiver”); provided,
however, such Waiver shall no longer be applicable if, subsequent to
becoming an “interested stockholder” (as defined in Section 203), the Purchaser
Group no longer has Beneficial Ownership of 15% or more of Common Stock as a
result of any sale or disposition of Beneficial Ownership of Common Stock by
the Purchaser Group.


 


4.             Voting Agreement.  In the event the Purchaser Group and their
Affiliates Beneficially Own more than 19.9% of the Common Stock, any shares of
Common Stock Beneficially Owned by the Purchaser Group and their Affiliates in
excess of 19.9% of the Common Stock shall be voted as directed by the Board,
whether at an annual or special meeting of stockholders of the Company, by
written consent or otherwise.  If
requested by the Board, the Purchaser Group shall execute and deliver to the
Company an irrevocable proxy to the foregoing effect.


 


5.             Amendments to Rights Agreement.  The Company represents and warrants to the
Purchaser Group that the Rights Agreement has been duly amended to exclude the
Purchaser Group from the definition of the term “Acquiring Person” as such term
may relate to the acquisition by the Purchaser Group (including by “affiliates”
and “associates”, as such terms are defined in Rule 12b-2 under the Exchange
Act, of the Purchaser Group) of Beneficial Ownership of up to 25.0% of the
Company’s issued and outstanding Common Stock. 
During the Standstill Period, the Company shall not amend or modify the
definition of “Acquiring Person” in the Rights Agreement, if, as a result of
such amendment or modification, the Purchaser Group would be deemed to be an “Acquiring
Person” thereunder.  During the
Standstill Period, the Company shall not adopt a new rights agreement or an
agreement having substantially the same effect of the Rights Agreement if the
Purchaser Group would be considered an “Acquiring Person” (or would have the
same or substantially similar effect of an “Acquiring Person” under the Rights
Agreement).


 


3





















 


6.             Limitation on Sales; Right of
First Offer.


 


(a)           Without the prior
written consent of a majority of the independent members of the Board who are
not affiliated with the Purchaser Group:


 


(i)            the Purchaser Group shall not sell
or cause any shares of Common Stock Beneficially Owned by them to be sold
pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Act”);


 


(ii)           except for sales pursuant to Section
6(b) or distributions in accordance with Section 6(d), all shares of Common
Stock Beneficially Owned by the Purchaser Group shall be sold only through a
registered, underwritten public offerings in accordance with the terms of the
Registration Rights Agreement, dated as of the date hereof, among the
Purchasers, WP and the Company (as the same may be amended from time to time,
the “Registration Rights Agreement”); provided, however,
that, to the extent that the Purchaser Group does not make a request for
registration or the Company does not effect, or take any action to effect, any
registration under the Registration Rights Agreement because the anticipated
aggregate public offering price (before deduction of Selling Expenses (as
defined in the Registration Rights Agreement)) of all Registrable Securities
(as defined in the Registration Rights Agreement) does not equal or exceed
$25,000,000 as set forth in Section 2(a)(i)(2)(C) of the Registration Rights
Agreement, the restrictions in this Section 6(a) shall be suspended;


 


(b)           No sales of Common
Stock Beneficially Owned by the Purchaser Group shall be made pursuant to a
private sale or other exemption from the registration requirements of the Act
without the prior written consent of the Company if, (i) the purchaser of such
shares is a biotechnology or pharmaceutical firm, (ii) such purchaser, or group
of affiliated purchasers, would, after giving effect to such sale, Beneficially
Own more than 5.0% of the Common Stock, or (iii) the purchaser of such shares
has announced an unsolicited tender offer for the Common Stock without the
prior consent of the Company’s Board of Directors.


 


(c)           Prior to any private
sale of the Company’s Common Stock by a member of the Purchaser Group (“Transferor”)
pursuant to Section 6(b) above, such Transferor will notify the Company of its
intent to sell such shares (the “Offered Shares”).  The Company may, within 36 hours after the
receipt of such notice, offer to purchase the Offered Shares (the “Offer”).  The Offer will be in writing and shall
specify the price and other terms and conditions of the Offer.  Until the expiration of such 36 hour period,
the Transferor will not accept, make or solicit any other offers to sell such
shares.


 


(d)           The provisions of
Section 6(a), (b) and (c) shall have no force or effect if, at the time of such
sale, the Purchaser Group and their Affiliates Beneficially Own 5.0% or less of
the Common Stock.


 


(e)           Notwithstanding any
provision of this Section 6 to the contrary, the


 


4





















 


Purchaser Group
shall be permitted to distribute shares of Common Stock Beneficially Owned by
them to their respective general and limited partners without restriction.  To the extent the Purchaser Group decides to
distribute shares of Common Stock to such partners, the Purchaser Group agrees
to use commercially reasonable best efforts to distribute such shares in a
manner designed not to adversely affect the market price of the Company’s
Common Stock.


 


7.             Representations.  Each party represents to the other that: (a) this
letter agreement has been duly authorized by all necessary corporate or
partnership action, as the case may be; and (b) this letter agreement is a
valid and binding agreement of such party, enforceable against it in accordance
with its terms.  The Company represents
that this letter agreement was approved by the vote a majority of the
independent members of the Board who are not affiliated with the Purchaser
Group as set forth in Section 6 of the Original Standstill Agreement.


 


8.             Specific Enforcement; Legal
Effect.  The parties hereto agree
that any breach of this letter agreement would result in irreparable injury to
other party and that money damages would not be an adequate remedy for such
breach.  Accordingly, without prejudice
to the rights and remedies otherwise available under applicable law, either
party shall be entitled to specific performance and equitable relief by way of
injunction or otherwise if the other party breaches or threatens to breach any
of the provisions of this letter agreement. 
It is further understood and agreed that no failure or delay by either
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any right, power or
privilege hereunder.  This letter
agreement contains the entire agreement between the parties hereto concerning
the matters addressed herein; the Original Standstill Agreement is hereby
amended and restated in its entirety and is of no further force and
effect.  No modification of this letter
agreement or waiver of the terms and conditions hereof shall be binding upon
either party hereto, unless approved in writing by each such party; provided,
however, that no waiver or amendment shall be effective as against the
Company unless such waiver or amendment is approved in writing by the vote a
majority of the independent members of the Board who are not affiliated with
the Purchaser Group.  This Agreement
shall be governed by and construed in accordance with the law of the State of
New York without regard to principles of conflicts of law that would cause the
application of the laws of any jurisdiction other than the State of New York.


 


9.             Counterparts.  This letter agreement may be executed in
counterpart (including by facsimile), each of which shall be deemed an
original.


 


[Remainder of page left blank intentionally.]


 


5





















 


If you are in agreement with the terms set forth above, please sign
this letter agreement in the space provided below and return an executed copy
to the undersigned.


 


Very truly yours,


 


	
  WARBURG, PINCUS EQUITY PARTNERS,

  L.P.

  	
  WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V.

  
	
   

  	
   

  
	
  By: Warburg Pincus & Co., its General Partner

  	
  By: Warburg Pincus & Co., its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jonathan Leff

  	
   

  	
  By:

  	
  /s/ Jonathan Leff

  	
   

  
	
  Name:  Jonathan Leff

  	
  Name:  Jonathan Leff

  
	
  Title:  Partner

  	
  Title:  Partner

  
	
   

  	
   

  
	
  WARBURG, PINCUS NETHERLANDS

  EQUITY PARTNERS II, C.V.

  	
  WARBURG PINCUS & CO.

  
	
   

  	
   

  
	
  By: Warburg Pincus & Co., its General Partner

  	
  By:

  	
  /s/ Jonathan Leff

  	
   

  
	
   

  	
  Name:  Jonathan Leff

  
	
   

  	
  Title:  Partner

  
	
  By:

  	
  /s/ Jonathan Leff

  	
   

  	
   

  
	
  Name:  Jonathan Leff

  	
  WARBURG PINCUS LLC

  
	
  Title:  Partner

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan Leff

  	
   

  
	
  WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V.

  	
  Name:  Jonathan Leff

  Title:  Managing Partner

  
	
   

  	
   

  
	
  By: Warburg Pincus & Co., its General Partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jonathan Leff

  	
   

  	
   

  
	
  Name:  Jonathan Leff

  	
   

  
	
  Title:  Partner

  	
   

  



 


 


	
  Confirmed and Agreed:

  	
   

  
	
   

  	
   

  
	
  INTERMUNE, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Daniel Welch

  	
   

  	
   

  
	
   

  	
  Name: Daniel G. Welch

  	
   

  
	
   

  	
  Title: President and Chief Executive Officer

  	
   

  
					



 


6