**Exhibit10.112**CIVIL, SETTLEMENT AGREEMENT I. PARTIES      This Settlement Agreement (“Agreement”) is entered into by and between the United States ofAmerica, acting through the United States Department of Justice and the United States Attorney’sOffice for the Northern District of California, on behalf of the Office of Inspector General(“OIG-HHS”) of the United States Department of Health and Human Services (“HHS”); the United StatesOffice of Personnel Management (“OPM”); the United States Department of Defense TRICARE ManagementActivity (“TMA”); the United States Department of Defense, Defense Logistics Agency (“DLA”), onbehalf of the Defense Supply Center- Philadelphia (“DSCP”) (collectively “the United States”);InterMune, Inc. (“InterMune”), a Delaware corporation with its principal place of business inBrisbane, California; and Joan Gallagher (“Relator”) (hereafter referred to as “the Parties”),through their authorized representatives.II. PREAMBLE      As a preamble to this Agreement, the Parties agree to the following: A. WHEREAS, at all relevant times, InterMune distributed, marketed and soldpharmaceutical products in the United States, including a drug it sold under the tradename Actimmune®;  B. WHEREAS, on or about July 9, 2004, Relator Joan Gallagher filed a qui tamaction in the United States District Court for the Eastern District of Pennsylvania,captioned United States of America ex rel. Joan Gallagher v. InterMune, Inc.,Civil Action No. 04 CV 3249 (E.D. Pa.). On October 7, 2004, the qui tam action wastransferred to the United States District Court for the Northern District of California(“Court”), now captioned United States of America ex rel. Joan Gallagher v.InterMune, Inc., C 04-4323 MHP (N.D. Cal.)(the “Civil Action”);
 

 
 C. WHEREAS InterMune has agreed to enter into a Deferred Prosecution Agreement(“DPA”) with the United States Attorney for the Northern District of California. TheUnited States has filed an Information in the United States District Court for theNorthern District of California (the “Court”) charging InterMune with One Count ofdoing an act, with intent to defraud or mislead, with respect to a drug while the drugwas held for sale after shipment in interstate commerce that results in the drug beingmisbranded, in violation of Title 2 1, United States Code, Section 33 1(k) (the“Information”);  D. WHEREAS, the United States and InterMune will file with the Court the DPA,which states that the Department of Justice will recommend to the Court thatprosecution of InterMune for the conduct charged in the Information be deferred for aperiod of 2 years from the date the Court approves the DPA and that the Department ofJustice will seek dismissal with release of the Information thereafter if InterMune isin compliance with all of its obligations under the DPA;  E. WHEREAS, InterMune has entered into or will be entering into separatesettlement agreements (“Medicaid State Settlement Agreements”) with the states whichwill be receiving settlement funds from InterMune pursuant to Paragraph 1(c) below forthe Covered Conduct described in Paragraph G below (hereinafter referred to as the“Medicaid Participating States”);  F. WHEREAS, the United States and the Medicaid Participating States allege thatInterMune caused to be submitted claims for payment for Actimmune to Medicaid Programs,established pursuant to or in connection with Title XIX of the Social Security Act(“Act”), 42 U.S.C. §§ 1396-1396y (the “Medicaid
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   Program”); and the United States further alleges that InterMune caused to besubmitted claims for payment of Actimmune to the Medicare Program, 42 U.S.C. §§1395-1395hhh, TRICARE Program (formerly known as the Civilian Health and MedicalProgram of the Uniformed Services (“CHAMPUS”)), 10 U.S.C. §§ l071-1110, which isadministered by the Department of Defense through TMA, and to the Federal EmployeesHealth Benefits Program (“FEHBP”), 5 U.S.C. §§ 8901-8914, and that InterMune causedpurchases of Actimmune by the Department of Veterans Affairs (“DVA”) and DSCP;  G. WHEREAS, the United States contends that it has claims under the False ClaimsAct, 31 U.S.C. §§ 3729-3733, and that it and the Medicaid Participating States(hereinafter collectively referred to as the “Government”) have certain other civilclaims against InterMune for allegedly engaging in the following conduct with respectto the marketing, promotion and sale of Actimmune:          (i) The Government contends that between January 1, 2001 and June 30, 2003, InterMuneknowingly and willfully promoted the sale and use of Actimmune for the treatment of idiopathicpulmonary fibrosis (“IPF”), a use for which Actimmune had not been approved by the United StatesFood and Drug Administration (“FDA”), and knowingly caused the submission of claims to theGovernment as described in subparagraph (v) below. Actimmune has only been approved by the FDA totreat two rare diseases, chronic granulomatous disease and severe, malignant osteopetrosis;          (ii) The Government contends that notwithstanding the fact that InterMune’s Phase 111 clinicaltrial of Actimmune for the treatment of IPF failed to establish statistically significant benefitson its primary endpoint or any of its secondary endpoints, including overall
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survival, certain former InterMune employees encouraged InterMune sales force personnel toinform physicians that Actimmune demonstrated a survival benefit in mild to moderate IPF patientpopulations, and certain former sales force personnel did so;          (iii) The Government contends that InterMune’s promotion of Actimmune for IPF violated theFood, Drug, and Cosmetic Act, 21 U.S.C. §§ 331(a) & (d);          (iv) The Government contends that the use of Actimmune for IPF was not a “medically acceptedindication” pursuant to 42 U.S.C. § 1396r-8(k)(6);          (v) The Government further contends that the conduct described in the foregoing subparagraphs(i) through (iv) resulted in claims for Actimmune being submitted to the Medicaid, Medicare, FEHBPand TRICARE Programs, and in DVA and DSCP purchasing Actimmune for dispensing to patients for anunapproved indication, between January 1, 2001 and June 30, 2005, in violation of the False ClaimsAct, 31 U.S.C. §§ 3729-3733.     InterMune’s conduct as described in the Civil Action, the DPA and in Preamble Paragraph G ofthis Agreement is hereafter referred to as the “Covered Conduct.” H. WHEREAS, the United States also contends that it has certain administrativeclaims against InterMune for engaging in the Covered Conduct, as specified inParagraphs 5-8 below;  I. WHEREAS, the United States and the Relator have reached an agreement withrespect to the Relator’s claim of entitlement under 31 U.S.C. § 3730(d) to a share ofthe proceeds of this Agreement;  J. WHEREAS, the Relator and InterMune have reached an agreement with respect tothe Relator’s claim of entitlement under 31 U.S.C. § 3730(d) to attorneys’ fees andcosts;
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 K. WHEREAS, this Agreement is neither an admission of facts or liability byInterMune (with the exception of such admissions as InterMune makes in connection withthe DPA referenced in Paragraph C above and accepted by the Court) nor a concession bythe Government that its claims are not well founded; and  L. WHEREAS, to avoid the delay, expense, inconvenience and uncertainty ofprotracted litigation of these claims, the Parties mutually desire to reach a full andfinal settlement as set forth in this Agreement.III. TERMS AND CONDITIONS      NOW, THEREFORE, in reliance on the representations contained herein and in consideration ofthe mutual promises, covenants, and obligations in this Agreement, and for good and valuableconsideration, receipt of which is hereby acknowledged, the Parties agree as follows:     1. InterMune shall pay to the United States and the Medicaid Participating States,collectively, the sum of thirty-six million, nine hundred forty-four thousand, forty-three dollars($36,944,043), plus any interest that may have accrued between November 1, 2006 and the EffectiveDate of this Agreement at a rate of 5% per annum (“Settlement Amount”). On the Effective Date ofthis Agreement, as defined in paragraph 32 herein, this sum shall constitute a debt due andimmediately owing to the United States and the Participating States. InterMune shall discharge itsdebt to the United States and the Medicaid Participating States under the following terns andconditions:          a. InterMune shall pay to the United States the principal sum of $30,249,229 (the “FederalSettlement Amount”). InterMune shall pay the Federal Settlement Amount, plus
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interest accrued thereon at the rate of 5% per annum, in accordance with the payment scheduleattached hereto as Exhibit A (“Payment Schedule”). Within 10 days after the Effective Date of thisAgreement, InterMune shall pay the United States the initial fixed payment in the amount of$4,093,925 (“Initial Payment”), plus any interest that may have accrued between November 1, 2006and the Effective Date, and thereafter make principal payments with interest according to theschedule in Exhibit A.          b. All payments set forth in this Paragraph l(a) shall be made to the United States byelectronic funds transfer pursuant to written instructions provided by the Office of the UnitedStates Attorney for the Northern District of California. The entire principal balance of theFederal Settlement Amount or any portion thereof, plus any interest accrued on the principal as ofthe date of any prepayment, may be prepaid without penalty.          c. InterMune shall pay to the Medicaid Participating States the sum of $6,694,814 (“MedicaidState Settlement Amount”). InterMune shall pay the Medicaid State Settlement Amount, plus interestaccrued thereon at the rate of 5% per annum, in accordance with the Payment Schedule found atExhibit A. Within 10 days after the Effective Date of this Agreement, InterMune shall set aside$906,075, plus any interest that may have accrued between November 1, 2006 and the Effective Date,into an interest-bearing account of its own choosing (“deposit account”) as agreed upon betweenInterMune and the National Association of Medicaid Fraud Control Units Settlement Team (the “NAMFCUTeam”) and, upon reaching agreements with, and obtaining release from each of the MedicaidParticipating States and receipt of written payment instructions from the NAMFCU Team, shall paythe State Settlement Amount plus any additional interest earned in the deposit account as directedby each settling Medicaid Participating State. Upon reaching final agreements with, and obtainingrelease from
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the Medicaid Participating States, InterMune shall thereafter make fixed pro rata paymentsaccording to the schedule in Exhibit A and as directed by each settling Medicaid ParticipatingState. The entire principal balance of the Medicaid State Settlement Amount or any portionthereof, plus any interest accrued on the principal as of the date of any prepayment, may beprepaid without penalty.          d. InterMune shall pay attorneys’ fees to the Relator in the amount of $40,000. This amountshall be paid as an electronic funds transfer to the Relator’s attorney (to be allocated inaccordance with their instructions) no later than seven (7) business days after the stipulations ofdismissal are filed as set forth in Paragraph 13.     2. If the Court does not accept the DPA as described in Preamble Paragraph D or refuses toimpose the agreed upon disposition for whatever reason, this Agreement shall be null and void atthe option of either the United States or InterMune. If either the United States or InterMuneexercises this option, which option shall be exercised by notifying all Parties, through counsel,in writing within ten (10) business days of the Court’s decision, the Parties will not object tothe voiding of this Agreement and the Agreement will be deemed rescinded. If this Agreement isrescinded, InterMune will not plead, argue or otherwise raise any defenses under the theories ofstatute of limitations, laches, estoppel or similar theories, to any such civil or administrativeclaims, actions or proceedings relating to the Covered Conduct which are brought by the UnitedStates within 90 calendar days of notification to all other Parties of that rescission, except tothe extent such defenses were available before the Effective Date of this Agreement.     3. Subject to the exceptions in Paragraphs 4, 5, 6, 7 and 8, in consideration of theobligations of InterMune set forth in this Agreement, conditioned upon InterMune’s payment in fullof the Settlement Amount, subject to Paragraph 20 below (concerning bankruptcy
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proceedings commenced within 91 days of the Effective Date of this Agreement, as definedbelow), and subject to the Court’s approval of the DPA described in Preamble Paragraph D, theUnited States, on behalf of itself, and its officers, agents, agencies, and departments, as setforth above, hereby fully and finally releases InterMune, its predecessors, subsidiaries, corporateparents and affiliates, successors and assigns, and current or former officers, directors, andemployees, except as excluded in Paragraph 4, below, from any civil or administrative monetaryclaim that the United States has against InterMune under the False Claims Act, 3 1 U.S.C. §§3729-3733; the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-38 12; the Civil MonetaryPenalties Law, 42 U.S.C. § 1320a-7a; any statutory provision applicable to the federally-fundedprograms in this Agreement for which the Civil Division, United States Department of Justice, hasactual and present authority to assert and compromise pursuant to 28 C.F.R. Part 0, Subpart I, §0.45(d); and common law claims for fraud, payment by mistake, unjust enrichment or disgorgement forthe Covered Conduct.     4. Notwithstanding any term of this Agreement, the United States specifically does not hereinrelease any person or entity from any of the following claims or liabilities: (a) any potentialcriminal, civil or administrative claims arising under Title 26, U.S. Code (Internal Revenue Code);(b) any criminal liability; (c) any potential liability to the United States (or any agenciesthereof) for any conduct other than the Covered Conduct; (d) any claims based upon obligationscreated by this Agreement; (e) except as explicitly stated in Paragraphs 5, 6, 7 and 8 of thisAgreement, any administrative liability, including mandatory exclusion from Federal health careprograms; (f) any express or implied warranty claims or other claims for defective or deficientproducts and services; (g) any claims for personal injury or property damage or for otherconsequential damages arising from the Covered Conduct; (h) any claim based on a failure
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to deliver items or services due; or (i) any civil or administrative claims againstindividuals, including current and former directors, officers, and employees of InterMune, itspredecessors, subsidiaries, and its corporate parent and affiliates, who, related to the CoveredConduct, receive written notification that they are the target of a criminal investigation, arecriminally indicted or charged, or are convicted, or who enter into a criminal plea agreement.     5. In consideration of the obligations of InterMune set forth in this Agreement and in theCorporate Integrity Agreement (“CIA”), conditioned upon InterMune’s payment in full of theSettlement Amount, and subject to Paragraph 20 below (concerning bankruptcy proceedings commencedwithin 91 days of the effective date of this Agreement), the OIG-HHS agrees to release and refrainfrom instituting, directing, or maintaining any administrative action seeking exclusion againstInterMune from Medicare, Medicaid or other Federal health care programs (as defined in 42 U.S.C. §1320a-7b(f)) under 42 U.S.C. § 1320a-7a (Civil Monetary Penalties Law), or 42 U.S.C. §§1320a-7(b)(7) (permissive exclusion for fraud, kickbacks, and other prohibited activities), for theCovered Conduct except as reserved in Paragraph 4 above, and as reserved in this Paragraph. TheOIG-HHS expressly reserves all rights to comply with any statutory obligations to exclude InterMunefrom the Medicare, Medicaid, or other Federal health care programs under 42 U.S.C. § 1320a-7(a)(mandatory exclusion) based upon the Covered Conduct. Nothing in this Paragraph precludes theOIG-HHS from taking action against entities or persons, or for conduct and practices, for whichclaims have been reserved in Paragraph 4, above. InterMune will immediately begin implementing itsobligations under the CIA upon execution of this Agreement.     6. In consideration of the obligations of InterMune set forth in this Agreement, conditionedupon InterMune’s full payment of the Settlement Amount, and subject to Paragraph
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20 below (concerning bankruptcy proceedings commenced within 91 days of the effective date ofthis Agreement or any payment under this Agreement), TMA agrees to release and refrain frominstituting, directing, or maintaining any administrative action seeking exclusion or suspensionfrom the TRICARE Program against InterMune and its predecessors, subsidiaries, corporate parents,affiliates, successors and assigns, or its current directors, officers or employees under 32 C.F.R.§ 199.9 for the Covered Conduct, except as reserved in Paragraph 4 above, and as reserved in thisParagraph. TMA expressly reserves its authority to exclude InterMune under 32 C.F.R. § 199.9(f)(l)(i)(A), (f)(l)(i)(B), and (f)(l)(iii), based upon the Covered Conduct. Nothing in thisParagraph precludes TMA or the TRICARE Program from taking action against entities or persons, orfor conduct and practices, for which claims have been reserved in Paragraph 4, above.     7. In consideration of the obligations of InterMune in this Agreement, conditioned uponInterMune’s full payment of the Settlement Amount, and subject to Paragraph 20 below (concerningbankruptcy proceedings commenced within 91 days of the Effective Date of this Agreement or anypayment under this Agreement), OPM agrees to release and refrain from instituting, directing, ormaintaining any administrative action seeking debarment from FEHBP against InterMune and itspredecessors, subsidiaries, corporate parents, affiliates, successors and assigns, or its currentdirectors, officers or employees under 5 U.S.C. § 8902a or 5 C.F.R. Part 970 for the CoveredConduct, except as reserved in Paragraph 4, above. OPM expressly reserves all rights to complywith any statutory obligations to debar InterMune from the FEHBP under 5 U.S.C. § 8902a(b)(mandatory debarment) based upon the Covered Conduct. Nothing in this Paragraph precludes OPM fromtaking action against entities or persons, or for conduct and practices, for which claims have beenreserved in Paragraph 4, above.
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     8. In consideration of the obligations of InterMune set forth in this Agreement, conditionedupon InterMune’s full payment of the Settlement Amount, and subject to Paragraph 20 below(concerning bankruptcy proceedings commenced within 91 days of the effective date of this Agreementor any payment under this Agreement), DSCP/DLA agrees to defer to the OIG-HHS for any contractorintegrity issues arising from this settlement and the Covered Conduct. Nothing in this Paragraphprecludes DLA from taking action against entities or persons, or for conduct and practices, forwhich claims have been reserved in Paragraph 4, above.     9. Relator and her heirs, successors, attorneys, agents, and assigns agree not to object tothis Agreement and agree and confirm that settlement of this Civil Action, and the payment scheduleset forth in Exhibit A, is fair, adequate and reasonable under all the circumstances, agree not tochallenge this Agreement pursuant to 31 U.S.C. § 3730(c)(2)(B), and expressly waive the opportunityfor a hearing on any objection to this Agreement pursuant to 31 U.S.C. § 3730(c)(2)(B).     10. Upon her receipt of the pro rata share of the Initial Payment, the Relator, individually,and for her heirs, successors, agents and assigns, fully and finally releases, waives, and foreverdischarges the United States, its agencies (including, but not limited to, the OIG-HHS, TMA, OPM,DVA, and DLA), employees, servants, and agents from any claims arising from or relating to 31U.S.C. § 3730 from any claims arising from the filing of the qui tam civil action, and from anyother claims for a share of the Federal Settlement Amount, and in full settlement of any claimsRelator may have under this Agreement. This Agreement does not resolve or in any manner affect anyclaims the United States has or may have against the Relator
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arising under Title 26, U.S. Code (Internal Revenue Code), or any claims arising under thisAgreement.     11. The United States agrees to pay the Relator $5,748,160 as her share of the proceedspursuant to 31 U.S.C. § 3730(d)(the “Relator’s Share”). The United States will pay the Relator herpro rata share of each payment that InterMune pays the United States under the Payment Schedule setforth in Exhibit A. The United States will pay the Relator her pro rata share within 21 days ofthe United States’ receipt of each payment from InterMune. The Relator expressly understands andagrees that the United States is only liable to the Relator for funds actually received orcollected by the United States.     12. Conditioned upon InterMune’s full payment of the Settlement Amount, the Relator,individually, and for her heirs, successors, agents and assigns, fully and finally releases,waives, and forever discharges InterMune, its predecessors, subsidiaries, corporate parents andaffiliates, successors and assigns, and current or former officers, directors, and employees, fromany claims that the Relator has or may have that arises under or relates to any of the allegationsin the Civil Action and/or the Covered Conduct, including claims for attorney’s fees, expense andcosts pursuant to 31 U.S.C. § 3730(d). The Relator hereby represents and warrants that no otherindividual is entitled to assert any matter released in this paragraph in or through the Relator’sright.     13. Upon execution of this Agreement by all parties, the United States will file a notice ofintervention in the quitam action and advise the Court that the parties have reached a civilsettlement. Upon receipt of the full payments described in Paragraph l(a) and (c) above and inExhibit A, the United States and Relator shall promptly sign and file in the Civil Action a
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Joint Stipulation of Dismissal with prejudice of the Civil Action pursuant to the terms of theAgreement.     14. In consideration of the obligations of the United States set forth in this Agreement,InterMune and its predecessors, subsidiaries, corporate parents and affiliates fully and finallyrelease the United States, its agencies (including, but not limited to, HHS, TMA, OPM and DVA),employees, servants, and agents from any claims (including attorneys’ fees, costs, and expenses ofevery kind and however denominated) which they have asserted, could have asserted, or may assert inthe future against the United States, its agencies, employees, servants, and agents, related to orarising from the United States’ criminal and civil investigations of the Civil Action and theCovered Conduct.     15. In consideration of the obligations of the Relator set forth in this Agreement, InterMune,and its predecessors, subsidiaries, corporate parents and affiliates, and all of their agents,successors and assigns, hereby fully and finally release the Relator and her respective heirs,successors, assigns, agents and attorneys from any claims they have asserted, could have asserted,or may assert in the future against the Relator arising from the filing of the Civil Action and theUnited States’ criminal and civil investigations of the Civil Action and the Covered Conduct.     16. The Settlement Amount shall not be decreased as a result of the denial of claims forpayment now being withheld from payment by any Federal or State payer, related to the CoveredConduct; and InterMune shall not resubmit to any Federal or State payer any previously deniedclaims related to the Covered Conduct, and shall not appeal any such denials of claims.
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     17. InterMune agrees to the following:          a. Unallowable Costs Defined: that all costs (as defined in the Federal AcquisitionRegulations (FAR) 48 C.F.R. § 31.205-47 and in Titles XVIII and XIX of the Social Security Act, 42U.S.C. §§ 1395-1395hhh and 1396-1396y, and the regulations and official program directivespromulgated thereunder) incurred by or on behalf on InterMune, its present or former officers,directors, employees, shareholders, and agents in connection with: (1) the matters covered by thisAgreement and the related DPA; (2) the United States’ civil and criminal investigation of thematters covered by this Agreement; (3) InterMune’s investigation, defense, and any correctiveactions undertaken in direct response to the United States’ civil and criminal investigations inconnection with the matters covered by this Agreement (including attorneys’ fees); (4) thenegotiation and performance of this Agreement, the DPA, and the Medicaid State SettlementAgreement, (5) the payments made to the United States or any State pursuant to this Agreement, theDPA, or the Medicaid State Settlement Agreement and any payments that InterMune may make toRelator; (6) the negotiation of, and the obligations undertaken pursuant to the CIA, including to(i) retain an independent review organization to perform annual reviews as described in SectionIII.D of the CIA; and (ii) prepare and submit reports to the OIG-HHS, are unallowable costs onGovernment contracts with DVA, DLA and other agencies and under the Medicare Program, MedicaidProgram, TRICARE Program, and FEHBP. However, nothing in this Paragraph affects the status ofcosts that are not allowable based on any other authority applicable to InterMune. (All costsdescribed or set forth in this Paragraph 17(a) are hereafter, “unallowable costs”).          b. Future Treatment of Unallowable Costs: If applicable, these unallowable costs willbe separately estimated and accounted for by InterMune, and it will not charge such
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unallowable costs directly or indirectly to any contracts with the United States or any StateMedicaid Program, or seek payment for such unallowable costs through any cost report, coststatement, information statement, or payment request submitted by them or any of their subsidiariesto Medicare, Medicaid, TRICARE, FEHBP, DLA or DVA.          c. Treatment of Unallowable Costs Previously Submitted for Payment: If applicable,InterMune further agrees that within 90 days of the Effective Date of this Agreement, it willidentify to applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors,and Medicaid, DLA, DVA, and FEHBP fiscal agents, any unallowable costs (as defined in thisParagraph) included in payments previously sought from the United States, or any State MedicaidProgram, including, but not limited to, payments sought in any cost reports, cost statements,information reports, or payment requests already submitted by InterMune or any of its subsidiaries,and will request, and agree, that such cost reports, cost statements, information reports, orpayment requests, even if already settled, be adjusted to account for the effect of the inclusionof the unallowable costs. InterMune agrees that the United States, at a minimum, will be entitledto recoup from InterMune any overpayment plus applicable interest as a result of the inclusion ofsuch unallowable costs on previously-submitted cost reports, information reports, cost statements,or requests for payment. Any payment due after the adjustments have been made shall be paid to theUnited States pursuant to the direction of the Department of Justice, and/or the affected agencies.The United States reserves its rights to disagree with any calculations submitted by InterMune orany of its subsidiaries on the effect of inclusion of unallowable costs (as defined in thisParagraph) on InterMune’s or any of its subsidiaries’ cost reports, cost statements, or informationreports. Nothing in this Agreement shall constitute a
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waiver of the rights of the United States to examine or reexamine the unallowable costsdescribed in this Paragraph.     18. InterMune agrees that it will not seek payment for any of the health care billings coveredby this Agreement from any health care beneficiaries or their parents or sponsors. InterMunewaives any causes of action against these beneficiaries or their parents or sponsors based upon theclaims for payment covered by this Agreement.     19. InterMune expressly warrants that it has reviewed its financial situation and that it iscurrently solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and 548(a)(l)(B)(ii)(I), and expectsto remain solvent following the payments to the United States hereunder. Further, the Partiesexpressly warrant that, in evaluating whether to execute this Agreement, the Parties (a) haveintended that the mutual promises, covenants and obligations set forth herein constitute acontemporaneous exchange for new value given to InterMune, within the meaning of 11 U.S.C. §547(c)(l), and (b) have concluded that these mutual promises, covenants and obligations do, infact, constitute such a contemporaneous exchange.     20. In the event InterMune or any other party commences, within 91 days of the Effective Dateof this Agreement (defined below), or of any payment made hereunder, any case, proceeding, or otheraction under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, (a)seeking to have any order for relief of InterMune’s debts, or seeking to adjudicate InterMune asbankrupt or insolvent, or (b) seeking appointment of a receiver, trustee, custodian or othersimilar official for InterMune for all or any substantial part of its assets, InterMune agrees asfollows:          a. InterMune’s obligations under this Agreement may not be avoided pursuant to 11 U.S.C. § 547or 548, and InterMune will not argue or otherwise take the position
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in any such case, proceeding or action that: (i) InterMune’s obligations under this Agreementmay be avoided under 11 U.S.C. § 547 or 548; (ii) InterMune was insolvent at the time thisAgreement was entered into, or became insolvent as a result of the payment made to the UnitedStates hereunder; or (iii) the mutual promises, covenants and obligations set forth in thisAgreement do not constitute a contemporaneous exchange for new value given to InterMune;          b. In the event that InterMune’s obligations hereunder are avoided for any reason, including,but not limited to, the exercise of a trustee’s avoidance powers under the Bankruptcy Code, theUnited States, at its sole option, may rescind the releases in this Agreement, and bring any civiland/or administrative claim, action or proceeding against InterMune for the claims that wouldotherwise be covered by the releases provided in this Agreement. If the United States chooses todo so, InterMune agrees that, for purposes only of any case, action, or proceeding referenced inthe first clause of this Paragraph, (i) any such claims, actions or proceedings brought by theUnited States (including any proceedings to exclude InterMune from participation in Medicare,Medicaid, or other Federal Health Care programs) are not subject to an “automatic stay” pursuant to11 U.S.C. Section 362(a) as a result of the action, case or proceeding described in the firstclause of this Paragraph, and that InterMune will not argue or otherwise contend that the UnitedStates’ claims, actions or proceedings are subject to an automatic stay; (ii) that InterMune willnot plead, argue or otherwise raise any defenses under the theories of statute of limitations,laches, estoppel or similar theories, to any such civil or administrative claims, actions orproceedings which are brought by the United States within 30 calendar days of written notificationto InterMune that the releases herein have been rescinded pursuant to this Paragraph, except to theextent such defenses were available before the Effective Data of this Agreement; and (iii) theUnited States
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and the Participating States have valid claims against InterMune in at least the aggregateamount of the Settlement Amount and they may pursue their claims, inter alia, in the case, actionor proceeding referenced in the first clause of this Paragraph, as well as in any other case,action, or proceeding; and          c. InterMune acknowledges that its agreement in this Paragraph is provided in exchange forvaluable consideration provided in this Agreement.     21. In the event that InterMune fails to pay any and all of the payments owed pursuant to thisAgreement within 30 calendar days of the due date (“Default”), any dismissals as to InterMuneshall, at the United States’ option, be null and void, and the Settlement Amount referenced inParagraph 1 above, less any payments already made, shall become immediately due and payable andshall bear interest at the Medicare interest rate (per 42 C.F.R. part 405.378) as of the date ofDefault until payment of the Settlement Amount is made in full.     Furthermore, in the event of a breach of the payment provisions as described in the precedingparagraph, the United States may at its option: 1) rescind its releases; 2) offset the remainingunpaid balance of the Settlement Amount from any amounts due and owing to InterMune by anydepartment, agency, or agent of the United States at the time of Default; 3) reinstitute an actionor actions against InterMune in this Court; and 4) InterMune agrees not to contest any draw,offset, or collection action undertaken by the United States pursuant to this Paragraph, eitheradministratively or in any court.     In the event of a Default of any payment under this Agreement, InterMune agrees to pay theUnited States all reasonable costs of collection and enforcement of this Agreement, includingattorneys’ fees and expenses. In the event the United States reinstitutes an action under thisParagraph, InterMune expressly agrees not to plead, argue, or otherwise raise any defense under
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the theories of statute of limitations, laches, estoppel, or similar theories, to any civil oradministrative claims, which: (a) are filed by the United States within 30 calendar days of writtennotification to InterMune that this Agreement has been made a nullity, and (b) relates to theCovered Conduct, except to the extent these defenses were available on September 4, 2006.     22. In the event of Default as defined in Paragraph 21 above, OIG-HHS may exclude InterMunefrom participating in all Federal health care programs until InterMune pays the Settlement Amountand reasonable costs as set forth in Paragraphs 1 and 21 above. OIG- HHS will provide writtennotice of any such exclusion to InterMune. InterMune waives any further notice of the exclusionunder 42 U.S.C. § 1320a-7(b)(7), and agrees not to contest such exclusion either administrativelyor in any state or federal court. Reinstatement to program participation is not automatic. If atthe end of the period of exclusion InterMune wishes to apply for reinstatement, InterMune mustsubmit a written request for reinstatement to the OIG in accordance with the provisions of 42C.F.R. §§ 1001.3001-.3005. InterMune will not be reinstated unless and until the OIG approves suchrequest for reinstatement.     23. InterMune has provided financial statements to the United States and the United States hasrelied on the accuracy and completeness of these financial statements in reaching this Agreement.If the United States learns that the historical financial statements contained in InterMune SECfilings made between May 2005, and the Effective Date, either (a) failed to disclose a materialnon-contingent asset or assets in which InterMune had an interest (a “Material Nondisclosure”); or(b) contained any other knowing, material misrepresentation or omission regarding the financialcondition of InterMune (a “Knowing Material Misrepresentation”), the United States may at itsoption pursue relief under this Paragraph 23 as follows: (a) the United States shall provideInterMune with written notice of the nature of the Material Nondisclosure or
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Knowing Material Misrepresentation; (b) within ten (10) calendar days of the date of thewritten notice, InterMune shall provide the United States, in writing, with any explanation it mayhave regarding the Material Nondisclosure or Knowing Material Misrepresentation referenced in thewritten notice; (c) if unsatisfied with InterMune’s explanation, as determined in its sole andabsolute discretion, the United States may file an action seeking relief under this Paragraph 23 inwhich action the United States shall bear the burden of establishing by a preponderance of theevidence the Material Nondisclosure or Knowing Material Misrepresentation; (d) if the court finds aMaterial Nondisclosure or Knowing Material Misrepresentation, then - (i) the SettlementAmount shall be increased by one hundred percent (100%) of the amount of the Material Nondisclosureor Knowing Material Misrepresentation; (ii) the remaining unpaid principal portion of theSettlement Amount (including the increase specified in subparagraph (d)(i) above) shall becomeaccelerated and immediately due and payable, with interest at a simple rate of 5% from theEffective Date of this Agreement to the date of the court finding, and at the Medicare interestrate (per 42 C.F.R. part 405.378) from the date of the court finding until the date of payment;(iii) the United States may offset the remaining unpaid balance of the Settlement Amount (inclusiveof interest and the increase specified in subparagraph (d)(i) above) from any amounts due and owingto InterMune by any department, agency, or agent of the United States; and (iv) InterMune shallimmediately pay the United States all reasonable costs incurred in the action seeking relief underthis Paragraph 23, including attorney’s fees and expenses.     24. If, after the Effective Date of this agreement and before the company has made allpayments required pursuant to Paragraph 1 of this Agreement, the company obtains a cumulative totalof more than $150,000,000.00 in cash financing from (1) license fees and milestone payments paid tothe company pursuant to partnering agreements, (2) external debt financing,
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and/or (3) external equity financing, the company shall notify the United States and applytwenty percent (20%) of the excess over $150,000,000.00 (“excess cash amount”) to make advancepayments against the Settlement Amount. The company shall make the advance payment(s) first bypaying the outstanding principal owed (plus any interest accrued on that principal through theadvance payment date) in 2011 and shall continue to make such advance payments in reversechronological order until the excess cash amount is reduced to zero. The payment schedulereferenced in Exhibit A shall remain in effect until the balance of the Settlement Amount is paidoff. Cash financing, for purposes of this paragraph, is limited to the sources enumerated in thefirst sentence of this paragraph and shall expressly exclude any increase in operating revenuesafter the Effective Date or reimbursement of research or development expenses from a partner.Advance payments made by the company pursuant to this paragraph shall not exceed $10,000,000.00 inany single calendar year. Further, in the event InterMune is sold (either through an asset sale oran equity sale) or merged into another non-affiliated entity, then all remaining payments owedpursuant to the Settlement Agreement, are accelerated and become immediately due and payable.     In addition to notifying the United States when it has obtained more than $150,000,000 in cashfinancing, InterMune will be required to provide the United States with notice within ten days ofeach financing arrangement or agreement (agreement) it obtains after the Effective Date of thesettlement after the cumulative financing described in the preceding paragraph totals $150,000,000,along with a copy of each such financing agreement. InterMune further agrees that it shall pay theU.S. all amounts required under this provision within 10 days following receipt of externalfinancing which causes a prepayment under this paragraph. Amounts that are due under thisparagraph and not paid when due will be considered amounts in Default. Default
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amounts are subject to the Default provisions (except that Default will be effectiveimmediately and not within 30 days of the due date) contained in this Settlement Agreement asspecified in paragraph 21, including the Default rate of interest at the Medicare interest rate(per 42 C.F.R. part 405.378) beginning as of the date of Default until payment of the SettlementAmount is made in full.     25. InterMune waives and will not assert any defenses it may have to any criminal prosecutionor administrative action relating to the Covered Conduct that may be based in whole or in part on acontention that, under the Double Jeopardy Clause in the Fifth Amendment of the Constitution, orunder the Excessive Fines Clause in the Eighth Amendment of the Constitution, this Agreement bars aremedy sought in such criminal prosecution or administrative action.     26. The Parties each represent that this Agreement is freely and voluntarily entered intowithout any degree of duress or compulsion whatsoever.     27. Except as otherwise stated herein, this Agreement is intended to be for the benefit of theParties only, and by this instrument the Parties do not release any claims against any other personor entity.     28. Nothing in any provision of this Agreement constitutes an agreement by the United States,InterMune or the Relator concerning the characterization of the Settlement Amount or the relator’sshare for purposes of the Internal Revenue Laws, Title 26 of the United States Code.     29. Except as expressly provided in this Agreement, each party to this Agreement will bear itsown legal and other costs incurred in connection with this matter, including the preparation andperformance of this Agreement.
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     30. This Agreement is governed by the laws of the United States. The Parties agree that theUnited States District Court for the Northern District of California shall retain jurisdiction overthis Agreement until all the terms and conditions have been completely satisfied. The Partiesagree that the exclusive jurisdiction and venue for any dispute arising between and among theParties under this Agreement will be the United States District Court for the Northern District ofCalifornia, including any dispute regarding Relator’s share of the settlement, except that disputesarising under the CIA shall be resolved through the dispute resolution provisions set forth in theCIA.     31. The undersigned InterMune signatories represent and warrant that they are authorized bytheir Board of Directors to execute this Agreement. The undersigned signatory or signatories forthe Relator represents and warrants that he is authorized to execute this Agreement on behalf ofthe Relator. The undersigned United States signatories represent that they are signing thisAgreement in their official capacities and they are authorized to execute this Agreement on behalfof the United States through their respective agencies and departments, and, in the case of theOIG-HHS and TMA, on behalf of their respective Departments.     32. This Agreement is effective on the later of (1) the date of signature of the lastsignatory to the Agreement, or (2) the date the Court approves the DPA as described in PreambleParagraph D (the “Effective Date”). Facsimiles of signatures shall constitute acceptable bindingsignatures for purposes of this Agreement.     33. This Agreement shall be binding on all successors, transferees, heirs and assigns of theParties.     34. This Agreement and Exhibit A attached hereto, together with the CIA, and the DPA describedin Preamble Paragraphs C and D, constitute the complete agreement between the
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Parties with regard to the Covered Conduct. This Agreement may not be amended except bywritten consent of all the Parties, except that only InterMune and OIG-HHS must agree in writing toa modification of the CIA, without the consent of any other party to this Agreement or the DPA.     35. InterMune and the Relator hereby consent to the United States’ disclosure of thisAgreement, and information about this Agreement, to the public.     36. This Agreement may be executed in counterparts, each of which shall constitute an originaland all of which shall constitute one and the same Agreement.
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UNITED STATES OF AMERICA     By: /s/ ALEX G. TSE      ALEX G. TSE  Dated:  Assistant United States Attorney    United States Attorney’s Office    Northern District of Columbia       By: /s/ ANDY J. MAO      ANDY J. MAO  Dated:  Trial Attorney    Commercial Litigation Branch    Civil Division    United States Department of Justice       By: /s/ GREGORY E. DEMSKE      GREGORY E. DEMSKE  Dated:  Assistant Inspector General for Legal Affairs    Office of Counsel to the Inspector General    Office of Inspector General    U.S. Department of Health and Human Services       By: /s/ LAUREL C. GILLESPIE      LAUREL C. GILLESPIE  Dated:  Deputy General Counsel    TRICARE Management Activity    United States Department of Defense  
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     By: /s/ KATHLEEN McGETTIGAN      KATHLEEN McGETTIGAN  Dated:  Deputy Associate Director    Center for Retirement & Insurance Services        United States Office of Personnel Management       By: /s/ J. DAVID COPE      J. DAVID COPE  Dated:  Assistant Inspector General for Legal Affairs \    United States Office of Personnel Management  
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     By: /s/ LAUREL C. GILLESPIE      LAUREL C. GILLESPIE  Dated:  Deputy General Counsel    TRICARE Management Activity    United States Department of Defense       By: /s/ SUSAN CHADICK      SUSAN CHADICK  Dated:  Deputy General Counsel    Defense Logistics Agency  
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INTERMUNE, INC.     By: /s/ ROBIN STEELE      Robin Steele, General Counsel  Dated:  InterMune, Inc.       By: /s/ ETHAN M. POSNER      ETHAN M. POSNER  Dated:  Covington & Burling LLP  
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RELATOR     By: /s/ JOAN GALLAGHER      JOAN GALLAGHER  Dated:     By: /s/ JOHN A. BERANBAUM      JOHN A. BERANBAUM  Dated:  Beranbaum Menken Ben-Asher & Biermann LLP  
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EXHIBIT A: PAYMENT SCHEDULETOTAL PAYMENT                 **Year** **Payment** **Interest at 5%** **Principal** **Balance**               36,944,043.50 11/1/2006  5,000,000.00   —   5,000,000.00   31,944,043.50 11/1/2007  5,000,000.00   1,597,202.18   3,402,797.83   28,541,245.68 11/3/2008  6,500,000.00   1,427,062.28   5,072,937.72   23,468,307.96 11/2/2009  7,000,000.00   1,173,415.40   5,826,584.60   17,641,723.36 11/1/2010  9,000,000.00   882,086.17   8,117,913.83   9,523,809.52 11/1/2011  10,000,000.00   476,190.48   9,523,809.52   0.00 Total  42,500,000.00       36,944,043.50     PAYMENT TO THE UNITED STATES                 **Year** **Payment** **Interest at 5%** **Principal** **Balance**               30,249,228.50 11/1/2006  4,093,924.98   —   4,093,924.98   26,155,303.52 11/1/2007  4,093,924.98  $1,307,765   2,786,159.80   23,369,143.72 11/3/2008  5,322,102.47  $1,168,457   4,153,645.29   19,215,498.43 11/2/2009  5,731,494.97  $960,775   4,770,720.05   14,444,778.38 11/1/2010  7,369,064.96  $722,239   6,646,826.04   7,797,952.34 11/1/2011  8,187,849.96  $389,898   7,797,952.34   0.00 Total  34,798,362.32   4,549,133.82   30,249,228.50     PAYMENT TO THE MEDICAID PARTICIPATING STATES                 **Year** **Payment** **Interest at 5%** **Principal** **Balance**               6,694,815.00 11/1/2006  906,075.02   —   906,075.02   5,788,739.98 11/1/2007  906,075.02  $289,437   616,638.02   5,172,101.96 11/3/2008  1,177,897.53  $258,605   919,292.43   4,252,809.53 11/2/2009  1,268,505.03  $212,640   1,055,864.55   3,196,944.97 11/1/2010  1,630,935.04  $159,847   1,471,087.79   1,725,857.18 11/1/2011  1,812,150.04  $86,293   1,725,857.18   0.00 Total  7,701,637.68   1,006,822.68   6,694,815.00     
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