Document:

exv10w103

 

Exhibit 10.103

CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

ASSET PURCHASE AGREEMENT

by and between

INTERMUNE, INC.

and

TARGANTA THERAPEUTICS CORPORATION

dated as of December 23, 2005

 

 

Table of Contents

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	Article 1. Definitions	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 1.01
	 	Defined Terms
	 	 	1	 
	 

	 	Section 1.02
	 	Construction of Certain Terms and Phrases
	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	Article 2. Purchase and Sale of Assets	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 2.01
	 	Purchase and Sale of Assets
	 	 	1	 
	 

	 	Section 2.02
	 	Transition Services
	 	 	2	 
	 

	 	Section 2.03
	 	Assignability and Consents
	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	Article 3. Assumption of Assumed Liabilities	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	Article 4. Purchase Price and Payment	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.01
	 	Purchase Price
	 	 	2	 
	 

	 	Section 4.02
	 	Purchase of Product Inventory
	 	 	3	 
	 

	 	Section 4.03
	 	Payment of Sales, Use and Other Taxes
	 	 	3	 
	 

	 	Section 4.04
	 	Impact of Failure to Issue Notes or Make Payments Thereunder
	 	 	3	 
	 

	 	Section 4.05
	 	Allocation of Purchase Price
	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	Article 5. Closing	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.01
	 	Time and Place
	 	 	4	 
	 

	 	Section 5.02
	 	Deliveries at Closing
	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	Article 6. Representations and Warranties of Seller	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 6.01
	 	Organization, Etc.
	 	 	6	 
	 

	 	Section 6.02
	 	Authority; Binding Nature
	 	 	6	 
	 

	 	Section 6.03
	 	Non-Contravention; Consents
	 	 	6	 
	 

	 	Section 6.04
	 	Purchased Assets
	 	 	6	 
	 

	 	Section 6.05
	 	Title to Purchased Assets
	 	 	7	 
	 

	 	Section 6.06
	 	Assumed Contracts
	 	 	7	 
	 

	 	Section 6.07
	 	Intellectual Property Rights
	 	 	7	 
	 

	 	Section 6.08
	 	Litigation
	 	 	8	 
	 

	 	Section 6.09
	 	No Debarment; Permits
	 	 	8	 
	 

	 	Section 6.10
	 	Purchased Product Inventory
	 	 	9	 
	 

	 	Section 6.11
	 	Product Data
	 	 	9	 
	 

	 	Section 6.12
	 	Brokers
	 	 	9	 
	 

	 	Section 6.13
	 	No Other Representations
	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	Article 7. Representations and Warranties of Buyer	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 7.01
	 	Organization, Etc.
	 	 	10	 
	 

	 	Section 7.02
	 	Authority; Binding Nature of Agreement
	 	 	10	 

i

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 

	 	Section 7.03
	 	Non-Contravention; Consents
	 	 	10	 
	 

	 	Section 7.04
	 	Litigation
	 	 	10	 
	 

	 	Section 7.05
	 	Brokers
	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	Article 8. Covenants of the Parties	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 8.01
	 	Public Announcements
	 	 	11	 
	 

	 	Section 8.02
	 	Non-Solicitation
	 	 	11	 
	 

	 	Section 8.03
	 	Corporate Names
	 	 	11	 
	 

	 	Section 8.04
	 	Regulatory Matters
	 	 	11	 
	 

	 	Section 8.05
	 	Adverse Experience Reports
	 	 	12	 
	 

	 	Section 8.06
	 	Affiliates
	 	 	12	 
	 

	 	Section 8.07
	 	Access
	 	 	12	 
	 

	 	Section 8.08
	 	Non-Competition
	 	 	13	 
	 

	 	Section 8.09
	 	Use of Proceeds
	 	 	13	 
	 

	 	Section 8.10
	 	Further Assurances
	 	 	13	 
	 

	 	Section 8.11
	 	Diligence
	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	Article 9. Conditions to the Obligations of Seller	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 9.01
	 	Representations, Warranties and Covenants
	 	 	14	 
	 

	 	Section 9.02
	 	No Actions or Proceedings
	 	 	14	 
	 

	 	Section 9.03
	 	Consents
	 	 	14	 
	 

	 	Section 9.04
	 	Buyer Restructuring
	 	 	14	 
	 

	 	Section 9.05
	 	Investor Convertible Notes
	 	 	14	 
	 

	 	Section 9.06
	 	Other Closing Deliveries
	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	Article 10. Conditions to the Obligations of Buyer	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 10.01
	 	Representations, Warranties and Covenants
	 	 	15	 
	 

	 	Section 10.02
	 	No Actions or Proceedings
	 	 	15	 
	 

	 	Section 10.03
	 	Consents
	 	 	15	 
	 

	 	Section 10.04
	 	Lilly Agreement
	 	 	15	 
	 

	 	Section 10.05
	 	Purchased Assets
	 	 	15	 
	 

	 	Section 10.06
	 	Other Closing Deliveries
	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	Article 11. Indemnification	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 11.01
	 	Survival of Representations, Warranties, Etc.
	 	 	16	 
	 

	 	Section 11.02
	 	Indemnification
	 	 	16	 
	 

	 	Section 11.03
	 	Limitations
	 	 	19	 
	 

	 	Section 11.04
	 	Consequential Damages
	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	Article 12. Miscellaneous	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 12.01
	 	Confidentiality
	 	 	20	 
	 

	 	Section 12.02
	 	Notices
	 	 	21	 
	 

	 	Section 12.03
	 	Entire Agreement
	 	 	21	 
	 

	 	Section 12.04
	 	Waiver
	 	 	22	 
	 

	 	Section 12.05
	 	Amendment
	 	 	22	 
	 

	 	Section 12.06
	 	Third Party Beneficiaries
	 	 	22	 

ii

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 

	 	Section 12.07
	 	Assignment; Binding Effect
	 	 	22	 
	 

	 	Section 12.08
	 	Headings
	 	 	22	 
	 

	 	Section 12.09
	 	Severability
	 	 	22	 
	 

	 	Section 12.10
	 	Governing Law; Dispute Resolution
	 	 	22	 
	 

	 	Section 12.11
	 	Expenses
	 	 	23	 
	 

	 	Section 12.12
	 	Counterparts
	 	 	23	 
	 

	 	Section 12.13
	 	Schedules, Exhibits and Other Agreements
	 	 	23	 

iii

 

ASSET PURCHASE AGREEMENT

          This Asset Purchase Agreement (this “Agreement”) is made and entered into as of
December 23, 2005, by and between Targanta Therapeutics Corporation, a Delaware corporation
(“Buyer”), and InterMune, Inc., a Delaware corporation (“Seller”).

RECITAL

          WHEREAS, subject to the terms and conditions of this Agreement, Seller desires to sell to
Buyer, and Buyer desires to purchase from Seller, the Purchased Assets (as defined below).

AGREEMENT

          NOW, THEREFORE, in consideration of the premises and the mutual covenants and promises
contained herein, and for other good and valuable consideration, the receipt and sufficiency of
which hereby are acknowledged, the Parties agree as follows:

Article 1.  Definitions

     Section 1.01 Defined Terms. Certain capitalized terms used in this Agreement are defined in
Exhibit A attached hereto.

     Section 1.02 Construction of Certain Terms and Phrases. Unless the context of this Agreement
otherwise requires: (a) words of any gender include each other gender; (b) words using the
singular or plural number also include the plural or singular number, respectively; (c) the terms
“hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement; (d)
the terms “Article,” “Section” or “Exhibit” refer to the specified Article, Section or Exhibit of
this Agreement; (e) the term “or” has, except where otherwise indicated, the inclusive meaning
represented by the phrase, “and/or”; and (f) the term “including” means “including without
limitation.” Whenever this Agreement refers to a number of days, such number shall refer to
calendar days unless Business Days are specified. All accounting terms used but not otherwise
defined herein shall have the meanings ascribed to such terms under U.S. Generally Accepted
Accounting Principles, consistently applied.

Article 2.  Purchase and Sale of Assets

     Section 2.01 Purchase and Sale of Assets. (a)     Subject to the terms and conditions of this
Agreement, at the Closing, Seller shall sell, transfer, convey, assign and deliver to Buyer, free
and clear of all Encumbrances, and Buyer shall purchase, acquire and accept from Seller, all of
Seller’s right, title and interest, as of the Closing, in and to the Purchased Assets.

          (b)     Notwithstanding anything contained in this Agreement to the contrary, (i) from and
after the Closing, Seller shall retain all of its right, title and interest in and to the Excluded
Assets, and (ii) Seller may retain an archival copy of all Assumed Contracts, Books and Records
(excluding any vendor lists, financial data, written and pending orders relating to the Purchased
Assets and the Business), Product Data and Marketing Materials (subject to Seller’s confidentiality
obligations pursuant to Section 12.01 hereof).

-1-

 

     Section 2.02 Transition Services. At the Closing, the Parties shall enter into the Transition
Services Agreement providing for the services specified therein.

     Section 2.03 Assignability and Consents. Notwithstanding anything to the contrary contained
in this Agreement, if the sale, assignment, transfer, conveyance or delivery or attempted sale,
assignment, transfer, conveyance or delivery to Buyer of any asset that would be a Purchased Asset
is (a) prohibited by any applicable Law or (b) would require any consents, waivers, approvals,
authorizations of or notices to a third Person or Governmental or Regulatory Authority and such
consents, waivers, approvals, authorizations or notices shall not have been obtained prior to the
Closing, then in either case the Closing shall proceed without the sale, assignment, transfer,
conveyance or delivery of such asset and this Agreement shall not constitute an agreement for the
sale, assignment, transfer, conveyance or delivery of such asset; provided that nothing in this
Section 2.03 shall be deemed to waive the rights of Buyer not to consummate the transactions
contemplated by this Agreement if the conditions to its obligations set forth in Article 10 have
not been satisfied. In the event that the Closing proceeds without the sale, assignment, transfer,
conveyance or delivery of any such asset, then following the Closing, the Parties shall use their
commercially reasonable efforts, and cooperate with each other, to obtain promptly such consents,
waivers, approvals, authorizations or notices. Pending such consents, waivers, approvals,
authorizations or notices, the Parties shall cooperate with each other in any mutually agreeable,
reasonable and lawful arrangements designed to provide to Buyer the benefits of use of such asset
and to Seller the benefits, including any indemnities, that, in each case, it would have obtained
had the asset been conveyed to Buyer at the Closing. To the extent that Buyer is provided the
benefits pursuant to this Section 2.03 of any Contract, Buyer shall (x) perform for the benefit of
the other parties thereto the obligations of Seller or any Affiliate of Seller thereunder and (y)
shall satisfy any related Liabilities with respect to such Contract that, but for the lack of an
authorization, approval, consent or waiver to assign such obligations or Liabilities to Buyer,
would be Assumed Liabilities. Once consent, waiver, approval, authorization or notice for the
sale, assignment, transfer, conveyance or delivery of any such asset not sold, assigned,
transferred, conveyed or delivered at the Closing is obtained or given, Seller shall assign,
transfer, convey and deliver such asset to Buyer at no additional cost to Buyer.

Article 3.  Assumption of Assumed Liabilities

     Subject to the terms and conditions of this Agreement, as of the Closing Date, Buyer will
deliver the Assignment and Assumption Agreement to Seller pursuant to which Buyer agrees to assume,
satisfy, perform, pay, discharge and otherwise be responsible for the Assumed Liabilities subject
to and in accordance with their respective terms and conditions. Except with respect to the
Assumed Liabilities, Buyer shall not assume and shall not in any way be responsible for any of the
debts, liabilities, or obligations of Seller.

Article 4.  Purchase Price and Payment

     Section 4.01 Purchase Price. As consideration for the Purchased Assets and the Seller’s full
and faithful performance of all of its obligations hereunder, Buyer shall:

          (a)
pay to Seller at the Closing in cash by wire transfer of immediately available funds a
payment of One Million U.S. Dollars (U.S.$1,000,000);

-2-

 

          (b)
pay to Eli Lilly and Company
at the Closing or on such later date as requested by Eli Lilly and Company in cash by wire transfer
of immediately available funds a payment of One Million U.S. Dollars (U.S.$1,000,000);

          (c)  pay to Seller on December 29, 2006 in cash by wire transfer of immediately available
funds a payment of One Million U.S. Dollars (U.S.$1,000,000);

          (d) issue to Seller at the Closing a convertible note, in the form attached hereto as
Exhibit 4.01(a) (the “Acquisition Note”), (i) in the initial principal amount of
[***] [***] ([***]), with such initial principal amount subject to adjustment as set forth in the
Acquisition Note, (ii) the principal amount of which shall be increased by [***] ([***]) on the
First Milestone, with such principal amount subject to adjustment as set forth in the Acquisition
Note and (iii) the principal amount of which shall be increased by [***] [***] ([***]) on the
Second Milestone, with such principal amount subject to adjustment as set forth in the Acquisition
Note;

          (e) pay to Seller on the First Milestone in cash by wire transfer of immediately available
funds a payment of [***] ([***]);

          (f) pay to Seller on the Third Milestone in cash by wire transfer of immediately available
funds a payment of [***] ([***]) (with the aggregate principal amount of the Acquisition Note plus
the payments made under Sections 4.01(a) and (c), the “Purchase Price”); and

          (g) assume the Assumed Liabilities pursuant to the Assignment and Assumption Agreement.

     Section 4.02 Purchase of Product Inventory. On the Closing Date, Buyer shall take title to
all Product Inventory.

     Section 4.03 Payment of Sales, Use and Other Taxes. Buyer and Seller shall share equally all
sales, use, transfer, value added, documentary and other related Taxes, if any, arising out of the
sale by Seller of the Purchased Assets to Buyer pursuant to this Agreement (excluding Taxes on
Seller’s income) (collectively, the “Transaction Taxes”). Buyer and Seller agree to
cooperate to determine the amount of any Transaction Taxes payable in connection with the transfer
of the Purchased Assets under this Agreement. Buyer and Seller agree to assist each other, to the
extent reasonably necessary and appropriate, in the preparation and filing of any and all required
Tax returns related to Transaction Taxes. Any Transaction Taxes shall be paid by Seller unless
such Transaction Tax is imposed by Law on Buyer. Buyer or Seller, as the case may be, shall
reimburse Seller or Buyer, as the case may be, for its one-half share of any Transaction Taxes
within ten (10) Business Days of receipt of reasonable written evidence of its payment. Buyer
hereby waives compliance by Seller with the provisions of the bulk transfer laws of any state.

     Section 4.04 Impact of Failure to Issue Notes or Make Payments Thereunder. The failure by
Buyer to issue the Acquisition Note pursuant to Section 4.01(a) or to make any payments thereunder
shall constitute an “Event of Default” under the Note Issuance Agreement.

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

-3-

 

     Section 4.05 Allocation of Purchase Price. The Purchase Price shall be allocated among the Purchased Assets in
the manner mutually agreed to by the Parties and set forth on Exhibit 4.05 attached hereto
in accordance with Section 1060 of the Internal Revenue Code of 1986, as amended. Buyer and Seller
agree (i) to report the sale of the Purchased Assets for federal and state Tax purposes in
accordance with the allocations set forth on Exhibit 4.05 and (ii) not to take any position
inconsistent with such allocations on any of their respective Tax returns.

Article 5.  Closing

     Section 5.01 Time and Place. The closing of the transactions contemplated by this Agreement,
including the purchase and sale of the Purchased Assets and the assumption of the Assumed
Liabilities (the “Closing”), shall take place as promptly as practicable, but no later than
five (5) Business Days, following satisfaction or waiver of the conditions set forth in Articles 9
and 10, at the offices of Latham & Watkins LLP, 12636 High Bluff Drive, Suite 400, San Diego, CA
92130 unless another time or place shall be agreed to by the Parties.

     Section 5.02 Deliveries at Closing

          (a) Closing Deliveries by Seller.

          At the Closing, Seller shall deliver or cause to be delivered to Buyer:

               (i) a certified copy of the Certificate of Incorporation of Seller;

               (ii) a certificate, executed by an executive officer of Seller, attaching a certified copy
of the resolutions of the Board of Directors of Seller approving the transactions contemplated
hereby;

               (iii) a Transition Services Agreement, substantially in the form of Exhibit B
hereto (the “Transition Services Agreement”);

               (iv) the Note Issuance Agreement, substantially in the form of Exhibit C hereto;

               (v) an intellectual property assignment, substantially in the form of Exhibit D
hereto, assigning to Buyer all right, title and interest of Seller in the Intellectual Property
(the “Intellectual Property Assignment Agreement”);

               (vi) an assignment and assumption agreement, substantially in the form of Exhibit E
hereto, assigning to Buyer all rights and obligations of Seller and its Affiliates in and to the
Purchased Assets including the Assumed Contracts (the “Assignment and Assumption
Agreement”);

               (vii) a bill of sale, substantially in the form of Exhibit F hereto, transferring the
Purchased Assets to Buyer;

               (viii) the Lilly Agreement, substantially in the form of Exhibit G;

               (ix) copies of all Seller Governmental Consents and Seller Third Party Consents;

-4-

 

               (x) consent from, or required notice to, each relevant Person, in accordance with the relevant
Assumed Contract, to the assignment by Seller to Buyer of any Assumed Contract to which such Person
is a party, which consents or required notices, as the case may be, shall be in forms to be agreed
upon by the Parties; and

               (xi) a certificate, executed by an executive officer of Seller, confirming that the conditions
set forth in Sections 10.01 and 10.02 have been satisfied and other documents to be delivered
pursuant to Article 10 hereof have in fact been delivered.

          (b) Closing Deliveries by Buyer.

          At the Closing, Buyer shall deliver or cause to be delivered to Seller:

               (i) the Acquisition Note in accordance with Section 4.01(a) hereof;

               (ii) the Transition Services Agreement;

               (iii) the Note Issuance Agreement;

               (iv) the Intellectual Property Assignment Agreement;

               (v) the Assignment and Assumption Agreement;

               (vi) such instruments of assumption and other instruments or documents, in form and substance
reasonably acceptable to Seller and Buyer, as may be reasonably necessary to effect Buyer’s
assumption of the Assumed Liabilities in accordance with the terms of this Agreement and the
Assignment and Assumption Agreement;

               (vii) copies of all Buyer Governmental Consents and Buyer Third Party Consents; and

               (viii) the Exchange Agreement;

               (ix) the Support Agreement;

               (x) a certified copy of the Articles of Amendment of Targanta Canada, reflecting the effect of
the Buyer Restructuring;

               (xi) a certified copy of the Certificate of Incorporation of Buyer;

               (xii) copies of the Investor Convertible Notes, executed by Buyer;

               (xiii) a certificate, executed by an executive officer of Buyer, attaching a certified copy of
the resolutions of the Board of Directors of Buyer approving the transactions contemplated hereby;

               (xiv) a certificate, executed by an executive officer of Buyer, attaching a certified copy of
a written consent of the stockholders of Buyer approving the transactions contemplated hereby; and

-5-

 

               (xv) a certificate, executed by an executive officer of Buyer, confirming that the conditions
set forth in Sections 9.01 and 9.02 have been satisfied and other documents to be delivered
pursuant to Article 9 hereof have in fact been delivered.

Article 6.  Representations and Warranties of Seller

     Seller represents and warrants to Buyer as of the date hereof and as of the Closing, subject
to such exceptions as are specifically disclosed in the disclosure schedule referencing the
appropriate Section or Sections hereof as shall be supplied by Seller to Buyer and dated as of the
date hereof (the “Seller Disclosure Schedule”), as follows:

     Section 6.01 Organization, Etc.

          Seller is a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite corporate power and authority (a) to conduct
the Business in the manner in which it is currently being conducted, and (b) to own and use its
assets in the manner in which its assets are currently owned and used.

     Section 6.02 Authority; Binding Nature. Seller has all necessary power and authority and has
taken all actions necessary to enter into this Agreement and the other agreements to be executed
pursuant hereto and to carry out the transactions and perform the obligations contemplated hereby.
Each of this Agreement and the other Transaction Documents has been duly and validly authorized,
executed and delivered by Seller and, when executed and delivered by Buyer, will constitute a
legal, valid and binding obligation of Seller enforceable against it in accordance with their
respective terms except (a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors rights
generally, and (b) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.

     Section 6.03 Non-Contravention; Consents. The execution, delivery and performance of this
Agreement and each of the other Transaction Documents and the sale of the Purchased Assets to Buyer
do not and will not contravene, conflict with or result in a violation of any (a) Laws applicable
to the Purchased Assets, any Assumed Contract or the Business; (b) any provision of an Assumed
Contract; (c) any of the provisions of Seller’s organizational documents or any resolution adopted
by Seller’s Board of Directors (or any committee thereof) or stockholders; or (d) any material
agreement or other material instrument or arrangement to which Seller is subject. No consent,
order, authorization, approval, declaration or filing, including with or from any Governmental or
Regulatory Authority, is required on the part of Seller for or in connection with the execution,
delivery or performance of this Agreement and each of the other Transaction Documents, and the
purchase by Buyer of the Purchased Assets.

     Section 6.04 Purchased Assets. The Purchased Assets collectively constitute all of the
properties, rights, interests and other tangible and intangible assets necessary to enable Buyer,
following the Closing, to continue the clinical development of the Product as Seller has developed
such Product in the past.

-6-

 

     Section 6.05 Title to Purchased Assets. Seller has good and
marketable title to all of the Purchased Assets, including the Product Inventory, free and clear of
all Encumbrances other than Permitted Encumbrances, and Seller has not received any written notice
of any adverse claim asserting ownership of the Purchased Assets. The execution, delivery and
performance by Seller of this Agreement and the sale of the Purchased Assets to Buyer will not
result in the imposition of any Encumbrance on the Purchased Assets.

     Section 6.06 Assumed Contracts.

          (a) Section 6.06 of the Seller Disclosure Schedule sets forth a complete and correct list
of each Contract to which Seller is a party that relates exclusively to, is necessary for or has
been used by Seller in the two years preceding the date of this Agreement to pursue the clinical
development, manufacture, marketing, sale or distribution of the Product with a value in excess of
[***] [***] ([***]) and any other Contract if a default thereunder would reasonably be expected to
have an Adverse Effect.

          (b) (i) Seller is not presently in violation or breach of, and has not declared or
committed any default under and, to the Knowledge of Seller, no Person is presently in violation or
breach of, or has declared or committed any default under, any Assumed Contract, (ii) Seller has
not received any written notice regarding any breach of, or default under, any Assumed Contract,
(iii) to the Knowledge of Seller, no event has occurred, and no circumstance or condition exists
(including the Closing of the transactions contemplated by this Agreement), that would give any
Person the right to cancel, terminate or modify any Assumed Contract and (iv) each Assumed Contract
sets forth the entire agreement and understanding between Seller and the other parties thereto and
is valid, binding and in full force and effect. Seller has made available to Buyer complete and
correct copies of all Assumed Contracts.

     Section 6.07 Intellectual Property Rights. (a) Section 6.07(a) of the Seller Disclosure
Schedule sets forth a complete and correct list of all Registered Intellectual Property and, to the
Knowledge of Seller, all common law trademarks.

          (b) Seller owns all right, title and interest in and to, or has a license, sublicense or
other permission to use, make, sell, have made, distribute, disclose, copy, modify and perform, all
of the Intellectual Property (including the Registered Intellectual Property and other Intellectual
Property set forth on Section 6.07(a) of the Seller Disclosure Schedule), free and clear of all
Encumbrances other than Permitted Encumbrances.

          (c) To the Knowledge of Seller, all documents and instruments necessary to perfect the
rights of Seller in the Patents included in the Intellectual Property have been validly executed,
delivered or filed in a timely manner with the appropriate Governmental or Regulatory Authorities.

          (d) To the Knowledge of Seller, Seller has disclosed trade secrets of Seller included in
the Intellectual Property only to Persons that have executed written confidentiality agreements
governing the use and disclosure of such trade secrets, except to the extent Seller was required to
disclose such information in connection with making filings related to any Purchased Assets with
Governmental or Regulatory Authorities.

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

-7-

 

          (e) To the Knowledge of Seller, the Intellectual
Property constitutes all patents and patent applications, and technology, know-how, information and
other intellectual property rights (i) owned or licensed to Seller relating exclusively to the
Business, manufacture of the Compound or the Product or the use or sale of the Product or (ii) that
are necessary for the conduct of the Business as currently conducted by Seller.

          (f) Section 6.07(f) of the Seller Disclosure Schedule sets forth all material licenses,
sublicenses and other agreements to which Seller is party and pursuant to which Seller is
authorized to use the Intellectual Property. Except as expressly set forth in this Agreement, no
interest in any of the Intellectual Property has been assigned, transferred, licensed or
sublicensed by Seller to any Person, nor has Seller agreed not to assert or to permit the assertion
of any Intellectual Property against any Person. Seller has not executed or granted to any third
party, directly or indirectly, or entered into any agreement for, any license or other right to
make, use, offer to sell, sell or import the Product or the Compound.

          (g) To the Knowledge of Seller, none of the Intellectual Property is or is likely to
become subject to any outstanding and final order, judgment, decree or stipulation from a
Government or Regulatory Authority having jurisdiction over Seller restricting the use thereof by
Seller with respect to the Business or restricting the licensing thereof by Seller to any Person.

          (h) To the Knowledge of Seller, no interference, opposition, reissue, reexamination or
other Action or Proceeding of any nature is or has been pending or threatened in writing in which
the scope, validity or enforceability of any of the Patents within the Intellectual Property is
being, has been or could reasonably be expected to be contested or challenged.

          (i) Seller has not made any claim of any violation or infringement by others of its rights
in the Intellectual Property, and, to the Knowledge of Seller, no grounds for any such claims
exist. Seller has not received any notice nor does it have any Knowledge that it is in conflict
with or infringing upon the asserted rights of others in connection with the Intellectual Property
and, to the Knowledge of Seller, the use of the Intellectual Property by Seller is not infringing
and has not infringed upon any rights of any other Person.

          (j) To the extent any Intellectual Property or any component thereof was created in whole
or in part by or on behalf of Seller, each Person who contributed to the creation of such
Intellectual Property has irrevocably assigned to Seller in writing all intellectual property or
other ownership rights in such Person’s contribution to such Intellectual Property or component
thereof, and such Person has waived all moral rights in such Person’s contribution to such
Intellectual Property or component thereof.

     Section 6.08 Litigation. There are no pending Actions or Proceedings, and to the Knowledge of
Seller, no Person has threatened in writing to commence any Action or Proceeding, (a) that involves
the Purchased Assets; or (b) that challenges, or that may have the effect of preventing, delaying,
making illegal or otherwise interfering with, the transactions contemplated by this Agreement.
There are, and there have been, no claims made in writing against Seller alleging any material
defects in the Product, the Compound or the Product Inventory or alleging any failure of the
Product, the Compound or the Product Inventory to meet specifications.

     Section 6.09 No Debarment; Permits.

          (a) Section 6.09 of the Seller Disclosure Schedule contains a complete and accurate list
of each Regulatory Filing and material license, franchise, permit or other similar authorization
necessary to conduct the Business as currently conducted, together with the name of the
Governmental or Regulatory Authority issuing such license or permit (the “Permits”) made or
held by Seller. Each such

-8-

 

Permit is valid and in full force and effect, except as would not
reasonably be expected to have an Adverse Effect. To the Knowledge of Seller, no event has
occurred, and Seller has not received any notice in writing from any Governmental or Regulatory
Authority or otherwise of the occurrence of any event, that will constitute a violation of or a
failure to comply with any term or requirement of any such Permit, or result in the revocation,
withdrawal, suspension, cancellation, or termination of any such Permit, except as would not
reasonably be expected to have an Adverse Effect.

          (b) (i) Seller has furnished Buyer with access to a complete copy of the IND, (ii) Seller
is and was, at all times prior to the Closing Date, the lawful holder of all rights under the
Regulatory Filings, (iii) Seller has complied in all material respects with applicable Laws
relating to the Regulatory Filings, and with regard to actions taken directly by Seller, the
Compound and the Product, (iv) the Regulatory Filings have been accepted by, and nothing has come
to Seller’s attention that has, or reasonably should have, led Seller to believe that the
Regulatory Filings are not in good standing with relevant regulatory authorities, (v) Seller has
filed with the relevant Governmental or Regulatory Authorities all required notices, supplemental
applications and annual or other reports, including adverse experience reports, with respect to the
Regulatory Filings, and (vi) to the Knowledge of Seller, there is no pending or overtly threatened
action by any relevant Government or Regulatory Authority that would reasonably be expected to have
an Adverse Effect.

          (c) Seller represents and warrants that Seller is not debarred and has not used in any
capacity relating to the Purchased Assets the services of any Person debarred under subsections
306(a) or (b) of the Generic Drug Enforcement Act of 1992.

     Section 6.10 Purchased Product Inventory.

          (a) Section 6.10 of the Seller Disclosure Schedule lists (i) the lot numbers associated
with the Product Inventory and (ii) the manufacturing, warehousing, distribution and consignee
locations where the Product Inventory is located. Seller represents and warrants that the Product
Inventory manufactured by or for Seller that will be provided to Buyer hereunder was manufactured,
packaged and stored in compliance with all relevant, applicable Laws, including those governing
clinical biopharmaceutical supplies.

          (b) The Product Inventory represents all raw materials, Compound and finished goods
directly related to the Product that is currently owned and on hand or in the control of Seller at
any of its warehouses, blenders, toll manufacturers, suppliers, or other third parties.

     Section 6.11 Product Data. Seller represents and warrants that the Product Data are true and
complete in all material respects. Seller is transferring to Buyer, as part of the Product Data,
all of the manufacturing information in Seller’s tangible possession as of the Closing that was
necessary for, and/or used by Seller or any of Seller’s Affiliates in, the development and/or
manufacture of the Compound or the Product by Seller or any such Affiliate.

     Section 6.12 Brokers. Seller has not retained any broker in connection with the transactions
contemplated hereunder. Buyer has no, and will have no, obligation to pay any brokers, finders,
investment bankers, financial advisors or similar fees in connection with this Agreement or the
transactions contemplated hereby by reason of any action taken by or on behalf of Seller.

     Section 6.13 No Other Representations.

          EXCEPT AS SET FORTH IN THIS AGREEMENT, SELLER IS SELLING THE PURCHASED ASSETS (INCLUDING, BUT
NOT LIMITED TO, THE PRODUCT INVENTORY) “AS

-9-

 

IS.” SELLER MAKES NO REPRESENTATION OR WARRANTY OTHER
THAN AS SET FORTH IN THIS AGREEMENT AS TO THE PRODUCT, THE PURCHASED ASSETS (INCLUDING, BUT NOT
LIMITED TO, THE PRODUCT INVENTORY) OR THE BUSINESS, WHETHER EXPRESS OR IMPLIED, INCLUDING
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR INFRINGEMENT OF THIRD PARTY
RIGHTS, AND ALL SUCH WARRANTIES ARE EXPRESSLY DISCLAIMED. NOTWITHSTANDING THE GENERALITY OF THE
FOREGOING, EXCEPT AS SET FORTH IN THIS AGREEMENT, SELLER WILL NOT AND DOES NOT WARRANT THAT OWNERS
OF OTHER PRODUCTS THAT ARE SUBSTANTIALLY SIMILAR TO OR IDENTICAL WITH THE PRODUCT WILL NOT ATTEMPT
TO REGISTER AND SELL SUCH OTHER PRODUCTS AND SELLER MAKES NO REPRESENTATION OF WARRANTY AS TO THE
PROSPECTS, FINANCIAL OR OTHERWISE, OF CONDUCTING THE BUSINESS OR MARKETING THE PRODUCT.

Article 7.  Representations and Warranties of Buyer

          Buyer represents and warrants to Seller as of the date hereof and as of the Closing, subject
to such exceptions as are specifically disclosed in the disclosure schedule referencing the
appropriate Sections hereof supplied by Buyer to Seller and dated as of the date hereof (the
“Buyer Disclosure Schedule”), as follows:

     Section 7.01 Organization, Etc.

     Buyer is a corporation duly incorporated, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite corporate power and authority (a) to conduct its
business in the manner in which it is currently being conducted, and (b) to own and use its assets
in the manner in which its assets are currently owned and used.

     Section 7.02 Authority; Binding Nature of Agreement. Buyer has all necessary power and
authority and has taken all actions necessary to enter into this Agreement and the other agreements
to be executed pursuant hereto and to carry out the transactions and perform the obligations
contemplated hereby. Each of this Agreement and the other Transaction Documents has been duly and
validly authorized, executed and delivered by Buyer and, when executed and delivered by Seller,
will constitute a legal, valid and binding obligation of Buyer enforceable against it in accordance
with their respective terms except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of creditors
rights generally, and (b) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.

     Section 7.03 Non-Contravention; Consents. The execution, delivery and performance of this
Agreement and each of the other Transaction Documents and the purchase of the Purchased Assets by
Buyer do not and will not contravene, conflict with or result in a violation of any (a) Laws to
which Buyer or any of the assets owned or used by Buyer is subject, (b) any of the provisions of
Buyer’s organizational documents or any resolution adopted by Buyer’s Board of Directors (or any
committee thereof) or stockholders or (c) any material agreement or other instrument or arrangement
to which Buyer is subject. No consent, order, authorization, approval, declaration or filing,
including with or to any Governmental or Regulatory Authority, is required on the part of Buyer for
or in connection with the execution, delivery or performance of this Agreement and each of the
other Transaction Documents, and the purchase by Buyer of the Purchased Assets.

     Section 7.04 Litigation. There are no pending Actions or Proceedings, and to the Knowledge of
Buyer, no Person has threatened to commence any Action or Proceeding, (a) that involves Buyer and
that might reasonably be expected to have an Adverse Effect; or (b) that challenges, or that may
have the

-10-

 

 effect of preventing, delaying, making illegal or otherwise interfering with, the
transactions contemplated by this Agreement.

     Section 7.05 Brokers. Buyer has not retained any broker in connection with the transactions
contemplated hereunder. Seller has no, and will have no, obligation to pay any brokers, finders,
investment bankers, financial advisors or similar fees in connection with this Agreement or the
transactions contemplated hereby by reason of any action taken by or on behalf of Buyer.

Article 8.  Covenants of the Parties

     Section 8.01 Public Announcements. Neither Seller, Buyer nor any of their respective
Affiliates shall issue any press release or make any public announcement with respect to this
Agreement and the transactions contemplated hereby without obtaining the prior written consent of
the other Party, which consent shall not be unreasonably withheld, except as may be required by
applicable Law upon the advice of counsel and only if the disclosing Party provides the
non-disclosing Party with an opportunity to first review the release or other public announcement.
Following the Closing, Buyer shall be entitled to make such public announcements as it deems
appropriate related to the Product and the Compound; provided, that, without Seller’s prior written
consent, no such announcement shall contain any reference to Seller or actions taken with respect
to the Product or Compound prior to the Closing Date.

     Section 8.02
 Non-Solicitation. (a) Without the prior written consent of Seller, for a
period commencing on the date hereof and expiring on the [***] of the Closing
Date, Buyer shall not, and shall cause its Affiliates to not, directly or indirectly, induce,
encourage or solicit any of Seller’s officers or employees who worked in the Business on the
Closing Date or who have carried out or participated in the transactions contemplated by this
Agreement on behalf of Seller to leave such employment.

          (b) Without the prior written consent of Buyer, for a period commencing on the date hereof
and expiring on the second (2nd) anniversary of the Closing Date, Seller shall not, and shall cause
its Affiliates to not, directly or indirectly, induce, encourage or solicit any of Buyer’s officers
or employees who have carried out or participated in the transactions contemplated by this
Agreement on behalf of Buyer to leave such employment.

          (c) Notwithstanding the foregoing, this Section 8.02 shall not be applicable to, nor
prohibit, general solicitations of employment not specifically targeted at employees of Seller or
Buyer or any of their Affiliates.

     Section 8.03 Corporate Names. (a)     Following the Closing, Buyer shall not have any rights
by virtue of this Agreement or any of the transactions or agreements contemplated hereby to any
names, trademarks, trade names, trade dress or logos relating to Seller or any of the Affiliates of
Seller or any of their products other than those included in the Purchased Assets.

          (b) Following the Closing, Seller shall not have any right to use any names, trademarks,
trade names, trade dress or logos included within the Purchased Assets.

     Section 8.04 Regulatory Matters. (a)     Buyer and Seller shall use their commercially
reasonable efforts to complete the transfer of each Regulatory Filing, at Buyer’s sole cost and
expense, as promptly as possible after the Closing.

          (b) From and after the Closing, Buyer, at its sole cost and expense, shall be solely
responsible and liable for taking all actions, paying all fees and conducting all communication
with the

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

-11-

 

appropriate Governmental or Regulatory Authority required by Law in respect of such
Regulatory Filing, including preparing and filing all reports (including adverse drug experience
reports) with the appropriate Governmental or Regulatory Authority.

     Section 8.05 Adverse Experience Reports. After the Closing, Seller shall promptly submit to
Buyer all adverse drug experience information brought to the attention of Seller in respect of the
Compound or the Product, as well as any material events and matters concerning or affecting the
safety or efficacy of the Compound or the Product, each as they relate to activities of Seller
prior to the Closing. After the Closing, Buyer shall have all responsibility for required
reporting of adverse experiences for the Compound and the Product, but such reporting shall not
limit Seller’s obligation for any actions necessary with respect to Products distributed prior to
the Closing based upon the facts and circumstances contained in such adverse drug experience
information.

     Section 8.06 Affiliates. Each Party hereto shall cause its respective Affiliates to comply
with the terms of this Agreement.

     Section 8.07 Access. Following the Closing and for a period of not less than five (5) years,
Seller will maintain and grant Buyer and its legal, accounting and other advisors access,
upon reasonable notice and during normal business hours, to any corporate records, books of
account, Tax records, contracts and other documents of Seller that are related to the
Business as are reasonably required for Buyer to complete any required Tax filings with any
Governmental or Regulatory Authority.

-12-

 

     Section 8.08 Non-Competition.

          Seller will not, for a period of two (2) years following the Closing Date, directly or
indirectly, individually or as a partner or other owner or participant in any business entity or
joint venture, engage in [***].

     Section 8.09 Use of Proceeds.  Buyer shall use its, and shall cause Targanta Canada
and Targanta Ontario to use their, commercially reasonable efforts to use the net proceeds from the
issuance of the Investor Convertible Notes in accordance with the budget set forth in Exhibit
8.09 hereto (the “Budget”). Notwithstanding the foregoing, not less than [***] ([***])
of such net proceeds shall be used for the development of the Product and Business, including
hiring team members for the development of the Business and commencing the preparation of an NDA
submission related to the Product.

     Section 8.10 Further Assurances.

          (a) Following the Closing, Seller and Buyer each agree to execute and deliver such other
documents, certificates, agreements and other writings and to take such other actions as may be
necessary or desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement and to vest in Buyer good and marketable title to the Purchased
Assets.

          (b) Seller hereby constitutes and appoints, effective as of the Closing Date, Buyer and
its successors and assigns as the true and lawful attorney of Seller with full power of
substitution in the name of Buyer or in the name of Seller, but for the benefit of Buyer (i) to
collect for the account of Buyer any items of Purchased Assets and (ii) to institute and prosecute
all proceedings that Buyer may in its sole discretion deem proper in order to assert or enforce any
right, title or interest in, to or under the Purchased Assets, and to defend or compromise any and
all actions, suits or proceedings arising after the Closing in respect of the Purchased Assets.
Buyer shall be entitled to retain for its account any amounts collected pursuant to the foregoing
powers, including any amounts payable as interest in respect thereof.

     Section 8.11 Diligence. After the Closing Date, Buyer shall devote commercially reasonable efforts
to develop the Product in accordance with the Development Plan, including those activities designed
to reach the First Milestone and Second Milestone, and shall give Seller written updates as to its
progress in such efforts within ten (10) days after Seller’s written request thereof. If Seller
believes that Buyer is not devoting commercially reasonable efforts to develop the Product in
accordance with the Development Plan, Seller shall so notify Buyer in writing, such notice to
include Seller’s specific concerns and

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

-13-

 

recommendations. Within fifteen (15) days after
receipt of such notice from Seller, appropriate individuals from Buyer and Seller shall meet to
discuss Seller’s concerns and recommendations, such agreed upon concerns and recommendations to
become part of the Development Plan.

Article 9.  Conditions to the Obligations of Seller

     The obligation of Seller to effect the transactions contemplated hereby is subject to the
satisfaction (or waiver by Seller), at or before the Closing, of each of the following conditions:

     Section 9.01 Representations, Warranties and Covenants. All representations and warranties of
Buyer contained in this Agreement shall be true and correct in all material respects on and as of
the Closing Date as though given on and as of such date, and Buyer shall have performed all
agreements and covenants required by this Agreement to be performed by it prior to or on the
Closing Date, and Seller shall have received a certificate to such effect dated the Closing Date
and executed by a duly authorized officer of Buyer.

     Section 9.02 No Actions or Proceedings. No Actions or Proceedings that question the validity
or legality or that seek to enjoin, alter or delay the consummation of the transactions
contemplated hereby shall have been instituted or threatened and not settled or otherwise
terminated.

     Section 9.03 Consents. All Seller Governmental Consents, Seller Third Party Consents, Buyer
Governmental Consents and Buyer Third Party Consents shall have been obtained or made, as the case
may be.

     Section 9.04 Buyer Restructuring. Buyer shall have delivered to Seller evidence of the
completion of the Buyer Restructuring, including, but not limited to:

          (a) A copy of the Exchange Agreement executed by all parties thereto;

          (b) A copy of the Support Agreement executed by all parties thereto;

          (c) A certified copy of the Articles of Amendment of Targanta Canada, reflecting the
effect of the Buyer Restructuring; and

          (d) A certified copy of the Certificate of Incorporation of Buyer, reflecting the effect
of the Buyer Restructuring.

     Section 9.05 Investor Convertible Notes. Buyer shall have delivered to Seller evidence of (a)
the issuance of the Investor Convertible Notes and (b) the receipt by Buyer of no less than [***]
([***] [***]) in consideration of the issuance thereof, including copies of the fully executed
Investor Convertible Notes.

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

-14-

 

     Section 9.06 Other Closing Deliveries. Buyer shall have delivered to Seller:

          (a) a certificate, executed by an executive officer of Buyer, attaching a certified copy
of the resolutions of the Board of Directors of Buyer approving the transactions contemplated
hereby;

          (b) a certificate, executed by an executive officer of Buyer, attaching a certified copy
of a written consent of the stockholders of Buyer approving the transactions contemplated hereby;

          (c) a certificate, executed by an executive officer of Buyer, confirming that, to the
actual knowledge of such executive officer, the conditions set forth in Sections 9.01 and 9.02 have
been satisfied, and any such other certificates and documents customary in transactions similar to
those contemplated hereby that are reasonably requested by Seller; and

          (d) all other certificates, documents and agreements required to be delivered by Buyer to
Seller pursuant to Section 5.02(b).

Article 10.  Conditions to the Obligations of Buyer

          The obligation of Buyer to effect the transactions contemplated hereby is subject to the
satisfaction (or waiver by Buyer), at or before the Closing, of each of the following conditions:

     Section 10.01 Representations, Warranties and Covenants. All representations and warranties
of Seller contained in this Agreement shall be true and correct in all material respects on and as
of the Closing Date as though given on and as of such date, and Seller shall have performed all
agreements and covenants required by this Agreement to be performed by it prior to or on the
Closing Date, and Buyer shall have received a certificate to such effect dated the Closing Date and
executed by a duly authorized officer of Seller.

     Section 10.02 No Actions or Proceedings. No Actions or Proceedings that question the validity
or legality or that seek to enjoin, alter or delay the consummation of the transactions
contemplated hereby shall have been instituted or threatened and not settled or otherwise
terminated.

     Section 10.03 Consents. All Seller Governmental Consents, Seller Third Party Consents, Buyer
Governmental Consents and Buyer Third Party Consents shall have been obtained or made, as the case
may be.

     Section 10.04 Lilly Agreement. Seller shall have assigned to Buyer the Lilly Agreement
pursuant to the Assignment and Assumption Agreement.

     Section 10.05 Purchased Assets. Seller shall have delivered or shall, at the Closing deliver,
the Purchased Assets to Buyer.

-15-

 

     Section 10.06 Other Closing Deliveries. Seller shall have
delivered to Buyer a certificate, executed by an executive officer of Seller, confirming that the
conditions set forth in Sections 10.01 and 10.02 have been satisfied. Seller shall also have
delivered to Buyer all other certificates, documents and agreements required to be delivered by
Seller to Buyer pursuant to Section 5.02(a) and any such other certificates and documents customary
in transactions similar to those contemplated hereby that are reasonably requested by Buyer.

 Article 11. Indemnification

     Section 11.01 Survival of Representations, Warranties, Etc.

     The representations and warranties made by either Party in this Agreement shall survive the
Closing and shall expire [***] ([***]) [***] after the Closing Date, provided that the
representations and warranties contained in Section 6.09(b)(iii) hereof shall expire [***] ([***])
[***] after the Closing Date, and any Liability of either Party with respect to such
representations and warranties (other than for Damages attributable to fraud) shall thereupon
cease; provided, however, that if, at any time prior to such expiration date, notice of any claim
for indemnification pursuant to Section 11.02(a)(i) or Section 11.02(b)(i), as the case may be,
shall have been given prior to the applicable expiration date and such notice describes the
circumstances with respect to which such indemnification claim relates, such indemnification claim
shall survive until such time as such claim is finally resolved.

     Section 11.02 Indemnification.

          (a) By Seller. Subject to Sections 11.03 and 11.04, from and after the Closing,
Seller shall indemnify, reimburse, defend and hold harmless Buyer, its Affiliates and their
respective officers, directors, employees, agents, successors and assigns (collectively, the
“Buyer Indemnified Parties”) from and against any and all costs, losses, Liabilities,
damages, lawsuits, deficiencies, claims and expenses (including interest, penalties and reasonable
fees and disbursements of attorneys paid in connection with the investigation, defense or
settlement of any of the foregoing) (collectively, the “Damages”) to the extent arising or
resulting from:

               (i) any inaccuracy or breach of any representation or warranty of Seller herein;

               (ii) any breach of any covenant or other agreement of Seller or any of its Affiliates herein;

               (iii) the conduct of the Business by Seller or any of its Affiliates prior to the Closing
except to the extent the same constitute Assumed Liabilities; or

               (iv) the failure of Seller or any of its Affiliates to pay, perform or discharge any Excluded
Liabilities.

          (b) By Buyer. Subject to Sections 11.03 and 11.04, from and after the Closing,
Buyer shall indemnify, reimburse, defend and hold harmless Seller, its Affiliates and their
respective officers, directors, employees, agents, successors and assigns (collectively, the
“Seller Indemnified Parties”) from and against any and all Damages to the extent arising or
resulting from:

               (i) any inaccuracy or breach of any representation or warranty of Buyer herein;

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

-16-

 

               (ii) any inaccuracy or breach of any covenant or other agreement of Buyer herein;

               (iii) the conduct of the Business by Buyer or any of its Affiliates from and after the
Closing; or

          (iv) the failure of Buyer or any of its Affiliates to pay, perform or discharge any Assumed
Liabilities.

          (c) Procedures. The indemnified party (the “Indemnified Party”) shall
give the indemnifying party (the “Indemnifying Party”) prompt written notice (an
“Indemnification Claim Notice”) of any Damages or discovery of fact upon which such
Indemnified Party intends to base a request for indemnification under Section 11.02(a) or Section
11.02(b); provided, however, in no event shall the Indemnifying Party be liable for any Damages
that result from any delay in providing such notice except to the extent that the rights of the
Indemnifying Party are not materially prejudiced by the failure to give notice. Each
Indemnification Claim Notice must contain a reasonable description of the claim and the nature and
amount of such Damages (to the extent that the nature and amount of such Damages are known at such
time). The Indemnified Party shall furnish promptly to the Indemnifying Party copies of all papers
and official documents received in respect of any Damages. All indemnification claims in respect
of a Party, its Affiliates or their respective directors, officers, employees and agents
(collectively, the “Indemnitees” and each an “Indemnitee”) shall be made solely by
such Party to this Agreement.

          (d) Third Party Claims. The obligations of an Indemnifying Party under this
Section 11.02 with respect to Damages arising from claims of any third party that are subject to
indemnification as provided for in Section 11.02(a) or Section 11.02(b) (a “Third Party
Claim”) shall be governed by and be contingent upon the following additional terms and
conditions:

               (i) At its option, the Indemnifying Party may assume the defense of any Third Party Claim by
giving written notice to the Indemnified Party within thirty (30) days after the Indemnifying
Party’s receipt of an Indemnification Claim Notice. The assumption of the defense of a Third Party
Claim by the Indemnifying Party shall not be construed as an acknowledgment that the Indemnifying
Party is liable to indemnify any Indemnitee in respect of the Third Party Claim, nor shall it
constitute a waiver by the Indemnifying Party of any defenses it may assert against any
Indemnitee’s claim for indemnification. Failure by the Indemnifying Party to notify the
Indemnified Party of its election to defend any such action within thirty (30) days after notice
thereof shall have been given to the Indemnifying Party shall be deemed a waiver by the
Indemnifying Party of its right to defend such action. Upon assuming the defense of a Third
Party Claim, the Indemnifying Party may appoint as lead counsel in the defense of the Third Party
Claim any legal counsel selected by the Indemnifying Party that is reasonably acceptable to the
Indemnified Party. In the event the Indemnifying Party assumes the defense of a Third Party Claim,
the Indemnified Party shall promptly deliver to the Indemnifying Party all original notices and
documents (including court papers) received by any Indemnitee in connection with the Third Party
Claim. Should the Indemnifying Party assume the defense of and continue to defend a Third Party
Claim with counsel reasonably acceptable to the Indemnified Party, except as provided in subsection
(ii) below, the Indemnifying Party shall not be liable to the Indemnified Party or any other
Indemnitee for any legal expenses subsequently incurred by such Indemnified Party or other
Indemnitee in connection with the analysis, defense or settlement of the Third Party Claim. In the
event that it is ultimately determined that the Indemnifying Party is not obligated to indemnify,
defend or hold harmless an Indemnitee from and against the Third Party Claim, the Indemnified Party
shall reimburse the Indemnifying Party for any and all costs and expenses (including attorneys’
fees and costs of suit) and any Damages incurred by the Indemnifying Party in its defense of the
Third Party Claim with respect to such Indemnitee.

-17-

 

               (ii) Without limiting Section 11.02(d)(i), any Indemnitee shall be entitled to participate in,
but not control, the defense of such Third Party Claim and to employ counsel of its choice for such
purpose; provided, however, that such employment of separate legal counsel shall be at the
Indemnitee’s own expense unless (A) the employment thereof has been specifically authorized by the
Indemnifying Party in writing, (B) the Indemnifying Party has failed to assume the defense and
employ counsel in accordance with Section 11.02(d)(i) (in which case the Indemnified Party shall
control the defense) or (C) if the Indemnified Party and the Indemnifying Party are both named
parties to the proceeding and the Indemnified Party has reasonably concluded that there may be one
or more legal defenses that are different from or in addition to those available to the
Indemnifying Party (in which case the Indemnifying Party shall not have the right to assume the
defense of such action on behalf of the Indemnified Party and the Indemnifying Party shall be
liable for all legal expenses incurred by the Indemnified Party in furtherance thereof). The
Indemnifying Party shall not, in the defense of a claim or any litigation resulting therefrom,
consent to entry of any judgment, except with the written consent of the Indemnified Party, or
enter into any settlement except with the written consent of the Indemnified Party, which does not
include as an unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party of a release from all liability in respect of such claim or litigation.

               (iii) With respect to any Damages relating solely to the payment of money damages in
connection with a Third Party Claim and that will not result in the Indemnitee’s becoming subject
to injunctive or other relief or otherwise adversely affect the business of the Indemnitee in any
manner, and as to which the Indemnifying Party shall have acknowledged in writing the obligation to
indemnify the Indemnitee hereunder, the Indemnifying Party shall have the sole right to consent to
the entry of any judgment, enter into any settlement or otherwise dispose of such Damages, on such
terms as the Indemnifying Party, in its sole discretion, shall deem appropriate. With respect to
all other Damages in connection with Third Party Claims, where the Indemnifying Party has assumed
the defense of the Third Party Claim in accordance with Section 11.02(d)(i), the Indemnifying Party
shall not have authority to consent to the entry of any judgment, enter into any settlement or
otherwise dispose of such Damages unless it obtains the prior written consent of the Indemnified
Party (which consent shall not be unreasonably withheld, conditioned or delayed). The Indemnifying
Party shall not be liable for any settlement or other disposition of Damages by an Indemnitee that
is reached without the written consent of the Indemnifying Party (which consent shall not be
unreasonably withheld or delayed). Regardless of whether the Indemnifying Party chooses to defend
or prosecute any Third Party Claim, no Indemnitee shall admit any liability with respect to, or
settle, compromise or discharge, any Third Party Claim without the prior written consent of the
Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed).

               (iv) Regardless of whether the Indemnifying Party chooses to defend or prosecute any Third
Party Claim, the Indemnified Party shall, and shall cause each other Indemnitee to, cooperate in
the defense or prosecution thereof and shall furnish such records, information and testimony,
provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and
appeals as may be reasonably requested in connection therewith. Such cooperation shall include
access during normal business hours afforded to the Indemnifying Party to, and reasonable retention
by the Indemnified Party of, records and information that are reasonably relevant to such Third
Party Claim, and making Indemnitees and other employees and agents available on a mutually
convenient basis to provide additional information and explanation of any material provided
hereunder. The Indemnifying Party shall reimburse the Indemnified Party for all its reasonable
costs and expenses in connection with any of the foregoing.

          (e) Expenses. Except as provided above, the costs and expenses, including fees and
disbursements of counsel, incurred by the Indemnified Party in connection with any claim shall be
reimbursed on a quarterly basis by the Indemnifying Party, without prejudice to the Indemnifying
Party’s

-18-

 

 right to
contest the Indemnified Party’s right to indemnification and subject to
refund in the event the Indemnifying Party is ultimately held not to be obligated to indemnify the
Indemnified Party.

     Section 11.03 Limitations. Notwithstanding anything to the contrary contained in this
Agreement, each of the following limitations shall apply:

          (a) Seller will not be required to indemnify Buyer under Section 11.02(a)(i) except to the
extent that the cumulative amount of the Damages under Section 11.02(a)(i) actually incurred by the
Buyer Indemnified Parties exceeds [***] ([***]) at which point Seller will be required to pay, and
will have Liability for, the cumulative amount of the Damages under Section 11.02(a)(i) actually
incurred by the Buyer Indemnified Parties (including the [***] [***] ([***])).

          (b) Buyer will not be required to indemnify Seller under Section 11.02(b)(i) except to the
extent that the cumulative amount of the Damages under Section 11.02(b)(i) actually incurred by the
Seller Indemnified Parties exceeds [***] ([***]) at which point Buyer will be required to pay, and
will have Liability for, the cumulative amount of the Damages under Section 11.02(b)(i) actually
incurred by the Seller Indemnified Parties (including the [***] [***] ([***])).

          (c) In no event shall the aggregate out-of-pocket Liability of Seller for any Damages
pursuant to Section 11.02(a)(i) exceed [***] ([***]); provided, however, that any such
indemnification payments to be made by Seller to Buyer shall be effected as follows: (i) [***]
([***]%) of such indemnification payment shall be made in cash and (ii) [***] [***] ([***]%) of
such indemnification payment shall be made solely by an offset against the initial principal amount
of the Acquisition Note such that the outstanding principal shall be reduced, as certified by the
chief financial officer of Buyer in accordance with the terms of the Acquisition Note; provided,
that if the First Milestone or Second Milestone have not yet occurred, and there is no outstanding
principal amount of the Acquisition Note, then the offset detailed in subsection (ii) above shall
occur solely by reduction in the principal amount by which the Acquisition Note is increased, if at
all, upon the First Milestone or Second Milestone, as the case may be. It is understood by both
parties that the maximum cash indemnification payments made by Seller under this Section 11.03(c)
shall be [***] [***] ([***]).

          (d) In no event shall Seller or Buyer have any Liability under Section 11.02(a)(i) or
11.02(b)(i), as the case may be, with respect to claims that are not properly asserted in writing
prior to the date that is (i) [***] ([***]) [***] after the Closing Date in the case of claims
related to breaches of representations and warranties other than those contained in Section
6.09(b)(iii) hereof, and (ii) [***] ([***]) [***] after the Closing Date in the case of claims
related to breaches of the representations and warranties contained in Section 6.09(b)(iii) hereof,
but only to the extent that any such breach causes an Adverse Effect.

          (e) The amount of any Damages under Section 11.02 shall be reduced by the amount of any
insurance proceeds actually received by the Indemnified Party relating to such claim.

          (f) No Party shall be entitled to indemnification under this Article 11 to the extent
Damages result from the gross negligence or intentional misconduct of the Party seeking
indemnification.

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

-19-

 

          (g) Except with respect to claims based on fraud or willful misconduct,
after the Closing:

               (i) the right of the Buyer Indemnified Parties to indemnification under this Article 11 shall
be the exclusive remedy of the Buyer Indemnified Parties with respect to claims arising or
resulting from (A) any inaccuracy or breach of any representation or warranty of Seller or any of
its Affiliates in this Agreement (B) any breach of any covenant or other agreement of Seller or any
of its Affiliates in this Agreement; (C) Seller’s or any of its Affiliates’ conduct of the Business
prior to the Closing except to the extent the same constitute Assumed Liabilities; or (D) the
failure of Seller or any of its Affiliates to pay, perform or discharge any Excluded Liabilities;
and

               (ii) the right of the Seller Indemnified Parties to indemnification under this Article 11
shall be the exclusive remedy of the Seller Indemnified Parties with respect to claims arising or
resulting from (A) any inaccuracy or breach of any representation or warranty of Buyer in this
Agreement; (B) any breach of any covenant or other agreement of Buyer in this Agreement, (C)
Buyer’s conduct of the Business from and after the Closing; or (D) the failure of Buyer to pay,
perform or discharge any Assumed Liabilities.

     Section 11.04 Consequential Damages.

          No party to this Agreement shall be liable for any punitive or exemplary damages or
incidental, special or consequential damages arising out of or relating to this Agreement, except
for any such damages asserted in any Third Party Claim.

Article 12.  Miscellaneous

     Section 12.01 Confidentiality. (a) In addition to the restrictions set forth in Section
8.01, each Party agrees that at and after the Closing, it shall not, without the prior written
consent of the other Party, (i) disclose to any Person such other Party’s Confidential Information
(as defined below), except to those of its employees or representatives who need to know such
information for the purpose of exploiting its rights or fulfilling its obligations under this
Agreement (and then only to the extent that such persons are under an obligation to maintain the
confidentiality of the Confidential Information), or (ii) use any of such other Party’s
Confidential Information for any reason other than as contemplated by this Agreement. If a Party
has been advised by legal counsel that in the opinion of such counsel disclosure of Confidential
Information of the other Party is required to be made under applicable Law (including the
requirements of a national securities exchange or another similar regulatory body) or pursuant to
documents subpoena, civil investigative demand, interrogatories, requests for information, or other
similar process, the Party required to disclose the Confidential Information shall provide the
other Party with prompt written notice of such request or demands or other similar process so that
such other Party may seek an appropriate protective order or, waive the disclosing Party’s
compliance with the provisions of this Section 12.01(a). In the absence of a protective order or
waiver or other remedy, the Party required to disclose the other Party’s Confidential Information
may disclose only that portion of the Confidential Information which its legal counsel advises that
it is legally required to disclose, provided that it exercises its best efforts to preserve the
confidentiality of such other party’s Confidential Information, including by cooperating with such
other Party to obtain an appropriate protective order or other reliable assurance that confidential
treatment will be accorded the Confidential Information.

          (b) The term “Confidential Information” as used in this Section 12.01 means (i) as
to Buyer, all confidential information relating to Buyer’s business, the Business, and the
Purchased Assets and the Assumed Liabilities, and (ii) as to Seller, all confidential information
relating to the business and operations of the Seller, including the Excluded Assets and the
Excluded Liabilities or other obligations

-20-

 

other than the Assumed Liabilities, but not including the
Business or Purchased Assets, in each of (i) and (ii) whether disclosed prior to or after the date
hereof. The term “Confidential Information” does not include information which (A) becomes
generally available to the public other than as a result of disclosure by the disclosing Party, (B)
becomes available to the disclosing Party on a non-confidential basis from a source other than the
non-disclosing Party provided that such source is not bound by a confidentiality agreement with the
non-disclosing Party, or (C) was previously known by the non-disclosing Party as evidenced by the
non-disclosing Party’s written records.

     Section 12.02 Notices. All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered personally against written
receipt or by facsimile transmission with answer back confirmation or by nationally recognized
overnight courier that maintains records of delivery to the Parties at the following addresses or
facsimile numbers:

	 	 	 	 	 
	 

	 	If to Buyer to:
	 	Targanta Therapeutics Corporation
	 

	 	 	 	7170 Frederick Banting
	 

	 	 	 	2nd Floor
	 

	 	 	 	St. Laurent, QC H4S 2A1
	 

	 	 	 	Attention: President
	 

	 	 	 	Facsimile: [***]
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Choate, Hall & Stewart LLP
	 

	 	 	 	Two International Place
	 

	 	 	 	Boston, MA 02110
	 

	 	 	 	Attention: Brian P. Lenihan, Esq.
	 

	 	 	 	Facsimile: (617) 248-4000
	 
	 	 	 	 
	 

	 	If to Seller to:
	 	InterMune, Inc.
	 

	 	 	 	3280 Bayshore Blvd.
	 

	 	 	 	Brisbane, CA 94005
	 

	 	 	 	Attention: General Counsel
	 

	 	 	 	Facsimile: [***]
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Latham & Watkins LLP
	 

	 	 	 	12636 High Bluff Drive, Suite 400
	 

	 	 	 	San Diego, CA 92130
	 

	 	 	 	Attention: Faye H. Russell, Esq.
	 

	 	 	 	Facsimile: (858) 523-5450

All such notices, requests and other communications will (a) if delivered personally to the address
as provided in this Section 12.02, be deemed given upon receipt, (b) if delivered by facsimile to
the facsimile number as provided in this Section 12.02, be deemed given upon receipt by the sender
of the answer back confirmation and (c) if delivered by overnight courier to the address as
provided in this Section 12.02, be deemed given upon receipt (in each case regardless of whether
such notice, request or other communication is received by any other Person to whom a copy of such
notice, request or other communication is to be delivered pursuant to this Section 12.02). Any
Party from time to time may change its address, facsimile number or other information for the
purpose of notices to that Party by giving notice specifying such change to the other Parties
hereto in accordance with the terms of this Section 12.02.

     Section 12.03 Entire Agreement. This Agreement (and all Exhibits and Schedules attached
hereto and all other documents delivered in connection herewith) supersedes all prior discussions
and

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

-21-

 

agreements among the Parties with respect to the subject matter hereof and contains the sole
and entire agreement among the Parties hereto with respect to the subject matter hereof.

     Section 12.04 Waiver. Any term or condition of this Agreement may be waived at any time by
the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set
forth in a written instrument duly executed by or on behalf of the Party waiving such term or
condition. No waiver by any Party hereto of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion.

     Section 12.05 Amendment. This Agreement may be amended, supplemented or modified only by a
written instrument duly executed by each Party hereto.

     Section 12.06 Third Party Beneficiaries. The terms and provisions of this Agreement are
intended solely for the benefit of each Party hereto and their respective successors or permitted
assigns and it is not the intention of the Parties to confer third-party beneficiary rights upon
any other Person.

     Section 12.07 Assignment; Binding Effect. Neither this Agreement nor any right, interest or
obligation hereunder may be assigned by any Party hereto without the prior written consent of the
other Party hereto (which consent shall not be unreasonably withheld) and any attempt to do so will
be void; provided however, such prior written consent will not be required with respect to an
assignment by either Party (a) to an Affiliate of such Party so long as such Party remains bound by
the terms hereof, or (b) in connection with a merger, sale or transfer involving all or
substantially all of the assets of such Party. This Agreement is binding upon, inures to the
benefit of and is enforceable by the Parties hereto and their respective successors and permitted
assigns.

     Section 12.08 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof

     Section 12.09 Severability. If any provision of this Agreement is held to be illegal, invalid
or unenforceable under any present or future law, and if the rights or obligations of any Party
hereto under this Agreement will not be materially and adversely affected thereby, (a) such
provision will be fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never compromised a part hereof, (c) the remaining
provisions of this Agreement will remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom, and (d) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar to terms to such illegal, invalid or
unenforceable provision as may be possible and reasonably acceptable to the Parties herein.

     Section 12.10 Governing Law; Dispute Resolution.

-22-

 

          (a) This Agreement shall be construed in accordance with, and governed in all respects by,
the laws of the State of Delaware (without giving effect to principles of conflicts of laws that
would require the application of any other law).

          (b) Except with respect to any claim seeking injunctive relief hereunder, in the event of
any controversy or claim arising out of, relating to or in connection with any provision of this
Agreement or the rights or obligations of the parties hereunder, the parties will try to settle
their differences amicably between themselves as contemplated herein. To the extent not provided
for herein, any party may initiate such informal dispute resolution by sending written notice of
the dispute to the other party, and within ten (10) days after such notice, the Chief Executive
Officer (or his or her designee) of Buyer will meet with the Chief Executive Officer (or his or her
designee) of Seller, for attempted resolution by good faith negotiations. If such Persons are
unable to resolve promptly such disputed matter, such dispute shall be finally settled by
arbitration in accordance with the commercial arbitration rules of the American Arbitration
Association (“AAA”), then in force, by one (1) arbitrator appointed in accordance with said
rules, provided that the appointed arbitrator shall have appropriate experience in the
biopharmaceutical industry. The place of arbitration shall be San Francisco, California. The
award rendered shall be final and binding upon all parties participating in such arbitration. The
judgment rendered by the arbitrator may, at the arbitrator’s discretion, include costs of
arbitration, reasonable attorneys’ fees and reasonable costs for any expert and other witnesses.
Judgment upon the award may be entered in any court having jurisdiction, or application may be made
to such court for judicial acceptance of the award and/or an order of enforcement as the case may
be. The parties agree to use their good faith efforts to resolve the dispute within six (6) months
of receipt of the original notice of dispute. Notwithstanding the foregoing, any disputes
regarding the scope, validity, enforceability or inventorship of any patents or patent applications
shall be submitted for final resolution by a court of competent jurisdiction.

     Section 12.11 Expenses. Except as otherwise provided in this Agreement, each Party hereto
shall pay its own expenses and costs incidental to the preparation of this Agreement and to the
consummation of the transactions contemplated hereby.

     Section 12.12 Counterparts. This Agreement may be executed in any number of counterparts and
by facsimile, each of which will be deemed an original, but all of which together will constitute
one and the same instrument.

     Section 12.13 Schedules, Exhibits and Other Agreements. The Exhibits, Schedules, other
agreements, certificates and notices specifically referred to herein, and delivered pursuant
hereto, are an integral part of this Agreement. Any disclosure that is made in any of the
Schedules or certificates delivered pursuant to this Agreement shall be deemed responsive to any
other applicable disclosure obligation hereunder where it is reasonably apparent that such
disclosure is responsive to such other applicable disclosure obligation.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

-23-

 

          IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto as of the
date first written above.

	 	 	 	 	 
	 	 	INTERMUNE, INC.
	 
	 	 	 	 
	 

	 	By:
	 	           /s/ Thomas Kassberg
	 

	 	 	 	 
	 

	 	Name:
	 	Thomas Kassberg
	 

	 	Title:
	 	Senior Vice President, Business Development
	 
	 	 	 	 
	 	 	TARGANTA THERAPEUTICS CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	          /s/ Pierre Etienne
	 

	 	 	 	 
	 

	 	Name:
	 	Pierre Etienne
	 

	 	Title:
	 	President and Chief Executive Officer

[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]

 

 

Exhibit A

DEFINITIONS

     “AAA” has the meaning set forth in Section 12.10(b).

     “Acquisition Note” has the meaning set forth in Section 4.01(a).

     “Action or Proceeding” means any action, suit, proceeding, arbitration, Order,
hearing, assessment with respect to fines or penalties or litigation (whether civil, criminal,
administrative, investigative or informal) commenced, brought, conducted or heard by or before any
Governmental or Regulatory Authority.

     “Adverse Effect” means an effect or condition that individually or in the aggregate is
materially adverse to the business, results of operations, or financial condition of the Business,
individually or taken as a whole.

     “Affiliate” means, with respect to any Person, any other Person which controls, is
controlled by or is under common control with such Person. A Person shall be regarded as in
control of another Person if it owns or controls, directly or indirectly, (i) in the case of
corporate entities at least fifty percent (50%) (or the maximum ownership interest permitted by
law) of the equity securities in the subject entity entitled to vote in the election of directors
and, (ii) in the case of an entity that is not a corporation, at least fifty percent (50%) (or the
maximum ownership interest permitted by law) of the equity securities or other ownership interests
with the power to direct the management and policies of such subject entity or entitled to elect
the corresponding management authority, or such other relationship as, in fact, constitutes actual
control.

     “Agreement” has the meaning set forth in the Preamble hereto.

     “Assets and Properties” of any Person means all assets and properties of any kind,
nature, character and description (whether real, personal or mixed, whether tangible or intangible,
whether absolute, accrued, contingent, fixed or otherwise and wherever situated), including the
goodwill related thereto, operated, owned or leased by such Person, including cash, cash
equivalents, accounts and notes receivable, chattel paper, documents, instruments, general
intangibles, regulatory approvals, equipment, inventory, goods and intellectual property.

     “Assignment and Assumption Agreement” has the meaning set forth in Section
5.02(a)(vi).

     “Assumed Contract” means the Contracts or portions of the Contracts identified in
Section 6.06 of the Seller Disclosure Schedule.

     “Assumed Liabilities” means:

     (i) all accounts payable incurred by or on behalf of Buyer or its Affiliates with respect to
the Business after the Closing;

     (ii) any and all Liabilities and obligations of Seller or any of its Affiliates under the
Assumed Contracts to be incurred after the Closing or arising from the Buyer’s performance under
the Assumed Contracts after the Closing, except to the extent such Liabilities and obligations,
were incurred, paid, performed or otherwise arose on or prior to the Closing or to the extent the
same arise out of any breach or default by Seller or any of its Affiliates under the Assumed
Contracts on or prior to the Closing;

A-1

 

     (iii) any and all Liabilities and obligations arising out of or resulting from product
liability claims caused by the Product administered, provided or sold by or on behalf of Buyer
after the Closing; and

     (iv) except as otherwise provided herein, any and all other Liabilities and obligations that
arise out of or are related to the Purchased Assets (including the Regulatory Filings), the
Business or the Product, attributable to occurrences and circumstances arising after the Closing.

     “Books and Records” means all files, documents, instruments, papers, books and records
(other than Marketing Materials) owned by Seller or any of its Affiliates relating exclusively to
the Business or that Seller reasonably believes is necessary for the clinical development, use or
manufacture of the Product, including any vendor lists, financial data, written and pending orders
and all documentation relating to the Intellectual Property.

     “Budget” has the meaning set forth in Section 8.09.

     “Business” means the activities of research, development and manufacturing for
clinical use the Compound or the Product in the Territory by Seller.

     “Business Day” means a day other than Saturday, Sunday or any day on which banks
located in the State of California are authorized or obligated to close.

     “Buyer” has the meaning set forth in the Preamble to this Agreement.

     “Buyer Disclosure Schedule” has the meaning set forth in Article 7 hereof.

     “Buyer Governmental Consents” means all consents, waivers, approvals, Orders,
authorizations of, declarations or filings with any Governmental or Regulatory Authority that are
required by, or with respect to, Buyer or any of its Affiliates in connection with the execution
and delivery of this Agreement and the other Transaction Documents to be executed pursuant hereto
by Buyer, the consummation by Buyer or any of its Affiliates of the transactions contemplated
hereby and thereby and the performance of their respective obligations hereunder and thereunder.

     “Buyer Indemnified Parties” has the meaning set forth in Section 11.02(a).

     “Buyer Restructuring” means a restructuring of Targanta Canada pursuant to which (i)
Buyer is organized and incorporated, (ii) all outstanding shares of Targanta Canada will be
exchanged for shares of capital stock of, or exchangeable for, shares of Buyer and (iii) Targanta
Canada will become the wholly owned subsidiary of Buyer.

     “Buyer Third Party Consents” means all consents, waivers, approvals, authorizations
of, or notices to, any third Person (other than a Governmental or Regulatory Authority) that are
required by, or with respect to, Buyer or any of its Affiliates in connection with the execution
and delivery of this Agreement by Buyer, the consummation by Buyer or any of its Affiliates of the
transactions contemplated hereby and the performance of their respective obligations hereunder.

     “Closing” has the meaning set forth in Section 5.01.

     “Closing Date” means the date that the Closing actually occurs as provided in Section
5.01.

     “Compound” has the meaning set forth in the Lilly Agreement.

A-2

 

     “Confidential Information” has the meaning set forth in Section 12.01(b).

     “Contract” means any and all commitments, contracts, purchase orders, leases, or other
agreements, whether written or oral related to the Compound or the Product.

     “Damages” has the meaning set forth in Section 11.02(a).

     “Encumbrance” means any mortgage, pledge, assessment, security interest, deed of
trust, lease, lien, adverse claim, levy, charge or other encumbrance, restriction, limitation or
third party right of any kind, or any conditional sale or title retention agreement or other
agreement to give any of the foregoing in the future.

     “Exchange Agreement” means the Exchange Agreement among Buyer, Targanta Canada and the
stockholders of Targanta Canada, entered into in connection with the Buyer Restructuring.

     “Excluded Assets” means all Assets and Properties of Seller and its Affiliates
(including Seller’s rights under this Agreement) except the Purchased Assets. The Excluded Assets
shall include any cash, short-term investments or other cash equivalents, and any prepaid expenses
or rights to receive refunds of Seller or any of its Affiliates.

     “Excluded Liabilities” means (i) any and all Liabilities and obligations in respect of
any Excluded Assets, including (a) the outstanding amount of all principal, interest, fees and
expenses in respect of borrowed money, capital leases, installment purchases and other indebtedness
of Seller, (b) except as provided in Section 4.03, obligations relating to Taxes, (c) any
environmental obligations or liability of Seller, (d) any Liabilities to directors, officers or
employees of Seller or in respect of Seller employee benefit, profit sharing or health care plans,
(e) any Liability of Seller with respect to any Action or Proceeding pending or threatened against
Seller, (f) any Liability of any Person other than Seller and (g) any obligations of Seller
(including expenses to be borne by Seller) under this Agreement or any of the other agreements,
instruments and certificates executed in connection herewith, (ii) any and all Liabilities and
obligations of Seller or any of its Affiliates which arise out of or are related to the Purchased
Assets, the Business or the Product attributable to occurrences and circumstances arising on or
prior to the Closing, and (iii) any Liability of Seller arising from or relating to any action
taken by Seller, or any failure on the part of Seller to take any action, at any time after the
Closing Date.

     “FDA” means the U.S. Food and Drug Administration.

     “First Milestone” means [***].

     “Governmental or Regulatory Authority” means any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the United States or other
country, or any supra-national organization, state, county, city or other political subdivision
thereof.

     “IND” shall mean the Initial New Drug Application (as defined under the United States
Food, Drug and Cosmetic Act and applicable regulations promulgated thereunder, as amended from time
to time) pertaining to the Product.

     “Indemnification Claim Notice” has the meaning set forth in Section 11.02(c).

     “Indemnified Party” has the meaning set forth in Section
11.02(c).

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

A-3

 

     “Indemnifying Party” has the meaning set forth in Section 11.02(c).

     “Indemnitee” and “Indemnitees” have the respective meanings set forth in
Section 11.02(c).

     “Intellectual Property” means any and all of the following intellectual property
rights owned by or licensed to Seller and used exclusively in connection with or reasonably
necessary to the conduct of the Business: all (i) Patents; (ii) Know-how; (iii) copyrights,
copyright registrations, applications therefor and renewal rights therefor; (iv) trademarks,
service marks, brand names, trade names, trade dress, logos, common law trademarks and service
marks, and trademark and service mark registrations, licenses, renewals and applications therefor
(excluding the InterMune trade names, trademarks and logos); and (v) software, data, covenants not
to assert and trade secrets, and in each case all documentation associated therewith; including
those items identified in Section 6.07(a) of the Seller Disclosure Schedule.

     “Investor Convertible Notes” means the convertible notes, in form reasonably
satisfactory to Seller, issued to certain of Buyer’s existing stockholders or other investors
identified by Buyer and/or its existing stockholders in the aggregate amount of Ten Million U.S.
Dollars ($U.S.10,000,000).

     “Know-how” means the following information owned by or licensed to Seller: all
tangible or intangible know-how, trade secrets, inventions (whether or not patentable),
engineering, production and other designs, drawing, specifications, formulas, technology, software,
data, analytic reference materials and methods and all confidential or proprietary chemical
substances, assays and information that is used exclusively in connection with the use or
manufacture of the Product.

     “Knowledge” with respect to Seller, means the actual knowledge of [***], or such
knowledge as should have been obtained after reasonable inquiry; and with respect to Buyer, means
the actual knowledge of [***], or such knowledge as should have been obtained after reasonable
inquiry.

     “Law” means any federal, state or local law, statute or ordinance, or any rule,
regulation, or published guidelines promulgated by any Governmental or Regulatory Authority.

     “Liability” means any liability (whether known or unknown, asserted or unasserted,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, and due or to become
due).

     “Lilly Agreement” means that certain License Agreement between Eli Lilly and Company
and Seller, as amended through the date hereof.

     “Marketing Materials” means all market research, marketing plans, media plans,
advertising, sales training materials, promotional and marketing books and records, owned by Seller
and used exclusively or necessary in connection with the proposed marketing and promotion of the
Product, including all films, artwork, photography mechanical art, color separations, prints,
plates and other graphic materials related thereto, other than any such items to the extent that
(i) any applicable Law prohibits its transfer or (ii) any transfer thereof by Seller would
constitute a material contractual violation.

     “NDA” means a New Drug Application filed with the FDA pursuant to 21 U.S.C. Section
357 and 21 C.F.R. Section 314.

     “Note Issuance Agreement” means that certain Note Issuance Agreement dated as of the
date hereof, as the same may be amended pursuant to its terms from time to time.

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

A-4

 

     “Order” means any writ, judgment, decree, injunction or similar order of any
Governmental or Regulatory Authority (in each such case whether preliminary or final).

     “Ordinary Course of Business” means such action that is in the ordinary course of
business consistent with the immediate past practices of the Business.

     “Parties” means Buyer and Seller.

     “Party” means each of Buyer and Seller.

     “Patents” means any patents, patent applications, provisional patent applications and
similar instruments (including any and all substitutions, divisions, continuations,
continuations-in-part, reissues, renewals, extensions, utilization models, reexaminations, patents
of addition, supplementary protection certificates, inventors’ certificates, pediatric data package
exclusivity extensions, divisions, re-filings, continuations and continuations-in-part thereof, or
the like) as well as any foreign equivalents thereof (including certificates of invention and any
applications therefor) and all documentation associated therewith.

     “Permits” has the meaning set forth in Section 6.09(a).

     “Permitted Encumbrance” means (a) Encumbrances for Taxes or assessments which are not
delinquent or which are being contested in good faith by appropriate proceedings or (b) statutory
mechanics’, carriers’, workmen’s, landlords’ or other similar liens arising or incurred in the
ordinary course of business which are not yet delinquent or the validity of which are being
contested in good faith by appropriate proceedings.

     “Person” means any natural person, corporation, general partnership, limited
partnership, limited liability company, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.

     “Product” means any final form pharmaceutical composition or preparation, in any
dosage strength or size, containing Compound as an active pharmaceutical ingredient that may,
pursuant to applicable laws, be manufactured, marketed and sold upon Regulatory Filings or
otherwise, together with all expansions, improvements and modifications thereon, and which, but for
the license granted under the Lilly Agreement, the manufacture, use, sale, offer for sale or
importation of which would infringe or contribute to the infringement of a Valid Claim (as defined
in the Lilly Agreement) under the Licensed Patents (as defined in the Lilly Agreement).

     “Product Data” means all toxicology, pre-clinical, clinical, regulatory and
manufacturing information and data and technology, and all submissions and correspondence with or
to any Governmental or Regulatory Authority in the Territory regarding the Compound or the Product
and the manufacturing, packaging and release of the Product, including all validation data and
documentation supporting the process of manufacturing the Compound or the Product, in any form
whatsoever including notebooks, but only to the extent the foregoing may be in Seller’s possession
or control.

     “Product Inventory” means all inventory owned as of the Closing by Seller of finished
Compound or Product or works in progress or materials used in the manufacture of finished Product,
whether held at a location or facility of Seller (or of any other Person on behalf of Seller,
including in any of Seller’s warehouses, blenders, toll manufacturers, suppliers, distributors or
consignees) or in transit to or from Seller (or any such other Person), including active
pharmaceutical ingredient; provided that such Product is listed by Seller in Section 6.09 of the
Seller Disclosure Schedule.

A-5

 

     “Purchase Price” has the meaning set forth in Section 4.01(d).

     “Purchased Assets” means, subject to Section 2.03: (i) the Intellectual Property
(including the Registered Intellectual Property); (ii) the Assumed Contracts; (iii) the Regulatory
Filings; (iv) the Books and Records; (v) the Product Data; and (vi) the Product Inventory and all
other assets used by Seller in the clinical development of the Product (other than Excluded
Assets).

     “Registered Intellectual Property” means all of the following registered Intellectual
Property: (i) the Patents identified in Section 6.07(a) of the Seller Disclosure Schedule; and
(ii) the registered trademarks and applications to register trademarks identified in Section
6.07(a) of the Seller Disclosure Schedule.

     “Regulatory Filings” means the investigational and new drug applications, and drug
submissions, licenses and marketing authorizations (and the equivalent foreign registrations and
approvals) for the Product in the Territory (including marketing approvals, pricing or
reimbursement approvals, manufacturing approvals, technical, medical, and scientific licenses, and
clinical and non-clinical study authorization applications or notifications), and all, amendments,
supplements, supporting files, data, studies, and reports relating thereto (in hard and electronic
form) and all technical and other information contained therein, including the IND and foreign
equivalents set forth in Section 6.08 of the Seller Disclosure Schedule.

     “Second Milestone” means [***].

     “Seller” has the meaning set forth in the Preamble to this Agreement.

     “Seller Disclosure Schedule” has the meaning set forth in the preamble to Article 6 of
this Agreement.

     “Seller Governmental Consents” means all consents, waivers, approvals, Orders,
authorizations of, declarations or filings with any Governmental or Regulatory Authority that are
required by, or with respect to, Seller or any of its Affiliates in connection with the execution
and delivery of this Agreement and the other Transaction Documents to be executed pursuant hereto
by Seller, the consummation by Seller or any of its Affiliates of the transactions contemplated
hereby and thereby and the performance of their respective obligations hereunder and thereunder.

     “Seller Indemnified Parties” has the meaning set forth in Section 11.02(b).

     “Seller Third Party Consents” means all consents, waivers, approvals, authorizations
of, or notices to, any third Person (other than a Governmental or Regulatory Authority) that are
required by, or with respect to, Seller or any of its Affiliates in connection with the execution
and delivery of this Agreement or the other agreements to be executed pursuant hereto by Seller,
the consummation by Seller or any of its Affiliates of the transactions contemplated hereby and the
performance of their respective obligations hereunder.

     “Support Agreement” means the Support Agreement among Buyer, Targanta Canada and the
stockholders of Targanta Canada, entered into in connection with the Buyer
Restructuring.

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

A-6

 

     “Targanta Canada” means Targanta Therapeutics Inc., a corporation
organized under the Laws of Canada.

     “Targanta Ontario” means Targanta Therapeutics (Ontario) Inc., a corporation organized
under the Laws of Canada.

     “Tax” means all of the following tax in connection with the operations of the Business
or the transactions contemplated hereby: (i) any net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license,
excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax,
custom, duty or other tax, governmental fee or other like assessment imposed by a governmental,
regulatory or administrative entity or agency responsible for the imposition of any such tax
(domestic or foreign); (ii) any Liability for the payment of any amounts of the type described in
(i) as a result of being a member of any affiliated, consolidated, combined, unitary or other group
for any taxable period; and (iii) any Liability for the payment of any amounts of the type
described in (i) or (ii) as a result of any express or implied obligation to indemnify any other
Person.

     “Territory” means the entire world.

     “Third Milestone” means [***].

     “Third Party Claim” has the meaning set forth in Section 11.02(d).

     “Transaction Documents” means this Agreement, the Assignment and Assumption Agreement,
the Bill of Sale, the Note Issuance Agreement, the Transition Services Agreement, the Intellectual
Property Assignment Agreement, the Lilly Agreement and the Acquisition Note.

     “Transaction Taxes” has the meaning set forth in Section 4.03.

     “Transition Services Agreement” has the meaning set forth in Section 5.02(a)(iii).

A-7exv10w104

 

Exhibit 10.104

certain material (indicated by an asterisk) has been omitted from
this document pursuant to a request for confidential treatment. the
omitted material has been filed separately with the securities and
exchange commission.

LICENSE AGREEMENT

     This LICENSE AGREEMENT (the “Agreement”) is made effective and entered into as of December 23,
2005 (the “Effective Date”), by and between InterMune, Inc. (“Licensee”), a corporation organized
and existing under the laws of the State of Delaware, and Eli Lilly and Company (“Lilly”), a
corporation organized and existing under the laws of the State of Indiana. Licensee and Lilly are
sometimes referred to herein individually as a “Party” and collectively as “Parties.” For certain
purposes under this Agreement, InterMune, Inc. is sometimes referred to as “InterMune.”

RECITALS

     WHEREAS, Lilly and Licensee entered into an asset purchase and license agreement on September
21, 2001 (the “Prior Agreement”) pursuant to which (i) Lilly sold or licensed to Licensee, and
Licensee purchased or licensed from Lilly, certain product inventory, technology and certain rights
thereto and regulatory documents owned by Lilly, and (ii) Licensee assumed certain liabilities
associated with the rights and assets transferred herein, each in accordance with the terms and
conditions set forth in the Prior Agreement; and

     WHEREAS, as of the Effective Date, Targanta Therapeutics, Inc. (“Targanta”) and Licensee
intend to enter into an Asset Purchase Agreement (“APA”) under which Targanta (i) will purchase all
of Licensee’s right, title and interest in and to the Purchased Assets (as defined in the APA),
including, without limitation, Licensee’s rights and obligations under this Agreement; and

     WHEREAS, as of and after the Effective Date, this Agreement will govern the exclusive license
of the Licensed Technology and Licensed Patents from Lilly to Licensee and the related rights and
obligations under such license.

     NOW, THEREFORE, in consideration of the foregoing, the covenants and premises contained in
this Agreement, and other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the Parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

For purposes of this Agreement, the following terms will have the meanings
set forth below:

	1.1	 	“Affiliate” means, with respect to a Party, any Person (or Persons) directly or indirectly

 

 

	 	 	Controlling, Controlled by, or under common Control with, such Party.

	1.2	 	“Applicable Laws” means all applicable laws, ordinances, rules and regulations of any kind
whatsoever of any governmental or regulatory authority, including, without limitation, all
laws, ordinances, rules and regulations promulgated by the FDA.
	 
	1.3	 	“Application for Marketing Authorization” means, with respect to Product, (i) in the United
States, a New Drug Application filed with the FDA pursuant to 21 U.S.C. Section 357 and 21
C.F.R. Section 314 (“NDA”), and (ii) in any country other than the United States, an
application or set of applications for marketing approval comparable to an NDA necessary to
make and sell Product commercially in such country.
	 
	1.4	 	“Calendar Quarter” means the three month period ending on March 31, June 30, September 30 or
December 31.
	 
	1.5	 	“Calendar Year” means the twelve (12) month period ending on December 31st.
	 
	1.6	 	“Closing Date” shall have the meaning set forth in the Prior Agreement.
	 
	1.7	 	“Compound” means any compound claimed in a Licensed Patent.
	 
	1.8	 	“Confidential Information” means information received (whether disclosed in writing, machine
readable form, orally or by observation) by one Party (the “Receiving Party”) from the other
Party (the “Disclosing Party”) that the Receiving Party: (i) has a reasonable basis to
believe is confidential to the Disclosing Party, (ii) is indicated in writing by the
Disclosing Party to be confidential, or (iii) is information that the Receiving Party received
relating to manufacture of Compound or Product, including but not limited to, manufacturing
know-how, unless in each case such information:

     (a) was known to the Receiving Party or to the public prior to the Disclosing Party’s
disclosure, as demonstrated by contemporaneous written records;

     (b) became known to the public, after the Disclosing Party’s disclosure hereunder,
other than through a breach of the confidentiality provisions of this Agreement by the
Receiving Party or any Person to whom such Receiving Party disclosed such information;

     (c) was disclosed to the Receiving Party by a Person having a legal right to disclose,
without any restrictions, such information or data; or

     (d) was developed by the Receiving Party independent of the Disclosing Party’s
Confidential Information, as demonstrated by contemporaneous written records.

	1.9	 	“Control,” “Controlling,” “Controlled By” or “Under Common Control With” means the direct or
indirect ability or power to direct or cause the direction of management policies of a Person
or otherwise direct the affairs of such Person, whether through ownership of equity, voting
securities, beneficial interest, by contract or otherwise.

2

 

	1.10	 	“Damages” means any and all costs, losses, claims, demands for payment, threatened
government enforcement actions, liabilities, fines, penalties, expenses, court costs and
reasonable fees and disbursements of counsel, consultants and expert witnesses incurred by a
Party hereto or its Affiliates (including interest which may be imposed in connection
therewith).
	 
	1.11	 	“Data Exclusivity Period” means, with respect to a country, the period of time (if any)
beginning on the date of the first Regulatory Approval by the FDA (or, in countries other than
the United States, an equivalent regulatory agency) during which the FDA (or, if applicable,
such equivalent regulatory agency) prohibits reference, without the consent of the owner of an
Application for Marketing Authorization or Regulatory Approval package, to the clinical and
other data that relates to the Product and that is contained in such Application for Marketing
Approval or Regulatory Approval package and that is not published or publicly available
outside of such Application or Regulatory Approval package.
	 
	1.12	 	“European Union” or “EU” means Austria, Belgium, Denmark, Finland, France, Germany, Greece,
Iceland, Ireland, Italy, Liechtenstein, Luxembourg, The Netherlands, Norway, Portugal, Spain,
Sweden, the United Kingdom, Switzerland and those additional countries that hereafter become
members (whether voting or nonvoting) or are allowed to participate in the European Union.
	 
	1.13	 	“FDA” means the United States Food and Drug Administration, any comparable agency in any
Foreign Jurisdiction, and any successor agency or entity to any of the foregoing that may be
established hereafter.
	 
	1.14	 	“Field” means [***].
	 
	1.15	 	“Foreign Jurisdiction” means any jurisdiction other than the United States.
	 
	1.16	 	“Indication” means Regulatory Approval of, approval by the FDA of a submission made by
Licensee under 21 CFR §99.201, or Licensee’s sales and promotion of Product which leads to the
treatment of additional diseases [***]. Such additional Indications may include, but not be
limited to,[***].
	 
	1.17	 	“Initial Product” means a form of Product that had been used by Lilly through the Closing
Date, i.e., oritavancin, which Lilly and Licensee contemplated as of the Closing Date would be
the form of Product to be first commercialized by InterMune.
	 
	1.18	 	“Licensee Technology” means any inventions, ideas, conceptions or reductions-to-practice,
patentable or not, information, works and/or data that are generated, identified, discovered,
created and/or made by Licensee, its employees or a Third Person contracted by or otherwise
controlled by Licensee [***] and [***].

 

*** Certain information on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted portions.

3

 

	1.19	 	“Licensed Patents” means those United States and foreign patent applications (including
provisional applications) and patents listed in Exhibit A attached hereto and all patents
and patent applications relating to the [***]; and:

     (a) all divisions and continuations of these applications, all patents issuing from
such applications, divisions and continuations, and any reissues, reexaminations and
extensions of all such patents; and

     (b) any continuations-in-part, any divisions and continuations of these
continuations-in-part, any patents issuing from such continuations-in-part, divisions and
continuations, and any reissues, reexaminations and extensions of all such patents, in each
case to the extent that they contain one or more claims directed to the invention or
inventions disclosed in the patent applications and patents listed in Exhibit A.

The Licensed Patents will not include any subject matter described or disclosed in
subsection (b), above, to the extent such subject matter [***], above, which was filed on or
before the Effective Date.

	1.20	 	“Licensed Technology” means all tangible or intangible know-how, trade secrets, inventions
(whether or not patentable), data, analytical reference materials and methods and all
confidential or proprietary chemical substances, assays and technical information which has
been developed, created, made, used or acquired by Lilly on or before the Effective Date, to
the extent such technology is reasonably necessary, useful for or used in connection with the
use or manufacture of the Compound or Product; provided, however, that Licensed Technology
will exclude any and all subject matter described or claimed in Licensed Patents.
	 
	1.21	 	“Major Market” means [***].
	 
	1.22	 	“Net Sales” means, with respect to the Product, the gross amount invoiced by a Permitted
Seller of the Product, less:

(a) [***],

(b) [***], and

(c) [***].

Such amounts will be determined from books and records maintained in accordance with GAAP,
consistently applied. In determining Net Sales of Product made by Licensee in a Foreign
Jurisdiction, Licensee’s then current standard procedures and methodology, including
Licensee’s then current exchange rate methodology of foreign currency sales

 

*** Certain information on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted portions.

4

 

	 	 	into United States Dollars, a copy of which is attached hereto as Schedule 1.22, will be
consistently applied. No deductions will be made for [***], whether they are [***] or [***]
by the Permitted Seller.
	 
	1.23	 	“Permitted Seller” means Licensee and its Affiliates and any assignee, licensee or
sublicensee having the right to sell Product hereunder.
	 
	1.24	 	“Person” means a natural person, a corporation, a partnership, a trust, a joint venture, a
limited liability company, any governmental authority or any other organization.
	 
	1.25	 	“Product” means any final form pharmaceutical composition or preparation, in any dosage
strength or size, containing Compound as an active pharmaceutical ingredient that may,
pursuant to Applicable Laws, be manufactured, marketed and sold upon Regulatory Approval or
otherwise, together with all expansions, improvements and modifications thereon, and which,
but for the license granted herein, the manufacture, use, sale, offer for sale or importation
of which in the Territory would infringe or contribute to the infringement of a Valid Claim
under the Licensed Patents. Notwithstanding the foregoing, any references in this Agreement
to “Product manufacturing” or the “manufacture” or “manufacturing” of Product means Product
that was manufactured for use in clinical trials and not for commercial use.
	 
	1.26	 	“Regulatory Approval” means (i) in the United States, approval by the FDA of an Application
for Marketing Authorization and satisfaction of any related applicable FDA registration and
notification requirements (if any) and (ii) in a Foreign Jurisdiction, approval by regulatory
authorities having jurisdiction over such country of a single Application or set of
Applications for Marketing Authorization; provided, however, that with respect to Japan only,
Regulatory Approval means the above-described regulatory approval and approval by
Japan’s pricing authorities.
	 
	1.27	 	“Representatives” of a Party means: (i) that Party’s agents, contractors, employees,
officers, directors, consultants and advisors, (ii) its Affiliates, and (iii) the agents,
contractors, employees, officers, directors, consultants and advisors of its Affiliates.
	 
	1.28	 	“Royalty Term” means, with respect to each country in which the Product is sold:

          (a) if no Valid Claim exists in such country, [***] ([***]) [***] from the date of
first commercial sale of Product in such country, or if a Valid Claim exists in such
country, the period of time from the Effective Date until the expiration in such country of
the last-to-expire Licensed Patent with a Valid Claim; and

          (b) if there is a [***] in such country for Product after the expiration of the
applicable time period in (a), above, the period of time until [***] [***] in such country.

	1.29	 	“Territory” means the entire world.
	 
	1.30	 	“Third Person” means a Person that is not a Party to this Agreement or an Affiliate of
a

 

*** Certain information on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted portions.

5

 

	 	 	Party to this Agreement.
	 
	1.31	 	“Valid Claim” means a claim of an issued and unexpired Licensed Patent in a country which:
(i) but for this Agreement, would preclude the sale or other disposition of Product by
Licensee or another Permitted Seller, (ii) has not been revoked or held unenforceable or
invalid by a decision of a court or other governmental agency of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal, and (iii) has not been
abandoned, disclaimed or admitted to be invalid or unenforceable through reissue, disclaimer
or otherwise.

ARTICLE 2

PRIOR AGREEMENT

	2.1	 	Prior Agreement Novated. The terms and conditions of the Prior Agreement related to the sale
by Lilly to InterMune of certain documents, rights, technology and Product Inventory as
defined in the Prior Agreement, and InterMune’s payment at the Closing Date of the Prior
Agreement have been fully performed and satisfied. This Agreement is a novation of the Prior
Agreement and, except as expressly set forth herein, supersedes the Prior Agreement in its
entirety. Lilly and Licensee hereby expressly release and forever discharge and covenant not
to sue the other party and its successor, assigns and predecessors, as well as all its
directors, officers, employees, equity holders, representatives, agents and attorneys, from
and for any and all debts, actions, accounts, suits, covenants, agreements, demands, claims,
damages, causes of action and liabilities, whether liquidated or non-liquidated, fixed or
contingent, matured or unmatured, known or unknown, related to the Prior Agreement, that such
party asserted, or could have asserted, against the other party by reason of any acts or
omissions of the first party related to the Prior Agreement prior to the date hereof,
including, without limitation, payment by InterMune to Lilly of the Ten Million Dollar
($10,000,000) milestone due under Section 2.2 of the Prior Agreement “upon completion of Phase
III Clinical Trials necessary to support first submission of NDA with FDA for Regulatory
Approval,” except for Damages (as defined in the Prior Agreement) to the extent caused by or
arising out of or in connection with (i) any claim for any breach of this Agreement; (ii) any
breach by the Receiving Party of the requirements of the Prior Agreement with respect to
Confidential Information (as defined in the Prior Agreement); (iii) any claim to the extent
caused by or arising out of or in connection with the Assumed Liabilities (as defined in the
Prior Agreement) prior to the Effective Date and (iv) obligations of indemnification under
Article 11 of the Prior Agreement to the extent caused by or arising out of or in connection
with such obligations prior to the Effective Date (items (ii) through (iv) the “Prior
Claims”).
	 
	2.2	 	Consent to Assignment. Pursuant to Section 12.1 of the Prior Agreement and this
Agreement, by executing this Agreement Lilly hereby ratifies this Agreement and indicates
its approval of the assignment to Targanta of all of Licensee’s rights and obligations under
this Agreement (other than the Prior Claims). Contingent upon the consummation of the
proposed transaction with Targanta, InterMune will retain only the obligations associated
with the Prior Claims and will have no other rights or obligations under this Agreement, and
all such other rights and obligations under this Agreement

6

 

	 	 	shall be assumed by Targanta. For clarity, Targanta will not assume any of InterMune’s
obligations under the Prior Agreement which are not expressly set forth herein or in the
APA. For the avoidance of doubt, Lilly shall have no responsibility for Assumed Liabilities
or for any Damages that are covered by indemnification obligations from and after the
Closing Date of the Prior Agreement and such Assumed Liabilities and Damages are the
responsibility and liability of InterMune if they are based on facts or circumstances first
accruing from the Closing Date until the Effective Date and are the responsibility and
liability of Targanta if they are based on facts or circumstances first accruing after the
Effective Date. Similarly, InterMune shall have no responsibility for Excluded Liabilities
(as defined in the Prior Agreement) or for any Damages that are covered by indemnification
obligations prior to the Effective Date, and Targanta shall have no responsibility for
Excluded Liabilities or for any Damages that that are covered by indemnification obligations
subsequent to the Effective Date, and such Excluded Liabilities and Damages shall remain the
responsibility and liability of Lilly under this Agreement and the Prior Agreement.

	2.3	 	Conflict with Prior Agreement. To the extent that any term or provision of this Agreement
conflicts with the Prior Agreement, the terms of this Agreement shall control.

ARTICLE 3

CONSIDERATION

       In consideration of the licenses granted by Lilly to Licensee under the Licensed Patents and
the Licensed Technology as set forth in this Agreement, Licensee will pay the following amounts to
Lilly:

	3.1	 	Milestone Payments for Product. Within thirty (30) days of Licensee and/or its Permitted
Sellers achieving a milestone event listed below following the Effective Date with respect to
the Product, Licensee will pay the below-specified non-creditable and non-refundable fee to
Lilly by Federal Reserve electronic wire transfer in immediately available funds to an account
designated by Lilly.

	 	 	 
	Milestone Event	 	Payment
	[***]

	 	[***]
	[***]

	 	[***]
	[***]

	 	[***]

 

*** Certain information on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted portions.

7

 

	3.2	 	Royalty Payment Calculation. Licensee will pay Lilly a royalty (the “Royalty Payment”)
during the Royalty Term based upon Net Sales of Product during each Calendar Year. Except as
set forth in Section 3.3 below, the following royalty percentages will apply:

	 	 	 
	 	 	Royalty Percentage on Net Sales of
	Net Sales of Product During a	 	Product in Jurisdictions in Which a
	Calendar Year	 	Valid Claim Exists
	$ [***]

	 	[***]%
	$[***]-$[***]

	 	[***]%
	[***] $[***]

	 	[***]%

	3.3	 	Royalty Payment.

     (a) Payments. Licensee will pay to Lilly the Royalty Payment within
[***]-[***] ([***]) [***] of the end of each Calendar Quarter, without regard to whether any
Permitted Seller’s customer has actually paid Licensee. For purposes of this Section 3.4, a
Net Sale of Product will be deemed to have been made as of the date of shipment of the
Product to the Permitted Seller’s customer, without regard to whether its customer has
actually paid Licensee. All payments to Lilly pursuant to this Section 3.4 will be made by
Licensee by an electronic funds transfer system designated or approved by Lilly unless
otherwise instructed by Lilly.

     (b) Payment of Tiered Royalties. In calculating Royalty Payments payable in
accordance with Section 3.2 above, Net Sales occurring during a specific Calendar Year will
be aggregated at the end of each Calendar Quarter during such year, and the applicable
royalty percentage(s) will be applied to that portion of the Net Sales that occurred during
the most recently completed Calendar Quarter.

     [***].

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

8

 

	3.4	 	Quarterly Report. Within [***]-[***] ([***]) [***] after the end of each Calendar
Quarter, Licensee will furnish Lilly a written report detailing: (i) the Net Sales of
Product for the previous Calendar Quarter, broken down by country and between Licensee and
any Permitted Sellers, (ii) the Royalty Payment that is due and payable, and (iii) the basis
for calculating such Royalty Payment. Licensee will mail such reports to the attention of:
[***].
	 
	3.5	 	Taxes. If laws or regulations require the withholding of taxes on any Royalty Payment due
Lilly, Licensee will deduct such taxes from the Royalty Payment and remit the tax to the
proper tax authority. Licensee will provide Lilly with proof of payment within thirty (30)
days after payment. Licensee will cooperate fully and promptly in pursuing a refund of such
tax, if such refund is appropriate in Lilly’s determination.
	 
	3.6	 	Late Payments. Any amounts not paid by Licensee when due under this Agreement and which are
not subject to a good faith dispute will be subject to interest from and including the date
payment is due through and including the date upon which Lilly has collected the funds in
accordance herewith at a rate equal to the lesser of (i) the sum of [***] ([***]) plus the
prime rate of interest quoted in the Money Rates section of the Wall Street Journal,
calculated daily on the basis of a three hundred sixty (360) day year, or (ii) the maximum
interest rate allowed by law.
	 
	3.7	 	No Excuse. Licensee will not be excused from or relieved of its obligations to pay the
amounts described in this Article 3 by any claimed or actual event of force majeure,
commercial or other impracticability or impossibility, or frustration of essential purpose.
	 
	3.8	 	Currency of Payment. All payments to be made under this Agreement will be made in U.S.
Dollars.
	 
	3.9	 	Financial Audits. Licensee will keep full and accurate books and records relating to
the performance required of it under this Agreement. Lilly will have the right, during
regular business hours and upon reasonable advance notice, to have such books and records of
Licensee audited no more than one (1) time per Calendar Year so as to verify the accuracy of
the information previously reported to Lilly. Lilly will, for purposes of such audit,
utilize only the services of an independent certified public accounting firm selected by
Lilly and approved by Licensee, such approval not to be unreasonably withheld. Such audit
may cover the two (2) Calendar Years preceding the date of the request for such audit.
Notwithstanding the foregoing, no audit of Licensee pursuant to this Section 2.10 will cover
any period of time preceding the Effective Date. Such accountants will keep confidential
any information obtained during such audit and will, report to Lilly only their conclusions.
The cost of such audit will be borne by Lilly; however, if such audit reveals an
underpayment to Lilly of [***] [***] ([***]) or more, the cost of the audit will be borne
by Licensee. Within thirty (30) days after both Parties have received a copy of an audit
report, Licensee or Lilly, as appropriate, will compensate the other Party for payment
errors or omissions revealed by the audit. Licensee will include in all sublicenses granted
in accordance herewith, and any other agreements enabling a Third Person to be a Permitted
Seller, an audit provision substantially similar to the foregoing requiring such Permitted
Seller to keep full and accurate books and records relating to the

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

9

 

	 	 	Product and granting Lilly the right to have an independent public accounting firm audit the
accuracy of the information reported by the sublicensee in connection therewith.
	 
	3.10	 	Compulsory License. If a Third Person obtains a Compulsory License (as defined below) in a
specific country, then Lilly will promptly notify Licensee thereof. If the royalty
percentage(s) payable by the grantee of the Compulsory License is less than the royalty
percentage(s) applicable in such country as set forth in Sections 3.2, above, then such
royalty percentage(s) will be reduced to the royalty percentage(s) under such Compulsory
License for so long as sales of Product are made pursuant to the Compulsory License.
“Compulsory License” means a compulsory license under the Licensed Patents obtained by a Third
Person through the order, decree or grant of a competent governmental authority authorizing
such Third Person to manufacture, use, sell, offer for sale or import the Product in a
specific country.

ARTICLE 4

LICENSE OF RIGHTS

	4.1	 	Grant of License to Licensee under Licensed Patents. Subject to the terms and conditions set
forth herein, during the term of this Agreement, Lilly hereby grants to Licensee, and Licensee
accepts, under the Licensed Patents, a royalty-bearing, exclusive (even as to Lilly, except as
expressly provided in the following sentence) license in the Field, with a right to
sublicense, to make, have made, use, offer to sell, sell and import Product in the Territory.
Such license is exclusive even as to Lilly except that Lilly hereby retains a right under the
Licensed Patents to [***].
	 
	4.2	 	Grant of License to Licensee under Licensed Technology. Subject to the terms and conditions
set forth herein, during the term of this Agreement, Lilly hereby grants to Licensee, and
Licensee accepts, under the Licensed Technology, an exclusive (even as to Lilly) license in
the Field, with a right to sublicense, to make, have made, use, offer to sell, sell and import
Product in the Territory.
	 
	4.3	 	Sublicenses and Business Opportunities. Licensee will notify Lilly of any sublicenses
granted and will, subject to applicable confidentiality restrictions, provide Lilly with the
material terms of the sublicense agreement. Licensee will remain liable for Royalty Payments
as a result of Net Sales made by a sublicensee pursuant to a sublicense or license. If,
during the term of this Agreement, (i) Licensee begins negotiations to enter into a
commercialization relationship with a Third Person with respect to selling Product in a
specific country, or (ii) a Third Person initiates such discussions with Licensee and Licensee
is interested in entertaining such discussions (both (i) and (ii) are collectively referred to
as a “Business Opportunity”), then Licensee will notify Lilly in writing thereof, with such
notice containing reasonable available non-confidential information relevant to the Business
Opportunity.
	 
	4.4	 	Excluded Assets. Anything herein to the contrary notwithstanding, Licensee will have no
right, title or interest in or to the trademarks “ELI LILLY AND COMPANY” and “LILLY” and any
variation thereof, and any other rights in or to such names.

 

** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

10

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF LILLY

	5.1	 	Ownership of Intellectual Property. Lilly represents and warrants that (i) either Lilly or
an Affiliate of Lilly is the owner of the Licensed Patents and the Licensed Technology which
were warranted under the Prior Agreement (collectively, the “Warranted Intellectual
Property”), and (ii) Lilly or its Affiliates can and have the right to license the Warranted
Intellectual Property to Licensee hereunder without the consent of any Third Person.
	 
	5.2	 	Claims Related to Use of Intellectual Property. Lilly represents and warrants that there are
no pending or, to Lilly’s knowledge, threatened claims against Lilly asserting that any of the
activities of Lilly relating to the Warranted Intellectual Property or the conduct of the
activities contemplated herein by the Parties relating to the Warranted Intellectual Property
infringes or violates the rights of Third Persons.
	 
	5.3	 	Notice to Third Persons. Lilly represents and warrants that Lilly has not given any notice
to any Third Persons asserting infringement by such Third Persons upon any of the Warranted
Intellectual Property.
	 
	5.4	 	Rights Granted to Third Persons. Lilly represents and warrants that Lilly has not executed
or granted to any Third Person, directly or indirectly, or entered into any agreement for, any
license or other right to make, use, offer to sell, sell or import the Product in the
Territory.
	 
	5.5	 	Organization and Standing. Lilly represents and warrants that Lilly is a corporation duly
organized, validly existing and in good standing under the laws of the State of Indiana.
	 
	5.6	 	Power and Authority. Lilly represents and warrants that (i) Lilly has all requisite
corporate power and authority to execute, deliver and perform this Agreement and the other
agreements and instruments to be executed and delivered by it pursuant hereto and thereto and
to consummate the transactions contemplated herein and therein, and (ii) the execution,
delivery and performance of this Agreement by Lilly does not, and the consummation of the
transactions contemplated hereby will not, violate any provisions of Lilly’s organizational
documents, bylaws, any law or regulation applicable to Lilly, or any agreement, mortgage,
lease, instrument, order, judgment or decree to which Lilly is a party or by which Lilly is
bound.
	 
	5.7	 	Corporate Action; Binding Effect. Lilly represents and warrants that (i) Lilly has duly
and properly taken all action required by law, its organizational documents or otherwise, to
authorize the execution, delivery and performance of this Agreement and the other
instruments to be executed and delivered by it pursuant hereto and thereto and the
consummation of the transactions contemplated hereby and thereby, and (ii) this Agreement
has been duly executed and delivered by Lilly and constitutes, and the other instruments
contemplated hereby when duly executed and delivered by Lilly will constitute, legal, valid
and binding obligations of Lilly enforceable against it in

11

 

	 	 	accordance with its respective terms, except as enforcement may be affected by bankruptcy,
insolvency or other similar laws and by general principles of equity.

	5.8	 	Governmental Approval. Lilly represents and warrants that no consent, approval, waiver,
order or authorization of, or registration, declaration or filing with, any governmental
authority or any other Third Person is required in connection with the execution, delivery and
performance of this Agreement, or any agreement or instrument contemplated by this Agreement,
by Lilly or the performance by Lilly of its obligations contemplated hereby and thereby.
	 
	5.9	 	Brokerage. Lilly represents and warrants that no broker, finder or similar agent has been
employed by or on behalf of Lilly, and no Person with which Lilly has had any dealings or
communications of any kind is entitled to any brokerage commission, finder’s fee or any
similar compensation in connection with this Agreement or the transactions contemplated
hereby.
	 
	5.10	 	Not Debarred. Lilly represents and warrants that Lilly is not debarred and has not and will
not use in any capacity the services of any Person debarred under subsections 306(a) or (b) of
the Generic Drug Enforcement Act of 1992 (the “GDE Act”).
	 
	5.11	 	Litigation. Lilly represents and warrants that there are no pending or, to Lilly’s
knowledge, threatened judicial, administrative or arbitral actions, claims, suits or
proceedings pending as of the date hereof against Lilly or its Affiliates which, either
individually or together with any other, will have a material adverse effect on the ability of
Lilly to perform its obligations under this Agreement or any agreement or instrument
contemplated hereby or on the ability of Licensee to develop or commercialize the Compound or
Product as contemplated by the Parties.
	 
	5.12	 	Survival Period. The representations and warranties contained in this Article 5 [***] [***]
associated with such representations and warranties will [***].
	 
	5.13	 	Implied Warranties. EXCEPT AS EXPRESSLY PROVIDED IN THIS ARTICLE 5, LILLY MAKES NO
REPRESENTATION OR WARRANTY AS TO THE LICENSED PATENTS OR THE LICENSED TECHNOLOGY, EXPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND LILLY
SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED OR STATUTORY WARRANTIES, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY, WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE AND WARRANTY OF NON-INFRINGEMENT. Without limiting the foregoing, Licensee
acknowledges that it has not and is not relying upon any implied warranty of merchantability,
fitness for a particular purpose, non-infringement, or upon any representation or warranty
whatsoever as to the future prospects (financial, regulatory or otherwise), or the likelihood
of commercial success of the Product after the date of this Agreement.

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

12

 

	5.14	 	No Third-Person Patent Infringement. Lilly represents and warrants that, to Lilly’s
knowledge, there is no patent issued to a Third Person as of the Effective Date that would
be infringed by any of the activities contemplated herein by the Parties.
	 
	5.15	 	Lilly Research and Development Program. Lilly represents and warrants that as of the
Effective Date it does not have a research or development program in place or planned
involving [***].

ARTICLE 6

REPRESENTATIONS AND WARRANTIES OF LICENSEE

	6.1	 	Organization and Standing. Licensee represents and warrants that Licensee is a corporation
duly organized, validly existing and in good standing under the laws of the State of Delaware.
	 
	6.2	 	Power and Authority. Licensee represents and warrants that (i) Licensee has all requisite
corporate power and authority to execute, deliver and perform this Agreement and the other
agreements and instruments to be executed and delivered by it pursuant hereto and thereto and
to consummate the transactions contemplated herein and therein, and (ii) the execution,
delivery and performance of this Agreement by Licensee does not, and the consummation of the
transactions contemplated hereby will not, violate any provisions of Licensee’s organizational
documents, bylaws, any law or regulation applicable to Licensee, or any agreement, mortgage,
lease, instrument, order, judgment or decree to which Licensee is a party or by which Licensee
is bound.
	 
	6.3	 	Corporate Action; Binding Effect. Licensee represents and warrants that (i) Licensee has
duly and properly taken all action required by law, its organizational documents or otherwise,
to authorize the execution, delivery and performance of this Agreement and the other
instruments to be executed and delivered by it pursuant hereto and thereto and the
consummation of the transactions contemplated hereby and thereby, and (ii) this Agreement has
been duly executed and delivered by Licensee and constitutes, and the other instruments
contemplated hereby when duly executed and delivered by Licensee will constitute legal, valid
and binding obligations of Licensee enforceable against it in accordance with its respective
terms, except as enforcement may be affected by bankruptcy, insolvency or other similar laws
and by general principles of equity.
	 
	6.4	 	Governmental Approval. Licensee represents and warrants that no consent, approval, waiver,
order or authorization of, or registration, declaration or filing with, any governmental
authority or any other Third Person is required in connection with the execution, delivery and
performance of this Agreement, or any agreement or instrument contemplated by this Agreement,
by Licensee or the performance by Licensee of its obligations contemplated hereby and thereby
	 
	6.5	 	Brokerage. Licensee represents and warrants that no broker, finder or similar agent has
been employed by or on behalf of Licensee, and no Third Person with which Licensee has had
any dealings or communications of any kind is entitled to any brokerage commission, finder’s
fee or any similar compensation in connection with this Agreement

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

13

 

or the transactions contemplated hereby.

	6.6	 	Not Debarred. Licensee represents and warrants that Licensee is not debarred and has not and
will not knowingly use in any capacity the services of any Person debarred under subsections
306(a) or (b) of the GDE Act.
	 
	6.7	 	Litigation. Licensee represents and warrants that there are no pending or, to Licensee’s
knowledge, threatened judicial, administrative or arbitral actions, claims, suits or
proceedings pending as of the date hereof against Licensee which, either individually or
together with any other, will have a material adverse effect on the ability of Licensee to
perform its obligations under this Agreement or any agreement or instrument contemplated
hereby.

ARTICLE 7

ADDITIONAL COVENANTS AND AGREEMENTS.

OF THE PARTIES

	7.1	 	Compliance with Law. Licensee will comply with all Applicable Laws relating to its
development, manufacture, distributing, marketing, promotion, selling, importing and exporting
of the Product.
	 
	7.2	 	Expenses. Lilly and Licensee will each bear their own direct and indirect expenses incurred
in connection with the negotiation and preparation of this Agreement and, except as set forth
in this Agreement, the performance of the obligations contemplated hereby.
	 
	7.3	 	Diligence. After the Effective Date, Licensee has sole responsibility for all aspects
of developing, obtaining Regulatory Approval for, manufacturing and commercializing the
Initial Product throughout the Territory. Licensee will devote Commercially Reasonable
Efforts (as defined in the following sentence) to obtain and maintain Regulatory Approval
for the Initial Product in the United States or to commercialize Initial Product in the
United States. For purposes of this section only, “Commercially Reasonable Efforts” means
the level of effort, expertise and resources that a similarly situated biopharmaceutical
company would typically devote to commercialization of a product of similar marketing
potential, profit potential or strategic value, based on conditions then prevailing. If
Lilly believes that Licensee is not devoting Commercially Reasonable Efforts for the Initial
Product in any country, Lilly will notify Licensee in writing detailing its specific
concerns and recommendations, and the Parties will meet within [***] ([***]) [***] of such
written notice to discuss such concerns and recommendations. After the last of such
meeting(s), Licensee will have [***] ([***]) [***] to devote its Commercially Reasonable
Efforts as set forth above. If Licensee subsequently defaults and does not devote
Commercially Reasonable Efforts for the Initial Product in any country, Lilly will have the
right to terminate the licenses granted in this Agreement to Licensee for such specific
country pursuant to Section 10.1(c), below, [***] [***] ([***]) [***], and Licensee will
grant to Lilly an exclusive license to all rights, Licensee Technology and data that are
useful and necessary for Lilly to obtain (or maintain) Regulatory Approval to

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

14

 

	 	 	commercialize the Initial Product in the United States.
	 
	7.4	 	Publicity. The Parties agree that no publicity release or announcement concerning this
Agreement will be issued without the advance written consent of the other, except as such
release or announcement may be required by law, in which case the Party making the release or
announcement will, before making any such release or announcement, afford the other Party a
reasonable opportunity to review and comment upon such release or announcement.
Notwithstanding anything in this Section 7.4 and Article 9 to the contrary, each Party may
make filings that are required by Applicable Laws to the Securities and Exchange Commission
(and any applicable securities exchanges) that discuss the subject matter of this Agreement or
otherwise make reference to the other Party in any way whatsoever; provided, however, that
such Party provides the other Party with no less than [***] ([***]) [***]; provided further,
however, that, such Party will use reasonable efforts to obtain confidential treatment by such
security exchanges with respect thereto.
	 
	7.5	 	Cooperation. If either Party becomes engaged in or participates in any investigation, claim,
litigation or other proceeding with any Third Person, including the FDA, relating in any way
to the Product, the other Party will cooperate in all reasonable respects with such Party in
connection therewith, including, without limitation, using its reasonable efforts to make
available to the other such employees who may be helpful with respect to such investigation,
claim, litigation or other proceeding, provided that, for purposes of this provision,
reasonable efforts to make available any employee will be deemed to mean providing a Party
with reasonable access to any such employee at no cost for a period of time not to exceed
twenty-four (24) hours (e.g., three (3) eight (8) -hour business days). Thereafter, any such
employee will be made available for such time and upon such terms and conditions (including,
but not limited to, compensation) as the Parties may mutually agree.
	 
	7.6	 	Conflicting Rights. Neither Party will grant any right to any Third Person which would
violate the terms of or conflict with the rights granted by such Party to the other Party
pursuant to this Agreement.
	 
	7.7	 	Deemed Breach of Covenant. Neither Lilly nor Licensee will be deemed to be in breach of this
Agreement to the extent such Party’s breach is the result of any action or inaction on the
part of the other Party.
	 
	7.8	 	Intellectual Property Maintenance. Licensed Patents shall be filed, prosecuted and
maintained worldwide by a third-party patent counsel acceptable to Licensee and Lilly.
Licensee shall have the ultimate responsibility for and control over such matters and shall
bear all expenses incurred in filing, prosecuting and maintaining Licensed Patents.
Licensee or its designee shall keep Lilly fully informed of the filing, prosecution and
maintenance of Licensed Patents, and shall furnish to Lilly copies of documents relevant to
any such efforts in advance with sufficient time for Lilly to review and provide comments on
such documents, and shall use its reasonable efforts to incorporate the comments and
suggestions of Lilly. Licensee shall not, without providing Lilly with

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

15

 

	 	 	prior written notice and sufficient time for Lilly to review and provide comment, [***]. To
the extent that Lilly does not agree with any such action that is desired by Licensee, in
the case of a patent application affected by such action, Lilly may file and assume control
of any patent application or foreign counterpart of a patent application filed by Lilly
prior to the Closing Date that Lilly wishes to pursue at Lilly’s sole expense, provided that
Licensee may retain control of the parent patent application so affected. Lilly shall
provide Licensee with any assistance reasonably necessary to support the filing, prosecution
or maintenance of Licensed Patents. If Licensee decides to allow any Licensed Patent that
is an International Patent Application (filed under the Patent Cooperation Treaty) or
regional patent application (filed under the applicable regional patent convention treaty)
pending as of the Closing Date to lapse without entry of the national phase in one or more
countries designated in such application, or if Licensee wishes to abandon or allow to lapse
any Licensed Patent that is a national patent application or patent pending or in force as
of the Closing Date, Licensee shall notify Lilly in writing not less than sixty (60) days
prior to taking such action, and Licensee shall thereby surrender to Lilly its rights under
the patent or patent application in the country or countries so affected and Lilly may
assume control of the same at Lilly’s sole expense.
	 
	7.9	 	No Fiduciary Relationship. The Parties hereby expressly agree and acknowledge that they do
not intend to create any type of fiduciary relationship as a result of the provisions set
forth in Section 7.8, above. Without limitation or condition of the foregoing, Lilly agrees
to provide Licensee’s agent with any and all powers of attorney and other instruments
necessary for Licensee to conduct the filing, prosecution or maintenance of the Licensed
Patents as provided in Section 7.8, above, and Lilly acknowledges that any such power of
attorney will make Licensee’s agent an attorney-in-fact for Lilly with respect to the matter
specified in the power of attorney or other instrument but will not create an attorney/client
relationship or any other fiduciary relationship between Lilly and Licensee’s agent. Lilly
shall promptly inform Licensee as to all matters that come to Lilly’s attention that may
affect the preparation, filing, prosecution, or maintenance of the Licensed Patents, including
without limitation any prior art of which Lilly or any representative of Lilly knows or has
reason to know is material to the preparation, filing, prosecution, or maintenance of the
Licensed Patents, provided that Lilly will have no obligation beyond that required of Lilly
under 37 CFR § 1.56 with respect to U.S. patent applications and that Lilly will have
obligations of corresponding scope with respect to foreign patent applications as required
under foreign patent regulations.
	 
	7.10	 	Enforcement of Intellectual Property Rights.

     (a) Right to Seek Relief. Each Party will promptly notify the other of any
infringement or suspected infringement which may come to its notice of any intellectual
property rights relating to the Product, including, without limitation, the Licensed
Technology, and will provide such other Party with any information with respect thereto. If
a Third Person infringes any [***] the Licensed Patents or the Licensed Technology, Licensee
will have the first right (but not the obligation) to pursue any and all injunctive relief,
and any or all compensatory and other remedies and relief (collectively, “Remedies”),
against such Third Person. Should

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

16

 

Licensee determine not to pursue Remedies with respect to any such intellectual property
within [***] ([***]) [***] after receipt of written notice from Lilly requesting Licensee to
do so, then Lilly will have the right (but not the obligation) to pursue Remedies against
such Third Person; provided, however, that such written notice from Lilly to Licensee must
prominently state that Licensee must take action on the subject matter contained within the
notice within [***] ([***]) [***] of Licensee’s receipt thereof.

     (b) Assistance and Cooperation. If a Party pursues Remedies hereunder, the
other Party will use all reasonable efforts to assist and cooperate with the Party pursuing
such Remedies. Each Party will bear its own costs and expenses relating to such pursuit.
Any damages or other amounts collected will be distributed, [***], to the Party that pursued
Remedies to cover its costs and expenses and, [***] the other Party to cover its costs and
expenses, if any, relating to the pursuit of such Remedies; any remaining amount will [***].

	7.11	 	Infringement of Third Person Rights. If a Third Person institutes a patent, trade secret or
other infringement suit against Licensee, a permitted sublicensee or a Permitted Seller during
the term of this Agreement, alleging that the manufacture, marketing, sale or use of the
Product infringes one or more patent or other intellectual property rights held by such Third
Person, then Licensee will have the first right (but not the obligation), at its sole expense,
to assume direction and control of the defense of such claims. Should Licensee determine not
to pursue the defense of a particular claim within [***] ([***] [***] after notice from Lilly,
then Lilly will have the right (but not the obligation), at its sole expense, to assume
direction and control of such claims. Licensee will not have the right to settle or otherwise
dispose of any such claim without the consent of Lilly, which consent will not be unreasonably
withheld.
	 
	7.12	 	No Liens. Licensee will keep the Licensed Patents and the Licensed Technology free from all
liens and encumbrances.
	 
	7.13	 	Debarment. If at any time a Party uses in any capacity the services of any Person debarred
under subsections 306(a) or (b) of the GDE Act, such Party will immediately notify the other
Party thereof.
	 
	7.14	 	Licensee Technology. Licensee will be the sole owner of the Licensee Technology,
subject to Section 7.3, above, and Section 10.2(a)(iii), below.
	 
	7.15	 	Covenant Not to Sue. [***] will not sue Licensee or any licensee of Licensee for any in
infringement of any patent or other rights of [***] that may arise from the use, manufacture,
sale, offer for sale or importation in the Territory by Licensee or any licensee of Licensee
of any product [***].
	 
	7.16	 	Product Inventory. Licensee will use the Product Inventory (as defined in the Prior
Agreement and supplied thereunder) for conducting clinical trials only and not for any
commercialization purposes whatsoever. For clarity, the foregoing will not limit

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

17

 

Licensee’s use of any product inventory manufactured after the Closing Date.

ARTICLE 8

ASSUMPTION OF LIABILITIES BY LICENSEE

	8.1	 	Assumption of Liabilities by Licensee. Except as otherwise provided in this Agreement,
Licensee hereby assumes and agrees to bear and be responsible for and to perform and satisfy
all responsibilities, duties (including, without limitation, compliance with all Applicable
Laws), obligations, claims, Damages, liabilities, burdens and problems of any nature
whatsoever that arise out of or relate to events occurring after the Effective Date
(collectively, the “Obligations”) associated directly or indirectly with Licensee’s ownership,
licensing, operation and/or use of the Licensed Patents and the Licensed Technology, as well
as those associated directly or indirectly with the development, manufacturing, distributing,
marketing, promoting or selling of the Product that arise out of or relate to events occurring
after the Effective Date, including, without limitation, all recalls, all warranty claims and
all product liability claims (without regard to the nature of the causes of action alleged or
theories of recovery asserted) arising out of or relating to events occurring in connection
with Product sold after the Effective Date, except for those Obligations with respect to which
Lilly is providing indemnification pursuant to the Prior Agreement and the provisions of
Section 11.1 of this Agreement, which Obligations will remain the responsibility of Lilly, and
those Obligations with respect to which InterMune is providing indemnification pursuant to the
Prior Agreement and the provisions of Section 2.2 of this Agreement, which Obligations will
remain the responsibility of InterMune.

ARTICLE 9

CONFIDENTIALITY

	9.1	 	Confidential Information. The Parties agree that, at all times during the term of this
Agreement and for a [***] following its expiration or earlier termination, the
Receiving Party will keep completely confidential, will not publish or otherwise disclose and
will not use directly or indirectly for any purpose other than as contemplated by this
Agreement any such Confidential Information of the Disclosing Party, whether such Confidential
Information was received by the Receiving Party prior to, on or after the Effective Date. For
clarity, Confidential Information provided under the Prior Agreement and meeting the
requirements of confidentiality thereunder and hereunder will be treated as Confidential
Information under this Agreement.

	9.2	 	Disclosure. Subject to Section 9.1, above, each Party may disclose and, with respect only to
Section 9.2(g), below, use, Confidential Information to the extent that such disclosure and,
with respect only to Section 9.2(g), below, use, is:

     (a) made in response to a valid order or subpoena of a court of competent jurisdiction or
other governmental body of a country or any political subdivision thereof of competent
jurisdiction; provided, however, that the Receiving Party will first have

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

18

 

given notice to the Disclosing Party and given the Disclosing Party a reasonable opportunity
to quash such order or subpoena and to obtain a protective order requiring that the
Confidential Information and documents that are the subject of such order or subpoena be
held in confidence by such court or governmental body or, if disclosed, be used only for
purposes for which the order or subpoena was issued; provided further, however, that if a
disclosure order or subpoena is not quashed or a protective order is not obtained, the
Confidential Information disclosed in response to such court or governmental order or
subpoena will be limited to that information that is legally required to be disclosed in
such response to such court or governmental order or subpoena;

     (b) otherwise required by law, in the opinion of legal counsel to the Receiving Party
as expressed in an opinion letter in form and substance reasonably satisfactory to the
Disclosing Party, which will be provided to the Disclosing Party at least twenty-four (24)
hours prior to the Receiving Party’s disclosure of the Confidential Information pursuant to
this Section 9.2;

     (c) made by the Receiving Party to the governmental or regulatory authority as required
to obtain or maintain marketing approval for the Product, provided that reasonable effort
will be taken to ensure confidential treatment of such information;

     (d) made by the Receiving Party to a Third Person as may be necessary or useful in
connection with the manufacture, development and commercialization of the Product, provided
that the Receiving Party will in each case obtain from the proposed Third Person recipient a
written confidentiality agreement containing confidentiality obligations no less onerous
than those set forth in this Section;

     (e) made by the Receiving Party to a United States or foreign tax authority;

     (f) made by the Receiving Party to its Representatives; provided, however, that: (i)
each such Representative has a need to know such Confidential Information for purposes of
this Agreement, (ii) the Receiving Party informs each Representative receiving Confidential
Information of its confidential nature, and (iii) the Receiving Party will be responsible
for any breach of this Section 9 by any of its Representatives to the same extent as if the
breach were by the Receiving Party; and

     (g) made by Licensee or any Representative of Licensee in the filing or publication of
patents or patent applications relating to Licensed Patents, Licensed Technology, Licensee
Technology or any invention relating to a Compound, including, without limitation, any
method of use or manufacture of such Compound, conceived or reduced to practice by Licensee
and/or any Representative of Licensee and or any permitted sublicensee of Licensee, to the
extent such use or disclosure in the filing or publication of the patent or patent
application is reasonably necessary for support of the patent or patent application.

	9.3	 	Notification. The Receiving Party will notify the Disclosing Party immediately, and
cooperate with the Disclosing Party as the Disclosing Party may reasonably request, upon

19

 

	 	 	the Receiving Party’s discovery of any loss or compromise of the Disclosing Party’s
Confidential Information.

	9.4	 	Remedies. Each Party agrees that the unauthorized use or disclosure of any Confidential
Information by the Receiving Party in violation of this Agreement or any other agreement
forming a part of this transaction will cause severe and irreparable damage to the Disclosing
Party. In the event of any violation of this Article 9, the Receiving Party agrees that the
Disclosing Party will be authorized and entitled to seek from any court of competent
jurisdiction injunctive relief, whether preliminary or permanent. The rights provided in the
immediately preceding sentences will be cumulative and in addition to any other rights or
remedies that may be available to Disclosing Party. Nothing in this Section is intended, or
should be construed, to limit a Party’s right to preliminary and permanent injunctive relief
or any other remedy for a breach of any other provision of this Agreement.

ARTICLE 10

TERMINATION

	10.1	 	Termination. Anything herein to the contrary notwithstanding, this Agreement may be
terminated as follows:

     (a) Expiration. The term of this Agreement will begin upon the Effective Date
and, unless sooner terminated under this Article 10, will continue in full force and effect
on a country-by-country basis in the Territory until Licensee and its Permitted Sellers have
no remaining Royalty Payment obligations in a specific country under Section 3.2 above.
Upon expiration of the Agreement in any country pursuant to this Section, Licensee will
have: (i) a fully paid-up, perpetual, irrevocable, exclusive (except as reserved by Lilly
under Section 4.1, above) license in the Field with the unrestricted right to grant
sublicenses under the Licensed Patents to make, use, offer to sell, sell and import Product
in such country, and (ii) a fully paid-up, perpetual, irrevocable, exclusive license in the
Field with the right to sublicense subject to Section 4.3, above, under the Licensed
Technology to make, have made, use, offer to sell, sell and import Product in such country.

     (b) Termination for Insolvency. Either Lilly or Targanta may immediately
terminate this Agreement by providing written notice to the other Party if, subsequent to
the Effective Date, the other Party is declared insolvent or bankrupt by a court of
competent jurisdiction, or a voluntary petition of bankruptcy is filed in any court of
competent jurisdiction by the other Party, or the other Party makes or executes any
assignment for the benefit of creditors.

     (c) Termination for Default. Either Lilly or Targanta may terminate this Agreement
because of a material breach or material default of this Agreement subsequent to the
Effective Date by the other Party by giving the other Party prior written notice thereof,
specifying in reasonable detail the alleged material breach or material default,

20

 

and if such alleged material breach or material default continues unremedied for a period of
[***]([***])[***] with respect to monetary breaches or defaults after the date of receipt of
the notification, or [***] ([***]) [***] with respect to non-monetary material breaches or
material defaults after the date of receipt of the notification or, if the non-monetary
material breach or material default reasonably cannot be corrected or remedied within [***]
([***]) [***], then if the defaulting Party has not in good faith commenced remedying said
material breach or material default within said [***] ([***]) [***] and be diligently
pursuing completion of same, then such Party may immediately terminate this Agreement by
again providing written notification to the defaulting Party. This Section 10.1(c) will not
be exclusive and will not be in lieu of any other remedies available to a Party hereto for
any breach or default hereunder on the part of the other Party. Notwithstanding the
foregoing, to the extent a material breach or material default of this Agreement by Targanta
affects Targanta’s performance and Lilly’s rights under this Agreement as it relates to one
or more jurisdictions, but not all jurisdictions, Lilly may terminate this Agreement in
accordance with this Section 10.1(c) as to the affected jurisdiction or jurisdictions only,
and in such case this Agreement will remain in full force and effect with respect to the
jurisdictions not so affected.

	10.2	 	Rights Upon Termination under Section 10.1.

     (a) Lilly’s Rights Upon Termination for Insolvency or Default of Licensee. If
Lilly terminates this Agreement under Section 10.1 (b) or (c), above, then the following
will take effect:

          (i) Reversion of Licensed Patents and Licensed Technology. All rights under
the Licensed Patents and the Licensed Technology granted by Lilly to Licensee pursuant to
Article 4, above, will terminate and all rights granted therein will immediately revert to
Lilly with no further notice or action required on Lilly’s behalf; provided, however, that
if the termination relates only to a specific country, then only the licenses pertaining to
such country will revert to Lilly hereunder.

           (ii) Reversion of Patent Maintenance Responsibilities. Upon the effective
date of the termination of this Agreement, the sole responsibility for preparing, filing,
prosecuting and maintaining the Licensed Patents and the Licensed Technology will revert
back to Lilly with no further notice or action required on Lilly’s behalf; provided,
however, that if the termination relates only to a specific country, then only the patent
maintenance obligations pertaining to such country will revert to Lilly hereunder. In such
case, Licensee will maintain its patent responsibilities for all other Licensed Patents and
Licensed Technology.

          (iii) Non-Exclusive License and Access to Licensee Technology.

               (A) Initial Product(s). Licensee will grant to Lilly a non-exclusive, world-wide,
[***] license, with a right to sublicense, under Licensee Technology to the extent that it
relates to Lilly’s ability to make, have made, use, offer to sell, sell and import the
Initial Product solely in, and for use in, the country or countries in which Licensee’s
rights to the Initial Product were so terminated. In addition to the

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

21

 

license granted under this Section, Licensee also agrees to provide Lilly, at Lilly’s
expense, reasonable access and reference to, copies of, and use of Licensee Technology,
[***], and if Lilly so requests, the [***], to the extent [***] to make, use, offer to sell,
sell and import the Initial Product in, and for use in, such country or countries.

       
        (B) Other Products. Licensee will also grant to Lilly a non-exclusive,
world-wide license, with a right to sublicense, under Licensee Technology to the extent that
it relates to Lilly’s ability to make, have made, use, offer to sell, sell and import any
other Products (namely, any Products other than Initial Product) solely in, and for use in,
the country or countries in which Licensee’s rights to the Initial Product were so
terminated. Such license shall be [***] ([***]). In addition to the license granted under
this Section, Licensee also agrees to provide Lilly, at Lilly’s expense, reasonable access
and reference to, copies of, and use of Licensee Technology, [***], to the extent [***] to
make, use, offer to sell, sell and import such other Products in, and for use in, such
country or countries.

       
   (ii) Disposition of Product Inventory Upon Termination. If Lilly terminates
this Agreement after Licensee has obtained a Regulatory Approval for the Initial Product,
Licensee will offer to sell to Lilly or its designee, [***] as determined by
Licensee’s records (maintained in accordance with GAAP, consistently applied) for the [***] prior to the termination, Licensee’s inventory of the Initial Product existing on
the date of termination (“Licensee Product Inventory”). Licensee will be entitled to finish
manufacturing any work-in-process into the Initial Product, and such newly made Initial
Product will be considered Licensee Product Inventory hereunder. If termination of this
Agreement relates only to a specific country, the provisions of this Subsection are
applicable only to Licensee’s Initial Product inventories for the country where such
termination occurred.

     (b) Licensee Rights Upon Termination for Insolvency or Default of Lilly. If
Licensee terminates this Agreement under Section 10.1 (b) or (c), above, then (i) the
licenses under the Licensed Patents and the Licensed Technology granted by Lilly to Licensee
pursuant to Article 4, above, will, unless otherwise terminated pursuant to the terms of
this Agreement, remain in full force and effect, and (ii) Licensee’s diligence obligations
under Section 7.3, above, will terminate. If the termination contemplated in this Section
10.2(b) is due to the default of Lilly, then in addition to the provisions of (i) and (ii),
above, [***] set forth in [***] above, will be [***]([***]) and [***].

	10.3	 	Termination of Sublicenses. If Lilly terminates this Agreement under Sections 10.1(b)
or (c), above, and Licensee has granted sublicenses in accordance herewith, Lilly agrees

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

22

 

	 	 	to continue such terminated sublicensee’s license with respect to the Licensed Patents
and/or Licensed Technology on [***]) unless such sublicensee was in breach of this Agreement
or its sublicense with Licensee on the date of such termination, in which event Lilly may
terminate such sublicense in accordance with its terms.
	 
	10.4	 	Continuing Obligations. Termination of this Agreement for any reason will not relieve the
Parties of any obligation accruing prior thereto and will be without prejudice to the rights
and remedies of either Party with respect to any antecedent breach of the provisions of this
Agreement. Without limiting the generality of the foregoing and in addition to the foregoing
and the rights upon termination set forth in Section 10.2, no termination of this Agreement,
whether by lapse of time or otherwise, will serve to terminate the rights and obligations of
the Parties hereto with respect to this Agreement as it relates to the jurisdiction(s) for
which this Agreement has not been terminated, and, with respect to those jurisdictions
terminated, the rights and obligations of the Parties hereto under Sections 7.4, 7.5, 10.2,
10.3 and 10.4 and Articles 2, 3, 9, 11 and 12, and such obligations will survive any such
termination.
	 
	10.5	 	Non-Exclusive Remedies. The remedies set forth in this Article 10 or elsewhere in this
Agreement will be in addition to, and will not be to the exclusion of, any other remedies
available to the Parties at law, in equity or under this Agreement.

ARTICLE 11

INDEMNIFICATION: INSURANCE

	11.1	 	Indemnification by Lilly. Lilly will indemnify, defend and hold Licensee (and its
Affiliates, and its and its Affiliates’ directors, officers and employees) harmless from and
against any and all Damages incurred or suffered by Licensee (and its directors, officers and
employees) to the extent caused by or arising out of or in connection with:

     (a) any breach of any representation or warranty made by Lilly in this Agreement; or

     (b) any failure to perform duly and punctually any covenant, agreement or undertaking
on the part of Lilly contained in this Agreement;

except to the extent that such Damages are due to the negligence, gross negligence or
willful misconduct of Licensee, its Affiliates, or its or its Affiliates’ employees, agents
or contractors.

	11.2	 	Indemnification by Licensee. Licensee will indemnify, defend and hold Lilly (and its
Affiliates and its and its Affiliates’ directors, officers and employees) harmless from and
against any and all Damages incurred or suffered by Lilly (and its directors, officers and
employees) to the extent caused by or arising out of or in connection with:

     (a) any breach of any representation or warranty made by such Licensee in this
Agreement;

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

23

 

     (b) any failure to perform duly and punctually any covenant, agreement or undertaking
on the part of such Licensee contained in this Agreement;

     (c) any Assumed Liabilities except those Assumed Liabilities for which InterMune
retained responsibility and liability pursuant to the Prior Agreement and Sections 2.2 and
8.1 of this Agreement;

     (d) the practice of the Licensed Patents and Licensed Technology by such Licensee, its
Affiliates, and any sublicensees;

     (e) the handling, possession, development, marketing, distribution, promotion, sale or
use of the Product by such Licensee or a Permitted Seller after the Effective Date
including, but not limited to, any Third Person claim alleging breach of any express or
implied warranties of merchantability or fitness for a particular purpose or asserting
strict liability, except to the extent such Damage is caused by a breach of this Agreement
by Lilly; or

     (f) Such Licensee’s failure to comply in all material respects with Applicable Laws in
connection with the performance of its obligations hereunder;

except to the extent that such Damages are due to the negligence, gross negligence or
willful misconduct of Lilly, its Affiliates or its or its Affiliates’ employees, agents or
contractors.

	11.3	 	Notice and Opportunity To Defend. Promptly after receipt by a Party hereto of notice
of any claim which could give rise to a right to indemnification pursuant to Section 11.1 or
11.2, above, such Party (the “Indemnified Party”) will give the other Party (the
“Indemnifying Party”) written notice describing the claim in reasonable detail. The failure
of an Indemnified Party to give notice in the manner provided herein will not relieve the
Indemnifying Party of its obligations under this Article 11, except to the extent that such
failure to give notice materially prejudices the Indemnifying Party’s ability to defend such
claim. The Indemnifying Party will have the right, at its option, to compromise or defend,
at its own expense and by its own counsel, any such matter involving the asserted liability
of the Party seeking such indemnification; provided, however, that the Indemnifying Party
may do so under a reservation of rights with respect to the obligation to indemnify. If the
Indemnifying Party will undertake to compromise or defend any such asserted liability, it
will promptly (and in any event not less than ten (10) days after receipt of the Indemnified
Party’s original notice) notify the Indemnified Party in writing of its intention to do so,
and the Indemnified Party agrees to cooperate fully with the Indemnifying Party and its
counsel in the compromise or defend against any such asserted liability. All reasonable
costs and expenses incurred in connection with such cooperation will be borne by the
Indemnifying Party subject to the Indemnifying Party’s reservation of rights. If the
Indemnifying Party elects not to compromise or defend the asserted liability, or fails to
notify the Indemnified Party of its election to compromise or defend as herein provided, the
Indemnified Party will have the right, at its option, to pay, compromise or defend such
asserted liability by its own counsel and its reasonable costs, expenses, and any payment
made therewith will be included as part of

24

 

	 	 	the indemnification obligation of the Indemnifying Party hereunder, subject to the
Indemnifying Party’s reservation of rights. Notwithstanding the foregoing, neither the
Indemnifying Party nor the Indemnified Party may settle or compromise any claim without
consent of the other; provided, however, that consent to settlement or compromise will not
be unreasonably withheld. In any event, the Indemnified Party and the Indemnifying Party
may participate, at their own expense, in the defense of such asserted liability. If the
Indemnifying Party chooses to defend any claim, the Indemnified Party will make available to
the Indemnifying Party any books, records or other documents within its control that are
necessary or appropriate for such defense; provided, however, any such books, records or
other documents within the control of the Indemnified Party which are made available to the
Indemnifying Party hereunder will be held in strict confidence by the Indemnifying Party and
will be disclosed by the Indemnified Party to the Indemnifying Party only to the extent that
such books, records or other documents relate to the claim.

     Notwithstanding anything to the contrary in this Section 11.3, (a) the Party conducting
the defense of a claim will (1) keep the other Party informed on a reasonable and timely
basis as to the status of the defense of such claim (but only to the extent such other Party
is not participating jointly in the defense of such claim), and (2) conduct the defense of
such claim in a prudent manner, and (b) the Indemnifying Party will not cease to defend,
settle or otherwise dispose of any claim without the prior written consent of the
Indemnified Party (which consent will not be unreasonably withheld).

	11.4	 	Indemnification Payment Obligation. Neither Party will incur any indemnification obligations
under this Article 11 until [***], at which time [***] such Damages will be covered. The
provisions of this Section will not limit or otherwise affect the obligations of any
Indemnifying Party under any other Section.
	 
	11.5	 	Indemnification Payment Adjustments. The amount of any Damages for which
indemnification is provided under this Article 11 will be reduced by the insurance proceeds
received and any other amount recovered, if any, by the Indemnified Party with respect to
any Damages; provided, however, that the foregoing will not under any circumstances reduce
the Damages for which either Party is obligated to indemnify the other to the extent the
insurance proceeds received result from a self-insurance program; provided further, however,
that an Indemnified Party will not be subject to an obligation to pursue an insurance claim
relating to any Damages for which indemnification is sought hereunder. To the extent the
preceding sentence is applicable, if any Indemnified Party will have received any payment
pursuant to this Article 11 with respect to any Damages and will subsequently have received
insurance proceeds or other amounts with respect to such Damages, then such Indemnified
Party will pay to the Indemnifying Party an amount equal to the difference (if any) between
(a) the sum of the amount of those insurance proceeds or other amounts received and the
amount of the payment by such Indemnifying Party pursuant to this Article 11 with respect to
such Damages and (b) the amount necessary to fully and completely indemnify and hold
harmless such Indemnified

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

25

 

	 	 	Party from and against such Damages; provided, however, that in no event will such
Indemnified Party have any obligation pursuant to this sentence to pay to such Indemnifying
Party an amount greater than the amount of the payment by such Indemnifying Party pursuant
to this Article 11 with respect to such Damages.
	 
	11.6	 	Indemnification Payment. Upon the final determination of liability and the amount of the
indemnification payment under this Article 11, the Indemnifying Party will pay to the
Indemnified Party, within ten (10) business days after such determination, the amount of any
claim for indemnification made hereunder.
	 
	11.7	 	Limitation of Liability. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR INDIRECT, SPECIAL,
INCIDENTAL, CONSEQUENTIAL (INCLUDING LOST PROFITS) OR PUNITIVE DAMAGES, HOWEVER CAUSED OR UPON
ANY THEORY OF LIABILITY (INCLUDING A PARTY’S OR ITS AFFILIATES’ OWN NEGLIGENCE, GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OR THE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
A PARTY’S OR A PARTY’S AFFILIATES’ EMPLOYEES, AGENTS OR CONTRACTORS), ARISING OUT OF THIS
AGREEMENT OR THE PERFORMANCE OF, OR THE FAILURE TO PERFORM, ANY OBLIGATION(S) SET FORTH
HEREIN.
	 
	11.8	 	Insurance. Licensee will maintain at its own expense, [***] [***] to Lilly, full insurance
coverage for Licensee, written on a per occurrence basis, which will [***], including, without
limitation, errors and omissions insurance encompassing claims relating to Licensee’s
performance of its obligations under this Agreement and comprehensive general liability
insurance for claims for damages arising from bodily injury (including death) and property
damages arising out of acts or omissions of Licensee, [***] [***]. Minimum limits of such
insurance (not [***] [***]) will be [***] [***][***]) coverage. Maintenance of such insurance
coverage will not relieve Licensee of any responsibility under this Agreement for damage in
excess of insurance limits or otherwise. Licensee will provide Lilly with a certificate from
the insurer(s), evidencing such insurance coverage and the insurer’s agreement to notify Lilly
[***] [***] ([***]) [***] such insurance coverage.
	 
	11.9	 	Survival. Each Indemnified Party’s rights under Article 11 will not be deemed to have been
waived or otherwise affected by such Indemnified Party’s waiver of the breach of any
representation, warranty, agreement or covenant contained in or made pursuant this Agreement,
unless such waiver expressly and in writing also waives any or all of the Indemnified Party’s
right under Article 11.

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

26

 

ARTICLE 12

MISCELLANEOUS

	12.1	 	Successors and Assigns. This Agreement will be binding upon and will inure to the benefit of
the Parties hereto and their respective successors and assigns, and either Lilly or Licensee
may assign this Agreement without the prior written consent of the other. No assignment of
this Agreement or of any rights hereunder will relieve the assigning Party of any of its
obligations or liability hereunder.
	 
	12.2	 	Notices. Unless otherwise stated in this Agreement as to the method of delivery, all notices
or other communications required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given if delivered by hand, courier, facsimile or if mailed
first class, postage prepaid, by registered or certified mail, return receipt requested (such
notices will be deemed to have been given on the date delivered in the case of hand delivery
or delivery by courier, on the date set forth in the confirmation sheet in the case of
facsimile delivery, and on the date of post mark in the case of delivery by mail) as follows:
	 
	 	 	If to Lilly, as follows:

Eli Lilly and Company

Lilly Corporate Center

Indianapolis, Indiana 46285

Facsimile: ([***]) [***]

Attn: Vice President, Corporate Business Development

With a copy to:

Eli Lilly and Company

Lilly Corporate Center

Indianapolis, Indiana 46285

Facsimile: ([***]) [***]

Attn: General Counsel

If to Licensee, as follows:

InterMune, Inc.

3280 Bayshore Boulevard

Brisbane, California 94005

Facsimile: ([***]) [***]

Attn: Senior Vice President of Corporate Development

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

27

 

With a copy to:

InterMune, Inc.

3280 Bayshore Boulevard

Brisbane, California 94005

Facsimile: ([***]) [***]

Attn: General Counsel

or in any case to such other address or addresses as hereafter will be furnished in a
written notice as provided in this Section 12.2 by any Party hereto to the other Party.

	12.3	 	Waiver. Any term or provision of this Agreement may be waived at any time by the Party
entitled to the benefit thereof only by a written instrument executed by such Party. No delay
on the part of Lilly or Licensee in exercising any right, power or privilege hereunder will
operate as a waiver thereof, nor will any waiver on the part of either Lilly or Licensee of
any right, power or privilege hereunder operate as a waiver of any other right, power or
privilege hereunder nor will any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any other right,
power or privilege hereunder.
	 
	12.4	 	Entire Agreement. This Agreement, including the exhibits and schedules attached hereto and
the certificates delivered in connection herewith and therewith constitute the entire
agreement between the Parties with respect to the subject matter hereof and supersede all
prior agreements or understandings of the Parties relating thereto, including that certain
Confidential Disclosure Agreement, dated as of August 1, 2001.
	 
	12.5	 	Amendment. This Agreement may be modified or amended only by written agreement of the
Parties hereto signed by authorized representatives of the Parties.
	 
	12.6	 	Counterparts. This Agreement may be executed in any number of counterparts, each of which
will be deemed an original but all of which together will constitute a single instrument.
	 
	12.7	 	Governing Law. This Agreement will be governed and construed in accordance with the laws of
the State of New York excluding any choice of law rules that may direct the application of the
law of another state.
	 
	12.8	 	Captions. All section titles or captions contained in this Agreement and in any exhibit,
schedule or certificate referred to herein or annexed to this Agreement are for convenience
only, will not be deemed a part of this Agreement and will not affect the meaning or
interpretation of this Agreement.
	 
	12.9	 	No Third-Person Rights. No provision of this Agreement will be deemed or construed in any
way to result in the creation of any rights or obligation in any Person not a Party to this
Agreement.
	 
	12.10	 	Construction. This Agreement will be deemed to have been drafted by both Lilly and

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

28

 

Licensee and will not be construed against either Party as the draftsperson hereof.

29

 

	12.11	 	Appendices, Exhibits, Schedules and Certificates. Each appendix, exhibit, schedule
and certificate attached hereto is incorporated herein by reference and made a part of this
Agreement.
	 
	12.12	 	No Joint Venture. Nothing contained herein will be deemed to create any joint venture or
partnership between the Parties hereto, and, except as is expressly set forth herein, neither
Party will have any right by virtue of this Agreement to bind the other Party in any manner
whatsoever.
	 
	12.13	 	Severability. If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future laws effective while this Agreement remains in effect,
the legality, validity and enforceability of the remaining provisions will not be affected
thereby.
	 
	12.14	 	Force Majeure. If either Party is prevented from complying, either totally or in part, with
any of the terms or provisions set forth herein by reason of force majeure, including, by way
of example and not of limitation, fire, flood, explosion, storm, strike, lockout or other
labor dispute, riot, war, rebellion, accidents, acts of God, acts of governmental agencies or
instrumentalities, failure of suppliers or any other similar or dissimilar cause, in each case
to the extent beyond its reasonable control, said Party will provide written notice of same to
the other Party. Said notice will be provided within [***] ([***]) [***] [***] of the
occurrence of such event and will identify the requirements of this Agreement or such of its
obligations as may be affected, and, subject to Section 3.8, to the extent so affected, said
obligations will be suspended during the period of such disability. The Party prevented from
performing hereunder will use reasonable efforts to remove such disability and will continue
performance whenever such causes are removed. The Party so affected will give to the other
Party a good faith estimate of the continuing effect of the force majeure condition and the
duration of the affected Party’s nonperformance. If the period of any previous actual
nonperformance of Lilly because of Lilly force majeure conditions plus the anticipated future
period of Lilly nonperformance because of such conditions will exceed an aggregate of [***]
([***])[***], Licensee may terminate this Agreement immediately by written notice to Lilly.
If the period of any previous actual nonperformance of Licensee because of Licensee force
majeure conditions plus the anticipated future period of Licensee nonperformance because of
such conditions will exceed an aggregate of [***]([***])[***], Lilly may terminate this
Agreement immediately by written notice to Licensee. When such circumstances as those
contemplated herein arise, the Parties will discuss in good faith, what, if any, modification
of the terms set forth herein may be required in order to arrive at an equitable solution.
	 
	12.15	 	Independent Contractors. It is understood and agreed that the Parties are independent
contractors and are engaged in the operation of their own respective businesses, and neither
Party is to be considered the agent of the other Party for any purpose whatsoever. Neither
Party will have any authority to enter into any contracts, assume any obligations, create any
liability, nor make any warranties or representations for or on behalf of the other
Party.

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

30

 

	12.16	 	Change of Control. If any Third Person makes a good faith written offer to Licensee to
acquire the right to control the majority of the voting stock of Licensee, and if such Third
Person potential acquirer has a [***] in place, then Licensee will promptly notify Lilly of
its receipt of such an offer.
	 
	12.17	 	Dispute Resolution. If any dispute arises relating to this Agreement, prior to instituting
any lawsuit, arbitration or other dispute resolution process on account of such dispute, the
Parties will attempt in good faith to settle such dispute first by negotiation and
consultation between themselves, including referral of such dispute to the Chief Executive
Officer of Licensee and the Vice President, Corporate Business Development, of Lilly. If
said executives are unable to resolve such dispute or agree upon a mechanism to resolve such
dispute within sixty (60) days of the first written request for dispute resolution under this
Section 12.16, the Parties may then either consider other forms of alternative dispute
resolution as a means of resolving any such dispute or institute litigation and seek such
remedies as may be available.

 

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

31

 

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	ELI LILLY AND COMPANY

 	 
	 	By:  	/s/ John C. Lechleiter
 	 
	 	Printed Name: John C. Lechleiter 	 
	 	Title: President & Chief Operating Officer 	 
	 
	 	INTERMUNE, INC.

 	 
	 	By:  	/s/ Thomas Kassberg
 	 
	 	Printed Name: Thomas Kassberg  	 
	 	Title: Senior Vice President,
Business

Development and Corporate Strategy 	 

32

 

	 	 	 	 	 

Exhibit A

Licensed Patents

[***]

 

*** Certain information on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted portions.

33

 

Schedule 1.22

InterMune’s Exchange Rate Methodology

     All payments to be made under this Agreement shall be made in U.S. Dollars. For those sales
involving Product which occur outside the United States, the Royalty Payments due on such sales
will be calculated on the basis of the local currency sales figures translated into United States
Dollars according to InterMune’s then current standard currency translation methodology. The
methodology employed by InterMune shall be that methodology used by InterMune in the translation of
its foreign currency operating results for external reporting and shall be consistent with United
States GAAP.

34

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}]]