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Development and Marketing Agreement  

 —Between—  

 Boehringer Ingelheim International GmbH  

 and  

 InterMune Pharmaceuticals, Inc.  

 March 23, 2001  

1

 
  
 

    Table of Contents    
  

	 
	 	 
	 	Page

	1.	 	Certain Definitions	 	3
	

2.	
 	

License Grants	
 	

6
	

3.	
 	

Development and Commercialization	
 	

7
	

4.	
 	

BI's Option to Promote	
 	

9
	

5.	
 	

Manufacturing	
 	

9
	

6.	
 	

Commercial Terms	
 	

9
	

7.	
 	

Development and Marketing Committees	
 	

12
	

8.	
 	

Diligence	
 	

12
	

9.	
 	

Payments and Reports	
 	

12
	

10.	
 	

Intellectual Property	
 	

14
	

11.	
 	

Representations and Warranties	
 	

15
	

12.	
 	

Indemnification and Liability	
 	

16
	

13.	
 	

Confidentiality	
 	

17
	

14.	
 	

Termination	
 	

17
	

15.	
 	

Effects of Termination	
 	

17
	

16.	
 	

Miscellaneous	
 	

18
	

Exhibit A—140 Amino Acid Sequence	
 	

 
	

Exhibit B—Territory No. 1	
 	

 
	

Exhibit C—Territory No. 2	
 	

 

2

 

    Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.  

  
 

    Exhibit 10.35    
  

 
  Development and Marketing Agreement    
  

    This Development nd Marketing Agreement (the "Agreement") is made effective and entered into as of
March 23, 2001 (the "Effective Date") by and between Boehringer Ingelheim International GmbH, a German GmbH ("BI"), and  InterMune Pharmaceuticals, Inc., a Delaware corporation ("InterMune"). InterMune and BI may be referred to herein as a "Party" or, collectively,
as "Parties." 

 
 

Recitals    
  

    Whereas, InterMune is a corporation formed for the purpose of research and development of biopharmaceutical
products; 

    Whereas, BI is an international pharmaceutical company which develops, manufactures and markets biological and pharmaceutical products; 

    Whereas, BI has licensed the rights to a certain biologic product and to the technology relating thereto from Genentech, Inc.
pursuant to the Genentech License (as defined in Article 1.12 below); and 

    Whereas, InterMune wishes to obtain, and BI desires to grant, certain licenses and rights to InterMune to use, develop, manufacture,
have made, promote, offer for sale, have sold and sell a biologic product for use for certain specific indications. 

    Now, Therefore, the Parties agree as follows: 

1.  Certain Definitions  

    1.1 "Affiliate" means any company or entity controlled by, controlling
or under common control with a Party. As used in this Article, "control" means (a) that an entity or company owns, directly or indirectly, fifty percent (50%) or more of the voting stock of
another entity, or (b) that an entity, person or group has the actual ability to control and direct the management of the entity, whether by contract or otherwise, but excluding, for all
purposes of this Agreement, BI, as to InterMune, and InterMune, as to BI. 

    1.2 "Aggregate Net Sales" means aggregate Net Sales of the Product  [*] within and outside [*] for a calendar year. 

    1.3 "Best Efforts" shall be the  [*] consistent with the [*] and
comparable with the
effort devoted to other products with [*]. 

    1.4 "BI Know-How" means all Know-How related to
the Product and/or in the areas of quality assurance/ quality control (QA/QC), pharmaceutical science, process development or regulatory affairs that (a) is Controlled by BI prior to and during
the term of this Agreement and (b) is necessary or useful to the development, registration or use of the Product. 

    1.5 "BI Patent Rights" means all rights under the BI Patents. 

[*]=Certain
confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. 

3

 

    1.6 "BI Patents" means any Patents that directly relate to the Product
in the Field in Territory No. 1 or Territory No. 2, Controlled by BI prior to or during the term of this Agreement, including without limitation any Patents listed in the Disclosure
Documents. 

    1.7 "Controlled" means with respect to any material,
Know-How or intellectual property right, that the Party owns or has a license to such material, Know-How or intellectual property right and has the ability to grant access, a
license, or a sublicense to such material, Know-How or intellectual property right to the other Party as provided for herein without violating an agreement with a Third Party as of the
time the Party would be first required hereunder to grant the other Party such access, license or sublicense. 

    1.8 "Disclosure Documents" means each of those certain packets of
diligence documents that BI provided to InterMune, under that certain letter dated as of March 22, 2001; and that InterMune provided to BI, under that certain letter dated as of
March 22, 2001. 

    1.9 "FDA" means the U.S. Food and Drug Administration, or any successor
agency. 

    1.10 "Field" means the therapeutic treatment of human beings for all of
the following diseases and conditions: chronic granulomatous disease (CGD), osteopetrosis (OP), idiopathic pulmonary fibrosis (IPF)), tuberculosis (TB) and fungal infections (FI) through the use of
the Product and shall include methods and means for such purpose. 

    1.11 "Genentech" means Genentech, Inc., a Delaware corporation,
with its principal office at 1 DNA Way, South San Francisco, CA 94080. 

    1.12 "Genentech License" means that certain agreement regarding
interferon gamma between Genentech and BI, dated March 29, 1985, as amended. 

    1.13 "Genentech License Rights" means all rights under Genentech Patents
and Know-How granted to BI by Genentech under the Genentech License. 

    1.14 "Genentech Patents" means any Patents to which BI has rights under
the Genentech License, including without limitation those listed under "Genentech Patents" in the Disclosure Documents. 

    1.15 "Interferon Gamma-1b" shall mean solely the single
chain polypeptide containing the 140 amino acid sequence set forth on Exhibit A hereto, i.e., the active ingredient in InterMune's
ACTIMMUNE® product and BI's Product sold inter alia under the trademark IMUKIN®. 

    1.16 "InterMune Know-How" means all Know-How
generated by InterMune during the development of the Product in the Field prior to and during the term of this Agreement. 

    1.17 "InterMune Patent Rights" means all rights under the InterMune
Patents. 

    1.18 "InterMune Patents" means any Patents that directly relate to the
Product in the Field in Territory No. 1 or Territory No. 2, Controlled by InterMune prior to or during the term of this Agreement, including without limitation any Patents listed in the
Disclosure Documents. 

    1.19 "Know-How" means all Protocols, as well as all
information, data, know-how, trade secrets, inventions, developments, results (including without limitation, results of clinical trials, including safety data,) techniques and materials,
(whether or not patentable) relating to the Product in the Field for any country in Territory No. 1 or Territory No. 2; and InterMune's clinical trials in the Field in the United States. 

    1.20 "Licensed Technology" means, collectively, the BI
Know-How, BI Patent Rights and the Genentech License Rights, except for any manufacturing know-how. 

4

 

    1.21 "Net Sales" shall mean, as to each calendar quarter, the gross
invoiced sales prices charged for all Product sold by a Party and its sublicensees in arm's length transactions to Third Parties during such quarter, after deduction of the following items paid by the
Party and its sublicensees during such calendar quarter with respect to sales of the Product regardless of the calendar quarter in which such sales were made, provided and to the extent that such
items are incurred or allowed and do not exceed reasonable and customary amounts in the market in which such sales occurred: 

     (i) trade and quantity discounts or rebates actually taken and allowed, including discounts or rebates to governmental
or managed care organizations; 

    (ii) credits or allowances given or made for rejection or return of previously sold Product; 

   (iii) any tax, duty or government charge (including any tax such as a value added or similar tax or government charge
other than an income tax) levied on the sale, transportation or delivery of a Product and borne by the seller thereof without reimbursement from any third party; and 

    (iv) any charges for freight from the seller, or for insurance, borne by the seller. 

    [*] 

    1.22 "New Indications" means IPF, TB, FI and any additional new
indications in human beings that may be mutually agreed by the Parties after the Effective Date. 

    1.23 "Patents" means any and all released, issued or pending patents and
patent applications, both foreign and domestic, and including without limitation: (i) all divisionals, continuations and continuations-in-part of any such applications,
(ii) any patents that issue from any of the foregoing, and (iii) all substitutions, extensions, reissues, renewals, supplementary protection certificates and inventors' certificates with
respect to any of the foregoing issued patents. 

    1.24 "Product" means solely  [*] Interferon Gamma-1b that is [*]
Territory No. 1 for the treatment of CGD and [*] manufactured by BI Austria and sold under the Trademarks. 

    1.25 "Protocols" mean those clinical protocols included in the
Disclosure Documents as well as all further protocols that relate to Interferon Gamma-1b or the Product in the Field and that are agreed upon by both Parties. 

    1.26 "Recognized Agent" means a Third Party through which BI regularly
distributes and sells its products in a particular country or region. 

    1.27 "Supply Agreement" means that certain Data Transfer, Clinical Trial
and Market Supply Agreement, entered into between InterMune and Boehringer Ingelheim Austria GmbH ("BI Austria"), effective as of January 27, 2000. 

    1.28 "Territory No. 1" means the countries listed in  Exhibit B attached hereto in which the Product is
currently marketed by BI, its Affiliates or Recognized Agents, and where BI has rights under
the Genentech License. 

    1.29 "Territory No. 2" means the countries listed in  Exhibit C attached hereto in which the Product is not
currently marketed, and where BI has rights under the Genentech License. 

    1.30 "Third Party" means any party besides the Parties, their respective
Affiliates and Genentech. 

    1.31 "Trademarks" mean any BI trademarks used for the marketing and sale
of the Product for the Field in Territory No.1 or intended to be used in Territory No. 2 Controlled by BI during 

5

 

the term of this Agreement, including without limitation any trademarks listed in the Disclosure Documents. 

2.  License Grants  

    2.1 BI grants to InterMune an exclusive sublicense, even as to BI, under the Genentech License Rights, and an exclusive
license, even as to BI, under the BI Patent Rights and BI Know-How, to develop the Product for New Indications subject to Article 3 in Territory No. 1 and Territory
No. 2, including the right to grant sublicenses, which sublicense right shall be subject to Genentech's prior written consent and to BI's prior written consent, which BI shall not unreasonably
withhold. 

    2.2 BI grants to InterMune an exclusive sublicense under the Genentech License Rights, even as to BI, and an exclusive
license under the BI Patent Rights and BI Know-How, even as to BI, to import the Product in Territory No. 1. This license grant is limited to the sole purpose of developing the
Product in New Indications; and therefore, BI retains the right to import the Product in Territory No. 1 for marketing and sale purposes. 

    2.3 InterMune grants to BI an exclusive license, even as to InterMune, under the InterMune Patent Rights and InterMune
Know-How, subject to Article 3, to register, distribute and book sales for the Product for the Field in Territory No. 1 including the right to grant sublicenses. Except for
sublicenses to BI's Affiliates and Recognized Agents, such sublicenses shall be subject to InterMune's prior written consent, which InterMune shall not unreasonably withhold. 

    2.4 BI grants to InterMune an exclusive sublicense, even as to BI, under the Genentech License Rights, and an exclusive
license, even as to BI, under the BI Patent Rights and BI Know-How, subject to Article 3, to register, import, distribute and book sales for the Product in the Field in Territory
No. 2, including the right to grant sublicenses, which sublicense right shall be subject to Genentech's prior written consent and to BI's prior written consent, which BI shall not unreasonably
withhold. 

    2.5 BI grants to InterMune an exclusive sublicense, alongside BI, under the Genentech License Rights, and an exclusive
license, alongside BI, under the BI Patent Rights and BI Know-How, to promote the Product for CGD and OP under the Trademarks in Territory No. 1 and Territory No. 2,
including the right to grant sublicenses, which sublicense right shall be subject to Genentech's prior written consent and to BI's prior written consent, which BI shall not unreasonably withhold. 

    2.6 In the event that BI exercises pursuant to Article 4 its option to promote any New Indication in any country
within Territory No. 1 or Territory No. 2, InterMune grants to BI an exclusive license, even as to InterMune, under the InterMune Patent Rights and InterMune Know-How to
promote the Product for such New Indication under the Trademarks in such country. Except for sublicenses to BI's Affiliates and Recognized Agents, such sublicenses shall be subject to InterMune's
prior written consent, which InterMune shall not unreasonably withhold. 

    2.7 In the event that BI does not exercise pursuant to Article 4 its option to promote any New Indication in any
country within Territory No. 1, BI grants to InterMune an exclusive sublicense, even as to BI, under the Genentech License Rights and an exclusive license, even as to BI, under the BI Patent
Rights and BI Know-How, to promote the Product for such New Indication under the Trademarks in such country, including the right to grant sublicenses, which sublicense right shall be
subject to
Genentech's prior written consent and to BI's prior written consent, which BI shall not unreasonably withhold. 

6

 

    2.8 In the event that BI does not exercise pursuant to Article 4 its option to promote any New Indication in any
country within Territory No. 2, BI grants to InterMune an exclusive sublicense, even as to BI, under the Genentech License Rights and an exclusive license, even as to BI, under the BI Patent
Rights and BI Know-How, to promote and import the Product for such New Indication under the Trademarks in such country, including the right to grant sublicenses, which sublicense right
shall be subject to Genentech's prior written consent and to BI's prior written consent, which BI shall not unreasonably withhold. 

    2.9 With respect to only those countries that are subject to the anti-competition laws of the European
Communities ("EC"), the exclusive sublicenses and exclusive licenses set forth in this Article 2 shall [*] on an  [*] for [*]
 from the date of first commercial sale of
Product in OP or any New Indication in any country of the EC; and after such [*] period, shall  [*] unless there exists a valid relevant claim under an
applicable Patent for such country, in which case, the sublicenses or
licenses shall [*] for the life of the Patent. 

3.  Development and Commercialization  

    3.1  Clinical Development:  The Product has been
developed for CGD and OP. Under this Agreement, InterMune will be responsible at its own expense for clinical development of the Product in New Indications according to the Protocols in the most
commercially attractive countries in Territory No. 1 and Territory No. 2 from a marketing point of view, which countries shall be mutually agreed upon  [*]
. Any amendment to the Protocols shall require the prior written approval of
both Parties. 

    3.2  Regulatory Filings:  

    (a) The Product has been approved and launched for CGD in Territory No. 1. Under this Agreement, InterMune shall
compile at its own cost state-of-the-art dossiers to obtain approval to market the Product in the most commercially attractive countries in Territory No. 1
from a marketing point of view, which countries shall be agreed upon by [*] for OP and all New Indications; provided however,
InterMune shall compile state-of-the-art-dossiers to obtain approval to market the Product for OP in the EC as soon as commercially practicable. In case
of disagreement with respect to any New Indication, BI has the
right to insist on a specific country, provided that BI shall reimburse InterMune for any costs incurred by InterMune regarding the registration of the Product in such country if BI does not launch
the Product in such country for such New Indication in accordance with Article 4, paragraph 2. BI shall file (at InterMune's cost) such dossiers in BI's name. BI shall respond to the
comments of regulatory authorities (at BI's cost), with InterMune's assistance (at InterMune's cost). BI (at BI's cost) shall maintain ongoing regulatory communication and compliance. 

    (b) The Product has been approved for CGD within certain countries for sale in Territory No. 2 as set forth in  Exhibit C. Under this Agreement, InterMune
may (at its own cost) compile, and subject to Article 3.2(c) below, file in its own name
dossiers for regulatory approval to market the Product in the Field, respond to the comments of regulatory authorities and maintain ongoing regulatory compliance, in certain countries in Territory
No. 2, which countries InterMune shall decide upon. When it is impractical for InterMune to file, respond to or maintain a regulatory filing in a country because BI has previously filed in such
country, BI shall file, respond to and maintain such regulatory filing (at InterMune's cost). 

    (c) InterMune will provide BI with a copy of all final draft clinical study reports intended to be used for a
registration dossier, as well as all draft registration dossiers, for Territory No. 1 at the final draft stage. BI will comment on each draft within thirty (30) days of receipt and
either (i) give its approval or (ii) point out deficiencies. InterMune will provide BI with a copy of any registration dossier InterMune intends to file in Territory No. 2. BI
will comment on the dossier within thirty (30) days and either (i) give its approval for filing or (ii) point out deficiencies. 

7

 

InterMune agrees not to file any dossier in Territory No. 2 without BI's prior approval, such approval not to be upheld unreasonably. 

    (d) If within [*] from the Effective Date a
registration dossier [*], respectively, has not [*] such
country shall automatically be removed from [*] for any such  [*] not [*]. 

    3.3  Marketing:  

    (a) In Territory No. 1, BI shall continue to exclusively distribute the Product in its own name, under the
Trademarks and its tradedress and book sales. In the event that BI exercises its option to promote, BI shall be obligated to launch the Product for any New Indication pursuant to Article 4. 

    (b) In Territory No. 2, InterMune shall exclusively distribute the Product under one of the Trademarks  [*] from time to time but in its own name and
tradedress and exclusively book sales for the Product. Subject to BI's option to
promote as set forth in Article 4, InterMune may also launch and promote the
Product within [*] of regulatory approval for a New Indication in certain countries of Territory No. 2, which countries
shall be agreed upon by the Parties, such launches shall be made under the Trademarks only. 

    (c) In the event InterMune has not launched the Product for a New Indication in such country of Territory No. 2
within the [*] time period set forth above, such country shall  [*] be removed from Territory No. 2. 

    (d) To the extent permitted by the local registration authority, the packaging, package insert and literature used by
InterMune in connection with Product shall indicate that any of the Trademarks is a trademark by using the symbol ®, with the customary declaration (e.g., "... is a registered trademark of
Boehringer Ingelheim International GmbH used under license"). 

    (e) All use of the Trademarks by InterMune shall inure to the sole benefit of BI. BI shall remain the sole owner of the
Trademarks and the goodwill associated with the same, and InterMune agrees not to assert any ownership interest in the Trademarks or the goodwill associated therewith. 

    (f)  InterMune shall promote and use the Trademarks. Whenever InterMune is using the Trademarks they will use the
Trademarks in capital letters, or similar form, and with any reasonable specifications and directions given by BI from time to time. InterMune will do nothing to mislead the public as to the nature or
quality of any Product on which the Trademarks are affixed to nor use them on advertising or display materials which are [*]. 

    (g) InterMune will neither use the Trademarks or  [*] in relation to other products, nor will InterMune apply for the Trademarks or  [*]
 throughout the world. InterMune shall take no action which could prejudice the validity, registration or reputation of the
Trademarks and the goodwill associated with the same. 

    (h) InterMune undertakes to inform BI promptly on any infringement or threatened infringement of the Trademarks, or
challenge or threatened challenge to the validity of the Trademarks coming to their notice. BI shall have the exclusive right (at its cost) to take action in respect of the registration, defense, and
infringement of the Trademarks, and InterMune shall provide all such assistance and co-operation, including but not limited to furnishing of documents and information and the execution of
registered user/license documentation or the like as may be required to give effect to any action as may be taken, or required to be taken by BI. Only if BI is not willing to take action with respect
to an infringement of the Trademarks shall InterMune be entitled to take action on its own behalf and at its expense. In such case InterMune will follow any reasonable directions given by BI, and
InterMune shall keep BI fully and constantly informed. 

    (i)  At the request of BI InterMune will present samples of all material to which the Trademarks have been affixed to by
InterMune at least once a year. 

8

 

    (j)  In the event that one Party distributes the Product in a country and the other Party exercises an option to
exclusively promote the Product in a New Indication in such country pursuant to Article 4, then the names of both Parties' Affiliates in such country shall appear with equal prominence on all
promotional material for such New Indication. 

    (k) BI shall be responsible (at its own cost) for applying for and maintaining registrations of any trademarks or
Trademarks. BI warrants and covenants to make such applications in any country that the Parties agree upon from time to time. If InterMune does not launch the Product in such country, InterMune shall  [*] for all [*] in such country  [*] by [*] the date of InterMune's written notice. 

4.  BI's Option to Promote  

    BI
shall have the option to exclusively promote the Product for the treatment of each New Indication on an approved New Indication-by-New Indication and
country-by-country basis in Territory No. 1 and 2 (the "BI Option"). BI's decision to exercise the BI Option for any New Indication will be made and communicated to
InterMune in writing listing the countries, if any, where BI exercises the BI Option within [*] following delivery by InterMune
of Phase III clinical data to BI for each New Indication. Such clinical data shall be equivalent to the clinical data used in an  [*] with the [*]. If BI
does not exercise the BI Option
in any country in either Territory No. 1 or Territory No. 2 for a New Indication within such [*], BI shall  [*] lose its right to promote in such
country for such New Indication, and InterMune may promote the Product for such New
Indication in such country; provided however, if InterMune contracts or licenses with a Third Party for promoting the Product in such country, such agreement shall be subject to Genentech's prior
written consent and to BI's prior written consent, which BI shall not unreasonably withhold. 

    In
the event that BI has exercised its option to promote in a country, but has not launched the Product for a New Indication within  [*] of regulatory approval for marketing the Product for such New
Indication in such country for reasons within its reasonable
control, BI shall automatically lose its right to promote in such country for such New Indication, and InterMune may promote the Product for such New Indication in such country; provided however, if
InterMune contracts with a Third Party for promoting the Product in such country, BI must reasonably approve such Third Party. 

5.  Manufacturing  

    For
the duration of the Supply Agreement, [*] Product required
by InterMune and its Affiliates for clinical development in Territory No. 1 and 2 and market supply in Territory No. 2 under this Agreement shall be purchased from BI Austria pursuant to
the Supply Agreement. 

6.  Commercial Terms  

    6.1  Territory No. 1:  

    (a) Before the regulatory approval of OP or any New Indication, and beginning on April 1, 2001, InterMune shall
receive a royalty of [*] on any Aggregate Net Sales in Territory No. 1 that exceed nine (9) million Euro, for  [*] from April 1, 2001;
provided however, for 2001, the nine (9) million Euro shall be pro-rated to
6.75 million Euro to reflect the nine-(9) month period. 

    From
the beginning of the next calendar quarter following regulatory approval of OP in any country of Territory No. 1, the royalty rate to InterMune shall increase to  [*] on any Aggregate Net Sales in
Territory No. 1 that nine (9) million Euro, payable for a period of  [*]; provided however, for any partial year, if any, the nine (9) million Euro shall be pro-rated to reflect
such partial year. 

9

 
    From the beginning of the next calendar quarter following regulatory approval in any New Indication in any country, the royalty rate on Aggregate Net Sales in Territory No. 1
shall be as set forth in the schedule in either paragraph (b) or (c) below, determined on a country-by-country basis, based on whether BI or InterMune promotes
the New Indication in the country and shall be payable for a period of [*] years from the date of the regulatory approval for
such New Indication; provided however, for any partial year after such regulatory approval, if any, the Annual Aggregate Net Sales ranges  [*] shall be pro-rated to reflect such partial year.
Specifically, in those countries in which BI promotes and sells
the Product for a New Indication, the royalty rate on Aggregate Net Sales shall be as set forth in paragraph (b). In those countries in which InterMune promotes the Product for such New
Indication, the royalty rate on Aggregate Net Sales shall be as set forth in paragraph (c). In countries in which neither Party promotes a New Indication, the royalty rate for Aggregate Net
Sales shall be as set forth in [*] below. In the countries in which one Party
promotes the Product for a New Indication and the other Party promotes the Product for a different New Indication, the Marketing Committee (defined in Article 7 herein) shall determine a
procedure for [*] and the royalty rate in paragraph (b) shall apply to sales in a New Indication promoted by BI and
paragraph (c) to sales in a New Indication promoted by InterMune; provided that in the event that the Marketing Committee cannot agree on the allocation of sales, such allocation shall be  [*].

    In
the event that the [*] of the sublicenses and licenses expires as set forth in  [*], and [*] enters into a
 [*] for the InterMune Patent Rights or InterMune Know-How or a  [*] to supply Interferon Gamma-1b to a Third Party for any country in Territory No. 1,
then the existing  [*] royalty period for such country set forth above in this Article 6.1(a) shall automatically be terminated on the date
of the effectiveness of such [*] agreement. 

    (b) BI Promotes New Indication: If BI exercises the BI Option and
promotes an approved New Indication in any country, BI shall pay to InterMune, for such country, in lieu of those royalties that would have been paid pursuant to paragraph (a) above, royalties
on Aggregate Net Sales in such country at the following rate: 

Annual Aggregate Net Sales in Territory (Mil. Euro) Royalty Rate  

    [*] 

    For
example, on Aggregate Net Sales of [*], the royalty shall be  [*] at [*],  [*]
 at [*] and  [*] at [*]. 

    (c) InterMune Promotes New Indication: If BI does not exercise the BI
Option in any country in Territory No. 1, and InterMune promotes the Product for an approved New Indication in such country, BI shall pay to InterMune, in lieu of those royalties that would
have been paid pursuant to paragraph (a) above, royalties for Aggregate Net Sales in such country at the following rate, calculated as in the example shown in (b) above: 

Annual Aggregate Net Sales in Territory (Mil. Euro) Royalty Rate  

    [*] 

    (d) [*] after BI's first launch of the Product
in a country of Territory No. 1, which dates are set forth on Exhibit B, BI's royalty rate to InterMune for such country under clauses
(b) and (c) above shall be [*] by [*]. 

    6.2  Territory No. 2:  

    (a) Before Approval for a New Indication: Before the approval of the
Product for any New Indication, on a country-by-country basis, and in addition to any obligation of InterMune set forth in Article 6.2(b) below, InterMune shall pay to
BI a [*] annual royalty on Aggregate Net Sales for 

10

 

 [*] from the Effective Date. After the Product is approved for marketing in a country for a New Indication, this paragraph (a) shall have no
effect for such country. 

    (b) After first Launch of Product: Starting with InterMune's first
launch of the Product in the Field, InterMune shall pay to BI a [*] royalty on Aggregate Net Sales for  [*] on a country-by-country basis. 

    (c) After Approval for a New Indication: After the approval of the
Product in a country for a New Indication, this paragraph (c) shall become effective for the country. If BI exercises the BI Option and promotes the Product for an approved New Indication in a
country, InterMune shall continue to distribute the Product and book sales and shall pay to BI in addition to any obligation of InterMune set forth in Article 6.2(b) above on Aggregate Net
Sales in the country for [*] from the date of regulatory
approval of such New Indication in each country: (i) a [*] annual royalty above the baseline amount and (ii) a  [*] annual royalty for up to the
baseline amount. The baseline amount for such country shall be determined by the Marketing
Committee based on [*]; provided that in the event that the Marketing Committee cannot agree on the baseline amount, such amount
shall be [*]. 

    If
BI does not exercise the BI Option in any country, InterMune may promote the Product in such country and shall pay to BI in addition to any obligation of InterMune set forth in
Article 6.2(b) above a [*] annual royalty on Aggregate Net Sales. In the countries in which one Party promotes the
Product for a New Indication and the other Party promotes the Product for a different New Indication, the Marketing Committee shall  [*] to each New Indication. A [*]
 royalty shall apply to
sales in a New Indication promoted by BI, and a [*] royalty to sales in a New Indication promoted by InterMune. Such royalties
for each New Indication shall be payable for [*] from the date of regulatory approval of each New Indication. 

    6.3  Subsequent New Indications: As set forth in Article 6.1 and
6.2, in the event that one New Indication is being promoted in any country in either Territory No. 1 or Territory No. 2 and there are any subsequent New Indications, the royalty term for
such subsequent New Indications shall be for [*] from the date of the regulatory approval of such subsequent New Indication (or
less, as otherwise set forth in Article 6.1 or 6.2). Upon the date of expiration of the royalty term for the first New Indication, the royalty term for any subsequent New Indication shall
continue for its duration. Before the launch of such subsequent New Indication, the Parties or Marketing Committee shall determine the royalty allocations for such subsequent New Indication after the
expiration of the royalty terms for the first New Indication. Such royalty allocation for any subsequent New Indication shall be based on  [*]. The Parties or Marketing Committee shall determine a
procedure for allocating such sales for such New Indication. If they
cannot agree on such a royalty allocation amount, such amount shall be [*]. 

    6.4  Third-Party Patent and Know-How Licenses: In addition
to the obligations set forth in Article 6.1, 6.2 and 6.3, the Parties shall also be obligated as follows: 

    (a) Subject to BI's prior agreement, which shall not be unreasonably withheld, InterMune may enter into licenses for all
Third-Party patents and know-how that have a material effect on the development and marketing of the Product for a New Indication in any country in Territory No. 1. Within  [*] of [*] of the Product for such  [*] in [*] BI shall reimburse InterMune for all
financial obligations (e.g., upfront payments, milestone payments, royalties, etc.) and become responsible for all remaining or ongoing financial obligations arising from such license(s). 

    (b) Subject to BI's prior agreement, which shall not be unreasonably withheld, InterMune may enter into licenses  [*] for all Third-Party patents and know-how that
have a material effect on the development and marketing of the
Product for the Field in any country in Territory No. 2. 

    (c) BI shall be free at [*] to enter into
licenses for Third-Party patents and know-how regarding the manufacturing of the Product for the Field for any country in Territory No. 1. 

11

 

    (d) Subject to the other Party's prior agreement, which shall not be unreasonably withheld, a Party may enter into
licenses for a territory comprising countries in both Territory No. 1 and Territory No. 2, for any Third-Party patents or know-how that have a material effect on the
development, marketing, composition or manufacturing of the Product for the Field. The Parties, the Development Committee or Marketing Committee shall determine the Parties' respective financial
obligations (e.g., upfront payments, milestone payments, royalties, etc.) with respect to such licenses. Such determination shall be based on  [*] in relation to each [*]
 arising from the  [*] or [*] of such licensed patents or
know-how: (i) with respect to BI, [*] and (ii) with respect to InterMune,  [*]. In the event that the Parties, Development Committee or Marketing
Committee cannot agree on the Parties' respective  [*] such amounts shall [*].
 

    6.5 Notwithstanding any other provision in this Agreement, the Parties agree that the expiration of the Genentech
License in any country shall not affect any temporal term of the royalty obligations set forth in this Article 6 with respect to such country. 

7.  Development and Marketing Committees  

    7.1  Development Committee:  The clinical development and
registration activities under clauses 3.1 and 3.2 shall be overseen by a Development Committee comprised of three (3) members from each of BI and InterMune. The Development Committee will meet
at least once per year during the period of clinical development and registration filings for New Indications. At such meetings, InterMune members will present the status of clinical trials, the
results of such trials, the status of registration filings including any reactions or questions of the authorities including the FDA and any proposed additional new indications for the Product. BI
members will comment on this information, provide guidance to InterMune based on the BI Know-How and BI's experience in respiratory disease and be responsible for  [*] for any additional new indications.
BI and InterMune will each appoint a member of the Development Committee as its project
coordinator. The project coordinators will ensure that the Parties exchange in written form all information pertinent to the patent situation to the extent consistent with obligations they may have
assumed elsewhere, clinical studies and all other activities required for filing applications for government new drug approvals regarding Product and shall ensure that significant adverse reactions of
the Product shall be communicated by each Party to the other promptly after such Party obtains such information. 

    7.2  Marketing Committee:  In the event BI exercises the
BI Option to promote the Product in a New Indication in any country, a Marketing Committee will be established to coordinate marketing activities in such New Indications, to determine: (i) the
procedure for [*] New Indications under [*]
(ii) the [*]
achieved by InterMune under [*] (iii) [*] for
subsequent New Indications under [*] and (iv) [*]
obligations under [*]. In the event no Marketing Committee is established, the Parties shall determine
(i)—(iv) above. 

8.  Diligence  

    Each Party shall use its Best Efforts in performing the activities and obligations set forth under this Agreement. 

9.  Payments and Reports  

    9.1  Payments by InterMune:  All payments under this
Agreement by InterMune shall be payable in U.S. Dollars. Conversion from currencies other than U.S. Dollars shall be made into U.S. Dollars using the exchange rate quoted by the Wall Street Journal on
the last banking day of the quarter for which such payment is due. 

    9.2  Payments by BI:  All payments under this Agreement
by BI shall be payable in Euros. Conversion from currencies other than Euros shall be made into Euros using the exchange rate quoted 

12

 

by the Deutsche Bank in Frankfurt on the last banking day of the quarter for which such payment is due. 

    9.3  Payment of Royalties:  Within  [*] of the end of a calendar quarter, a report indicating gross sales in the calendar
quarter and the calculation of estimated
royalties due for the quarter shall be sent to the receiving Party. This estimation shall be based on gross sales [*]. The
Parties shall use their Best Efforts to determine from each prior quarter's sales whether on an annualized basis any royalty is estimated to be due to the other Party on Aggregate Net Sales. (By way
of illustration, if in Territory No. 1 at the end of the first full calendar quarter following April 1, 2001, gross sales  [*] are [*], then the
annualized projection for three
(3) quarters would be [*], resulting in a projected  [*] over the [*] pro-rated baseline.
Accordingly, InterMune would be due a royalty of [*] of  [*]) Within [*] after the end of each calendar year,
the
Parties shall jointly: (i) determine the actual Aggregate Net Sales (pro-rated, if applicable) for the prior final calendar quarter; and (ii) adjust the royalties paid, if
any, for the first three (3) calendar quarters of the prior calendar year to finalize the account for the actual Aggregate Net Sales for the prior calendar year. All royalty and estimated
royalty payments due under this Agreement shall be
made within [*] after the end of each calendar quarter to a bank account nominated by the receiving Party. 

    9.4  Records Retention:  Each Party and its sublicensees
shall keep complete and accurate records (specifically including originals or copies of documents supporting entries in the books of account) pertaining to the sale of Product and covering all
transactions from which Net Sales are derived for a period of [*] after the calendar year in which such sales occurred, and in
sufficient detail to permit the other Party to confirm the accuracy of royalty calculations hereunder. 

    9.5  Audit Request:  At the request and expense of a
Party, the other Party and its sublicensees shall permit an independent, certified public accountant appointed by the first Party, at reasonable times (not to exceed once per calendar year) and upon
reasonable notice, to examine those records and all other material documents relating to or relevant to the computation of Net Sales in the possession or control of the other Party or its
sublicensees, for a period of [*] after such royalties have accrued, as may be necessary to: (i) determine the
correctness of any report or payment made under this Agreement; or (ii) obtain information as to the royalties payable for any calendar year in the case of the other Party failure to report or
pay pursuant to this Agreement. Results of any such examination shall be made available to both Parties. The first Party shall bear the full cost of the performance of any such audit except as
hereinafter set forth. If, as a result of any inspection of the books and records of the other Party or its sublicensees, it is shown that the other Party's royalty payments under this Agreement were
less than the amount which should have been paid; then the other Party shall make all payments required to be made to eliminate any discrepancy revealed by said inspection within thirty
(30) days after the first Party's demand therefore. Furthermore, if the royalty payments were less than the amount which should have been paid by an amount in excess of five percent (5%) of the
royalty payments actually made during the period in question, the other Party shall also reimburse the first Party for the cost of such inspection. 

    9.6  Withholding Taxes:  In the event that a Party is
required to withhold and remit any tax on behalf of the other Party to the revenue authorities of Germany or the United States regarding any payments due under this Agreement, such Party shall deduct
such amount and pay it to the proper revenue authorities of Germany or the United States. Each Party shall maintain official receipts of payment of any withholding taxes and forward these receipts to
the other Party. The Parties will exercise their [*] to ensure that any withholding taxes imposed are reduced as far as possible
under the provisions of the current or any future double taxation agreement between the United States and Germany. 

    According
to existing German law this reduction requires that the German Bundesamt für Finanzen issue a Certificate of Tax Exemption. In order to achieve such
reduction, InterMune shall 

13

 

provide BI with the claim for a certificate of tax exemption in respect of royalties performed on the official form ("Application for Tax Exemption") containing the statement of residence and
indication of the taxpayer's identification number as well as the Certificate of Filing a Tax Return, in which
InterMune confirms that it does not derive the royalties through a permanent establishment maintained in Germany. BI shall provide InterMune with the official form. Every three (3) years
InterMune has to submit a new Application for Tax Exemption unsolicited, which complies with the above-mentioned prerequisites. Payments from BI to InterMune hereunder  [*] InterMune provides BI with the
Application for Tax Exemption fulfilling the requirements of German law. Payments arising
after expiration of any Certification of Tax Exemption shall not be due until InterMune provides BI with the next Application for Tax Exemption fulfilling such requirements. BI will notify InterMune
of any changes regarding the filing of Applications for Tax Exemptions. 

10.  Intellectual Property  

    10.1  Ownership of Inventions:  Each Party shall remain
the sole owner of its respective technology and other intellectual property that it owned as of the Effective Date and shall [*]
of [*] and other [*] made by  [*] in the course of work performed hereunder. Each Party shall own an equal
undivided interest in any invention made jointly by
employees or agents of the two Parties. To the extent that a jointly owned invention applied to the use and/or sale of Product within the Field, each Party shall have an exclusive right to practice
such invention in any country in which it promotes the Product. Such right shall be co-exclusive if both Parties promote the Product in the same country. Except as otherwise provided in
this Agreement, each Party shall be free to use jointly owned inventions worldwide without accounting to the other for such use to the extent that such inventions do not relate to the Product within
the Field. Except as otherwise provided in this Agreement, neither Party shall have any license to use the inventions to which the other Party has sole title. A Party shall not have or acquire any
rights in any inventions, Know-How or intellectual property rights of the other Party, except as specifically granted herein. 

    10.2  Patent Prosecution and Litigation:  

    (a) InterMune shall be solely responsible, subject to prior consultation with BI, for all patent applications, filings,
prosecution and related litigation for [*] with respect to the development or marketing of the Product for New Indications in
Territory No. 1 and Territory No. 2. The Parties, Development Committee or Marketing Committee shall determine the Parties' respective financial obligations with respect to such
applications, filings, prosecution and related litigation concerning such joint inventions. Such determination shall be based on fair proportionality in relation to each Party's projected profit
arising from the applicability or use of such licensed patents or know-how: (i) with respect to BI, within countries in Territory No. 1; and (ii) with respect to
InterMune, within countries in Territory No. 2. In the event that the Parties, Development Committee or Marketing Committee cannot agree on the Parties' respective proportional obligations for
such joint inventions, such amounts shall [*]. 

    (b) BI shall be solely responsible (at BI's cost) for all patent applications, filings, prosecution and related
litigation with respect to the composition or manufacturing of the Product. 

    (c) Each Party shall be responsible (at its own cost), subject to prior consultation with the other Party, for filing
all patent applications; filings, prosecution and related litigation for its sole inventions under the BI Patents or InterMune Patents, respectively, in Territory No. 1 and Territory
No. 2. 

    10.3  Infringement of Third-Party Patents:  In the event
that a Third Party files an action against a Party alleging that such Party's activities under this Agreement infringe such Third Party's patent rights, such Party shall give written notice to the
other Party, and the Parties shall consult and 

14

 

cooperate on the best course of action. The Party that was sued shall have the right to defend itself against such action, and the other Party shall provide all reasonable assistance in such defense 

    10.4  Infringement of Licensed Patents:  In the event
that either Party becomes aware that a Third Party is infringing any rights in the BI Patents, InterMune Patents or Genentech Patents in the Field in Territory No. 1 or Territory No. 2,
such Party shall promptly notify the other. BI shall be responsible to enforce the BI Patents in Territory No. 1 and No. 2. InterMune shall be responsible to enforce the InterMune
Patents in Territory No. 1 and No. 2. Subject to Genentech's prior approval, InterMune shall have the right, in BI's stead, to manage the enforcement of the Genentech Patents in
Territory No. 1 or Territory No. 2, and BI shall reasonably cooperate with InterMune in such enforcement actions and take all reasonably necessary steps to facilitate the enforcement of
the Genentech Patents. 

    10.5  Cooperation:  Each Party agrees to cooperate with
the other and take all reasonable additional actions as may be reasonably required to achieve the intent of this Article 10, including, without limitation, the execution of all necessary and
appropriate instruments and documents. 

11.  Representations and Warranties  

    11.1  Mutual Representations and Warranties:  Each Party
hereby represents and warrants to the other Party as follows: 

    (a) Such Party (i) is duly organized, validly existing and in good standing under the laws of the state and/or
country in which it is organized; (ii) has the power and authority and the legal right to own and operate its property and assets, to lease the property and assets it operates under lease, and
to carry on
its business as it is now being conducted; and (iii) is in compliance with all requirements of applicable law, except to the extent that any noncompliance would not materially adversely affect
such Party's ability to perform its obligations under the Agreement. 

    (b) Such Party (i) has the power and authority and the legal right to enter into the Agreement and to perform its
obligations hereunder and (ii) has taken all necessary action on its part to authorize the execution and delivery of the Agreement and the performance of its obligations hereunder. The
Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, binding obligation, enforceable against such Party in accordance with its terms. 

    (c) All necessary consents, approvals and authorizations of all governmental authorities and other persons required to
be obtained by such Party in connection with the Agreement have been obtained, including without limitation, the consent of Genentech. 

    (d) The execution and delivery of the Agreement and the performance of such Party's obligations hereunder (i) do
not conflict with or violate any requirement of applicable laws or regulations or any material contractual obligation of such Party and (ii) do not materially conflict with, or constitute a
material default or require any consent under any material contractual obligation of such Party. 

    (e) The Disclosure Documents are true, accurate and complete in all material respects, and each Party represents and
warrants that it shall timely update such Disclosure Documents. 

15

 
    11.2  BI Representations and Warranties:  BI hereby
represents and warrants that: 

    (a) to the best of its knowledge and belief as of the Effective Date and with the possible exception of  [*], the practice of the Licensed Technology in the
indication CGD does not infringe on any intellectual property rights owned
by a Third Party; 

    (b) as of the Effective Date, it possesses the necessary right, title and interest to the Licensed Technology and it has
registered or applied for the Trademarks, to grant the sublicenses and licenses and to make the grants and assignments to InterMune hereunder; 

    (c) it will, upon InterMune's written notice pursuant to Article 3.3(k), apply for and maintain any trademark
registrations in countries that the Parties have agreed; and 

    (d) following expiration of the term of the Genentech License in each country, BI will be free to acquire Product for
such country from any source irrespective of any Genentech Patent then in existence, and shall likewise have the royalty-free right to continue to practice under the Genentech
Know-How within the Field; provided however, [*] to any Genentech Patent or Genentech
Know-How in such country. 

    11.3  InterMune Representations and
Warranties:  InterMune hereby represents and warrants that: 

    (a) it will abide by the Protocols and will devote the efforts of suitably qualified and trained employees capable of
carrying out the development of the Product to a professional standard and within the timelines agreed upon; and 

    (b) it will not make any claims for the Product which have not been approved by the relevant regulatory authorities. 

12.  Indemnification and Liability  

    12.1  Indemnification by BI:  BI agrees to indemnify,
hold harmless and defend InterMune and InterMune's directors, officers, employees and agents, and the directors, officers, employees and agents of any InterMune Affiliate (collectively "Indemnitees")
from and against any and all claims or suits by Third Parties for losses, damages, costs, fees and reasonable expenses (collectively "Losses") resulting from or arising out of any negligent or
wrongful act or omission by BI or its Affiliates, or any breach by BI of its obligations under this Agreement or under the Genentech License, except to the extent that such Losses arise or result from
any negligent or wrongful act or omission of an Indemnitee or are related to intellectual property matters not covered by the warranty set forth in Article 11.2(a). 

    12.2  Indemnification by InterMune:  InterMune agrees to
indemnify, hold harmless and defend BI and Genentech and their directors, officers, employees and agents, and the directors, officers, employees and agents of any BI and Genentech Affiliates
(collectively "Indemnitees") from and against any and all Losses resulting from or arising out of the development of the Product, any negligent or wrongful act or omission of InterMune or its
Affiliates, or any breach by InterMune of its obligations under this Agreement, except to the extent that such Losses arise or result from any negligent or wrongful act or omission of an Indemnitee. 

    12.3  Indemnification Procedure:  In all cases where one
Party seeks indemnification by the other under this Article 12, the Party seeking indemnification (the "Indemnitee") shall promptly notify the indemnifying Party of receipt of any claim or
lawsuit covered by such indemnification obligation and shall cooperate fully with the indemnifying Party in connection with the investigation and defense of such claim or lawsuit. The indemnifying
Party shall have the right to control the defense, with counsel of its choice, provided that the Indemnitee shall have the right to be represented by advisory counsel at its own expense. The
indemnifying Party shall not settle or dispose of the matter in any manner which 

16

 

could negatively and materially affect the rights or liability of the Indemnitee without the Indemnitee's prior written consent, which shall not be unreasonably withheld. 

    12.4  Limitation of Liability:  Except with respect to
each Party's indemnification obligations under this Article 12, in no event shall either Party be liable to the other Party for any consequential, incidental, special or indirect damages
arising in connection with this Agreement. 

13.  Confidentiality  

    The Parties hereby affirm that certain Secrecy Agreement between the Parties, dated as of November 27, 2000, in its entirety for the term of this
Agreement. 

14.  Termination  

    14.1  Term of Agreement:  

    (a) The term of this Agreement shall expire, unless earlier terminated as provided by
Article 14.2 - 14.5 below on a country-by-country basis upon expiry of the royalty obligations under Article 6. 

    (b) With respect to the BI grants to InterMune of sublicenses under the Genentech License Rights set forth in
Article 2, such grants shall expire upon the expiration of the Genentech License as it pertains to such Patents and Know-How grants, respectively, on a
country-by-country basis. Such expiration shall have no effect on the terms under Article 6. 

    14.2  Termination on New Indications Basis:  If within  [*] from the Effective Date no registration dossier has been filed
in the Territory No. 1 or Territory No. 2 for a
specific New Indication, this Agreement shall be automatically terminated with respect to such New Indication without requirement to provide written notice thereof to either Party. 

    14.3  Termination for Material Breach:  If either Party
shall default in a material manner with respect to any material provision of this Agreement, and the other Party shall have given the defaulting Party written notice of such default, the defaulting
Party shall have sixty (60) days to cure such default. If such default is not cured within such sixty-(60) day period, the non-defaulting Party shall have the right, upon notice to
the defaulting Party and without prejudice to any other rights the non-defaulting Party may have, to terminate this Agreement. 

    14.4  Voluntary Termination:  At any time following  [*] InterMune may terminate this Agreement on a country-by-country
basis in Territory No. 2. 

    14.5  Insolvency:  Either Party may terminate this
Agreement if, at any time, the other Party shall file in any court pursuant to any statute of any individual state or country, a petition in bankruptcy or
insolvency or for reorganization or for an agreement or for the appointment of a receiver or trustee of the Party or of its assets, or if the other Party proposes a written agreement of composition or
extension of its debts, or if the other Party shall be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within sixty
(60) days after the filing thereof, or if the other Party shall propose or be a Party to any dissolution or liquidation, or if the other Party shall make an assignment for the benefit of
creditors. 

15.  Effects of Termination  

    15.1  (a)  Following expiration of the term pursuant to
Article 14.1 of this Agreement as to the Product in each country: BI and InterMune shall be free in Territory No. 1 and Territory No. 2, respectively to develop, use, sell, offer
for sale, have sold, import, make and have made, the Product for the Field irrespective of any BI Patents, BI Know-How in Territory No. 2 or InterMune Patents or InterMune
Know-How in Territory No. 1 then in existence and shall likewise have the royalty-free right 

17

 

to continue to practice within the Field; provided, however, that the Parties will agree on an appropriate royalty in return for InterMune's continued
rights to use the Trademarks in Territory No. 2. 

    (b) The expiration of the term pursuant to Article 14.1(b) of this Agreement in each country shall not affect the
terms of this Agreement other than the rights under and the enforcement of Genentech Patents and Genentech Know-How. 

    15.2    In the event of a termination pursuant to
Article 14.2 for a New Indication all rights granted by either Party to the other Party under this Agreement with respect to such New Indication shall expire and revert to the granting Party
provided that the granting Party shall for a period of [*] after termination shall refrain from exploiting its rights with
respect to the New Indication terminated. 

    15.3    In the event this Agreement is terminated by
either Party as a result of a material breach of the other Party pursuant to Article 14.3, all rights granted to the defaulting Party under this Agreement shall terminate and revert to the
terminating Party. The same applies in case of a termination pursuant to Article 14.4 and 14.5 provided that in case of a termination pursuant to Article 14.4 InterMune shall for a
period of [*] thereafter refrain from promoting, selling or have sold Product within such country even if Controlling the
necessary intellectual property rights to do so. 

    15.4    Upon early termination, InterMune shall within
thirty (30) days of such termination transfer to BI all Product registrations and applications filed by InterMune in Territory 2. In case of early termination by BI pursuant to
Article 14.3 and 14.5 and for early termination by InterMune pursuant to Article 14.4, such transfer shall be at no charge to BI. 

    15.5  Surviving Rights:  The obligations and rights of
the Parties under Articles 9, 10.1, 11, 12, 13, 14, 15, 16.3 and 16.6 shall survive termination or expiration of this Agreement. 

    15.6  Accrued Rights and Surviving Obligations:  The
termination or expiration of the Agreement for any reason shall be without prejudice to any rights, which shall have accrued to the benefit of either Party prior to such termination or expiration,
including any damages arising from any breach hereunder. Such termination or expiration shall not relieve either Party from obligations which are expressly indicated to survive termination or
expiration of the Agreement. 

16.  Miscellaneous  

    16.1  Waiver:  No waiver by either Party hereto of any
breach or default of any of the covenants or agreements herein set forth shall be deemed a waiver as to any subsequent or similar breach or default. 

    16.2  Limitations on Assignment:  Except as provided in
this Article, neither this Agreement nor any interest hereunder shall be assignable by either Party without the written consent of the other; provided,
however, that either Party may assign this Agreement to any corporation or entity with which it may merge or consolidate, or to which it may transfer substantially all of its
assets or all of its assets to which this Agreement relates without obtaining the consent of the other Party; and further provided that either Party may without such consent assign, in whole or in
part, its rights and obligations hereunder to its Affiliate. This Agreement shall be binding upon the permitted successors and assigns of the Parties hereto and the name of a Party appearing herein
shall be deemed to include the names of such Party's successors and assigns to the extent necessary to carry out the intent of this Agreement and the performance of the rights and obligations of such
successors and assigns shall be deemed guaranteed by such Party. 

    16.3  Notices:  Any notice or other communication
required or permitted to be given to either Party hereto shall be in writing and shall be deemed to have been properly given and to be effective (i) on the date of delivery if delivered in
person or by facsimile if confirmed on the same day by 

18

 

registered or certified mail, postage paid, or (ii) five (5) days after mailing by registered or certified mail, postage paid, to the other Party at the following address: 

	In the case of InterMune:	 	InterMune Pharmaceuticals, Inc.

1710 Gilbreth Road, Suite 301

Burlingame, CA 94010

Fax: (650) 409-2068

Attention: General Counsel (with a copy to the Chief Executive Officer)
	

In the case of BI:	
 	

Boehringer Ingelheim International GmbH

D-55216 Ingelheim am Rhein

Germany

Fax: +49 (0)6132-77-4080

Attention: Head of Legal Department (with a copy to the Head of Corporate Development)

    Either
Party may change its address for communications by a notice to the other Party in accordance with this Article. 

    16.4  Headings:  The headings of the several articles and
sections are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. 

    16.5  Amendment:  No amendment or modification hereof
shall be valid or binding upon the Parties unless made in writing and signed by both Parties. 

    16.6  (a)  Dispute Resolution:  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 shall try to
settle their differences amicably between themselves by referring the disputed matter to the Chief Executive Officer of InterMune or his/her designee and the Chairman of the Board of Managing
Directors of BI or his/her designee for discussion and resolution. Either Party may initiate such informal dispute resolution by sending written notice of the dispute to the other Party, and within
ten (10) days of such notice the Chief Executive Officer of InterMune and the Chairman of the Board of Managing Directors of BI or its designee shall conference for attempted resolution by good
faith negotiations. If mutually agreeable, the Parties may explore alternative forms of dispute resolution, such as mediation and/or arbitration. If such persons are unable to resolve such dispute or
to agree on a plan to solve it within thirty (30) days of initiating such negotiations, each Party may thereafter pursue any and all rights and remedies it may have at law or equity. 

       (b)  Governing Law and Place of
Venue:  This Agreement shall be governed exclusively by the laws of the State of New York. In the event of any controversy or claim arising out of or relating to
any provision of this Agreement, the Parties shall first try to settle those conflicts amicably between themselves. All disputes arising in connection with this Agreement that cannot be settled
amicably in accordance with Article 16.6(a) above shall be litigated solely in the U.S. Federal Courts located within the State of New York, and any lawsuit shall and must be filed solely in
such courts. The Parties hereby consent to waive any constitutional, statutory of common law right of trial by jury and of forum non-conviens. 

    16.7  Force Majeure:  Any delays in performance by any
Party under this Agreement shall not be considered a breach of this Agreement if and to the extent caused by occurrences beyond the reasonable control of the Party affected, including but not limited
to acts of God, embargoes, governmental restrictions, fire, flood, explosion, riots, wars, civil disorder, rebellion or sabotage. The Party suffering such occurrence shall immediately notify the other
Party as soon as practicable, and any 

19

 

time for performance hereunder shall be extended by the actual time of delay caused by the occurrence plus a period of thirty (30) days. 

    16.8  Independent Contractors:  In making and performing
this Agreement, InterMune and BI act and shall act at all times as independent contractors, and nothing contained in this Agreement shall be construed or implied to create an agency, partnership or
employer and employee relationship between InterMune and BI. At no time shall one Party make commitments or incur any charges or expenses for or in the name of the other Party. 

    16.9  Severability:  If any part of this Agreement is
declared invalid by any legally governing authority having jurisdiction over either Party, then such declaration shall not affect the remainder of the Agreement and the Parties shall revise the
invalidated part in a manner that will render such provision valid without impairing the Parties' original interest. 

    16.10  Cumulative Rights:  The rights, powers and
remedies hereunder shall be in addition to, and not in limitation of, all rights, powers and remedies provided at law or in equity, or under any other agreement between the Parties. All of such
rights, powers and remedies shall be cumulative, and may be exercised successively or cumulatively. 

    16.11  Counterparts:  This Agreement may be executed in
two or more counterparts, each of which shall be an original and all of which shall constitute together the same document. 

    16.12  Entire Agreement:  This Agreement and the Exhibits
referred to herein and the Secrecy Agreement embody the entire understanding of the Parties with respect to the subject matter hereof and supersede and terminate all previous communications,
representations or understandings, either oral or written, between the Parties relating to the subject matter hereof, including without limitation, that certain Letter of Intent, effective as of
December 4, 2000. 

    16.13  Press Releases:  Neither Party shall issue a press
release regarding the existence and terms of this Agreement without the other Party's prior written consent, not to be unreasonably withheld. If either Party desires to issue a press release in
Territory No. 1 or Territory No. 2 regarding the development or commercialization of the Product in Territory No. 1 or Territory No. 2, such Party shall provide the other
Party with a copy of the text of such press release at least two (2) business days in the country of the other Party prior to its publication, in order to allow the other Party to comment
thereon. The Party issuing such press release shall consider the other Party's comments in good faith prior to its publication. 

    16.14  List of Exhibits:  The following Exhibits are
incorporated into and made part of this Agreement: 

	Exhibit A:	 	140 Amino Acid Sequence
	Exhibit B:	 	Territory No. 1
	Exhibit C:	 	Territory No. 2

    In Witness Whereof, both InterMune and BI have executed this Agreement, as of the day and year first written
above. 

	
InterMune Pharmaceuticals, Inc.	
 	

Boehringer Ingelheim International GmbH
	

By:	

/s/ W. SCOTT HARKONEN   
	
 	

By:	

/s/ DR. DAVID MITCHARD   

	

Print Name:	

W. Scott Harkonen
	
 	

Print Name:	

Dr. David Mitchard

	

Title:	

President/CEO
	
 	

Title:	

Authorized Signatory

20

  

 
 
 

Exhibit A—140 Amino Acid Sequence    
    
    [*]    
  

A–1

  

 
 
 

Exhibit B—Territory No. 1

	Country
	 	Date of first sale

[*]  

B–1

  

 
 
 

Exhibit C—Territory No. 2    
  

	Country
	 	Registration Status

[*]  

C–1

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Table of Contents

Exhibit 10.35

Development and Marketing Agreement

Recitals

Exhibit A

Exhibit B

Exhibit CPrepared by MERRILL CORPORATION

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Exhibit 10.36    
  

    
Standard Form Office Lease 

    Made
and entered into at BURLINGAME, California, between HARVARD INVESTMENT CO. ("Lessor") and INTERMUNE, INC. ("Lessee") 

	1.	 	Premises. (a) In consideration of the rent herein provided and the terms and conditions hereof, Lessor hereby leases to Lessee those certain premises, more particularly described in Exhibit
"A" attached hereto, situated in THE CROWN BUILDING located at 875 MAHLER RD., SUITE 118, BURLINGAME, California.
	

 	
 	

(b) For all lease purposes, the rentable square footage shall be deemed to be 2992.
	

2.	
 	
Term. Subject to the terms and conditions set forth herein, the term of this lease shall commence on FEBRUARY 14, 2001 and shall end on JULY 31, 2001, unless sooner terminated as hereinafter
provided.
	

3.	
 	
Rent. (a) Lessee agrees to pay to Lessor, as a monthly rent for the premises, during the term hereof, the sum of $11,968.00, which rent is subject to adjustment as provided herein. Such
monthly rent shall be due and payable in advance each month on the first day of the month and shall be payable to Lessor at the address shown below. The first monthly installment shall be due upon execution of this lease by Lessee. Should this lease
commence on a day other than the first of the month, the rent for such partial month shall be prorated.
	

 	
 	

(b) On the first day of January following the date hereof and on each and every January 1 thereafter during the term hereof, the then current rent shall be increased by the percentage increase, if any, in the CPI's Annual Average or
December Index for the immediately preceding year over that which existed for the previous year. If index figures are not available for adjustment purposes when rent payments otherwise become due, said rent payments shall be made at the then
current rate and adjusted retroactively when said index figures are available. It is herein understood and agreed that in no event will the rent determined by application of the CPI on any January 1 be less than the monthly rent in effect during
the preceding year. As used herein, the term "CPI" shall mean the All Items Consumer Price Index for All Urban Consumers or Urban Wages Earners and Clerical Workers, as determined by Lessor, for the San Francisco-Oakland-San Jose area, 1982-84 - 100,
as published by the United States Department of Labor. In the event that said CPI is no longer available, the Index designated by the Bureau of Labor Statistics as replacing said CPI, or the most comparable substitute as determined by the Lessor,
shall be used thereafter.
	

 	
 	

(c) At the end of each calendar year, Lessee shall pay to Lessor, as additional rent, Lessee's pro-rata share of the amount, if any, by which operating expenses for said calendar year exceed $4.00 per square foot of rentable area. As used herein, the
term "operating expenses" shall mean all costs of management, operation and maintenance of the land and building of which the premises are a part, including without limitation, management office rental value, the cost of all capital improvements
required by any governmental authority or made by Lessor to maintain operations, employee wages, benefits and overhead expenses, equipment and tools, insurance, janitorial services, landscaping, maintenance and repairs, materials and supplies,
scavenger, security services, utilities and taxes.
	

4.	
 	
Security Deposit. Upon execution of this lease by Lessee, Lessee, shall deposit with Lessor the sum of $23,936.00. Said sum shall be held by Lessor as security for the faithful performance
by Lessee of all the terms and conditions of this lease. If Lessee defaults with respect to any provision of this lease, including without limitation, the provisions relating to the payment of rent, Lessor may, at its option apply or retain as much
of said deposit as is necessary to compensate Lessor for the damages caused by Lessee's default. If any portion of said deposit is so used or applied, Lessee shall, upon demand therefore, deposit cash with Lessor in an amount sufficient to restore
said deposit to its original amount and Lessee's failure to do so shall be a material breach of this lease. Lessor shall not be required to keep this deposit separate from its general funds and Lessee shall not be entitled to interest on said
deposit. If Lessee shall fully and faithfully perform every provision of this lease to be performed by it, the deposit or any balance thereof shall be returned to Lessee at the expiration of the lease term. In the event of termination of Lessor's
interest in this

	 	 	lease, Lessor shall transfer said deposit to Lessor's successor in interest.
	

5.	
 	
Use. Lessee shall use the premises for general office purposes only and in strict compliance with the rules and regulations attached hereto. Lessee shall conduct its business, insofar
as the same relates to Lessee's use of the premises, in a lawful manner and in strict compliance with all governmental laws, rules, regulations and orders applicable to the use by Lessee of the premises. Lessee shall, at its sole cost and expense,
promptly comply with all laws, statutes, ordinances and governmental rules, regulations, orders or requirements now in force or which may hereafter be in force and with the requirements of any board of fire underwriters or other similar body now or
hereafter constituted relating to or affecting the condition or use of the premises. Lessee shall not do or permit anything to be done in or about the premises nor bring or keep anything therein which will in any way increase fire or casualty
insurance rates or interfere with the rights of other tenants or occupants of the building or injure or annoy them, nor shall Lessee cause, maintain or permit any nuisance in or about the premises. Lessee shall not commit or suffer to be committed
any waste in or about the premises. Moreover, Lessee shall pay Lessor, upon demand, for any damages Lessor or other tenants of the building may suffer as a result of any violation of this provision by Lessee, its agents, employees, invitees,
contractors, suppliers or customers.
	

6.	
 	
Occupant Load. Lessee shall not permit the premises to be occupied by more than 17 employees.
	

7.	
 	
Equipment. No equipment, other than that described in Exhibit "B" attached hereto, shall be used in the premises without the prior written consent of Lessor. Lessor does not guarantee that
the building's air conditioning will be adequate to service Lessee's equipment needs. If auxiliary air conditioning is necessary the cost of purchase, installation, maintenance and operation thereof shall be paid by Lessee upon demand.
	

8.	
 	
Building Services. (a) With the exception of holidays, Lessor shall provide Lessee electricity and HVAC for normal operations 8 a.m. to 6 p.m. Monday through Friday,
janitorial service Monday through Friday, building lighting replacement, restroom supplies, window washing with reasonable frequency; provided, however, that Lessee shall not be in default hereunder. Any additional usage or service required by Lessee
must be arranged with Lessor and shall be subject to an additional charge. Lessor shall not be liable for, and Lessee shall not be entitled to, any abatement or reduction of rent by reason of Lessor's failure to furnish any of the foregoing when such
failure is caused by accidents, breakage, repairs, strikes, lockouts, labor disturbances, or any other cause, similar or dissimilar, beyond the reasonable control of Lessor shall not be liable under any circumstances for loss of or injury to property,
 however, occurring through or in connection with or incidental to the failure to furnish any of the foregoing.
	

 	
 	

(b) Whenever heat generating machines, equipment or lighting are used in the premises which affect the temperature otherwise maintained by the air conditioning system, Lessor reserves the right to install supplementary air conditioning for the
premises and the cost of purchase, installation, maintenance and operation thereof shall be paid by Lessee upon demand.
	

9.	
 	
Maintenance Repairs. By accepting occupancy, Lessee shall be deemed to have agreed that the premises and building are in (i) a clean and sanitary condition, (ii) good state of
repair and (iii) a condition suitable for Lessee's use. Lessee shall maintain the premises and building in said condition. If Lessee, its agents, employees, invitees, contractors, suppliers or customers fail to so maintain the premises and
building, Lessor may, at its option, perform such acts and expend such funds as are reasonably required to so maintain or repair the premises and building. Any amount so expended by Lessor shall be paid by Lessee upon demand. Lessor shall have no
liability to Lessee for any damage, inconvenience or interference with the use of the premises and building by Lessee as a result of performing any such work.
	

10.	
 	
Alterations and Improvements. Lessee shall not make or allow to be made any alterations or physical additions in or to the premises without the prior written consent of Lessor. Any
alterations, additions or improvements to the premises consented to by Lessor shall be made by Lessor for Lessee's account, and Lessee shall reimburse Lessor for the cost thereof, including a reasonable charge for Lessor's overhead, in advance or
upon demand as specified by Lessor. Any and all such alterations or improvements shall, at Lessor's option, be removed by Lessee or surrendered to Lessor upon the termination of this lease by lapse of time or otherwise; provided, however, that this
clause shall not apply to moveable equipment, trade fixtures or furniture of Lessee which may be removed by Lessee upon the expiration or earlier termination of this lease if Lessee is not then in default.

	

11.	
 	
Liens. Lessee shall keep the land and building of which the premises are a part free from any liens arising out of any work performed, materials furnished or obligations incurred by Lessee.
Lessor shall have the right to post and keep posted on the premises any notices that may be provided by law or which Lessor may deem to be proper for the protection of Lessor from such liens and to secure the release of any such liens at Lessee's
expense, by payment or by the posting of a bond.
	

12.	
 	
Rules and Regulations. The rules and regulations attached hereto, as well as such rules and regulations as may be hereafter adopted by Lessor for care and cleanliness of the
premises and the building and the preservation of good order therein, are hereby expressly made a part hereof, and Lessee agrees to comply with them. Lessor shall not be responsible to Lessee for the non-performance by any other tenant or occupant of
the building of any of said rules and regulations. The violation of any such rules and regulation shall be deemed a material breach of the lease by Lessee. Moreover, Lessee shall pay Lessor, upon demand, for any damages Lessor or other
tenants of the building may suffer as a result of any violation of said rules and regulations by Lessee, its agents, employees, invitees, contractors, suppliers or customers.
	

13.	
 	
Assignment or Sublease. Lessee shall not assign, transfer, mortgage, pledge, hypothecate or encumber this lease or any interest therein, directly or indirectly, and shall not sublet the
premises or any part thereof, or allow any use thereof by license or otherwise. Any attempt to do so shall be void and shall, at Lessor's option, terminate this lease. The acceptance of rent by Lessor from any other person shall not be deemed to be a
waiver by Lessor of any provision of this lease or to be a consent to any assignment, subletting or other transfer. In the event Lessee wishes to give up the subject premises, Lessor shall be given the listing assignment to find a replacement tenant.
Lessor shall use its best efforts to find a replacement tenant as quickly as possible on terms and conditions acceptable to Lessee and Lessor.
	

14.	
 	
Insurance. Lessee shall obtain and maintain, at all times during the term hereof, at its own cost, commercial general liability insurance with a combined single limit of at least
$1,000,000.00. The aforementioned policies shall in no event limit the liability of Lessee hereunder. The aforementioned insurance shall name Lessor as an additional insured and shall contain a cross-liability endorsement. Said insurance shall be
with companies having a rating of not less than A in "Best's Insurance Guide" Lessee shall furnish from the insurance companies or cause the insurance companies to furnish certificates of coverage. No policy shall be cancelable or subject to
reduction of coverage or other modification or cancellation except after 30 days prior written notice to Lessor by the insurer. All such policies shall be written as primary policies, not contributing with and not in excess of tÈhe coverage
which Lessor may carry Lessee shall, at least 20 days prior to the expiration of such policies, furnish Lessor with renewals or binders. Lessee agrees that if Lessee does not take out and maintain such insurance, Lessor may, at its option, procure
said insurance on Lessee's behalf and charge Lessee the premiums therefore together with a 25% handling charge payable upon demand. Lessee shall have the right to provide such insurance coverage pursuant to blanket policies obtained by Lessee
provided such blanket policies expressly afford coverage to the premises and to Lessee as required hereunder.
	

15.	
 	
Fire and Casualty Damage. If the premises, through no fault or neglect of Lessee, its agents, employees, invitees, contractors, suppliers or customers, shall be partially or totally
destroyed by fire or other casualty so as to render them partially or totally untenantable, the rent herein shall be prorated until the premises are made tenantable by Lessor. If Lessor shall decide not to rebuild, then all rent owed to that time
shall be paid by Lessee and this lease shall cease and terminate. The provisions of California Civil Code Sections 1932 (2) and 1933 (4), and any successor statutes, are inapplicable with respect to any damage or destruction of the
premises.
	

16.	
 	
Condemnation. If the premises shall be taken or condemned in whole or in substantial part for public purposes, this lease shall, at the option of either party, forthwith cease and terminate,
and Lessee shall have no claim against Lessor for the value of any unexpired term of this lease or otherwise, except for moving expenses, if any, designated for Lessee.
	17.	 	Loss or Damage. Lessor shall not be liable to Lessee for any injury or damage that may result to any person or property by or from any cause whatsoever in or about the land and building of which
the premises are a part, unless caused by Lessor's negligence or intentional conduct.

	

18.	
 	
Bankruptcy by Lessee. If (i) voluntary bankruptcy proceedings are initiated by Lessee, (ii) Lessee is adjudged a bankrupt, (iii) Lessee makes an assignment for the benefit of
its creditors, (iv) execution is issued against Lessee or its assets or (v) the interest of Lessee hereunder passes by operation of law to any person other than Lessee, this lease may, at Lessor's option, be terminated.
	

19.	
 	
Default. (a) If Lessee breaches any of the terms and conditions hereof and takes possession of the premises, (ii) remove all persons and property therefrom and (iii) declare
this lease terminated. In such event, Lessee shall peacefully and quietly surrender the premises to Lessor and execute such instruments as Lessor may require to evidence termination of Lessee's rights and interest hereunder; and Lessor shall be
entitled to recover from Lessee the aggregate of all amounts Lessor is permitted to recover from Lessee pursuant to Section 1951.2 of the California Civil Code, as amended, including without limitation, (i) the worth at the time of award of the
unpaid rent which had been earned at the time of termination, (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental
loss that Lessee proves could have been reasonably avoided, (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that Lessee proves
could have been reasonably avoided and (iv) all costs associated with reletting efforts, including without limitation, Lessor's overhead, legal fees, commissions and improvement costs. The "worth at the time of award" of the amounts referred to
in clauses (i) and (ii) above shall be computed by allowing interest at the maximum rate permitted by law. The "worth at the time of award" of the amount referred to in clause (iii) above shall be computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus 1%. Lessee hereby irrevocably appoints Lessor its attorney-in-fact to enter the premises in the event of default and remove any and all persons and property
therefrom, and to place said property in storage for the account of, and at the expense of Lessee. If Lessee fails to cure said breach and pay the cost of said storage within 30 days, Lessor may sell any or all of such property, at public or private
sale, in such manner and at such times and places as Lessor, in its sole discretion, may deem proper, and shall apply the proceeds of such sale to (i) the cost of such sale, (ii) the payment of storage charges, (iii) the payment of
sums due hereunder and (iv) to Lessee if a balance exists.
	

 	
 	

(b) Lessor may, at any time after Lessee commits a default hereunder, cure the default for the account and at the expense of Lessee, and any expense that Lessor elects or is compelled to pay or incur in connection therewith, including without
limitation, reasonable attorney's fees, together with interest thereon at the maximum rate permitted by law, shall be paid by Lessee to Lessor on demand.
	

 	
 	

(c) The rights and remedies herein conferred upon Lessor are not intended to be exclusive and are in addition to any other rights and remedies it may have now or hereafter by law, equity or statute.
	

20.	
 	
Lessor's Right of Entry. Lessor or its agents may enter the premises at all reasonable hours to inspect, clean, repair, alter or make additions thereto or to adjacent space, or for any other
lawful purpose, including without limitation, showing the premises to prospective purchasers, tenants or lenders. For each of the aforesaid purposes, Lessor shall retain a key with which to unlock all of the doors in the premises. Lessor may use any
and all means which it deems proper to open said doors in an emergency and any entry to the premises obtained by any of said means shall not, under any circumstances, be construed or deemed to be a forcible or unlawful entry into, or a detainer of,
the premises, or an eviction of Lessee from the premises or any portion thereof.
	

21.	
 	
Subordination. This lease, at Lessor's option, shall be subject and subordinate to the lien of any mortgages or deeds of trust in any amount or whatsoever now or hereafter placed on or
against the land or building of which the premises are a part without the necessity of the execution and delivery of any further instruments on the part of Lessee to effectuate such subordination; provided, however, that (i) Lessee shall, within
5 days of request from Lessor, execute and deliver such further instruments confirming such subordination as Lessor or its lender may request and (ii) Lessor or any holder of such a mortgage or deed of trust may elect that this lease shall be
senior to and have priority over such mortgage or deed of trust whether this lease is dated before or after the mortgage or deed of trust. Lessee shall attorn to the purchaser upon any foreclosure or trust deed sale and recognize such purchaser as
the Lessor under this lease.

	

22.	
 	
Estoppel Certificates. Lessee shall execute, acknowledge and deliver to Lessor at any time within 5 days after request by Lessor, a statement in writing certifying, if such be the case, that
this lease is unmodified and in full force and effect, or if there have been modifications that the same is in full force and effect as modified, the dates on and to which rent has been paid and such other information as Lessor shall reasonably
request. If additional documents are reasonably required by Lessor for this or other purposes, Lessee shall cooperate in the preparation thereof.
	

23.	
 	
Substituted Premises. Lessor may, at any time during the term hereof, upon giving Lessee not less than 30 days prior notice, provide Lessee with space of approximately the same size and
configuration elsewhere in the building and relocate Lessee to such space, with Lessor to pay all reasonable costs and expenses incurred as a result of such relocation. If Lessor moves Lessee to such a new space, Lessee shall execute a lease for said
new space on the same terms and conditions specified herein. Failure to cooperate fully with this provision shall constitute a material breach of the lease and paragraphs 19 and 29 shall apply. If relocation to space of approxmiately the same size
and configuration is not possible, Lessor may, at its option, terminate this lease 30 days from the date notice of said decision to terminate is given to Lessee. Relocation shall be accomplished [ILLEGIBLE] two consecutive pay period to the selected
by Lessee.

	

24.	
 	
Waiver. No term or condition hereof or the breach thereof shall be deemed waived, except by written consent of the party against whom the waiver is claimed, and any waiver of the breach of
any term or condition shall not be deemed to be a waiver of any preceding or succeeding breach of the same or any other term or condition. Acceptance by Lessor of any performance by Lessee after the time the same shall have become due shall not
constitute a waiver by Lessor of the breach or default unless otherwise expressly agreed to by Lessor in writing.
	

25.	
 	
Late Charges. If the payment of any amount due hereunder is not received by Lessor on or before the due date thereof said payment shall be in default and a late charge of 10% of the
defaulted payment shall also become due and payable as additional rent. Thereafter, said past due amount together with the late charge described herein shall bear interest at the maximum rate permitted by law.
	

26.	
 	
Attorney's Fees. If either party shall seek the aid of an attorney for relief against the other hereunder, including any suit by Lessor for the recovery of rent or possession of the premises,
 the losing party shall pay the prevailing party all the costs and expenses thereby incurred, including without limitation, attorney's fees, discovery costs, witness fees and court costs if applicable, whether or not an action is initiated or
prosecuted to judgment. The prevailing party shall also be entitled to attorney's fees and other costs for collection of any judgment. Attorney's fees shall be an element of costs under California Code of Civil Procedure Section 685.040 and/or
Section 1033.5, or any successor statute.
	

27.	
 	
Hold Harmless. Lessee shall indemnify, defend and hold harmless Lessor, its agents and employees from and against any and all claims, damages, liabilities, losses and expenses, including
without limitation, attorney's fees and costs of any kind whatsoever arising out of or resulting from, directly or indirectly, any act or omission of Lessee, its agents, employees, invitees, contractors, suppliers or customers.
	

28.	
 	
Holdover. Any holding over by Lessee after the expiration of this lease, without Lessor's consent, shall be subject to an unlawful detainer action immediately and the rent for such holdover
period shall be an amount equal to 2 times the rent due for the last month of the lease term.
	

29.	
 	
Surrender of Premises. Upon the expiration or earlier termination of this lease, Lessee shall surrender the premises and all alterations, additions and improvements thereto in the same
condition and configuration as received, ordinary wear and tear alone excepted. Any damage of the type described in the rules and regulations attached hereto shall be deemed excessive. If Lessee fails to so surrender the premises, Lessee shall
pay to Lessor, upon demand, the estimated cost of repairs and the rental value of the premises for the time reasonably estimated to make said repairs. The wall repair component of said estimate, if any, shall reflect the charges necessary to replace
damaged panels in accordance with manufacturer's specifications and procedures. Lessee shall further indemnify Lessor against any loss or liability resulting from delay by Lessee in so surrendering the premises, including without limitation, any
claims made by succeeding tenants founded in such failure.
	

30.	
 	
Notices. All notices which are required to be given by either party to the other hereunder shall be in writing and shall be deemed to have been given when they are (i) personally
delivered, (ii) faxed or (iii) mailed as shown below. Lessee hereby appoints, as its agent for the service of 3 day notices and any other process, the person in charge of or occupying the premises at the time of such service. If no such
person can be found, service may be made by attaching said notice or process to the entry door of the premises.
	

31.	
 	
Authority. If Lessee signs as a corporation, partnership or joint venture, each of the persons executing this lease on behalf of Lessee does hereby covenant and warrant that (i) Lessee
is a duly authorized and existing entity, (ii) Lessee has and is qualified to do business in California, (iii) the entity has full right and authority to enter into this lease and (iv) each person signing on behalf of the entity is
authorized to do so.
	

32.	
 	
Joint and Several Liability. Each person or entity signing as Lessee hereunder shall be jointly and severally liable for the obligations of Lessee herein.
	

33.	
 	
Miscellaneous. This lease shall be construed in accordance with the law

	 	 	of the State of California. In the event that one or more of the provisions or paragraphs of this lease is determined to be illegal or unenforceable, the remainder of this lease shall not be affected thereby; and each
remaining provision or portion thereof shall continue to be valid and effective and shall be enforceable to the fullest extent permitted by law. Lessee has reviewed this lease, and has had a full opportunity to consult any attorney of its choice in
this regard, and accordingly, the normal rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this lease.
	

34.	
 	
Entire Understanding. This agreement, together with the rules and regulations and any and all exhibits, riders or schedules attached hereto, all of which are made a part of this lease,
represents the entire understanding of Lessor and Lessee and supersedes all prior written or oral agreements relative to the subject matter hereof.
	

35.	
 	
Binding Effect. Subject to the provisions of Section 13 supra. and any other provisions of this lease to the contrary, all of the provisions of this lease shall be binding upon and inure to
the benefit of the parties and their respective heirs, legal representatives, successors and/or assignees.
	

36.	
 	
Assignment or Sublease. Subject to Lessee being a tenant in good standing hereunder, Lessee shall have the right, subject to Lessor's consent, to assign this lease to a franchise, joint
venture partner, or any entity controlled by or under common control with Lessee, or to a corporation with which Lessee has merged or consolidated. Upon receipt of written notice from Lessee that it wishes to vacate the premises prior to the lease
termination date, Lessor shall have ninety (90) days to recapture the space if it so desires. At the end of said ninety (90) day period, or sooner if agreed to by Lessor, Lessee may assign or sublease with Lessor's written consent but not at a rate
greater than Lessee is then paying. Nothing contained herein, however, shall affect Lessee's obligations under this Lease, including without limitations, its obligations to pay rent.

Dated February 14,
2001 

	Lessees
	 	Lessor

	Intermune
 (address)	 	Harvard Investment Company

	

1710 Gilbreth Road
 (address)	
 	

805 Veterans Blvd., Suite 200

	

Burlingame, California 94010
 (city, state, zip code)	
 	

Redwood City, Ca 94063
 (city, state, zip code)
	

By /s/ STEPHEN N. ROSENFIELD
 STEPHEN N. ROSENFIELD

(individual)	
 	

By /s/ GARY A MARTIN
 GARY A MARTIN

Rules and Regulations 

	1.	 	Lessee shall not mark, drive nails, screw or drill into floors, walls, doors, woodwork, plaster or ceilings, or in anyway deface the premises or any part thereof. Premises will be returned in the same condition
received.
	

2.	
 	

Lessor will direct workers as to where and how all computer, communication and telephone equipment is to be installed. No boring or cutting for wires or equipment will be allowed without the prior written consent of Lessor.
	

3.	
 	

No unusual furniture, freight, packages, supplies, equipment or merchandise of any kind shall be brought into the building without the prior written consent of Lessor and all moving of the same into or out of the building shall be done in such a time
and in such manner as Lessor shall designate.
	

4.	
 	

Lessee shall specify that all deliveries be made at the rear of the building only. Under no circumstances are deliveries to be made or received at or through the front of the building. There shall not be used in the building any hand trucks except
those equipped with rubber tires and side guards. In no event shall hand trucks be used on or about the front stairs or lobby of the building.
	

5.	
 	

Lessee shall not overload the floor of the premises. Lessor shall have the right to prescribe the weight size and position of all heavy objects brought into the building and also the times and manner of moving the same in and out of the building.
Lessor may require Lessee to pay for any engineering and construction work it deems appropriate to strengthen floors. Lessor will not be responsible for loss of or damage to any such property from any cause and all damage done to the building by
moving or maintaining such property shall be repaired at the expense of Lessee.
	

6.	
 	

Before leaving each day, Lessee shall see that (i) all drapes are closed, (ii) all water, gas and electricity in the premises is shut off and (iii) the doors of the premises and building are securely locked.
	

7.	
 	

Cars are to park in properly marked spaces only. Under no circumstances are cars to (i) back in, (ii) park in spaces reserved for other tenants, (iii) park in driveways, (iv) park in front of entrances to the building,
(v) park in unmarked areas or (vi) park in loading zones except while loading or unloading. All motorcycles, mopeds and bicycles are to park only in the area designated for them. Lessor shall have the right to cause improperly parked
vehicles to be towed at the owners expense. In addition Lessee shall pay to Lessor a charge of $100.00 per day for each parking violation of Lessee, its employees, agents, invitee's, or licensees.
	

8.	
 	

Lessee shall use protective pads at all desks, coffee machines and copy machines and maintain the premises in a clean and orderly manner at all times.
	

9.	
 	

No sign, placard, picture, advertisement, name or notice shall be inscribed, displayed, printed or affixed to any part of the outside or inside of the building or the premises without the prior written consent of Lessor and Lessor shall have the
right to remove any such item without notice to and at the expense of Lessee.
	

10.	
 	

The sidewalks, halls, exits, entrances and stairways shall not be obstructed or used for any purpose other than for ingress and egress. The halls, exits, entrances, stairways and roof are not for the use of the general public and Lessor shall in all
cases retain the right to control and prevent access thereto by all persons whose presence, in the judgment of Lessor, shall be prejudicial to the safety, character, reputation and interests of the building. Bicycles shall not be brought into any
interior space or common area of the premises and shall be parked, stored or locked only at the bicycle racks provided on the north side of the premises. No vehicles of any kind, whether motorized or nonmotorized, shall be parked or stationed on or
so as to obstruct any interior or exterior walkway, stairway, path, landscaped area, courtyard, foyer, lobby or any other place in or around the premises except for marked and designated parking spaces or bicycle racks.
	

 	
 	

At no time shall any common area of the premises, including without limitation, sidewalks, halls, exits, entrances, stairways, lobbies, foyers, courtyards, parking areas, lawns or landscaped areas, be used as waiting or assembly areas for guests,
employees, invitees or clients of

	 	 	any tenant (collectively "employees and invitees"). All tenants shall take all steps necessary to insure that all employees and their invitees (including any adults or children accompanying such employees or invitees)
wait and assemble only in internal lobbies or waiting rooms not visible from the common areas of the premises and located within the demised space of the tenant in question. At no time shall any tenant permit any employee or invitee to sit, wait,
play on or otherwise utilize any common area of the premises except for purposes of ingress and egress to the enclosed and demised tenant space.
	11.	 	Lessor will furnish Lessee 2 keys to Lessee's entry door. Lessor shall make a reasonable charge for any additional keys. Lessee shall not have any such keys copied. Upon the expiration or earlier termination of this lease,
 Lessee shall deliver to Lessor all keys to doors in the building. Lessee shall not alter any lock or install any new or additional locks or any bolts on any door of the premises without the written consent of Lessor.
	12.	 	The bathrooms, urinals and washbowls shall be used only for the purpose for which they were constructed and no foreign substance of any kind shall be thrown or disposed of therein.
	13.	 	Lessee shall not employ any person other than Lessor's janitor for the purpose of cleaning the premises without the prior written consent of Lessor. Except with the written consent of Lessor, no persons other than those
approved by Lessor shall be permitted to Enter the building for the purpose of cleaning the same. Lessee shall not cause any unnecessary labor by reason of Lessee's carelessness or indifference in the preservation of good order and cleanliness.
Lessor shall in no way be responsible to Lessee for any loss of property on the premises, however occurring, or for any damage done to the effects of any tenant by the janitor or any other employee or any other person. Janitor service shall include
ordinary dusting and cleaning and shall not include cleaning of carpets or rugs, except normal vacuuming, or moving of furniture and other special services, janitor service will not be furnished on nights when rooms are occupied after
9:30 p.m.
	14.	 	Lessee shall not (i) permit or suffer the premises to be occupied or used in a manner offensive or objectionable to Lessor or other occupants of the building, (ii) use the premises for manufacturing, maintenance,
 repair or for the storage of merchandise except as such storage may be incidental to the use of the premises for general office purposes or (iii) use the premises for cooking, lodging, sleeping, smoking or any illegal purpose.
	15.	 	Lessee shall not use or keep in the premises any hazardous material, toxic, flammable, explosive or noxious material, food, animal or bird.
	16.	 	No vending machine of any kind shall be installed, maintained or operated in the premises without the prior written consent of Lessor.
	17.	 	On Saturdays, Sundays, legal holidays and other days between the hours of 6:00 p.m. and 9:00 a.m. the following day, access to the building or to the premises may be refused unless the person seeking access is
known to the person or employee of the building in charge and has a pass or is properly identified. The Lessor shall in no case be liable for damages for any error with regard to the admission to or exclusion from the building of any person. In case
of invasion, riot, public excitement or other commotion, Lessor reserves the right to prevent access to the building for the safety of the building and its tenants.
	18.	 	Lessee shall not disturb, solicit or canvass any other tenants of the building and shall cooperate to prevent same.
	19.	 	If Lessee desires a music system, the system available through Lessor shall be used and a separate charge will be assessed for same.
	20.	 	Lessee shall install and maintain, at Lessee's expense, fire extinguishers next to any duplicating machine or similar heat producing equipment.
	21.	 	If Lessee wishes to maintain a coffee machine or like device in the premises, a timer must be connected to the outlet into which said machine is connected to prevent same from being left on.
	22.	 	No air conditioner, heater or similar appliance shall be used without the prior written consent of Lessor.

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Exhibit 10.36

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