Document:

Asset Purchase Agreement

 Exhibit 10.12 
 ASSET PURCHASE AGREEMENT 
 by and between 
 INTERMUNE, INC. 
 and 
 TARGANTA THERAPEUTICS CORPORATION 
 dated as of December 23, 2005 

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page
	 Article 1. Definitions
	  	1
			
	 Section 1.01
	  	Defined Terms	  	1
	 Section 1.02
	  	Construction of Certain Terms and Phrases	  	1
		
	 Article 2. Purchase and Sale of Assets
	  	1
			
	 Section 2.01
	  	Purchase and Sale of Assets	  	1
	 Section 2.02
	  	Transition Services	  	2
	 Section 2.03
	  	Assignability and Consents	  	2
		
	 Article 3. Assumption of Assumed Liabilities
	  	2
		
	 Article 4. Purchase Price and Payment
	  	2
			
	 Section 4.01
	  	Purchase Price	  	2
	 Section 4.02
	  	Purchase of Product Inventory	  	3
	 Section 4.03
	  	Payment of Sales, Use and Other Taxes	  	3
	 Section 4.04
	  	Impact of Failure to Issue Notes or Make Payments Thereunder	  	3
	 Section 4.05
	  	Allocation of Purchase Price	  	3
		
	 Article 5. Closing
	  	4
			
	 Section 5.01
	  	Time and Place	  	4
	 Section 5.02
	  	Deliveries at Closing	  	4
		
	 Article 6. Representations and Warranties of Seller
	  	6
			
	 Section 6.01
	  	Organization, Etc.	  	6
	 Section 6.02
	  	Authority; Binding Nature	  	6
	 Section 6.03
	  	Non-Contravention; Consents	  	6
	 Section 6.04
	  	Purchased Assets	  	6
	 Section 6.05
	  	Title to Purchased Assets	  	6
	 Section 6.06
	  	Assumed Contracts	  	6
	 Section 6.07
	  	Intellectual Property Rights	  	7
	 Section 6.08
	  	Litigation	  	8
	 Section 6.09
	  	No Debarment; Permits	  	8
	 Section 6.10
	  	Purchased Product Inventory	  	9
	 Section 6.11
	  	Product Data	  	9
	 Section 6.12
	  	Brokers	  	9
	 Section 6.13
	  	No Other Representations	  	9
		
	 Article 7. Representations and Warranties of Buyer
	  	10
			
	 Section 7.01
	  	Organization, Etc.	  	10
	 Section 7.02
	  	Authority; Binding Nature of Agreement	  	10

  

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	 Section 7.03
	  	Non-Contravention; Consents	  	10
	 Section 7.04
	  	Litigation	  	10
	 Section 7.05
	  	Brokers	  	10
		
	 Article 8. Covenants of the Parties
	  	10
			
	 Section 8.01
	  	Public Announcements	  	10
	 Section 8.02
	  	Non-Solicitation	  	11
	 Section 8.03
	  	Corporate Names	  	11
	 Section 8.04
	  	Regulatory Matters	  	11
	 Section 8.05
	  	Adverse Experience Reports	  	11
	 Section 8.06
	  	Affiliates	  	11
	 Section 8.07
	  	Access	  	11
	 Section 8.08
	  	Non-Competition	  	12
	 Section 8.09
	  	Use of Proceeds	  	12
	 Section 8.10
	  	Further Assurances	  	12
	 Section 8.11
	  	Diligence	  	12
		
	 Article 9. Conditions to the Obligations of Seller
	  	13
			
	 Section 9.01
	  	Representations, Warranties and Covenants	  	13
	 Section 9.02
	  	No Actions or Proceedings	  	13
	 Section 9.03
	  	Consents	  	13
	 Section 9.04
	  	Buyer Restructuring	  	13
	 Section 9.05
	  	Investor Convertible Notes	  	13
	 Section 9.06
	  	Other Closing Deliveries	  	13
		
	 Article 10. Conditions to the Obligations of Buyer
	  	14
			
	 Section 10.01
	  	Representations, Warranties and Covenants	  	14
	 Section 10.02
	  	No Actions or Proceedings	  	14
	 Section 10.03
	  	Consents	  	14
	 Section 10.04
	  	Lilly Agreement	  	14
	 Section 10.05
	  	Purchased Assets	  	14
	 Section 10.06
	  	Other Closing Deliveries	  	14
		
	 Article 11. Indemnification
	  	14
			
	 Section 11.01
	  	Survival of Representations, Warranties, Etc.	  	14
	 Section 11.02
	  	Indemnification	  	15
	 Section 11.03
	  	Limitations	  	17
	 Section 11.04
	  	Consequential Damages	  	18
		
	 Article 12. Miscellaneous
	  	19
			
	 Section 12.01
	  	Confidentiality	  	19
	 Section 12.02
	  	Notices	  	19
	 Section 12.03
	  	Entire Agreement	  	20
	 Section 12.04
	  	Waiver	  	20
	 Section 12.05
	  	Amendment	  	20
	 Section 12.06
	  	Third Party Beneficiaries	  	20

  

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	 Section 12.07
	  	Assignment; Binding Effect	  	20
	 Section 12.08
	  	Headings	  	21
	 Section 12.09
	  	Severability	  	21
	 Section 12.10
	  	Governing Law; Dispute Resolution	  	21
	 Section 12.11
	  	Expenses	  	21
	 Section 12.12
	  	Counterparts	  	22
	 Section 12.13
	  	Schedules, Exhibits and Other Agreements	  	22

  

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 Exhibits 
  

			
	Exhibit 4.01	  	Form of Acquisition Note
	Exhibit 4.05	  	Allocation of Purchase Price
	Exhibit 8.08	  	Development Plan
	Exhibit 8.09	  	Budget
		
	Exhibit A	  	Definitions
	Exhibit B	  	Transition Services Agreement
	Exhibit C	  	Note Issuance Agreement
	Exhibit D	  	Intellectual Property Assignment Agreement
	Exhibit E	  	Assignment and Assumption Agreement
	Exhibit F	  	Bill of Sale
	Exhibit G	  	Lilly Agreement

  

 iv 

 ASSET PURCHASE AGREEMENT 
 This Asset Purchase Agreement (this “Agreement”) is made and entered into as of December 23, 2005, by and between Targanta
Therapeutics Corporation, a Delaware corporation (“Buyer”), and InterMune, Inc., a Delaware corporation (“Seller”). 
 RECITAL 
 WHEREAS, subject to the terms and conditions of this Agreement, Seller desires to sell to Buyer, and Buyer
desires to purchase from Seller, the Purchased Assets (as defined below). 
 AGREEMENT 
 NOW, THEREFORE, in consideration of the premises and the mutual covenants and promises contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which hereby are acknowledged, the Parties agree as follows: 
 Article 1. Definitions

 Section 1.01 Defined Terms. Certain capitalized terms used in this Agreement are defined in Exhibit A attached
hereto. 
 Section 1.02 Construction of Certain Terms and Phrases. Unless the context of this Agreement otherwise requires:
(a) words of any gender include each other gender; (b) words using the singular or plural number also include the plural or singular number, respectively; (c) the terms “hereof,” “herein,” “hereby” and
derivative or similar words refer to this entire Agreement; (d) the terms “Article,” “Section” or “Exhibit” refer to the specified Article, Section or Exhibit of this Agreement; (e) the term “or”
has, except where otherwise indicated, the inclusive meaning represented by the phrase, “and/or”; and (f) the term “including” means “including without limitation.” Whenever this Agreement refers to a number of
days, such number shall refer to calendar days unless Business Days are specified. All accounting terms used but not otherwise defined herein shall have the meanings ascribed to such terms under U.S. Generally Accepted Accounting Principles,
consistently applied. 
 Article 2. Purchase and Sale of Assets 
 Section 2.01 Purchase and Sale of Assets. Subject to the terms and conditions of this Agreement, at the Closing, Seller shall sell, transfer,
convey, assign and deliver to Buyer, free and clear of all Encumbrances, and Buyer shall purchase, acquire and accept from Seller, all of Seller’s right, title and interest, as of the Closing, in and to the Purchased Assets. 
 (b) Notwithstanding anything contained in this Agreement to the contrary, (i) from and after the Closing, Seller shall retain all of
its right, title and interest in and to the Excluded Assets, and (ii) Seller may retain an archival copy of all Assumed Contracts, Books and Records (excluding any vendor lists, financial data, written and pending orders relating to the
Purchased Assets and the Business), Product Data and Marketing Materials (subject to Seller’s confidentiality obligations pursuant to Section 12.01 hereof). 
  

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 Section 2.02 Transition Services. At the Closing, the Parties shall enter into the Transition
Services Agreement providing for the services specified therein. 
 Section 2.03 Assignability and Consents. Notwithstanding anything
to the contrary contained in this Agreement, if the sale, assignment, transfer, conveyance or delivery or attempted sale, assignment, transfer, conveyance or delivery to Buyer of any asset that would be a Purchased Asset is (a) prohibited by
any applicable Law or (b) would require any consents, waivers, approvals, authorizations of or notices to a third Person or Governmental or Regulatory Authority and such consents, waivers, approvals, authorizations or notices shall not have
been obtained prior to the Closing, then in either case the Closing shall proceed without the sale, assignment, transfer, conveyance or delivery of such asset and this Agreement shall not constitute an agreement for the sale, assignment, transfer,
conveyance or delivery of such asset; provided that nothing in this Section 2.03 shall be deemed to waive the rights of Buyer not to consummate the transactions contemplated by this Agreement if the conditions to its obligations set
forth in Article 10 have not been satisfied. In the event that the Closing proceeds without the sale, assignment, transfer, conveyance or delivery of any such asset, then following the Closing, the Parties shall use their commercially reasonable
efforts, and cooperate with each other, to obtain promptly such consents, waivers, approvals, authorizations or notices. Pending such consents, waivers, approvals, authorizations or notices, the Parties shall cooperate with each other in any
mutually agreeable, reasonable and lawful arrangements designed to provide to Buyer the benefits of use of such asset and to Seller the benefits, including any indemnities, that, in each case, it would have obtained had the asset been conveyed to
Buyer at the Closing. To the extent that Buyer is provided the benefits pursuant to this Section 2.03 of any Contract, Buyer shall (x) perform for the benefit of the other parties thereto the obligations of Seller or any Affiliate of
Seller thereunder and (y) shall satisfy any related Liabilities with respect to such Contract that, but for the lack of an authorization, approval, consent or waiver to assign such obligations or Liabilities to Buyer, would be Assumed
Liabilities. Once consent, waiver, approval, authorization or notice for the sale, assignment, transfer, conveyance or delivery of any such asset not sold, assigned, transferred, conveyed or delivered at the Closing is obtained or given, Seller
shall assign, transfer, convey and deliver such asset to Buyer at no additional cost to Buyer. 
 Article 3. Assumption of Assumed
Liabilities 
 Subject to the terms and conditions of this Agreement, as of the Closing Date, Buyer will deliver the Assignment and
Assumption Agreement to Seller pursuant to which Buyer agrees to assume, satisfy, perform, pay, discharge and otherwise be responsible for the Assumed Liabilities subject to and in accordance with their respective terms and conditions. Except with
respect to the Assumed Liabilities, Buyer shall not assume and shall not in any way be responsible for any of the debts, liabilities, or obligations of Seller. 
 Article 4. Purchase Price and Payment 
 Section 4.01 Purchase Price. As consideration
for the Purchased Assets and the Seller’s full and faithful performance of all of its obligations hereunder, Buyer shall: 
 (a) pay to Seller at the Closing in cash by wire transfer of immediately available funds a payment of One Million U.S. Dollars (U.S.$1,000,000); 
 (b) pay to Eli Lilly and Company at the Closing or on such later date as requested by Eli Lilly and Company in cash by wire transfer of immediately available funds a payment of One Million U.S. Dollars
(U.S.$1,000,000); 
  

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 (c) pay to Seller on December 29, 2006 in cash by wire transfer of immediately
available funds a payment of One Million U.S. Dollars (U.S.$1,000,000); 
 (d) issue to Seller at the Closing a convertible
note, in the form attached hereto as Exhibit 4.01(a) (the “Acquisition Note”), (i) in the initial principal amount of Thirteen Million U.S. Dollars (U.S.$13,000,000), with such initial principal amount subject to
adjustment as set forth in the Acquisition Note, (ii) the principal amount of which shall be increased by Six Million U.S. Dollars (U.S.$6,000,000) on the First Milestone, with such principal amount subject to adjustment as set forth in the
Acquisition Note and (iii) the principal amount of which shall be increased by Six Million U.S. Dollars (U.S.$6,000,000) on the Second Milestone, with such principal amount subject to adjustment as set forth in the Acquisition Note; 

(e) pay to Seller on the First Milestone in cash by wire transfer of immediately available funds a payment of Two Million U.S. Dollars
(U.S.$2,000,000); 
 (f) pay to Seller on the Third Milestone in cash by wire transfer of immediately available funds a
payment of Five Million U.S. Dollars (U.S.$5,000,000) (with the aggregate principal amount of the Acquisition Note plus the payments made under Sections 4.01(a) and (c), the “Purchase Price”); and 
 (g) assume the Assumed Liabilities pursuant to the Assignment and Assumption Agreement. 
 Section 4.02 Purchase of Product Inventory. On the Closing Date, Buyer shall take title to all Product Inventory. 
 Section 4.03 Payment of Sales, Use and Other Taxes. Buyer and Seller shall share equally all sales, use, transfer, value added, documentary and
other related Taxes, if any, arising out of the sale by Seller of the Purchased Assets to Buyer pursuant to this Agreement (excluding Taxes on Seller’s income) (collectively, the “Transaction Taxes”). Buyer and Seller agree to
cooperate to determine the amount of any Transaction Taxes payable in connection with the transfer of the Purchased Assets under this Agreement. Buyer and Seller agree to assist each other, to the extent reasonably necessary and appropriate, in the
preparation and filing of any and all required Tax returns related to Transaction Taxes. Any Transaction Taxes shall be paid by Seller unless such Transaction Tax is imposed by Law on Buyer. Buyer or Seller, as the case may be, shall reimburse
Seller or Buyer, as the case may be, for its one-half share of any Transaction Taxes within ten (10) Business Days of receipt of reasonable written evidence of its payment. Buyer hereby waives compliance by Seller with the provisions of the
bulk transfer laws of any state. 
 Section 4.04 Impact of Failure to Issue Notes or Make Payments Thereunder. The failure by Buyer to
issue the Acquisition Note pursuant to Section 4.01(a) or to make any payments thereunder shall constitute an “Event of Default” under the Note Issuance Agreement. 
 Section 4.05 Allocation of Purchase Price. The Purchase Price shall be allocated among the Purchased Assets in the manner mutually agreed to by
the Parties and set forth on Exhibit 4.05 attached hereto in accordance with Section 1060 of the Internal Revenue Code of 1986, as amended. Buyer and Seller agree (i) to report the sale of the Purchased Assets for federal and state
Tax purposes in accordance with the allocations set forth on Exhibit 4.05 and (ii) not to take any position inconsistent with such allocations on any of their respective Tax returns. 
  

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 Article 5. Closing 
 Section 5.01 Time and Place. The closing of the transactions contemplated by this Agreement, including the purchase and sale of the Purchased
Assets and the assumption of the Assumed Liabilities (the “Closing”), shall take place as promptly as practicable, but no later than five (5) Business Days, following satisfaction or waiver of the conditions set forth in
Articles 9 and 10, at the offices of Latham & Watkins LLP, 12636 High Bluff Drive, Suite 400, San Diego, CA 92130 unless another time or place shall be agreed to by the Parties. 
 Section 5.02 Deliveries at Closing 
 (a) Closing Deliveries by Seller. 
 At the Closing, Seller shall deliver or cause to be delivered to
Buyer: 
 (i) a certified copy of the Certificate of Incorporation of Seller; 
 (ii) a certificate, executed by an executive officer of Seller, attaching a certified copy of the resolutions of the Board of
Directors of Seller approving the transactions contemplated hereby; 
 (iii) a Transition Services Agreement,
substantially in the form of Exhibit B hereto (the “Transition Services Agreement”); 
 (iv) the Note
Issuance Agreement, substantially in the form of Exhibit C hereto; 
 (v) an intellectual property assignment,
substantially in the form of Exhibit D hereto, assigning to Buyer all right, title and interest of Seller in the Intellectual Property (the “Intellectual Property Assignment Agreement”); 
 (vi) an assignment and assumption agreement, substantially in the form of Exhibit E hereto, assigning to Buyer all rights and
obligations of Seller and its Affiliates in and to the Purchased Assets including the Assumed Contracts (the “Assignment and Assumption Agreement”); 
 (vii) a bill of sale, substantially in the form of Exhibit F hereto, transferring the Purchased Assets to Buyer; 
 (viii) the Lilly Agreement, substantially in the form of Exhibit G; 
 (ix) copies of all Seller Governmental Consents and Seller Third Party Consents; 
 (x) consent from, or required notice to, each relevant Person, in accordance with the relevant Assumed Contract, to the assignment by
Seller to Buyer of any Assumed Contract to which such Person is a party, which consents or required notices, as the case may be, shall be in forms to be agreed upon by the Parties; and 
 (xi) a certificate, executed by an executive officer of Seller, confirming that the conditions set forth in Sections 10.01 and 10.02 have
been satisfied and other documents to be delivered pursuant to Article 10 hereof have in fact been delivered. 
  

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 (b) Closing Deliveries by Buyer. 
 At the Closing, Buyer shall deliver or cause to be delivered to Seller: 
 (i) the Acquisition Note in accordance with Section 4.01(a) hereof; 
 (ii) the Transition Services Agreement; 
 (iii) the Note Issuance Agreement; 
 (iv) the Intellectual Property Assignment Agreement;

 (v) the Assignment and Assumption Agreement; 
 (vi) such instruments of assumption and other instruments or documents, in form and substance reasonably acceptable to Seller and Buyer,
as may be reasonably necessary to effect Buyer’s assumption of the Assumed Liabilities in accordance with the terms of this Agreement and the Assignment and Assumption Agreement; 
 (vii) copies of all Buyer Governmental Consents and Buyer Third Party Consents; and 
 (viii) the Exchange Agreement; 
 (ix) the Support Agreement; 
 (x) a certified copy of the Articles of Amendment of Targanta
Canada, reflecting the effect of the Buyer Restructuring; 
 (xi) a certified copy of the Certificate of Incorporation of
Buyer; 
 (xii) copies of the Investor Convertible Notes, executed by Buyer; 
 (xiii) a certificate, executed by an executive officer of Buyer, attaching a certified copy of the resolutions of the Board of Directors
of Buyer approving the transactions contemplated hereby; 
 (xiv) a certificate, executed by an executive officer of Buyer,
attaching a certified copy of a written consent of the stockholders of Buyer approving the transactions contemplated hereby; and 
 (xv) a certificate, executed by an executive officer of Buyer, confirming that the conditions set forth in Sections 9.01 and 9.02 have been satisfied and other documents to be delivered pursuant to Article 9 hereof have in fact been
delivered. 
  

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 Article 6. Representations and Warranties of Seller 
 Seller represents and warrants to Buyer as of the date hereof and as of the Closing, subject to such exceptions as are specifically disclosed in the
disclosure schedule referencing the appropriate Section or Sections hereof as shall be supplied by Seller to Buyer and dated as of the date hereof (the “Seller Disclosure Schedule”), as follows: 
 Section 6.01 Organization, Etc. 
 Seller is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority (a) to conduct the Business in the
manner in which it is currently being conducted, and (b) to own and use its assets in the manner in which its assets are currently owned and used. 
 Section 6.02 Authority; Binding Nature. Seller has all necessary power and authority and has taken all actions necessary to enter into this Agreement and the other agreements to be executed pursuant hereto and
to carry out the transactions and perform the obligations contemplated hereby. Each of this Agreement and the other Transaction Documents has been duly and validly authorized, executed and delivered by Seller and, when executed and delivered by
Buyer, will constitute a legal, valid and binding obligation of Seller enforceable against it in accordance with their respective terms except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies. 
 Section 6.03 Non-Contravention; Consents. The execution, delivery and performance of this Agreement and each of the other Transaction Documents
and the sale of the Purchased Assets to Buyer do not and will not contravene, conflict with or result in a violation of any (a) Laws applicable to the Purchased Assets, any Assumed Contract or the Business; (b) any provision of an Assumed
Contract; (c) any of the provisions of Seller’s organizational documents or any resolution adopted by Seller’s Board of Directors (or any committee thereof) or stockholders; or (d) any material agreement or other material
instrument or arrangement to which Seller is subject. No consent, order, authorization, approval, declaration or filing, including with or from any Governmental or Regulatory Authority, is required on the part of Seller for or in connection with the
execution, delivery or performance of this Agreement and each of the other Transaction Documents, and the purchase by Buyer of the Purchased Assets. 
 Section 6.04 Purchased Assets. The Purchased Assets collectively constitute all of the properties, rights, interests and other tangible and intangible assets necessary to enable Buyer, following the Closing, to
continue the clinical development of the Product as Seller has developed such Product in the past. 
 Section 6.05 Title to Purchased
Assets. Seller has good and marketable title to all of the Purchased Assets, including the Product Inventory, free and clear of all Encumbrances other than Permitted Encumbrances, and Seller has not received any written notice of any adverse
claim asserting ownership of the Purchased Assets. The execution, delivery and performance by Seller of this Agreement and the sale of the Purchased Assets to Buyer will not result in the imposition of any Encumbrance on the Purchased Assets.

 Section 6.06 Assumed Contracts. 
 (a) Section 6.06 of the Seller Disclosure Schedule sets forth a complete and correct list of each Contract to which Seller is a party that relates exclusively to, is necessary for or has been used by Seller
in the two years preceding the date of this Agreement to pursue the clinical development, manufacture, marketing, sale or distribution of the Product with a value in excess of Ten Thousand U.S. Dollars (U.S. $10,000) and any other Contract if a
default thereunder would reasonably be expected to have an Adverse Effect. 
 (b) (i) Seller is not presently in
violation or breach of, and has not declared or committed any default under and, to the Knowledge of Seller, no Person is presently in violation or 

  

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breach of, or has declared or committed any default under, any Assumed Contract, (ii) Seller has not received any written notice regarding any breach
of, or default under, any Assumed Contract, (iii) to the Knowledge of Seller, no event has occurred, and no circumstance or condition exists (including the Closing of the transactions contemplated by this Agreement), that would give any Person
the right to cancel, terminate or modify any Assumed Contract and (iv) each Assumed Contract sets forth the entire agreement and understanding between Seller and the other parties thereto and is valid, binding and in full force and
effect. Seller has made available to Buyer complete and correct copies of all Assumed Contracts. 
 Section 6.07 Intellectual
Property Rights. Section 6.07(a) of the Seller Disclosure Schedule sets forth a complete and correct list of all Registered Intellectual Property and, to the Knowledge of Seller, all common law trademarks. 
 (b) Seller owns all right, title and interest in and to, or has a license, sublicense or other permission to use, make, sell, have
made, distribute, disclose, copy, modify and perform, all of the Intellectual Property (including the Registered Intellectual Property and other Intellectual Property set forth on Section 6.07(a) of the Seller Disclosure Schedule), free and
clear of all Encumbrances other than Permitted Encumbrances. 
 (c) To the Knowledge of Seller, all documents and
instruments necessary to perfect the rights of Seller in the Patents included in the Intellectual Property have been validly executed, delivered or filed in a timely manner with the appropriate Governmental or Regulatory Authorities. 
 (d) To the Knowledge of Seller, Seller has disclosed trade secrets of Seller included in the Intellectual Property only to Persons
that have executed written confidentiality agreements governing the use and disclosure of such trade secrets, except to the extent Seller was required to disclose such information in connection with making filings related to any Purchased Assets
with Governmental or Regulatory Authorities. 
 (e) To the Knowledge of Seller, the Intellectual Property constitutes all
patents and patent applications, and technology, know-how, information and other intellectual property rights (i) owned or licensed to Seller relating exclusively to the Business, manufacture of the Compound or the Product or the use or sale of
the Product or (ii) that are necessary for the conduct of the Business as currently conducted by Seller. 
 (f) Section 6.07(f) of the Seller Disclosure Schedule sets forth all material licenses, sublicenses and other agreements to which Seller is party and pursuant to which Seller is authorized to use the Intellectual Property. Except
as expressly set forth in this Agreement, no interest in any of the Intellectual Property has been assigned, transferred, licensed or sublicensed by Seller to any Person, nor has Seller agreed not to assert or to permit the assertion of any
Intellectual Property against any Person. Seller has not executed or granted to any third party, directly or indirectly, or entered into any agreement for, any license or other right to make, use, offer to sell, sell or import the Product or the
Compound. 
 (g) To the Knowledge of Seller, none of the Intellectual Property is or is likely to become subject to any
outstanding and final order, judgment, decree or stipulation from a Government or Regulatory Authority having jurisdiction over Seller restricting the use thereof by Seller with respect to the Business or restricting the licensing thereof by Seller
to any Person. 
 (h) To the Knowledge of Seller, no interference, opposition, reissue, reexamination or other Action or
Proceeding of any nature is or has been pending or threatened in writing in which the 

  

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scope, validity or enforceability of any of the Patents within the Intellectual Property is being, has been or could reasonably be expected to be contested
or challenged. 
 (i) Seller has not made any claim of any violation or infringement by others of its rights in the
Intellectual Property, and, to the Knowledge of Seller, no grounds for any such claims exist. Seller has not received any notice nor does it have any Knowledge that it is in conflict with or infringing upon the asserted rights of others in
connection with the Intellectual Property and, to the Knowledge of Seller, the use of the Intellectual Property by Seller is not infringing and has not infringed upon any rights of any other Person. 
 (j) To the extent any Intellectual Property or any component thereof was created in whole or in part by or on behalf of Seller, each
Person who contributed to the creation of such Intellectual Property has irrevocably assigned to Seller in writing all intellectual property or other ownership rights in such Person’s contribution to such Intellectual Property or component
thereof, and such Person has waived all moral rights in such Person’s contribution to such Intellectual Property or component thereof. 
 Section 6.08 Litigation. There are no pending Actions or Proceedings, and to the Knowledge of Seller, no Person has threatened in writing to commence any Action or Proceeding, (a) that involves the Purchased Assets; or
(b) that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, the transactions contemplated by this Agreement. There are, and there have been, no claims made in writing against Seller
alleging any material defects in the Product, the Compound or the Product Inventory or alleging any failure of the Product, the Compound or the Product Inventory to meet specifications. 
 Section 6.09 No Debarment; Permits. 
 (a) Section 6.09 of the Seller Disclosure Schedule contains a complete and accurate list of each Regulatory Filing and material license, franchise, permit or other similar authorization necessary to conduct
the Business as currently conducted, together with the name of the Governmental or Regulatory Authority issuing such license or permit (the “Permits”) made or held by Seller. Each such Permit is valid and in full force and effect,
except as would not reasonably be expected to have an Adverse Effect. To the Knowledge of Seller, no event has occurred, and Seller has not received any notice in writing from any Governmental or Regulatory Authority or otherwise of the occurrence
of any event, that will constitute a violation of or a failure to comply with any term or requirement of any such Permit, or result in the revocation, withdrawal, suspension, cancellation, or termination of any such Permit, except as would not
reasonably be expected to have an Adverse Effect. 
 (b) (i) Seller has furnished Buyer with access to a complete copy of
the IND, (ii) Seller is and was, at all times prior to the Closing Date, the lawful holder of all rights under the Regulatory Filings, (iii) Seller has complied in all material respects with applicable Laws relating to the Regulatory
Filings, and with regard to actions taken directly by Seller, the Compound and the Product, (iv) the Regulatory Filings have been accepted by, and nothing has come to Seller’s attention that has, or reasonably should have, led Seller to
believe that the Regulatory Filings are not in good standing with relevant regulatory authorities, (v) Seller has filed with the relevant Governmental or Regulatory Authorities all required notices, supplemental applications and annual or other
reports, including adverse experience reports, with respect to the Regulatory Filings, and (vi) to the Knowledge of Seller, there is no pending or overtly threatened action by any relevant Government or Regulatory Authority that would
reasonably be expected to have an Adverse Effect. 
  

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 (c) Seller represents and warrants that Seller is not debarred and has not used in
any capacity relating to the Purchased Assets the services of any Person debarred under subsections 306(a) or (b) of the Generic Drug Enforcement Act of 1992. 
 Section 6.10 Purchased Product Inventory. 
 (a) Section 6.10 of the Seller
Disclosure Schedule lists (i) the lot numbers associated with the Product Inventory and (ii) the manufacturing, warehousing, distribution and consignee locations where the Product Inventory is located. Seller represents and warrants that
the Product Inventory manufactured by or for Seller that will be provided to Buyer hereunder was manufactured, packaged and stored in compliance with all relevant, applicable Laws, including those governing clinical biopharmaceutical supplies.

 (b) The Product Inventory represents all raw materials, Compound and finished goods directly related to the Product
that is currently owned and on hand or in the control of Seller at any of its warehouses, blenders, toll manufacturers, suppliers, or other third parties. 
 Section 6.11 Product Data. Seller represents and warrants that the Product Data are true and complete in all material respects. Seller is transferring to Buyer, as part of the Product Data, all of the
manufacturing information in Seller’s tangible possession as of the Closing that was necessary for, and/or used by Seller or any of Seller’s Affiliates in, the development and/or manufacture of the Compound or the Product by Seller or any
such Affiliate. 
 Section 6.12 Brokers. Seller has not retained any broker in connection with the transactions contemplated
hereunder. Buyer has no, and will have no, obligation to pay any brokers, finders, investment bankers, financial advisors or similar fees in connection with this Agreement or the transactions contemplated hereby by reason of any action taken by or
on behalf of Seller. 
 Section 6.13 No Other Representations. 
 EXCEPT AS SET FORTH IN THIS AGREEMENT, SELLER IS SELLING THE PURCHASED ASSETS (INCLUDING, BUT NOT LIMITED TO, THE PRODUCT INVENTORY) “AS IS.”
SELLER MAKES NO REPRESENTATION OR WARRANTY OTHER THAN AS SET FORTH IN THIS AGREEMENT AS TO THE PRODUCT, THE PURCHASED ASSETS (INCLUDING, BUT NOT LIMITED TO, THE PRODUCT INVENTORY) OR THE BUSINESS, WHETHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR INFRINGEMENT OF THIRD PARTY RIGHTS, AND ALL SUCH WARRANTIES ARE EXPRESSLY DISCLAIMED. NOTWITHSTANDING THE GENERALITY OF THE FOREGOING, EXCEPT AS SET FORTH IN THIS AGREEMENT, SELLER WILL NOT AND
DOES NOT WARRANT THAT OWNERS OF OTHER PRODUCTS THAT ARE SUBSTANTIALLY SIMILAR TO OR IDENTICAL WITH THE PRODUCT WILL NOT ATTEMPT TO REGISTER AND SELL SUCH OTHER PRODUCTS AND SELLER MAKES NO REPRESENTATION OF WARRANTY AS TO THE PROSPECTS, FINANCIAL OR
OTHERWISE, OF CONDUCTING THE BUSINESS OR MARKETING THE PRODUCT. 
  

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 Article 7. Representations and Warranties of Buyer 
 Buyer represents and warrants to Seller as of the date hereof and as of the Closing, subject to such exceptions as are specifically disclosed in the
disclosure schedule referencing the appropriate Sections hereof supplied by Buyer to Seller and dated as of the date hereof (the “Buyer Disclosure Schedule”), as follows: 
 Section 7.01 Organization, Etc. 
 Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority (a) to conduct its business in the manner in which it is
currently being conducted, and (b) to own and use its assets in the manner in which its assets are currently owned and used. 
 Section 7.02 Authority; Binding Nature of Agreement. Buyer has all necessary power and authority and has taken all actions necessary to enter into this Agreement and the other agreements to be executed pursuant hereto and to carry
out the transactions and perform the obligations contemplated hereby. Each of this Agreement and the other Transaction Documents has been duly and validly authorized, executed and delivered by Buyer and, when executed and delivered by Seller, will
constitute a legal, valid and binding obligation of Buyer enforceable against it in accordance with their respective terms except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies. 
 Section 7.03 Non-Contravention; Consents. The execution, delivery and performance of this Agreement and each of the other Transaction Documents
and the purchase of the Purchased Assets by Buyer do not and will not contravene, conflict with or result in a violation of any (a) Laws to which Buyer or any of the assets owned or used by Buyer is subject, (b) any of the provisions of
Buyer’s organizational documents or any resolution adopted by Buyer’s Board of Directors (or any committee thereof) or stockholders or (c) any material agreement or other instrument or arrangement to which Buyer is subject. No
consent, order, authorization, approval, declaration or filing, including with or to any Governmental or Regulatory Authority, is required on the part of Buyer for or in connection with the execution, delivery or performance of this Agreement and
each of the other Transaction Documents, and the purchase by Buyer of the Purchased Assets. 
 Section 7.04 Litigation. There are no
pending Actions or Proceedings, and to the Knowledge of Buyer, no Person has threatened to commence any Action or Proceeding, (a) that involves Buyer and that might reasonably be expected to have an Adverse Effect; or (b) that challenges,
or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, the transactions contemplated by this Agreement. 
 Section 7.05 Brokers. Buyer has not retained any broker in connection with the transactions contemplated hereunder. Seller has no, and will have no, obligation to pay any brokers, finders, investment bankers, financial advisors or
similar fees in connection with this Agreement or the transactions contemplated hereby by reason of any action taken by or on behalf of Buyer. 
 Article 8. Covenants of the Parties 
 Section 8.01 Public Announcements. Neither Seller, Buyer nor any of
their respective Affiliates shall issue any press release or make any public announcement with respect to this Agreement and the transactions contemplated hereby without obtaining the prior written consent of the other Party, which consent shall not
be unreasonably withheld, except as may be required by applicable Law upon the advice of counsel and only if the disclosing Party provides the non-disclosing Party with an opportunity to first review the release or other public announcement.
Following the Closing, Buyer shall be entitled to make such public announcements as it deems appropriate related to the Product and the Compound; provided, that, without Seller’s prior written consent, no such announcement shall contain
any reference to Seller or actions taken with respect to the Product or Compound prior to the Closing Date. 
  

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 Section 8.02 Non-Solicitation. Without the prior written consent of Seller, for a period
commencing on the date hereof and expiring on the second (2nd) anniversary of the Closing Date, Buyer shall not, and shall cause its Affiliates to not, directly or indirectly, induce, encourage or solicit any of Seller’s officers or
employees who worked in the Business on the Closing Date or who have carried out or participated in the transactions contemplated by this Agreement on behalf of Seller to leave such employment. 
 (b) Without the prior written consent of Buyer, for a period commencing on the date hereof and expiring on the second
(2nd) anniversary of the Closing Date, Seller shall not, and shall cause its Affiliates to not, directly or indirectly, induce, encourage or solicit any of Buyer’s officers or employees who have carried out or participated in the
transactions contemplated by this Agreement on behalf of Buyer to leave such employment. 
 (c) Notwithstanding the
foregoing, this Section 8.02 shall not be applicable to, nor prohibit, general solicitations of employment not specifically targeted at employees of Seller or Buyer or any of their Affiliates. 
 Section 8.03 Corporate Names. Following the Closing, Buyer shall not have any rights by virtue of this Agreement or any of the transactions or
agreements contemplated hereby to any names, trademarks, trade names, trade dress or logos relating to Seller or any of the Affiliates of Seller or any of their products other than those included in the Purchased Assets. 
 (b) Following the Closing, Seller shall not have any right to use any names, trademarks, trade names, trade dress or logos included
within the Purchased Assets. 
 Section 8.04 Regulatory Matters. Buyer and Seller shall use their commercially reasonable efforts to
complete the transfer of each Regulatory Filing, at Buyer’s sole cost and expense, as promptly as possible after the Closing. 
 (b) From and after the Closing, Buyer, at its sole cost and expense, shall be solely responsible and liable for taking all actions, paying all fees and conducting all communication with the appropriate Governmental or Regulatory
Authority required by Law in respect of such Regulatory Filing, including preparing and filing all reports (including adverse drug experience reports) with the appropriate Governmental or Regulatory Authority. 
 Section 8.05 Adverse Experience Reports. After the Closing, Seller shall promptly submit to Buyer all adverse drug experience information brought
to the attention of Seller in respect of the Compound or the Product, as well as any material events and matters concerning or affecting the safety or efficacy of the Compound or the Product, each as they relate to activities of Seller prior to the
Closing. After the Closing, Buyer shall have all responsibility for required reporting of adverse experiences for the Compound and the Product, but such reporting shall not limit Seller’s obligation for any actions necessary with respect to
Products distributed prior to the Closing based upon the facts and circumstances contained in such adverse drug experience information. 
 Section 8.06 Affiliates. Each Party hereto shall cause its respective Affiliates to comply with the terms of this Agreement. 
 Section 8.07 Access. Following the Closing and for a period of not less than five (5) years, Seller will maintain and grant Buyer and its legal, accounting and other advisors access, upon reasonable notice and during normal
business hours, to any corporate records, books of account, Tax records, contracts and other documents of Seller that are related to the Business as are reasonably required for Buyer to complete any required Tax filings with any Governmental or
Regulatory Authority. 
  

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 Section 8.08 Non-Competition. 
 Seller will not, for a period of two (2) years following the Closing Date, directly or indirectly, individually or as a partner or
other owner or participant in any business entity or joint venture, engage in the development of intravenous gram positive antibiotic agents in the indications to be pursued by Buyer within the next three (3) years as set forth in the written
development plan for the Compound attached hereto as Exhibit 8.08 (the “Development Plan”); provided that the prohibition set forth in this Section 8.08 shall not be effective against the Seller to the extent that
such competitive activity arises solely and directly out of any pre-existing drug development activities of Seller (or, in the event of an acquisition of Seller, then arising solely and directly with respect to activities that such acquiring party
or its direct or indirect affiliates were engaged in prior to the closing of such acquiring party’s acquisition of Seller). 
 Section 8.09 Use of Proceeds. Buyer shall use its, and shall cause Targanta Canada and Targanta Ontario to use their, commercially reasonable efforts to use the net proceeds from the issuance of the Investor Convertible Notes in
accordance with the budget set forth in Exhibit 8.09 hereto (the “Budget”). Notwithstanding the foregoing, not less than Five Million Dollars (U.S.$5,000,000) of such net proceeds shall be used for the development of the
Product and Business, including hiring team members for the development of the Business and commencing the preparation of an NDA submission related to the Product. 
 Section 8.10 Further Assurances. 
 (a) Following the Closing, Seller and Buyer
each agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by
this Agreement and to vest in Buyer good and marketable title to the Purchased Assets. 
 (b) Seller hereby constitutes
and appoints, effective as of the Closing Date, Buyer and its successors and assigns as the true and lawful attorney of Seller with full power of substitution in the name of Buyer or in the name of Seller, but for the benefit of Buyer (i) to
collect for the account of Buyer any items of Purchased Assets and (ii) to institute and prosecute all proceedings that Buyer may in its sole discretion deem proper in order to assert or enforce any right, title or interest in, to or under the
Purchased Assets, and to defend or compromise any and all actions, suits or proceedings arising after the Closing in respect of the Purchased Assets. Buyer shall be entitled to retain for its account any amounts collected pursuant to the foregoing
powers, including any amounts payable as interest in respect thereof. 
 Section 8.11 Diligence. After the Closing Date, Buyer shall
devote commercially reasonable efforts to develop the Product in accordance with the Development Plan, including those activities designed to reach the First Milestone and Second Milestone, and shall give Seller written updates as to its progress in
such efforts within ten (10) days after Seller’s written request thereof. If Seller believes that Buyer is not devoting commercially reasonable efforts to develop the Product in accordance with the Development Plan, Seller shall so notify
Buyer in writing, such notice to include Seller’s specific concerns and recommendations. Within fifteen (15) days after receipt of such notice from Seller, appropriate individuals from Buyer and Seller shall meet to discuss Seller’s
concerns and recommendations, such agreed upon concerns and recommendations to become part of the Development Plan. 
  

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 Article 9. Conditions to the Obligations of Seller 
 The obligation of Seller to effect the transactions contemplated hereby is subject to the satisfaction (or waiver by Seller), at or before the Closing,
of each of the following conditions: 
 Section 9.01 Representations, Warranties and Covenants. All representations and warranties of
Buyer contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date as though given on and as of such date, and Buyer shall have performed all agreements and covenants required by this Agreement to be
performed by it prior to or on the Closing Date, and Seller shall have received a certificate to such effect dated the Closing Date and executed by a duly authorized officer of Buyer. 
 Section 9.02 No Actions or Proceedings. No Actions or Proceedings that question the validity or legality or that seek to enjoin, alter or delay
the consummation of the transactions contemplated hereby shall have been instituted or threatened and not settled or otherwise terminated. 
 Section 9.03 Consents. All Seller Governmental Consents, Seller Third Party Consents, Buyer Governmental Consents and Buyer Third Party Consents shall have been obtained or made, as the case may be. 
 Section 9.04 Buyer Restructuring. Buyer shall have delivered to Seller evidence of the completion of the Buyer Restructuring, including, but not
limited to: 
 (a) A copy of the Exchange Agreement executed by all parties thereto; 
 (b) A copy of the Support Agreement executed by all parties thereto; 
 (c) A certified copy of the Articles of Amendment of Targanta Canada, reflecting the effect of the Buyer Restructuring; and

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

 Section 9.05 Investor Convertible Notes. Buyer shall have delivered to Seller evidence of (a) the issuance of the Investor
Convertible Notes and (b) the receipt by Buyer of no less than Ten Million U.S. Dollars (U.S. $10,000,000) in consideration of the issuance thereof, including copies of the fully executed Investor Convertible Notes. 
 Section 9.06 Other Closing Deliveries. Buyer shall have delivered to Seller: 
 (a) a certificate, executed by an executive officer of Buyer, attaching a certified copy of the resolutions of the Board of Directors
of Buyer approving the transactions contemplated hereby; 
 (b) a certificate, executed by an executive officer of Buyer,
attaching a certified copy of a written consent of the stockholders of Buyer approving the transactions contemplated hereby; 
 (c) a certificate, executed by an executive officer of Buyer, confirming that, to the actual knowledge of such executive officer, the conditions set forth in Sections 9.01 and 9.02 have been satisfied, and any such other certificates
and documents customary in transactions similar to those contemplated hereby that are reasonably requested by Seller; and 
  

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 (d) all other certificates, documents and agreements required to be delivered by
Buyer to Seller pursuant to Section 5.02(b). 
 Article 10. Conditions to the Obligations of Buyer 
 The obligation of Buyer to effect the transactions contemplated hereby is subject to the satisfaction (or waiver by Buyer), at or before the Closing, of
each of the following conditions: 
 Section 10.01 Representations, Warranties and Covenants. All representations and warranties of
Seller contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date as though given on and as of such date, and Seller shall have performed all agreements and covenants required by this Agreement to be
performed by it prior to or on the Closing Date, and Buyer shall have received a certificate to such effect dated the Closing Date and executed by a duly authorized officer of Seller. 
 Section 10.02 No Actions or Proceedings. No Actions or Proceedings that question the validity or legality or that seek to enjoin, alter or delay
the consummation of the transactions contemplated hereby shall have been instituted or threatened and not settled or otherwise terminated. 
 Section 10.03 Consents. All Seller Governmental Consents, Seller Third Party Consents, Buyer Governmental Consents and Buyer Third Party Consents shall have been obtained or made, as the case may be. 
 Section 10.04 Lilly Agreement. Seller shall have assigned to Buyer the Lilly Agreement pursuant to the Assignment and Assumption Agreement.

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

 Section 10.06 Other Closing Deliveries. Seller shall have delivered to Buyer a certificate, executed by an executive officer of
Seller, confirming that the conditions set forth in Sections 10.01 and 10.02 have been satisfied. Seller shall also have delivered to Buyer all other certificates, documents and agreements required to be delivered by Seller to Buyer pursuant to
Section 5.02(a) and any such other certificates and documents customary in transactions similar to those contemplated hereby that are reasonably requested by Buyer. 
 Article 11. Indemnification 
 Section 11.01 Survival of Representations, Warranties, Etc.

 The representations and warranties made by either Party in this Agreement shall survive the Closing and shall expire twelve
(12) months after the Closing Date, provided that the representations and warranties contained in Section 6.09(b)(iii) hereof shall expire twenty-four (24) months after the Closing Date, and any Liability of either Party with respect
to such representations and warranties (other than for Damages attributable to fraud) shall thereupon cease; provided, however, that if, at any time prior to such expiration date, notice of any claim for indemnification pursuant to
Section 11.02(a)(i) or Section 11.02(b)(i), as the case may be, shall have been given prior to the applicable expiration date and such notice describes the circumstances with respect to which such indemnification claim relates, such
indemnification claim shall survive until such time as such claim is finally resolved. 
  

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 Section 11.02 Indemnification. 
 (a) By Seller. Subject to Sections 11.03 and 11.04, from and after the Closing, Seller shall indemnify, reimburse, defend and
hold harmless Buyer, its Affiliates and their respective officers, directors, employees, agents, successors and assigns (collectively, the “Buyer Indemnified Parties”) from and against any and all costs, losses, Liabilities,
damages, lawsuits, deficiencies, claims and expenses (including interest, penalties and reasonable fees and disbursements of attorneys paid in connection with the investigation, defense or settlement of any of the foregoing) (collectively, the
“Damages”) to the extent arising or resulting from: 
 (i) any inaccuracy or breach of any representation or
warranty of Seller herein; 
 (ii) any breach of any covenant or other agreement of Seller or any of its Affiliates herein;

 (iii) the conduct of the Business by Seller or any of its Affiliates prior to the Closing except to the extent the same
constitute Assumed Liabilities; or 
 (iv) the failure of Seller or any of its Affiliates to pay, perform or discharge any
Excluded Liabilities. 
 (b) By Buyer. Subject to Sections 11.03 and 11.04, from and after the Closing, Buyer
shall indemnify, reimburse, defend and hold harmless Seller, its Affiliates and their respective officers, directors, employees, agents, successors and assigns (collectively, the “Seller Indemnified Parties”) from and against any
and all Damages to the extent arising or resulting from: 
 (i) any inaccuracy or breach of any representation or warranty of
Buyer herein; 
 (ii) any inaccuracy or breach of any covenant or other agreement of Buyer herein; 
 (iii) the conduct of the Business by Buyer or any of its Affiliates from and after the Closing; or 
 (iv) the failure of Buyer or any of its Affiliates to pay, perform or discharge any Assumed Liabilities. 
 (c) Procedures. The indemnified party (the “Indemnified Party”) shall give the indemnifying party (the
“Indemnifying Party”) prompt written notice (an “Indemnification Claim Notice”) of any Damages or discovery of fact upon which such Indemnified Party intends to base a request for indemnification under
Section 11.02(a) or Section 11.02(b); provided, however, in no event shall the Indemnifying Party be liable for any Damages that result from any delay in providing such notice except to the extent that the rights of the
Indemnifying Party are not materially prejudiced by the failure to give notice. Each Indemnification Claim Notice must contain a reasonable description of the claim and the nature and amount of such Damages (to the extent that the nature and amount
of such Damages are known at such time). The Indemnified Party shall furnish promptly to the Indemnifying Party copies of all papers and official documents received in respect of any Damages. All indemnification claims in respect of a Party, its
Affiliates or their respective directors, officers, employees and agents (collectively, the “Indemnitees” and each an “Indemnitee”) shall be made solely by such Party to this Agreement. 
  

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 (d) Third Party Claims. The obligations of an Indemnifying Party under this
Section 11.02 with respect to Damages arising from claims of any third party that are subject to indemnification as provided for in Section 11.02(a) or Section 11.02(b) (a “Third Party Claim”) shall be governed by and
be contingent upon the following additional terms and conditions: 
 (i) At its option, the Indemnifying Party may assume the
defense of any Third Party Claim by giving written notice to the Indemnified Party within thirty (30) days after the Indemnifying Party’s receipt of an Indemnification Claim Notice. The assumption of the defense of a Third Party Claim by
the Indemnifying Party shall not be construed as an acknowledgment that the Indemnifying Party is liable to indemnify any Indemnitee in respect of the Third Party Claim, nor shall it constitute a waiver by the Indemnifying Party of any defenses it
may assert against any Indemnitee’s claim for indemnification. Failure by the Indemnifying Party to notify the Indemnified Party of its election to defend any such action within thirty (30) days after notice thereof shall have been given
to the Indemnifying Party shall be deemed a waiver by the Indemnifying Party of its right to defend such action. Upon assuming the defense of a Third Party Claim, the Indemnifying Party may appoint as lead counsel in the defense of the Third Party
Claim any legal counsel selected by the Indemnifying Party that is reasonably acceptable to the Indemnified Party. In the event the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party shall promptly deliver to the
Indemnifying Party all original notices and documents (including court papers) received by any Indemnitee in connection with the Third Party Claim. Should the Indemnifying Party assume the defense of and continue to defend a Third Party Claim with
counsel reasonably acceptable to the Indemnified Party, except as provided in subsection (ii) below, the Indemnifying Party shall not be liable to the Indemnified Party or any other Indemnitee for any legal expenses subsequently incurred by
such Indemnified Party or other Indemnitee in connection with the analysis, defense or settlement of the Third Party Claim. In the event that it is ultimately determined that the Indemnifying Party is not obligated to indemnify, defend or hold
harmless an Indemnitee from and against the Third Party Claim, the Indemnified Party shall reimburse the Indemnifying Party for any and all costs and expenses (including attorneys’ fees and costs of suit) and any Damages incurred by the
Indemnifying Party in its defense of the Third Party Claim with respect to such Indemnitee. 
 (ii) Without limiting
Section 11.02(d)(i), any Indemnitee shall be entitled to participate in, but not control, the defense of such Third Party Claim and to employ counsel of its choice for such purpose; provided, however, that such employment of
separate legal counsel shall be at the Indemnitee’s own expense unless (A) the employment thereof has been specifically authorized by the Indemnifying Party in writing, (B) the Indemnifying Party has failed to assume the defense and
employ counsel in accordance with Section 11.02(d)(i) (in which case the Indemnified Party shall control the defense) or (C) if the Indemnified Party and the Indemnifying Party are both named parties to the proceeding and the Indemnified
Party has reasonably concluded that there may be one or more legal defenses that are different from or in addition to those available to the Indemnifying Party (in which case the Indemnifying Party shall not have the right to assume the defense of
such action on behalf of the Indemnified Party and the Indemnifying Party shall be liable for all legal expenses incurred by the Indemnified Party in furtherance thereof). The Indemnifying Party shall not, in the defense of a claim or any litigation
resulting therefrom, consent to entry of any judgment, except with the written consent of the Indemnified Party, or enter into any settlement except with the written consent of the Indemnified Party, which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified Party of a release from all liability in respect of such claim or litigation. 
 (iii) With respect to any Damages relating solely to the payment of money damages in connection with a Third Party Claim and that will not result in the Indemnitee’s becoming subject to injunctive or other relief
or otherwise adversely affect the business of the Indemnitee in any manner, and as to which the Indemnifying Party shall have acknowledged in writing the obligation to indemnify the Indemnitee hereunder, the Indemnifying Party shall have the sole
right to consent to the 

  

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entry of any judgment, enter into any settlement or otherwise dispose of such Damages, on such terms as the Indemnifying Party, in its sole discretion, shall
deem appropriate. With respect to all other Damages in connection with Third Party Claims, where the Indemnifying Party has assumed the defense of the Third Party Claim in accordance with Section 11.02(d)(i), the Indemnifying Party shall not
have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Damages unless it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld,
conditioned or delayed). The Indemnifying Party shall not be liable for any settlement or other disposition of Damages by an Indemnitee that is reached without the written consent of the Indemnifying Party (which consent shall not be unreasonably
withheld or delayed). Regardless of whether the Indemnifying Party chooses to defend or prosecute any Third Party Claim, no Indemnitee shall admit any liability with respect to, or settle, compromise or discharge, any Third Party Claim without the
prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed). 
 (iv) Regardless of whether the Indemnifying Party chooses to defend or prosecute any Third Party Claim, the Indemnified Party shall, and shall cause each other Indemnitee to, cooperate in the defense or prosecution thereof and shall furnish
such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include access during
normal business hours afforded to the Indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Third Party Claim, and making Indemnitees and other employees and agents
available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Indemnifying Party shall reimburse the Indemnified Party for all its reasonable costs and expenses in connection with
any of the foregoing. 
 (e) Expenses. Except as provided above, the costs and expenses, including fees and
disbursements of counsel, incurred by the Indemnified Party in connection with any claim shall be reimbursed on a quarterly basis by the Indemnifying Party, without prejudice to the Indemnifying Party’s right to contest the Indemnified
Party’s right to indemnification and subject to refund in the event the Indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party. 
 Section 11.03 Limitations. Notwithstanding anything to the contrary contained in this Agreement, each of the following limitations shall apply: 
 (a) Seller will not be required to indemnify Buyer under Section 11.02(a)(i) except to the extent that the cumulative amount of
the Damages under Section 11.02(a)(i) actually incurred by the Buyer Indemnified Parties exceeds Two Hundred Fifty Thousand U.S. Dollars (U.S.$250,000) at which point Seller will be required to pay, and will have Liability for, the cumulative
amount of the Damages under Section 11.02(a)(i) actually incurred by the Buyer Indemnified Parties (including the first Two Hundred Fifty Thousand U.S. Dollars (U.S.$250,000)). 
 (b) Buyer will not be required to indemnify Seller under Section 11.02(b)(i) except to the extent that the cumulative amount of
the Damages under Section 11.02(b)(i) actually incurred by the Seller Indemnified Parties exceeds Two Hundred Fifty Thousand U.S. Dollars (U.S.$250,000) at which point Buyer will be required to pay, and will have Liability for, the cumulative
amount of the Damages under Section 11.02(b)(i) actually incurred by the Seller Indemnified Parties (including the first Two Hundred Fifty Thousand U.S. Dollars (U.S.$250,000)). 
 (c) In no event shall the aggregate out-of-pocket Liability of Seller for any Damages pursuant to Section 11.02(a)(i) exceed
Seven Million U.S. Dollars (U.S.$7,000,000); provided, however, 

  

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that any such indemnification payments to be made by Seller to Buyer shall be effected as follows: (i) twenty-five percent (25%) of such
indemnification payment shall be made in cash and (ii) seventy-five percent (75%) of such indemnification payment shall be made solely by an offset against the initial principal amount of the Acquisition Note such that the outstanding
principal shall be reduced, as certified by the chief financial officer of Buyer in accordance with the terms of the Acquisition Note; provided, that if the First Milestone or Second Milestone have not yet occurred, and there is no
outstanding principal amount of the Acquisition Note, then the offset detailed in subsection (ii) above shall occur solely by reduction in the principal amount by which the Acquisition Note is increased, if at all, upon the First Milestone or
Second Milestone, as the case may be. It is understood by both parties that the maximum cash indemnification payments made by Seller under this Section 11.03(c) shall be One Million Seven Hundred Fifty Thousand U.S. Dollars (U.S.$1,750,000).

 (d) In no event shall Seller or Buyer have any Liability under Section 11.02(a)(i) or 11.02(b)(i), as the case
may be, with respect to claims that are not properly asserted in writing prior to the date that is (i) twelve (12) months after the Closing Date in the case of claims related to breaches of representations and warranties other than those
contained in Section 6.09(b)(iii) hereof, and (ii) twenty-four (24) months after the Closing Date in the case of claims related to breaches of the representations and warranties contained in Section 6.09(b)(iii) hereof, but only
to the extent that any such breach causes an Adverse Effect. 
 (e) The amount of any Damages under Section 11.02
shall be reduced by the amount of any insurance proceeds actually received by the Indemnified Party relating to such claim. 
 (f) No Party shall be entitled to indemnification under this Article 11 to the extent Damages result from the gross negligence or intentional misconduct of the Party seeking indemnification. 
 (g) Except with respect to claims based on fraud or willful misconduct, after the Closing: 
 (i) the right of the Buyer Indemnified Parties to indemnification under this Article 11 shall be the exclusive remedy of the Buyer
Indemnified Parties with respect to claims arising or resulting from (A) any inaccuracy or breach of any representation or warranty of Seller or any of its Affiliates in this Agreement (B) any breach of any covenant or other agreement of
Seller or any of its Affiliates in this Agreement; (C) Seller’s or any of its Affiliates’ conduct of the Business prior to the Closing except to the extent the same constitute Assumed Liabilities; or (D) the failure of Seller or
any of its Affiliates to pay, perform or discharge any Excluded Liabilities; and 
 (ii) the right of the Seller Indemnified
Parties to indemnification under this Article 11 shall be the exclusive remedy of the Seller Indemnified Parties with respect to claims arising or resulting from (A) any inaccuracy or breach of any representation or warranty of Buyer in this
Agreement; (B) any breach of any covenant or other agreement of Buyer in this Agreement, (C) Buyer’s conduct of the Business from and after the Closing; or (D) the failure of Buyer to pay, perform or discharge any Assumed
Liabilities. 
 Section 11.04 Consequential Damages. 
 No party to this Agreement shall be liable for any punitive or exemplary damages or incidental, special or consequential damages arising
out of or relating to this Agreement, except for any such damages asserted in any Third Party Claim. 
  

 -18- 

 Article 12. Miscellaneous 
 Section 12.01 Confidentiality. In addition to the restrictions set forth in Section 8.01, each Party agrees that at and after the Closing, it
shall not, without the prior written consent of the other Party, (i) disclose to any Person such other Party’s Confidential Information (as defined below), except to those of its employees or representatives who need to know such
information for the purpose of exploiting its rights or fulfilling its obligations under this Agreement (and then only to the extent that such persons are under an obligation to maintain the confidentiality of the Confidential Information), or
(ii) use any of such other Party’s Confidential Information for any reason other than as contemplated by this Agreement. If a Party has been advised by legal counsel that in the opinion of such counsel disclosure of Confidential
Information of the other Party is required to be made under applicable Law (including the requirements of a national securities exchange or another similar regulatory body) or pursuant to documents subpoena, civil investigative demand,
interrogatories, requests for information, or other similar process, the Party required to disclose the Confidential Information shall provide the other Party with prompt written notice of such request or demands or other similar process so that
such other Party may seek an appropriate protective order or, waive the disclosing Party’s compliance with the provisions of this Section 12.01(a). In the absence of a protective order or waiver or other remedy, the Party required to
disclose the other Party’s Confidential Information may disclose only that portion of the Confidential Information which its legal counsel advises that it is legally required to disclose, provided that it exercises its best efforts to
preserve the confidentiality of such other party’s Confidential Information, including by cooperating with such other Party to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the
Confidential Information. 
 (b) The term “Confidential Information” as used in this Section 12.01
means (i) as to Buyer, all confidential information relating to Buyer’s business, the Business, and the Purchased Assets and the Assumed Liabilities, and (ii) as to Seller, all confidential information relating to the business and
operations of the Seller, including the Excluded Assets and the Excluded Liabilities or other obligations other than the Assumed Liabilities, but not including the Business or Purchased Assets, in each of (i) and (ii) whether disclosed
prior to or after the date hereof. The term “Confidential Information” does not include information which (A) becomes generally available to the public other than as a result of disclosure by the disclosing Party, (B) becomes
available to the disclosing Party on a non-confidential basis from a source other than the non-disclosing Party provided that such source is not bound by a confidentiality agreement with the non-disclosing Party, or (C) was previously
known by the non-disclosing Party as evidenced by the non-disclosing Party’s written records. 
 Section 12.02 Notices. All
notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally against written receipt or by facsimile transmission with answer back confirmation or by nationally
recognized overnight courier that maintains records of delivery to the Parties at the following addresses or facsimile numbers: 
  

			
	If to Buyer to:	  	Targanta Therapeutics Corporation
		  	7170 Frederick Banting
		  	 2nd
Floor
 St. Laurent, QC H4S 2A1
 Attention:
President

		  	Facsimile: (514) 332-6033
		
	With a copy to:	  	 Choate, Hall & Stewart LLP
 Two International
Place
 Boston, MA 02110

		  	 Attention: Brian P. Lenihan, Esq.
 Facsimile: (617) 248-4000

  

 -19- 

			
	If to Seller to:	  	 InterMune, Inc.
 3280 Bayshore Blvd.
 Brisbane, CA 94005

		  	Attention: General Counsel
		  	Facsimile: (415) 466-2300
		
	With a copy to:	  	 Latham & Watkins LLP
 12636 High Bluff Drive,
Suite 400
 San Diego, CA 92130

		  	 Attention: Faye H. Russell, Esq.
 Facsimile: (858)
523-5450

 All such notices, requests and other communications will (a) if delivered personally to the address as
provided in this Section 12.02, be deemed given upon receipt, (b) if delivered by facsimile to the facsimile number as provided in this Section 12.02, be deemed given upon receipt by the sender of the answer back confirmation and
(c) if delivered by overnight courier to the address as provided in this Section 12.02, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a
copy of such notice, request or other communication is to be delivered pursuant to this Section 12.02). Any Party from time to time may change its address, facsimile number or other information for the purpose of notices to that Party by giving
notice specifying such change to the other Parties hereto in accordance with the terms of this Section 12.02. 
 Section 12.03
Entire Agreement. This Agreement (and all Exhibits and Schedules attached hereto and all other documents delivered in connection herewith) supersedes all prior discussions and agreements among the Parties with respect to the subject matter
hereof and contains the sole and entire agreement among the Parties hereto with respect to the subject matter hereof. 
 Section 12.04 Waiver. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the Party waiving such term or condition. No waiver by any Party hereto of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other
term or condition of this Agreement on any future occasion. 
 Section 12.05 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by each Party hereto. 
 Section 12.06 Third Party Beneficiaries. The terms and
provisions of this Agreement are intended solely for the benefit of each Party hereto and their respective successors or permitted assigns and it is not the intention of the Parties to confer third-party beneficiary rights upon any other Person.

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

  

 -20- 

 
This Agreement is binding upon, inures to the benefit of and is enforceable by the Parties hereto and their respective successors and permitted assigns.

 Section 12.08 Headings. The headings used in this Agreement have been inserted for convenience of reference only and do not define
or limit the provisions hereof 
 Section 12.09 Severability. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law, and if the rights or obligations of any Party hereto under this Agreement will not be materially and adversely affected thereby, (a) such provision will be fully severable, (b) this Agreement
will be construed and enforced as if such illegal, invalid or unenforceable provision had never compromised a part hereof, (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom, and (d) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable
provision as similar to terms to such illegal, invalid or unenforceable provision as may be possible and reasonably acceptable to the Parties herein. 
 Section 12.10 Governing Law; Dispute Resolution. 
 (a) This Agreement shall be
construed in accordance with, and governed in all respects by, the laws of the State of Delaware (without giving effect to principles of conflicts of laws that would require the application of any other law). 
 (b) Except with respect to any claim seeking injunctive relief hereunder, in the event of any controversy or claim arising out of,
relating to or in connection with any provision of this Agreement or the rights or obligations of the parties hereunder, the parties will try to settle their differences amicably between themselves as contemplated herein. To the extent not provided
for herein, any party may initiate such informal dispute resolution by sending written notice of the dispute to the other party, and within ten (10) days after such notice, the Chief Executive Officer (or his or her designee) of Buyer will meet
with the Chief Executive Officer (or his or her designee) of Seller, for attempted resolution by good faith negotiations. If such Persons are unable to resolve promptly such disputed matter, such dispute shall be finally settled by arbitration in
accordance with the commercial arbitration rules of the American Arbitration Association (“AAA”), then in force, by one (1) arbitrator appointed in accordance with said rules, provided that the appointed arbitrator shall
have appropriate experience in the biopharmaceutical industry. The place of arbitration shall be San Francisco, California. The award rendered shall be final and binding upon all parties participating in such arbitration. The judgment rendered by
the arbitrator may, at the arbitrator’s discretion, include costs of arbitration, reasonable attorneys’ fees and reasonable costs for any expert and other witnesses. Judgment upon the award may be entered in any court having jurisdiction,
or application may be made to such court for judicial acceptance of the award and/or an order of enforcement as the case may be. The parties agree to use their good faith efforts to resolve the dispute within six (6) months of receipt of the
original notice of dispute. Notwithstanding the foregoing, any disputes regarding the scope, validity, enforceability or inventorship of any patents or patent applications shall be submitted for final resolution by a court of competent jurisdiction.

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

 -21- 

 Section 12.12 Counterparts. This Agreement may be executed in any number of counterparts and by
facsimile, each of which will be deemed an original, but all of which together will constitute one and the same instrument. 
 Section
12.13 Schedules, Exhibits and Other Agreements. The Exhibits, Schedules, other agreements, certificates and notices specifically referred to herein, and delivered pursuant hereto, are an integral part of this Agreement. Any disclosure that is
made in any of the Schedules or certificates delivered pursuant to this Agreement shall be deemed responsive to any other applicable disclosure obligation hereunder where it is reasonably apparent that such disclosure is responsive to such other
applicable disclosure obligation. 
 [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 
  

 -22- 

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

			
	INTERMUNE, INC.
		
	By:	 	/s/ Thomas Kassberg
	Name:	 	Thomas Kassberg
	Title:	 	Senior Vice President, Business Development
	
	TARGANTA THERAPEUTICS CORPORATION
		
	By:	 	/s/ Pierre Etienne
	Name:	 	Pierre Etienne
	Title:	 	President and Chief Executive Officer

 [SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT] 

 EXHIBIT A 
 DEFINITIONS 
 “AAA” has the meaning set forth in
Section 12.10(b). 
 “Acquisition Note” has the meaning set forth in Section 4.01(a). 
 “Action or Proceeding” means any action, suit, proceeding, arbitration, Order, hearing, assessment with respect to fines or penalties or
litigation (whether civil, criminal, administrative, investigative or informal) commenced, brought, conducted or heard by or before any Governmental or Regulatory Authority. 
 “Adverse Effect” means an effect or condition that individually or in the aggregate is materially adverse to the business, results of
operations, or financial condition of the Business, individually or taken as a whole. 
 “Affiliate” means, with respect to
any Person, any other Person which controls, is controlled by or is under common control with such Person. A Person shall be regarded as in control of another Person if it owns or controls, directly or indirectly, (i) in the case of corporate
entities at least fifty percent (50%) (or the maximum ownership interest permitted by law) of the equity securities in the subject entity entitled to vote in the election of directors and, (ii) in the case of an entity that is not a
corporation, at least fifty percent (50%) (or the maximum ownership interest permitted by law) of the equity securities or other ownership interests with the power to direct the management and policies of such subject entity or entitled to
elect the corresponding management authority, or such other relationship as, in fact, constitutes actual control. 
 “Agreement” has the meaning set forth in the Preamble hereto. 
 “Assets and Properties” of any
Person means all assets and properties of any kind, nature, character and description (whether real, personal or mixed, whether tangible or intangible, whether absolute, accrued, contingent, fixed or otherwise and wherever situated), including the
goodwill related thereto, operated, owned or leased by such Person, including cash, cash equivalents, accounts and notes receivable, chattel paper, documents, instruments, general intangibles, regulatory approvals, equipment, inventory, goods and
intellectual property. 
 “Assignment and Assumption Agreement” has the meaning set forth in Section 5.02(a)(vi).

 “Assumed Contract” means the Contracts or portions of the Contracts identified in Section 6.06 of the Seller
Disclosure Schedule. 
 “Assumed Liabilities” means: 
 (i) all accounts payable incurred by or on behalf of Buyer or its Affiliates with respect to the Business after the Closing; 
 (ii) any and all Liabilities and obligations of Seller or any of its Affiliates under the Assumed Contracts to be incurred after the Closing or arising
from the Buyer’s performance under the Assumed Contracts after the Closing, except to the extent such Liabilities and obligations, were incurred, paid, performed or otherwise arose on or prior to the Closing or to the extent the same arise out
of any breach or default by Seller or any of its Affiliates under the Assumed Contracts on or prior to the Closing; 
  

 A-1 

 (iii) any and all Liabilities and obligations arising out of or resulting from product liability claims
caused by the Product administered, provided or sold by or on behalf of Buyer after the Closing; and 
 (iv) except as otherwise provided
herein, any and all other Liabilities and obligations that arise out of or are related to the Purchased Assets (including the Regulatory Filings), the Business or the Product, attributable to occurrences and circumstances arising after the Closing.

 “Books and Records” means all files, documents, instruments, papers, books and records (other than Marketing Materials)
owned by Seller or any of its Affiliates relating exclusively to the Business or that Seller reasonably believes is necessary for the clinical development, use or manufacture of the Product, including any vendor lists, financial data, written and
pending orders and all documentation relating to the Intellectual Property. 
 “Budget” has the meaning set forth in
Section 8.09. 
 “Business” means the activities of research, development and manufacturing for clinical use the
Compound or the Product in the Territory by Seller. 
 “Business Day” means a day other than Saturday, Sunday or any day on
which banks located in the State of California are authorized or obligated to close. 
 “Buyer” has the meaning set forth in
the Preamble to this Agreement. 
 “Buyer Disclosure Schedule” has the meaning set forth in Article 7 hereof. 
 “Buyer Governmental Consents” means all consents, waivers, approvals, Orders, authorizations of, declarations or filings with any
Governmental or Regulatory Authority that are required by, or with respect to, Buyer or any of its Affiliates in connection with the execution and delivery of this Agreement and the other Transaction Documents to be executed pursuant hereto by
Buyer, the consummation by Buyer or any of its Affiliates of the transactions contemplated hereby and thereby and the performance of their respective obligations hereunder and thereunder. 
 “Buyer Indemnified Parties” has the meaning set forth in Section 11.02(a). 
 “Buyer Restructuring” means a restructuring of Targanta Canada pursuant to which (i) Buyer is organized and incorporated,
(ii) all outstanding shares of Targanta Canada will be exchanged for shares of capital stock of, or exchangeable for, shares of Buyer and (iii) Targanta Canada will become the wholly owned subsidiary of Buyer. 
 “Buyer Third Party Consents” means all consents, waivers, approvals, authorizations of, or notices to, any third Person (other than a
Governmental or Regulatory Authority) that are required by, or with respect to, Buyer or any of its Affiliates in connection with the execution and delivery of this Agreement by Buyer, the consummation by Buyer or any of its Affiliates of the
transactions contemplated hereby and the performance of their respective obligations hereunder. 
 “Closing” has the meaning
set forth in Section 5.01. 
 “Closing Date” means the date that the Closing actually occurs as provided in
Section 5.01. 
 “Compound” has the meaning set forth in the Lilly Agreement. 
  

 A-2 

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

 “Contract” means any and all commitments, contracts, purchase orders, leases, or other agreements, whether written or
oral related to the Compound or the Product. 
 “Damages” has the meaning set forth in Section 11.02(a). 
 “Encumbrance” means any mortgage, pledge, assessment, security interest, deed of trust, lease, lien, adverse claim, levy, charge or
other encumbrance, restriction, limitation or third party right of any kind, or any conditional sale or title retention agreement or other agreement to give any of the foregoing in the future. 
 “Exchange Agreement” means the Exchange Agreement among Buyer, Targanta Canada and the stockholders of Targanta Canada, entered into in
connection with the Buyer Restructuring. 
 “Excluded Assets” means all Assets and Properties of Seller and its Affiliates
(including Seller’s rights under this Agreement) except the Purchased Assets. The Excluded Assets shall include any cash, short-term investments or other cash equivalents, and any prepaid expenses or rights to receive refunds of Seller or any
of its Affiliates. 
 “Excluded Liabilities” means (i) any and all Liabilities and obligations in respect of any
Excluded Assets, including (a) the outstanding amount of all principal, interest, fees and expenses in respect of borrowed money, capital leases, installment purchases and other indebtedness of Seller, (b) except as provided in
Section 4.03, obligations relating to Taxes, (c) any environmental obligations or liability of Seller, (d) any Liabilities to directors, officers or employees of Seller or in respect of Seller employee benefit, profit sharing or
health care plans, (e) any Liability of Seller with respect to any Action or Proceeding pending or threatened against Seller, (f) any Liability of any Person other than Seller and (g) any obligations of Seller (including expenses to
be borne by Seller) under this Agreement or any of the other agreements, instruments and certificates executed in connection herewith, (ii) any and all Liabilities and obligations of Seller or any of its Affiliates which arise out of or are
related to the Purchased Assets, the Business or the Product attributable to occurrences and circumstances arising on or prior to the Closing, and (iii) any Liability of Seller arising from or relating to any action taken by Seller, or any
failure on the part of Seller to take any action, at any time after the Closing Date. 
 “FDA” means the U.S. Food and Drug
Administration. 
 “First Milestone” means the date on which Buyer receives FDA authorization to conduct clinical studies of
the Product in the United States with finished Product. 
 “Governmental or Regulatory Authority” means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of the United States or other country, or any supra-national organization, state, county, city or other political subdivision thereof. 
 “IND” shall mean the Initial New Drug Application (as defined under the United States Food, Drug and Cosmetic Act and applicable
regulations promulgated thereunder, as amended from time to time) pertaining to the Product. 
 “Indemnification Claim
Notice” has the meaning set forth in Section 11.02(c). 
 “Indemnified Party” has the meaning set forth in
Section 11.02(c). 
  

 A-3 

 “Indemnifying Party” has the meaning set forth in Section 11.02(c). 
 “Indemnitee” and “Indemnitees” have the respective meanings set forth in Section 11.02(c). 
 “Intellectual Property” means any and all of the following intellectual property rights owned by or licensed to Seller and used
exclusively in connection with or reasonably necessary to the conduct of the Business: all (i) Patents; (ii) Know-how; (iii) copyrights, copyright registrations, applications therefor and renewal rights therefor; (iv) trademarks,
service marks, brand names, trade names, trade dress, logos, common law trademarks and service marks, and trademark and service mark registrations, licenses, renewals and applications therefor (excluding the InterMune trade names, trademarks and
logos); and (v) software, data, covenants not to assert and trade secrets, and in each case all documentation associated therewith; including those items identified in Section 6.07(a) of the Seller Disclosure Schedule. 
 “Investor Convertible Notes” means the convertible notes, in form reasonably satisfactory to Seller, issued to certain of Buyer’s
existing stockholders or other investors identified by Buyer and/or its existing stockholders in the aggregate amount of Ten Million U.S. Dollars ($U.S.10,000,000). 
 “Know-how” means the following information owned by or licensed to Seller: all tangible or intangible know-how, trade secrets, inventions (whether or not patentable), engineering, production and other
designs, drawing, specifications, formulas, technology, software, data, analytic reference materials and methods and all confidential or proprietary chemical substances, assays and information that is used exclusively in connection with the use or
manufacture of the Product. 
 “Knowledge” with respect to Seller, means the actual knowledge of Blake Campbell, Russell
Kawahata, Thomas Kassberg, Jeff Loutit, Steve Porter and Robin Steele, or such knowledge as should have been obtained after reasonable inquiry; and with respect to Buyer, means the actual knowledge of Pierre Etienne, Alex Moot, Thomas Parr
and Margaret Wasilewski, or such knowledge as should have been obtained after reasonable inquiry. 
 “Law” means any
federal, state or local law, statute or ordinance, or any rule, regulation, or published guidelines promulgated by any Governmental or Regulatory Authority. 
 “Liability” means any liability (whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, and due or to become due). 
 “Lilly Agreement” means that certain License Agreement between Eli Lilly and Company and Seller, as amended through the date hereof.

 “Marketing Materials” means all market research, marketing plans, media plans, advertising, sales training materials,
promotional and marketing books and records, owned by Seller and used exclusively or necessary in connection with the proposed marketing and promotion of the Product, including all films, artwork, photography mechanical art, color separations,
prints, plates and other graphic materials related thereto, other than any such items to the extent that (i) any applicable Law prohibits its transfer or (ii) any transfer thereof by Seller would constitute a material contractual
violation. 
 “NDA” means a New Drug Application filed with the FDA pursuant to 21 U.S.C. Section 357 and 21 C.F.R.
Section 314. 
 “Note Issuance Agreement” means that certain Note Issuance Agreement dated as of the date hereof, as
the same may be amended pursuant to its terms from time to time. 
  

 A-4 

 “Order” means any writ, judgment, decree, injunction or similar order of any
Governmental or Regulatory Authority (in each such case whether preliminary or final). 
 “Ordinary Course of Business”
means such action that is in the ordinary course of business consistent with the immediate past practices of the Business. 
 “Parties” means Buyer and Seller. 
 “Party” means each of Buyer and Seller. 
 “Patents” means any patents, patent applications, provisional patent applications and similar instruments (including any and all
substitutions, divisions, continuations, continuations-in-part, reissues, renewals, extensions, utilization models, reexaminations, patents of addition, supplementary protection certificates, inventors’ certificates, pediatric data package
exclusivity extensions, divisions, re-filings, continuations and continuations-in-part thereof, or the like) as well as any foreign equivalents thereof (including certificates of invention and any applications therefor) and all documentation
associated therewith. 
 “Permits” has the meaning set forth in Section 6.09(a). 
 “Permitted Encumbrance” means (a) Encumbrances for Taxes or assessments which are not delinquent or which are being contested in
good faith by appropriate proceedings or (b) statutory mechanics’, carriers’, workmen’s, landlords’ or other similar liens arising or incurred in the ordinary course of business which are not yet delinquent or the validity
of which are being contested in good faith by appropriate proceedings. 
 “Person” means any natural person, corporation,
general partnership, limited partnership, limited liability company, proprietorship, other business organization, trust, union, association or Governmental or Regulatory Authority. 
 “Product” means any final form pharmaceutical composition or preparation, in any dosage strength or size, containing Compound as an
active pharmaceutical ingredient that may, pursuant to applicable laws, be manufactured, marketed and sold upon Regulatory Filings or otherwise, together with all expansions, improvements and modifications thereon, and which, but for the license
granted under the Lilly Agreement, the manufacture, use, sale, offer for sale or importation of which would infringe or contribute to the infringement of a Valid Claim (as defined in the Lilly Agreement) under the Licensed Patents (as defined in the
Lilly Agreement). 
 “Product Data” means all toxicology, pre-clinical, clinical, regulatory and manufacturing information
and data and technology, and all submissions and correspondence with or to any Governmental or Regulatory Authority in the Territory regarding the Compound or the Product and the manufacturing, packaging and release of the Product, including all
validation data and documentation supporting the process of manufacturing the Compound or the Product, in any form whatsoever including notebooks, but only to the extent the foregoing may be in Seller’s possession or control. 
 “Product Inventory” means all inventory owned as of the Closing by Seller of finished Compound or Product or works in progress or
materials used in the manufacture of finished Product, whether held at a location or facility of Seller (or of any other Person on behalf of Seller, including in any of Seller’s warehouses, blenders, toll manufacturers, suppliers, distributors
or consignees) or in transit to or from Seller (or any such other Person), including active pharmaceutical ingredient; provided that such Product is listed by Seller in Section 6.09 of the Seller Disclosure Schedule. 
  

 A-5 

 “Purchase Price” has the meaning set forth in Section 4.01(d). 
 “Purchased Assets” means, subject to Section 2.03: (i) the Intellectual Property (including the Registered Intellectual
Property); (ii) the Assumed Contracts; (iii) the Regulatory Filings; (iv) the Books and Records; (v) the Product Data; and (vi) the Product Inventory and all other assets used by Seller in the clinical development of the
Product (other than Excluded Assets). 
 “Registered Intellectual Property” means all of the following registered
Intellectual Property: (i) the Patents identified in Section 6.07(a) of the Seller Disclosure Schedule; and (ii) the registered trademarks and applications to register trademarks identified in Section 6.07(a) of the Seller
Disclosure Schedule. 
 “Regulatory Filings” means the investigational and new drug applications, and drug submissions,
licenses and marketing authorizations (and the equivalent foreign registrations and approvals) for the Product in the Territory (including marketing approvals, pricing or reimbursement approvals, manufacturing approvals, technical, medical, and
scientific licenses, and clinical and non-clinical study authorization applications or notifications), and all, amendments, supplements, supporting files, data, studies, and reports relating thereto (in hard and electronic form) and all technical
and other information contained therein, including the IND and foreign equivalents set forth in Section 6.08 of the Seller Disclosure Schedule. 
 “Second Milestone” means the earliest date on which Buyer receives FDA authorization to conduct clinical efficacy studies of the Product in patients with an eight hundred milligram (800 mg) dose;
provided that, if the first clinical efficacy trial conducted by Buyer does not administer an 800 mg dose (for reasons other than being prevented from testing such dose by the FDA), then the increase in the principal amount of the Acquisition
Note otherwise required to occur on the Second Milestone will be deemed to have automatically occurred immediately upon the initiation of such first clinical efficacy trial. 
 “Seller” has the meaning set forth in the Preamble to this Agreement. 
 “Seller Disclosure Schedule” has the meaning set forth in the preamble to Article 6 of this Agreement. 
 “Seller Governmental Consents” means all consents, waivers, approvals, Orders, authorizations of, declarations or filings with any
Governmental or Regulatory Authority that are required by, or with respect to, Seller or any of its Affiliates in connection with the execution and delivery of this Agreement and the other Transaction Documents to be executed pursuant hereto by
Seller, the consummation by Seller or any of its Affiliates of the transactions contemplated hereby and thereby and the performance of their respective obligations hereunder and thereunder. 
 “Seller Indemnified Parties” has the meaning set forth in Section 11.02(b). 
 “Seller Third Party Consents” means all consents, waivers, approvals, authorizations of, or notices to, any third Person (other than a
Governmental or Regulatory Authority) that are required by, or with respect to, Seller or any of its Affiliates in connection with the execution and delivery of this Agreement or the other agreements to be executed pursuant hereto by Seller, the
consummation by Seller or any of its Affiliates of the transactions contemplated hereby and the performance of their respective obligations hereunder. 
 “Support Agreement” means the Support Agreement among Buyer, Targanta Canada and the stockholders of Targanta Canada, entered into in connection with the Buyer Restructuring. 
  

 A-6 

 “Targanta Canada” means Targanta Therapeutics Inc., a corporation organized under the
Laws of Canada. 
 “Targanta Ontario” means Targanta Therapeutics (Ontario) Inc., a corporation organized under the Laws of
Canada. 
 “Tax” means all of the following tax in connection with the operations of the Business or the transactions
contemplated hereby: (i) any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, excise, severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or other like assessment imposed by a governmental, regulatory or administrative entity or agency responsible for the imposition of any such tax (domestic or foreign); (ii) any
Liability for the payment of any amounts of the type described in (i) as a result of being a member of any affiliated, consolidated, combined, unitary or other group for any taxable period; and (iii) any Liability for the payment of any
amounts of the type described in (i) or (ii) as a result of any express or implied obligation to indemnify any other Person. 
 “Territory” means the entire world. 
 “Third Milestone” means the earliest date upon which all
approvals granted or issued by the FDA (or any successor agency) necessary for the sale of the Product in the United States have been received by Buyer. 
 “Third Party Claim” has the meaning set forth in Section 11.02(d). 
 “Transaction Documents” means this Agreement, the Assignment and Assumption Agreement, the Bill of Sale, the Note Issuance Agreement, the Transition Services Agreement, the Intellectual Property Assignment Agreement, the
Lilly Agreement and the Acquisition Note. 
 “Transaction Taxes” has the meaning set forth in Section 4.03. 

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

 A-7Note Issuance Agreement

 Exhibit 10.13 
 NOTE ISSUANCE AGREEMENT 
 THIS NOTE ISSUANCE AGREEMENT (this “Agreement”),
dated as of December 23, 2005, is made by and between INTERMUNE, INC., a Delaware corporation (together with its permitted successors and assigns, called “InterMune), and TARGANTA THERAPEUTICS CORPORATION, a Delaware corporation
(the “Purchaser”). 
 A. Purchaser and InterMune are parties to that certain Asset Purchase Agreement (defined below)
pursuant to which Purchaser is to buy all of InterMune’s right, title, and interest in a certain product commonly referred to as Oritavancin. In consideration thereof, Purchaser is to pay the purchase price in installments as and when set forth
in the Asset Purchase Agreement. 
 B. Purchaser has requested that it be permitted to issue a note in the form attached hereto, the
principal amount of which shall change on the date each such installment of the purchase price is payable to InterMune and upon the occurrence of other events. InterMune is willing to accept such note subject to the terms and conditions set forth in
this Agreement. 
 WHEREFORE, for fair and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties
agree as follows: 
 ARTICLE I 
 DEFINITIONS 
 SECTION 1.01 Certain Defined Terms. Capitalized terms shall have the meanings assigned to them in this
Agreement. In addition, as used in this Agreement, the following terms shall have the following meanings: 
 “Acquisition
Documents” means this Agreement, the Collateral Documents, the Acquisition Note, and all other certificates, documents, agreements and instruments delivered to InterMune under or in connection with any of the foregoing. 
 “Acquisition Installment Payment” means any installments of the purchase price payable by Purchaser for the purchase of the Product as
set forth in the Asset Purchase Agreement. 
 “Acquisition Note” has the meaning set forth in Section 2.01(b).

 “Action or Proceeding” means any action, suit, proceeding, arbitration, Order, hearing, assessment with respect to fines
or penalties or litigation (whether civil, criminal, administrative, investigative or informal) commenced, brought, conducted or heard by or before any Governmental or Regulatory Authority. 
 “Affiliate” means, with respect to any Person, any other Person which controls, is controlled by or is under common control with such
Person. A Person shall be regarded as in control of another Person if it owns or controls, directly or indirectly, (i) in the case of corporate entities at least fifty percent (50%) (or the maximum ownership interest permitted by law) of
the equity securities in the subject entity entitled to vote in the election of directors and, (ii) in the case of an entity that is not a corporation, at least fifty percent (50%) (or the maximum 

 
ownership interest permitted by law) of the equity securities or other ownership interests with the power to direct the management and policies of such
subject entity or entitled to elect the corresponding management authority, or such other relationship as, in fact, constitutes actual control. 
 “Agreement” has the meaning set forth in the recitals hereto. 
 “Asset Purchase Agreement” means
that certain Asset Purchase Agreement, dated as of the date hereof, by and between InterMune and Purchaser. 
 “Business
Day” means a day of the year on which commercial banks are not required or authorized by law to close in San Francisco, California. 
 “Canadian Subsidiary” has the meaning set forth in Section 4.01(m)(ii). 
 “Certificate of
Incorporation” means the certificate of incorporation, as amended and restated from time to time, of Purchaser as on file with the Secretary of State of the State of Delaware. 
 “Closing Date” has the meaning set forth in Section 3.01. 
 “Collateral” means the property acquired by Purchaser from InterMune pursuant to the Asset Purchase Agreement and described in the
Collateral Documents, and all other property now existing or hereafter acquired that may at any time be or become subject to a Lien in favor of InterMune pursuant to the Collateral Documents securing the payment and performance of the Obligations
under the Acquisition Note. 
 “Collateral Documents” means the Security Agreement, the Patent and Trademark Security
Agreement, and any other agreement pursuant to which Purchaser provides a Lien on the Product in favor of InterMune and all filings, documents and agreements made or delivered pursuant thereto. 
 “Common Stock” has the meaning set forth in Section 4.01(m)(i). 
 “Compound” has the meaning set forth in the Lilly Agreement. 
 “Default” means an Event of Default or an event or condition that with notice or lapse of time or both would constitute an Event of
Default. 
 “Disclosure Letter” means the letter, if any, of even date herewith from Purchaser to InterMune setting forth
exceptions to, and disclosures with respect to, Article IV (it being understood that for any disclosure set forth in the Disclosure Letter having relevance to more than one of the Sections of Article IV, such item shall also suffice for other
Sections of Article IV where the relevance to such other Section is reasonably apparent). 
 “Dollars” and the sign
“$” each means lawful money of the United States. 
  

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 “Environmental Laws” means all federal, state or local laws, statutes, common law
duties, rules, regulations, ordinances and codes, together with all administrative orders, directives, requests, licenses, authorizations and permits of, and agreements with (including consent decrees), any governmental agencies or authorities, in
each case relating to or imposing liability or standards of conduct concerning public health, safety and environmental protection matters. 
 “ERISA” means the Employee Retirement Income Security Act of 1974, including (unless the context otherwise requires) any rules or regulations promulgated thereunder. 
 “ERISA Affiliate” means any trade or business (whether or not incorporated) which is under common control with Purchaser within the
meaning of Section 4001(a)(14) of ERISA and Sections 414(b), (c) and (m) of the Internal Revenue Code. 
 “Event of
Default” has the meaning set forth in Section 6.01. 
 “FDA” shall mean the United States Food and Drug
Administration, or any successor regulatory authority in the United States. 
 “Fiscal Year” means Purchaser’s fiscal
year for financial accounting purposes. The current Fiscal Year of Purchaser will end on December 31, 2005. 
 “GAAP”
means generally accepted accounting principles in the United States, consistently applied. 
 “Governmental or Regulatory
Authority” means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States or other country, or any supra-national organization, state, county, city or other political subdivision
thereof. 
 “Hazardous Substances” means any toxic or hazardous substances, materials, wastes, contaminants or pollutants,
including asbestos, polychlorinated biphenyls (PCBs), petroleum products and byproducts, and any substances defined or listed as “hazardous substances,” “hazardous materials,” “hazardous wastes” or “toxic
substances” (or similarly identified), regulated under or forming the basis for liability under any applicable Environmental Law. 
 “Indebtedness” means, for any Person, (i) all indebtedness or other obligations of such Person for borrowed money or for the deferred purchase price of property or services; (ii) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses; (iii) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person; (iv) all reimbursement and other obligations of such Person in respect of letters of credit and bankers acceptances and all net obligations in respect of interest rate
swaps, caps, floors and collars, currency swaps, and other similar financial products; (v) all obligations under leases that have been or should be, in accordance with GAAP, recorded as capital leases; and (vi) all indebtedness of another
Person of the types referred to in clauses (i) through (v) guaranteed directly or indirectly in any manner by the Person for whom Indebtedness is being determined, or in effect guaranteed directly or indirectly by such Person through an
agreement to purchase or acquire such indebtedness, to advance or supply funds for the payment 

  

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or purchase of such indebtedness or otherwise assure a creditor against loss, or secured by any Lien upon or in property owned by the Person for whom
Indebtedness is being determined, whether or not such Person has assumed or become liable for the payment of such indebtedness of such other Person. 
 “InterMune” has the meaning set forth in the recital of parties to this Agreement. 
 “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended including (unless the context otherwise requires) any rules or regulations promulgated thereunder. 
 “Investor Convertible Notes” has the meaning set forth in the Asset Purchase Agreement. 
 “Lien” means any mortgage, pledge, security interest, assignment, deposit arrangement, charge or encumbrance, lien or other type of
preferential arrangement (other than a financing statement filed by a lessor in respect of an operating lease not intended as security). 
 “Lilly Agreement” has the meaning set forth in the Asset Purchase Agreement. 
 “Liquidity Event”
shall mean (i) each of sections (i), (ii), (iii) and (iv) of the definition of “Liquidation Event” set forth in the Amended and Restated Certificate of Incorporation of Purchaser, as in existence as of the date hereof or
(ii) a “Qualified Public Offering” as defined in the Amended and Restated Certificate of Incorporation of Purchaser, as in existence as of the date hereof. 
 “Material Adverse Effect” means any event, matter, condition or circumstance which (i) has or would reasonably be expected to have a material adverse effect on the business, properties, results
of operations or condition (financial or otherwise) of Purchaser and its Subsidiaries taken as a whole; (ii) would materially impair the ability of Purchaser or any other Person (excluding InterMune) to perform or observe its obligations under
or in respect of the Acquisition Documents; or (iii) affects the legality, validity, binding effect or enforceability of any of the Acquisition Documents (except for events, matters, conditions or circumstances caused solely by the action or
inaction of InterMune) or the perfection or priority of any Lien granted to InterMune under any of the Collateral Documents (other than due to an action or inaction that was solely the fault of InterMune, and not the consequence of some other
default or breach of Purchaser under any of the Acquisition Documents). 
 “Maximum Rate” has the meaning set forth in
Section 2.02(b). 
 “New Equity Shares” means the shares of Preferred Stock of Purchaser issued pursuant to the
Preferred Equity Financing. 
 “Obligations” means the indebtedness, liabilities and other obligations of Purchaser to
InterMune under or in connection with the Acquisition Documents, including, without limitation, all principal and accrued interest, if any, on the Acquisition Note, all fees due under this Agreement and all other amounts payable by Purchaser to
InterMune under the Acquisition Documents or in connection therewith. 
  

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 “Ontario Subsidiary” has the meaning set forth in Section 4.01(m)(ii). 

“Option Plan” has the meaning set forth in Section 4.01(m)(i). 
 “Order” means any writ, judgment, decree, injunction or similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final). 
 “Ownership Limitation” means that percent ownership, which shall be set at 19.9%, above
which the equity ownership of InterMune in Purchaser (based on the total number of voting shares of Purchaser then issued and outstanding) may not exceed upon conversion (in connection with an equity financing) of any principal amount of the
Acquisition Note. 
 “Patent and Trademark Security Agreement” means a Patent and Trademark Security Agreement between
Purchaser and InterMune, in substantially the form of Exhibit C attached hereto and otherwise in form and substance satisfactory to InterMune. 
 “Permits” has the meaning set forth in Section 4.01(h). 
 “Permitted
Liens” means: (i) Liens in favor of InterMune, (ii) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings and that are
adequately reserved for in accordance with GAAP or which do not in the aggregate materially impair the use or value of the property or risk the loss or forfeiture thereof, (iii) Liens of materialmen, mechanics, warehousemen, carriers or
employees or other similar Liens provided for by mandatory provisions of law and securing obligations either not delinquent or being contested in good faith by appropriate proceedings and which do not in the aggregate materially impair the use or
value of the property or risk the loss or forfeiture thereof and (iv) Liens set forth on Section 4.01(j) of the Disclosure Letter. 
 “Person” means an individual, corporation, partnership, joint venture, trust, unincorporated organization or any other entity of whatever nature or any governmental agency or authority. 
 “Plan” means any employee pension benefit plan as defined in Section 3(2) of ERISA (including any multiemployer plan) and any
employee welfare benefit plan, as defined in Section 3(1) of ERISA (including any plan providing benefits to former employees or their survivors). 
 “Preferred Equity Financing” means a preferred equity financing of Purchaser occurring following the Closing Date resulting in gross proceeds to Purchaser, Quebec Subsidiary and Ontario Subsidiary,
collectively, of at least Ten Million Dollars ($10,000,000), excluding for purposes of calculating such gross proceeds amounts received by Purchaser in connection with the issuance of the Investor Convertible Notes. 
 “Preferred Stock” has the meaning set forth in Section 4.01(m)(i). 
 “Product” means any final form pharmaceutical composition or preparation, in any dosage strength or size, containing Compound as an
active pharmaceutical ingredient that may, pursuant to applicable laws, be manufactured, marketed and sold upon Regulatory Filings (as defined in the Asset Purchase Agreement) or otherwise, together with all expansions, 

  

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improvements and modifications thereon, and which, but for the license granted under the Lilly Agreement, the manufacture, use, sale, offer for sale or
importation of which would infringe or contribute to the infringement of a Valid Claim (as defined in the Lilly Agreement) under the Licensed Patents (as defined in the Lilly Agreement). 
 “PSA” has the meaning set forth in Section 4.01(m)(ii). 
 “Purchaser” has the meaning set forth in the recital of parties to this Agreement. 
 “Purchaser Securities” has the meaning set forth in Section 4.02. 
 “Quebec Subsidiary” has the meaning set forth in Section 4.01(m)(ii). 
 “Responsible Officer” means, with respect to any Person, the chief executive officer, the president, the chief financial officer or the
treasurer of such Person, or any other senior officer of such Person having substantially the same authority and responsibility. 
 “Securities Act” has the meaning set forth in Section 4.02. 
 “Security Agreement” means a
Security Agreement between Purchaser and InterMune, in substantially the form of Exhibit B attached hereto and otherwise in form and substance satisfactory to InterMune. 
 “Subsequent Equity Financing” has the meaning set forth in the Acquisition Note. 
 “Subsidiary” means any corporation, association, partnership, joint venture or other business entity of which more than 50% of the
voting stock or other equity interest is owned directly or indirectly by any Person or one or more of the other Subsidiaries of such Person or a combination thereof, which in the case of Purchaser shall specifically include the Canadian Subsidiary.

 “United States” and “U.S.” each means the United States of America. 
 “USA” has the meaning set forth in Section 4.01(m)(ii). 
 SECTION 1.02 Accounting Terms. Unless otherwise defined or the context otherwise requires, all accounting terms not expressly defined herein shall
be construed, and all accounting determinations and computations required under this Agreement or any other Acquisition Document shall be made, in accordance with GAAP. 
 SECTION 1.03 Interpretation. In the Acquisition Documents, except to the extent the context otherwise requires: (i) any reference to an Article, a Section, a Schedule or an Exhibit is a reference to an
article or section thereof, or a schedule or an exhibit thereto, respectively, and to a subsection or a clause is, unless otherwise stated, a reference to a subsection or a clause of the Section or subsection in which the reference appears;
(ii) the words “hereof,” “herein,” “hereto,” “hereunder” and the like mean and refer to this Agreement or any other Acquisition Document as a whole and not merely to the specific Article, Section,
subsection, paragraph or clause in which the respective word appears; (iii) the meaning of 

  

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defined terms shall be equally applicable to both the singular and plural forms of the terms defined; (iv) the words “including,”
“includes” and “include” shall be deemed to be followed by the words “without limitation;” (v) references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and
other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of the Acquisition Documents; (vi) references to statutes or regulations are to be construed as including all statutory
and regulatory provisions consolidating, amending or replacing the statute or regulation referred to; (vii) any table of contents, captions and headings are for convenience of reference only and shall not affect the construction of this
Agreement or any other Acquisition Document; and (viii) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and
“until” each mean “to but excluding”; and the word “through” means “to and including.” 
 ARTICLE II

 THE ACQUISITION NOTE 
 SECTION
2.01 Acquisition Note. 
 (a) Issuance of Acquisition Note. So long as no Default or Event of Default has
occurred and is continuing, InterMune agrees, on the terms and conditions hereinafter set forth, to accept on the Closing Date the Acquisition Note, representing a loan from InterMune to Purchaser in the amount of the first Acquisition Installment
Payment, which amount shall be changed as each additional Acquisition Installment Payment becomes due and payable under the Asset Purchase Agreement. 
 (b) Acquisition Note. Purchaser shall execute and deliver to InterMune the promissory note in substantially the form of Exhibit A (the “Acquisition Note”) on the Closing Date, as
evidence of the obligations of Purchaser to make the Acquisition Installment Payments to InterMune under the Asset Purchase Agreement, such Acquisition Note to be automatically amended to increase or decrease the principal amount outstanding
thereunder from time to time to reflect Acquisition Installment Payments under the Asset Purchase Agreement and conversions of principal into New Equity Shares upon the occurrence of the Preferred Equity Financing or thereafter (subject to the
Ownership Limitation). 
 (c) Effect of Event of Default. Upon the occurrence of an Event of Default prior to the
occurrence of the First Milestone (as defined in the Asset Purchase Agreement) or the Second Milestone (as defined in the Asset Purchase Agreement), only the portion of the principal amount of the Acquisition Note that is then outstanding (that is,
without taking into account the Acquisition Installment Payments that would become due on the occurrence of the First Milestone or Second Milestone, as the case may be) shall become due and payable, as set forth in Article 6 hereof. Notwithstanding
the occurrence of an Event of Default, Purchaser shall be obligated to make the Acquisition Installment Payments upon the First Milestone or Second Milestone, as applicable, to the extent such payments have not yet been made. 
 (d) Conversion of Acquisition Note. The Acquisition Note shall be converted into shares of Purchaser’s capital stock in
connection with a Preferred Equity Financing or Subsequent Equity Financing, as the case may be, in accordance with the terms and conditions 

  

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set forth in Section 9 of such Acquisition Note. Upon the closing of any Equity Financing (as defined in the Acquisition Note) pursuant to which any
portion of the principal amount of the Acquisition Note is converted into preferred stock of the Purchaser, InterMune shall be a party to any purchase agreement entered in connection with such Equity Financing and Purchaser’s counsel shall
include InterMune as an addressee in the opinion delivered to the other investors in such Equity Financing. So long as Purchaser may be required, under the Asset Purchase Agreement, to make Acquisition Installment Payments, the Acquisition Note
shall remain outstanding, notwithstanding all amounts owing under the Acquisition Note having been converted into shares of Purchaser’s capital stock in accordance with Section 9 of the Acquisition Note. As provided in Section 9 of
the Acquisition Note, if Purchaser, prior to the maturity date of the Acquisition Note, completes the Preferred Equity Financing or a Subsequent Equity Financing, the maximum amount of principal under the Acquisition Note as may, subject to the
Ownership Limitation, be converted into New Equity Shares or Subsequent Equity Shares, as the case may be, shall automatically be converted into such equity securities. In the event that InterMune’s equity ownership in Purchaser inadvertently
exceeds the Ownership Limitation, including without limitation as a result of repurchases or redemptions of equity securities by Purchaser, then (i) that number of equity securities resulting in InterMune’s equity ownership exceeding the
Ownership Limitation shall be automatically be cancelled (the “Violating Shares”) and (ii) the principal amount of the Acquisition Note shall automatically be increased by an amount equal to the product of (x) the number
of Violating Shares and (y) the Per Share Price (as defined in the Acquisition Note) at which such Violating Shares were originally issued upon conversion thereunder. 
 (e) Treatment in Connection with a Liquidity Event. Absent acceleration after an Event of Default, at any time, if there shall be a
Liquidity Event, then the balance outstanding under the Acquisition Note as of the closing of the Liquidity Event shall be (i) automatically converted into the most recently issued series of preferred stock of Purchaser at the conversion price
such shares were originally sold to unrelated third parties, subject to the Ownership Limitation, (ii) due and payable in cash or (iii) assumed by the successor entity in connection with such Liquidity Event, as more fully set forth in
Section 10 of the Acquisition Note. 
 SECTION 2.02 Interest. 
 (a) No Interest Payments Absent Acceleration. Except as set forth in this Section 2.02, no interest shall accrue and no
interest payments shall be due under the Acquisition Note. 
 (b) Default Rate of Interest. In the event of an Event of
Default, which Event of Default shall not have been cured in the applicable cure period, if any, from the date of the Event of Default until such Event of Default has been cured or, if such Event of Default cannot be cured, until all Obligations
have been paid in full, Purchaser shall pay interest on the unpaid principal of the Acquisition Note at a rate per annum equal at all times to the lesser of (i) 8%, and (ii) the highest lawful rate. Anything herein to the contrary
notwithstanding, if during any period for which interest is computed hereunder, the applicable interest rate, together with all fees, charges and other payments which are treated as interest under applicable law, as provided for herein or in any
other Acquisition Document, would exceed the maximum rate of interest 

  

 8 

 
which may be charged, contracted for, reserved, received or collected by InterMune in connection with this Agreement under applicable law (the
“Maximum Rate”), Purchaser shall not be obligated to pay, and InterMune shall not be entitled to charge, collect, receive, reserve or take, interest in excess of the Maximum Rate, and during any such period the interest payable
hereunder shall be limited to the Maximum Rate. 
 (c) Computations. All computations of interest hereunder shall be
made on the basis of a year of 365 or 366 days, as the case may be, for the actual number of days occurring in the period for which any such interest is payable. 
 SECTION 2.03 General Provisions Regarding Payments. 
 (a) Unconditional
Obligation. Purchaser shall make each payment under this Agreement, the Acquisition Note and each payment on account of the purchase price of the Purchased Assets under the Asset Purchase Agreement, unconditionally in full without set-off,
counterclaim or, to the extent permitted by applicable law, other defense (except to the extent otherwise permitted by the Asset Purchase Agreement). Each payment shall be made not later than 11:00 a.m. (San Francisco time) on the day when due to
InterMune in Dollars and in same day funds, or such other funds as shall be separately agreed upon by Purchaser and InterMune, in accordance with InterMune’s payment instructions. 
 (b) Extension. Whenever any payment hereunder shall be stated to be due, or whenever any interest payment date or any other date
specified hereunder would otherwise occur, on a day other than a Business Day, then, except as otherwise provided herein, such payment shall be made, and such interest payment date or other date shall occur, on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of payment of interest. 
 SECTION 2.04 No Prepayments of the
Acquisition Note. Purchaser may not pre-pay all or any portion of the Acquisition Note. 
 SECTION 2.05 Waiver of Presentment,
Etc. Unless otherwise expressly provided herein, Purchaser waives presentment, and notice of demand or dishonor and protest as to any instrument, notice of intent to accelerate the payment Obligations and notice of acceleration of the payment
Obligations, as well as any and all other notices to which it might otherwise be entitled. No notice to or demand on Purchaser that InterMune may elect to give shall entitle Purchaser to any or further notice or demand in the same, similar or other
circumstances. 
 ARTICLE III 
 CONDITIONS PRECEDENT 
 SECTION 3.01 Conditions Precedent to InterMune’s Obligations at Closing. InterMune shall have no
obligation to accept the Acquisition Note until the date (the “Closing Date”) when each of the following conditions precedent has been satisfied or waived: 
 (a) Acquisition Documents. InterMune shall have received duly executed originals or counterpart signature pages of the following
Acquisition Documents: 
 (i) this Agreement; 
  

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 (ii) the Acquisition Note in the form of Exhibit A attached hereto; 
 (iii) the Security Agreement in the form of Exhibit B attached hereto; and 
 (iv) a Patent and Trademark Security Agreement in the form of Exhibit C attached hereto. 
 (b) Asset Purchase Agreement. InterMune shall have received a duly executed original or counterpart signature page of the Asset
Purchase Agreement and all conditions precedent to the effectiveness of the Asset Purchase Agreement shall have been satisfied or waived in writing by the “Seller” thereunder. 
 (c) Documents and Actions Relating to Collateral. InterMune shall have received, in form and substance satisfactory to it, results
of such Lien searches as it shall reasonably request, and evidence that all filings, registrations and recordings have been made in the appropriate governmental offices, and all other action has been taken, that shall be necessary to create, in
favor of InterMune, a perfected first priority Lien on the Collateral. InterMune shall have received executed versions of the Collateral Documents sufficient to enable it to file all UCC-1 financing statements and other documents necessary to
protect its liens in the Collateral. 
 (d) Representations and Warranties; No Event of Default. On the date of
issuance of the Acquisition Note, both before and after giving effect thereto: the representations and warranties contained in Section 4.01 shall be true, correct and complete in all material respects on and as of the date of such Acquisition
Note; and (ii) no Event of Default shall have occurred and be continuing or shall result from the issuance of such Acquisition Note. 
 (e) Additional Closing Documents. InterMune shall have received the following, in form and substance satisfactory to it: 
 (i) a copy of the Disclosure Letter, if any, which shall be in form and substance reasonably satisfactory to InterMune; 
 (ii) evidence that all (A) authorizations or approvals of any governmental agency or authority, and (B) approvals or consents of
any other Person, required in connection with the execution, delivery and performance of the Acquisition Documents shall have been obtained; 
 (iii) a certificate of the Secretary or other appropriate officer of Purchaser, dated the Closing Date, certifying (A) copies of the articles or certificate of incorporation, and bylaws, of Purchaser and the
resolutions and other actions taken or adopted by Purchaser authorizing the execution, delivery and performance of the Acquisition Documents, and (B) the incumbency, authority and signatures of each officer of Purchaser authorized to execute
and deliver the Acquisition Documents and act with respect thereto; and 
  

 10 

 (iv) a certificate in the form of Exhibit D signed by a Responsible Officer of
Purchaser stating that no Event of Default has occurred and is continuing and that the representations and warranties in Section 4.01 of this Agreement are and remain true and correct in all material respects. 
 SECTION 3.02 Conditions Precedent to Increases in Acquisition Note after the Closing Date. The obligation of InterMune to accept Acquisition
Installment Payments in the form of increases in the principal amount of the Acquisition Note shall be subject to the satisfaction of each of the following conditions precedent: 
 (a) Representations and Warranties; No Default. On the date of such increase in the principal amount of the Acquisition Note, both
before and after giving effect thereto: (i) the representations and warranties contained in Sections 4.01(e), (f) and (g) shall be true, correct and complete in all material respects on and as of the date of such increase in the
principal amount of the Acquisition Note; and (ii) no Event of Default shall have occurred and be continuing or shall result from the increase in the principal amount of the Acquisition Note. For purposes of this Section 3.02(a), clause
(i) shall take into account any amendments to the Disclosure Letter and other disclosures made in writing by Purchaser to InterMune and reasonably approved in writing by InterMune. 
 (b) Officer’s Certificate. InterMune shall have received, in form and substance satisfactory to it a certificate in the form
of Exhibit D signed by a Responsible Officer of Purchaser stating that no Event of Default has occurred and is continuing and that the representations and warranties in Section 4.01 of this Agreement are and remain true and correct.

 For the avoidance of doubt, if Purchaser is unable to satisfy any of the above conditions precedent on the date such Acquisition Installment Payment is
due and payable, unless such condition is waived by InterMune, Purchaser shall be required to pay to InterMune the Acquisition Installment Payment in cash. 
 SECTION 3.03 Conditions Precedent to Purchaser’s Obligations at Closing. 
 (a)
Asset Purchase Agreement. Purchaser shall have received a duly executed original or counterpart signature page of the Asset Purchase Agreement and all conditions precedent to the effectiveness of the Asset Purchase Agreement and all
conditions precedent to the effectiveness of the Asset Purchase Agreement shall have been satisfied or waived in writing by “Buyer” thereunder. 
 (b) Note Issuance Agreement. Purchaser shall have received a duly executed original or counterpart signature page to this Agreement. 
 (c) Collateral Documents. Purchaser shall have received a duly executed original or counterpart signature page to each of
(i) the Security Agreement in the form attached hereto as Exhibit B; and (ii) the Patent and Trademark Security Agreement in the form attached hereto as Exhibit C. 
  

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 (d) Representations and Warranties. On the date of issuance of the Acquisition
Note, both before and after giving effect thereto, the representations and warranties contained in Section 4.02 shall be true, correct and complete on and as of such date. 
 ARTICLE IV 
 REPRESENTATIONS AND WARRANTIES 
 SECTION 4.01 Representations and Warranties of Purchaser. Purchaser represents and warrants to InterMune on and as of the Closing Date that,
except as set forth in the Disclosure Letter: 
 (a) Organization and Powers. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has all requisite power and authority to (i) conduct its business in the manner in which it is currently being conducted and as it is
planned to be conducted, (ii) own and use its assets in the manner in which its assets are currently owned and used and (iii) execute, deliver and perform its obligations under the Acquisition Documents. Purchaser is qualified to do
business and is in good standing in each jurisdiction in which the failure to so qualify or be in good standing would result in a Material Adverse Effect. 
 (b) Authorization; No Conflict. The execution, delivery and performance by Purchaser of each of the Acquisition Documents have been duly authorized by all necessary corporate action of Purchaser and do not and
will not (i) contravene, conflict with or result in a violation or breach of, or constitute a default under any (A) law, rule, regulation, order, judgment, decree or the like to which Purchaser or any of the assets owned or used by
Purchaser is subject, (B) any of the provisions of Purchaser’s organizational documents or any resolution adopted by Purchaser’s Board of Directors (or any committee thereof) or stockholders or (C) any material agreement or other
instrument or arrangement to which Purchaser or its properties is subject or (ii) except as contemplated by this Agreement, result in, or require, the creation or imposition of any Lien other than a Permitted Lien upon or with respect to any of
the Collateral. 
 (c) Binding Obligation. The Acquisition Documents constitute, or when delivered under this Agreement
will constitute, legal, valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies. 
 (d) Consents. No authorization, consent, approval, license, exemption of, or filing or registration with, any Governmental or
Regulatory Authority, or approval or consent of any other Person, is required for or in connection with the due execution, delivery or performance by Purchaser of any of the Acquisition Documents. 
 (e) No Defaults. Neither Purchaser nor any of its Subsidiaries is in default under any material contract, lease, agreement,
judgment, decree or order to which it is a party or by which it or its properties may be bound. 
  

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 (f) Litigation. There are no pending Actions or Proceedings or, to the best of
Purchaser’s knowledge, threatened against or affecting Purchaser or any of its Subsidiaries or the properties of Purchaser or any of its Subsidiaries before any governmental agency or authority or arbitrator that if determined adversely to
Purchaser or any such Subsidiary would result in a Material Adverse Effect. 
 (g) Liabilities. Other than liabilities
in connection with Permitted Liens, neither Purchaser nor any of its Subsidiaries has any material Indebtedness or liabilities, fixed or contingent, in excess of $500,000, other than liabilities incurred in the ordinary course of business that do
not, in the aggregate, exceed $100,000 during any fiscal year. 
 (h) Other Rights. Purchaser and its Subsidiaries
possess all permits, franchises, and governmental licenses (the “Permits”), free from burdensome restrictions, that are necessary for the ownership, maintenance and operation of its business and none of Purchaser or its Subsidiaries
is in violation of any of the foregoing, except where the failure to have any such Permits or the violation of such Permit would not result in a Material Adverse Effect. 
 (i) Insurance. The properties of Purchaser and its Subsidiaries are insured, with financially sound and reputable insurance
companies, in such amounts, with such deductibles and covering such risks as, in the good faith belief of Purchaser, are customarily appropriate for companies engaged in similar businesses and owning similar properties in the localities where
Purchaser or such Subsidiary operates. 
 (j) Liens. Assuming that the representations and warranties of
“Seller” under the Asset Purchase Agreement are true and correct, there is no Lien upon or with respect to any of the Collateral, except for Permitted Liens. 
 (k) Subsidiaries. Each of Purchaser’s Subsidiaries is duly organized, validly existing, and in good standing under the laws of
the jurisdiction of its organization and has all requisite power and authority to (i) conduct its business in the manner in which it is currently being conducted and as it is planned to be conducted and (ii) own and use its assets in the
manner in which its assets are currently owned and used. Each of Purchaser’s Subsidiaries is duly qualified to transact business and is in good standing in each jurisdiction in which the nature of the business conducted by it, or its ownership
or leasing of property, or its employment of employees or consultants therein, makes such qualification necessary and where any statutory fines or penalties, or any corporate disability imposed for this failure to qualify, would have a Material
Adverse Effect. True and accurate copies of each of Purchaser’s subsidiaries’ charter documents, each as amended and in effect at the Closing, have been made available to InterMune. 
 (l) Valid Issuance. The New Equity Shares or Subsequent Equity Shares, as applicable issuable upon conversion of the Acquisition
Note, if and when issued and delivered in accordance with the terms of the Acquisition Note and this Agreement, will be duly and validly issued, fully paid, non-assessable and free of liens and encumbrances and, based in part upon the
representations of InterMune in this Agreement, will be issued in compliance with all applicable federal and state securities laws. The shares of Common Stock issuable upon conversion of the 

  

 13 

 
New Equity Shares and Subsequent Equity Shares, as applicable, if and when issued, will be duly and validly issued, fully paid, non-assessable and free of
liens and encumbrances and, based in part upon the representations of InterMune in this Agreement and the Acquisition Note, as applicable, will be issued in compliance with all applicable federal and state securities laws. 
 (m) Capitalization. Immediately following the restructuring (including the exchange of certain Class B Exchangeable Shares by
investors in the Québec Subsidiary (as hereinafter defined) for shares of Series B Preferred Stock of the Purchaser) and the implementation of the exchangeable share structure: 
 (i) The authorized capital stock of Purchaser consists of 65,000,000 shares of Common Stock, par value $0.0001 per share (the “Common
Stock”), none of which are issued and outstanding, and 125,000,000 shares of Preferred Stock (the “Preferred Stock”), par value $0.0001 per share, 2,500,000 of which are designated Series A Preferred Stock, none of which
are issued and outstanding, 50,000,000 of which are designated Series B Preferred Stock, 3,205,128 of which are issued and outstanding, 2,500,000 of which are designated Series A Special Voting Stock, 2,346,632 of which are issued and outstanding,
30,000,000 of which are designated as Series B Special Voting Stock, 7,051,280 of which are issued and outstanding and 40,000,000 of which are designated as Common Special Voting Stock, 3,035,749 of which are issued and outstanding. Each share of
Series A Preferred Stock and Series B Preferred Stock is convertible into one share of Common Stock. Under Purchaser’s 2005 Stock Option Plan (the “Option Plan”), Purchaser has reserved an aggregate of 2,860,884 shares (plus up
to an additional 2,127,116 shares that may be added to the Option Plan upon forfeiture of outstanding options issued under the stock option plan of the Québec Subsidiary) of Common Stock for issuance to employees and consultants pursuant to
the Option Plan. Under the Option Plan, (A) no shares have been issued and are reflected in the currently outstanding Common Stock, (B) no options to purchase shares are presently outstanding and (C) 2,872,884 shares (plus up to an
additional 2,139,116 shares that may be added to the Option Plan upon forfeiture of outstanding options issued under the stock option plan of the Québec Subsidiary) remain available for future grant. All issued and outstanding shares have
been duly authorized and validly issued and are fully paid and nonassessable. There are no other outstanding rights, options, warrants, preemptive rights, rights of first refusal, or similar rights for the purchase or acquisition from Purchaser of
any securities of Purchaser nor are there any commitments to issue or execute any such rights, options, warrants, preemptive rights or rights of first refusal. Except as otherwise provided in the Certificate of Incorporation, there are no
outstanding rights or obligations of Purchaser to repurchase or redeem any of its securities. The respective rights, preferences, privileges, and restrictions of the Preferred Stock and the Common Stock are as stated in the Certificate of
Incorporation. All outstanding securities have been issued in compliance with state and federal securities laws. 
 (ii) The authorized
capital stock of Targanta Therapeutics Inc., a corporation organized under the Canada Business Corporations Act (the “Québec Subsidiary”) consists of an unlimited number of common exchangeable shares, 3,035,749 of
which are issued and outstanding, an unlimited number of Class A preferred exchangeable shares, 2,346,632 of which are issued and outstanding, an unlimited number of Class B exchangeable preferred shares, 7,051,280 of which are issued and
outstanding, and an unlimited number of new common shares, 1,000 of which is issued and outstanding. All issued and outstanding shares of the Québec Subsidiary’s capital 

  

 14 

 
stock have been duly authorized and validly issued and are fully paid and non-assessable. All outstanding securities of the Québec Subsidiary have
been issued in compliance with applicable Canadian securities laws. The respective rights, preferences, privileges, and restrictions of the capital stock of the Québec Subsidiary are as set forth in the Québec Subsidiary’s
Articles of Incorporation, as amended through the date hereof. Each Class A exchangeable preferred share and Class B exchangeable preferred share of the Québec Subsidiary is convertible into one common exchangeable share. There are no
other outstanding rights, options, warrants, preemptive rights, rights of first refusal, or similar rights for the purchase or acquisition from Québec Subsidiary of any securities of Québec Subsidiary nor are there any commitments to
issue or execute any such rights, options, warrants, preemptive rights or rights of first refusal. Except as otherwise provided in (A) the Articles of Incorporation of the Quebec Subsidiary, as amended as of the date hereof, (B) the
Unanimous Shareholders Agreement by and among the Purchaser, the Québec Subsidiary, Targanta Therapeutics (Ontario) Inc., a corporation organized under the Canada Business Corporations Act (the “Ontario Subsidiary”)
and all of the shareholders of such entities, dated on or around the date hereof (the “USA”) and (C) the Principal Shareholders Agreement by and among the Purchaser, the Québec Subsidiary, the Ontario Subsidiary and the
shareholders of such entity party thereto, dated on or around the date hereof (the “PSA”), there are no outstanding rights or obligations of the Quebec Subsidiary to repurchase or redeem any of its securities. 
 (iii) The authorized capital stock of the Ontario Subsidiary consists of an unlimited number of common shares, 1,000 of which is issued and outstanding,
an unlimited number of Class B exchangeable preferred shares, none of which are issued and outstanding, and an unlimited number of common exchangeable shares, none of which are issued and outstanding. All issued and outstanding shares of the Ontario
Subsidiary’s capital stock have been duly authorized and validly issued and are fully paid and non-assessable. All outstanding securities of the Ontario Subsidiary have been issued in compliance with applicable Canadian securities laws. All of
the rights, privileges and preferences of the capital stock of the Ontario Subsidiary are as set forth in the Ontario Subsidiary’s Articles of Incorporation, as amended through the date hereof. Each Class B exchangeable preferred share of the
Ontario Subsidiary is convertible into one common exchangeable share. There are no other outstanding rights, options, warrants, preemptive rights, rights of first refusal, or similar rights for the purchase or acquisition from Ontario Subsidiary of
any securities of Ontario Subsidiary nor are there any commitments to issue or execute any such rights, options, warrants, preemptive rights or rights of first refusal. Except as otherwise provided in (A) the Articles of Incorporation of the
Ontario Subsidiary, (B) the USA and (C) the PSA, there are no outstanding rights or obligations of the Ontario Subsidiary to repurchase or redeem any of its securities. 
 SECTION 4.02 Representations and Warranties of InterMune. InterMune represents and warrants to Purchaser on and as of the Closing Date that:

 (a) Securities Laws. InterMune (i) will acquire the Acquisition Note and the equity securities issuable
upon conversion of the Acquisition Note (the “Purchaser Securities”) for its own account for investment and not with a view to any resale or other distribution of Purchaser Securities in a transaction constituting a public offering
or otherwise requiring registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or in a transaction that would result in noncompliance with applicable state securities laws; (ii) has such 

  

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knowledge and experience in financial and business matters as to be capable of evaluating the merits and the risks of its acquisition of Purchaser Securities
and credit extensions to Purchaser; (iii) is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act; and (iv) understands that neither the Acquisition Note nor the Purchaser Securities have not
been, and will not be, registered under the Securities Act or any state securities laws and therefore will not transfer the Acquisition Note or the Purchaser Securities other than as permitted by a valid exemption to the registration requirements of
the Securities Act of 1933, as amended or other applicable securities laws. 
 (b) Transfer Restrictions. InterMune
will not transfer the Acquisition Note unless the transferee enters into a written agreement in form and substance acceptable to the Purchaser pursuant to which the transferee agrees to be bound by all of the provisions of the Acquisition Note
and this Agreement; provided that, InterMune shall not transfer the Acquisition Note to an entity engaging in drug discovery or drug development (an “Industry Transferee”) without the prior written consent of Purchaser, such
consent not to be unreasonably withheld; provided further, that the transfer of the Acquisition Note to an entity engaged primarily in investment and investment-related activities, including a direct or indirect affiliate or subsidiary
of an Industry Transferee that has separate operations from the Industry Transferee, shall not require the prior written consent of Purchaser. 
 ARTICLE V 
 COVENANTS 
 SECTION 5.01 Reporting Covenants. So long as any of the Obligations shall remain unpaid or outstanding or Purchaser may be required, under the Asset Purchase Agreement, to make Acquisition Installment Payments, Purchaser agrees that:

 (a) Books and Records. Purchaser shall maintain, at all times, correct and complete books, records and accounts in
which complete, correct and timely entries are made of its transactions in accordance with GAAP applied consistently with the audited financial statements required to be delivered pursuant to Section 5.02. Purchaser shall, by means of
appropriate entries, reflect in such accounts and in all financial statements proper liabilities and reserves for all taxes and proper provision for depreciation and amortization of property and bad debts, all in accordance with GAAP. Purchaser
shall maintain at all times books and records pertaining to its assets and to the Collateral in such detail, form and scope as InterMune shall reasonably request in writing, including, but not limited to, records of all dealings affecting the
Products and/or the Collateral. 
 (b) Financial Statements and Other Reports. Purchaser shall promptly furnish to
InterMune the following, financial information: 
 (i) Quarterly Reports. As soon as available, but in any event not
later than forty-five (45) days after the end of each fiscal quarter, Purchaser will furnish to InterMune consolidated and consolidating unaudited balance sheets of Purchaser and its consolidated Subsidiaries as at the end of such quarter, and
consolidated and consolidating unaudited income statements and cash flow statements for Purchaser and its consolidated Subsidiaries for such quarter and for the period from the beginning of the 

  

 16 

 
Fiscal Year to the end of such quarter, all in reasonable detail, fairly presenting the financial position and results of operations of Purchaser and its
consolidated Subsidiaries as of the date thereof and for such periods, and prepared in accordance with GAAP (other than the exclusion of footnotes not ordinarily included in interim period financial statements) applied consistently with the audited
financial statements required to be delivered pursuant to Section 5.02(b)(ii). Purchaser shall certify by a certificate signed by its Responsible Officer that all such statements have been prepared in accordance with GAAP (other than the
exclusion of footnotes not ordinarily included in interim period financial statements) and present fairly Purchaser’s financial position as at the dates thereof and its results of operations for the periods then ended, subject to normal
year-end adjustments. 
 (ii) Annual Reports. As soon as available, but in any event not later than one hundred and
twenty (120) days after the close of each Fiscal Year, Purchaser will furnish to InterMune consolidated audited balance sheets, and income statements, cash flow statements and changes in stockholders’ equity for Purchaser and its
Subsidiaries for such Fiscal Year, and the accompanying notes thereto, setting forth in each case in comparative form figures for the previous Fiscal Year, all in reasonable detail, fairly presenting the financial position and the results of
operations of Purchaser and its consolidated Subsidiaries as at the date thereof and for the Fiscal Year then ended, and prepared in accordance with GAAP. Such statements shall be examined in accordance with generally accepted auditing standards by
and, accompanied by a report thereon of independent certified public accountants of recognized standing selected by Purchaser. 
 (c) Additional Information. Purchaser will furnish to InterMune: 
 (i) promptly, and in no event more than
ten (10) days, after Purchaser has knowledge or becomes aware thereof, notice of the occurrence of any Default; 
 (ii)
prompt, and in no event more than ten (10) days, written notice of all actions, suits and proceedings before any governmental agency or authority or arbitrator pending, or to the best of Purchaser’s knowledge, threatened against or
affecting Purchaser or any of its Subsidiaries, including any actions, suits, claims, notices of violation, hearings, investigations or proceedings pending, or to the best of Purchaser’s knowledge, threatened against or affecting Purchaser or
any of its Subsidiaries, or with respect to the ownership, use, maintenance and operation of their respective properties, or with respect to the Product, or relating to FDA or other regulatory matters or relating to Environmental Laws or Hazardous
Substances, that (A) involve an aggregate liability of $100,000 or more, or (B) otherwise could reasonably be expected to have a Material Adverse Effect; 
 (iii) prompt, and in no event more than ten (10) days, written notice of any other condition or event that has resulted, or that
could reasonably be expected to result, in a Material Adverse Effect; 
  

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 (iv) promptly, and in no event more than ten (10) days, after the same are released,
copies of all press releases; 
 (v) promptly, and in no event more than ten (10) days, after the giving, sending or
filing thereof, copies of all reports and financial information, if any, that Purchaser or any of its Subsidiaries sends to the holders of its respective capital stock or other securities, and the holders, if any, of any other Indebtedness; and

 (vi) such other information respecting the operations, properties, business or condition (financial or otherwise) of
Purchaser or its Subsidiaries (including with respect to the Collateral) as InterMune may from time to time reasonably request. 
 Each notice pursuant to
clauses (i) through (iii) of this subsection (c) shall be accompanied by a written statement by a Responsible Officer of Purchaser setting forth details of the occurrence referred to therein. 
 SECTION 5.02 Affirmative Covenants. So long as any of the Obligations shall remain unpaid or outstanding or Purchaser may be required, under the
Asset Purchase Agreement, to make Acquisition Installment Payments, Purchaser agrees that: 
 (a) Preservation of
Existence, Etc. 
 (i) Purchaser will, and will cause each of its Subsidiaries to, maintain and preserve its corporate
existence. 
 (ii) Purchaser will, and will cause each of its Subsidiaries to, use commercially reasonable efforts to maintain
and preserve its rights to transact business and all other rights, Permits and privileges necessary in the normal course of its business and operations and the ownership of its properties, except in connection with any transactions expressly
permitted by this Agreement, or where the failure to so maintain or preserve such rights, Permits and privileges would not result in a Material Adverse Effect. Notwithstanding the foregoing, this covenant will not be breached by the fact that
Purchaser has not yet obtained a license to sell pharmaceutical products in California (or any jurisdiction where the same may be necessary or desirable) so long as Purchaser uses its best efforts to diligently obtain such license or licenses, and
the lack of the same does not cause a Material Adverse Effect. 
 (b) Payment of Taxes, Etc. Purchaser will, and will
cause each of its Subsidiaries to, use commercially reasonable efforts to pay and discharge all taxes, fees, assessments and governmental charges or levies imposed upon it or upon its properties or assets prior to the date on which penalties attach
thereto, and all lawful claims for labor, materials and supplies which, if unpaid, might become a Lien upon any properties or assets of Purchaser or any Subsidiary, except to the extent such taxes, fees, assessments or governmental charges or
levies, or such claims, are being contested in good faith by appropriate proceedings and are adequately reserved against in accordance with GAAP. 
 (c) Maintenance of Insurance. Purchaser will, and will cause each of its Subsidiaries to, use commercially reasonable efforts to carry and maintain in full force and 

  

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effect, at its own expense and with financially sound and reputable insurance companies, insurance in such amounts, with such deductibles and covering such
risks as, in the good faith belief of Purchaser, is customarily appropriate for companies engaged in similar businesses and owning similar properties in the localities where Purchaser or such Subsidiary operates. Insurance on the Collateral shall
name InterMune as an additional insured and as a loss payee. Upon the request of InterMune, Purchaser shall furnish InterMune from time to time with full information as to the insurance carried by it and, if so reasonably requested, copies of all
such insurance policies. Purchaser shall also furnish to InterMune, from time to time upon its reasonable request, a certificate of Purchaser’s insurance broker or other insurance specialist stating that all premiums then due on the policies
relating to Purchaser’s insurance have been paid and that such policies are in full force and effect. 
 (d)
Inspection Rights. Purchaser will, at any reasonable time and from time to time upon reasonable notice, during normal business hours and subject to Purchaser’s reasonable security measures, permit InterMune or any of its agents or
representatives to visit and inspect any of the properties of Purchaser and its Subsidiaries and to examine the records and books of account of Purchaser and its Subsidiaries, and to discuss the business affairs, finances and accounts of Purchaser
and any such Subsidiary with any of the officers, employees or accountants of Purchaser or such Subsidiary; provided that InterMune and its agents and representatives shall hold confidential all such information related to Purchaser, any
Subsidiary, the Product or any other matters related thereto (other than as is required of InterMune for the preparation of its financial statements in accordance with GAAP or as is required pursuant to securities laws applicable to InterMune).

 (e) Compliance with Laws, Etc. Purchaser will, and will cause each of its Subsidiaries to, comply in all material
respects with the requirements of all applicable laws, rules, regulations and orders of any governmental agency or authority, including all Environmental Laws and ERISA, and the terms of any indenture, contract or other instrument to which it may be
a party or under which it or its properties may be bound. Purchaser will, and will cause each of its Subsidiaries to, use commercially reasonable efforts to obtain and maintain all licenses, authorizations, consents, filings, exemptions,
registrations and other governmental approvals of any governmental agency or authority necessary in connection with the execution, delivery and performance of the Acquisition Documents, the consummation of the transactions therein contemplated or
the operation and conduct of its business and ownership of its properties. 
 (f) Protection of Collateral. Purchaser
shall comply in all material respects with all laws, regulations and ordinances, and all policies of insurance, relating in a material way to the possession, operation, maintenance and control of the Collateral. Purchaser shall not surrender or lose
possession of (other than (i) to InterMune, (ii) related to sales or other dispositions of inventory in the ordinary course of business or (iii) by transfer of the custody thereof in the ordinary course of business to a third party
contracted by Purchaser to store any portion of the Collateral), sell, lease, rent, or otherwise dispose of or transfer any of the Collateral or any right or interest therein, except as otherwise permitted by this Agreement. 
 (g) Affiliate Security Agreement. In the event Purchaser transfers any of the assets or rights relating to or constituting the
Products or any Collateral to any Affiliate of Purchaser (subject to the terms and conditions of this Agreement), then within two Business 

  

 19 

 
Days of such transfer, Purchaser shall cause to be delivered to InterMune a security agreement (relating to the Collateral transferred to such Affiliate) and
a guaranty of the Obligations duly executed by such Affiliate and otherwise in form and substance satisfactory to InterMune and shall cause such Affiliate to have executed and filed any UCC-1 financing statements furnished by InterMune in each
jurisdiction in which such filing is necessary to perfect the security interest of InterMune in the Collateral of such Affiliate and in which InterMune requests that such filing be made. Additionally, Purchaser and such Affiliate shall have executed
and delivered to InterMune such other items as reasonably requested by InterMune in connection with the foregoing, including resolutions, search reports and other certificates and documents. 
 (h) Further Assurances and Additional Acts. Purchaser will execute, acknowledge and deliver, all such further agreements,
instruments, certificates, documents and assurances and perform such acts as InterMune shall reasonably deem necessary or appropriate to effectuate the purposes of this Agreement or the Collateral Documents. 
 (i) Composition of Board of Directors. Purchaser shall cause the Board of Directors of Purchaser to include one member designated
by InterMune. 
 (j) Preferred Equity Financing. Purchaser shall cause the closing of the Preferred Equity Financing to
occur no later than one hundred and twenty (120) days following achievement of the First Milestone by Purchaser (the “Cut Off Date”); provided that if, at the Cut Off Date, the Purchaser is in good faith negotiations
with a lead investor regarding the terms of a Preferred Equity Financing but Purchaser is not yet ready to close such Preferred Equity Financing, Purchaser shall cause the closing of such Preferred Equity Financing to occur as soon as practicable
following the Cut Off Date, but in any event no longer than sixty (60) days following the Cut Off Date. 
 (k)
Additional Security Documents. As promptly as practicable after the Closing Date, and in no event more than thirty (30) days after the Closing Date, Purchaser will cause each of the Ontario Subsidiary and the Quebec Subsidiary to
(i) enter into, execute and deliver a guarantee of the Obligations, and a security agreement or hypothec, as applicable, pursuant to which each of them shall, as security for the payment and performance of the Obligations, pledge, assign,
transfer, hypothecate and grant a first priority security interest and lien in all of such entity’s right, title and interest in, to and under the Collateral (as defined in the Security Agreement) and (ii) take any and all other actions
reasonably requested by InterMune for the attachment, perfection and priority of and the ability of InterMune to enforce InterMune’s security interest in any and all of the Collateral. 
 SECTION 5.03 Negative Covenants. Until the Closing of the Preferred Equity Financing, Purchaser agrees that: 
 (a) Indebtedness. Purchaser will not, and will not permit any of its Subsidiaries to, create, incur, assume or otherwise become
liable for or suffer to exist any Indebtedness, whether secured or unsecured, other than: 
 (i) Indebtedness of Purchaser to
InterMune hereunder; 
  

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 (ii) accounts payable to trade creditors for goods and services and current operating
liabilities (not the result of the borrowing of money) incurred in the ordinary course of Purchaser’s or such Subsidiary’s business in accordance with customary terms and paid within the specified time, unless contested in good faith by
appropriate proceedings and reserved for in accordance with GAAP; 
 (iii) Indebtedness directly related to the acquisition by
Purchaser of a product or product line, provided that such Indebtedness is owed to the seller of such product or product line or to a Person financing the acquisition of the same, but only to the extent the portion of the purchase price for
the assets thus acquired is financed by Indebtedness; and if such Indebtedness is secured, then such Indebtedness shall be secured solely by the assets for which the acquisition financing was provided; 
 (iv) Indebtedness consisting of a refinancing of the Indebtedness permitted in subsection (iii) above or subsection (vi) below,
provided that the principal amount of such Indebtedness that is being refinanced does not increase; 
 (v) Indebtedness for
capital leases as determined in accordance with GAAP not to exceed that amount allocated for capital leases in the annual budget of Purchaser, which shall have been approved by the Board of Directors of Purchaser; 
 (vi) Indebtedness under the loan by Investissement Quebec in an amount no greater than Eight Million Canadian Dollars (CDN $8,000,000);

 (vii) Indebtedness evidenced by the Investor Convertible Notes not to exceed the sum of approximately (A) One Million
Seven Hundred Forty-Seven Thousand Eight Hundred Forty-One Canadian Dollars (CDN $1,747,841) and (B) Ten Million Three Hundred Thousand United States Dollars ($10,300,000); 
 (viii) Indebtedness issued pursuant to the Additional Offering (as defined in the USA); and 
 (ix) Indebtedness that, by its terms, is expressly subordinated to the prior payment of the Obligations under the Acquisition Note.

 (b) Change in Nature of Business. Purchaser will not, and will not permit any of its Subsidiaries to, engage in any
material line of business substantially different from the biopharmaceutical business. 
 (c) Restrictions on Fundamental
Changes. Purchaser will not, and will not permit any of its Subsidiaries to, 
 (i) consummate any acquisition of any
Person by means of merger or other form of corporate reorganization in which outstanding shares of such Person are exchanged for securities or other consideration issued, or caused to be issued, by Purchaser or any of its Subsidiaries, or consummate
a purchase of substantially all of any Person’s assets unless (A) Purchaser is the surviving entity, and (B) both immediately before and after such merger, reorganization or acquisition, no Event of Default shall have occurred or be
caused by virtue thereof; 
  

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 (ii) sell, transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets without the consent of InterMune, such consent not to be unreasonably withheld; 
 provided that, Purchaser shall not be bound by this section if Purchaser has not achieved the First Milestone prior to December 31, 2006. 
 (d) Sales of Collateral. Purchaser will not, and will not permit any of its Subsidiaries to, sell, lease, transfer, license, or
otherwise dispose of, or part with control of (whether in one transaction or a series of transactions) any Collateral, except: (i) sales or other dispositions of inventory in the ordinary course of business or as permitted by
Section 5.02(f), (ii) sales of Collateral that, in the aggregate, do not exceed $500,000 or (iii) with the consent of InterMune; provided, that no such consent shall be required in connection with a Liquidity Event of the
Purchaser that results in the Acquisition Note being treated in the manner set forth in Section 2.01(e) hereof. 
 (e)
Distributions. 
 (i) Purchaser will not declare or pay any dividends in respect of its capital stock, or purchase,
redeem, retire or otherwise acquire for value any of its capital stock now or hereafter outstanding, return any capital to its shareholders as such, or make any loan of assets to its shareholders as such, or permit any of its Subsidiaries to
purchase, redeem, retire, or otherwise acquire for value any stock of Purchaser, except that Purchaser may: 
 (A) declare
and deliver dividends and loans payable only in capital stock of Purchaser; 
 (B) purchase, redeem, retire, or otherwise
acquire shares of its capital stock with the proceeds received from a substantially concurrent issue of new shares of its capital stock; and 
 (C) so long as either (i) no Event of Default has occurred and is continuing or (ii) the amount paid by Purchaser does not exceed $500,000 in cash or value per year, repurchase unvested stock from any of
Purchaser’s employees, directors or consultants upon the termination of service of such person or repurchase shares in connection with Purchaser’s stock option or compensation plans. 
 (ii) Purchaser will not permit any Subsidiary of Purchaser to grant or otherwise agree to or suffer to exist any consensual restrictions
on the ability of such Subsidiary to pay dividends and make other distributions to Purchaser, or to pay any Indebtedness owed to Purchaser or transfer properties and assets to Purchaser. 
 (iii) No Subsidiary shall purchase, redeem, retire or otherwise acquire for value any of its capital stock now or hereafter outstanding.

  

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 (f) Transactions with Related Parties. Purchaser will not (absent InterMune’s
prior written consent), and will not (absent InterMune’s prior written consent) permit any of its Subsidiaries to, enter into any transaction, including the purchase, sale or exchange of property or the rendering of any services, with any
Affiliate, any officer or director thereof or any Person that beneficially owns or holds 5% or more of the equity securities, or 5% or more of the equity interest, thereof (a “Related Party”), or enter into, assume or suffer to
exist, or permit any Subsidiary to enter into, assume or suffer to exist, any employment or consulting contract with any Related Party, except a transaction or contract that is in the ordinary course of Purchaser’s or such Subsidiary’s
business and that is upon fair and reasonable terms not less favorable to Purchaser or such Subsidiary than it would obtain in a comparable arm’s length transaction with a Person not a Related Party; provided, however, that
nothing in this subsection shall prohibit any transactions (i) between Purchaser and its wholly owned Subsidiaries or the Canadian Subsidiary or between Purchaser’s wholly owned Subsidiaries and the Canadian Subsidiary; provided, that no
such transaction materially impairs InterMune’s rights in and to the Collateral under the Acquisition Documents, (ii) between Purchaser and InterMune, or (iii) between Purchaser or its Subsidiaries and their existing stockholders in
connection with the Investor Convertible Notes, the Preferred Equity Financing or any Subsequent Equity Financing. 
 ARTICLE VI 

EVENTS OF DEFAULT 
 SECTION 6.01 Events
of Default. Any of the following events that shall occur shall constitute an “Event of Default” once any specified cure period (if any) has passed: 
 (a) Covenants that are Curable Within Ten (10) Calendar Days. 
 (i) Payments. The failure of Purchaser to pay when due or in the appropriate currency any amount of principal of, or interest on,
the Acquisition Note or the failure to pay any other amount payable under any of the Acquisition Documents, including without limitation all payment obligations under the Asset Purchase Agreement (including, without limitation, the payment
obligations relating to the purchase of inventory as set forth in Section 4.02 of the Asset Purchase Agreement, and for indemnification if the indemnity obligation has been liquidated), if the same shall not be cured within ten
(10) calendar days of their due date, shall constitute an Event of Default. 
 (ii) Other Covenants. Breaches of
the covenants set forth in the following Sections shall become Events of Default once ten (10) days have passed from their occurrence without the same having been cured: 
  

			
	 Sections of this Agreement
	  	Short Name
		
	 Section 5.02(f)
	  	“Protection of Collateral”
	 Section 5.02(i)
	  	“Composition of Board of Directors”
	 Section 5.02(k)
	  	“Additional Security Documents”
		
	 Other Acquisition Documents
	  	
		
	 Any section of the Security Agreement
	  	
	 Any section of the Patent and Trademark Security Agreement

	 Any section of the Patent and Trademark Security Agreement

  

 23 

 (b) Covenants that are Curable Within Thirty (30) Calendar Days. Breaches of
the covenants set forth in the following Sections shall become Events of Default once thirty (30) days have passed from their occurrence without the same having been cured: 
  

			
	Sections of this Agreement	  	Short Name
		
	5.01	  	“Reporting Covenants” (provided that a breach of Section 5.01(c)(iv) shall not constitute a default or Event of Default)
	5.02(a)(ii)	  	“Preservation of Existence, Etc.”
	5.02(b)	  	“Payment of Taxes”
	5.02(c)	  	“Maintenance of Insurance”
	5.02(d)	  	“Inspection Rights”
	5.02(e)	  	“Compliance With Laws, Etc.”
	5.02(g)	  	“Affiliate Security Agreement”
	5.02(h)	  	“Further Assurances and Additional Acts”
	5.03(f)	  	“Transactions With Related Parties”

 (c) Covenants that are Not Curable. The occurrence of any of the following
shall become Events of Default immediately upon their occurrence: 
  

			
	Sections of this Agreement	  	Short Name
		
	5.02(j)	  	“Preferred Equity Financing”
	5.02(a)(i)	  	“Preservation of Existence, Etc.”
	5.03(a)	  	“Indebtedness”
	5.03(b)	  	“Change in Nature of Business”
	5.03(c)	  	“Restrictions on Fundamental Changes”
	5.03(d)	  	“Sales of Collateral”
	5.03(e)	  	“Distributions”

 (d) Levy. Notwithstanding anything to the contrary contained above
regarding the ability to cure defaults, should any levy upon, seizure or attachment of any of the Collateral in the amount of at least $1,000,000 which shall not have been rescinded or withdrawn within 10 calendar days occur, including on account of
any liens or tax claims listed in Section 5.03(b), it shall then constitute an Event of Default after the tenth day if no cure is effected. 
 (e) Insolvency. (i) Purchaser or any of its Subsidiaries shall (A) admit in writing its inability to, or shall fail generally or be generally unable to, pay its debts (including its payrolls) as such
debts become due, (B) make a general assignment for the benefit of creditors, (C) be dissolved, liquidated, wound up or cease its corporate existence; or (ii) Purchaser or any Subsidiary (A) shall file a voluntary petition in
bankruptcy or a petition or answer seeking 

  

 24 

 
reorganization, to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act of 1978 (the “Bankruptcy
Code”) or under any other state or federal law relating to bankruptcy or reorganization granting relief to debtors, whether now or hereafter in effect, or (B) shall file an answer admitting the jurisdiction of the court and the
material allegations of any involuntary petition filed against Purchaser or any Subsidiary pursuant to the Bankruptcy Code or any such other state or federal law; or (iii) Purchaser or any Subsidiary shall be adjudicated a bankrupt, or shall
make an assignment for the benefit of creditors, or shall apply for or consent to the appointment of any custodian, receiver or trustee for all or any substantial part of Purchaser’s or any Subsidiary’s property, or shall take any action
to authorize any of the actions or events set forth above in this subsection; or (iv) an involuntary petition seeking any of the relief specified in this subsection shall be filed against Purchaser or any Subsidiary and shall not have been
dismissed with forty-five (45) days of the filing of the petition; or (v) any order for relief shall be entered against Purchaser or any Subsidiary in any involuntary proceeding under the Bankruptcy Code or any such other state or federal
law referred to in this subsection. 
 (f) Dissolution, Etc. Other than in the case of a Liquidity Event, Purchaser or
any of its Subsidiaries shall (i) liquidate, wind up or dissolve (or suffer any liquidation, wind-up or dissolution), (ii) suspend its operations other than in the ordinary course of business, or (iii) take any corporate action to
authorize any of the actions or events set forth above in this subsection (f). 
 (g) Default Under Other Indebtedness.
Purchaser or any of its Subsidiaries shall: 
 (i) fail to make any payment of any principal of, or interest or premium on,
any Indebtedness (other than in respect of the Acquisition Note) in an aggregate principal amount outstanding of at least $500,000 (or its equivalent in another currency) when due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness as of the date of such failure, provided that so long as such Indebtedness or the
non-payment thereof is being diligently contested in good faith by Purchaser, no Event of Default shall be triggered unless the party claiming that Purchaser has defaulted exercises some right or remedy or takes some action that would otherwise be a
Default or Event of Default under any of the Acquisition Documents; or 
 (ii) have any Indebtedness in an aggregate principal
amount outstanding of at least $500,000 be declared to be immediately due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof. 
 (h) Judgments. 
 (i) final, non-appealable judgment or order for the payment of money, where the portion payable by Purchaser (or any Subsidiary) and not a third-party insurance carrier is in excess of $1,000,000 shall be rendered against Purchaser or any
of its Subsidiaries (or its equivalent in another currency); or 
  

 25 

 (ii) any non-monetary judgment or court order shall be rendered against Purchaser or any
Subsidiary that has or could be reasonably expected to have a Material Adverse Effect; 
 and in each case there shall be any period of thirty
(30) consecutive days during which such judgment continues unsatisfied or during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect. 
 (i) Collateral Documents. It shall be an immediate Event of Default hereunder and not susceptible of cure should any of the
Collateral Documents after delivery thereof for any reason be revoked or invalidated, or otherwise cease to be in full force and effect (other than due to an action or inaction that was solely the fault of InterMune, and not the consequence of some
other default or breach of Purchaser under any of the Acquisition Documents), or Purchaser or any other Person shall contest in any manner the validity or enforceability thereof, or Purchaser or any other Person shall deny that it has any further
liability or obligation thereunder; or any of the Collateral Documents for any reason, except to the extent permitted by the terms thereof, shall cease to create a valid and perfected first priority Lien subject only to Permitted Liens in any of the
Collateral purported to be covered thereby (other than due to an action or inaction that was solely the fault of InterMune, and not the consequence of some other default or breach of Purchaser under any of the Acquisition Documents). 
 (j) Violation of Regulations, Etc. Notwithstanding anything to the contrary in this Agreement, and despite any representation,
warranty and covenant to the contrary set forth herein or in the other Acquisition Documents or the Disclosure Letter, in the event that Purchaser 
 (i) is in material violation of any law, rule, regulation, order, judgment, decree or the like reasonably expected to be binding on or affecting Purchaser; 
 (ii) lacks any authorization, consent, approval, license, exemption of, or filing or registration with, any governmental agency or
authority that is material to the Purchaser, or 
 (iii) lacks any material Permits, free from burdensome restrictions, that
are necessary for the ownership, maintenance or operation of Purchaser’s business, 
 then so long as any of the same, (A) if known on the
Closing Date, have been disclosed in the Disclosure Letter, and/or (B) if not known on the Closing Date, are promptly disclosed to InterMune once Purchaser has notice thereof, Purchaser shall have 120 days from the date Purchaser learns (or
should have learned) that the foregoing events have caused or can reasonably be expected to cause a Material Adverse Effect within which to effectuate a cure and reverse the Material Adverse Effect, thereby postponing the occurrence of an Event of
Default until such 120th day (if no cure is effected), notwithstanding that Purchaser may be in breach of the covenants contained in any of Sections 5.02(a)(ii) and/or 5.02(e) or any similar covenants relating to the matters referred to in
subsections (i), (ii), or (iii) of this Section 6.01(j). 
 (k) Amendment of Investor Convertible Notes. It
shall be an immediate Event of Default if the Investor Convertible Notes are amended in a manner that materially and adversely affects InterMune, except if InterMune shall have consented in advance and in writing to such amendment. 
  

 26 

 SECTION 6.02 Effect of Event of Default. If any Event of Default shall occur, InterMune may
(i) by notice to Purchaser, (A) declare its commitment to accept the Acquisition Note in place of the Acquisition Installment Payments to be terminated, upon which declaration such commitment to accept the Acquisition Note shall forthwith
terminate, and/or (B) declare the entire unpaid outstanding principal amount of the Acquisition Note and all interest accrued and unpaid on the foregoing and all other Obligations to be forthwith due and payable, whereupon the Acquisition Note
and all such accrued interest shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by Purchaser; provided that if an event described in
Section 6.01(f) or (g) shall occur, the result of which would otherwise occur only upon giving of notice by InterMune to Purchaser as specified in this clause (i) shall occur automatically, without the giving of any such notice; and
(ii) whether or not the actions referred to in clause (i) have been taken, (A) exercise any or all of InterMune’s rights and remedies under the Collateral Documents, and (B) proceed to enforce all other rights and remedies
available to InterMune under the Acquisition Documents and applicable law; and provided, further, that if an Event of Default occurs because of a breach of the covenant set forth in Section 5.02(j) and InterMune elects to exercise
its rights to the Collateral under Section 6 the Security Agreement, all obligations, whether outstanding or potentially arising in the future, owed to InterMune by Purchaser under the Acquisition Note shall immediately be released and
terminated. 
 ARTICLE VII 
 MISCELLANEOUS 
 SECTION 7.01 Amendments and Waivers. No amendment to any provision of the Acquisition Documents shall be
effective unless it is in writing and has been signed by InterMune and Purchaser, and no waiver of any provision of any Acquisition Document, or consent to any departure by Purchaser therefrom, shall be effective unless it is in writing and has been
signed by InterMune. Any such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 
 SECTION 7.02 Notices. All notices and other communications provided for hereunder and under the other Acquisition Documents shall, unless otherwise stated herein, be in writing (including by facsimile
transmission) and mailed, sent or delivered to the respective parties hereto at or to their respective addresses or facsimile numbers set forth below their names on the signature pages hereof, or at or to such other address or facsimile number as
shall be designated by any party in a written notice to the other party hereto. All such notices and communications shall be effective (i) if delivered by hand, when delivered; (ii) if sent by mail, upon the earlier of the date of receipt
or five Business Days after deposit in the mail, first class, postage prepaid; and (iii) if sent by facsimile transmission, when sent; provided, however, that notices and communications to InterMune pursuant to Article II shall
not be effective until received. 
  

 27 

 SECTION 7.03 No Waiver; Cumulative Remedies. No failure on the part of InterMune to exercise, and
no delay in exercising, any right, remedy, power or privilege under any Acquisition Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege. The rights and remedies under the Acquisition Documents are cumulative and not exclusive of any rights, remedies, powers and privileges that may otherwise be available
to InterMune. 
 SECTION 7.04 Costs and Expenses; Indemnity. 
 (a) Costs and Expenses. Purchaser agrees to pay on demand all costs and expenses of InterMune and its Affiliates, and fees and
disbursements of counsel, in connection with (A) any Default, (B) the enforcement or attempted enforcement of, and preservation of any rights or interests under, the Acquisition Documents (excluding the Asset Purchase Agreement because the
cost and expense provisions contained therein shall govern the Asset Purchase Agreement), and (C) any out-of-court workout or other refinancing or restructuring or any bankruptcy or insolvency case or proceeding. 
 (b) Treatment of Tax Liabilities. Each of InterMune and Purchaser shall be responsible for paying its own sales, use, transfer and
value added and other related taxes, if any, relating to this Agreement. 
 (c) Indemnification. Purchaser shall
indemnify, reimburse, defend and hold harmless InterMune, its Affiliates and their respective officers, directors, employees, agents, successors and assigns (each an “Indemnified Person”) from and against any and all Damages (as
defined in the Asset Purchase Agreement) on the terms set forth in the Asset Purchase Agreement, under which Purchaser shall be considered “Buyer” and InterMune shall be considered “Seller.” 
 SECTION 7.05 Currency. The United States dollar is the currency of account and payment for each and every sum at any time due from Purchaser
hereunder provided that each payment in respect of costs and expenses or Taxes shall be made in the currency in which the same were incurred. 
 SECTION 7.06 Survival. All covenants, agreements, representations and warranties made in any Acquisition Documents (excluding the Asset Purchase Agreement which shall not be governed or limited by this provision) shall, except to the
extent otherwise provided therein, survive the execution and delivery of this Agreement, the acceptance by InterMune of the Acquisition Note and the execution and delivery of the Acquisition Note, and shall continue in full force and effect so long
as InterMune has any commitment to accept the Acquisition Note in place of any Acquisition Installment Payment from Purchaser, the Acquisition Note remains outstanding or any other Obligations remain unpaid or any obligation to perform any other act
hereunder or under any other Acquisition Document remains unsatisfied. Without limiting the generality of the foregoing, the obligations of Purchaser under Section 7.04, and all similar obligations under the other Acquisition Documents
(including all obligations to pay costs and expenses and all indemnity obligations, excluding the Asset Purchase Agreement which shall not be governed or limited by this provision), and all confidentiality obligations shall survive the repayment of
the Acquisition Note and the termination of the commitment or InterMune to accept the Acquisition Note in place of any Acquisition Installment Payment. 
  

 28 

 SECTION 7.07 Benefits of Agreement. The Acquisition Documents are entered into for the sole
protection and benefit of the parties hereto and thereto and their successors and assigns, and no other Person shall be a direct or indirect beneficiary of, or shall have any direct or indirect cause of action or claim in connection with, any
Acquisition Document. 
 SECTION 7.08 Binding Effect; Assignment. This Agreement shall become effective when it shall have been
executed by Purchaser and InterMune and thereafter shall be binding upon, inure to the benefit of and be enforceable by Purchaser, InterMune and their respective successors and assigns. Purchaser shall not have the right to assign its rights and
obligations hereunder or under the other Acquisition Documents or any interest herein or therein without the prior written consent of InterMune, which consent shall not be unreasonably withheld, other than the assignment in connection with a
Liquidity Event of an obligation to issue an Acquisition Note. Any such purported assignment, transfer, hypothecation or other conveyance by Purchaser without the prior express written consent of InterMune shall be void. InterMune reserves the right
to sell, assign, transfer or grant participations in all or any portion of InterMune’s rights and obligations hereunder and under the other Acquisition Documents to any other Person in accordance with Section 4.02(b). In the event of any
such sale, assignment, transfer or grant (including of participation interests) by InterMune in accordance with Section 4.02(b) hereof, the assignee shall be deemed “InterMune” for all purposes of the Acquisition Documents with
respect to the rights and obligations assigned to it, and the obligations of InterMune so assigned shall thereupon terminate. Purchaser shall, from time to time upon request of InterMune, enter into such amendments to the Acquisition Documents and
execute and deliver such other documents as shall be necessary to effect any such sale, assignment, transfer or grant (including of participation interests). Purchaser agrees that in connection with any such sale, assignment, transfer or grant
(including of participation interests), InterMune may deliver to the prospective participant, assignee, purchaser, transferee or grantee financial statements and other relevant information relating to Purchaser and its Subsidiaries. InterMune shall
obtain from any such prospective participant, assignee, purchaser, transferee or grantee a confidentiality agreement in which such participant or assignee agrees to an obligation of confidentiality substantially similar to the terms of
Section 7.09 of this Agreement and Section 12.01 of the Asset Purchase Agreement. 
 SECTION 7.09 Confidentiality.

 (a) In addition to the restrictions contained in Section 7.12 of this Agreement, after the Closing Date no party to
this Agreement (a “Disclosing Party”) shall, without the prior written consent of the other Party (the “Non-disclosing Party”), disclose to any Person and Confidential Information (as defined below) of the
Non-disclosing party, except to a Disclosing Party’s employees or representatives who need to know such information in connection with the transactions contemplated hereby (and then only to the extent that such persons are under an obligation
to maintain the confidentiality of the Confidential Information) or use any Confidential Information of the Non-disclosing Party for any reason other than contemplated by this Agreement unless such Disclosing Party has used its best efforts to
(i) consult with the Non-disclosing Party and obtain the Non-disclosing Party’s prior written consent in a timely manner, and (ii) the Disclosing Party has been advised by counsel that disclosure is required to be made under
applicable law or the requirements of a national securities exchange or another similar regulatory body. In the event that the Disclosing Party is requested or required by documents 

  

 29 

 
subpoena, civil investigative demand, interrogatories, requests for information, or other similar process to disclose any Confidential Information, the
Disclosing Party shall provide the Non-disclosing Party with prompt notice of such request or demands or other similar process so that the Non-disclosing Party may seek an appropriate protective order or, if such request, demand or other similar
process is mandatory, waive the Disclosing Party’s compliance with the provisions of this Section 7.09(a) as appropriate. 
 (b) The term “Confidential Information” as used in this Section 7.09 means (i) as to Purchaser, the provisions and terms of this Agreement and the other Acquisition Documents, as well as all confidential
information relating to Purchaser’s business, and the Purchased Assets, and the Assumed Liabilities (as defined in the Asset Purchase Agreement), and (ii) as to InterMune, the provisions and terms of this Agreement and the other
Acquisition Documents, all confidential information relating to the Business (as defined in the Asset Purchase Agreement) other than information related solely to the business and operations of InterMune and its Affiliates, including the Excluded
Assets and the Excluded Liabilities (as those terms are defined in the Asset Purchase Agreement) or other obligations other than the Assumed Liabilities, in each of (i) and (ii) whether disclosed prior to or after the date hereof. The term
“Confidential Information” does not include information that becomes generally available to the public other than as a result of disclosure by the Disclosing Party, or becomes available to the Disclosing Party on a non-confidential
basis from a source other than the Non-disclosing Party, provided that such source is not bound by a confidentiality agreement with the Non-disclosing Party. 
 SECTION 7.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING
EFFECT TO CONFLICTS OF LAWS PRINCIPLES. 
 SECTION 7.11 Public Announcements. Neither Purchaser, InterMune nor any of their respective
Affiliates shall issue any press release or make any public announcement with respect to this Agreement and the transactions contemplated hereby without obtaining the prior written consent of the other party, which consent shall not be unreasonably
withheld, except as may be required by applicable law upon the advice of counsel and only if the disclosing Party provides the non-disclosing Party with an opportunity to first review the release or other public announcement. 
 SECTION 7.12 Entire Agreement. The Acquisition Documents reflect the entire agreement between Purchaser and InterMune with respect to the matters
set forth herein and therein and supersede any prior agreements, commitments, drafts, communication, discussions and understandings, oral or written, with respect thereto. 
 SECTION 7.13 Severability. Whenever possible, each provision of the Acquisition Documents shall be interpreted in such manner as to be effective
and valid under all applicable laws and regulations. If, however, any provision of any of the Acquisition Documents shall be prohibited by or invalid under any such law or regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed
modified to conform to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so modified, it shall be ineffective and invalid only to the extent of such prohibition or invalidity without affecting the remaining
provisions of such Acquisition Document, or the validity or effectiveness of such provision in any other jurisdiction. 
  

 30 

 SECTION 7.14 Counterparts. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. 
 [Remainder of Page Intentionally Left Blank.] 
  

 31 

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

			
	PURCHASER
	
	 TARGANTA THERAPEUTICS CORPORATION,
 a
Delaware corporation

		
	By:	 	/s/ Pierre Etienne
	Name: Pierre Etienne
	Title: President and Chief Executive Officer

  

	
	 7170 Frederick Banting
 2nd Floor
 St. Laurent, QC H4S
2A1
 Attention: President
 Facsimile:
(514) 332-6033

  

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

  

	
	 3280 Bayshore Blvd.
 Brisbane, California
94005
 Attention: General Counsel
 Facsimile:
(415) 466-2300

 [Signature Page to Note Issuance Agreement] 
  

 32

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