RETENTION PAYMENT AGREEMENT

Exhibit 10.2

RETENTION PAYMENT AGREEMENT

     The following agreement (the “Agreement”) between InterMune, Inc. and Robin Steele (“Executive”), provides for payment of specified sums as compensation (“Retention Payments”). This Agreement does not change the at-will nature of Executive’s employment.

     1.  Retention Payments. Executive shall be eligible to earn each Retention Payment listed below, by: (a) being employed on the date listed next to the Retention Payment; (b) not being in a PIP Period (“PIP Period” is defined in Paragraph 4(a) below) on the date listed next to the Retention Payment; and (c) if Executive has resigned or been given notice of termination without Cause (“Cause” is defined in Paragraph 4(b) below) but remains employed during a notice period, assisting in an Orderly Transition of Duties (“Orderly Transition of Duties” is defined in Paragraph 4(c) below). Notwithstanding condition (b), Executive shall be eligible to earn any Retention Payments not earned because Executive was in a PIP Period (“Suspended Payments”) by remaining employed by InterMune, Inc. through the expiration of the PIP Period, at which time any Suspended Payments will be paid to the Executive. Retention Payments are in addition to Executive’s regular compensation package and are not to be considered “bonus” compensation.

Date Retention Payment May Be Earned		Amount
May 31, 2007		$	35,000
October 31, 2007		$	50,000
June 30, 2008		$	50,000
January 31, 2009		$	50,000
April 1, 2009		$	15,000

     2.  Disposition of Suspended Payments and Remaining Unearned Retention Payments Upon Termination of Employment

          a. Voluntary Resignation/Termination for Cause. If Executive voluntarily resigns from employment with InterMune, Inc., or Executive’s employment is terminated with Cause, Executive shall not be eligible to receive Remaining Unearned Retention Payments (“Remaining Unearned Retention Payments” is defined at Paragraph 4(d) below) following the effective date of the resignation or termination for Cause. Executive shall not be eligible to earn any Suspended Payments if the effective date of either a voluntary resignation or termination for Cause occurs during a PIP Period.

          b. Termination of Employment Without Cause. In the event InterMune, Inc. terminates Executive’s employment without Cause or eliminates Executive’s position, InterMune, Inc. shall pay to Executive 100% of any Suspended Payments and/or Remaining Unearned Retention Payments. Any payment of Remaining Unearned Retention Payments under this Paragraph 2(b) shall be: (i) contingent upon Executive’s execution of a release of claims against InterMune, Inc., which release shall be in a form acceptable to InterMune, Inc. in its sole

discretion; and, (ii) made in a lump sum within ten (10) business days following Executive’s delivery to InterMune, Inc. of Executive’s signature upon such release.

          c. Termination Due to Death or Disability. Executive shall not be eligible to earn any Remaining Unearned Retention Payments or Suspended Payments in the event Executive dies before earning any Remaining Unearned Retention Payments or during a PIP Period. If Executive resigns due to incapacitation as a result of a long term medical disability or similar unforeseen circumstances, InterMune, Inc. may, in its sole discretion, pay to Executive any or all Remaining Unearned Retention Payments and/or Suspended Payments.

     3.  Effect of Change in Control. Except as provided in this Paragraph 3, this Agreement shall remain in effect upon a Change in Control (“Change in Control” is defined in Paragraph 4(e) below), and Executive shall remain eligible to earn Retention Payments as set forth above. However, if within 12 months of a Change in Control, Executive’s employment is terminated without Cause, or Executive resigns for “Good Reason” (“Good Reason” is defined in paragraph 4(f) below), then InterMune, Inc. or its successor shall pay to Executive any Remaining Unearned Retention Payments and Suspended Payments. Payment of Suspended Payments and/or Remaining Unearned Retention Payments under this Paragraph 3 shall be made in a lump sum within ten (10) business days following the effective date of the termination or resignation.

     4.  Definitions.

          a. PIP Period. For purposes of this Agreement, “PIP Period” shall mean the period commencing on the date an Executive becomes subject to a Performance Improvement Plan (“PIP”), and ending after sixty continuous days of employment with InterMune, Inc. following the removal of that PIP.

          b. Cause. For purposes of this Agreement, “Cause” shall mean any of the following:

	•		Willful refusal to follow lawful and reasonable corporate policy or a directive made by the CEO; or
	•		Willful failure to assist in Orderly Transition of Duties; or
	•		Willful failure, gross neglect or refusal to perform duties; or
	•		Failure to adequately perform job duties while on a PIP or to accomplish removal of a