Exhibit 10.48

 

THERAVANCE, INC.
2009 CHANGE IN CONTROL SEVERANCE PLAN
AND SUMMARY PLAN DESCRIPTION

 

(As adopted by the Board of Directors on December 16, 2009)

 

The Theravance, Inc. 2009 Change in Control Severance Plan (the “Plan”) is
primarily designed to provide separation pay and other benefits to
Theravance, Inc. (the “Corporation”) executives who meet the eligibility
requirements as set forth below (an “Eligible Executive”) and whose employment
is involuntarily terminated in connection with a change in control.

 

Eligible Executives will not be eligible for severance benefits under the
Company’s Amended and Restated Change in Control Severance Plan.

 

This Plan is designed to be an “employee welfare benefit plan,” as defined in
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).  This Plan is governed by ERISA and, to the extent applicable, the
laws of the State of California.  This document constitutes both the official
plan document and the required summary plan description under ERISA.

 

I.                                         ELIGIBILITY

 

You will be an Eligible Executive for severance benefits under the Plan if:

 

·                  you are an officer of the Corporation who was either
(i) hired after December 16, 2009 or (ii) promoted to an officer level position
after December 16, 2009;

 

·                  your active employment is Involuntarily Terminated other than
for Misconduct within the designated period following a Change in Control;

 

·                  you execute a waiver and general release of all claims in a
form provided by and acceptable to the Corporation as provided for in the
section entitled “Release and Waiver of Claims,” within the prescribed number of
days following your date of termination, as set forth in such release; and

 

·                  you are not in one of the excluded categories listed below.

 

You will not be an Eligible Executive for severance benefits under this Plan if:

 

·                  you are an independent contractor, a temporary employee,
part-time employee working fewer than 32 hours per week, probationary employee
or student employee;

 

·                  you are employed with a successor employer following a Change
in Control.  However, you would be eligible for severance benefits pursuant to
the terms of the Plan upon a subsequent Involuntary Termination other than for
Misconduct within the designated period following a Change in Control; or

 

·                  you are dismissed for Misconduct.

 

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II.                                     HOW THE PLAN WORKS

 

1.             SEVERANCE GUIDELINES

 

If you are an Eligible Executive and your employment is Involuntarily Terminated
within three (3) months before or twenty-four (24) months after a Change in
Control, you will be paid a Severance Payment calculated as follows:

 

If you were an officer of the Corporation immediately before the Change in
Control:

 

·                  100% of your combined Annual Base Pay and Target Bonus, plus

 

·                  A pro-rata portion of your current target bonus based on the
number of full months of employment completed in the applicable period on the
date of termination in such year of termination.

 

If you were senior vice president or an executive vice president of the
Corporation immediately before the Change in Control:

 

·                  150% of your combined Annual Base Pay and Target Bonus, plus

 

·                  A pro-rata portion of your current target bonus based on the
number of full months of employment completed in the applicable period on the
date of termination in such year of termination.

 

If you were the chief executive officer of the Corporation immediately before
the Change in Control:

 

·                  200% of your combined Annual Base Pay and Target Bonus, plus

 

·                  A pro-rata portion of your current target bonus based on the
number of full months of employment completed in the applicable period on the
date of termination in such year of termination.

 

Payments made under this Plan shall not be treated as “compensation” for
purposes of the Theravance, Inc. 401(k) Profit Sharing Plan.  An Eligible
Executive will also receive his unpaid salary through his termination date and a
lump sum payment for all accrued and unused vacation (through the termination
date) in a final paycheck provided on his last day of work.

 

The full amount of any balance and accrued interest remaining on any outstanding
loans owed by the Eligible Executive to the Corporation as of the date of
termination shall be forgiven in full immediately upon the Eligible Executive’s
Involuntary Termination.

 

The Severance Payment under this subsection 1 shall be paid in one lump sum from
the general assets of the Corporation on the first scheduled payroll date of the
Corporation following the latest of the following dates:  the Eligible
Executive’s last day of employment, the date the Corporation receives the
Eligible Executive’s signed release, or the date the revocation period (if any)
specified in the release expires.  If the release has not been signed by the
Eligible Executive and become effective by the date that is two and one-half
months after the end of the year in

 

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which employment ceases, then the Eligible Executive will cease to be eligible
for benefits under this Plan.

 

2.             GROUP INSURANCE COVERAGE

 

If an Eligible Executive becomes entitled to a Severance Payment under this
Plan, then the Corporation shall continue to provide all welfare benefits
provided on the date of termination to the Eligible Executive and, if
applicable, to the Eligible Executive’s dependents for the following periods:

 

·                  12 months if you were an officer of the Corporation
immediately before the Change in Control

 

·                  18 months if you were a senior vice president or an executive
vice president of the Corporation immediately before the Change in Control

 

·                  24 months if you were the chief executive officer of the
Corporation immediately before the Change in Control

 

The Corporation’s obligation to pay premiums or make contributions shall cease
when the Eligible Executive obtains new employment offering comparable welfare
benefits.  All welfare benefits, other than pursuant to COBRA, shall cease on
the last day of the second calendar year following the year in which the
separation from service occurs. The Corporation will pay the monthly premium
under COBRA for the Eligible Executive and, if applicable, his or her dependents
until the earliest of (a) the end of the period of 12, 18 or 24 months (as
applicable based on the formula set forth above) following the month in which
the Eligible Executive’s employment terminates or (b) the expiration of the
Eligible Executive’s continuation coverage under COBRA.

 

3.             EQUITY

 

IF AN ELIGIBLE EXECUTIVE BECOMES ENTITLED TO A SEVERANCE PAYMENT UNDER THIS
PLAN, THEN THE CORPORATION SHALL FULLY VEST THE OFFICER IN ALL OF HIS UNVESTED
SHARES AND OPTIONS, AND SUCH OPTIONS SHALL BECOME FULLY EXERCISABLE, AS OF THE
DATE OF TERMINATION.

 

4.             DEFINITIONS

 

Annual Base Pay shall mean the Eligible Executive’s base salary at the highest
rate in effect at any regularly scheduled payroll period preceding the
occurrence of the Change in Control and does not include, for example, bonuses,
overtime compensation, incentive pay, sales commissions or expense allowances.

 

Target Bonus shall mean the normal bonus amount that would be paid for achieving
100% of goals or MBOs as used in the applicable annual bonus plan.

 

Involuntary Termination shall mean the termination of the service of the
Eligible Executive which occurs by reason of:

 

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A.            SUCH INDIVIDUAL’S INVOLUNTARY DISMISSAL OR DISCHARGE BY THE
CORPORATION FOR REASONS OTHER THAN MISCONDUCT, OR

 

B.            SUCH INDIVIDUAL’S VOLUNTARY RESIGNATION FOLLOWING (I) A MATERIAL
DIMINUTION IN THE ELIGIBLE EXECUTIVE’S AUTHORITY, DUTIES OR RESPONSIBILITIES,
(II) A MATERIAL REDUCTION IN HIS OR HER BASE COMPENSATION, (III) A MATERIAL
CHANGE IN THE GEOGRAPHIC LOCATION AT WHICH HE OR SHE MUST PERFORM SERVICES FOR
THE CORPORATION OR (IV) ANY OTHER ACTION OR INACTION THAT CONSTITUTES A MATERIAL
BREACH BY THE CORPORATION OF THE AGREEMENT UNDER WHICH THE ELIGIBLE EXECUTIVE
PROVIDES SERVICES.  FOR THE ELIGIBLE EXECUTIVE TO RECEIVE THE BENEFITS UNDER
THIS PLAN AS A RESULT OF A VOLUNTARY RESIGNATION UNDER THIS CLAUSE B, ALL OF THE
FOLLOWING REQUIREMENTS MUST BE SATISFIED:  (1) THE ELIGIBLE EXECUTIVE MUST
PROVIDE NOTICE TO THE CORPORATION OF HIS OR HER INTENT TO ASSERT THIS CLAUSE B
WITHIN 90 DAYS OF THE INITIAL EXISTENCE OF ONE OR MORE OF THE CONDITIONS SET
FORTH IN SUBCLAUSES (I) THROUGH (IV); (2) THE CORPORATION WILL HAVE 30 DAYS FROM
THE DATE OF SUCH NOTICE TO REMEDY THE CONDITION AND, IF IT DOES SO, THE ELIGIBLE
EXECUTIVE MAY WITHDRAW HIS OR HER RESIGNATION OR MAY RESIGN WITH NO PLAN
BENEFITS; AND (3) ANY TERMINATION OF EMPLOYMENT UNDER THIS CLAUSE B MUST OCCUR
WITHIN TWO YEARS OF THE INITIAL EXISTENCE OF ONE OR MORE OF THE CONDITIONS SET
FORTH IN SUBCLAUSES (I) THROUGH (IV).  SHOULD THE CORPORATION REMEDY THE
CONDITION AS SET FORTH ABOVE AND THEN ONE OR MORE OF THE CONDITIONS ARISES AGAIN
WITHIN TWO YEARS FOLLOWING THE OCCURRENCE OF A CHANGE IN CONTROL, THE ELIGIBLE
EXECUTIVE MAY ASSERT THIS CLAUSE B AGAIN SUBJECT TO ALL OF THE CONDITIONS SET
FORTH HEREIN.

 

Misconduct shall mean the commission of any material act of fraud, embezzlement
or dishonesty by an individual, any material unauthorized use or disclosure by
such person of confidential information or trade secrets of the Corporation (or
any Parent or Subsidiary), or any other intentional material misconduct by such
person adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary).

 

Change in Control shall mean:

 

A.            THE CONSUMMATION OF A MERGER OR CONSOLIDATION OF THE CORPORATION
WITH OR INTO ANOTHER ENTITY OR ANY OTHER CORPORATE REORGANIZATION, IF PERSONS
WHO WERE NOT STOCKHOLDERS OF THE CORPORATION IMMEDIATELY PRIOR TO SUCH MERGER,
CONSOLIDATION OR OTHER REORGANIZATION OWN IMMEDIATELY AFTER SUCH MERGER,
CONSOLIDATION OR OTHER REORGANIZATION 50% OR MORE OF THE VOTING POWER OF THE
OUTSTANDING SECURITIES OF EACH OF (I) THE CONTINUING OR SURVIVING ENTITY AND
(II) ANY DIRECT OR INDIRECT PARENT CORPORATION OF SUCH CONTINUING OR SURVIVING
ENTITY;

 

B.            THE SALE, TRANSFER OR OTHER DISPOSITION OF ALL OR SUBSTANTIALLY
ALL OF THE CORPORATION’S ASSETS;

 

C.            A CHANGE IN THE COMPOSITION OF THE BOARD, AS A RESULT OF WHICH
FEWER THAN 50% OF THE INCUMBENT DIRECTORS ARE DIRECTORS WHO EITHER:

 

(I)                                     HAD BEEN DIRECTORS OF THE CORPORATION ON
THE DATE 24 MONTHS PRIOR TO THE DATE OF SUCH CHANGE IN THE COMPOSITION OF THE
BOARD (THE “ORIGINAL DIRECTORS”) OR

 

(II)                                  WERE APPOINTED TO THE BOARD, OR NOMINATED
FOR ELECTION TO THE BOARD, WITH THE AFFIRMATIVE VOTES OF AT LEAST A MAJORITY OF
THE AGGREGATE OF (A) THE

 

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ORIGINAL DIRECTORS WHO WERE IN OFFICE AT THE TIME OF THEIR APPOINTMENT OR
NOMINATION AND (B) THE DIRECTORS WHOSE APPOINTMENT OR NOMINATION WAS PREVIOUSLY
APPROVED IN A MANNER CONSISTENT WITH THIS CLAUSE (II); OR

 

D.            ANY TRANSACTION AS A RESULT OF WHICH ANY PERSON IS THE “BENEFICIAL
OWNER” (AS DEFINED IN RULE 13D-3 UNDER THE EXCHANGE ACT), DIRECTLY OR
INDIRECTLY, OF SECURITIES OF THE CORPORATION REPRESENTING AT LEAST 50% OF THE
TOTAL VOTING POWER REPRESENTED BY THE CORPORATION’S THEN OUTSTANDING VOTING
SECURITIES.  FOR PURPOSES OF THIS PARAGRAPH (D), THE TERM “PERSON” SHALL HAVE
THE SAME MEANING AS WHEN USED IN SECTIONS 13(D) AND 14(D) OF THE EXCHANGE ACT
BUT SHALL EXCLUDE (I) A TRUSTEE OR OTHER FIDUCIARY HOLDING SECURITIES UNDER AN
EMPLOYEE BENEFIT PLAN OF THE CORPORATION OR OF A PARENT OR SUBSIDIARY AND (II) A
CORPORATION OWNED DIRECTLY OR INDIRECTLY BY THE STOCKHOLDERS OF THE CORPORATION
IN SUBSTANTIALLY THE SAME PROPORTIONS AS THEIR OWNERSHIP OF THE COMMON STOCK OF
THE CORPORATION.

 

Except with respect to a GSK Change In Control (defined below), (i) any stock
purchase by SmithKline Beecham Corporation, a Pennsylvania corporation (“GSK”),
pursuant to the Class A Common Stock Purchase Agreement dated as of March 30,
2004 or (ii) the exercise by GSK of any of its rights under the Amended and
Restated Governance Agreement dated as of June 4, 2004 among the Corporation,
GSK, GlaxoSmithKline plc and Glaxo Group Limited, as amended (the “Governance
Agreement”) to representation on the Board (and its committees) or (iii) any
acquisition by GSK of securities of the Company (whether by merger, tender
offer, private or market purchases or otherwise) not prohibited by the
Governance Agreement shall not constitute a Change in Control.  A transaction
shall not constitute a Change in Control if its sole purpose is to change the
state of the Corporation’s incorporation or to create a holding company that
will be owned in substantially the same proportions by the persons who held the
Corporation’s securities immediately before such transaction.  A “GSK Change In
Control” shall mean the acquisition by GSK of the Company’s Voting Stock (as
defined in the Governance Agreement) that would bring GSK’s Percentage Interest
(as defined in the Governance Agreement) to 100% in compliance with the
provisions of the Governance Agreement.

 

5.             GOLDEN PARACHUTE TAX LIMITATION

 

The Internal Revenue Code imposes a 20% excise tax on certain payments and other
benefits received by certain officers and shareholders in connection with a
change of control involving the Corporation.  Such payments can include
severance pay, loan forgiveness and acceleration of option vesting.

 

Basic Rule

 

In the event that it is determined that any payment or distribution of any type
to or for the benefit of the Eligible Executive made by the Corporation, by any
of its affiliates, by any person who acquires ownership or effective control of
the Corporation or ownership of a substantial portion of the Corporation’s
assets (within the meaning of section 280G of the Code and the regulations
thereunder) or by any affiliate of such person, whether paid or payable or
distributed or distributable pursuant to the terms of this Plan or under any
other agreement including an Eligible Executive’s stock option agreement and
including loan forgiveness (the “Total Payments”), would be subject to the
excise tax imposed by section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such

 

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interest or penalties, are collectively referred to as the “Excise Tax”), then
the Total Payments shall be made to the Eligible Executive either (i) in full or
(ii) as to such lesser amount as would result in no portion of the Total
Payments being subject to Excise Tax (a “Reduced Payment”), whichever of the
foregoing results in the receipt by the Eligible Executive on an after-tax
basis, of benefits of the greatest value, notwithstanding that all or some
portion of the Total Payments may be subject to the Excise Tax.

 

Reduction of Payments

 

For purposes of determining whether to make a Reduced Payment, the Corporation
shall cause to be taken into account all federal, state and local income and
employment taxes and excise taxes applicable to the Eligible Executive
(including the Excise Tax).  If a Reduced Payment is made, the Corporation shall
reduce or eliminate the Total Payments in the following order: (1) cancellation
of accelerated vesting of stock options with no intrinsic value, (2) reduction
of cash payments, (3) cancellation of accelerated vesting of equity awards other
than stock options, (4) cancellation of accelerated vesting of stock options
with intrinsic value and (5) reduction of other benefits paid to the Eligible
Executive.  In the event that acceleration of vesting is reduced, such
acceleration of vesting shall be cancelled in the reverse order of the date of
grant of the Eligible Executive’s equity awards.  In the event that cash
payments or other benefits are reduced, such reduction shall occur in reverse
order beginning with payments or benefits which are to be paid the farthest in
time from the date of the Determination (as defined below).  For avoidance of
doubt, an option will be considered to have no intrinsic value if the exercise
price of the shares subject to the option exceeds the fair market value of such
shares.

 

All mathematical determinations and all determinations of whether any of the
Total Payments are “parachute payments” (within the meaning of Section 280G of
the Code) shall be made by an independent accounting firm selected by the
Corporation (the “Accounting Firm”), which shall provide its determination (the
“Determination”), together with detailed supporting calculations, both to the
Corporation and to the Eligible Executive within seven business days of the
Eligible Executive’s termination date, if applicable, or such earlier time as is
requested by the Corporation or by the Eligible Executive (if the Eligible
Executive reasonably believes that any of the Total Payments may be subject to
Excise Tax).  In any event, as promptly as practicable following the Accounting
Firm’s Determination, the Corporation shall pay or transfer to or for the
benefit of the Eligible Executive such amounts as are then due to him or her and
shall promptly pay or transfer to or for the benefit of the Eligible Executive
in the future such amounts as become due to him or her.  Any determination by
the Accounting Firm shall be binding upon the Corporation and the Eligible
Executive, absent manifest error.

 

Underpayments and Overpayments.

 

As a result of uncertainty in the application of Sections 4999 and 280G of the
Code at the time of an initial Determination by the Accounting Firm hereunder,
it is possible that payments will have been made by the Corporation which should
not have been made (an “Overpayment”) or that additional payments which will not
have been made by the Corporation could have been made (an “Underpayment”),
consistent in each case with the calculation of whether and to what extent a
Reduced Payment shall be made hereunder.  In either event, the Accounting Firm
shall determine the amount of the Overpayment or Underpayment that has
occurred.  In the event that the Accounting Firm determines that an Overpayment
has occurred, such Overpayment shall be

 

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treated for all purposes as a loan to the Eligible Executive that he or she
shall repay to the Corporation, together with interest at the applicable federal
rate provided in Section 7872(f)(2) of the Code; provided, however, that no
amount shall be payable by the Eligible Executive to the Corporation if and to
the extent that such payment would not reduce the amount that is subject to
taxation under Section 4999 of the Code.  In the event that the Accounting Firm
determines that an Underpayment has occurred, such Underpayment shall promptly
be paid or transferred by the Corporation to or for the benefit of the Eligible
Executive, together with interest at the applicable federal rate provided in
section 7872(f)(2) of the Code.

 

If this Section 5 is applicable, it shall supersede any contrary provision of
any plan, arrangement or agreement governing the Eligible Executive’s rights to
the Total Payments.

 

6.             MANDATORY DEFERRAL OF PAYMENTS.

 

This Section 6 shall only apply if the Corporation determines that the Eligible
Executive is a “specified employee” under Section 409A(a)(2)(B)(i) of the Code
and the regulations thereunder when his or her employment terminates.  If this
Section 6 applies, it shall supersede any contrary provision of this Agreement. 
To the extent that no exemption from Section 409A of the Code is available for
the benefits under Section 1 or 2, such payments shall commence on the earliest
practicable date that occurs more than six months after the Eligible Executive’s
employment terminates.  The severance payments or benefits that otherwise would
have been made during the first six months following the termination date shall
be paid in a lump sum on the first day of the seventh month after the
termination date.

 

III.                                 OTHER IMPORTANT INFORMATION

 

1.                                      RELEASE AND WAIVER OF CLAIMS.  ANY OTHER
PROVISION OF THIS PLAN NOTWITHSTANDING, AN ELIGIBLE EXECUTIVE SHALL NOT BE
ENTITLED TO RECEIVE ANY SEVERANCE PAYMENT, OTHER PAYMENT, OR BENEFIT UNDER THIS
PLAN UNLESS SUCH ELIGIBLE EXECUTIVE HAS EXECUTED A WAIVER OF CLAIMS AND A
GENERAL RELEASE OF ALL CLAIMS IN FAVOR OF THE CORPORATION AND ITS AFFILIATES. 
SUCH RELEASE SHALL BE EXECUTED ON A FORM PROVIDED BY AND ACCEPTABLE TO THE
CORPORATION.  THE CORPORATION SHALL COMPLETE THE FORM OF RELEASE AND DELIVER IT
TO THE ELIGIBLE EXECUTIVE WITHIN 30 DAYS AFTER HIS OR HER EMPLOYMENT
TERMINATES.  THE FORM OF THE RELEASE WILL SPECIFY HOW MUCH TIME SUCH ELIGIBLE
EXECUTIVE HAS TO SIGN IT AND WHETHER THERE IS A REVOCATION PERIOD.

 

2.                                      PLAN ADMINISTRATION.  AS THE PLAN
ADMINISTRATOR, THE CORPORATION HAS FULL DISCRETIONARY AUTHORITY TO ADMINISTER
AND INTERPRET THE PLAN, INCLUDING DISCRETIONARY AUTHORITY TO DETERMINE
ELIGIBILITY FOR BENEFITS UNDER THE PLAN AND THE AMOUNT OF BENEFITS (IF ANY)
PAYABLE PER PARTICIPANT. ANY DETERMINATION BY THE PLAN ADMINISTRATOR WILL BE
FINAL AND CONCLUSIVE UPON ALL PERSONS.  THE PLAN ADMINISTRATOR HEREBY DELEGATES
TO THE CHIEF FINANCIAL OFFICER ALL OF ITS ADMINISTRATIVE DUTIES.  ACCORDINGLY,
THE CHIEF FINANCIAL OFFICER, ON BEHALF OF THE PLAN ADMINISTRATOR, HAS FULL
DISCRETIONARY AUTHORITY TO CARRY OUT ITS DELEGATED DUTIES.  ANY DETERMINATION BY
THE CHIEF FINANCIAL OFFICER WILL BE FINAL AND CONCLUSIVE UPON ALL PERSONS.  THE
CORPORATION, AS THE PLAN ADMINISTRATOR, WILL INDEMNIFY AND HOLD HARMLESS THE
CHIEF FINANCIAL OFFICER FOR CARRYING OUT THE RESPONSIBILITIES OF THE PLAN
ADMINISTRATOR; PROVIDED, HOWEVER, SUCH PERSON DOES NOT ACT WITH GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT.

 

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3.                                      BENEFITS.  THE CORPORATION IS NOT
REQUIRED TO ESTABLISH A TRUST TO FUND THE PLAN.  THE BENEFITS PROVIDED UNDER
THIS PLAN ARE NOT ASSIGNABLE AND MAY BE CONDITIONED UPON YOUR COMPLIANCE WITH
ANY CONFIDENTIALITY AGREEMENT YOU HAVE ENTERED INTO WITH THE CORPORATION.

 

4.                                      CLAIMS PROCEDURE.  IF YOU BELIEVE YOU
ARE INCORRECTLY DENIED A BENEFIT OR ARE ENTITLED TO A GREATER BENEFIT THAN THE
BENEFIT YOU RECEIVE UNDER THE PLAN, YOU MAY SUBMIT A SIGNED, WRITTEN APPLICATION
TO THE PLAN ADMINISTRATOR WITHIN NINETY (90) DAYS OF YOUR TERMINATION DATE OR,
IN THE CASE OF A DISPUTE INVOLVING A REDUCED PAYMENT, THE DATE ON WHICH A
DETERMINATION IS MADE REGARDING A REDUCED PAYMENT.  YOU WILL BE NOTIFIED OF THE
APPROVAL OR DENIAL OF THIS CLAIM WITHIN NINETY (90) DAYS OF THE DATE THAT THE
PLAN ADMINISTRATOR RECEIVES THE CLAIM, UNLESS SPECIAL CIRCUMSTANCES REQUIRE AN
EXTENSION OF TIME FOR PROCESSING THE CLAIM.  IF YOUR CLAIM IS DENIED, THE
NOTIFICATION WILL STATE SPECIFIC REASONS FOR THE DENIAL AND YOU WILL HAVE SIXTY
(60) DAYS FROM RECEIPT OF THE WRITTEN NOTIFICATION OF THE DENIAL OF YOUR CLAIM
TO FILE A SIGNED, WRITTEN REQUEST FOR A REVIEW OF THE DENIAL WITH THE PLAN
ADMINISTRATOR.  THIS REQUEST SHOULD INCLUDE THE REASONS YOU ARE REQUESTING A
REVIEW, FACTS SUPPORTING YOUR REQUEST AND ANY OTHER RELEVANT COMMENTS.  PURSUANT
TO ITS DISCRETIONARY AUTHORITY TO ADMINISTER AND INTERPRET THE PLAN AND TO
DETERMINE ELIGIBILITY FOR BENEFITS UNDER THE PLAN, THE PLAN ADMINISTRATOR WILL
GENERALLY MAKE A FINAL, WRITTEN DETERMINATION OF YOUR ELIGIBILITY FOR BENEFITS
WITHIN SIXTY (60) DAYS OF RECEIPT OF YOUR REQUEST FOR REVIEW.

 

5.                                      PLAN TERMS.  THIS PLAN SUPERSEDES ANY
AND ALL PRIOR SEPARATION, SEVERANCE AND SALARY CONTINUATION ARRANGEMENTS,
PROGRAMS AND PLANS WHICH WERE PREVIOUSLY OFFERED BY THE CORPORATION RELATING TO
A CHANGE IN CONTROL EVENT, FOR WHICH YOU ARE ELIGIBLE (INCLUDING, WITHOUT
LIMITATION, THE COMPANY’S AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE
PLAN), BUT EXCLUDING TERMS OF THE CORPORATION’S STOCK OPTION PLANS AND
INDIVIDUAL LETTER AGREEMENTS WHICH ADDRESS THE VESTING OF STOCK OPTIONS OR
RESTRICTED STOCK.  IN NO EVENT SHALL AN ELIGIBLE EXECUTIVE RECEIVE CASH
SEVERANCE BENEFITS UNDER THIS PLAN FOLLOWING A CHANGE IN CONTROL EVENT AND UNDER
ANY OTHER PLAN (INCLUDING, WITHOUT LIMITATION, THE COMPANY’S AMENDED AND
RESTATED CHANGE IN CONTROL SEVERANCE PLAN), PROGRAM OR ARRANGEMENT.

 

6.                                      PLAN AMENDMENT OR TERMINATION.  THE
CORPORATION, ACTING THROUGH ITS BOARD OF DIRECTORS OR ITS COMPENSATION
COMMITTEE, RESERVES THE RIGHT TO TERMINATE OR AMEND THE PLAN AT ANY TIME AND IN
ANY MANNER.  ANY TERMINATION OR AMENDMENT OF THE PLAN MAY BE MADE EFFECTIVE
IMMEDIATELY WITH RESPECT TO ANY BENEFITS NOT YET PAID, WHETHER OR NOT PRIOR
NOTICE OF SUCH AMENDMENT OR TERMINATION HAS BEEN GIVEN TO AFFECTED EMPLOYEES. 
HOWEVER, NO AMENDMENT OR TERMINATION MAY BE APPROVED FOLLOWING THE EXECUTION OF
A DEFINITIVE AGREEMENT TO EFFECT ANY CHANGE IN CONTROL INVOLVING THE CORPORATION
WITHOUT THE CONSENT OF 75% OF THE THEN PARTICIPATING ELIGIBLE EXECUTIVES.

 

7.                                      TAXES.  EXCEPT AS SET FORTH HEREIN, THE
CORPORATION WILL WITHHOLD TAXES AND OTHER PAYROLL DEDUCTIONS FROM ANY SEVERANCE
PAYMENT.

 

8.                                      NO RIGHT TO EMPLOYMENT.  THIS PLAN DOES
NOT PROVIDE YOU WITH ANY RIGHT TO CONTINUE EMPLOYMENT WITH THE CORPORATION OR
AFFECT THE CORPORATION’S RIGHT, WHICH RIGHT IS HEREBY EXPRESSLY RESERVED, TO
TERMINATE THE EMPLOYMENT OF ANY INDIVIDUAL AT ANY TIME FOR ANY REASON WITH OR
WITHOUT CAUSE.

 

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IV.                                STATEMENT OF ERISA RIGHTS

 

As a participant in the Plan, you are entitled to certain rights and protections
under ERISA.  ERISA provides that all Plan participants shall be entitled to:

 

1.                                       Examine, without charge, at the Plan
Administrator’s office, all Plan documents, including all documents filed by the
Plan with the U.S. Department of Labor.

 

2.                                       Obtain copies of all Plan documents and
other Plan information upon written request to the Plan Administrator.  The Plan
Administrator may make a reasonable charge for the copies.

 

3.                                       File suit in a federal court, if you,
as a participant, request materials and do not receive them within thirty (30)
days of your request.  In such a case, the court may require the Plan
Administrator to provide the materials and to pay you a fine of up to $100 for
each day’s delay until the materials are received, unless the materials were not
sent because of reasons beyond the control of the Plan Administrator.

 

In addition to creating rights for certain employees of the Corporation under
the Plan, ERISA imposes obligations upon the people who are responsible for the
operation of the Plan.  The people who operate the Plan (called “fiduciaries”)
have a duty to do so prudently and in the interest of the Corporation’s
employees who are covered by the Plan.

 

No one, including your employer or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining a benefit to
which you are entitled under the Plan or from exercising your rights under
ERISA.

 

If your claim for a severance benefit is denied or ignored, in whole or in part,
you have a right to file suit in a federal or a state court.  If Plan
fiduciaries are misusing the Plan’s assets (if any) or if you are discriminated
against for asserting your rights, you may seek assistance from the U.S.
Department of Labor or file suit in a federal court.  The court will decide who
will pay court costs and legal fees.  If you are successful in your lawsuit, the
court may, if it so decides, order the party you have sued to pay your legal
costs, including attorney fees.  However, if you lose, the court may order you
to pay these costs and fees, for example, if it finds that your claim or suit is
frivolous.

 

If you have any questions about the Plan, this statement or your rights under
ERISA, you should contact the Plan Administrator or the nearest Area Office of
the U.S. Labor-Management Services Administration, Department of Labor.

 

ADDITIONAL PLAN INFORMATION

 

Name of Plan:

 

Theravance, Inc. 2009 Change in Control Severance Plan

 

 

 

Corporation Sponsoring Plan:

 

Theravance, Inc.
901 Gateway Boulevard
South San Francisco, CA 94080
650-808-6000

 

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Employer Identification Number:

 

94-3265960

 

 

 

Plan Number:

 

507

 

 

 

Plan Year:

 

The calendar year; the first plan year shall end December 31, 2009

 

 

 

Plan Administrator:

 

Theravance, Inc.
901 Gateway Boulevard
South San Francisco, CA 94080
650-808-6000

 

 

 

Agent for Service of Legal Process:

 

Plan Administrator

 

 

 

Type of Plan:

 

Severance Plan/Employee Welfare Benefit Plan

 

 

 

Plan Costs:

 

The cost of the Plan is paid by Theravance, Inc.

 

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