Exhibit 10.52

 

THERAVANCE, INC. 2004 EQUITY INCENTIVE PLAN:

PERFORMANCE CASH AWARD AGREEMENT

 

You have been granted a Performance Cash Award by Theravance, Inc. (the
“Company”) on the terms set forth in this Performance Cash Award Agreement (the
“Agreement”):

 

Name:

«Name»

 

 

Performance Cash Award Details:

 

 

Date of Grant:

«DateGrant»

Base Amount:

$«BaseAmount»

Maximum Amount:

$«MaxAmount»

Base Value:

$«BaseValue»

Expiration Date:

«ExpirationDate»

 

Grant of Award

 

This Performance Cash Award is granted under and governed by the terms and
conditions of the Theravance, Inc. 2004 Equity Incentive Plan (the “Plan”) and
represents the right to receive one or more cash payments (each, a “Payment”),
subject to the terms and conditions set forth in this Agreement and the Plan.

 

Certain capitalized terms are defined in the Section of this Agreement entitled
“Definitions”. Capitalized terms not otherwise defined herein have the meaning
ascribed to such terms in the Plan.

 

 

 

Vesting

 

Your right to receive the Payments is subject to vesting based on the
achievement of both the performance-based conditions and service-based
conditions set forth on Exhibit A, both of which must be satisfied in order for
a Payment to vest.

 

A Payment will be considered “vested” when both the performance-based conditions
and service-based conditions applicable to the Payment have been satisfied, or
when a Payment vests in accordance with the post-Change in Control vesting rules
set forth in the Section below entitled “Change in Control.”

 

In no event will the aggregate Payments under this Award exceed the Maximum
Amount specified above. In addition, if the Maximum Amount is greater than
$2,000,000, in no event will you be paid more than $2,000,000 per fiscal year
under this award. In the event that the vesting schedule set forth in this
Agreement results in Payments in excess of $2,000,000 in a fiscal year, the
excess will be forfeited.

 

It is intended that the vesting schedule applicable to the Payments is
commensurate with a full-time work schedule. For possible adjustments that may
be made by the Company, see the Section below entitled “Leaves of

 

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Absence and Part-Time Work.”

 

 

 

Change in Control

 

If the Company is subject to a Change in Control prior to the Expiration Date,
the following rules will apply to the portion of this award that is unvested as
of the date of the Change in Control:

 

·                  If the performance-based conditions applicable to a Payment
have been achieved prior to the Change in Control, but the service-based
conditions applicable to such Payment have not yet been achieved as of the date
of the Change in Control, that Payment (a, “Pre-CIC Performance Payment”) will
remain eligible to vest based on the applicable service-based conditions.

 

·                  If the performance-based conditions applicable to any
remaining Payments have not been achieved as of the date of the Change in
Control, then such Payments (collectively, the “Remaining Amount”) will be
reduced (such reduced amount, the “Retention Amount”) and the balance of the
Remaining Amount will be forfeited as follows:

 

·                  If the Change in Control Value is less than or equal to the
Base Value, then the Retention Amount will be $0 and 100% of the Remaining
Amount will be forfeited as of the date of the Change in Control;

 

·                  If the Change in Control Value is greater than the Base Value
but less than two times the Base Value, then the Retention Amount will be equal
to 1% of the Remaining Amount for each 1% (rounded down to the nearest whole
percent) that the Change in Control Value is greater than the Base Value and the
remainder of the Remaining Amount will be forfeited as of the date of the Change
in Control; and

 

·                  If the Change in Control Value is equal to or greater than
two times the Base Amount, the Retention Amount will be equal to the Remaining
Amount and no portion of such amount will be forfeited.

 

·                  In lieu of the performance-based conditions and service-based
conditions set forth on Exhibit A, the following vesting schedule will apply to
the Retention Amount after the Change in Control: 50% of the Retention Amount
will vest on the one-year anniversary of the Change in Control and the remaining
50% of the Retention Amount will vest on the two-year anniversary of the Change
in Control, subject to your continuous Service through the applicable vesting
date.

 

·                  If you are subject to an Involuntary Termination within 3
months

 

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prior to or 24 months after a Change in Control, provided you execute a Release,
you will become vested in (i) any unvested Pre-CIC Performance Payments and (ii)
any unvested portion of the Retention Amount. If you do not sign and return a
Release, and the Release does not become effective, on or before the date
specified by the Company, then no vesting will occur as a result of your
Involuntary Termination. Notwithstanding the definitions of “Pre-CIC Performance
Payment,” “Remaining Amount” and “Retention Amount” set forth above, in the
event of an Involuntary Termination within 3 months prior to a Change in
Control, the amount of any Pre-CIC Performance Payment, the Remaining Amount and
the Retention Amount will be determined based on the achievement of the
applicable performance-based conditions as of the date of your Involuntary
Termination.

 

 

 

Termination of Service and Forfeiture

 

No additional Payments will vest after your Service has terminated for any
reason, except as set forth above in the event of an Involuntary Termination
within 3 months prior to a Change in Control (in which case vesting will occur
on the date of the Change in Control).

 

If your Service terminates for any reason, then any portion of this award that
has not vested before the termination date and does not vest as a result of the
termination of your Service pursuant to this Agreement will be forfeited. The
Company determines when your Service terminates for this purpose.

 

Even if your Service has not terminated, unless a Change in Control occurs prior
to the Expiration Date, any unvested Payments will be forfeited on the
Expiration Date. Notwithstanding the foregoing, if the performance-based
conditions applicable to a Payment were achieved prior to the Expiration Date,
the Payment will remain eligible to vest based on the service-based conditions
applicable to the Payment.

 

In addition, a portion of this award may be forfeited in connection with a
Change in Control as described in the Section entitled “Change in Control.”

 

 

 

Leaves of Absence and Part-Time Work

 

For purposes of this award, your Service does not terminate when you go on a
military leave, a sick leave or another bona fide leave of absence, if the leave
was approved by the Company in writing. If your leave of absence (other than a
military leave) lasts for more than 6 months, then vesting will be suspended on
the day that is 6 months and 1 day after the leave of absence began. Vesting
will resume as of the second Company Vesting Date after you return from leave of
absence provided you have worked at least one day during that vesting period. In
this regard, if the Compensation Committee certifies achievement of the
performance-based conditions applicable to a Payment while vesting is suspended,
then the performance-based conditions applicable to the Payment will be deemed
achieved on the date vesting resumes and the service-based conditions applicable
to the Payment will be measured from

 

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such date.

 

In the case of all leaves, your Service terminates when the approved leave ends,
unless you immediately return to active work.

 

If you and the Company agree to a reduction in your scheduled work hours, then
the Company reserves the right to modify the rate at which the Payments vest, so
that the rate of vesting is commensurate with your reduced work schedule. Any
such adjustment shall be consistent with the Company’s policies for part-time or
reduced work schedules or shall be pursuant to the terms of an agreement between
you and the Company pertaining to your reduced work schedule.

 

The Company shall not be required to make any adjustments pursuant to this
Section.

 

 

 

Payment of Award

 

A vested Payment will be paid to you as soon as practicable, but in any event
within 60 days, after vesting. The actual payment date will be selected by the
Company in its sole discretion. In addition, if vesting of a Payment is
contingent on your execution of a Release and the 60 day payment period
described above spans two calendar years, then the Payment will in any event be
made in the second calendar year. The Company will reduce the amount of any
Payment by the amount of any withholding taxes that apply to the Payment.

 

 

 

[Include if applicable:]

 

Golden Parachute Limitation

 

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

 

Basic Rule

 

In the event that it is determined that any payment or distribution of any type
to or for your benefit made by the Company, by any of its affiliates, by any
person who acquires ownership or effective control of the Company or ownership
of a substantial portion of the Company’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 Agreement or under any other agreement including your equity award
agreements (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 interest or penalties, are
collectively referred to as the “Excise Tax”), then the Total Payments shall be
made to you 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 your receipt on an after-tax
basis, of benefits of the greatest value, notwithstanding that all or some

 

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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 Company shall
cause to be taken into account all federal, state and local income and
employment taxes and excise taxes applicable to you (including the Excise Tax).
If a Reduced Payment is made, the Company 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 you. 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 your 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
Company (the “Accounting Firm”), which shall provide its determination (the
“Determination”), together with detailed supporting calculations, both to you
and the Company within seven business days of the date your Service terminates,
if applicable, or such earlier time as is requested by the Company or by you (if
you reasonably believe 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 Company shall pay or transfer to or for your benefit such
amounts as are then due to you and shall promptly pay or transfer to or for your
benefit in the future such amounts as become due to you. Any determination by
the Accounting Firm shall be binding upon you and the Company, 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 Company which should not
have been made (an “Overpayment”) or that additional payments which will not
have been made by the Company 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

 

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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 treated for all purposes as a loan to you that you shall repay to the
Company, 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 you to the Company 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 Company to or for
your benefit, together with interest at the applicable federal rate provided in
section 7872(f)(2) of the Code.

 

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

 

 

 

Unfunded Status of Award

 

The Company’s obligations hereunder are unfunded and unsecured, and you have no
rights other than the rights of a general creditor of the Company.

 

 

 

No Assignment of Benefits

 

You may not sell, assign, transfer, pledge or otherwise dispose of any rights
under this Agreement other than by will or by the laws of descent and
distribution.

 

 

 

No Retention Rights

 

Your award or this Agreement does not give you the right to be employed or
retained by the Company (or a Parent, Subsidiary or Affiliate) in any capacity.
The Company and its Parent, Subsidiaries and Affiliates reserve the right to
terminate your Service at any time, with or without cause.

 

 

 

Company’s Successors

 

This Agreement shall be binding upon any successor (whether direct or indirect
and whether by purchase, merger, consolidation, Change in Control or otherwise)
to all or substantially all of the Company’s business and/or assets. For all
purposes under this Agreement, the term “Company” shall include any successor to
the Company’s business and/or assets that becomes bound by this Agreement.

 

 

 

Section 409A

 

Payments under this award are intended to be exempt from the application of
Section 409A of the Code by virtue of Treasury Regulation 1.409A-1(b)(4) and any
ambiguities herein will be interpreted consistent with that intent.

 

Notwithstanding the foregoing, if no exemption is available for one or more
payments under this award and if the Company determines that you are a
“specified employee” (as defined in the regulations under Code Section 409A) at
the time of your “separation from service” (as defined in those regulations),
then any such payments that would otherwise have been made within six months
after your separation from service will instead be made on the first business
day following the six-month anniversary of your separation from

 

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service, unless the event triggering vesting is an event other than your
separation from service.

 

For purposes of Code Section 409A, each payment to be made under this award is
hereby designated as a separate payment.

 

 

 

Applicable Law

 

This Agreement will be interpreted and enforced with respect to issues of
contract law under the laws of the State of California.

 

 

 

The Plan and Other Agreements

 

The text of the Plan is incorporated in this Agreement by reference. A copy of
the Plan is available on the Company’s intranet or by request to the Finance
Department.

 

This Agreement and the Plan constitute the entire understanding between you and
the Company regarding this award. Any prior agreements, commitments or
negotiations concerning this award are superseded. This Agreement may be amended
only by another written agreement between the parties.

 

 

 

Definitions:

 

 

 

 

 

Base Value

 

“Base Value” means the Base Value specified in this Agreement, which is equal to
the closing price of the Company’s Common Stock on                    , 20    .
In the event of a stock split or any other event described in Section 11.1 of
the Plan, a corresponding adjustment will be made in the Base Value.

 

 

 

Change in Control

 

“Change in Control” shall have the meaning set forth in the Plan, provided that
the transaction or occurrence also constitutes a “change in control event” under
Treasury Regulation 1.409A-3(a)(5).

 

 

 

Change in Control Value

 

“Change in Control Value” means the total per share value to be received by a
holder of the Company’s Common Stock in a Change in Control, determined as of
the closing date of the Change in Control. Any non-cash transaction proceeds
will be valued by the Compensation Committee in good faith using, if applicable,
the same valuation methodology set forth in the definitive agreement evidencing
the Change in Control. To the extent not all of the transaction proceeds will be
paid at closing (for example, because of an escrow or earn-out arrangement), the
Compensation Committee will take into account reasonable discounts for the time
value of money, the risk of forfeiture or non-achievement of future payment
milestones and other contingencies in order to determine the Change in Control
Value as of the closing date. The Compensation Committee’s good faith
determination of the Change in Control Value will be final and binding.

 

 

 

Company Vesting Date

 

“Company Vesting Date” means February 20, May 20, August 20 or November 20.

 

 

 

Involuntary Termination

 

“Involuntary Termination” means a termination of your Service which occurs by
reason of (i) an involuntary dismissal or discharge by the

 

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Company for reasons other than Misconduct or (ii) your voluntary resignation
following (A) a material diminution in your authority, duties or
responsibilities, (B) a material reduction in your base compensation, (C) a
material change in the geographic location at which you must perform services
for the Company or (D) any other action or inaction that constitutes a material
breach by the Company of the agreement under which you provide services,
provided that, in either case, a “separation from service” (as defined in the
regulations under Code Section 409A) occurs. In order for vesting to accelerate
under this Agreement as a result of your voluntary resignation under clause
(ii), all of the following requirements must be satisfied: (1) you must provide
notice to the Company of your intent to assert clause (ii) within 90 days of the
initial existence of one or more of the conditions set forth in subclauses (A)
through (D), (2) the Company will have 30 days from the date of such notice to
remedy the condition and, if it does so, you may withdraw your resignation or
resign without any vesting acceleration under this Agreement, and (3) any
termination of employment under clause (ii) must occur within two years of the
initial existence of one or more of the conditions set forth in subclauses (A)
through (D). Should the Company 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, you may assert clause (ii) again subject to
all of the conditions set forth herein.

 

 

 

Misconduct

 

“Misconduct” means your commission of any material act of fraud, embezzlement or
dishonesty, your material unauthorized use or disclosure of confidential
information or trade secrets of the Company (or any Parent, Subsidiary or
Affiliate) or any other intentional material misconduct adversely affecting the
business or affairs of the Company (or any Parent, Subsidiary or Affiliate).

 

 

 

Release

 

“Release” means a waiver and general release of all claims you may have against
the Company or persons affiliated with the Company, in a form provided by the
Company. You must execute and return the Release on or before the date specified
by the Company, which will in no event be later than 50 days after your
Involuntary Termination. The Release must become effective on or before the date
specified by the Company, which will in no event be later than 60 days after
your Involuntary Termination.

 

 

 

Service

 

“Service” means your continuous service as an employee of the Company, a Parent,
a Subsidiary or an Affiliate.

 

BY SIGNING THIS PERFORMANCE CASH AWARD AGREEMENT, YOU AGREE TO

ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

 

RECIPIENT:

 

THERAVANCE, INC.

 

 

 

 

 

By:

 

 

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EXHIBIT A

 

VESTING SCHEDULE

 

Performance-Based Conditions

 

Upon achievement, prior to the Expiration Date specified in the Agreement, of
performance targets with the aggregate number of points set forth in the table
below, the performance-based conditions will be achieved with respect to the
Payment indicated in the table below:

 

Aggregate Number of Points

 

Dollar Amount of Payment

 

 

    x Base Amount (“First Payment”)

 

 

    x Base Amount (“Second Payment”)

 

 

    x Base Amount (“Third Payment”)

 

The following performance targets and points associated with each performance
target will apply to this award:

 

 

Performance Target

 

Number of Points Related to Performance
Target

 

 

 

 

 

 

 

 

 

 

 

 

 

A performance target will not be deemed achieved unless and until the
Compensation Committee certifies in writing that the performance target has been
achieved.  Minutes of a Compensation Committee meeting or an action by unanimous
written consent with resolutions approving achievement constitute written
certification.

 

Service-Based Conditions

 

Subject to achievement of the performance-based conditions described above, the
service-based conditions applicable to a Payment will be satisfied if you remain
in continuous Service from the Date of Grant until the following date:

 

·                  First Payment — The first Company Vesting Date on or after
the «First Payment Service Condition».

 

·                  Second Payment — The first Company Vesting Date on or after
«Second Payment Service Condition».

 

·                  Third Payment - The first Company Vesting Date on or after
«Third Payment Service Condition».

 

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