Exhibit 10.5

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

The Theravance, Inc. Amended and Restated 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 occurring
after an initial public offering (“IPO”).

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;

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

·                  you execute a 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.

--------------------------------------------------------------------------------

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 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 or an executive vice president 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 Advanced Medicine, 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.

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:

2

--------------------------------------------------------------------------------

·                  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 of the
Corporation immediately before the Change in Control

·                  24 months if you were the chief executive officer or an
executive vice president 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.

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.  TO THE EXTENT THAT THE FOREGOING RESULTS IN ACCELERATION
OF EXERCISABILITY ON OR BEFORE SEPTEMBER 1, 2007 AS TO OPTIONS WHICH OTHERWISE
WOULD NOT HAVE BEEN EXERCISABLE ON THAT DATE, THEN SUCH ACCELERATED OPTIONS
SHALL BE TREATED AS VESTED AND EXERCISABLE AS OF SEPTEMBER 1, 2007.  TO THE
EXTENT NECESSARY TO EFFECTUATE THE INTENT OF THE FOREGOING, EACH SUCH OPTION
SHALL HAVE AN EXTENDED PERIOD OF TIME TO EXERCISE FOLLOWING A CESSATION OF
SERVICE WHICH SHALL NOT EXPIRE EARLIER THAN OCTOBER 1, 2007.

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 any
individual which occurs by reason of:

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 CHANGE IN
HIS OR HER POSITION WITH THE CORPORATION WHICH MATERIALLY REDUCES HIS OR HER
LEVEL OF RESPONSIBILITY, (II) A MATERIAL REDUCTION IN HIS OR HER LEVEL OF
COMPENSATION (INCLUDING BASE SALARY, FRINGE BENEFITS AND PARTICIPATION IN BONUS
OR INCENTIVE PROGRAMS) OR (III) A RELOCATION OF SUCH INDIVIDUAL’S PLACE OF
EMPLOYMENT BY MORE THAN FIFTY (50) MILES, PROVIDED AND ONLY IF SUCH CHANGE,
REDUCTION OR RELOCATION IS EFFECTED BY THE CORPORATION WITHOUT THE INDIVIDUAL’S
CONSENT.

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

3

--------------------------------------------------------------------------------

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 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 (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

4

--------------------------------------------------------------------------------

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.

Gross-Up Payment.

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
interest or penalties, are collectively referred to as the “Excise Tax”), then
the Corporation shall pay Eligible Executive an additional amount (a “Gross-Up
Payment”) equal to the amount that shall fund the payment by the Eligible
Executive of any Excise Tax on the Total Payments as well as all income taxes
imposed on the Gross-Up Payment, any Excise Tax imposed on the Gross-Up Payment
and any interest or penalties imposed with respect to taxes on the Gross-Up
Payment or any Excise Tax.

Determination by Accountant.

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) that are required to be made under this Section 4, including all
determinations of whether a Gross-Up Payment is required, of the amount of such
Gross-Up Payment and of amounts relevant to the last sentence of this section,
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 regarding the amount of any
Gross-Up Payment and any other relevant matters, 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 the Excise Tax).  If
the Accounting Firm determines that no Excise Tax is payable by the Eligible
Executive, it shall furnish the Eligible Executive with a written statement that
such Accounting Firm has concluded that no Excise Tax is payable (including the
reasons therefor) and that the Eligible Executive has substantial authority not
to report any Excise Tax on the Eligible Executive’s federal income tax

5

--------------------------------------------------------------------------------

return.  If a Gross-Up Payment is determined to be payable, it shall be paid to
the Eligible Executive within five business days after the Determination is
delivered to the Corporation or the Eligible Executive.  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 section 4999 of the Code at
the time of the initial Determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments not made by the Corporation should have been
made (“Underpayments”) or that Gross-Up Payments will have been made by the
Corporation which should not have been made (“Over­payments”).  In either event,
the Accounting Firm shall determine the amount of the Underpayment or
Overpayment that has occurred.  In the case of an Underpayment, the amount of
such Underpayment shall promptly be paid by the Corporation to or for the
benefit of the Eligible Executive.  In the case of an Overpayment, the Eligible
Executive shall, at the direction and expense of the Corporation, take such
steps as are reasonably necessary (including the filing of returns and claims
for refund), follow reasonable instructions from, and procedures established by,
the Corporation and otherwise reasonably cooperate with the Corporation to
correct such Overpayment; provided, however, that (i) the Eligible Executive
shall in no event be obligated to return to the Corporation an amount greater
than the net after-tax portion of the Overpayment that the Eligible Executive
has retained or has recovered as a refund from the applicable taxing authorities
and (ii) this provision shall be interpreted in a manner consistent with the
intent of this section, which is to make the Eligible Executive whole, on an
after-tax basis, for the application of the Excise Tax, it being understood that
the correction of an Overpayment may result in the Eligible Executive’s repaying
to the Corporation an amount which is less than the Overpayment.

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 WAIVER AND RELEASE SHALL BE EXECUTED ON A FORM PROVIDED BY AND ACCEPTABLE
TO THE CORPORATION.  THE FORM OF THE WAIVER AND GENERAL 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.

6

--------------------------------------------------------------------------------

3.                                      BENEFITS.  WHEN BENEFITS ARE DUE, THEY
WILL 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
COMPANY RECEIVES THE ELIGIBLE EXECUTIVE’S SIGNED GENERAL RELEASE OF ALL CLAIMS,
OR THE DATE THE REVOCATION PERIOD (IF ANY) SPECIFIED IN THE GENERAL RELEASE OF
ALL CLAIMS EXPIRES.  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 GROSS-UP PAYMENT, THE DATE ON WHICH A
DETERMINATION IS MADE REGARDING A GROSS-UP 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, 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, 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.

7

--------------------------------------------------------------------------------

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.

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.

8

--------------------------------------------------------------------------------

ADDITIONAL PLAN INFORMATION

Name of Plan:

Theravance, Inc. Amended and Restated Change in Control Severance Plan

Corporation Sponsoring Plan:

Theravance, Inc.

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

Employer Identification Number:

94-3265960

Plan Number:

506

Plan Year:

The calendar year; the first plan year shall end December 31, 2004

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.

 

9

--------------------------------------------------------------------------------