Exhibit
10.42


THERAVANCE,
INC. 2004 EQUITY INCENTIVE PLAN


NOTICE
OF RESTRICTED STOCK UNIT AWARD


You have been granted the number of restricted stock
units indicated below by Theravance, Inc. (the “Company”)
on the following terms:


	
  Name:

  	
  «Name»

  



 


Restricted Stock Unit Award
Details:


	
  Date of Grant:

  	
   

  	
  «DateGrant»

  
	
  Restricted Stock Units:

  	
   

  	
  «TotalShares»

  
	
  Vesting Commencement Date:

  	
   

  	
  «VestComDate»

  



 


Each
restricted stock unit (the “Restricted Stock Unit”)
represents the right to receive one share of the Company’s Common 


Stock subject to the terms and conditions contained in the Restricted
Stock Unit Agreement.


Vesting Schedule:


Vesting is dependent upon continuous service as an employee of the
Company, a Parent, a Subsidiary or an Affiliate (“Service”)
throughout the vesting period.  A certain
number of Restricted Stock Units shall vest on «FinalVestDate» (the final day
of the vesting period), provided you have remained in continuous Service from
the Date of Grant through the final day of the vesting period and provided
further that one or more of the following performance targets have been
achieved on or before their related deadlines. 
The number of shares to be issued upon vesting of the units will be
equal to the number of units set forth below based on the timely achievement of
the respective performance targets:


Performance targets:


	
  Deadline for 

  Achieving Target

  	
   

  	
  Target

  	
   

  	
  Number of Units for each Target

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  «TargetDate1»

  	
   

  	
  «Target1»

  	
   

  	
  «%1TotalShares»

  
	
  «TargetDate2»

  	
   

  	
  «Target2»

  	
   

  	
  «%2TotalShares»

  
	
  «TargetDate3»

  	
   

  	
  «Target3»

  	
   

  	
  «%3TotalShares»

  
	
  «TargetDate4»

  	
   

  	
  «Target4»

  	
   

  	
  «%4TotalShares»

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total Possible Shares:

  	
   

  	
  «TotalShares»

  



 


In addition, in the event that
your Service terminates because of death or total and permanent disability (as
defined in the Restricted Stock Unit Agreement), then the number of units that
correspond to any performance target that has been achieved on or before the
applicable deadline as of the date your Service terminates will accelerate and
vest immediately.


In addition, if the Company is
subject to an Acquisition before your Service terminates, then the number of units that corresponds to (A) all
targets that have been achieved as of the date of the Acquisition and (B) the next target
(i) that has not been achieved as of the date of the Acquisition and (ii) the deadline for 











which has not come to pass shall vest immediately on
the date the Acquisition is
consummated.  Thereafter, the balance of
the units will be forfeited on the date the Acquisition
is consummated.


An Acquisition shall mean a “Change in Control” (as defined in the 2004
Equity Incentive Plan (the “Plan”)) by an entity other than GSK (as defined in the Plan) or by GSK in a transaction that is
accomplished in a manner that is currently prohibited by the Governance
Agreement (as defined in the Plan).


If you are a participant in the Company’s Change in
Control Severance Plan, then the foregoing acceleration on Acquisition shall be
applicable to you and will replace any acceleration of vesting of the units
that may otherwise occur under the Company’s Change in Control Severance Plan.  However, in the event of a GSK Change in
Control (as defined in the Company’s
Change in Control Severance Plan),
then the provisions of the Company’s Change in Control Severance Plan will
govern your right to accelerated vesting.


By
your signature and the signature of the Company’s representative below, you and
the Company agree that your right to receive the units is granted under and
governed by the terms and conditions of the Plan and of the Restricted Stock
Unit Agreement that is attached to and made a part of this document.  Capitalized terms not defined herein have the meaning ascribed to such
terms in the Plan.


You agree that the Company may deliver by email all
documents relating to the Plan or this award (including, without limitation,
prospectuses required by the Securities and Exchange Commission) and all other
documents that the Company is required to deliver to its security holders
(including, without limitation, annual reports and proxy statements).  You also agree that the Company may deliver
these documents by posting them on a web site maintained by the Company or by a
third party under contract with the Company. 
If the Company posts these documents on a web site, it will notify you
by email.


By
your signature below, you agree to cover the applicable withholding taxes as
set forth more fully herein.


	
  RECIPIENT:

  	
  THERAVANCE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
  Print Name

  	
   

  
						



 











THERAVANCE,
INC. 2004 EQUITY INCENTIVE PLAN:

RESTRICTED STOCK UNIT AGREEMENT


	
  Payment for Shares

  	
   

  	
  No payment is required for the restricted stock
  units you are receiving.

  
	
   

  	
   

  	
   

  
	
  Nature of Units

  	
   

  	
  Your units are bookkeeping entries. They represent
  only the Company’s unfunded and unsecured promise to issue shares of Common
  Stock on a future date. As a holder of units, you have no rights other than
  the rights of a general creditor of the Company.

  
	
   

  	
   

  	
   

  
	
  Settlement of Units

  	
   

  	
  Each of your units will be settled when it vests
  (unless you and the Company have agreed to a later settlement date pursuant
  to procedures that the Company may prescribe at its discretion). 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  At the time of settlement, you will receive one
  share of the Company’s Common Stock for each vested unit.

  
	
   

  	
   

  	
   

  
	
  Vesting

  	
   

  	
  The restricted stock units
  that you are receiving will vest as shown in the Notice of Restricted Stock
  Unit Award. For all purposes under this Agreement, “total and permanent disability” means that you are unable
  to engage in any substantial gainful activity by reason of any medically
  determinable physical or mental impairment which can be expected to result in
  death or which has lasted, or can be expected to last, for a continuous
  period of not less than one year. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  No additional units vest after your Service has terminated for any
  reason, except as set forth on the
  Notice of Restricted Stock Unit Award. It is intended that vesting in the restricted stock units 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 Absence and Part-Time
  Work.”

  
	
   

  	
   

  	
   

  
	
  Forfeiture

  	
   

  	
  If your Service terminates for any reason, then your
  restricted stock units that have not vested before the termination date and
  do not vest (whether immediately or on a deferred basis) as a result of the
  termination pursuant to this Agreement or as set forth on the Notice of
  Restricted Stock Unit Award, will be forfeited immediately. This means that
  the restricted stock units will immediately revert to the Company. You
  receive no payment for restricted stock units that are forfeited. The Company
  determines when your Service terminates for this purpose. On the final day of
  the vesting period as defined in the Notice of Restricted Stock Unit Award,
  any restricted stock units that are not vested will be forfeited immediately.

  
	
   

  	
   

  	
   

  
	
  Leaves of Absence

  	
   

  	
  For purposes of this award, your Service does not
  terminate when you go

  



 











 


	
  and Part-Time Work

  	
   

  	
  on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by
  the Company in writing. But 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 restricted stock units 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 adjust any
  vesting schedule pursuant to this subsection.

  
	
   

  	
   

  	
   

  
	
  Stock Certificates

  	
   

  	
  No shares of Common Stock shall be issued to you
  prior to the date on which the restricted stock units vest. After any
  restricted stock units vest pursuant to this Agreement, the Company shall
  promptly cause to be issued in book-entry form, registered in your name or in
  the name of your legal representatives, beneficiaries or heirs, as the case
  may be, the number of shares of Common Stock representing your vested
  restricted stock units. No fractional shares shall be issued.

  
	
   

  	
   

  	
   

  
	
  Stockholder Rights

  	
   

  	
  The restricted stock units do not entitle you to any
  of the rights of a stockholder of Common Stock. Upon settlement of the
  restricted stock units into shares of Common Stock, you will obtain full
  voting and other rights as a stockholder of the Company.

  
	
   

  	
   

  	
   

  
	
  Units Restricted

  	
   

  	
  You may not sell, transfer, pledge or otherwise
  dispose of any restricted stock units or rights under this Agreement other
  than by will or by the laws of descent and distribution. Notwithstanding the
  foregoing, you may designate a beneficiary or beneficiaries to receive any
  property distributable with respect to the restricted stock units upon your
  death.

  
	
   

  	
   

  	
   

  
	
  Withholding Taxes

  	
   

  	
  No shares will be distributed to you unless you have
  made arrangements acceptable to the Company to pay any withholding taxes that
  may be due as a result of the settlement of this award. With the Company’s consent, these arrangements
  may include (a) withholding shares of Common Stock that otherwise would
  be issued to you when the units are settled, (b) surrendering shares
  that you previously acquired, (c) the payment of withholding
  taxes from the proceeds of an approved sale of shares through a
  Company-approved broker or
  (d) your delivery of cash to the
  Company. The fair
  market value of withheld or surrendered shares, determined as of the date
  taxes otherwise would have been withheld in cash, will be applied against the
  withholding

  



 











 


	
  

  	
   

  	
  taxes.

  
	
   

  	
   

  	
   

  
	
  Restrictions on Issuance

  	
   

  	
  The Company will not issue shares to you if the
  issuance of shares at that time would violate any law or regulation.

  
	
   

  	
   

  	
   

  
	
  Restrictions on Resale

  	
   

  	
  You agree not to sell any shares of Common Stock you
  receive under this Agreement at a time when applicable laws, regulations,
  Company trading policies (including the Company’s Insider Trading Policy, a
  copy of which can be found on the Company’s intranet) or an agreement between
  the Company and its underwriters prohibit a sale. This restriction will apply
  as long as your Service continues and for such period of time after the
  termination of your Service as the Company may specify.

  
	
   

  	
   

  	
   

  
	
  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 or Subsidiary)
  in any capacity. The Company and its Parent and its Subsidiaries reserve the
  right to terminate your Service at any time, with or without cause.

  
	
   

  	
   

  	
   

  
	
  Beneficiary Designation

  	
   

  	
  You may dispose of your units in a written
  beneficiary designation. A beneficiary designation must be filed with the
  Company on the proper form. It will be recognized only if it has been
  received at the Company’s headquarters before your death. If you file no
  beneficiary designation or if none of your designated beneficiaries survives
  you, then your estate will receive any vested units that you hold at the time
  of your death.

  
	
   

  	
   

  	
   

  
	
  Adjustments

  	
   

  	
  In the event of a stock split, a stock dividend or a
  similar change in Common Stock, the number of restricted stock units that
  will vest in any future installments will be adjusted accordingly.

  
	
   

  	
   

  	
   

  
	
  Applicable Law

  	
   

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

  
	
   

  	
   

  	
   

  
	
  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, the Notice of Restricted Stock Unit Award, 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.

  



BY SIGNING THE NOTICE OF
RESTRICTED STOCK UNIT AWARD, YOU AGREE TO


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