Exhibit 10.1


 


THERAVANCE, INC.


 


COMMON STOCK PURCHASE AGREEMENT


 


November 29, 2010


 


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TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
  1.  Purchase and Sale
  of Stock

  	
   

  	
  3

  
	
  1.1  Sale and Issuance of Common Stock

  	
   

  	
  3

  
	
  1.2  Closing

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  2.  Representations
  and Warranties of the Company

  	
   

  	
  4

  
	
  2.1  Organization, Good Standing and
  Qualification

  	
   

  	
  4

  
	
  2.2  Capitalization and Voting Rights

  	
   

  	
  4

  
	
  2.3  Subsidiaries

  	
   

  	
  4

  
	
  2.4  Authorization

  	
   

  	
  5

  
	
  2.5  Valid issuance of Common Stock

  	
   

  	
  5

  
	
  2.6  Governmental Consents

  	
   

  	
  5

  
	
  2.7  Offering

  	
   

  	
  5

  
	
  2.8  Litigation

  	
   

  	
  6

  
	
  2.9  Patents and Trademarks

  	
   

  	
  6

  
	
  2.10  Compliance with Other Instruments

  	
   

  	
  7

  
	
  2.11  SEC Reports; Financial Statements

  	
   

  	
  7

  
	
  2.12  Related-Party Transactions

  	
   

  	
  9

  
	
  2.13  Permits

  	
   

  	
  9

  
	
  2.14  Disclosure

  	
   

  	
  9

  
	
  2.15  Corporate Documents

  	
   

  	
  9

  
	
  2.16  Title to Property and Assets

  	
   

  	
  9

  
	
  2.17  Tax Returns, Payments and Elections

  	
   

  	
  9

  
	
  2.18  Environmental Law

  	
   

  	
  9

  
	
  2.19  Proprietary Information and Employment
  Agreements

  	
   

  	
  10

  
	
  2.20  Registration Rights

  	
   

  	
  10

  
	
  2.21  Real Property Holding Corporation

  	
   

  	
  10

  
	
  2.22  Labor Agreements

  	
   

  	
  10

  
	
  2.23  Insurance

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  3.  Representations
  and Warranties of the Investor

  	
   

  	
  10

  
	
  3.1  Authorization

  	
   

  	
  10

  
	
  3.2  Purchase Entirely for Own Account

  	
   

  	
  11

  
	
  3.3  Disclosure of Information

  	
   

  	
  11

  
	
  3.4  Investment Experience

  	
   

  	
  11

  
	
  3.5  Accredited Investor

  	
   

  	
  11

  
	
  3.6  Restricted Securities

  	
   

  	
  11

  
	
  3.7  Amended and Restated Governance Agreement

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  4.  Conditions of
  Investor’s Obligations at Closing

  	
   

  	
  11

  
	
  4.1  Performance

  	
   

  	
  12

  
	
  4.2  Representations and Warranties

  	
   

  	
  12

  
	
  4.3  Compliance Certificate

  	
   

  	
  12

  
	
  4.4  Qualifications

  	
   

  	
  12

  



 


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  4.5  Proceedings and Documents

  	
   

  	
  12

  
	
  4.6  Section 203 of DGCL

  	
   

  	
  12

  
	
  4.7  Amendment of Governance Agreement

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  5.  Conditions of the
  Company’s Obligations at Closing

  	
   

  	
  12

  
	
  5.1  Representations and Warranties

  	
   

  	
  12

  
	
  5.2  Qualifications

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  6.  Miscellaneous

  	
   

  	
  13

  
	
  6.1  Survival of Warranties

  	
   

  	
  13

  
	
  6.2  Successors and Assigns

  	
   

  	
  13

  
	
  6.3  Governing Law

  	
   

  	
  13

  
	
  6.4  WAIVER OF JURY TRIAL

  	
   

  	
  13

  
	
  6.5  Counterparts

  	
   

  	
  13

  
	
  6.6  Titles and Subtitles

  	
   

  	
  13

  
	
  6.7  Notices

  	
   

  	
  13

  
	
  6.8  Finder’s Fee

  	
   

  	
  14

  
	
  6.9  Expenses

  	
   

  	
  14

  
	
  6.10  Amendments and Waivers

  	
   

  	
  14

  
	
  6.11  Severability

  	
   

  	
  14

  
	
  6.12  Confidentiality

  	
   

  	
  14

  
	
  6.13  Publicity

  	
   

  	
  15

  
	
  6.14  Entire Agreement

  	
   

  	
  15

  
	
  6.15  Legends

  	
   

  	
  15

  
	
  6.16  Nasdaq Listing

  	
   

  	
  16

  
	
  6.17  Existing Agreements Between GSK and
  Theravance

  	
   

  	
  16

  
	
  6.18  Authorization

  	
   

  	
  16

  
	
  6.19  Registrable Securities

  	
   

  	
  16

  



 


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THERAVANCE, INC.


 


COMMON STOCK PURCHASE AGREEMENT


 


THIS
COMMON STOCK PURCHASE AGREEMENT (the “Agreement”) is made as of the 29th
day of November, 2010, by and among Theravance, Inc., a Delaware
corporation (the “Company”), and Glaxo Group Limited, a limited
liability company organized under the laws of England and Wales (the “Investor”),
and solely for the purposes of Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.9,
6.10, 6.11, 6.12, 6.13, 6.14, 6.17 and 6.18 hereof, GlaxoSmithKline LLC, a
Delaware limited liability company, the successor entity to SmithKline Beecham
Corporation, a Pennsylvania corporation (“GSK”).


 


THE
PARTIES HEREBY AGREE AS FOLLOWS:


 


1.                                       Purchase and
Sale of Stock.


 


1.1                                 Sale and Issuance of Common
Stock.


 


(a)                                  On or prior to the Closing
(as defined below), the Company shall have authorized the sale and issuance to
the Investor of shares of its Common Stock (the “Shares”).  The Shares shall have the rights,
preferences, privileges and restrictions set forth in the Company’s Amended and
Restated Certificate of Incorporation (the “Restated Certificate”).


 


(b)                                 Subject to the terms and
conditions of this Agreement, the Investor agrees to purchase at the Closing
and the Company agrees to sell and issue to the Investor at the Closing, Five
Million Seven Hundred Fifty Thousand (5,750,000) Shares for Twenty Two Dollars
and Fifty Cents ($22.50) per Share, resulting in an aggregate purchase price of
One Hundred Twenty Nine Million Three Hundred Seventy Five Thousand Dollars
($129,375,000) (the “Aggregate Purchase Price”).


 


1.2                                 Closing.  The purchase and sale of the Shares shall
take place at the offices of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP, 1200 Seaport Blvd., Redwood City, CA 94063. Concurrently
with the execution and delivery of this Agreement by each of the parties, the
Investor will immediately initiate an irrevocable wire transfer in the amount
of the Aggregate Purchase Price to the account set forth on Exhibit A
hereto.  Immediately upon the Company’s
receipt of the Aggregate Purchase Price the purchase and sale of the Shares
shall be consummated (which time is designated as the “Closing”).  At the Closing the Company shall deliver
evidence to the Investor that the Shares that the Investor is purchasing
hereunder are being issued in book form by the Company’s transfer agent for its
Common Stock. As promptly as practicable following the Closing, the Company
shall cooperate with the Investor and the Company’s transfer agent to arrange
to have delivered to the Investor a certificate representing the Shares that
the Investor has purchased pursuant to this Agreement.


 


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2.                                       Representations
and Warranties of the Company.  The Company hereby represents and warrants to
the Investor that, as of the date hereof, except as set forth in the SEC
Reports (as defined below, but excluding for the purposes of Section 2,
other than Section 2.11, any risk factor disclosures contained in such
documents under the heading “Risk Factors” and any disclosure of risks included
in any “forward-looking statements” disclaimer or other statements that are
similarly non-specific and are predictive or forward-looking in nature), which
exceptions shall be deemed to be representations and warranties as if made
hereunder:


 


2.1                                 Organization, Good Standing
and Qualification.  The Company
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all requisite corporate power and
authority to (i) execute, deliver and perform its obligations under this
Agreement and the Second Amendment to Amended and Restated Governance
Agreement, in substantially the form attached hereto as Exhibit B
(the “Amendment”), (ii) to issue and sell the Common Stock
hereunder, (iii) to perform its obligations under the Restated
Certificate, and (iv) to carry on its business as now conducted and as
proposed to be conducted.  The Company is
duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on its business or properties.


 


2.2                                 Capitalization and Voting
Rights.  The authorized capital stock
of the Company consists of 230,230,000 shares, with a par value of $0.01 per
share, of which:


 


·                                          200,000,000
shares are designated as Common Stock;


 


·                                          30,000,000
shares are designated as Class A Common Stock; and


 


·                                          230,000 shares
are designated as Preferred Stock.


 


At September 30, 2010, the Company had
outstanding 64,559,227 shares of Common Stock, 9,401,499 shares of Class A
Common Stock and no shares of Preferred Stock. All of the Company’s outstanding
Class A Common Stock is held by the Investor and its affiliates. In
addition, as of September 30, 2010, an aggregate of 10,114,189 shares of
the Company’s Common Stock were subject to outstanding options and restricted
stock unit awards.  Except for stock
option grants and restricted stock unit awards made since September 30,
2010 in the aggregate amount not exceeding 55,420 shares and other than as set
forth above in this Section 2.2 or pursuant to this Agreement, the
Governance Agreement (as defined below) or the Amendment, there are no other
securities convertible into or exchangeable for, or options, warrants, calls,
subscriptions, rights, contracts, commitments, arrangements or understandings
of any kind to which the Company is a party or by which it is bound obligating
the Company to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other voting securities of the
Company.


 


2.3                                 Subsidiaries.  The Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
association or other business entity, other than Advanced Medicine East, Inc.,
a Delaware corporation, and Theravance UK Limited, each a direct wholly-owned
subsidiary of the Company.  The Company
is not a participant in any joint venture, partnership, or similar arrangement.


 


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2.4                                 Authorization.


 


(a)                                  All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the Amendment, the
performance of all obligations of the Company hereunder and thereunder, and the
authorization, issuance (or reservation for issuance), sale and delivery of the
Common Stock being sold hereunder has been taken or will be taken prior to the
Closing, and this Agreement and the Amendment constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors’ rights generally and (ii) as limited
by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.


 


(b)                                 The Board of Directors of
the Company (the “Board of Directors”) has approved the entry by the
Company into this Agreement, the Amendment and the performance of the Company’s
obligations hereunder and thereunder and consummation of the transactions
contemplated hereby and thereby for purposes of paragraph (a)(1) of
Section 203 of the Delaware General Corporation Law (“DGCL
Section 203”), and, to the Company’s knowledge, no other “moratorium”,
“control share acquisition”, “business combination”, “fair price” or other form
of anti-takeover or similar law of any jurisdiction is applicable to the
Company and the transactions contemplated by this Agreement.


 


2.5                                 Valid Issuance of Common
Stock.  The Common Stock that is being
purchased by the Investor hereunder, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and nonassessable, and
will be free of restrictions on transfer other than restrictions on transfer
under this Agreement, the Amended and Restated Governance Agreement dated June 4,
2004, as amended May 11, 2007, by and among the Company, GSK, and solely
with respect to Articles III, IV and VI thereof, GlaxoSmithKline plc, an
English public limited company (“GlaxoSmithKline”), and the Investor
(the “Governance Agreement”) and under applicable state and federal securities
laws.  The Common Stock that is being
purchased by the Investor hereunder will not be subject to preemptive rights or
rights of first refusal that have not been waived or complied with.


 


2.6                                 Governmental Consents.  No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with,
any federal, state or local governmental authority on the part of the Company
is required in connection with the consummation of the transactions
contemplated by this Agreement, except certain post-closing filings as may be
required pursuant to federal securities laws and under the “Blue Sky” laws of
the various states.


 


2.7                                 Offering.  Subject in part to the truth and accuracy of
the Investor’s representations set forth in Section 3 of this Agreement,
the offer, sale and issuance of the Common Stock as contemplated by this
Agreement are exempt from the registration requirements of any applicable state
and federal securities laws, and neither the Company nor any authorized agent
acting on its behalf will take any action (including any offering of any
securities of the Company under circumstances which would require the
integration of such 


 


5

















 


offering
with the offering of any of the Securities to be issued pursuant to this
Agreement under the Securities Act and the rules and regulations of the
Commission thereunder) hereafter that would cause the loss of such exemption.


 


2.8                                 Litigation.  There is no action, suit, proceeding or
investigation pending or, to the Company’s knowledge, currently threatened
against the Company that questions the validity of this Agreement, the
Amendment, or the right of the Company to enter into this Agreement or the
Amendment, or to consummate the transactions contemplated hereby or thereby, or
if determined adversely, might result, either individually or in the aggregate,
in (i) any material adverse changes in the assets, business or prospects
of the Company, financially or otherwise or (ii) any change in the current
equity ownership of the Company, nor is the Company aware that there is any
basis for the foregoing.  The Company is
not a party or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or instrumentality.  There is no material action, suit, proceeding
or investigation by the Company currently pending or that the Company intends
to initiate.


 


2.9                                 Patents and Trademarks.  The Company owns, or has rights to use
pursuant to a valid license, all patents, trademarks, service marks, trade
names, copyrights, trade secrets, information, proprietary rights and processes
necessary for its business as now conducted. 
The use, modification, licensing, sublicensing, sale, or any other
exercise of rights involving such intellectual property does not infringe any
copyright, trade secret, trademark, service mark, trade name, firm name, logo,
trade dress, mask work, moral right, other intellectual property right, right
of privacy or right in personal data, or to the knowledge of the Company, any
patent, of any person.  No claims (i) challenging
the validity, effectiveness, or ownership by the Company of any of the Company’s
intellectual property, or (ii) to the effect that the use, reproduction,
modification, manufacturing, distribution, licensing, sublicensing, sale or any
other exercise of rights in any product, work, technology, service or process
as used, provided or offered at any time, or as proposed for use, reproduction,
modification, distribution, licensing, sublicensing, sale or any other exercise
of rights, by the Company infringes or will infringe on any intellectual
property or other proprietary or personal right of any person have been
asserted or, to the knowledge of the Company, (A) are threatened by any
person nor (B) are there any valid grounds for any bona fide claim of any
such kind.  To the knowledge of the
Company, there is no unauthorized use, infringement or misappropriation of any
of the Company’s intellectual property by any third party, employee or former
employee.  The Company’s employees are
not obligated under any contract (including licenses, covenants or commitments
of any nature) or other agreement, or subject to any judgment, decree or order
of any court or administrative agency, that would interfere with the use of his
or her best efforts to promote the interests of the Company or that would
conflict with the Company’s business as proposed to be conducted.  Neither the execution nor delivery of this
Agreement or the Amendment, nor the carrying on of the Company’s business by
the employees of the Company, nor the conduct of the Company’s business as
proposed, will, to the best of the Company’s knowledge, conflict with or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which any of such employees
is now obligated.  The Company does not
believe it is or will be necessary to utilize any inventions of any of its
employees made prior to their employment by the Company unless such inventions
are properly assigned to the Company.


 


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2.10                           Compliance with Other
Instruments.  The Company
is not in violation or default in any material respect of any provision of its
Restated Certificate or Bylaws, or in any material respect of any instrument,
judgment, order, writ, decree or contract to which it is a party or by which it
is bound, or, to the best of its knowledge, of any provision of any statute, rule or
regulation applicable to the Company. 
The execution, delivery and performance of this Agreement, the
Amendment, and the consummation of the transactions contemplated hereby and
thereby will not result in any such violation or be in conflict with or constitute,
with or without the passage of time and giving of notice, either a default
under any such provision, instrument, judgment, order, writ, decree or contract
or an event that results in the creation of any lien, charge or encumbrance
upon any assets of the Company or the suspension, revocation, impairment,
forfeiture, or nonrenewal of any material permit, license, authorization, or
approval applicable to the Company, its business or operations or any of its
assets or properties.  Without limiting
the foregoing, the purchase of the Shares contemplated by this Agreement and
the Amendment have been approved by a majority of the “Independent Directors”
as defined in the Governance Agreement.


 


2.11                           SEC Reports; Financial
Statements.  The Company
has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act of 1933, as
amended (the “Securities Act”) or the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), including pursuant to Section 13(a) or
15(d) thereof, for the three (3) years preceding the date hereof (the
foregoing materials being collectively referred to herein as the “SEC
Reports”) on a timely basis or has received a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any
such extension.  As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations
of the Securities and Exchange Commission (the “Commission”) promulgated
thereunder, as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. To the knowledge of the Company, except as disclosed to counsel to
the Investor, there are no outstanding comments from the Commission with
respect to any SEC Report.  No executive
officer of the Company has failed in any respect to make the certifications
required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act
of 2002.  The financial statements of the
Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared
in accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.


 


2.12                           Internal Controls.  The Company (i) has implemented and
maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of
the Exchange Act) to 


 


7

















 


reasonably
assure that material information relating to the Company is made known to the
chief executive officer and the chief financial officer of the Company by
others within the Company; and (ii) has disclosed, based on its most
recent evaluation of internal controls over financial reporting prior to the
date hereof, to the Company’s outside auditors and the audit committee of the
Board of Directors (A) any significant deficiencies and material
weaknesses in the design or operation of internal controls over financial
reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are
reasonably likely to adversely affect the Company’s ability to record, process,
summarize and report financial information; and (B) to the knowledge of
the Company, any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company’s internal controls
over financial reporting.  For the three (3) years
preceding the date hereof, (i) neither the Company nor, to the knowledge
of the Company, any director, officer, employee, auditor or accountant of the
Company has received or otherwise had or obtained knowledge of any material
complaint, allegation, assertion or claim, whether written or oral, regarding
the accounting or auditing practices, procedures, methodologies or methods of
the Company or its internal accounting controls, including any material
complaint, allegation, assertion or claim that the Company has engaged in
questionable accounting or auditing practices; and (ii) no attorney
representing the Company, whether or not employed by the Company, has reported
evidence of a material violation of securities laws, breach of fiduciary duty or
similar violation by the Company or any of its officers, directors, employees
or agents to the Board of Directors or any committee thereof or to any director
or officer of the Company.


 


2.13                           Absence of Certain Events
and Changes.  Since
September 30, 2010, (i) the Company has conducted its businesses in
all material respects in the ordinary course consistent with past practice;
(ii) there has not been any event, change or development which,
individually or in the aggregate, has had or is reasonably likely to have a
material adverse effect on the Company; (iii) the Company has not incurred
any material liabilities (contingent or otherwise) other than trade payables
and accrued expenses incurred in the ordinary course of business consistent
with past practice; (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders; and (v) other
than the surrender to the Company of shares of Common Stock by the executive
officers of the Company in connection with the Company’s payment of withholding
taxes due upon the vesting or settlement of the executive officers’ restricted
stock unit awards, the Company has not purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock.


 


2.14                           No Undisclosed Liabilities.  The Company does not have any liabilities
(contingent or otherwise), except for (i) liabilities reflected or
reserved against in financial statements of the Company included in the SEC
Reports filed prior to the date of this Agreement; and (ii) liabilities
that have not had and are not reasonably likely to have a material adverse
effect on the Company.


 


8

















 


2.15                           Related-Party Transactions.  No executive officer or director of the
Company or member of his or her immediate family is indebted to the Company,
nor is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them.  To the Company’s
knowledge, none of such persons has any direct or indirect ownership interest
in any firm or corporation with which the Company is affiliated or with which
the Company has a business relationship, or any firm or corporation that
competes with the Company, except that executive officers or directors of the
Company and members of their immediate families may own stock in publicly
traded companies that may compete with the Company.  No member of the immediate family of any
executive officer or director of the Company is directly or indirectly
interested in any material contract with the Company.


 


2.16                           Permits.  The Company has all material franchises,
permits, licenses, and any similar authority necessary for the conduct of its
business as now being conducted by it, and the Company believes it can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as planned to be conducted.  The
Company is not in default in any material respect under any of its franchises,
permits, licenses, or other similar authority.


 


2.17                           Disclosure. The Company
has provided the Investor with all information requested by the Investor in
connection with its decision to purchase the Common Stock, including all
information the Company believes is reasonably necessary to make such
investment decision.  To the Company’s
knowledge, neither this Agreement, the Amendment, nor any other statements or
certificates made or delivered in connection herewith or therewith contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein not misleading.


 


2.18                           Corporate Documents.  The Restated Certificate and Bylaws of the
Company are in the form as set forth as exhibits in the SEC Reports.


 


2.19                           Title to Property and Assets.  The Company owns its property and assets free
and clear of all mortgages, liens, loans and encumbrances, except such
encumbrances and liens that arise in the ordinary course of business and do not
materially impair the Company’s ownership or use of such property or assets,
and has good and marketable title to such property.  With respect to the property and assets it
leases, the Company is in compliance with such leases and holds a valid
leasehold interest free of any liens, claims or encumbrances.


 


2.20                           Tax Returns, Payments and
Elections.  The Company
has timely filed all tax returns and reports as required by law.  These returns and reports are true and
correct in all material respects.  The
Company has paid all taxes and assessments due, except those contested by it in
good faith, if any.  The Company has not
been advised (a) that any of its federal, state or local returns are being
audited as of the date hereof, or (b) of any deficiency in assessment or
proposed judgment to its federal, state or other taxes.  The Company has no knowledge of any tax
liabilities due with respect to the Company or its properties or assets as of
the date of this Agreement that are not adequately provided for.


 


2.21                           Environmental Law.  To the Company’s knowledge, the Company is
not in violation of and has no liability or potential liability under any
applicable statute, law, or 


 


9

















 


regulation
relating to the environment, and to the best of its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law, or regulation.


 


2.22                           Proprietary Information and
Employment Agreements.  Each
current and former employee and officer of the Company has executed a standard
Proprietary Information and Inventions Agreement.  Each consultant of the Company has executed a
standard Consulting Agreement containing invention assignment provisions.  The Company is not aware that any of its
employees, officers or consultants is in violation thereof, and the Company
will use its best efforts to prevent any such violation.  The Company has not entered into any
employment agreements with any executive officers of the Company.


 


2.23                           Registration Rights.  Except as required pursuant to the Amended
and Restated Investors’ Rights Agreement dated May 11, 2004, by and among
the Company and the investors who are parties thereto (the “Investors’
Rights Agreement”), the Company is not presently under any obligation, and
has not granted, any rights to register any of the Company’s presently
outstanding securities or any of its securities that may hereafter be issued.


 


2.24                           Real Property Holding
Corporation.  The Company
is not a real property holding corporation within the meaning of Section 897(c)(2) of
the Internal Revenue Code of 1986 (the “Code”), as amended, and any
regulations promulgated thereunder.


 


2.25                           Labor Agreements.  The Company is not bound by or subject to
(and none of its assets or properties is bound by or subject to) any written or
oral, express or implied, contract, commitment or arrangement with any labor
union, and no labor union has requested or, to the Company’s knowledge, has
sought to represent any of the employees, representatives or agents of the
Company.  There is no strike or other
labor dispute involving the Company pending, or to the Company’s knowledge,
threatened, that could have a material adverse effect on its business or
properties, nor is the Company aware of any labor organization activity
involving its employees.


 


2.26                           Insurance. The Company
maintains in full force and effect such types and amounts of insurance issued
by insurers of recognized responsibility insuring the Company with respect to
its business and properties, in such amounts and against such losses and risks
which are usual and customary in the Company’s business as to amount and scope.


 


3.                                       Representations
and Warranties of the Investor.  The Investor hereby represents and warrants
that:


 


3.1                                 Authorization.  The Investor has full power and authority to
enter into this Agreement and the Amendment, and this Agreement and the
Amendment constitute its valid and legally binding obligations, enforceable in
accordance with their respective terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors’ rights generally and
(ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.


 


10
















 


3.2           Purchase
Entirely for Own Account.  This
Agreement is made with the Investor in reliance upon the Investor’s
representation to the Company, which by the Investor’s execution of this
Agreement the Investor hereby confirms, that the Common Stock to be received by
the Investor (the “Securities”) will be acquired for investment for the
Investor’s own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that the Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same in violation of applicable securities laws.  By executing this Agreement, the Investor
further represents that the Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of
the Securities.


 


3.3           Disclosure
of Information.  The Investor further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Common Stock and the business, properties, prospects and financial condition of
the Company.  The Investor acknowledges that
it has read the “Risk Factors” Section contained in the Company’s
Quarterly Report on Form 10-Q filed on October 29, 2010 and
understands the Company’s business and recognizes that a purchase of the
Company’s Common Stock involves risks and uncertainties.  The foregoing, however, does not limit or
modify the representations and warranties of the Company in Section 2 of
this Agreement or the right of the Investor to rely thereon.


 


3.4           Investment
Experience.  The Investor is an
investor in securities of companies in the development stage and acknowledges
that it is able to fend for itself, can bear the economic risk of its
investment, and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
in the Common Stock.  The Investor also
represents that it has not been organized for the purpose of acquiring the
Common Stock.


 


3.5           Accredited
Investor.  The Investor is an “accredited
investor” within the meaning of Rule 501 of Regulation D adopted
pursuant to the Act, as presently in effect.


 


3.6           Restricted
Securities.  The Investor understands
that the Securities it is purchasing are characterized as “restricted
securities” under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the Act, only in certain limited circumstances.  In this connection, the Investor represents
that it is familiar with Rule 144 adopted pursuant to the Act, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.


 


3.7           Amended
and Restated Governance Agreement. 
The Investor acknowledges and agrees that (a) the Shares it is purchasing
hereunder are “Voting Stock” (as defined in the Governance Agreement), (b) the
Shares are subject to the terms and conditions of the Governance Agreement,
including, but not limited to, the resale restrictions and voting obligations
contained therein, and (c) it is a GSK Affiliate under the Governance
Agreement.


 


4.             Conditions of Investor’s Obligations at Closing.  The obligations of the Investor under
subsection 1.1(b) of this Agreement are subject to the fulfillment on
or before the 


 


11

















 


Closing of each of the following conditions, the
waiver of which shall not be effective against the Investor if it does not
consent thereto:


 


4.1           Performance.  The Company shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing.


 


4.2           Representations
and Warranties.  The representations
and warranties of the Company contained in Section 2 shall have been true
on and as of the Closing.


 


4.3           Compliance
Certificate.  The Chief Executive
Officer of the Company shall deliver to the Investor at the Closing a
certificate stating that the conditions specified in Section 4.1 and 4.2
have been fulfilled.


 


4.4           Qualifications.  All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Securities pursuant to this Agreement shall be duly obtained and
effective as of the Closing.


 


4.5           Proceedings
and Documents.  All corporate and
other proceedings in connection with the transactions contemplated at the
Closing and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Investor, and they shall have received all such
counterpart original and certified or other copies of such documents as they
may reasonably request.


 


4.6           Section 203
of DGCL . The Board of Directors shall have approved the entry by the
Company into this Agreement and the Amendment and the performance by of the
Company’s obligations hereunder and thereunder and consummation of the
transactions contemplated hereby and thereby for purposes of paragraph (a)(1) of
DGCL Section 203 and the Company shall deliver to the Investor true and
correct copies of resolutions adopted by the Board of Directors to the
foregoing effect.


 


4.7           Amendment
of Governance Agreement . The Company shall have executed and delivered to
the Investor its signature page to the Amendment.


 


5.             Conditions
of the Company’s Obligations at Closing. 
The obligations of the Company to the Investor under this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions by the Investor:


 


5.1           Representations
and Warranties.  The representations
and warranties of the Investor contained in Section 3 shall have been true
on and as of the Closing.


 


5.2           Qualifications.  All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Securities pursuant to this Agreement shall be duly obtained and
effective as of the Closing.


 


12

















 


6.             Miscellaneous.


 


6.1           Survival
of Warranties.  The warranties,
representations and covenants of the Company, the Investor and GSK contained in
or made pursuant to this Agreement shall survive the execution and delivery of
this Agreement and the Closing and shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the
Investor, GSK or the Company.


 


6.2           Successors
and Assigns.  Except as otherwise
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties (including transferees of any Securities).  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.


 


6.3           Governing
Law.   This Agreement shall be
governed by and construed in accordance with and governed by the law of the
State of Delaware, without regard to the conflicts of laws principles
thereof.  Any action brought, arising out of, or relating to this
Agreement shall be brought in the Court of Chancery of the State of Delaware.
Each party hereby irrevocably submits to the exclusive jurisdiction of said
Court in respect of any claim relating to the validity, interpretation and
enforcement of this Agreement, and hereby waives, and agrees not to assert, as
a defense in any action, suit or proceeding in which any such claim is made
that it is not subject thereto or that such action, suit or proceeding may not
be brought or is not maintainable in such courts, or that the venue thereof may
not be appropriate or that this agreement may not be enforced in or by such
courts.  The parties hereby consent to and grant the Court of Chancery of
the State of Delaware jurisdiction over such parties and over the subject
matter of any such claim and agree that mailing of process or other papers in
connection with any such action, suit or proceeding in the manner provided in
Section 6.6, or in such other manner as may be permitted by law, shall be
valid and sufficient thereof.


 


6.4           WAIVER
OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


 


6.5           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


 


6.6           Titles
and Subtitles.  The titles and
subtitles used in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement.


 


6.7           Notices.
All notices required or permitted hereunder shall be in writing and shall be
deemed effectively given: (a) upon personal delivery to the party to be
notified, (b) when sent by confirmed electronic mail or facsimile if sent
during normal business hours of the recipient, if not, then on the next
business day or (c) one (1) day after deposit with a 


 


13

















 


nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt.  Notwithstanding
the foregoing or any provision to the contrary in the Investors’ Rights
Agreement or the Restated Certificate, the Company agrees that when any notice
is given to the Investor or GSK, whether under this Agreement, the Investors’
Rights Agreement or the Restated Certificate, such notice shall not be deemed
to be effectively given until a copy of such notice is transmitted to the
Investor and GSK via facsimile.  All
notices and certificates will be addressed to the Investor and GSK at their
respective addresses set forth on the signature page hereto or at such
other address as the Company or the Investor or GSK may designate by ten (10) days
advance written notice to the other parties hereto.


 


6.8           Finder’s
Fee.  The Investor agrees to
indemnify and to hold harmless the Company from any liability for any
commission or compensation in the nature of a finders’ fee (and the costs and
expenses of defending against such liability or asserted liability) for which
the Investor or any of its officers, partners, employees, or representatives is
responsible.


 


The
Company agrees to indemnify and hold harmless the Investor from any liability
for any commission or compensation in the nature of a finders’ fee (and the
costs and expenses of defending against such liability or asserted liability)
for which the Company or any of its officers, employees or representatives is
responsible.


 


6.9           Expenses.  Irrespective of whether the Closing is
effected, each party shall bear their own costs and expenses incurred with
respect to the negotiation, execution, delivery and performance of this
Agreement.  If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement or the
Restated Certificate, the prevailing party shall be entitled to reasonable
attorney’s fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.


 


6.10         Amendments
and Waivers.  Any term of this
Agreement may be amended and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company,
the Investor and GSK.  Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any securities purchased under this Agreement at the time
outstanding, each future holder of all such securities, and the Company.


 


6.11         Severability.  If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.


 


6.12         Confidentiality.  Any
confidential information obtained by the Investor or GSK pursuant to this
Agreement which is labeled or otherwise identified as confidential or
proprietary shall be treated as confidential and shall not be disclosed to a
third party without the prior written consent of the Company and shall not be
used by the Investor or GSK for any purpose other than monitoring the Investor’s
or GSK’s investment in the Company, except that the Investor or GSK may
disclose such information (i) to its attorneys, accountants, consultants,
and other professionals to the extent necessary to obtain their services in
connection with monitoring its investment in the Company, (ii) to its
affiliates, officers, directors, shareholders, 


 


14

















 


members and/or partners in the ordinary course of
business or pursuant to disclosure obligation to affiliates, shareholders,
members and/or partners; provided that such information is provided to such
persons and entities with notice that such information is confidential and
should be treated as such, (iii) to any prospective purchaser of the
Investor’s or GSK’s shares of the Company, provided (in the case of disclosure
in clause (iii)) the recipient agrees to keep such information confidential and
to use such information solely for evaluation of such proposed purchase, or
(iv) as may otherwise be required by law. 
Notwithstanding the foregoing, such information shall not be deemed
confidential for the purpose of enforcement of this Agreement and said
information shall not be deemed confidential after it becomes publicly known
through no fault of the recipient.  The
provisions of this Section 6.12 shall be in addition to, and not in substitution
for, the provisions of any separate confidentiality agreements executed by the
parties hereto; provided that if there is any conflict between the provisions
of this Section 6.12 and the more restrictive provisions of such separate
confidentiality agreements, the provisions of such separate confidentiality
agreements shall prevail.


 


6.13         Publicity.   No party or any affiliate of a party shall
make, or cause to be made, any publicity, news release or other such general
public announcement or make any other disclosure to any third party in respect
of this Agreement or the transactions contemplated hereby (including, without
limitation, disclosure of Investor’s or GSK’s ownership interest in the
Company) without the prior written consent of the other party; provided however, that the foregoing provision
is not intended to limit communications deemed reasonably necessary or
appropriate by a party or its affiliates to its employees, stockholders,
partners, directors, officers, potential investors, accountants and legal
counsel who are under an obligation to preserve the confidentiality of the
foregoing.  Notwithstanding the foregoing
provision, the parties and their respective affiliates shall not be prohibited
from making any disclosure or release that is required by law, court order, or
applicable regulation, or is considered necessary by legal counsel to fulfill
an obligation under securities laws or the rules of a national stock
exchange.


 


6.14         Entire
Agreement.  This Agreement and the
documents referred to herein constitute the entire agreement among the parties
and no party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein.


 


6.15         Legends.  It is understood that the certificates
evidencing the Securities may bear one or all of the following legends:


 


(a)           “The
shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended (the “Act”). 
The shares may not be sold, transferred or assigned in the absence of an
effective registration for these shares under the Act or an opinion of the
corporation’s counsel that registration is not required under the Act.”


 


(b)           “The
sale, pledge, hypothecation, assignment or transfer of the securities
represented by this certificate is subject to the terms and conditions of a
Governance Agreement by and between the stockholder and the corporation.  Copies of such agreement may be obtained upon
written request to the Secretary of the Corporation.”


 


(c)           Any
legend required by the laws of any state.


 


15

















 


6.16         Nasdaq
Listing.  The Company shall use all
commercially reasonable efforts to have the Shares acquired by the Investor at
the Closing authorized for listing on Nasdaq.


 


6.17         Existing
Agreements Between GSK and Theravance. 
GSK, the Investor, and the Company agree and acknowledge that (a) none
of GSK, the Investor nor any of their affiliates currently have any right to
nominate or designate any individual to serve as a member or observer of the
Board of Directors pursuant to section 1.1(a) of the Governance Agreement,
and (b) notwithstanding the purchase of the Shares by the Investor
hereunder or any other acquisition of shares of Voting Stock (as defined in the
Governance Agreement) by GSK, the Investor or any of their affiliates, none of
GSK, the Investor nor any of their affiliates will following the Closing have
any right to nominate or designate any individual to serve as a member or
observer of the Board of Directors pursuant to section 1.1(a) of the
Governance Agreement.  Notwithstanding
the approval of the purchase of the Shares hereunder by the Independent
Directors and the Company and except as otherwise set forth herein, GSK and the
Investor agree and acknowledge that and each of them and their affiliates
continue to be subject to the limitations set forth in the Governance Agreement
with respect to acquisitions of any securities or direct or indirect rights,
warrants or options to acquire, or securities convertible into or exchangeable
for, any Equity Securities (as defined in the Governance Agreement).  GSK, the Investor and the Company agree that
neither the execution of this Agreement nor the consummation by it of the transactions
contemplated hereby does or will, violate, conflict with or result in the
breach or termination of, or constitute a default under the terms of, any
existing agreement between GSK or any of its affiliates, on the one hand, and
Theravance or any of its affiliates, on the other hand.


 


6.18         Authorization.  GSK has full power and authority to enter
into this Agreement and the Amendment, and this Agreement and the Amendment
constitute its valid and legally binding obligations, enforceable in accordance
with their respective terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors’ rights generally and
(ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.


 


6.19         Registrable
Securities.  The Shares purchased by
the Investor pursuant to this Agreement shall constitute Registrable Securities
as defined in, and in accordance with the limitations set forth in, the
Investors’ Rights Agreement.


 


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blank.]


 


16

















 


IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.


 


 


	
   

  	
  THERAVANCE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Rick E Winningham

  
	
   

  	
   

  	
  Rick
  E Winningham

  
	
   

  	
   

  	
  Chief
  Executive Officer

  



 


 


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COMMON STOCK PURCHASE AGREEMENT


 

















 


	
   

  	
  INVESTOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Glaxo
  Group Limited

  
	
   

  	
  Name
  of Investor

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Peter K. Hopkins

  
	
   

  	
  Signature
  of Authorized Person

  
	
   

  	
  Name:
  Peter K. Hopkins

  
	
   

  	
  Title:
  A duly authorized representative for and on behalf of Glaxo Group Limited

  
	
   

  	
   

  
	
   

  	
  Address:
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Fax
  No: 

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GlaxoSmithKline
  LLC

  
	
   

  	
  (Solely
  with respect to Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.9, 6.10, 6.11,
  6.12, 6.13, 6.14, 6.17 and 6.18)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  William J. Mosher

  
	
   

  	
  Signature
  of Authorized Person

  
	
   

  	
  Name:
  William J. Mosher

  
	
   

  	
  Title:
  Vice President and Secretary

  
	
   

  	
   

  
	
   

  	
  Address:
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Fax
  No: 

  	
   

  
	
   

  	
   

  
						



 


 


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COMMON STOCK PURCHASE AGREEMENT