Document:

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:

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·                  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.

  

 

 9Exhibit
10.32

Theravance,
Inc.

Cash
Bonus Program, amended effective as of February 28, 2007

Theravance’s Cash Bonus
Program is based on performance measured against specific goals and objectives.  The program is designed to provide incentives
for employees to meet and exceed individual, department and corporate goals as
well as encourage teamwork among the disciplines within the company and reward
those who significantly impact corporate results. All employees are eligible to
participate in the Cash Bonus Program.

Each year the
Compensation Committee assesses the Company’s performance measured against the
corporate goals.  Depending on the Committee’s
conclusion, a bonus pool is established and is allocated among the departments
pro rata. Bonus percentage guidelines are then developed by Senior Management.  In general, however, the maximum bonus
amounts as a percentage of base salary are as follows:

	
  Grades 1-6

  	
   

  	
  Determined Annually

  	
   

  
	
  Grades 7-9

  	
   

  	
  10

  	
  %

  
	
  Grade 10

  	
   

  	
  15

  	
  %

  
	
  Grades 11-12

  	
   

  	
  20

  	
  %

  
	
  Vice President

  	
   

  	
  25

  	
  %

  
	
  Senior Vice President

  	
   

  	
  40

  	
  %

  
	
  Executive Vice
  President

  	
   

  	
  40

  	
  %

  
	
  Chief Executive Officer

  	
   

  	
  50

  	
  %

  

 

Managers have the
discretion of allocating bonuses based on the highest percentage designated and
total available bonus pool.  Any exceptions
require CEO approval.

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