Document:

Exhibt 10.4

 

THERAVANCE, INC.

 

2004 EMPLOYEE STOCK PURCHASE PLAN

 

(AS ADOPTED MAY 27, 2004 AND AMENDED ON APRIL 19, 2005, DECEMBER 11, 2007, DECEMBER 10, 2008, APRIL 27, 2010 AND FEBRUARY 11, 2011)

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
SECTION 1. PURPOSE OF THE   PLAN
    	
1
    
	
 
    	
 
    
	
SECTION 2. ADMINISTRATION OF   THE PLAN
    	
1
    
	
 
    	
(a)  Committee Composition
    	
1
    
	
 
    	
(b)  Committee Responsibilities
    	
1
    
	
 
    	
 
    	
 
    
	
SECTION 3. STOCK OFFERED   UNDER THE PLAN
    	
1
    
	
 
    	
(a)  Authorized Shares
    	
1
    
	
 
    	
(b)  Anti-Dilution Adjustments
    	
1
    
	
 
    	
(c)  Reorganizations
    	
2
    
	
 
    	
 
    	
 
    
	
SECTION 4. ENROLLMENT AND   PARTICIPATION
    	
2
    
	
 
    	
(a)  Offering Periods
    	
2
    
	
 
    	
(b)  Accumulation Periods
    	
2
    
	
 
    	
(c)  Enrollment
    	
2
    
	
 
    	
(d)  Duration of Participation
    	
2
    
	
 
    	
(e)  Applicable Offering Period
    	
3
    
	
 
    	
 
    	
 
    
	
SECTION 5. EMPLOYEE   CONTRIBUTIONS
    	
3
    
	
 
    	
(a)  Commencement of Payroll Deductions
    	
3
    
	
 
    	
(b)  Amount of Payroll Deductions
    	
3
    
	
 
    	
(c)  Changing Withholding Rate
    	
4
    
	
 
    	
(d)  Discontinuing Payroll Deductions
    	
4
    
	
 
    	
(e)  Limit on Number of Elections
    	
4
    
	
 
    	
 
    	
 
    
	
SECTION 6. WITHDRAWAL FROM   THE PLAN
    	
4
    
	
 
    	
(a)  Withdrawal
    	
4
    
	
 
    	
(b)  Re-Enrollment After Withdrawal
    	
4
    
	
 
    	
 
    	
 
    
	
SECTION 7. CHANGE IN   EMPLOYMENT STATUS
    	
4
    
	
 
    	
(a)  Termination of Employment
    	
4
    
	
 
    	
(b)  Leave of Absence
    	
4
    
	
 
    	
(c)  Death
    	
5
    
	
 
    	
 
    	
 
    
	
SECTION 8. PLAN ACCOUNTS AND   PURCHASE OF SHARES
    	
5
    
	
 
    	
(a)  Plan Accounts
    	
5
    
	
 
    	
(b)  Purchase Price
    	
5
    
	
 
    	
(c)  Number of Shares Purchased
    	
5
    
	
 
    	
(d)  Available Shares Insufficient
    	
6
    
	
 
    	
(e)  Issuance of Stock
    	
6
    
	
 
    	
(f)  Tax Withholding
    	
6
    
	
 
    	
(g)  Unused Cash Balances
    	
6
    

 

i

 

	
 
    	
(h)  Stockholder Approval
    	
6
    
	
 
    	
 
    	
 
    
	
SECTION 9. LIMITATIONS ON   STOCK OWNERSHIP
    	
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(a)  Five Percent Limit
    	
6
    
	
 
    	
(b)  Dollar Limit
    	
7
    
	
 
    	
 
    	
 
    
	
SECTION 10. RIGHTS NOT   TRANSFERABLE
    	
7
    
	
 
    	
 
    
	
SECTION 11. NO RIGHTS AS AN   EMPLOYEE
    	
8
    
	
 
    	
 
    
	
SECTION 12. NO RIGHTS AS A   STOCKHOLDER
    	
8
    
	
 
    	
 
    
	
SECTION 13. SECURITIES LAW   REQUIREMENTS
    	
8
    
	
 
    	
 
    
	
SECTION 14. AMENDMENT OR   DISCONTINUANCE
    	
8
    
	
 
    	
 
    
	
SECTION 15. DEFINITIONS
    	
8
    
	
 
    	
(a)  Accumulation Period
    	
8
    
	
 
    	
(b)  Board
    	
8
    
	
 
    	
(c)  Code
    	
8
    
	
 
    	
(d)  Committee
    	
8
    
	
 
    	
(e)  Company
    	
8
    
	
 
    	
(f)  Compensation
    	
9
    
	
 
    	
(g)  Corporate Reorganization
    	
9
    
	
 
    	
(h)  Eligible Employee
    	
9
    
	
 
    	
(i)  Exchange Act
    	
9
    
	
 
    	
(j)  Fair Market Value
    	
9
    
	
 
    	
(k)  Offering Period
    	
10
    
	
 
    	
(l)  Participant
    	
10
    
	
 
    	
(m)  Participating Company
    	
10
    
	
 
    	
(n)  Plan
    	
10
    
	
 
    	
(o)  Plan Account
    	
10
    
	
 
    	
(p)    Purchase Price
    	
10
    
	
 
    	
(q)    Stock
    	
10
    
	
 
    	
(r)    Subsidiary
    	
10
    

 

ii

 

THERAVANCE, INC.

 

2004 EMPLOYEE STOCK PURCHASE PLAN

 

SECTION 1.                PURPOSE OF THE PLAN.

 

The Board adopted the Plan effective as of the date of the IPO.  The Plan shall be implemented on such date following its effectiveness as shall be determined by the Board in its discretion.  The purpose of the Plan is to provide Eligible Employees with an opportunity to increase their proprietary interest in the success of the Company by purchasing Stock from the Company on favorable terms and to pay for such purchases through payroll deductions.  The Plan is intended to qualify for favorable tax treatment under Section 423 of the Code.

 

SECTION 2.                ADMINISTRATION OF THE PLAN.

 

(a)           Committee Composition.  The Committee shall administer the Plan.  The Committee shall consist exclusively of one or more directors of the Company, who shall be appointed by the Board.

 

(b)           Committee Responsibilities.  The Committee shall interpret the Plan and make all other policy decisions relating to the operation of the Plan.  The Committee may adopt such rules, guidelines and forms as it deems appropriate to implement the Plan.  The Committee’s determinations under the Plan shall be final and binding on all persons.

 

SECTION 3.                STOCK OFFERED UNDER THE PLAN.

 

(a)           Authorized Shares.  The number of shares of Stock available for purchase under the Plan shall be 2,025,000(1) (subject to adjustment pursuant to Subsection (b) below).

 

(b)           Anti-Dilution Adjustments.  The aggregate number of shares of Stock offered under the Plan, the 2,500-share limitation described in Section 8(c) and the price of shares that any Participant has elected to purchase shall be adjusted proportionately for any increase or decrease in the number of outstanding shares of Stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend, any other increase or decrease in such shares effected without receipt or payment of consideration by the Company, the distribution of the shares of a Subsidiary to the Company’s stockholders, or a similar event.

 

(1)  All share numbers reflect the reverse stock split approved in connection with the IPO.  Reflects 300,000 share increase approved by the stockholders on June 30, 2005.  Reflects 300,000 share increase approved by the Compensation Committee of the Board on December 11, 2007 and approved by stockholders at the Annual Stockholders Meeting on April 22, 2008. Reflects 550,000 share increase approved by the Board on December 10, 2008 and approved by stockholders at the Annual Stockholders Meeting on April 24, 2009.  Reflects 550,000 share increase approved by the Compensation Committee of the Board of Directors on February 11, 2011 and approved by stockholders at the Annual Stockholders Meeting on April 27, 2011.

 

 

(c)           Reorganizations.  Any other provision of the Plan notwithstanding, immediately prior to the effective time of a Corporate Reorganization, the Offering Period and Accumulation Period then in progress shall terminate and shares shall be purchased pursuant to Section 8, unless the Plan is continued or assumed by the surviving corporation or its parent corporation.  The Plan shall in no event be construed to restrict in any way the Company’s right to undertake a dissolution, liquidation, merger, consolidation or other reorganization.

 

SECTION 4.                ENROLLMENT AND PARTICIPATION.

 

(a)           Offering Periods.  While the Plan is in effect, two overlapping Offering Periods shall commence in each calendar year.  The Offering Periods shall consist of the 24-month periods commencing on each May 16 and November 16, except that:

 

(i)            Each Offering Period shall commence on the date designated by the Board or Committee and shall end on the date 24 months later or such shorter period selected by the Board or Committee.

 

(ii)           The Committee may determine that the first Offering Period applicable to the Eligible Employees of a new Participating Company shall commence on any date specified by the Committee.

 

(iii)          An Offering Period shall in no event be longer than 27 months.

 

(b)           Accumulation Periods.  While the Plan is in effect, two Accumulation Periods shall commence in each calendar year.  The Accumulation Periods shall consist of the six-month periods commencing on each May 16 and November 16, except that:

 

(i)            Each Accumulation Period shall commence on May 16 and November 16 and end on the earliest of the next November 15 and May 15, respectively, unless otherwise provided by the Committee.

 

(ii)           The Committee may determine that the first Accumulation Period applicable to the Eligible Employees of a new Participating Company shall commence on any date specified by the Committee.

 

(c)           Enrollment.  Each Eligible Employee may elect to become a Participant on the first day of an Offering Period by filing the prescribed enrollment form with the Company.  The enrollment form shall be filed at the prescribed location not later than the day designated by the Company but in any event prior to the commencement of the Offering Period.

 

(d)           Duration of Participation.  Once enrolled in the Plan, a Participant shall continue to participate in the Plan until he or she:

 

(i)            Reaches the end of the Accumulation Period in which his or her employee contributions were discontinued under Section 5(d) or 9(b);

 

(ii)           Is deemed to withdraw from the Plan under Subsection (c) above;

 

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(iii)          Withdraws from the Plan under Section 6(a); or

 

(iv)          Ceases to be an Eligible Employee.

 

A Participant whose employee contributions were discontinued automatically under Section 9(b) shall automatically resume participation at the beginning of the earliest Accumulation Period ending in the next calendar year, if he or she then is an Eligible Employee.  In all other cases, a former Participant may again become a Participant, if he or she then is an Eligible Employee, by following the procedure described in Subsection (d) above.

 

(e)           Applicable Offering Period.  For purposes of calculating the Purchase Price under Section 8(b), the applicable Offering Period shall be determined as follows:

 

(i)            Once a Participant is enrolled in the Plan for an Offering Period, such Offering Period shall continue to apply to him or her until the earliest of (A) the end of such Offering Period, (B) the end of his or her participation under Subsection (e) above or (C) re-enrollment for a subsequent Offering Period under Paragraph (ii), (iii) or (iv) below.

 

(ii)           In the event that the Fair Market Value of Stock on the last trading day before the commencement of the Offering Period for which the Participant is enrolled is higher than on the last trading day before the commencement of any subsequent Offering Period, the Participant shall automatically be re-enrolled for such subsequent Offering Period.

 

(iii)          If Section 14(b) applies, the Participant shall automatically be re-enrolled for a new Offering Period.

 

(iv)          Any other provision of the Plan notwithstanding, the Company (at its sole discretion) may determine prior to the commencement of any new Offering Period that all Participants shall be re-enrolled for such new Offering Period.

 

(v)           When a Participant reaches the end of an Offering Period but his or her participation is to continue, then such Participant shall automatically be re-enrolled for the Offering Period that commences immediately after the end of the prior Offering Period.

 

SECTION 5.                EMPLOYEE CONTRIBUTIONS.

 

(a)           Commencement of Payroll Deductions.  A Participant may purchase shares of Stock under the Plan solely by means of payroll deductions.  Payroll deductions shall commence as soon as reasonably practicable after the Company has received the prescribed enrollment form.

 

(b)           Amount of Payroll Deductions.  An Eligible Employee shall designate on the enrollment form the portion of his or her Compensation that he or she elects to have

 

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withheld for the purchase of Stock.  Such portion shall be a whole percentage of the Eligible Employee’s Compensation, but not less than 1% nor more than 15%.

 

(c)           Changing Withholding Rate.  If a Participant wishes to change the rate of payroll withholding, he or she may do so by filing a new enrollment form with the Company at the prescribed location at any time.  The new withholding rate shall be effective as soon as reasonably practicable after the Company has received such form.  The new withholding rate shall be a whole percentage of the Eligible Employee’s Compensation, but not less than 1% nor more than 15%.

 

(d)           Discontinuing Payroll Deductions.  If a Participant wishes to discontinue employee contributions entirely, he or she may do so by filing a new enrollment form with the Company at the prescribed location at any time.  Payroll withholding shall cease at the date requested by the Participant or thereafter as soon as reasonably practicable after the Company has received such form.  (In addition, employee contributions may be discontinued automatically pursuant to Section 9(b).)  A Participant who has discontinued employee contributions may resume such contributions by filing a new enrollment form with the Company at the prescribed location.  Payroll withholding shall resume as soon as reasonably practicable after the Company has received such form.

 

(e)           Limit on Number of Elections.  No Participant shall make more than 2 elections under Subsection (c) or (d) above during any Accumulation Period.

 

SECTION 6.                WITHDRAWAL FROM THE PLAN.

 

(a)           Withdrawal.  A Participant may elect to withdraw from the Plan by filing the prescribed form with the Company at the prescribed location at any time before the last day of an Accumulation Period.  As soon as reasonably practicable thereafter, payroll deductions shall cease and the entire amount credited to the Participant’s Plan Account shall be refunded to him or her in cash.  No partial withdrawals shall be permitted.

 

(b)           Re-Enrollment After Withdrawal.  A former Participant who has withdrawn from the Plan shall not be a Participant until he or she re-enrolls in the Plan under Section 4(d).  Re-enrollment may be effective only at the commencement of an Offering Period.

 

SECTION 7.                CHANGE IN EMPLOYMENT STATUS.

 

(a)           Termination of Employment.  Termination of employment as an Eligible Employee for any reason, including death, shall be treated as an automatic withdrawal from the Plan under Section 6(a).  (A transfer from one Participating Company to another shall not be treated as a termination of employment.)

 

(b)           Leave of Absence.  For purposes of the Plan, employment shall not be deemed to terminate when the Participant goes on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing.  Employment, however, shall be deemed to terminate 90 days after the Participant goes on a leave, unless a contract or statute guarantees his or her right to return to work.  Employment shall be deemed to

 

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terminate in any event when the approved leave ends, unless the Participant immediately returns to work.

 

(c)           Death.  In the event of the Participant’s death, the amount credited to his or her Plan Account shall be paid to a beneficiary designated by him or her for this purpose on the prescribed form or, if none, to the Participant’s estate.  Such form shall be valid only if it was filed with the Company at the prescribed location before the Participant’s death.

 

SECTION 8.                PLAN ACCOUNTS AND PURCHASE OF SHARES.

 

(a)           Plan Accounts.  The Company shall maintain a Plan Account on its books in the name of each Participant.  Whenever an amount is deducted from the Participant’s Compensation for purposes of the Plan, such amount shall be credited to the Participant’s Plan Account.  Amounts credited to Plan Accounts shall not be trust funds and may be commingled with the Company’s general assets and applied to general corporate purposes.  No interest shall be credited to Plan Accounts, except to the extent otherwise provided by the Committee.

 

(b)           Purchase Price.  The Purchase Price for each share of Stock purchased at the close of an Accumulation Period shall not be less than the lower of:

 

(i)            85% of the Fair Market Value of such share on the last trading day before the commencement of the applicable Offering Period (as determined under Section 4(f)); or

 

(ii)           85% of the Fair Market Value of such share on the last trading day in such Accumulation Period.

 

(iii)          The Committee may determine at any time prior to the start of an Accumulation Period that the Purchase Price will be such percentage of the Fair Market Value as the Committee shall determine provided that the price shall not be lower than 85% nor higher than 100% of the Fair Market Value of such share on the last trading day before the commencement of the applicable Offering Period or on the last trading day of an Accumulation Period (whichever of such days is selected by the Committee).

 

(c)           Number of Shares Purchased.  As of the last day of each Accumulation Period, each Participant shall be deemed to have elected to purchase the number of shares of Stock calculated in accordance with this Subsection (c), unless the Participant has previously elected to withdraw from the Plan in accordance with Section 6(a).  The amount then in the Participant’s Plan Account shall be divided by the Purchase Price, and the number of shares that results shall be purchased from the Company with the funds in the Participant’s Plan Account.  The foregoing notwithstanding, no Participant shall purchase more than 2,500 shares of Stock with respect to any Accumulation Period (or such lesser number established by the Committee prior to the beginning of an Accumulation Period) nor more than the amounts of Stock set forth in Sections 3(a) and 9(b).  The Committee may determine with respect to all Participants that any fractional share, as calculated under this Subsection (c), shall be (i) rounded down to the next lower whole share or (ii) credited as a fractional share.

 

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(d)                                 Available Shares Insufficient.  In the event that the aggregate number of shares that all Participants elect to purchase during an Accumulation Period exceeds the maximum number of shares remaining available for issuance under Section 3, then the number of shares to which each Participant is entitled shall be determined by multiplying the number of shares available for issuance by a fraction.  The numerator of such fraction is the number of shares that such Participant has elected to purchase, and the denominator of such fraction is the number of shares that all Participants have elected to purchase.

 

(e)                                  Issuance of Stock.  Certificates representing the shares of Stock purchased by a Participant under the Plan shall be issued to him or her as soon as reasonably practicable after the close of the applicable Accumulation Period, except that the Committee may determine that such shares shall be held for each Participant’s benefit by a broker designated by the Committee (unless the Participant has elected that certificates be issued to him or her).  Shares may be registered in the name of the Participant or jointly in the name of the Participant and his or her spouse as joint tenants with right of survivorship or as community property.

 

(f)                                    Tax Withholding.  To the extent required by applicable federal, state, local or foreign law, a Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan.  The Company shall not be required to issue any shares of Stock under the Plan until such obligations are satisfied.

 

(g)                                 Unused Cash Balances.  An amount remaining in the Participant’s Plan Account that represents the Purchase Price for any fractional share shall be carried over in the Participant’s Plan Account to the next Accumulation Period.  Any amount remaining in the Participant’s Plan Account that represents the Purchase Price for whole shares that could not be purchased by reason of Subsection (c) above, Section 3 or Section 9(b) shall be refunded to the Participant in cash, without interest.

 

(h)                                 Stockholder Approval.  Any other provision of the Plan notwithstanding, no shares of Stock shall be purchased under the Plan unless and until the Company’s stockholders have approved the adoption of the Plan.

 

SECTION 9.                                               LIMITATIONS ON STOCK OWNERSHIP.

 

(a)                                  Five Percent Limit.  Any other provision of the Plan notwithstanding, no Participant shall be granted a right to purchase Stock under the Plan if such Participant, immediately after his or her election to purchase such Stock, would own stock possessing more than 5% of the total combined voting power or value of all classes of stock of the Company or any parent or Subsidiary of the Company.  For purposes of this Subsection (a), the following rules shall apply:

 

(i)                                     Ownership of stock shall be determined after applying the attribution rules of Section 424(d) of the Code;

 

(ii)                                  Each Participant shall be deemed to own any stock that he or she has a right or option to purchase under this or any other plan; and

 

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(iii)                               Each Participant shall be deemed to have the right to purchase 2,500 shares of Stock under this Plan with respect to each Accumulation Period (or such lesser number established by the Committee prior to the beginning of an Accumulation Period).

 

(b)                                 Dollar Limit.  Any other provision of the Plan notwithstanding, no Participant shall purchase Stock with a Fair Market Value in excess of the following limit:

 

(i)                                     In the case of Stock purchased during an Offering Period that commenced in the current calendar year, the limit shall be equal to (A) $25,000 minus (B) the Fair Market Value of the Stock that the Participant previously purchased under the Plan in the current calendar year.

 

(ii)                                  In the case of Stock purchased during an Offering Period that commenced in the immediately preceding calendar year, the limit shall be equal to (A) $50,000 minus (B) the Fair Market Value of the Stock that the Participant previously purchased under the Plan in the current calendar year and in the immediately preceding calendar year.

 

(iii)                               In the case of Stock purchased during an Offering Period that commenced in the second preceding calendar year, the limit shall be equal to (A) $75,000 minus (B) the Fair Market Value of the Stock that the Participant previously purchased under the Plan in the current calendar year and in the two preceding calendar years.

 

For all purposes under this Subsection (b), the Fair Market Value of Stock shall be determined as of the beginning of the Offering Period in which such Stock is purchased.  For all purposes under this Subsection (b), this Plan shall be aggregated with any other employee stock purchase plans of the Company (or any parent or Subsidiary of the Company) that is described in Section 423 of the Code, and employee stock purchase plans not described in Section 423 of the Code shall be disregarded.  If a Participant is precluded by this Subsection (b) from purchasing additional Stock under the Plan, then his or her employee contributions shall automatically be discontinued and shall automatically resume at the beginning of the earliest Accumulation Period ending in the next calendar year (if he or she then is an Eligible Employee).

 

SECTION 10.                                        RIGHTS NOT TRANSFERABLE.

 

The rights of any Participant under the Plan, or any Participant’s interest in any Stock or moneys to which he or she may be entitled under the Plan, shall not be transferable by voluntary or involuntary assignment or by operation of law, or in any other manner other than by beneficiary designation or the laws of descent and distribution.  If a Participant in any manner attempts to transfer, assign or otherwise encumber his or her rights or interest under the Plan, other than by beneficiary designation or the laws of descent and distribution, then such act shall be treated as an election by the Participant to withdraw from the Plan under Section 6(a).

 

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SECTION 11.                                        NO RIGHTS AS AN EMPLOYEE.

 

Nothing in the Plan or in any right granted under the Plan shall confer upon the Participant any right to continue in the employ of a Participating Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Participating Companies or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her employment at any time and for any reason, with or without cause.

 

SECTION 12.                                        NO RIGHTS AS A STOCKHOLDER.

 

A Participant shall have no rights as a stockholder with respect to any shares of Stock that he or she may have a right to purchase under the Plan until such shares have been purchased on the last day of the applicable Accumulation Period.

 

SECTION 13.                                        SECURITIES LAW REQUIREMENTS.

 

Shares of Stock shall not be issued under the Plan unless the issuance and delivery of such shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded.

 

SECTION 14.                                        AMENDMENT OR DISCONTINUANCE.

 

The Board or Committee shall have the right to amend, suspend or terminate the Plan at any time and without notice.  Except as provided in Section 3, any increase in the aggregate number of shares of Stock that may be issued under the Plan shall be subject to the approval of the Company’s stockholders.  In addition, any other amendment of the Plan shall be subject to the approval of the Company’s stockholders to the extent required by any applicable law or regulation.  The Plan shall terminate automatically 20 years after its adoption by the Board, unless (a) the Plan is extended by the Board and (b) the extension is approved within 12 months by a vote of the stockholders of the Company.

 

SECTION 15.                                        DEFINITIONS.

 

(a)                                  “Accumulation Period” means a period during which contributions may be made toward the purchase of Stock under the Plan, as determined pursuant to Section 4(b).

 

(b)                                 “Board” means the Board of Directors of the Company, as constituted from time to time.

 

(c)                                  “Code” means the Internal Revenue Code of 1986, as amended.

 

(d)                                 “Committee” means a committee of the Board, as described in Section 2.

 

(e)                                  “Company” means Theravance, Inc., a Delaware corporation.

 

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(f)                                    “Compensation” means (i) the total compensation paid in cash to a Participant by a Participating Company, including salaries, wages, bonuses, incentive compensation, commissions, overtime pay and shift premiums, plus (ii) any pre-tax contributions made by the Participant under section 401(k) or 125 of the Code.  “Compensation” shall exclude all non-cash items, moving or relocation allowances, cost-of-living equalization payments, car allowances, tuition reimbursements, imputed income attributable to cars or life insurance, severance pay, fringe benefits, contributions or benefits received under employee benefit plans, income attributable to the exercise of stock options, and similar items.  The Committee shall determine whether a particular item is included in Compensation.

 

(g)                                 “Corporate Reorganization” means:

 

(i)                                     The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization; or

 

(ii)                                  The sale, transfer or other disposition of all or substantially all of the Company’s assets or the complete liquidation or dissolution of the Company.

 

(h)                                 “Eligible Employee” means any employee of a Participating Company who meets both of the following requirements:

 

(i)                                     His or her customary employment is for more than five months per calendar year and for more than 20 hours per week; and

 

(ii)                                  He or she has been an employee of a Participating Company for such period (if any) as the Committee may determine before the beginning of the applicable Offering Period.

 

Officers of the Company shall not participate in the initial Offering Period or in any subsequent Offering Period unless the Committee announces prior to commencement of an Offering Period that officers shall be eligible to participate.  The foregoing notwithstanding, an individual shall not be considered an Eligible Employee if his or her participation in the Plan is prohibited by the law of any country that has jurisdiction over him or her or if he or she is subject to a collective bargaining agreement that does not provide for participation in the Plan.

 

(i)                                     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(j)                                     “Fair Market Value” means the market price of Stock, determined by the Committee as follows:

 

(i)                                     If the Stock was traded on The Nasdaq National Market or The Nasdaq SmallCap Market on the date in question, then the Fair Market Value shall be equal to the last-transaction price quoted for such date by such Market;

 

(ii)                                  If the Stock was traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable composite transactions report for such date; or

 

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(iii)                               If none of the foregoing provisions is applicable, then the Committee shall determine the Fair Market Value in good faith on such basis as it deems appropriate.

 

Whenever possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in The Wall Street Journal or as reported directly to the Company by Nasdaq or a stock exchange.  Such determination shall be conclusive and binding on all persons.

 

(k)                                  “Offering Period” means a period with respect to which the right to purchase Stock may be granted under the Plan, as determined pursuant to Section 4(a).

 

(l)                                     “Participant” means an Eligible Employee who participates in the Plan, as provided in Section 4.

 

(m)                               “Participating Company” means (i) the Company and (ii) each present or future Subsidiary designated by the Committee as a Participating Company.

 

(n)                                 “Plan” means this Theravance, Inc. 2004 Employee Stock Purchase Plan, as it may be amended from time to time.

 

(o)                                 “Plan Account” means the account established for each Participant pursuant to Section 8(a).

 

(p)                                 “Purchase Price” means the price at which Participants may purchase Stock under the Plan, as determined pursuant to Section 8(b).

 

(q)                                 “Stock” means the Common Stock of the Company.

 

(r)                                    “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

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Addendum for International Participants

 

The Committee may allow Participants who are employed by a Participating Company designated by the Committee, who are not employed by the Company and who work or reside outside of the United States an opportunity to acquire Common Stock pursuant to the Plan in accordance with such special terms and conditions as the Committee may designate with respect to each such Participating Company.  Without limiting the authority of the Committee, the special terms and conditions which may be established with respect to each such Participating Company, and which need not be the same for all Participating Companies, include but are not limited to the right to participate, procedures for elections to participate, the payment of any interest with respect to amounts received from or credited to accounts held for the benefit of Participants, the purchase price of any shares to be acquired, the length of any purchase period, the maximum amount of contributions, credits or Stock which may be acquired by any Participant, and a Participant’s rights in the event of his or her death, disability, withdrawal from the Plan, termination of employment on behalf of the Company and all matters related thereto.  This Addendum is not subject to Section 423 of the Code or any other provision of the Plan that refers to or is based upon such Section.  For purposes of United States tax laws, this Addendum shall be treated as separate and apart from the balance of the Plan.

 

11Exhibit 10.48

 

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 (the “Agreement”).

 

Vesting Schedule:

 

Vesting is dependent upon continuous service as an employee or consultant of the Company, a Parent, a Subsidiary or an Affiliate (“Service”) throughout the vesting period.  The units will vest as follows:  «X»% on <<InitialVestDate>>; [«Y»% on <<SecondVestDate>>;] and an additional «Z»% on the final day of each 3-month period thereafter, provided that you remain in continuous Service through such date.

 

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 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.

 

You agree to cover the applicable withholding taxes as set forth more fully herein.  In connection with your receipt of the restricted stock units, you are simultaneously entering into a trading arrangement that complies with the requirements of Rule 10b5-1(c)(1) under the Securities Exchange Act of 1934 (a “10b5-1 Plan”).  As of the date of the Agreement, you are not aware of any material nonpublic information concerning the Company or its securities, or, as of the date any sales are effected pursuant to the 10b5-1 Plan, you will not effect such sales on the basis of material nonpublic information about the securities or the Company of which you were aware at the time you entered into the Agreement.

 

 

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. 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
If   the Company is subject to a Change in Control (as defined in the Plan) before   your Service terminates, the restricted stock units will vest in full if not   assumed or replaced with a new award as set forth in Section 10.1 of the   Plan.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
For   avoidance of doubt, the restricted stock units shall be treated as “shares”   for purposes of acceleration of vesting under the Company’s Change in Control   Severance Plan and 2009 Change in Control Severance Plan (each, a “Severance   Plan”) to the extent you are eligible to participate in either such plan. 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
No   additional units vest after your Service has terminated for any reason except   as set forth in a Severance Plan to the extent you are eligible for benefits   thereunder. 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 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. This means that the   restricted stock units will 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.
    

 

 

	
Leaves   of Absence and Part-Time Work
    	
 
    	
For   purposes of this award, your Service does not terminate when you go on a   military leave, a sick leave or another bona fide   leave of absence, if the leave was approved by the Company in writing. If   your leave of absence (other than a military leave) lasts for more than 6   months, then vesting will be suspended on the day that is 6 months and 1 day   after the leave of absence began. Vesting will resume effective as of the   second vesting date after you return from leave of absence provided you have   worked at least one day during that vesting period. 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
In   the case of all leaves, your Service terminates when the approved leave ends,   unless you immediately return to active work. 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
If   you and the Company agree to a reduction in your scheduled work hours, then the   Company reserves the right to modify the rate at which the 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.
    
	
 
    	
 
    	
 
    
	
Section   409A
    	
 
    	
Unless   you and the Company have agreed to a deferred settlement date (pursuant to   procedures that the Company may prescribe at its discretion), settlement of   these restricted stock units is intended to be exempt from the application of   Code Section 409A pursuant to the “short-term deferral exemption” in Treasury   Regulation 1.409A-1(b)(4) and shall be administrated and interpreted in a   manner that complies with such exemption. 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Notwithstanding   the foregoing, to the extent it is determined that settlement of these   restricted stock units is not exempt from Code Section 409A as a short-term   deferral or otherwise and the Company determines that you are a “specified   employee,” as defined in the regulations under Code Section 409A, at the time   of your “separation from service,” as defined in those regulations, then any   restricted stock units that otherwise would have been settled during the   first six months following your separation from service will instead be   settled 
    

 

2

 

	
 
    	
 
    	
on   the first business day following the six-month anniversary of your separation   from service, unless the event triggering vesting is an event other than your   separation from service.
    
	
 
    	
 
    	
 
    
	
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. Prior to the relevant taxable event,   you shall pay or make adequate arrangements satisfactory to the Company to   satisfy all withholding obligations for applicable taxes. 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
You   authorize the Company to instruct the broker whom it has selected for this   purpose to sell a number of shares of Common Stock to be issued upon the   vesting of your restricted stock units or a lesser number necessary to meet   tax withholding obligations. Such sales shall be effected at a market price   following the date that the restricted stock units vest (unless you and the   Company have agreed to a later settlement date pursuant to procedures that   the Company may prescribe at its discretion). 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
You   acknowledge that the proceeds of any such sale may not be sufficient to   satisfy your withholding obligations. To the extent the proceeds from such   sale are insufficient to cover the taxes due, the Company may in its   discretion (a) withhold the balance of all applicable taxes legally payable   by you from your wages or other cash compensation paid to you by the Company   and/or (b) withhold in shares of Common Stock, provided that the Company only   withholds an amount of shares not in excess of the amount necessary to   satisfy the minimum withholding amount. The fair market value of withheld   shares, determined as of the date taxes otherwise would have been withheld in   cash, will be applied against the withholding taxes. If the Company satisfies   the obligation for taxes by withholding a number of shares of Common Stock as   described above, you are deemed to have been issued the full number of shares   subject to the award of restricted stock units.
    

 

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Rule 10b5-1   Plan
    	
 
    	
You   acknowledge that the instruction to the broker to sell in the foregoing   section is intended to comply with the requirements of Rule 10b5-1(c)(1)(i)(B)   under the Securities Exchange Act of 1934 (the “Exchange Act”), and to be   interpreted to comply with the requirements of Rule 10b5-1(c)(1) under the   Exchange Act (a “10b5-1 Plan”). This 10b5-1 Plan is adopted to be effective   as of the first date on which the restricted stock units vest. This 10b5-1   Plan is being adopted to permit you to sell a number of shares awarded upon   the vesting of restricted stock units sufficient to pay withholding taxes   that become due as a result of this award or the vesting of the restricted   stock units or, if you elect within thirty days following notification via   the broker whom the Company has selected for this purpose of your restricted   stock unit award, to permit you to sell all of the vested restricted stock   units. You hereby appoint the Company as your agent and attorney-in-fact to   instruct the broker with respect to the number of shares to be sold under   this 10b5-1 Plan. 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
You   hereby authorize the broker to sell the number of shares of Common Stock   determined as set forth above and acknowledge that the broker is under no   obligation to arrange for such sale at any particular price. You acknowledge   that the broker may aggregate your sales with sales occurring on the same day   that are effected on behalf of other Company employees pursuant to sales of   shares vesting under Company options or restricted stock unit awards and your   proceeds will be based on a blended price for all such sales. You acknowledge   that you will be responsible for all brokerage fees and other costs of sale,   and you agree to indemnify and hold the Company harmless from any losses,   costs, damages, or expenses relating to any such sale. You acknowledge that   it may not be possible to sell Common Stock during the term of this 10b5-1   Plan due to (a) a legal or contractual restriction applicable to you or to   the broker, (b) a market disruption, (c) rules governing order execution   priority on the Nasdaq Global Market, (d) a sale effected pursuant to this   10b5-1 Plan that fails to comply (or in the reasonable opinion of the   broker’s counsel is likely not to comply) with Rule 144 under the Securities   Act of 1933, if applicable, or (e) if the Company determines that sales may   not be effected under this 10b5-1 Plan. You acknowledge that this 10b5-1 Plan   is subject to the terms of any policy adopted now or hereafter by the Company   governing the adoption of 10b5-1 plans.
    
	
 
    	
 
    	
 
    
	
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 
    

 

4

 

	
 
    	
 
    	
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.
    
	
 
    	
 
    	
 
    
	
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 ACCEPTING THIS RESTRICTED STOCK UNIT AWARD, YOU AGREE TO

 

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

 

5

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