Document:

Exhibit 10.1

 

AMENDMENT NO. 1

TO

NATURE’S SUNSHINE PRODUCTS, INC.

2009 STOCK INCENTIVE PLAN

 

The
Nature’s Sunshine Products, Inc. 2009 Stock Incentive Plan (the “Plan”), is hereby amended, effective
as of July 30, 2010 subject to approval of the stockholders at the Nature’s
Sunshine Products, Inc. annual meeting, as follows:

 

1.                                       Section 4(a) of
the Plan is hereby amended and restated as follows:

 

“Shares
Available.  Subject to adjustment as
provided in Section 4(c) of the Plan, the aggregate number of Shares
that may be issued under all Awards under the Plan shall be One Million Five
Hundred Thousand (1,500,000).  Shares to
be issued under the Plan may be authorized but unissued Shares, treasury shares
or Shares acquired in the open market or otherwise.  Notwithstanding the foregoing, (i) the
number of Shares available for granting Incentive Stock Options under the Plan
shall not exceed One Million Five Hundred Thousand (1,500,000), subject to
adjustment as provided in Section 4(c) of the Plan and subject to the
provisions of Section 422 or 424 of the Code or any successor provision
and (ii) the number of Shares available for granting Restricted Stock and
Restricted Stock Units shall not exceed Seven Hundred and Fifty Thousand
(750,000), subject to adjustment as provided in Section 4(c) of the
Plan.  If an Award terminates or is
forfeited or cancelled without the issuance of any Shares, or if any Shares
covered by an Award or to which an Award relates are not issued for any other
reason, then the number of Shares counted against the aggregate number of
Shares available under the Plan with respect to such Award, to the extent of
any such termination, forfeiture, cancellation or other event, shall again be
available for granting Awards under the Plan. 
If Shares of Restricted Stock are forfeited or otherwise reacquired by
the Company prior to vesting, whether or not dividends have been paid on such
Shares, then the number of Shares counted against the aggregate number of
Shares available under the Plan with respect to such Award of Restricted Stock,
to the extent of any such forfeiture or reacquisition by the Company, shall
again be available for granting Awards under the Plan.  Shares that are withheld in full or partial
payment to the Company of the purchase or exercise price relating to an Award
or in connection with the satisfaction of tax obligations relating to an Award
shall not be available for granting Awards under the Plan.”

 

2.                                       Except as
modified by this Amendment, all the terms and provisions of the Plan shall
continue in full force and effect.Exhibit 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 AND APRIL 27,
2010)

 

 

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

  	
  6

  
	
  (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 1,475,000(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.

 

 

(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;

 

2

 

(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 

 

3

 

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 

 

4

 

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.

 

5

 

 

(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

 

6

 

(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).

 

7

 

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.

 

8

 

(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

 

9

 

(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.

 

10

 

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.

 

11

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