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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: a 300,000 share increase approved by the stockholders on June 30, 2005; a 300,000 share increase approved by the stockholders on April 22, 2008; and a 550,000 share increase approved by the stockholders 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;

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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 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%.

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(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