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Exhibit 10.17    
    

 
 

Advanced Medicine    
    
    August 23, 2001    

Via Courier  

Mr. Rick
E Winningham

12 Weatherfield Drive

Newtown, PA 18940 

Dear
Rick: 

        On
behalf of Advanced Medicine, Inc. (the "Company"), I am pleased to offer you the position of President and Chief Executive Officer. Your starting salary will be $600,000 per
year. You will be eligible to receive a bonus up to 50% of your salary, which for the balance of 2001 and for 2002 will be guaranteed. In addition, you will receive a signing bonus upon your first day
of employment in the amount of $100,000, which will be grossed up to cover the taxes associated with receiving this bonus. You will be eligible to receive additional bonus compensation based upon
extraordinary accomplishments at the discretion of the Board of Directors. You will also be appointed to the Board of Directors of the Company. 

        Subject
to the approval of the Company's Board of Directors, you will be granted options to purchase 1,200,000 shares of Common Stock of the Company at a purchase price of $5.50 per
share. Such options will vest over a four-year period after the date of hire at a rate of 25% after the first year and ratably each month thereafter. The options granted to you will be
contingent on your execution of the Company's Standard Stock Option Agreement and will be subject to all terms of the Company's 1997 Stock Option Plan. In 2003, you will receive an additional stock
option grant for the greater of (i) 100,000 shares or (ii) two times the number of shares under the next highest "follow-on" stock option grant received by any Company
employee that year, all on the standard terms and conditions applicable to all such grants made by the Company. 

        The
Company will provide you with short-term rental reimbursement through December 31, 2001, in a reasonable amount to assist you while you locate appropriate
permanent housing. The Company will also reimburse you for the reasonable costs associated with moving personal effects to California (including short-term storage costs, if necessary) and
will reimburse you for the standard, one-time closing costs incurred by you when you sell your home in Newtown, Pennsylvania and when you purchase your home in California. In addition, the
Company will reimburse you for any non-refundable tuition expenses incurred by you relating to your children's Fall 2001 school programs. The above reimbursement payments will be "grossed
up" to cover the taxes associated with them. 

        If
by January 1, 2002 you have not sold your Pennsylvania home the Company will continue to reimburse you (on a fully grossed up basis for tax purposes) for your reasonable
California rental expense for an additional 3 months, provided you are actively marketing the Pennsylvania home. If by April 1, 2002 you still have not sold your Pennsylvania home, the
Company will thereafter continue to reimburse you for 50% of your reasonable rental expense (not grossed up) until the Pennsylvania home is sold, provided you continue to actively market the home. If
by January 1, 2002 you have sold your Pennsylvania home but have not yet purchased a California home, the Company will thereafter reimburse you for 50% of your reasonable rental expense (not
grossed up) until you purchase a California home. In addition, if you purchase a California home before you sell your Pennsylvania home, the Company will reimburse you for the after-tax
cost of your mortgage payments on your Pennsylvania home until you sell your Pennsylvania home or June 30, 2002, whichever date occurs first. 

        The
Company will loan you up to $3.75 million to assist you with the purchase of a home in the Bay Area. This loan will be interest-free and will be secured by a
second deed of trust on your home and by a stock pledge agreement relating to your option shares. Fifty percent (50%) of the original principal balance of the loan will be forgiven on the fifth
anniversary of your employment with the 

Company,
and an additional sixteen percent (16%) of the original principal balance of the loan will be forgiven on the seventh anniversary of your employment with the Company. Repayment of the balance
of the loan will be required 10 years from the date the loan is made; provided, however, that in the event you sell any of your option shares prior to the 10-year maturity date, you agree to
apply 25% of any gain realized on such sale(s) to a reduction in the outstanding principal. If you have not sold your Pennsylvania home when you purchase your California home, the Company will provide
you with an interest-free bridge loan in an amount up to the value of the equity in your Pennsylvania home. 

        Given
your concerns about California real estate, the Company will agree to share any realized loss on the sale of your California home 50/50, provided you remain as an
employee of the Company for at least five years. We anticipate that this protection will take the form of a cash payment to you in the amount of 50% of your realized loss, grossed up to cover the
taxes associated with such a payment. In return, you agree to share with the Company 50/50 any gain realized on the sale of your California home. This arrangement will be documented
separately once you have purchased a home in California. 

        If
the location of your permanent home in the Bay Area is in Marin County, the Company will, at your request, either provide a car and driver for you or lease a full-size
luxury automobile for you. 

        As
a regular employee of Advanced Medicine, Inc., you will be eligible for a number of Company-sponsored benefits. These are described in the Summary Plan Description that you
will receive when you begin work; however, they include enrollment in our Aetna PPO or HMO plan and in our Vision and Dental plans for you and your family. The Company also provides life, LTD
and AD&D insurance, and you will be able to participate in our 401(k) program. In addition to the Company's generous allotment of standard holidays, you will be eligible for three weeks of paid
vacation per year. 

        Your
employment pursuant to this offer is contingent on you executing the Company's standard form of Proprietary Information and Inventions Agreement. Also, the United States Immigration
and Naturalization Service requires that employers establish the eligibility of each employee as a U.S. citizen, permanent resident or individual authorized for employment in the United States. 

        While
we hope that your employment with the Company will be mutually satisfactory, employment with Advanced Medicine, Inc. is for no specific period of time. As a result, either
you or the Company is free
to terminate your employment relationship at any time for any reason, with or without cause. This is the full and complete agreement between us on this term. Although your job duties, title,
compensation and benefits, as well as the Company's personnel policies and procedures, may change from time-to-time, the "at-will" nature of your employment may
only be changed in an express writing signed by you and the Chairman of the Board of the Company. Notwithstanding the foregoing, if your employment is terminated by the Company without cause, the
Company will make a lump sum payment to you (less taxes) of: 

	(i)
	12 months
salary plus current target annual bonus if the termination occurs before October 1, 2002; and

	(ii)
	24 months
salary plus 2 times your then current target bonus if the termination occurs on or after October 1, 2002. 

For
purposes of this provision, a termination "without cause" shall mean termination for any reason other than: (i) unauthorized use or
disclosure of the confidential information or trade secrets of the Company, which use causes material harm to the Company, (ii) conviction of a felony under the laws of the United States or any
state thereof, (iii) gross negligence, or (iv) repeated failure to perform lawful assigned duties for thirty days after receiving written notification from the Board of Directors. You
agree, as a condition to receiving the severance payment set forth above, to sign the Company's standard form of Release required of all employees who receive any severance pay. 

        This
letter sets forth the terms of your employment with us and supersedes any prior representations or agreements, whether written or oral. A duplicate original of this offer is
enclosed for your records. To accept this offer, please sign and return this letter to me, in which event your 

employment
will begin on a date mutually agreed to, but no later than October 1, 2001. This offer will expire if not accepted by you before August 24, 2001. 

        Rick,
we look forward to having you join us. If you have any questions, please call me at (908) 658-3108 or (508) 645-5133. 

	 	 	Sincerely,
	

 	
 	

/s/  P. ROY VAGELOS      
 P. Roy Vagelos

Chairman of the Board
	

I have read and accept this employment offer:	
 	

 
	

/s/  RICK E WINNINGHAM      
 Rick E Winningham	
 	

 
	

Date: August            , 2001.

8/29/01 Advanced Medicines Inc.	
 	

 

	1)
	The
$300,000 annual guaranteed bonus is payable $300,000 in 2001 and $300,000 in 2002.

	2)
	The
investment in the house for the purposes of calculating the realized gain or loss will include purchase price plus improvements which increase the cost basis of the house. 

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Exhibit 10.17

Advanced Medicine August 23, 2001QuickLinks
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Exhibit 10.18    
    

 
  FULL RECOURSE NOTE
  SECURED BY DEED OF TRUST AND STOCK PLEDGE    
    

	$3,750,000.00	 	July 1, 2002
 South San Francisco, California

        FOR
VALUE RECEIVED, the undersigned Maker promises to pay to the order of Theravance, Inc. (the "Company"), at its principal offices at 901 Gateway Boulevard, South San Francisco,
California 94080, the principal sum of Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000.00), upon the terms and conditions specified below. 

        1.    Principal.    The entire principal balance of this Note shall be due and payable on July 1, 2012, subject
to paragraphs 5 and 10 below. 

        2.    Interest.    No interest shall accrue on the unpaid principal balance of the Note. 

        3.    Application of Payment.    Payment shall be made in lawful tender of the United States. Prepayment of the
principal balance of this Note may be made in whole or in part at any time without penalty. 

        4.    Purpose and Security.    The proceeds of the loan evidenced by this Note shall be applied solely to the purchase
of the Maker's principal residence in the Town of Hillsborough, County of San Mateo, State of California. Payment of this Note shall be secured by a Deed of Trust on such principal residence, as such
residence is more particularly described in Exhibit "A" to the Deed of Trust, a copy of which is attached hereto as Exhibit I. Payment of this Note also shall be secured by a Stock
Pledge Agreement to be executed and delivered by Maker covering shares of the Company's Common Stock. Maker, however, shall remain personally liable for payment of this Note, and all assets of the
Maker, in addition to the collateral under the Deed of Trust and the Stock Pledge Agreement, may be applied to the satisfaction of the Maker's obligations hereunder. 

        5.    Events of Acceleration.    The entire unpaid principal balance of this Note shall become immediately due and
payable upon any one of the following events: 

	A.
	the
date thirty (30) days after the Maker ceases to be in service as an employee of the Company if such cessation of service is due to Maker's (i) voluntary resignation
or (ii) termination for cause (which for purposes of this Note shall mean (A) the unauthorized use or disclosure of the confidential information or trade secrets of the Company which
causes material harm to the Company, (B) conviction of a felony under the laws of the United States or any State thereof, (C) gross misconduct, or (D) repeated failure to perform
assigned duties for thirty days after receiving notice from a senior officer of the Company); or

	B.
	the
sale, transfer, mortgage, assignment, encumbrance or lease, whether voluntarily or involuntarily or by operation of law or otherwise, of the property covered by the Deed of Trust,
or any portion thereof or interest therein, without the prior written consent of the Company; or

	C.
	the
insolvency of the Maker, the commission of any act of bankruptcy by the Maker, the execution by the Maker of a general assignment for the benefit of creditors, the filing by or
against the Maker of any petition in bankruptcy or any petition for relief under the provisions of the federal bankruptcy act or any other state or federal law for the relief of debtors and the
continuation of such petition without dismissal for a period of thirty (30) days or more, the appointment of a receiver or trustee to take possession of any property or assets of the Maker, or
the attachment of or execution against any property or assets of the Maker; or

	D.
	the
failure of the Maker to execute and deliver to the Company a Deed of Trust on Maker's principal residence within 5 days of a request from the Company; or 

1

 

	E.
	the
sale or other disposition for value by Maker of any of the shares of Common Stock (or other collateral) that secure the repayment of this Note, but only to the extent of 25% of the
gain realized by Maker from such sale or disposition (net of commissions). If such proceeds are not sufficient to repay in full the principal and accrued interest under this Note, Maker will execute
and deliver a new promissory note to the Company on substantially the same terms as this Note but reflecting the remaining unpaid principal and accrued interest (if any); or

	F.
	the
occurrence of any event of default under the Deed of Trust or the Stock Pledge Agreement securing this Note or any obligation secured thereby. 

        6.    Assignment.    This Note shall be binding on the Maker and his successors, assigns, personal representatives,
heirs, and legatees, and shall be binding upon and inure to the benefit of the Company, any future holder of this Note and their respective successors and assigns. The Maker may not assign or transfer
this Note or any of his obligations hereunder. 

        7.    Collection.    If action is instituted to collect this Note, the Maker promises to pay all costs and expenses
(including reasonable attorney fees) incurred in connection with such action. 

        8.    Waiver.    No previous waiver and no failure or delay by the Company in acting with respect to the terms of this
Note, the Deed of Trust or the Stock Pledge Agreement shall constitute a waiver of any breach, default, or failure of condition under this Note, the Deed of Trust, the Stock Pledge Agreement or the
obligations secured thereby. A waiver of any term of this Note, the Deed of Trust, the Stock Pledge Agreement or of any of the obligations secured thereby must be made in writing and shall be limited
to the express terms of such waiver. 

        The
Maker hereby waives presentment, demand for payment, notice of dishonor, default or delinquency, notice of acceleration, notice of protest and non-payment, notice of
costs, expenses or losses and interest thereon, notice of interest on interest, and diligence in taking any action to collect any sums owing under this Note or in proceeding against any of the rights
or interests in or to properties securing payment of this Note. 

        9.    Conflicting Agreements.    In the event of any inconsistencies between the terms of this Note and the terms of
any other document related to the loan evidenced by the Note, the terms of this Note shall prevail. 

        10.    Loan Forgiveness.    The principal balance of this Note shall be subject to forgiveness as follows: One Million
Eight Hundred Seventy-Five Thousand Dollars ($1,875,000.00) shall be forgiven upon Maker's continuation in employment with the Company through October 1, 2006, and Six Hundred
Thousand Dollars ($600,000.00) shall be forgiven upon Maker's continuation in employment with the Company through October 1, 2008. 

        Maker
shall, however, be responsible for the payment of all income and employment withholding taxes applicable to such loan forgiveness and imputed interest and shall make appropriate
arrangements with the Company for the satisfaction of such tax liability, if appropriate. In no event shall any portion of this Note which remains outstanding at the time of Maker's cessation of
employment with the Company be subject to the loan forgiveness provisions of this Paragraph 10. 

        11.    Governing Law.    This Note shall be construed in accordance with the laws of the State of California. 

	

 	
 	

/s/  RICK E WINNINGHAM      
MAKER: Rick E Winningham

2

 
 
 

CONSENT OF SPOUSE    
    

	To:
	Theravance, Inc.

        I
acknowledge that I have been provided copies of the Promissory Note, Deed of Trust and Stock Pledge Agreement each dated as of July     , 2002 between Rick E
Winningham and Theravance, Inc. (the "Secured Party") any and all related collateral documents and agreements (collectively, the "Collateral Documents"); and that I am familiar with the
contents of the Collateral Documents. I acknowledge and agree that any interest I may have, whether direct, community or otherwise, in the property and assets constituting the collateral contemplated
by the Collateral Documents (the "Collateral") shall be subject to all of the terms and conditions of the Collateral Documents. Without limiting the generality of the foregoing, I am aware that in the
Collateral Documents Rick E Winningham grants to the Secured Party a security interest in the Collateral as security for the obligations referred to in the Collateral Documents. The granting of a
security interest in the Collateral includes and encumbers any property interest I may have therein, whether direct, community or otherwise, and I consent to such encumbrance. 

        I
agree that I will not make or cause to be made any transfer of my interest in the Collateral except to the extent expressly permitted by the Collateral Documents. 

        I
further agree that this Consent shall bind my successors, assigns (including, but not limited to, the trustee of any trust), personal representatives, heirs, and legatees. 

        Dated:  July 1,
2002. 

	

 	
 	

/s/  GALE E. WINNINGHAM      
 Gale E. Winningham

3

 
 

EXHIBIT I    
    
    DEED OF TRUST    
    

 
 

EXHIBIT A    
    
    LEGAL DESCRIPTION OF PRINCIPAL RESIDENCE    
    

        The land referred to is situated in the State of California, County of San Mateo, Town of Hillsborough, and is described as follows: 

        Parcel
"C", as delineated upon that certain Map entitled 'PARCEL MAP BEING A RESUBDIVISION OF LOTS 2 AND 3, 'BRIDGE CERRITO,"' filed for record in the Office of the Recorder of the
County of San Mateo, State of California, on July 30th, 1974 in Book 25 of Maps, at Page 33. 

	A.P.N. 032-400-270	 	J.P.N. 32-40-400-19.04

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Exhibit 10.18

FULL RECOURSE NOTE SECURED BY DEED OF TRUST AND STOCK PLEDGE

CONSENT OF SPOUSE

EXHIBIT I DEED OF TRUST

EXHIBIT A LEGAL DESCRIPTION OF PRINCIPAL RESIDENCE

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