exv10w1







Exhibit 10.1




ARADIGM CORPORATION

Employee Stock Purchase Plan

Adopted April 16, 1996

Approved by the Shareholders on June 5, 1996

Amended by the Board of Directors on April 7, 1998

Approved by the Shareholders on May 15, 1998

Amended by the Board of Directors on February 2, 1999

Approved by the Shareholders on May 21, 1999

Amended by the Board of Directors on April 3, 2000

Approved by the Shareholders on May 19, 2000

Amended by the Board of Directors on April 2, 2001

Approved by the Shareholders on May 18, 2001

Amended by the Board of Directors on December 17, 2001

Approved by the Shareholders on February 8, 2002

Amended by the Board of Directors on February 19, 2003

Approved by the Shareholders on May 15, 2003

Amended by the Board of Directors on March 21, 2005

Approved by the Shareholders on May 19, 2005

Amended by the Board of Directors on April 4, 2008

Approved by the Shareholders on May 15, 2008

Amended by the Board of Directors on February 25, 2009

Approved by the Shareholders on May 15, 2009




Purpose




     The purpose of the Employee Stock Purchase Plan (the “Plan”) is to provide a means by which
employees of Aradigm Corporation, a California corporation (the “Company”), and its Affiliates, as
defined in subparagraph 1(b), which are designated as provided in subparagraph 2(b), may be given
an opportunity to purchase stock of the Company.



     The word “Affiliate” as used in the Plan means any parent corporation or subsidiary
corporation of the Company, as those terms are defined in Sections 424(e) and (f), respectively, of
the Internal Revenue Code of 1986, as amended (the “Code”).



     The Company, by means of the Plan, seeks to retain the services of its employees, to secure
and retain the services of new employees, and to provide incentives for such persons to exert
maximum efforts for the success of the Company.



     The Company intends that the rights to purchase stock of the Company granted under the Plan be
considered options issued under an “employee stock purchase plan” as that term is defined in
Section 423(b) of the Code.



Administration




     The Plan shall be administered by the Board of Directors (the “Board”) of the Company unless
and until the Board delegates administration to a Committee, as provided in subparagraph 2(c).
Whether or not the Board has delegated administration, the Board shall have the final power to
determine all questions of policy and expediency that may arise in the administration of the Plan.



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     The Board shall have the power, subject to, and within the limitations of, the express
provisions of the Plan:




	 	•	 	To determine when and how rights to purchase stock of the Company shall be
granted and the provisions of each offering of such rights (which need not be
identical).
	 
	 	•	 	To designate from time to time which Affiliates of the Company shall be eligible
to participate in the Plan.
	 
	 	•	 	To construe and interpret the Plan and rights granted under it, and to establish,
amend and revoke rules and regulations for its administration. The Board, in the
exercise of this power, may correct any defect, omission or inconsistency in the
Plan, in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
	 
	 	•	 	To amend the Plan as provided in paragraph 13.
	 
	 	•	 	Generally, to exercise such powers and to perform such acts as the Board deems
necessary or expedient to promote the best interests of the Company and its
Affiliates and to carry out the intent that the Plan be treated as an “employee
stock purchase plan” within the meaning of Section 423 of the Code.





     The Board may delegate administration of the Plan to a Committee composed of not fewer than
two (2) members of the Board (the “Committee”) constituted in accordance with the requirements of
Rule 16b-3 under the Exchange Act. If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers theretofore possessed by
the Board, subject, however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. The Board may abolish the Committee at any time
and revest in the Board the administration of the Plan.



Shares Subject to the Plan




     Subject to the provisions of paragraph 12 relating to adjustments upon changes in stock, the
stock that may be sold pursuant to rights granted under the Plan shall not exceed in the aggregate
four million five hundred fifty thousand (4,550,000) shares of the Company’s common stock (the
“Common Stock”). If any right granted under the Plan shall for any reason terminate without having
been exercised, the Common Stock not purchased under such right shall again become available for
the Plan.



     The stock subject to the Plan may be unissued shares or reacquired shares, bought on the
market or otherwise.



Grant of Rights; Offering




     The Board or the Committee may from time to time grant or provide for the grant of rights to
purchase Common Stock of the Company under the Plan to eligible employees (an “Offering”) on a date
or dates (the “Offering Date(s)”) selected by the Board or the Committee. Each Offering shall be in
such form and shall contain such terms and conditions as the Board or the Committee shall deem
appropriate, which shall comply with the requirements of Section 423(b)(5) of the Code that all
employees granted rights to purchase stock under the Plan shall have the same rights and
privileges. The terms and conditions of an Offering shall be incorporated by reference into the
Plan and treated as part of the Plan. The provisions of separate Offerings need not be identical,
but each Offering shall include (through incorporation of the provisions of this Plan by reference
in the document comprising the Offering or otherwise) the period during which the Offering shall be
effective, which period shall not exceed twenty-seven (27) months beginning with the Offering Date,
and the substance of the provisions contained in paragraphs 5 through 8, inclusive.



Eligibility




     Rights may be granted only to employees of the Company or, as the Board or the Committee may
designate as provided in subparagraph 2(b), to employees of any Affiliate of the Company. Except as
provided in subparagraph 5(b), an employee of the Company or any Affiliate shall not be eligible to
be granted rights under the Plan, unless, on the Offering Date, such employee has been in the
employ of the Company or any Affiliate for such continuous period preceding such grant as the Board
or the Committee may require, but in no event shall the required period of continuous employment be
equal to or greater than two (2) years. In addition, unless otherwise determined by the Board or
the Committee and set forth in the terms of the applicable Offering, no employee of the Company or
any



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Affiliate shall be eligible to be granted rights under the Plan, unless, on the Offering Date, such
employee’s customary employment with the Company or such Affiliate is for at least twenty (20)
hours per week and at least five (5) months per calendar year.



     The Board or the Committee may provide that, each person who, during the course of an
Offering, first becomes an eligible employee of the Company or designated Affiliate will, on a date
or dates specified in the Offering which coincides with the day on which such person becomes an
eligible employee or occurs thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall have the same characteristics
as any rights originally granted under that Offering, as described herein, except that:




	 	•	 	the date on which such right is granted shall be the “Offering Date” of such
right for all purposes, including determination of the exercise price of such right;
	 
	 	•	 	the period of the Offering with respect to such right shall begin on its Offering
Date and end coincident with the end of such Offering; and
	 
	 	•	 	the Board or the Committee may provide that if such person first becomes an
eligible employee within a specified period of time before the end of the Offering,
he or she will not receive any right under that Offering.





     No employee shall be eligible for the grant of any rights under the Plan if, immediately after
any such rights are granted, such employee owns stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Company or of any Affiliate.
For purposes of this subparagraph 5(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee, and stock which such employee may purchase under
all outstanding rights and options shall be treated as stock owned by such employee.



     An eligible employee may be granted rights under the Plan only if such rights, together with
any other rights granted under “employee stock purchase plans” of the Company and any Affiliates,
as specified by Section 423(b)(8) of the Code, do not permit such employee’s rights to purchase
stock of the Company or any Affiliate to accrue at a rate which exceeds twenty five thousand
dollars ($25,000) of fair market value of such stock (determined at the time such rights are
granted) for each calendar year in which such rights are outstanding at any time.



     Officers of the Company and any designated Affiliate shall be eligible to participate in
Offerings under the Plan, provided, however, that the Board may provide in an Offering that certain
employees who are highly compensated employees within the meaning of Section 423(b)(4)(D) of the
Code shall not be eligible to participate.



Rights; Purchase Price




     On each Offering Date, each eligible employee, pursuant to an Offering made under the Plan,
shall be granted the right to purchase up to the number of shares of Common Stock of the Company
purchasable with a percentage designated by the Board or the Committee not exceeding fifteen
percent (15%) of such employee’s Earnings (as defined by the Board or the Committee in each
Offering) during the period which begins on the Offering Date (or such later date as the Board or
the Committee determines for a particular Offering) and ends on the date stated in the Offering,
which date shall be no later than the end of the Offering. The Board or the Committee shall
establish one or more dates during an Offering (the “Purchase Date(s)”) on which rights granted
under the Plan shall be exercised and purchases of Common Stock carried out in accordance with such
Offering.



     In connection with each Offering made under the Plan, the Board or the Committee may specify a
maximum number of shares that may be purchased by any employee as well as a maximum aggregate
number of shares that may be purchased by all eligible employees pursuant to such Offering. In
addition, in connection with each Offering that contains more than one Purchase Date, the Board or
the Committee may specify a maximum aggregate number of shares which may be purchased by all
eligible employees on any given Purchase Date under the Offering. If the aggregate purchase of
shares upon exercise of rights granted under the Offering would exceed any such maximum



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aggregate number, the Board or the Committee shall make a pro rata allocation of the shares
available in as nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.



     The purchase price of stock acquired pursuant to rights granted under the Plan shall be not
less than the lesser of:




	 	•	 	an amount equal to eighty-five percent (85%) of the fair market value of the
stock on the Offering Date; or
	 
	 	•	 	an amount equal to eighty-five percent (85%) of the fair market value of the
stock on the Purchase Date.





Participation; Withdrawal; Termination




     An eligible employee may become a participant in the Plan pursuant to an Offering by
delivering a participation agreement to the Company within the time specified in the Offering, in
such form as the Company provides. Each such agreement shall authorize payroll deductions of up to
the maximum percentage specified by the Board or the Committee of such employee’s Earnings during
the Offering (as defined by the Board or Committee in each Offering). The payroll deductions made
for each participant shall be credited to an account for such participant under the Plan and shall
be deposited with the general funds of the Company. A participant may reduce (including to zero) or
increase such payroll deductions, and an eligible employee may begin such payroll deductions, after
the beginning of any Offering only as provided for in the Offering. A participant may make
additional payments into his or her account only if specifically provided for in the Offering and
only if the participant has not had the maximum amount withheld during the Offering.



     At any time during an Offering, a participant may terminate his or her payroll deductions
under the Plan and withdraw from the Offering by delivering to the Company a notice of withdrawal
in such form as the Company provides. Such withdrawal may be elected at any time prior to the end
of the Offering except as provided by the Board or the Committee in the Offering. Upon such
withdrawal from the Offering by a participant, the Company shall distribute to such participant all
of his or her accumulated payroll deductions (reduced to the extent, if any, such deductions have
been used to acquire stock for the participant) under the Offering, without interest, and such
participant’s interest in that Offering shall be automatically terminated. A participant’s
withdrawal from an Offering will have no effect upon such participant’s eligibility to participate
in any other Offerings under the Plan but such participant will be required to deliver a new
participation agreement in order to participate in subsequent Offerings under the Plan.



     Rights granted pursuant to any Offering under the Plan shall terminate immediately upon
cessation of any participating employee’s employment with the Company and any designated Affiliate,
for any reason, and the Company shall distribute to such terminated employee all of his or her
accumulated payroll deductions (reduced to the extent, if any, such deductions have been used to
acquire stock for the terminated employee) under the Offering, without interest.



     Rights granted under the Plan shall not be transferable by a participant otherwise than by
will or the laws of descent and distribution, or by a beneficiary designation as provided in
paragraph 14 and, otherwise during his or her lifetime, shall be exercisable only by the person to
whom such rights are granted.



Exercise




     On each Purchase Date specified therefor in the relevant Offering, each participant’s
accumulated payroll deductions and other additional payments specifically provided for in the
Offering (without any increase for interest) will be applied to the purchase of whole shares of
stock of the Company, up to the maximum number of shares permitted pursuant to the terms of the
Plan and the applicable Offering, at the purchase price specified in the Offering. No fractional
shares shall be issued upon the exercise of rights granted under the Plan. The amount, if any, of
accumulated payroll deductions remaining in each participant’s account after the purchase of shares
which is less than the amount required to purchase one share of stock on the final Purchase Date of
an Offering shall be held in each such participant’s account for the purchase of shares under the
next Offering under the Plan, unless such participant withdraws from such next Offering, as
provided in subparagraph 7(b), or is no longer eligible to be granted rights under the Plan, as
provided in paragraph 5, in which case such amount shall be distributed to the participant after
such final Purchase Date, without interest. The amount, if any, of accumulated payroll deductions



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remaining in any participant’s account after the purchase of shares which is equal to the amount
required to purchase whole shares of stock on the final Purchase Date of an Offering shall be
distributed in full to the participant after such Purchase Date, without interest.



     No rights granted under the Plan may be exercised to any extent unless the shares to be issued
upon such exercise under the Plan (including rights granted thereunder) are covered by an effective
registration statement pursuant to the Securities Act of 1933, as amended (the “Securities Act”)
and the Plan is in material compliance with all applicable state, foreign and other securities and
other laws applicable to the Plan. If on a Purchase Date in any Offering hereunder the Plan is not
so registered or in such compliance, no rights granted under the Plan or any Offering shall be
exercised on such Purchase Date, and the Purchase Date shall be delayed until the Plan is subject
to such an effective registration statement and such compliance, except that the Purchase Date
shall not be delayed more than twelve (12) months and the Purchase Date shall in no event be more
than twenty-seven (27) months from the Offering Date. If on the Purchase Date of any Offering
hereunder, as delayed to the maximum extent permissible, the Plan is not registered and in such
compliance, no rights granted under the Plan or any Offering shall be exercised and all payroll
deductions accumulated during the Offering (reduced to the extent, if any, such deductions have
been used to acquire stock) shall be distributed to the participants, without interest.



Covenants of the Company




     During the terms of the rights granted under the Plan, the Company shall keep available at all
times the number of shares of stock required to satisfy such rights.



     The Company shall seek to obtain from each federal, state, foreign or other regulatory
commission or agency having jurisdiction over the Plan such authority as may be required to issue
and sell shares of stock upon exercise of the rights granted under the Plan. If, after reasonable
efforts, the Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance and sale of stock
under the Plan, the Company shall be relieved from any liability for failure to issue and sell
stock upon exercise of such rights unless and until such authority is obtained.



Use of Proceeds from Stock




     Proceeds from the sale of stock pursuant to rights granted under the Plan shall constitute
general funds of the Company.



Rights as a Shareholder




     A participant shall not be deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares subject to rights granted under the Plan unless and until the
participant’s shareholdings acquired upon exercise of rights under the Plan are recorded in the
books of the Company.



Adjustments upon Changes in Stock




     If any change is made in the stock subject to the Plan, or subject to any rights granted under
the Plan (through merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding rights will be appropriately
adjusted in the class(es) and maximum number of shares subject to the Plan and the class(es) and
number of shares and price per share of stock subject to outstanding rights. Such adjustments shall
be made by the Board or the Committee, the determination of which shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company shall not be treated as a
“transaction not involving the receipt of consideration by the Company.”)



     In the event of: (1) a dissolution or liquidation of the Company; (2) a merger or
consolidation in which the Company is not the surviving corporation; (3) a reverse merger in which
the Company is the surviving corporation but the shares of the Company’s Common Stock outstanding
immediately preceding the merger are converted by virtue of the merger into other property, whether
in the form of securities, cash or otherwise; or (4) the acquisition by



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any person, entity or group within the meaning of Section 13(d) or 14(d) of the Exchange Act or any
comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored
or maintained by the Company or any Affiliate of the Company) of the beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of the combined voting power
entitled to vote in the election of directors, then, as determined by the Board in its sole
discretion (i) any surviving or acquiring corporation may assume outstanding rights or substitute
similar rights for those under the Plan, (ii) such rights may continue in full force and effect, or
(iii) participants’ accumulated payroll deductions may be used to purchase Common Stock immediately
prior to the transaction described above and the participants’ rights under the ongoing Offering
terminated.



Amendment of the Plan




     The Board at any time, and from time to time, may amend the Plan. However, except as provided
in paragraph 12 relating to adjustments upon changes in stock, no amendment shall be effective
unless approved by the shareholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:




	 	•	 	Increase the number of shares reserved for rights under the Plan;
	 
	 	•	 	Modify the provisions as to eligibility for participation in the Plan (to the
extent such modification requires shareholder approval in order for the Plan to
obtain employee stock purchase plan treatment under Section 423 of the Code or to
comply with the requirements of Rule 16b-3 promulgated under the Exchange Act as
amended (“Rule 16b-3”)); or employee stock purchase plan treatment under Section 423
of the Code or to comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act as amended (“Rule 16b-3”)); or
	 
	 	•	 	Modify the Plan in any other way if such modification requires shareholder
approval in order for the Plan to obtain employee stock purchase plan treatment
under Section 423 of the Code or to comply with the requirements of Rule 16b-3.





     It is expressly contemplated that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated thereunder relating to
employee stock purchase plans and/or to bring the Plan and/or rights granted under it into
compliance therewith.



     Rights and obligations under any rights granted before amendment of the Plan shall not be
impaired by any amendment of the Plan, except with the consent of the person to whom such rights
were granted, or except as necessary to comply with any laws or governmental regulations, or except
as necessary to ensure that the Plan and/or rights granted under the Plan comply with the
requirements of Section 423 of the Code.



Designation of Beneficiary




     A participant may file a written designation of a beneficiary who is to receive any shares and
cash, if any, from the participant’s account under the Plan in the event of such participant’s
death subsequent to the end of an Offering but prior to delivery to the participant of such shares
and cash. In addition, a participant may file a written designation of a beneficiary who is to
receive any cash from the participant’s account under the Plan in the event of such participant’s
death during an Offering.



     Such designation of beneficiary may be changed by the participant at any time by written
notice. In the event of the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant’s death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of the Company), the
Company, in its sole discretion, may deliver such shares and/or cash to the spouse or to any one or



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more dependents or relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.



Termination or Suspension of the Plan




     The Board in its discretion, may suspend or terminate the Plan at any time. No rights may be
granted under the Plan while the Plan is suspended or after it is terminated.



     Rights and obligations under any rights granted while the Plan is in effect shall not be
impaired by suspension or termination of the Plan, except as expressly provided in the Plan or with
the consent of the person to whom such rights were granted, or except as necessary to comply with
any laws or governmental regulation, or except as necessary to ensure that the Plan and/or rights
granted under the Plan comply with the requirements of Section 423 of the Code.



Effective Date of Plan




     The Plan shall become effective on the same day that the Company’s initial public offering of
shares of common stock becomes effective (the “Effective Date”), but no rights granted under the
Plan shall be exercised unless and until the Plan has been approved by the shareholders of the
Company within twelve (12) months before or after the date the Plan is adopted by the Board or the
Committee, which date may be prior to the Effective Date.




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