EX-10.1






ARADIGM CORPORATION




EXECUTIVE OFFICER SEVERANCE BENEFIT PLAN




Section 1. Introduction.



The Aradigm Corporation Executive Officer Severance Benefit Plan (the “Plan”) was established
effective October 7, 2005 and is hereby amended and restated effective December 31, 2008. The
purpose of the Plan is to provide for the payment of severance benefits to certain eligible
employees of Aradigm Corporation (the “Company”) or an affiliate of the Company whose employment
with the Company is involuntarily terminated. This Plan, the Company’s Severance Benefit Plan and
the Company’s Director Severance Benefit Plan shall supersede any severance benefit plan, policy or
practice previously maintained by the Company or any affiliate of the Company. This Plan document
also is the Summary Plan Description for the Plan.



Section 2. Eligibility For Benefits.



(a) General Rules. Subject to the requirements set forth in this Section, the Company will
grant severance benefits under the Plan to Eligible Employees.



(1) “Eligible Employees” for purposes of this Plan are all full-time and part-time regular
hire employees of the Company and its affiliates (i) who are based in the United States, (ii) whose
employment is involuntarily terminated, (iii) whose termination of employment results in a
“separation from service” with the Company within the meaning of Treasury Regulation Section
1.409A-1(h) (without regard to any permissible alternative definition of “termination of
employment” thereunder) (such date, a “Termination Date”), (iv) who have the title of officer of
the Company and (v) who are notified by the Company in writing that they are eligible for
participation in this Plan. The determination as to whether an employee is an Eligible Employee
shall be made by the Company, in its sole discretion, and such determination shall be binding and
conclusive on all persons. For purposes of this Plan, part-time employees are those regular hire
employees who are regularly scheduled to work more than twenty (20) hours per week but less than a
full-time work schedule. Regular hire employees working twenty (20) hours per week or less and
temporary employees are not eligible for severance benefits under the Plan.



(2) In order to be eligible to receive benefits under the Plan, an Eligible Employee must
remain on the job until his or her Termination Date.



(3) In order to be eligible to receive benefits under the Plan, an Eligible Employee also must
execute a general waiver and release in substantially the form attached hereto as Exhibit A,
Exhibit B or Exhibit C, as appropriate, and such release must become effective in accordance with
its terms within sixty (60) days following a Termination Date. The Company, in its sole discretion,
may modify the form of the required release to comply with applicable state law and shall determine
the form of the required release.



(b) Exceptions to Benefit Entitlement. An employee will not be an Eligible Employee and thus
will not receive benefits under the Plan in any of the following circumstances, as determined by
the Company, in its sole discretion:



(1) The employee has executed an individually negotiated employment contract or agreement with
the Company relating to severance benefits that is in effect on his or her Termination Date, in
which case such employee’s severance benefit, if any, shall be governed by the terms of such
individually negotiated employment contract or agreement.



(2) The employee voluntarily terminates employment with the Company or an affiliate of the
Company. Voluntary terminations include, but are not limited to, resignation, retirement or
failure to return from a leave of absence on the scheduled date.



(3) The employee voluntarily terminates employment with the Company or an affiliate of the
Company in order to accept employment with another entity that is wholly or partly owned (directly
or indirectly) by the Company or an affiliate of the Company.



(4) The employee is involuntarily terminated for reasons related to job performance or
misconduct.



(5) The employee is offered a position with the Company or an affiliate of the Company for
which the employee is qualified and does not accept that position.



(6) The employee is offered immediate reemployment by a successor to the Company or by a
purchaser of its assets, as the case may be, following a change in ownership of the Company or a
sale of substantially all of the assets of the Company or of a division or business unit of the
Company. For purposes of the foregoing, “immediate reemployment” means that the employee’s
employment with the successor to the Company or the purchaser of its assets, as the case may be,
results in uninterrupted employment such that the employee does not incur a lapse in pay as a
result of the change in ownership of the Company or the sale of its assets.



(7) The employee is rehired by the Company or an affiliate of the Company prior to the date
benefits under the Plan are scheduled to commence.



(8) The employee engages in misconduct, violates a Company policy, or acts in a manner deemed
harmful to the Company or an affiliate of the Company prior to his or her Termination Date.



Section 3. Amount Of Benefit.



(a) Cash Benefit. Each Eligible Employee shall receive cash payments, in the form defined
pursuant to Section 4, equal to the sum of the following base severance benefits:



	 	 	 
	Eligible Employee 

	 	Amount of Base Severance Benefit
	Officers

	 	• Fifty-two (52) weeks of Base Salary (as

defined herein); and







	 	•	 	The Bonus Payment (as defined herein)





(b) Definition of “Base Salary.” For purposes of calculating Plan benefits, “Base Salary”
shall mean the Eligible Employee’s then-current base salary, excluding incentive pay, premium pay,
commissions, overtime, and other forms of variable compensation.



(c) Definition of “Bonus Payment.” For purposes of calculating Plan benefits, “Bonus Payment”
shall mean an Eligible Employee’s target bonus for the year in which the Termination Date occurs
multiplied by the average annual percentage achievement of corporate goals over each fiscal year
for the three complete fiscal years preceding the Termination Date.



(d) Career Transition Assistance. Following an Eligible Employee’s termination of employment
by the Company, the Company, in its sole discretion, may provide the Eligible Employee with career
transition services through an outplacement service provider.



(e) Other Employees. Notwithstanding any other provision of this Plan to the contrary,
including, without limitation, Sections 2(a), 3(a) and 7(a), the Company, in its sole discretion,
may by an action pursuant to Section 6(b) that is communicated in writing to an employee of the
Company who does not qualify as an Eligible Employee, provide Plan benefits to such employee (in
which case, references in the Plan to “Eligible Employee” shall be deemed to refer to such employee
of the Company). The Company’s decision to provide Plan benefits to an employee of the Company who
does not qualify as an Eligible Employee does not obligate the Company to provide similar benefits
under this Plan to any other Eligible Employee or employee of the Company, whether or not similarly
situated.



(f) Certain Reductions. Notwithstanding any other provision of the Plan to the contrary, any
benefits payable to an Eligible Employee under this Plan shall be reduced by any severance benefits
payable by the Company or an affiliate of the Company to such individual under any other policy,
plan, program or arrangement, including, without limitation, a contract between the Eligible
Employee and any entity, covering such individual. Furthermore, to the extent that any federal,
state or local laws, including, without limitation, so-called “plant closing” laws, require the
Company to give advance notice or make a payment of any kind to an Eligible Employee because of
that Eligible Employee’s involuntary termination due to a layoff, reduction in force, plant or
facility closing, sale of business, change of control, or any other similar event or reason, the
benefits payable under this Plan shall either be reduced or eliminated. The benefits provided
under this Plan are intended to satisfy any and all statutory obligations that may arise out of an
Eligible Employee’s involuntary termination of employment for the foregoing reasons, and the Plan
Administrator shall so construe and implement the terms of the Plan.



Section 4. Time Of Payment And Form Of Benefit.



(a) All payments provided under this Plan are intended to constitute separate payments for
purposes of Treasury Regulation Section 1.409A-2(b)(2). Cash severance payments pursuant to
Section 3(a) will be paid in a series of successive equal installments over the regularly scheduled
payroll periods occurring during the one year period following the Termination Date.



(b) If an Eligible Employee is a “specified employee” of the Company or any affiliate thereof
(or any successor entity thereto) within the meaning of Section 409A(a)(2)(B)(i) of the Internal
Revenue Code of 1986, as amended (the “Code”) on a Termination Date, then any cash severance
payments pursuant to Section 3(a) (the “Severance Payments”) shall be delayed until the earlier of:
(i) the date that is six (6) months after the Termination Date, or (ii) the date of the Eligible
Employee’s death (such date, the “Delayed Payment Date”), and the Company (or the successor entity
thereto, as applicable) shall (A) pay to the Eligible Employee a lump sum amount equal to the sum
of the Severance Payments that otherwise would have been paid to the Eligible Employee on or before
the Delayed Payment Date, without any adjustment on account of such delay, and (B) continue the
Severance Payments in accordance with any applicable payment schedules set forth for the balance of
the period specified herein. Notwithstanding the foregoing, (i) Severance Payments scheduled to be
paid from the Termination Date through March 15th of the calendar year following such termination
shall be paid to the maximum extent permitted pursuant to the “short-term deferral” rule set forth
in Treasury Regulation Section 1.409A-1(b)(4); (ii) Severance Payments scheduled to be paid that
are not paid pursuant to the preceding clause (i) shall be paid as scheduled to the maximum extent
permitted pursuant to an “involuntary separation from service” as permitted by Treasury Regulation
Section 1.409A-1(b)(9)(iii), but in no event later than the last day of the second taxable year
following the taxable year of the Termination Date; and (iii) any Severance Payments that are not
paid pursuant to either the preceding clause (i) or the preceding clause (ii) shall be subject to
delay, if necessary, as provided in the previous sentence. Except to the extent that payments may
be delayed until the Delayed Payment Date, on the first regularly scheduled payroll period
following the release described in Section 2(a)(3), the Company will pay the Eligible Employee the
Severance Payments the Eligible Employee would otherwise have received under the Plan on or prior
to such date but for the delay in payment related to the effectiveness of the release described in
Section 2(a)(3), with the balance of the Severance Payments being paid as otherwise provided
herein.



(c) Amounts paid under Section 3(d) are intended to qualify for the exception provided under
Treasury Regulation Sections 1.409A-1(b)(9)(v)(A) and (C). Any amounts paid under Section 7 are
not intended to be delayed pursuant to Section 409A(a)(2)(B)(i) of the Code and are intended to be
paid pursuant to the exception provided by Treasury Regulation Section 1.409A-1(b)(9)(v)(B).



(d) All payments under the Plan will be subject to applicable withholding for federal, state
and local taxes. If a terminating employee is indebted to the Company at his or her Termination
Date, the Company reserves the right to offset any severance payments under the Plan by the amount
of such indebtedness. In no event shall payment of any Plan benefit be made prior to the Eligible
Employee’s Termination Date or prior to the effective date of the release described in Section
2(a)(3).



Section 5. Reemployment.



(a) Repayment. In the event of an Eligible Employee’s reemployment by the Company or an
affiliate of the Company during the Severance Period, as defined below, such Eligible Employee will
be required to repay to the Company a prorated portion of the severance pay received under Section
3.



(b) Definition of “Severance Period.” “Severance Period,” for purposes of this Plan, means
the number of weeks of Base Salary in respect of which the amount paid to the Eligible Employee
under Section 3(a) was calculated.



Section 6. Right To Interpret Plan; Amendment and Termination. 



(a) Exclusive Discretion. The Plan Administrator shall have the exclusive discretion and
authority to establish rules, forms, and procedures for the administration of the Plan and to
construe and interpret the Plan and to decide any and all questions of fact, interpretation,
definition, computation or administration arising in connection with the operation of the Plan,
including, but not limited to, the eligibility to participate in the Plan and amount of benefits
paid under the Plan. The rules, interpretations, computations and other actions of the Plan
Administrator shall be binding and conclusive on all persons.



(b) Amendment or Termination. The Company reserves the right to amend or terminate this Plan
or the benefits provided hereunder at any time; provided, however, that no such amendment or
termination shall affect the right to any unpaid benefit of any Eligible Employee whose Termination
Date has occurred prior to amendment or termination of the Plan. Any action amending, terminating
or extending the Plan shall be in writing and executed by the Chief Executive Officer or Chief
Financial Officer of the Company.



Section 7. Continuation Of Certain Employee Benefits.



(a) COBRA Continuation Coverage. Each Eligible Employee who is enrolled in a health or dental
plan sponsored by the Company or an affiliate of the Company may be eligible to continue coverage
under such health or dental plan (or to convert to an individual policy), at the time of the
Eligible Employee’s termination of employment, under the Consolidated Omnibus Budget Reconciliation
Act of 1985 (“COBRA”). The Company will notify the individual of any such right to continue such
health coverage at the time of termination pursuant to COBRA. No provision of this Plan will
affect the continuation coverage rules under COBRA, except that the Company’s payment, if any, of
any applicable insurance premiums will be credited as payment by the Eligible Employee for purposes
of the Eligible Employee’s payment required under COBRA. Therefore, the period during which an
Eligible Employee may elect to continue the Company’s group medical or dental coverage at his or
her own expense under COBRA, the length of time during which COBRA coverage will be made available
to the Eligible Employee, and all other rights and obligations of the Eligible Employee under COBRA
(except the obligation to pay insurance premiums that the Company pays, if any) will be applied in
the same manner that such rules would apply in the absence of this Plan. Specifically, if COBRA is
elected, the Company will pay COBRA premiums on behalf of an Eligible Employee in accordance with
the following schedule or until the eligible employee becomes eligible for group health insurance
coverage through a new employer (whichever comes first):



	 	 	 
	Eligible Employee 

	 	Duration of Premium Payments
	Officers

	 	The Severance Period up to a maximum of twelve

(12) months.






The Executive must promptly notify the Company in writing if the Executive becomes eligible for
group health insurance coverage through a new employer during the Severance Period. At the
conclusion of the period of insurance premium payments made by the Company, the Eligible Employee
will be responsible for the entire payment of premiums required under COBRA for the duration of the
COBRA period. For purposes of this Section 7(a), applicable premiums paid by the Company during
the Severance Period shall not include any amounts payable by the Eligible Employee under a Section
125 health care reimbursement plan, which amounts, if any, are the sole responsibility of the
Eligible Employee.



(b) Other Employee Benefits. All non-health benefits (such as life insurance, disability and
401(k) plan coverage) terminate as of the employee’s Termination Date (except to the extent that a
conversion privilege may be available thereunder).



Section 8. No Implied Employment Contract.



The Plan shall not be deemed (i) to give any employee or other person any right to be retained
in the employ of the Company or (ii) to interfere with the right of the Company to discharge any
employee or other person at any time with or without cause and with or without advance notice,
which right is hereby reserved.



Section 9. Legal Construction.



This Plan is intended to be governed by and shall be construed in accordance with the Employee
Retirement Income Security Act of 1974 (“ERISA”) and, to the extent not preempted by ERISA, the
laws of the State of California.



Section 10. Claims, Inquiries And Appeals.



(a) Applications for Benefits and Inquiries. Any application for benefits, inquiries about
the Plan or inquiries about present or future rights under the Plan must be submitted to the Plan
Administrator in writing by an applicant (or his or her authorized representative). The Plan
Administrator is:



Aradigm Corporation

3929 Point Eden Way

Hayward, CA 94545




(b) Denial of Claims. In the event that any application for benefits is denied in whole or in
part, the Plan Administrator must provide the applicant with written or electronic notice of the
denial of the application, and of the applicant’s right to review the denial. Any electronic
notice will comply with the regulations of the U.S. Department of Labor. The written notice of
denial will be set forth in a manner designed to be understood by the employee and will include the
following:



(1) the specific reason or reasons for the denial;



(2) references to the specific Plan provisions upon which the denial is based;



(3) a description of any additional information or material that the Plan Administrator needs
to complete the review and an explanation of why such information or material is necessary; and



(4) an explanation of the Plan’s review procedures and the time limits applicable to such
procedures, including a statement of the applicant’s right to bring a civil action under section
502(a) of ERISA following a denial on review of the claim, as described in Section 10(d) below.



This written notice will be given to the applicant within ninety (90) days after the Plan
Administrator receives the application, unless special circumstances require an extension of time,
in which case, the Plan Administrator has up to an additional ninety (90) days for processing the
application. If an extension of time for processing is required, written notice of the extension
will be furnished to the applicant before the end of the initial ninety (90) day period.



This notice of extension will describe the special circumstances necessitating the additional
time and the date by which the Plan Administrator is to render its decision on the application.



(c) Request for a Review. Any person (or that person’s authorized representative) for whom an
application for benefits is denied, in whole or in part, may appeal the denial by submitting a
request for a review to the Plan Administrator within sixty (60) days after the application is
denied. A request for a review shall be in writing and shall be addressed to:



Aradigm Corporation

3929 Point Eden Way

Hayward, CA 94545




A request for review must set forth all of the grounds on which it is based, all facts in
support of the request and any other matters that the applicant feels are pertinent. The applicant
(or his or her representative) shall have the opportunity to submit (or the Plan Administrator may
require the applicant to submit) written comments, documents, records, and other information
relating to his or her claim. The applicant (or his or her representative) shall be provided, upon
request and free of charge, reasonable access to, and copies of, all documents, records and other
information relevant to his or her claim. The review shall take into account all comments,
documents, records and other information submitted by the applicant (or his or her representative)
relating to the claim, without regard to whether such information was submitted or considered in
the initial benefit determination.



(d) Decision on Review. The Plan Administrator will act on each request for review within
sixty (60) days after receipt of the request, unless special circumstances require an extension of
time (not to exceed an additional sixty (60) days), for processing the request for a review. If an
extension for review is required, written notice of the extension will be furnished to the
applicant within the initial sixty (60) day period. This notice of extension will describe the
special circumstances necessitating the additional time and the date by which the Plan
Administrator is to render its decision on the review. The Plan Administrator will give prompt,
written or electronic notice of its decision to the applicant. Any electronic notice will comply
with the regulations of the U.S. Department of Labor. In the event that the Plan Administrator
confirms the denial of the application for benefits in whole or in part, the notice will set forth,
in a manner calculated to be understood by the applicant, the following:



(1) the specific reason or reasons for the denial;



(2) references to the specific Plan provisions upon which the denial is based;



(3) a statement that the applicant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other information relevant to his
or her claim; and



(4) a statement of the applicant’s right to bring a civil action under section 502(a) of
ERISA.



(e) Rules and Procedures. The Plan Administrator will establish rules and procedures,
consistent with the Plan and with ERISA, as necessary and appropriate in carrying out its
responsibilities in reviewing benefit claims. The Plan Administrator may require an applicant who
wishes to submit additional information in connection with an appeal from the denial of benefits to
do so at the applicant’s own expense.



(f) Exhaustion of Remedies. No legal action for benefits under the Plan may be brought until
the claimant (i) has submitted a written application for benefits in accordance with the procedures
described by Section 10(a) above, (ii) has been notified by the Plan Administrator that the
application is denied, (iii) has filed a written request for a review of the application in
accordance with the appeal procedure described in Section 10(c) above, and (iv) has been notified
in writing that the Plan Administrator has denied the appeal. Notwithstanding the foregoing, if
the Plan Administrator does not respond within the time limits specified in this Section 10, the
claimant has the right to bring a civil action under Section 502(a) of ERISA.



Section 11. Basis Of Payments To And From Plan.



All benefits under the Plan shall be paid by the Company. The Plan shall be unfunded, and
benefits hereunder shall be paid only from the general assets of the Company.



Section 12. Other Plan Information.



(a) Employer and Plan Identification Numbers. The Employer Identification Number assigned to
the Company (which is the “Plan Sponsor” as that term is used in ERISA) by the Internal Revenue
Service is 94-3133088. The Plan Number assigned to the Plan by the Plan Sponsor pursuant to the
instructions of the Internal Revenue Service is 513.



(b) Ending Date for Plan’s Fiscal Year. The date of the end of the fiscal year for the
purpose of maintaining the Plan’s records is December 31.



(c) Agent for the Service of Legal Process. The agent for the service of legal process with
respect to the Plan is Aradigm Corporation, 3929 Point Eden Way, Hayward, CA 94545.



(d) Plan Sponsor and Administrator. The “Plan Sponsor” and the “Plan Administrator” of the
Plan is Aradigm Corporation, 3929 Point Eden Way, Hayward, CA 94545. The Plan Sponsor’s and Plan
Administrator’s telephone number is (510) 265-9000. The Plan Administrator is the named fiduciary
charged with the responsibility for administering the Plan.



Section 13. Statement Of ERISA Rights.



Participants in this Plan (which is a welfare benefit plan sponsored by Aradigm Corporation)
are entitled to certain rights and protections under ERISA. If you are an Eligible Employee, you
are considered a participant in the Plan and, under ERISA, you are entitled to:



(a) Examine, without charge, at the Plan Administrator’s office and at other specified
locations, such as work sites, all Plan documents and copies of all documents filed by the Plan
with the U.S. Department of Labor, such as detailed annual reports (to the extent required to be
filed) and available at the Public Disclosure Room of the Pension and Welfare Benefit
Administration;



(b) Obtain, upon written request to the Plan Administrator, copies of documents governing the
operation of the Plan and copies of the latest annual report (Form 5500 Series), to the extent
required to be filed, and an updated (as necessary) Summary Plan Description. The Administrator
may make a reasonable charge for the copies; and



(c) Receive a summary of the Plan’s annual financial report, to the extent the Plan is
required to prepare and distribute the summary.



(d) Receive a summary of the Plan’s annual financial report, in the case of a plan which is
required to file an annual financial report with the Department of Labor. (Generally, all pension
plans and welfare plans with one hundred (100) or more participants must file these annual
reports.)



In addition to creating rights for Plan participants, ERISA imposes duties upon the people
responsible for the operation of the employee benefit plan. The people who operate the Plan,
called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and
other Plan participants and beneficiaries.



No one, including your employer or any other person, may fire you or otherwise discriminate
against you in any way to prevent you from obtaining a Plan benefit or exercising your rights under
ERISA. If your claim for a Plan benefit is denied in whole or in part, you must receive a written
explanation of the reason for the denial. You have the right to have the Plan review and
reconsider your claim.



Under ERISA, there are steps you can take to enforce the above rights. For instance, if you
request materials from the Plan and do not receive them within thirty (30) days, you may file suit
in a federal court. In such a case, the court may require the Plan Administrator to provide the
materials and pay you up to $110 a day until you receive the materials, unless the materials were
not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for
benefits that is denied or ignored, in whole or in part, you may file suit in a state or federal
court. If it should happen that the Plan fiduciaries misuse the Plan’s money, or if you are
discriminated against for asserting your rights, you may seek assistance from the U.S. Department
of Labor, or you may file suit in a federal court. The court will decide who should pay court
costs and legal fees. If you are successful, the court may order the person you have sued to pay
these costs and fees. If you lose, the court may order you to pay these costs and fees, for
example, if it finds your claim is frivolous.



Assistance with Your Questions




If you have any questions about the Plan, you should contact the Plan Administrator. If you
have any questions about this statement or about your rights under ERISA, or if you need assistance
in obtaining documents from the Plan Administrator, you should contact the nearest office of the
Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone
directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security
Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.
You may also obtain certain publications about your rights and responsibilities under ERISA by
calling the publications hotline of the Employee Benefits Security Administration.



Section 14. Execution.



To record the adoption of the Plan as set forth herein, effective as of December 31, 2008,
Aradigm Corporation has caused its duly authorized officer to execute the same this 31st day of
December, 2008.




Aradigm Corporation




By: /s/ Nancy Pecota




	 	 	Nancy E. Pecota






CFO



1




Exhibit A




RELEASE AGREEMENT




I understand and agree completely to the terms set forth in the Aradigm Corporation Executive
Officer Severance Benefit Plan (the “Plan”). I understand that this Release Agreement (“Release”),
together with the Plan, constitutes the complete, final and exclusive embodiment of the entire
agreement between the Company and me with regard to the subject matter hereof. I am not relying on
any promise or representation by the Company that is not expressly stated herein.



In consideration of benefits I will receive under the Plan, I hereby release, acquit and
forever discharge the Company, its parents and subsidiaries, and their respective officers,
directors, agents, servants, employees, shareholders, attorneys’ successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of action, costs,
expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed
(other than any claim for indemnification I may have as a result of any third party action against
me based on my employment with the Company), arising out of or in any way related to agreements,
events, acts or conduct at any time prior to and including the date I execute this Release,
including but not limited to: all such claims and demands directly or indirectly arising out of or
in any way connected with my employment with the Company or the termination of that employment,
including but not limited to, claims of intentional and negligent infliction of emotional distress,
any and all tort claims for personal injury, claims or demands related to salary, bonuses,
commissions, stock, stock options, or any other equity or ownership interests in the Company,
vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of
compensation; claims pursuant to any federal, state or local law or cause of action including, but
not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in
Employment Act of 1967, as amended (“ADEA”); the federal Americans with Disabilities Act of 1990;
the California Fair Employment and Housing Act, as amended; the California Labor Code; tort law;
contract law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach
of the implied covenant of good faith and fair dealing.



I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have
under the ADEA. I also acknowledge that the consideration given for the waiver and release in the
preceding paragraph hereof is in addition to anything of value to which I was already entitled. I
further acknowledge that I have been advised by this writing, as required by the ADEA, that: (a)
my waiver and release do not apply to any rights or claims that may arise after the date I execute
this Release; (b) I have the right to consult with an attorney prior to executing this Release; (c)
I have forty-five (45) days from the date I receive this Release and the information specified in
(f) below to consider this Release (although I voluntarily may choose to execute this Release
earlier); (d) I have seven (7) days following the execution of this Release to revoke the Release;
and (e) this Release shall not be effective until the later of (i) the date upon which the
revocation period has expired, which shall be the eighth (8th) day after I execute this
Release, and (ii) the date I return this Release, fully executed, to the Company; and (f) I have
received with this Release a detailed list of the job titles and ages of all employees who were
terminated in this group termination and the ages of all employees of the Company and its
affiliates in the same job classification or organizational unit who were not terminated.



I acknowledge that I have read and understand Section 1542 of the California Civil Code which
reads as follows: “A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor.” I hereby expressly waive and relinquish all
rights and benefits under that section and any law of any jurisdiction of similar effect with
respect to my release of any claims I may have against the Company, its affiliates, and the
entities and persons specified above.




Employee




Signed:




Date:



2




Exhibit B




RELEASE AGREEMENT




I understand and agree completely to the terms set forth in the Aradigm Corporation Executive
Officer Severance Benefit Plan (the “Plan”). I understand that this Release Agreement (“Release”),
together with the Plan, constitutes the complete, final and exclusive embodiment of the entire
agreement between the Company and me with regard to the subject matter hereof. I am not relying on
any promise or representation by the Company that is not expressly stated herein.



In consideration of benefits I will receive under the Plan, I hereby release, acquit and
forever discharge the Company, its parents and subsidiaries, and their respective officers,
directors, agents, servants, employees, shareholders, attorneys’ successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of action, costs,
expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed
(other than any claim for indemnification I may have as a result of any third party action against
me based on my employment with the Company), arising out of or in any way related to agreements,
events, acts or conduct at any time prior to and including the date I execute this Release,
including but not limited to: all such claims and demands directly or indirectly arising out of or
in any way connected with my employment with the Company or the termination of that employment,
including but not limited to, claims of intentional and negligent infliction of emotional distress,
any and all tort claims for personal injury, claims or demands related to salary, bonuses,
commissions, stock, stock options, or any other equity or ownership interests in the Company,
vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of
compensation; claims pursuant to any federal, state or local law or cause of action including, but
not limited to, the federal Civil Rights Act of 1964, as amended; the California Labor Code; the
federal Americans with Disabilities Act of 1990; the California Fair Employment and Housing Act, as
amended; the California Labor Code; tort law; contract law; wrongful discharge; discrimination;
fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair
dealing.



I acknowledge that to become effective, I must sign and return this Release to the Company so
that it is received not later than fourteen (14) days following the date of my employment
termination. I acknowledge that I have read and understand Section 1542 of the California Civil
Code which reads as follows: “A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the release, which if known by
him must have materially affected his settlement with the debtor.” I hereby expressly waive and
relinquish all rights and benefits under that section and



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any law of any jurisdiction of similar effect with respect to my release of any claims I may
have against the Company, its affiliates, and the entities and persons specified above.




Employee




Signed:




Date:



4




Exhibit C




RELEASE AGREEMENT




I understand and agree completely to the terms set forth in the Aradigm Corporation Executive
Officer Severance Benefit Plan (the “Plan”). I understand that this Release Agreement (“Release”),
together with the Plan, constitutes the complete, final and exclusive embodiment of the entire
agreement between the Company and me with regard to the subject matter hereof. I am not relying on
any promise or representation by the Company that is not expressly stated herein.



In consideration of benefits I will receive under the Plan, I hereby release, acquit and
forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents,
servants, employees, shareholders, attorneys’ successors, assigns and affiliates, of and from any
and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages,
indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for
indemnification I may have as a result of any third party action against me based on my employment
with the Company), arising out of or in any way related to agreements, events, acts or conduct at
any time prior to and including the date I execute this Release, including, but not limited to:
all such claims and demands directly or indirectly arising out of or in any way connected with my
employment with the Company or the termination of that employment, including but not limited to,
claims of intentional and negligent infliction of emotional distress, any and all tort claims for
personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options,
or any other equity or ownership interests in the Company, vacation pay, fringe benefits, expense
reimbursements, severance pay, or any other form of compensation; claims pursuant to any federal,
state or local law or cause of action including, but not limited to, the federal Civil Rights Act
of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”);
the federal Employee Retirement Income Security Act of 1974, as amended; the federal Americans with
Disabilities Act of 1990; the California Fair Employment and Housing Act, as amended; the
California Labor Code; tort law; contract law; wrongful discharge; discrimination; fraud;
defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing.



I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have
under the ADEA. I also acknowledge that the consideration given under the Agreement for the waiver
and release in the preceding paragraph hereof is in addition to anything of value to which I was
already entitled. I further acknowledge that I have been advised by this writing, as required by
the ADEA, that: (A) my waiver and release do not apply to any rights or claims that may arise
after the date I execute this Release; (B) I have the right to consult with an attorney prior to
executing this Release; (C) I have twenty-one (21) days to consider this Release (although I may
choose to voluntarily execute this Release earlier); (D) I have seven (7) days following my
execution of this Release to revoke the Release; and (E) this Release shall not be effective until
the date upon which the revocation period has expired, which shall be the eighth (8th)
day after I execute this Release (provided that I have returned it to the Company by such date).



I acknowledge that I have read and understand Section 1542 of the California Civil Code which
reads as follows: “A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor.” I hereby expressly waive and relinquish all
rights and benefits under that section and any law of any jurisdiction of similar effect with
respect to my release of any claims I may have against the Company, its affiliates, and the
entities and persons specified above.




Employee




Signed:




Date:




5