Document:

Unassociated Document

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of April 12, 2011, by and between REPUBLIC AIRWAYS HOLDINGS INC., a Delaware corporation (the “Company”), and LARS-ERIK ARNELL (the “Executive”).

 

RECITALS

 

WHEREAS, the Executive has served as Vice President, Corporate Development of the Company;

 

WHEREAS, the Company desires to employ and retain the Executive as the Company’s Senior Vice President, Corporate Development; and

 

WHEREAS, the Company and the Executive desire to enter into this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

1.           Employment.  The Company agrees to continue to employ the Executive, and the Executive agrees to render his services to the Company, as its Senior Vice President, Corporate Development, during the Term (as defined below).  In connection with his employment as Senior Vice President, Corporate Development, the Executive shall serve without additional payment or compensation of any kind as an officer of any other direct or indirect subsidiary or affiliate of the Company designated by the Company’s Chief Executive Officer (collectively, the “Subsidiaries”).  The Executive shall render his services at the direction of the Company’s Chief Executive Officer at the Company’s offices in Indianapolis, Indiana.  The Executive agrees to use his best efforts to promote and further the business, reputation and good name of the Company and the Subsidiaries (collectively, the “Company Group”) and the Executive shall promptly and faithfully comply with all instructions, directions, requests, rules and regulations made or issued from time to time by the Company.

 

2.           Term.

 

(a)           The term of employment pursuant to this Agreement (the “Term”) shall continue until December 31, 2013; provided that the Company may terminate this Agreement for any reason or no reason by providing the Executive with 30 days prior written notice of such termination.

 

(b)           Notwithstanding the foregoing, this Agreement may be terminated by the Company in the event that “Cause” for such termination exists as provided in Section 8(a) below or by the Executive for Good Reason as provided in Section 8(b) below.  If this Agreement is terminated by the Company for “Cause”, the Executive shall not be entitled to any Severance Compensation or other compensation of any kind following the effective date of such termination.

 

  

  

  

 

(c)           In the event (i) the Company terminates this Agreement or the Executive’s employment other than for Cause, or (ii) the Executive terminates this Agreement or the Executive’s employment for Good Reason, the Company shall pay the Executive Severance Compensation as provided in Section 4 hereof.  If this Agreement is terminated by the Company other than for Cause, options granted to the Executive to purchase shares of the Company’s common stock and restricted shares covering shares of the Company’s common stock shall immediately become fully vested and exercisable in accordance with the agreements evidencing such awards.

 

(d)           The Term shall automatically renew for successive one year periods unless either party shall have given notice to terminate this Agreement no later than ninety (90) days prior to the end of the then current Term.

 

3.           Compensation.  As full and complete compensation for all the Executive’s services hereunder, the Company shall pay the Executive the compensation described below.

 

(a)           Base Salary.  During the Term, the Company shall pay the Executive an annual base salary of $225,000 (“Base Salary”).  The Board of Directors of the Company (the “Board”) shall review the Executive’s Base Salary each year and shall have the right in its discretion to increase such Base Salary.  In the event this Agreement is terminated prior to the expiration of the Term, the Company shall pay to the Executive, in addition to any Severance Compensation payable under Section 4, any accrued but unpaid Base Salary through the termination date.

 

(b)           Annual Incentive Plan.  In addition to the Base Salary, during the Term, the Executive will have an annual bonus opportunity target equal to 65% of the Executive’s salary for the year.  The amount of the annual bonus (“Bonus”) for any year may be more or less than the target amount, but not more than 125% of the Executive’s salary for the year, and will be determined, in its sole discretion, by the Compensation Committee based upon certain performance measures which shall be determined by the Board in its discretion and communicated to the Executive by the end of each September of the prior year during the Term.  The Bonus for a year will be determined and payable by March 15 of the following year.  In the event this Agreement or the Executive’s employment is terminated by the Company for Cause or by the Executive other than for Good Reason, the Executive shall not be entitled to any Bonus Compensation for such year or any subsequent period.

 

4.           Severance Compensation.

 

(a)           Termination Upon Death, or by the Company for Disability or Without Cause.  In the event of the Executive’s death or in the event the Company terminates this Agreement as a result of the Executive’s inability, with reasonable accommodation, to perform the essential functions of his position, by reason of physical or mental incapacity, for a total period of 90 days in any 360-day period (“Executive’s Disability”) or other than for Cause, the Company shall pay to the Executive or his estate as the case may be as severance compensation two times the Executive’s Base Salary as then in effect plus two times the Executive’s bonus paid for the Company’s last calendar year.  The severance compensation shall be paid in a lump sum by the end of the following month following termination of this Agreement, provided that the Company receives a release within 30 days following termination of this Agreement signed by the Executive, substantially in the form attached hereto as Exhibit A, that is no longer revocable.  The Executive agrees that the Company may satisfy its obligations to provide severance compensation pursuant to this Section 4(a) by purchasing and maintaining one or more insurance policies payable to either the Executive or his designees or to the Company (with further payment to the Executive or such designees) upon the Executive’s death or as a result of the Executive’s Disability.  The Executive agrees to cooperate with the Company in obtaining such insurance, including by participating in such physical examinations and providing such personal information as may be requested by the Company’s insurers.

 

  

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(b)           Occurrence of a Change in Control.  In the event of a Change of Control (provided that after such Change of Control, the Executive’s employment is terminated (x) by the Company without Cause or (y) by the Executive for Good Reason), the Company shall pay to the Executive as severance compensation two times the Executive’s Base Salary as then in effect plus two times the Executive’s bonus paid for the Company’s last calendar year.  The severance compensation shall be paid in a lump sum by the end of the following month following a qualifying event.  “Change of Control” shall mean that after the date hereof, (i) any person or group of affiliated or associated persons acquires a majority or more of the voting power of the Company; (ii) the consummation of a sale of all or substantially all of the assets of the Company; (iii) the dissolution of the Company or (iv) the consummation of any merger, consolidation, or reorganization involving the Company in which, immediately after giving effect to such merger, consolidation or reorganization, less than majority of the total voting power of outstanding stock of the surviving or resulting entity is then “beneficially owned” (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) in the aggregate by the stockholders of the Company immediately prior to such merger, consolidation or reorganization.

 

(c)           Termination by the Executive for Good Reason.  If the Executive terminates this Agreement for Good Reason, the Company shall pay to the Executive as severance compensation two times the Executive’s Base Salary as then in effect plus two times the Executive’s bonus paid for the Company’s last calendar year.  The severance compensation shall be paid in a lump sum within ten (10) days following termination.

 

(d)           Failure to Renew.  If either the Executive or the Company gives notice to terminate this Agreement at the end of the stated Term, the Company shall make a payment to the Executive equal to one times the Executive’s Base Salary as in effect at the end of the Term plus one times the Executive’s target bonus as in effect at the end of the Term.  Such payment shall be made in a lump sum within ten (10) days following the end of the stated Term of this Agreement, provided that the Company receives a release within 30 days following termination of this Agreement signed by the Executive, substantially in the form attached hereto as Exhibit A.  In addition, upon delivery of such release, all remaining unvested shares of restricted stock granted to the Executive shall immediately vest.

 

5.           No Other Compensation.  Except as otherwise expressly provided herein, or in any other written document executed by the Company and the Executive, no other compensation or other consideration shall become due or payable to the Executive on account of the services rendered to the Company Group.  The Company shall have the right to deduct and withhold from the compensation payable to the Executive hereunder any amounts required to be deducted and withheld under the provisions of any statute, regulation, ordinance, order or any other amendment thereto, heretofore or hereafter enacted, requiring the withholding or deduction of compensation.

 

  

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6.           Medical & 401K Benefits.  The Company agrees that the Executive shall be entitled to participate in any retirement, 401K, disability, medical, pension, profit sharing, group insurance, or any other plan or arrangement, or in any other benefits now or hereafter generally available to executives of the Company, in each case to the extent that the Executive shall be eligible under the general provisions thereof.

 

7.           Vacation.  The Executive shall be entitled to take three weeks of paid vacation which shall accrue monthly during each 12 months of the Executive’s employment hereunder, and which vacation shall be taken on dates to be selected by mutual agreement of the Company and the Executive.

 

8.           Termination for Cause or Good Reason.

 

(a)           Termination for Cause by the Company.  The Company, by written notice to the Executive, may immediately terminate this Agreement and the Executive’s employment hereunder for Cause.  As used herein, a termination by the Company “for Cause” shall mean that the Executive has (i) willfully or materially refused to perform a material part of his duties hereunder, (ii) materially breached the provisions of Sections 9, 10 or 11 hereof, (iii) acted fraudulently or dishonestly in his relations with the Company, (iv) committed larceny, embezzlement, conversion or any other act involving the misappropriation of Company funds or assets in the course of his employment, or (v) been indicted or convicted of any felony or other crime involving an act of moral turpitude.

 

(b)           Termination for Good Reason by the Executive.  The Executive, by 20 business days prior written notice to the Company, may terminate this Agreement and his employment hereunder for Good Reason, provided that the Company shall have the right to cure such Good Reason within such 20 business day period.  As used herein, a termination by the Executive “for Good Reason” shall mean that (i) the Company has materially diminished the duties and responsibilities of the Executive with respect to the Company, (ii) the Company has relocated its principal offices more than 25 miles from Indianapolis to another location without the consent of the Executive or (iii) the Company has materially breached the terms of this Agreement.

 

9.           Confidential Information.  The Executive recognizes and acknowledges that he shall receive in the course of his employment hereunder certain confidential information and trade secrets concerning the Company Group’s business and affairs which may be of great value to the Company Group.  The Executive therefore agrees that he will not disclose any such information relating to the Company Group, the Company Group’s personnel or their operations other than in the ordinary course of business or in any way use such information in any manner which could adversely affect the Company Group’s business.  For purposes of this Agreement, the terms “trade secrets” and “confidential information” shall include any and all information concerning the business and affairs of the Company Group and any division or other affiliate of the Company Group that is not generally available to the public.

 

  

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10.           Non-Competition.  The Executive agrees that without the prior written consent of the Company’s Chief Executive Officer during the Term and for a period of 12 months following the termination or expiration of this Agreement, he will not participate as an advisor, partner, joint venturer, investor, lender, consultant or in any other capacity in any business transaction or proposed business transaction (a) with respect to which the Executive had a material personal involvement on behalf of the Company Group during the last 12 months of his employment with the Company, or (b) that could reasonably be expected to compete with the Company Group’s business or operations or proposed or contemplated business or transactions of the Company Group that are (I) known by the Executive as of the date of such termination or expiration, and (II) contemplated by the Company Group to proceed during the 12 month period following such termination or expiration.  For these purposes, the mere ownership by the Executive of securities of a public company not in excess of 2% of any class of such securities shall not be considered to be competition with the Company Group.

 

11.           Non-Solicitation.  The Executive agrees that during the Term, and for a period of 12 months following the termination or expiration of this Agreement, he shall not, without the prior written consent of the Company, directly or indirectly, employ or retain, or have or cause any other person or entity to employ or retain, any person who was employed by the Company Group or any of its divisions or affiliates while the Executive was employed by the Company.

 

12.           Breach of this Agreement.  If the Executive commits a breach, or threatens to commit a breach, of any of the provisions of Sections 9, 10 or 11 of this Agreement, then the Company shall have the right and remedy to have those provisions specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed by the Executive that the rights and privileges of the Company granted in Sections 9, 10 and 11 are of a special, unique and extraordinary character and any such breach or threatened breach will cause great and irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company.

 

13.           Notices.  All notices and other communications required or permitted hereunder shall be in writing (including facsimile, telegraphic, telex or cable communication) and shall be deemed to have been duly given when delivered by hand, or mailed, certified or registered mail, return receipt requested and postage prepaid:

 

	 	
If to the Company: 

	
Republic Airways Holdings, Inc.

8909 Purdue Road

Suite 300

Indianapolis, IN  46268

Attn:  President and Chief Executive Officer

 

With a copy to each member of the Board

 

	 	
If to the Executive: 

	
Lars-Erik Arnell

2983 Jason Street

Carmel, IN 46033

 

14.           Applicable Law.  This Agreement was negotiated and entered into within the State of Indiana.  All matters pertaining to this Agreement shall be governed by the laws of the State of Indiana applicable to contracts made and to be performed wholly therein.  Nothing in this Agreement shall be construed to require the commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any material present or future statute, law, governmental regulation or ordinance as a result of which the parties have no legal right to contract or perform, the latter shall prevail, but in such event the provision(s) of this Agreement affected shall be curtailed and limited only to the extent necessary to bring it or them within the legal requirements.

 

  

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15.           Entire Agreement; Modification; Consents and Waivers.  This Agreement contains the entire agreement of the parties with respect to the subject matter hereof and supersedes any and all prior agreements or understandings, written or oral, between the parties with respect to the subject matter hereof.  No interpretation, change, termination or waiver of or extension of time for performance under any provision of this Agreement shall be binding upon any party unless in writing and signed by the party intended to be bound thereby.  Except as otherwise provided in this Agreement, no waiver of or other failure to exercise any right under or default or extension of time for performance under any provision or this Agreement shall affect the right of any party to exercise any subsequent right under or otherwise enforce said provision or any other provision hereof or to exercise any right or remedy in the event of any other default, whether or not similar.

 

16.           Severability.  The parties acknowledge that, in their view, the terms of this Agreement are fair and reasonable as of the date signed by them, including as to the scope and duration of post-termination activities.  Accordingly, if any one or more of the provisions contained in this Agreement shall for any reason, whether by application of existing law or law which may develop after the date of this Agreement, be determined by an arbitrator or court of competent jurisdiction to be excessively broad as to scope of activity, duration or territory, or otherwise unenforceable, the parties hereby jointly request such court to construe any such provision by limiting or reducing it so as to be enforceable to the maximum extent in favor of the Company compatible with then-applicable law.  If any one or more of the terms, provisions, covenants or restrictions of this Agreement shall nonetheless be determined by an arbitrator or court of competent jurisdiction to be invalid, void or unenforceable, then the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

 

17.           Assignment.  The Company may, at its election, assign this Agreement or any of its rights hereunder.  This Agreement may not be assigned by the Executive.

 

18.           Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

19.           Arbitration.  Each of the parties hereby irrevocably and unconditionally consents to arbitrate any dispute arising out of or relating in any manner to this Agreement or the employment relationship contemplated hereby or the termination thereof, or any alleged breach of any term or provision of this Agreement.  Such arbitration shall be conducted in Marion County, Indiana by a single arbitrator in accordance with the employment dispute resolution rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitrator’s award in any federal or state court in Indiana (and the parties expressly consent to the jurisdiction of such court), or in any other court having jurisdiction.  The Company shall be responsible for, and shall pay, 75% of all costs and expenses of any arbitration hereunder, including, without limitation, all costs, fees and expenses of the American Arbitration Association and arbitrator.  The Executive shall be responsible for, and shall pay, 25% of all costs and expenses of any arbitration hereunder, including, without limitation, all costs, fees and expenses of the American Arbitration Association and arbitrator.  Each of the Parties agrees that in any arbitration arising out of or relating to this Agreement or the employment relationship contemplated hereby or the termination thereof, or any alleged breach of any term or provision of this Agreement or in any action to enter judgment on an award in such arbitration each party shall bear its own fees and expenses.

 

  

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20.           Survival.  The provisions of Sections 9 through 19 of this Agreement shall survive any expiration or termination of this Agreement.

 

21.           Equity Commitment.  Upon executing this Agreement, the Executive shall be granted 20,000 shares of restricted stock at a price per share equal to the par value thereof, which shall vest on each of December 31, 2011, December 31, 2012 and December 31, 2013, such restricted stock grants to be evidenced by a Restricted Stock Purchase Agreement substantially in the form attached hereto as Exhibit B pursuant to the Republic Airways Holdings Inc. 2007 Equity Incentive Plan, by and between the Company and the Executive.

 

22.           Options Under Prior Agreements.  The vesting of any options to purchase stock of the Company previously granted to the Executive under the terms of a Stock Option Agreement shall be governed by the terms of such agreement notwithstanding any provision of this Agreement.

 

23.           Indemnification.  The Company shall, to the fullest extent allowed by law, defend, indemnify and hold harmless the Executive from and against any and all demands, claims, suits, liabilities, actions asserted or brought against the Executive or in which the Executive is made a party, including, without limitation, all litigation costs and attorneys’ fees incurred by the Executive or judgments rendered against the Executive, in connection with any matter arising within the course and scope of Executive’s employment with the Company or service as an officer, director or manager of the Company or any of the Subsidiaries.  The right of the Executive to indemnification hereunder shall vest at the time of occurrence or performance of any event, act or omission giving rise to any demand, claim, suit, liability, action or legal proceeding of the nature referred to in this Section 23 and, once vested, shall survive the termination of Executive’s employment with the Company for any reason.

 

24.           Section 409A Compliance.

 

(a)           Any payments conditioned upon a termination of the Executive’s employment will be deemed to be conditioned upon the Executive’s separation from service within the meaning of Treasury Regulation Section 1.409A-1(h) and will be construed and interpreted accordingly.  If the Executive is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of the Executive’s separation from service, then the Executive shall not be entitled to any severance payments or other benefits pursuant to this Agreement until the earlier of (i) the date which is six months after the date of the Executive’s separation from service, or (ii) the date of the Executive’s death.  This paragraph shall only apply if, and to the extent required in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and Treasury Regulation Section 1.409A-3(i)(2).  Any amounts otherwise payable to the Executive upon or in the six-month period following the Executive’s separation from service that are not so paid by reason of this paragraph shall be paid to the Executive (or the Executive’s estate, as the case may be) as soon as practicable (and in all events within twenty days) after the expiration of such six-month period or (if applicable, the date of the Executive’s death).

 

  

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(b)           Any taxable reimbursement of expenses payable to the Executive shall be paid to the Executive on or before the last day of the Executive’s taxable year following the taxable year in which the related expense was incurred.  Expense reimbursements and in-kind benefits provided to the Executive shall not be subject to liquidation or exchange for another benefit and the amount of such reimbursements or in-kind benefits that the Executive receives in one taxable year shall not affect the amount of such reimbursements or benefits that the Executive may receive in any other taxable year.

 

(c)           It is intended that any amounts payable under this Agreement and the Company’s and the Executive’s exercise of any authority or discretion hereunder shall comply with, and avoid the imputation of any tax, penalty or interest under Section 409A of the Code.  This Agreement shall be construed and interpreted consistent with that intent.  Should the Company pay the Executive contrary to clause (i) or (ii) of Section 24(a) above, the Company shall indemnify the Executive for any taxes due thereon as a result.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first above written.

 

	 	REPUBLIC AIRWAYS HOLDINGS, INC.	 
	 	 	 	 
	
 

	
By: 

	/s/ David N. Siegel	 
	 	 	Name: David N. Siegel	 
	 	 	 
Title:   Chairman of the Compensation 

            Committee of the Board of Directors

	 
	 	 	 	 
	 	LARS-ERIK ARNELL	 
	 	 	 	 
	 	/s/ Lars-Erik Arnell	 

 

  

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EXHIBIT A

 

FORM OF RELEASE

 

In exchange for the payments and benefits set forth in the Employment Agreement between Republic Airways Holdings Inc. (the “Company”) and me dated April 12, 2011 (the “Agreement”), and to be provided following the Effective Date (as defined below) of this General Release and subject to the terms of the Agreement, and my execution (without revocation) and delivery of this General Release:

 

1.           (a)           On behalf of myself, my agents, assignees, attorneys, heirs, executors and administrators, I hereby release the Company and its predecessors, successors and assigns, their current and former parents, affiliates, subsidiaries, divisions and joint ventures (collectively, the “Company Group”) and all of their current and former officers, directors, employees, and agents, in their capacity as Company Group representatives (individually and collectively, “Releasees”) from any and all controversies, claims, demands, promises, actions, suits, grievances, proceedings, complaints, charges, liabilities, damages, debts, taxes, allowances, and remedies of any type, including but not limited to those arising out of my employment with the Company Group (individually and collectively, “Claims”) that I may have by reason of any matter, cause, act or omission.  This release applies to Claims that I know about and those I may not know about occurring at any time on or before the date of execution of this General Release.

 

(b)           This General Release includes a release of all rights and Claims under, as amended, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Rehabilitation Act of 1973, the Civil Rights Acts of 1866 and 1991, the Americans with Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974, the Equal Pay Act of 1963, the Family and Medical Leave Act of 1993, the Older Workers Benefit Protection Act of 1990, the Occupational Safety and Health Act of 1970, the Worker Adjustment and Retraining Notification Act of 1989 and the Sarbanes-Oxley Act of 2002, as well as any other federal, state, or local statute, regulation, or common law regarding employment, employment discrimination, termination, retaliation, equal opportunity, or wage and hour.  I specifically understand that I am releasing Claims based on age, race, color, sex, sexual orientation or preference, marital status, religion, national origin, citizenship, veteran status, disability and other legally protected categories.

 

(c)           This General Release also includes a release of any Claims for breach of contract, any tortious act or other civil wrong, attorneys’ fees, and all compensation and benefit claims including without limitation Claims concerning salary, bonus, and any award(s), grant(s), or purchase(s) under any equity and incentive compensation plan or program.

 

(d)           In addition, I am waiving my right to pursue any Claims against the Company Group and Releasees under any applicable dispute resolution procedure, including any arbitration policy.

 

I acknowledge that this General Release is intended to include, without limitation, all Claims known or unknown that I have or may have against the Company Group and Releasees through the Effective Date of this General Release.  Notwithstanding anything herein, I expressly reserve and do not release pursuant to this General Release (and the definition of “Claims” will not include) (i) my rights with respect to the enforcement of the Agreement, including but not limited to the right to receive Severance Compensation (as defined in the Agreement), if any, and other payments, benefits and indemnifications specified in the Agreement, (ii) any rights or interest under any Benefit Plans (as defined in the Agreement), (iii) any right to indemnification pursuant to the Company’s Certificate of Incorporation or By-laws as in effect on the date hereof, (iv) the protections of the Company Group’s directors and officers liability insurance, if any, in each case, to the same extent provided to other senior executives of the Company, (v) any claims and rights that cannot be waived by law, (vi) the vesting and exercise of any equity grant pursuant to the terms of the applicable equity award agreement or the applicable equity incentive plan, (vii) any rights as a stockholder of the Company, and (viii) any rights under Sections 12 and 13 of the Agreement following termination of employment.

 

  

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2.           I acknowledge that I have had at least 21 calendar days from the date of my termination of employment with the Company (the “Termination Date”) to consider the terms of this General Release, that I have been advised to consult with an attorney regarding the terms of this General Release prior to executing it, that I have consulted with my attorney, that I fully understand all of the terms and conditions of this General Release, that I understand that nothing contained herein contains a waiver of claims arising after the date of execution of this General Release, and I am entering into this General Release knowingly, voluntarily and of my own free will.  I further understand that my failure to sign this General Release and return such signed General Release to the Company, 8909 Purdue Road, Suite 300, Indianapolis, IN 46268 by 5:00 pm on the 22nd day after the Termination Date will render me ineligible for the payments and benefits described herein and in the Agreement.

 

3.           I understand that once I sign and return this General Release to the Company, I have 7 calendar days to revoke it.  I may do so by delivering to the Company, 8909 Purdue Road, Suite 300, Indianapolis, IN 46268 written notice of my revocation within the 7-day revocation period (the “Revocation Period”).  This General Release will become effective on the 8th day after I sign and return it to the Company (“Effective Date”); provided that I have not revoked it during the Revocation Period.

 

YOU ARE HEREBY ADVISED BY THE COMPANY TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS GENERAL RELEASE.

 

I HAVE READ THIS GENERAL RELEASE AND UNDERSTAND ALL OF ITS TERMS. I SIGN AND ENTER THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY, WITH FULL KNOWLEDGE OF WHAT IT MEANS.

 

	 	LARS-ERIK ARNELL	 
	 	 	 
	 	_______________________________	 
	 	Date:___________________________	 

 

  

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EXHIBIT B

 

FORM OF RESTRICTED STOCK PURCHASE AGREEMENT

 

  

12a6688025ex10_1.htm

Exhibit 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, amended December 31, 2008 and is hereby amended and restated effective April 15, 2011.  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.

 

  

  

  

 

Exhibit 10.1

 

(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:

 

  

  

  

 

Exhibit 10.1

 

	
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 amount equal to 50% of then-current annual base salary in the case of the Chief Executive Officer and 40% of then-current annual base salary in the case of the Chief Financial Officer.

 

(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.

 

  

  

  

 

Exhibit 10.1

 

(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).

 

  

  

  

 

Exhibit 10.1

 

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):

 

  

  

  

 

Exhibit 10.1

 

	
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:

 

  

  

  

 

Exhibit 10.1

 

(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.

 

  

  

  

 

Exhibit 10.1

 

(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.

 

  

  

  

 

Exhibit 10.1

 

(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.

 

  

  

  

 

Exhibit 10.1

 

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 April 15, 2011, Aradigm Corporation has caused its duly authorized officer to execute the same this 18th day of April, 2011.

 

 

	  	
Aradigm Corporation

	  
	  	  	  	  
	  	
By:

	  	  
	  	  	
Nancy E. Pecota

	  
	  	  	
CFO

	  

 

  

  

  

 

SAMPLE

For Employees Age 40 or Older

(Group Termination)

 

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.

 

  

1.

  

 

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:

	  

 

  

  

  

 

SAMPLE

For Employees Under Age 40

(Individual or Group Termination)

 

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 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.

 

  

1.

  

 

	  	
Employee

	  
	 	 	 
	  	
Signed:

	  
	 	 	 
	  	
Date:

	  

 

  

  

  

 

SAMPLE

For Employees Age 40 or Older

(Individual Termination)

 

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).

 

  

1.

  

 

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:

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