ARADIGM CORPORATION
Employee Stock Purchase Plan
Adopted April 16, 1996
Approved by the Shareholders on June 5, 1996
Amended by the Board of Directors on April 7, 1998
Approved by the Shareholders on May 15, 1998
Amended by the Board of Directors on February 2, 1999
Approved by the Shareholders on May 21, 1999
Amended by the Board of Directors on April 3, 2000
Approved by the Shareholders on May 19, 2000
Amended by the Board of Directors on April 2, 2001
Approved by the Shareholders on May 18, 2001
Amended by the Board of Directors on December 17, 2001
Approved by the Shareholders on February 8, 2002
Amended by the Board of Directors on February 19, 2003
Approved by the Shareholders on May 15, 2003
Amended by the Board of Directors on March 21, 2005
Approved by the Shareholders on May 19, 2005
Amended by the Board of Directors on April 4, 2008
Approved by the Shareholders on May 15, 2008
Amended by the Board of Directors on February 25, 2009
Approved by the Shareholders on May 15, 2009
The purpose of the
Employee Stock Purchase Plan (the “Plan”) is to provide
a means by which employees of Aradigm Corporation, a California
corporation (the “Company”), and its Affiliates, as
defined in subparagraph 1(b), which are designated as provided in
subparagraph 2(b), may be given an opportunity to purchase stock of
the Company.
The word
“Affiliate” as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those
terms are defined in Sections 424(e) and (f), respectively, of the
Internal Revenue Code of 1986, as amended (the
“Code”).
The Company, by
means of the Plan, seeks to retain the services of its employees,
to secure and retain the services of new employees, and to provide
incentives for such persons to exert maximum efforts for the
success of the Company.
The Company
intends that the rights to purchase stock of the Company granted
under the Plan be considered options issued under an
“employee stock purchase plan” as that term is defined
in Section 423(b) of the Code.
The Plan shall be
administered by the Board of Directors (the “Board”) of
the Company unless and until the Board delegates administration to
a Committee, as provided in subparagraph 2(c). Whether or not the
Board has delegated administration, the Board shall have the final
power to determine all questions of policy and expediency that may
arise in the administration of the Plan.
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The Board shall
have the power, subject to, and within the limitations of, the
express provisions of the Plan:
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To
determine when and how rights to purchase stock of the Company
shall be granted and the provisions of each offering of such rights
(which need not be identical).
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To
designate from time to time which Affiliates of the Company shall
be eligible to participate in the Plan.
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To
construe and interpret the Plan and rights granted under it, and to
establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan, in a
manner and to the extent it shall deem necessary or expedient to
make the Plan fully effective.
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To
amend the Plan as provided in paragraph 13.
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Generally, to exercise such powers
and to perform such acts as the Board deems necessary or expedient
to promote the best interests of the Company and its Affiliates and
to carry out the intent that the Plan be treated as an
“employee stock purchase plan” within the meaning of
Section 423 of the Code.
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The Board may
delegate administration of the Plan to a Committee composed of not
fewer than two (2) members of the Board (the
“Committee”) constituted in accordance with the
requirements of Rule 16b-3 under the Exchange Act. If
administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as
may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the
administration of the Plan.
Shares
Subject to the Plan
Subject to the
provisions of paragraph 12 relating to adjustments upon changes in
stock, the stock that may be sold pursuant to rights granted under
the Plan shall not exceed in the aggregate four million five
hundred fifty thousand (4,550,000) shares of the Company’s
common stock (the “Common Stock”). If any right granted
under the Plan shall for any reason terminate without having been
exercised, the Common Stock not purchased under such right shall
again become available for the Plan.
The stock subject
to the Plan may be unissued shares or reacquired shares, bought on
the market or otherwise.
Grant of
Rights; Offering
The Board or the
Committee may from time to time grant or provide for the grant of
rights to purchase Common Stock of the Company under the Plan to
eligible employees (an “Offering”) on a date or dates
(the “Offering Date(s)”) selected by the Board or the
Committee. Each Offering shall be in such form and shall contain
such terms and conditions as the Board or the Committee shall deem
appropriate, which shall comply with the requirements of
Section 423(b)(5) of the Code that all employees granted
rights to purchase stock under the Plan shall have the same rights
and privileges. The terms and conditions of an Offering shall be
incorporated by reference into the Plan and treated as part of the
Plan. The provisions of separate Offerings need not be identical,
but each Offering shall include (through incorporation of the
provisions of this Plan by reference in the document comprising the
Offering or otherwise) the period during which the Offering shall
be effective, which period shall not exceed twenty-seven
(27) months beginning with the Offering Date, and the
substance of the provisions contained in paragraphs 5 through 8,
inclusive.
Rights may be
granted only to employees of the Company or, as the Board or the
Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in
subparagraph 5(b), an employee of the Company or any Affiliate
shall not be eligible to be granted rights under the Plan, unless,
on the Offering Date, such employee has been in the employ of the
Company or any Affiliate for such continuous period preceding such
grant as the Board or the Committee may require, but in no event
shall the required period of continuous employment be equal to or
greater than two (2) years. In addition, unless otherwise
determined by the Board or the Committee and set forth in the terms
of the applicable Offering, no employee of the Company or
any
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Affiliate shall
be eligible to be granted rights under the Plan, unless, on the
Offering Date, such employee’s customary employment with the
Company or such Affiliate is for at least twenty (20) hours per
week and at least five (5) months per calendar
year.
The Board or the
Committee may provide that, each person who, during the course of
an Offering, first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the
Offering which coincides with the day on which such person becomes
an eligible employee or occurs thereafter, receive a right under
that Offering, which right shall thereafter be deemed to be a part
of that Offering. Such right shall have the same characteristics as
any rights originally granted under that Offering, as described
herein, except that:
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the
date on which such right is granted shall be the “Offering
Date” of such right for all purposes, including determination
of the exercise price of such right;
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the
period of the Offering with respect to such right shall begin on
its Offering Date and end coincident with the end of such Offering;
and
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the
Board or the Committee may provide that if such person first
becomes an eligible employee within a specified period of time
before the end of the Offering, he or she will not receive any
right under that Offering.
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No employee shall
be eligible for the grant of any rights under the Plan if,
immediately after any such rights are granted, such employee owns
stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Company or of
any Affiliate. For purposes of this subparagraph 5(c), the rules of
Section 424(d) of the Code shall apply in determining the stock
ownership of any employee, and stock which such employee may
purchase under all outstanding rights and options shall be treated
as stock owned by such employee.
An eligible
employee may be granted rights under the Plan only if such rights,
together with any other rights granted under “employee stock
purchase plans” of the Company and any Affiliates, as
specified by Section 423(b)(8) of the Code, do not permit such
employee’s rights to purchase stock of the Company or any
Affiliate to accrue at a rate which exceeds twenty five thousand
dollars ($25,000) of fair market value of such stock (determined at
the time such rights are granted) for each calendar year in which
such rights are outstanding at any time.
Officers of the
Company and any designated Affiliate shall be eligible to
participate in Offerings under the Plan, provided, however, that
the Board may provide in an Offering that certain employees who are
highly compensated employees within the meaning of
Section 423(b)(4)(D) of the Code shall not be eligible to
participate.
On each Offering
Date, each eligible employee, pursuant to an Offering made under
the Plan, shall be granted the right to purchase up to the number
of shares of Common Stock of the Company purchasable with a
percentage designated by the Board or the Committee not exceeding
fifteen percent (15%) of s
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