December 12, 2008
Babatunde A. Otulana,
M.D.
Dear Tunde:
This letter sets forth the
substance of the separation agreement (the “Agreement”)
that Aradigm Corporation (the “Company”) is offering to
you to aid in your employment transition.
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1.
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Separation. Your last day of work with the Company and your
employment termination date will be December 31, 2008 (the
“Separation Date”).
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2.
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Accrued
Salary and Paid Time Off. On the Separation Date, the Company will pay all
accrued salary, and all accrued and unused vacation earned through
the Separation Date, subject to standard payroll deductions and
withholdings. You are entitled to these payments regardless of
whether or not you sign this Agreement.
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3.
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Severance
Benefits. The Company
will make severance payments to you in the amount of $16,666.67 per
month paid over one year following the Separation Date. These
payments will be made on the Company’s ordinary payroll
dates, and will be subject to standard payroll deductions and
withholdings.
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4.
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Health
Insurance. To the extent
provided by the federal COBRA law or, if applicable, state
insurance laws, and by the Company’s current group health
insurance policies, you and your dependents will be eligible to
continue your group health insurance benefits. Later, you may be
able to convert to an individual policy through the provider of the
Company’s health insurance, if you wish. If you elected
COBRA, the Company will pay COBRA premiums on your behalf and on
behalf of your dependents up to a maximum of twelve
(12) months or until you become eligible for group health
insurance coverage through a new employer (whichever comes first).
You must promptly notify the Company in writing if you become
eligible for group health insurance coverage through a new employer
during the twelve (12) months following the Separation
Date.
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5.
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Other
Compensation or Benefits. Except with respect to any fees earned by you
pursuant to that certain Consulting Agreement for Independent
Contractors between you and the Company dated effective
January 1, 2009 and that certain International Scientific
Advisory Agreement between you and the Company dated effective
January 1, 2009, you acknowledge that, except as expressly
provided in this Agreement, you will not receive any additional
compensation, severance or benefits after the Separation Date, with
the sole exception of any benefit the right to which has vested
under the express terms of a Company benefit plan document.
Notwithstanding the foregoing any stock options and/or restricted
stock awards previously granted to you, including, without
limitation, the continued vesting thereof, will continue to be
governed by the plan documents pursuant to which they were
granted.
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6.
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Expense
Reimbursement. You agree
that, within ten (10) days of the Separation Date, you will
submit your final documented expense reimbursement statement
reflecting all business expenses you incurred through the
Separation Date, if any, for which you seek reimbursement. The
Company will reimburse you for these expenses pursuant to its
regular business practice.
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7.
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Return of
Company Property. You
agree that, by the Separation Date, you shall return to the Company
all Company documents (and all copies thereof) and other Company
property in your possession or control, including, but not limited
to: Company files, notes, memoranda, correspondence, agreement,
draft documents, notebooks, logs, drawings, records, plans,
proposals, reports, forecasts, financial information, sales and
marketing information, research and development information,
personnel information, specifications, computer-recorded
information, tangible property and equipment, credit cards, entry
cards, identification badges, and keys; and any materials of any
kind that contain or embody any proprietary or confidential
information of the Comp
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