Exhibit 10.49

 

ARTHROCARE CORPORATION

 

AMENDED AND RESTATED DIRECTOR OPTION PLAN

 

RESTRICTED STOCK BONUS AGREEMENT

 

This Restricted Stock Bonus Agreement (the “Agreement”) is made as of
                    , by and between ArthroCare Corporation, a Delaware
corporation (the “Company”), and                      (“Director”). Capitalized
terms not defined herein shall have the meanings assigned to such terms in the
Company’s Amended and Restated Director Option Plan (the “Plan”).

 

1. Issuance of Stock.

 

(a) Pursuant to the Plan and subject to the terms and conditions of this
Agreement, on the Issuance Date (as defined below), the Company will issue to
Director              shares of the Company’s Stock (the “Shares”) for good and
valuable consideration which the Company has determined to exceed the par value
of the Company’s Stock. The term “Shares” refers to the issued Shares and all
securities received in replacement of or in connection with the Shares pursuant
to stock dividends or splits, all securities received in replacement of the
Shares in a recapitalization, merger, reorganization, exchange or the like, and
all new, substituted or additional securities or other properties to which
Director is entitled by reason of Director’s ownership of the Shares.

 

(b) The parties agree that the Shares have a Fair Market Value of $            
per share as of the date of this Agreement.

 

(c) The issuance of the Shares under this Agreement shall occur at the principal
office of the Company simultaneously with the execution of this Agreement by the
parties or on such other date as the Company and Director shall agree (the
“Issuance Date”). As soon as practicable following the Issuance Date, the
Company will deliver to Director a certificate representing the Shares to be
issued to Director (which shall be issued in Director’s name).

 

2. Limitations on Transfer.

 

(a) Subject to the provisions of Section 2(b) below, in the event a Director’s
Continuous Status as a Director terminates for any or no reason, all of the
Unreleased Shares (as defined below) shall thereupon be forfeited immediately
and without any further action by the Company (the “Forfeiture Restriction”).
Upon the occurrence of such a forfeiture, the Company shall become the legal and
beneficial owner of the Shares being forfeited and all rights and interests
therein or relating thereto, and the Company shall have the right to retain and
transfer to its own name the number of Shares being forfeited by Director.

 

(b) Provided that Director continues to serve as a Director of the Company on
such date, all of the Shares shall be released from the Forfeiture Restriction
in sixty (60) equal monthly installments on the first day of each month
following the Date of Issuance; provided,

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however, that, notwithstanding the foregoing, in the event of a Change of
Control of the Company, if Director’s Continuous Status as a Director has not
terminated prior to such Change of Control, all of the Shares shall be released
from the Forfeiture Restriction at least ten (10) days prior to the effective
time of the Change of Control pursuant to Section 10(c) of the Plan.

 

(c) Any of the Shares which, from time to time, have not yet been released from
the Forfeiture Restriction are referred to herein as “Unreleased Shares.”

 

3. Escrow.

 

(a) Director hereby authorizes and directs the secretary of the Company, or such
other person designated by the Company from time to time, to transfer any
Unreleased Shares which are forfeited pursuant to Section 2 above from Director
to the Company.

 

(b) To insure the availability for delivery of Director’s Unreleased Shares upon
forfeiture under Section 2, Director hereby appoints the secretary, or any other
person designated by the Company as escrow agent from time to time, as its
attorney-in-fact to sell, assign and transfer unto the Company, such Unreleased
Shares, if any, forfeited by Director pursuant to Section 2 and shall, upon
execution of this Agreement, deliver and deposit with the secretary of the
Company, or such other person designated by the Company, the share
certificate(s) representing the Unreleased Shares, together with the stock
assignment duly endorsed in blank, attached hereto as Exhibit A. The Unreleased
Shares and stock assignment shall be held by the secretary in escrow, pursuant
to the Joint Escrow Instructions of the Company and Director attached as Exhibit
B hereto, until the Shares are forfeited as provided in Section 2, until such
Unreleased Shares are fully released from the Forfeiture Restriction, or until
such time as this Agreement no longer is in effect. Upon release of the
Unreleased Shares from the Forfeiture Restriction, the escrow agent shall
promptly deliver to Director the certificate or certificates representing such
Shares in the escrow agent’s possession belonging to Director, and the escrow
agent shall be discharged of all further obligations hereunder; provided,
however, that the escrow agent shall nevertheless retain such certificate or
certificates as escrow agent if so required pursuant to other restrictions
imposed pursuant to this Agreement.

 

(c) The Company, or its designee, shall not be liable for any act it may do or
omit to do with respect to holding the Shares in escrow and while acting in good
faith and in the exercise of its judgment.

 

4. Taxation Representations. In connection with the purchase of the Shares,
Director represents to the Company the following:

 

(a) Director acknowledges that he or she has been informed that unless an
election is filed by Director with the Internal Revenue Service and, if
necessary, the proper state taxing authorities, within thirty (30) days of the
date of this Agreement, electing pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended (and similar state tax provisions if
applicable), to be taxed currently on the fair market value of the Shares on the
date of this Agreement, there will be a recognition of taxable income to
Director equal to the fair market value

 

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of the Shares at the time the Forfeiture Restriction lapses. Director represents
that Director has consulted any tax consultant(s) Director deems advisable in
connection with the receipt or disposition of the Shares or the filing of the
election under Section 83(b) and similar tax provisions and that Director is not
relying on the Company for any tax advice.

 

DIRECTOR ACKNOWLEDGES THAT IT IS DIRECTOR’S SOLE RESPONSIBILITY AND NOT THE
COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF DIRECTOR
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON DIRECTOR’S
BEHALF.

 

(b) Director has reviewed with his or her own tax advisors the federal, state,
local and foreign tax consequences of this investment and the transactions
contemplated by this Agreement. Director is relying solely on such advisors and
not on any statements or representations of the Company or any of its agents.
Director understands that Director (and not the Company) shall be responsible
for his or her own tax liability that may arise as a result of this investment
or the transactions contemplated by this Agreement. Director has reviewed this
Agreement in its entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Agreement and fully understands all provisions
of this Agreement.

 

5. Transferability; Restrictive Legends and Stop-Transfer Orders.

 

(a) Unreleased Shares Not Transferable. No Unreleased Shares or any interest or
right therein or part thereof shall be subject to any lien, obligation, or
liability of the Director or any other party than the Company or a Subsidiary;
provided, however, that this Section 5(a) shall not prevent transfers by will or
by applicable laws of descent and distribution. In case of a permitted transfer,
the transferee or other recipient shall receive and hold the Shares so
transferred subject to the provisions of this Agreement, and there shall be no
further transfer of such Shares except in accordance with the terms of this
Section. Any transferee shall acknowledge the same by signing a copy of this
Agreement. Transfer or sale of the Shares is subject to restrictions on transfer
imposed by any applicable state and federal securities laws.

 

(b) Legends. The certificate or certificates representing the Shares shall bear
the following legend (as well as any legends required by applicable state and
federal corporate and securities laws):

 

THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY
OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

 

(c) Stop-Transfer Notices. Director agrees that, in order to ensure compliance
with the restrictions referred to herein, the Company may issue appropriate
“stop transfer” instructions to its transfer agent, if any, and that, if the
Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.

 

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(d) Refusal to Transfer. The Company shall not be required (i) to transfer on
its books any Shares that have been sold or otherwise transferred in violation
of any of the provisions of this Agreement or (ii) to treat as owner of such
Shares or to accord the right to vote or pay dividends to any purchaser or other
transferee to whom such Shares shall have been so transferred.

 

(e) Removal of Legend. After such time as the Forfeiture Restriction shall have
lapsed with respect to the Shares, and upon Director’s request, a new
certificate or certificates representing such Shares shall be issued without the
legend referred to in Section 5(a)(i), and delivered to Director.

 

6. Rights as Stockholder. Except as otherwise provided herein, upon delivery of
the Shares to the escrow holder pursuant to Section 3, Director shall have all
the rights of a stockholder with respect to said shares, subject to the
restrictions herein, including the right to vote the shares and to receive all
dividends or other distributions paid or made with respect to the Shares;
provided, however, that any and all shares of Stock received by Director with
respect to such Shares as a result of stock dividends, stock splits or any other
form of recapitalization shall also be subject to the Forfeiture Restriction
until such restrictions on the underlying Shares lapse or are removed pursuant
to this Agreement.

 

7. Miscellaneous.

 

(a) Governing Law. This Agreement and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.

 

(b) Entire Agreement; Enforcement of Rights. The Plan is incorporated herein by
reference. This Agreement and the Plan set forth the entire agreement and
understanding of the parties relating to the subject matter herein and merge all
prior discussions between them. No modification of or amendment to this
Agreement, nor any waiver of any rights under this Agreement, shall be effective
unless in writing signed by the parties to this Agreement. The failure by either
party to enforce any rights under this Agreement shall not be construed as a
waiver of any rights of such party. Notwithstanding anything to the contrary
anywhere else in this Agreement, the grant of the Shares is subject to the
terms, definitions and provisions of the Plan, which is incorporated herein by
reference. Any of your rights hereunder shall be in addition to any rights you
may otherwise have under benefit plans or agreements of the Company to which you
are a party or in which you are a participant, including, but not limited to,
any Company sponsored employee benefit plans, stock option plans, severance
plans or severance agreements. The provisions of this Agreement shall not in any
way limit your rights under such other plans and agreements.

 

(c) Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In

 

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the event that the parties cannot reach a mutually agreeable and enforceable
replacement for such provision, then (i) such provision shall be excluded from
this Agreement, (ii) the balance of the Agreement shall be interpreted as if
such provision were so excluded and (iii) the balance of the Agreement shall be
enforceable in accordance with its terms.

 

(d) Construction. This Agreement is the result of negotiations between and has
been reviewed by each of the parties hereto and their respective counsel, if
any; accordingly, this Agreement shall be deemed to be the product of all of the
parties hereto, and no ambiguity shall be construed in favor of or against any
one of the parties hereto.

 

(e) Notices. Any notice required or permitted by this Agreement shall be in
writing and shall be deemed sufficient when delivered personally or sent by
telegram or fax or 48 hours after being deposited in the U.S. mail, as certified
or registered mail, with postage prepaid, and addressed to the party to be
notified at such party’s address or fax number as set forth below or as
subsequently modified by written notice.

 

(f) Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one instrument.

 

(g) Successors and Assigns. The rights and benefits of this Agreement shall
inure to the benefit of, and be enforceable by the Company’s successors and
assigns. The rights and obligations of Participant under this Agreement may only
be assigned with the prior written consent of the Company.

 

[Signature Page Follows]

 

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The parties have executed this Agreement as of the date first set forth above.

 

ARTHROCARE CORPORATION By:  

 

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Title:  

 

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Address:

680 Vaqueros

Sunnyvale, CA 94085

 

Director acknowledges receipt of a copy of the Plan and represents that he or
she is familiar with the terms and provisions thereof. Director hereby accepts
this Agreement subject to all of the terms and provisions hereof. Director has
reviewed the Plan and this Agreement in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Agreement and fully
understands all provisions of this Agreement. Director hereby agrees to accept
as binding, conclusive and final all decisions or interpretations of the Board
upon any questions arising under the Plan or this Agreement. Director further
agrees to notify the Company upon any change in the residence address indicated
below.

 

DIRECTOR:

[NAME OF DIRECTOR]

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(Signature) Address:

 

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CONSENT OF SPOUSE

 

I,                                         , spouse of                      have
read and hereby approve the foregoing Agreement. In consideration of the
Company’s issuing the Shares to my spouse as set forth in the Agreement, I
hereby agree to be irrevocably bound by the Agreement and further agree that any
community property or similar interest that I may have in the Shares shall be
similarly bound by the Agreement. I hereby appoint my spouse as my
attorney-in-fact with respect to any amendment or exercise of any rights under
the Agreement.

 

 

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Spouse of  

 

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EXHIBIT A

 

ASSIGNMENT SEPARATE FROM CERTIFICATE

 

FOR VALUE RECEIVED I,                     , hereby sell, assign and transfer
unto                                                                          
(                    ) shares of the Common Stock of ArthroCare Corporation
registered in my name on the books of said corporation represented by
Certificate No.              herewith and do hereby irrevocably constitute and
appoint                                          to transfer the said stock on
the books of the within named corporation with full power of substitution in the
premises.

 

This Assignment Separate from Certificate may be used only in accordance with
the Restricted Stock Bonus Agreement between ArthroCare Corporation and the
undersigned dated                     .

 

Dated:                     ,             

 

Signature  

 

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INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to enforce the
Forfeiture Restriction, as set forth in the Restricted Stock Bonus Agreement,
without requiring additional signatures on the part of Director.

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EXHIBIT B

 

JOINT ESCROW INSTRUCTIONS

 

 

ArthroCare Corporation

Attn: Secretary

 

As Escrow Agent for both ArthroCare Corporation (the “Company”) and the
undersigned recipient of stock of the Company (the “Director”), you are hereby
authorized and directed to hold the documents delivered to you pursuant to the
terms of that certain Restricted Stock Bonus Agreement (“Agreement”) between the
Company and Director, in accordance with the following instructions:

 

1. In the event of forfeiture of any of the shares owned by Director pursuant to
the Forfeiture Restriction set forth in the Agreement, the Company and/or any
assignee of the Company (referred to collectively for convenience herein as the
“Company”) shall give to Director and you a written notice specifying the number
of shares of stock forfeited and the date of forfeiture. Director and the
Company hereby irrevocably authorize and direct you to effect the forfeiture
contemplated by such notice in accordance with the terms of said notice.

 

2. As of the date of forfeiture indicated in such notice, you are directed (a)
to date the stock assignments necessary for the forfeiture and transfer in
question, (b) to fill in the number of shares being forfeited and transferred,
and (c) to deliver the same, together with the certificate evidencing the shares
of stock to be forfeited and transferred, to the Company or its assignee.

 

3. Director irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares. Director does hereby irrevocably
constitute and appoint you as Director’s attorney-in-fact and agent for the term
of this escrow to execute, with respect to such securities, all documents
necessary or appropriate to make such securities negotiable and to complete any
transaction herein contemplated, including but not limited to the filing with
any applicable state blue sky authority of any required applications for consent
to, or notice of transfer of, the securities. Subject to the provisions of this
paragraph 3, Director shall exercise all rights and privileges of a stockholder
of the Company while the stock is held by you.

 

4. Upon written request of Director, but no more than once per calendar year,
unless the Forfeiture Restriction has been triggered, you will deliver to
Director a certificate or certificates representing the number of shares of
stock as are not then subject to the Forfeiture Restriction. Within one hundred
twenty (120) days after any voluntary or involuntary termination of Director’s
services to the Company for any or no reason, you will deliver to Director a
certificate or certificates representing the aggregate number of shares held or
issued pursuant to the Agreement and not forfeited pursuant to the Forfeiture
Restriction set forth in Section 2 of the Agreement.

 

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5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Director,
you shall deliver all of the same to Director and shall be discharged of all
further obligations hereunder.

 

6. Your duties hereunder may be altered, amended, modified or revoked only by a
writing signed by all of the parties hereto.

 

7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Director while acting in good faith, and
any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.

 

8. You are hereby expressly authorized to disregard any and all warnings given
by any of the parties hereto or by any other person or corporation, excepting
only orders or process of courts of law and are hereby expressly authorized to
comply with and obey orders, judgments or decrees of any court. In case you obey
or comply with any such order, judgment or decree, you shall not be liable to
any of the parties hereto or to any other person, firm or corporation by reason
of such compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.

 

9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.

 

10. You shall not be liable for the expiration of any rights under any
applicable state, federal or local statute of limitations or similar statute or
regulation with respect to these Joint Escrow Instructions or any documents
deposited with you.

 

11. You shall be entitled to employ such legal counsel and other experts as you
may deem necessary properly to advise you in connection with your obligations
hereunder, may rely upon the advice of such counsel, and the Company shall
reimburse you for any reasonable attorneys’ fees incurred in connection
therewith.

 

12. Your responsibilities as Escrow Agent hereunder shall terminate if you shall
cease to be an officer or agent of the Company or if you shall resign by written
notice to each party. In the event of any such termination, the Company shall
appoint a successor Escrow Agent.

 

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13. If you reasonably require other or further instruments in connection with
these Joint Escrow Instructions or obligations in respect hereto, the necessary
parties hereto shall join in furnishing such instruments.

 

14. It is understood and agreed that should any dispute arise with respect to
the delivery and/or ownership or right of possession of the securities held by
you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

 

15. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or upon deposit in the
United States Post Office, by registered or certified mail with postage and fees
prepaid, addressed to each of the other parties thereunto entitled at the
addresses set forth on the signature page attached hereto or at such other
addresses as a party may designate by ten (10) days’ advance written notice to
each of the other parties hereto.

 

16. By signing these Joint Escrow Instructions, you become a party hereto only
for the purpose of said Joint Escrow Instructions; you do not become a party to
the Agreement.

 

17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.

 

18. These Joint Escrow Instructions shall be governed by, and construed and
enforced in accordance with, the laws of the State of California, excluding that
body of law pertaining to conflicts of law.

 

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The parties have executed these Joint Escrow Instructions as of the date first
set forth above.

 

ARTHROCARE CORPORATION

By:

 

 

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Name:

 

 

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Title:

 

 

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Address: 680 Vaqueros Sunnyvale, CA 94085

DIRECTOR:

   

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Address:

   

 

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ESCROW AGENT:

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Address:

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