SENIOR VP CONTINUITY AGREEMENT

 

This Senior VP Continuity Agreement (the “Agreement”) is made and entered into
effective as of                     ,         , by and between
                     (the “Employee”) and ArthroCare Corporation, a Delaware
corporation (the “Company”).

 

RECITALS

 

A. It is expected that the Company from time to time will consider the
possibility of a Change of Control (as defined below). The Board of Directors of
the Company recognizes that such consideration can be a distraction to the
Employee and can cause the Employee to consider alternative employment
opportunities. The Board of Directors has determined that it is in the best
interests of the Company and its shareholders to assure that the Company will
have the continued dedication and objectivity of the Employee, notwithstanding
the possibility, threat or occurrence of a Change of Control.

 

B. The Board of Directors believes that it is in the best interests of the
Company and its shareholders to provide the Employee with an incentive to
continue his/her employment and to motivate the Employee to maximize the value
of the Company upon a Change of Control for the benefit of its shareholders.

 

C. The Board of Directors believes that it is imperative to provide the Employee
with certain benefits upon a Change of Control and, under certain circumstances,
upon termination of the Employee’s employment, which benefits are intended to
provide the Employee with financial security and sufficient incentive and
encouragement to remain with the Company notwithstanding the possibility of a
Change of Control or a termination of employment.

 

D. Certain capitalized terms used in the Agreement are defined in Section 7
below.

 

In consideration of the mutual covenants herein contained, and in consideration
of the continuing employment of Employee by the Company, the parties agree as
follows:

 

1. Duties and Scope of Employment. The Company shall continue to employ the
Employee in the position of Senior Vice President,                     , as such
position was defined in terms of responsibilities and compensation as of the
effective date of this Agreement; provided, however, that the Board of Directors
shall have the right, subject to the other provisions of this Agreement, at any
time prior to the occurrence of a Change of Control, to revise such
responsibilities and compensation as the Board of Directors in its discretion
may deem necessary or appropriate. The Employee shall comply with and be bound
by the Company’s operating policies, procedures and practices from time to time
in effect during his/her employment. During the term of the Employee’s
employment with the Company, the Employee shall devote his/her full time, skill
and attention to his/her duties and responsibilities, and shall perform them
faithfully, diligently and competently, and the Employee shall use his/her best
efforts to further the business of the Company and its affiliated entities.

 

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2. Base Compensation. The Company shall pay the Employee as compensation for
his/her services a base salary, along with such performance bonus amounts as the
Board of Directors shall authorize, in its discretion, from time to time. Such
salary shall be paid periodically in accordance with normal Company payroll
policies. The Employee’s compensation (including bonus amounts) specified in
this Section 2, together with any increases in such compensation that the Board
of Directors may grant from time to time, is referred to in this Agreement as
the Employee’s “Base Compensation.”

 

3. Employee Benefits. The Employee shall be eligible to participate in the
employee benefit plans and compensation programs maintained by the Company and
applicable to other key employees of the Company, including (without limitation)
retirement plans, savings or profit-sharing plans, stock option, incentive or
other bonus plans, life, disability, health, accident and other insurance
programs, paid time off, and similar plans or programs, subject in each case to
the generally applicable terms and conditions of the applicable plan or program
in question and to the determination of any committee administering such plan or
program.

 

4. At-Will Employment. The Company and the Employee acknowledge that the
Employee’s employment is and shall continue to be at-will, as defined under
applicable law. The terms of this Agreement shall terminate upon the earlier of
(i) termination of the Employee’s position as an executive officer of the
Company; or (ii) the date that all obligations of the parties hereunder have
been satisfied. A termination of the terms of this Agreement pursuant to the
preceding sentence shall be effective for all purposes, except that such
termination shall not affect the payment or provision of compensation or
benefits on account of a termination of employment occurring prior to the
termination of the terms of this Agreement.

 

5. Option Acceleration Upon a Change of Control. Upon a Change of Control, the
vesting and exercisability of each option granted to the Employee by the Company
(the “Options”) shall be automatically accelerated as to 50% of the unvested
shares subject thereto at the time of the Change of Control.

 

6. Option Acceleration Upon a Hostile Takeover. Upon a Hostile Takeover, the
vesting and exercisability of the Options shall be automatically accelerated as
to 100% of the shares subject thereto.

 

7. Compensation Upon Termination of Employment.

 

(a) Termination Without Cause Apart from a Change of Control. If the Employee’s
employment is terminated by the Company without Cause at any time either prior
to the occurrence of a Change of Control or after the twenty-four (24) month
period following the effective date of a Change of Control, then the Employee
shall be entitled to receive severance benefits as follows:

 

(i) Accrued Compensation. The Company shall pay to the Employee his or her full
earned but unpaid base salary, when due, through the date of termination at the
rate in effect immediately prior to the date of termination, plus all other
amounts to which the Employee is entitled under any compensation plan or
practice of the Company at the time such payments are due, including accrued
paid time off. The Employee will not accrue paid time off following the date of
termination.

 

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(ii) Severance Pay. During the Compensation Continuation Period, the Company
shall pay the Employee continuing payments of severance pay in accordance with
its normal payroll practices at a rate equal to the Employee’s base salary (not
including any bonus) in effect immediately prior to the Employee’s termination.

 

(iii) Medical Benefits. The Company shall reimburse the Employee for the amount
of his or her premium payment for group health coverage, if any, elected by the
Employee pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended (“COBRA”); provided, however, that (A) such reimbursement shall not
exceed $650.00 per month, and (B) the Employee shall be solely responsible for
all matters relating to his or her continuation of coverage pursuant to COBRA,
including (without limitation) his or her election of such coverage and his or
her timely payment of premiums; provided, further, that upon the earlier to
occur of (1) the time that the Employee no longer constitutes a Qualified
Beneficiary (as such term is defined in Section 4980B(g)(1) of the Internal
Revenue Code of 1986, as amended) and (2) the date six (6) months following the
Employee’s termination, the Company’s obligations to reimburse the Employee
under this subsection (iii) shall cease.

 

(iv) Stock Options. Effective as of the date of termination, the Employee’s
Options will cease to continue vesting and all of the unvested Options will be
canceled. The Employee’s Options which are vested at the time of termination
will remain exercisable in accordance with the terms of the stock option
agreements pursuant to which they were granted for the periods set forth
therein.

 

(b) Involuntary Termination Following a Change of Control. If the Employee’s
employment with the Company terminates in an Involuntary Termination at any time
within twenty four (24) months after a Change of Control, then the Employee
shall be entitled to receive severance benefits as follows:

 

(i) Accrued Compensation. The Company shall pay to the Employee his or her full
earned but unpaid base salary, when due, through the date of termination at the
rate in effect immediately prior to the Involuntary Termination, plus all other
amounts to which the Employee is entitled under any compensation plan or
practice of the Company at the time such payments are due, including accrued
paid time off. The Employee will not accrue paid time off following the date of
termination.

 

(ii) Severance Pay. During the Compensation Continuation Period, the Company
shall pay the Employee continuing payments of severance pay in accordance with
its normal payroll practices at a rate equal to the Employee’s Current
Compensation.

 

(iii) Medical Benefits. The Company shall reimburse the Employee for the amount
of his or her premium payment for group health coverage, if any, elected by the
Employee pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended (“COBRA”); provided, however, that (A) such reimbursement shall not
exceed $650.00 per month, and (B) the Employee shall be solely responsible for
all matters relating to

 

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his or her continuation of coverage pursuant to COBRA, including (without
limitation) his or her election of such coverage and his or her timely payment
of premiums; provided, further, that upon the earlier to occur of (1) the time
that the Employee no longer constitutes a Qualified Beneficiary (as such term is
defined in Section 4980B(g)(1) of the Internal Revenue Code of 1986, as amended)
and (2) the date twenty-four (24) months following the Employee’s termination,
the Company’s obligations to reimburse the Employee under this subsection (iii)
shall cease; provided, finally, that if the Company’s obligations under this
subsection (iii) cease pursuant to clause (1), the Company shall make a lump sum
payment to the Employee equal to the product of the last monthly reimbursement
paid to the Employee pursuant to this subsection (iii) multiplied by six (6).

 

(iv) Outplacement Services. During the twenty-four (24) months following
termination of the Employee’s employment, the Employee shall be entitled to
executive-level outplacement services at the Company’s expense, not to exceed
$15,000. Such services shall be provided by a firm selected by the Employee from
a list compiled by the Company.

 

(v) Option Acceleration. The vesting and exercisability of each option shall be
automatically accelerated as to 100% of the unvested shares subject thereto at
the time of the Involuntary Termination.

 

(c) Voluntary Resignation; Termination For Cause. If the Employee voluntarily
resigns from the Company (other than in an Involuntary Termination), or if the
Company terminates the Employee’s employment for Cause, then the Employee shall
not be entitled to receive severance or other benefits under this Section 7, but
shall be eligible for those benefits (if any) as may then be established under
any other Section of this Agreement or the Company’s then-existing severance and
benefits plans and policies at the time of such termination.

 

(d) Disability; Death. If the Company terminates the Employee’s employment as a
result of the Employee’s Disability, or such Employee’s employment terminates
due to the death of the Employee, either in connection with or apart from a
Change of Control, then the Employee shall not be entitled to receive severance
or other benefits under this Section 7, but shall be eligible for those benefits
(if any) as may then be established under any other Section of this Agreement or
the Company’s then-existing severance and benefits plans and policies at the
time of such Disability or death.

 

(e) Release. Payment of any amount to the Employee pursuant to this Section 7
and the Employee’s acceptance of such amounts shall be subject to the execution
of a general waiver and release of all claims in the form attached hereto as
Exhibit A.

 

8. Definition of Terms. The following terms referred to in this Agreement shall
have the following meanings:

 

(a) Cause. “Cause” shall mean the happening of one or more of the following
events, in each case as determined in good faith by the Company’s Board of
Directors, (i) any act

 

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of personal dishonesty taken by the Employee in connection with his/her
responsibilities as an employee and intended to result in substantial personal
enrichment of the Employee, (ii) the Employee’s commission of a felony or an act
of fraud against the Company or its affiliates, (iii) a willful act by the
Employee that constitutes gross misconduct and that is injurious to the Company,
(iv) the Employee’s failure to satisfactorily perform the Employee’s obligations
under Section 1 of this Agreement, which failure adversely affects the business
of the Company or its affiliates, as determined by a majority of the members of
the Company’s Board of Directors, and (v) continued violations by the Employee
of the Employee’s obligations under Section 1 of this Agreement, which are
demonstrably willful and deliberate on the Employee’s part after there has been
delivered to the Employee a written demand for performance from the Company that
describes the basis for the Company’s belief that the Employee has not
substantially performed his/her duties along with an opportunity for the
Employee to meet such demands, which the Employee fails to accomplish within a
reasonable period of time.

 

(b) Change of Control. “Change of Control” shall mean the occurrence of any of
the following events:

 

(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becomes the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing fifteen percent (15%) or more of the total voting power
represented by the Company’s then outstanding voting securities;

 

(ii) A merger or consolidation of the Company with any other corporation, other
than a merger or consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation;

 

(iii) The approval by the shareholders of the Company of a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s assets; or

 

(iv) A change in the composition of the Board, as a result of which fewer than a
majority of the directors are Incumbent Directors. “Incumbent Directors” shall
mean directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of those directors whose election or
nomination was not in connection with any transaction described in subsections
(i), (ii) or (iii) or in connection with an actual or threatened proxy contest
relating to the election of directors of the Company.

 

(c) Compensation Continuation Period. “Compensation Continuation Period” shall
mean (i) in the case of a termination pursuant to Section 7(a) above, the period
of time commencing with termination of the Employee’s employment by the Company
without Cause during the term of this Agreement and ending with the expiration
of six (6) months following the

 

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date of the Employee’s termination, or (ii) in the case of a termination
pursuant to Section 7(b) above, the period of time commencing with termination
of the Employee’s employment in an Involuntary Termination during the term of
this Agreement and ending with the expiration of twenty-four (24) months
following the date of the Employee’s termination.

 

(d) Current Compensation. “Current Compensation” shall mean an amount equal to
the greater of (i) Employee’s Base Compensation earned in the fiscal year
preceding the fiscal year of Employee’s termination; or (ii) Employee’s Base
Compensation for the fiscal year of Employee’s termination, including 100% of
any bonus which the Employee could have earned during such fiscal year, assuming
the achievement of all relevant Employee and Company goals, milestones and
performance criteria.

 

(e) Disability. “Disability” shall mean that the Employee has been unable to
perform his duties under this Agreement as the result of his incapacity due to
physical or mental illness, and such inability, at least 26 weeks after its
commencement, is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Employee or the Employee’s
legal representative (such Agreement as to acceptability not to be unreasonably
withheld). Termination resulting from Disability may only be effected after at
least 30 days’ written notice by the Company of its intention to terminate the
Employee’s employment. In the event that the Employee resumes the performance of
substantially all of his/her duties hereunder before the termination of his
employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.

 

(f) Hostile Takeover. “Hostile Takeover” shall mean any “person” (as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the total voting power represented by the Company’s
then outstanding voting securities, without the approval of the Company’s Board
of Directors;

 

(g) Involuntary Termination. “Involuntary Termination” shall mean (i) without
the Employee’s express written consent, the assignment to the Employee of any
duties or the significant reduction of the Employee’s duties, either of which is
inconsistent with the Employee’s position with the Company and his/her
responsibilities in effect immediately prior to such assignment, or the removal
of the Employee from such position and responsibilities; (ii) without the
Employee’s express written consent, a substantial reduction, without good
business reasons, of the facilities and perquisites (including office space and
location) available to the Employee immediately prior to such reduction; (iii) a
reduction by the Company in the Base Compensation of the Employee as in effect
immediately prior to such reduction; (iv) a material reduction by the Company in
the kind or level of employee benefits to which the Employee is entitled
immediately prior to such reduction, with the result that the Employee’s overall
benefits package is significantly reduced; (v) the relocation of the Employee to
a facility or a location more than 30 miles from the Employee’s then present
location, without the Employee’s express written consent; (vi) any purported
termination of the Employee by the Company that is not effected for Disability
or for Cause, or any purported termination for which the grounds relied upon are
not valid; or (vii) the failure of the Company to obtain the assumption of this

 

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Agreement by any successors contemplated in Section 12 below; provided, however,
that no Involuntary Termination shall be deemed to have occurred if any such
successor substitutes an agreement for this Agreement providing comparable
severance benefits to those provided for in this Agreement.

 

9. Golden Parachute Excise Tax.

 

(a) Reimbursement. In the event that it shall be determined that any payment or
other benefit by the Company to or for the benefit of the Employee under this
Agreement, whether paid or payable, but determined without regard to any
additional payments required under this Section (the “Payments”), would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
(the “Excise Tax”), then the Employee shall be entitled to receive an additional
payment from the Company (the “First Reimbursement Payment”) equal to one
hundred percent (100%) of any Excise Tax actually paid or payable by the
Employee in connection with the Payments, plus an additional payment from the
Company in such amount that after payment of all taxes (including, without
limitation, any interest and penalties on such taxes and the Excise Tax) on the
Reimbursement Payment, the Employee retains an amount equal to the Reimbursement
Payment.

 

(b) Determination. Unless the Company and the Employee otherwise agree in
writing, any determination required under this Section shall be made in writing
by the Company’s primary independent public accounting firm (the “Accountants”),
whose determination shall be conclusive and binding upon the Employee and the
Company for all purposes. For purposes of making the calculations required by
this Section, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make their determination under this Section. The Company shall bear all costs
the Accountants may reasonably incur in connection with any calculations
contemplated by this Section.

 

10. Nonsolicitation Covenant. The Employee hereby agrees that he or she shall
not, during the term of Employee’s employment with the Company and until the
later of (i) one year following termination of Employee’s employment with the
Company or (ii) the date upon which the Employee ceases receiving payments
pursuant to Section 7 above, without the prior written consent of the Company’s
Board of Directors, do any of the following:

 

(a) solicit or influence or attempt to influence any client, customer or other
person either directly or indirectly, to direct any purchase of the Company’s
products and/or services to any person, firm, corporation, institution or other
entity in competition with the business of the Company; and

 

(b) solicit or influence or attempt to influence any person employed by the
Company to terminate or otherwise cease his or her employment with the Company
or become an employee of any competitor of the Company.

 

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The Employee’s obligations under this Section 10 shall survive termination of
the Employee’s employment with the Company and the termination of this
Agreement.

 

11. Non-Disparagement. The Employee agrees to refrain from any disparagement,
criticism, defamation, slander, or tortious interference with the contracts and
relationships of the Company or its employees, directors or principal
stockholders. The Employee’s obligations under this Section 11 shall survive
termination of the Employee’s employment with the Company and the termination of
this Agreement.

 

12. Successors.

 

(a) Company’s Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and assets
shall assume the obligations under this Agreement and agree expressly to perform
the obligations under this Agreement in the same manner and to the same extent
as the Company would be required to perform such obligations in the absence of a
succession. For all purposes under this Agreement, the term “Company” shall
include any successor to the Company’s business and assets that executes and
delivers the assumption agreement described in this subsection (a) or which
becomes bound by the terms of this Agreement by operation of law.

 

(b) Employee’s Successors. The terms of this Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee’s personal or legal representatives, executors, administrators,
successors, heirs, devisees and legatees.

 

13. Notice.

 

(a) General. Notices and all other communications contemplated by this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
personally, or by facsimile, or three business days after deposit in the U.S.
mail by registered or certified mail, return receipt requested and postage
prepaid. In the case of the Employee, mailed notices shall be addressed to
him/her at the home address which he/she most recently communicated to the
Company in writing. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be directed to
the attention of its Secretary.

 

(b) Notice of Termination. Any termination of Employee’s employment by the
Company for Cause or by the Employee as a result of an Involuntary Termination
shall be communicated by a notice of termination to the other party hereto given
in accordance with this Section. Such notice shall indicate the specific
termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the termination
date (which shall be not more than 15 days after the giving of such notice). The
failure by the Employee to include in the notice any fact or circumstance which
contributes to a showing of Involuntary Termination shall not waive any right of
the Employee hereunder or preclude the Employee from asserting such fact or
circumstance in enforcing his/her rights hereunder.

 

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14. Confidentiality. The Parties hereto each agree to use their best efforts to
maintain in confidence the underlying facts leading up to this Agreement, the
existence of this Agreement, the contents and terms of this Agreement, and the
consideration for this Agreement. Each Party hereto agrees not to disclose or
use and to take every reasonable precaution to prevent disclosure or use of any
such information to or by third parties, and each agrees that there will be no
publicity, directly or indirectly, concerning any such information. The parties
hereto agree that breach of this Section shall constitute a material breach of
this Agreement that shall entitle the non-breaching party to all available legal
and equitable remedies including, but not limited to, rescission of this
Agreement. The parties hereto further agree that all benefits to the Employee
under this Agreement shall be conditioned on his/her compliance with his/her
obligations under this Section.

 

15. Miscellaneous Provisions.

 

(a) No Duty to Mitigate. The Employee shall not be required to mitigate the
amount of any payment or benefit contemplated by this Agreement (whether by
seeking new employment or in any other manner), nor (except as otherwise
provided in this Agreement) shall any such payment or benefit be reduced by the
Employee obtaining new employment or by any earnings that the Employee may
receive from any other source.

 

(b) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by an authorized officer of the Company (other
than the Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.

 

(c) Whole Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto, and any prior agreement of the parties
hereto in respect of the subject matter contained herein, including, without
limitation, any prior severance or change in control agreements (including that
certain VP Continuity Agreement between the Employee and the Company dated
            ,              (the “Prior Agreement”)), is hereby terminated and
cancelled. Any of the Employee’s rights hereunder shall be in addition to any
rights the Employee may otherwise have under benefit plans or agreements of the
Company (other than severance plans or agreements or the Prior Agreement) to
which the Employee is a party or in which the Employee is a participant,
including, but not limited to, any Company sponsored employee benefit plans and
stock options plans. The provisions of this Agreement shall not in any way
abrogate the Employee’s rights under such other plans and agreements.

 

(d) Choice of Law. The validity and interpretation of this Agreement shall be
governed by the laws of the State of California without reference to rules of
conflicts of law. Employee hereby consents to the personal jurisdiction of the
state and federal courts located in California for any action or proceeding
arising from or relating to this Agreement or relating to any arbitration in
which the parties are participants.

 

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(e) Severability. If any portion of this Agreement is held by an arbitrator or a
court of competent jurisdiction to conflict with any federal, state or local
law, or to be otherwise invalid or unenforceable, such portion of this Agreement
shall be of no force or effect and the remaining provisions of this Agreement
shall otherwise remain in full force and effect and be construed as if such
portion had not been included in this Agreement.

 

(f) Arbitration.

 

(i) Unless otherwise provided herein, in the event that there shall be a dispute
(a “Dispute”) among the parties arising out of or relating to this Agreement, or
the breach thereof, the parties agree that such dispute shall be resolved by
final and binding arbitration before a single arbitrator in Santa Clara County,
California, administered by the American Arbitration Association (the “AAA”), in
accordance with AAA’s Employment ADR Rules. The arbitrator’s decision shall be
final and binding upon the parties, and may be entered and enforced in any court
of competent jurisdiction by either of the parties. The arbitrator shall have
the power to grant temporary, preliminary and permanent relief, including
without limitation, injunctive relief and specific performance.

 

(ii) The Company will pay the direct costs and expenses of the arbitration. The
Employee and the Company are responsible for their respective attorneys’ fees
incurred in connection with enforcing this Agreement; however, the Employee and
the Company agree that, except as may be prohibited by law, the arbitrator may,
in his or her discretion, award reasonable attorneys’ fees to the prevailing
party. Judgment may be entered on the arbitrator’s award in any court having
jurisdiction. Punitive damages shall not be awarded.

 

(g) No Assignment of Benefits. The rights of any person to payments or benefits
under this Agreement shall not be made subject to option or assignment, either
by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor’s
process, and any action in violation of this subsection (g) shall be void.

 

(h) Employment Taxes. All payments made pursuant to this Agreement will be
subject to withholding of applicable income and employment taxes.

 

(i) Assignment by Company. The Company may assign its rights under this
Agreement to an affiliate, and an affiliate may assign its rights under this
Agreement to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of assignment. In the case of
any such assignment, the term “Company” when used in a Section of this Agreement
shall mean the corporation that actually employs the Employee.

 

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

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.

 

COMPANY:

ARTHROCARE CORPORATION

By:

 

 

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Title:

 

 

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EMPLOYEE:

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(Signature)

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(Print Name)

Date:

 

 

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EXHIBIT A

 

EMPLOYEE AGREEMENT AND RELEASE

 

Pursuant to a Senior VP Continuity Agreement (the “Continuity Agreement”) dated
                    ,         , with ArthroCare Corporation (the “Company”), I
have been offered the opportunity to receive certain severance benefits from the
Company described in Section 7 of the Continuity Agreement to which I otherwise
would not be entitled by executing this Employee Agreement and Release (this
“Agreement”).

 

I hereby confirm my obligations under the Company’s proprietary information and
inventions agreement.

 

In granting the release herein, I acknowledge that I understand that I am
waiving the benefit of any provision of law in any jurisdiction to the following
effect: “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 her settlement with the
debtor.” (California Civil Code Section 1542). I hereby expressly waive and
relinquish all rights and benefits under that section and any law or legal
principle of similar effect in any jurisdiction with respect to the release of
unknown and unsuspected claims granted in this Agreement.

 

Except as otherwise set forth in this Agreement, I hereby release, acquit and
forever discharge the Company, its parents and subsidiaries, and its and their
respective officers, directors, agents, servants, employees, shareholders,
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 the date
I execute this Agreement, 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 ownership
interests in the Company, paid time off, 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
Equal Pay Act, as amended; the federal Age Discrimination in Employment Act of
1967, as amended (“ADEA”); the Older Workers Benefit Protection Act of 1990; the
federal Employee Retirement Income Security Act of 1974, as amended; the federal
Americans with Disabilities Act of 1990; all claims under the Fair Labor
Standards Act; all claims under the National Labor Relations Act; all claims
under the Family and Medical Leave Act; all claims under 42 U.S.C. 1981; the
California Fair Employment and Housing Act, as amended, and the California Labor
Code; tort law; contract law; wrongful discharge; harassment; discrimination;
fraud; defamation; emotional distress; and breach of the implied covenant of
good faith and fair dealing; all claims under any principle of common law;

 

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all claims concerning any right to reinstatement; and/or any other local, state,
or federal law governing discrimination in employment and/or the payment of
wages and benefits; provided, however, that nothing in this paragraph shall be
construed in any way to release the Company from its obligation to indemnify me
pursuant to the Company’s indemnification agreement.

 

I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under 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 on or after the
date I execute this Agreement; (B) I have the right to consult with an attorney
prior to executing this Agreement; (C) I have twenty-one (21) days to consider
this Agreement (although I may choose to voluntarily execute this Agreement
earlier); (D) I have seven (7) days following the execution of this Agreement by
the parties to revoke the Agreement; and (E) this Agreement shall not be
effective until the date upon which the revocation period has expired, which
shall be the eighth day after this Agreement is executed by me, provided that
the Company has also executed this Agreement by that date.

 

BY SIGNING BELOW, I ACKNOWLEDGE THAT I HAVE READ THIS AGREEMENT, UNDERSTAND ITS
TERMS AND EFFECT, AND AGREE TO IT VOLUNTARILY.

 

Date:

 

 

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[Name of Executive]

Acknowledged and Agreed:

        

ARTHROCARE CORPORATION

        

By:

 

 

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Name:

 

 

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Title:

 

 

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