May 12, 1999
 
 
Dear Bruce:
 
This letter is to serve as confirmation of the employment agreement
between you and ArthroCare Corporation (the "Company"). You currently
hold the position of Vice President, Regulatory Affairs and Quality
Assurance.  In this position, you are expected to devote your full
business time, attention, and energies to the performance of your duties
with the Company.  The effective date of your employment was October 5,
1998, and you report directly to me.
 
The terms your offer are as follows:
 
1.      Compensation:  Your annual salary is $125,000.00.  The Company
pays you $4,807.69 bi-weekly in accordance with the Company's
standard payroll policies.  Your salary began as of the effective
date of employment at a rate agreed upon at that time.  The first
and last payment by the Company to you will be adjusted, if
necessary, to reflect a commencement or termination date other
than the first or last working day of a pay period. You are also
eligible for an annual bonus of approximately 30% of your then-
current salary which is based upon the successful completion of
agreed upon goals and objectives and the Company's financial
performance.
 
2.      Benefits:  You are entitled, during the term of your employment,
to the Company's standard vacation and benefits covering
employees, as such may be in effect from time to time.
 
3.      Stock Options:  The Company granted you an initial option to
purchase 40,000 shares of the Company's Common Stock pursuant to
the Company's 1993 Stock Plan (the "Plan"), a copy of which was
provided to you. The option will vest over four years with 1/4 of
the shares subject to the option vesting one year from the
effective date of your employment and 1/48 of the shares vesting
at the end of each full month thereafter until all shares are
vested, subject to all provisions of the Plan and your continued
employment with the Company. Subsequent stock option grants have
been, and will be, made pursuant to this same Plan with vesting
schedules pursuant to standard Company practice at the time of
grant.
 
 
 
 
 
 
 
 
 
 
Bruce Prothro
May 12, 1999
Page 2 of 2
 
 
4.      At-Will Employment:  You should be aware that your employment with
the Company is for no specified period and constitutes "at-will"
employment.  As a result, you are free to terminate your
employment at any time, for any reason or for no reason.
Similarly, the Company is free to terminate your employment at any
time,  for any reason or for no reason.  In the event of
termination of your employment, you will not be entitled to any
payments, benefits, damages, awards, or compensation other than as
may otherwise be available in accordance with the Company's
established employee plans and policies at the time of
termination.
 
5. The terms of this letter supersede any remaining current terms of
any previous employment arrangements with the Company.
 
Bruce, we look forward to your continued employment with the Company.
If the foregoing terms are agreeable, please indicate your acceptance by
signing the enclosed copy of this letter in the space provided below and
returning it to me.
 
Sincerely yours,
 
ArthroCare Corporation
 
 
 
Michael A. Baker
President and CEO
 
ACCEPTED:
 
_______________________________         _______________________
Bruce Prothro                                   Date