Form of Stock Option Agreement



  
 Exhibit 4.3 

 
 ARTHROCARE CORPORATION 
  
 2003 INCENTIVE STOCK PLAN 
  
 STOCK OPTION AGREEMENT 
  
 ArthroCare Corporation (the “Company”), pursuant to its 2003
Incentive Stock Plan (the “Plan”), hereby grants to the Optionee listed below (“Optionee”), an option to purchase the number of shares of the Company’s Common Stock set forth below, subject to the terms and conditions of
the Plan and this Stock Option Agreement. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Stock Option Agreement. 
  

	I.	NOTICE OF STOCK OPTION GRANT 

  

					
			
	 Optionee:
	  	 	  	 
			
	 Date of Grant:
	  	 	  	 
			
	 Vesting Commencement Date:
	  	 	  	 
			
	 Exercise Price per Share:
	  	 	  	$
			
	 Total Number of Shares Granted:
	  	 	  	 
			
	 Total Exercise Price:
	  	 	  	$
			
	 Term/Expiration Date:
	  	 	  	10 years from Date of Grant
			
	 Type of Option:
	  	 ̈ Incentive Stock Option	  	 ̈ Nonstatutory Stock Option
		
	 Vesting Schedule:
	  	The Shares subject to this Option shall vest according to the following schedule:
		
	 	  	[Twenty-five percent (25%) of the Shares subject to the Option (rounded down to the next whole number of shares) shall vest one year after the Vesting Commencement Date, and one
forty-eighth (1/48th) of the Shares subject to the Option (rounded down to the next whole number of shares) shall
vest on the first day of each full month thereafter, so that all of the Shares shall be vested on the first day of the forty-eighth (48th) month after the Vesting Commencement Date.]
		
	 	  	or
		
	 	  	[One forty-eighth (1/48th) of the Shares
subject to the Option (rounded down to the next whole number of shares) shall vest one month after the Vesting Commencement Date, and one forty-eighth (1/48th) of the Shares subject to the Option (rounded down to the next whole number of shares) shall vest on the first day of each full month thereafter, so that all of the Shares shall be vested on the first
day of the forty-eighth (48th) month after the Vesting Commencement Date.]

  










					
	 Termination Period:
	  	This Option may be exercised, to the extent vested, for thirty (30) days after the termination of the Optionee’s Continuous Status as an Employee or Consultant, or such
longer period as may be applicable upon the death or Disability of Optionee as provided herein (or, if not provided herein, then as provided in the Plan), but in no event later than the Term/Expiration Date as provided above.

  

	II.	AGREEMENT 

  
 1. Grant of Option. The Company hereby grants to the Optionee an Option to purchase the Common Stock (the “Shares”) set forth in the
Notice of Grant, at the exercise price per share set forth in the Notice of Grant (the “Exercise Price”). Notwithstanding anything to the contrary anywhere else in this Option Agreement, this grant of an Option is subject to the terms,
definitions and provisions of the Plan adopted by the Company, which is incorporated herein by reference. 
  
 If designated in the Notice of Grant as an Incentive Stock Option, this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code; provided, however, that to the extent that the aggregate Fair Market Value of stock with respect to which Incentive Stock Options (within the meaning of Code Section 422, but without regard to Code Section
422(d)), including the Option, are exercisable for the first time by the Optionee during any calendar year (under the Plan and all other incentive stock option plans of the Company or any Subsidiary) exceeds $100,000, such options shall be treated
as not qualifying under Code Section 422, but rather shall be treated as Nonstatutory Stock Options to the extent required by Code Section 422. The rule set forth in the preceding sentence shall be applied by taking options into account in the order
in which they were granted. For purposes of these rules, the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is granted. 
  
 2. Exercise of Option. This Option is exercisable as follows: 
  
 (a) Right to Exercise. 
  
 (i) This Option shall be exercisable cumulatively according
to the vesting schedule set out in the Notice of Grant. For purposes of this Stock Option Agreement, Shares subject to this Option shall vest based on Optionee’s Continued Status as an Employee or Consultant. 
  
 (ii) This Option may not be exercised for a fraction of a
Share. 
  
 (iii) In the event of Optionee’s
death, Disability or other termination of the Optionee’s Status as an Employee or Consultant, the exercisability of the Option is governed by Sections 5, 6 and 7 below. 
  
 (iv) In no event may this Option be exercised after the date of expiration of the term of this Option as set
forth in the Notice of Grant. 
  
 (b) Method
of Exercise. This Option shall be exercisable by written Notice in a form designated by the Company. The Notice must state the number of Shares for which the Option is being exercised, and such other representations and agreements with respect
to such shares of Common Stock as may be required by the Company pursuant to the provisions of the Plan. The Notice must be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company. The Notice must
be accompanied by payment of the Exercise Price, including payment of any applicable withholding tax. This Option shall be deemed to be exercised upon receipt by the Company of such written Notice accompanied by the Exercise Price and payment of any
applicable withholding tax. 
  

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 No Shares shall be issued pursuant to the exercise of an Option unless such issuance and
such exercise comply with all relevant provisions of law and the requirements of any stock exchange upon which the Shares may then be listed. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the
Optionee on the date on which the Option is exercised with respect to such Shares. 
  
 3. Lock-Up Period. Optionee hereby agrees that if so requested by the Company or any representative of the underwriters (the “Managing Underwriter”) in connection with any registration of the offering
of any securities of the Company under the Securities Act, Optionee shall not sell or otherwise transfer any Shares or other securities of the Company during the 180-day period (or such longer period as may be requested in writing by the Managing
Underwriter and agreed to in writing by the Company) (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under the Securities Act. The Company may impose stop-transfer instructions
with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period. 
  
 4. Method of Payment. Payment of the Exercise Price shall be by any of the following, or a combination thereof, subject to the consent of the
Administrator: 
  
 (a) cash; 
  
 (b) check; 
  
 (c) delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the option and delivery to the Company of the sale or loan proceeds required to pay the exercise price; 
  
 (d) a reduction in the amount of any Company liability to
the Optionee, including any liability attributable to the Optionee’s participation in any Company-sponsored deferred compensation program or arrangement; 
  

(e) any combination of the foregoing methods of payment; or 
  
 (f) such other consideration and method of payment for the issuance of Shares to the extent permitted by
applicable laws. 
  
 5. Termination of Relationship. Upon
termination of Optionee’s Continuous Status as an Employee or Consultant, other than upon the Optionee’s death or Disability, the Optionee may exercise his or her Option, but only within such period of time as is specified in the Notice of
Grant, and only to the extent that the Optionee was entitled to exercise it at the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant). If, after the termination, the
Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate. 
  
 6. Disability of Optionee. In the event that an Optionee’s Continuous Status as an Employee or Consultant terminates as a result of the
Optionee’s Disability, the Optionee may exercise this Option at any time within twelve (12) months from the date of such termination, but only to the extent that the Optionee was entitled to exercise it at the date of such termination (but in
no event later than the expiration of the of the term of his or her Option as set forth in the Notice of Grant). If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate.

  
 7. Death of Optionee. In the event of the death of an
Optionee, the Optionee may be exercised at any time within twelve (12) months following the date of death (but in no event later than the expiration of the term of such Option as set forth in the notice of Grant), by the Optionee’s estate or by
a 

  

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person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent that the Optionee was entitled to exercise the Option
at the date of death. If, after death, the Optionee’s estate or a person who acquired the right to exercise the Option by bequest or inheritance does not exercise the Option within the time specified herein, the Option shall terminate.

  
 8. Non-Transferability of Option. This Option may not
be transferred in any manner except by will or by the laws of descent or distribution . It may be exercised during the lifetime of Optionee only by Optionee. The terms of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee. 
  
 9. Term of
Option. This Option may be exercised only within the term set out in the Notice of Grant. 
  
 10. Governing Law. This Option shall be governed by and construed in accordance with the laws of the State of Delaware. 
  

[Signature page follows] 
  

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 This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and
all of which shall constitute one document. 
  

			
	ARTHROCARE CORPORATION
		
	 By:
	 	 



			
		
	 Name:
	 	 Fernando Sanchez

		
	 Title:
	 	 Senior VP of Operations and CFO



  
 OPTIONEE
ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE
COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE. 
  
 Optionee acknowledges receipt of a copy of the Plan and represents that he is
familiar with the terms and provisions thereof. Optionee hereby accepts this Option subject to all of the terms and provisions hereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the
Plan or this Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below. 
  

					
	 Dated: ____________________
	 	 	 	 
	 	 	 	 	 [OPTIONEE] (Signature)

			
	 	 	 	 	 Residence Address:

			
	 	 	 	 	 
			
	 	 	 	 	 

  

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