Unassociated Document


    Exhibit
10.70

     

    
      


       

      [Bank of
America Letterhead]

       

    

     

    February
23, 2009

     

    ArthroCare
Corporation

    7500
Rialto Boulevard

    Building
Two, Suite 100

    Austin,
Texas 78735

    
      	
              Attention:

            	
              Mr.
      Jeffrey Templer

              Mr. Richard Rew, Senior Vice-President and General
      Counsel

            


    

     

    
      	
              
              

            	
              Re:
      

            	
              Credit
      Agreement dated as of January 13, 2006 (as amended by that certain First
      Amendment dated as of December 18, 2007, that certain Second Amendment and
      Consent dated as of November 26, 2008, that certain Waiver dated as of
      January 16, 2009 and as further amended, restated, supplemented or
      otherwise modified prior to the date hereof, the "Credit
      Agreement") by and among ArthroCare Corporation, a Delaware
      corporation, as Borrower (the "Borrower"), the
      banks and other financial institutions party thereto from time to time, as
      Lenders (the "Lenders") and
      Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C
      issuer (the "Administrative
      Agent"), Each capitalized term used herein but not defined herein
      shall be defined in accordance with the Credit
  Agreement.

            


    

     

    Dear
Messrs. Templer and Rew:

     

    As you
are aware, the Borrower recently provided the Administrative Agent with certain
updated financial information in the form of a power point presentation prepared
by the Borrower for the Lenders. In addition, on February 17, 2009, you provided
us with a draft press release which was then released to the public (in
substantially similar form) on February 18, 2009. After reviewing the foregoing
items and other information, this letter is to inform you that, as of the date
of this letter, the following Events of Default exist under the Credit Agreement
(collectively, the "Existing Events of
Default"):

     

    (a)    Events of
Default under Section
8.01(b) of the Credit Agreement resulting from the Borrower's failure to
comply with Section
7.12(c) of the Credit Agreement for the fiscal quarters ended as of March
31, 2008, June 30, 2008 and September 30, 2008;

     

    (b)    Events of
Default under Section
8.01(c) of the Credit Agreement resulting from:

     

    
      	
              
              

            	
              (i)

            	
              the
      Borrower's failure to comply with the requirements set forth in Section 6.08 of the
      Credit Agreement; and

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ArthroCare
Corporation 

    
      February
23, 2009 

      Page
2

       

    

    
      
        
          	
                  
                  

                	
                  (ii)

                	
                  the
      Borrower's failure to comply with the requirements set forth in that
      certain Consent dated as of May 17, 2007 (the "Consent")
      related to the Beam One Loan (as defined in the Consent) and the Factoring
      Arrangement (as defined in the
Consent);

                


        

      

      


      in each
case with respect to the foregoing clauses (i) and (ii), which failures by the
Borrower have continued for at least thirty (30) days in each instance;
and

      


      (c)    an Event of
Default under Section
8.01(d) of the Credit Agreement resulting from incorrect and/or
misleading representations made under Sections 5.01(d), 5.05(c), 5.05(d), and 5.16.

      


      This is
to further notify you that, by virtue of the existence of the Existing Events of
Default, and in addition to any pertinent provision of any other Loan Document,
the Administrative Agent and the Lenders are not required to honor (and
presently do not intend to honor) any Credit Extension (other than a
continuation or conversion of an existing Eurocurrency Rate Loan or the possible
extension/renewal of an existing Letter of Credit).

      


      While the
Administrative Agent and the Lenders are not presently exercising any other
rights, powers, or remedies available to them with respect to the Existing
Events of Default described above, nothing contained herein shall be deemed to
constitute any waiver by the Administrative Agent or the Lenders of any such
Events of Default, and the Administrative Agent, on behalf of itself and the
Lender, hereby expressly reserves all rights, powers, and remedies, and shall be
entitled, to pursue at any time and from time to time, without notice, demand or
any other action, any and all rights, powers, and/or remedies provided under the
Credit Agreement and/or the other Loan Documents, at law, in equity or
otherwise, whether or not with respect to any Existing Events of Default or any
other Events of Default, all in the sole and absolute discretion of the
Administrative Agent and the Lenders. Neither this letter nor any other
communication between the Administrative Agent and/or the Lenders, on the one
hand, and the Borrower, on the other hand, shall be construed as a consent,
waiver, forbearance or other modification with respect to any term, condition or
other provision of the Credit Agreement and/or any other Loan Document. Neither
this letter, any other communication between the Administrative Agent and/or the
Lenders, on the one hand, and the Borrower, on the other hand, nor any act or
omission on the part of the Administrative Agent and/or the Lenders constitutes,
or shall be deemed to constitute, a course of conduct or a course of dealing so
as to justify an expectation by the Borrower that the Administrative Agent and
the Lenders will not exercise any rights or remedies available to them with
respect to any Existing Event of Default, any other existing Event of Default or
any subsequent Event of Default or an expectation by the Borrower that the
Administrative Agent and the Lenders will waive any Existing Event of Default,
any other existing Event of Default or any subsequent Event of
Default.

      


      Without
limiting the generality of the foregoing, nothing contained herein is intended
to or shall be deemed to constitute any binding commitment or other agreement on
behalf of the Administrative Agent or the Lenders to enter into any amendment to
the Credit Agreement or any forbearance or other type of agreement with respect
to the Existing Events of Default or any other Events of Default, including,
without limitation, to extend any funding or loan commitment

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      ArthroCare
Corporation

      
        February
23, 2009

        Page
3

      

      
         

        pursuant
to any such amendment or other type of agreement. As conspicuously set forth in
the Credit Agreement, only terms in writing executed by the Administrative Agent
and the requisite Lenders (and not other terms or oral promises) are enforceable
against the Administrative Agent or the Lenders.

         

        As we
have discussed with you, the undersigned now has primary day-to-day
responsibility for the administration of this credit at the Administrative
Agent, and accordingly, communications under Section 10.02 of the Credit
Agreement should be directed to his attention. The Administrative Agent also has
retained special counsel in connection with this matter, who should also be
included in any such communications at the following address: Mayer Brown LLP,
71 South Wacker Drive, Chicago, Illinois 60606-4637, Attention: Thomas S.
Kiriakos (#######@#########).

         

         

        Sincerely,

         

        BANK OF
AMERICA, N.A., as Administrative Agent on behalf of the Lenders

         

        By : /s/ David Maiorella

        Name:
David Maiorella 

        Title:
Senior Vice President 

        (###)
###-####